Loading...
HomeMy WebLinkAbout55-10 RESOLUTIONRESOLUTION NO. 55-10 A RESOLUTION APPROVING A CONTRACT FOR THE PURCHASE OF A SIXTY-FOUR SPACE PARKING LOT LOCATED ON THE SOUTHEAST CORNER OF BLOCK AVENUE AND ROCK STREET FROM ROCK STREET PARKING, LLC IN THE AMOUNT OF $342,000.00 PLUS APPLICABLE CLOSING COSTS, AND APPROVING A BUDGET ADJUSTMENT OF $344,000.00 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves a contract, a copy of which is attached to this Resolution as Exhibit "A" and incorporated herein as if set out word for word, with Rock Street Parking, LLC for the purchase of a sixty-four space parking lot located on the southeast corner of Block Avenue and Rock Street in the total amount of $342,000.00, plus applicable closing costs. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment, a copy of which is attached to this Resolution as Exhibit "B" and incorporated herein as if set out word for word, in the amount of $344,000.00. PASSED and APPROVED this 6th day of April, 2010. APPROVED By: LI 1. foiT L P JORD .006yor ATTEST: tastuitz, SDRA E. SMITH, City Clerk/TreasurerYN9 ..;%_kC.}. • bl Y 0;-" • .&.A i',4-..• • ii" .-: ..-... . • -23 '-', to - • :-. - 5. :FAYETTEVILLE...:A4 .t4-.• VS.. 4q 1kA 1451.t1p. 7 /A/G-r0tA "iiiiiiiin, ,,,,, , Rya, c.51.4ad- OFFER AND ACCEPTANCE CONTRACT 1. The City of Fayetteville, Arkansas, a municipal corporation, offers to buy, subject to the terms and conditions set forth herein, the following described property: SEE ATTACHED EXHIBIT "A" FOR PROPERTY DESCRIPTION 2. Purchase Price: Subject to the following conditions, the City of Fayetteville shall pay for the property at closing, the total and cash payment of $342,000.00. 3. Contingent Earnest Money Deposit: ROCK STREET PARKING. LLC waives the requirement of eamest money from the City of Fayetteville. 4. Conveyance will be made to the City of Fayetteville by general Warranty Deed, except it shall be subject to recorded instruments and easements, if any, which do not materially affect the value of the property. Such conveyance shall include mineral rights owned by ROCK STREET PARKING, LLC. 5. ROCK STREET PARKING. LLC shall furnish a policy of title insurance in the amount of the purchase price from a title insurance company as selected by the City of Fayetteville. The City of Fayetteville shall pay the total cost of the title insurance. 6. ROCK STREET PARKING. LLC agree(s) to allow the City of Fayetteville, if the City of Fayetteville so desires, at City of Fayetteville's expense, to survey the property. ROCK STREET PARKING. LLC agree(s) to cure any title problems which may result from any differences between the recorded legal descriptions of the property and the survey description. Said title problems, if any, must be solved prior to closing to the satisfaction of the City of Fayetteville. 7. Taxes and special assessments due on or before closing shall be paid by ROCK STREET PARKING, LLC. Insurance, general taxes, ad valorem taxes, special assessments and rental payments shall be prorated as of closing. 8. The closing date shall be within fourteen (14) days after approval of this offer by the City Council. If such date of closing falls on a weekend or holiday, it will be held the following working day. 9. Possession of the property shall be delivered to the City of Fayetteville on the date of closing, without any further obligation to prior contracts entered into by ROCK STREET PARKING, LLC. 10. ROCK STREET PARKING. LLC hereby grant(s) permission for the City of Fayetteville or its employees or designates to enter the above described property and improvements for the purpose of inspection and/or surveying. 11. All fixtures, improvements and attached equipment are included in the purchase price. 12. Risk of loss or damage to the property by fire or other casualty occurring up to the time of closing is assumed by ROCK STREET PARKING. LLC. 13. ROCK STREET PARKING. LLC shall disclose to the City of Fayetteville any and all environmental hazards of which ROCK STREET PARKING. LLC has/have actual knowledge. Upon acceptance of all conditions and terms of this Offer and Acceptance, the City of Fayetteville and ROCK STREET PARKING, LLC shall share equally the costs of any and all testing for the existence of environmental hazards. Should the existence of environmental hazards be known or determined, ROCK STREET PARKING LLC shall cure such, at their expense; or, in the alternative, at the City of Fayetteville's discretion, the City of Fayetteville may cure such environmental hazard, and ROCK STREET PARKING, LLC shall indemnify the City of Fayetteville for all costs associated with said cure. EXHIBIT A OFFER AND ACCEPTANCE CONTRACT Page 2 of 4 14. This agreement shall be governed by the laws of the State of Arkansas. 15. This agreement, when executed by both the City of Fayetteville and ROCK STREET PARKING. LLC shall contain the entire understanding and agreement of the parties with respect to the matters referred to herein and shall supersede all price or contemporaneous agreements, representations and understanding with respect to such matters, and no oral representations or statements shall be considered a part hereof. 16. This contract expires, if not accepted by ROCK STREET PARKING. LLC on or before the 18th day of March 2010. 17. The City of Fayetteville shall submit this fully executed Offer and Acceptance Contract to the City Council for their approval within twenty (20) days of acceptance by ROCK STREET PARKING, LLC. 18. NOTICE: THE CITY OF FAYETTEVILLE ASSERTS AND ROCK STREET PARKING, LLC HEREBY ACKNOWLEDGES THAT THIS OFFER IS EXPRESSLY CONTINGENT UPON THE APPROVAL OF THIS OFFER OF PURCHASE BY THE CITY COUNCIL OF FAYETTEVILLE AND THAT THE FAILURE OF THE COUNCIL TO SO APPROVE WILL MAKE ALL PORTIONS OF THIS OFFER NULL AND VOID, INCLUDING, BUT NOT LIMITED TO, THE RETURN TO CITY OF FAYETTEVILLE OF THE $0.00 EARNEST MONEY DEPOSIT. AGENT OR WITNESS: %Secuuk_.5-n-A City of of Fayetteville, Arkansas, A municip rporation Date: Date: Date: Date: Date: Date: OFFER AND ACCEPTANCE CONTRACT Page 3 of 4 EXHIBIT "A" PROPERTY DESCRIPTION A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3, plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW comer of said Block 41, said point being an existing iron; thence S 89°41'51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30'11' W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27" W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30'11" E, 182.32 feet (record 184.00 feet) to the point of beginning. SIGNED FOR IDENTIFICATION: (1 1/1 f 7121. ordi'Smith, City Clerk Date: 3119//6 Date: Date: Date: d//trik) OFFER AND ACCEPTANCE CONTRACT Page 4 of 4 ACKNOWLEDGMENT STATE OF ARKANSAS SS, COUNTY OF WASHINGTON BE IT REMEMBERED, that on this date, before the undersigned, a duly commissioned and acting 0 k Notary Public within and for said County and State, personally appeared CO) W(I" , to me well known as the person(s) who executed the foregoing document, and who stated and ackn s ledged that he/she/they is/are of and is/are duly authorized to execute the foregoing instrument for and in the name and behalf of said , and further stated and acknowledged that he/she/they had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. V& WITNESS my hand and seal on this day of MY CTIISSION EXPIRES: 9- 1 -Th - 10. L400,...6..,... BARBARA L. C MY COMMISSION # 12 EXPIRES: February 2, 2017 IP,"fig'V WashIn ton Coun Public ACKNOWLEDGMENT STATE OF ARKANSAS SS. COUNTY OF WASHINGTON BE IT REMEMBERED, that on this date, before the undersigned, a duly commissioned and acting Notary Public within and for said County and State, personally appeared Lioneld Jordan and Sondra Smith, to me well known as the persons who executed the foregoing document, and who stated and acknowledged that they are the Mayor and City Clerk of the City of Fayetteville, Arkansas, a municipal corporation, and are duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said municipal corporation, and further stated and acknowledged that they had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. WITNESS my hand and seal on this 1 lc day of (AJOIO , 2010. MY COMMISSION EXPIRES: o2 tAA-Ligi il)S1 Notary Public frit" 4F<;:PT ▪ .0 • Zik 124O, • ).8*. 01 1"1 Y r' • 0S! • N.\ ' • • 40Zr. '.7.17 • 0C, • PL113 • e •Ez, • • • ;Rites 2-1-- 6')••••••••••‘• 4111111110 City of Fayetteville, Arkansas Budget Adjustment Form Budget Year 2010 Department: Transportation Services Division: Parking & Telecommunications Program: Off -Street Parking Request Date 4/6/2010 Adjustment Number JUSTIFICATION TO INCREASE PROJECT / ITEM: $344,000 is requested in the Rock Street Parking Lot Purchase capital project. The purchase price of the property is $342,000.00 plus a contingency of $2,000.00 to cover closing costs. JUSTIFICATION TO DECREASE PROJECT/ ITEM (OR RECOGNIZING REVENUE): A budget adjustment of $6,750.00 will be taken from Rent Expense that will be the unused remainder of the lease for the lower level. The other $337,250.00 will be taken from Off -Street Parking Fund Balance which may ONLY be used for parking related items (land acquisitions, operations, maintenance, equipment, etc.). Account Name Land Acquisition Use of Fund Balance Rent Increase Decrease Project.Sub Account Number Budget Budget Number 2130.9130.5805.00 344,000 10021 . 1 2130.0913.4999.99 337,250 2130.9130.5308.00 6,750 TOTAL 344,000 344,000 'vision Head s'rov"•-__ -10 Date 673 Date V*--‘ -/9 Date 4 - 10- lei o Budg Director Departm t Director Nf'0.3. Fk-nce Director Date Date a e Requested By kspringer Budget & Research Use Only Type: A Description: General Ledger Date Posted to General Ledger Posted to Project Accounting Initial Date C:pocuments and Settings1scrossonDesktoplRock Street Parking Lot1AMA BAFORM_2010_RackStreetParking Initial Date Sharon Crosson Submitted By City of Fayetteville Staff Review Form City Council Agenda Items and Contracts, Leases or Agreements 4/6/2010 City Owner) Meeting Date Agenda Items Only Parking Management Division Action Required: Transportation Services Department A resolution to approve the purchase of a 64 space parking lot located on the southeast comer of Block Avenue and Rock Street, and approving a budget adjustment for $343,000.000 for the purchase and closing costs. 343,000.00 Cost of this request 2130-9130-5805-00 Account Number 10021-1 Project Number Budgeted Item 77 Category / Project Budget Funds Used to Date Remaining Balance Budget Adjustment Attached 11111111 Rock Street Parking Lot Program Category / Project Name Land Acquisition Program (Project Category Name Off -Street Parking Fund Name `Pec3 c _ LL.„_ 3 -II- 2.0t6 Finance and Internal Services Director Date Chief of 41 /, Ati1140.4Y Ma r /0 Date LAdDa Previous Ordinance or Resolution # Original Contract Date: Original Contract Number: Comments: Revised January 15, 2009 'Mtteffle THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENT CORRESPONDENCE ARKANSAS www.accessfayetteville.org CITY COUNCIL AGENDA MEMO To: Mayor and City Council Thru: Don Marr, Chief of Staff Terry Gulley, Director of Transportation From: Sharon Crosson, Parking and Telecom Manager 4/1" Date: March 18, 2010 Subject: Purchase of 64 Space Parking Lot and Approval of Budget Adjustment PROPOSAL: City staff is requesting a resolution to approve the purchase of a 64 space parking lot located directly behind the Town Center Parking Garage on the southeast corner of Block Avenue and Rock Street, and the approval of a' budget adjustment in the amount of $343,000.00 to cover the purchase price plus closing costs. The Engineering Division had the property appraised in October 2009, at which time it appraised at $380,000.00. City staff negotiated a purchase price of $342,000.00 with the City paying closing costs, which was accepted by the seller. RECOMMENDATION: This bi-level parking lot is owned by Rock Street Parking, LLC and was originally listed for sale at a price of $525,000.00. The City currently leases 27 spaces on the lower level for $9,720.00 per year. City vehicles are currently using this parking lot when working at City Hall in an effort to keep public parking spaces available to visitors of our downtown area. The upper level has 37 spaces and is vacant most of the time. In December 2009, the construction of the new Disctict Court and Prosecutor Building was completed. The site for this building is located where the City previously had a 30 space parking lot. 20 of these spaces were used for Police Department vehicles which are now parking on the public parking spaces on street. Due to the proximity of the upper level parking lot to the Police Department, this is an ideal area to park the overflow of police vehicles that are currently taking up public spaces. The Police Department has a total of 64 vehicles and only 32 on-site spaces. That leaves 32 vehicles that need a parking space, plus any outside agency such as Washington County units or other area police agencies that conduct business at our Police Department. If we choose not to purchase this parking lot, we will have another 27 city vehicles that will be displaced and will have to take up even more valuable downtown public parking. BUDGET IMPACT: The purchase price of the property is $342,000.00 plus a contingency of $1,000.00 to cover closing costs. A budget adjustment of $6,750.00 will be taken from Rent Expense that will be the unused remainder of the lease for the lower level. The other $336,250.00 will be taken from Off -Street Parking Fund Balance which may ONLY be used for parking related items (land acquisitions, operations, maintenance, equipment, etc.). RESOLUTION NO. A RESOLUTION APPROVING A CONTRACT FOR THE PURCHASE OF A SIXTY-FOUR SPACE PARKING LOT LOCATED ON THE SOUTHEAST CORNER OF BLOCK AVENUE AND ROCK STREET FROM ROCK STREET PARKING, LLC IN THE AMOUNT OF $342,000.00 PLUS APPLICABLE CLOSING COSTS, AND APPROVING A BUDGET ADJUSTMENT OF $344,000.00 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves a contract, a copy of which is attached to this Resolution as Exhibit "A" and incorporated herein as if set out word for word, with Rock Street Parking, LLC for the purchase of a sixty-four space parking lot located on the southeast corner of Block Avenue and Rock Street in the total amount of $342,000.00, plus applicable closing costs. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment, a copy of which is attached to this Resolution as Exhibit "B" and incorporated herein as if set out word for word, in the amount of $344,000.00. PASSED and APPROVED this 6th day of April, 2010. APPROVED: ATTEST: By: By: LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer Summag Appraisal' Report The City of Eayetteva- Engineering Division As of October 20, 2009 Client: City of Fayetteville Engineering Division 125 W Mountain St Fayetteville, AR 72701 Presented By: The Real Estate Consultants 118 N. East Avenue Fayetteville, AR 72701 Produced By: Mark E. Risk State Certified General Appraiser #0202 File #09-0228 Copyrig fit 2009 by The WcalEstate ConsuCtants A.1T *grits Wfserved 1a61 of Contents Salient Facts & Conclusions 3 Subject Location Map 4 Subject Pictures 5 Legal Description 9 Appraisal Inspection Comments 9 Section II - Appraisal -Premises 10 Market Value Defined 10 Definition of Special Purpose Property 10 Purpose Of The Appraisal 11 Intended Use And User Of The Appraisal 11 Property Rights Appraised 11 Subject History 11 Subject Status 11 Assumptions and Limiting Conditions 12 Scope of the Appraisal 17 General Comments 17 Scope of the Appraisal— Appraisal Methods Used 18 Section III — Data Presentation 19 Neighborhood Description 19 Property Description 20 Subject Property Aerial Map 21 City Downtown Zoning Map 21 Subject Site Water and Utility Map 22 Section IV — SuOect Analysis a Valisation Approaches 23 Highest And Best Use Analysis 23 The Four Tests of Highest & Best Use 24 The Market Data Approach 26 The Market Data Approach -- Comparable Land Sales Map 27 The Market Data Approach — Comparable Sales Data 28 Analysis Of Comparables And Conclusion Of Land Value 32 The Cost Approach Methodology 33 Cost Approach Data 34 The Income Approach 35 The Income Approach -- Determination of Economic Rent 36 The Income Approach -- Determination of Economic Rent 37 The Income Approach -- Determination of Net Operating Income 38 The Income Approach — Determination of Capitalization Rate 40 The Income Approach — Determination of Value 41 Correlation, Analysis, and Conclusion 42 Certificate ofAppraiser 44 Section 1 i - ildekndum 45 Zoning Information 45 lOsume 46 1 The gteaf Estate Consultants 118A'. East five. Tayettevilie, Ar. 72701 479-442-0762 November 6, 2009 Ms Holly Jones, City Land Agent City of Fayetteville 113 W. Mountain • Fayetteville, Ar 72701 RE: Appraisal Services Dear Ms Jones: City of Fayetteville Parking Lot at Rock and Block Fayetteville, Ar 72701 In compliance with your request and to determine the Market Value of thc above captioned property, I hereby certify that I have personally inspected thc property and made a survey of matters pertinent to the estimation of its value. The subject property was inspected by the appraiser on October 20. 2009. The intended use is to determine the feasibility of a purchase of the aforementioned property by the City of Fayetteville. I further certify that I have no interest present or contemplated in the property under appraisement, and that my fee was not contingent upon the value estimate reported. The opinions set forth in this letter are stated as of November 6. 2009. The following narrative appraisal report contains the data gathered in my investigation and shows the method of appraisal in detail. The report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Foundation. This report is considered a complete summary appraisal. This appraisal is based upon information gathered by the appraiser from the subject owner, public records, and other reliable sources, and upon an inspection of the subject property and neighborhood. In developing the appraisal approaches used, data was collected from the Real Estate Consultantsoffice files and courthouse records. The appraiser has applied the Market Data, Cost and Income Approaches in this appraisal. This report has been prepared for the exclusive benefit of the City of Fayetteville. This report can only be relied upon by the client. Based upon my inspection of the subject property and the investigation and analysis can-ied out in this report, it is myconsidered opinion that the Market Value of the subject property as of October 20. 2009, and subject to the assumptions and limiting conditions set forth in the body of this report, is as follows: THREE HUNDRED AND EIGHTY THOUSAND DOLLARS ($380,000) Respectfully submitted, a.- 1.141N. MO. 0 4.4 Mark A. Risk GAA State Certified General Appraiser # CG0202 2 Property: County: Tamer #(s) Section 1— T.:..tecutive Summit), Salient Ruts et Conclusions 64 Space Parking Lot at Corner of Block and Rock Streets in Downtown Fayetteville Washington 765-02098-000 Tee Owner Rock Street Parking, LLC Subject Location: Block Ave and Rock Street - Fayetteville, AR 72701 9daiGngJddress: 231 E Dickson — Fayetteville, AR 72701 Estate Appraised: Fee Simple Size: Approximately 134 x 183 ft Level 1 Lot: 88 x 123 if Level 2 Lot: 62 x 124 ft Effective Coate: October 20, 2009 - The Date of Inspection Vtilities: All Municipal Utilities Are Available Zoning: Downtown General Hignest and Best `Use: Mixed Use Development Vatue Indications: Cost Approach $367,000 Market Data Approach $409,000 Income Approach $367,000 Tina( Estimate of alarkft 1/due: $380,000 Note: This appraisal report has been prepared for the exclusive benefit of The City of Fayetteville. It may not be used or relied upon by any other party. Any party, who uses or relies upon any information in this report without the preparer's written permission, does so at their own risk. 3 Subject Location Map 11.104 r piex 614 Pl.tz 4.4e.;toi_ lappingL tn1 Sito N karo,tar.ikFd C3) W Dicksort St UtliverStIy" 31 Arkansas I- If .1 • • -; 01 ryp:Irv I ktt-ir‘testElm of Trip 0711f k Eir4,:firften contEt1,..n. N Schs-sru Ave 7-7-x [:3 E--.ve,yr • "14E: NorTh it Lafaywto Coyetteville Xi 14(4' '4. 601 St JIRO W'EittE E bt Fayette...Elle Natickrtal C::3 Cerneleti x- FEitrvi .