W912ES24Q0090 Statement of Work.pdf

USACE, Saint Paul District Ref

LGCI SOW as of 22 April 2024 Page 1 of 17

Statement of Work - SOW Mississippi River Navigation Project – Lock and Dam No. 2

Land Acquisition - Dredged Material Placement Site Subject Property: A portion of Lower Grey Cloud Island located in Washington County, Minnesota

SECTION 1 – SUBJECT PROPERTY IDENTIFICATION & GENERAL

INFORMATION

Summary Identification: Located at the Lower Grey Cloud Island, City of Cottage Grove, Washington

County, Minnesota. See Special Instructions for a complete explanation.

Client:

Mr. Kevin Sommerland, Chief Real Estate Division / Real Estate Contracting Officer U.S. Army Corps of Engineers, St. Paul District, 332 Minnesota Street, Suite E1500, St. Paul, MN 55101-1323

Intended Users: U.S. Army Corps of Engineers, St. Paul District, and authorized agents or assigns.

Intended Use: For use by the USACE in connection with the proposed acquisition of specified real property rights. The appraisal report is not intended for any other use.

Description of Proposed Acquisition:

Approximately 331.33+ acres consisting of real property at the location known as Lower Grey Cloud Island at Cottage Grove, Minnesota, and being more particularly described as property located within Section 31, Township 27 North, Range 21 West and Section 6, Township 26 North, Range 21 West, situated above the Ordinary High Water Mark (OHWM) of the Mississippi River at that location.

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IMPORTANT: Please refer to SECTION 2 APPRAISAL REQUIREMENTS AND INSTRUCTIONS, “Legal Instructions”

Parcel 1: Commencing at the Northwest corner of the Northeast Quarter of the Southeast Quarter; thence South along the Westerly line thereof as distance of 80 rods to the Southwest corner thereof;

thence Easterly on the Southerly line thereof, a distance of 80 rods to the Southeast corner thereof; thence Northerly along the East line thereof a distance of 40 rods to the East and West centerline thereof;

thence diagonally in a Northwesterly direction to a point on the Northerly line thereof, 40 rods East of the point of beginning; thence Westerly on the North line thereof to the place of beginning.

Parcel 2: The Southeast Quarter of the Southeast Quarter and the West Half of the Southeast Quarter of Section 31, Township 27, Range 21, Washington County, Minnesota

Parcel 3: Government Lot 1, less and except that part of Lot 1 situated below the Ordinary High Water Mark, Section 6, Township 26, Range 21, Washington County, Minnesota

Parcel 4: Government Lot 2, less and except that part of Lot 2 situated below the Ordinary High Water Mark, Section 6, Township 26, Range 21, Washington County, Minnesota

Parcel 5: Government Lot 3, less and except that part of Lot 3 situated below the Ordinary High Water Mark, Section 6, Township 26, Range 21, Washington County, Minnesota

Parcel 6: Government Lot 1, less and except that portion of a small island situated within Government Lot 1 being approximately 700 feet south of Lower Grey Cloud Island; and also less and except that part of Lot 1 situated below the Ordinary High Water Mark; and the East Half of the Southwest Quarter all in Section 31, Township 27, Range 21, Washington County, Minnesota

Washington County Tax Assessor Parcel i.d.No.

USACE Parcel (Area) Gross Acres (Land)

0602621110001 3 18.48 0602621120001 4 15.29 0602621210001 5 10.38 0602621310001 6 133.06 0602621410003 1 34.81 0602621420001 2 119.31

TOTAL 331.33

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Legal Description: Lengthy – see preliminary title reports.

Owner(s)/Occupant(s): The preliminary title reports indicate that “PAS Associates Limited

Partnership of Saint Paul” is the owner of the property with William M.

(Biff) Folberth being managing partner, with Hugh K. Schilling and Paul L. Schilling reported as general partners.

