APPRAISAL REPORT ON EAU CLAIRE, WISCONSINimages-s3.bid4assets.com/info/assetid643186/315515.pdfAPPRAISAL REPORT ON 2831 HENDRICKSON DRIVE EAU CLAIRE, WISCONSIN BRUCE CHRIST J.C. NORBY

APPRAISAL REPORT ON 2831 HENDRICKSON DRIVE EAU CLAIRE, WISCONSIN

BRUCE CHRIST J.C. NORBY & ASSOCIATES, INC. 2115 EAST CLAIREMONT AVENUE SUITE 2 EAU CLAIRE, WISCONSIN

J. C. Norby & Associates, Inc. Real Estate Valuation & Consultation.

2115 East Clairemont Avenue, Suite #2 Eau Claire, WI 54701

Phone: 715-834-3953 Fax: 715-834-5101 Email: [email protected] Website: www.jcnorby.com

July 26, 2013 Voyager Bank Attn: Ms Stacey Willman 775 Prairie Center Drive Eden Prairie, MN 55344 RE: Sonic Restaurant

2831 Hendrickson Drive Eau Claire, Wisconsin

Dear Ms Willman: At your request, we have done a summary appraisal intended to comply with Standard 1 of the Uniform Standards of Professional Appraisal Practice (USPAP) and FIRREA requirements. This is a summary type report prepared under Standards Rule 2-2(b). The legal description is included in the enclosed report. We have thoroughly inspected the property, researched data, and considered matters pertinent to its value. It is my opinion that the Market Value of the subject property as of the date of inspec-tion is as follows;

MARKET VALUE OF SUBJECT PROPERTY LAND .................................................$395,000 ESTIMATED DEMOLITION COSTS OF IMPROVEMENTS ON SUBJECT ................... $ 38,000

This appraisal includes the vacant land only. It does not include improvements. As indicated above, it also includes an estimate for demolition costs on the subject property. This is a summary appraisal report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice.

Voyager Bank Attn: Ms Stacey Willman RE: 2831 Hendrickson Drive, Eau Claire, Wisconsin July 26, 2013 Page 2 As such, it presents summary discussions of the data, reasoning and analyses that are used in the appraisal process to develop the opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in the appraisal file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser’s is not responsible for unauthorized use of this report. In compliance with USPAP and the Ethics Rule, we have not provided a service regarding the

subject within the past 36 months.

Respectfully submitted,

Bruce Christ WI Certified General Appraiser #640 Expiration Date: December 14, 2013 J. C. NORBY & ASSOCIATES, INC.

James C. Norby, MAI, SRA WI Certified General Appraiser #125 Expiration Date: December 14, 2013 J.C. NORBY & ASSOCIATES, INC. BC/JCN/ca Enclosure F:\DATA\NARRATIVE2\2013\13454FV 2831 HENDRICKSON DR (SONIC)

Copyright © 2013 by J. C. Norby & Associates, Inc. All rights reserved

J. C. NORBY & ASSOCIATES Real Estate Valuation & Consultation

- i -

TABLE OF CONTENTS PAGE PURPOSE OF APPRAISAL..................................................................................................... 1-2

INTENDED USE OF REPORT ....................................................................................................2

INTEREST VALUED, EFFECTIVE DATE OF VALUE, DATE OF REPORT ..............................................2

SCOPE OF WORK ..................................................................................................................2

DESCRIPTION OF REAL ESTATE APPRAISED

NEIGHBORHOOD..................................................................................................................3

TREND ..............................................................................................................................3

SITE ........................................................................................................................... 3-4

UTILITIES, ZONING, FLOOD PLAIN ..........................................................................................5

LEGAL DESCRIPTION.............................................................................................................5

SALES HISTORY ....................................................................................................................6

ASSESSED VALUATION AND TAXES...........................................................................................6

HIGHEST AND BEST USE ..................................................................................................... 6-8

ENVIRONMENTAL CONDITION.................................................................................................8

IMPROVEMENT ANALYSIS.......................................................................................................9

LAND VALUATION- SALES COMPARISON APPROACH ...............................................................9-13

ESTIMATE OF DEMOLITION COSTS FOR SUBJECT PROPERTY...................................................... 13

VALUATION BY COST APPROACH........................................................................................... 14

VALUATION BY INCOME CAPITALIZATION APPROACH ........................................................... 14-15

ESTIMATED EXPOSURE AND MARKETING TIME........................................................................ 15

CORRELATION OF VALUE OPINIONS .................................................................................. 15-16

FINAL OPINION OF VALUE ................................................................................................... 16

ASSUMPTIONS AND LIMITING CONDITIONS ......................................................................... 17-19

CERTIFICATIONS ............................................................................................................ 20-21

QUALIFICATIONS............................................................................................................ 22-24

ADDENDUM SUBJECT PHOTOGRAPHS LAND SALES LOCATION MAP AND SALES SHEETS


- 1 -

APPRAISAL REPORT ON SONIC RESTAURANT PROPERTY

2831 HENDRICKSON DRIVE EAU CLAIRE, WISCONSIN

CLIENT: Voyager Bank

Attn: Ms Stacey Willman 775 Prairie Center Drive Eden Prairie, MN 55344

APPRAISER: Bruce Christ James C. Norby, MAI, SRA

J.C. NORBY & ASSOCIATES, INC. 2115 E. Clairemont Ave., Suite 2 Eau Claire, WI 54701 SUBJECT: 2831 Hendrickson Drive

Eau Claire, WI 54701 PURPOSE OF THE APPRAISAL:

The purpose of this appraisal is to provide my best estimate of the market value of the subject real property as of the effective date. Market value is defined by the federal financial institutions regulatory agencies as follows:

Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

(1) buyer and seller are typically motivated;

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

consider their own best interests;

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

(4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and


- 2 -

(5) the price represents the normal consideration for the property sold

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

(Source: Office of the Comptroller of the Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions [f].)

