SOW_Gouin Village Housing Nantucket.docx

STATEMENT OF WORK

Appraisal Services - USCG, Civil Engineering Unit Providence United States Coast Guard Civil Engineering Unit Providence 475 Kilvert St, Suite 100 Warwick, RI 02886

1. Introduction:

The U.S. Coast Guard, Civil Engineering Unit Providence (hereinafter referred to as "the Government") is soliciting proposals from qualified and licensed/certified real estate appraisers to provide appraisal services for the property located at:

20 Vesper Lane, Nantucket, MA 02554. 3.35 Acres

This Statement of Work (SOW) outlines the requirements for submitting a proposal and describes the scope of work for the appraisal services. All proposals must conform to the instructions outlined in this SOW.

2. Project Description:

The Government requires a professional real estate appraisal to determine the fair market value (of the subject property) as of the effective date of appraisal June 20, 2026 (subject to change). The Property on 20 Vesper Lane (Gouin Village Housing) consists of nine 2-bedroom duplexes and one 3-bedroom single family home on 3.39 acres (19 total units). The homes were built in 1962 and do not meet current housing size standards as they are almost all 2-bedroom units. The purpose is to support several real property decisions and divestitures. Additionally, the appraiser must consider the impact of major adjacent developments, specifically new facilities being constructed by the local hospital and the Town of Nantucket, including the new utility infrastructure being fed to these sites, as this will directly affect the subject property’s market value.

3. Scope of Work:

The selected appraiser (hereinafter referred to as "the Contractor") shall perform the following services:

3.1. Property Identification and Verification: Confirm the legal description and boundaries of the property. Verify all available information regarding the property with appropriate sources.

3.2. Property Inspection: Conduct a thorough on-site inspection of the subject property, including both interior and exterior features. This inspection will be a Complete inspection. Site visits will have to be coordinated as all on site visits require notice to owner and appropriate certificates of insurance. Photographs of the subject property are required.

3.3. Site Access and Coordination: The Contractor must coordinate all site access by submitting a formal request in writing via email to the Government Point of Contact (POC), ENS Kenneth W. Marra at Kenneth.W.Marra@uscg.mil, no less than seven (7) business days prior to the desired inspection. Access will be granted Monday through Friday between 9:00 AM and 4:00 PM local time, excluding Federal holidays. The Government POC is solely responsible for coordinating access with residents; the Contractor shall not contact residents directly.

3.4. Data Collection and Analysis: Gather and analyze relevant market data, including:

3.4.1. Comparable sales data for similar properties.

3.4.2. Listing data.

3.4.3. Market trends and conditions impacting the property's value.

3.4.4. Cost data.

3.4.5. Local zoning regulations and land use restrictions.

3.4.6. Environmental factors.

3.4.7. Economic Overview of area

3.4.8. Major Capital Projects

3.4.9. Demographics & Population Trends

3.4.10. Economic Base & Sector Performance

3.5. Additional Valuation Scenarios: In addition to the primary opinion of value for the entire subject property, the appraisal report must also include separate opinions of value for the following two distinct scenarios:

3.5.1. Current Value: The market value of the subject property as it exists today.

3.5.2. Easement Value: The market value of the fee interest in the land underlying the future access road (see attachment #1), assuming the road area is granted as an easement to the Town of Nantucket. The road is not currently constructed and shall be treated as a proposed condition.

3.5.3. Remainder Value (Easement): The market value of the subject property after the hypothetical granting of the access road easement. This value shall reflect the main parcel with all improvements, subject to the easement.

3.5.4 Conveyance Value: The market value of the land underlying the future access road (see attached plan), assuming the area is conveyed in fee simple to the Town of Nantucket.

3.5.5 Remainder Value (Conveyance): The market value of the subject property after the hypothetical conveyance of the access road area, including consideration of any required demolition of existing improvements and the impact of proposed development on adjacent lots to the south of the parcel.

3.5.6. Fair Market value of building(s) to be demolished should the easement be conveyed

3.5.7. Future value of 20 Vesper Lane considering known development proposed on adjacent lots to the south of the parcel. This scenario must explicitly factor in the new hospital and Town of Nantucket buildings, as well as the new utility lines being fed to these developments, and how this infrastructure will impact the future market value of the property.

3.6. Fair Market Value: Provide a final opinion of value as supported by subparagraph 3.1-3.3. The opinion of value shall be developed using the following valuation approach(es) if applicable:

3.6.1. Valuation Approaches:

Sales Comparison Approach: Analyze recent sales of comparable properties in the subject's market area. Provide a detailed comparison of the subject property to the comparable sales.

Cost Approach: Estimate the cost to reproduce the subject property, less depreciation, and add the value of the land. Provide detailed documentation of all cost estimates.

Income Capitalization Approach: Estimate the value of the property based on its potential income-generating capacity.

