church of immaculate conceptionimmaculate-conception-parish.com/.../12/...grace-.pdf1 water street...

Appraisal Report

prepared for:

Mr. Gerard Gregory

Chairman, R C Parish of Harbour Grace

prepared by:

Altus Group Limited © 2013

Church of Immaculate

Conception 1 Water Street East Harbour Grace, NL

At September 25, 2013

Street Smart. World Wise.

Research, Valuation & Advisory Cost Consulting & Project Management Realty Tax Consulting Geomatics

186 Duckworth Street, Suite 300, St. John's, NL A1C 1G5 Canada T 709-726-4059 F 709-726-9217

altusgroup.com

November 21, 2013 Project No.:1003247

File No.: 13-185

Mr. Gerard Gregory, Chairman R C Parish of Harbour Grace P.O. Box 444, Bay Roberts, NL A0H 1G0

RE: Church of Immaculate Conception 1 Water Street East, Harbour Grace, NL

Mr. Gregory:

Further to your request, we have inspected the above-noted property and have completed our investigations and analyses in accordance with the stated Scope of Work in order to provide our opinion of the current market value of the fee simple interest in the property on an all-cash basis, as defined herein. The property to be appraised is the Church of Immaculate Conception property situated at 1 Water Street East, Harbour Grace, NL. The intended user of this report is the R C Parish of Harbour Grace. The intended use is to provide the R C Parish of Harbour Grace with a basis for possible sale and no other use. No additional intended users are identified or intended by the appraiser.

As described within the report, the subject property is an older, elegant structure built in a Gothic Revival style constructed in 1892. The building was declared a registered heritage structure by the Heritage Foundation of NL in 1990. Although, the structure has undergone periodic maintenance and repairs, years of differed maintenance, harsh winds, rain and freeze thaw cycles have taken a toll on the structure. During the fall of 2013, consulting engineers from Stantec Inc. completed a Building Condition Report on the property. This review focused mainly on the building envelope, which included the exterior stone, roof, windows, foundation/structural and interior plaster. Excerpts from the report and related costs to repair the building envelope are attached at Appendix D. It is our opinion that the costs to upgrade the current structure to a reasonable standard exceed any value currently in the property.

Subject to the Extraordinary Assumptions listed on page 3 of the report and the Contingent and Limiting Conditions in Appendix A, it is our opinion that the current market value of the subject property, as of the effective date, September 25, 2013, is: “$0” (No Value)

Based on this estimate of current market value, liquidity is considered “poor”. Should you have any questions, please feel free to contact us.

Respectfully submitted,

Altus Group Limited

Table of Contents

1. Executive Summary ............................................................................................................................................... 1 Analysis and Commentary .................................................................................................................................. 2 Liquidity ................................................................................................................................................................. 2

2. Introduction ............................................................................................................................................................ 3 Date and Purpose of the Appraisal .................................................................................................................... 3 Assumptions and Limiting Conditions.............................................................................................................. 3 Ownership and History ....................................................................................................................................... 3

3. Property Description ............................................................................................................................................. 5 Property Identification ......................................................................................................................................... 5 Location Overview................................................................................................................................................ 5 Site Description ..................................................................................................................................................... 6 Land Use Controls ................................................................................................................................................ 8 Building Description ........................................................................................................................................... 10 Municipal Assessment and Taxes ..................................................................................................................... 11

4. Market Overview ................................................................................................................................................. 13 Newfoundland and Labrador ........................................................................................................................... 13 Town of Harbour Grace ..................................................................................................................................... 22

5. Highest and Best Use .......................................................................................................................................... 25

6. Valuation ............................................................................................................................................................... 27 Direct Comparison Approach ........................................................................................................................... 29 Reconciliation and Conclusion .......................................................................................................................... 35

7. Certification .......................................................................................................................................................... 37

Appendices

Appendix A Terms of Reference Scope of Work Limiting Conditions Definitions

Appendix B Photographs of Subject Property Location Map Legal Description & Survey Plan Sketch Plan

Appendix C Comparable Building Sales

Appendix D Preliminary Estimate – Excerpt from Stantec Report

Church o f Im m a cula te Co nce ption 1 Wa ter S t r ee t Ea st , Ha rb o ur G ra ce , NL 1 0 0 32 4 7

1

Executive Summary

INSERT PICTURE

Church of Immaculate Conception

1 Water Street East, Harbour Grace, NL


2

Analysis and Commentary

Location

Strengths

Weaknesses

��The subject property is located on the north

side of Water Street, at the intersection of

Water Street with Cathedral Street.

� Small community location.

Physical Characteristics

Strengths

Weaknesses

��Current improvement is an older historic

property constructed in 1892 of rock and

mortar. The total site area is 1.054 hectares

(2.61 acres).

�� Large landscaped area to the front of the

building.

�� Because of its age and structure the subject

building requires an extensive ongoing

maintenance program; workers are currently

on site completing repairs to east side of the

building

�� The building has heating and lighting only

and is not hooked-up to municipal servicing

Investment Market

Strengths

Weaknesses

�� Investors constantly seeking good property

opportunities.

��The trend is continuing growth.�

��Limited availability of financing for some

types of properties.

Liquidity

Liquidity is the measure of the typical buyer’s desire and ability to purchase the property. An estimate of

market value should include an assessment of liquidity. Overall, we consider the liquidity of the subject

property to be “poor” at the value reported herein. A detailed definition of “poor” liquidity is presented

in Appendix A.


3

Introduction

Date and Purpose of the Appraisal

The purpose of this appraisal is to estimate the current market value of the fee simple interest in the

subject property as at September 25, 2013. The intended use of this appraisal is to assist in possible sale of

the property and no other use.

We refer you to Appendix A of this report for a detailed description of the Terms of Reference, Scope of

Work, Contingent and Limiting Conditions and Definitions.

Assumptions and Limiting Conditions

The reader’s attention is drawn to certain Contingent and Limiting Conditions that are outlined at

Appendix A. In addition, the estimated value included herein will potentially be impacted if any of the

following Extraordinary Assumptions are not realized as of the effective date.

Financing For the purpose of this appraisal we have assumed that the property is

free and clear of all financing.

Encumbrances A full search and interpretation of the title are beyond the scope of this

appraisal and the report is contingent on the expectation that there are

no material encumbrances that would affect value unless otherwise

noted. However, as these can have a significant impact on the market

value and / or marketability, legal advice is recommended.

Ownership and History of the Property

The subject property is currently owned by the R C Episcopal Corporation of Grand Falls. Our research

indicates that the subject property has never been listed for sale.


5

Property Description

Property Identification

Municipal Address 1 Water Street East, Harbour Grace, NL.

Legal Description Legal Description and Survey Plan pertaining to the subject site was completed

by G. M. Fitzgerald Surveys Ltd., October 16, 2013 and is shown at Appendix B.

This description was obtained from the Immaculate Conception Parish and is

assumed to be correct.

Location Overview

The subject property is located on the north side of Water Street East at the intersection of Water Street

East with Cathedral Street, in the community of Harbour Grace, NL. Development within the immediate

area is residential and with low profile commercial along Harvey Street to the west. The exact location of

the subject property is indicated below. Additional photographs of the subject property are located in

Appendix B.

Photo Credit: Bing Maps. Subject property outlined in red.


6

Position and Access

Site Position North side of Water Street.

Surrounding Land Uses Residential, commercial and institutional.

Dominant Land Use Residential with some commercial and institutional uses along Cathedral

Street and Water Street.

Regional Access The subject property is located in the central portion of the community of

Harbour Grace towards the central portion of Water Street. The TCH is

situated some 50 kilometres to the west of the Town.

Local Access The subject property is currently accessible via Water Street.

Public Transit None.

