CTR054974_Contractor_Proposal.pdf

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Chelsey Bishop

From: ADOT Business Engagement and Compliance Office <AZUTRACS-Support@azdot.gov> Sent: Thursday, November 5, 2020 11:45 AM To: steve@swaa.biz Cc: ContractorCompliance@azdot.gov Subject: Bidders List for Southwest Appraisal Associates

Southwest Appraisal Associates, AZUTRACS Number: 15509 has submitted a Bidder/Proposer list for BPM002912 on 11/05/2020 at 11:45 AM MST (UTC ‐ 07:00).

Southwest Appraisal Associates submitted a blank bidders/proposers list. This means that they did not list any firms that they reached out to or were contacted by during the preparation of this bid/proposal. NOTE: Subbing out work is encouraged, where applicable. Under some circumstances, no subbing opportunities are available.

11/5/2020

AERIAL VIEW OF ADOT PARCEL NUMBER 10-1870

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SUBJECT

August 22, 2016

Mr. Steve Troxel, C.P.M., A.P.P.

Procurement Specialist Arizona Department of Transportation Right of Way Operations Section - Consultant Contracts 205 South 17th Avenue, Room 331, Mail Drop 612E Phoenix, AZ 85007-3296

RE: Appraiser’s File No.: 16-121-C; ADOT Parcel No.: #10-1870 4500 West Ina Road, Marana, AZ; Section 31, Township 12 South, Range 13 East, APN 225-36-014C; Property Owner RI CS1, LLC (aka Realty Income Corporation)

Dear Mr. Troxel:

At your request, we have provided our market value opinion for a total of 2,200 square feet of net area required for a Temporary Construction Easement (TCE), as defined in the Arizona Department of Transportation (ADOT) and Federal Highway Administration (FHWA) appraisal policies and guidelines. The TCE is needed for the Ina Road/Interstate 10 Interchange road improvement project. The property appraised is located on the north side of West Ina Road, just west of Camino de la Cruz, with a physical address of 4500 W. Ina Road, Marana, Pima County, Arizona, in Section 31, Township 12S, Range 13E.

In addition, we have provided market value opinions for the subject property, including all improvements, “before” and “after” the land rental for the TCE and a planned access control along the south boundary of the subject property, commencing at the southwest corner. The new access control is imposed on the west 70 feet of the frontage along Ina Road, leaving 40 feet of the subject’s frontage for access from Ina Road. The new access control is for a new bus pull-out that will be added in the existing right of way, and will eliminate the subject’s use of the existing west access point from Ina Road.

The 2,200 square-foot TCE consists of a 20-foot wide strip of land that extends 110 feet along the south boundary of the site. Improvements located in the TCE consist of approximately 2,200 square feet of asphalt paving. According to the TCE agreement, any improvements within the TCE, if disturbed, will be restored to their prior condition, at no cost to the property owner, as of the date ADOT commences use. A copy of the TCE form is provided in the Addenda.

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The purpose of the appraisal is to form and express an opinion of the market value of the subject property “before” and “after” the land rental for the proposed TCE, and implementation of the new access control. The effective date of the value opinion provided herein is July 1, 2016, the date of the appraisers’ most recent property inspection.

The improvements were originally built as a self-service gas station and C-store. The underground gasoline storage tanks were removed on May 26, 2010. The improvements are in poor “shell” condition with deferred maintenance, including floor covering, interior and exterior paint, doors and windows, HVAC and walk-in cooler equipment, plumbing and lighting fixtures, and electrical circuit box. The property owner is RI CS1, LLC, also known as Realty Income Corporation.

The subject improvements are currently unoccupied, but the property is encumbered by a Land and Building Lease Agreement dated March 18, 2004. The initial term of the lease is 17 years, unless terminated earlier. A copy of the lease is included in the Addenda. The building was vacated by Circle K in 2010 when they opened their new store at 4900 West Ina Road. The subject lease runs for another 5 years and it is doubtful that the subject would be used as a convenience store at the end of the lease since a newer Circle K store is located just west of the subject at 4900 West Ina Road.

There is a condemnation clause in the lease. Under Section 15.2, “Termination of Lease Due to Condemnation,” the tenant may terminate the lease as to a “Condemned Property” “in the event the Condemnation materially adversely affects the use by Tenant of the Premises (“Condemned Property”). Since the improvements are unoccupied, the TCE does not adversely impact the tenant’s use of the subject property. Furthermore, the subject is not currently used as a convenience store and is not likely to be used as a convenience store after the project is complete. When the access control of the west entrance is implemented, the east access point is considered “suitable” for a freestanding retail or general commercial use.

According to Real Estate Valuation in Litigation, a property owner is entitled to “suitable” access. “Suitable” describes that which is adequate to the requirements of or answers the needs of a particular object inherent in the highest and best use of the property involved.