The Contractor shall select the appropriate valuation methodologies within each approach and provide justification for their selection.

3.6.2. Reconciliation:

Reconcile the results of the valuation approaches (if more than one is used) to arrive at a final opinion of value. Provide a clear and concise explanation of the reconciliation process.

4. Deliverables / Appraisal Report Preparation:

Prepare a comprehensive appraisal report that meets the requirements of the USPAP, Yellow Book and any other applicable jurisdictional laws and regulations, as well as the specific requirements of this SOW. Prior to submission of the final appraisal report, a draft report shall be provided to the Government to ensure accuracy and comprehensiveness. The appraisal report shall follow the narrative format found in Enclosure (3). The report shall include, but not be limited to:

4.1. Clear and concise description of the subject property, including legal description.

4.2. Detailed analysis of relevant market data and trends.

4.3. Detailed explanation of the valuation approaches used, including all supporting data and calculations.

4.4. Support for the Contractor's opinion of value.

4.5. Photographs of the subject property and comparable sales.

4.6. Site map showing the location of the subject property and comparables.

4.7. Completion of Enclosures (1) and (2): Technical and Price Quotes and U.S. Coast Guard Fair Market Value Appraisal Report Summary of Significant Conclusions and Reporting Requirements, respectively.

4.8. Contractor's certification and qualifications, including license/certification number.

4.9. A statement of assumptions and limiting conditions.

4.10. A signed certification that the appraisal was performed independently and without bias.

A statement indicating compliance with the independence requirements of the Government Auditing Standards (GAGAS) for performing government audits. This includes disclosing any potential personal, external, or organizational impairments to independence.

5. Submission of Deliverables:

Submit two copies of the appraisal report in electronic PDF to the Government by May 30, 2026.

Proposals must be submitted electronically to Kenneth.W.Marra@uscg.mil by May 30, 2026.

Late proposals will not be considered.

6. Proposal Requirements:

Proposals must include the following information:

6.1. Company Profile: A brief description of the appraiser's company, including its history, experience, and qualifications.

6.2. Appraiser Qualifications: Documentation of the appraiser's qualifications, including:

6.2.1. Valid and current appraiser license/certification in the State of Massachusetts

6.2.2. Experience in appraising similar types of properties, specifically those suitable for government use, to include: (Provide examples.)

6.2.3. Professional affiliations (e.g., Appraisal Institute).

6.2.4. Evidence of Errors & Omissions insurance.

6.2.5. Confirmation of familiarity with and adherence to the USPAP and Yellow Book.

6.3. Proposed Methodology: A detailed description of the methodology the appraiser will use to perform the appraisal, including the specific data sources and valuation techniques.

6.4. Project Timeline: A proposed timeline for completing the appraisal that meets the deliverable date detailed in Paragraph 5 of this SOW. Key milestones shall be included in the timeline to ensure compliance with the deadline.

6.5. Fee Schedule: A detailed breakdown of the appraiser's fees for the appraisal services.

6.6. References: Contact information for at least three (3) references for whom the appraiser has performed similar appraisal services, preferably including other government agencies.

6.7. Statement of Compliance: A statement certifying that the appraiser will comply with all applicable laws, regulations, and professional standards, including USPAP and Yellow Book.

6.8. Disclosure of Conflicts of Interest: A statement disclosing any potential conflicts of interest that may affect the appraiser's ability to perform the appraisal independently and objectively, specifically addressing GAGAS independence requirements.

7. Evaluation Criteria:

Proposals will be evaluated based on the following criteria:

7.1. Qualifications and Experience: The appraiser's qualifications, experience, and expertise in appraising similar types of properties, with emphasis on experience appraising properties for government entities and demonstrated understanding of GAGAS requirements.

7.2. Proposed Methodology: The appropriateness and thoroughness of the proposed methodology, including compliance with USPAP and Yellow Book.

7.3. Project Timeline: The reasonableness and feasibility of the proposed timeline.

7.4. Fee Schedule: The competitiveness and reasonableness of the proposed fees.

7.5. References: The positive feedback from the references provided.

8. Terms and Conditions:

The Government reserves the right to reject any and all proposals.

The Government is not obligated to award a contract as a result of this SOW.

The successful Contractor will be required to enter into a formal contract with the Government.

The Government reserves the right to negotiate the terms and conditions of the contract with the successful proposer.

All proposals become the property of the Government.

The successful Contractor will be required to comply with all applicable Federal Acquisition Regulations (FAR).

Background checks may be required for personnel performing work on government property.

9. Questions and Point of Contact:

Questions regarding this SOW must be submitted in writing to the email below by 30 May 2026.

Kenneth W. Marra, ENS, United States Coast Guard

(330) 301-1310 Kenneth.W.Marra@uscg.mil

10. Attachments:

Attachment #1: Access Easement Exhibit Proposal Attachment #2: ATI Site Plan Hospital 25OCT18

Enclosure (1): Technical and Price Quotes Technical Quote

I Certify that:

I have experience in the valuation of properties similar in complexity to the subject, and I have performed appraisals of a similar property in the past.

