APPRAISAL OF A VACANT TRACT OF LAND CONTAINING …€¦ · REAL PROPERTY APPRAISERS AND CONSULTANTS 8403 Cross Park Drive Suite 3G Austin, Texas 78754 512/388-0086 Fax 512/381-0226

APPRAISAL OF A VACANT TRACT OF LAND CONTAINING 159.802 ACRES

LOCATED ON THE NORTH SIDE OF FM 969 AT BURLESON-MANOR ROAD

MANOR, TRAVIS COUNTY, TEXAS

AS OF

JANUARY 12, 2015

PREPARED FOR:

MR. JAMES CARPENTER

AUSTIN, TEXAS

PREPARED BY:

LARRY H. DECOVIC MAI, SRA

VIOLET CROWN APPRAISALS

8403 CROSS PARK DRIVE, SUITE 3G

AUSTIN, TEXAS 78754

Appraisal of

159.802 Acres known as the Whisper Valley

Tract

Manor, Travis County, Texas

Prepared for

Mr. James Carpenter

As of January 12, 2015

Prepared By

Larry H. Decovic, MAI SRA

VIOLET CROWN APPRAISALS

REAL PROPERTY APPRAISERS AND CONSULTANTS

8403 Cross Park Drive Suite 3G Austin, Texas 78754 512/388-0086 Fax 512/381-0226

January 12, 2015

Mr. James Carpenter

Austin, Texas

Re: The appraisal of an 159.802 acre tract of land located on the north side of FM 969 at the

intersection of Burleson-Manor Road, Manor, Travis County, Texas

Dear Sirs:

As requested, we have performed an appraisal on the above referenced property. The client for

this assignment is Mr. James Carpenter. The format of the appraisal will be a complete

narrative with a sales comparison approach only as the property is a vacant tract of land and all

the back-up support, approximating the old appraisal format formerly referred to as a self-

contained appraisal.

The intended use of this report is to provide an estimate of the most probable Market Value of

the fee simple interests “as is”. It is also to provide a guideline for lending underwriting.

Intended User of the report is Mr. James Carpenter. In the case of unimproved land, only a fee

simple interest is applicable.

The appraisal, as set forth, is subject to any terms or conditions stated within this transmittal

letter, the body of the report, or the Assumptions and Limiting Conditions in the addenda.

The effective date of the appraisal “as is” is January 12, 2015, which was the date of our

inspection. The date of final report preparation is the date shown at the top of this letter. The

report is being prepared in compliance with U.S.P.A.P., 12 C.F.R. Part 1608, and the standards

set forth by the Appraisal Institute and Texas Real Estate Commission.

Market Value: Market Value, as used in this report, is defined as: The most probable price in

terms of money which a property should bring in competitive and open market under all

conditions requisite to a fair sale, the buyer and seller, each, acting prudently, knowledgeably

and assuming the price is not affected by undue stimulus. Implicit in this definition is the

consummation of a sale as of a specified date and the passing of title from seller to buyer under

conditions whereby:

(1) buyer and seller are typically motivated.

(2) both parties are well informed or well advised, and each acting in what they consider

their own best interest.

(3) a reasonable time is allowed for exposure in the open market.

(4) payment is made in cash in US dollars or in terms of financial arrangements comparable

thereto; and.

(5) the price represents a normal consideration for the property sold unaffected by special or

creative financing or sales concessions granted by anyone associated with the sale.

Transmittal Page

8403 Cross Park Drive, 3G Austin, Texas 78754 512/381-0086

Page Two

January 12, 2015

The most probable Market Value of the fee simple interest of the subject tract of land (159.802

acres) “As Is”, as of January 12, 2015, is estimated at:

FIVE MILLION SIX HUNDRED THOUSAND DOLLARS

($5,600,000)

The appraiser has estimated a reasonable marketing period for the subject to be approximately six to

twelve months based on information obtained from various brokers active in the market and from our

research of property sales and marketing times

The following report contains the factual data and analyses upon which the value estimate is based

and has been presented in consideration of the guidelines outlined above. It has been a pleasure

serving you. Should you have any questions pertaining to this report, please contact us.

Respectfully Submitted,

Larry H. Decovic, MAI, SRA

Director of the Valuation Group

Violet Crown Appraisals, LLC

State Certified General Real Estate Appraiser

#TX-1320138-G

Table of Contents

Violet Crown Appraisals Page 5

TABLE OF CONTENTS

Contents

TABLE OF CONTENTS .............................................................................................................................................................. 5

EXECUTIVE SUMMARY ............................................................................................................................................................ 7

EXPLANATION OF APPRAISAL PROCESS AND SCOPE ............................................................................................................... 8

SPECIFICATION OF APPRAISAL ASSIGNMENT .......................................................................................................................................... 8 COLLECTION OF DATA ....................................................................................................................................................................... 8 HIGHEST AND BEST USE ANALYSIS ...................................................................................................................................................... 8 APPROACHES TO VALUE .................................................................................................................................................................... 8 RECONCILIATION OF APPROACHES & FINAL VALUE ESTIMATE ................................................................................................................... 9

ASSIGNMENT DATA .............................................................................................................................................................. 10

PROPERTY IDENTIFICATION .............................................................................................................................................................. 10 LEGAL DESCRIPTION ....................................................................................................................................................................... 10 CLIENT, INTENDED USE OF THE REPORT AND INTENDED USERS ............................................................................................................... 10 DATE OF APPRAISAL ....................................................................................................................................................................... 10 EXPOSURE PERIOD ......................................................................................................................................................................... 10 MARKETING TIME .......................................................................................................................................................................... 10 PREVIOUS APPRAISALS OF THE SUBJECT ............................................................................................................................................. 11 COMPETENCY PROVISION ................................................................................................................................................................ 11 VALUE AND PROPERTY RIGHTS DEFINITIONS ....................................................................................................................................... 11 FEE SIMPLE ESTATE ........................................................................................................................................................................ 12 LEASED FEE ESTATE ........................................................................................................................................................................ 12

AREA ANALYSIS .................................................................................................................................................................... 13

GENERAL LOCATION ....................................................................................................................................................................... 13 DEMOGRAPHICS ............................................................................................................................................................................ 13 AREA MAP ................................................................................................................................................................................... 14 GEOGRAPHIC CHARACTERISTICS ........................................................................................................................................................ 17 GOVERNMENT INFLUENCES ............................................................................................................................................................. 17 UTILITIES ...................................................................................................................................................................................... 20 ECONOMIC PROFILE & INDICATORS ................................................................................................................................................... 21 SUMMARY AND CONCLUSION........................................................................................................................................................... 29

NEIGHBORHOOD ANALYSIS .................................................................................................................................................. 34

BOUNDARIES ................................................................................................................................................................................ 34 PREDOMINANT LAND USE ............................................................................................................................................................... 34 REPUTATION OF THE AREA .............................................................................................................................................................. 34 NEIGHBORHOOD MAP .................................................................................................................................................................... 35 RANGE OF SALES AND RENTALS ........................................................................................................................................................ 36 LIFE STATE AND TREND OF NEIGHBORHOOD ....................................................................................................................................... 37 EXTENT OF NEIGHBORHOOD DEVELOPMENT ....................................................................................................................................... 37 RECENT STUDIES............................................................................................................................................................................ 39 MOST PROBABLE SOURCE OF FINANCING ........................................................................................................................................... 39 LOCATION AND ACCESSIBILITY OF NEIGHBORHOOD ............................................................................................................................... 39 PLANNING, ZONING AND RESTRICTIONS ............................................................................................................................................. 40 ADEQUACY OF UTILITIES.................................................................................................................................................................. 40 DETRIMENTAL INFLUENCES, NUISANCES AND HAZARDS ......................................................................................................................... 40

Table of Contents


CONCLUSION ................................................................................................................................................................................ 40

PROPERTY HISTORY .............................................................................................................................................................. 41

OWNERSHIP & SALE PRICE HISTORY .................................................................................................................................................. 41 MARKETING & LISTING PRICE HISTORY .............................................................................................................................................. 41 PROPERTY ASSESSMENT AND TAXATION .................................................................................................................................. 41

SITE ANALYSIS ...................................................................................................................................................................... 42

SURVEY: PARCEL 190645 – 159.802 ACRES ..................................................................................................................................... 42 CONTOUR MAP: PARCEL 190645 – 159.802 ACRES .......................................................................................................................... 43 PROPOSED SITE USE: PARCEL 190645 – 159.802 ACRES .................................................................................................................... 43 LOCATION .................................................................................................................................................................................... 45 SIZE ............................................................................................................................................................................................ 45 FRONTAGE/ACCESS ........................................................................................................................................................................ 45 FLOOD PLAIN ................................................................................................................................................................................ 46 TERRAIN ...................................................................................................................................................................................... 47 INTERIOR ROADS ........................................................................................................................................................................... 47 UTILITIES ...................................................................................................................................................................................... 47 POTENTIAL SITE HAZARDS ............................................................................................................................................................... 48

SUBJECT PROPERTY PHOTOGRAPHS ..................................................................................................................................... 49

HIGHEST AND BEST USE ........................................................................................................................................................ 51

ANALYSIS OF THE SITE AS VACANT ..................................................................................................................................................... 51

SALES COMPARISON APPROACH - VACANT LAND “AS IS” .................................................................................................... 52

MARKET DATA - VACANT LAND SALES ............................................................................................................................................... 52 SALES COMPARISON APPROACH – VACANT LAND COMMENTS: .............................................................................................................. 54 COMPARABLE LAND SALES ADJUSTMENT GRID .................................................................................................................................... 56

LAND SALES COMPARABLES ................................................................................................................................................. 57

LAND SALES MAP – 159.802 ACRE TRACT ........................................................................................................................................ 57

CERTIFICATION ..................................................................................................................................................................... 71

ASSUMPTIONS AND LIMITING CONDITIONS ......................................................................................................................... 72

GENERAL CONDITIONS .................................................................................................................................................................... 72 COURT OR HEARING TESTIMONY ...................................................................................................................................................... 73 TITLE REPORT ............................................................................................................................................................................... 73 SOIL OR GEOLOGICAL CONDITIONS ................................................................................................................................................... 73 VACANT LAND............................................................................................................................................................................... 74 IMPROVED PROPERTY ..................................................................................................................................................................... 74 APPRAISER QUALIFICATIONS .................................................................................................................................................... 77 APPRAISER’S STATE GENERAL CERTIFICATION SHEET ............................................................................................................... 78

Executive Summary


EXECUTIVE SUMMARY

ASSIGNMENT DATA

Appraisal Purpose

Effective Date January 12, 2015

PROPERTY IDENTIFICATION

Property Appraised

Size (Ac)

190645 02-0270-02-02 159.802

SITE DESCRIPTION

Zoning None

Size & Shape 159.802 Acres - roughly rectangular

Frontage

Improvements None

Topography Flat

Easements None

Special Encumbrances None

IMPROVEMENTS DESCRIPTION

Type: None

HIGHEST AND BEST USE Residential development

VALUE CONCLUSIONS

Sales Comparison Approach $5,600,000

Cost Approach N/A

Income Approach N/A

Land Value $5,600,000

FINAL VALUE CONCLUSION

Whisper Valley - 159.802 Acres $5,600,000

Approximately 1861.35' on FM 969 & approximately 6295.19 ' on

Burleson Manor Road

One parcel of vacant land consting of 159.802 acres located on

the northeast corner of Burleson Manor Road and FM 969.

To estimate the market value of the fee simple interest in 159.802 acres of

vacant land located on the north side of FM 969.

Parcel IDs Geographic ID

159.8020 acres for Abstract 12 of J. Gilleland Survey No. 13

Legal Description

Introduction


EXPLANATION OF APPRAISAL PROCESS AND SCOPE

This section provides an overview of the appraisal process and the scope of investigation. The

appraiser has performed five tasks in the process of valuing the subject. The following

paragraphs briefly describe each of these tasks.

Specification of Appraisal Assignment

In order to clarify the assignment, the appraiser defines the appraisal objective. This involves

identifying the real property and the rights to be appraised, establishing a definition and an "as

of" date for the value to be given, clarifying the use of the appraisal, and outlining any limiting

conditions potentially affecting the value. The Assignment Data section and the Assumptions

and Limiting Conditions addendum contain most of this information.

Collection of Data

The appraiser then collects "general" and "specific" data for use throughout the report. General

or basic data includes the social, economic, governmental and environmental information

presented in the Area Analysis and Neighborhood Analysis sections of the report. Sources used

to collect general data in this report include various City of Austin publications and information

obtained by a physical inspection of the subject neighborhood. Specific information is presented

as property data in the Site Analysis and as market data in the approach to value. Since the

subject of this report is vacant land, only the sales comparison approach was used. Sources used

to collect specific data in this report include the Violet Crown Appraisals data base, various

brokers, county court house records, county appraisal district, the appraiser's inspection of the

property, and information provided by the client. Ultimately, both categories of data affect the

estimated value of the subject property, although, to different degrees.

Highest and Best Use Analysis

Next, the appraiser estimates the highest and best use of the property as if vacant and as currently

improved. Highest and best use generally serves three purposes: 1) to help the appraiser identify

properties comparable to the subject when gathering market data, 2) to establish the land-use

providing maximal income, and 3) to determine if the current improvements, if any, warrant

demolition. This analysis is contained in the Highest and Best Use section of the report.

