NAS_JRB-Willow_Grove_Scope_of_Work_(SOW)_3.01.2016.pdf

- 1 -

Scope of Work for Real Estate Valuation/Appraisal Services Naval Air Station Joint Reserve Base - Willow Grove

Horsham Township, Pennsylvania

I. Introduction:

The following Scope of Work is designed to address the requirements for a Contract for Appraisal Services on the property described below. The Department of the Navy, Base Realignment and Closure Office and the General Services Administration (GSA), Real Property Utilization and Disposal (RPU&D) Boston Regional Office is seeking the “market value” of the fee simple interest of the land and improvements for the former Naval Air Station Joint Reserve Base Willow Grove in accordance with the standards and guidelines of the Uniform Standards of Professional Appraisal Practice (USPAP).

II. Background Information:

Base Property and Historical Use

In 2005, the Defense Base Closure and Realignment Act (BRAC) directed the closure of Naval Air Station Joint Reserve Base (NASJRB) Willow Grove. In early 2011, NASJRB concluded nearly 70 years of service and ceased flight operations. In September 2011, the air station entered caretaker status, pending property transfer to the Horsham Land Redevelopment Authority.

From 1942 to 2011, Naval Air Station Joint Reserve Base (NASJRB) Willow Grove provided support infrastructure and services to assigned units and supported commands, enabling them to achieve their readiness and training goals. The station trained all assigned units for mobilization status. NASJRB supported Navy, Marine Corps, Air Force Reserve, and Pennsylvania Air National Guard and Army Guard units.

Pursuant to BRAC, the Horsham Township Authority for NASJRB was established by Horsham Township, Pennsylvania, and was recognized by the Office of the Secretary of Defense as the designated Federal planning local reuse authority for NASJRB. Thereafter, pursuant to BRAC, the Horsham Township Authority for NASJRB, did prepare and submit for Federal approval a Homeless Submission and a Reuse Plan for NASJRB Willow Grove dated April 27, 2012, that was subsequently approved by the United States Department of Housing and Urban Development on May 21, 2014, (Reuse and Redevelopment Plan).

III. Property Description:

The surplus property available at the former NASJRB Willow Grove consists of 858 +/- acres located approximately 18 miles north of center city Philadelphia and about 1.5 miles north of the

- 2 -

Willow Grove interchange with the Pennsylvania Turnpike. The U.S. Air Force owns approximately 207 contiguous acres just north of NASJRB Willow Grove, which is the site of the Horsham Air Guard Station. In addition, the FAA owns three acres near the western boundary of the base for their radar tower. NASJRB Willow Grove sits between two major roads. Horsham Road forms much of the western boundary and Easton Road (Rte. 611) forms much of the eastern boundary. The site extends to the north to Keith Valley Road and to the south to Maple Avenue. The site also includes small parcels south of Maple Avenue both east and west of Easton Road as well as small parcels north of Keith Valley Road. The site currently includes closed runways and taxiways and numerous existing buildings Additional information on the property can be found on the Horsham Land Redevelopment Authority’s web site http://hlra.org/ http://hlra.org/

- 3 -

Property Location

- 4 -

- 5 -

IV. Services Required:

The Appraisal Report will provide Prospective Market Value; the date of value will be the anticipated date of transfer for the property. The parcel’s known as “FOST ONE” will be valued as of September 2018. The parcels known as “FOST TWO” will be valued as of December 2020.

FOST Parcel Map Parcel Transfer Map

FOST One – Light Blue FOST TWO - Orange

- 6 -

2. The appraisal analysis will be complete to the extent that the appraiser collects, verifies and analyzes all information necessary for credible assignment results. The appraisal will be based on a comprehensive study and analysis and setting forth, in detail, all data, analysis, and conclusions, as necessary and typical of a self-contained appraisal report. The appraisal preparation, documentation, and reporting shall be in conformity with the requirements of the Uniform Standards of Professional Appraisal Practices (USPAP).

Appraisal Reports should contain the following sections:

Title Page - This should include (a) the name, street address and agency assigned tract, or parcel number (if any), of the property appraised, (b) the name and address of the individual(s) making the report, and (c) the effective date of the appraisal.