-•4•2' Mem( -. Ceme .4) () f flunisvilbe Rri ( g2009 Google Map data a2009 Goog& 4 Subject Pictures Subject Site Lipper Level Looking South Interior of Subject Site Upper Level Looking North Subject Pictures Lower Level ofSubject Lookin_z East Railing and Stairs ofSubject Looking North Su6ject Pictures Street Scene -- Rock Street Looking West (Subject Site on the Lett) Street Scene Rock Street Lookin2 Fast (Subject Site on the Right) 7 Subject Pictures Street Scene- Block Avenue Lookini4 South (Subject Property on .eit ) Street Scene- Block Avenue Looking North (Subject Property on Right) Property kfrntfication The property under appraisement is an existing bi-level, 64 space parking lot at the southeast comer of the intersection of Block Ave and Rock St in Downtown Fayetteville, Washington County, Arkansas. The property is owned by Rock Street Parking, LLC.. It has been commonly referred to as the Bank of America Parking Lot. Le,gat Description A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3 , plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW comer of said Block 41, said point being an existing iron; thence S 89°41'51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30'11" W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27" W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30'11" E, 182.32 feet (record 184.00 feet) to the point of beginning. Appraisal' Inspection Comments Date: October 20, 2009 Inspection Notes: Mark Risk visually inspected the subject land on the above date. The inspection consisted of a walking tour of the property with an assistant. Owner contact: WichariAkander 9 Section - Appraisal ftemises Marift Value Defined The Appraisal Foundation defines market value as follows: "The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated. 2. Both parties are well informed or well advised, and acting in what he considers his own best interest. 3. A reasonable time is allowed for exposure in the open market. 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto. 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." Definition cf Special' Turpose Property The Appraisal Foundation defines a Special Purpose Property as follows: "A limited -market property with unique physical design, special construction materials, or layout that restricts its utility to the use for which it was built. Also called special design property." The subject property can be considered to be a special purpose property. 10 �Puipose ?lie raisaf The purpose of this report is to estimate the Market Value of the subject property. Intended Vse-And Vser Of'IfieAppraisa( The intended use of the appraisal is for potential purchase evaluation purposes of the client. The intended user is the client, The City of Fayetteville - Engineering Division. �Prope )lppraisei The property is appraised as though owned in fee simple and unencumbered. A fee simple title is the fullest type of private ownership possible, subject to all public limitations including zoning, taxation, and eminent domain; and subject to private limitations, which may exist, such as easements and restrictions of record. Su6ject .7fistor According to Washington County records, the current owners have held the subject property since 2009. The most recent ownership change occurred on February 27, 2009 per Deed 2009-6411. In this transaction the property was deeded to the current owner Rock Street Parking, LLC. The property has gone through several interrelated transactions since the acquisition of the property in 2005 from the Arkansas Teacher Retirement System. Courthouse records indicate that Richard Alexander, Rob Merry -Ship, and Ted Belden, et.al. acquired the subject property from the Arkansas Teacher Retirement System on March 3, 2005. No revenue stamps were placed on the deed at that time. This transaction involved additional property besides the subject, in particular, the Bank of America Building on the downtown square. No other arm's length transactions were discovered involving the subject property within the past five years. Su�ject Status The subject is currently offered for sale by Alexander, Merry -Ship, & Alt Real Estate Group. List price as of the effective date of this appraisal is $495,000. All spaces in the parking lot are currently leased and the seller requires 2 year leaseback agreement. The property has been on the market for over 2.5 years. 11 Assumptions andLimiting Con&tions ACCEPTANCE OF AND/OR USE OF THIS APPRAISAL REPORT BY THE CLIENT OR ANY THIRD PARTY CONSTITUTES ACCEPTANCE OF THE FOLLOWING ASSUMPTIONS AND LIMITING CONDITIONS: Limit of Liabi&ty The liability of TREC, Inc., The Real Estate Consultants, Mark E. Risk GAA, and associates and employees is limited to the client only and to the fee actually 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 the assignments. The appraiser is in no way to be responsible for any costs incurred to discover or correct any deficiencies of any type present in the property - physically, financially, and/or legally. In the case of limited partnerships, client agrees that if any lawsuit brought by a lender, partner, part owner, tenant, or other party, results in any award or settlements of any type in such suit regardless of outcome, that the client, who is the intended sole recipient of this report, will hold the appraiser completely harmless in any such action. Copies, (Publication, (Distribution, and `Vse of the 1�port Possession of this report or any copy thereof does not carry with it the right of publication, nor may it be used for any purpose other than its intended use. The signer of this report is a candidate for membership in the National Association of Independent Fee Appraisers, and a member of the National Association of Realtors and its Appraisal Section. The Bylaws and Regulations of these organizations require their members to control the use and distribution of each report signed by such member. Therefore, except as hereinafter provided, only the party for whom this report was prepared may distribute copies of this report, and only in its entirety, to such third parties as may be selected, but not without prior written consent and approval of the signatory of this report. The physical report remains the property of the appraiser for the use of the client. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser or the firm with which he is connected, or any reference to the National Association of Independent Fee Appraisers, the National Association of Realtors or any designations shall be disseminated to the public through the advertising media, public relations media, news media or any public means of communication without prior written consent and approval of the signer of this report. The authentic copies of this report are sealed with my Seal. Any copy that is not so sealed is unauthorized and may have been altered. Confidentiaisty and Trade Secrets: This appraisal consists of trade secrets and commercial or financial information which is privileged and confidential and exempted from disclosure under 5 U.S.C. 552 (b) (4). The appraiser may not divulge the material contents of this report, the analytical findings and conclusions, or give a copy of this report to anyone other than the client or his designee as specified in writing - except as may be required by the National Association of Independent Fee Appraisers, the National Association of Realtors, or other organizations as they may request in confidence for ethics 12 enforcement, or by a court of law of body with the power of subpoena. This appraisal is to be used only in its entirety and no part is to be used without the whole report. No change of any item in the report shall be made by anyone other than the appraiser, and the appraiser shall have no responsibility if any such unauthorized change is made. The client shall notify the appraiser signing the report of any request to reproduce this appraisal in whole or part. Testimony, Consuftatior, and Completion ofAppraisa(Services The contract for appraisal, consultation, or analytical services is fulfilled and the total fee payable upon completion of this report. The appraiser or those assisting in preparation of this report will not be asked or required to give testimony or be subpoenaed in court of any public or private hearing because of having made this appraisal, in full or in part, nor engage in post appraisal consultation with the client or third parties except under separate and special arrangement and at additional fee. A MINIMUM TWENTY DAYS NOTICE MUST BE GIVEN BEFORE COURT APPEARANCE FOR PURPOSES OF REVIEW AND STUDY. If testimony or deposition is required because of any subpoena, the client shall be responsible for any additional time, fees, and charges regardless of the issuing party. Information vsed No responsibility is assumed for the accuracy of information as to description (legal, physical, etc.) of the premises, restrictions, improvements, and income features of the property furnished by others, the client, his designee, or public records. All information furnished by others is assumed to be true, correct, and reliable and a reasonable effort has been made to verify such information. An impractical amount of time and money would be necessary to furnish unimpeachable verification in all instances. It is suggested that the client consider independent verification if so desired before making a significant commitment regarding the subject property. No responsibility for the accuracy of data and information obtained or the work of possible subcontractors is assumed by the appraiser. 13 4Punchasing Power, value Change, and 1Marfct Influences The estimated market value and the costs used relate only to the effective date of the appraisal. All dollar amounts are based on the purchasing power and price of the dollar as of the date of the value estimate. Market value is highly related to exposure, time, promotional effort, terms, motivation, and conditions surrounding the offering and subject to economic changes in the marketplace over time. In appraisals involving the capitalization of future income benefits, the estimate of market value reflects the appraiser's interpretation of income, yields, and other factors derived from general and specific market information. Such estimates are as of the date of appraisal and subject to dynamic changes in the financial markets that may occur. Legality of Vse and 4cfatedStudtes This report is based on the premise 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 report. It is assumed that all applicable zoning, building codes, and use regulations and restrictions of all types have been complied with, unless non -conformity has been stated, defined, and considered in the appraisal report. It is assumed that all required licenses, consents, permits, or other legislative or administrative authority from any local, state, or federal government and/or private entity or organization have been or can be obtained or renewed for any use on which the value estimate in this report is based. No environmental or impact studies, special market study of analysis, highest and best use analysis study, or feasibility study has been requested or made unless otherwise specified in an agreement for services or in the report. The appraiser reserves the unlimited right to alter, amend, revise, or rescind any of the statements, findings, opinions, values, estimates, or conclusions based upon any subsequent study or analysis, or any previous study or analysis pertinent to the assignment that becomes known to him after the report is finished. Legafand FinancialAssumptions No responsibility is assumed for matters of a legal nature affecting title to the property nor is an opinion of title rendered. The title is assumed to be good and merchantable. The property is appraised in gross as free and clear of all mortgages, liens, encumbrances, leases, and servitudes unless so specified within the report. If this appraisal is used for mortgage loan purposes, it should be noted that specific loan ratios, term amortization, and equity requirements have not been suggested. The appraisal report and value estimate are subject to change if the physical or legal entity or financing is different than that envisioned in this report. Architectural Structural 9Vlechanicaf and EngineeringAssumptions No responsibility is assumed for matters of survey, architectural, structural, mechanical, or engineering nature. The legal description used in this report is assumed to be correct as furnished by the client, his designee, or as derived by the appraiser. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described, and that there is no encroachment to trespass unless noted within this report. The appraiser has inspected, as far as possible, by observation the land and the improvements thereon. However, it was not possible to personally observe conditions beneath the 14 soil, hidden structural components, or any mechanical components within the improvements and no representations are made as to these matters unless specifically stated and considered in this report. This appraisal is based on there being no hidden, unapparent or apparent conditions of the property site, subsoil, or structures which would render it more or less valuable. No responsibility is assumed for any such conditions or for any expertise or engineering needed to discover such factors. The appraiser does not warrant against the occurrence of problems arising from the soil conditions. All mechanical components are assumed to be in operable condition and states standard for properties of the subject's type. Conditions of heating, cooling, ventilating, electrical, and plumbing equipment is considered to be commensurate with the conditions of the balance of the improvements unless otherwise stated. No judgment is made as to the adequacy of insulation or energy efficiency of the improvements or equipment. The lender, owner, or buyer should inspect the property before purchase or any disbursement of funds. Any of those parties may wish to require mechanical or structural inspection by a qualified and licensed contractor, civil or structural engineer, architect, or other expert. The appraiser has not been requested to make an investigation of the possible existence of any potentially hazardous insulation or material used in the construction or maintenance of the building, or the possible existence of toxic waste which may or may not have been stored on the property or the possible existence of radon gas on the property. The appraiser represents that he is not qualified to test for the presence or absence of such items and has not considered, and assumes no responsibility for, such products which might render the property more or less valuable. The client is advised to retain an expert in this field if this information is presumed appropriate and necessary. This appraisal has not considered conditions relating to surface or subsurface waters; including, but not limited to water table, flood plain, flood hazard, or rights, if any, claimed nor or in the future in riparian lands and drainage - unless otherwise noted in this report. The appraiser assumes no responsibility for any costs or consequences arising from the need for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 'Management of cPnvperty It is assumed that the property being appraised will be operated under prudent, responsible, and competent ownership and management - being neither inefficient nor super efficient. E ii6its The sketches and maps in this report are included only to assist the reader in visualizing the property and are not necessarily to scale. Various photos, if any, are included for the same purpose and are not intended to represent the property in other than actual status as of the date of the photos. Site plans are not surveys unless shown from a separate surveyor. 15 Component values The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. Neither the analysis and conclusions herein nor the allocations of value for land and improvements may be used in conjunction with any other appraisal and are invalid if so used. crsona(cPmperty Furnishings, fixtures, or equipment of the business operation except as specifically indicated and typically considered as a part of the real estate have been disregarded unless otherwise stated. For some property types, business and real estate interests and values are combined. dera(After 7a,4 na(ysts Any after tax income and investment analysis or measures of return on investment are intended only to reflect possible and general market considerations at an assumed value of price paid. The appraiser does not claim expertise in tax matters and advises the client and any other person using this appraisal to seek competent tax advice. The appraiser is in no way to be considered a tax or investment advisor. 1 16 Scope o the raisa( Intmduction "The term scope of the appraisal refers to the extent of the process of collecting, confirming, and reporting data."' The appraiser determines a report's scope (extent of data collection & depth of reporting) according to the following primary factors: 1) Satisfaction of standards as set forth by USPAP 2) Satisfaction of any additional standards/specific requirements as defined by client request &/or organization(s) for which an appraiser has professional membership 3) Perceived needs of the intended user(s) as related to a report's intended use. The scope of this appraisal encompasses the necessary research and analysis to prepare a report in accordance with its' intended use, the Code of Professional Ethics & Standards of Professional practice of the National Association of Realtors, and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. The appraiser has determined a Complete Summary appraisal report conforming to USPAP Standard 2-2(b) would satisfy the needs of the intended user(s). A Summary report offers basic statements of fact &Jor brief summary comments when describing data, reasoning, and analysis used in the appraisal process to develop an opinion of value. As such, some documentation supporting the data, reasoning, and analysis was kept in the appraiser's files. enera(Comments Basic information pertaining to this assignment is based upon information gathered by the appraiser from inspection of the subject property and neighborhood, public records, and other identified sources. Data believed to be unreliable was not included in this report nor used as a basis for the value conclusion. Region, county, city, and neighborhood data were based on information in the Real Estate Consultants library and files, physical inspection of the immediate neighborhood, and data from the City of Fayetteville and Washington County. The appraiser physically inspected the subject on October 20, 2009, with subject photographs taken on October 27, 2009. Subject property data was based upon information gathered from physical inspection of the subject property and immediate neighborhood, documentation provided by the City of Fayetteville, public records, and other identified sources. In evaluating the highest and best use for the subject property, an analysis was made of data compiled in the steps noted above. The appraiser's opinion of subject's highest and best use is based on important factors such as physical location, physical characteristics, zoning requirements, and use history/potential. In addition, a study of the downtown land development market in the subject area has been made to help determine the economic feasibility of the subject property. ' Appraisal Institute, The Appraisal of Real Estate-I0`h Edition, (Chicago: The Appraisal Institute, 1992), p. 575 17 Scope o the aisaf— aisaf9Wethods Vied Mart (Data (Safes Comparison)Approach Underlying land value based upon analysis of available market data for land comparables, either vacant or with improvements extracted, in the central downtown area. Comparables were gathered from the appraiser's files, Realtors ® multi -list service, Courthouse records, and interviews with knowledgeable market participants. The,most important individual examples are discussed in digest format, and then reconciled on a price per square foot basis to the subject after discussion. Applied appreciation over time, if any, is based on accumulated data in the appraiser's files and the appraiser knowledge of the local market. Income Approach The income approach was developed using a basic capitalization technique. To begin this process, data for existing market lease rates of downtown parking spaces was gathered from the appraiser's files, Realtors ® multi -list service, and persons/data reporting services knowledgeable of the subject's market niche. The most important examples were reported in a brief summary format, and then reconciled on a price per space per month basis to the subject. The appraiser then developed an estimate of Net Operating Income using the above -determined potential annual lease income less expenses, reported in a summary grid format. Applicable capitalization rates and related economic factors were based on accumulated data retained in the appraiser's files, prevailing mortgage rates as of the effective date of the report, and discussions with persons knowledgeable of the subject's market niche. Reporting of these factors and subsequent development of a final estimate of value via the Income Approach was reported in a brief summary format. Cast Approach Cost estimates for improvements are based on `replacement cost' defined as follows: "The estimated cost to construct, at current prices as of the effective appraisal date, a building with utility equivalent to the building being appraised, using modem materials and current standards, design, and layout." 