APPRAISAL REPORT OF ACRES OWNED BY STATE OF SOUTH DAKOTA LOCATED AT 209 EXPERIMENT FARM ROAD HIGHMORE, SOUTH DAKOTA CONTROL NUMBER

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1 APPRAISAL REPORT OF ACRES OWNED BY STATE OF SOUTH DAKOTA LOCATED AT 209 EXPERIMENT FARM ROAD HIGHMORE, SOUTH DAKOTA CONTROL NUMBER CLIENT SOUTH DAKOTA OFFICE OF SCHOOL AND PUBLIC LANDS ATTN: MR. RYAN BRUNNER 500 EAST CAPITOL AVENUE PIERRE, SOUTH DAKOTA DATE OF VALUE DECEMBER 13, 2018 BY SHAYKETT APPRAISAL COMPANY, INC. 601 NORTH MINNESOTA AVENUE, SUITE 100 SIOUX FALLS, SOUTH DAKOTA (605)

2 Shaykett Appraisal Company, Inc. 601 N. Minnesota Avenue, Suite 100 Sioux Falls, South Dakota Phone (605) Fax (605) Travis E. Shaykett Steven C. Shaykett, MAI George P. Stavrenos State Certified General Appraiser State Certified General Appraiser State Certified General Appraiser December 31, 2018 South Dakota Office of School and Public Lands Attn: Mr. Ryan Brunner 500 East Capitol Avenue Pierre, South Dakota RE: Appraisal Report of Acres Owned by State of South Dakota Located At 209 Experiment Farm Road Highmore, South Dakota Control # Dear Mr. Brunner: In accordance with your request, I have prepared an Appraisal Report of the above referenced property. Purpose of the appraisal is to estimate the as is fee simple estate market value of the subject property as of December 13, Intended use of the appraisal is to assist in the disposal of the property. After viewing the subject property on October 24, 2018 and December 13, 2018, as well as completing research and analysis necessary for the appraisal of the property, it is my opinion that the as is fee simple estate market value of the subject property as of December 13, 2018 was $400,500. FOUR HUNDRED THOUSAND FIVE HUNDRED DOLLARS Analysis of the subject property and the data on which the appraiser s opinions are based are set forth in the following report. Appraisal has been made in conformity with generally accepted appraisal practices in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisal is subject to all assumptions, limiting conditions, and other special limiting conditions as set forth in this report, or as specifically presented below, if any.

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4 LIMITING CONDITIONS This appraisal report and the letter of transmittal and the certification of value are made expressly subject to the following limiting conditions, and any special limiting conditions contained elsewhere which are incorporated herein by reference. 1. This appraisal is subject to the accuracy of the legal description furnished the appraiser; however, I can assume no responsibility for matters legal in nature, nor can I render an opinion as to the title. 2. The distribution of the total valuation between land and improvements applied only under the existing program of utilization. The separate valuations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 3. I believe the information which was furnished to me by others is reliable, but I assume no responsibility for its accuracy. The comparable data relied upon in this appraisal is believed to be from reliable sources. However, it was not possible to view the comparables completely and it was necessary to rely on the information furnished by others as to said data. Therefore, the value conclusions are subject to the correctness of said data. 4. Unless otherwise indicated, all existing liens and encumbrances have been disregarded and the property is appraised as though it were free and clear of any such impediments that might affect value. The property is appraised as though it were under responsible ownership and competent management. 5. Subsurface rights (minerals and oil) were considered as they may contribute to the value of the surface rights unless otherwise indicated. 6. All furnishings and equipment, except those specifically indicated, have been disregarded by the appraiser. Only the real estate has been considered. 7. The appraiser has viewed, as far as possible, by observation, the land and the improvements thereon and has reported damage, if any, by termites, dry rot, wet rot, or other infestations as a matter of information. However, it was not possible to personally observe conditions beneath the soil or hidden structural components within the improvements. Viewing by the appraiser does not guarantee the lack of the presence of any hazardous materials, gases, or other materials which could be considered to pollute the environs of the subject property. Therefore, no representations are made herein as to these matters and unless specifically considered in the report, my value estimate is subject to any such conditions that could cause a loss in value. 8. Any sketches in this report are included to assist the reader in visualizing the property. I have made no survey of the property and assume no responsibility in connection with such matters.

5 LIMITING CONDITIONS 9. I am not required to give testimony or to appear in court by reason of this appraisal with reference to the property in question unless arrangements have been previously made therefore. 10. Possession of this report or a copy thereof does not carry with it the right of publication. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media, nor for any purpose, without the written consent and approval of the appraiser, particularly as to valuation conclusions, the identity of the appraiser or firm with which he is connected, or any reference to the Appraisal Institute or to the MAI designation. 11. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless non-compliance is stated, defined and considered in the appraisal report. 12. The appraiser is not aware of the presence of soil contamination on the subject property, unless otherwise noted in this appraisal report. The effect upon market value, due to contamination was not considered in this appraisal, unless otherwise stated. 13. The appraiser is not aware of the presence of asbestos or other toxic contaminants in the building(s), unless otherwise noted in this report. The effect upon market value, due to contamination was not considered in this appraisal, unless otherwise stated. 14. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. 15. The appraisal is subject to any proposed improvements or additions being completed as set forth in the plans, specifications, and representations referred to in the report, and all work being performed in a good and workmanlike manner. The appraisal is further subject to the proposed improvements or additions being constructed in accordance with the regulations of the local, county, and state authorities. The plans, specifications, and representations referred to are an integral part of the appraisal report when new construction or additions, renovation, refurbishing, or remodeling applies.

6 LIMITING CONDITIONS 16. The limit of liability of the appraiser or Shaykett Appraisal Company, Inc. is limited to the client only and to the amount of the fee received. Further there is no accountability, obligation or liability to any third party. If this report is placed in the hands of anyone other than the client, the client shall make such party aware of all limiting conditions and assumptions of this assignment. The appraiser is also in no way responsible for the costs to correct any physical, economic, legal or any other deficiencies of the property. In the case of any third party actions brought against the client, the client will hold the appraiser completely harmless. 17. The Americans with Disabilities Act ("ADA") became effective January 26, The appraiser has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA in estimating the value of the property has not been considered. 18. Provision of an Insurable Value by the appraiser does not change the intended user or the intended purpose of the appraisal. The appraiser assumes no liability for the Insurable Value estimate provided and does not guarantee that any estimate or opinion will result in the subject property being fully insured for any possible loss that may be sustained. The appraiser recommends that an insurance professional be consulted. The Insurable Value estimate may not be a reliable indication of replacement or reproduction cost for any date other than the effective date of this appraisal due to changing costs of labor and materials and due to changing building codes and governmental regulations and requirements.

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8 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Location: 209 Experiment Farm Road Highmore, South Dakota Latitude & Longitude: Approximate Center of Property (Decimal Degrees) , Owner of Record: Property Rights Appraised: Land Area: Description of the Property: Zoning: State of South Dakota Fee Simple Estate Acres The property is agricultural land, used by South Dakota State University for agriculture research. Improvements consist of one single family home and seven outbuildings. None Effective Date of Value: December 13, 2018 Highest and Best Use: Agriculture and Residential Fee Simple Estate Market Value: Sales Comparison Approach Summary: ****** VALUATION SUMMARY ****** West Farmstead House and 5.3 Acres $ 75,500 East Farmstead Seven Buildings and 4.7 Acres $ 90,000 Agriculture Land Acres $235,000 Total - $400,500 Final Estimate of Market Value $400,500

9 TABLE OF CONTENTS LETTER OF TRANSMITTAL LIMITING CONDITIONS APPRAISER CERTIFICATIONS SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS IDENTIFICATION OF THE PROPERTY 1 CLIENT AND INTENDED USER 1 PURPOSE AND INTENDED USE OF THE APPRAISAL 1 PLAT MAP 2 APPRAISAL REPORT OPTION 3 DATE OF VALUE AND DATE OF THE REPORT 3 DEFINITION OF MARKET VALUE 3 PROPERTY RIGHTS APPRAISED 3 PERSONAL PROPERTY 3 INTANGIBLE PROPERTY 4 HYPOTHETICAL CONDITION 4 EXTRAORDINARY ASSUMPTION 4 SCOPE OF WORK 5 AREA AND NEIGHBORHOOD DATA 7 MARKET CONDITIONS 12 NEIGHBORHOOD MAP 16 NEIGHBORHOOD AERIAL 17 ZONING 18 ASSESSMENT INFORMATION AND TAX DATA 19 PROPERTY DESCRIPTION 20 PROPERTY AERIAL 24

10 TABLE OF CONTENTS SOIL MAP 25 HIGHEST AND BEST USE 27 SALES COMPARISON APPROACH 30 RECONCILIATION AND FINAL ESTIMATE OF MARKET VALUE 38 APPRAISER QUALIFICATIONS 39 COMPARABLE SALES MAP(S) COMPARABLE LAND SALE WRITE-UPS EXHIBITS: 1 Photographs of Subject Property 2 Land Adjustments ****** ADDENDA ******

11 IDENTIFICATION OF THE PROPERTY APPRAISAL REPORT LEGAL DESCRIPTION: Legal description of the subject property, as provided by the client, is as follows. All of that part of the Northwest Quarter of Section 11 in Township 112 North of Range 72, West of the 5 th P.M., lying North of the right of way of the Chicago and Northwestern Railway and containing acres. LESS Lot H-1 in the Northwest Quarter of Section 11, Township 112 North, Range 72, West of the 5 th P.M., Hyde County, South Dakota, as shown by plat made by H.C. Rempfer, Registered Land Surveyor, under date of October 30, 1950, which plat is now on file in the office of the Register of Deeds, Hyde County, South Dakota. Said Lot H-1 contains 3.26 acres, more or less. Parcel assessment map from the Hyde County website can be found on the following page with subject shaded in yellow. LOCATION: Subject property is located at 209 Experiment Farm Road, Highmore, South Dakota. The property is next to, but not located within the City of Highmore. Property will be discussed in greater detail in later sections SITE AND IMPROVEMENTS: The property is agricultural land, used by South Dakota State University for agriculture research. Improvements consist of one single family home and seven outbuildings. OWNERSHIP AND HISTORY: Subject property has been under the ownership of the State of South Dakota for more than three years. CLIENT AND INTENDED USER Client and intended user of the appraisal is Mr. Ryan Brunner and South Dakota Office of School and Public Lands. PURPOSE AND INTENDED USE OF THE APPRAISAL Purpose of the appraisal is to estimate the as is fee simple estate market value of the subject property as of December 13, Intended use of the appraisal is to assist in the disposal of the property. 1