Access to the subject will be somewhat circuitous during the project. This is generally non-compensable unless it results in a “substantial impairment of access.” “Circuitous” indicates that which is round-about and indirect but which nevertheless leads to the same destination.1

Severance damages reflect a decline in the market value of the remainder parcel that arises as a result of the taking and/or construction of the proposed road improvement. Direct access with two curb cuts is currently available from westbound Ina Road, a 4-lane, median-divided, asphalt-paved thoroughfare. Eastbound traffic must make a U-turn at Camino de la Cruz, just east of the subject. The most recent two-way daily traffic volume count on Ina Road at this location is about 21,000 vehicles per day, providing average visibility. In the after condition, the subject will have only one, 40-foot wide access point from Ina Road.

1 Real Estate Valuation in Litigation, 2nd Edition, Appraisal Institute, 1995, page 320.

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To estimate a diminution in value, if any, we have appraised the larger parcel in the “before” condition and the “after” condition. Our analysis of sales of freestanding commercial properties with only one access point indicates that severance damages accrue due to a diminution in value in the after condition. In addition, based on information provided by Kevin Thornton, project engineer with Psomas, the existing canopy may be problematic for semi-trucks making deliveries. Thus, a cost to cure includes the cost of removing the canopy.

As part of the road improvement project, Camino de la Cruz will be realigned to the north and a traffic signal will be installed at the new intersection of Ina Road and Camino de la Cruz. The planned construction of a new freeway interchange at Ina Road will be completed in stages spanning approximately two years. During the project, there could be an impact to the property appraised during the construction period due to the necessity to completely close Ina Road to both travel directions at the I-10 right of way. This is necessary to construct the bridge that will cross over the freeway travel lanes and the Union Pacific Railroad. However, since the property is currently unoccupied, the project does not impact the use of the improvements during construction.

This appraisal employs the “Larger Parcel” technique. A detailed discussion about the Larger Parcel method of valuation and support for its use in this appraisal is contained in the following report. The Larger Parcel herein is identified as a Pima County Assessor’s Parcel Number 225-36-014C and is comprised of an average quality 2,833 square-foot retail store, a 1,104 square foot canopy, approximately 12,000 square feet of asphalt paving, and 1,200 square feet of concrete paving. All utilities are available to the site.

The intended users of the appraisal include the officials and agents of the Arizona Department of Transportation, Federal Highway Administration, courts having jurisdiction concerning the acquisition of the property, and the owners of the subject property. No other use or users are intended, and any unintended use may be misleading.

Pursuant to Arizona Revised Statute 28-7091:

“...'Market Value' means the most probable price estimated in terms of cash in United States dollars or comparable market financial arrangements which the property would bring if exposed for sale in the open market, with reasonable time allowed in which to find a purchaser, buying with knowledge of all of the uses and purposes to which it was adapted and for which it was capable.”

This appraisal report is intended to comply with the reporting requirements set forth in: (1) the Arizona Department of Transportation Appraisal Standards and Specifications; and (2) in Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP) promulgated by the Appraisal Standards Board of the Appraisal Foundation. The Sales Comparison Approach is utilized to support our market value opinion.

Based upon the data, analyses, opinions and conclusions contained in this report, our market value opinions, as of July 1, 2016, are as follows:

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Parcel #10-1870 Larger Parcel: 19,102 Square Feet Property Owner: RI CS1, LLC T12S R13E Section 31 Temporary Construction Easement: 2,200 Square Feet

Value of Larger Parcel, Before Condition Based on a Gross Building Area of 2,833 Square Feet

$350,000

$123.54/SF

Value of Remainder Parcel, After Condition Based on a Gross Building Area of 2,833 Square Feet

$215,000

$75.89/SF

No Area Acquired $0

Severance Damages $135,000

Special Benefits $0

Cost to Cure $2,100

Total Award $137,100

Market Value Opinion for the Area Encumbered by TCE Per Square Foot:

$35,200

$16.00/SF

Market Rent Opinion for the TCE Per Year:

Per Month:

$2,816 $234.67

EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS

Extraordinary Assumption is defined as an assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. An extraordinary assumption may be used in an assignment only if:

It is required to properly develop credible opinions and conclusions;

The appraiser has a reasonable basis for the extraordinary assumption;

Use of the extraordinary assumption results in a credible analysis; and The appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions (USPAP, 2016-2017 ed.)2

The following are extraordinary assumptions relative to this appraisal:

1) No sign of distressed vegetation, soil stains or extraordinary odors were observed during the inspection. No environmental reports were provided to the appraisers. No adverse conditions were observed. The underground gasoline storage tanks formerly installed on the site were successfully removed in May, 2010 and cleared by ADEQ. Lacking an environmental report, this appraisal assumes that there are no known environmental risks or hazardous conditions on the subject site.

2 Uniform Standards of Professional Appraisal Practice, The Appraisal Foundation, 2016-2017 iv

2) It is an assumption of this appraisal that any improvements located inside the TCE will remain undisturbed or be replaced at no expense to the property owner and the subject property will be left in the same condition existing prior to ADOT’s entry.