2 Improvements construction cost for Scenario 3 is based on independent publications referenced, interviews with local market participants, and data provided by the Marshall & Swift valuation service. Aggregate costs are represented in a price per space format. Construction cost estimates under Scenario 4 was based primarily upon data provided by the Marshall & Swift valuation service and appraiser's knowledge of the local marketplace. Development of replacement cost is developed using the `unit -in -place' method as represented in a summary grid format. ' Appraisal Institute, The Dictionary of Real Estate Appraisal -3'd Edition, (Chicago: The Appraisal Institute, 1993), p. 303 �- FI Section III — Data (Presentation For appraisal purposes, a neighborhood is considered to be a portion of a larger community in which there is a homogeneous grouping of inhabitants, buildings, or business enterprises. Neighborhood inhabitants usually have a more casual community of interest and similarity of economic level and cultural background. Neighborhood boundaries may consist of well-defined natural or man-made barriers, or they may be more or less well defined by a distinct change in land use, or in the character of the inhabitants. The immediate area is commonly known as Fayetteville's downtown, with neighborhood boundaries defined as such: N- Maple, S- 6`h St., E- College Ave., and W- U of A Campus. The central downtown encompasses the City's financial and entertainment centers and continues to undergo revitalization as it adapts to current market demands and trends. The neighborhood is viewed by the market as one of the most desirable for commercial use, especially within the entertainment niche, both within the city and throughout the NW Arkansas region. College Avenue (Highway 71 B) is the most important N -S open -access business route in the region. Close proximity to the University of Arkansas. Per a special census as of July 2002, Fayetteville's population was stated at 60,732. This is a healthy 4.6% increase from the April 2000 General Census figure of58,047. The 1990 Census indicated an approximate population of 42,100, indicating a ten-year increase of 37.9%. The most recent estimates place the City at 64,190 residents, a 5.7% increase in just two years. 19 cFm a Descri Lion Site Based upon the parcel deed provided by the client, the subject size is approximately 134 ft. x 183.22 ft. Hence, the site totals 24,550± square feet or 0.56± acre. It is a rectangular urban corner lot, with a gentle to steep slope down from Rock Street. The site is cleared and paved; there are some mature trees on the site. The lot offers 134± feet of frontage along Rock Street and 183± feet along Block Avenue. Both streets are two lanes and paved. The land appears to lie outside any FEMA identified flood zone area. No adverse easements, encroachments, or other conditions were noted upon inspection. There does appears to be normal utility easements. Per the City's Downtown Master Plan zoning code, zoning is Downtown General. This is a broad, conceptual classification, primarily designed to allow high -density development. Improvements Current improvements include asphalt paving and concrete curbing in fair to average condition. There are two curb cuts on Rock and one curb cut on Block for driveways. A concrete sidewalk lines the north and west boundaries of the property. The site is split into a bi-level parking lot with 64 spaces. Paving on the Rock Street level measures 123 ft x 88 ft and contains 37 parking spaces. Paving on the Block Street level measures 124 ft x 62 ft and contains 27 parking spaces. There is an existing stone retaining wall at the north-west corner of the site, and an existing concrete block retaining wall at the south-west comer of the site. A concrete stairway connects both levels of the parking lot and 165 ft of iron post rail fencing separate the elevations. Site also features yard lighting on wooden utility poles. Envimnmenta(Analysis My routine inspection of and inquiries about the subject property did not develop any information that indicated any apparent significant hazardous substances or detrimental environmental conditions that would affect the subject property negatively. The value estimated in this report is based on the assumption that the property is not negatively affected by the existence of hazardous substances or detrimental environmental conditions. However, the appraiser is not an expert in the identification of hazardous substances or detrimental environmental conditions. It is unlikely but possible that tests and inspections made by a qualified hazardous substance and environmental expert would reveal the existence of hazardous substances or detrimental environmental conditions on or around the property that would negatively affect its value 20 Su6ject cPmpiertyfteria(9Wap fM q r 71I A!rZ,r: Source: City of Fayetteville GIS Mapping System O -b Downtown Zoning Wap •. r� .. �.+i n �$Ci mar CSC ? {H U �. t J _�� SG f rlC w. ROCK s a, f: N 1 :1TTLJ r tMC1�E�#*� t? UTH __ Source: City of Fayetteville GIS Mapping System ill Legend Minor Street -__ Major Street Zoning District . P-1 Institutional 0 Downtown Commercial Downtown General _____ Main Street Center Neighborhood Su6ject Site Water and V till Map JFJU .1i__i II _ Source: City of Fayetteville GIS Mapping System 22 Legend Gravity Mains Diameter -611 Vg., - 1p,I — 12„ Parcel Line -- Minor Street — Maor Street 0 Access Easement ection ITV -- valuation ?f' hest nd Best else naf sis The Appraisal Institute defines highest and best use as follows: "The reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability." The following tests must be met in estimating the highest and best use of the subject: 1. It must be physically possible based on subject site characteristics. 2. It must be a legal use under current or likely zoning regulations. 3. It must be probable and not based upon conjecture or speculation. 4. There must be a profitable demand for such use and it must return to the land the highest net return for the longest period of time. I applied these tests to the subject. The Highest and Best use of a property is based on current trends and necessities in it's' neighborhood with respect to overall supply and demand factors, and required rates of return for specific investment types. An appraiser's interpretation of highest and best use is essentially an economic study of market forces as they affect a specific property. Appraisal theory and USPAP generally require development of two Highest and Best use opinions - 'as though vacant' and 'as improved'. 'As though vacant' is essential to determining underlying land value and intimately connected to the Cost Approach. The 'as improved' conclusion considers potential economic contribution (if any) of existing improvements and assists in determining how a prudent investor would utilize such improvements (renovation, expansion, demolition, et cetera). 'The Appraisal of Real Estate- 10`h Addition' (Appraisal Institute, Chicago, 1992) offers this statement: "The use that maximizes an investment property's value, consistent with the long-term rate of return and associated risk, is its highest and best use as improved." Any determination of highest and best use includes identifying the motivations of probable purchasers. The benefits of an investment property like the subject relates to net income potential and eventual resale or refinancing. Thus, the highest and best use will be that use which maximizes the net operating income on a long-term basis. This use must meet the four criteria previously mentioned. 'As though vacant'- It is my opinion the land's highest and best use as though vacant is some type of mixed use development of commercial office/residential condominium, with higher density compared to what currently exists. 'As improved'- It is my opinion the land's highest and best use as improved is its' current use as a parking lot. A summary discussion on the four tests of highest and best use is offered on the following pages. 23 The 'Four Tests o Jf hest Best Vse genera comments The subject land is well located in central Fayetteville, with the immediate neighborhood established for commercial and residential uses. Its' current zoning allows for very dense development. aPhysicalry q'ossi6le: Basic factors affecting the potential for physically constructing improvements on a specific site include tract size, shape, topography, and soils. Further utility depends on utilities availability, roadway frontage, and tract depth in relation to width. Irregularly shaped parcels may cost more to develop and usually have less overall utility than a rectangular parcel. The site offers adequate size with a somewhat narrow and deep rectangular shape, along with built-up and cleared terrain on a comer. I am unaware of any adverse soil conditions that might hinder full use of the lots. Considering these factors, prospective developers would enjoy a multitude of commercial development options, including office and residential. Legaffy ft missi6fe: Land use options are further restricted by legal considerations, primarily determined by civil authorities, but also possible via private contract. The most obvious example is zoning. Other important factors include building codes and environmental regulations. Private, non -governmental examples include deed restrictions, subdivision covenants, and long-term land leases. These legal factors limit current use &/or development options in the absence of `grand fathering', allowed `non -conforming use', or other usually rare privileges. The subject lies within Fayetteville city limits and zoned Downtown General per October 2006 Downtown Master Plan. This zoning designation is planned for high -density use. Many options are therefore available according to the legality test, including development into commercial office and residential condominium. 24 F'our?ests Of 9fz 4 Best Vse Continued Financialry Feari6le: After limiting the array of uses by tests of physical possibility and legal permissibility, the appraiser then judges remaining possibilities according to financial considerations. A potential use is deemed financially feasible if that use promises a positive return on investment all things considered. Positive return is contingent upon potential net operating income matched with appropriate required rates of return for a particular use. Important factors affecting such return include operating expenses, debt satisfaction, and capital amortization. In my opinion, the subject's current use satisfies the above requirements of positive return in the interim before total redevelopment into a more dense complex. i&jnza11y cProductive: 'The Appraisal of Real Estate Tenth addition' (Appraisal Institute, Chicago) defines this concept as such: "Of the financially feasible uses, the use that produces the highest residual land value consistent with the rate of return warranted by the market for that use is the highest and best use." Among all potential uses remaining after consideration of the first three tests, a single specific use that results in the highest estimated residual land value is then determined. Most often, due to the durability of most real estate related improvements, prospective uses are narrowed according to a long-term scenario. Thus, the highest and best use will be that use which maximizes the net operating income on a long-term basis. Per Tenth addition: "The stream of benefits, or income, produced by the buildings reflects a carefully considered, and usually very specific, land use program." I believe the subject's use as a mixed use of Ice and residential condominium offers maximal productivity over time. 25 'fie Ma t (Data i4pproacfi The Market Data Approach or Sales Comparison Approach is an attempt to measure the reactions of typical buyers and sellers in the market. In this approach a direct comparison is made between the property being appraised and comparable properties that have either sold recently, have received bonafide offers by prospective buyers, or are currently offered for sale. The value of the property being appraised is inferred from the selling prices, offers, and asking prices of the comparable properties. To be "comparable" a property need not be identical to the subject. The word "comparable" is used in its ordinary sense meaning something that is capable of being compared with or worthy of comparison. The appraiser assumes that a typical buyer in the market will not pay more for the subject property than it would cost to buy a comparable substitute property. The price a typical buyer is willing to pay is generally the result of an extensive searching process in which he is constantly comparing alternative properties. In the meantime, the typical seller is usually trying to obtain the highest possible price for his property based upon his knowledge of the market place. In applying the Market Data Approach, the appraiser takes the following steps: 1. Researches the market for available comparable properties in which actual sales, listings, or offerings has occurred. Confirms the prices and bonafide nature of the data and qualifies the terms and motivating forces. 3. Compares the property being appraised with each of the comparable properties, under the general division of location, time, physical characteristics, and other economic factors. 4. Formulates an opinion of the market value of the property being appraised based upon the price of each comparable property. Pursuant to the appraisal of the subject property, I researched courthouse records, reviewed company files, accessed the Realtor's ® multi -list database, and interviewed knowledgeable market participants to locate recent market activity involving properties comparable or similar to the subject. Land sales selected for comparison with the subject property are included on the following pages. 26 ire 9artct Data ppn ach -- Compara6Te LandSafes !Map 27 'The JKar*t Data Approach — Compara6fe Sales (Data Land Safe #1 Grantor. New Deal Ill, Inc. Grantee: Joel Casey and Linda Parnell (Date of Safe: 07/25/07 (Property Location: 3 E. Rock St. Legaf(Description: Part of Lots 3,4,5 Block 42 of Fayetteville Original Zoning Category: Downtown General Size: 115' x 162' = 18,630 Square Feet Improvements: None si�ported�Pn'ce: $200,000 (Data Source: Washington County Courthouse Records, Parcel #765-02139-000, Deed 2007- 28822 ftmar►j: Sale of vacant land in downtown Fayetteville. Previous buildings were raised. The sale did involve related parties but appears to be fair price paid. Ind catediP,ice: $10.74/Square Foot Land Safe #2 Grantor. Fred Kouchenbagh & Sammy Mohandessian Grantee: Cruz Bay, LLC (Date of Safe: 01/31/06 4PYoperty Location: 406 S. School Ave Legal (Description: E 122' of Lot 7, all of Lots 4-6, Block 11, Ferguson Addition Zoning Category: Main Street Center per Downtown Master Plan Site Qualties: 28,205± Square Feet or 0.648+ Acre Improvements: (2) Older single-family dwellings with no contributory value 90portedcPrice: $350,000 (Data Source: Appraiser Files — Prior assignment, Parcel #765-05452-000, 05453, & 05454, Deed 2006-4446, Buyer interview Remarks: Four assembled parcels just south of the Downtown's immediate neighborhood influence along Highway 71 B at the intersection of 5'h Street. Only one parcel actually fronts School. Location of a newly introduced multi -family development. Indicated (Price: $12.41 /Square Foot 28 The Mark,�t Data ach — Com ara6Ce Safes Data Land Sale #3 Grantor; William Lazenby Grantee: Robert Walsh and Ed Knight Date of Sale: 11/21/06 (Property Location. 122 W. South St. Lega(Description: Part of Block #40 of Fayetteville Original Zoning Category: Downtown General, Medium Density Residential at time of sale. Size Appx. 5,053 Square Feet Improvements: (2) Old rent houses with no contributory Sidported Price: $67,000 Data Source: Washington County Courthouse Records - Parcel # 765-02080 & 84 cN.cmarks: Small lot located at the corner of Church Ave. and South St. Buyers initially intended to remodel houses on site but they were in such poor condition that the decided to raise them. Indicated cp► ce: $13.26/Square Foot Land Sale #4 Grantor McClinton Enterprises, LP Grantee: Frederick and Karolyn Woolverton Date of Safe: 6/30/04 Property Location: 35 W.Rock ck Legal 'Description. Part of Lot 1, Block 41, Fayetteville Original Plat Zoning Category: Downtown General, Residential Office at time of Sale Central Commercial (C-3) at time of sale Size: 8,059± Square Feet or 0.185 Acre Improvements: None of Contributory Value 4 cportedPrice: $80,000 Data Source: Washington County Courthouse Records- Parcel #765-02097, Deed 2004- 32454 1narkF. Small lot on Rock St. one block south of the square. Older sale. A large upscale home has been built on the lot. IndicatedP►ice: $9.93/Square Foot 29 The fMarkct Data acf — om arable Safes CData LandSak #5 Grantor. Deanna Hunter grantee: Dan and Debra Coody Date ofSafe: 11/30/05 Site Location; 227 S. Church Lega1Description: Pt. of Lot #39 Fayetteville Original Zoning Category.' Residential Office (R -O) at time of sale Now zoned Downtown General Size: 9,953± Square Feet or .228 Acre Improvements: Older single family dwelling with 720 sq.ft. planned for major renovation 4 fportedPi^tce: $95,500 Data Source: Appraiser Files - Deed 2005-53787, Parcel #765-02067-000 lnarj: Old house was gutted and totally renovated, not considered to have much contributory value. An additional multi unit structure has been added to the site since purchase. The property has recently resold between related parties. InduatedcPrice: $9.60/Square Foot LandSale #6 Grantor. MOD -3, LLC Grantee: Bouldin Creek, Inc. Date of Sale: 11/3/08 a' operty Location: 200 Block of South Locust Ave. Lega(Descnption: Lot 3, Block 12, Ferguson Addition Zoning Category.' Downtown General per Downtown Master Plan Size: 7,200± Square Feet or 0.17+ Acre Impmvements: None 4 cportedOice: $75,000 Data Source: MLS #493981, Parcel #765-05463-000 Omar j: Very recent sale of vacant lot just south of the subject site. Induated (Pace: $10.42/Square Fo o t 30 The Marct Data mach — om ara6fe Safes (Data LandSaie #7 grantor. grantee: Date of Safe: D7rperty Location: LegaRDescription: Zoning Category: Size: Improvements: c sported e: Data Source: mm4. Indicated cprice: James Emmett Silkwood & Celia K. Scott Silkwood Monroe Locust, LLC 02/26/07 221 N. Locust Avenue, between Dickson & Spring Streets Lot 9, Block 5, Original Town of Fayetteville Main Street Center (MSC) 7,750± Square Feet or 0.178+ Acre None considered having contributory value $300,000 Appraiser files - Buyer interview, Parcel #765-01712-000, Deed 2007-7009 Recent sale of a small lot in City's Downtown master plan area. Located on a one- way street running south from Dickson. Buyer constructed six common -wall townhome units totaling 6,600±- SF along with lower level garages (3,300± SF). $38.7I/Square Foot 31 flnabsxs Qf Com ara6Ces ,. nd Conclusion Of Land Va(ue In my opinion, there are an