PINECREST ACADEMY OF NEVADA

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1 NOTICE OF PUBLIC MEETING of the Board of Directors of PINECREST ACADEMY OF NEVADA tice is hereby given that the Board of Directors of Pinecrest Academy of Nevada, a public charter school, will conduct a telephonic public meeting on December 13, 2018, beginning at 8:00 a.m. The call-in information is as follows: Call-in Number: Access Code: # The public is invited to attend. Anyone that wishes to make public comment is welcome to attend the meeting at 6630 Surrey Street, Las Vegas, Nevada Attached hereto is an agenda of all items scheduled to be considered. Unless otherwise stated, items may be taken out of the order presented on the agenda at the discretion of the Chairperson. Reasonable efforts will be made to assist and accommodate physically handicapped persons desiring to attend or participate at the meeting. Any persons requiring assistance may call Annette Christensen at (702) at least two days prior to the meeting so that arrangements may be conveniently made. If you would like copies of the meeting agenda, support materials or minutes, please visit the schools website at For copies of meeting audio, please Public comment may be limited to three minutes per person at the discretion of the Chairperson. 1

2 AGENDA December 13, 2018 Telephonic Meeting of the Board of Directors of Pinecrest Academy of Nevada (Action may be taken on those items denoted For Possible Action ) 1. Call to Order and Roll Call (For Possible Action) 2. Public Comment and Discussion ( action may be taken on a matter raised under this item of the agenda until the matter itself has been specifically included on an agenda as an item upon which action will be taken.) 3. Discussion and Possible Action to Approve the Purchase Price for Horizon Campus (For Possible Action) 4. Public Comments and Discussion (For Discussion) 5. Adjournment (For Possible Action) This notice and agenda has been posted on or before 9 a.m. on the third working day before the meeting at the following locations: (1) Henderson City Hall 240 South Water Street, Henderson, NV (2) Las Vegas City Hall 495 S Main St., Las Vegas, NV (3) rth Las Vegas City Hall 2250 Las Vegas Blvd. rth, rth Las Vegas, NV (4) Academica Nevada 6630 Surrey St., Las Vegas NV (5) notices.nv.gov 2

3 PINECREST ACADEMY OF NEVADA Supporting Document Meeting Date: December 13, 2018 Agenda Item: 3 Discussion and Possible Action to Approve the Purchase Price for Horizon Campus Number of Enclosures: 2 SUBJECT: Approval of Purchase Price for Horizon Campus X Action Appointments Approval Consent Agenda Information Public Hearing Regular Adoption Presenter (s): Trevor Goodsell Recommendation: Proposed wording for motion/action: Move to approve the purchase price for the Horizon Campus. Fiscal Impact: N/A Estimated Length of time for consideration (in minutes): 5-10 minutes Background: The third appraisal for the Horizon campus has now been submitted and the Board will need to approve a purchase price. Submitted By: Staff 3

4 INTERNATIONAL APPRAISAL & CONSULTING APPRAISAL REVIEWS OF APPRAISAL REPORTS PREPARED BY TROPHY PROPERTY COMPANY, INC., AND MORSE-KRUEGER & ASSOCIATES, LLC PROPERTY APPRAISED Pinecrest Academy Horizon Campus Located at 1360 South Boulder Highway Henderson, Clark County, Nevada EFFECTIVE DATES OF VALUE IN APPRAISALS UNDER REVIEW: Trophy Property Company, Inc. As of October 8, 2018 Morse-Krueger & Associates, LLC As of vember 14, 2018 EFFECTIVE DATE OF REVIEWER S OPINIONS & CONCLUSIONS: vember 14, 2018 PREPARED FOR: Pinecrest Academy of Las Vegas Attn: Mr. Trevor Goodsell 1378 Paseo Verde Parkway, Suite 200 Henderson, Nevada PREPARED BY: Tio S. DiFederico, MAI The DiFederico Group 3030 South Durango Drive Las Vegas, Nevada TDG File.: THE DIFEDERICO GROUP INTERNATIONAL APPRAISAL & CONSULTING 3030 S. DURANGO DRIVE, LAS VEGAS, NV (702) FAX (702)

5 INTERNATIONAL APPRAISAL & CONSULTING December 7, 2018 Pinecrest Academy of Las Vegas Attn: Mr. Trevor Goodsell 1378 Paseo Verde Parkway, Suite 200 Henderson, Nevada SUBJECT: Reviews of appraisal reports prepared by Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, of Pinecrest Academy Horizon Campus, located at 1360 South Boulder Highway, Henderson, Clark County, NV Dear Mr. Goodsell: Pursuant to your request, and for the purpose of these appraisal reviews, I have made relevant investigations regarding the above-referenced property. I have reviewed the appraisals prepared by Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, regarding the above referenced property. The client and the intended user of these appraisal reviews is Pinecrest Academy of Las Vegas, c/o Mr. Trevor Goodsell and the intended use is to provide the client external reviews of the referenced appraisals. The Trophy Property Company, Inc., appraisal was prepared with a valuation date of October 8, 2018, and a report date of October 29, Trophy Property Company, Inc., identifies this appraisal as File Number C. This appraisal was prepared for the purposes of estimating the as is market value of the fee simple estate at the date of inspection. The Morse-Krueger & Associates, LLC, appraisal was prepared with a valuation date of vember 14, 2018, and a report date of vember 19, Morse-Krueger & Associates, LLC, identifies this appraisal as File Number This appraisal was prepared for the purposes of developing an opinion of the market value of the leased fee estate interest as of vember 14, The scope of the appraisal reviews was the following: to identify the property and the property rights appraised in each report; to determine whether the appraisal reports conform to standards set by the Uniform Standards of Professional Appraisal Practice (USPAP); to form an opinion as to the apparent adequacy and relevance of the data contained in the reports, and the analysis of that data; to analyze the appropriateness of the appraisal methods and techniques applied in each report; to form an opinion as to whether the analysis, opinions and conclusions in the reports are appropriate and reasonable; and to set forth specific reasons for any disagreement. The reviews were completed in compliance with the reporting requirements set forth under Standards Rule 3 and 4 of USPAP as promulgated by the Appraisal Standards Board of the Appraisal Foundation. Additionally, the appraisal reviews were prepared in accordance with the Code of Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and USPAP as promulgated by the Appraisal Standards Board of the Appraisal Foundation and the State of Nevada. The depth of discussion contained in the attached appraisal review report is specific to your needs and for the above stated use. Use of these appraisal reviews by anyone other THE DIFEDERICO GROUP INTERNATIONAL APPRAISAL & CONSULTING 3030 S. DURANGO DRIVE, LAS VEGAS, NV (702) FAX (702)