Approaches to Value

After defining the problem, gathering all pertinent data, and establishing the highest and best use

of the subject property, the appraiser normally performs three separate valuation techniques.

These techniques are referred to as the Sales Comparison Approach, Cost Approach, and Income

Approach. The validity and reliability of each approach is dependent on the data available and

the type of property being appraised.

Introduction


Each of the valuation techniques is founded on the "Principle of Substitution", which describes

the action of a prudent person considering all available alternatives and acting rationally.

Substitution is formally defined by the Appraisal Institute as:

The principal of substitution states when several similar or commensurate commodities, goods

or services are available, the one with the lowest price will attract the greatest demand and

widest distribution.

The approaches to values, as used in this report, are briefly described below.

Sales Comparison Approach: The Sales Comparison Approach is a method of estimating value

by considering recent sales of properties similar to the subject. The sale price of each

"comparable" property is divided by a common denominator such as acreage, square footage,

units, rooms, lots, or gross income. After reducing each sale price to a "unit basis", appropriate

adjustments are made to arrive at an estimate of value for the subject. This method is considered

reliable when sales of highly similar properties are available for comparison. The shortcomings

of this method are apparent when market data are outdated and/or significantly dissimilar

Cost Approach: In the Cost Approach, the appraiser finds the cost to replace or reproduce the

subject improvements and site improvements, less any deterioration and obsolescence, and then

adds this cost to the previously established land value to derive an indication of value. This

method is highly reliable if the improvements have no, or little, deterioration and obsolescence.

The Cost Approach is considered particularly useful as an indication of value for some non-

income producing properties that have a very specific use such as churches and schools.

Income Approach: In the Income Approach, the appraiser considers the subject property's

earning potential to establish a value indication. Two variations on this theme are normally used:

1) the direct capitalization of the property's anticipated stabilized income and 2) the discounting

of the property's anticipated net income-stream and ultimate sale proceeds over an estimated

holding period.

Reconciliation of Approaches & Final Value Estimate

In this final phase, the appraiser considers the value indications from the preceding approaches

and weighs each approach's relevance in the case at hand. Based on this assessment of the

approaches, the appraiser then assigns a single value to the subject property in the Reconciliation

and Final Value Estimate section. Only the Sales Comparison was used to value the fee simple

interest value of the subject as the property consists of vacant land.

Assignment Data


ASSIGNMENT DATA

This section clarifies the appraisal objective. First, the real property under consideration is

positively identified both physically and legally. The legal interest in the property to be valued

and the specific value type used is then discussed. Other factors affecting the objective, such as

effective date, appraisal use, and specific client guidelines are also considered.

Property Identification

The subject property consists of a single 159.802 Acre parcel in Travis County. The Parcel ID

numbers is 190645. The property is located about 13 miles east of Austin’s Central Business

District and 8 miles south of Manor, Texas.

Legal Description

Per the Travis Central Appraisal District:

Parcel 190645 is 159.802 Acres from Abstract 12 of James Gilleland Survey No. 13

Client, Intended Use of the Report and Intended Users

The client for this assignment is Mr. Jim Carpenter. The intended use of this report is to

provide an estimate of the most probable Market Value of the fee simple interest of the subject.

Intended Users of the report are Mr. James Carpenter.

Date of Appraisal

The effective date of valuation of the subject is January 12, 2015, which is also the date of

inspection.

Exposure Period

An exposure period of six to twelve months was estimated for the subject “As Is”. That period

was selected after looking at the marketing time of other properties in the area and from

conversations with local brokers. It assumes that the subject would have been aggressively

marketed and priced very close to the final value estimate contained in this report.

Marketing Time

A marketing time of six to twelve months was also estimated for the subject “As Is”. That

period was selected after looking at the marketing time of similar properties and from

conversations with local brokers. It assumes that the subject property will be aggressively

marketed and priced very close to the final value estimate contained in this report.

Assignment Data


Exposure period is always in the past. As pointed out above, it is the estimated time frame that

will have elapsed to achieve the hypothetical sale of a property on which our current estimate of

market value is based on as of the effective date of the valuation. Generally, in a stable market,

the time frames needed for exposure to affect the sale of a property and the marketing time

required to sell a property based on a current value are likely to be similar. Unlike exposure

periods, marketing times always occur in the future starting from the effective date of the

appraisal.

Differences can occur if future marketing trends are projected to be interior to or superior to the

recently passed exposure period.

The appraiser believes those time frames to be similar as of the date of this valuation.

Previous Appraisals of the Subject

Recent additions to USPAP now require an appraiser to notify the client if the appraiser has

previously appraised the subject property in the past three years. In this case, the appraiser has

not appraised the subject property within the past three years immediately preceding the date of

this assignment.

Competency Provision

Violet Crown Appraisals and the signatories hereto have experience in the appraisal of properties

similar to the subject and are deemed qualified by education, training and experience in the

preparation of such reports to comply with the competency provisions of USPAP. Moreover, we

have extensive experience of real property in the subject’s geographic location.

Value and Property Rights Definitions

Market Value: Market Value, as used in this report, is defined according to the Office of the

Comptroller of the Currency under 12 CFR, Part 34, subpart C-appraisals, 34.42 Definitions (g).)

as:

The most probable price in terms of money which a property should bring in competitive and

open market under all conditions requisite to a fair sale, the buyer and seller, each acting

prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in

this definition is the consummation of a sale as of a specified date and the passing of title from

seller to buyer under conditions whereby:

(1) buyer and seller are typically motivated.

(2) both parties are well informed or well advised, and each acting in what they consider

their own best interest.

(3) a reasonable time is allowed for exposure in the open market.

Assignment Data


(4) payment is made in cash in US dollars or in terms of financial arrangements comparable

thereto; and.

(5) the price represents a normal consideration for the property sold unaffected by special or

creative financing or sales concessions granted by anyone associated with the sale.

Fee Simple Estate

The Appraisal Dictionary, 4th

Edition, defines Fee Simple Estate as:

... 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.

Leased Fee Estate

The Appraisal Dictionary, 4th

Edition, defines Leased Fee Estate as:

“an ownership interest held by a landlord with the right of use and occupancy conveyed by lease to

others; the rights of lessor or the leased fee owner and leased fee are specified by contract terms

contained within the lease.”

The subject property in this report has been appraised free and clear of liens and any delinquent

taxes. The interest appraised for the property is the Fee Simple Interest.

Area Analysis


AREA ANALYSIS

The demand for, and thus the value of, all forms of real estate is ultimately the product of its

location and the surrounding demographic, geographic, governmental, economic, and other

forces in the surrounding community. For this reason, a general analysis of the Austin

metropolitan area has been made for this report.

General Location

Austin is the state capital of Texas and is the county seat of Travis County. It is bordered on the

north by Williamson County and on the south by Hays County. Bastrop and Caldwell Counties

adjoin Travis County to the southeast. The city is strategically located near the center of the state

and surrounded by the three largest metropolitan areas in Texas that form a triangle around it.

The Dallas-Fort Worth area is 170 miles to the north,

Houston is 130 miles to the east and San Antonio is

60 miles to the southwest. The shaded area on the

inset shows the location of the five county

metropolitan areas. A map of the immediate Austin

area is included on the following page.

Demographics

Population Growth Trends: The City of Austin and

its Metropolitan Statistical Area (MSA - which

includes Travis County, Williamson County, Hays

County, Caldwell County, and Bastrop County) have

experienced rapid population growth over the last

thirty years and the MSA passed the 1,000,000

population threshold in 1997 and recently passed the

1,500,000 threshold in 2005. For years, this MSA consisted of a three county group; however, in

1988, two additional counties were added to the group, bringing the MSA to its current

composition. Austin forms the heart of this MSA and is situated in both Travis and Williamson

Counties. The area is currently named the Austin-Round Rock-San Marcos Metropolitan

Statistical Area.

The population of Austin's MSA has increased at a much higher rate than that of the nation or the

State of Texas as a whole. Austin's MSA, from 1980 to 1990, had a total population increase of

about 45.63%; while, during this same period the population of the United States increased about

9.78%, and the population of State of Texas about 19.38% (Source: U.S. Bureau of Census).

While population and job growth predictions for the MSA between 1990 and 2000 were on the

order of 2% to 3% per year, actual population and job growth exceeded these expectations. Both

job and population growth have been major factors in the recruitment of several major high-tech

companies and the accompanying peripheral growth had been about 3% to 6% per year.

Area Analysis


Area Map

Area Analysis


As of the 2000 U.S. Census, the Austin-Round Rock-San Marcos Metropolitan Statistical Area

had a population of 1,249,763. Total population growth from 1990 to 2000 was 47.7% also far

exceeding state and national population growth figures. The latest two estimates for the Austin-

Round Rock-San Marcos MSA show a population of ranging from 1,716,289 to 1,880,794 in

2013. Previously ranked on a national basis of being the 36th

largest metropolitan area in the

nation based on 2008 city estimates, the latest two estimates above indicate a ranking of 31 or

34, depending on the accuracy of the two new estimates. The recent increase over the last ten

years will likely provide additional opportunities in economic development for the area by

attracting projects that require a high MSA population threshold of 1,000,000 or better. In 2006,

the Texas State Data Center forecasted the Austin-Round Rock-San Marcos Metro Area would

surpass San Antonio, Texas to become the 3rd

largest metropolitan area in the state by 2020.

Note: A great deal of the following information is gathered and ranked on the basis of ten

year increments with 2010 being the latest official reporting date. However, many other

reporting sources thought to be reliable sources have made estimates annually since the 2010

Area Analysis


official data. The 2013 data in the preceding chart is believed to be a reasonable estimate of

the most current population figures.

General Characteristics of Population: The general characteristics Austin's population reflects

a young and highly educated group. Forty-five percent of the citizens are between 18 and 44

years old with the median age being 32.2 years versus the U.S. median of 36.7 as of 2007. The

Austin MSA has a median household income of $56,746 and a per capita income of $28,822

which is higher than the U.S. median household income of $50,740 and per capita income of

$26,688. Household size is measured in the number of persons living in one home. There were

a total of 471,855 households in Austin in 2000. Current estimates report the number of

households in 2009 to be 614,640, which equates to an average household size of 2.75 persons

per household based on 2009 estimates. As reported in the 2009-2010 Economic Forecast

Summary prepared by Angelou Economics, Austin’s population growth has primarily been the

results of in migration, with 47% of the population growth coming from domestic migration and

9.5% coming from international migration. The remaining 43.5% of population increase was the

result of natural increase. Austin is also continuing to change into a more diverse area as

minority population continues to grow.

Reportedly, people of Asian and Hispanic ethnicity have been the fastest growing segments of

Austin Metro area population with the Asian population growing at a reported rate of 58% while

the Hispanic population followed closely behind at 45% from 2000 to 2007. As of 2007, the

Asian share of the total population is estimated at 4.5% while the Hispanic share is estimated at

29.8%. These two cultures are reported to have the highest entrepreneurial rates in the nation

and will likely continue to impact Austin’s entrepreneurial culture in the future. African

Americans share of the total population was reported to be about 15% a few decades ago,

dropping to an estimated 7.9%. This ethnicity group is projected to drop in share of total

population to as low as 5% which would make this segment the smallest minority group in the

city. Anglo population in the Austin-Round Rock-San Marcos Metro area is estimated at 57%

per the U.S. Census Bureau. However, this ethic group within the Austin city limits had dropped

below 50% for the first time since 2005 and is projected to remain below that marker in the

foreseeable future (currently estimated to be 48.6% in 2008). This has resulted in Austin being

identified as a “Majority-Minority city”. This term is used to define a city that has no single

ethnic or demographic group existing as a majority of the city’s population.

Historically, Austin has one of the most highly educated populations of American cities with a

population over 250,000. The city has 29 public school districts, 17 charter schools, and 69

private schools. In fall 2007, public school enrollment was estimated to be 274,509 students. In

addition, 122,350 students were enrolled in the University of Texas and seven other

public/private universities and colleges located in the Metro area, with 21,240 of those students

enrolled in a graduate degree. Approximately 38.4% of the adult population in the Austin Metro

area has completed college (13.5% of those obtained graduate degrees) versus the 27.5% of the

adult population in the U.S. with a college degree (10.1% of those obtained graduate degrees).

Approximately another third of the MSA adult population has attended some college (1 to 3

years). This is largely due to the University of Texas being located within the city.

According to The Public Ivies: America's Flagship Public Universities (2001) by Howard and

Area Analysis


Matthew Greene, The University of Texas at Austin is one of America's "Public Ivy" institutions

of higher education, defined by the authors as a public institution that "provides an Ivy League

collegiate experience at a public school price." Founded in 1883, the university has the seventh

largest single-campus enrollment in the nation with nearly 50,000 undergraduate and graduate

students (and had the largest enrollment in the country from 1997–2003) and 2,364 full-time

faculty for the 2008-09 school year. It currently holds the largest enrollment of all colleges in

Texas. In addition, the Times Higher Education Supplement (THES) ranked the university 70th

in the world in 2008 (the university’s best ranking was in 2004 at 15th

in the world).

Geographic Characteristics

The Balcones Escarpment is the most dominant geographic feature influencing the Austin

topography. The escarpment, which runs roughly north and south through the western edge of

the city, is a cliff resulting from the faulting of the earth's upper crust ages ago. It marks the

boundary of two very different geological regions. The area west of the fault is higher and

consists mainly of rocky limestone hills with thin soils that are covered with junipers and oaks.