3) No geological or archaeological surveys were provided by the client. It is an extraordinary assumption of this appraisal that there is no known archaeological or geological significance on the subject site.

4) It is an extraordinary assumption of this appraisal that the subject will have continuous access throughout the term of the project.

5) This appraisal is based on ADOT Preliminary Stage IV Submittal Plans, 90% Complete as of October, 2015, and the Preliminary Right of Way Plans dated May 17, 2016, for the Ina Road Traffic Interchange. The value opinions provided herein may be subject to change if the construction plans change.

6) The appraisers inspected the interior and exterior of the improvements on December 15, 2015 for a prior appraisal. The exterior was re-inspected on July 1, 2016 for this appraisal. The perimeter fencing was in place and gates were locked. It is an extraordinary assumption of this appraisal that the interior of the improvements have not changed significantly since they were inspected on December 15, 2015.

Hypothetical Condition is defined as a condition directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends;

or about the integrity of data used in an analysis. A hypothetical condition may be used in an assignment only if:

Use of the hypothetical condition is clearly required for legal purposes, for purposes of reasonable analysis, or for purposes of comparison; and Use of the hypothetical condition results in a credible analysis; and The appraiser complies with the disclosure requirements set forth in USPAP for hypothetical conditions. (USPAP, 2016-2017 ed.) 3

The following are hypothetical conditions relative to this appraisal:

In the valuation of the property in the “before” condition, it is a hypothetical condition that the project for which this appraisal is required does not exist.

The use of the above extraordinary assumptions and hypothetical condition might have affected the assignment results.

This report is prepared for the client. This report or any portion thereof is for the exclusive use of the client and is not intended to be used, sold, transferred, given, or relied on by any other person other than the client without the prior, expressed written permission of the author, as set forth within the Limiting Conditions contained in this report.

3 Uniform Standards of Professional Appraisal Practice, The Appraisal Foundation, 2016-2017 v

We hereby certify that to the best of my knowledge and belief, all statements and opinions contained in this appraisal report are correct. This transmittal letter is not valid for any purpose unless accompanied by the appraisal referred to herein.

In order to guarantee the authenticity of this report, the designated appraiser has imprinted this letter of transmittal with an embossed seal. Any copy without same is not a certified copy and the appraiser assumes no responsibility or liability for such a report.

Respectfully submitted, Steven R. Cole, MAI, SRA Susanne Grace-Poore Certified General Real Certified General Real Estate Appraiser #30130 Estate Appraiser #31601 vi

TABLE OF CONTENTS

CONTINGENT AND LIMITING CONDITIONS

THE APPRAISAL PROCESS

PROPERTY IDENTIFICATION

PURPOSE OF THE APPRAISAL

DEFINITIONS

INTEREST TO BE APPRAISED

OWNERSHIP AND FIVE YEAR CHAIN OF TITLE

SCOPE OF WORK

REGIONAL ANALYSIS

NEIGHBORHOOD ANALYSIS

MARKET ANALYSIS

SITE ANALYSIS

ZONING

ASSESSED VALUATION AND TAX DATA

IMPROVEMENTS ANALYSIS

HIGHEST AND BEST USE

PROJECT INFLUENCE

SALES COMPARISON APPROACH – BEFORE CONDITION

SALES COMPARISON ANALYSIS – BEFORE CONDITION

EXPOSURE TIME

INCOME APPROACH – BEFORE CONDITION

RECONCILIATION

LAND VALUATION

PROJECT INFLUENCE

VALUATION – PART TO BE ACQUIRED

VALUATION – REMAINDER AS PART OF THE WHOLE, BEFORE CONDITION

PHYSICAL EFFECTS OF THE ACQUISITION – BEFORE CONDITION

PHYSICAL EFFECTS – “AFTER” CONDITION

SALES COMPARISON APPROACH – AFTER CONDITION

SALES COMPARISON ANALYSIS – AFTER CONDITION

EXPOSURE TIME

INCOME APPROACH – AFTER CONDITION

RECONCILIATION

SEVERANCE DAMAGES & SPECIAL BENEFITS

COST TO CURE

VALUATION - TEMPORARY CONSTRUCTION EASEMENT

AUDITING BREAKDOWN

CERTIFICATE OF APPRAISER

CERTIFICATE OF APPRAISER

CERTIFICATION

QUALIFICATIONS OF STEVEN R. COLE, MAI, SRA

QUALIFICATIONS OF SUSANNE GRACE-POORE

_____________________________________________________________________ 1 Southwest Appraisal Associates

CONTINGENT AND LIMITING CONDITIONS

The certification of the Appraiser appearing in the report is subject to the following conditions, and to such other specific and limiting conditions as are set forth by the Appraiser in the report.