INTENDED USE OF REPORT:

This appraisal is intended to assist the client, Voyager Bank, in determining the value for market review and other bank purposes.

INTEREST VALUED: Fee Simple EFFECTIVE DATE OF VALUE: July 23, 2011 DATE OF REPORT: July 26, 2013 SCOPE OF WORK:

The scope of work included a number of investigations and analysis agreed upon between the appraiser and client. The scope includes the following by the appraiser:

• Inspected the subject site and building on the exterior; • Observed and described the neighborhood; • Researched the site size, zoning and flood plain data for the subject; • Determined the Highest and Best Use of the property; • Researched sales of similar sites and estimated a land value for the subject; • Researched data on demolition costs for the improvements on the subject; • Applied the Sales Comparison to arrive at an estimate of value for the land;

Sources of information included: personal inspection of the property, my office files, MLS data files, other appraisers, city of Eau Claire and Eau Claire County records, FEMA flood insurance rate map. In the appraiser’s opinion, the research sources used were sufficient for the discovery of comparable market data and the information recited and analyzed are sufficient to provide a reliable value estimate for the property being appraised. However, because of the diversity of the information discovery process, there may be other data which may be more comparable, more recent or more suitable to the subject property, which was not discovered, and which was, therefore, not included in this analysis.


- 3 -

DESCRIPTION OF REAL ESTATE APPRAISED: Location Description:

Neighborhood: The subject is located on the southwest side of the city of Eau Claire, in a heavily developed commercial neighborhood. The property is fronted by a service road of STH 37, known as Hendrickson Drive. Distance to the intersection with STH 37 is about one block. The subject is visible from STH 37. Properties in the vicinity of the subject include an Arby’s restaurant adjacent to the east. East of that is the Shopko Plaza shopping center which includes a supermarket grocery store, numerous small shops and a Shopko discount store. Adjacent to the west is a large multi use commercial/residential property currently under construction. To the south of the subject are several apartment buildings and a multi family neighborhood. To the north is the service road and then STH 37. Across STH 37 to the north is a large motel property, an office building and a truck sales and service property.

Trend:

This neighborhood is currently fully developed. The commercial properties in this neighborhood appear to be in good condition. This will likely continue into the foreseeable future.

Site:

The subject site is almost rectangular in shape with a level topography. According to the city of Eau Claire, plat map it has 142.05 feet of frontage with access along Hendrickson Drive. The northeasterly property line is 270.69 feet in length. The southwesterly property line is 249.01 feet in length and the rear southerly property line is 159.91 feet in length. The site contains 38,564 square feet according to the city records. A plat map outlining the subject site is on the following page:


- 4 -

PLAT MAP


- 5 -

Utilities:

Municipal water and sewer, public electricity, telephone and natural gas serve the site. There is a 70 foot building setback along Hendrickson Drive in the front of the site.

Zoning:

The subject is zoned C-3 (Community Commercial District). This district is established to accommodate those uses which are of city-wide and regional significance. Within this district are found the primary retailing and specialized retailing activities, the cultural, recreational and educational activities of city-wide significance, the administrative offices of private organizations and the offices of professional and nonprofessional persons offering a variety of specialized services. Within this district, development provides services on a community wide or regional scale. The most previous use of the subject as a drive in restaurant was a legal conforming use permitted under the general use heading of personal services.

Flood Plain:

The Federal Emergency Management Agency (FEMA) Flood Insurance Rate Map Panel #5501280042-E, effective date of February 18, 2006 shows the subject in zone X unshaded, which indicates the subject is not in a flood plain.

LEGAL DESCRIPTION:

A parcel of land in E ½ - NW ¼ Section 30, T27N, R9W, described as follows: commencing at the Southwest corner of E ½ - NW ¼ - SE ¼ thence N 0º 30’ 30” West along West line 296.25 feet to Southerly line of 40 feet service road and point of beginning, thence S 35º 10’ 10” East 249.01 feet, thence N 50º 17’ 37” East 159.91 feet, thence N 39º 42’ 23” West 270.69 feet to Southerly line of 40 feet service road, thence Southwesterly along Southerly line of said road and along the arc of a curve concave Northwesterly whose chord bears S 41º 11’ 29” West 142 feet to point of beginning containing 38,564.02 square feet more or less, city of Eau Claire, Eau Claire County, Wisconsin.


- 6 -

SALES HISTORY:

The subject site as vacant was purchased in 2008 by WI Sonic Properties, LLC from Kuhnert Properties, LLC, Warranty Deed dated August 26, 2008, Document #996822, sale price was $485,300 for the vacant site. The currently existing building was then constructed in 2008. Note that shortly after the economic slowdown began in 2007, the values of vacant commercial sites in Eau Claire began gradually trending downward. According to my study of the local market and a study of Department of Revenue, property valuation data, the values trended downward from 2008 into 2011.