I have read the Scope of Work, and I agree to perform the work according to those requirements and to the requirements of the current USPAP, Yellow Book, and, if identified, additional USCG supplemental appraisal requirements.

I agree to complete and include in the Addendum section of the appraisal report both the Fair Market Value Appraisal Report Summary of Significant Conclusions and Scope of Work Reporting Requirements Checklist. I understand that the draft appraisal report will be rejected if these two documents are not included.

Except for unforeseen circumstances that may result from the inability of U.S. Coast Guard (USCG) to provide GFI and GFE, I am able to meet the deadlines and time frames allotted by USCG delineated in Paragraph 5.

I cannot deliver the work in the time frame allotted by USCG; However, I can deliver a Draft of the work required by:

/ / (mm/dd/yyyy).

Company Name (Offeror):

Point of Contact Email:

Physical Address:

Office Phone Number:

Cell Number:

UEI Number:

Signature

Date Signed

Price Quote

Firm Fixed Price

$ .00

Enclosure (2): U.S. Coast Guard Fair Market Value Appraisal Report Summary of Significant Conclusions and Reporting Requirements These two checklists must be completed by the Contractor and included in both the draft and final appraisal report. If not included in the addendum, the report will be returned. The following are samples only; an Excel Spreadsheet will be provided upon contract award.

U.S. Coast Guard - Fair Market Value Appraisal Report Summary of Significant Conclusions

Building/Facility Number

Property Name

Street Address

City, State, Zip

Property Type

Property Interest(s) Appraised

Appraisal Report Type

Contract Appraiser

Contract Appraiser Phone No. & Email

Contract Appraiser Address

Highest and Best Use as if vacant

Highest and Best Use as improved

USCG Review Appraiser

Building /Site Data

Usable Area (in SF)

Gross Building Area (SF)

Mkt Rentable Area (SF)

Mkt Bldg. Class (A,B,C,D)

Number of Stories

# of Existing Occupancy Agreements

Year Built

Current Occupancy

Condition

Yr. of Recent Renovation/Expansion

Other Features

Land Area (SF) (including excess land)

Excess Land (SF)

Appraisal Report Findings

Analysis reflects following scenario:

label values below)

Effective Date of Values

Cost Approach

Effective Age (years)

Total Economic Life (years)

Cost New

Depreciated Cost

Land Value

Value Indication

Sales Comparison Approach

Price Per SF/Unit/Lot

Value Indication

Income Capitalization Approach

Market Rent

Overall Capitalization Rate

Annual Revenue per SF Gross Full Service Rate

Annual Expense per SF Conclusion

Expense Ratio (%)

Analysis Period Years/Months/etc.

Value Indication

Reconciliation

Final Value

Value Per Unit of Comparison

If Applicable, Other Value (Specify): (Disposition, Bulk, Going Concern, Excess Land, etc. )

General Review Comments - To Be Completed by USCG Reviewer

Recommend appraiser for future assignments?

TBD

Additional Comments

U.S. Coast Guard - Fair Market Value Appraisal Report Reporting Requirements Checklist

Please note: This document will be used to review the appraisal report. It must be completed by the appraiser and included in the initial draft report or report will be returned.

Bldg/Facility Number

Property Name

Street Address

City, State, Zip

Production Appraiser

USCG Review Appraiser

Date Draft Rec'd by USCG

Part I: INTRODUCTION

a) Property name, street address, and Building/Facility Number.

b) Effective date of the appraisal and date of the report.

Table of Contents

Summary of Salient Facts and Conclusions

a) Is the important data and conclusions summarized in a complete but concise manner?

b) Does the data include: Property Identification, Purpose of the Appraisal, Scope of the Appraisal, Dates of Value, brief Site and Improvement Descriptions, Occupancy, Zoning, Highest and Best Use, Value Indications, Capitalization and other rates used and Final Estimate of Value?

description)?

Property Rights Appraised. Are the property rights appraised consistent with the instructions?

Definition of Value. Is the fair market value appraised consistent with the Scope of Work and the correct definition is the only market value definition in the report?

a) Is the date of value the same date as the last comprehensive interior inspection by the Production Appraiser?

b) Is the date of value 45 days or less from the date the draft is submitted and final appraisal report is received and accepted by the USCG?