6 Pinecrest Academy of Las Vegas Trevor Goodsell December 7, 2018 Page 2 than the stated intended user and for any other use than the stated intended use is prohibited. The review appraiser is not responsible for its unauthorized use. As of the date of the review, the reviewer had not personally inspected the property that is the subject of the appraisal. The reviewer independently verified the accuracy of the information presented in the appraisals using county records, deeds of trust and information available from various reporting agencies. The reviewer has also examined the Clark County Assessor site for the accuracy of the subject ownership, ownership history, site area, building size, zoning and similar items. The reviewer then searched commercial property listing and marketing service websites to verify information in the reports about the subject property and the comparables. This review is a supplementary critique for use in conjunction with the appraisal reports under review. Any extraordinary assumptions and/or hypothetical conditions contained in the appraisal reports are relevant to these reviews along with any additional limiting conditions stated within these reviews. The reviews are an integral part of the appraisal reports and are invalid as a separate documents. Based upon my reviews of Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, appraisal reports, it is my conclusion that the retrospective market value of the leased fee interest of the subject property, as of vember 14, 2018, was as follows: Fee Simple Market Value As of vember 14, 2018 TWELVE MILLION FOUR HUNDRED THOUSAND DOLLARS ($12,400,000). The above retrospective value is based on the following extraordinary assumption and its use may affect the assignment results: 1. The above value is based on the extraordinary assumption that the condition of the property noted during the Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, inspection was similar to the condition of the property on vember 14, 2018, the effective date of my review. 2. The contract rental rate on the effective date of value was $76, per month on a triple net basis. Respectfully submitted, THE DIFEDERICO GROUP Tio S. DiFederico, MAI Certified General Real Estate Appraiser Nevada Certificate #A CG (05/19) THE DIFEDERICO GROUP INTERNATIONAL APPRAISAL & CONSULTING 3030 S. DURANGO DRIVE, LAS VEGAS, NV (702) FAX (702)

7 SUMMARY OF APPRAISAL REVIEW SUMMARY OF APPRAISAL REVIEW Client/Intended Users: Intended Use: Purpose of the Review: Pinecrest Academy of Las Vegas Attn: Mr. Trevor Goodsell 1378 Paseo Verde Parkway, Suite 200 Henderson, Nevada Provide Mr. Goodsell with external reviews of the referenced appraisals. Determine if the results in either report are credible and if they comply with USPAP, and, if necessary, express an independent opinion of the value of the subject property. Reviewers: DiFederico Group File.: The DiFederico Group Tio S. DiFederico, MAI Appraisal Review Date: December 7, 2018 Property Description: APPRAISALS UNDER REVIEW Pinecrest Academy Horizon Campus, is a charter school that consists of two (2) freestanding buildings fronting Boulder Highway and a larger building to the rear of the site. According to the supplied information, these buildings contain a total of 46,392 square feet of rentable building area (RA). Property Address: 1360 S. Boulder Highway, Henderson, Clark County, Nevada, Assessor s Parcel Number (APN): Appraisal Firm: Appraisers: Appraisal File s: Trophy Property Company, Inc., and Morse- Krueger & Associates, LLC Trophy Property Company, Inc., John L Emmerling, MAI Morse-Krueger & Associates, LLC, Scott D. Krueger, MAI Trophy Property Company, Inc. - #18-011C Morse-Krueger & Associates, LLC # Effective Appraisal Date: Trophy Property Company, Inc. 10/08/2018 Morse-Krueger & Associates, LLC 11/14/2018 Inspection Date: Trophy Property Company, Inc. 10/07/2018 FILE# PAGE 1 7

8 SUMMARY OF APPRAISAL REVIEW Morse-Krueger & Associates, LLC 11/14/2018 Date of the Report: Trophy Property Company, Inc. 10/29/2018 Morse-Krueger & Associates, LLC 11/19/2018 Interest Appraised: Exposure Time / Marketing Period: Market Value Conclusions: Trophy Property Company, Inc. Fee Simple Morse-Krueger & Associates, LLC Leased Fee Trophy Property Company, Inc Months Morse-Krueger & Associates, LLC < 6 Months Trophy Property Company, Inc. Land Only - Sales Comparison Approach: $2,165,000 Cost Approach: $10,635,000 Sales Comparison Approach: $10,440,000 to $10,670,000 Income Capitalization Approach: $10,245,000 As Is Fee Simple Value 10/08/2018: $10,635,000 Market Value Conclusions: Morse-Krueger & Associates, LLC Sales Comparison Approach: $12,500,000 Income Capitalization Approach: $12,400,000 As Is Leased Fee Value 11/14/2018: $12,400,000 Market Value Conclusions: The DiFederico Group Retrospective 11/08/2018 Leased Fee Value: $12,400,000 The above retrospective value is based on the following extraordinary assumption and its use may affect the assignment results: 1. The above value is based on the extraordinary assumption that the condition of the property noted during the Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, inspection was similar to the condition of the property on vember 14, 2018, the effective date of my review. 2. The contract rental rate on the effective date of value was $76, per month on a triple net basis. FILE# PAGE 2 8

9 COMMERCIAL PROPERTY APPRAISAL REVIEW COMMERCIAL PROPERTY APPRAISAL REVIEW In accordance with Standard Rules 3 and 4 of the Uniform Standards of Professional Appraisal Practice (USPAP), effective date January 1, 2018 through December 31, 2019, I am performing appraisal review assignments involving appraisals of the Pinecrest Academy -Horizon Campus, located at 1360 South Boulder Highway, Henderson, Nevada In acting as a reviewer, I am developing and reporting credible opinions as to the quality of other appraisers work. The other appraisers in this case are John L, Emmerling, MAI of Trophy Property Company, Inc., and Scott Krueger, MAI, of Morse-Krueger & Associates, LLC. The Trophy Property Company, Inc., appraisal is their File C and has a report date of October 29, 2018 and an effective date of value of October 8, The Morse- Krueger & Associates, LLC, appraisal is their File and has a report date of vember 19, 2018 and an effective date of value of vember 14, My review opinions about the quality will encompass the completeness, adequacy, relevance, appropriateness and reasonableness of the works under review. REVIEWER S CLIENT, INTENDED USERS AND INTENDED USE The reviewer s client and the intended user of these appraisal reviews is Pinecrest Academy of Las Vegas, c/o Trevor Goodsell, and the intended use is to provide the client external reviews of the referenced appraisals. PURPOSE OF THE APPRAISAL REVIEW The purpose of my reviews was to determine if the results of the works under review were credible for the intended users intended use, as well as to evaluate whether the appraisal reports conformed to standards set by the Uniform Standards of Professional Appraisal Practice (USPAP); to form an opinion as to the apparent adequacy and relevance of the data contained in each report, and the analysis of that data in each report; to analyze the appropriateness of the appraisal methods and techniques applied in each report; to form an opinion as to whether the analysis, opinions and conclusions in each report are appropriate and reasonable; and to set forth specific reasons for any disagreement. IDENTIFICATION OF THE WORK UNDER REVIEW The Pinecrest Academy Horizon Campus, is located 1360 S. Boulder Highway, Henderson, Clark County, Nevada, This is a charter school that consists of two (2) free-standing buildings fronting Boulder Highway and a larger building to the rear of the site. According to the supplied information, these buildings contain a total of 46,392 square feet of rentable building area (RA). It does not appear that any of the appraisers had any ownership interest in the properties that is the subject of the work under review. EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS The retrospective value is based on the extraordinary assumption that the condition of the property noted in the two (2) appraisals under review was similar to the condition of the property on vember 14, 2018, the effective date of value of my value conclusion in the review of these appraisals. FILE# PAGE 3 9