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13 APPRAISAL REPORT OPTION Appraisal is presented in an Appraisal Report format in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). DATE OF VALUE AND DATE OF THE REPORT Effective date of value is December 13, 2018, the date the subject property was last viewed by Mr. Steven C. Shaykett, MAI, State Certified General Appraiser. Date of the appraisal report is the date stated on the Appraiser Certifications. DEFINITION OF MARKET VALUE Definition of market value, as used in this report, is taken from The Dictionary of Real Estate Appraisal, 6 th Edition, published in 2015 at page 141, and reads as follows: Market Value. The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress. PROPERTY RIGHTS APPRAISED Property rights appraised are fee simple estate. Outstanding liens, mortgages, easements or other types of encumbrances are considered, but not separately addressed, unless stated elsewhere in the report. Definition of fee simple estate, as used in this report, is taken from The Dictionary of Real Estate Appraisal, 6 th Edition, published in 2015 at page 90. Fee Simple Estate. 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. PERSONAL PROPERTY Typically, personal property is not included in the value of real estate. Definition of personal property is as follows: Personal Property. Identifiable tangible objects that are considered by the general public as being "personal" - for example, furnishings, artwork, antiques, gems and jewelry, collectibles, machinery and equipment; all tangible property that is not classified as real estate. (USPAP, Edition) There is no personal property included in the final value estimate. 3

14 INTANGIBLE PROPERTY Typically, intangible property is not included in the value of real estate. Definition of intangible property is as follows: Intangible Property (Intangible Assets). Nonphysical assets, including but not limited to franchises, trademarks, patents, copyrights, goodwill, equities, securities, and contracts as distinguished from physical assets such as facilities and equipment. (USPAP, Edition) There is no intangible property included in the final value estimate. HYPOTHETICAL CONDITION Hypothetical conditions are contrary to what exists. Definition of hypothetical conditions is as follows: Hypothetical Condition. A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. (USPAP, Edition) Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. There are no hypothetical conditions in this appraisal report. EXTRAORDINARY ASSUMPTION Extraordinary assumptions presume uncertain information to be factual. Definition of extraordinary assumptions is as follows: Extraordinary Assumption. An assignment-specific assumption, as of the effective date regarding uncertain information used in an analysis, which, if found to be false, could alter the appraiser s opinions or conclusions. (USPAP, ed.) Comment: Uncertain information might include physical, legal, or economic characteristics of the subject property; or conditions external to the property, such as market conditions or trends; or the integrity of data used in an analysis. There are no extraordinary assumptions in this appraisal. 4

15 SCOPE OF WORK The estimate of market value of a property usually calls for the employment of three approaches to value. These approaches to value are identified as follows: Cost Approach Income Capitalization Approach Sales Comparison Approach In the Cost Approach, the appraiser estimates the new replacement cost of the improvements. A deduction is made for depreciation due to wear and tear, design and plan, and neighborhood defects. The value of the land, which is estimated by direct comparison with similar vacant sites, is then added to the depreciated cost of the improvements. In the Income Capitalization Approach, the appraiser estimates the market rent, sometimes known as economic rent, from rents found in the market from similar properties. Next, there is a deduction for operating expenses to arrive at the net operating income. The net operating income is then capitalized into a value indication by means of one or more capitalization methods with data taken from the market. In the Sales Comparison Approach, the appraiser compares the subject property on a similar unit of comparison with similar sale properties. Adjustments are made for all factors of dissimilarity recognized by the market. All known sales were considered and used to develop market adjustments; however, the appraiser relied on only those considered to be most similar to the property appraised. After a thorough analysis, the data is then correlated into a final value estimate by this approach. The appraiser then correlates the indicated value estimates of the three approaches into a final value estimate. Consideration is given to the relative strengths and weaknesses of each approach, giving the most weight to the approach most commonly used by typical purchasers for the type of property appraised. Scope of work for this appraisal assignment includes the development of the Sales Comparison Approach as the agriculture land is unimproved and the subject property buildings are of age that the Cost Approach is not typically considered by potential buyers. Also, neither the agriculture land or the farmstead improvements are predominately purchased based on investment bases, so the Income Capitalization Approach is not deemed relevant. As part of this appraisal, the appraiser has made a number of independent investigations and analysis specific to this appraisal based on data developed during the appraisal and also on data files maintained in the appraiser s office and updated on an ongoing basis. 5

16 SCOPE OF WORK Research undertaken and the major data sources used are discussed in the following paragraphs. Property Description and Analysis: Appraiser obtained pertinent information from the client, the City of Highmore, and the Hyde County Assessor s Office relating to the subject property as needed. Hyde County Courthouse records were reviewed by the appraiser for a history of transactions relating to the subject property for a period for more than three years. Subject property was viewed by Mr. Steven C. Shaykett on October 24, 2018 and again on December 13, Photographs of the subject property and the surrounding area were taken on October 24, Market Data Program: Appraiser obtained data on comparable agriculture sales and sales of single family homes by researching sales occurring within the last three years which were similar in use and located in the subject area. Appraiser obtained copies of deeds from the county courthouses and attempted to contact the buyers, sellers, or others knowledgeable, to verify transaction data. Details of the verified sales are included in the Addenda. Correlation and Final Value Estimate: Upon completion of all the steps to gather and analyze data, a review of the value indications is made and a final value estimate conclusion. 6

17 AREA AND NEIGHBORHOOD DATA Purpose of the area and neighborhood analysis is to review information on the social, governmental, and economic forces of the local economy, and the expectations for the future. Appraisers have made a review of the relevant data for Highmore, the county seat and local trade center for Hyde County, South Dakota. Comparison will include a review of demographic and economic data for surrounding and competitive market areas, including Kingsbury County, Hand County, Spink County, and Beadle County. A map of South Dakota can be found on the following page. Social forces include population trends and the age distribution of that population. POPULATION TRENDS: Table 1 illustrates the changes in population for Highmore, Hyde County, the comparison counties, and the state. None of the counties showed an increase in population from 2000 to 2010, except for Beadle County, which showed a 2.20 percent increase. Hyde County had the largest decrease at percent, followed by Spink County with a decrease of percent, Kingsbury County with a decrease of percent, and Hand County with a decrease of 8.29 percent. Highmore had a decline in population from 1980 to 1990, but between 1990 and 2000 showed an increase in population of 1.92 percent, then decreased by 6.58 percent from 2000 to Population for 2010 was only 795 persons, which is lower than the 2000 population and shows this decrease in population. The state showed an increase in population of 7.86 percent from 2000 to COMMUNITY/ COUNTY TABLE 1 ~ POPULATION COMPARISONS (%) CHANGE (%) CHANGE (%) CHANGE Hyde County 2,515 2,069 1,696 1,671 1, % -1.47% % Highmore 1,173 1, % 1.92% -6.58% Kingsbury County 7,657 6,679 5,925 5,815 5, % -1.86% % Hand County 5,883 4,948 4,272 3,741 3, % % -8.29% Spink County 10,595 9,201 7,981 7,454 6, % -6.60% % Beadle County 20,877 19,195 18,253 17,023 17, % -6.74% 2.20% South Dakota 665, , , , , % 8.45% 7.86% SOURCE: U.S. Census Bureau Population Conclusion: Hyde County and all comparison counties experienced a decrease in population from 2000 to 2010, except for Beadle County, which had a 2.20 percent increase. Highmore experienced decline from 1980 to 1990, with population gaining slightly between 1990 and 2000, then falling between 2000 and Rural areas show a decline in population mostly due to young people moving to larger towns or out-of-state to seek education and employment opportunities. The factor with the greatest effect on the future population growth will be the capacity of the local communities to provide employment opportunities for the local population or to draw people into the area with new employment opportunities. 7

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19 AREA AND NEIGHBORHOOD DATA ECONOMIC FORCES: Economic forces include employment trends, median household income, retail sales, and housing starts. Employment Trends: Table 2 illustrates employment from 2010 to 2017 for Hyde County and the State. TABLE 2 TOTAL NON-AG WAGE AND SALARY EMPLOYMENT TOTAL CHANGE According to Tara from the City of Highmore, the leading employers for Highmore are Venture Communications, Titan Machinery, North Central Farmers Elevator, Highmore Healthcare, and Highmore-Harrold School. Employment Conclusion: Hyde County experienced a decline in employment from 2010 through Employment shifts from manufacturing, wholesale and retail trade, leisure and hospitality, and government to natural resources and construction, and transportation/warehousing/utilities have absorbed many of these employees. Growth in employment is essential to the population reaching the employment age. Highmore has shown steady population decline. If the city and county do not provide adequate employment opportunities, they will suffer further loss in population. Loss in population will occur as people seek alternative locations with better education and economic opportunity. Unemployment: Unemployment rates are a good indicator of the health of the local economy, as evidenced by Table 3. Higher unemployment rates mean less money which can be spent in the local economy and affects all areas of economic growth. Hyde County s unemployment has steadily improved since the seven year high in 2011 of 3.7 percent. In 2017, the latest full year reported, the average unemployment rate was 3.2 percent, which is below the state average unemployment rate. An unemployment rate of around 5.0 percent is typically indicative of a healthy economy. TABLE 3 UNEMPLOYMENT RATES 9 ANNUAL CHANGE Hyde County % -1.64% South Dakota 441, , , , , , , , % 0.39% Source: SD Department of Labor Community 2011 Average 2012 Average 2013 Average 2014 Average 2015 Average 2016 Average 2017 Average Change Hyde County 3.7% 3.5% 3.3% 2.8% 3.0% 2.7% 3.2% -13.5% Kingsbury County 4.4% 3.6% 3.2% 3.9% 3.0% 2.6% 3.2% -27.3% Hand County 3.3% 3.1% 2.8% 2.6% 2.4% 2.1% 2.5% -24.2% Spink County 4.2% 4.1% 3.6% 3.5% 3.1% 3.1% 3.5% -16.7% Beadle County 3.8% 3.5% 3.5% 3.1% 2.7% 2.6% 2.9% -23.7% South Dakota 4.7% 4.3% 3.8% 3.4% 3.1% 3.0% 3.3% -29.8% Source: SD Department of Labor

20 AREA AND NEIGHBORHOOD DATA Median Household Income: Trends in the median household income reflect the tendency of an area s population to spend money in the local economy. Table 4 illustrates the historic median household income for Hyde County, the comparison counties, and the state. Information is not available for small cities and towns. TABLE 4 MEDIAN HOUSEHOLD INCOME COUNTY % CHANGE Between 2000 and 2017, all comparison counties experienced growth in median household income. Spink County showed the largest increase at 97.7 percent, followed by Kingsbury County at an increase of 88.1 percent. Hyde County s increase was 72.6 percent, which is higher than the state average. Retail Sales: Table 5 illustrates the annual change in retail sales for Hyde County and the state for the period from 2009 to Retail sales are described in terms of actual dollars not adjusted for inflation. Hyde County has had decreasing retail sales for the last five years. TABLE 5 RETAIL SALES ($000) ANNUAL % CHANGE Hyde County $31,103 $41,196 $53, % 4.3% Kingsbury County $31,262 $44,948 $58, % 5.2% Hand County $32,377 $45,895 $50, % 3.3% Spink County $31,717 $45,000 $62, % 5.7% Beadle County $43,800 $55,300 $52, % 1.1% South Dakota $35,282 $46,369 $54, % 3.1% SOURCE: U.S. Dept of Housing and Urban Development Year Hyde County South Dakota 2009 $19,862 $20,430, $22,975 $22,354, $28,058 $25,472, $64,255 $29,215, $32,676 $25,122, $30,583 $27,848, $27,315 $27,394, $24,674 $27,574, $22,827 $27,553,901 Ann. Change 1.66% 3.87% Source: South Dakota Department of Revenue 10