adequate number of comparables available to render a reliable opinion of the subject's underlying land value according to its' highest and best use. I offer a variety of verified transactions considered representative of recent market activity, while retaining additional examples in my files. The comparables are summarized as follows: Sale (Date Tract Size Land (Price $/SF Compara5iIity 1 Jul -07 18,630 SF $200,000 $10.74 Larger - Similar 2 Jan -06 28,205 SF $350,000 $12.41 Larger - Similar 3 Nov -06 5,053 SF $67,000 $13.26 Smaller - Similar 4 Jun -04 8,059 SF $80,000 $9.93 Smaller - Similar 5 Nov -05 9,953 SF $95,500 $9.60 Smaller - Similar 6 Nov -08 7,200 SF $75,000 $10.42 Smaller - Similar 7 Feb -07 7,750 SF $300,000 $38.71 Smaller - Superior All comparables are located in close proximity, with most considered having similar immediate Downtown neighborhood influence. All are at least similar in basic physical features (terrain, utility services, etc.). There is currently a tract of land on Locust Ave. just north of Center St. that is being offered for sale by REMAX for $200,000. It is a 50' x 150' lot, which is $26.67 per sq.ft. This tract appears to be over priced for today's market. Slight appreciation over time within the subject's land market niche is still prevalent. But, there are much fewer top -end prices paid compared to the more speculative time of 2004-2007. In addition, many of the comparables included planned projects that either did not get underway, or experienced dampened success due to the economic downturn. The researched sales indicate an unadjusted price range of $9.60 - $38.71. This is a wide range in which to comfortably place the subject. Primary differences are attributable to location relative to the Downtown grid, total size, date of sale, and zoning/overall potential. Generally speaking, per square foot values decline as the size of the tract increases. This rule of thumb does not always hold true, though, especially when considering the unique requirements of urbanized areas. Some tracts suffer discounts if they are too small to satisfy zoning ordinances (e.g. parking). In addition, owing to the current trend of condominium/mixed-use projects prevalent downtown, tracts too small for development into multi -story structures do not have nearly the same desirability as the City grows upward. It is my opinion the subject's land would fall near the lower area of the stated range. Therefore, based upon the above recited sales and analysis thereof, and after adjustments are made for differences in time, size, location, visibility, land qualities, and other economic factors, it is my considered opinion the subject's land value, as of October 20, 2009, is as follows: 24,450± SF @ $15.00/SF = $366,750 Say $367,000 32 21�e Cost ftppivacfi 911etkodoti The Cost Approach is based upon the principle of substitution that states: "A purchaser will not pay more for an existing property than the cost to reproduce it in the current market & in a similar location." The Cost Approach is particularly applicable when the subject improvements are new or relatively new and represent the Highest & Best Use of the land. Also, this approach is useful when the subject improvements are unique or special purpose improvements for which there exist few if any comparable properties in the marketplace, which is the case for the subject. The Cost Approach for properties such as the subject property indicates a value estimate as follows: 1) Reproduction or Replacement Costs of all proposed existing improvements based upon current labor & material costs are estimated. 2) Any depreciation due to physical, functional or external inadequacies is deducted from the cost estimate. 3) The estimated value of the land is then added to the depreciated cost to obtain a total value estimate for the subject property. 33 Cost fipproach (Data COST APPROACH GRID Rock St. and Block Ave. Parking Lot 64 Space Asphalt Parking Lot 18,512 SF 64 Spaces Basic Per Space Cost Engineering - plans, surveys, permits, etc. $110.00 Grading- Rough and finished $115.00 Drainage $160.00 Paving - Spaces and Drives $805.00 Pavement Marking - Striping and bumpers $33.00 Electrical - Lighting and wiring $170.00 Adjusted Space Cost $1,393.00 Estimated Cost New of Parking Lot: $89,152 Add Estimated Cost New of Related Improvements: Retaining Walls: Concrete 376 SF @ $18.00 $6,768 Native Stone 512 SF @ $27.50 $14,080 Concrete Block 180 SF @ $10.00 $1,800 Concrete Stairway 15 ft @ $45.00 $675 Pipe Rail Fencing - Metal Guard Rail 165 ft @ $35.00 $5,775 Concrete Sidewalks 1,000 SF @ $5.00 $5,000 Landscaping $1_,500 Estimated Cost New of Related Improvements 35,598.00 Total Estimated Cost New of all Improvements: $124,750 Add for Entrepreneurial Profit and Indirect Costs 12% $14,970 Total Estimated Value New $139,720 Less Depreciation: Physical (Effective age 20) 50% $69,860.00 Functional 0% $0.00 Economic 20% $27,944.00 Total Depreciation $97,804 TOTAL INDICATED VALUE- ALL IMPS. $41,916 ADD LAND VALUE $367,000 INDICATED VALUE VIA COST APPROACH $408,916 SAY $409,000 34 The Income roach In the Income Approach, real estate is valued on the basis of its capacity to produce income. The approach is based on the premise that the value of a property may be determined by the amount of Net Income it can reasonably produce over its remaining economic life. The following equation is used to ascertain a value estimate: Net Income Value = ------------------ Capitalization This approach is of particular significance when applied to those properties capable of generating an income stream. The steps under taken by the appraiser in order to obtain a value estimate utilizing the Income Approach is as follows: 1) Obtain a reliable Economic or Market rent for the subject property from research of comparable rentals in the market place or if the property is under a long term lease, obtain contract rent from the lease agreement. 2) Develop an Income Statement for the subject property. Gross Income is determined, usual and ordinary operating expenses are deducted to indicate the net operating income which the subject property can be expected to produce under competent management. 3) Develop an overall capitalization rate applicable to the subject property. The capitalization rate takes into account the rate of return that a prudent investor would seek, the degree of risk involved, illiquidity, returns available on alternative type investments, current mortgage terms, mortgage principal reduction, & potential appreciation. 4) The capitalization process is performed. The capitalization rate is applied in the appropriate manner to the net operating income to indicate the value ofthe subject property. 35 The Income 11ppivacfi — (Determination of Economic nt "Economic Rent" is the amount of rental the property would likely command in the open market if it were vacant and available for rent. "Contract Rent" is the rental stipulated by a contract; that is, under the terms of a lease. After conducting interviews with the current owner and city officials, and after analyzing data relating to the subject, the following facts were determined: The subject lot has 64 parking spaces. The lots have been leased over the past several years to the City of Fayetteville and Crossland Construction. However, the lot is less frequently used due to its location quite some distance from the square and its lower tier siting. Furthermore, the area bank's staffing has been down sized in recent years reducing the demand by employees for parking. The owner reports that the current lot space rental is $35/space/month and it is his intentions to raise the rate to $50/space/month upon new lease negotiations. The average rental rate for parking in downtown Fayetteville ranges from $20-$50/month The majority of parking spaces are rented at full capacity with a waiting list for vacated spaces. Collection losses are at a minimum There are a number of additional metered spaces in the downtown area. On the following page are statistics from the City owned parking lots in the downtown area. According to city officials, rates for city operated lots are kept artificially low to encourage downtown patronage. Currently, the city leases the Parking District's lots in addition to managing and maintaining its own lots. Although the appraiser feels that downtown parking lots could command higher rental rates, it would be unrealistic to ascribe market rates with no prospect of an actual increase. In effect, the city has created its own market by the decision to keep rates at a minimum Due to this fact, the appraiser will use the existing rate of $35/month for long term parking when determining value via the Income Approach. 36 The Income ach -- �Detennination of Economic nt City of Fayetteville Lots: fMunicipaf(Deck 266 total spaces- fully occupied (Cosmopolitan) Proceeds 2008 $125,860 2007 $125,340 2006 $120,544 Space/Month $39.43 $39.27 $37.76 Notes: The City leases the first and third levels of the deck to the Cosmopolitan, who is then responsible for management and filling of spaces. The City leases out spaces on the second level individually. Town Center cDeck 220 total spaces- 66% basic occupancy over the years per City study Basic fee of $3.00 or $50.00 per month for reserved Notes: Occupancy is much higher during special events hosted at the Town Center Church e9 Mountain 111 total spaces - (Lot 1) 85 metered, 26 leased; full occupancy for reserved spaces Metered spaces- 2008 proceeds of $18,539 or $18.17/Space/Month Leased spaces- Basic fee of $50.00/Space/Month Notes: Good example of premium paid for reserved parking vs. open metering East at Meadow 53 total spaces- all controlled access and fully occupied (Lot 5) Basic fee of $30.00/Space/Month Notes: Controlled by gate access Church e`L I eadow 166 total spaces- 100 metered, 66 controlled access (Lot 7) Metered spaces- 2008 proceeds of $14.945 or $12.45/Space/Month Leased spaces- Basic fee of $30.00/SpacelMonth (28 leased) Notes: 66 controlled by gate access (28 of66 spaces leased) 37 27ie Income acli -- Determination o Net Operating Income DETERMINATION OF NET OPERATING INCOME The following income statement has been prepared based on market rents in the subject area. Estimated Potential Gross Annual Income Net Rentable Parking Spaces 64 Spaces @ Less: Allowances for vacancies and bad debts Estimated Effective Gross Income Less: Operating Expenses Property Taxes (Act.) Insurance (Est.) Utilities Repairs, Maintenance, & Misc. Management Reserves for Replacement Total Expenses Net Operating Income Notes to the above Income Statement: 5% 5% Generally, owners of this property type are responsible for property taxes. a landlord policy on the improvements.maintenance and utilities. The tenants would not be responsible any operating expenses. $35 /Month x I2 ms 30% $1,077 $0 $960 $200 $1,344 $1,344 $4,925 Management fees are included even though the owner may choose to manage the property. Management fees for this type of property are typically in the 5-10% range. Reserves for replacement are funds set aside for the replacement of big ticket items which require replacement occasionally over the life of the improvements, such as the parking lot surface, etc. These components of the subject have an economic life less than the entire subject structure. 38 $26,880 $8,064 $18,816 $13,891 r1)ze Income Aupmach — cDeternination of Capita&ation Rate he Mortgage Equity Technique The mortgage equity technique is a precise method of obtaining a capitalization rate. Unlike other methods, mortgage equity analysis considers financing in its determination of a capitalization rate and hence value. This method recognizes that a prudent investor in today's market will seek the best mortgage financing available in order to get a maximum yield on a minimum down payment. In doing so, the mortgage equity technique considers two (2) factors beyond those used in conventional capitalization rates. First, the technique makes a compensation for equity build-up. As time passes the owner through the payment of debt service is slowly building up his equity in the property by reducing the principal. Therefore, a deduction from the basic capitalization rate is necessary to compensate for the equity build-up from mortgage principal reduction. Secondly, the mortgage equity method includes a provision for the depreciation or appreciation of the property during the income projection period (holding period). For example, if the property is going to increase in value over time it is not necessary to make a provision for the recapture of the investment; therefore, the investor is willing to accept a lower return on his investment He will receive his recapture of the investment and a capital gain upon resale. As a result, in applying the mortgage equity method to the subject property the following assumption were made: Typical investors in property of this type would be able to acquire financing under the following terms: 80% Loan to Value Ratio at 6.5% for 20 yrs., 2 yr. Balloon 2. Typical investors at this time would demand a 10% return on there investment in property of the subject's type; hence, an equity yield rate of 10% will be used. 3. From analysis of occupancy of this type, a typical investor will hold the property for 10 years. 4. From analysis of market data and projections of stabilized property values, it is the appraiser's opinion that the subject property land will appreciate 25% over the holding period, and the subject improvements will depreciate 30% over the holding period. 39 The Income )(ppmach - QDetennination of Capita&ation cRgte DEVELOPMENT OF THE CAPITALIZATION RATE LN * Amortization Factor 1st Mortgage 80.00% x 0.089470 0.071576 EN * Equity Yield Rate Equity 20.00% x 0.100000 0.020000 Total 0.091576 Less Credit for Equity Build-up: (% Mortgage paid off*LN*Sinking Fund Equal to 0.27 80.00% x 0.062745 0.014037 BASIC RATE Unload for Land Appreciation (Appreciation over Holding Period*Sinking fund) Equal to 25.00% 0.062745 0.015686 Capitalization Rate for the Subject Land Load for Building Depreciation: (Depreciation over Holding Period*Sinking fund) Equal to 30.00% x 0.062745 0.018824 Capitalization Rate for the Subject Improvements Financial Assumptions: Terms - 80% Loan to Value Ratio at 6.5%, 20 yr. Amortization, 2 year Balloon Return - 10% Return on Investment, 10% Equity yield rate 10 year investment period, Average interest rate of 7% over holding period 25% Land appreciation over holding period 30% improvement depreciation over holding period Ratios & Factors utilized: LJV ratio 80% EN ratio 20% Yield 10.00% Amort. Factor 0.089470 % Mortgage Paid over holding period 0.332000 Sinking fund factor 0.062745 Land Appreciation 25.00% Improvement. Depreciation 30.00% Land Value $367,000 :1 0.077539 0. 0963 62 The Income ach — (Determination o value DETERMINATION OF VALUE Net Operating Income Less: Income attributable to the land (Land Value * Land Capitalization Rate) Equal to $367,000.00 x Income Attributable to the Improvements Capitalize @ Building Cap Rate Equal to -$8,808.91 x Add Land Value Value Indicated by Income Approach 41 $13,891 0.061853 $22,700 -$8,809 0.096362 $0 $367,000 $367,000 SAY $367,000 Correlation, nay sis and oncyu cion The three appraisal approaches were used to estimate the market value of the subject property. The Market Data Approach was used to estimate the value of the subject land. There were no sales available of parking lots in the downtown area. The Cost & Income Approaches were used to estimate the value of the subject property as improved. These approaches resulted in the following indicated values: The Ufa (DataApproach $ 367,000 The Cost Approach $ 409,000 The Income Approach $ 367,000 It is the appraiser's opinion that an adequate amount of Market Data was available to obtain a reliable value estimate for the subject land as if vacant. A sufficient amount of sales activity has occurred in the general vicinity of the subject property. However, due to the fully developed nature of the downtown area and the current economic environment, there were few recent sales available. None the less, these sales are considered reliable and do indicate the prices being paid for commercial land in the Downtown Fayetteville area. The value estimate indicated by the Cost Approach is also considered reliable. The appraiser has consulted with area contractors familiar with similar parking lot construction. The cost estimates derived in this report are considered reliable under the best ability of the appraiser. When calculating depreciation on special use property such as the subject, there is room for error. This approach best reflects the principal of substitution in the marketplace. The majority of the value is in the land and the existing parking lot improvements do not contribute significantly to the overall property value. The parking lot is considered an interim use and does contribute some value due to the ability to generate some income until a higher and better use can be obtained for the land. The Income Approach value estimate is based upon the subject property's capacity to generate income. The Income Approach bases its value estimate upon the current, realized rental rates of the subject and historic vacancies & expenses. By capitalizing the income stream the appraiser has obtained a value estimate which reflects the value a prudent investor would place on the property. It is interesting that the Income Approach reveals that the current income levels are not sufficient to support the value of the land. The appraiser has used capitalization rates to reflect the lower risk of the project which still has resulted in inadequate returns on the investment in the property. Consequently, the Income Approach value estimate is essentially a little more than the value of the land. This further underscores the low rental rates on downtown parking. The subject would most likely be purchased by either a company needing to provide parking for its employees or a public entity not a private investor looking for a good rate of return. 