This area is known as the "hill country" and is famous for its rustic and picturesque scenery, deer

hunting, and abundant water recreational uses. The area to the east of the fault is relatively flat

and consists mainly of loamy soils that are covered with a variety of native grasses and

agriculture crops. This area is the southernmost part of the "Blackland Prairie" which extends

into Texas from the Midwest.

Another important and unique geographic feature of the city consists of the bottomlands, low

terraces, and man-made lakes along the Colorado River. The river runs through the center of

Austin and forms a natural north/south division of the metropolitan area. Lady Bird Lake

(formerly known as Town Lake) and Lake Austin are the two large bodies of water, which lie

within the city limits and are the result of the damming of the Colorado River for flood control

purposes. They are the primary source of Austin's municipal water. These two lakes plus five

other large lakes, which lie above Austin on the Colorado River, make the region one of the most

popular recreational areas in the state with boating, fishing, and water skiing.

Austin's climate is temperately subtropical, and there is little air pollution. The normal daily

temperature range is 74 to 94 degrees in the summer and 40 to 60 degrees in the winter. Winters

are relatively mild with the temperature dropping below freezing on average about 25 days per

year. Average annual rainfall is approximately 31.35 inches and is fairly distributed throughout

the year.

Government Influences

Federal & State Government: Austin is the state capitol of Texas and, consequently, is home to

a large number of state agencies. It is also the location of offices for more than 50 federal

agencies, a regional IRS service center (recently expanded), and nearly 350 state and national

associations. In 1993, the United States Defense Department closed Bergstrom Air Force Base

due to national military cutbacks however the site has undergone a redevelopment into the site of

the Austin-Bergstrom International Airport.

http://en.wikipedia.org/wiki/Public_Ivy

http://en.wikipedia.org/wiki/List_of_largest_United_States_universities_by_enrollment

http://en.wikipedia.org/wiki/List_of_largest_United_States_universities_by_enrollment

Area Analysis


Municipal Government: The City of Austin has recently undergone a shift in the structure of

the city council. There is now a mayor and ten city council members (six previously). The

council members now represent specific districts instead of the electorate at large. The mayor

and council members now all serve a 4-year term. Five of the council members elected will

serve an initial term of two years so that council member terms are staggered. After the election

for 2017 terms, all terms will be four years. The City Manager is appointed by the council.

The issues of Austin's rate of growth and its quality of life have become increasingly important

to both the city's economic and environmental development. The present city council,

politically, is a mixture of those supporting controlled growth in Austin and those advocating a

more restrictive growth pattern.

Zoning Ordinances: The City of Austin and the areas under its extra territorial jurisdiction

(ETJ) are currently operating under a complex zoning ordinance adopted in 1989. Austin has

one of the strictest development codes in the nation. The majority of these ordinances address

water quality, storm water flooding, and park land and shoreline preservation. In certain

environmentally sensitive areas, which are typically areas with flowing water draining into the

Edwards Aquifer Recharge Zone, maximum impervious coverage is routinely limited to 15% or

less. Strict development standards in most of Austin, plus the proliferation of special interest

group's input to the decision-making process regarding property usage, causes a longer than

typical time frame in obtaining land-use approvals.

The most recent Watershed Regulation Areas map divides the Metro area into two zones, the

Desired Development Zone and the Drinking Water Protection Zone. Properties located in the

Drinking Water Protection Zone are typically those with the most development restrictions.

However, Austin has passed several recent legislations creating zoning overlays that are intended

to spur growth by lowering zoning restrictions. A recent example of this is the University

Neighborhood Overlay (UNO). UNO was established in 2004 to “to promote high-density,

pedestrian-friendly development in the area generally west of the University of Texas Campus

(West Campus).” Under a new zoning overlay identified as UNO, areas west of the University of

Texas campus now have permitted heights from 40 feet to 220 feet. These new height limits

have spurred extensive new construction in the west campus neighborhoods.

Growth Corridors and Enterprise Zones: The city established preferred growth corridors and

enterprise zones east of Interstate Highway 35 to stimulate growth to the east away from

sensitive hill country and water recharge zone. Over the last thirty years, the City of Austin has

implemented many growth and development initiatives, policies, and ordinances that are

intended to stimulate or control growth in specified areas by enforcing strict standards via the

government’s right to police power.

Area Analysis


In 2001, the city adopted the Corridor Planning Program designed to “complement

Neighborhood Planning by making long-term, coordinated transportation and land use choices

before thousands of new and arriving Austin residents overwhelm unplanned and unprepared

neighborhoods, corridors, and the infrastructure they rely upon.” Five major corridors were

created in this initiative: Town Center, Main Street, Neighborhood Village, Gateway, and New

Urban.

A recent growth corridor initiative that followed the Corridor Planning Program was the Transit-

Oriented Development (TOD). TOD was adopted in 2005 authorizing the Capital Metropolitan

Transportation Agency to operate a commuter rail linking Leander to Downtown Austin. This

ordinance “establishes denser development surrounding commuter rail stops, improved

connectivity between the surrounding community and the TOD district, and seeks to establish

housing affordability goals for new development. As new rail lines are planned, the number of

TOD districts will increase accordingly.” The original plan consists of nine Red Line Stations

and is projected to begin operation by mid 2010.

Capital Area Metropolitan Planning Organization recently submitted a presentation to the city

council proposing a new commuter rail, to be known as the Green Line, which would establish

the Austin-Manor-Elgin Transit Corridor. The Green Line Commuter Rail is proposed to run

along an existing Capital Metro rail that runs south of U.S. Highway 290 beginning in Elgin then

runs southwest east of Lake Walter E. Long ending at the Plaza Saltillo Station, one of the nine

Red Line Commuter Rail stations. The Green Line has eight proposed rail stations.

Finally, the Lone Star Rail District, formerly the Austin-San Antonio Commuter Rail District,

announced in November 2009 the next strips to linking Austin and San Antonio via a LSTAR

regional passenger rail service. In 2010, dozens of meetings will be held to determine

environmental impact and explore potential rail station locations (proposing 16 from

Georgetown to South San Antonio).

In addition to growth corridors, the Enterprise Zone Program was established by the State of

Texas to stimulate growth to local communities. Mr. Jim Colson, president of site selection for

Angelou Economics in Austin, defines Enterprise Zones as areas “designed to stimulate business

growth and job creation in economically distressed communities, where market forces would not

normally operated.” Projects that are designated in this program are eligible for tax benefits in

the form of sales tax refunds related to the capital investment and jobs created by the qualified

business site. For example, a small project investing as low as $40,000 with 10 employees could

receive up to $25,000 whereas the largest project, known as a “Triple Jumbo Project”, investing

as high as $250 million or more with at least 500 employees could receive up to $3.75 million.

Enterprise zones exist in all five counties in the Austin MSA. Majority of properties located in

the Austin Enterprise Zone are also located in the Desired Development Zone (east of Interstate

Highway 35).

Properties located in the preferred growth corridors and enterprise zones receive preferential

treatment from the City of Austin in the permitting/zoning process, resulting in faster building

times from start to finish.

Area Analysis


Endangered Species Act: The western portion of Austin consists primarily of a "hill country"

terrain. This area is home to at least seven "endangered" or "threatened" species as listed by the

U.S. Fish and Wildlife Service. These endangered species include two small birds known as the

Golden-Cheeked Warbler and the Black Capped Vireo, three endangered cave invertebrates

ranging in size from 1.5 millimeters to one-centimeter size (Comal Springs riffle beetle and

dryopid beetle and Peck’s cave amphipod), and two or more rare plants. To develop in this area,

approval is generally needed from the U.S. Fish and Wildlife Service. A plan referred to as the

Balcones Canyonlands Conservation Plan has been approved and implemented to help speed

development approval in this area. The area east of Interstate Highway 35 has been reported to

be free of endangered species; consequently, approvals east of Interstate Highway 35 are

typically made more rapidly.

Airport: Austin’s main airport is Austin-Bergstrom International Airport. It is located in the

southeast sector of the city. The airport opened in 1999 and is one of the newest and most

modern in the nation. The airport has two main runways and has substantial room for future

expansion. Passenger traffic in 2008 reached a record high 9.05 million, up 1.8% from the

approximately 8.89 million passengers recorded in 2007. However, passenger traffic slightly

decreased by 10% from 2008 Year To Date as of October (YTD) to 2009 YTD as a result from a

lagging job market, nearly level personal income growth, and uncertainty in the nation’s

economic future. In addition, the total amount of cargo activity has decreased nearly 68% since

2000.

Utilities

Water: Austin benefits from a number of water resources. Lady Bird Lake and Lake Austin,

two large man-made reservoirs formed by the damming of the Colorado River, serve as Austin's

primary source of drinking water. The city owns and operates three water-purifying plants:

Davis, Ullrich, and Water Treatment Plant 4. Ullrich can now process 160 mgd, Davis has a

capacity of 116 mgd, and WTP4 can currently process 50 mgd. That means Austin has a rated

combined maximum capacity of 326 million gallons/day (mgd) and a storage capacity of 167

million gallons in 34 reservoirs. Their capacity is more than adequate to meet the current

community's needs.

While Davis and Ullrich are older plants, the city completed a new water treatment plant at the

end of 2014. Water Treatment Plant 4 was built on 94 acres of land located at the southwest

corner of Ranch Road 620 and Ranch Road 2222 in close proximity to the local 3M

administrative facility. Water Treatment Plant 4 has the capacity to treat 50 mgd with expansion

capacity reaching 300 mgd after all the phases are built. At the present time, the city, as a whole,

appears to have sufficient and abundant water supplies to meet demand into the foreseeable

future. In addition, the Austin Water Utility has executed an agreement with LCRA that

guarantees water supply for the City’s corporate limits and ETJ to the end of the century. LCRA

has rights to more than 2.1 million acre-feet of water per year.

The Edwards Aquifer, a large underground reservoir that extends southwest from Austin,

provides water for a small portion of the metropolitan area's southwest population, primarily

within Hays County. The Edwards Aquifer Regulatory Committee's function is to review

Area Analysis


development over the aquifer to protect the integrity of this water source. The aquifer presently

is being heavily pumped, and water rationing has been necessary in some extremely dry years.

Responsible water and wastewater management will be of importance to the future prosperity of

the southwest metropolitan area, which presently depends upon the aquifer as their major source

of water.

Wastewater: The City of Austin Water Utility, the region’s largest municipal supplier, operates

three wastewater plants with a current combined permitted capacity of approximately 160+

million gallons per day (mgd). In addition, there is a fourth wastewater treatment plant, referred

to as the Hornsby Bend plant, which treats solid waste at about an average of 1.1 to 1.2 mgd.

Thus, the current wastewater capacity is more than adequate to handle the city's wastewater

needs.

Electricity, Gas & Telephone: Electricity for the city is provided by the City of Austin serviced

by Austin Energy, a publicly owned utility company. The current total generation capacity is

2,600+ megawatts majorly produced by using natural gas fuel with several plants producing

electricity by using coal, nuclear, or wind fuel. Other major providers of electricity in the

metropolitan area include Pedernales Electric Cooperative, Bastrop Power & Light, Bluebonnet

Electric Cooperative, City of Lockhart, Energy Future Holdings (formerly TXU), Georgetown

Utilities Systems, and San Marcos Electric Utility. The electric capacity is, presently, more than

adequate to support the population base. Atmos Energy, CenterPoint, and Texas Gas Service are

suppliers of natural gas for the area. Telephone service is provided by AT&T (formerly

Southwestern Bell).

Economic Profile & Indicators

Many factors can be considered in looking at an economic profile and major economic indicators

of a community. In this case, a brief description of the history of the local economy is given

followed by more detailed information regarding current national and metropolitan area's

economy.

History of the Metro Economy: The Austin metropolitan area (and the State of Texas) generally

experienced strong economic growth from 1980 to 1985. The area's population and employed

work force increased rapidly, and real estate prices escalated sharply upward due to greater

consumer demand and developer speculation that the economy would continue to boom. In the

beginning of 1986, world oil prices suddenly dropped sharply and the tax laws were modified, all

of which slowed the growth of the local economy. Real estate prices, which had been inflated

due to speculation, also, then plummeted. During the period from 1986 to 1990, the local

metropolitan and state economy experienced difficult economic times as evident from a much

slower employment growth rate, dropping real estate prices, fewer businesses locating to the

state, numerous financial institution failures, and many foreclosures and bankruptcies.

From 1992 to 2000 the Austin economy experienced strong job growth and was generally ranked

as the fastest or second fastest growing metropolitan area in the nation. Local hi-tech growth,

particularly, help fuel this growth. Since the high-tech bust in mid 2000, the growth of the local

economy was substantially slowed and the few years to follow would be spent in recovery from

Area Analysis


the bust. By 2004, appreciation in the Austin MSA exceeded levels that would be considered

normal in other parts of the nation, which continued until mid 2007. In many cases, this

appreciation approached 20% to 25% per year. We have considered 12% per year to be a

conservative estimate. This can be tied to many factors that included increased land costs which

translated into higher lot values, an unemployment rate under 4% that left builders bidding for

construction workers, extraordinary local job growth, and salary increases tied to substantial

numbers of new high-tech jobs that led to multiple contracts on homes for sale and contract

prices frequently over asking prices. By 2006, the local economy had recovered to a point that

prompted new commercial development and record level residential development. Growth

continued until mid-2007 when evidence of the failing sub-prime mortgage market began to

surface.