21 AREA AND NEIGHBORHOOD DATA Housing Starts: Number of housing starts is affected by population growth, the affordability of the cost of mortgage money, and the supply of existing homes. As these factors all are generally reflective of the health of a local economy, the number of housing starts is generally a good barometer of the expansion of a local economy. State of the Cities Data Systems indicates that Highmore and Hyde County have not had any building permits since However, according to the City Auditor, the town has averaged two new houses per year. Economic Conclusion: Highmore and Hyde County compare favorably to the comparison counties in the region and with the state when compared for most economic factors. Overall, the economy of Hyde County is considered to be stable, although population and employment have declined, retail sales and median income have remained constant. Ability of the local economy and population to grow will be in direct correlation to growth in the local employment. ENVIRONMENTAL FORCES: Location: Property appraised is located in Highmore, South Dakota. Highmore is located in central South Dakota, near the junction of U.S. Highway 14 and SD Highway 47, approximately 48 miles east of Pierre, the state capital. Topography: Topography of Highmore is nearly level to gently rolling. Soil conditions generally do not require extensive soil preparation. Utilities: Utilities are available to almost all sites in the town. These utilities include water, sewer, and electricity. Rates for these services are comparable to the rates for other cities in the region. Transportation: Primary east/west access to Highmore is U.S. Highway 14 and north/south access is SD Highway 47. SD Highway 47 has an interchange with Interstate 90 approximately 72 miles south of Highmore. Highmore has rail access and good access to the highway system. NEIGHBORHOOD DATA: Subject property is located one half mile west of the junction of U.S. Highway 14 and SD Highway 47, on the south side of U.S. Highway 14, in the west city limits of town. Immediate neighborhood boundaries would be considered all of Highmore and the adjacent rural commercial/residential zones along the outreaches of the city limits. Neighborhood map and aerial photograph at the end of this section show the location of the subject property to the city. 11

22 AREA AND NEIGHBORHOOD DATA Neighborhood boundaries also provide the primary access to the area. Primary north/south collector street is SD Highway 47, also known as Iowa Avenue, which serves all areas of the city. This intersects with U.S. Highway 14 just east of subject. There are two main commercial streets running through Highmore, Commercial Avenue and Iowa Avenue, where banks, the post office, library, drug store, and health clinic, along with other commercial businesses and services, can be found. The main east/west streets are 2 nd Street and U.S. Highway 14. About 10 years ago the Highmore Livestock Barn closed, with the property being sold and converted into a commercial fertilizer business. About 10 years ago a hunting lodge was developed on the north side of U.S. Highway 14, which offers a restaurant and lounge open to the public and commercial hunting and other recreation packages. Highmore offers a limited number of businesses and services, but its location at the junction of U.S. Highway 14 and SD Highway 47 provides a convenient travel route to Pierre, the state capital and regional trade center, just 48 miles to the west. County and State government offices are located in Highmore, the county seat, and the only town located in the county. The Highmore-Harrold School District #34-2, serves grades kindergarten through 12 is also located in Highmore. As mentioned above, Highmore has a health clinic, but the closest hospital is located approximately 20 miles away in Miller. Pierre serves as the regional center for most shopping goods and service businesses that offer basic needs, including groceries, banking, and farm products, and continues to be a location for satellite businesses owned or affiliated with businesses in larger communities. Fire protection is provided by a volunteer fire department, while police protection is provided through the Highmore Police Department. Highmore has a number of places of worship. Recreational outlets include the Highmore Golf Club, a 9-hole golf course. This area is known as the gateway to Big Bend on the Missouri River and offers many fishing, hunting, and camping sites. Typical to smaller communities, all areas of the town are convenient to shopping areas and have similar access to employment centers and recreation areas within the community. These attributes tend to blur neighborhood lines and lessen the differences between neighborhoods. MARKET CONDITIONS: General overall economic conditions were discussed and summarized earlier in the Area and Neighborhood Data section. This section relates specifically to the commercial real estate segment and to the subject property as it relates to exposure time and marketing period. Appraiser conducted sales research for this appraisal from public records in the Director of Equalization Office and the Register of Deeds Office for Hyde County, as well as interviews with real estate professionals. Since there is no local Multiple Listing Service, there is no reliable central data source or statistical data collection point from which to judge exposure and marketing time for the subject. It has been the experience of the appraiser that residential properties in small communities are listed with local brokers, and sometimes a property is known to be for sale, or a buyer s representative searches out a seller. Based on the actual sales, appraisers experience, and discussion with knowledgeable brokers, an exposure time of one year or less is considered typical for residential properties. 12

23 AREA AND NEIGHBORHOOD DATA Demand is placed on all areas of support services, with rising employment, which will help bring new population. Subject property is agriculture based, which is the main economic source for this area and all of the state. The agriculture market has had substantial growth in recent years. However, over the past three years commodity prices have dropped, leading to a reduction in farm income, and therefore has been a downward trend in the agriculture industry. It is anticipated that the economic level for the agriculture sector will remain flat for at least the next couple of years. Sales for agricultural land in the last three years were mixed due to dramatic swings in crop prices, national economic news, and upheaval in the banking industry. A review of sales for the past three years indicates that there are willing sellers and there are buyers willing to purchase, suggesting that the market is as active as in previous years. Market strength is attributed to the small inventory of properties on the market at any one time and the strong cash position of many farmers in the area. Continued strength in the area market is evident by the sales reviewed. As with most counties in the state, the majority of transfers of land are from one family member to another family member and generally are not sold at market price; therefore, will not be considered. However, the market in this area appears active, with a steady number of sales within the last three years. From conversations with market participants, the sale price of farm ground is affected by the difference in quality of soils, as generally a higher price is paid for better quality soil. However, other factors such as location, existing irrigation, and the number of qualified buyers also can have an effect on sale price. From conversations with auctioneers and real estate professionals, typical buyers of this type of land are local farmers expanding operations, with little influence from investors. As part of the market conditions research the appraiser has reviewed a recent study of Agricultural Land Market Trends by South Dakota State University. Information taken from the study lumps several counties into clusters and then lumps the clusters into regions for an overall trend. Table on the following page gives the average dollar per acre for non-irrigated cropland and pasture land for the selected counties. Table also shows the percentage of change of average dollar per acre from one year to the next. Average value per year is from February to February. As the table indicates, agricultural land had been increasing prior to 2016 for the county cluster. However, for 2017 the average shows a decrease for the county cluster of percent and a jump back up of from 2017 to 2018 to an average per acre price of $3,250. This is still percent below the peak year of 2016 at $4,267 per acre. The study does not consider the overall soil productivity or other factors that affect price or location within a specific market, but gives a general analysis of the region. Rangeland has followed similar trends as the cropland, but at a lower percentage. The subject s county cluster showed the highest value for range land in 2015 at $2,313 per acre and in 2018 the average per acre price is $1,938. This shows a decline of percent. 13

24 AREA AND NEIGHBORHOOD DATA All of Region $/Acre % Change Per Year % Change Per Month Buffalo, Brule, Hand, Hyde % Change Per Year % Change Per Month Avg $3, % 0.14% $3, % 1.26% High Productivity $4,137 All of Region CENTRAL REGION County Cluster Non- Irrigated Cropland Low Productivity $2,526 Avg $3, % -1.20% $2, % -2.82% Avg $3, % -0.11% $4, % 0.68% Avg $3, % -0.12% $3, % -0.38% Avg $3, % 0.87% $4,133 N/A N/A Avg $3,580 N/A N/A ** N/A N/A Rangeland (Native) Avg $1, % -1.46% $1, % -1.60% High Productivity $2,295 $2,400 Low Productivity $1,485 $1,500 Avg $2, % -0.78% $1, % -1.08% Avg $2, % 0.47% $2, % -1.00% Avg $2, % 1.24% $2, % 0.94% Avg $1, % 0.98% $2,079 NA NA Avg $1,636 NA NA ** NA NA Marketing time is heavily influenced by historical exposure time, but tempered by the current economic conditions and by the pricing of the property. As discussed above, typically agricultural properties are sold at auction and have a marketing time of less than two months. The agricultural market has been an active market for some time now, but over the last 12 months there has been a slowdown in the regional agricultural market and the national agricultural market. However, the agricultural market shows continued demand for all property types. This is evident by the sales reviewed. Exposure time for this type of property has been less than one year. Market area for subject is expected to continue to show good demand, but uncertainties in the national and area economy and lowering commodity prices have slowed price trends. Appraiser has reviewed sales from the last three years for Hyde County, as well as the Agricultural Land Market Trends Study by South Dakota State University. From the review, agricultural land prices had been increasing up to January 2013, with decreasing to flatting trends most recently. In the judgment of the appraiser, the marketing time for agriculture properties like subject would be considered to be 12 months or less, even with a slowdown in the national and regional agricultural economy. 14

25 AREA AND NEIGHBORHOOD DATA In general, the Highmore market appears to be continuing downward in trends in population and employment. These trends limit market potential for all real estate segments. It is the conclusion of the appraisers that current market conditions are acceptable to slow. Market conditions are reflective of the supply-demand cycle, and at present the cycle appears to be in balance. In conclusion, the current market conditions are similar to the past and the marketing time for subject is one year or less. Conclusion: Subject property has frontage along a U.S. highway, and proximity to the town. Overall, the subject neighborhood is considered to be typical in overall marketability and desirability, consistent with the economic level of the community. While the agricultural market in subject s market area has been strong for the last several years, it does appear to be past the peak of its latest growth cycle. This indicates that the real estate market for all agricultural segments will likely be flat or show a slight decline in the short term, which also indicates slow to flat values and activity in single family residences in small rural communities. 15

26 NEIGHBORHOOD MAP 16

27 NEIGHBORHOOD AERIAL 17

28 ZONING According to information obtained from the Highmore City Auditor, the subject property is within the city limits of Highmore and the City has no zoning ordinance. Conclusion: Current mixed use is typical for this area. The City has some control over development by requiring building permits. 18

29 ASSESSMENT INFORMATION AND TAX DATA Subject property is owned by the State of South Dakota, so is not subject to real estate taxes, and therefore shows no assessed values in the Hyde County Assessor s Office. Subject property will be assessed as agriculture land within the city limits at the same level based on productivity as outside the city limits. However, the mil levy for the City of Highmore is almost four times that of the county. 19