ASSESSED VALUATION AND TAXES:

The 2012 valuation and real estate taxes are as follows:

Parcel #221-15-1056-G: Land ................................................................................ $463,000 Improvements..................................................................... $ 47,000 Total Assessed Valuation ....................................................... $510,000

The equalized value assessment level for the city of Eau Claire in 2012 was 1.03.

Note: 2012 real estate taxes unpaid as of July 22, 2013 plus penalty and interest is $13,112.16. 2012 real estate taxes unpaid as of July 23, 2013 are $11,079.33.

HIGHEST AND BEST USE:

For Highest and Best Use of land as though vacant and property as improved, the use must meet four criteria. Those criteria are that the Highest and Best Use must be:

1. Physically Possible 2. Legally Permissible 3. Financially Feasible 4. Maximally Productive

These criteria should usually be considered sequentially, for only when there is a reasonable possibility that one of the prior unacceptable conditions can be changed is it appropriate to proceed with the analysis.


- 7 -

The following definition of "Highest and Best Use" as applied to real estate is taken from the Dictionary of Real Estate Appraisal, published by the Appraisal Institute.

Highest and Best Use:

1. The reasonable and probable use that supports the highest present

value of vacant land or improved property, as defined, as of the date of the appraisal.

2. The reasonably probable and legal use of land or sites as though

vacant, found to be physically possible, appropriately supported, financially feasible, and that results in the highest present land value.

3. The most profitable use. Implied in these definitions is that the determination of Highest and Best

Use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. Hence, in certain situations, the Highest and Best Use of land may be for parks, green belts, preservation, conservation, wildlife habitats and the like.

Highest and Best Use Analysis: Land as Though Vacant: The appraiser must consider the four questions about the subject property

before a Highest and Best Use estimate can be reached. This is done after examining surrounding land uses and coming to a tentative use conclusion.

In the case of the subject, the tentative use conclusion would appear to conform to the most productive use allowed by the zoning code, Highway Commercial use. It would not appear to be either prudent or profitable, in this case, to consider putting this land to an alternative use such as residential or industrial.

Physically Possible: Discussing the first criteria of Highest and Best Use, Physically

Possible, it is the appraiser's opinion that the subject can be developed for a commercial use. The soils appear to be satisfactory for this purpose and the technology exists to transform the vacant


- 8 -

site into such a use. Also, the subject has adequate street frontage, visibility and access for a commercial use.

Legally Permissible: Regarding the second criteria, Legally Permissible, it is legally

permissible for the subject property to be developed as a commercial property. As indicated in the Zoning section of this report, the property is zoned C-3 (Community Commercial District).

Financially Feasible: Regarding the third criteria, Financially Feasible, it appears the

subject is financially feasible as a commercial site. The neighborhood is built up heavily for commercial use. This type of commercial use would support various commercial properties such as auto related, restaurants, hotels and motels, and convenience stores.

Maximally Productive: Regarding Maximally Productive, the site would be maximally

productive if used for some type of Highway Commercial use. Summary: Based on the above analysis, it appears the site, if vacant, would be

suitable as a commercial site. Property as Improved: The subject property building was built in 2008 as a fast food facility. At

this time it is vacant and not operating. The improvements on the subject are considered of no contributory value. Therefore, no Highest and Best Use analysis of the improvements is done.

ENVIRONMENTAL CONDITION:

No obvious environmental hazards were observed by the appraiser at the time of inspection. However, the appraiser is not qualified to determine if environmental hazards are present. If this is a concern, a qualified environmental inspector should be consulted to determine if any hazards are present. The value arrived at in the appraisal assumes that no environmental hazards requiring a costly clean-up are present on the property.


- 9 -

IMPROVEMENT ANALYSIS:

The subject improvements consists of a one story fast food facility that contains 1,534 square feet and was built in 2008. It is currently vacant, not operating and is considered of no contributory value. Other improvements on the property include approximately 3,800 square feet of concrete paving, 120 lineal feet of concrete curb, and approximately 24,400 square feet of bituminous paving. These improvements are also of no contributory value.

LAND VALUATION – SALES COMPARISON APPROACH:

In this approach, sales of similar unimproved land are analyzed, compared and adjusted to derive an indication of value for the land being appraised. In applying the sales comparison approach, the appraiser follows a systematic procedure. The appraiser must always compare like properties. That is, the appraiser must adjust each comparable to the subject to impute an indicated value to the property. The steps of the procedure are as follows:

1. Research the market to obtain information about transactions and listings of

other properties similar to the subject property. 2. Verify the information by considering whether the data is factually accurate

and the transaction reflects an arm's length market consideration. 3. Determine relevant units of comparison such as acres, square foot and front

foot, and develop a comparative analysis for each unit. 4. Compare the subject and comparable sales according to the elements of

comparison and adjust the sales price of each comparable as appropriate. 5. Reconcile the multiple value indications that result from the adjustments

into a single value indication.