Letter of Transmittal - This should include the date of the letter; identification of the property and property rights appraised; a reference that the letter is accompanied by an Appraisal Report; a statement of the effective date of the appraisal; identification of any limiting conditions, or legal instructions; the value estimate, or estimates; and the appraiser’s signature.

Table of Contents - The major parts of the appraisal report and their subheadings should be listed. Items in the addenda of any report shall be listed individually in the table of contents.

Appraiser’s Certification - The Appraisal Report shall include an appraiser’s signed certification conforming to USPAP. The appraiser’s certification shall also include the appraiser’s opinion of the market value of the property appraised as of the effective date of the appraisal. Appraisers may also add to their certifications certain items that may be required by law, the USPAP, and the appraiser’s professional organization(s). However, appraisers should avoid adding certifications that are not pertinent to the specific appraisal (e.g., that the report was prepared in accordance with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)) or that are beyond the scope of the appraisers’ assignment. The appraiser’s certification may alternately follow the appraiser’s final estimate of value in the appraisal report.

Summary of Salient Facts and Conclusions - The appraiser shall report the major facts and conclusions that led to the final estimate(s) of value. This summary should include an identification of the property appraised; the highest and best use of the property; brief description of improvements; indicated value of the property by each approach to value employed if (i) developed in accordance with the highest and best use of the property, and (ii) if developed in accordance with the uses set forth in the Reuse and Redevelopment Plan; the final estimate of value; any limiting conditions or instruction; the effective date of the appraisal; the date of the appraisal report; and any other relevant information. This portion of the report will serve as an Executive Summary of the appraisal.

Photographs of Subject Property – Provide quality color photographs of the appraised property and all comparable in the original and all copies of the final report.

Photographs may be a separate exhibit in the addenda or included with the narrative description of the appraised property and comparable sales. When a large number of buildings are involved, including duplicates, one picture may be used for each type.

Identify the photographed scene and indicate direction of view, vantage point, and other pertinent information. A map may be used to show this information.

- 7 -

Statement of Assumptions and Limiting Conditions – Any assumptions and limiting conditions that are necessary to the background of the appraisal shall be stated. Any client agency or special legal instructions provided the appraiser shall be referenced and a copy of such instructions shall be included in the addenda of the appraisal report. The appraiser must avoid including “boiler-plate” type of assumptions and limiting conditions.

Also, assumptions and limiting conditions cannot be used by an appraiser to alter an appraisal contract, assignment letter, or the appraiser’s scope of work. Unauthorized hypothetical conditions, assumptions, or limiting conditions may result in disapproval of the appraisal report. Section VI Special Conditions of this specification contain several items that may require a Hypothetical Condition or Extraordinary Assumption.

Scope of the Appraisal - The appraiser shall describe the scope of investigation. The appraisal’s scope should conform to its purpose and intended use. The intended use and purpose of the appraisal places specific demands on the scope of the investigation and analysis presented in the appraisal report. The appraisal report should clearly link the appraisal’s scope with its purpose and intended use. The geographical area and time span searched for market data should be included, as should a description of the type of market data researched and the extent of market data confirmation. The appraiser should state the references and data sources relied upon in making the appraisal; if preferred, this information may be shown within the applicable approaches to value. The applicability of all standard approaches to value shall be discussed and the exclusion of any approach to value shall be explained.

Purpose of the Appraisal - This section shall include an explanation of the reason for the appraisal, and the definition of all value estimates required, and a description of the property rights appraised. The purpose of the appraisal will be to estimate the market value of the fee simple interest of the subject parcels as of the effective date of the appraisal subject to any existing leases, permits, and easements for public roads, highways, public utilities, railroads, and pipelines.

This section should specifically identify the intended use and the intended user(s) of the appraisal report. The intended users of the appraisal report will be the GSA and the Department of Navy, and the intended use of the appraisal report is to assist in negotiations for an Economic Development Conveyance (EDC) to the HLRA. Care should be taken to prepare the appraisal report in a manner that clearly meets the intended use of the report by the intended user. It is imperative that the appraiser utilize the correct definition of market value

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal.