Current National Economy: The National Bureau of Economic Research announced that the

United States fell into a recession as of December 2007. This announcement along with the

tightening of credit had significantly decreased consumer confidence which had directly

impacted major indicators of economic health such as decreasing retail sales and job layoffs.

The weekly public announcements of major companies laying off numerous jobs and/or filing

for bankruptcy and the record-high declines in the stock market over the last few years had

crippled consumer trust resulting in increasing savings and decreasing spending and investment

from individuals and businesses alike. According to the first edition for 2010 of The Economist,

titled The World in 2010, from the beginning of the recession through to mid-2009, households

had lost $12 trillion, or 19%, of their wealth, because of the collapse in house and stock prices.

By the end of 2009, consumer sentiment began improving as the market suggested strong signs

of recovery with the recession statistically ending as positive GDP was indicated in the 3rd

Quarter 2009. Also, the DOW Jones index reached the 10,000 benchmark when it was near the

6,500 territory just a year ago. Further signs of recovery have unveiled including significant

increases in home sales (aided by government stimulus in the form of homebuyer credits), slight

increases in retail sales during this holiday season compared to the previous year’s sales, a slight

decline in the unemployment rate to 10%, and slightly increase in payrolls.

While signs of improvements are evident, many other factors are in play that can slow or even

derail the economy back into a recession. According to an article in The Economist, titled

Square-root reversal, “the American economy in 2010 will be torn between two opposing forces.

The first is that deep recessions usually lead to strong recoveries. The other is that financial

crises usually produce weak recoveries. The interplay of these two forces will produce a cycle

that resembles not a V, U, or W, but a reverse-square-root symbol: an expansion that begins

surprisingly briskly, then gives way to a long period of weak growth”. Based on historical trends

of U.S. growth after recessions, the American economy, which shrank by some 4% over the

course of the 2007-2009 recession, should grow by as much as 8% in its first year of recovery,

and unemployment, now at 10.0%, should fall down to 8%.

However, without a self-sustaining cycle of private spending and income growth, the previously

described predictions based on historical trends will not likely occur as majority of the positive

gains have been heavily subsidized by government spending and stimulus. This is because

consumer spending is the major component of GDP making up nearly 70%. According to IMF

Area Analysis


economists, “U.S. household consumption declined sharply in late 2008, against the backdrop of

a deepening financial crisis. Personal consumption expenditure, which had peaked above 95

percent of disposable personal income in 2005, fell below 92 percent by the second quarter of

2009. This decline, if sustained, would break the trend of steady increase in the U.S.

consumption rate since the 1980’s. Our analysis suggests that U.S. household consumption and

saving rates will settle at 89½–91½ and 5–7 percent, respectively, over the next several years.

Similar levels of consumption and saving rates were last seen in the early 1990s. Though not too

far from the 2009 saving rate of nearly 5 percent, the forecast implies a significantly lower share

of private sector demand in GDP by about 3 percentage points compared to the pre-crisis

(2003–07) average. However, the forecast uncertainty is large: a 95-percent confidence interval

has width of about 7 percentage points (3¾ percentage points on each side).” Negative factors

such as high unemployment and wage cuts will keep consumer spending at “below-normal”

levels. Also, if deflation sets in, real debt burdens will increase further depressing consumer

spending. With national debt rising at record levels due to increasing annual budget and trade

deficits, the government will not likely be able to continue to subsidize GDP growth and further

dependence will be placed in the business sector to generate new jobs to get money in the hands

of the consumer to return the economy back to sustainable levels of growth.

A major loss in wealth described above was in real estate. “Residential- and commercial-

property values fell by $8 trillion, or almost 20%, from the beginning of the recession through to

mid-2009, impairing existing loans and eroding the collateral for new ones.” With regulators

imposing higher capital requirements and lenders’ balance sheets still deep in the red, borrowers

are running into trouble when their maturity date looms or their properties are reevaluated

resulting in the borrowers being obligated to inject capital they do not have and/or cannot borrow

because of tightened lending restrictions. However, the national attitude in the banking world

has been to “Extend and Pretend”. In other words, lenders are extending the maturity dates of

loans and pretending balance sheets will fix themselves versus the other option, which would be

to flood the market with foreclosures and REO sales at large discounts similar to the Savings and

Loans crash. The primary fear in the real estate industry is that the looming maturity dates for

the majority of risky loans issued during the peak of the bubble will create a collapse of the

banking system. According to Korpacz Real Estate Investor Survey, published by

PriceWaterHouse Coopers as of 4th

Quarter 2009, “the delinquency rate for commercial real

estate loans has more than doubled at the 100 largest U.S. banks in the past year, moving to

9.56% in the third quarter of 2009. Since property cash flows are not expect to improve fast

enough to rescue troubled borrowers and fully relieve the $1.4 trillion of commercial real estate

debt maturing by the end of 2012, refinancing difficulties could easily sidetrack the U.S.

economic recovery and subsequently detour the recovery of the commercial real estate

industry.”

In conclusion, the nation appears to be improving at a slow pace. Experts believe the

progression will continue upward, but at a slow rate as companies repair their balance sheets and

credit becomes available resulting in expansion and, in turn, job growth. The major hurdle will

be to restore liquidity to the banking industry to allow real estate transactions to occur to

motivated buyers and sellers and to allow businesses to borrow credit to facilitate daily

operations.

Area Analysis


Current Metro Economy: Currently, in the Austin-Round Rock-San Marcos Metropolitan

Statistical Area, the occupancy rates and rents for the industrial, office, retail, and apartment

segments of the real estate market have started to show signs of decline since the beginning of

2008. It is our opinion that supply of commercial product (vacant and new construction) has

surpassed current demand (absorption). Based on historical job and population growth in the

Austin MSA and considering the ease of obtaining financing prior to the national credit crisis,

many new large scale developments were completed prior to the end of the decade which has

resulted in an oversupply of commercial product (vacant and new construction). The current

commercial inventory coupled with increasing vacancy rates and declining rent rates will most

likely pressure builders to continue to hold off on plans for future development. At the end of

this section are multi-family, retail, and office national forecast maps and value cycle tables

showing Austin recovering from the recession faster than the majority of the country.

The housing market has begun showing signs of recovery with median prices remaining

relatively stable. Dr. Mark Dotzour, the chief economist for the Texas Real Estate Center,

believed that home prices had remained stable since the beginning of the recession due to the

high-tech bust which kept home price stable unlike the housing boom that was occurring

throughout rest of the country during that time frame (specifically California, Florida, and

Arizona who are currently experiencing the worst housing declines in the country). Although the

local commercial market is likely to exhibit a slowdown in the short term, the housing market

was projected to have an optimistic recovery. According to Eldon Rude of Metrostudy, “Austin

has never experienced a ‘bubble’ in home prices; Central Texas is poised for significant growth

in population over the next 5-10 years; tight financing has created pent-up demand for homes

that will give our market a boost when more financing options become available, and businesses

continue to location in Austin.” Rude recently reported in January 2010 that “[Austin’s]

relatively stable home pricing, minimal levels of available inventory, lower volume of

foreclosures and the general resilience of our economy are in sharp contrast to many areas of

the country that will be much slower to see recovery in their housing markets”. Local builders

have begun expressing optimism as they witness demand on the rise likely due heavy buying

incentives such as low interest rates, tax credits, and home concessions. With the $8,000 first-

time homebuyer tax credit extended from the end of November to the end of April 2010, the

local housing market will likely continue its slow pace towards recovery in the following quarter.

Although fundamentals have weakened locally, the Austin area has been far more resilient to the

effects of the recession than most of the county. Both the Korpacz Investors Survey’s Report

and Grubb & Ellis 2010 Forecast Report named Austin the number 1 place to invest in

commercial real estate. In June 2009, an article in Forbes magazine listed Austin the best city

poised for recession recovery in the nation bolstered by GDP growth projections ($5 billion by

yearend 2010) by Moody’s Economy.com, unemployment figures from the U.S. Bureau of Labor

Statistics, and homes prices, incomes, and affordability data from the National Association of

Home Builders. In October 2009, BusinessWeek ranked Austin the 2nd

strongest metro economy

in the U.S. next to San Antonio. Per U.S. Bureau Labor Statistics, Austin is ranked 6th

in lowers

unemployment rate among the 50 largest metros, with San Antonio ranking 4th

. The

MetroMonitor, published by Brookings in December 2009, ranked Austin 2nd

best performing

metros during the recession based on lowest annual job loss rate (-0.8%) and Gross Metro

Product (GMP) growth.

Area Analysis


Two indicators of the current and future commercial market stability are the local Gross

Metropolitan Product (GMP) and venture capital investment. Bureau of Economic Analysis

reported a GMP of $80.1 billion in 2008, up from $75.7 billion in 2007, nearly a 6% increase for

the Austin-Round Rock-San Marcos MSA, exceeding Texas’s GDP growth of 2% during the

same period. Capital Area Council of Governments (CAPCOG) announced in August 2009 that

GMP has declined by more than 1.2% in the second and third quarters of 2009 but is forecasted

to increase by 1% in the 4th

Quarter 2009. Based on growth projections, 2009 will have been a

stagnant year of growth for the metro area. However, the MetroMonitor indicated Austin MSA’s

GMP grew by 2% from the 4th

Quarter 2008 to 3rd

Quarter 2009, the fastest amongst the 100

largest metro areas in the nation. According to Pricewaterhouse Coopers, venture capital

investment in the Austin MSA in 2009 was estimated at $171.3 million (47 deals), a 48%

decrease from the 2008 investment of $328.3 million (56 companies and 65 deals), and a 75%

decrease from 2007 making it the lowest level recorded since 1996. Assuming CAPCOG’s

GMP forecast is accurate, venture capital spending will likely increase as the local area capture

pent-up investor demand to invest in growing metros.

Major Employers: The State of Texas alone employs over 65,000 people in the Austin area.

While all of the major government employers are important, The University of Texas is felt to be

the nucleus of growth in the current economy. According to the National Association of College

and University Business Officers, the University of Texas System ranks fifth in total size of

endowment at $15.6 billion ranked behind Harvard University, Yale University, Stanford

University, and Princeton University in that order. In 2008, the University of Texas – Austin

was reported to have a $7.2 billion endowment, with $3 billion being private funds and $4.2

billion being public funds allocated out of the $15.6 billion University of Texas System

permanent endowment fund. This indicates a benefit of approximately $144,000 per student

enrolled based on 50,000 students. UT presently has 288 endowed chairs, 506 endowed

professorships, and 265 endowed faculty fellowships and lectureships.

In the 1980's, two major events occurred that helped shape the future focus of the Austin high-

tech market. This was the formation of MCC and Sematech. First, in 1983, Austin was the

successful bidder for Microelectronics and Computer Technology Corporation (MCC). This was

the first national high-tech consortium, and the focus of this consortium is software development.

Then, in 1987-1988, Austin mounted a campaign to bring Sematech to town. The campaign was

successful, and Sematech moved to Austin in 1988. Sematech is a high-technology research

consortium whose membership is comprised of most of the largest computer companies in the

United States. The focus of this organization is high-tech research on a national level. Since this

time, Austin has become the location of over 2,000 high-tech companies including Dell

Computers, Applied Materials, Apple Computers, the Gallup Organization, Lotus Development

Corporation, and, most recently, Samsung Electronics. In recent quarters, many of these major

high-tech employers, both locally and nationally, have announced plans to layoff jobs to cut

costs in order to curve the anticipated drop in national demand which has drastically decreased

projected revenues.

The on-going vitality and potential growth of a city depends to a large degree on the number of

new companies it can attract to its metropolitan area either through new start-ups or relocations

Area Analysis


and to the expansion of the existing companies already located in the area. The Austin area has

been extremely successful in enticing numerous growth companies. Although Austin’s Chamber

of Commerce is not as aggressive in attracting enterprises to move to the area as it was in the 80s

to bring in the high-tech industry, the city has been promoting a new enterprise, solar power,

primarily to spur job growth and, in turn, attract ancillary growth from related businesses to

relocate to the area (solar power manufactures, retailers, distributors, etc.). Angelou reported in

his annual forecast luncheon that “[Austin] must support the chamber in attracting high-paying

jobs by providing incentive package to lure major employers. For those looking to start a new

business, Angelou said cheap office space and an abundance of talent make 2010 the ideal

time.”

The latest employment figures from the Texas Workforce reports employment in metro Austin

has increased from 815,600 in March 2009 to 845,000 in March 2010 indicating an annual

increase of 3.6%. Unemployment figures for the Austin area as of March 2010 were 7.1%, up

from 6.6% in March 2009 but decreased from the previous month’s rate of 7.3%. The current

7.1% unemployment rate is still one of the lowest in the state (state average – 8.2%) and below

the national average of 10.2% per Texas Workforce. The U.S. Bureau of Labor Statistics

recently reported the unemployment rate declined from 10.4% in February 2010 to 10.2% in

March 2010.

Looking to the future’s economy, Angelou predicts that clean technology and renewable energy

will be the biggest industries over the next 10 years. Although we have a good reputation for

clean energy, Oregon and New Mexico are more aggressive in attracting wind and solar

manufacturing.