Amenities The subject property is located in a typical rural community with some

commercial uses along Harvey Street and Water Street interspersed with

residential dwellings and some institutional properties (i.e. Town Hall,

Churches, and Post Office).

Commentary

Overall, the location is considered good for a variety of uses.

Site Description

Site Area 1.054 hectares (2.61 acres).

Topography The property is level and at grade with Water Street at the front of the site

and has a slight incline towards the rear. The site is improved with the

subject building, is landscaped and has mature trees. No adverse subsoil

conditions noted and drainage patterns appear adequate.

Frontage 80.734 meters ( 264.9 feet) along Water Street East

Configuration Rectangular.

Services Nil.


7

Site Coverage 9.82%

Parking Gravel parking at the side of the building; ample room for additional

parking.

Expansion Potential The property offers some expansion potential.

Environmental We are not experts in environmental matters and make no representations

regarding them. It is assumed for the purpose of this report that there is

no environmental contamination. A formal environmental audit should be

conducted for certainty. Any costs associated with contamination would

need to be deducted from the final value concluded herein.

Encumbrances A full search and interpretation of the title are beyond the scope of this

appraisal and the report is contingent on the expectation that there are no

material encumbrances that would affect value unless otherwise noted.

However, as these can have a significant impact on the market value and / or

marketability, legal advice is recommended.

Commentary

The size and configuration of the site appeared appropriate for the current use as a church.

Land Use Controls

Zoning / Land Use Heritage District (HD) Zone.

Permitted Uses Boarding House, Residential and Bed and Breakfast, Child Care,

Conservation, Cultural and Civic, Double Dwelling, Home Business

Accessory Use, Recreational Open Space, Row Dwelling, Single Dwelling.

Discretionary Uses Antenna, Apartment Building, Catering (restaurants), Club and Lodge,

Commercial-Residential, General Assembly, General Service, Light

Industry, Medical Treatment and Special Care, Office, Personal Service,

Place of Worship, Theatre, Transportation.

Minimum Building Line

Setback 6 meters.

Building Height (max) 10 meters.


8

Minimum Side Yard 3 and 4 meter.

Minimum Rear Yard 10 meters.

Maximum Lot Coverage 33%

Excess Density Given the building’s position on the site and existing density, the property

appears to have room for expansion; however, legal advice from the Town

of Harbour Grace should be obtained for certainty.

Limitations For the purposes of this appraisal, we have assumed that the data obtained

is correct and that the property represents a legal use or at least a legal non-

conforming use. Legal and planning advice would be required for certainty.

Zoning / Land Use Map

Photo Credit: Town of Harbour Grace. Subject property is circled in red

Commentary

Given consideration to the information contained above it is our opinion that the subject property

developments appear to conform to existing land use controls.

N


9

The Church

The history of the Cathedral of Immaculate Conception in Harbour Grace begins with the establishment

of the Diocese of Harbour Grace and the construction of an earlier cathedral started in 1852. Bishop John

Dalton became the first bishop in the new Diocese in June of 1856. Bishop Dalton made the construction

of the cathedral a main priority.

The initial Cathedral of Immaculate Conception was modelled on St. Peter’s in Rome, but Bishop John

Dalton had other plans for the cathedral under his construction. Reverend Father Henry Carfagnini,

known for his architectural design talents, was enlisted to assist in the construction of the cathedral by

Bishop Dalton. In May of 1869 the cathedral was far from complete when Bishop John Dalton died and

was later interred under the main alter of the cathedral.

After the passing of Bishop Dalton, Reverend Carfagnini was appointed the new Bishop of the Diocese of

Harbour Grace and continued work on the cathedral. With the cathedral still under construction in 1880,

Carfagnini left Harbour Grace to accept a position in Italy. Carfagnini’s replacement, Bishop Ronald

MacDonald, supervised the completion and consecration of the first cathedral in 1884. The parish failed

to insure the cathedral, which was particularly detrimental as on September 2, 1889, the cathedral was

destroyed by fire. The reconstruction, led by the efforts of a local priest, began almost immediately after

the structure was destroyed. The rubble-wall cathedral was built in a Gothic style with lancet windows

and two tower spires on either side of the main entrance. The interior had a high-vaulted plaster ceiling

through the nave, transepts, and chancel. In 1892 the cathedral was completed and the parish held a

consecration service. The cathedral served as the seat of the Diocese until 1953, when the seat was moved

to Grand Falls. The building remained a co-cathedral until 1965, when the seat of the Diocese was fully

occupied by Grand Falls. The Diocese included all of the parishes and missions in Conception Bay, along

the Northeast coast, and in Labrador.

The cathedral has required restoration work due to the wind and weather. The twin spires were removed

from the building in order to make the restoration easier, and were subsequently repositioned. The

Heritage Foundation of Newfoundland and Labrador declared the Cathedral of Immaculate Conception

a registered heritage structure in April 1990.


10

Building Description

The following is based on our inspection and data obtained from the Luke Reynolds, who accompanied

the appraiser at the time of the site visit. Sketch of the building is attached at Appendix B.

Date of Inspection September 25, 2013.

Occupancy Type Church.

Use Church of Immaculate Conception.

Year Built 1892

Building Configuration Roughly rectangular

Number of Storeys One storey.

Total Area 11,146

Construction:

Foundation Rock and Mortar.

Floors Wooden floor joists.

Structure Rock and mortar.

Exterior Walls Embedded rock. Workers on site doing rock repair at the time of

inspection

Windows / Doors Wood frame, single glaze.

Roof Shingles. –Roof may need immediate repair

Layout Typical church layout with open area for seating, pews, Eucharist

alter and high alter.

Cellar level is accessed from the outside and has a gravel floor; it is

used for storage, as well as furnace area.

Finishes Commercial linoleum and floor tile; mostly lath and plaster to walls

and decorative ceiling areas. Ceiling height is approximately 50 feet

to main center aisle.


11

Lighting Incandescent lighting.

HVAC Hot water radiation heat; new furnace installed in the summer of

2013.

Electrical 200 amp.

Fire Protection Nil.

Washrooms Nil, the subject property does not have water and sewer

connections.

Condition Fair; the subject property is a purpose built church constructed in

1892 with good quality materials and workmanship; it has been

well maintained, however, due to its increasing age, maintenance

and repair costs have become excessive and the maintenance

program has been difficult to keep up.

Limitation We have not undertaken a structural survey and for the purpose of

the report have assumed the building to be structurally sound. In

order to verify this assumption, a qualified engineer should be

retained.

Commentary

Overall, the subject property has been well maintained, however as mentioned previously, due to its age,

an excessive amount of maintenance is required for upkeep. At the time of inspection, workers were on

site, repairing and replacing the rock facing to the eastern exterior wall. Our inspection also shows

immediate repair and replacement may be required to the roof shingles as they show some signs of

disrepair. The interior ceiling will require repair and repainting within the near future.

Municipal Assessment and Taxes

1 Water Street East

Total Assessment (2013) $473,900

2013 Tax Levy (9 mils): $4,265.10

Water & Sewer / Garbage: Nil

Total Levy: $4,265.10


12

Commentary

Establishing reasonableness of assessed value and realty tax costs associated with the subject property is

beyond the scope of this appraisal assignment. Municipal assessment information is provided here for

informational purposes only. It should be noted that the property under its church use was exempt from

paying property taxes. The 2013 mil rate for the Town is 9 mils with water and sewer charges at $400 per

annum.