10 COMMERCIAL PROPERTY APPRAISAL REVIEW SCOPE OF WORK The scope of work that this reviewer has undertaken in this review assignment is first to have read the two (2) appraisals. I also contacted the Henderson Planning Department, researched public records, deeds, and building records, and carefully went through each appraisal report and addressed its compliance with Standard 1 and Standard 2 of USPAP and then addressed my compliance to Standards 3 and 4 of the edition of USPAP in effect when these appraisals were completed. PURPOSE OF THE REVIEW The purpose of these reviews is to form an opinion, in compliance with the Uniform Standards of Professional Appraisal Practice of the APPRAISAL FOUNDATION, as to the following: 1. Completeness of each Report 2. Apparent accuracy and relevance of the data & propriety of any adjustments to the data in each report 3. Appropriateness of appraisal methods & techniques used in each report 4. Appropriateness & reasonableness of the analysis, opinions & conclusions in each report SCOPE AND LIMITING CONDITIONS These Appraisal Reviews are subject to the following conditions and to such other specific Limiting Conditions as are set forth in the body of the review: 1. Possession of these reviews, or copies thereof, does not carry with it the right of publication. 2. These reviews are intended solely for the internal use of the Company or its assigns. Neither all nor any part of the contents of these Reviews shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the reviewer. 3. Unless prior arrangements have been made, the reviewer, by reason of these Reviews, is not required to give further consultation or testimony, or to be in attendance in court with reference to the property that is the subject of these reviews. 4. In addition to the data, analyses, and conclusions contained in the appraisal reports under review, the analyses, opinions and conclusions in this review also considered additional market data that I researched for this review. 5. The reviewer independently verified the accuracy of the information presented in the appraisals, using county records, deeds of trust and information available from various reporting agencies. The reviewer has examined the Clark County Assessor site for the accuracy of the subject ownership, ownership history, site area, zoning and similar items. The reviewer also searched commercial property listing and marketing service websites to verify information in the reports about the subject and the comparables. 6. All analyses, opinions and conclusions expressed by the Reviewer are limited by the scope of the review process as defined herein. FILE# PAGE 4 10

11 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES APPRAISAL REPORT REVIEWS Ethics Rule: An appraiser must promote and preserve the public trust inherent in appraisal practice by observing the highest standards of professional ethics. An appraiser must comply with USPAP when obligated by law or regulation, or by agreement with the client or intended users. In addition to these requirements, an individual should comply any time that individual represents that he or she is performing the service as an appraiser. Does each appraisal report reveal any apparent noncompliance with the USPAP Ethics Rule? Yes X Reviewer s Comments: Based on the provided appraisals, both were compliant with the USPAP Ethics Rule. Record Keeping Rule: An appraiser must prepare a work file for each appraisal or appraisal review assignment. A work file must be in existence prior to the issuance of any report. A written summary of an oral report must be added to the work file within a reasonable time after the issuance of the oral report. An appraiser must retain the work file for a period of at least five years after preparation or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment. An appraiser must have custody of the work file, or make appropriate work file retention, access, and retrieval arrangements with the party having custody of the work file. Does either appraisal report reveal any apparent noncompliance with the USPAP Record Keeping Rule? Yes X Reviewer s Comments: I was not provided with the work file for either appraisal. Competency Rule: An appraiser must: (1) be competent to perform the assignment; (2) acquire the necessary competency to perform the assignment; or (3) decline or withdraw from the assignment. The appraiser must determine, prior to accepting an assignment, that he or she can perform the assignment competently. A competent appraiser has the ability to properly identify the problem to be addressed, has the knowledge and experience to complete the assignment competently, and has recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment. If the appraiser determines he or she is not competent prior to accepting an assignment, the appraiser must disclose the lack of knowledge and/or experience to the client before accepting the assignment, take all steps necessary or appropriate to complete the assignment competently, and describe, in the report, the lack of knowledge and/or experience and the steps taken to complete the assignment competently. When facts or conditions are discovered during the course of an assignment that cause an appraiser to determine, at that time, that he or she lacks the required knowledge and experience to complete the assignment competently, the appraiser must notify the client, and take all steps necessary or appropriate to complete the assignment competently, and describe, in the report, the lack of knowledge and/or experience and the steps taken to complete the assignment competently. Do the appraisal reports reveal any apparent noncompliance with the USPAP Competency Rule? Yes X Reviewer s Comments: Based on the provided appraisals, both were compliant with the Competency Rule. FILE# PAGE 5 11

12 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES Scope of Work Rule: For each appraisal and appraisal review assignment, an appraiser must identify the problem to be solved, determine and perform the scope of work necessary to develop credible assignment results, and disclose the scope of work in the report. An appraiser must properly identify the problem to be solved in order to determine the appropriate scope of work. The appraiser must be prepared to demonstrate that the scope of work is sufficient to produce credible assignment results. An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use. An appraiser must not allow the intended use of an assignment or a client s objectives to cause the assignment results to be biased. The report must contain sufficient information to allow intended users to understand the scope of work performed. Do the appraisal reports reveal any apparent noncompliance with the USPAP Scope of Work Rule? Reviewer s Comments: While both reports identify the problem to be solved and described the process to provide an opinion of value, in the Work Scope on page 8 of the Trophy Property Company report, the appraiser refers to the appraisal presented as being in a summary format. Prior to January 1, 2014, USPAP provided three (3) written report options for real property and personal property appraisal assignments: Self-Contained Appraisal Report, Summary Appraisal Report, and Restricted Use Appraisal Report. However, as of January 1, 2014, USPAP changed those options and only had two (2) written report options for real property and personal property appraisal assignments: Appraisal Report and Restricted Appraisal Report. These formats continued to be the only options in compliance with USPAP in the and editions. Therefore, the summary format option has not been in compliance with USPAP for almost five (5) years. Jurisdictional Exception Rule: If any applicable law or regulation precludes compliance with any part of USPAP, only that part of USPAP becomes void for that assignment. In an assignment involving a jurisdictional exception, an appraiser must identify the law or regulation that precludes compliance with USPAP, comply with that law or regulation, clearly and conspicuously disclose in the report the part of USPAP that is voided by that law or regulation, and cite in the report the law or regulation requiring this exception to USPAP compliance. Do the appraisal reports reveal any apparent noncompliance with the USPAP Jurisdictional Exception Rule? Yes X Reviewer s Comments: t applicable FILE# PAGE 6 12