30 PROPERTY DESCRIPTION Property description is based on the appraiser s viewing of the property along with maps from Agridata Inc. Photographs taken on October 24, 2018 can be found in the Addenda as Exhibit 1. Maps reviewed by the appraiser are taken from AgriData Inc map service and can be found at the end of this section. Subject property consists of acres improved with one house and seven outbuildings. Subject lays along the south side of US Highway 14 and along the east side of 336 th Avenue, a gravel township road, as well as being along the north side of the Burlington Northern Railroad right of way. Subject is in the northwest city limits of Highmore. All maps reviewed by the appraiser show Experiment Farm Road as a road connecting US Highway 34 and across the rail road to First Street Southwest. However, there does not appear to be platting of this road for dedication to the public use of this road. This provides easy access to the farmstead from the highway and also from Highmore. Public use of this road is an extraordinary assumption for this appraisal. Also, since it does not appear to be a platted road it is also an extraordinary assumption for this appraisal that the rail road crossing is a permitted crossing for public use. Subject land is a mix of tillable cropland, three tree shelter belts and the farmstead site. According to the AgriData Inc maps, the tillable cropland is acres and the farmstead is 10.0 acres with 15.0 acres in trees and 1.5 acres in the gravel road right of way and 3.0 acres for the assumed 66 foot wide right of way for Experiment Farm Road. The farmstead site is further separated as 5.3 acres west of Experiment Farm Road that is the location of the house. This leaves 4.3 acres east of the road where the remaining seven outbuildings are located. At the present time the tillable cropland is not be farmed. It appears that most of the tillable acres are in grass or alfalfa. There is an onsite trash pile that needs to be properly buried or removed from the site. This appraisal is subject to the hypothetical condition that this site and any other area are clear of any contamination and debris. There are two ponds that were dug to improve surface drainage. The three areas with the trees could be farmed if the trees were removed, which would improve the field size and configurations. Portions of these areas also have some fences. The only perimeter fences are along the east property line. Subject property basically has three soil types with Productivity Index ranging from 55 to 86 and an average of These soils are moderately to well drained and slopes of less than 6 percent. Topography map shows the general and natural slope to the northeast. A check of the FEMA website it appears that this property is in an area that is not mapped. This should not be taken as fact and the appraiser recommends obtaining a flood certification for this property. The appraiser did not observe any hazardous or nuisance on the subject property other than noted above, nor any easements other than those typical and necessary to provide utilities to the subject improvements. Subject does have city water in use at the house. There is a well that has been used in the past. There are water hydrants in the farmstead yard and water has been piped out to some of the fields closest to the farmstead. These hydrants have not been used in recent years. It is believed that there might be a sewer line that comes from the north side of the highway from the South Dakota Department of Transportation facility then going east parallel to the highway and exiting the east side of the property. This existence of this line and the exact location if it does exist would have to be established and become a recorded encumbrance on the subject property. This appraisal is subject to the extraordinary assumption that the sewer line exists. Underground sewer lines are common and typically do not have a measurable impact on property values. 20

31 PROPERTY DESCRIPTION House: This is a wood frame two story house with an estimated 951 square feet on the first floor and 787 square feet on the second floor for a total of 1,738 square feet of gross living area. Actual age is not known to the appraiser, but estimated at or near 100 years old. It has vinyl siding and composition shingle roof and the windows have been updated. First floor has living room, kitchen with dining area, half bath and entry. Second floor has three bedroom and a bathroom. Floor covering in the bedrooms is carpet, while the balance of the rooms have sheet vinyl. Room finish is generally painted walls and ceiling. Kitchen has adequate base and upper cabinets and space for stove, hood over the stove and refrigerator. It is assumed that the appliances are owned by the tenant. First floor half bath has sink and stool. Second floor bathroom has stool, small vanity with sink and a fiberglass tub/shower. This room has separate thru the wall air conditioner. Basement area is estimated at 787 square feet and is mostly finished. This includes a laundry room with washer and dryer hookup and a shower stall, as well as a laundry sink. Also, located in this room is the newer 200 AMP electric main, a 40 gallon electric water heater and the gas forced air furnace with central air. Floor in this area is painted. Bedroom, does not have an escape window, so would not qualify as a bedroom for some lenders. This bedroom has carpeting and electric heat panel on the wall. Finish is painted gypsum wall board and ceiling. There is also a fruit cellar that has painted floor, painted gypsum wall board and ceiling. In recent years improvements have been made to basement walls to control water, updated electrical, furnace, newer siding, windows and roof. These updates and the general floor plan are acceptable and functional by today s standards. Market recognized finished area is estimated at 50 percent, which is 394 square feet. There is a large 12.5 foot by 30 foot (375 sqft) wood deck across the south end of the house with access from the living room. Overall, the house is considered to be in average to above average condition for age. Expected life for this improvement type is 70 years and the actual age is estimated at over 100 years, but effective age is estimated at 30 years. Seed House: Seed house is a two story wood frame structure on a concrete block foundation on crawl space. It has vinyl siding, metal soffit and fascia and metal gutters and downspouts. It has a hip roof with composition shingles. It has 1,830 square feet on the first floor and equal size on the second floor for a total gross building size of 3,660 square feet. North half of the first floor is an open room. This room has wood floor, painted gypsum wall board and ceiling, with ceiling height of 10 feet. There is a laundry sink along the south wall. South half is separated into a larger office that has sheet vinyl floor covering, wood panel walls. Second office has wood floor and painted gypsum wall board and ceiling. Storage closet has a 40 gallon electric water heater. There are two bathrooms, each with stool and vanity with sink. One bathroom also has a shower stall. Each bathroom has sheet vinyl floor covering, painted gypsum wall board and ceilings. These rooms have baseboard electric heaters. North half of the second floor has a wood floor and is open to the roof joists, unfinished walls and not insulated. There is a 5 foot by 6 foot manual elevator using ropes and pulleys serving this room from the first floor. South half of the second floor has three finished rooms. These rooms have carpet floor covering, painted gypsum wall board and ceiling. Finished rooms have baseboard electric heat panels. Electric main is 100 AMP. There is a 10 foot by 10 foot wood deck at the east side door and a 5 foot by 6 foot covered porch at the south door and a 5 foot by 10 foot covered porch at the west door. This building is served by water and 21

32 PROPERTY DESCRIPTION sewer, so could be converted to a residence, or as a small manufacturing or service commercial use. Actual age of this improvement is not known to the appraiser, but estimated to be at or near 100 years old. Overall, the improvement is in average condition for age and use. Expected life for this improvement type is 50 years. Updates to the siding, roof and interior finished space and the flexibility of the floor plan provide an effective age estimated at 40 years. Machine Shed: This is a 48 foot by 96 foot, 4,608 square foot wood pole frame structure with steel panel walls and roof. It has dirt floor and minimal electric outlets and lights. It has two overhead garage doors with electric door openers and one sliding door. It has 18 foot side walls. Actual age is not known to the appraiser, but estimated to be at least 25 years old. The shed is in average condition for age and use and is functional by today s standards for farm equipment. Expected life for this improvement type is 25 years and the estimated effective age is 10 year. Barn: This is a 24 foot by 34 foot wood frame structure with a 16 foot by 34 foot wood frame lean to on the north side giving a gross building size of 1,360 square feet. It has steel panel siding and gable roof with composition shingles. It has concrete floor and most of the rooms have OSB board walls and ceiling. There is one overhead garage door with electric door opener for the barn and one for the lean to. The barn has 100 amp electrical box and minimal electric outlets and lights. There is a loft that has wood floor and open to the roof joists. Side walls are 12 feet. Actual age is not known to the appraiser, but estimate to be at least 100 years old. The improvement is in average condition for age and use but is not real functional by today s standards for farm equipment. Expected life for this improvement type is 50 years and the estimated effective age is 45 years. North Storage Shed: This is a 21 foot by 85 foot wood pole frame structure giving a gross building size of 1,785 square feet. It has steel panel siding and gable roof with steel panels. It has concrete floor in half and dirt floor in the other half. There are two overhead garage doors on the south. It has an electrical box and minimal electric outlets and lights. Side walls are 8 feet. Actual age is not known to the appraiser, but estimated to be at least 80 years old. The improvement is in average condition for age and use but is not real functional by today s standards for farm equipment. Expected life for this improvement type is 50 years and the estimated effective age is 45 years. South Storage Shed: This is an 18.5 foot by 67 foot wood frame structure giving a gross building size of 1,240 square feet. It has steel panel siding and gable roof with steel panels. It has concrete floor throughout. There are two overhead garage doors each with electric door openers. It has an electrical box and good distribution of electric outlets and lights. Side walls are 8 to 10 feet. The improvement is insulated, and walls and ceiling are finished. It is heated by propane forced air furnace. Actual age is not known to the appraiser, but estimate to be at least 80 years old. The improvement is in average condition for age and use but is not real functional by today s standards for farm equipment. Expected life for this improvement type is 50 years and the estimated effective age is 40 years. 22

33 PROPERTY DESCRIPTION Tree/Storage Shed: This is a 24 foot by 24 foot wood frame structure giving a gross building size of 576 square feet. It has steel panel siding and gable roof with composition shingles. West half of the building has concrete floor and electricity. East half has concrete floor and the walls and ceiling are insulated, as this section was used to store nursery trees. It is set up with heating and refrigerating to control temperature. There is a storage attic over each half with outside access only. It has an electrical box and minimal electric outlets and lights. Side walls are 8 feet. Actual age is not known to the appraiser, but estimate to be at least 80 years old. The improvement is in average condition for age and use, but is not real functional by today s standards for farm equipment. Expected life for this improvement type is 50 years and the estimated effective age is 40 years Scale House: This is a 9.5 foot by 9.5 foot wood frame structure giving a gross building size of 90 square feet. It has steel panel siding and gable roof with composition shingles. It has concrete floor and the scale floor. It has an electrical box and minimal electric outlets and lights. Side walls are 7 feet. The scale capacity was not determined, but appears to be for small animals or commodities, probably less than 500 pounds. Scale does not appear to have been used for many years and would have little or no value. Actual age is not known to the appraiser, but estimate to be at least 80 years old. The improvement is in average to fair condition for age and use, but is not real functional by today s standards for it s designed use. Expected life for this improvement type is 40 years and the estimated effective age is 40 years. Site Improvement: Site improvements at the farmstead includes considerable gravel around the buildings and water to some of the buildings. Water is from the City and the house and seed house have septic systems. Conclusion: Subject property has a location within the city limits and has frontage along a US Highway 14 and access from this highway through subject to First Street. Also, it is along an active rail line. Both of these are positive for potential agribusiness related uses of the property. Subject has not been utilized to the maximum potential, as the tillable acres have not been farmed and the three wooded areas- could be removed and farmed as well. Farmstead site of 10.0 acres has good wind protection with tree groves along all sides. Farmstead site would not appeal to some buyers due to the public road splitting the site in half. However, due to its location close to town and access from the highway it would have some potential for commercial use of the outbuildings. Subject house is considered to have average to above average appeal, due to size, location, updating and condition. Seed house could have some alternative uses, but only with some additional improvements. It is in average condition for age. Balance of the outbuildings have minimal contributory value, except for the machine shed, which is functional for todays agriculture use. 23