13

Market Overview

Newfoundland and Labrador, Economic Overview

Source: Altus Group Economic Consulting based on Statistics Canada, CMHC, and Conference Board of Canada (data as at December, 2012)

Declining production from existing oilfields and the temporary maintenance shutdown of Terra Nova

and White Rose through the summer months weighed on GDP growth in 2012. Decreased production

combined with depressed oil prices have reduced government revenues, likely resulting in reduced

expenditure. However, these slowdowns are due to temporary maintenance and resumed oil production

and strong retail sales growth should provide a boost going forward.

After a brief slowdown, employment growth has sprung back to life. In the fourth quarter, employment

rose by 2.4% compared to the previous quarter as 5,500 net new jobs were created (seasonally adjusted).

This contributed to annualized employment growth in 2012 of 2.1%. While work on the Hebron oil

project continues, it is not expected to generate additional employment in 2013. The stalling of some

mineral related projects and the winding down of energy projects is forecast to result in annualized

employment growth slowing to 0.9% over the 2013-2017 forecast period.

Economic Overviews - Newfoundland and Labrador2011A 2012E 2013P 2014P 2015P 2016P 2017P

Gross Domestic Product (GDP) (2007$ millions) $28,912 $28,999 $29,927 $30,256 $30,952 $31,168 $31,387 - Percentage change 3.0 0.3 3.2 1.1 2.3 0.7 0.7

Manufacturing $1,025 $1,039 $1,109 $1,347 $1,472 $1,539 $1,543 - Percentage change 1.7 1.4 6.7 21.4 9.3 4.6 0.2Construction $1,450 $1,521 $1,456 $1,057 $1,113 $1,008 $973 - Percentage change 8.9 4.9 -4.3 -27.4 5.3 -9.4 -3.5Office $7,892 $7,921 $8,060 $8,303 $8,470 $8,567 $8,596 - Percentage change 2.7 0.4 1.8 3.0 2.0 1.2 0.3Wholesale and Retail Trade $1,853 $1,865 $1,957 $2,062 $2,132 $2,176 $2,178 - Percentage change 3.7 0.6 4.9 5.4 3.4 2.0 0.1

Inflation (C.P.I.) - Percentage Change 3.4 2.1 2.0 2.2 2.1 2.0 2.1Population, in thousands 513 513 513 514 517 517 516 - Annual change (000s persons) 1 -0 1 1 3 0 -1 - Percentage change 0.2 0.0 0.1 0.1 0.5 0.0 -0.1Employment, in thousands 225 231 233 236 239 240 242 - Annual change (000s persons) 6 5 3 3 3 1 1 - Percentage change 2.7 2.3 1.3 1.1 1.3 0.5 0.5

Manufacturing 11 11 12 13 13 14 15 - Percentage change 8.2 6.6 7.1 4.4 5.6 8.1 1.6Construction 19 20 18 18 19 12 13 - Percentage change 22.7 4.8 -8.6 -1.8 4.1 -36.2 14.1Services 176 180 184 186 187 193 193 - Percentage change 1.0 2.3 2.1 1.2 0.6 2.8 0.4

Unemployment Rate 12.7 12.5 12.5 11.9 11.3 10.9 10.7Personal Income, $ millions $14,918 $15,666 $16,135 $16,776 $17,484 $18,062 $18,517 - Percentage change 8.3 5.0 3.0 4.0 4.2 3.3 2.5Housing Starts 3.5 3.9 3.2 2.6 2.6 2.6 2.6 - Single-detached, in thousands 2.6 2.5 2.3 1.9 2.0 2.0 2.0 - Semi/Row, in thousands 0.2 0.2 0.2 0.2 0.2 0.2 0.2 - Apartment, in thousands 0.7 1.2 0.7 0.5 0.5 0.4 0.4Retail Sales, $ millions $7,830 $8,274 $8,744 $9,086 $9,427 $9,670 $9,862 - Percentage change 5.1 5.7 5.7 3.9 3.8 2.6 2.0


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Housing starts have slowed in the province. In the fourth quarter, housing starts were 3,700 units

(SAAR), a 14.1% decrease compared to the previous quarter. Minimal population growth is expected to

slow the pace of housing starts going forward. After strong housing starts in 2010 and 2011, levels are

expected to moderate through the 2013-2017 forecast period and remain more in line with levels

experienced over the past decade, ranging from 2,600 to 3,200 units annually.

After being exceptionally strong over 2010-2011, spending on non-residential structures fell throughout

2012, with spending in the fourth quarter falling 1.9% in comparison to the previous quarter on a

seasonally adjusted basis. Going forward, the $7.7 billion development of Muskrat Falls hydroelectric

project should provide a further boost to investment.

Economic growth in the province continues to be fuelled by demand for oil and minerals and production

of oil should be notably higher in coming years. However, decreased Chinese demand for steel and lower

potash prices will limit growth in the mining sector. The strength of the Canadian dollar will create some

further headwinds to export growth, as the U.S. accounts for the majority of exports from the province.

Population & Employment

The province’s population stood at 513,636 as of January 1, 2013, according to the latest information

released by Statistics Canada. This represents an increase of 81 persons from October 2012 (the previous

quarter), this is the highest population reported since 2005.

The change in population from July 2012 to September 2012 was the result of positive net migration and a

natural increase. Net migration totaled 750 persons during the third quarter of 2012 as the province

experienced net inter-provincial migration of 158 persons and net international migration of 592. The

natural increase for the third quarter of 2012 was 146.

Labour market performance was strong in 2012 and 2011 driven by major project development activity.

Employment in Newfoundland and Labrador increased by 2.3% to a record high 230,500 people

employed in 2012. Employment growth in Newfoundland and Labrador was the second highest among

provinces after Alberta.

Energy Sector

According to the Province of Newfoundland’s Department of Finance, oil production from the province’s

three producing projects is expected to increase in 2013. During January 2013 oil production was 6.8

million barrels, down 14.2% over January 2012. This drop is due primarily to natural production


15

declines. The Department of Finance projected an annual oil production for 2013 to be approximately 84.4

million barrels. This represents an increase of 16.9% over 2012.

Source: Canada-Newfoundland and Labrador Offshore Petroleum Board

Activity associated with development of the Hebron Ben Nevis field is accelerating. The construction of

the Gravity Base Structure (GBS) commenced in October 2012 at the Bull Arm industrial fabrication site

with the installation of the steel skirts. The project will create an estimated 4.1 million person hours of

employment in the province with an estimated 707 million barrels of recoverable reserves. Topsides

construction is expected to start in 2013 with first oil expected as early as 2017. Husky is also exploring

options for developing the White Rose Extension Project. If pursued, the concrete gravity structure

would be constructed at Argentia with construction anticipated to begin in 2014 with first oil in late 2016.

Muskrat Falls is considered the most attractive undeveloped hydroelectric resource in North America; the

combined generating capacity of the Project’s Gull Island and Muskrat Falls installations is over 3,000


16

megawatts (MW). This project, a portion of the Lower Churchill Project was sanctioned by the

Government of Newfoundland and Labrador on December 17, 2012.

Mining

A decline in some mineral prices including iron ore and nickel that began in late 2011 continued in 2012

due primarily to slowing economic growth in China and India. Nickel prices decreased by about 23%

and copper decreased nearly 10% over 2011. However, Prices have been trending upward since the 4th

quarter of 2012.

Total iron ore shipments were approximately 19 million tonnes for 2012, an increase of 10% relative to

2011. The rise was due to higher production at the Iron Ore Company of Canada (IOC) and Labrador

Iron Mines Ltd. (LIM). The value of shipments is estimated to have decreased by about 12% due to

decreases in iron ore prices.


17

IOC continues to expand its capacity. Phases 1 is and 2 of a three-phase project are under construction

with capital costs of $539 and $289 million, respectively. Phase 1 of the project commenced in 2012 and

was recently completed, expanding production from 18 million tonnes to 22 million tonnes per year.