Definition of Terms: Unless specifically defined herein or in either USPAP, definitions of all terms are the same as those found in “The Dictionary of Real Estate Appraisal” (Appraisal Institute), current edition.

- 8 -

Summary of Appraisal Problems - This section gives the appraiser the opportunity to acquaint the reader of the Appraisal Report with the specific appraisal problems, if any, which have been encountered by the appraiser and will be discussed in detail in the body of the appraisal report. Appraisers are encouraged to take advantage of it. The appraiser should briefly describe the principal problems presented in estimating the market value of the property under appraisal and describe the estate to be valued.

1. The appraisal of the market value shall be performed (i) based on the highest and best use of the property, and (ii) based on the intended land uses outlined in the HLRA’s Reuse and Redevelopment Plan. To the extent that the intended land uses outlined in the HLRA’s Reuse and Redevelopment Plan are inconsistent with the highest and best use of the property, such inconsistencies shall be identified and valued.

Any methodology other than that specifically addressed within this Scope of Work shall, to the extent practical, be based on market-derived data and methodology as formulated in a market value appraisal. Any additional assumptions and limiting conditions shall be approved in advance by the GSA contact for technical consultation. The appraiser shall consider all local, state, and federal ordinances, regulations, land use restrictions, engineering controls, and local practices when making a determination of the highest and best use, defined as:

“The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. An appraiser’s supported opinion of the most probable and legal use of a property, based on market evidence, as of the date of valuation” (36 CFR 245.2).

2. All three approaches to value should be considered when valuing the property. If the appraiser determines that a typical approach should be omitted, he/she must first consult with the GSA technical consultant and explain the reasons to support the exclusion in the appraisal report. It is anticipated that the Income Approach and Sales Comparison Approach will be the most relevant to this appraisal problem. If it is determined that the Cost Approach is not applicable, the appraisal shall include an analysis of comparable land sales and an estimate of the value of the site. Some parcels may require the application of a subdivision analysis or development approach to arrive at the present value of the property considering projected revenue, development/sales expenses, and absorption time. Improvements in some parcels may require demolition, in which case demolition cost estimates must be well supported.

3. A working copy of any DCF will be provided in a form similar to excel to the Government with all assumptions and data inputs identified, and provided to the government separate from the Appraisal report.

4. The appraiser shall explain the reasoning applied to arrive at the final opinion of value and how the results of each approach to value were weighed in that opinion, and the reliability of each approach to value for solving the particular appraisal problem. The appraiser shall also state his or her final estimate of market value for each parcel, including the contributory value of fixtures if any.

5. The GSA & Navy shall provide the appraiser a copy of all records and data pertaining to the property detailed in Section VIII.

- 9 -

V. General Requirements:

1. Only the real property is to be valued in the appraisal. The appraiser is required to describe, list and differentiate all controversial or questionable items of personal property from the real property under appraisal. These items must be clearly itemized and set forth in the appraisal so as not to confuse the reader of the appraisal as to what is actually being appraised. This paragraph should not be interpreted to indicate that the appraiser must itemize all personal property. The emphasis lies on whether a particular item’s classification as either real property or personal property would be controversial or questionable.

2. All adjustments for dissimilarities between the appraised property and comparable market data, including sales comparable and rental data, as well as all discount and capitalization rates, etc., must be supported to the extent practical by market data. The narrative description of the adjustment process shall be sufficiently complete to indicate to the reader that the adjustments or rates were derived and applied in a reasonable and rational fashion consistent with market data. The actual adjustments shall be set forth in an adjustment grid(s) and discussed in sufficient detail to lead the reader to the appraiser’s conclusions.

3. A detailed description/analysis, with photographs, of the property and improvements under appraisal is required which includes: a plot plan, improvement plans; description and size and shape of site, topographical features, soil and subsoil conditions (if known), drainage and flood zone information, access and ingress/egress, utilities availability, site’s relationship to neighboring properties, potential or existing nuisances and hazards, easements, encroachments and right-of-ways, and overall functional adequacy of the site.