34 PROPERTY AERIAL 24

35 SOIL MAP 25

36 TOPOGRAPHY MAP 26

37 HIGHEST AND BEST USE Real estate is appraised in its highest and best use. In concluding a highest and best use of a property, consideration must be given to the land as if vacant and then considering the improvements and land together as the improved property. First, it is necessary to define highest and best use. In this appraisal, the appraisers have relied on the definition of highest and best use as defined in The Dictionary of Real Estate Appraisal, 6 th Edition, published in 2015 at page 109. Highest and Best Use. The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. In the evaluation of the highest and best use of a property, the appraisers have reviewed the four criteria referenced above and summarized this analysis for the subject below. The criteria referenced above can be considered filters to allow the proposal of first general and then more specific alternative uses which can be tested for maximal return. Application of the four tests noted above is applied in light of the conclusions drawn regarding area, city, and neighborhood characteristics, interpreted in terms of any social, economic, governmental, or environmental physical forces, and other forces of real estate principals which could likely affect the highest and best use options. Legal Permissibility: Analysis of the legal permissibility, in relation to the highest and best use, examines those legal factors which could preclude the development of certain uses of the subject site or improvements. Development of the subject site or property to its highest and best use can be limited by long term leases, zoning, private deed restrictions, building codes, historic district controls, or environmental regulations. Physical Possibility: Physical possibility in relationship to the highest and best use examines the physical features of the subject site or improvements, which can preclude development of certain uses of the subject site or improvements. Development of the subject site to its highest an10d best use can be limited by the size, configuration, location and availability of utilities, and terrain of the site. Development of the subject improvements to their highest and best use can be limited by the size, design, type, and condition of the improvement(s). Financial Feasibility: In evaluating the financially feasible uses of the subject site or improvement, the analysis considers those applications to the subject site which would yield a positive return on investment in consideration of the constraints of legal permissibility and physical possibilities of the subject site or improvements. To estimate if potential developments of the vacant site or uses of the existing improvements provide for a market acceptable return on investment, an analysis is completed of the demand and supply in a neighborhood for the indicated physically possible and financially feasible uses. For a vacant site, the demand and supply of a given use must be at an equilibrium price level adequate enough to provide for returns that would be market acceptable to be financially feasible. For a developed property, the financially feasible uses are those uses which provide for a positive economic income stream to the property. 27

38 HIGHEST AND BEST USE Maximum Productivity: In the evaluation of the maximum productive uses of the subject site or improvements, the utilization which produces the greatest return is considered to be the highest and best use of the improved site. Constraints listed above can be considered filters to allow the proposal of first general and then more specific alternative uses, which can be tested for maximal return. Application of the four tests noted above are applied in the light of the conclusions drawn regarding area, city, and neighborhood characteristics, interpreted in terms of any social, economic, governmental, or environmental physical forces, and other forces of real estate principals which could likely affect the proposed highest and best use options. HIGHEST AND BEST USE OF THE SUBJECT PROPERTY: Application to Subject: Subject consists of acres of agricultural land and a 10.0 acre farmstead site. Highmore has no zoning ordinance. Uses found in the city limits include agricultural uses and single-family residential uses, the current uses at subject. Zoning, therefore, is not a limiting factor to potential uses found in the neighborhood at the present time, which include agricultural uses and residential. There are no private restrictions that would further restrict use beyond the zoning known to the appraiser. Exceptions are the potential sewer line easement and documented railroad crossing permit. Property Description section provides the basis for physical possibility. Subject has a total property size of acres, of which 10.0 acres is considered the farmstead site, with the remaining acres as agriculture land. Currently the agriculture land is mix of native grass, alfalfa and bean fields and trees. General topography of the property is nearly level to slight slope to the northeast. There is perimeter fence along the east side in fair condition and some partial fences in the interior. In addition to having frontage along and access to US Highway 14, 336 th Avenue, a gravel road is along the west side of the property. Experiment Farm Road crosses through the middle of the property connecting US Highway 14 to 1 st Street SW. This provides easy access for the farmstead site from the highway and also the center of town. Farmstead site has good shelter belt around all sides. However, the south property line is adjacent to the active rail road. This does not appear to be a major concern in this market as residential properties are along this rail road right of way in this area. Subject property is located in a rural community of South Dakota where agriculture is the predominate land use and basis for property value. This area is predominately cropland and some pasture land determined mostly by topography, with a few areas left in pasture by choice. Subject has typical access to markets to sell grain, livestock and other agricultural products. There is limited demand for home sites, as demonstrated by the lack of new construction in the area. However, subject site has benefit of proximity to town and city water. Agricultural uses are included in those financially feasible uses, as based on the sales of similar properties found in the market. In general, the values of similar uses within this area sell for a fairly consistent price range, suggesting what the market s interpretation is for the maximal profit use. In the judgment of the appraiser, the highest and best use of the subject property as vacant is mix use of single family residential and agriculture use. 28

39 HIGHEST AND BEST USE Farmstead site is improved with a 100 year old single family home and seven outbuildings that range in age, size and potential use. All are in average to good condition, but only the machine shed would have functional utility in todays agriculture practices. The Seed House has potential for alternative use, but would need updating for most any alternative use. The improved site would have appeal not only to local farming enterprises as a primary or secondary headquarters, but do to being located in Highmore and to US Highway 14 for mixed use for single family home along with some type of business. Farmstead site as improved would also have the flexibility of being separated into two parcels. That portion west of Experiment Farm Road with the house could stand alone as one parcel. That portion east of the road could stand alone or could be part of either the agricultural land or the west parcel. There is not sufficient data to make a clear determination, but the flexibility adds to the potential marketability of the property. Rural residential uses are included in those financially feasible uses, as based on the sales of similar properties found in the market. In general, the values of similar uses within this area sell for a fairly consistent price range, suggesting what the market s interpretation is for the maximal profit use. In the judgment of the appraiser, the highest and best use of the improved subject property is agriculture use for the agriculture land and as residential use for the farmstead. 29

40 SALES COMPARISON APPROACH In estimating the market value of the subject property by the Sales Comparison Approach to value, the appraiser has made a search of the market for recent sales of both property types in the subject market area. From the review of these sales, the appraiser has selected three sales of each property type for direct comparison which best represent the range of value potential for the subject property. UNIT OF COMPARISON: Unit of comparison is the measure utilized in the market place to compare properties. Unit of comparison normally utilized in the comparison of residential properties is the price per square foot of gross living area and the price per acre for the agriculture land. Appraiser has completed the comparison based on 1,738 square feet of gross living area in the house. For comparison purposes the house site that area west of the road is 5.3 acres, but for comparison to the house sales the comparison site size is based on typical house site at 13,068 square feet, which is 0.30 of the acres. Balance of the west farmstead site 5.0 acres is excess site. The remaining 4.7 acres east of the road and the seven outbuildings will be shown separately. DIRECT COMPARISON OF SUBJECT TO SIMILAR SALES FOUND IN THE MARKET: Overview: In the application of the direct comparison, the appraiser makes comparison of the subject property to recent sales of similar properties. Appraiser has estimated the highest and best use of the subject property to be mixed use as a residential dwelling and agriculture land, which is the highest and best use of the comparables. To find properties with attributes which best reflect the value of the subject property, it was necessary to review many sales. It was necessary to review a number of sales from within Highmore due to the location of subject. Therefore, the appraiser has selected the three sales that were the most similar in most of the other features of the subject property to directly compare to subject. Appraiser has abstracted from the neighborhood market or competitive neighborhoods those sales which have the closest application to subject, and has adjusted the sales for variations from subject. Variations in the sale properties, which are recognized in the market, have been analyzed and are indicative of value placed on these variations. These variations are adjustments, which are then applied to the sale properties to indicate the market value of the subject property by the Sales Comparison Approach. Adjustments: Personal property is typically not considered part of the real estate, however for residential property some personal property typically is included. In this case, however, the appliances are not included. Although the sale properties are considered equivalent to the subject property in many aspects, adjustment of the sale properties to the subject was required for specific differences. Grid analysis for this comparison to the west farmstead parcel is located on the following page. Following the grid is a discussion of the adjustments made to the comparable properties to provide an indicated value for subject. In the Addenda is a map showing the location of the comparable sales and a photograph of each. 30

41 SALES COMPARISON GRID 31

42 SALES COMPARISON APPROACH In making the comparison of the subject to the sales, the following elements of comparison are considered and shown in sequential order of their application. 1. Property Rights Conveyed 2. Financing 3. Conditions of Sale 4. Market Conditions (Time) 5. Location 6. Physical Characteristics 7. Income Characteristics (typically not considered in comparison of residential properties) West Farmstead: Property Rights Conveyed: All of the sales shown on the grid are sales in fee simple estate. Subject is being appraised in fee simple estate, so no adjustment is required. Financing: Market value definition is stated as cash or cash equivalent. Sales 2 and 3 were cash to the seller, so no adjustment is required. Sale 1 was with Contract for Deed, with no down payment and interest rate 1.0 percent below market, but amortization is based on 11 years, rather than typical market of 15 to 20 years. No adjustment is made for financing, but the impact if any is a consideration in the final value. Conditions of Sale: Adjustment for condition of sale usually reflects the motivation of the buyer and the seller. As far as the appraiser can determine, there were no unusual conditions of sale for any of the sales. Market Conditions (Time): In the past the Highmore area residential market has shown a very gradual upward price trend. In recent years, however, it appears this has slowed down or stopped with the downward farm economy. This downward farm economy and the concerns for trends in the future also affect the rural communities and those that might be considering purchasing a home in a negative way. Also, with interest rates increasing this makes it more expensive to purchase a home. All of the comparables sold within the last 18 months, so are considered to be current in time of the most similar sales in the present market. For these reasons, no adjustment is made for market conditions, but is a strong consideration in the value conclusion. Location: Subject is located on the edge of town, while all three are located within a few blocks of downtown. However, in a community of this size distance to commercial or social activities is not considered to have a measurable influence on value. Also, being somewhat secluded within the city limits would appeal to many prospective purchasers. For these reasons, no adjustment is made to any of the sales for location difference. 32

43 SALES COMPARISON APPROACH Physical Characteristics: Adjustments for physical characteristics take into account many factors, including site size and relative market value per square foot, gross living area and relative value per square foot, appeal, age, condition, room count, and for other added features of value as compared to subject. All of the sales have been adjusted to the subject site. Adjustment for improvement size is based upon a mathematical computation comparing each sale to the subject for variances in the size/value of the site and the gross living area size of the improvement. Subject site value is estimated at the same as the three sales at $0.35 per square foot based on this appraiser s review of the limited sales activity of lots in Highmore. Sale comparables all had actual age and estimated effective age similar to that of the subject. Each of the comparables are adjusted for gross living area compared to subject based on the age adjusted per square foot contribution of the improvement at $30.00 per square foot for Sales 1 and 2, but at $20.00 per square foot for Sale 3, as the adjustment is much larger. These adjustments are quantitative and do not consider the condition of the improvements, nor the other amenities found or not found at sales relative to the subject. All three comparable sales have varying home amenities and some site amenities. Adjustments for the remaining physical features such as bathrooms, basement finish, different types or lack of heating and cooling, garage stalls, fireplaces, decks, and patios, are estimated by the appraiser from market analysis and using guidelines from the Marshall and Swift cost estimating service and are shown on the grid. Correlation: After adjustments, the sales indicate a range in value from $62,200 to $66,350 for the subject property. Sales shown are the best comparables available in the subject s neighborhood. These sales provide a range of market demonstrated prices. Appraiser has placed less emphasis on Sale 1 due to seller financing. Subject is an older home very similar to all three sales, but has had good maintenance and updating that adds to the overall appeal of the property. There is an additional 5.0 acres west of the road that is considered to be part of this farmstead. Additional value of these 5.0 acres is estimated similar to the value estimate for the agriculture land, which is $2,500 per acre. Additional site value for the farmstead would be $12,500, which would produce a value range of $74,700 to $78,850. In conclusion, the appraiser has estimated the value for the subject west farmstead parcel at the middle of the range at $75,500. East Farmstead Parcel: In the appraiser s research of the Highmore and Hyde County market there were no sales of small sites with older outbuildings to complete a direct comparison. Below is a summary of the agriculture buildings on the east farmstead site and the estimated contributory value for each and a total contributory value of $78,243. IMPROVEMENT SUMMARY Seed House 3,660 $10.00 $36,600 Machine Shed 4,608 $5.00 $23,040 Barn 1,360 $2.50 $3,400 North Storage Shed 1,785 $2.50 $4,463 South Storage Shed 1,240 $7.50 $9,300 Tree/Storage Shed 576 $2.50 $1,440 Scale House 90 $0.00 $0 Totals 13,319 $78,243 Average $