The land is leased to Aggregate Industries for the mining of gravel and sand. Central Area Manager for the tenant’s interest on Grey Cloud Island is Tom Burrows of Aggregate Industries. He can be reached via email at: tom.burrows@aggregate-us.com or via his mobile number 612- 282-8609.

Property Access: Access to the property is provided by Grey Cloud Trail and Grey Cloud

Island Drive at Cottage Grove, MN. Waterborne accessibility exists from the Mississippi River.

Review Appraiser For This Assignment Mississippi Valley Division Review Appraiser, Ramon Tate, P.O Box 80, Vicksburg, MS 39180; Office: 601-6345862, Mobile: 601-618-8218, or 901-870-6220 ; ramon.c.tate@usace.army.mil

Inspection Permission: Arrangements are to be made with the noted property owner contact, with advance coordination with the principle realty specialist in charge of this proposed acquisition. The USACE-Approved Review Appraiser or USACE Review Appraiser, should be informed about when the inspection will take place so that he/she may accompany if so desired. Please see the section of this SOW titled: “General Appraisal Requirements & Instructions”, item #5, for important details regarding property inspection and its documentation.

Larger Parcel and

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Federal land acquisition Rules : Since this proposed acquisiton is a partial acquisiton, the appraisal must adhere to the guidelines contained in the Uniform Appraisal Standards for Federal Land Acquisitions (yellow book), including, but not limited to, careful determination of the Larger Parcel to which the Before and After valuation technique will be applied.

Personal Property: Only real property is to be appraised. The appraisal report should clearly identify the items considered in the appraisal to be real property, as well as those identified as personal property. Pursuant to requirement of federal regulation at 49 CFR 24.103(a)(2)(i), a declaration of property classification, real or personal property, is required to appear in the appraisal report. This property classification declaration is not required to include or enumerate those items which are obviously personal property, i.e. vehicles, inventory, supplies, or any readily portable items, etc. Furthermore, the appraiser shall pay attention to, and not include non-compensable items such as “loss of goodwill”; “frustration of plans” etc. under Federal land acquisition rules contained in the Yellow Book.

Controversies / Issues: Should controversies or other issues be discovered or identified by the appraiser during the course of the assignment, the Review Appraiser and client must be immediately notified via written communication, (email is acceptable). “Issues” can include, but are not limited to: conflicting lease or ownership claims, pending transfers of ownership, imminent plans for construction by the owner, owner performing construction within close proximity or within the proposed acquisition area, reservations not appearing in title information, complaints to public officials, ownership boundaries, owner describing promises or commitments made by government representatives, death or incapacity of person(s) having ownership interest(s)etc.

Outstanding Rights:

The base premise is that the subject property larger parcel is to be appraised “as is” and in fee simple, subject to existing easements for public roads and highways, public utilities, railroads, and pipelines, in the BEFORE condition.

In the AFTER condition, the necessary premise is to appraise the REMAINDER property under the hypothetical condition that the proposed acquisiton has taken place. see also SECTION 2 of the Statement of Work, APPRAISAL REQUIREMENTS & INSTRUCTIONS, “Property Rights Appraised”, for details of the Estate wherein certain rights, such as the rights to the existing gravel material, and all appurtenant rights for the exploration, development, and removal of said gravel, are reserved to the Lessee.

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Provided Subject Property Information:

The following documents and reports, as indicated below by check mark, will be provided under separate cover:

Location Map Assessor’s Plat

X Preliminary Title Report X Real Property Estates to be acquired (fee, permanent or temporary easements, etc.)

X Other - map exhibits X Legal Descriptions Acquisition Plat

X Other: Environmental Assessment Worksheet (EAW) prepared by the subject property Lessee, Aggregate Industries.

SECTION 2 – APPRAISAL REQUIREMENTS & INSTRUCTIONS

Appraisal Standards: The appraisal process and appraisal report must conform to standards established by the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP 2024); and federal appraisal standards found in the Uniform Appraisal Standards for Federal Land Acquisition 2016 (UASFLA), aka “yellow book”. Any governing law that uniquely impacts the calculation of estimated compensation due the property owner for the property type being appraised should be appropriately cited in the appraisal report as applicable and appropriate.