The sales data is as follows:


- 10 -

SALE

#

LOCATION SALE

DATE SALE

PRICE

SIZE/SF

PRICE/SF

4029

2851 HENDRICKSON DRIVE EAU CLAIRE

9/2012

$900,000

131,884

$6.82

3971

1104 E CLAIREMONT AVE EAU CLAIRE*

2/2012

$695,000

80,006

$8.68

3857

1111 W CLAIREMONT AVE EAU CLAIRE

8/2011

$615,000

37,6105

$16.35

4079

2112 S HASTINGS WAY EAU CLAIRE

7/2011

$250,000*

26,818

$10.14

*Demolition costs of $22,000 – total cost is than $272,000

ADJUSTMENT GRID

SALE #

#4029

#3971

#3857

#4079

SALE DATE

9/2012

2/2012

8/2011

7/2011

SALE PRICE

$900,000

$695,000

$615,000

$250,000

SIZE (SF)

131,884

80,006

37,605

26,818

PRICE (SF)

$6.82

$8.68

$16.35

$10.14

ADJUSTMENTS

TIME

0%

0%

0%

0%

TIME ADJUSTED SALE PRICE

$6.82

$8.68

$16.35

$10.14

SIZE

+35%

+10%

0%

0%

LOCATION

0%

0%

-20%

0%

TOPOGRAPHY & SHAPE

0%

0%

0%

0%

ACCESS

0%

0%

0%

0%

VISIBILITY

0%

0%

-10%

0%

ZONING

0%

0%

0%

0%

NET ADJUSTMENTS

INDICATED VALUE/SF

$9.21

$9.55

$11.45

$10.14


- 11 -

Discussion:

The four vacant land comparable sales listed above sold in 2011 and 2012. A study of the market and conversations with local Realtors and appraisers indicated that the value trend of vacant land commercial sites in Eau Claire have remained mostly steady since 2011. Therefore, no time adjustment is made to any of the sales. Sale #4029 is located adjacent to the west of the subject property. It was the site of a vacant motel property. The maintenance of the motel had been neglected and it was demolished prior to the sale date. This vacant site property was purchased for development of a multi-family property with some commercial space on the first floor level. It sold in September of 2012 for $900,000. This is equivalent to $6.82 per square foot. Being adjacent to the subject, its location is similar and no location adjustment is required to be made. This sale is substantially larger than the subject. Generally, larger parcels will sell for less on a square foot basis with other factors being similar. Therefore, this sale is adjusted upward for the difference in site size. The topography of this sale and its mostly rectangular shape are similar to the subject. Being located adjacent to the subject, its visibility and access are also similar. The zoning on this parcel was changed just prior to the sale date from Commercial to Residential 4 to accommodate the proposed construction that included some multi-family units. This zoning had no affect on the sale price and no adjustment for zoning is required to be made.

The adjusted value of this sale is $9.21 per square foot. Sale #3971 is located on the west side of Eau Claire approximately four blocks to the northwest of the subject property. It was the site of a vacant site that had been a restaurant property. The improvements were demolished prior to the sale date. This site was purchased for the development medical facility. It sold in February of 2012 for $695,000. This is equivalent to $8.68 per square foot. The subject is located in an area of similar commercial development. No location adjustment is necessary. This sale is larger than the subject and an upward adjustment is made to this sale for this difference.


- 12 -

Other features of this sale that are similar to the subject include its mostly level topography, rectangular shape, similar access and visibility along a service road, and its commercial zoning. No other adjustments are made to this sale. The adjusted value of this sale is $9.55 per square foot. Sale #3857 is located approximately three blocks to the northwest of the subject property. It was the site of a former auto dealership. The improvements were demolished before the sale date. This vacant site property was purchased for the construction of a credit union property. It sold in August of 2011 for $615,000. This is equivalent to $16.35 per square foot. This sale is a corner site with frontage along Craig Road on its west side and along West Clairemont Avenue on its north side. Clairemont Avenue is the major traffic artery traveling through this side of the city in a west/east direction. Craig Road is a secondary artery that is well traveled and connects State Road 37 and Clairemont Avenue. Due to this sale having frontage along both of these streets, its location and visibility are superior to the subject and downward adjustments are made for these differences. This sale is very similar in size to the subject and no size adjustment is made. This sale has mostly level topography and is rectangular in shape. It is zoned Commercial. No adjustments are made for these factors. This sale is a corner site but has access from only one street, Craig Road, so no access adjustment is made.

The adjusted value of this sale is $11.45 per square foot. Sale #4079 is located on the east central side of Eau Claire. It was the site of an older garage property. This property sold in July of 2011 for $250,000. In addition, the buyer demolished the improvements on the property at a cost of $22,000. Therefore, the total sale price of this property including demolition cost was $272,000 which is equivalent to $10.14 per square foot of site size. This property was purchased for the development of a two unit commercial property with one unit now occupied by Caribou Coffee. The location of this sale is in a commercial area that is similar in marketability to the subject and no location adjustment is made. This sale is smaller than the subject, but similar enough in size to the subject that no size adjustment is necessary.


- 13 -

The topography of this sale and its mostly rectangular shape are similar to the subject. Access, zoning, and commercial zoning are also similar and no adjustments are made for these features.

The adjusted value of this sale is $10.14 per square foot.