This report is prepared for the client. This report or any portion thereof is for the exclusive use of the client and is not intended to be used, sold, transferred, given or relied on by any other person than the client without the prior, expressed written permission of the author, as set forth within the Limiting Conditions contained in this report.

The Appraiser assumes no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor does the Appraiser render any opinion as to the title, which is assumed to be good and marketable. No Owner's Title Policy has been furnished to the Appraiser. The property is appraised as though under responsible ownership, competent management and adequate marketing typical for that type of property. The legal description, if provided to me, is assumed to be correct. Unless otherwise noted, it is assumed there are no encroachments, zoning violations or restrictions existing in the subject property.

The Appraiser has made no survey of the property. Any sketch or map in the report may show approximate dimensions and is included for illustrative purposes only. It is the responsibility of a certified engineer, architect or registered surveyor to show by a site plan the exact location of the subject property or any improvements or any proposed improvements thereon, or the exact measurements or calculations of estimated area of the site. In the absence of such a survey, the Appraiser may have utilized Tax Assessor's maps or other maps which may not represent the exact measurements of the subject property or other comparable information utilized to determine the value of the subject property. Any variation in dimensions or calculations based thereon may alter the estimates of value contained within the report.

When possible, the appraiser has relied upon building measurements provided by the client, owner, or agents of these parties. In their absence, the appraiser has relied upon his own measurements of the subject improvements. However, there are some factors that may limit our ability to obtain accurate measurements. Professional building area measurements are beyond the scope of this appraisal assignment.

In estimating the opinion of value of the subject property and in analyzing comparable information, the Appraiser has relied upon information from public and private planning agencies as to the potential use of land or improved properties. This information may include, but is not limited to, Area Plans, Neighborhood Plans, Zoning Plans and Ordinances, Transportation Plans and the like. To the extent that these plans may change, the value opinions of this report may also change.

The dates of value to which the opinions expressed in this report apply are set forth in this report. The appraiser assumes no responsibility for the economic or physical factors occurring at some point at a later date, which may affect the opinions stated herein. The forecasts, projections, or operating estimates contained herein are based on current market

_____________________________________________________________________ 2 conditions and anticipated short-term supply and demand factors. These forecasts are therefore subject to changes with future conditions.

In the absence of a professional Engineer's Feasibility Study, information regarding the existence of utilities is made only from a visual inspection of the site. The Appraiser assumes no responsibility for the actual availability of utilities, their capacity or any other problem which may result from a condition involving utilities. The respective companies, governmental agencies or entities should be contacted directly by concerned persons.

The Appraiser is not required to give testimony or appear in court as a consequence of having performed the appraisal with reference to the property in question, unless prior arrangements have been made and confirmed in writing.

Any allocation of the valuation in the appraisal report between land and improvements applies only under the existing program of utilization. The separate valuation for land and improvements must not be used in conjunction with any appraisal and are invalid if so used.

The Appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil, potential flooding hazards, hydrology or structures which would render it more or less valuable. The Appraiser assumes no responsibility for such conditions or for engineering which might be required to discover such factors.

Unless otherwise stated within this report, the existence of hazardous materials, which may or may not be present within or on the property, will not be considered by the appraiser.

The Appraiser assumes, and the client warrants, that no such materials adversely affect the utility, usability or developability of the property, to the best of their knowledge. The Appraiser is not qualified to detect such substances. The value opinion has been predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility will be assumed for any such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

The presence of barriers to the disabled, which may or may not be present within or on the subject property, will not be considered by the appraiser. The Appraiser has not performed a compliance survey to determine if it is in conformance with the A.D.A (Americans with Disabilities Act). The Appraiser assumes, and the client warrants, that no such barriers adversely affect the utility, usability, or developability of the property to the best of their knowledge. The Appraiser is not qualified to analyze such barriers. The value opinion has been predicated on the assumption that there are no such barriers on or in the property that would cause a loss in value. The client is urged to retain an expert in this field, if desired.

Information, estimates and opinions furnished to the Appraiser and contained in the report were obtained from sources considered reliable and believed to be true and correct.

However, no responsibility for accuracy of such items furnished to the Appraiser can be attributed to the Appraiser.

_____________________________________________________________________ 3

Disclosures of the contents of the report by the Appraiser are governed by the Bylaws and Regulations of the professional appraisal organizations with which the Appraiser is affiliated.

On all reports which are undertaken subject to satisfactory completion of, alterations of, or repairs to improvements, the report and value conclusions contained in it are contingent upon completion of the improvements, or of the repairs thereto, or alterations thereof in a workmanlike manner and consistent with the specifications presented to the Appraiser.

Prospective value opinions are intended to reflect the current expectations and perceptions of market participants. They should not be judged on whether specific items in the forecasts are realized. The Appraiser cannot be held responsible for unforeseeable events that alter market conditions after the effective date of the report. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute prediction of future operating results. Furthermore, it is likely that some assumptions will not materialize and that unanticipated events may occur that will affect actual performance.