Appraiser Competency and Prior Engagements with Subject Property. Did the appraiser discuss competency with assignment and any prior appraisal and/or consulting assignments involving the subject property during the past three years?

a) Photographs: Do the photographs of the subject show the front elevation, any unusual features, abutting properties, etc., and have captions including the date taken, and exterior photos show the view direction of the camera?

b) Maps: Do the location maps legibly depict the locations of the subject and comparables?

c) Do the graphic exhibits include adequate descriptive captions?

a) Are the extraordinary assumptions, hypothetical conditions, and limiting conditions affecting value are clearly noted? (Assumptions may include: Build to Suit Methodology, ownership by a private sector entity, continued stabilized occupancy by the Federal government, completion of on-going capital improvements, etc.)

b) Are any encumbrances impacting the subject clearly explained?

a) Is the certification compliant with current USPAP recommendations?

b) Does the appraiser have any interest, direct or indirect, in the subject?

c) Is the certification signed by all signatories of the report?

PART II: FACTUAL DATA

a) Are the pertinent aspects of the region and/or city are adequately discussed in a concise manner, including descriptions of the economic base/MSA, and land use trends?

b) Does the conclusion for this section explain how this information impacts the subject?

a) Does the discussion include a market description for subject's property type?

b) Are market vacancy & absorption rates, rents, efficiency ratios and market R/U factors addressed?

c) Supply and Demand Issues:

· Are competitive supply factors (including proposed additions) discussed?

· Sources of demand and most significant competitors identified and discussed?

d) Is the competitive position of the subject property in relation to its market discussed?

a) Is there a clearly defined neighborhood boundary?

b) Are land use patterns, transportation issues, vacant land, life cycle, and local market for subject's property type discussed?

c) Does the conclusion for this section explain how this information impacts the subject?

a) Site:

- Are relevant characteristics impacting the site, its use, and value discussed?

b) Zoning/Legal Restrictions:

- Did the appraiser conclude, support, and discuss the most likely zoning if the site was under private ownership?

- Does the concluded most likely zoning under private ownership allow for additional building area, transferable development rights and/or any other rights or regulations that could impact value?

- Is there a discussion whether the improvements would be legally conforming or non-conforming if privately owned?

c) Improvements:

- Are the improvements adequately described including, at a minimum:

- Building dimensions (gross, net rentable, and common areas), square foot measurements, exteriors, interiors, age, condition, quality (Class A, B, C), functional utility/obsolescence, core factors, number of stories, adequacy of parking, deferred maintenance, etc.?

- Is the subject LEED certified and the certification level identified?

d) Rentable to Useable Area Discussion:

- Does the appraisal adequately address the subject property's R/U factor?

- What is the appraiser's estimate of "Market Rentable Area"? Does this R/U factor and adjusted Market Rental Area affect the appraiser's estimate of market value?

e) Recent Improvements/Renovations

If the subject property has recently undergone a renovation project or significant upgrades, did the appraiser provide an adequate description of those improvements with an explanation of how those changes might affect the value of the property?

f) Real Estate Taxes: Is the real estate tax assessment under private ownership estimated and does this estimate appear reasonable?

PART III: ANALYSES AND CONCLUSIONS

20 Highest and Best Use (H&BU)

a) H&BU of Underlying Land as if Vacant and available for Development. Is this report section adequately described and conclusion supported and reasonable?.

b) H&BU as Improved. Are the improvements briefly described and the conclusion supported and reasonable? Are the existing improvements an interim or special purpose use?

b) H&BU as Improved. Has the appraiser completed a financial feasibility rent analysis?

21 Land Value

a) Is the land value based on the H&BU as if vacant and available for development?

b) Is the site valued using sales confirmed with a party knowledgeable regarding the terms of the transaction and is the methodology reasonably applied?

c) Has the estimate of land value, as if vacant, been adequately supported?

d) Are the detailed datasheets in the Addenda and has the reader been advised of their location.

22 Cost Approach

a) Is the data source(s) for the direct/indirect costs identified and appropriately applied?

b) Is the effective age and economic life estimated and supported?

c) Are the estimates for the developer's profit and depreciation supported?

d) Is the value concluded by this approach reasonable, given the data and analysis presented?

e) If the USCG has granted permission to omit Cost Approach, has the property's economic life, effective age, and any applicable forms of depreciation or obsolescence discussed?

23 Sales Comparison Approach

a) Are confirmed sales of comparable properties used?

b) Are all sale comparables reasonably current?

c) If the subject is LEED certified are the comparable sales also LEED certified? If not, have appropriate adjustments been made in the comparables sales analysis process?

d) Are the adjustments quantified, clearly explained and logically supported?

e) Are the value indicators such as overall rates, adjusted sale price per SF and the final estimate of value developed through the use of appropriate correlation techniques, not by averaging?

f) The location of the detailed information datasheets, if in the Addenda, has been provided.

g) The value indicated by the sales comparison approach appears reasonable, given the data and analysis presented.