Phase 2 is currently more than 80% complete and will expand capacity to 23.3 million tonnes. The

original plan included a Phase 3 that would increase production to 26 million tonnes; this is under

consideration. IOC is also investigating an additional expansion plan, called Project Genesis that would

increase production to 50 million tonnes annually. This entails a staged expansion that involves

investment in the company’s mines, plants, rails and ports. The company completed an order of

magnitude study and the engineering selection process has begun. If sanctioned, first production is

expected in 2015.

Wabush Mines shipped approximately 3 million tonnes of iron ore in 2012 down from 3.1 million tonnes

in 2011. High manganese content in the Mines’ ore have caused operational challenges and are being

address with the installation of separation circuits to reduce manganese levels. The project requires

about six circuits and will extend the mine life to around 2030.

Vale Newfoundland and Labrador’s (VNL) operations at Voisey’s Bay, Labrador increased production to

119,000 tonnes in 2012, up by about 1% in over 2011. The company shipped $1.3 billion of metal

concentrates in 2012— down about 27% compared to 2011 due to lower nickel prices.

Labour Iron Mines Ltd (LIM) began operations in April 2011 and shipped its first iron ore the following

October. The company sold 1.55 million tonnes of iron ore in 2012 which was down from expectations of

2 million tonnes, this was a result of the processing plant closing earlier than anticipated due to

deteriorating iron ore prices over the summer and early fall of 2012. LIM is currently targeting 1.7 to 2

million tonnes of iron ore in 2013.

The construction of Vale Newfoundland & Labrador’s US$2.8 billion nickel processing facility in Long

Harbour continues with building construction and infrastructure upgrading. Capital expenditures for

2013 are expected to be $1.2 billion. Peak employment is anticipated in 2013 at about 5,000 people. The

project is expected to be completed in 2013. The plant will take 18 months to reach full capacity following

completion of construction.

Fishery & Aquaculture

The Newfoundland and Labrador fishery fared well in 2012 as a result of notable price increases for key

species, particularly shrimp. Total landings decreased in 2012 by 6.2% to 251,952 tonnes. The decline in

landings is mainly the result of lower pelagics, groundfish and shellfish catch volumes. Total value of the


18

landings increased by 2.1% to $580 million in 2012, this increase was attributed to an increase in raw

material prices of shrimp.

The United States and China remain the largest international markets for the province’s seafood

products. Other major markets include: United Kingdom, Russia, Denmark and Japan.

Real Estate & Construction

Total construction investment is expected to be about $10.2 billion in 2013, a 25.9% increase over 2012.

Construction activity at Vale’s nickel processing facility in Long Harbour is well underway; IOC

expansion activities in Labrador City are progressing; the Hebron oil project is ramping up; and other oil-

related projects, such as White Rose and Hibernia expansions, are adding to activity. The continued

advancement of these major projects is the main reason for a projected 33.8% increase in non-residential

construction in 2013.

In addition to spending on major projects and public infrastructure, residential investment is also

contributing to high levels of capital expenditures. Investment in the residential sector was over $1.8

billion in 2012, an increase of 6.8% over 2011. Housing starts are up from 2011 and remain at historically

high levels.

The construction industry is reaping the benefits of this increase in investment, as evidenced by an

increase in wages and employment.


19

Housing starts totalled 3,885 units in 2012, up 11.4% compared to 2011. By comparison, housing starts

were down 3.0% in the Maritimes and up 10.8% in Canada over the same period. Single-detached starts

(which typically account for about 80% of total starts in the province) declined by 3.4% to 2,523 units,

while multiple starts (which include denser housing types such as row, semi-detached homes,

apartments and condominiums) increased by 55.5% to 2,523 units. Factors contributing to the increase in


20

multiple starts likely include tight conditions in the rental market, increased affordability and an aging

population.

Non-residential construction accounts for the largest portion of construction expenditure, representing

77.4% of investment in 2012 (see chart). Construction investment in this sector reached a record $6.3

billion, up 57.8% from 2011. This increase is being driven by both the private and public sectors. The

advancement of private sector major projects, in particular activity related to the Long Harbour nickel

processing facility, the IOC expansion, the Hebron project, and tie-ins to the Hibernia oilfield, all

contributed to high levels of spending.


21

Outlook for 2013

The resource sector is expected to continue to be a primary driver of the economy in 2013 with expansion

of existing projects and continued ramp up of new projects. Higher oil production along with growth in

iron ore production and investment are expected to contribute to economic growth. Construction at

Vale’s Long Harbour facility is expected to remain at high levels and the development of the Hebron

project and Muskrat Falls hydro-electric project are expected to accelerate over the next year.

Fundamentals for 2013 have a mixed outlook, with positive outlooks for retail sales, consumer confidence

and aquaculture. However, housing starts are expected to decline. In addition, the government recently

announced a 5.4% reduction to the public service sector. These layoffs are part of the Newfoundland &

Labrador 10-year sustainability plan that the government implemented in the 2013 Budget to reduce the

current provincial deficit and return to surplus by 2015.

The above information was obtained from “The Economy 2013” produced by the Newfoundland &

Labrador Department of Finance along with supplemental sources. More detailed information on the

Newfoundland & Labrador economy is available at www.gov.nl.ca.


22

Town of Harbour Grace

Overview

Harbour Grace is 100 km from St. John’s and 33 km from the Trans-Canada Highway. Its economic

activity is closely tied to the geographical area from Carbonear to Bay Roberts which consists of several

small communities and towns on what is referred to as the north side of Conception Bay. The majority of

communities grew mainly based on the fishery and some as regional centers. The towns and

communities were linked by a coastal road leading west from Holyrood, and the Roaches Line access

became important after development of the Trans-Canada Highway (TCH) in the 1960s. Development of

the Veterans Memorial Highway several years ago provided greater access to the Trans-Canada Highway

and surrounding communities.

Main Population Centres

The population found within the area between Carbonear and Bay Roberts has increased slightly over the

last decade, despite experiencing a small decrease in the first half. The table below illustrated the

individual census area populations for the Census years 2001, 2006, and 2011.

Harbour Grace


23

Community Area 2001 2006 2011

Carbonear 4,759 4,723 4,739

Harbour Grace 3,380 3,074 3,131

Bay Roberts 5,237 5,414 5,818

Total 13,376 13,211 13,688 Source: Statistics Canada 2001, 2006 Censuses of Canada, 2011 Census of Canada

While the population of Harbour Grace decreased 9% over the five years between the 2001 Census and

the 2006 Census, it experienced a small rebound between 2006 and 201l growing by almost 2%. Bay

Roberts, on the other hand, has experienced consistent growth over the past decade.

Road Infrastructure

From the 1960’s to the early 2000’s, the main access to this area from east and west along the TCH had

been via Roaches Line (Route 71). A coastal road, Route 70, travelled through Roaches Line, South River,

Clarke's Beach, Bay Roberts and north through Harbour Grace and Carbonear. A new 40-kilometre

Conception Bay North By-Pass (also known as Veterans Memorial Highway) has been developed over

recent years from the TCH to Carbonear. Travelling time on the highway to and from the TCH is much

quicker from Bay Roberts and areas north compared with travelling the coastal route and Roaches Line.

Economy

The economy of the area is centered in the larger towns of Bay Roberts, Harbour Grace and Carbonear.

The majority of commercial development over the last 15 years has been found in Bay Roberts. This

community has grown to be the dominant retail and service centre for the area. The town has a variety of

businesses ranging from fishery related to government services, and retail. The main highway through

the centre of the town has seen the development of a Dominion Store, McDonald’s, Tim Horton’s,

Shoppers Drug Mart, Scotia Bank, Do-It Store and several strip retail and smaller retail/service businesses

since the late 1980’s which complement existing retail malls. The road connection with the highway is

located close to the main commercial development strip in the centre of the town.