The Appraiser has not made a specific survey of the subject property to determine whether or not it has any plant or wildlife which is identified as an endangered or threatened species by the U.S. Fish and Wildlife Service. While not observed and while no information was provided to confirm or deny the existence of any endangered or threatened species on the subject property (unless expressly stated herein), it is emphasized that the Appraiser is not qualified to detect or analyze such plants and wildlife. Any such conclusions must be based upon the professional expertise of persons qualified to make such judgments. Thus, any person or other entity with an interest in the subject property is urged to retain an expert if so desired.

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

Neither all, nor any part of the content of the report, or copy thereof (including conclusions as to property value, the identity of the appraiser, professional designations, reference to any professional appraisal organization or the firm with which the appraiser are connected), shall be disseminated to the public through advertising, public relations, news, sales, or other media without prior written consent and approval from Southwest Appraisal Associates’ President.

This appraisal was prepared for the sole and exclusive use of the client. Any party who is not the client or intended user identified in the appraisal or engagement letter is not entitled to rely upon the contents of the appraisal without express written consent of Southwest Appraisal Associates. We claim no expertise in areas such as, legal description survey, structural, or environmental, engineering mechanical or electrical systems and the like. We assume such data is accurate and such systems functional unless otherwise noted in the appraisal.

This appraisal shall be considered in its entirety. No part thereof shall be used separately or out of context.

_____________________________________________________________________ 4

This appraisal does not guarantee compliance with building code and life safety code requirements of the local jurisdiction. It is assumed that all required licenses, consents, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value conclusion contained in this report is based unless specifically stated to the contrary.

This appraisal is not intended to be used in connection with a real estate syndicate or syndicates. A real estate syndicate is defined as a general or limited partnership, joint venture, unincorporated association or other organization formed for the purpose of, an investment from an interest in real property. It includes but, is not limited to a sale, exchange, trade or development of such real property. It may or may not be registered with the United States Securities and Exchange Commission or a state regulatory agency which regulates public offerings.

This appraisal applies to the land and building improvements only. The value of trade fixtures, furnishings, and other equipment, or subsurface rights, (mineral, gas, and oil), were not considered in this appraisal, unless specifically stated to the contrary.

If any claim is filed against Southwest Appraisal Associates, its officers or employees, or the firm providing this report, in connection with, or in any way arising out of, or relating to, this report, or the engagement of the firm providing this report, then (1) under no circumstances shall such claimant be entitled to consequential, special or other damages, only for direct compensatory damages, (2) the maximum amount of such compensatory damages recoverable by such claimant shall be the amount actually received by Southwest Appraisal Associates to provide this report.

All disputes shall be settled by binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association.

The use of this report or its analysis and conclusions by the client or any other party constitutes acceptance of all the above limiting conditions.

EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS

Extraordinary Assumption:

An Extraordinary Assumption is defined as an assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. An extraordinary assumption may be used in an assignment only if:

It is required to properly develop credible opinions and conclusions;

The appraiser has a reasonable basis for the extraordinary assumption;

Use of the extraordinary assumption results in a credible analysis; and

_____________________________________________________________________ 5

The appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions (USPAP, 2016-2017 ed.)4

The following are extraordinary assumptions relative to this appraisal:

1) No sign of distressed vegetation, soil stains or extraordinary odors were observed during the inspection. No environmental reports were provided to the appraisers. No adverse conditions were observed. The underground gasoline storage tanks formerly installed on the site were successfully removed in May, 2010 and cleared by ADEQ. Lacking an environmental report, this appraisal assumes that there are no known environmental risks or hazardous conditions on the subject site.

2) It is an assumption of this appraisal that any improvements located inside the TCE will remain undisturbed or be replaced at no expense to the property owner and the subject property will be left in the same condition existing prior to ADOT’s entry.

3) No geological or archaeological surveys were provided by the client. It is an extraordinary assumption of this appraisal that there is no known archaeological or geological significance on the subject site.

4) It is an assumption of this appraisal that the subject will have continuous access throughout the term of the project.

5) This appraisal is based on ADOT Preliminary Stage IV Submittal Plans, 90% Complete as of October, 2015, and the Preliminary Right of Way Plans dated May 16, 2016, for the Ina Road Traffic Interchange. The value opinions provided herein may be subject to change if the construction plans change.

6) The appraisers inspected the interior and exterior of the improvements on December 15, 2015 for a prior appraisal. The exterior was re-inspected on July 1, 2016 for this appraisal. The perimeter fencing was in place and gates were locked.

It is an extraordinary assumption of this appraisal that the interior of the improvements have not changed significantly since they were inspected on December 15, 2015.