1 42 Correlation nab sis and Conclusion Cont'rb The appraiser has used a market rent for the subject property, which is considered low in comparison to other cities in the region. However, the City of Fayetteville pretty much controls the parking market in downtown Fayetteville, so essentially these rates are the local market rates. Although a higher rent may better mirror the private market, the appraiser feels using an unlikely rate would not reflect the actual situation of the subject. The three appraisal approaches have resulted in value estimates within a reasonably close range. Each approach is considered reliable; however, the Income Approach will be given less weight due to the above stated reasons in arriving at a final value estimate for the subject. The subject property has intrinsic value to both the City and nearby enterprises. Therefore, based upon the data collected and analyzed within this report and the preceding discussion, it is the considered opinion of this appraiser that the Fair Market Value of the subject property as of October 20, 2009 is as follows. $ 380,000 43 Cert!ficate ofAppraiser I hereby certify, that to the best of my knowledge and belief, that the statements of fact contained in this report are true and correct; that the reported analysis, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions; that I have no present or prospective interest in the property that is the subject of this report, and I have no interest or bias with respect to the property that is the subject of this report or to the parties involved with this assignment; that my engagement in this assignment was not contingent upon developing or reporting predetermined results; that my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. I hereby certify, that my analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with requirements of the code of Professional Ethics and the Standards of Professional practice of the National Association of Realtors; that the use of this report is subject to the requirements of the National Association of Realtors relating to review by its duly authorized representatives; that all signatories of this report have physically inspected the subject property and are familiar with the comparables stated within. The appraiser further certifies that the analyses, opinions and conclusions were developed, and this report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice ("USPAP"), except that the Departure Provision of the USPAP does not apply. In the previous sections of this report, the appraiser has analyzed the relevant facts and applied the appropriate appraisal processes to the subject property. It is the considered opinion of this appraiser that the Market Value of the subject property as of the effective date of October 20, 2009 is: THREE HUNDRED EIGHTY THOUSAND DOLLARS ($380,000) Respectfully Submitted, N.y�Ch�VG �49n G, illSsj/� „R0.4 Mark E. Risk, GAA State Certified General Appraiser #0202 44 SectionV- ddendum Zoning Information 161.22 Downtown General. (A) Purpose. Downtown General is a flexible zone, and it is not limited to the concentrated mix of uses found in the Downtown Core or Main Street / Center. Downtown Genera! includes properties in the neighborhood that are not categorized as identifiable centers, yet are more intense in use than Neighborhood Conservation. There is a mixture of single-family homes, row houses, apartments, and livelwork units. Activities include a flexible and dynamic range of uses, from public open spaces to less intense residential development and businesses. For the purposes of Chapter 96: Noise Control, the Downtown General district is a residential zone. (B) Uses. (1) Permitted uses. Unit 1 City-wide uses by right Unit 4 Cultural and recreational facilities Unit 5 Government facilities Unit 8 Single-family dwellings Unit 9 Two-family dwellings Unit 10 Three-family dwellings Unit 12 Offices, studios and related services Unit 13 Eating places Unit 15 Neighborhood shopping goods Unit 24 Home occupations Unit 25 Professional offices Unit 26 Multi -family dwellings Note: Any combination of above uses is permitted upon any lot within this zone. Conditional uses shall need approval when combined with pre -approved uses. (2) Conditional uses. Unit 2 City-wide uses by conditional use permit Unit 3 Public protection and utility facilities Unit 14 Hotel, motel and amusement services Unit 16 Shopping goods Unit 17 Trades and services Unit 19 Commercial recreation, small sites Unit 28 Center for collecting recyclable materials Unit 36 Wireless communication facilities Unit 40 Sidewalk Cafes (C) Density, None (D) Bulk and area regulations. (1) Lot width minimum. Dwelling (all unit types) 18 ft. (2) Lot area minimum. None. (E) Setback regulations. Front: The principal facade of a building shall be built within a build -to zone that is located between the front property line and a line 25 ft. from the front property line. Side facing street: The principal facade of a building shall be built within a build -to zone that is located between the front property line and a line 25 ft. from the front property line. Side, i� nternal: None Rear, without easement or alley: 5 ft. Rear, from center line of an easement or alley: 12 ft. (F) Minimum buildable street frontage. 50% of lot width. (G) Height regulations. Maximum height is 4 stories or 56 feet which ever is less. (H) Parking regulations. No parking lots are allowed to be located in the front or side build -to -zone facing a public right of way. (Ord. 5028, 6-19-07; Ord. 5029, 6-19-07) 45 sume Mark E. Risk, GAA POSITION University of Arkansas — Adjunct Instructor — Real Estate PRESIDENT TREC, INC. dba The Real Estate Consultants 118 N East Ave.. / P. O. Box 747 Fayetteville, Ar. 72702 (479) 442-0762 STATE State of Arkansas — #CG -0202 CERTIFIED GENERAL APPRAISER LICENSED REAL State of Arkansas- Principal Broker #00005933 ESTATE BROKER EDUCATION University of Arkansas, MBA 1979 University of Arkansas, BSBA 1977 Major: Real Estate and Finance American Institute of Appraisers Real Estate Appraisal Principles Basic Valuation Procedures Standards of Professional Practice Capitalization Theory and Techniques (U of A) Marshall & Swift Building Cost Seminar Easement Valuation -- International Right of Way Assoc. GRI Course 306 -- Arkansas Realtors Association NAIFA Courses -- Standards of Professional Practice Reviewing the URAR Form -- The New URAR Report -- NAIFA, Springdale, Ar. Sales Comparison Approach -- Arkansas Realtors Assoc. Environmental Site Assessment -- Lincoln Graduate Center HUD/FHA Appraiser Training Seminar -- Little Rock HUD Office ASB Information Meeting (revisions to USPAP) -- Dallas, Tx National Association of Realtors USPAP Update Course Instructors' Training Institute (ITI) -- San Antonio, Tx Timberland Appraisal — Fayetteville, Ar Evaluating Residential Construction -Springdale, Ar. Federal Regulation of Real Estate Appraisal -Springdale, Ar. Recerts, Updates and You -Bentonville, Ar. USPAP 2006 Update -Springdale, Ar. PROFESSIONAL National Association of Realtors (MAR) -- Appraisal Section MEMBERSHIPS Arkansas Realtor's Association Metro Area Board of Realtors PROFESSIONAL General Accredited Appraiser (GAA) - National Association DESIGNATIONS of Realtors 46 STATE BOARDS Appointed to the Appraiser's Licensing and Certification Board by Governor Bill Clinton in January 1992. Reappointed by Governor Jim Guy Tucker in 1994, Term Expired in January of 1997. BOARD OF DIRECTORS Served on Board of Directors of the UARK Federal Credit Union NATIONAL National Association of Realtors Appraisal Section COMMITTEES Subcommittee 1995-1998 Chair - 1998 Appraisal Forum 1995 Appraisal Committee 1997-98; 2000-2006 EXPERIENCE Real Estate Consultants 198 1 -present Actively appraising real estate in Northwest Arkansas since 1979. Associated with Jim Sullivan (Sullivan Agency), 1979 to 1989. Associated with Tom Reed (Reed & Associates), 1981 to 1985. Employed by Keith S. Schultz (Associated Appraisers) 1980-81. TEACHING Real Estate Instructor at the University of Arkansas (1981 to date) Courses taught include: Real Estate Principles, Investments & Appraisal, and Finance Continuing Education Seminars: Basic Steps to Residential Appraisal, Environmental Concerns, Property Management PUBLICATIONS "Recreational Land Values and Trends in Northwest Arkansas", Arkansas Business and Economic Review, Vol. 16, No. 1, 1983; Picked up for reprint by the International Association of Assessors CLIENTS SERVED *LENDING 66. Federal Credit Union INSTITUTIONS American Airlines Credit Union Arkansas National Bank Arvest Bank UARK Federal Credit Union Bank of Arkansas Bank of Salem Bank of Eureka Springs Bank of Oklahoma Chambers Bank First Security Bank of NW Arkansas Community First Bank First State Bank Great Southern Bank First Federal Bank First Financial Bank 47 *LENDING Metropolitan National Bank INSTITUTIONS Simmons First Bank (Cont'd.) Signature Bank Liberty Bank of Arkansas Legacy National Bank Bank of Fayetteville Regions Bank -Dallas Telco Credit Union Bank of America First National Bank of St. Louis Bank of Jackson Hole *MORTGAGE Ameriquest Mortgage COMPANIES Arvest Mortgage Company Broyles Mortgage Company Federal National Mortgage Association (FANNIE MAE) James River Mortgage Company Lomas & Nettleton Norwest Mortgage PHIL Home Mortgage Pulaski Mortgage Company Southern Mortgage U.S. Mortgage Lending Tree Ditech.com DEVELOPERS Dream Structures Copher Quality Homes Larry Carter Development Corporation Castle Development East Avenue Development, LLC Dr. J. B. Hays Houses, Inc. C & K Construction Riggins Construction RELOCATION Corporate Relocation COMPANIES Sirva Relocation Cendant Mobility Coldwell Banker Relocation Commonwealth Relocation Services Equitable Relocation Mgmt. Corporation Executive Relocation Forward Mobility Home Equity Corporation Prudential Relocation Management Re/Max Relocation Relocation Funding Corporation Relocation Resources Weichert Relocation 48 MISCELLANEOUS Anheuser Busch Ball Corporation Bell International Busch Ski] Company Cargill Corporation Cannon Express Cummulus Broadcasting Central United Methodist Church City Of Eureka Springs City Of Fayetteville City Of Springdale City Of Rogers City Of Johnson City Of Bentonville Arkansas Department of Parks & Recreation Arkansas State Highway & Transportation Department Nature Conservancy SWEPCO Bentonville Airport Commission Colgate Palmolive CTS Corporation Deere Credit Services Federal Deposit Insurance Corp. (FDIC) Fulbright Enterprises Gates Rubber Company General Motors Gerald Carr (Retired Astronaut) Kraft, Inc. Love Box Company MGIC Michelin Tire Company Ozarks Electric Cooperative Phizer, Inc. Procter & Gamble Record Data, Inc. Resolution Trust Corporation Roadway Express Salvation Army Sioux Transportation Tyson Foods, Inc. Many Other Attorneys, Doctors, And Individuals COURT Benton County Circuit Court TESTIMONY Carroll County Circuit Court U.S. Federal Bankruptcy Court Washington County Circuit Court Crawford County Circuit Court GEOGRAPHIC Northwest Arkansas AREA SERVED Washington, Benton, Carroll & Madison Counties 49 OFFER AND ACCEPTANCE CONTRACT The City of Fayetteville, Arkansas, a municipal corporation, offers to buy, subject to the terms and conditions set forth herein, the following described property: SEE ATTACHED EXHIBIT "A" FOR PROPERTY DESCRIPTION 2. Purchase Price: Subject to the following conditions, the City of Fayetteville shall pay for the property at closing, the total and cash payment of $342,000.00. 3. Contingent Earnest Money Deposit: ROCK STREET PARKING. LLC waives the requirement of earnest money from the City of Fayetteville. 4. Conveyance will be made to the City of Fayetteville by general Warranty Deed, except it shall be subject to recorded instruments and easements, if any, which do not materially affect the value of the property. Such conveyance shall include mineral rights owned by ROCK STREET PARKING, LLC. 5. ROCK STREET PARKING. LLC shall furnish a policy of title insurance in the amount of the purchase price from a title insurance company as selected by the City of Fayetteville. The City of Fayetteville shall pay the total cost of the title insurance. 6. ROCK STREET PARKING, LLC agree(s) to allow the City of Fayetteville, if the City of Fayetteville so desires, at City of Fayetteville's expense, to survey the property. ROCK STREET PARKING Lt_C agree(s) to cure any title problems which may result from any differences between the recorded legal descriptions of the property and the survey description. Said title problems, if any, must be solved prior to closing to the satisfaction of the City of Fayetteville. 7. Taxes and special assessments due on or before closing shall be paid by ROCK STREET PARKING, LLC. Insurance, general taxes, ad valorem taxes, special assessments and rental payments shall be prorated as of closing. 8. The closing date shall be within fourteen 14 days after approval of this offer by the City Council. If such date of closing falls on a weekend or holiday, it will be held the following working day. 9. Possession of the property shall be delivered to the City of Fayetteville on the date of closing, without any further obligation to prior contracts entered into by ROCK STREET PARKING, LLC. 10. ROCK STREET PARKING, LLC hereby grant(s) permission for the City of Fayetteville or its employees or designates to enter the above described property and improvements for the purpose of inspection and/or surveying. 11. All fixtures, improvements and attached equipment are included in the purchase price. 12. Risk of loss or damage to the property by fire or other casualty occurring up to the time of closing is assumed by ROCK STREET PARKING LLC. 13. ROCK STREET PARKING, LLC shall disclose to the City of Fayetteville any and all environmental hazards of which ROCK STREET PARKING, LLC has/have actual knowledge. Upon acceptance of all conditions and terms of this Offer and Acceptance, the City of Fayetteville and ROCK STREET PARKING, LLC shall share equally the costs of any and all testing for the existence of environmental . hazards. Should the existence of environmental hazards be known or determined, ROCK STREET PARKING. LLC shall cure such, at their expense; or, in the alternative, at the City of Fayetteville's discretion, the City of Fayetteville may cure such environmental hazard, and ROCK STREET PARKING LLC shall indemnify the City of Fayetteville for all costs associated with said cure. C IBIT OFFER AND ACCEPTANCE CONTRACT Page 2 of 4 14. This agreement shall be governed by the laws of the State of Arkansas. 15. This agreement, when executed by both the City of Fayetteville and ROCK STREET PARKING, LLC shall contain the entire understanding and agreement of the parties with respect to the matters referred to herein and shall supersede all price or contemporaneous agreements, representations and understanding with respect to such matters, and no oral representations or statements shall be considered a part hereof. 16. This contract expires, if not accepted by ROCK STREET PARKING, LLC on or before the 18th day of March, 2010. 17. The City of Fayetteville shall submit this fully executed Offer and Acceptance Contract to the City Council for their approval within twenty (20) days of acceptance by ROCK STREET PARKING, LLC. 18. NOTICE: THE CITY OF FAYETTEVILLE ASSERTS AND ROCK STREET PARKING, LLC HEREBY ACKNOWLEDGES THAT THIS OFFER IS EXPRESSLY CONTINGENT UPON THE APPROVAL OF THIS OFFER OF PURCHASE BY THE CITY COUNCIL OF FAYETTEVILLE AND THAT THE FAILURE OF THE COUNCIL TO SO APPROVE WILL MAKE ALL PORTIONS OF THIS OFFER NULL AND VOID, INCLUDING, BUT NOT LIMITED TO, THE RETURN TO CITY OF FAYETTEVILLE OF THE $0.00 EARNEST MONEY DEPOSIT. Date: Date: AGENT OR WITNESS: Date: City of Fayetteville, Arkansas, A municip rporation ion d Jordan, Sondl a�Smith, City Clerk Date: Date: OFFER AND ACCEPTANCE CONTRACT Page 3of4 EXHIBIT "A" PROPERTY DESCRIPTION A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3, plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW corner of said Block 41, said point being an existing iron; thence S 89°41'51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30'11" W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27' W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30'11" E, 182.32 feet (record 184.00 feet) to the point of beginning. SIGNED FOR IDENTIFICATION: Date: Date: Date: c.3 / v n Jordan, ay So Smit , C5ty Clerk Date://_/__ OFFER AND ACCEPTANCE CONTRACT Page 4 of 4 ACKNOWLEDGMENT STATE OF ARKANSAS ss. COUNTY OF WASHINGTON BE IT REMEMBERED, that on this date, before the undersigned, a duly commissioned and acting Notary Public within and for said County and State, personally appeared , to me well known as the person(s) who executed the foregoing document, and who stated and acknowledged that he/she/they is/are of and is/are duly authorized to execute the foregoing instrument for and in the name and behalf of said , and further stated and acknowledged that he/she/they had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. WITNESS my hand and seal on this day of , 2010. Notary Public MY COMMISSION EXPIRES: ACKNOWLEDGMENT STATE OF ARKANSAS ss. COUNTY OF WASHINGTON BE IT REMEMBERED, that on this date, before the undersigned, a duly commissioned and acting Notary Public within and for said County and State, personally appeared Lioneld Jordan and Sondra Smith, to me well known as the persons who executed the foregoing document, and who stated and acknowledged that they are the Mayor and City Clerk of the City of Fayetteville, Arkansas, a municipal corporation, and are duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said municipal corporation, and further stated and acknowledged that they had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. WITNESS my hand and seal on this I day of t A ioJo , 2010 MY COMMISSION EXPIRES: Notary Public nnifi, BR,gN�i��� QPSS�pN # 11346sSO,y��� 52•� TARY •�� RESOLUTION NO. A RESOLUTION APPROVING A CONTR CT FOR THE PU CHASE OF A .SIXTY-FOUR SPACE PARKING LOT LOC TED ON THE SOUTHEAST CORNER Q BLOCK AVENUE AND lQCK STREET FROM ROCK STREE PARKING, LLC IN THE A UNT OF $342,000.00 PLUS A LICABLE CLOSING COSTS, AN&D APPROVING A BUDG T ADJUSTMENT OF $343,000.00 BE IT RESOLVED BY THE CITY/ COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: / Section 1. That the city hereby approves a contract, a\ Exhibit "A" and incorporated he Parking, LLC for the purchase southeast corner of Block AVE $342,000.00, plus applicable closi Councof the City of Fayetteville, Arkansas opy of which is attached to this Resolution as ein a if set out word for word, with Rock Street a ixty-four space parking lot located on the nu and Rock Street in the total amount of Section 2. That the Ci Counc'iJ of the City of Fayetteville, Arkansas hereby approves a budget 1ljustment, copy of which is attached to this Resolution as Exhibit "B" anyl incorporated erein as if set out word for word, in the amount of $343,000.00. PASSED and APPROVED: By: LIONELD J0R AN, Mayor VED this 6th day of pril, 2010. ATTEST: By: SONDRA E. SMIT] City Clerk/Treasurer City of Fayetteville, Arkansas Budget Adjustment Form Budget Year Department: Transportation Services Request Date Adjustment Number 2010 Division: Parking & Telecommunications 4!6!2010 Program: Off -Street Parking JUSTIFICATION TO INCREASE PROJECT 1 ITEM: $343,000 is requested in the Rock Street Parking Lot Purchase capital project. The purchase price of the property is $342,000.00 plus a contingency of $1,000.00 to JUSTIFICATION TO DECREASE FOJECT I ITEM (OR RECOGNIZING A budget adjustment of $6,750.00 w'R be taken from Rent Expense that I the lower level. The other $336,250.0 will be taken from Off -Street Pa� used for parking related items (land acq isitions, operations, mainten�c closing costs. be the unused remainder of the lease for g Fund Balance which may ONLY be equipment, etc.). EXHIBIT J5 Increase Decrease Project.Sub Account Name Accou� Nu ber Budget Budget Number Land Acquisition 2130.913005.00 343,000 10021 1 Use of Fund Balance 2130.091 .4999.99 336,250 Rent 2130.9 0.5308.00 6,750 TOTAL 343,000 343,000 3 IS-fo Date )7 vt Date Date •$4j ck: 1JF.— _3 .2aso Date D _, --/t, Date t� e Requested By Budget & Type: A B Description: General Ledger Date Posted to General Ledger Posted to Project Accounting Ksprrnger rch Use Only C E Initial Date Initial 0 C:ID0CUME-1\ scrossonlL0CALS--11TempXXPgrpwiselBAF0RM 2p10 RockStreetParking CITY of FAYETTEVILLE. ARKANSAS CHECK NO. 389741 DATE INVOICE NO. UESGRIPTION AMOUNT 4/16/2010 0000063141 Purchase Rocs St Parkg Lot per 1iUU Stmnt 343,537.27 CHECK AMOUNT $343,537.27 13 DETRC*I HERE FOR YOUR REGARDS RICHARD L. MILLER X M g x x Policy Issuing Agent for FIRST AMERICAN TITLE INSURANCE COMPANY 2013 N. Green Acres Rd., Suite B P.O. Box 3354 Fayetteville, AR 72702 Telephone (479) 521-6288 Fax (479) 521-3863 ARKANSAS TITLE INSURANCE COMPANY NOTICE OF AVAILABILITY OF CLOSING PROTECTION COVERAGE Rock Street Properties, LLC to City of Fayetteville Transaction Regarding transaction of the real property located at: Pt. of Block 41, Original Town (not City), Fayetteville, AR 72701. Please be advised that, pursuant to Arkansas Code Annotated § 23-103-405 and Rule 87 of the Arkansas Insurance Department, provided that you are an insured under a title insurance policy issued by an Arkansas Title Insurance Company with respect to the transaction contemplated herein, you are entitled to closing protection coverage for the contemplated transaction at a cost of $25.00. Closing Protection Coverage allows, subject to the conditions and exclusions contained in the closing protection letter, for indemnification against the following: 1. Failure of the closing/title agent named below to comply with your written closing instructions to the extent that they relate to (a) the status of the title to that interest in land or the validity, enforceability and priority of the lien of the mortgage on that interest in land, including the obtaining of documents and the disbursement of funds necessary to establish the status of title or lien, or (b) the obtaining of any other document, specifically required by you, but only to the extent the failure to obtain the other document affects the status of the title to that interest in the land or the validity, enforceability and priority of the lien of the mortgage on that interest in land, and not to the extent that your instructions require a determination of the validity, enforceability, or the effectiveness of the other document, or 2. Fraud, dishonesty or negligence of the closing/title agent named below in handling your funds or documents in connection with the closing to the extent that fraud, dishonesty or negligence relates to the status of the title to that interest in land or to the validity, enforceability, and priority of the lien of the mortgage on that interest in land. A copy of the closing protection letter may be obtained upon request from the closing/title agent providing this notice, Miller Law Offices Being notified of the availability and cost of Closing Protection Coverage: I/We do request such coverage. )( I/We do not request such coverage. Signed this .jdaq of April, 2010. Richard Aie[nder, Managing Member Rock Street Properties, LLC Being notified of the availability and cost of Closing Protection Coverage: I/We do request such coverage. _ I/We do not request such coverage. Signed this /' day of April, 2010. Sondra Clark, City Clerk WARRANTY DEED Limited Liability Company KNOW ALL MEN BY THESE PRESENTS: That Rock Street Parking, LLC, a limited liability company organized under and by virtue of the laws of the State of Arkansas, hereinafter called Grantor, for and in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration in hand paid by the City of Fayetteville, Arkansas, a municipal corporation, hereinafter called Grantee, does hereby grant, bargain and sell unto the said Grantee and Grantee's successors and assigns, the following described land situate in Washington County, State of Arkansas, to -wit: A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3, plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW comer of said Block 41, said point being an existing iron; thence S 89°41'51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30' 11" W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27" W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30' 11" E, 182.32 feet (record 184.00 feet) to the point of beginning. TO HAVE AND TO HOLD the said lands and appurtenances belonging unto the said Grantee and Grantee's heirs and assigns, forever. And said company hereby covenants with the said Grantee that it is lawfully seized of said land and premises, that the same is unencumbered, and that it will forever warrant and defend the title to the said lands against all legal claims whatever. IN TESTIMONY WHEREOF, the name of the Grantor is hereunto affixed by its member this ! 