The adjusted sales indicate a value range of $9.21 to $11.45 per square foot. Sale # 4029 is the most similar in location to the subject. Sales #4029 and #3971 are the most recently sold properties having sold in 2012. Sale #3857 is the most similar in size to the subject. Sale #4079 required the fewest adjustments. The market value of the subject site should fall near the middle of this adjusted value range in my opinion, or $10.25 per square foot. This is shown as follows

Subject: 38,564 sf @ $10.25/sf = $395,281 Round to nearest $1,000................................ $395,000

The market value of the subject property vacant site is estimated at $395,000.

ESTIMATE OF DEMOLITION COSTS FOR SUBJECT PROPERTY:

Marshall and Swift Cost Service was studied to derive an estimate for demolition costs on the subject property. These costs that apply to the subject are as follows:

Building demolition costs for a Class D wood frame building range from approximately $6.80 to $15.60 per square foot. The cost to remove asphalt paving ranges from $0.43 to $0.65 per square foot. The cost to remove reinforced concrete is $1.26 to $2.84 per lineal feet. The cost to remove concrete curbing is $1.79 to $2.26 per square foot.

Based on the above data, and using cost estimates near the middle of the above ranges, the estimated demolition costs for the subject are as follows:

The Building Consisting of 1,534 sf x $11.20................................$17,180 Asphalt Paving – 24,400 sf x $0.55 ............................................$13,420 Concrete Paving – 3,800 sf x $2.00 ............................................ $ 7,600 Concrete Curbing – 120 lf x $2.00 ............................................. $ 240 Total..................................................................................$38,440 Round to nearest $1,000..........................................................$38,000


- 14 -

VALUATION BY COST APPROACH:

Underlying the theory of the Cost Approach to Value is the principle of substitution which suggests that no prudent person will pay more for a property than the amount for which he can obtain, by purchase of a site and construction of improvements without undue delay, a property of equal desirability and utility. Consequently, current reproduction cost, prior to any deduction for accrued depreciation, plus land value, plus entrepreneurial profit, provide a measure against which prices for already improved properties may be judged. For the Cost Approach to produce a valid indication of market value, it is necessary to consider the accrued depreciation evident in the property being appraised due to all causes; physical, functional, and economic.

The steps taken by the appraiser in deriving an indication of value through application of the Cost Approach are:

1. Estimate the value of the land as though vacant and available to be

developed to its highest and best use. 2. Estimate the reproduction or replacement cost of the improvement on the

effective appraisal date. 3. Estimate the amount of accrued depreciation in the improvements,

categorized by three major types: a. Physical Deterioration b. Functional Obsolescence c. Economic Obsolescence 4. Deduct the appropriate estimated depreciation from the reproduction or

replacement cost of the improvements to derive an estimate of the improvements' contribution to total value.

5. Add the depreciated reproduction or replacement cost of the improvements

to obtain an estimated value by the Cost Approach.

Since there are no improvements on the subject of any contributory value, this approach is not done.

VALUATION BY INCOME CAPITALIZATION APPROACH:

Investment property includes real estate which is bought primarily on the basis of the income which is produced. In dealing with such properties, the value tends to be set by the quantity, quality, and durability of the net income to the property.


- 15 -

In the valuation of fee simple rights, the appraiser begins by analyzing the existing and/or most probable gross income at the time of appraisal, plus miscellaneous and net service income, if any. Economic rental is based on prevailing rental rates for comparable space. This may be more or less than the actual or contract rent.

In actual practice, most buildings cannot expect to be fully and continuously occupied. Prudent investors make a deduction for anticipated vacancy and/or collection losses, which leaves an effective gross income. The next claims upon income are the various operating expenses, such as taxes, insurance, administration, utilities, repairs, reserve for replacements, and any other appropriate out-of-pocket expense.

Capitalization is the process of converting net income into value, either by dividing the net income by an appropriate rate, or multiplying it by a factor. There is no single way to capitalize income. The most commonly used methods have variable built-in assumptions.

Various income approaches to value may be used in an appraisal since, if properly used, each analysis helps to explain the characteristics important to real estate investments; and also they help to illustrate how different points of view can still result in similar value estimates. The subject property improvements are of no contributory value. Therefore, the property is not capable of producing a reliable income stream and this approach is not done.

ESTIMATED EXPOSURE AND MARKETING TIME:

The improved property sales indicated that exposure time (i.e., the length of time the subject property would have been exposed for sale in the market had it sold at the market value concluded in this analysis as of the date of this valuation) would have been approximately 6 to 12 months. The estimated marketing time (i.e., the amount of time it would probably take to sell the property if exposed in the market beginning on the date of valuation) is estimated to be three to eight months.

CORRELATION OF VALUE OPINIONS:

Valuation by Cost Approach ......................................................... No estimate Valuation by Sales Comparison Approach ........................................... $395,000 Valuation by Income Approach...................................................... No estimate

Discussion:

The Cost Approach is typically more reliable with new or newer properties. However, the subject property improvements are vacant at this time and considered of no contributory value. Per agreement with the client, this approach is not done.


- 16 -

The Sales Comparison Approach was done on the subject property vacant site. Four vacant commercial sites were found to compare to the subject. They were adjusted for pertinent differences. The market value of the site was arrived at by this approach. The Income Capitalization Approach reflects the thinking of a typical investor. However, the subject property improvements are vacant and have not been operating since December of 2011. Per agreement with the client, this approach was not done.