13 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES Standard 1 In developing a real property appraisal, an appraiser must identify the problem to be solved, determine the scope of work necessary to solve the problem, and correctly complete research and analyses necessary to produce a credible appraisal. Standards Rule In developing a real property appraisal, an appraiser must: 1-1(a) be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal; Did the appraisals under review meet this requirement? 1-1(b) not commit a substantial error of omission or commission that significantly affects an appraisal; and Did the appraisal under review meet this requirement? 1-1(c) not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. Did the appraisals under review meet this requirement? Yes X Reviewer s Explanation: The reports used recognized methods and techniques to produce credible appraisals. However, the Trophy Property Company, Inc., appraisal was rendered in a careless manner. Numerous errors were made that affected the credibility of the value results. This is a violation of S.R. 1-1(c). First, the Trophy Property Company, Inc., appraisal identifies the appraisal format as An Appraisal Report on the cover page. However, the first paragraph of the letter of transmittal states it is in summary format and the next page identifies it as being a Limited Restricted Report. It is called a summary format twice in the Work Scope on page 8. USPAP retired the summary format almost five (5) years ago. I also noted that the definitions given on pages 9 and 10 are sourced from The Appraisal of Real Estate, 13 th Edition and The Dictionary of Real Estate Appraisal, 2 nd Edition. The Appraisal of Real Estate, 13 th Edition was retired in 2015 when the 14 th Edition was released by the Appraisal Institute. And the 2 nd Edition of The Dictionary of Real Estate Appraisal, which was released in 1984, was retired in 1993 when the 3 rd Edition was released. The Appraisal Institute s most recent release was the 6 th Edition, which was released in Errors continue throughout the report. For example, under utilities, the Trophy Property Company, Inc., appraisal shows Comcast as the local cable company. Comcast does not operate in this area. On page 57, the appraiser concludes the site s market value at $10.00 per square foot and then uses $8.00 per square foot in the table stating the value. In addition, according to the Clark County Assessor, the size of two (2) of the land sales used to value the site are shown as being larger than they are and a third is based on gross acreage. This results in understating the unit prices paid and understating the subject s site value. On page 65, the Trophy Property Company, Inc., appraisal shows information for eight (8) charter schools that had purchase options. The appraiser presents a table that includes the FILE# PAGE 7 13

14 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES name of the school, which is most cases is only a partial reference to the area, the start lease date, end lease date, annual rent, building size, year of construction, rent per square foot, option sale date, option rental rate, option purchase price and capitalization rate. While the appraiser did not provide all of the names or any of the addresses or Assessor Parcel Numbers, I was able to research these properties. Of the eight (8) improved sales, the appraiser had the incorrect year built for four (4). This was confirmed by reviewing the Clark County Assessor s aerial photographs that reflect when construction began and was completed for each property. This appraiser did include the option sale date for all eight (8), which indicates that four (4) of these properties would not be sold until at least 2020 and two (2) would be in The other two (2) were stated to have option dates on As of the date of this report, December 7, 2018, the Clark County Assessor reflects that none of these properties have sold. This is not discussed in the report. This is misleading as it suggests to the reader that these properties sold, when in fact, none of these charter schools have sold. The Trophy Property Company, Inc., appraiser then uses the sales comparison approach as support for the conclusion indicated by the cost approach because he states that the subject is a Specialty Use property and there is a restricted amount of sale data for charter schools. The appraiser then goes on to identify seven (7) sales, three (3) that closed in April of 2015, four (4) that closed in 2017 and one (1) supplemental sale from April of Adding the three (3) additional 2018 sales from the Morse-Krueger & Associates report, that were not used in the Trophy Property Company, Inc., report, reflects ten (10) fairly recent charter school sales and four (4) just from This indicates an active market. The interesting part is the fourth paragraph on page 62. This states that These sales prices can be misleading as in many cases the acquisition option price to the tenant (school) was established at the time the school was completed and both the rental rate (with annual escalators) and option price were documented. In nearly all these instances, the Las Vegas marketplace has experienced increases in labor, construction materials, and land prices. The Trophy Property Company, Inc., appraiser then concludes a value below the average. There is no analysis or discussion of the adjustments used to conclude that value. This is interesting because on page 65 the Trophy Property Company, Inc., appraiser shows eight (8) charter schools that have the same type of option to buy situation that this appraiser just discussed as being potentially misleading. However, this appraiser uses the overall capitalization rates generated by those sales with no discussion about them potentially being misleading, and none of those properties have sold as of the date of this report. Standards Rule In developing a real property appraisal, an appraiser must: 1-2(a) identify the client and other intended users; Did the appraisals under review meet this requirement? 1-2(b) identify the intended use of the appraiser s opinions and conclusions; Did the appraisals under review meet this requirement? 1-2(c) identify the type and definition of value and, if the value opinion to be developed is market value, ascertain whether the value is to be the most probable price: FILE# PAGE 8 14

15 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES 1-2(d) 1-2(e) 1-2(f) 1-2(g) 1-2(h) (i) in terms of cash; or (ii) in terms of financial arrangements equivalent to cash; or (iii) in other precisely defined terms; and (iv) if the opinion of value is to be based on non-market financing or financing with unusual conditions or incentives, the terms of such financing must be clearly identified and the appraisers opinion of their contributions to or negative influence on value must be developed by analysis of relevant market data; Did the appraisals under review meet this requirement? identify the effective date of the appraiser s opinions and conclusions Did the appraisals under review meet this requirement? identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, including: (i) its location and physical, legal, and economic attributes; (ii) the real property interest to be valued; (iii) any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal; (iv) any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and (v) whether the subject property is a fractional interest, physical segment, or partial holding; Did the appraisal under review meet this requirement? identify any extraordinary assumptions necessary in the assignment; Did the appraisal under review meet this requirement? Yes X N/A identify any hypothetical conditions necessary in the assignment; and Did the appraisal under review meet this requirement? Yes X N/A determine the scope of work necessary to produce credible assignment results in accordance with the SCOPE OF WORK RULE; Did the appraisal under review meet this requirement? Reviewer s Explanation: Both appraisers properly identified the client and intended user, and intended use in the appraisal reports under review. The definitions of market value FILE# PAGE 9 15