Hypothetical Condition is defined as a condition directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends;

or about the integrity of data used in an analysis. A hypothetical condition may be used in an assignment only if:

Use of the hypothetical condition is clearly required for legal purposes, for purposes of reasonable analysis, or for purposes of comparison; and Use of the hypothetical condition results in a credible analysis; and The appraiser complies with the disclosure requirements set forth in USPAP for hypothetical conditions. (USPAP, 2016-2017 ed.) 5

4 Uniform Standards of Professional Appraisal Practice, The Appraisal Foundation, 2016-2017 5 Uniform Standards of Professional Appraisal Practice, The Appraisal Foundation, 2016-2017

_____________________________________________________________________ 6

In the valuation of the property in the “before” condition, we assume that the project for which this acquisition is required does not exist.

The use of the above extraordinary assumptions and hypothetical conditions may have affected the assignment results.

THE APPRAISAL PROCESS

An appraisal is an opinion based upon research, judgment, and an analysis of factors influencing real estate value. These factors consider the four major forces at work in the economy: physical, legal/political, social and economic forces.

The sections comprising the first portion of the report include: Property

Identification, Date, Function and Purpose of the Appraisal, Scope of Work, Neighborhood

Analysis, Site Analysis, and Highest and Best Use. The highest and best use of the subject property is the basis upon which market value opinion is formed.

The second portion of the report contains the approaches used to support the market value opinion for the subject property. Since the subject parcel is appraised as vacant land, the Sales Comparison Approach is the only applicable approach to value.

In the Sales Comparison Approach, recent sales of similar properties, known as

"comparables," are analyzed and adjusted to the subject property. This approach best represents the actions of buyers and sellers in the market for this type of property. The degree of similarity between the comparables and the subject property determines the reliability of this approach.

PROPERTY IDENTIFICATION

The subject property is located on the north side of West Ina Road, between

Oldfather Road and Camino de Oeste, about 0.2 mile east of the Ina Road and Interstate 10

Interchange in Tucson, Pima County, Arizona. It is further identified as Pima County

Assessor’s Parcel Number 125-36-014C. The legal description for the larger parcel was provided by the Arizona Department of Transportation Right of Way Title Report, which is included in the Addenda. The abbreviated legal description from the Pima County

Assessor’s records is as follows:

Portion of the E 110’ of the W 573.35’ M/L North 175’ of the S 250’ of the Southeast Quarter of Section 31, Township 12S Range 13E, Marana, Pima County, Arizona.

_____________________________________________________________________ 7

The property appraised consists of a 2,833 square-foot retail store with a 1,104 square-foot canopy, 12,000 square feet of asphalt paving, and 1,200 square feet of concrete paving. The plat map and the Plan Sheet for the new right of way and TCE are provided on the following pages.

PLAT MAP

_________________________________________________________________ 8

ADOT PLAN SHEET P-10

Effective 05/16/16

____________________________________________________________________ 9

Determination of the larger parcel:

This appraisal employs the larger parcel technique to provide a market value opinion for the subject property. Reference is made to Chapter 5, beginning on page 75, in the textbook Real Estate Valuation in Litigation, Second Edition, published by the

Appraisal Institute. The larger parcel must meet the following three criteria:

1. Unity of Ownership

2. Physical Contiguity

3. Unity of Use

As depicted on the preceding page, the Larger Parcel is generally rectangular in shape and consists of approximately 19,102 square feet. The Larger Parcel is owned by RI

CS1, LLC, thereby having unity of ownership. The Larger Parcel is physically contiguous to the TCE. The Larger Parcel is zoned VC, Village Commercial, for the Town of Marana and has a commercial use.

The larger parcel is improved with a former self-service gas station/convenience store that is currently unoccupied and the gasoline storage tanks have been removed.

However, it is encumbered by a Land and Building Lease Agreement, a copy of which is included in the Addenda. The TCE does not impact the improvements located outside the

TCE. This appraisal is based on the extraordinary assumption that ADOT will not disturb the existing site improvements in the area required for the TCE, or will return the site to its prior condition as of the date ADOT commenced use. As such, the larger parcel has unity of use. The site, therefore, meets the three criteria for making a larger parcel determination.

Surrounding land uses include retail, commercial, and single-family residential uses. Interstate 10 is about 0.2 mile west of the subject. Surrounding uses include commercial, single-family residential with home business uses, and retail. Generally, parcels in the area are used for residential or commercial use. The subject has good access and visibility from Ina Road.

PURPOSE OF THE APPRAISAL

Purpose of the Appraisal: The purpose of the appraisal is to provide a market value opinion for a partial interest in the fee simple estate of the Larger Parcel for a Temporary Construction Easement (TCE). Further, the purpose of the appraisal is to provide a market value opinion for the fee simple estate interest in the Larger Parcel before and after the land rental and new access control of the west entrance from Ina Road. It is noted that the subject property is encumbered by a Land and Building Lease Agreement that commenced in March, 2004 and will expire in February, 2021.

However, the subject has been unoccupied by the lessee since May, 2010 and the gasoline storage tanks were successfully removed.