Market Value Defintion: Per the Uniform Appraisal Standards for Federal Land Acquisition, 2016.

Section 1.2.4.

“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”

Pursuant to the requirements of USPAP 2-2(a)(vi), the appropriate definition of market value, accompanied by the source citation, must appear in the body of the appraisal report.

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Property Rights Appraised:

The Estate to be appraised is a fee acquisition subject to the outstanding lease held by a third party. See ER 405-1-11, paragraph 3-18.c (page 3-10) and Standard Estate 1 (Fee) along with footnote 1.

“The fee simple title subject, however, to existing easements for public roads and highways, public utilities, railroads, and pipelines; excepting and excluding from the taking all interests in gravel which are outstanding in parties other than the surface owners and all appurtenant rights for the exploration, development, and removal of said gravel”

Any information developed by the appraiser, or observations that are found to be contrary to the appraisal assignment’s described real property rights must immediately be brought to the review appraiser’s attention in writing, (email is acceptable), as a request for possible amended, revised, or clarified appraisal assignment instructions as determined to be appropriate by the Review Appraiser.

Date of Value: The effective date of appraised value (date of value, date of appraisal, effective date of appraisal, etc.) will be the same as the date of the last property inspection, unless the appraiser receives specific written instruction for the date of value from the client, or written instruction from the review appraiser prior to preparation of the appraisal report.

Extraordinary Assumption(s): USPAP defines an Extraordinary Assumption (EA) as:

“an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis, which, if found to be false, could alter the appraiser’s opinions or conclusions.”

The appraiser may not assume or invoke any extraordinary assumption without informing the review appraiser in writing (email is acceptable). The Review Appraiser shall inform the appraiser in writing if the described extraordinary assumption is acceptable. Any Extraordinary Assumption utilized in the appraisal process, must be prominently declared in the appraisal report.

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Hypothetical Condition(s):

USPAP defines “Hypothetical Condition” 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 [date of value], but is used for the purposes of analysis”

For all proposed acquisitions of real property, the requirements of 49 CFR 24.103(b), (a requirement also found in the UASFLA at Section 1.2.7.3.3, and known as the “Scope of the Project Rule”), must be followed. The “Scope of the Project Rule” is applicable to all total property acquisitions, and the BEFORE position appraisal of partial acquisition appraisals.

Any increase or decrease in the market value of real property prior to the date of valuation caused by the government project for which the property is being acquired must be disregarded in developing the appraisal.

The requirement of disregarding the value influence of the project, for which the appraisal is requested, is sometimes classified as a “hypothetical condition”, while others regard it as an “assignment condition”, and still others classify the “Scope of the Project Rule” as a “jurisdictional exception” to USPAP 1-4(f). Regardless of how this requirement is characterized, the “Scope of the Project Rule” must be followed.

For proposed acquisitions of a total property, no other hypothetical conditions are allowed without written approval from the Review Appraiser assigned to the project.

For all partial acquisitions, there is a standard AFTER position hypothetical condition as follows:

Appraisal of the AFTER position remainder property shall be performed under the hypothetical condition that as of the appraised date of value, the proposed real property acquisition has been completed, all construction associated with the project has been completed, and all construction is consistent with plans provided to the appraiser by the client

ALL hypothetical conditions utilized in the appraisal process, whether for complete or partial acquisitions, must be documented and prominently declared in the body of the appraisal report.

A written approval for use of any other hypothetical condition must be included in the addenda section of the appraisal report.

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Jurisdictional Exceptions: If the appraiser perceives that USPAP’s Jurisdictional Exception Rule should be invoked to meet other standards in UASFLA, or other state or local requirements of law or regulation not previously declared in this section of the SOW as standard or required, the appraiser must communicate in writing, (email is acceptable), with the Review Appraiser to obtain prior written approval. All jurisdictional exceptions to the USPAP must be prominently declared in the appraisal report. The specific law, regulation, or standard that requires invoking the USPAP’s jurisdictional exception rule must be cited, along with the specific portion of the USPAP for which jurisdictional exception is claimed.