The following chart shows the increase in the Austin-Round Rock-San Marcos MSA as of

September 2014 with total non-farms jobs increasing from 869,900 in September 2013 to

901,300 in September 2014 followed by an older chart showing the top 25 public companies that

were headquartered in Austin in 2009.

Area Analysis


Area Analysis


Area Analysis


Summary and Conclusion

Austin is a unique city in Texas. It is the state capital of Texas and is located on the edge of the

Colorado River and the scenic "hill country". The population of the revised metropolitan area is

currently estimated to be 1,880,794. The city is the home of the University of Texas and has one

of the youngest and most educated populations of any large city in the nation.

Zoning and development codes in Austin are very complex and are known as being some of the

more restrictive in the nation. This is in part due to the fact that the "hill country" terrain, which

is found in parts of its metropolitan area, is very environmentally sensitive and is home to at least

seven endangered species. The employment make-up of the city consists primarily of a large and

growing government sector and a private base sector specializing in high-technology related

research and products.

Overall, the general consensus is that the Austin real estate market has softened and will continue

this trend in the next year or more depending on a variety of factors.

Historically, Austin has ranked very high nationally in almost all recent major polls as to

“Overall Performance of the Largest 100 Metro Areas During the Recession (No. 2)”, “Strongest

U.S. Metro Economies (No. 2)”, “Best Big Cities for Jobs” (No. 1), “Best Place To Do Business

(No. 8), “America’s Hottest Labor Market” (No. 2), “Best City to Live, Work, & Play” (No. 8),

“Best Bang for the Buck (No. 1)”, “Best Performing Cities” (No. 4), “Most Wired City (No.1)”,

and “The Best City For Relocating Families” (No. 5) including 14 of Austin companies making

the “Deloitte Texas Technology Fast 50” list. The 2009 list of the top 1,500 high schools in the

nation revealed that Texas faired quite well with 14 Austin and Round Rock high schools

making the list, including one from Dripping Springs. The Association of Foreign Investors in

Real Estate ranked Austin 11th

place in a recent survey as a top city for U.S. and global

investment in 2009, up from 16th

place in 2008.

Forbes – 2014

Lists Austin as No. 1 in the U.S. Regions to watch in 2014

No. 1: Austin, Texas GDP Growth, 2007-2012: 21.7%

Job Growth, August. 2007 to October 2013: 11.8%

Population Change, 2007-2012: 16.3%

Median Household Income Change: -5.4%

Net Domestic Migration Gain, 2010-2012 (Per 1,000): 17.0

Birthrate (Per 1,000): 14.2

Unemployment Rate, 2013: 5.4%

In conclusion, the Metro area has continued to experience positive net job and population

growth. The long-term outlook for the Austin metropolitan area is positive. Most experts

predict the Austin MSA will continue to significantly outpace the state and national economy in

the long run.

Area Analysis


Area Analysis


Area Analysis


Area Analysis


Neighborhood Analysis


NEIGHBORHOOD ANALYSIS

The objective of the neighborhood analysis section of this report is to make observations and/or

quantify data which indicate discernible social, economic, governmental, and environmental

patterns and forces that affect property values in the area. The Appraisal Institute defines a

neighborhood as "a group of complementary land uses." (The Appraisal of Real Estate, 13th

Edition, 2008)

Boundaries

The designation of neighborhood boundaries for this appraisal is based upon the appraiser's

evaluation of those physical and man-made influences that affect the relative desirability and

value trend of the subject property and that of surrounding properties in the same or similar way.

Although neighborhood boundaries often are and can be drawn to coincide with major physical

features such as rivers or highways, the significant boundaries are those that fix the limits of

influences on property values. The boundaries for the subject neighborhood are described as

follows:

North Travis County / Williamson County line

South State Highway 71

East State Highway 95 and an imaginary line

along FM 1704 to SH 71

West FM 973

This boundary description is supported by similar social, economic, government, and

environmental forces that influence property values in the subject property neighborhood. Also,

these neighborhood boundaries have been defined to include properties that exhibit similar types

of land usage and homogeneous groupings of land use trends. The subject is situated near the

center of the defined neighborhood. A map depicting the boundaries of the neighborhood is on

the following page.

Predominant Land Use

The neighborhood boundaries include portions of eastern Travis county and western Bastrop

county and can be characterized as predominantly a mixture of small to large rural acreage tracts

with scattered home sites. The neighborhood also includes portions of the towns of Manor,

Elgin, and Garfield. Commercial and industrial development is very limited and is concentrated

mainly around the city of Manor and along US Highway 290 East and State Highway 71 East.

Rural acreage tracts that are vacant or improved with home sites are estimated to comprise about

90% of the neighborhood.

Reputation of the Area

The neighborhood has historically been considered an agricultural and rural (small to large

acreage) residential area for lower to middle income families working in Austin or nearby towns.



Its terrain is flat to moderately rolling. Agricultural uses consist mainly of small cattle

operations and the growing of crops such as wheat, milo, and cotton. The Colorado River runs

Neighborhood Map

SUBJECT



through the southern portion of the area. It has some scenic appeal and is used recreationally

primarily for fishing. The neighborhood has and is continuing to experience an increasing

density of residential development as the city of Austin expands outward. Over the last several

years, residential subdivisions have undergone development throughout the

area most notably in the Manor and Elgin areas.

The two latest major developments in this area are the improvement to an existing tract of land

designated as a regional park that is now complete and the construction of State Highway 130

Toll Road.

Known as Travis County East Metropolitan Park, this is a

$10,418,000 development located at the southwest intersection of

Blake-Manor Road and Burleson-Manor Road, approximately 2

miles north of the subject.

While the Travis County East Metropolitan Park will certainly

improve the quality of life for residents in this neighborhood, the

most significant impact on the neighborhood was the

construction of the new State Highway 130 Toll Road, which was intended to relieve traffic in

the area by creating a commuter and NAFTA corridor alternative to IH 35. The new SH 130 is

an 89-mile toll way extending from IH 35, north of Georgetown, southward to U.S. Hwy. 183,

southeast of Austin, passing though Williamson and Travis counties. SH 130 is a six-lane

roadway with toll facilities and major interchanges at IH 35, U.S. 79, SH 45 North, U.S. 290, and

SH 71. The design of SH 130 also includes limited frontage roads with the ability to expand the

current six lanes to ten lanes in a very short time frame. This new roadway is changing the

character of this formerly rural area into an area with excellent access to the metropolitan area

and major development potential.

Range of Sales and Rentals

The historic price for most vacant mid to large sized agricultural tracts ranged from $2,000/acre

to $4,000/acre for several years. More recently, acreage land that has significant improvements

or is near one of the neighborhood's urban areas (Manor, Elgin, US Highway 290 East) has been

bringing a premium over this range. Acreage with full utility service available brought the

highest price.

The value of residential units ranges widely with recently constructed houses on small acreage

tracts selling mainly from $70,000 to $150,000. Since 1999 numerous new home subdivisions

have been under development throughout the neighborhood. These subdivisions range in price

from $85,000 to over $500,000. Little information is available on the level of rent for residences

near the subject as the area is mainly rural and undeveloped. The same can be said of rent and

sale data on the few commercial properties in the neighborhood.

With the completion of SH 130 Toll Road, a rush to purchase land for development in the area

occurred. Acreage prices rose from $10,000 per acre to $14,000 per acres and then to $20,000 to

$40,000 per acre. Knowledgeable residential developers realize that acreage purchased in the



$25,000 to $30,000 per acre can still yield profitable single family lots and that large commercial

tracts can easily run up to $45,000 to $150,000 per acre.

Life State and Trend of Neighborhood

In analyzing the life state and trend of a neighborhood, the appraiser must determine which life

cycle applies to the neighborhood. "A neighborhood's life cycle usually consists of one of the

following stages:

1. Growth - a period during which the market area gains public favor and acceptance

2. Stability - a period of equilibrium without marked gains or losses

3. Decline - a period of diminishing demand

4. Revitalization - a period of renewal, redevelopment, modernization, and increasing

demand"

(From The Appraisal of Real Estate, Appraisal Institute, 13th

Edition, Copyright 2008)

Currently the neighborhood is considered to be in a growth stage with numerous new single-

family subdivisions in development. The local school districts in Manor, Elgin, and Del Valle

have all built new facilities to handle the growth throughout the area. The present and long-term

appearance of the neighborhood is judged to be an area of moderate to strong growth and is

being impacted positively by the construction of State Highway 130 through the area providing

improved access to areas north and south of the subject neighborhood.

Extent of Neighborhood Development

There is new development taking place in the subject neighborhood consisting mainly of new

residential subdivisions and commercial developments located along and just off US Highway

290 East and State Highway 71 East. Existing and new residential development in the area

includes Austin’s Colony with 500 dwellings built and 1,500 more platted; Forest Bluff with 178

dwellings built and a total of 571 lots platted or proposed; Creekside (Wild Horse) with a total of

550 lots (286 dwellings to date) and a potential of 4,000 additional lots; Hamilton Point with 104

homes and a total of 600 planned; Briarcreek with 360 dwellings and 1,100 total planned;

Shadow Glen with 752 lots and a golf course in the 1st Phase and 4,000 additional lots; and

Presidential Meadows with 145 built and a total of six hundred planned. Currently, major

builders involved in this area include Main Street; Centex, Lennar, Capital Pacific, Milburn

(Houston Homes), Mercedes and Weekly Homes. Several other builders are also planning on

developments in the area and several hundred acres is in the hands of residential subdivision

developers. Prior to the completion of SH 130 Toll Road, conservative estimates place new

residential development in this area at 20,000 to 25,000 homes over the next 8 to 10 years. Now

estimates are closer to 50,000 to 60,000 new homes over the next 8 to 10 years.



Wild Horse, originally planned as a residential subdivision, is now substantially oriented toward

both residential and commercial development. There is also new proposed development near the

new Austin-Bergstrom International Airport, which is located adjacent to the southwest corner of

the neighborhood (see below).

$2 BILLION COMMUNITY PLANNED NEAR MANOR

AUSTIN (statesman.com) – Fort Worth-based Taurus of Texas Holdings LP, a subsidiary of

Boston-based Taurus Investment Holdings, has purchased 2,200 acres of wooded land south of

Manor from an investment group that includes local developer Jim Carpenter. Plans were to

develop a $2 billion master-planned, energy-efficient community with more than 8,000 homes

ranging from the $150,000s to $500,000, townhomes, condominiums, and hundreds of thousands

of square feet of retail and office space.

Whisper Valley Ranch is slated for development near the ten-lane Texas 130 toll road. About

1,965 acres is on the east side of Texas 130; another 241 acres is to the west. The land also

borders the recently improved Travis County East Metropolitan Park .

$500 MILLION COMMUNITY PLANNED NEAR AUSTIN-BERGSTROM AIRPORT

(Austin Business Journal) – An almost 2,500-acre mixed-use development the size of a small

town is planned near Austin-Bergstrom International Airport. Carma Texas, under the umbrella

of Canada-based Carma Developers LP, originally planned to break ground in 2009 on the $500

million master-planned community, which is bordered by US 183 to the east and McKinney

Falls Parkway to the west but those plans are now on hold.

The unnamed development’s value at buildout, which should take more than 20 years, could total

more than $3 billion. In addition to more than one million square feet of retail and office space,

Carma plans to include approximately 3,500 multifamily units, from apartments to for-sale

townhomes; 2,000 small-lot urban-style houses; and about 5,500 single-family homes. More than

140 acres will be set aside for parks and a trail system. Carter & Burgess Inc. is providing urban

and transportation planning and civil engineering services, Brown McCarroll LLP is overseeing

land use entitlement, and Dubois Bryant & Campbell LLP is handling the real estate transactions.

Carma Developers LP is a wholly-owned subsidiary of Brookfield Properties Corp. The

development would be Carma's second in Central Texas, following the recent opening of its 575-

acre Blanco Vista project in San Marcos.

Finally, a new private airport has received approval from the FFA to be constructed in Bastrop.

Reportedly, this new reliever airport will require significant amounts of residential housing to

support the many employees expected to be generated by the operation of this new facility.



Recent Studies

A recent study of note was completed and the conclusions of that study are considered likely to

impact the subject neighborhood.

The study, commissioned by the City of Austin, was prepared by Mainstreet Services, Inc. and

was titled Opportunity Austin II, Taking It To The Next Level, dated 20, 2007. We were privy

to a draft copy of the report. This is the second such study prepared by this group for the City of

Austin and in the report under the category of Infrastructure, there were three major

recommendations that would enhance the economic future of the Austin-Round Rock

Metropolitan Statistical Area including (1) working to bring about the University of Texas

building a medical school in the MSA; (2) continuing the efforts to secure the local development

of the state research lab for the Texas Alliance for Nanoelectronics (TexAN); and (3) provide

assistance and support for the developers of Villa Muse, the proposed mixed use campus for

professional, creative industries.

Most Probable Source of Financing

The predominant sources of financing for recent sales of residential properties are primarily by

savings and loan associations and mortgage lenders. With the national economy struggling to

come out of a national recession, the most probable sources of financing for commercial

properties are from local banks, insurance companies, pension funds, and various mortgage

lenders.

Location and Accessibility of Neighborhood

The center of the subject neighborhood is located approximately 9.5 miles east of the Austin

CBD. Access to the area is considered average to good. The primary east/west roadways in the

area are State Highway 71 East and U.S Highway 290 East. State Highway 71 East is located

along the neighborhood’s southern border. U.S. Highway 290 East bisects the northern portion.