Much of the retailing in the area is being drawn to this growing commercial centre in Bay Roberts. Other

than for servicing local rural neighborhoods, commercial retail establishments are in lower demand

outside the larger centers.

The employment in the area is fairly diversified but centered on retailing, wholesaling, the fishery

(mainly Bay Roberts and Harbour Grace), and various levels of government services, tourism and school


24

boards. Recently, one of Harbour Grace’s largest employers, Terra Nova Shoes, eliminated 59 employees

in May, 2010 due to depressed demand in the construction industry.

There are a fairly high proportion of commuters traveling from the smaller, more rural neighborhoods, to

the larger local centers and to the metropolitan area of St. John's. Although tourism is a growing industry

in the area and brings a lot of associated traffic and retail trade, it is quite seasonal.


25

Highest and Best Use

We refer the reader to Appendix A for the definition of Highest and Best Use.

Highest and Best Use as Improved

The subject property is a church building was constructed in 1892 with period stone and designs; and has

a striking street view. The rock and masonry structure retains much of its original character and as such

could lend itself to other community oriented uses. Attendance to the church has declined in recent years

and with the rising costs in upkeep, the parish has entertained ideas of alternate uses for the property.

However, without demand for its intended use as a church, the alternative uses could be for a community

centre or similar type public use. Demand for other alternative uses such as office, retail, industrial and /

or residential are considered limited.

Highest and Best Use as if Vacant Land

Given the location of the subject property, the size and configuration of the site, it is likely that its use

would be consistent with similar properties in the immediate area. Based on the foregoing, we conclude

that the Highest and Best Use of the property, as vacant land, the development of residential or public

development.


27

Valuation

Three approaches can be used to estimate Market Value: the Income Approach, the Direct Comparison

Approach and the Cost Approach.

Income Approach

The Income Approach recognizes the principle of anticipation, where the anticipation of future benefits

creates value. The Income Approach is usually used as the primary method of valuation when a property

is expected to be acquired by an investor. The two primary capitalization procedures are:

Direct Capitalization: This procedure involves dividing stabilized annual net income by a

singular rate that takes into account all of the comparative investment characteristics of the

property. Discounted Cash Flow (DCF): The Discounted Cash Flow Procedure calculates the present

value of the future cash flows over a specified time period, including the potential proceeds of a

deemed disposition, to determine market value.

Direct Comparison Approach

The Direct Comparison Approach recognizes the principle of substitution, according to which a buyer

will not pay more for one property than for another that is equally desirable. By this approach, an

opinion of value is developed by applying a comparative analysis of properties that are similar to the

subject property that have recently sold, are listed for sale or are under contract, which focuses on the

similarities and differences that affect value.

Cost Approach

The Cost Approach recognizes the principle of substitution, according to which a knowledgeable

purchaser would not pay more for a property than it would cost to construct a property of similar design

and utility, assuming no unreasonable delays. The Cost Approach involves adding the market value of

the land to the depreciated value of the building and site improvements.

Valuation Methodology Selected

Given the nature of the subject property, we have utilized the Direct Comparison Approach in estimating

the value of the subject property with backup support from an Income Approach. The large amount of

physical and economic depreciation required for a Cost Approach analysis would make this approach

very subjective and unreliable and therefore, not undertaken.


29

Direct Comparison Approach

The Direct Comparison Approach has, as its basis, the comparison of the subject with recent sales of

properties that have similar characteristics in terms of location and building type.

Where recent, good comparable sales evidence is available, the approach can provide a dependable value

estimate. The weight given to the value estimate derived through this approach depends on the

characteristics of the subject property, available market data and the extent to which purchasers rely on

this methodology.

The Direct Comparison Approach is considered useful not only in terms of estimating value but also in

demonstrating that the final value estimate concluded in the appraisal falls within a reasonable range of

value evident in the marketplace.

The typical procedure for undertaking the Direct Comparison Approach involves:

� researching the market for data from sales, contracts, offers and listings of competitive

properties;

� verifying that the data is accurate and representative of arms-length transactions;

� determining relevant units of comparison;

� comparing the subject with the comparable sales and adjusting the sales for differences; and

� reconciling the multiple value indications into a single value or range of values for the subject.

Listing Data and Analysis

Shown below are four institutional properties located in the general area of the subject property, as well

as one listing located in Moncton, NB.

Municipality Name of Building Floor Area(sf) Date of Listing Listing Price Price PSF

Whitbourne Whitbourne Boy's Home 12,000 April-13 $199,000 $16.58

Dildo Former Jr. High School 12,000 April-13 $79,000 $6.58

Heart's Content Former School; now self-storage 20,000 April-13 $199,000 $9.95Brigus Parish Hall 13,000 September-13 $299,500 $23.04Moncton, NB St. Andrews Presbyterian Church 15,622 January-09 $249,900 $16.00


30

The range of listing prices for these buildings varies from $6.58 per square foot to $23.04 per square foot.

The Whitbourne Boys Home is a three storey structure in poor condition and recently expired after being

listed for sale over the past several years with no acceptable offers being made. The former Woodlands

Junior High School in Dildo is located directly to the rear of the Woodland Elementary School. It is a

wood frame structure that has been vacant for several years and is in poor condition. The listing in

Heart’s Content is for a former school property converted into a self-storage facility. The property is in

good condition and is currently listed for sale at approximately $9.95 per square foot. This property has

been listed for sale for the past two years with no acceptable offers being presented. The property at 87-

91 Station Road, Brigus has just been listed. It is the former parish hall and is listed in fair condition. It is

wood framed and has two floors of open space.

We have added an additional listing of a somewhat similar church located in Moncton, NB. This property

is reported in good condition and has been on the market since 2009. It consists of a full basement with

church and hall on the main level. It had been originally listed for $650,000 and has since been reduced to

$249,900.

Sales Data and Analysis

We have undertaken a survey of relevant former institutional sales throughout the Province and Atlantic

provinces. From those sales analyzed the following are thought to offer some comparability to the

Church of Immaculate Conception. Detailed descriptions are contained at Appendix C.


31

Index 1 sold in August 2007 for $173,000 or $41.08 psf. It is located on the main highway through Clarkes

Beach. The property was in good condition at the date of sale with face brick façade on two sides and

vinyl siding on the remaining sides. The property was the Former Salvation Army Church and was

purchased by the Town of Clarkes Beach to convert to Town Hall use. Index 2 is the sale of a leased

commercial school building in Spaniard’s Bay and indicates one of the higher prices paid at $43.33 per

square foot. The building was built in 1999 and comprised more modern finishes and building systems.

The property was renovated and modernized and then sold as a commercial building, which is partially

Closing Date Building Type Bldg. Size S.F.)Index # Complex Price Year Built Lot Size (Acres)

Address Status Condition $P.S.F

Salvation Army Church 5/8/2007 Religious Facility 4,2111 165-167 Conception Bay Hwy $173,000 Mid 1980's 1.70

Clarke's Beach, NL Closed Good $41.08 Discovery Center Educational Facility

4/23/2010 School 12,000

2 8 Muddy Hole Road $520,000 1996 1.10 Spaniard's Bay, NL Closed Very Good $43.33 Daffodil Place (Former Pentecostal Tabernacle)

4/30/2007 Religious Facility 17,422

370 Ropewalk Lane, 7 Stamps Lane & 344 Penneywell Road

$975,000 N/A 2.39

St. John's, NL Closed Good $55.96 Littledale Complex 9/18/2008 Religious Facility 111,637

4 250 Waterford Bridge Road $3,275,000 1968 7.95 St. John's, NL Closed Good $29.34 Seventh Day Adventist Academy 9/1/2008 School 14,874

5 154 Freshwater Road $600,000 1966 2.52 St. John's, NL Closed Good $40.34 Former Labrador City Collegiate 10/23/2008 School 78,090

6 213 Matthew Ave $1,200,000 N/A 5.71 Labrador City, NL Closed Poor $15.37 Notre Dame Academy Building 7/28/2011 School 80,958

7 121 Matthew Avenue $2,695,000 Early 1960's 6.82 Labrador City, NL Closed Fair $33.29 Wesley Memorial United Church 12/13/2011 Religious Facility 11,426

8 168 Cameron Street $415,000 1891 0.58 Moncton, NB Closed Average $36.32 Humphrey Memorial United Church

3/2/2012 Religious Facility 7,314

9 95 Massey Avenue $295,000 1900's 0.77 Moncton, NB Closed Average $40.33

Sales Summary Report


32

occupied by a private educational facility. It is noted that the modernized building with two tenants

would have contributed to this price.