FINAL OPINION OF VALUE:

In our opinion the market value of the subject property site, not including improvements as of July 23, 2013 is $395,000.

Also, the estimated cost for the demolition of the improvements is $38,000.


- 17 -

ASSUMPTIONS AND LIMITING CONDITIONS

1. The “Scope of Work”, as agreed upon by the client and appraiser, is the work the appraiser performed to develop the assignment results. Please refer to the ”Scope of Work” section of this report.

2. This is a Summary Appraisal Report which is intended to comply with the reporting requirements set forth

under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

3. No responsibility is assumed for legal description, legal or title considerations. Title to the property is

assumed to be good and marketable unless otherwise stated in this report. 4. The property is appraised free and clear of any or all liens and encumbrances unless otherwise stated in this

report. 5. Responsible ownership and competent property management are assumed unless otherwise stated in this

report. 6. The information furnished by others is believed to be reliable. However, no warranty is given for its

accuracy. 7. All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included

only to assist the reader in visualizing the property. 8. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that

render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

9. It is assumed that there is full compliance with all applicable federal, state, and local environmental

regulations and laws unless otherwise stated in this report. 10. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a

nonconformity has been stated, defined, and considered in this appraisal report. 11. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative

authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

12. Any sketch in this report may show approximate dimensions and is included to assist the reader in visualizing

the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.


- 18 -

ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 13. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the

property described and that there is no encroachment or trespass unless otherwise stated in this report. 14. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the

appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process.

15. Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey

having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities Act. The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property's value, marketability, or utility.

16. Any proposed improvements are assumed to be completed in a good workmanlike manner in accordance with

the submitted plans and specifications. 17. The distribution, if any, of the total valuation in this report between land and improvements applies only under

the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

18. Possession of this report, or a copy thereof, does not carry with it the right of publication in whole or in part.

It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser.

19. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the

appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news sales, or other media without prior written consent and approval of the appraiser.

20. The valuation of the property (i.e., Cost Approach, Sales Comparison Approach and Income Capitalization

Approach) is used in the appraisal to value only this property for the intended client. The appraised value, any parts of the appraisal, or valuation process must not be used for any other purpose or reason.

21. The client agrees that the appraisal firm does not by performing the services rendered, assume, abridge,

abrogate, or undertake to discharge any duty of client to any other entity.


- 19 -

ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 22. Any use of the appraisal report, by the client, is conditioned upon payment of all fees in accordance with the

agreed terms. 23. In consideration for performing the services rendered at the fee charged, the appraisal firm expressly limits its

liability to the amount of the fee. The appraisal firm expressly disclaims liability as an insurer or guarantor. Any persons seeking greater protection from loss or damage than is provided for herein, should obtain appropriate insurance. The client shall indemnity and hold harmless the appraisal firm and its employees, against all claims by any third party or any judgment for loss or damage relating to the performance of any services by the appraisal firm.

24. In the future, if the appraisal firm is compelled to produce documents or testify with regard to work

performed, the client shall reimburse appraiser for all costs and expenses incurred. 25. J. C. Norby & Associates, Inc. and/or the appraisers are not qualified to render expert opinions regarding

structural issues, water damage, environmental assessments (such as mold), engineering/mechanical issues, ADA and/or building code compliance, land planning, architectural experts or soil conditions. If requested, J. C. Norby & Associates, Inc. will recommend qualified experts in these fields to assist the client and/or the appraisal process.

26. This appraisal report has been written for the intended use of the client listed in this appraisal. Possession of

this report, or a copy thereof, does not carry with it the right of publication (either in whole or in part), nor may it be used for any purpose other than the one stated in the Letter of Transmittal and the Purpose of the Appraisal, without the express, written consent of the appraiser and client. Authorized copies of this report will be signed by the appraiser(s). Unsigned copies should be considered incomplete. All unauthorized or incomplete copies of this report should also be considered confidential, and as such, must be returned, in their entirety, to J. C. Norby & Associates, Inc.


- 20 -

CERTIFICATION I certify that, to the best of my knowledge and belief:

- The statements of fact contained in this report are true and correct.

- The reported analyses, opinions, and conclusions are limited only by the reported assumptions and

limiting conditions and aremy personal, impartial, and unbiased professional analyses, opinions and conclusions.

- I 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.

- I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

- have no bias with respect to the property that is the subject of this report or to the parties involved with

this assignment.

- My engagement in this assignment was not contingent upon developing or reporting predetermined results.

- My 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.

- My analyses, opinions, and conclusions were developed and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice.

- I have made a personal inspection of the property that is the subject of this report.

- No one provided significant real property appraisal assistance to the person signing this certification.

- The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in

conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

- The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly

authorized representatives.

- As of the date of this report, I have completed the continuing education program of the Appraisal Institute.

___July 26, 2013_____________ Signature Date

Bruce Christ WI Certified General Appraiser #640 Expiration Date: December 14, 2013


- 21 -

CERTIFICATION I certify that, to the best of my knowledge and belief:

- The statements of fact contained in this report are true and correct.

- The reported analyses, opinions, and conclusions are limited only by the reported assumptions and

limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions and conclusions.

- I 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.

- I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

- I have no bias with respect to the property that is the subject of this report or to the parties involved with

this assignment.