The major north/south roadways are FM 973 and State Highway 95. Various secondary

roadways provide additional access through the neighborhood.

Access to the subject development will improve significantly with the extension of Braker Lane

to Burleson-Manor Road and then continuing south along Burleson-Manor Road to the subject.

It will then be extended along the eastern boundary of the subject tract, crossing the Colorado

River on a new bridge constructed by Travis County, and tying into SH 71, south of the subject.

Few bridges exist across the Colorado River and this access to the subject property will be a

significant improvement. The main entrance into the subject is proposed to be from the new

Burleson-Manor extension.



Planning, Zoning and Restrictions

The neighborhood includes the town of Manor and a portion of the town of Elgin with the

remaining area being rural. Therefore, the majority is not subject to municipal land use

restrictions such as zoning ordinances or land development codes. The area is, however, subject

to Travis county and Bastrop county development regulations. This appears to be about to

change for the westernmost portion of the neighborhood. The City of Austin has announced

interest in annexation up to the new SH 130 Toll Road. This will not include the subject

property. The appraiser is not aware of any endangered species in the neighborhood. The

Houston Toad is found east of the neighborhood around Bastrop but not in the vicinity of the

subject.

Adequacy of Utilities

The majority of the neighborhood has limited service availability from wastewater service

providers. Water is available primarily from on-site water wells or rural water districts such as

Aqua Water and Manville Water Supply. Wastewater is typically provide by Hornsby Bend

Utility Company or is processed by on-site facilities (mainly septic systems). However, with the

development of new residential subdivisions in the area, wastewater lines are expanding

throughout the area. Public electric service is available throughout the neighborhood. Liquid

propane can be purchased from trucks for heating.

Detrimental Influences, Nuisances and Hazards

There appear to be few detrimental influences in the neighborhood. Expansive and clay-type

soils in the neighborhood do necessitate that improvements be built with foundations that are

stronger and more expensive than that found in some other areas of the state.

Conclusion

The neighborhood has a good location and is close to support facilities in Austin. The

predominant land use has been agricultural; however, vast quantities of new residential

development are taking place throughout the neighborhood. The construction of SH 130 Toll

Road is driving huge amounts of new residential development. Economically, the neighborhood

reflects a state of moderate to strong growth. It is in rapidly growing niche on the edge of the

Austin Metropolitan Area that is undergoing a transformation from a rural community to

suburban satellite city. The City of Austin plans to annex the portion of the subject

neighborhood nearest to the CBD and will eventually provide full utility service to that area.

The subject neighborhood should experience additional growth as the Austin economy continues

to expand.

Property History


PROPERTY HISTORY

Ownership & Sale Price History

According to tax records, land planning and surveys, the subject 159.802 acres use was

purchased on August 27, 2004.

Marketing & Listing Price History

As of January 12, 2015, the subject property is not listed for sale.

PROPERTY ASSESSMENT AND TAXATION

In its current configuration the subject property is under an agricultural exemption. Agricultural

assessments are significantly favorable to owners. Should the land be converted to a non-

agricultural use, a tax roll back occurs with the owner responsible for 5 years of past taxes at

market assessed values. The tax roll-back liability for loss of agricultural exemption on the

property can be calculated as follows:

(Market Value - Assessed Value) x Tax Rate / 1000

Tax Rates for the subject property from 2010 to 2014 are listed below:

Entity Description 2014 2013 2012 2011 2010

03 Travis County 0.456300 0.494600 0.500100 0.485500 0.465800

06 Del Valle ISD 1.470000 1.530000 1.530000 1.530000 1.530000

2J Travis County Healthcare District 0.126400 0.129000 0.078946 0.078900 0.071900

68 ACC District 0.094200 0.094900 0.095100 0.094800 0.095100

72 Travis County ESD No 12 0.100000 0.100000 0.100000 0.100000 0.100000

2.2469 2.3485 2.304146 2.2892 2.2628

Tax Rate / $1,000

The following table summarizes the TCAD appraised market value versus the assessed value.

TCAD Appraised and Assessed Values: 2010-2014

Year Land Area Market Value Assessed Value Taxes if no Ag

2010 159.802 $1,198,515 $22,692 $2,660.65

2011 159.802 $1,198,515 $22,900 $2,691.22

2012 159.802 $352,364 $22,196 $760.76

2013 159.802 $352,364 $21,413 $777.24

2014 159.802 $352,364 $20,634 $745.36

$7,635.235 years back taxes on

loss of Ag exemption

Property History


SITE ANALYSIS

Survey: Parcel 190645 – 159.802 Acres

Property History


Contour Map: Parcel 190645 – 159.802 Acres

Property History


Proposed Site Use: Parcel 190645 – 159.802 Acres

Property History


Location

The Whisper Valley tract is located approximately 13 miles east of Austin’s Central Business

District. The property is located at the northwest corner of FM 969 and Burleson-Manor Road.

The SH 130 toll road is approximately 4.25 miles to the west of the subject and provides

excellent access to all other parts of the metropolitan area.

Size

Per surveys, land planning documents and deed records, the property's size is 159.802 acres.

Frontage/Access

The subject is located approximately 8 miles south of Manor, Texas and U.S. Hwy. 290 and 10

miles north of U.S. Hwy. 71 and the new Bergstrom International Airport. The new SH 130 toll

road (10 lanes) was constructed to provide parallel relief to IH-35 is located west of the subject.

The tract is located on the northwest corner of the intersection of Burleson Manor Road and FM

969. It has approximately 3,201 feet of frontage on FM 969 and approximately 3708 feet of

frontage on Burleson Manor Road.

Property History


Flood Plain

The Whisper Valley tract is located in FEMA map 48453C Panel 0495J which is dated August

18, 2014. A graphic analysis of the flood plain area indicates that approximately 34% of the

property, or 54.33 acres, is located inside a Special Flood Hazard Area Subject to Inundation by

the 1% Annual Chance of Flood. The area in light blue is designated Zone A, which means no

base flood elevations have been determined. The Proposed Site Use Plan takes the flood plain

into account.

Property History


Terrain

The terrain of the subject is effectively two hills with a small valley containing a creek between

them. The hill on the southwestern part of the property has three stock tanks on it and is

substantially lower than the northeastern hill. The northeastern portion of the property rises up

high enough that downtown skyline views are available. The vegetation on the subject is

predominantly post oak, live oak, and cedar. The open areas are covered with native grasses and

scattered trees.

Interior Roads

The subject property has a few trails / dirt based roads providing current access.

Utilities

Reportedly, the subject property has all of the necessary utility entitlements from the Manville

Water and sewer service from Hornsby Bend Utility Company. Electricity is also readily

available.

This analysis assumes that utilities are available to the site but must be brought to the site.

Consultation with the utility district indicated that extension of utilities to the subject site would

require an extension of approximately 1.5 mile. The cost for this extension was estimated at

$1,000,000. This cost estimate is based on actual extensions recently budgeted for two nearby

tracts which are scheduled to have wastewater lines extended. When these costs are allocated on

a per acre basis of the parent tract, the cost is $1,120 per acre. Most of the comparable sales used

also have utilities available but also require extension of existing lines to the property in

question. Therefore, most of the comparables will have a similar utility situation and will not

require an adjustment for utilities. Any adjustments will be explained in detail in the body of this

report.

Property History


Potential Site Hazards

The subject does not appear to be impacted by environmental hazards. The appraiser noted no

indications of site hazards on the inspection of the subject.

Subject Photographs


SUBJECT PROPERTY PHOTOGRAPHS

Northwest facing view from eastern boundary (Burleson Manor Road)

North facing view from eastern boundary of property (Burleson Manor Road).

Subject Photographs


SUBJECT PHOTOS

West facing view from northeastern portion of subject property.

Note Austin downtown skyline in the distance.

Northwestern view of property from intersection of Burleson Manor Road and FM 969

(southeastern corner of subject property).

Highest and Best Use


HIGHEST AND BEST USE

Highest and best use is a basic premise of value. As with value, highest and best use is not an

absolute fact; it reflects an appraiser's opinion of the best use of the property based on an analysis

of prevailing market conditions. The term highest and best use, as used in this report, is defined

as, "The reasonably probable and legal use of vacant land or an improved property, that is

physically possible, appropriately supported, financially feasible, and that results in the highest

value." (The Appraisal of Real Estate, 13th Edition, 2008, Appraisal Institute)

Analysis of the Site as Vacant

Physically Possible Uses: The physical characteristics of a site can affect its development

potential. These characteristics can include size, location, shape, topography, floodplain,

easements, and utility availability.

The subject tract contains 159.802 acres and is roughly rectangular in shape. It has two hills

divided by a small valley containing a creek. Approximately 34% of the middle portion of the

subject lies within a floodplain area. This area could serve as a green belt area for residential

development. No adverse easements or encroachments were observed.

The site is serviced by public electric service, water and wastewater service, gas service, and

telephone. Overall, the physical attributes of the site do not appear to be constraining in terms of

the site's potential highest and best use. Based on the site's proximity to SH 130, lack of zoning

and physical characteristics, it is our opinion the tract could eventually be developed with a wide

variety of uses, however the highest and best use as of the appraisal date, January 12, 2015 is for

residential development.

Legally Permissible Uses: Legal restrictions as they apply to the subject stem mainly from the

public restrictions of the city's zoning and building codes. The subject is outside the city of

Austin, but within the City of Austin 5 mile ETJ. The subject site is not zoned and any sort of

development is permitted.

Financially Feasible Uses: The physical attributes of the site and the surrounding land uses

indicate the subject would appear to be suited for a single family development. Demand for

single family sites in Austin appears favorable.

Maximally Productive: A determination must be made as to the maximal productive use of the

site. The subject's most likely feasible development, as discussed in the preceding paragraphs, is

with a single family development. Because of the subject’s location and the flood plain dividing

the property, a single family development is likely to be the best use of the subject site.

Valuation Section – Sales Comparison Approach – Vacant Land


SALES COMPARISON APPROACH - VACANT LAND “AS IS”

The Sales Comparison Approach for vacant land is a process of comparing actual comparable land

sales and listings to the subject. The market data is compared to the subject on the basis of

significant characteristics exhibited in the subject property that influence value, and adjustments are

made to the comparables for differences to make them equal to the subject. Characteristics generally

analyzed and considered for adjustments include property rights conveyed, unusual buyer/seller

motivation, special financing, location, size, floodplain, topography, and zoning. Because the

adjustments, whenever possible, are market derived, the desires and actions of typical buyers and

sellers are reflected in the comparison process.

Several units of comparison are available for use in the comparative evaluation of vacant land sales

in the sales comparison approach. These include the sale price per square foot of allowable net

rentable area and the sale price per square foot of land area. The most common unit of comparison

used, however, for vacant land is the sale price per square foot (or per acre) of land area.

In the case of the subject site, the subject site is not zoned or platted and consists of 159.802 acres.

The site appears to be best suited for residential development. Therefore, our analysis of the subject

site “as is” will be an estimation of the site as raw large acreage tracts suitable for residential

development.

The sale price per acre comparison is calculated by using the actual size of the site on an acre basic

by comparison to individual market sales. The market data in this section is analyzed through the

sale price per acre unit of comparison.

Market Data - Vacant Land Sales

A detailed market investigation was made in order to locate recent sales and listings of vacant

acreage suitable for development of residential lots. Whenever possible, the terms of the sales were

confirmed by a party involved in each transaction. In some instances, verification was not possible

from a party that was willing to publicly verify the data but was willing to verify the conditions of

the sale on a confidential basis. Details on each sale are maintained in the appraiser's office files

including the source of confidential information. This information is only included in our reports

when the highest degree of confidence in the reliability of the source is believed. Generally, we

have found these confidential sources to be the most reliable verifications, frequently coming from

closing statement information and direct involvement in the transaction.



The following schedule is a summary of the vacant land sales presented at the end of this section.

Size Price

No. Location Submarket Date (AC) /SF Zoning

1 6648 SH 79, Hutto Hutto 1/17/08 466.230 $1.43 PUD

2 2713 Highland Tr, Leander FNW 6/30/10 438.196 $0.99 SFS/SFU

3 15101 Ronald W Reagan BlvdFNW 10/7/11 125.850 $0.73 SFC/SFU

4 12750 SH 29 Georgetown 6/3/11 107.330 $0.62 None

5 7651 Kellam Rd SE 7/6/12 117.208 $0.47 None

LAND MARKET DATA SUMMARY

There have been few, recent, large acreage, mixed use land sales in good locations throughout the

Austin-Round Rock MSA. The sales presented represent the most recent comparable data available

in terms of size, location, potential use, and similar market appeal. They were selected based on

being purchased for held for investment with a potential of single family or mixed use development

in the future.

The subject property is located in Travis County outside the city limits of Austin. There were no

other comparable sales listed in the Austin MLS or in data available from CoStar in the subject’s

immediate neighborhood. Five sales of single family type acreage located in or near the Austin

metro area indicated sale prices of $20,473/acre to $62,291 per acre which were analyzed for this

report. They ranged in size from 107.33 acres to 466.23 acres.

The sales presented in the chart above represent the most recent comparable data available in terms

of location, potential use, and similar market appeal.