9 day of April, 2010. Rock Street P LC By Rich P. Alexander, anaging Member THIS INSTRUMENT PREPARED BY: Miller Law Offices P.O. Box 3354 Fayetteville, AR 72702 A. Settlement Statement U.S. Department of Housing and Urban Development OMB No. 2502-0265 B. Tye of Loan 1. ❑ PHA 2. ❑ FmHA 3. © Cons Unins 6. File Number 7. Loan Number & Mortgage Ins Case Number 4. O VA 5. O Con. Ins. S. ❑ Set lcr Finance IA587 C. Note: 'I his form is furnished to give you a statement of actual settlement costs. Amounts paid ro and by the settlement agent are shown. Items marked o.c. ' were -d outside the closing; they are shown here for informational ptirposes and are not included in the totals. D. Name & Address ofBorrower E. Name & Address of Salter F. Name & Address of Lender City of Fayelteriile, AR Rock Sheet Parking, LLC None 113 W. Mountain St. 231 E. Dickson Fayetteville, AR 72701 Fayetteville, AR 72701 IDN26.4154057 C. Property Location Pi. of Block 41 In the Original Town (now City) of Fayetteville, Arkansas. H. Settlement Agent Name Richard L. Miller, Attorney P.U. Box 3354 Faycttevik:, AR 72702 Place of Settlement I. Settlement Date First American Title Company 2013 N. Green Acres Rd., Suite B April 19, 2010 FayelteWle, AR 72703 J. Summary of Borrower's Transaction K. Summary of Seller's Transaction 100. Gross Amount Due from Borrower 400. Gnsui Amount Due to Seller 101. Contract Sales Price $342,009.00 401. Contract Sales Price $342,000.00 102. Personal Property 402. Personal Property 103. Settlement Charges to borrower (tine 1400) $1,859.00 403, 104. 404, 105. 405, Adjustments for tienu paid by seller to advance Adjustments for Items paid by seller In advance 106. City property taxes 406. City property taxes 107. County property taxes 407. County property taxes 108. Assessment Taxes 408. Assessment 'taxes 109, POA Dues 409. POA Dues 110. Rent Proration 410. Rent Proration ill. Other Taxes 411. Other Taxes 112. 412. 113. 413. 114. 414. 115. 415. 116. 416. 120. Grass Amount Due From Borrower 5343859.00 420, Gross Amount Due to Seller 53 000.00 200. Amounts Paid By Orin Behalf Of Borrower 500. Redurtioos in Armm.t flue to Seller 201. Deposit or earnest money 0 501. Excess Deposit 202. Principal amount of new loan(s) 502. Settlement Charges to Seller (line 1400) $21,597.39 203. Existing loan(s) taken subject to 503. Existing Loan(s) Taken Subject to 204. Commitment fee 504, Payoff of first mortgage loan Metropolitan Bank $198,90L6S 205. 505. Payoff of second mortgage loan 206, 506, 207. 507. 208. 508. 209. 509. Adjustments for items unpaid by seller Adjustments for items unpaid by seller 210. City property taxes 510. City property taxes 211. County property taxes 01/01/10 to 04/19/10 $321.73 511. County property taxes 01/01/10 to 04/19/10 $321.73 212, Assessment Taxes 511 Assessment Taxes 213. POA Dues 513_ POA Dues 214. Rent Proration 514, Rent Proration 215. Other Taxes 515. Other Taxes 216, 516. 217. 517, 218, 518, 219. 519. 120. Total Paid /Far Borrower $321.73 520. Total Reduction Amount Due Seller $220820.79 300. Cash At Settlement Fram/To Borrower 690. Cash At Settlement To/from Seller 301. Gross Amount due from borrower (line 120) $343,854.00 691. Gross Amount due to seller (line 420) $342,000.00 302. Less amounts paid by/for borrower (line 220) $321.73 602. Less reductions in amt. due seller (line 520) $120,820.79 303. Cash From Borrower $343,537.27 603. Cash To Seiler $121,179.21 Section 5 of the Real Estate Settlement Procedures Act (Rt~.SI'A) requires the following. • HOD must develop a Special Information Booklet to help persons borrowing money to finance the purchase of residential real estate to better understand the nature and costs of real estate settlement services; • Each lender must provide the booklet to all applicants from whom it receives or for whom it prepares a written application to borrow money to finance the purchase of residential real estate; • I.enders must prepare and distribute with the Booklet a Good Faith Estimate of the settlement costs that the borrower is likely to incur in connection with the settlement. These disclosures arc mandatory. tiection 4[a) 0I leesrA manoate5 mat AIVJ rtevemp and] preSCTIOe tout Stannaro form to be used at the time of loan sertlement to provide full disclosure of all charges imposed upon the borrower and seller. Theme we third party disclosures that are designed to provide the borrower with pertinent information daring the settlement process in order to boa betler shopper. The Public Reporting Burden for this collediaa of information is estimated to average one hour per response, including the time for reviewing instructions searching existing data sources, gathering end normal Ming the data needed, and completing and reviewing the collection of information. Ibis agency may not collect this information, and you are not required to complete this form, unless it displays a currently valid OMB control number. The information rerrueste d does not lend itself to confidentiality. are Obsolete ...... Page 1 Handbook L. Settlement Charges 700. Total Ssles/Rroknr's Commission based on price $342,900.00 @ 6 % = $20,520.00 Division of Commission (line 700) as follaws! Paid From gorrowery Fondant Settlement Paid From Seller's ponds at Settlement 701. $20,520.00 to Alexander, Merry -ship & Alt — 702. 10 703. Commission Paid at Settlement $20,524.00 704. Broker Fee to 800. Items Payable in Connection with Loan 801. Loan Origination Fee ')5 to 802. Loan Discount % to 803. Appraisal Fee to 804. Credit Report to 805. lender's Inspection Fee to 806. Mortgage Insurance Application to 807. Future Release Fee to 808. Flood Certification Fee to 809. Tax Service Fee to 810. Undetwritirig Fee to 811. Application Fee to 900. Items Required by Lender 1b Be Paid in Advance 901- Interest tram to @day 902- Mortgage Insurance Premium for months to 903- Hazard Insurance Premium for years to 1000. Reserves Lhepnnited With Lender 1001, Hazard insurance months @ per month 1002, Mortgage insurance months @ per month 1003. City property taxes months @ per month 1004. County property taxes months @ per month 1005. Assessment Taxes months @ per month 1006. POA Dues months per month 1007. AggregatoAdjustmom 1100. Title Charges 1101. Settlementiclosing Fee to Miller Law Offices $400.00 1102. Processing and handling fee to Miller Law Offices $100.00 1103- Title examination to 1104. Title insurance binder to 1105. Document preparation to Miller Law Offices $50,00 1106. Tax Report to 1107. Attorney'sfees to (includes above items numbers: 1108. First American Title Insurance Company I51,254.00 (includes above items numbers- 1109. Lender'acoverage $ 1110. Owner's coverage $342,000.00 1111. Courier Fee to 1200. Government Recording and Transfer Charges 1201. Recording Fees Deed $20.00 ; Mortgage $ to Washington County Circuit Clerk $2000 1202. City/county tax/stamps Deed ; Mortgage to 1203. State tax/stamps Deed S to Department of Finance and Admin. 1204. Record Certification of Trust to 1205. 2009 Real Estate Taxes #765-02098-000 to Washington County Tax Collector $1,07733 1300. Additional Settlement Charges 1391. Survey Its 1302. Pest Inspection to 1303. Split Approval to 1304. Home Inspection to 1305. Septic/Well inspection to 1400. Toiat Settlement Charges {enter on Lines 103 Section J and 502, Section K) 51,859.00 621,597.38 I have carefully reviewed the HUD -1 Settlement Statement and to the best of my knowledge and bell - a true and accurate statement of all receipts and disbursements made o y account on e in this transaction. I farther certify that I have teems' a pleted copy of pages 1, 2 and 3 of this HUD -1 Settlement Statement. t. orrowe B ♦ Rnrr Seller '�VVR•����wff �r liea a, Mayor r, ti;�� _ ! 13 RichardAlexan , Managing Member Sondra Clark, City Clerk SEi ELEMENT AGENT The HUD -1 Settlement Statement which I have�or�accurate account of this transaction. [ have caused the funds f6rher3' keaM t in Sc won In, s statement. •.... m.,a: rI ro...,,,,,nJ r,,,u..,agry ,,,.n ,o D this er any other similar form. Penalties upon conviction can include a dne and impr sonment. For details ace: Title 18 U.S. Code Section 1001 and Section 1010. Settlement Agent Dat Previous Editions are Obsolete Page 2 form H1SD-1(3186) Handbook 4305.2 Miller Law Offices 2013 N. Green Acres Rd., Suite B P.O. Box 3354 - Fayetteville, AR 72702 Richard L. Miller C. Brett Miller John R. Lineberger, Of Counsel CLOSING CERTIFICATION Telephone (479) 521-6288 Fax (479) 521-3863 RE: File No. L4587 Rock Street Parking, LLC to City of Fayetteville, Arkansas Transaction Property located at: P ?1,r'ck 'H QA4j..J'�. � n^ We, the undersigned, hereby state that we are the parties with respect to the transaction referenced above and therefore make the following certifications, where applicable. Property Tax Prorations We, the undersigned Buyer(s) and Seller(s) of the above referenced property, acknowledge that Miller Law Offices, as closing agent for the transaction has prorated 2010 real estate taxes between the Buyer(s) and the Seller(s) based on information obtained from the Assessor's/Collector's office in the county in which the subject property is located, and said information available at the time of closing of the transaction was only an ESTIMATE of the taxes for the parcel of real property. The prorations amount WILL reflect any credits the Seller(s) would have received on the current tax assessment. Buyer(s) and Seller(s) acknowledge that Miller Law Offices has full discretion to prorate the real estate taxes for the 2O10 tax year and has elected to base the prorations on an estimated tax amount. Should there be any discrepancy in the amount of estimated taxes prorated and the actual amount of 2010 taxes that become due, both the Buyer(s) and Seller(s) agree to hold Miller Law Offices harmless from any claims or demands from themselves or any lending institution or other entity for the payment of said taxes. Buyer(s) acknowledge that Buyer(s) are responsible for contacting the county taxing authority for the purpose of applying for and receiving any credit for which they may be entitled. Buyer(s) further acknowledge that Buyer(s) are responsible for and should receive a tax bill in March 2011, for the entire 2010 year. If for some reason Buyer(s) do not receive a bill, Buyer(s) will take the responsibility to obtain the bill from the county taxing authority and to pay the 2010 real estate taxes when due and payable. The Buyer(s) and Seller(s) further agree to make a pro -rata payment of said taxes based on the same percentage reflected in their respective closing statements regarding the transaction when advised by either party that the funds collected at closing for the payment of said taxes were not sufficient to pay same. Miller Law Offices WILL NOT be responsible or liable to the undersigned for any discrepancies and/or adjustments concerning the taxes on the property that are generated by the taxing authorities. Title Insurance Affidavit The undersigned, where applicable, hereby affirm they have received a copy of the Title Insurance Commitment and are aware of the matters contained therein. Survey Waiver The undersigned affirm and acknowledge they will not receive, unless previously agreed, a survey of the property, and further will have no coverages or protection on their title policy with respect to matters that would have been disclosed on a proper survey of the property. It is the responsibility of the undersigned to request such coverages, including but not limited to survey matters, directly from the Title Insurance issuing Agent prior to the closing, and be responsible for any additional charges. Page 1 of 2 Dormancy Charge The undersigned parties acknowledge and understand that the Closing Agent may deduct from funds presumed abandoned a charge of $25.00 by reason of the undersigned parties' failure to claim the funds. Funds are presumed abandoned in accordance with Arkansas Code Annotated, Title 18 — Property, Subtitle 3 — Personal Property, Chapter 28 — Unclaimed Property, Subchapter 2 — Unclaimed Property Act, which states that funds are presumed abandoned if it is unclaimed by the apparent owner five (5) years after the owner's right to demand the property or after the obligation to pay or distribute the property arises, whichever occurs first. Stop Payment Flees The undersigned parties acknowledge and understand that the Closing Agent is charged $9.00 for any stop payments requested through the Closing Agent's financial institution. Closing Agent will charge the undersigned parties $9.00 for any stop payment requests that arise as a result of the undersigned party requesting that a new check be issued to replace a prior check. Errors and Omissions The undersigned parties affirm and acknowledge they will cooperate, and agree to re -execute documents, initial any changes, or pay any additional amounts and/or fees which may result from clerical errors or other matters, including but not limited to misspellings, incorrect names, addresses, legal descriptions, costs, terms, conditions, computations and expenses which were all done in good faith by the Closing Agent and further agree to respond to any such request made by the Closing Agent, Lender, or other party involved in the transaction, in a manner which is timely and consistent with such request. We further agree to indemnify and hold Miller Law Offices, including the Closing Agent, and First American Title Insurance Company harmless from damage or liability resulting from the matters herein. Dated: April / 9 , 2010. Seller(s) Buyer(s) Rock Street Parki City of Fayett ille, Arkansas By Richard P. ander, Managing Member i eld Ford M•j.__. Page 2 of 2 ALTA Commitment Form COMMITMENT FOR TITLE INSURANCE Issued by First American Title Insurance Company First American Title Insurance Company, a California corporation ("Company"), for a valuable consideration, commits to issue its policy or policies of title insurance, as identified in Schedule A, in favor of the Proposed Insured named in Schedule A, as owner or mortgagee of the estate or interest in the land described or referred to in Schedule A, upon payment of the premiums and charges and compliance with the Requirements; all subject to the provisions of Schedules A and B and to the Conditions of this Commitment. This Commitment shall be effective only when the identity of the Proposed Insured and the amount of the policy or policies committed for have been inserted in Schedule A by the Company. All liability and obligation under this Commitment shall cease and terminate six (6) months after the Effective Date or when the policy or policies committed for shall issue, whichever first occurs, provided that the failure to issue the policy or policies is not the fault of the Company. The Company will provide a sample of the policy form upon request. This Commitment shall not be valid .or binding until countersigned by a validating officer or authorized signatory. IN WITNESS WHEREOF, First American Title Insurance Company has caused its corporate name and seal to be affixed by its duly authorized officers on the date shown in Schedule A. First Amn Title Insurance Company BY: 12-ir;*:i" PRESI p• .&i Attest: ,. '. SEPTEMOER 24, a SECRE z COUNTERSIGNED BY: J?o 3Z Saug5' 41003000006(2/07) Page 1 of 2 �T AbEBR�� .t AMRRp tiSY. 4 4 .p FIRST AMERICAN TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE SCHEDULE A Commitment No. L4587 1. Commitment Date: April 5, 2010, at 7:00 A.M. 2. Policy (or Policies) to be issued: Policy Amount: (a) ALTA Owner's Policy X $342,000.00 Proposed Insured: City of Fayetteville, Arkansas, a municipal corporation. (b) ALTA Loan Policy Proposed Insured: 3. The estate or interest in the land described or referred to in this Commitment and covered herein is a fee simple estate. 4. Title to the fee simple estate or interest in said land is at the effective date hereof vested in: Rock Street Parking, LLC. 5. The land referred to in this commitment is described in Schedule C. Please read the exceptions and the terms shown or referred to herein carefully. The exceptions are meant to provide you with notice of matters that are not covered under the terms of the title insurance policy and should be carefully considered. This report is a written representation as to the condition of title for purposes of providing title insurance and lists all liens, defects, and encumbrances affecting title to the land that are filed of record within the last thirty (30) years that have not been released of record or that are not statutorily expired. No title insurance agent or any other person other than a licensed Arkansas attorney may provide legal advice concerning the status of title to the property described in the title commitment. Page 1 of 4 SCHEDULE B - SECTION I REQUIREMENTS The following are the requirements to be complied with: (a) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured. (b) Pay us the premiums, fees and charges for the policy. (c) Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered, and recorded: 1. Obtain and record a Warranty Deed, without intervening rights, from Rock Street Parking, LLC, to the City of Fayetteville, Arkansas, a municipal corporation, with the legal description being the same as described in Schedule C. 2. Obtain and record a release of the Mortgage in favor of Metropolitan National Bank, in the original principal amount of $200,836.85, recorded August 16, 2007, at Document No. 2007- 31552 of the records of the Washington County Circuit Clerk and Recorder. This Mortgage was modified in an instrument recorded September 4, 2008, at Document No. 2008-29281 of said records. 3. The 2009 real estate taxes on Parcel #765-02098-000 must be paid in the amount of $1,077.38. 4. Provide an instrument demonstrating good standing of Rock Street Parking, LLC to do business in Arkansas and an instrument executed by its members, setting forth the authority of those to act on its behalf in order to complete the proposed transaction and execute all closing documents and documents to be insured. 