Index 3, 4 & 5 are located within the City of St. John’s. Index 3 is comprised of a former Pentecostal

Tabernacle Church, and 2 residential houses. One house is located along Stamps Lane and the other along

the Pennywell Road. Property was vacant at the time of sale. Following the purchase the property was

extensively renovated into a 24 room 24,000 square foot hostel providing housing for families and

individuals receiving cancer treatment. The property has been renamed Daffodil Place and opened its

doors in 2009. It sold for $55.96 psf. Index 4 sold in September 2008 for $3,275,000 or $29.34 psf. The

Littledale complex was built and occupied by the Sisters of Mercy in the late 1960's as a nuns generalate,

chapel, nurses training centre with classrooms, dormitory style accommodation, gymnasium / swimming

pool, large kitchen and dining room. The complex had become increasingly excessive to requirements

and the nurses training ended in the 1980's. The property was largely vacant since the early 2000's. The

property was sold with a restrictive covenant on use, whereby the following uses would not be

permitted: gambling halls, night-clubs, significant retail shops, strip malls, industrial purposes.

Index #5 is a single storey steel frame school building. Purpose built in 3 stages, the original building was

constructed in 1966 and contained a total area of approximately 4,039 square feet. An addition was added

to the original structure in 1976 and contained a total area of approximately 2,281 square feet. In 1999 a

third addition was added to the structure and contained a total area of 8,554 square feet. Of the 8,554

square feet, 3,226 was gymnasium space. The building is heated with oil fired hot water radiation system

throughout. Ceiling heights within the building vary from 10 - 12.5 feet, with the gymnasium extension

have a total ceiling height of approximately 24 feet. Prior to becoming vacant the property was utilized as

a K-12 school with a maximum student body of approximately 110-120 students. It sold in January 2008

for $40.34 psf.

Index 6 & 7 was the resale of two former schools located in Labrador City. Index 6 is located on a block of

land with Matthew Avenue to the west and Campbell Avenue to the east with the Anglican/United and

Pentecostal churches immediately to the north and the former CNA building immediately to the south.

The IOC mine site is situated off Avalon Drive some 1 mile to the northeast of the property with Little

Wabush Lake situated some 300 yards to the southeast. The property is a two-storey purpose-built school

building. The building has classrooms, laboratories, staff lounge, gymnasium, all purpose room, music

room, industrial arts space and library. Property was originally constructed for use as a school, and was

purchased for conversion into residential apartments. It sold in October 2008 for $1,200,000 or $15.37psf.

Index 7 is also located on Matthew Avenue and sold in July 2011 for $15.37 psf. The site is improved with

a former school building containing classrooms, offices, computer labs, science labs, rigging shop,

welding shop and gymnasium. There is a pole line easement extending along the southern boundary of

the site. The original portion of the structure was constructed in the early 1960’s with the most recent


33

renovations completed in 1999/2000. The building frame is steel and masonry (concrete block)

throughout. At the time of sale the building appeared to be in fair condition and has been well

maintained. The rentable area of the building is 72,187 square feet. The property contains the former

Notre Dame Academy Building most recently occupied by the College of the North Atlantic prior to their

relocation in July 2011. The property was purchased by a local development company for redevelopment

into an office building to be fully leased to the Iron Ore Company of Canada

Index 8 & 9 are sales of former church properties located within the City of Moncton, New Brunswick.

Index 8 is located at the northwest corner of the intersection of St. George Street and Cameron Street. It

also fronts along Dufferin Street to the north. The main entrance to the church is via St. George Street and

the main entrance to the hall is via Dufferin Street. Two other prominent arterial roads are located a short

distance away. Mountain Road is located one block to the north, while Main Street is located one block to

the south. This is a steel and masonry construction with a brick facade. The building is a one storey

structure with a full, complete poured concrete foundation. The layout is typical for an older, large

church use. The improvements consist of two "sections", built approximately 30 years apart. The church

sanctuary is large with high ceilings, partial second floor balcony, and common hallway that leads into

the church hall. This part of the church is used for social events due to its open space and industrial

kitchen. There are two concrete poured basements that are also connected via the passageway. The lower

level is divided into numerous periphery rooms that complement the current use of the building. Recent

repairs and improvements include new roof on the boiler room, roof repairs to the tower and church in

2010. The roof on the hall and most of the church was replaced in the early 2000's. In 2009, the gym floor

was sanded and finished. In 2008, there was some reappointing of the brick facade, painting of the

foundation, and storm windows were installed in the tower. New carpeting was installed at the hall

entrance and in one of the basement rooms. Some other smaller projects were also undertaken. This is an

old building that is considered to be very unique in nature. The adaptability to alternative uses is very

limited considering the substantial improvements on the property. The ceiling height in the sanctuary is

estimated at 50 feet. There is a partial second floor level that serves as a balcony. The church is 5,798 sq. ft.

while the hall building is 5,628 sq. ft. There is also 11,916 sq. ft. of basement space under the structure.

Building bought as a church with the intention of redeveloping into an apartment building. Cost to

demolish the building was +/-$75,000 (not reflected in the sale price). The property sold in December 2011

for $36.32 psf.

Index 9, which is also located within the city of Moncton sold in March 2012 for $40.33 psf. The property is

located along Massey Avenue in a well-established neighborhood referred to as Sunny Brae. The

University of Moncton and the Sunny Brae Middle School are both within walking distance. This is an

older, established neighbourhood with a mix of average to good quality single family homes and low to

medium density multi-family residences. The property is improved with a one storey wood framed

church structure. It was constructed in several phases. The original section of the building dates back to


34

the early 1900's with an addition in 1949 and the latest addition in 1976. The building is considered to be

in average to good condition.

Analysis

The listings and sales vary in price per square foot from $6.58 to $55.96 per square foot. The lower end of

the range comprise mainly of properties located in more rural locations, older and have limited utility. In

addition, the properties have been generally held vacant for an extended period and similar to the

subject, entail expensive carrying charges motivating the vendor to dispose of the properties. Those

properties located in or near larger centres indicate the higher end of the range with the highest price

indicated by a newer property in St. John’s that was converted to hostel type accommodation for cancer

patients requiring overnight lodging while attending the Health Sciences complex.

The Church of Immaculate Conception was constructed in 1892 and maintains much of its older

character. As at the time of inspection, it was in fair overall condition and due to its excessive age requires

ongoing maintenance and repair. Workers were on site at the time of our site visit repairing and replacing

the rock face at the eastern wall. Immediate upgrades to the interior ceiling plastering may also be

required within the immediate future. The site does not have municipal servicing which would have to

be extended from its Water Street frontage, some 500 feet away. The subject building has electrical and

heating only.