44 SALES COMPARISON APPROACH Contributory value of the seed house is based on the analysis of the house sales for the per square foot value of the house, excluding the land. This produced a range from $30 to $37 per square foot. The seed house could be converted to residential use, as it already has water and sewer systems and half of each floor is already insulated and gypsum wall board on the walls and ceiling, as well as having an updated exterior, so half the building is almost equivalent to house value. Other half is similar to storage. It does lack a kitchen, which could be part of the conversion on the north half. Overall, the contributory of this improvement is estimated at about one-third at $10.00 per square foot. The machine shed is considered to be functional and desirable for continued agriculture use. This shed as good wall height and doors, but does not have concrete floor. The contributory value of this improvement is estimated a $5.00 per square foot based on analysis of sales over the years with farm outbuildings. Balance of the outbuildings are considered to have nominal contributory values as good weather tight storage buildings with the south storage building having additional value, as it is insulated and heated. Land value for the east farmstead site is also estimated at $2,500 per acre for the 4.7 acres for a total of $11,750. Therefore, the estimated value of the east farmstead site is $89,993, rounded to $90,000. Agriculture Land: Adjustment grid for the agriculture land can be found on the following page. Property Rights Conveyed: Subject property is being appraised in fee simple estate. All sales are fee simple estate. No adjustment was made to any of the sales for property rights conveyed. Financing: Market value definition is stated as cash or cash equivalent. All sales were cash to the seller. No adjustment is made to any of the sales for this element of comparison. Conditions of Sale: Adjustments for conditions of sale usually reflect the motivation of the buyers and sellers. There are no unusual conditions of sale known to the appraiser. Many of the sales were sold at auction, and as best as the appraiser can determine, the remaining sales were sold at negotiated price between knowledgeable buyers and sellers, often represented by real estate professionals, with circumstances common to this market. Land and Improvement Adjustments: Land and improvement adjustments consider the differences in land use of subject to the comparables and the depreciated differences of any improvements compared to the comparables. Subject agriculture improvements are limited to small amount of fences, with minimal value. None of the sales had any structures and any fences was limited to perimeter fencing, so there is no improvement adjustment to any of the sales. All sales are predominately cropland with any areas not being farmed would be considered non-productive. Subject has a total of acres currently considered as cropland and an additional 15.0 acre with trees that for the purpose of this appraisal is considered as part of the cropland for a total of acres. The land with trees is considered cropland for this comparison, but a deduction for cost to remove the trees is shown later. Adjustments for these elements are mathematical computation using these sales and other sales known to the appraiser. All the sales have been adjusted accordingly. For Sale 1 this is a minus adjustment of $16 per acre and for Sale 2 a plus $90 per acre, while Sale 3 is a minus $80 per acre. Land adjustment pages can be found in the Addenda as Exhibit 2. 34

45 SALES COMPARISON GRID 35

46 SALES COMPARISON APPROACH Market Conditions (Time): Date of sale of the sale comparables ranges from May 2017 to July Appraisers review of the market shows continued sales activity in Hyde County. Sales relied upon were selected due to physical features and being the most recent sales close in location. Uncertainties in commodity prices and tighter lending policies for most banks have reduced the availability of mortgage money to some potential buyers. In the judgment of the appraiser, there is still good demand for agricultural land and the supply at any one time in any one area is not at a level that will negatively impact price. As described in the Market Conditions in the Area and Neighborhood Data section, cropland values have decreased since the high in 2016, but overall have remained fairly flat since the date of these sales. This is evident by the sales reviewed and the SDSU Agricultural Land Market Trends Survey. Therefore, no adjustment was made to any of the sales for Market Conditions. Location: Location of subject property is in the city limits of Highmore with frontage along US Highway 14. Other than the convenience of close proximity to agriculture services there is little or no advantage for location in town. In fact, the much higher tax expense would offset any location advantage. Sales 3 is located along US Highway 14, and one mile past the town of Holabird. Sale 2 is located along State Highway 47 three mile south of Highmore. Sale 1 is located west of Highmore, about three miles south of Holabird, so a rural area along a maintained gravel road. All of the comparables are located in rural areas along paved county highways or maintained gravel roads. Comparables have similar access to markets and communities as subject. No consistent measurable adjustment is shown for location on paved roads in this market versus gravel roads. No adjustment was made to any of the comparables for location, but is a consideration in the final conclusion of value. Physical Characteristics: Adjustments for physical features include factors such as size, shape, topography, soils, frontage, accessibility, utilities, and physical features. Size and utility are addressed separately below. General topography of the property ranges from nearly level to gentle slope. According to AgriData Inc. subject has a productivity index of Sale 1 has a productivity index of 73.9, Sale 2 is 59.4 and Sale 3 has a productivity index of These three sales do not appear to pattern with the higher the productivity index the higher price per acre within this productivity index range. Subject and Sale 1 are fairly close, and subject is within the range of sales so no adjustment. Size: In some markets larger sales commonly sell for less per acre than sales smaller in size, however not all sales follow this pattern. Based on reviewing these sales and other sales, no adjustment was made to any of the sales for size. Other: No other adjustments were made to any of the sales. 36

47 SALES COMPARISON APPROACH Conclusion: After adjustments, the sales indicate a range in value for subject from $2,320 per acre to $2,684 per acre. Sales shown are the best comparables available in the market. These sales provide a range of market demonstrated prices. Appraiser has not relied on any one sale, but have taken all of the sales data and information presented and known into account. For these reasons and from the analysis of the data presented in recognition of the market trends, the appraiser has concluded a value towards the upper end of the range, due to location at $2,500 per acre, for a total value of $259,725. However, subject has 15.0 acres of trees that are on land that could be better utilized as cropland. Cost to remove the trees is estimated at between $22,500 to $30,000 based on information from other appraisal assignments. A deduction of $25,000 is made to a final indicated value of $234,725, rounded to $235,000. Sales Comparison Approach Summary: West Farmstead House and 5.3 Acres $ 75,500 East Farmstead Seven Buildings and 4.7 Acres $ 90,000 Agriculture Land Acres $235,000 Total - $400,500 Subject property has the potential to be marketed and sold as a single unit or as a combination of two of the different parcels or as three separate parcels. It is the opinion of the appraiser that the combined value by the individual sales comparison approach represents the greatest potential value and final value by the Sales Comparison Approach of $400,

48 RECONCILIATION AND FINAL ESTIMATE OF MARKET VALUE Correlation of the data and indicated value estimates is the final step in the appraisal process. Sufficient data has been assembled and analyzed for the purpose of judging the reactions of typical purchasers in the market place. Purpose of the appraisal was to estimate market value, and to that end the data was studied and processed by use of one of the three approaches to value. In the correlation process, the greatest weight should be given to that approach most commonly used by typical purchasers for the type of property appraised. Consideration is also given to that approach in which the appraiser has the highest degree of confidence and which has been processed with a minimum of assumptions. In consideration of the above, and for the reasons and conclusions contained in this report, sole weight is given to the Sales Comparison Approach. It is the opinion of the appraiser that the as is fee simple estate market value of the subject property as of December 13, 2018 was $400,

49 APPRAISER QUALIFICATIONS STEVEN C. SHAYKETT, MAI EDUCATION: College: B.S. Degree, University of South Dakota, 1975 Appraisal Education: Completed required 165 hours of educational instruction, appraisal experience and comprehensive examination to be awarded Member Appraisal Institute (MAI) from the Appraisal Institute in May Continuing Education: Complete listing found at the end of this section SPECIALIZED EDUCATION: - Successfully completed the Valuation of Conservation Easements Certificate Program - Successfully completed the Appraisal Institute s Fundamentals of Separating Real Property, Personal Property and Intangible Business Assets Course for Small Business Administration (SBA) Appraisals ASSOCIATION MEMBERSHIP: Appraisal Institute - MAI Member # North Star Chapter President 2012 State Certified General Appraiser - State of South Dakota (#155CG-2019) - State of Iowa (#CG01446) - State of Minnesota (# ) Licensed Real Estate Broker - State of South Dakota Appraisers Advisory Council Member - South Dakota Appraisers Certification Program to 2001 EXPERIENCE: Mr. Shaykett has been owner of Shaykett Appraisal Company, Inc. since 1979, which was located in Prairie Village, Kansas from August 1979 to June 1984, and since June 1984 in Sioux Falls, South Dakota. Mr. Shaykett was also a partner in the firm of Shaykett Agency in Miller, South Dakota from August 1979 to June 1984, when the two offices were consolidated. Mr. Shaykett has been qualified as an expert valuation witness in a number of Circuit Courts in South Dakota, as well as Johnson County, Kansas; Cass County, Missouri; and in Federal District Court, Western Division of Missouri. 39

50 APPRAISER QUALIFICATIONS STEVEN C. SHAYKETT, MAI From May 1975 to August 1979, Mr. Shaykett was an associate appraiser with Appraisal Associates of Kansas City, Missouri. Appraisal assignments completed by the appraiser during that employment include rural, urban fringe and commercial properties, as well as a number of special use properties in the Kansas City Metro Area and throughout Missouri and Kansas. From May 1971 to May 1975, Mr. Shaykett was associated on a part-time basis with Shaykett Agency in Miller, South Dakota. During this time, the appraiser assisted in real estate sales and management, and appraisal work throughout South Dakota. Principal clients served include private industry, banks and attorneys, including US Bank, Wells Fargo Bank, Great Western Bank, Plains Commerce Bank, First National Bank, First Premier Bank, CorTrust Bank, First Midwest Bank - Deerfield Branch, Marquette Bank, Citicorp, Security Bank, Frontier Bank, Security National Bank, and Firstar of Sioux City. Governmental agencies served include the Department of Justice; U.S. Corps of Engineers; South Dakota Department of Transportation; City of Sioux Falls; City of Yankton; City of Mitchell; City of Kansas City, Missouri; Federal Aviation Administration; Department of Energy; Federal Deposit Insurance Corporation; U.S. Forest Service; City of Independence, Missouri; and the City of Maryville, Missouri. Mr. Shaykett has been involved in the appraisal of a number of rock mining operations, including the Carthage Marble Mining and Storage Operation in Carthage, Missouri; Alrok Quarries and Underground Development in Kansas City, Missouri. Other specialty assignments include North American University, National Foods 1.2 million bird egg laying facility, Nor-Am Cold Storage, Western Mall, Kmart, other large retail, daycare centers, assisted living centers, nursing homes, country clubs, churches, mobile home parks, hotels and motels. General assignments have included the appraisal of grain facilities, wildlife hunting clubs, fast food restaurants, industrial properties, office buildings, apartment projects, commercial properties, multi-family developments, and valuation of full and partial acquisition for detention basins for flood control. Appraisals for leasehold value have also been completed. Rural properties appraised include farms in South Dakota, North Dakota, Montana, Nebraska, Kansas and Missouri. Mr. Shaykett has completed many appraisal assignments for full or partial acquisition for flowage easement or conservation easements. Mr. Shaykett has completed multiple tract appraisal projects. During late 1979 and early 1980, Mr. Shaykett was one of two appraisers hired by the Department of Energy to appraise 260 farm tracts for right-of-way acquisition for a 230 KV transmission line in Montana and South Dakota. In 1983, Mr. Shaykett completed 38 farm appraisals for acquisition for the 3,000 acre Mozingo Creek Watershed Project. Also completed are a number of multi-tract appraisal projects for street widening and detention basins. As of the date of this appraisal, Steven C. Shaykett has completed the requirements of the Continuing Education Program of the Appraisal Institute. 40