24 Income Capitalization Approach

Potential Income Discussion

a) Does the appraisal discuss current subject property suite sizes and interior finishes?

b) Are the confirmed lease and rent comparables adequately described and applicable to subject? Federal Leases are not to be used as comparables.

c) Are all rental comparables reasonably current?

d) Is each rent comparable explained in relation to the subject? Are the adjustments made to the comparable after considering the subject attributes?. Are adjustments quantified either by dollar amounts or percentages?

e) Are estimated revenues consistent with market rents? Are allowances for absorption, periods of vacancy, credit loss or renewal/ turnover considered?

f) If property is not stabilized, is an appropriate lease-up period supported by market information included in report?

Vacancy and Collection Loss Projection

g) Are current and projected occupancies adequately supported? Does the vacancy and collection loss estimate reasonably account for the assumption of "continued stabilized occupancy by the federal government" for the typical local real estate market holding period?

Operating Expense Discussion

h) Operating history is reported and considered as background information.

i) Are the expenses logically explained and supported, including real estate taxes and insurance as if the subject property was privately (non-government) owned.

Capitalization and Valuation Analysis

j) Is a supported, stabilized operating statement including reserves for replacement included? Are the immediate capital expenditure needs quantified?

k) Is/are the overall rate(s) (cap rate(s)) adequately analyzed and reconciled?

l) If used, does the discounted cash flow model adequate support the projected revenues and expenses, rates of increase, and discount rate?

m) Does the value indicated by the Income Approach appears reasonable, given the data and analysis presented?

25 Reconciliation and Final Estimated Value

a) Are the appraiser's opinions concerning marketability, market trends and highest and best use reflected in the valuation?

b) Is the appropriateness and reliability of each approach discussed? Does the derivation of the final estimated value appear reasonable?

PART IV: EXHIBITS AND ADDENDA

a) Plot Plan and Tax Map.

b) If provided by USCG, only a single representative floor plan of one floor is included in report. Appraiser may elect to exclude all floor plans. As per Homeland Security, additional floor plans are not to be included and report will be sent back for revision.

c) Comparative Data Map(s) showing the subject and the comparables.

d) Is the Statement of Work included?

e) The Summary of Significant Conclusions and the Reporting Requirements Checklist have been completed by the appraiser(s) and included in the Addenda.

f) Appraiser Qualifications for all appraisers & analysts significantly contributing to assignment.

COMMENTS AND CLARIFICATIONS FROM THE REVIEWER

Enclosure (3): Narrative Format

To provide uniformity for USCG files, the text of the Appraisal Report, as defined by USPAP 2-2(a) shall be divided into four parts as outlined below:

PART I - INTRODUCTION

1. TITLE PAGE. This shall include (a) the name, street address and USCG building control number of the property, (b) the name of the individual(s) signing the report, and (c) the effective date of the appraisal.

2. TABLE OF CONTENTS

3. LETTER OF TRANSMITTAL.

4. SUMMARY OF SALIENT FACTS AND CONCLUSIONS. Summarize the important data and conclusions in a concise manner, including: Property Identification, Purpose of the Appraisal, Scope of the Appraisal, Date of Value, Site Description, Improvement Description, Percentage of Current Occupancy, Zoning, Highest and Best Use, Value Indications (by Cost, Sales Comparison, and Income Capitalization Approaches), discount, capitalization and growth rates used, Final Estimate of Value.

5. PROPERTY IDENTIFICATION. Identify the property by name, location, and address. A legal description, deed book and page number or plat reference is preferred.

6. SCOPE OF THE APPRAISAL. The asset is to be appraised is set forth in the Statement of Work (SOW) as of the effective date of value, or such other date(s) and in such other condition(s) as may be specified by the USCG for the assignment. However, the hypothetical condition of ownership by a private sector purchaser is to be assumed. The types of value to be estimated include “as is”, “as rehabilitated”, and “interim as is” market value for the land and improvements merged. The “as is” land value is also required.

The estimates of value are for the fee simple estate. “As is” fair market value, as defined by USCG appraisal policy, is based on the market value of the real property in its current physical condition and use as of the effective appraisal date with the following Assignment Conditions: (1) assume private (non-government) property ownership in a build to suit methodology; and (2) continued stabilized occupancy by the Federal government.

“As rehabilitated” fair market value, as defined by USCG appraisal policy, is a current market value reflecting an effective date that is within

(45) days of the date of the final appraisal inspection. “As rehabilitated” value opinions: (1) are intended to reflect the current expectations and perceptions of market participants, based on available market data; (2) requires an extraordinary assumption indicating the construction rehabilitation has been completed as of the date of value. This assignment condition ensures that the intended user understands that: (1) the rehabilitation is not completed as of the inspection date of the appraisal; (2) the analyses performed to develop the opinion of value are based on a hypothesis, specifically that the improved subject property is assumed to have the rehabilitation completed when in fact it is not completed as of the inspection date; (3) the rehabilitation process must be completed in a good and workmanlike manner consistent with sound construction practices as determined by USCG; (4) the improvements must be completed in a reasonable time from the effective date of the appraisal based upon the scope of the rehabilitation; (5) market conditions at the time of completion shall be similar to market conditions as of the effective date of the appraisal; (6) assume private (non-government) property ownership; and (7) continued stabilized occupancy by the Federal government.