As well as our onsite inspection, during the fall of 2013, consulting engineers from Stantec Inc. completed a

Building Condition Report on the property. This review focused mainly on the building envelope, which

included the exterior stone, roof, windows, foundation/structural and interior plaster. The estimated

construction/repair cost as per that report (see Addenda D) is $7,866,276 plus HST. ($705.75 per square foot).

Such repair cost would be cost prohibitive to any investor/purchaser of the subject.

Based on our analysis of the sales above, as well as taking into consideration the cost of immediate repairs

as noted above ($705.75psf), which far outreach the value range of $6.58 to $55.96 per square foot

indicated above, we feel the property has no value on the open market.

Alternatively, should the Parish entertain land value only, this would also present difficulties as the

property is a designated heritage site and may not allow removal of the building under this status. As

well, the cost to remove the building may far out way the value of the underlying land.


35

Reconciliation and Conclusion

The subject property is an older church structure constructed in 1892 and at the time of inspection was in

fair overall condition located on a 2.61-acre site, having a civic address of 1 Water Street East, Harbour

Grace, NL. The Highest and Best Use of the property, as improved, is for conversion to community center

or alternative public use.

Final Value Conclusion

Further to our analysis of the subject property and of the market data outlined in this report, we

estimate the current market value of the property located at 1 Water Street East, Harbour Grace, NL as

at September 25, 2013, subject to the Extraordinary Assumptions listed in this report and the underlying Contingent and Limiting Conditions outlined in Appendix A to be:

“$0” (No Value)

Based on this estimate of current market value, liquidity is expected to be “poor”.


37

Certification

We certify that, to the best of our knowledge and belief:

� The statements of fact contained in this report are true and correct

� The reported analyses, opinions, and conclusions are limited only by the reported Extraordinary Assumptions and Limiting Conditions and Contingent and Limiting Conditions, and are our personal, unbiased professional analyses, opinions and conclusions

� We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest or bias with respect to the parties involved

� Compensation is not contingent upon the reporting of a predetermined value or direction in value that favours the cause of R C Parish of Harbour Grace, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event

� To the best of our knowledge and belief, the reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Canadian Uniform Standards of Professional Appraisal Practice (“The Standards”)

� The property was inspected on September 25, 2013 by Kevin Fancey. The content, form, and reasoning have been prepared by Kevin Fancey. A detailed inspection was not completed to report building condition. We have not knowingly withheld any comments or observations that might affect the opinions of value stated in this report

� We have the knowledge and experience to complete the assignment competently

� No one provided significant professional assistance to the undersigned

� The confidentiality of our client’s individual subject property data is of paramount importance to Altus Group Limited and we have taken reasonable and appropriate measures to safeguard client data against unauthorized access. A full description of our Client Data Policy appears on our web page www.altusgroup.com.

� As of the date of this report the undersigned had fulfilled the requirements of the Appraisal Institute of Canada Continuing Professional Development Program for members and are all members in good standing of the Appraisal Institute of Canada.

In our opinion, the current market value of the fee simple interest in the subject property, subject to the Extraordinary Assumptions and Limiting Conditions listed on page 3 of this report and the Contingent and Limiting Conditions at Appendix A as at September 25, 2013 is: “$0” (No Value)

Altus Group Limited

Kevin Fancey, AACI, MRICS Date: November 21, 2013

Appendices

Appendix A Terms of Reference

Scope of Work

Limiting Conditions

Definitions


1

Terms of Reference

Identification Church of Immaculate Conception

1 Water Street East, Harbour Grace, NL

Legal Description The legal description and plot plan of the subject site was provided by the

Immaculate Conception Parish and shows the total site to be 1.054 hectares

(2.61 acres). The site plan is attached in Appendix B.

Purpose of Report The purpose of this appraisal is to provide our unbiased opinion of the

current market value of the property identified herein.

Intended User The intended user of this report is the R C Parish of Harbour Grace and the

R.C. Episcopal Corporation of Grand Falls. No additional intended users

are identified by the appraiser.

Intended Use The intended use is for the R C Parish of Harbour Grace to evaluate the

property that is the subject of this appraisal for possible sale subject to the

stated Scope of Work, purpose of the appraisal and Definition of Market

Value.

Effective Date September 25, 2013.

Tenure The title to the property is appraised on the basis of the fee simple interest,

without debt or encumbrances.

Ownership This property is owned by the R. C Episcopal Corporation of Grand Falls.


2

Scope of Work

The scope of work has involved the following procedures:

Site & Building Inspection

� Identify characteristics of location and any overall trends

� Identify site and building features based on a physical inspection and review of information provided by the client to consider consistency with other similar properties as opposed to a detailed condition report

� Note observed condition of property

� Visually review occupancy and / or status of the property

� Visually survey adjacent land uses and competitive buildings in the area

� Consider local and regional access as well as access to public transportation

Title

A title search has not been completed. The legal description provided is assumed to be correct and the

title to be good and marketable. The final value reported herein, unless otherwise noted, is contingent

on no encumbrances that would negatively affect the value. A legal review is required for certainty.

Planning/Land Use

� Consider zoning/official plan regulations

� Consider excess density

� A formal land use review was not completed

Highest & Best Use

Review existing use in terms of:

� Location

� Physical elements

� Land use controls

� Income characteristics

� Market conditions

� Consider alternate uses

� Analyze the highest and best use of the land as if vacant as well as the existing improvements


3

Market Survey

� Survey of active brokers

� Survey of potential investors

� Analyze sales and lease transaction activity of similar properties

� Review performance of competitive listings

Valuation

� Comparison rating

� Strengths/weaknesses

� Liquidity

� Outlook

� Consider value per sq.ft.


4

Contingent and Limiting Conditions

1) This report is prepared at the request of the R C Parish of Harbour Grace for an appraisal of current market value of the subject property located at 1 Water Street East, Harbour Grace, NL to provide information required to assist in possible sale of the property. It is not reasonable for any other person or corporation other than the R C Parish of Harbour Grace or the R. C. Episcopal Corporation of Grand Falls to rely upon this appraisal without first obtaining written authorization from Altus Group Limited. Publication in whole or in part, or any reference thereto, or to the valuation figures contained herein, or to the name and professional affiliation of the Appraiser herein is prohibited without the written consent of the Appraiser. There may be qualifications, assumptions, or limiting conditions in addition to those set out below, relevant to the intended user or their intended use.

This report is prepared on the assumption that no other person will rely on it for any other purpose and that all liability to all such persons is denied.

2) While expert in appraisal matters, the authors are not qualified and do not purport to give legal advice. It is assumed that:

� any legal description provided is correct

� title to the property is good and marketable

� there are no encroachments, encumbrances, restrictions, servitudes, church taxes, heritage or cultural property restrictions, privileges, liens, leases or covenants that would in any way affect the valuation, except as expressly noted herein

� leasehold interests referred to herein have, or will have, properly drawn and executed instruments that legally bind the parties in the described manner and that any rent due has been paid in full

� the use is a legally conforming or non-conforming use which may be continued by any purchaser from the existing owner

� rights of way, easements or encroachments over other real property and leases or other covenants noted herein are legally enforceable

Because these assumptions have been made, no investigation, legal or otherwise, has been undertaken that would verify these assumptions except as expressly noted herein.

3) The authors are not qualified surveyors and, unless noted, no legal survey concerning the subject property has been provided. Furthermore, any measurements of rentable areas that have been provided to us are assumed to be correct.

For certainty a formal up-to-date survey and architectural measurement are required. This appraisal is therefore contingent on the correctness of the areas given. Any sketches, drawings, diagrams, photographs, or graphs presented in this report for the limited purpose of illustration.

