Kitsap County Assessor Narrative for Area 5 - Bremerton and Central Kitsap East

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1 Kitsap County Assessor arrative for Area 5 - Bremerton and Central Kitsap East Appraisal Date 1/1/2015 Tax ear 2016 Property Type: Apartment Updated 10/27/2015 by CM20 Area Overview Area 5 encompasses downtown Bremerton, East Bremerton, West Bremerton, Highway 303 from Riddell to Waaga Way, Auto Center, and commercial sites located in Tracyton, Fairgrounds, and Illahee. Area 5 has 60 parcels developed with apartment buildings. Apartments are found in the following neighborhoods: , , , , , , , , , , , Property Type Overview Apartment buildings are comprised of multiple self-contained housing units. High-rise apartments have three or more floors and generally have interior hallway access to units and elevators. Garden apartments are low-rise apartment buildings, are typically designed with three or fewer floors, and generally have exterior access from a shared stairway. Apartment units occupy one level, while a townhouse configuration is multiple levels. The apartment complex can contain multiple buildings with additional features such as: landscaping, playgrounds, dog parks, garages, carports, clubhouses, swimming pools, tennis courts or sports courts, business centers, media rooms, or community rooms. The majority of apartment complexes in Bremerton, 50 parcels out of 60, were built since The three decades of the 70's, 80's, and 90's saw the development of 38 parcels into apartment complexes, mainly garden apartments. Three projects have been built since Land to Building Ratio: The national land to building ratio for this property type is 2-4:1. The countywide land to building ratio for this property type is: n/a. The land to building ratio is used to determine excess or surplus land. Review of zoning requirements such as total lot coverage or parking requirements, as well as topography and easements, must also be considered before calculating value for this land. Apartment complexes are typically developed to the highest allowable ratio. Economic Overview: The market for apartments appears to be improving. Vacancy is low, and sales are increasing. ew construction of apartment complexes in Area 5 has been very limited but new projects are currently under construction. Valuation Summary Approach Used: Income Analysis The threeand approaches Conclusion to value Summary: were considered. The cost approach was given little consideration in the appraiser's final analysis. Cost approach components such as replacement cost new, effective age, and depreciation are difficult to accurately calculate in a mass appraisal model. A market/sales comparison approach uses sale prices of comparable properties to calculate value. The market/sales approach was not applied as Kitsap County lacks sufficient, recent sales. The income approach was selected as the best method for valuing these properties. The data used to develop our current model data was collected from our mail survey, site visits, local sales, national publications, and data supplied for review or appeal. Model Calibration Preliminary Ratio Analysis: Analysis of 4 sales resulted in a mean ratio of 74%, a median ratio of 72%, and a coefficient of disperson (COD) of 12.33%.

2 Kitsap County Assessor arrative for Area 5 - Bremerton and Central Kitsap East Appraisal Date 1/1/2015 Tax ear 2016 Property Type: Apartment Updated 10/27/2015 by CM20 /Sales Comparison Approach Data and Analysis Sales: Range of Sale Dates: 1/1/2012 to 3/31/2015. A total of 4 local sales, and 0 regional sales, and 0 national sales were used in the sales analysis. Additional information is provided on the sales analysis data sheet. Text231 Kitsap County attempts to review, analyze, and validate via telephone, mail, or in person interviews, all commercial sales within the county for inclusion or exclusion in our market/sales approach. /Sales Rates: Sales ranged from $45,900 to $70,000 per units. There were insufficient sales to develop a market approach. Income Approach and Data Analysis Values were calculated using a full service income model. Income and expense information was collected from mailed surveys, property representatives, on-site visits, and market research (publications, newsletters, websites, etc.) Analysis of rents indicated an adjustment for townhouse and duplex style units was required. An increase of 15% has been applied to the townhouse and duplex population. Vacancy across the entire population was low, the model uses 5% to 10%. Expenses are reviewed locally and countywide. Typical expenses range between 45% and 55% and fall in line with industry standards. Data: The Assessor validated rents from 48% of the market. Typical reported rents had a range of $5,520 to $18,000. We selected $5,015 to $14,352 for our model. Vacancy Data: Typical reported vacancy had a range of 0% to 50%. We selected 5% to 10% for our model. Expense Data: Sources Typical reported expense had a range of 30% to 61%. We selected 45% to 55% for our model. Capitalization Rate (Cap) Data: Typical sale cap rates ranged from 5.25% to 11.34%. We selected 6.5% to 8.5% for our model. Cap rates calculated from Kitsap County countywide apartment sales ranged between 5.25% and 11.34% with a median of 7.29%. Review of national publications reflected a range between 4.50% and %. ational publications were reviewed and emphasis was placed on information relevant to the west or Pacific region, or the Seattle/Tacoma/Kitsap areas. Income Model Value Range: units. Model Validation Final Ratio Analysis: Analysis of 4 sales resulted in a mean ratio of 97%, a median ratio of 98%, and a coefficient of disperson (COD) of 4.39%. Kitsap County Board of Equalization appeal documentation. Washington State Board of Tax appeal documentation. Kitsap County income and expense surveys. Kitsap County sales questionaires. The income approach calculates a range of values from $29205 to $ per The Dictionary of Real Estate Appraisal, Appraisal Institute, Third Edition, 1993