The Fee Simple interest will be appraised, subject to any legally binding agreements, such as out-leases.1 The existing tenants may continue to occupy the property regardless of the hypothetical change of ownership. Although the existing tenants may continue to occupy the property under private ownership, assume that a private owner would require that market derived rents and terms would dictate their continuing occupancy. Additionally, for any current or expected vacant spaces, assume that they would be subject to market derived lease up, rents and terms.

1 No federal government-owned property has any legally binding leases because such agreements between government agencies are prohibited by law. To compensate for this, USCG has developed Occupancy Agreements (OA’s) that spell out the business agreements for occupancy of the spaces by tenant agencies. The OA’s are patterned after private sector leases, but are not legally binding. However, they represent a commitment by both the tenant agency and USCG that the agency will occupy the space for the term specified in the OA. In some cases, the leased fee estate may be analyzed where actual leases encumber the subject property between USCG, as landlord, and a private tenant through a formal out-lease.

“Interim use” fair market value, as defined by USCG appraisal policy, is current market value reflecting an effective date that is within (45) days of the date of the final appraisal inspection. If the existing improvements are determined to have little or no contributory value, the contribution of the existing improvements may not be in proper balance with the total property. A potential buyer may be more likely to base an investment decision on the risk and reward associated with a future use of the property rather than the current use. The current existing use may continue until it is economically feasible to absorb the costs of converting the property, either by razing and replacing the existing improvements or by rehabilitating them. Some functionally deficient improvements that clearly do not resemble the ideal improvement do create an increment of value over the value of the land as though vacant. Also, the interim use may have value to the property user to the extent that the income generated by the improvements defrays the costs of carrying the property, and the cost of demolishing the improvements. Based upon your market analysis, if this scenario presents itself during the appraisal process, the as is fee simple, fair market value, with the existing improvements as an interim use, shall be estimated.

Consideration shall be given to air rights in the value conclusion, if applicable. A separate report section is required for any air rights analysis.

The operating statement developed by the production appraiser must reflect market derived income and expenses that would be incurred by a private sector owner assuming application of competent property management practices observed in the local market. Although the fee simple interest in the property is to be appraised, an analysis is to be done regarding the anticipated market derived income and expenses. Although not legally binding, the OA’s represent a commitment by both the tenant agency and USCG that the agency will occupy the s pace under the terms specified in the OA. This commitment is to be considered in the analysis of the property’s anticipated occupancy.

7. PROPERTY RIGHTS APPRAISED. The property rights to be appraised are the Fee Simple Estate, subject to any legally binding agreements, such as out-leases.

The Fee Simple estate is defined 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.

8. REQUIRED DEFINITION OF VALUE. The value to be appraised is the Market Value which is defined as:

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.

The report will contain this definition and only this definition of Market Value within the content of the report, or any addenda or glossary attached to the report.

9. INTENDED USE AND USERS OF THE APPRAISAL. The intended use of the appraisal is to provide an opinion of the value of the asset for analysis by USCG in determining the appropriate strategy for the asset. The intended user of the appraisal is the USCG.

10. DATE OF VALUE. The date of value will be the date of the latest comprehensive inspection of the asset by the principal appraiser. The USCG COR on the appraisal contract has the authority to change the date of value due to exigent circumstances.

11. EXHIBITS.

· PHOTOGRAPHS. Pictures of the subject shall show at least the front and rear elevations of the major improvements, a street scene, and any salient features (significant deferred maintenance or other value impacting conditions or features). Each subject photograph shall indicate the date the photograph was taken and the camera’s direction of view. When a large number of buildings are involved, including duplicates, one picture may be used for each type of building as long as the photograph is labeled to indicate that it represents a typical building type. Views of the comparable data are to be included. All graphic material shall include captions.

· MAPS. Legible location maps of the subject property and the comparable data must be included. The scale of the maps must be sufficient to allow the USCG reviewer to understand the relevant market locational characteristics including physical and topography barriers, transportation corridors and relevant neighborhood linkages.

12. STATEMENT OF LIMITING CONDITIONS AND ASSUMPTIONS. The appraisal shall clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical and limiting conditions to which the valuation is subject and that are used in the report. Each assumption or condition must be reasonable and supportable in the context of the appraisal. The appraiser must ensure that assumptions and limiting conditions are appropriate to the property being valued and refrain from boilerplate that has no bearing on the appraisal, the reporting process or the conditions of employment.

13. APPRAISER’S CERTIFICATION. All appraisers who sign any part of the report will provide a certification as required by the licensing board in the state, commonwealth, territory or district where the property is located, and by USPAP. This shall include a statement that signatories have no undisclosed interest in property, that the statements included in the appraisal report are true and correct, that they have personally inspected the interior and exterior of the premises, date and amount of value estimates, etc. Any hypothetical conditions required by these specifications must be included within the certification.