Intended Users of the Appraisal:

The intended users of the appraisal include the officials and agents of the Arizona Department of Transportation; Federal Highway Administration (FHWA); the property owner(s), as well as their representatives and agents; and courts having jurisdiction concerning the proposed acquisition and the owners of the subject property. No other use or users are intended, and any unintended use is not authorized.

Intended Use of the Appraisal: The intended use of the appraisal is to provide a land rental value opinion for the part required for the TCE for use by ADOT for proposed road improvements to Ina Road, and estimate severance damages, if any, in the after condition.

Date of Value Opinion: The date of the value opinion is July 1, 2016, the date of the property inspection.

Date of the Appraisal Report: The date of the appraisal report is July 8, 2016.

DEFINITIONS

Market Value Definition:

Pursuant to Arizona Revised Statute 28-7091:

‘Market Value’ means the most probable price estimated in terms of cash in United States dollars or comparable market financial arrangements which the property would bring if exposed for sale in the open market, with reasonable time allowed in which to find a purchaser, buying with knowledge of all of the uses and purposes to which it was adapted and for which it was capable.

INTEREST TO BE APPRAISED

For the valuation of the TCE, in accordance with the client’s instructions, the interest appraised is a partial interest in the Fee Simple Estate ownership. For the valuation of the subject property, as improved, the fee simple estate is appraised.

However, the subject is encumbered by a land and building lease agreement dated March

18, 2004. The term of the lease is 17 lease years following the commencement date, unless terminated earlier. The expiration date is February 28, 2021.

Fee Simple Estate: The Dictionary of Real Estate Appraisal, 6th Edition, by The

Appraisal Institute defines the fee simple estate as:

“Absolute ownership, unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”

Under this premise, the property is appraised as if free and clear and without any restrictions or encumbrances that would limit the marketability of the property.

Partial Interest is defined as “Divided or undivided rights in real estate that represent less than the whole.”6 For the TCE valuation, the subject is appraised for its land value, as if vacant. It is an assumption of this appraisal that no site improvements outside the area to be acquired are adversely impacted by the Temporary Construction Easement

(“TCE”). We have provided an estimated rent value per month since the actual construction period is unknown as of the date of value.

Temporary Construction Easement (“TCE”) is defined in the 6th Edition of The

Dictionary of Real Estate Appraisal as follows:

6 The Dictionary of Real Estate Appraisal, Sixth Edition, The Appraisal Institute, 2015, P. 168.

“An easement granted for a specific purpose and applicable for a specific time period. A construction easement, for example, is terminated after the construction of the improvement and the unencumbered fee interest in the land reverts to the owner.”

OWNERSHIP AND FIVE YEAR CHAIN OF TITLE

ADOT Parcel 10-1870:

According to the Right of Way Title Report, title to the subject property is vested in RI CS1, LLC, an Arizona limited liability company, also known as Realty Income

Corporation. The Five Year Chain of Title is provided on the following page, as well as in the Addenda as part of the Title Report.

Existing Lease to Circle K Stores, Inc.

Ms. Patty Alaniz, the tenant’s representative from Circle K Stores, provided a redacted copy of the lease. The subject property is leased to Circle K Stores, Inc., under a master lease agreement to RI CS1, LLC, for 10 different Circle K Store locations that includes the subject. The date of the lease is March 18, 2004. The lease includes the c-store building, built-in refrigeration equipment, walk-in coolers, steel canopy and site improvements. The storage tank systems and the tenant’s personal property (as defined in

Sections 1.5 and 10.2, respectively) are excluded from the lease. The storage tank systems are the tenant’s personal property. According to Ms. Alaniz, the storage tank systems and personal property were successfully removed in 2010. The lease terms are summarized below:

LEASE SUMMARY

Lessor: RI CS1, LLC aka Realty Income Corporation Lessee: Circle K Stores, Inc.

Premises: 4500 W. Ina Road, Tucson, AZ Date Commenced: March 24, 2004 Type of Lease: Absolute Net Term - Expiration: 17 Years - February 28, 2021 Base Rent: Amount was redacted in the copy provided Rent Escalations: Every 5 years the rent is to be adjusted based on the Consumer

Price Index, All Urban Consumers, using the formula stipulated in the lease. Rent adjustments for the Sixth and Seventh Renewals are to be based on the market rent at that time to be determined by qualified brokers. The tenant and landlord are to choose their own brokers.

Current Rent: Undisclosed Operating Expenses: Lessee responsible for all operating expenses including real estate taxes, insurance, maintenance, repairs, utilities, janitorial, management, license fees, etc.

Condemnation Clause: In the event of the taking or conveyance of the whole or any part of any of the Premises, or any Storage Tank System thereon by reason of condemnation, each part shall be entitled to the amount awarded or apportioned respectively to each, subject to specific terms in the lease agreement.