The five sales comparables were analyzed, and adjustments were made to make them equal to the

subject. Factors that were given consideration included property rights conveyed, motivation,

financing and terms, date of sale, location, frontage/access, size, physical characteristics, zoning, and

utilities. Explanations of the adjustments are given in the following paragraphs. An adjustment grid

showing the adjustments made is at the end of this section.



Sales Comparison Approach – Vacant Land Comments:

Property Rights Conveyed & Conditions of Sale (Motivation): The interest of the subject being

appraised is fee simple. The comparables' property rights conveyed was judged equal or similar to

that of the subject. The buyers and sellers appeared typically motivated with no parties under undue

stress. No other adjustments for differences in property rights conveyed or conditions of sale were

necessary.

Atypical Financing (Cash Equivalency): It is necessary to determine if the consummated sale

included a typically motivated buyer and seller with the price representing normal consideration of

the property sold, including payments of cash or its equivalent. Adjustments should be made for any

financing felt to be favorable or unfavorable. The comparables all sold or were being marketed on a

cash basis or were believed financed with terms similar to cash. No adjustments for cash

equivalency were necessary.

Time Adjustment: Over the past several years, Austin and the surrounding areas have been growing

rapidly. In general, the market has been exhibiting signs of improvement with rising rental rates and

appreciating property values.

The comparable sales utilized in our analysis occurred between January 2008 and July 2012. Our

analysis indicates that market conditions have only fluctuated for distressed land owners with

significant cash flow problems. As all of the sales occurred during the past six years, no adjustment

for market conditions was warranted for the comparable sales.

Location/Exposure: The subject site is located just east of U.S. 183 in Austin, Texas, on the

northwest corner of FM 969 and Burleson Manor Road. The subject’s immediate area is primarily

undeveloped except for small to large acreage tracts generally improved with a residential dwelling

or a small commercial property – typically retail in nature. There is some retail development in the

area. Comparable 1 is considered superior due to its location at the intersection of SH 130 and

Highway 79 in the town of Hutto. It was adjusted down 10% to compensate. The other land

comparables were considered similar in locations and no further adjustments were made for location.

Size (SF of Land Area): The subject site contains 159.802 acres of land. The comparables range in

size from 107.33 acres to 466.23 acres. The general rule indicated in the marketplace is that the

larger tract will sell for less per unit than a smaller, but similar, tract. This is primarily because the

smaller amount of land can be developed or utilized more quickly and, also, the holding cost on the

land held in reserve will limit the amount that the typical investor/developer will be willing to invest.

A guideline frequently used by appraisers for size adjustments is that a property's price decreases or

increases 5% to 10% for each doubling or halving in size the appraiser concluded that no

adjustments for size were required for the size range of the comparable tracts.

Zoning/Use: The subject is located outside the city limits of Austin and is not zoned. All of the

comparable sales were considered to have a similar lack of zoning or were zoned for residential uses

and did not warrant any adjustments for zoning/use.

Frontage/Access: This adjustment looks at the accessibility and frontage of the comparables. It

considers frontage in terms of access and developability, but not in terms of influence. The relative

influences of the comparables' streets were analyzed as part of their location adjustment. The



comparables were analyzed on the basis of their frontage and accessibility allowed by their frontage.

The subject has frontage on FM 969 and Burleson Manor Road with average to good access. Two of

the five sales were considered comparable. The corner location of Sale 1 was considered superior

and this was represented in the much higher price per square foot of $62,201.06/Acre. This sale was

adjusted downward 15% for the superior corner. 15101 Ronald Reagan is an interior parcel with

somewhat limited access and was adjust up 10% to make it comparable. 12570 SH 29 is also an

interior lot with even more limited access. It was also adjusted upward by 10% to make it

comparable.

Other Factors: There were no other factors deemed relevant to adjust on this property.

After adjustments, the comparables indicate a range from $20,476.42 to $46,650.79 /Acre or

$0.47/SF to $1.07/SF, with a mean of $34,950.12 /Acre or $0.80/SF. We have selected a reasonable

value estimate based on the Sales Comparison Approach of $35,000/Acre or $0.80/SF. In the final

analysis a weighted value of $35,00/Acre was considered reasonable for the subject.

159.802 Acres x $35,000/Acre = $ 5,593,070 or $5,600,000 (Rounded)


($5,600,000)



Comparable Land Sales Adjustment Grid

Land Sales Comparables


LAND SALES COMPARABLES

Land Sales Map – 159.802 Acre Tract

Sale 4

Sale 1

Subject

Sale 2

Sale 5

Sale 3



1 LAND SALE COMPARABLE 1

Hutto 400

6648 State Highway 79, Hutto, Texas

78634

Hold For Investment

Sold : 1/17/2008

Sale Price : $29,000,000

Size (Acres) : 466.230 Acres

Price/Acre : $62,201.00

Price/sf :$1.43 /SF


Property Type : Hold For Investment

Address : 6648 State Highway 79, Hutto, Texas 78634

Location : Southwest and southeast corners of State Highway 130 and State

Highway 79; Site has multiple addresses.

City Sector : Hutto

Tax ID Number : R003315, R020493-94, / see reference tab

Legal Description : 204.03 acres in the Martin Strouse Svy, Abs. 587; 125.95 acres in the

Rober McNutt Svy, Abs. 422;& 136.25 acres in the Nathaniel Edwards

Svy, Abs. 225

//LARRY-VCA/Violet Crown Appraisals/Data Bases/Data Bases/Photos/L2625-9808BockPhoto.jpg/LARRY-VCA/Violet Crown Appraisals/Data Bases/Data Bases/Photos/5300BeeCave_picture.jpg/LARRY-VCA/Violet Crown Appraisals/Data Bases/Data Bases/Photos/5300BeeCave_picture.jpg



TRANSACTION INFORMATION

Sale Date : 1/17/2008

Sale Price : $29,000,000

Sale Price/Acre : $62,201.00

Sale Price/SF : $1.43

Transaction Comments : R020496, R020789, R020949, R020952-53, R325498, R372449,

R392664, R405676, R449839-40, R458122, & R462801; Tax records

report a total size of 465.177 acres. I relied on the total reported size of

466.23 acres.

Volume/Page : 2007004453-55

Grantor : Hutto 400 Partners, LTD.

Grantee : ACD-GREP II Hutto Real Estate, LLC



1 LAND SALE 1, CONTINUED

6648 State Highway 79, Hutto, Texas 78634

PROPERTY INFORMATION

Land Size (SF/Acres) : 20,308,979 SF / 466.230 Acres

Shape : Irregular

Zoning : PUD - Planned Unit Development

Frontage : W/s-4,544' on SH130 and 1,735' on SH79; E/s-5,122' on FM685, 3,568'

on SH79 and 4,565' on SH130

Flood Hazard Areas : Yes; per FEMA Map 48491C, Panel 0515E, dated September 26, 2008

Site Comments : This site is split into two portions by SH 130. The eastern portion has

388.425 acres while the western side has 76.752 acres. The seller

assembled 16 parcels for this sale. A Union Pacific Railroad runs along

all of the SH 79 frontage of both sides of the site which restricts direct

access. The eastern tract has access via all of linda lane (appears to be a

dirt road), FM 685, and the SH 130 frontage road at the southeast

corner of SH 79 and SH 130. The western tract appears to have access

via the SH 130 frontage road at the southwest corner of SH 79 and SH

130 and from an unnamed dirt road from SH 79 that crosses the railroad

similar to Linda Lane on the eastern tract. Brushy creek runs along the

southern boundary of the eastern parcel.

REFERENCE INFORMATION

Database Record : 1667

Map Page/Grid : 379

Source of Sale : Seller and Buyer

Date of Research : 5/7/2014

Appraiser Confirming : Larry H. Decovic, MAI, SRA




The Highlands at Crystal Falls

2713 Highland Trail, Leander, Texas

78641

Residential Development Land

Sold : 6/30/2010

Sale Price : $18,816,000


Price/Acre : $42,940.00

Price/sf :$0.99 /SF


Property Type : Residential Development Land

Address : 2713 Highland Trail, Leander, Texas 78641

Location : West side of the end of Highland Trail at the Williamson/Travis County

boundary line.

City Sector : Far Northwest

Tax ID Number : R483067, R483070, / R483073-75

Legal Description : 436.9248 acres out of and a part of the J.H. Harris Survey 96, ABS

2150, Travis County; the Lindsey Davis survey, ABS 255, Travis

County and ABS 838, Williamson County; the Issac A. Hampton

Survey, ABS 361, Travis County, and ABS 886 Williamson County;

Joseph W. Morris Survey, ABS 572, Travis County and ABS 896,

Williamson County; Luncinda Carter Survey ABS 2209 and B.F. Davis

Survey, Abstract No. 2280 Travis County; J.H. Faubion Survey, BAS

126, Williamson County; Juciuus B. Johnson Survey, ABS 426 in

Travis and Williamson County; and Lots 1, 4, 7, 8, and 9, Block I, The

Highlands, Section I, Phase I, Williamson County, Texas





2713 Highland Trail, Leander, Texas 78641


Sale Date : 6/30/2010

Sale Price : $18,816,000



Transaction Comments : The broker, Joe Duncan, was not able to confirm a specific sales price

but gave me the range of $15-$17K per paper lot. I went with the

average. CoStar notes - A source deemed reliable reported 440 acres,

1,176 lots, sold for an undisclosed amount. There were no conditions to

the sale. This was a cash purchase.

Development will begin in September 2010. Prices will range from

$200,000 to 600,000. The lots were mostly raw land with approvals for

single family homes in place. There were 5 sites that were completely

finished.

Volume/Page : 2010094028

Grantor : Lookout Development Group, L.P.

Grantee : Taylor Morrison at Crystal Falls, LLC.




2713 Highland Trail, Leander, Texas 78641



Shape : Irregular

Zoning : SFU and SFS

Frontage : Highland Trail and Ambush Canyon

Flood Hazard Areas : Yes; per FEMA Map 48453C, Panel 0115H and 0095H, dated

September 26, 2008

Site Comments : Must include TCAD parcels 0501470104, 0508440107. This site is

part of the 5,000-acre Crystal Falls development, where about 1,400

homes have been built and a total of 9,000 to 13,000 are expected to be

constructed during the next decade per Bill Hinckley, president of

Lookout Group, Inc. Site consists of a 436.9248 tract with 1,176

approved paper lots and five developed residential lots totaling 1.271

acres. Development is expected to begin in September 2010. Prices

will range from $200,000 to $600,000. Broker reported that no

signficant off-site costs will be required for lot development.

Floodplain presence is minimal and does not appear to be a negative

factor. The about half of the site (west) is zoned Single Family

Surburban (SFS) while the other half (east) is zoned Single Family

Urban (SFU).



Map Page/Grid : 372

Source of Sale : Broker; TAMU; CoStar


Appraiser Confirming : Andre Suissa

Date Reconfirmed : 8/16/2010




15101 Ronald W Reagan Boulevard,

Leander, Texas 78641

Residential Development Land

Sold : 10/7/2011

Sale Price : $4,000,000


Price/Acre : $31,784.00

Price/sf :$0.73 /SF


Property Type : Residential Development Land

Address : 15101 Ronald W Reagan Boulevard, Leander, Texas 78641

Location : Adjacent to commercial land that fronts Ronald Reagan Parkway - no

actual frontage other than an entry right of way through the commercial

land.

City Sector :

Tax ID Number : R031216

Legal Description : Being 125.85 acres out of the W. Campbell Survey, Abstract 3,

Williamson County Texas.


Sale Date : 10/7/2011

Sale Price : $4,000,000



Transaction Comments :

Marketing Time (days) : 325


Grantor : Willian P. Hazelwood et al

Grantee : Ten Hazlewood Investment LLC





15101 Ronald W Reagan Boulevard, Leander, Texas 78641



Shape : Irregular

Zoning : Residential

Frontage : None

Flood Hazard Areas : Yes - Partial; per FEMA Map 48491C, Panel 0470E, dated September

26, 2008

Site Comments : Part of a multi-use tract. 22.5 acres adjacent to the subject and with

frontage on Ronald Reagan Parkway is zoned for office, retail and

commercial uses. The residential portion (this sale) is zoned for Single

Family Compact and Single Family Urban.



Map Page/Grid : 343

Source of Sale : MLS-6273132






Seven Oaks Ranch

12750 SH 29, Taylor, Texas 76574

Ranch Land

Sold : 6/3/2011

Sale Price : $2,900,000


Price/Acre : $27,019.00

Price/sf :$0.62 /SF


Property Type : Ranch Land

Address : 12750 SH 29, Taylor, Texas 76574

Location : South side of SH 29, in both Taylor and Georgetown, Texas

City Sector : Georgetown

Tax ID Number : R018565, R038901

Legal Description : Being 107.33 acres in the William Ashworth Survey, Abstract 24,

Williamson County, Texas


Sale Date : 6/3/2011

Sale Price : $2,900,000



Transaction Comments :

Marketing Time (days) :


Grantor : River Chase Subdivision II Ltd.

Grantee : Beverly Jo Atchley Trust





12750 SH 29, Taylor, Texas 76574



Shape : Irregular

Zoning : None

Frontage : Highway and river frontage

Flood Hazard Areas : Yes - Partial; per FEMA Map 048491C, Panel 0340, dated September

26, 2008

Site Comments : Heavily improved site with improvements assessed at $637,700

indicating a land value of $2,262,300 or $21,078 per acre ($0.48/sf).