PART II - FACTUAL DATA

14. REGIONAL AND CITY ANALYSIS. In a concise manner, discuss the pertinent aspects of the asset's city and or region (e.g. geographic, legal, social and economic factors). Include a succinct description of the regional market for the asset's property type. This data should include such information as affects the appraised property together with the appraiser’s conclusions as to significant trends.

15. NEIGHBORHOOD DATA. Clearly define the asset's neighborhood, including boundaries, land use patterns, transportation issues, vacant land (especially developable land), as well as the lifecycle of the neighborhood (e.g., developing, stable, declining, redeveloping). Include a description of the local market for the asset's property type, and any other characteristics that have an impact on the asset’s value, either positive or negative (vacancy rates, market rents, absorption, efficiency factors, and R/U ratios). Provide a comparative analysis of the subject property within the context of its market. The Market Rentable/Usable (R/U) factor estimated for the subject must be appropriately analyzed, quantified, and supported in this section. The appraiser shall refrain from applying any statistics and language that can be construed as discriminatory in defining and describing the neighborhood.

16. PROPERTY DATA -

a. LEGAL DESCRIPTION - This description shall be sufficient to properly identify the property appraised. If lengthy, it can be referenced and included in Part IV.

b. SITE – The site description will be based on information provided by USCG, the appraiser's inspection, and other data as may be gathered from publicly recorded or other reliable sources. Describe the relevant characteristics of the site (both positive and negative) that impact the site's use and value. Describe the site's location, size, shape, access, ingress/egress, soil, topography, utilities, mineral deposits, easements, off-site improvements, any excess land, and any other relevant factors. Discuss any issues that impact the functionality of the site, such as drainage/flood plain, soil, visibility, developability, environmental issues or excess land. If an asset being valued shares an undivided site with a number of other assets that are not part of the asset being appraised, the production appraiser shall immediately contact the USCG Project Reviewer for the assignment to discuss the method by which a reasonable and adequately supported estimate of the land necessary to support the existing or proposed asset shall be allocated. An appropriate disclosure of the extraordinary assumptions and limiting conditions related to such an allocation of land must be made within the appraisal report.

While appraisers are not normally expected to be environmental experts, they should make a reasonable attempt to discover if there is contamination on the property. The appraiser shall note in the report any observed, suspected or other knowledge of environmental contamination. The impacts of any noted environmental issues will be appropriately addressed.

c. LEGAL RESTRICTIONS. Discuss the zoning that regulates the development of the site, or the most likely zoning that would regulate the development of the site under private ownership. Include relevant requirements such as permitted land uses, maximum building height, floor area ratio (FAR), and minimum setbacks and parking spaces. Discuss if the site and/or existing improvements (including the parking) are in compliance with the zoning regulations that impact the site. Discuss any other legal restrictions (binding agreements, covenants, easements, transferable development rights), and/or other regulations (historic designations or local comprehensive plans) that would impact the value of the site under private ownership.

d. IMPROVEMENTS - This description may be by narrative or schedule form and shall include dimensions, square foot measurements, and where appropriate, a statement of the method of measurement used in determining rentable areas such as full floor, multi-tenancy, etc. Briefly describe the exteriors and interiors of any existing improvements. Include age, condition, quality, functional utility (or inutility), gross building area, net rentable area, usable area, joint use spaces, core factors, number of stories, adequacy of parking, and any other relevant characteristics (USCG rentable area may not be the same as rentable area in a specific market). Describe if the asset’s leasing quality is considered to be Class A, B, or C (or lower) by market participants. If the property has a LEED certification, discuss the certification and its impact on value. If the property has a historic preservation designation, discuss the designation status and any impact on value. State and photograph any deferred maintenance observed during the inspection of the building. Discuss and quantify any immediate capital costs that a private purchaser would incur. The appraiser must address whether the USCG R/U factor is reasonable, based on the inspection of the appraised.

Analyze and discuss the subject property’s market rentable area compared to the rentable area reported by USCG. The market rentable area is to be used in estimating the asset’s value.

e. HISTORY - State briefly when USCG took possession of the property (include at least a ten-year history of the subject property) and, if possible, cite the deed book and page of the transaction. Include a copy of the deed in the report, if possible. State the purpose for which the improvements were designed, dates of original construction and major renovations, and/or additions.

f. REAL ESTATE TAXES. Estimate the real estate tax assessment under private ownership. State the tax rate and give the dollar amount of the tax estimate. Future trends or prospective changes in the level of taxes should be discussed.