- My engagement in this assignment was not contingent upon developing or reporting predetermined results.

- My 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.

- My analyses, opinions, and conclusions were developed and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice.

- I have made a personal inspection of the property that is the subject of this report.

- No one provided significant real property appraisal assistance to the person signing this certification.

- The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in

conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

- The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly

authorized representatives.

- As of the date of this report, I have completed the continuing education program of the Appraisal Institute.

___________________________ ____July 26, 2013______________

Signature Date

James C. Norby, MAI, SRA WI Certified General Appraiser #125 Expiration Date: December 14, 2013


- 22 -

QUALIFICATIONS OF

BRUCE C. CHRIST

J.C. NORBY & ASSOCIATES

EAU CLAIRE, WISCONSIN

EDUCATION: Residential Appraisal - National Association of Real Estate Appraisers - 1988 Farm Appraisal - National Association of Real Estate Appraisers - 1989 S.R.E.A. 101 - Society of Real Estate Appraisers - 1990 An Introduction to Appraising Real Property, Course 101-U of Minnesota - Society of Real Estate Appraisers - 1990 Applied Residential Property Valuation, Course 102 WRA Headquarters, Madison, WI. - Society of Real Estate Appraisers-1991 S.R.E.A 102 - Society of Real Estate Appraisers - 1991 Standards of Professional Practice Part A - Appraisal Institute - 1991 Standards of Professional Practice Part B - Appraisal Institute - 1991 Standards of Professional Practice-WRA Headquarters, Madison, Wisconsin - Appraisal Institute - 1991 Appraisal Three - Income Property Appraisal - 1992 Evaluating Residential Construction - Appraisal Institute - 1993 Feasibility Analysis Highest and Best Use - Residential Properties - Appraisal Institute - 1993 FIRREA: Overview and Practical Application - State of Minnesota, Barret, Slade, MAI, - 1993 Accrued Depreciation - Appraisal Institute - 1993 Appraising Apartments - Appraisal Institute - 1993 How to Prepare the New URAR Form - Prosource Educational Services - 1993 Business Writing for Results - Fred Pryor Seminars - 1994 Residential Appraisal Review - Appraisal Institute - 1995 Industrial Property Valuation - Appraisal Institute - 1995 Appraising Waterfront Property - Chippewa Valley Technical College - 1996 Advance Writing Skills for the Residential Appraiser - Appraisal Institute - 1996 Special Purpose Properties - Appraisal Institute - 1996 Standards of Professional Practice, Part A - 1997 Case Studies in Eminent Domain - WI Right-of-way Association - 1997 Standards of Professional Practice, Part C - Appraisal Institute - 1997 Appraisal of NonConforming Uses - Appraisal Institute - 1999 Automated Valuation Models - McKissock Data Systems - 1999 Appraising 2-4 Family Residential Properties - McKissock Data Systems - 1999 Wisconsin 1999 USPAP Update - Appraisal Institute - 1999 Liability Concerns for Appraisers - Appraisal Institute - 2001 Appraising Water Front Property - Chippewa Valley Technical College - 2001 Underwriting Appraisal Process - Chippewa Valley Technical College - 2001 Commercial Construction - Appraisal Institute - 2003 USPAP Update - Appraisal Institute - 2003 Manufactured Housing - McKissock - 2003 USPAP Update - Prosource - 2004 Subdivision Analysis - Appraisal Institute - 2004 Appraising Conservation Easements - Gathering Waters Conservancy - 2005 Using New URAP & Other Forms - Chippewa Valley Technical College - 2005 What Clients Want Appraisers to Know - Appraisal Institute - 2006 USPAP Update - McKissock Data Systems - 2007 Mortgage Fraud - Chippewa Valley Technical College - 2007 Appraising Odd Ball Properties - McKissock Data Systems - 2007 Appraising Property in Distressed Markets - 2008 National USPAP Update - 2009 Scope of Work - 2009 FNMA A Reporting Market Condition - 2009 Foreclosure & Short Sale - 2009 Commercial Appraisal Engagement and Review - 2010 Analyzing Tenant Risk & Commercial Lease Analysis - 2011


- 23 -

USPAP Update - 2011 Understanding UAD - 2011 Essential Elements of Disclosures and Disclaimers – 2011

MEMBERSHIPS & LICENSES:

State of Wisconsin Certified - General #640 Affiliate Member of the Appraisal Institute Realtor Member - National Association of Realtors Realtor Member - Wisconsin Realtors Association Realtor Member - Northwestern Wisconsin Board of Realtors Wisconsin Licensed Real Estate Broker-since 1979

APPRAISAL EXPERIENCE:

LENDING INSTITUTIONS Bank of Mondovi, United Bank in Osseo, Peoples State Bank of Augusta, State Bank of Arcadia, Bank of Alma, First Financial Bank, London Square Bank, M&I Marshall & Ilsley Bank, Citizens Community Federal, AnchorBank, Superior Home Mortgage, Charter Bank of Eau Claire, Firstar Bank of Eau Claire, MONYCOR Savings, First Federal Savings Bank of LaCrosse, First Federal Bank of Eau Claire, ITT Financial Services, Royal Credit Union, Wells Fargo Bank, Security National Bank of Durand, Westconsin Credit Union, FMHA in Buffalo, and Trempealeau Counties, Northern Investment Company, PHH Mortgage, Valley Bank, Preferred Mortgage Company, TransAmerica Financial Services, North Star Title, Amlend, Central States Mortgage, Farm Credit Services, Peoples National Bank, State Bank of Independence, Pigeon Falls State Bank, First Bank & Trust, Loan Source, Liberty State Bank, Rural Development and Bank Mutual.