4. In addition to the above, the following information is required for existing improvements determined to be the highest and best use and which would remain on site: estimated size of the improvements detailed in the most standard market acknowledged unit(s), a description of interior and exterior construction features and layout, physical and chronological age, quality and condition, deferred maintenance, current use, and functional utility of the improvements.

5. Photographs of all comparable market data utilized in the report shall be provided within the appraisal. Maps displaying the location of all market data must also be included. These maps should be detailed enough to show specific site identification and location so that market data can be located during a field review of the appraisal.

6. Comparable market data shall be presented in individual write-up sheets. Rental Comparable data sheets shall include at a minimum: physical address, improvement description, lessor/lessee, date of lease(s) or most recent rental transaction(s), lease rates and terms including: type of lease (gross, modified gross, triple net), tenant improvement allowances, rental concessions, expense allocations, size of space leased, etc., and date and source of verification. Comparable sales data sheets must include, at a minimum: physical address or legal description, grantor/grantee, sales price & date, financing terms and conditions to include cash equivalency, zoning, size and shape of site, description of improvements, current use, development of capitalization rate (if sale comparable is income producing) and date and source of verification. The appraiser should physically inspect all principle comparable data used.

- 10 -

The documentation of each comparable sale should include:

Parties to the transaction

Date of transaction

Confirmation of the transaction with buyer, seller, broker, or other person having knowledge of the price, terms, and conditions of sale.

Buyer motivation

Location

Size

Legal description

Property rights conveyed

Consideration

Financing terms

Sale conditions, such as arm’s length or distressed

Improvements, include utilities available, Physical description (topography, vegetative cover, water influence, and other characteristics.)

Non-realty items

Economic characteristics

Zoning

Current use

Topographic map

Photographs

7. The appraiser must provide a line-item discussion reflecting the mathematical development of each income, expense, vacancy, infrastructure, cost-to-cure, or demolition item cited in the appraisal report. Property operating expenses must be supported by market data based on industry standards or supported by industry recognized income/expense manuals such as BOMA, IREM, etc.

8. If the appraiser chooses to use self-made or commercial appraisal software, such as ARGUS, DYNA, PROJECT, Microsoft Excel etc., he/she must provide all supporting printouts, spreadsheets, and electronic versions of the files, which support the Operating Statement or Discounted Cash Flow (DCF) Analyses provided within the appraisal, along with a working functional format will be provided to the Government, separate from the Appraisal report.

9. The appraisal report will be reviewed by a GSA review appraiser prior to acceptance.

10. The GSA contact for technical consultation during the appraisal assignment is:

Mr. David E. Kiernan US General Services Administration New England Region 10 Causeway Street Boston, MA 02222 617-565-5078

VI. Special Considerations:

- 11 -

1. The appraisal will be based on the as-is, where-is condition of building improvements, utilities, and infrastructure, with consideration of the HLRA’s Reuse plan.

2. Assume the purchaser is entitled to approvals if the use is consistent with HLRA’s Reuse and Redevelopment Plan.

3. Assume if the use is not consistent with HLRA’s Reuse and Redevelopment Plan that any requested zoning and entitlements must be reviewed and approved by Horsham Township.

4. The following assumptions should be used concerning the availability of utility services:

a. Electric: Electrical service should be available at the property boundary from local utility providers. Fees and costs associated with the service yet to be determined.

b. Gas: Gas service should be available at the property boundary from local utility providers. Fees and costs associated with the service yet to be determined.

c. Water: There is no water available on the property. Discussions with the local utility (Horsham Water and Sewer Authority) indicate that water for any redevelopment on the property (at the amounts predicted in the HLRA’s Reuse and Redevelopment Plan) would be available from the HWSA with the location of the connection point yet to be determined. Developer may be responsible for upgrades to the system to deliver water to the property boundary. Additionally to provide adequate water pressure, a new water storage tank to be located on the property will be necessary.

d. Sewer: There is no sewer available on the property. Currently, the local sewer authority (Horsham Water and Sewer Authority) has an easement for a transfer pipe on the property which connects the Horsham Air Guard Station to the existing HWSA collection system located along Keith Valley Road. An expansion of HWSA’s Park Creek Sewage Treatment Plant (STP) is needed to handle the capacity estimated in the HLRA’s Reuse and Redevelopment Plan. The cost for that portion of the plant upgrade may be borne by the redevelopment of the property. Additionally, the conveyance pipe along Keith Valley Road to the Park Creek STP will have to be up-sized to handle flows from the redevelopment with the costs may be borne by the redevelopment of the property.