16 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES were provided within the appraisal reports. Both appraisers properly identified the effective dates of their opinions and conclusions and the dates of their report. Both appraisers identified the characteristics that are relevant to the subject property. Neither appraiser identified any extraordinary assumptions or hypothetical conditions within the report. Standards Rule When necessary for credible assignment results in developing a market value opinion, an appraiser must: 1-3(a) identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations, economic supply and demand, the physical adaptability of the real estate, and market area trends; and Did the appraisal under review meet this requirement? 1-3(b) develop an opinion of the highest and best use of the real estate. Did the appraisal under review meet this requirement? Reviewer s Explanation: Both appraisers discussed the market trends, land use regulations, economic supply and demand and the physical adaptability of the subject. The Highest and Best use analyses of the property as though vacant and as improved was discussed in both reports. Standards Rule In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results. 1-4(a) When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. Did both appraisals under review meet this requirement? Yes X 1-4(b) When a cost approach is necessary for credible assignment results, an appraiser must: (i) develop an opinion of site value by an appropriate appraisal method or technique; (ii) analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and (iii) analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation). Did both the appraisals under review meet this requirement? Yes X FILE# PAGE 10 16

17 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES 1-4(c) 1-4(d) 1-4(e) 1-4(f) 1-4(g) When an income approach is necessary for credible assignment results, an appraiser must: (i) analyze such comparable rental data as are available and/or the potential earnings capacity of the property to estimate the gross income potential of the property; (ii) analyze such comparable operating expense data as are available to estimate the operating expenses of the property; (iii) analyze such comparable data as are available to estimate rates of capitalization and/or rates of discount; and (iv) base projections of future rent and/or income potential and expenses on reasonably clear and appropriate evidence Did both appraisals under review meet this requirement? Yes X When developing an opinion of the value of a leased fee estate or a leasehold estate, an appraiser must analyze the effect on value, if any, of the terms and conditions of the lease(s). Did both appraisals under review meet this requirement? Yes X N/A When analyzing the assemblage of the various estates or component parts of a property, an appraiser must analyze the effect on value, if any, of the assemblage. An appraiser must refrain from valuing the whole solely by adding together the individual values of the various estates or component parts. Did the appraisal under review meet this requirement? Yes X N/A When analyzing anticipated public or private improvements, located on or off the site, an appraiser must analyze the effect on value, if any, of such anticipated improvements to the extent they are reflected in market actions. Did the appraisal under review meet this requirement? Yes X N/A When personal property, trade fixtures, or intangible items are included in the appraisal, the appraiser must analyze the effect on value of such non-real property items. Did the appraisal under review meet this requirement? Yes X N/A Reviewer s Explanation: S.R. 1-4(a). The Trophy Property Company, Inc.., appraiser completes a sales comparison approach for both the land and improved value. In the land FILE# PAGE 11 17

18 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES value, this appraiser identifies eight land sales. Of those, the land area is overstated on two (2), and the appraiser used gross acreage for a third. This results in understating the unit prices paid for those sales. The appraiser then discusses the issues that were considered for adjustment. The appraiser states that no adjustments were made for the effective sales price, rights conveyed, financing terms, or conditions of sale. He then applies upward adjustments to Sales 1, 2, 4 and 6 for increased market conditions since those sites sold. The appraiser then considers location differences and concludes that Sales 4 through 7 require upward adjustments for inferior locations. Sales 2 and 8 were considered to have similar locations. There is no mention of Sale 1 s location. As for physical characteristics, the appraiser adjusts all but Sale 6 upward for size differences. Sale 6 had a similar size. He then adjusted those sales with moderate to steep topography due to the additional costs of development. The appraiser then states that states on page 57; While a charter school can be developed in all zoning classifications, this data indicates that sites developed residentially are slightly lower in price and we have adjusted these sales (#2, #5, and #7 upward for development potential (use). (sic) According to a planner with the city of Henderson, charter schools are not allowed in all zoning classifications. The following is a copy of their development code on schools. The boxes with an S allows charter schools with certain standards to be met. The boxes with a C require approval of a conditional use permit. Charter schools are not allowed in the boxes in grey. This includes the RS residential zoning classifications. This appraisers Land Sales 2 and 5 were zoned R-S8, which would not allow a charter school and are therefore, not comparable sales. In addition, charter schools are no allowed in the Airport Environs Overlay District (AE). But more interesting is the fact that every adjustment applied to these sales was upward. This would indicate that all of these sales are inferior. The highest sales price per square foot for these sales was reflected by Sale 8 at $10.01 per square foot. According to this appraiser, Sale 8 only required one adjustment, and that was upward for being over 50% larger than the subject. This indicates a value above $10.01 per square foot. Again, all of the appraiser s adjustments to these sales was upward. However, the appraiser concludes a land value of $10.00 per square foot? As for the sales comparison approach as improved, there was no analysis or adjustments in the sales comparison approach portion of the Trophy Property Company, Inc., report. And considering that sale 7 is indicated to have closed in 2015 for $8.7M and then re-sold in 2018 for $13.5M, which is a 55% increase over three (3) years, substantial upward adjustments for market conditions was indicated. However, there was no discussion of this increase in the FILE# PAGE 12 18