4) The authors are not qualified to give engineering advice. In valuing the property it is assumed that:

� the soil is stable and that there are no forms of contamination or hazardous waste affecting the site

� there are no patent or latent defects in the improvements


5

� no objectionable materials, such as Asbestos, PCBs, or Urea Formaldehyde foam are present

� the improvements are structurally sound and in need of no immediate repairs, unless expressly noted within this report

� the heating, plumbing, electrical, air conditioning or other systems are in good working order.

For certainty, a full engineering and environmental study is required.

5) No official investigation has been undertaken with the local municipal public utilities department, the zoning office, the fire department, the building inspector, the health department or any other government regulatory agency, unless such investigations are expressly represented to have been made in this report. The subject property must comply with such government regulations, and if it does not comply, its non-compliance may affect market value. To be certain of compliance, further investigations may be necessary.

Unless otherwise noted, it is assumed that full municipal services (water, sanitary/storm sewers, etc.) and public utilities (gas, hydro and telephone) are available, without local improvement charges.

6) Neither possession of this report nor a copy of it carries with it the right of publication. All copyright is reserved to the author and is considered confidential by the author and his client. It shall not be disclosed, quoted from or referred to, in whole or in part, or published in any manner, without the express written consent of the appraiser.

This is subject only to confidential review by the APPRAISAL INSTITUTE OF CANADA

7) Market data has been obtained from documents at the Land Registry Office, or as reported by the Real Estate Board. As well as using such documented and generally reliable evidence of market transactions, it was also necessary to rely on hearsay evidence. Except as noted herein, a reasonable attempt has been made to verify all such information.

8) The compensation for services rendered in this report does not include a fee for court preparation or court appearance, which must be negotiated separately. However, neither this nor any other of these limiting conditions is an attempt to limit the use that might be made of this report should it properly become evidence in a judicial proceeding. In such case, it is acknowledged that it is the judicial body that will decide the use of the report which best serves the administration of justice.

9) Any distribution of value between land, buildings and other improvements applies only for the purpose and function of this appraisal and should not be taken out of context.

10) It assumed that any and all liabilities that might accrue against the real estate such as taxes, hypothecs, contracts or services of any kind, are paid when due.

11) Other assumptions, limiting conditions or clarifications are listed throughout the report as needed.


6

Definitions

Altus InSite Investment Trend Survey

Altus InSite, with assistance from key personnel at Altus Group’s Research, Valuation and Advisory

Division, undertake a survey of the Canadian real estate industry to determine the informed consensus

opinion on investment performance trends and valuation parameters from Canada's key investors,

lenders and other opinion leaders. The results of this quarterly survey are presented online as a series of

data reports and colour charts and address Office, Retail, Industrial and Multiple Unit Residential asset

classes for 7 major markets across Canada.

Highest and Best Use

Highest and best use may be defined as:

“The reasonably probable and legal use of property, that is physically

possible, appropriately supported, financially feasible, and that results in

the highest value.” 1

The highest and best use of both land as though vacant and property as developed must meet four

criteria. The highest and best use must be:

Physically Possible: The size, shape, terrain and soil conditions of a

parcel of land affect its physical utility and adaptability. The size, design

and condition of an improved property may suggest that rehabilitation,

conversion, or demolition is in order

Legally Permissible: Depends on public restrictions such as zoning,

building codes, historic preservation regulations, and environmental

controls, as well as the private or contractual restrictions found in deeds

and long-term leases

Financially Feasible: Uses that should produce returns that exceed the

income required to satisfy operating expenses and debt service (interest

and amortization)

Maximum Return: Among financially feasible uses, the use that

produces the highest price or value consistent with the rate of return

warranted by the market.

1Canadian Uniform Standards of Professional Appraisal Practice, Ottawa. Appraisal Institute of Canada. 2012.

Section 2.30.


7

Fee Simple1

An interest consisting in absolute ownership unencumbered by any other interest or estate, subject only

to the limitations imposed by the governmental powers of taxation, expropriation, police power and

escheat.

Leased Fee2

An ownership interest held by the landlord with the rights of use and occupancy conveyed by the lease to

others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms

contained with the lease.

Leasehold3

The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and

occupancy for a stated term under certain conditions.

Liquidity

We have provided our opinions on the liquidity of the subject property if it were placed on the open

market for sale. Our summary shows a single-word description from Excellent through Poor, explained

as follows:

Excellent Liquidity

May achieve a price above market value and within a brief marketing period

� High competition among buyers, keen and able to make an acquisition

� Rare availability of similar assets

� A high availability of both debt and equity

� Brief marketing period is possible

� Evidence of similar properties achieving price above a common view of market value

� Overwhelming strengths of investment character

1The Appraisal of Real Estate: 2nd Canadian Edition. Vancouver. University of British Columbia Real Estate Division.

2002. Glossary 14 2,3The Appraisal of Real Estate: 2nd Canadian Edition. Vancouver. University of British Columbia Real Estate Division.

2002. Glossary 14


8

Good Liquidity

Likely to achieve market value within a reasonable marketing period

� Buyers, keen and able to make an acquisition

� Restricted availability of similar assets

� A good availability of both debt and equity

� Reasonable marketing period and brokerage effort required in order to achieve market value

� High confidence of brokers able to achieve market value estimate

� Similar properties demonstrate pricing at a common view of market value

� Investment character strengths outweigh the weaknesses

Modest Liquidity

Market value may be difficult to achieve; a more extensive marketing period may be

required

� Selective and few buyers

� Demand/supply of investment opportunities is in balance

� A good availability of debt but at higher margins

� More cautious sources of equity

� Strengths and weaknesses of investment character offset each other

� More extensive marketing effort required in order to achieve value

� Similar properties demonstrate pricing at a common view of market value

Poor Liquidity

Market value is difficult to gauge and achieve notwithstanding an extensive marketing

period

� Very few buyers and limited to a speculative nature only

� Unusual assets, or high, or potentially high availability of similar assets

� Poor availability of debt even at higher margins

� Very cautious sources of equity

� Limited trading activity

� Extensive marketing period required

� Overwhelming weaknesses of investment character

� Low broker confidence


9

Market Value1

The most probable price which a property should bring in a competitive and open market under all

conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and

assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specified date and the passing of title

from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider their best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in Canadian dollars or in terms of financial arrangements comparable thereto; and

5. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

Reasonable Exposure Time

Reasonable Exposure Time is an estimate of the length of time that the property would have been offered

on the market prior to the hypothetical consummation of a sale at market value on the effective date of

the appraisal. It is a retrospective estimate an analysis of past events assuming a competitive and open

market. It is always presumed to have preceded the effective date of the appraisal.2 The estimate of time

period for reasonable exposure is not intended to be a prediction, but is an estimate of the amount of time

that the property would have required to be exposed for sale on the open market in an appropriate

manner, and using an experienced broker.

1 Canadian Uniform Standards of Professional Appraisal Practice, Ottawa. Appraisal Institute of Canada. 2012.

Section 12.16.1, 12.16.2.and 12.16.3 2 Canadian Uniform Standards of Professional Appraisal Practice, Ottawa. Appraisal Institute of Canada. 2012.

Section 7.7.1

Appendix B Photographs of Subject Property

Location Map

Legal Description & Survey Plan

Sketch Plan


1

Photographs of Subject Property

Exterior front and side view of the property

Exterior rear and side view of the property


2

Side view showing current repairs being carried out on the exterior of the property

Church; looking towards the front entrance


3

Alternate view of Church area

Dug out basement (cellar) area


4

Fire exit

Alternate interior view


5

Area Map


6

Legal Description


7

Survey Plan


8

Sketch Plan

Appendix C Comparable Building Sales


1


2


3


4


5


6


7


8


9

Appendix D Preliminary Estimate – Excerpt from Stantec Report


1


2

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