51 CONTINUING EDUCATION - Since 2008: APPRAISER QUALIFICATIONS STEVEN C. SHAYKETT, MAI DATE COURSE DESCRIPTION Essential Elements of Disclosures and Disclaimers Work File Documentation for Appraisers Hour National USPAP Update Course FHA Appraising for Valuation Professionals: FHA Single Family Housing Appraisal Requirements Property Management Dealing with Disclosure Business Practices and Ethics Appraisal of Self-Storage Facilities Land and Site Valuation Introduction to Legal Description Valuation of Donated Real Estate Including Conservation Easements Hour National USPAP Update A New Economy: A Guide for Real Estate Professionals Hour National Uniform Standards of Professional Appraisal Practice A Walk Through the Minnesota Property Tax System Fundamentals of Separating Real Property, Personal Property and Intangible Business Social Media th Annual Real Estate Trends Seminar Hour National USPAP Equivalent Course Appraising the Appraisal: Appraiser Review - Residential Critical Rules th Annual Real Estate Trends Seminar Residential Report Writing: More than Forms Understanding the Uniform Mortgage Data Program and the Uniform Appraisal Data Set Appraising the Appraisal: Appraisal Review - General Multi-Family Housing USPAP 7 Hour Course Update Training Course for Supervising Appraisers Residential Writing Report Responsible Broker Course USPAP Update Your Promise of Professionalism - The Code of Ethics Valuation of Conservation Easements Appraising Convenience Stores 41

52 ADDENDA

53 UAAR Sale Comparable Map COMP 3 COMP 1 COMP AgWare, Inc. All Rights Reserved.

54 UAAR Index # 18HYD05 Database # 319 Sale # 1 Improved Sale Grantor Raymond E. Kusser Sales Price 60,000 Property Type Residential Grantee Tyler Wieseler Other Contrib Primary Land Use Residential Deeded Acres Net Sale Price 60,000 Deed Bk/Pg 35MS/511 Sale Date/DOM 06/01/18 / $/Deeded Acre Plat Bk/Pg Prior Sale Date Financing Contract for Deed Transfer Type Contract for Deed Prior CEV Price % Fin Adj Topography Fairly Level Analysis Code CEV Price 60,000 Township Source Public Records SCA Unit Type Primary Frontage Commercial Ave Motivation Typical Eff Unit Size Secondary Frontage Alley Highest & Best Use Residential SCA $/Unit Sale Company Address 511 Commercial Ave Multiplier Unit Excess Land Use None City Highmore Multiplier No. County Hyde Legal Access Public Street State/Zip SD / Physical Access Street Region/Area/Zone / / View Similar Houses Tax ID/Recording Location City Utilities All public Sec/Twp/Rge / / Legal Description: Lots 6, 7, 8 & 9, Block 20, Van Camp and Olds Addition to Abram E. Van Camp's Addition Sale Analysis Land Mix Analysis Land-Mix Analysis Land Use Ratios Acres $/Acre Unit Size Unit Type $/Unit Total Unit Value Building Site 100 % Ac X $ 0.35 = $ Road Waste 0 % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ Totals Ac. X $ = $ CEV Price $ 60,000 - Land Contribution $ = Improvement Contribution $ Main Improvement Details Age Effective Units Effective Size Contrib/Effective Size Design & Appeal Quality of Construction Rooms Above Grade Basement Finished Bsmt Rooms Below Grade Utility Condition Heating/Cooling Energy Efficient Items Garage/Carport Porch, Patio, Deck Fireplaces, etc Total Bdrms Baths Primary Improvement AgWare, Inc. All Rights Reserved.

55 UAAR Index # 18HYD06 Database # 320 Sale # 2 Improved Sale Grantor Ellen L. Wheelhouse Sales Price 54,000 Property Type Residential Grantee Michael & Shalon Ahrenholz Other Contrib Primary Land Use Residential Deeded Acres Net Sale Price 54,000 Deed Bk/Pg 65/477 Sale Date/DOM 05/29/18 / $/Deeded Acre Plat Bk/Pg Prior Sale Date Financing Conventional Transfer Type Personal Rep. Deed Prior CEV Price % Fin Adj Topography Fairly Level Analysis Code CEV Price 54,000 Township Source Public Records SCA Unit Type Square Feet Primary Frontage Commercial Ave Motivation Typical Eff Unit Size 1, Secondary Frontage Alley Highest & Best Use Residential SCA $/Unit Sale Company Address 522 Commercial Ave Multiplier Unit Excess Land Use None City Highmore Multiplier No. County Hyde Legal Access Public Street State/Zip SD / Physical Access Street Region/Area/Zone / / View Similar Houses Tax ID/Recording Location City Utilities All public Sec/Twp/Rge / / Legal Description: Lots 13, 14 & 15, Block 19, Van Camp and Olds Addition to Abram E. Van Camp's Addition Sale Analysis Land Mix Analysis Land-Mix Analysis Land Use Ratios Acres $/Acre Unit Size Unit Type $/Unit Total Unit Value Building Site 100 % Ac. 9, X $ 0.35 = $ 3,281 Road Waste 0 % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ Totals Ac. 9, X $ 0.35 = $ 3,281 CEV Price $ 54,000 - Land Contribution $ 3,281 = Improvement Contribution $ 50,719 Main Improvement Details Age Effective Units Effective Size Contrib/Effective Size Design & Appeal Quality of Construction Rooms Above Grade Basement Finished Bsmt Rooms Below Grade Utility Condition Heating/Cooling Energy Efficient Items Garage/Carport Porch, Patio, Deck Fireplaces, etc 98 1,498 SqFt 1,498 SqFt Story Average Average Total Bdrms Baths SqFt None None Average Average Baseboard Hot Water N/A 2 Car 720 SqFt 232 SqFt Primary Improvement AgWare, Inc. All Rights Reserved.

56 UAAR Index # 18HYD07 Database # 321 Sale # 3 Improved Sale Grantor Douglas R. Hageman Sales Price 84,000 Property Type Residential Grantee Kevin & Cathy Myers Other Contrib Primary Land Use Residential Deeded Acres Net Sale Price 84,000 Deed Bk/Pg 65/174 Sale Date/DOM 06/06/17 / $/Deeded Acre Plat Bk/Pg Prior Sale Date Financing FHA Transfer Type Warranty Deed Prior CEV Price % Fin Adj Topography Fairly Level Analysis Code CEV Price 84,000 Township Source Public Records SCA Unit Type Square Feet Primary Frontage Cummings Ave Motivation Typical Eff Unit Size 2, Secondary Frontage 3rd Street Highest & Best Use Residential SCA $/Unit Sale Company Address 301 Cummings SW Multiplier Unit Excess Land Use City Highmore Multiplier No. County Hyde Legal Access Public Street State/Zip SD / Physical Access Street Region/Area/Zone / / View Similar Houses Tax ID/Recording Location City Utilities All public Sec/Twp/Rge / / Legal Description: North 91.5 feet of Lots 9, 10, 11, 12, 13, 14, Block 6, Parker's Town Sale Analysis Land Mix Analysis Land-Mix Analysis Land Use Ratios Acres $/Acre Unit Size Unit Type $/Unit Total Unit Value Building Site 100 % Ac. 13, X $ 0.35 = $ 4,804 Road Waste 0 % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ Totals Ac. 13, X $ 0.35 = $ 4,804 CEV Price $ 84,000 - Land Contribution $ 4,804 = Improvement Contribution $ 79,196 Main Improvement Details Age Effective Units Effective Size Contrib/Effective Size Design & Appeal Quality of Construction Rooms Above Grade Basement Finished Bsmt Rooms Below Grade Utility Condition Heating/Cooling Energy Efficient Items Garage/Carport Porch, Patio, Deck Fireplaces, etc 117 2,577 SqFt 2,577 SqFt Story - Average Average Total Bdrms Baths Partial None None Average Average Hot Water None 3 Car SqFt N/A N/A Primary Improvement AgWare, Inc. All Rights Reserved.

57 UAAR Land Sale Map COMP 3 COMP 1 COMP AgWare, Inc. All Rights Reserved.

58 UAAR Index # 18HYD02 Database # 316 Sale # 1 Unimproved Sale Grantor Buhler Family, LLP Sales Price 432,000 Property Type Tillable Farm Ground Grantee Travis & Natasha Smith Other Contrib. Primary Land Use Tillable Farm Ground Deeded Acres Net Sale Price 432,000 Deed Bk/Pg 65/159 Sale Date/DOM 05/11/17 / $/Deeded Acre 2, Transfer Type Warranty Deed Prior Sale Date Financing Encumbrance None Known Prior CEV Price % Fin. Adj. Topography FL/Gently Rolling Analysis Code CEV Price 432,000 Township Holabird Source Public Records SCA Unit Type Acres Primary Frontage Gravel Road Motivation Eff. Unit Size Sale Method Live Auction Highest & Best Use Agriculture SCA $/Unit 2, Fence None Address Multiplier Unit % Tillable 96.3 City Multiplier No. Sale Company Dakota Land Co County Hyde Legal Access Minimum Maint. Rd. Soil Productivity # 80.6 State/Zip SD / Physical Access Minimum Maint. Rd. $ Per Soil Prod Region/Area/Zone / / View Rural Tax ID/Recording Location Rural Utilities Rural Sec/Twp/Rge 13 / 112 / 73 Legal Description: Township 112 N, Range 73 W of 5th PM, Hyde County Section13 Property Facts Land Analysis Cost/Income Land-Mix Analysis Land Use Ratios Acres $/Acre Unit Size Unit Type $/Unit Total Unit Value Building Site 100 % Ac. 2, X $ = $ Irrigated Cropland 115 % Ac. 3, X $ = $ Dry Cropland 100 % Ac. 2, X $ = $ 431,999 Hayland 70 % Ac. 1, X $ = $ Pasture 40 % Ac. 1, X $ = $ Recreation- Wood/Water 30 % Ac X $ = $ Road/Waste 0 % 6.00 Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ Totals Ac. 2, X $ = $ 431,999 CEV Price $ 432,000 - Land Contribution $ 431,999 = Improvement Contribution $ Cost and Depreciation Summary Physical Depreciation % Functional Obsolescence % External Obsolescence % Total Depreciation % Total RCN $ Total Improvement Contribution: $ Improvement As % of Price % Income Summary Summary Total Expenses / Stabilized G.I. = Expense Ratio % Total Expenses = $ Net Income / CEV Price 432,000 = Cap Rate % Net Income = $ Comments AgWare, Inc. All Rights Reserved.