5. The following assumptions should be used concerning ingress/egress and ‘right of access’ to the property:

a. The NAS-JRB Willow Grove property sits between two major state highways

(Rte. 611 Easton Road and Rte. 463 Horsham Road). Currently there is limited access to these two main roads. Redevelopment of the property will include obtaining highway occupancy permits from the Pennsylvania Department of Transportation (PennDOT) for access to these highways. As a condition of the issuance of any permit(s), PennDOT may require various improvements at existing access points as well as any other new access points.

b. Additionally, redevelopment of the property will result in a significant increase in vehicle trips in areas surrounding the former base. Traffic studies have shown a majority of the adjacent intersections will experience an increase in delay and a

- 12 -drop in the level of service and may, fail to meet PennDOT requirements.

Proposed mitigation measures may include off-property improvements such as adding through lanes, multiple left hand turn lanes, adjusting signal timing and channelized right turn lanes to reduce the impact of the development of the property.

6. Assume that all property information provided by the Navy is correct.

7. The Navy’s Interim Lease with the HLRA relating to the Delaware Valley Historical Aviation

Association (DVHAA)’s Museum and Restoration areas will remain in effect until the property is transferred.

8. The property is listed on the National Priorities List (NPL) (Superfund) due to past Navy operations, hazardous materials releases and/or spills and disposal of wastes on site.

Future development may be impacted by land use controls, notices of hazardous substances releases, restrictive covenants, engineering controls and other miscellaneous constraints. The recent discovery of perfluorinated compounds (PFCs) in the groundwater on the property and on neighboring parcels (attributable to Navy activities) and the designation as a Superfund site may have an impact on property valuation

9. The HLRA’s Reuse and Redevelopment Plan includes a Legally Binding Agreement obligating the property owner to guarantee the availability of adequate access roads and to bring certain water, sewer, and other utility infrastructure to that portion of the property set aside for homeless uses.

10. The Property includes jurisdictional wetlands that must be managed and/or mitigated as part of the development process as described in the HLRA’s Reuse and Redevelopment Plan.

11. Development of the Property must include the creation and dedication of easements and potential construction costs for (i) unrestricted separate access from public roads for the Federal Aviation Administration (FAA) to the FAA Parcel, and (ii) unrestricted separate and/or joint access from public roads to the Air National Guard for the Air National Guard Station.

VII. Appraiser Qualifications:

Appraisers shall be a State Certified General Real Property Appraiser in PA or obtain a temporary practice permit in PA where the subject property is located and be in good standing with the licensing authority where the credential was issued. The contract appraiser must possess substantial experience in appraising similar complex, residential, office, commercial, mixed-use, redevelopment properties on a regional level. The appraiser signing the appraisal report must inspect the property and must materially participate in the development of the report.

VIII. Information to be provided to the Appraiser:

1. Maps of Parcels

2. Real Property Inventory

3. HLRA’s property reuse proposed plan link, http://hlra.org/ http://hlra.org/

- 13 -

IX. Timing & Process:

All dates are completion dates (due dates)

1. Deliver Information to Appraiser - Within 7 days of contract award, information referenced in the contract specification and not included in the contract award documents will be provided to the contract appraiser by GSA.

2. Supplemental Information Request – If needed, request additional information at any time during the assignment by contacting the GSA contact for technical consultation.

3. Pre-Work Conference and Property Inspection - Within 10 days of contract award, the contract appraiser is required to attend a pre-work conference with representatives of GSA and Navy for discussion and understanding of these instructions and to begin the property inspection.