Legal Issues: The subject property to be appraised is partially located within a navigable waterway, and therefore involves legal issues of Navigation Servitude. For purposes of governmental acquisition valuation, certain value issues are framed and directed by federal court decisions, and the Corps legal counsel’s instructions specific to this proposed acquisiton action.

Real Property Rights of the Encumbered Fee Interest Below the OHWM PAS Associates of Saint Paul owns an encumbered fee interest to submerged lands near to and adjoining LGCI. The encumbrance consists of many flowage easements that were obtained by the United States in 1930. The owner of the tracts in question, (see yellow-shaded area of map below), has fee interest and the boundary of the tracts extends into the river and below the surface of the water.

Therefore, subject to applicable and required permit approvals, the ownership rights of the tracts include the potential to remove or excavate sand and gravel material existing below the surface of the water. Nearly all of the yellow-shaded area adjoining to the south and westward areas of LGCI are included as part of the total area leased to Aggregate Industries.

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Navigation Servitude: The Mississippi River, upon which the land in this acquisition is situated, has been determined navigable by a USACE navigation study. Consequently, the acreage below the ordinary high water mark (OHWM) along the river would be subject to the potential exercise of the navigation servitude. Please refer to the UASFLA Section 4.11.1 for additional information.

Consideration of Submerged Lands and Sand and Gravel Mining The Uniform Appraisal Standards for Federal Land Acquisitions, para. 4.8.2, provides that extraction of a mineral or other resource cannot be considered as a highest and best use absent “proof that it would be legally permissible to exploit that resource” in the reasonably near future, physically possible to extract, and financially feasible.

Status of Flooded Excavation Pit Within The Proposed Acquisition Area With respect to the mine pit that is filled with water, these waters were ascertained in a 2017 Jurisdiction Determination to not be jurisdictional waters under the Clean Water Act or Rivers and Harbors Act. Assuming the pit has not materially changed since 2017, the acreage below the OHWM of the mining pit lake would not be subject to the potential exercise of navigation servitude. Accordingly, navigation servitude would not impact the appraisal of market value for acreage below the OHWM in the mining pit lake.

Special Appraisal Instructions:

1. The presentation format of the appraisal report should substantially conform with the content for appraisal reports found in the UASFLA 2016 (Yellow Book), The appraisal reporting format must be coordinated with, and determined to be acceptable by, the Review Appraiser if it differs from the UASFLA.

2. For partial acquisitions, only the BEFORE position appraisal is to be performed “as is”, of course as subject to the “scope of the project rule” previously described in this statement of work. For partial acquisition appraisals, the AFTER position appraisal valuation is to be performed utilizing the standard hypothetical condition as follows:

Appraisal of the AFTER position remainder shall be performed under the hypothetical condition that as of the appraised date of value, the proposed real property acquisition has been completed, all construction associated with the project has been completed, and all construction is consistent with plans provided to the appraiser by the client.

3. A single market value conclusion is required for the Total Property in the BEFORE position and the property remainder tract in the AFTER position, except as described or modified below. In addition, an allocation of the market value DIFFERENCE, between the BEFORE and AFTER, will be necessary as described below or specifically excepted.

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a. For partial acquisition appraisals, and pursuant to the requirement of 49 CFR 24.102(e) and 24.103(a)(2)(iv), the allocation of the market value DIFFERENCE declared in the appraisal report shall state the value of the part to be acquired (the real property rights proposed to be acquired), and separately state damages to the remainder property, if any, as applicable.

Pay special attention to Yellow Book guidance on elements to consider in establishing the Larger Parcel such as unity of highest and best use, unity of existing use, unity of ownership, and contiguity of the properties. In this case, the area under one single lease to an operator/lessee may be a significant supporting indicator.