19 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES Trophy Property Company, Inc., report. Their appraiser simply stated the names, addresses (of which one was incorrect), sales dates, sales prices, building square footages, price per square foot and land area for the seven (7) sales. The appraiser then stated the range of sizes and unit prices and stated his value conclusion. There is no indication that any of these sales were confirmed by anyone involved with these sales. In comparison, the appraiser for the Morse-Krueger & Associates, LLC report provided detailed abstracts of each sale and then prepared an adjustment grid with the accompanying narrative that supported the value conclusion. This report included the necessary upward adjustment for the increased market conditions. S.R. 1-4(b). As for the cost approach to value, only the Trophy Property Company, Inc., included one. However, it did not provide the sections and page numbers needed to verify if this was done correctly. The appraiser states that he used the Marshall Valuation Manual and concluded the direct costs for the buildings at $140 per square foot. Without knowing what category was used, I looked at the cost of an average quality Class D wood-frame elementary schools. According to Marshall, the base cost is $133 per square foot and to that you must at a minimum apply a current multiplier and a local multiplier. The October 2018 current multiplier was 1.08 and the local multiplier was Just applying these multipliers reflects the cost at $ per square foot ($133/SF x 1.08 x 1.12 = $160.88/SF). This alone reflects the value is understated by $968,517 ($ $ = $20.88 and $20.88 x 46,392 = $968,517). Adding the indirect costs at the 18.35% used the Trophy Property Company, Inc., appraisal, reflects this mistake increases to $1,146,239 ($968,665 x 18.35% = $1,146,239). Therefore, after considering the understated land value and that the wrong direct cost was used, I have concluded the Trophy Property Company, Inc., report s cost approach to value, which is given the most weight in the value conclusion, is grossly understated in this report. S.R. 1-4(c). Both appraisers completed the income approach to value. Unfortunately, the Trophy Property Company, Inc. report used the wrong rental rate and did not include the overall capitalization rate from any closed sales. In fact, he relied on the rates that he reported to be based on options when the properties were built. This was the reason he felt the sales prices of his comparable sales were misleading, but yet they are reliable for this approach? That does not make sense. In addition, this appraiser removes 2% for expenses to arrive at the net operating income (NOI) for the subject that he then applies an 8.00% overall capitalization rate (Ro) to. However, is uses the potential gross income when calculating the Ro s for the comparables. You can use the gross potential income of the comparables, but you must then use the gross potential income of the subject. In this situation, the 2% expense rate should have been applied to the comparables to arrive at their respective NOI s if he wanted to use the NOI for the subject. You just can t compare apples to oranges. This is misleading as it over states that Ro s generated by these future sales by approximately 20 basis points. If you just correct these mistakes by increasing the rent to the actual rate of $76,146 per month, and decrease this appraiser s 8.00% Ro by 20 basis points to 7.80%, the value indication by this appraiser s income approach increases from $10,245,000 to $11,480,473. The Morse-Krueger & Associates report s income approach does not include any expenses. Based on my experience, an expense for management would have been appropriate. A property like the subject may very well be managed internally without outside professional assistance and, thus, have no management charge or a minimal management charge. However, the handling of such items requires expenditure of time, effort, and resources on the part of the owner or partners, and represents time and resources that are lost on the FILE# PAGE 13 19

20 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES management of the subject property that could be spent productively on other endeavors. As such, any internal management by the subject owners or other related parties still requires a management charge. The charge for management for the subject property is conceptual and recognizes that the expenditure of the owners time, resources, and effort represents a valid expense for the subject property. Based on my research, a reasonable management charge would have been 1.50%. Applying this adjustment would change the range from $12,183,413 - $12,603,531, to $12,000,662-$12,414,478, which still supports his concluded value of $12,400,000 by the income approach. Standards Rule When the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business: 1-5(a) analyze all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal; and Did both appraisals under review meet this requirement? 1-5(b) analyze all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal. Did both appraisals under review meet this requirement? N/A Reviewer s Explanation: Both appraisers discuss the property ownership and the subject s sale history, which did not transfer in the previous three years. Standards Rule In developing a real property appraisal, an appraiser must: 1-6(a) reconcile the quality and quantity of data available and analyzed within the approaches used; and Did both appraisals under review meet this requirement? 1-6(b) reconcile the applicability or suitability of the approaches used to arrive at the value conclusion(s). Did both appraisals under review meet this requirement? Reviewer s Explanation: Standards Rule 1-6 was satisfied in the report. Standard Rule 2 In reporting the results of a real property appraisal, an appraiser must communicate each analysis, opinion, and conclusion in a manner that is not misleading. Standards Rule Each written or oral real property appraisal report must: 2-1(a) clearly and accurately set forth the appraisal in a manner that will not be misleading; Did both appraisals under review meet this requirement? FILE# PAGE 14 20

21 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES 2-1(b) 2-1(c) contain sufficient information to enable the intended users of the appraisal to understand the report properly; and Did the appraisal under review meet this requirement? clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions used in the assignment. Did the appraisal under review meet this requirement? Reviewer s Explanation: The appraisal reports contain sufficient information to enable the intended users to understand the report properly. The appraisal report contains sufficient information to convey the results. 2-2(a) (i) (ii) (iii) (iv) (v) (vi) Each written real property report must be prepared under one of the following options and prominently state which option is used: Appraisal Report or Restricted Report. state the identity of the client and any intended users, by name or type; Did both appraisals under review meet this requirement? state the intended use of the appraisal; Did both appraisals under review meet this requirement? summarize information sufficient to identify the real estate involved in the appraisal, including the physical and economic property characteristics relevant to the assignment; Did both appraisals under review meet this requirement? state the real property interest appraised; Did both appraisals under review meet this requirement? state the type and definition of value and cite the source of the definition; Did both appraisals under review meet this requirement? state the effective date of the appraisal and the date of the report; Did both appraisals under review meet this requirement? FILE# PAGE 15 21

22 REVIEW REMARKS REGARDING USPAP COMPLIANCE ISSUES (vii) summarize the scope of work used to develop the appraisal. Did both appraisals under review meet this requirement? (viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained. Did both appraisal under review meet this requirement? (ix) state the use of the real estate existing as of the date of value and the use of the real estate reflected in the appraisal; Did both appraisals under review meet this requirement? (x) when an opinion of highest and best use was developed by the appraiser, describe the support and rationale for that opinion; Did both appraisals under review meet this requirement? (xi) state all extraordinary assumptions and hypothetical conditions; and state that their use might have affected the assignment results Did both appraisals under review meet this requirement? Yes X N/A (xii) include a signed certification in accordance with Standards Rule 2-3. Did the appraisal under review meet this requirement? Reviewer s Explanation: Both appraisals met all of the requirements under Standards Rule 2-2. FILE# PAGE 16 22