59 UAAR Index # 18HYD02 Database # 316 Sale # AgWare, Inc. All Rights Reserved.

60 UAAR Index # 18HYD02 Database # 316 Sale # AgWare, Inc. All Rights Reserved.

61 UAAR Index # 18HYD03 Database # 317 Sale # 2 Unimproved Sale Grantor Buhler Family, LLP Sales Price 1,402,691 Property Type Tillable Farm Ground Grantee Cowan Family, LLP Other Contrib. Primary Land Use Tillable Farm Ground Deeded Acres Net Sale Price 1,402,691 Deed Bk/Pg 65/155 Sale Date/DOM 05/11/17 / $/Deeded Acre 2, Encumbrance None Known Prior Sale Date Financing Transfer Type Warranty Deed Prior CEV Price % Fin. Adj. Topography Gently Rolling Analysis Code CEV Price 1,402,691 Township Highmore Source Public Records SCA Unit Type Acres Primary Frontage Hwy 47 Motivation Eff. Unit Size Sale Method Live Auction Highest & Best Use Agriculture SCA $/Unit 2, Fence Partial Address Multiplier Unit % Tillable 92.1 City Multiplier No. Sale Company Dakota Land Co County Hyde Legal Access Paved State Hwy Soil Productivity # 59.4 State/Zip SD / Physical Access Paved State Hwy $ Per Soil Prod Region/Area/Zone / / View Rural Tax ID/Recording Location Rural Utilities Rural Sec/Twp/Rge 35 / 112 / 72 Legal Description: See appraiser's files Property Facts Land Analysis Cost/Income Land-Mix Analysis Land Use Ratios Acres $/Acre Unit Size Unit Type $/Unit Total Unit Value Building Site 100 % Ac. 2, X $ = $ Irrigated Cropland 115 % Ac. 2, X $ = $ Dry Cropland 100 % Ac. 2, X $ = $ 1,402,693 Hayland 70 % Ac. 1, X $ = $ Pasture 40 % Ac. 1, X $ = $ Recreation- Wood/Water 30 % Ac X $ = $ Road/Waste 0 % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ Totals Ac. 2, X $ = $ 1,402,693 CEV Price $ 1,402,691 - Land Contribution $ 1,402,693 = Improvement Contribution $ Cost and Depreciation Summary Physical Depreciation % Functional Obsolescence % External Obsolescence % Total Depreciation % Total RCN $ Total Improvement Contribution: $ Improvement As % of Price % Income Summary Summary Total Expenses / Stabilized G.I. = Expense Ratio % Total Expenses = $ Net Income / CEV Price 1,402,691 = Cap Rate % Net Income = $ Comments AgWare, Inc. All Rights Reserved.

62 UAAR Index # 18HYD03 Database # 317 Sale # AgWare, Inc. All Rights Reserved.

63 UAAR Index # 18HYD03 Database # 317 Sale # AgWare, Inc. All Rights Reserved.

64 UAAR Index # 18HYD01 Database # 315 Sale # 3 Unimproved Sale Grantor Gary D. Lentz Sales Price 377,976 Property Type Tillable Farm Ground Grantee Travis & Natasha Smith Other Contrib. Primary Land Use Tillable Farm Ground Deeded Acres Net Sale Price 377,976 Deed Bk/Pg 65/500 Sale Date/DOM 07/23/18 / $/Deeded Acre 2, Encumbrance None Known Prior Sale Date Financing Transfer Type Warranty Deed Prior CEV Price % Fin. Adj. Topography Fairly Level Analysis Code CEV Price 377,976 Township Holabird Source Public Records SCA Unit Type Acres Primary Frontage US HIghway 14 Motivation Additional Cropland Eff. Unit Size Sale Method Private Sale Highest & Best Use Agriculture SCA $/Unit 2, Femce None Address Multiplier Unit % Tillable 99 City Multiplier No. Sale Company NA County Hyde Legal Access US Highway 14 Soil Productivity # 73.9 State/Zip SD / Physical Access Paved State Hwy $ Per Soil Prod Region/Area/Zone / / View Rural Tax ID/Recording Location Rural Utilities Rural Sec/Twp/Rge 5 / 112 / 73 Legal Description: Township 112 N, Range 79 W of 5th PM, Hyde County Section 5 Property Facts Land Analysis Cost/Income Land-Mix Analysis Land Use Ratios Acres $/Acre Unit Size Unit Type $/Unit Total Unit Value Building Site 100 % Ac. 2, X $ = $ Irrigated Cropland 115 % Ac. 2, X $ = $ Dry Cropland 100 % Ac. 2, X $ = $ 377,975 Hayland 70 % Ac. 1, X $ = $ Pasture 40 % Ac X $ = $ Recreation- Wood/Water 30 % Ac X $ = $ Road/Waste 0 % 1.62 Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ % Ac. X $ = $ Totals Ac. 2, X $ = $ 377,975 CEV Price $ 377,976 - Land Contribution $ 377,975 = Improvement Contribution $ Cost and Depreciation Summary Physical Depreciation % Functional Obsolescence % External Obsolescence % Total Depreciation % Total RCN $ Total Improvement Contribution: $ Improvement As % of Price % Income Summary Summary Total Expenses / Stabilized G.I. = Expense Ratio % Total Expenses = $ Net Income / CEV Price 377,976 = Cap Rate % Net Income = $ Comments AgWare, Inc. All Rights Reserved.

65 UAAR Index # 18HYD01 Database # 315 Sale # AgWare, Inc. All Rights Reserved.

66 UAAR Index # 18HYD01 Database # 315 Sale # AgWare, Inc. All Rights Reserved.

67

68 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING EAST ALONG US HIGHWAY 14 FROM 336 TH AVENUE VIEW LOOKING EAST ALONG US HIGHWAY 14 FROM EXPERIMENT FARM ROAD 1

69 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING SOUTH ALONG EXPERIMENT FARM ROAD FROM US HIGHWAY 14 VIEW LOOKING NORTH ALONG 336 TH AVENUE FROM SOUTH END OF PROPERTY 2

70 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING EAST ALONG SOUTH END OF PROPERTY FROM 336 TH AVENUE VIEW LOOKING NORTHEAST ACROSS SUBJECT FROM 336 TH AVENUE 3

71 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING EAST ALONG SOUTH END OF PROPERTY FROM EXPERIMENT FARM ROAD VIEW LOOKING NORTH ALONG EXPERIMENT FARM ROAD FROM RAILROAD 4

72 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING NORTH ALONG EXPERIMENT FARM ROAD FROM FARMSTEAD VIEW LOOKING SOUTH ALONG EXPERIMENT FARM ROAD TO FARMSTEAD 5

73 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING NORTHEAST ACROSS SUBJECT FROM EXPERIMENT FARM ROAD SMALL DUG OUT EAST SIDE OF EXPERIMENT FARM ROAD 6

74 PHOTOGRAPHS OF SUBJECT PROPERTY VIEW LOOKING EAST ACROSS GRASSLAND AND TREES EAST SIDE OF EXPERIMENT FARM ROAD VIEW LOOKING EAST ACROSS GRASSLAND AND TREES EAST SIDE OF EXPERIMENT FARM ROAD 7

75 PHOTOGRAPHS OF SUBJECT PROPERTY DEBRIS PILE AND DIRT PILE DUG OUT BY DEBRIS PILE AND DIRT PILE 8

76 PHOTOGRAPHS OF SUBJECT PROPERTY EAST AND NORTH VIEW OF HOUSE SOUTH AND WEST VIEW OF HOUSE 9

77 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE FIRST FLOOR HOUSE FIRST FLOOR 10

78 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE FIRST FLOOR HOUSE FIRST FLOOR 11

79 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE FIRST FLOOR HOUSE FIRST FLOOR 12

80 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE SECOND FLOOR HOUSE SECOND FLOOR 13

81 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE SECOND FLOOR HOUSE SECOND FLOOR 14

82 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE SECOND FLOOR HOUSE SECOND FLOOR 15

83 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE BASEMENT HOUSE BASEMENT 16

84 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE BASEMENT HOUSE BASEMENT 17

85 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE BASEMENT HOUSE BASEMENT 18

86 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE BASEMENT HOUSE BASEMENT 19

87 PHOTOGRAPHS OF SUBJECT PROPERTY HOUSE BASEMENT WEST VIEW OF SEED HOUSE 20

88 PHOTOGRAPHS OF SUBJECT PROPERTY SOUTH VIEW OF SEED HOUSE EAST AND NORTH VIEW OF SEED HOUSE 21

89 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE FIRST FLOOR SEED HOUSE FIRST FLOOR 22

90 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE FIRST FLOOR SEED HOUSE FIRST FLOOR 23

91 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE FIRST FLOOR SEED HOUSE FIRST FLOOR 24

92 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE SECOND FLOOR SEED HOUSE SECOND FLOOR 25

93 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE SECOND FLOOR SEED HOUSE SECOND FLOOR 26

94 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE SECOND FLOOR SEED HOUSE SECOND FLOOR 27

95 PHOTOGRAPHS OF SUBJECT PROPERTY SEED HOUSE SECOND FLOOR WEST VIEW OF MACHINE SHED 28

96 PHOTOGRAPHS OF SUBJECT PROPERTY NORTH VIEW OF MACHINE SHED SOUTH AND EAST VIEW OF MACHINE SHED 29

97 PHOTOGRAPHS OF SUBJECT PROPERTY INTERIOR VIEW OF MACHINE SHED SOUTH AND EAST VIEW OF BARN 30

98 PHOTOGRAPHS OF SUBJECT PROPERTY NORTH AND WEST VIEW OF BARN INTERIOR BARN 31

99 PHOTOGRAPHS OF SUBJECT PROPERTY INTERIOR BARN INTERIOR BARN LEAN TO 32

100 PHOTOGRAPHS OF SUBJECT PROPERTY INTERIOR BARN LOFT SOUTH VIEW NORTH STORAGE SHED 33

101 PHOTOGRAPHS OF SUBJECT PROPERTY EAST AND NORTH VIEW NORTH STORAGE SHED INTERIOR VIEW NORTH STORAGE SHED 34

102 PHOTOGRAPHS OF SUBJECT PROPERTY INTERIOR VIEW NORTH STORAGE SHED WEST AND SOUTH VIEW SOUTH STORAGE SHED 35

103 PHOTOGRAPHS OF SUBJECT PROPERTY EAST VIEW SOUTH STORAGE SHED INTERIOR VIEW SOUTH STORAGE SHED 36

104 PHOTOGRAPHS OF SUBJECT PROPERTY INTERIOR VIEW SOUTH STORAGE SHED INTERIOR VIEW SOUTH STORAGE SHED 37

105 PHOTOGRAPHS OF SUBJECT PROPERTY EAST AND NORTH VIEW SCALE HOUSE INTERIOR VIEW SCALE HOUSE 38

106 PHOTOGRAPHS OF SUBJECT PROPERTY INTERIOR VIEW SCALE HOUSE WEST AND SOUTH VIEW TREE/STORAGE SHED 39

107 PHOTOGRAPHS OF SUBJECT PROPERTY SOUTH AND EAST VIEW TREE/STORAGE SHED WEST STORE ROOM TREE/STORAGE SHED 40

108 PHOTOGRAPHS OF SUBJECT PROPERTY EAST STORE ROOM TREE/STORAGE SHED 41