4. A portion of an area referred to as “the backwater area”, located south and southeast of the existing flooded pit (proposed USACE acquisition area), includes submerged land area in which landowner, PAS Associates of Saint Paul, possesses an encumbered fee interest (please refer to legal issues for additional information on the “encumbered fee interest”). The red-encircled area, visible in the aerial photo below, is part of the total area under lease to Aggregate Industries. The lessee, Aggregate Industries, has prepared and submitted documents as part of an application process to the Minnesota Department of Natural Resources with the intent to secure a permit for the mining of sand and gravel at this location.

The appraiser shall perform appropriate research and analysis in support of any conclusion as to whether there is current marketable value to any embedded mineral material, and also consideration of the aforementioned issues surrounding government rights and restrictions over navigable waters.

5. The existing use of LGCI in the vicinity of the proposed acquisition is sand and gravel mining. An Environmental Assessment Worksheet (EAW) prepared by Aggregate Industries (Lessee), is to be considered a part of the addenda of this statement of work (SOW). The EAW contains a description that declares available sand and gravel materials are expected to be exhausted on the upland portions of LGCI within approximately 5 years of the date of the EAW submittal…(that would be 2027). If the application for a sand and gravel mining permit for the“backwater area”, described previously in item #4 above, is subsequently concluded to be unlikely or not probable, then additional lands owned/controlled by Aggregate Industries will need to be evaluated for the probability of the continuation of sand and gravel mining on the subject property.

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The total contiguous area of the parcels controlled by Aggregate Industries (lessee) (outlined in blue below) appears to total an estimated 3,000+ acres. The proposed USACE acquisition area is outlined in red. As the existing use of the subject property in the immediate vicinity of the proposed USACE acquisition is for sand and gravel mining operations, the appraiser is to consider and evaluate characteristics of the total contiguous area owned or leased by Aggregate Industries Properties – (outlined in blue below) in considering the determination of H&BU in the “reasonably near future” (Please refer to UASFLA 4.3.1 for guidance in this area).

6. That portion of the flooded excavation pit that comprises the majority of the area of the proposed USACE acquisition, has been described as having been depleted of economically recoverable product (gravel). The appraiser shall research and evaluate the existence of commercial market competition for dredge material disposal, and consideration of the probability of those areas of the subject property, (excavated flooded pit area that has been depleted of economically recoverable materials), that may constitute a Highest and Best Use (H&BU) in the local market for the dredge material disposal. This evaluation would necessarily include consideration of “tipping fees” (i.e. the fees paid by those wanting to deposit waste materials). Pursuant to requirements of 49 CFR 24.103(b), and UASFLA (Yellow Book), pay special attention to the guidance that “demand created solely by the government must not be used as the basis of determing Highest and Best Use”..

7. Address and analyze…does the material to be deposited in the excavated flooded pit by the USACE (dredged materials from the Mississippi River navigation channel) constitute a commercially marketable product which has a reasonable probability of being recovered and sold by the existing lessee, Aggregate Industries?

8. Although the flooded pit area is reportedly depleted of economically recoverable gravel product, the appraiser shall perform research and evaluation of how much material, if any, remains that is financially feasible to mine within the proposed USACE acquisition area;

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9. Description, analysis and evaluation of the state’s reclamation requirements for sand and gravel operations, or reclamation requirements associated with the permit to mine that was obtained by the lessee, Aggregate Industries.

a. Under the proposed USACE acquisition of a fee interest subject to the lessee’s interest, are state reclamation requirements triggered for the USACE on any part of the proposed acquisition as a consequence of the USACE acquiring fee interest?

b. Which party, fee interest holder or lessee, bears the responsibility and costs of the state’s reclamation requirements, or any other requirements that run with the mining permit that was originally granted?

c. Because the USACE’s intended use of the flooded excavation pit includes depositing large quantities of dredged materials, does that action qualify, if reclamation is required, as an acceptable reclamation process or function by the USACE?

d. Are there any Minnesota DNR environmental requirements that impact the adjoining owner given the USACE’s intended use of the proposed acquisition.