5. Obtain a Seller's Affidavit and a Closing Certification at closing. (d) You must tell us in writing the name of anyone not referred to in this commitment who will get an interest in the land or who will make a loan on the land. We may make additional requirements or exceptions relating to the interest or the loan. Page 2 of 4 SCHEDULE B — SECTION II EXCEPTIONS Any policy we issue will have the following exceptions unless they are taken care of to our satisfaction. 1. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the Proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment. 2. Any discrepancies or conflicts in boundary lines, any shortages in area, or any encroachment or overlapping of improvements. 3. Any facts, rights, interests or claims which are not shown by the public record but which could be ascertained by an accurate survey of the land or by making inquiry of persons in possession thereof. 4. Easements, liens or encumbrances or claims thereof, which are not shown by the public record. 5. Any lien or right to lien for services, labor or material imposed by law and not shown by the public record. 6. All assessments and taxes due in 2010, and thereafter. 7. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public record. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or the public record. 8. Loss arising from security interest evidenced by financing statements filed of record as of the effective date hereof, under the Arkansas Uniform Commercial Code and Judgment liens and other liens of record in any United States District Court or Bankruptcy Court in the State of Arkansas, as of the effective date herein. 9. All right, title and interest in and to all of the oil, gas and other minerals, and other components of the mineral estate, together with all rights, easements and privileges relating thereto. The purpose of this exception is to limit policy coverage to the surface estate only and to exclude policy coverage for all right, title and interest of any persons, and/or the public, and/or entities, and/or governments, in and to all of the oil, gas, minerals and other elements which do not constitute a part of the surface estate. It is the further purpose of this exception to exclude coverage for all rights, privileges, whether recorded or unrecorded, relating to the mineral estate including, but not limited to, items such as: mineral leases, transfers of mineral interests, mineral conveyances or reservations, royalty conveyances or reservations, pooling agreements, unit designations, royalty interests, royalties, bonuses, mineral estate rentals, delay rentals and ingress/egress for mineral production or Page 3 of 4 transportation purposes. It is also the purpose of this exception to exclude from coverage any recorded or unrecorded easements and/or rights of way which are owned or held by any lessee or mineral estate interest owner, on, over, across or under the land described on Schedule "A" for the purpose of producing or transporting any of the minerals and/or mineral interests excepted from policy coverage hereunder. 10. Loss arising from any utility or right of way easement, active leasehold, mineral conveyance, or any ingress or egress rights thereof. 11. The policy, when issued, will not insure as to the amount of acreage contained within the described boundaries of the insured premises. Any mention of acreage amounts is done so for descriptive purposes only. 12. Loss arising, if any, from restrictions in the Plat and Protective Covenants of the Original Town (now City) of Fayetteville, on file in the office of the Circuit Clerk and Ex -Officio Recorder of Washington County, Arkansas. SCHEDULE C Commitment No. L4587 The land in this policy is situated in the State of Arkansas, County of Washington, and is described as follows: A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3, plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW corner of said Block 41, said point being an existing iron; thence S 89°41'51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30' 11" W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27" W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30 11" E, 182.32 feet (record 184.00 feet) to the point of beginning. First American Title Insurance Company 1 First American Way Santa Ana, CA 92707 1-714-800-300 Richard L. Miller, Agent 2013 N. Green Acres Rd., Suite B Fayetteville, AR 72703 1-479-521-6288 Agency License No: 325317 Issuing Agent License No: 325045 If we at First American Title Insurance Company fail to provide you with reasonable and adequate service, you should feel free to contact: Arkansas Insurance Department, 1200 West Third Street, Little Rock, AR 72201, 1-501-371-2640 or 1-800-852-5494. Page 4 of 4 CONDITIONS 1. The term mortgage, when used herein, shall include deed of trust, trust deed, or other security instrument. 2. If the proposed Insured has or acquired actual knowledge of any defect, lien, encumbrance, adverse claim or other matter affecting the estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule B hereof, and shall fail to disclose such knowledge to the Company in writing, the Company shall be relieved from liability for any loss or damage resulting from any act of reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed Insured shall disclose such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse claim or other matter,'the Company at its option may amend Schedule B of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurred pursuant to paragraph 3. of these Conditions and Stipulations. 3. Liability of the Company under this Commitment shall be only to the named proposed Insured and such parties included under the definition of Insured in the form of policy or policies committed for and only for actual loss incurred in reliance hereon in undertaking in good faith (a) to comply with the requirements hereof, or (b) to eliminate exceptions shown in Schedule B, or (c) to acquire or create the estate or interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount stated in Schedule A for the policy or policies committed for and such liability is subject to the insuring provisions and Conditions and Stipulations and the Exclusions from Coverage of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein. 4. This Commitment is a contract to issue one or more title insurance policies and is not an abstract of title or a report of the condition of title. Any action or actions or rights of action that the proposed Insured may have or may bring against the Company arising out of the status of the title to the estate or interest or the status of.the mortgage thereon covered by this Commitment must be based on and are subject to the provisions of this Commitment. 5. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the certain dollar amount set forth in any applicable arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. If you desire to review the terms of the policy, including any arbitration clause that may be included, contact the office that issued this Commitment or Report to obtain a sample of the policy jacket for the policy that is to be issued in connection with your transaction. 41-003-06-500 (06106) Page 2 of 2 t¢y•S AMERIC7 The First American Corporation First American Title Insurance Company Privacy Policy We Are Committed to Safeguarding Customer Information In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information — particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our parent company, The First American Corporation, we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability This Privacy Policy governs our use of the information which you provide to us. -It does not govern the manner in which we may use information we have obtained from any other source, such as information obtainedfrom a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fair Information Values, a copy of which can be found on our website at www.firstam.com Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means; • Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the period after which any customer relationship has ceased.. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies, and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies, or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical,. electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. ® 2001. The First American Corporation • All Rights Reserved nm�uuitnu><att��11111���111��1i�1111��1111�1111���ll�ll����111�� DOG ID: 013397890002 Type : REL Kind: WARRANTY DEED Recorded: 04/20/2010 at 11:4412 AM Fee Amt: $20.00 Page 1 of 2 Washington County. AR Bette Stamps Circuit Clerk File2ette o10-00010132 WARRANTY DEED Limited Liability Company KNOW ALL MEN BY THESE PRESENTS: That Rock Street Parking, LLC, a limited liability company organized under and by virtue of the laws of the State of Arkansas, hereinafter called Grantor, for and in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration in hand paid by the City of Fayetteville, Arkansas, a municipal corporation, hereinafter called Grantee, does hereby grant, bargain and sell unto the said Grantee and Grantee's successors and assigns, the following described land situate in Washington County, State of Arkansas, to -wit: A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3, plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW corner of said Block 41, said point being an existing iron; thence S 89°41'51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30' 11" W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27" W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30' 11" E, 182.32 feet (record 184.00 feet) to the point of beginning. TO HAVE AND TO HOLD the said lands and appurtenances belonging unto the said Grantee and Grantee's heirs and assigns, forever. And said company hereby covenants with the said Grantee that it is lawfully seized of said land and premises, that the same is unencumbered, and that it will forever warrant and defend the title to the said lands against all legal claims whatever. IN TESTIMONY WHEREOF, the name of the Grantor is hereunto affixed by its member this / 9 day of April, 2010. Rock Street P LC By Richa P. Alexander, anaging Member THIS INSTRUMENT PREPARED BY: Miller Law Offices P.O. Box 3354 Fayetteville, AR 72702 I certify under penalty of false swearing that at least the correct amount of documentary stamps have been placed on,this instra ent. Grantee (or gent) _ " u J -D tQ ju Address ACKNOWLEDGMENT STATE OF ARKANSAS COUNTY OF WASHINGTON On this the /9 day of April, 2010, before me, a notary public, appeared Richard P Alexander, to me personally known (or satisfactorily proven), who stated that he was a Managing Member of Rock Street Parking, LLC, an Arkansas limited liability company, and was duly authorized in his capacity to execute the foregoing instrument for and in the name and behalf of said company, and further stated and acknowledged that he had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal. My Commission Expires: Notary Public Reno lu+) OA) ms's`-' / 0 Any notice of claim and any other notice or statement in writing required to be given to the Company under this policy must be given to the Company at the address shown in Section 18 of the Conditions. W COVERED RISKS SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS, FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation (the "Company") insures, as of Date of Policy and, to the extent stated in Covered Risks 9 and 10, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of: 1. Title being vested other than as stated in Schedule A. 2. Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is not limited to insurance against loss from (a) A defect in the Title caused by (I) forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation; (ii) failure of any person or Entity to have authorized a transfer or conveyance; (iii) a document affecting Title not properly created, executed, witnessed, sealed, acknowledged, notarized, or delivered; (iv) failure to perform those acts necessary to create a document by electronic means authorized by law; (v) a document executed under a falsified, expired, or otherwise invalid power of attorney; (vi) a document not properly filed, recorded, or indexed in the Public Records including failure to perform those acts by electronic means authorized by law; or (vii) a defective judicial or administrative proceeding. (b) The lien of real estate taxes or assessments imposed on the Title by a governmental authority due or payable, but unpaid. (c) Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term "encroachment" includes encroachments of existing improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land. 3. Unmarketable Title. 4. No right of access to and from the Land. (Covered Risks Continued on Page 2) In Witness Whereof, First American Title Insurance Company has caused its corporate name to be hereunto affixed by its authorized officers as of Date of Policy shown in Schedule A. First American Title Insurance Company aa� rwaaaata / /IU/_'/ S ��' • • �P 0 q 9e, '�i� =0 4.a .e' +, Dennis J. Gilmore ' — ' o S President SEPTEMBER 24, d� '•, 1968 ,� ? - ���/ F'T t/ +f'h, C40 F B RR0fo` Timothy Kemp Secretary (This Policy is valid only when Schedules A and B are attached) Copyright 2006-2009 American Land Title Association. All rights reserved. The use of this form is restricted to ALTA licensees and ALTA members in good standing as of the date of use. All other uses are prohibited. Reprinted under license from the American Land Tille Association. Form 5011400 (8/1/09) Page 1 of 6 ALTA Owner's Policy of Title Insurance (6-17-06) COVERED RISKS (Continued) 5. The violation or enforcement of any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (a) the occupancy, use, or enjoyment of the Land; (b) the character, dimensions, or location of any improvement erected on the Land; (c) the subdivision of land; or (d) environmental protection if a notice, describing any part of the Land, is recorded in the Public Records setting forth the violation or intention to enforce, but only to the extent of the violation or enforcement referred to in that notice. 6. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 5 if a notice of the enforcement action, describing any part of the Land, is recorded in the Public Records, but only to the extent of the enforcement referred to in that notice. 7. The exercise of the rights of eminent domain if a notice of the exercise, describing any part of the Land, is recorded in the Public Records. S. Any taking by a governmental body that has occurred and is binding on the rights of a purchaser for value without Knowledge. 9. Title being vested other than as stated in Schedule A or being defective (a) as a result of the avoidance in whole or in part, or from a court order providing an alternative remedy, of a transfer of all or any part of the title to or any interest in the Land occurring prior to the transaction vesting Title as shown in Schedule A because that prior transfer constituted a fraudulent or preferential transfer under federal bankruptcy, state insolvency, or similar creditors' rights laws; or (b) because the instrument of transfer vesting Title as shown in Schedule A constitutes a preferential transfer under federal bankruptcy, state insolvency, or similar creditors' rights laws by reason of the failure of its recording in the Public Records (i) to be timely, or (ii) to impart notice of its existence to a purchaser for value or to a judgment or lien creditor. 10. Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 9 that has been created or attached or has been filed or recorded in the Public Records subsequent to Date of Policy and prior to the recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The Company will also pay the costs, attorneys' fees, and expenses incurred in defense of any matter insured against by this Poicy, but only to the extent provided in the Conditions. EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1.(a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect. of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy. (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. Form 5011400 (811109) Page 2 of 6 1 ALTA Owner's Policy of Title Insurance (6-17-06) 4g'i AME$ jc� FIRST AMERICAN TITLE INSURANCE COMPANY OWNER'S POLICY OF TITLE INSURANCE PREMIUM SCHEDULE A SI # Amount of Insurance Date of Policy $342,000.00 April 20, 2010, at 11:44 A.M. 1. NAME OF INSURED: City of Fayetteville, Arkansas, a municipal corporation. 2. The estate or interest in the land which is insured by this policy is: A fee simple estate. 3. Title to the estate or interest in the land is vested in: City of Fayetteville, Arkansas, a municipal corporation. 4. The land referred to in this policy is described in Schedule "C". Page 1 of 3 RI $ FILE NO. L4587 Policy No. 501400-14208 SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Any discrepancies or conflicts in boundary lines, any shortages in area, or any encroachment or overlapping of improvements. 2. Any facts, rights, interests or claims which are not shown by the public record but which could be ascertained by an accurate survey of the land or by making inquiry of persons in possession thereof. 3. Easements, liens or encumbrances or claims thereof, which are not shown by the public record. 4. Any lien or right to lien for services, labor or material imposed by law and not shown by the public record. 5. All assessments and taxes due in 2010, and thereafter. 6. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public record. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or the public record. 7. Loss arising from security interest evidenced by financing statements filed of record as of the effective date hereof, under the Arkansas Uniform Commercial Code and Judgment liens and other liens of record in any United States District Court or Bankruptcy Court in the State of Arkansas, as of the effective date herein. 8. All right, title and interest in and to all of the oil, gas and other minerals, and other components of the mineral estate, together with all rights, easements and privileges relating thereto. The purpose of this exception is to limit policy coverage to the surface estate only and to exclude policy coverage for all right, title and interest of any persons, and/or the public, and/or entities, and/or governments, in and to all of the oil, gas, minerals and other elements which do not constitute a part of the surface estate. It is the further purpose of this exception to exclude coverage for all rights, privileges, whether recorded or unrecorded, relating to the mineral estate including, but not limited to, items such as: mineral leases, transfers of mineral interests, mineral conveyances or reservations, royalty conveyances or reservations, pooling agreements, unit designations, royalty interests, royalties, bonuses, mineral estate rentals, delay rentals and ingress/egress for mineral production or transportation purposes. It is also the purpose of this exception to exclude from coverage any recorded or unrecorded easements and/or rights of way which are owned or held by any lessee or mineral estate interest owner, on, over, across or under the land described on Schedule "A" for the purpose of producing or transporting any of the minerals and/or mineral interests excepted from policy coverage hereunder. Page 2 of 3 9. Loss arising from any utility or right of way easement, active leasehold, mineral conveyance, or any ingress or egress rights thereof. 