3 Kitsap County Assessor arrative for Area 5 - Bremerton and Central Kitsap East Appraisal Date 1/1/2015 Tax ear 2016 Property Type: Apartment Updated 10/27/2015 by CM20 Property Appraisal and Assessment Administration, IAAO, 1990 Glossary for Property Appraisal and Assessment, IAAO,1997 Loopet -loopnet.com Commercial Brokers Association -commercialmls.com Apartment Insights Washington - 3rd Quarter 2014 Tacoma Kitsap CBRE - 1st Half 2014 Survey - Multifamily Suburban Seattle Class B & Class C Dupre + Scott - Spring Kitsap Integra Realty Resources Mid-ear Viewpoint - Seattle Multi-Family Suburban Class B Kidder Mathews - 3rd Quarter Seattle Apartment Marcus & Millichap ational Apartment Report - Seattle-Tacoma ational Apartment Association Survey Operating Income & Expenses - Garden Properties PWC-Korpacz - First Quarter Pacific Region Apartments Realty Rates - 4th Quarter 2014 Survey ationwide - Class A & B Apartments 90+ Units

4 Apartment Model Definition APARTMET AMEITIES PROJECT AMEITIES AREA Class Land Influence Condition Effective Age Amenities Duplex/Townhouse Configuration Elevator Fireplace Dishwasher Garbage Disposal Microwave Internet Quality Finishes Indoor-Pool Outdoor-Pool Sauna/Spa Tennis or Racket Clubhouse Fitness Bus Center Media Room W/D in Unit Shared Laundry Extra Storage for Garages Carports Extra Parking Play Areas Pets Close in Location Waterfront or Views A B C D E ice views or waterfront, quiet neighborhood Some views, minimal/no traffic noise Average neighborhood, light traffic noise Declining neighborhood, moderate traffic noise ew or recently updatedwindows replaced, updated wiring/plumbing, modern interior, good paint & floor coverings Updated/well maintained, functional, good paint & floor coverings Functional, somewhat dated, minimal repairs needed Dated, limited updating, some repairs needed 0-10 years years years years Garage, storage area, washer/dryer in unit, dishwasher, pool, sauna, fitness center, business center, media room Covered parking, washer/dryer in unit, fitness center, outdoor pool, sauna Covered parking or ample open parking area, shared laundry, small fitness center Limited parking, shared laundry, no exterior common areas Blighted Limited parking, small shared Dated, functional problems, very neighborhood, much 50+ years or no laundry facility. o original, needs repairs traffic noise exterior common areas If all else is equal, but the configuration is a duplex or townhouse, consider increasing one grade. Count manager's unit in the income stream. Small projects (in the range of 20 units or less) with limited interior and no exterior or common area amenities, move to multifamily model. Age restricted apartments may have limited exterior amenities, but many interior amenities including hair salons and mini-marts. Multi-story age restricted apartments SHOULD have an elevator. If not, consider dropping upper units a grade. Check unit size and rents per unit. A 18+ B C D <10 E <10 Check effective age & maintenance Check effective age & maintenance May have deferred maintenance

5 Income Model: Property Type: eighborhood: Apartment All Area 5 eighborhoods Studio/0br 1Br/1 2Br/1 2Br/2 3br 4br Class A 10, , , , , Class B 8, ,43 10, , , Class C 8, , , , , Class D 6, , , , , Class E 5,01 7, , , , /27/2015

6 Local Income Survey Property Type: Apartment A Studio $7, % $7, % $5, % $4, % OI per Unit $4, $2, A 1Br/1 $9, % $9, % $9, % $8, % $8, % $8, % $8, % $7, % $8, % $8, % $8, % $8, % $8, % $8, % $8, % $7, % $8, % $6, % $8, % $6, % $7, % $7, % $7, % $7, % $7, % $7,4 30% $7, % $6, % $7, % $6, % $7, % $7, % $6, % $6, % $5, % $5, % $5, % $5, % OI per Unit $6, $5, $3, $4, $5, $4, $4, $5, $3, $3, $7, $2, $5, $4, $4, $7, $3, $3, $2,480.54

7 Local Income Survey A 2Br/1 $10, % $9, % $10, % $9, % $9, % $9, % $9, % $9, % $9, % $8, % $9, % $7, % $9, % $7, % $9, % $8, % $9, % $7, % $9, % $7,90 52% $9, % $8, % $8, % $8, % $8, % $7, % $8, % $8, % $8, % $7, % $7, % $7, % $7, % $7, % 0% 50% 5% 46% OI per Unit $5, $5, $6, $6, $5, $4, $4, $6, $3, $3, $8, $4, $3, $8, $4, $3, $4,853.55

8 Local Income Survey A 2Br/2 $10, % $9, % $10, % $10, % $9,4 7% $8,78 0% $9, % $8, % $8, % $7, % OI per Unit $5, $10, $8, $3, $4, Local Income Survey A 3Br $12, % $11, % $11, % $9, % $9, % $8, % $9, % $4, % $9, % $7, % OI per Unit $6, $6, $3, $4, $3,765.56

9 Tax ear 2016 Apartments Sales from 01/1/ /31/2015 o. eighborhood PC Account umber Project ame Units Excise VC Sales Date Sale Price 2016 Assessed Value Ratio $ $ 2,208,250 96% OLMPIC COURT WEST APTS EX07253 V 12/07/12 2,300, Bayview West Apts $ 1,260,510 & (parking) $ 27, EX02293 W 04/15/13 $ 1,297,600 99% Pacific Terrace Apartments EX02099 V 04/09/14 $ 1,065,000 $ 1,092, % Marion Court Apartments EX06773 V 10/13/14 $ 2,450,000 $ 2,168,650 89% VC Count: Validity Code 4 V Lowest: Valid 89% W Highest: With other property 103% PC Mean Property Ratio: Class 97% 134 Average Units Dev: C.O.D Units Units 460 Parking eighborhood West Bremerton West Bremerton Uplands Cit-COM Median Ratio: 98%