10. The sand and gravel mining operation that exists on Lower Grey Cloud Island, according to the lessee’s EAW documentation, has been going on for over 70 years. The area proposed to be acquired by the USACE consists mainly of that portion of the mining operation lands where economically recoverable gravel materials have been depleted. The area depleted of economically recoverable materials is apparently used for some residual deposit of tailings. As mining operations continue, the amount of mined out area will expand and enlarge. It is important for the appraisal to address the potential impact to the lessee’s operations when the proposed USACE acquisition takes place (the AFTER position valuation) and whether the proposed USACE acquisition will negatively affect the property owner’s usage of and highest and best use of the remainder lands. Or in the alternative, whether the sale of the depleted part will be a net benefit to the sellers if it relieves the seller (existing owner or lessee) of Restoration/Reclamation obligations.

11. The appraisal should discuss, based on reliable sources, whether the intended use by the government to deposit dredge material, will pose an environmental concern for the adjacent lands or not, and whether there will be future impact to the eventual development of adjacent remainder lands.

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The subject property is utilized for sand and gravel mining which is, by definition, a “special purpose” property. The Aggregate Industries sand and gravel mining operation features the comparatively unique feature of existing on a navigable waterway and being reasonably close to a major metropolitan area. The substantial economy advantage of river transport over traditional truck transport is well known, and therefore must be taken into consideration in selection and analyses of comparable data. The Scope of work shall take into consideration, and apply all relevant approaches to value.

Additionally, in consideration of the estate to be acquired:

“The fee simple title to (the land described in Schedule A) (Tracts Nos. _____, _____ and _____), subject, however, to existing easements for public roads and highways, public utilities, railroads, and pipelines; excepting and excluding from the taking all interests in gravel which are outstanding in parties other then the surface owners and all appurtenant rights for the exploration, development, and removal of said gravel.”

12. It is the client’s direction and intention to except and exclude from the taking all interests in gravel which are outstanding in parties other than the surface owners and all appurtenant rights for the exploration, development, and removal of said gravel. Therefore, it is the client’s intention that the appraisal assignment would not require an assessment of the quality and quantity of the minerals on site by a mineral valuation expert. However, if the appraiser concludes that, in order to provide a credible appraisal and conclusion of value, a mineral valuation third party expert needs to be consulted in furtherance of prepaing an income approach valuation of the subject property for this appraisal assignment, the review appraiser should be immediately contacted in writing.

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General Appraisal Report Requirements & Instructions:

1. The appraiser performing the appraisal must hold a valid License as a Certified General Appraiser

2. The Scope-of-Work performed by the appraiser, is required to be documented in the appraisal report, and must include actions and procedures required to achieve credible assignment results for the intended use.

3. This Statement-of-Work must be included within the addenda section of the appraisal report.

4. The appraiser may be required to attend a pre-appraisal meeting with the property owner, the

USACE Realty Specialist and the Review Appraiser. The date, time and place of the meeting (if required) will be coordinated by the review appraiser and communicated to the appraiser and other necessary parties. The appraiser may be required to submit a draft report to the Corps Review Appraiser, prior to the assignment due date, for initial review and communications to preemptively address or resolve any potential issues or concerns.

5. For all appraisals having an intended use connected with a proposed acquisition of real property rights or exchange, requirements of Federal Regulation, found at 49 CFR 24.102(c)(1) and UASFLA 2016, section 1.2.6.4, require the appraiser to offer the property owner, or the owner’s designated representative, an opportunity to accompany the appraiser during the appraiser’s inspection of the subject property. The appraiser must describe, in the property owner contact section of the appraisal report, information regarding the required contact and the offer to accompany inspection, who was contacted (by name, whether the named person is the property owner or a designated representative of the owner, name and title if the individual is a trustee of a trust, or officer of a corporation, partnership, or owning legal entity), when contacted, how the individual was contacted, and whether the owner, or owner’s designated representative, agreed or declined to accompany the appraiser’s inspection of the subject property. Additionally, any comments made by the owner/owner’s representative, having relevance to the subject property valuation, should be included in the documentation of the contact in the appraisal report.