10. This policy does not insure as to the amount of acreage contained within the described boundaries of the insured premises. Any mention of acreage amounts is done so for descriptive purposes only. 11. Loss arising, if any, from restrictions in the Plat and Protective Covenants of the Original Town (now City) of Fayetteville, on file in the office of the Circuit Clerk and Ex -Officio Recorder of Washington County, Arkansas. SCHEDULE C Owner's Policy No. 501400-14208 The land in this policy is situated in the State of Arkansas, County of Washington, and is described as follows: A part of Block 41, in the Original Town (now City) of Fayetteville, Arkansas, as shown on plat of record in plat book 4, at page 3, plat records of Washington County, Arkansas, being more particularly described as follows: Beginning at the NW corner of said Block 41, said point being an existing iron; thence S 89°41' 51" E, along the North line of said Block 41, 134.00 feet to an existing iron; thence S 00°30' 11" W, 183.22 feet (record 184.00 feet) to an existing iron; thence N 89°20'27" W, 134.00 feet to an existing iron on the West line of said Block 41; thence N 00°30' 11" E, 182.32 feet (record 184.00 feet) to the point of beginning. First American Title Insurance Company 1 First American Way Santa Ana, CA 92707 1-714-800-300 Richard L. Miller, Agent 2013 N. Green Acres Rd., Suite B Fayetteville, AR 72703 1-479-521-6288 Agency License No: 325317 Issuing Agent License No: 325045 If we at First American Title Insurance Company fail to provide you with reasonable and adequate service, you should feel free to contact: Arkansas Insurance Department, 1200 West Third Street, Little Rock, AR 72201, 1-501-371-2640 or 1-800-852-5494. Page 3 of 3 CONDITIONS 1. DEFINITION OF TERMS The following terms when used in this policy mean: (a) "Amount of Insurance": The amount stated in Schedule A, as may be increased or decreased by endorsement to this policy, increased by Section 8(b), or decreased by Sections 10 and 11 of these Conditions. (b) "Date of Policy": The date designated as "Date of Policy" in Schedule A. (c) "Entity": A corporation, partnership, trust, limited liability company, or other similar legal entity. (d) "Insured": The Insured named in Schedule A. (1) The term "Insured" also includes (A) successors to the Title of the Insured by operation of law as distinguished from purchase, including heirs, devisees, survivors, personal representatives, or next of kin; (B) successors to an Insured by dissolution, merger, consolidation, distribution, or reorganization; (C) successors to an Insured by its conversion to another kind of Entity; (D) a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the Title (1) if the stock, shares, memberships, or other equity interests of the grantee are wholly - owned by the named Insured, (2) if the grantee wholly owns the named Insured, (3) if the grantee is wholly -owned by an affiliated Entity of the named Insured, provided the affiliated Entity and the named Insured are both wholly -owned by the same person or Entity, or (4) if the grantee is a trustee or beneficiary of a trust created by a written instrument established by the Insured named in Schedule A for estate planning purposes. (ii) With regard to (A), (B), (C), and (D) reserving, however, all rights and defenses as to any successor that the Company would have had against any predecessor Insured. (e) "Insured Claimant": An Insured claiming loss or damage. (f) "Knowledge" or "Known": Actual knowledge, not constructive knowledge or notice that may be imputed to an Insured by reason of the Public Records or any other records that impart constructive notice of matters affecting the Title. (g) "Land": The land described in Schedule A, and affixed improvements that by law constitute real property. The term "Land" does not include any property beyond the lines of the area described in Schedule A, nor any right, title, interest, estate, or easement in abutting streets, roads, avenues, alleys, lanes, ways, or waterways, but this does not modify or limit the extent that a right of access to and from the Land is insured by this policy. (h) "Mortgage": Mortgage, deed of trust, trust deed, or other security instrument, including one evidenced by electronic means authorized by law. (i) "Public Records": Records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without Knowledge. With respect to Covered Risk 5(d), "Public Records" shall also include environmental protection liens filed in the records of the clerk of the United States District Court for the district where the Land is located. (j) "Title": The estate or interest described in Schedule A. (k) "Unmarketable Title": Title affected by an alleged or apparent matter that would permit a prospective purchaser or lessee of the Title or lender on the Title to be released from the obligation to purchase, lease, or lend if there is a contractual condition requiring the delivery of marketable title. 2. CONTINUATION OF INSURANCE The coverage of this policy shall continue in force as of Date of Policy in favor of an Insured, but only so long as the Insured retains an estate or interest in the Land, or holds an obligation secured by a purchase money Mortgage given by a purchaser from the Insured, or only so long as the Insured shall have liability by reason of warranties in any transfer or conveyance of the Title. This policy shall not continue in force in favor of any purchaser from the Insured of either (i) an estate or interest in the Land, or (ii) an obligation secured by a purchase money Mortgage given to the Insured. 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT The Insured shall notify the Company promptly in writing (i) in case of any litigation as set forth in Section 5(a) of these Conditions, (ii) in case Knowledge shall come to an Insured hereunder of any claim of title or interest that is adverse to the Title, as insured, and that might cause loss or damage for which the Company may be liable by virtue of this policy, or (iii) if the Title, as insured, is rejected as Unmarketable Title. If the Company is prejudiced by the failure of the Insured Claimant to provide prompt notice, the Company's liability to the Insured Claimant under the policy shall be reduced to the extent of the prejudice. 4. PROOF OF LOSS In the event the Company is unable to determine the amount of loss or damage, the Company may, at its option, require as a condition of payment that the Insured Claimant furnish a signed proof of loss. The proof of loss must describe the defect, lien, encumbrance, or other matter insured against by this policy that constitutes the basis of loss or damage and shall state, to the extent possible, the basis of calculating the amount of the loss or damage. 5. DEFENSE AND PROSECUTION OF ACTIONS (a) Upon written request by the Insured, and subject to the options contained in Section 7 of these Conditions, the Company, at its own cost and without unreasonable delay, shall provide for the defense of an Insured in litigation in which any third party asserts a claim covered by this policy adverse to the Insured. This obligation is limited to only those stated causes of action alleging matters insured against by this policy. The Company shall have the right to select counsel of its choice (subject to the right of the Insured to object for reasonable cause) to represent the Insured as to those stated causes of action. It shall not be liable for and will not pay the fees of any other counsel. The Company will not pay any fees, costs, or expenses incurred by the Insured in the defense of those causes of action that allege matters not insured against by this policy. Form 5011400 (811109) Page 3 of 6 ALTA Owner's Policy of Title Insurance (6-17-06) CONDITIONS (Continued) (b) The Company shall have the right, in addition to the options contained in Section 7 of these Conditions, at its own cost, to institute and prosecute any action or proceeding or to do any other act that in its opinion may be necessary or desirable to establish the Title, as insured, or to prevent or reduce loss or damage to the Insured. The Company may take any appropriate action under the terms of this policy, whether or not it shall be liable to the Insured. The exercise of these rights shall not be an admission of liability or waiver of any provision of this policy. It the Company exercises its rights under this subsection, it must do so diligently. (c) Whenever the Company brings an action or asserts a defense as required or permitted by this policy, the Company may pursue the litigation to a final determination by a court of competent jurisdiction, and it expressly reserves the right, in its sole discretion, to appeal any adverse judgment or order. 6. DUTY OF INSURED CLAIMANT TO COOPERATE (a) In all cases where this policy permits or requires the Company to prosecute or provide for the defense of any action or proceeding and any appeals, the Insured shall secure to the Company the right to so prosecute or provide defense in the action or proceeding, including the right to use, at its option, the name of the Insured for this purpose. Whenever requested by the Company, the Insured, at the Company's expense, shall give the Company all reasonable aid (i) in securing evidence, obtaining witnesses, prosecuting or defending the action or proceeding, or effecting settlement, and (ii) in any other lawful act that in the opinion of the Company may be necessary or desirable to establish the Title or any other matter as insured. If the Company is prejudiced by the failure of the Insured to furnish the required cooperation, the Company's obligations to the Insured under the policy shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation, with regard to the matter or matters requiring such cooperation. (b) The Company may reasonably require the Insured Claimant to submit to examination under oath by any authorized representative of the Company and to produce for examination, inspection, and copying, at such reasonable times and places as may be designated by the authorized representative of the Company, all records, in whatever medium maintained, including books, ledgers, checks, memoranda, correspondence, reports, e -mails, disks, tapes, and videos whether bearing a date before or after Date of Policy, that reasonably pertain to the loss or damage. Further, if requested by any authorized representative of the Company, the Insured Claimant shall grant its permission, in writing, for any authorized representative of the Company to examine, inspect, and copy all of these records in the custody or control of a third party that reasonably pertain to the loss or damage. All information designated as confidential by the Insured Claimant provided to the Company pursuant to this Section shall not be disclosed to others unless, in the reasonable judgment of the Company, it is necessary in the administration of the claim. Failure of the Insured Claimant to submit for examination under oath, produce any reasonably requested information, or grant permission to secure reasonably necessary information from third parties as required in this subsection, unless prohibited , by law or governmental regulation, shall terminate any liability of the Company under this policy as to that claim. Form 5011400 (8/1109) Page 4 of 6 7. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY In case of a claim under this policy, the Company shall have the following additional options: (a) To Pay or Tender Payment of the Amount of Insurance. To pay or tender payment of the Amount of Insurance under this policy together with any costs, attorneys' fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment or tender of payment and that the Company is obligated to pay. Upon the exercise by the Company of this option, all liability and obligations of the Company to the Insured under this policy, other than to make the payment required in this subsection, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation. (b) To Pay or Otherwise Settle With Parties Other Than the Insured or With the Insured Claimant. (i) To pay or otherwise settle with other parties for or in the name of an Insured Claimant any claim insured against under this policy. In addition, the Company will pay any costs, attorneys' fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment and that the Company is obligated to pay; or (ii) To pay or otherwise settle with the Insured Claimant the loss or damage provided for under this policy, together with any costs, attorneys' fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment and that the Company is obligated to pay. Upon the exercise by the Company of either of the options provided for in subsections (b)(i) or (ii), the Company's obligations to the Insured under this policy for the claimed loss or damage, other than the payments required to be made, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation. 8. DETERMINATION AND EXTENT OF LIABILITY This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the Insured Claimant who has suffered loss or damage by reason of matters insured against by this policy. (a) The extent of liability of the Company for loss or damage under this policy shall not exceed the lesser of (i) the Amount of Insurance; or (ii) the difference between the value of the Title as insured and the value of the Title subject to the risk insured against by this policy. (b) If the Company pursues its rights under Section 5 of these Conditions and is unsuccessful in establishing the Title, as insured, (i) the Amount of Insurance shall be increased by 10%, and (ii) the Insured Claimant shall have the right to have the loss or damage determined either as of the date the claim was made by the Insured Claimant or as of the date it is settled and paid. (c) In addition to the extent of liability under (a) and (b), the Company will also pay those costs, attorneys' fees, and expenses incurred in accordance with Sections 5 and 7 of these Conditions. ALTA Owner's Policy of Title Insurance (6-17-06) CONDITIONS (Continued) 9. LIMITATION OF LIABILITY (a) If the Company establishes the Title, or removes the alleged defect, lien, or encumbrance, or cures the lack of a right of access to or from the Land, or cures the claim o₹ Unmarketable Title, all as insured, in a reasonably diligent manner by any method, including litigation and the completion of any appeals, it shall have fully performed its obligations with respect to that matter and shall not be liable for any loss or damage caused to the Insured. (b) In the event of any litigation, including litigation by the Company or with the Company's consent, the Company shall have no liability for loss or damage until there has been a final determination by a court of competent jurisdiction, and disposition of all appeals, adverse to the Title, as insured. (c) The Company shall not be liable for loss or damage to the Insured for liability voluntarily assumed by the Insured in settling any claim or suit without the prior written consent of the Company. 10. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF LIABILITY. All payments under this policy, except payments made for costs, attorneys' fees, and expenses, shall reduce the Amount of Insurance by the amount of the payment. 11. LIABILITY NONCUMULATIVE The Amount o₹ Insurance shall be reduced by any amount the Company pays under any policy insuring a Mortgage to which exception is taken in Schedule B or to which the Insured has agreed, assumed, or taken subject, or which is executed by an Insured after Date of Policy and which is a charge or lien on the Title, and the amount so paid shall be deemed a payment to the Insured under this policy. 12. PAYMENT OF LOSS When liability and the extent of loss or damage have been definitely fixed in accordance with these Conditions, the payment shall be made within 30 days. 13. RIGHTS OF RECOVERY UPON PAYMENT OR SETTLEMENT (a) Whenever the Company shall have settled and paid a claim under this policy, it shall be subrogated and entitled to the rights of the Insured Claimant in the Title and all other rights -and remedies in respect to the claim that the Insured Claimant has against any person or property, to the extent of the amount of any loss, costs, attorneys' fees, and expenses paid by the Company. If requested by the Company, the Insured Claimant shall execute documents to evidence the transfer to the Company of these rights and remedies. The Insured Claimant shall permit the Company to sue, compromise, or settle in the name of the Insured Claimant and to use the name of the Insured Claimant in any transaction or litigation involving these rights and remedies. If a payment on account of a claim does not fully cover the loss of the Insured Claimant, the Company shall defer the exercise of its right to recover until after the Insured Claimant shall have recovered its loss. (b) The Company's right of subrogation includes the rights of the Insured to indemnities, guaranties, other policies of insurance, or bonds, notwithstanding any terms or conditions contained in those instruments that address subrogation rights. 14. ARBITRATION Either the Company or the Insured may demand that the claim or controversy shall be submitted to arbitration pursuant to the Title Insurance Arbitration Rules of the American Land Title Association Form 5011400 (8/1/09) Page 5 of 6 ("Rules"). Except as provided in the Rules, there shall be no joinder or consolidation with claims or controversies of other persons. Arbitrable matters may include, but are not limited to, any controversy or claim between the Company and the Insured arising out of or relating to this policy, any service in connection with its issuance or the breach of a policy provision, or to any other controversy or claim arising out of the transaction giving rise to this policy. All arbitrable matters when the Amount of Insurance is $2,000,000 or less shall be arbitrated at the option of either the Company or the Insured. All arbitrable matters when the Amount of Insurance is in excess of $2,000,000 shall be arbitrated only when agreed to by both the Company and the Insured. Arbitration pursuant to this policy and under the Rules shall be binding upon the parties. Judgment upon the award rendered by the Arbitrator(s) maybe entered in any court o₹ competent jurisdiction. 15. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE CONTRACT (a) This policy together with all endorsements, if any, attached to it by the Company is the entire policy and contract between the Insured and the Company. In interpreting any provision of this policy, this policy shall be construed as a whole. (b) Any claim of loss or damage that arises out of the status of the Title or by any action asserting such claim shall be restricted to this policy. �c) Any amendment of or endorsement to this policy must be in writing and authenticated by an authorized person, or expressly incorporated by Schedule A of this policy. (d) Each endorsement to this policy issued at any time is made a part of this policy and is subject to all of its terms and provisions. Except as the endorsement expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsement, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. 16. SEVERABILITY In the event any provision of this policy, in whole or in part, is held invalid or unenforceable under applicable law, the policy shall be deemed not to include that provision or such part held to be invalid, but all other provisions shall remain in full force and effect. 17. CHOICE OF LAW; FORUM (a) Choice of Law: The Insured acknowledges the Company has underwritten the risks covered by this policy and determined the premium charged therefor in reliance upon the law affecting interests in real property and applicable to the interpretation, rights, remedies, or enforcement of policies o₹ title insurance of the jurisdiction where the Land is located. Therefore, the court or an arbitrator shall apply the law of the jurisdiction where the Land is located to determine the validity of claims against the Title that are adverse to the Insured and to interpret and enforce the terms of this policy. In neither case shall the court or arbitrator apply its conflicts of law principles to determine the applicable law. (b) Choice of Forum: Any litigation or other proceeding brought by the Insured against the Company must be filed only in a state or federal court within the United States of America or its territories having appropriate jurisdiction. 18. NOTICES, WHERE SENT Any notice of claim and any other notice or statement in writing required to be given to the Company under this policy must be given to the Company at First American Title Insurance Company, Attn: Claims National Intake Center, I First American Way; Santa Ana, CA 92707. Phone: 888.632.1642. ALTA Owner's Policy of Title Insurance (6-17-06) ISSUED THROUGH THE OFFICE OF: Sl AM I, A,O k~ 'Z First American Title FIRST AMERICAN TITLE INSURANCE COMPANY Corporate Office 1 First American Way Santa Ana, CA 92707 (800)854-3643