RELOCATION COMPANIES

Relocation Resources, Coldwell Banker Relocation Company, Boatman Relocation, Relocation Funding Corp. of America, Plus Relocation, PHH Homequity, State Farm Relocation Company.

GOVERNMENTAL BODIES

Eau Claire County, City of Altoona, City of Eau Claire, City of Mondovi, Department of Veteran's Affairs, State of Wisconsin, Wisconsin Dept of Transportation and Wisconsin Department of Natural Resources.

PAST AND PRESENT EMPLOYMENT: Northern Investment Company, Independence and Mondovi, WI, 1978-1990. Duties included clerking auctions, personal property and real estate appraisals, real estate broker, personal property and real estate loans. Christ Realty, Inc., Mondovi, WI, 1987 - Present. Real estate appraisals. J.C. Norby & Associates, Eau Claire, WI, April 1991-Present. Real estate appraisals.


- 24 -

QUALIFICATIONS OF JAMES C. NORBY, MAI, SRA

Specialization in Real Estate Valuation & Consultation Wisconsin Certified General #125

PRESIDENT - J.C. NORBY & ASSOCIATES, INC. Member - Appraisal Institute (MAI & SRA) Member - International Right-of-Way Association Realtor Member - Eau Claire-Chippewa Board of Realtors and National Association of Realtors Chairman - American Institute of Real Estate Appraisers - Subchapter - 1987 & 1988 Ethics and Counseling Regional Panel Member - Appraisal Institute Professional Standards Regional Panel Member - Appraisal Institute Appraisal Institute - Subchapter Task Force - 1997 Appraisal Institute - State Board Member 1999 - 2002 Appointed - Eau Claire County Condemnation Commissioner - 2001 to present Has lectured on appraisal practices at University of Wisconsin-Eau Claire, District One Technical College, International Right-of-Way Association, Wisconsin Assessors Association, and various organizations. Published information newsletter to Banks, Credit Unions and other interested associates. Has Appraised For:

LENDING INSTITUTIONS First National Bank, Hudson Landmark Bank, Hudson First Fifth Bank US Bank - Eau Claire & Milwaukee State Bank of Medford, Medford Associated Bank Wells Fargo Bank, Eau Claire, Minneapolis American Bank, Wisconsin Bremer Bank London Square Bank, Eau Claire Wisconsin Business Bank Superior Bank, Wisconsin Royal Credit Union, Eau Claire Anchor Savings Bank Peoples Bank of Wisconsin First Tennessee Bank, Memphis, TN First National Bank Peoples State Bank Citizens Community Federal Valley Bank, Menomonie Bank of Augusta State Bank of Fall Creek Bank of Alma Bank Mutual First Bank & Trust, Menomonie BMO, Harris Bank of New England Charter Bank, Eau Claire Telco Credit Union Bank of Alma First Federal Capital Bank Citizens State Bank

GOVERNMENTAL BODIES Resolution Trust Corporation City of Eau Claire Chippewa County Department of Natural Resources City of Rice Lake St. Croix County Dept. of Veterans Affairs, State of Wisconsin City of Menomonie Barron County Small Business Administration City of River Falls Pierce County University of Wisconsin System City of Altoona Eau Claire County Wisconsin Housing Finance Authority City of Chippewa Falls Dunn County Wisconsin Department of Transportation City of Hudson Bureau of the Census Wisconsin Business Development Finance Corp. Department FNMA Wisconsin Department of Justice (DOJ)

MAJOR CORPORATIONS

Equitable Relocation Management Corporation Imperial Clevite Company Miles Homes Chicago & Northwestern Transportation Company Ayres & Associates Executrans, Inc. AVCO Financial Services YMCA of Chicago Land O'Lakes Homequity Relocation Company I.T.T. Financial Services Texaco, Inc. Prudential Relocation Company Wisconsin Gas Company Uniroyal Wisconsin Telephone Company Sunmark Industries Cray Research Prudential Insurance Company Grace Lutheran Foundation ConAgra Corporation Transamerica Corporation Flambeau Mining Company Dairyland Power Employee Transfer Corporation Luther-Midelfort Hospital Sacred Heart Hospital Evans Financial Corporation Excel Energy Prepared Feasibility Studies for various types of properties Testified as an Expert Witness in Federal, State and County Courts

Published Real Estate studies Interviewed on Real Estate matters Reviewed Appraisals for Wisconsin Department of Regulation & Licensing The MAI & SRA designations of the Appraisal Institute are awarded to individuals only after meeting extensive educational requirements, numerous examinations, experience ratings and appraisal reviews by peers.

Documents

APPRAISAL REPORT ON EAU CLAIRE, WISCONSINimages-s3.bid4assets.com/info/assetid643186/315515.pdfAPPRAISAL REPORT ON 2831 HENDRICKSON DRIVE EAU CLAIRE, WISCONSIN BRUCE CHRIST J.C. NORBY