Additionally, any other persons actually present for the appraiser’s property inspection should be described. Copies of any written/electronic communications transmitted to the property owner, or received by the appraiser, from the owner/owner’s representative, are to be included in the addenda section of the appraisal report.

If contact with the property owner could not be completed, the applicable clause in the appraiser certification, directed by the UASFLA 2016 at 2.3.1.4, should be revised as appropriate so as to indicate attempts of contact were performed, but were unsuccessful and/or no response was received.

6. If a property owner is contacted, and does not permit the appraiser to enter the property for an on-site inspection, or does not permit inspection of parts of the subject property, or on-site physical inspection is not practical, the appraiser shall immediately notify the review appraiser in writing, (email is acceptable), for instruction regarding acceptable off-site inspection procedures. Any deviation from a full on-site inspection of the subject property shall be documented, in detail, in the appraisal report.

7. The appraisal report will be reviewed for compliance with the terms, requirements, law, and appraisal standards declared in this Statement-of-Work, as applicable. As determined by the

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Review Appraiser, findings of omission, inadequacy, errors, or improper declarations, if any, will require clarification, editing, amendment, and/or correction to the report. The appraiser is expected to respond to any such inquires in a timely manner.

8. The opinion of market value declared in an appraisal report may not be predicated upon a highest and best use (H&BU) that is speculative or conjectural. A H&BU opinion requires showing reasonable probability that the land is both physically adaptable for such use and there is an economic need or demand for such use as of the date of value, or in the reasonably near future from the declared date of value. The appraiser’s conclusion of H&BU, as of the date of value, must be an economic use. A non-economic H&BU, such as conservation, natural lands, preservation or any use that requires the property to be withheld from economic production in perpetuity, is not a valid use upon which to estimate market value. The H&BU opinion of a property in the BEFORE position must disregard the impact of the project for which the appraisal is being performed (See Scope of the Project Rule).

9. Essential in the appraiser’s consideration of highest and best use is the determination of larger parcel. It is the “larger parcel” that is the context for the highest and best use. Declaration of the “larger parcel” is required for all appraisal reports. Federal regulation at 49 CFR 24.103(a)(2)(i) and USPAP Standard Rule 2-2(a)(iv) requires a clear and adequate declaration and description of the total property being appraised. If the “larger parcel”, as determined by the appraiser, is less than the total contiguous ownership, then the declaration of the “larger parcel” must also include reference to, and reasonable description of, the larger contiguous ownership from which the smaller “larger parcel” was opined. Any uncertainty regarding the required documentation should be discussed with the Review Appraiser as previously referenced at “Larger Parcel Issues” located in Section 1 of this Statement of Work.

10. The preferred method of adjusting comparable sales is through supported quantitative adjustments (percentage, $/acre, etc.); qualitative adjustments (similar, inferior, or superior) are to be used only when the market variables cannot be reasonably quantified within the context of the available data. Quantitative adjustments without support are unacceptable. When the appraiser must resort to qualitative analyses, support that is more extensive and discussion of the appraiser’s reasoning why a comparable sale is similar, inferior, or superior to the subject property is required. All adjustments must be supported by clear, appropriate, and credible analysis based on documented market research. Mere references to undisclosed “trends,” or reliance on the Appraiser’s “opinion” or “judgment” without market support is unacceptable.

Market support includes, but is not limited to, discussions with buyers/sellers, potential investors, brokers, and others knowledgeable about the market. The appraiser must also recognize that variances in sale prices may be caused by multiple factors and should not over adjust a comparable by double-counting overlapping items.