Improved price per acre is $27,019/acre. Three ponds on site and a

pecan orchard. Home is 4/3.5 with 3,480 sf.



Source of Sale : MLS






7651 Kellam Road, Austin, Texas

78617

Acreage

Sold : 7/6/2012

Sale Price : $2,400,000


Price/Acre : $20,476.41

Price/sf :$0.47 /SF


Property Type : Acreage

Address : 7651 Kellam Road, Austin, Texas 78617

Location : Northeast corner of Kellam Road and Elroy Road

City Sector : Southeast

Tax ID Number : 299082 / 824452

Legal Description : 3.0182 and 112.2821 Acres from the TB Westbrook Survey, Abstract

797, Survey 5


Sale Date : 7/6/2012

Sale Price : $2,400,000



Transaction Comments : Cash to seller

Marketing Time (days) :

Volume/Page : 2012109754TR

Grantor : Joseph Family Et Al

Grantee : Circuit of the Americas, LLC





7651 Kellam Road, Austin, Texas 78617



Shape : Iregular

Zoning : None

Frontage : Approximately 1632 ft on Kellam Road and approximately 3098 ft on

Elroy Road.

Flood Hazard Areas : No; per FEMA Map 48453C, Panel 0640H, dated 9/26/2008

Site Comments : No utilities to site. No imfrastructure present.



Map Page/Grid : 708E

Source of Sale : Title Company


Appraiser Confirming : Larry Decovic, MAI

Date Reconfirmed : 12/6/2014

Reconciliation and Final Value Estimate


RECONCILIATION AND FINAL VALUE ESTIMATE

0f the three traditional approaches (Sales Comparison Approach, Cost Approach, and Income

Approach) typically used to evaluate property, only the Sales Comparison Approach is

applicable to a vacant land Appraisal and, therefore, this is the only approach considered in this

appraisal. The Sales Comparison Approach indicated the following values for the two subject

conditions

AS IS

Sales Comparison Approach $5,600,000

Cost Approach N/A

Income Approach N/A

Of the three standard approaches to value, only the Sales Comparison Approach was applicable

as the subject is a vacant tract of land.

The most probable Market Value of the fee simple interest of the subject tract of land (159.802

acres) “As Is”, as of January 12, 2015, is estimated at:


($5,600,000)

Certification


CERTIFICATION

We certify that, to the best of our 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 our personal, impartial, and unbiased

professional analyses, opinions, and conclusions.

3. We have no present or prospective interest in the property that is the subject of this report

and no personal interest with respect to the parties involved.

4. We have no bias with respect to the property that is the subject of this report or to the

parties involved with this assignment.

5. Our engagement in this assignment was not contingent upon developing or reporting

predetermined results.

6. Our compensation for completing this assignment is not contingent upon the development

or reporting of a predetermined value or direction in value that favors the cause of the

client, the amount of the value opinion, the attainment of a stipulated result, or the

occurrence of a subsequent event directly related to the intended use of this appraisal.

7. Our analyses, opinion, and conclusion were developed, and this report has been prepared,

in conformity with the Uniform Standards of Professional Appraisal Practice.

8. We have made a personal inspection of the property that is the subject of this report

9. No one provided significant professional assistance to the persons signing this report.

10. The use of this report is subject to requirements of the Appraisal Institute relating to review

by its duly authorized representatives.

We are of the opinion that the most probable current Market Value of the leased fee and fee

simple interest of the subject “As Is”, as of January 12, 2015, is estimated at $5,600,000; and the

most probable Market Value of the fee simple interest in the subject tract as of January 12, 2015

is estimated at $5,600,000:


Director of the Valuation Group

State Certified General Real Estate Appraiser#TX-1320138-G

Addenda


ASSUMPTIONS AND LIMITING CONDITIONS

General Conditions

1. The reviewer of this report is associated with the Appraisal Institute and the Bylaws and

Regulations require each member to control the use and distribution of each appraisal report

signed by such member. Therefore, except as hereinafter provided, the party for whom this

appraisal report was prepared may distribute copies of this appraisal report, in its entirety, to

such third parties as may be selected by the party for whom this appraisal report was prepared;

however, portions of this appraisal report shall not be given to third parties without prior written

consent of the signatory of this appraisal report. Further, neither all nor part of this appraisal

shall be disseminated to the general public by the use of advertising media, public relations

media, news media, sales media or other media for public communication without the prior

written consent of the signatory of this appraisal report.

2. That the term market value as used herein, is defined as: The most probable price in

terms of money which a property should bring in competitive and open market under all

conditions requisite to a fair sale, the buyer and seller, each, acting prudently, knowledgeably

and assuming the price is not affected by undue stimulus. Implicit in this definition is the

consummation of a sale as of a specified date and the passing of title from seller to buyer under

conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well

informed or well advised, and each acting in what they consider their own best interest; (3) a

reasonable time is allowed for exposure in the open market; (4) payment is made in cash in US

dollars or in terms of financial arrangements comparable thereto; and (5) the price represents a

normal consideration for the property sold unaffected by special or creative financing or sales

concessions granted by anyone associated with the sale.

3. That the date of value to which the opinions expressed in this report apply is set forth in

the letter of transmittal. The appraiser assumes no responsibility for economic or physical

factors occurring at some later date, which may affect the opinions herein stated.

4. That no opinion is intended to be expressed for legal matters or that would require

specialized investigation or knowledge beyond that ordinarily employed by real estate appraisers,

although such matters may be discussed in the report.

5. That no opinion as to title is rendered. Data on ownership and the legal description were

obtained from sources generally considered reliable. Title is assumed to be marketable and free

and clear of all liens and encumbrances, easements and restrictions, except those specifically

discussed in the report. The property is appraised assuming it to be under responsible ownership

and competent management and available for its Highest and Best Use.

6. That no engineering survey has been made by the appraiser. Except as specifically

stated, data relative to size and area was taken from sources considered reliable, and no

encroachment of real property improvements is assumed to exist.

Addenda


7. That maps, plats and exhibits included herein are for illustration only as an aid in

visualizing matters discussed within the report. They should not be considered as surveys or

relied upon for any other purpose.

8. That no opinion is expressed as to the value of subsurface oil, gas or mineral rights, and

that the property is not subject to surface entry for the exploration or removal of such materials,

except as is expressly stated.

9. That if this appraisal is used for mortgage loan purposes, the appraiser invites attention to

the fact that the equity cash requirements of the lender have not been analyzed; the loan ratio has

not been suggested; and the amortization method and term have not been suggested.

10. That if this appraisal has been limited at the request of the client for valuation of

fractional property interest, the reported value or values herein relate to only its fractional

interest in the real estate involved, and that the value of all other fractional interests may or may

not equal the value of the entire fee simple estate considered as a whole.

Court Or Hearing Testimony

11. That testimony or attendance in court or at any other hearing is not required by reason of

rendering this appraisal, unless such arrangements are made at a reasonable time in advance.

12. That if the date of value used herein is the date of trial, the appraiser reserves the right to

consider and evaluate additional data that becomes available between the date of this report and

the date of trial and to make any adjustments to the value opinions that may be required.

Title Report

13. That if the title report was made available to the appraiser, he assumes no responsibility

for such items of record not disclosed by his normal investigation. However, the appraiser does

not render an opinion on title and it is considered good for the purposes of this report.

Soil Or Geological Conditions

14. That no detailed soil studies covering the subject property were available to the appraiser.

Therefore, premises as to soil qualities employed in this report are not conclusive but have been

considered consistent with information available to the appraiser.

15. That since earthquakes, floods, tornadoes and other potentially dangerous natural

phenomenon are possible from time to time in the area, no responsibility is assumed, due to their

possible affect on individual properties, unless detailed geological reports are made available.

Addenda


Vacant Land

16. That the appraisers have personally inspected the subject property find no obvious

evidence of deficiencies, except as stated in this report. However, no responsibility for hidden

defects or conformity to specific governmental requirements such as zoning, fire, building and

safety, earthquake, tornado, flooding, etc. can be assumed without provisions of specific

professional or governmental inspections.

17. That if this appraisal involves an analysis of differing geographical portions of the subject

tract or tracts relative to their potential uses and values, the reported value or values relate to the

whole, and the sum of the parts may or may not equal the value of the property as a whole.

Improved Property

18. That the appraiser has personally inspected the subject property and finds no obvious

evidence of structural deficiencies, except as stated in this report. However, no responsibility for

hidden defects or conformity to specific governmental requirements such as zoning, flood, fire,

building and safety, earthquake or occupancy codes can be assumed without provisions of

specific professional or governmental inspections.

19. That although no termite inspection report was available, the appraisers personally

inspected the subject property and found no significant evidence of termite damage or

infestation.

20. That no consideration has been given in this appraisal to personal property located on the

premises, or to the cost of moving or relocating such personal property; only the real property

has been considered.

21. That consideration of equipment is as stated within the report. And if consideration has

been given in this appraisal to certain items of equipment located on the property and itemized

herein, they are considered in the property valuation.

22. That building and rental areas herein have been provided by the client or reliable sources

and are believed to have been calculated in accord with standards developed by the American

Standards Association as included in the Real Estate Appraisal Terminology.

23. That income and expense data that was relied upon were provided by the client or sources

that are felt to be reliable and no responsibility is assumed for other correctness.

24. That the improvements are assumed to be within the lot lines and in accordance with

local zoning and building ordinances.

Addenda


25. That, unless otherwise stated in the report, the subject property is assumed to be free of

all hazardous materials affecting, or with the potential to affect said property's. The appraiser is

unqualified to detect the presence of all hazardous materials, including asbestos and Urea-

Formaldehyde foam insulation, and therefore assumes no responsibility for the presence of, or

costs associated with the detection of such materials. The presence of hazardous materials could

affect the value estimated by this appraisal.

Letter of Engagement/Qualifications


LETTER OF ENGAGEMENT

Verbal engagement to value the subject by the owner was based on a previous appraisal

assignment prepared on this property by the Appraiser.



APPRAISER QUALIFICATIONS

LARRY H. DECOVIC

Designations & Memberships

Appraisal Institute, Member, MAI

Appraisal Institute, Senior Residential Appraiser, SRA, Designated Member

Larry Decovic, MAI, certified under the State of Texas Continuing Education program

State Certified General Real Estate Appraiser, Certificate #TX-1320138-G

Austin Chapter of Appraisal Institute, Member of Admissions Committee

South Central Regional Professional Standards Panel, 3 year term, Past Member

American Institute of Real Estate Appraisers, Past Director of North Texas Chapter

Approved to practice before the Texas Department of Highways and Public Transportation

Education & Training

Southern Methodist University, B.B.A. Degree in Real Estate, 1972

Southern Methodist University, Certificate in Real Estate, Courses Include: Principles of Real Estate, Real Estate Practices, Real Estate Finance, Zoning and City Planning,

Real Estate Appraisal I and II, Property Management, and Commercial Construction

University of Houston, Advanced Case Studies Seminar of Income Property Financing

Republic Bank, Discounted Cash Flow Seminar - Dallas, Tx

University of Texas Graduate School, Microcomputer Analysis of Real Estate Investment

Resolution Trust Corporation, Affordable Housing Seminar - San Antonio, Tx

American Institute of Real Estate Appraisers (AIREA) Courses: Reviewing Appraisals Seminar - Houston, Tx

Rate Extraction Seminar - Houston, Tx

Real Estate Appraisal Principles - Chicago, Il

Principles of Income Property Valuation - (SREA) - Dallas, Tx

Case Studies in Real Estate Valuation - Chapel Hill, NC

Valuation Analysis and Report Writing - Chapel Hill, NC

Standards of Professional Practices - San Antonio, Tx

Rural Valuation - Portland, Or

Understanding Limited Appraisals - San Antonio, Tx

Appraiser's Liability - San Antonio, Tx

Other Seminars USPAP; The Appraiser as an Expert Witness; Environmental Site Analysis; Residential Update,

Appraisal Insight, New Fannie Mae Appraisal Guide, Mold Insights, USPAP 2013 Update, Income

Capitalization, Appraising for the Secondary Market, Appraising Nursing Facilities

Expert Witness in County, State, District, and Federal Court

Experience

Violet Crown Appraisals LLC, Austin, Tx, Director of Valuation Group, 2013 to Present

American Realty Corporation, Austin, Tx, Director of Valuation Group, 2000 to 2012

American Realty Corporation, Austin, Tx, Director of Commercial Appraisals, 1992 to 1999

L. H. Decovic & Associates, Austin, Tx, Owner, 1988 to 1992

First Republic Bank Austin, Group Manager and Trustee, Central Tx Department, 1987 to 1988

RepublicBank Austin & San Antonio, Appraisal Manager & Asst Vice President, 1984 to 1987

RepublicBank Dallas, Staff and Senior Appraiser, Appraisal Officer & Coordinator, 1977-1984

H. W. Dunham & Associates, Fee Appraiser & Assistant Vice President, Dallas, Tx, 1970-1977



APPRAISER’S STATE GENERAL CERTIFICATION SHEET

General Certification


2011 through 2013

Documents

APPRAISAL OF A VACANT TRACT OF LAND CONTAINING …€¦ · REAL PROPERTY APPRAISERS AND CONSULTANTS 8403 Cross Park Drive Suite 3G Austin, Texas 78754 512/388-0086 Fax 512/381-0226