PART III - ANALYSES AND CONCLUSIONS

17. ANALYSIS OF HIGHEST AND BEST USE. Describe the highest and best use of the site “as if vacant” and “as improved”, using standard appraisal guidelines of physically possible uses, legally permitted uses, financially feasible uses, and maximally productive uses. The analysis should tie the highest and best use to the analyses used in the descriptions of the regional and neighborhood markets, the site, and the existing improvements. In the “as if vacant” analysis, include a discussion of the size as well as the type of any buildings that represent the highest and best use. Determine whether the existing improvements represent the highest and best use of the site, including if they represent a viable interim use or a special purpose use. Consider whether any opportunities to increase income and/or value of the existing improvements are observed.

The appraiser shall prepare a financially feasible analysis including the financially feasible rent estimate. For land use to be considered financially feasible, the value of the land use must exceed its cost. The financially feasible rent is the rent necessary to justify new construction. This concept helps the analyst determine the timing of development, as well as the difference between the required rent and market rent based on known costs and expected returns to the investor.

The Government-owned assets over which USCG has stewardship often have unique design and construction, and many are over 50 years old. Therefore, the highest and best use analysis will be critical to determining strategies for the asset.

18. LAND VALUE. The appraiser’s opinion of the value of the land shall be supported by confirmed sales of comparable lands. Differences shall be weighed and explained to show how the sales indicate the value of the land being appraised. Adjustments should be made from the sales to the subject, either in dollar amounts or percentages for all applicable elements of comparison. Provide adequate summary descriptions of comparable land sales, including location maps. Comparable sales used should be confirmed by someone who has personal knowledge of the terms and conditions of the sale as well as the motivation of the principals. Reference to public records and revenue stamps does not confirm the terms and conditions of a sale. Tie the land valuation to the highest and best use analysis. All appraisals must include a section estimating the market value of the asset’s underlying land as if vacant and ready for development. Vacant and ready for development means the improvements have been removed and all entitlements have been obtained for the highest and best use. Deductions for demolition costs and the costs and timing of entitlements shall not be considered in the value conclusion.

19. VALUE ESTIMATED BY COST APPROACH. The Cost Approach should be considered if it provides a relevant estimate of market value. It is particularly important when a lack of market activity limits the usefulness of the Sales Comparison Approach and when properties are not amenable to valuation by the Income Capitalization Approach. Since these characteristics pertain to some of USCG's Government-owned properties, the Cost Approach may be a viable method of valuation.

This shall be in the form of quantitative data, arranged in sequence, beginning with reproduction or replacement cost. The dollar amounts of physical deterioration and functional and external obsolescence, or the omission of same, shall be explained in narrative form. The reader should be able to follow the appraiser's logic to his/her conclusion of value.

· Identify and describe the source used to estimate the replacement cost (or reproduction cost). The quantity survey or unit- in-place methods of estimating replacement/reproduction cost are preferred for most properties.

· Describe and quantify direct and indirect costs.

· Describe and estimate entrepreneurial profit.

· Explain and quantify all applicable types of accrued depreciation, including physical deterioration and functional and external obsolescence. Include deferred maintenance costs. Discuss whether the accrued depreciation is curable or incurable.

· Discuss the asset's total and remaining economic life, and effective age.

The Cost Approach may not be applicable to the valuation of all USCG assets. If USCG grants omission of the Cost Approach, at a minimum, the market value of the site is to be estimated, the total and remaining economic life and effective age of the improvements are to be quantified, and any applicable forms of obsolescence and/or depreciation are to be discussed. The elimination of the Cost Approach does not relieve the appraiser of the obligation to provide an estimate of the rent required to justify new construction as delineated in Section 20 which immediately follows.

20. VALUE ESTIMATED BY INCOME CAPITALIZATION APPROACH. This shall include adequate factual data (a) estimated gross full service market rent; (b) allowance for vacancy and credit losses; (c) an itemized estimate of total anticipated expenses including reserves for replacement; and (d) net operating income. Capitalization of net income shall be at the rate prevailing for the subject property’s type and location. The capitalization technique, method and rate used shall be explained in narrative form supported by an explanation of sources of rates and factors. The reader should be able to follow the appraiser's logic to his/her conclusion of value.

· Vacancy rates for similar properties.

· Describe current rents, current tenant(s), and current and forecasted income and expenses.

· Discuss supply and demand in the market, including the subject's competitive position. Explain the key functional and economic issues, both positive and negative, relating to the subject property

· Describe and analyze market rents (including escalations, concessions, length of the initial lease and the number and length of any renewal options, lease terms and conditions, tenant improvement allowances, expenses and any expense stops, etc.). Federal leases may not be used as lease comparable data. Compare the market rents to the rents generated under current federal ownership based on any OA’s impacting the property. The use of comparable leases more than one year old must be adequately explained and justified.

· Describe and analyze expenses in comparable properties, including fixed (ad valorem taxes and insurance), and variable (management, administration, utilities, cleaning, repairs and maintenance).