11. Documentation of the comparable sales and other market data utilized in the appraisal must comply with the federal regulation requirements for reporting comparable sales and market data which can be found at 49 CFR 24.103 and the UASFLA at Section 2.3.3.4.

12. If sales to governmental entities, including sales to non-profit entities with the intention of transferring the sale property to a governmental entity, or sales to environmental or other public interest organizations are included in the appraisal report as comparable sales, they are subject to extraordinary verification and treatment. Governmental entities have the power of Eminent Domain and as such, possess an authority that does not exist in the private market. Such sale transactions must be considered with a heightened scrutiny and research as described in detail in

LGCI SOW as of 22 April 2024 Page 16 of 17 the UASFLA at section 1.5.2.4. If the appraiser has questions regarding this issue, the Review Appraiser should be consulted.

13. Color photographs and maps of comparable properties shall be included in the appraisal report, and addenda as appropriate. Aerial photographs for comparable properties will be accepted unless the aerial photographs are so dated that they do not accurately represent the property as it physically existed on the date of inspection. Any unusual property features are preferred to be photographed from ground level.

14. The appraisal report and all information furnished to the appraiser by the appraisal client are the client’s internal documents, and are to be considered confidential by the appraiser. All requests for information concerning the appraisal must be referred to the appraisal client and the Review Appraiser. The general public is not an intended user of the appraisal report; however, the appraiser must also be aware that the Freedom of Information Act, or a court’s order, may result in the release of all or part of the appraisal report to others.

15. Should the appraiser be the recipient of, confidential information, and find it necessary to rely on that information for the appraisal process, he or she will contact the review appraiser in writing for instructions (email is acceptable). The review appraiser will arrange to view the information and provide further instruction to the appraiser regarding handling and storage of, and reliance on, the confidential information.

16. When the appraiser has performed any services regarding the subject property in the past he or she must appropriately disclose this information following the direction of the USPAP Ethics Rule, Conduct Section. This disclosure must be made with the proposal and also in the completed report. A declaration regarding whether any prior services were performed must be included in the Certificate of Appraiser.

17. Uneconomic Remainders: Partial acquisitions sometimes result in AFTER Position remainder tracts in which the property owner is left with an interest that has “little or no value or utility to the owner” (Please refer to 49 CFR 24.2(a)(27) and 24.102(k)). Part of the appraisal report’s description and analysis of the AFTER Position remainder tract shall include, if applicable, a clear identification of such remainders that may meet conditions to be classified as an “Uneconomic Remainder”. The formal classification of a remainder tract, or portion thereof, as an “Uneconomic Remainder”is a Federal regulation-directed determination of the Agency, not the appraiser. However, the initial identification of a potential “Uneconomic Remainder” is to be performed by the appraiser as part of the appraisal process, and documented in the appraisal report.

18. Date of Report: The Date of Report or Report Date is the date the appraiser certification is signed, dated, and transmitted to the Review Appraiser. The “date of report” should always appear on the cover sheet of the appraisal report, and should be the same as the dated signature on the appraiser certification page.

During the appraisal review process, the Review Appraiser may communicate with the authoring appraiser(s) of the report under review regarding a wide variety of issues. The purpose of the communication by the Reviewer to the authoring appraiser may be for general discussion, to note errors, omissions, requests for clarification, needed amendments to the report, or other edits that are needed.

LGCI SOW as of 22 April 2024 Page 17 of 17

Whenever CHANGES OF ANY KIND are made to an appraisal report, that appraisal report becomes a unique report document and must be given a NEW “Date of Report” or “Report Date”.. The new “Date of Report” is the date the revised/edited/amended report is completed, including a new signed appraiser certification page, and transmitted back to the Review Appraiser. The new “Date of Report” shall be shown on the appraisal report cover sheet, and must match the dated signature appearing on the Appraiser Certification page. The new “Date of Report” uniquely identifies a specific version of the appraisal report and differentiates it from all other versions of the report that may exist.