23 CONCLUSION OF REVIEW CONCLUSION OF REVIEW These reviews involve two (2) appraisals of the Pinecrest Academy -Horizon Campus, located at 1360 South Boulder Highway, Henderson, Nevada In acting as a reviewer, I am developing and reporting credible opinions as to the quality of other appraisers work. The other appraisers in this case are John L, Emmerling, MAI of Trophy Property Company, Inc., and Scott Krueger, MAI, of Morse-Krueger & Associates, LLC. In this conclusion, I will first discuss the report prepared by Trophy Property Company, Inc. As detailed in my review, the Trophy Property Company, Inc., appraisal contains numerous errors. In addition, the Trophy Property Company, Inc., appraisal was rendered in a careless manner as these numerous errors affected the credibility of the value results. This begins in the letter of transmittal when the Trophy Property Company, Inc., appraiser refers to the appraisal presented as being in a summary format and a Limited Restricted Report. This is a violation of S.R. 2-2, which states that Each written real property appraisal report must be prepared under one of the following options and prominently state which option is used: Appraisal Report or Restricted Report. The appraiser states a number of times that this report is in summary format. The summary format option has not been in compliance with USPAP for almost five (5) years. This would be a violation of S.R Other errors in the Trophy Property Company, Inc., appraisal include showing Comcast as the local cable company. Comcast does not operate in this area. On page 57, the appraiser concludes the site s market value at $10.00 per square foot and then uses $8.00 per square foot in the table stating the value. In addition, according to the Clark County Assessor, the size of two (2) of the sales is overstated and a third is based on gross acreage. This results in understating the unit prices paid. Also interesting is the fact that every adjustment applied to these land sales was upward. This would indicate that all of these sales are inferior. The highest sales price per square foot for these sales was reflected by Sale 8 at $10.01 per square foot, which only required one adjustment, and that was upward for being over 50% larger than the subject. This indicates a value above $10.01 per square foot. Again, all of the appraiser s adjustments to these sales was upward. However, the appraiser concludes a land value of $10.00 per square foot? This is a violation of S.R. 1-4(a). On page 65, the Trophy Property Company, Inc., appraisal shows information for eight (8) charter schools that had purchase options. Of the eight (8), the appraiser had the incorrect year built for four (4). In the cost approach, this appraiser uses the incorrect direct cost per square foot of $140, which results in understating the value by over $1M. The Trophy Property Company, Inc., appraiser then uses the sales comparison approach as support for the conclusion indicated by the cost approach because he states that the subject is a Specialty Use property and there is a restricted amount of sale data for charter schools. The appraiser then goes on to identify seven (7) sales, three (3) that closed in April of 2015, four (4) that closed in 2017 and one (1) supplemental sale from April of Adding the three (3) additional 2018 sales from the Morse-Krueger & Associates report, that were not used in the Trophy Property Company, Inc., report, reflects ten (10) fairly recent sales and four (4) just from This indicates an active market. The interesting part is the fourth paragraph on page 62. This states that These sales prices can be misleading as in many cases the acquisition option price to the tenant (school) was established at the time the school was completed and both the rental rate (with annual escalators) and option price were documented. In nearly all these instances, the Las Vegas FILE# PAGE 17 23

24 CONCLUSION OF REVIEW marketplace has experienced increases in labor, construction materials, and land prices. The Trophy Property Company, Inc., appraiser then concludes a value below the average. There is no analysis or discussion of the adjustments used to conclude that value. This is a violation of S.R. 1-4(a). In the cost approach to value, which was only completed in the Trophy Property Company, Inc., report, the appraiser did not provide the sections and page numbers needed to verify if this was done correctly. The appraiser states that he used the Marshall Valuation Manual and concluded the direct costs for the buildings at $140 per square foot. According to Marshall, the base cost is $133 per square foot and to that you must at a minimum apply a current multiplier and a local multiplier, which reflect the value was understated by $968,517. Adding the indirect costs at the 18.35% used the Trophy Property Company, Inc., appraisal, reflects this mistake increases to value indicated by the appraiser s cost approach to $11,781,239. Therefore, the value concluded in the Trophy Property Company, Inc., report s cost approach to value, which is given the most weight in the value conclusion, is grossly understated in this report. This is a violation of S.R. 1-4(b). This is interesting because on page 65 the Trophy Property Company, Inc., appraiser shows eight (8) charter schools that have the same type of option to buy situation that this appraiser just discussed as being potentially misleading. However, this appraiser uses the overall capitalization rates from those sales with no discussion about them potentially being misleading, and none of those properties have sold as of the date of this report. This is a violation of S.R. 1-4(c). The Morse-Krueger & Associates report includes the sales comparison approach and income capitalization approaches. The appraiser for the Morse-Krueger & Associates, LLC report provided detailed abstracts of each sale and then prepared an adjustment grid with the accompanying narrative that supported the value conclusion. This appraiser used four (4) sales that all closed in This report included the necessary upward adjustment for the increased market conditions. This appraiser also completed the income capitalization approach. I did note this report s income approach did not include any expenses. Based on my experience, an expense for management would have been appropriate. A reasonable management charge would have been 1.50%. Applying this adjustment would change the indicated value range from $12,183,413 - $12,603,531, to $12,000,662-$12,414,478, which still supports his concluded value of $12,400,000 by the income approach. Based on my review, the Trophy Property Company, Inc., appraisal does not meet the requirements of USPAP. As detailed previously, their appraisal is not clear and sets forth the appraisal in a manner that is not credible. Standards 1 and 2 were not complied with and followed and the appraisers did not produce a credible appraisal. The appraisers committed substantial errors that significantly affected the appraisal. The Trophy Property Company, Inc., appraisal included multiple errors and misstatements that significantly affected the final value conclusion. Based on my review, that appraisal did not follow and does not meet the guidelines of USPAP. In comparison, the Morse-Krueger & Associates report included recent sales and provided detailed abstracts containing the necessary information of each sale and then prepared an adjustment grid with the accompanying narrative that supported the value conclusion. For the income approach, they included the correct contract rental rate, and then used recent sales to select the appropriate overall capitalization rate for the subject property. Although a FILE# PAGE 18 24

25 CONCLUSION OF REVIEW deduction for a management fee was not included, even with that expense the value indicated by the Morse-Krueger & Associates, LLC, report was well supported. Based upon my reviews of Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, appraisal reports, it is my conclusion that the retrospective market value of the leased fee interest of the subject property, as of vember 14, 2018, was as follows: Fee Simple Market Value As of vember 14, 2018 TWELVE MILLION FOUR HUNDRED THOUSAND DOLLARS ($12,400,000). The above retrospective value is based on the following extraordinary assumption and its use may affect the assignment results: 1. The above value is based on the extraordinary assumption that the condition of the property noted during the Trophy Property Company, Inc., and Morse-Krueger & Associates, LLC, inspection was similar to the condition of the property on vember 14, 2018, the effective date of my review. 2. The contract rental rate on the effective date of value was $76, per month on a triple net basis. FILE# PAGE 19 25

26 CERTIFICATION CERTIFICATION I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of the work under review and no personal interest with respect to the parties involved. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of the work under review within the three-year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of the work under review or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in this review or from its use. My compensation for completing this assignment is not contingent upon the development or reporting of predetermined assignment results or assignment results that favors the cause of the client, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal review. My analyses, opinions, and conclusions were developed and this review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice. I have not made a personal inspection of the subject of the work under review. one provided significant appraisal or appraisal review assistance to the person signing this certification. As of the date of this report, Tio S. DiFederico, MAI, has completed the continuing education program of the Appraisal Institute. Tio S. DiFederico, MAI Certified General Real Estate Appraiser Nevada Certificate # A CG (05/19) FILE# PAGE 20 26