4. Analysis of Highest and Best Use and the HLRA’s Reuse and Redevelopment Plan - Within

45 days of contract award, develop a preliminary highest and best use using traditional criteria (physically possible, legally permissible, financially feasible, and maximally productive) for each parcel.

5. This shall include evaluating the potential for contributory value of the existing improvements and their demolition costs if the improvements are found to not contribute value to the site.

Also, develop a market analysis with a thorough discussion of the real estate market for each property type (existing or potential) on the installation (office, commercial, residential, mixed use, retail, recreational, etc.), and a discussion of supply and demand factors relative to the land and improvements, including existing inventories, vacancies, competitive projects, and absorption rates. The preliminary highest and best use conclusion shall be in the context of the HLRA’s Reuse and Redevelopment Plan

6. In Process Review - Within 7 days of delivery of the analysis of the highest and best use and the HLRA’s Reuse and Redevelopment Plan, participate in a conference call with representatives of GSA and Navy to discuss the results of the analysis.

7. First Draft Appraisal Report – Within 60 days of contract award, provide a digital copy of the first draft appraisal report estimating the market value.

8. Second Draft Appraisal Report - Within 90 days of contract award, provide a digital copy of the second draft appraisal report estimating the value the second draft appraisal report must be essentially complete except for finished copies of maps, pictures, and exhibits.

9. Final Meeting - Within 10 days of the delivery of the second draft appraisal report, it may be necessary to participate in a conference call with GSA and Navy to discuss the draft appraisal.

10. Final Appraisal Report - Within 10 days of the Government’s comments on the second draft appraisal report, provide an electronic Portable Document Format (PDF) version and four hard copies of the signed appraisal report along with any maps, drawings, photos, graphs and all backup information.

- 14 -

Updating the Appraisal Report - Upon the request of GSA, the contract appraiser shall, during a one-year period following the valuation date of the appraisal report, update the value of any or all of the parcels as of a specified date. If requested, the appraiser shall submit four signed copies and an electronic PDF version of the updated report and shall include sales data or other evidence to substantiate the updated conclusion of value. The updated appraisal is to be reported in an Appraisal Report format and changes must be thoroughly discussed. The time allowed for the update, if ordered, will be 45 days. The fee to provide an updated appraisal report shall be included in the initial proposal.

Testimony - Upon the request of the GSA, Department of Navy, United States Attorney, or the Department of Justice, the contract appraiser shall, in any judicial proceedings, testify as to the value of any and all property included in the appraisal report as of the valuation date. Fees for these services shall be determined upon the Government’s request for testimony.

X. Confidentiality:

Both the Navy & GSA and the contract appraiser acknowledge and agree that in the course of performing the Work under this agreement, the Navy & GSA may choose to disclose Confidential Information to the appraiser.

If provided confidential information, the appraiser agrees not to disclose the confidential information to any third party and to treat it with the same degree of care as it would its own confidential information. It is understood, however, that the appraiser may disclose the Navy’s confidential information on a “need to know” basis to the appraiser’s employees and subcontractors. All such employees and subcontractors of the appraiser shall have executed a confidentiality agreement with the Navy requiring a promise of confidentiality concerning the confidential information, if any confidential information is provided.

Appraisers’ valuations and supporting appraisal reports are confidential information, the appraiser and support staff will be in strict compliance with the Confidentiality provisions of the Ethics Rule of USPAP, which provides as follows:

An appraiser must protect the confidential nature of the appraiser-client relationship.

An appraiser must act in good faith with regard to the legitimate interests of the client in the use of confidential information and in the communication of assignment results.

An appraiser must not disclose confidential information or assignment results prepared for a client to anyone other than:

1) the client (GSA), and

2) persons specifically authorized by the client (Navy)

Under the exceptions in the preceding paragraph, appraisers must obtain written authorization from GSA or the Navy before disclosure. The passage of time in and of itself does not extinguish either the appraiser’s responsibility for confidentiality or the appraiser/client relationship. The appraiser/client relationship is extinguished only upon written release from GSA. Even though the appraiser/client relationship may terminate, the appraiser remains subject to the confidentiality provisions of USPAP. Furthermore, the subject property may not be appraised for another party without prior written permission from GSA.