In the event Condemnation materially adversely affects the use by Tenant of the premises, tenant may terminate the lease as to the condemned property by giving landlord written notice of its intention to terminate the lease within sixty (60) days of receipt of written notice of the condemnation.

Owner Contact and Site Inspection:

The improvements were inspected on December 15, 2015 for a prior appraisal. The improvements were unoccupied at that time and continue to be unoccupied. The appraisers re-inspected the exterior of the subject property on July 1, 2016. The perimeter fencing was in place and the gates were locked. It is an extraordinary assumption of this appraisal that the interior of the improvements have not changed significantly since they were inspected on December 15, 2015.

Appraisers Steven R. Cole and Susanne Grace-Poore re-inspected the exterior of the subject property on July 1, 2016. Jim Walcutt, representative for the client, inspected the subject property on a separate site visit.

The following contact report was completed for the prior appraisal.

ADOTM-1-V-4042-9-14 APPRAISALS

EXHIBIT 9-14

July 1, 1992

CONTACT REPORT

DATE: December 2, 2015

PARTIES CONTACTED: Realty Income Corporation by letter mailed Certified Mail, Return Receipt Requested. We also contacted Patricia Alaniz, Real Estate Property Supervisor for Circle K Stores, by e-mail at PAlaniz@CircleK.com. Ms. Alaniz provided the appraisers with a Grant of Access letter addressed to Robert Hatchel, Facilities Supervisor for Circle K Stores. Mr. Hatchel provided access to the property and improvements.

Appraisal Services

Project: H847901R Section: Ina Road TI Parcel No. 10-1870

SCOPE OF WORK

The scope of work for an appraisal is the extent of the process of collecting, confirming, and reporting data, as well as the methods used in supporting the value opinion. In accordance with Uniform Standards of Professional Appraisal Practice

(USPAP), the scope of work for the appraisal includes, but is not limited to, the following:

Inspection and analysis of the subject property, market conditions, and other restrictions that affect value; and

Research, analysis, inspection and confirmation of comparable market data; and Consideration of the three approaches to value which include the Cost, Sales

Comparison and Income Approaches to support my market value opinion for the subject property; and

Consideration for severance damages, if any, and special benefits if present.

Data Sources and Confirmation:

Research for comparable sales included a thorough search of sale data from

January 1, 2012 through the present. Data sources include the Pima County Assessor’s

Records, CoStar Comps, the Tucson Association of Realtors Multiple Listing Service

(TARMLS), the Arizona Department of Transportation website, and interviews with local real estate brokers and market participants. The search criteria included commercial improved and land sales that are similar in size and location, as well as active listings of comparable properties.

For both the “before” and “after” valuations, the comparable sales were selected based on their comparability to the subject in terms of size, location, and impact from transportation corridors. The subject currently has two direct access points from westbound

Ina Road, about 0.2 mile east of the Ina Road and I-10 interchange. In the “after” condition, the west entrance will be access controlled for a new bus pull-out.

Research for recent data focused on improved and vacant land sales in the Tucson market with access from major roadways. The most recent sales similar in terms of physical characteristics and potential use were selected for the analysis. The overall quality of the data is adequate to provide a reliable indication of value.

Although a copy of the master lease for the subject Circle K was provided to the appraisers, the rent amount was redacted and Circle K declined to disclose rental information. More significantly, the primary competitors in the marketplace, Quik Trip and

Circle K, have ironclad non-disclosure stipulations in their lease agreements. Furthermore, the subject is unoccupied and requires repairs of the deferred maintenance to be usable for any commercial or retail use. For this reason there is a dearth of actual market rental data for like-kind properties. Therefore, the Income Approach would not provide a credible indication of value and is omitted from this appraisal.

Scope of the Project:

The scope of the project by the Arizona Department of Transportation, in conjunction with the Federal Highway Administration, is to replace the traffic interchange

(TI) at Interstate 10 and Ina Road. According to information from ADOT, the project will include elevating Ina Road to pass over I-10, Union Pacific Railroad and Camino de Oeste.

The existing frontage roads and ramps will require reconstruction to intersect with the crossroad in its reconstructed (elevated) position. The project also includes these features:

Widening the crossroad at the frontage road intersections.

Construction of new loop roads on both sides of I-10 to provide access to existing businesses that front on Ina Road.

Assigning new rights of way, including commercial and residential acquisitions, and relocating numerous utilities.

The construction of the new Ina Road overpass and traffic interchange requires new right-of-way acquisitions along Ina Road, as well as other Temporary Construction

Easements in other areas that are impacted by the project. A portion of the subject property is encompassed in the traffic interchange project. This appraisal is intended to assist the client with establishing a market value and land rental value for the subject property for the project.

Arizona State Transportation Board Resolution Data:

The project was approved in accordance with Arizona State Transportation Board

Resolution 2014-10-A-042, dated October 10, 2014.

Right-of-Way Plan Drawing…