27 APPRAISER QUALIFICATIONS ADDENDUM A APPRAISER QUALIFICATIONS FILE#

28 APPRAISER QUALIFICATIONS PROFESSIONAL QUALIFICATIONS OF TIO S. DIFEDERICO, MAI EXPERIENCE: I am a life-long resident of Las Vegas. I graduated from the University of Nevada, Las Vegas (UNLV) with a Bachelor of Science in Business Administration as a Finance Major. I obtained a real estate license in the 1984 and began appraising real estate in 1986 with Shelli L. Lowe & Associates. In 1999 Shelli L. Lowe & Associates joined several other premier appraisal firms across the country to form a network of appraisal expertise to serve national and international clients; Integra Realty Resources (IRR). This provided me an opportunity to appraise a full range of properties and to interact with leaders in the appraisal and business community. I was typically entrusted with the most complex assignments and became qualified by the courts to testify in litigation as an expert in the appraisal of vacant land, residential, apartment, office, retail, industrial and hotel casino properties. In 2009 I formed The DiFederico Group. I am a Certified General Appraiser in the State of Nevada (Certificate Number A CG) and earned the MAI designation from the Appraisal Institute (MAI ). I am an appointed member of the Clark County Board of Equalization (BOE) and previously served as the President and Vice President for the Las Vegas Chapter of the Appraisal Institute. I have extensive litigation experience involving fee and partial takings, as well as permanent and temporary construction easements. I have also completed numerous assignments involving air rights takings and ground leases. I completed these assignments for both property-owners and government agencies. In addition, I have completed assignments involving partnership disputes, bankruptcies, estate valuations and partial interests. I have appraised office buildings, business parks, apartment complexes, shopping malls, taverns, restaurants, night clubs, cell sites, billboard sites, water rights and special use properties. These include the +/- 400 Acre Groom Mine overlooking Area 51, the Las Vegas Motor Speedway and the Henderson Executive Airport. I have also appraised the Summerlin, Kyle Canyon and Tuscany Master-Planned Communities and the site of the proposed Ivanpah Airport. My appraisal experience also includes appraisals of hotel casinos. These include: The Riviera Hotel Casino, The LVH Las Vegas Hotel & Casino, Horseshoe, Lady Luck, Dukes and Golden Phoenix in Nevada. I have also been hired to analyze the ground leases for the Texas Hotel Casino, Eastside Cannery, Buffalo Bills, Primm Valley and Whiskey Pete s in Nevada. Outside of Nevada, I have appraised the Isle of Capri in Louisiana, the Aztar Casino in Missouri and the Twin River in Rhode Island, as well as proposed hotel casinos in Macau and Puerto Rico. And, while serving on the BOE, I have analyzed and valued well over a hundred hotel casinos in Clark County. I have been hired by both Clark County and lenders to analyze leasehold and sandwich leasehold positions involving Clark County's ground leases in the area referred to as the Co-operative Management Area (CMA). I was also selected by Clark County to analyze the value of modifying the CMA restrictions and in 2017 I was selected by the State of Nevada s Real Estate Division to be a member of their Appraisal Advisory Review Committee. My function on this committee is to complete Standard 3 Reviews for reports that are being considered by the State for disciplinary actions. PROFESSIONAL/COMMUNITY AFFILIATIONS: Professional Designation: MAI- Member of the Appraisal Institute (MAI ) Licensed Appraiser: A CG (Certificate Number in Nevada) Member: Clark County Board of Equalization (Since 1998) Elected Member: President - Las Vegas Chapter - Appraisal Institute 2012 FILE #

29 APPRAISER QUALIFICATIONS PROFESSIONAL/COMMUNITY AFFILIATIONS (Continued): Elected Member: 2 nd Vice President - Las Vegas Chapter - Appraisal Institute 2010 Member: Appraisal Institute - Region VII minating Committee 2013 Chair: LV Chapter of the Appraisal Institute minating Committee 2013 Member: LV Chapter of the Appraisal Institute minating Committee Member: Appraisal Institute Education Committee Member: Bishop Gorman High School - Alumni Representative (1977) Elected Member: Summerlin s Willow Creek HOA Elected Member: Summerlin s Willow Creek Design & Review Committee 2004 Board Member (Past Chair): Lance Burton Foundation for Crippled and Burned Children Elected Member: Vice President - Las Vegas Chapter - Appraisal Institute 2011 EDUCATION: Tio S. DiFederico received a Bachelor of Science in Business Administration from the University of Nevada, Las Vegas. The following is a partial list of the appraisal courses sponsored by the Appraisal Institute that he has completed: 550 Advanced Applications General Comprehensive Exam 540 Report Writing and Valuation Analysis Forecasting Revenue 530 Advanced Sales Comparison and Cost Approaches Analyzing Operating Expenses 520 Highest & Best Use and Market Analysis Nevada Law 510 Advanced Income Capitalization Nevada Statues 420 Business Practices and Ethics Appraising Apartments 310 Basic Income Capitalization Market Analysis Standard of Professional Practice, Part A Accrued Depreciation Standard of Professional Practice, Part B Residential Valuation Standard of Professional Practice, Part C Supervising Appraisal Trainees Condemnation Appraising: Principles & Applications Ethics - USPAP Statements Litigation Appraisal & Expert Testimony 1A-2 Basic Valuation Procedures Eminent Domain and Condemnation 1A-1 Basic Appraisal Principles Litigation Appraising: Specialized Topics and Application The Appraiser as an Expert Witness Appraising the Appraisal: Appraisal Review - General In addition to the above, I have successfully completed numerous other real estate related Clinics, Conferences, Courses, and Seminars sponsored by the Appraisal Institute over the last 32 years. FILE #

30 APPRAISER QUALIFICATIONS QUALIFIED BEFORE COURTS AND ADMINISTRATIVE BODIES: United States Federal Court United States Bankruptcy Court District of Nevada Clark County District Court Clark County Board of Equalization Various Arbitration Courts PROFESSIONAL DEVELOPMENT PROGRAMS: Tio S. DiFederico, MAI, has completed the Appraisal Institute s Litigation Professional Development Program curriculum; passed the exams and is listed on the Appraisal Institute s Litigation Professional Registry. PUBLICATIONS: Tio S. DiFederico co-authored the Gaming Overview articles in the IRR-Viewpoint, published by Integra Realty Resources (IRR), from 2003 through FILE #

31 APPRAISER QUALIFICATIONS FILE #

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