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REED APPRAISAL COMPANY REAL PROPERTY APPRAISERS AND CONSULTANTS

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100 SOUTH KENTUCKY AVENUE #230 iP.O. BOX 1645 iLAKELAND, FLORIDA 33802-1645 OFFICE: (863) 688-6718 iFAX: (863) 688-5993iEMAIL: [email protected]

TO: Henry W. Lavandera Associate General Counsel University of South Florida 4202 E. Fowler Avenue, ADM 250 Tampa, FL 33620-6250 FROM: Stanley B. Reed, MAI DATE: May 27, 2008 SUBJECT: Orlando Utilities Commission Easement Parcel No. P-6C.02 Proposed Lakeland Campus Site at Williams DRI (I-4 & Polk Parkway) Review of Appraisal Prepared for OUC by Diversified Property Specialists, Inc. Conclusion of Appraisal - $95,100 Value Amount Conclusion of Review – Appraisal & Report Meet Requirements of USPAP Recommended Value Amount - $135,000 _________________________________________________________________________________ I have completed a technical appraisal review (“desk review”) of the appraisal prepared by C. Lee Lobban, MAI, of Diversified Property Specialists, Inc., of the proposed utility easement acquisition identified as Parcel No. P-6C.02 of the OUC Easement Project in Polk County. The appraisal report is dated October 20, 2007 and states a value opinion of $95,100 for the loss in value to the USF property as a result of the proposed easement acquisition. This memo format review report contains 15 pages. The appraisal report is well written and documented and complies with the Uniform Standards of Professional Appraisal Practice (USPAP) requirements for a Summary Appraisal Report. The appraisal report presents appropriate analyses, appraisal methods and techniques in developing an opinion as to market value, or loss in market value due to the proposed easement. The opinions are reasonably well supported. The evaluation of utility easements is a specialized part of the practice of real estate appraisal. The most basic element of most utility easement appraisals is the effect of the easement, generally measured as a percentage of the fee value of the encumbered land. Other issues, such as effect on improvements and damages to the remainder, may be applicable in some situations. On page 30 Mr. Lobban’s appraisal report provides a limited discussion of the nature of the proposed easement. He states –

• “the easement is being acquired for the transmission and distribution of electricity and for other uses specified in the easement document”

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• “the property owner will be permitted to ingress/egress across the easement area….but will

not be permitted to utilize the land in any way that interferes with the easement owner’s ability to access and maintain the power lines”

• “the largest portion of rights acquired pertains to the air rights…..however, some surface

rights have also been acquired since OUC will have the right to enter and use the property for construction and maintenance of its improvements”

• “of the bundle of rights, the rights to the surface represent the most valuable ……these rights

will be shared by the property owner and the easement owner” Mr. Lobban’s conclusion is that the easement rights acquired represent 50% of the fee simple ownership. Although not specifically referenced in the narrative section of the report, the language of the proposed easement is presented in Resolution Number 2007-071001L01-B in the Addenda of the report. For ease of review, this document is included with this memo. Based on my review, additional, significant aspects of the easement language which were not specifically addressed by Mr. Lobban are –

• the easement is for “public works”, including –

o overhead & underground electric transmission & distribution and communication lines o water mains, lines or pipes o sanitary sewer o gray water treatment and distribution o stabilized roadways o pads, fences & drainage o “other utility purposes”

• the right of a perpetual easement for ingress and egress over roads on adjoining land of the

Grantor (USF) My experience has been that utility easements are generally valued in the range of 50% to 100% of the fee interest value of the land. Specific measurement of the effect is difficult to document or support, with appraisers typically resorting to a discussion of the bundle of rights, allocation or separation of rights and a general opinion as to the effect. There is often a significant variance in the opinions of appraisers, but typically in the stated range of 50% to 100%. In the broad context of utility easement evaluations, it is my opinion that the subject easement represents an effective encumbrance nearer the mid to high end of the range of commonly estimated percentage of fee encumbrances. This conclusion is due to the following points –

• The easement is “broad”, encompassing a wide range of potential uses, both surface, subsurface and aerial, some of which can be intense.


• The easement is not located adjacent to an accessible public right-of-way which can be used

for access for maintenance and inspections, thereby resulting in more frequent and more intense exercise of easement rights for these purposes, including ingress and egress over roads on other parts of the USF property.

Mr. Lobban does not address the required zoning setbacks, which represent a pre-existing encumbrance effectively prohibiting certain uses which would be prohibited by the proposed utility easement. The required setback for BPC type uses is 10’ from the Interstate 4 right-of-way. Mr. Lobban’s conclusion as to the fee interest land value is $62,000 per acre, based on consideration of four comparable land sales. He states that access and utilities are not yet at the property, but have been approved for construction in the foreseeable future. I have recently appraised several parcels along this section of Interstate 4 for the City of Lakeland for the same purpose – relocation of existing power line easements off the I-4 right-of-way. One parcel included an existing OUC easement, with the relocated City of Lakeland easement being an adjacent, additional encumbrance. Based on the information contained in Mr. Lobban’s report and my office files, the following is my opinion as to the loss in value to the subject USF property as a result of the proposed easement:

3.065 acres x 10% (a) x $ 50,000 per acre fee land value x 70% (encumbrance) = $ 10,728 3.065 acres x 90% (b) x $ 50,000 per acre fee land value x 90% (encumbrance) = $ 124,133

Total $ 134,860 rounded to $ 135,000

(a) estimated portion of 100' wide easement within 10' zoning setback (b) estimated portion of 100' wide easement not within 10' zoning setback

The offering of this alternative opinion as to the loss in value is not intended to indicate that Mr. Lobban’s appraisal was not properly prepared or does not comply with USPAP. As stated, utility easements can be somewhat complicated and difficult to evaluate. It is my opinion that Mr. Lobban did not give complete attention to certain aspects of the proposed easement and that his opinion as to effect of the easement is toward the low end of the spectrum of generally accepted easement effects for an easement which is quite broad in language and is not located adjacent to an existing accessible road right-of-way. As stated, this is my report of my “desk review” of Mr. Lobban’s appraisal report. It is possible that further investigation, on-site inspection, review of additional information, etc., could result in a different opinion.


Please let me know if you are any authorized user of this report should need further explanation or documentation from me. I appreciate this opportunity to be of assistance to the University of South Florida. Best regards, REED APPRAISAL COMPANY Stanley B. Reed, MAI State Certified General Appraiser Certificate #71 Attached: Resolution Document (Easement Language) Assumptions & Limiting Conditions Qualifications of the Appraiser Certificate of Appraiser


RESOLUTION (Easement Language Document)


ASSUMPTIONS AND LIMITING CONDITIONS In accepting this memo appraisal review report, the client/employer agrees that the description set forth herein correctly describes the property that was to be reviewed/appraised. No responsibility is assumed by the appraiser for legal matters, nor is any opinion on the title rendered herewith. The appraiser assumes that the title to the property is good and marketable. Unless stated otherwise in this report, all existing liens and encumbrances, if any, have been disregarded, and the property is appraised as though free and clear, except for the proposed easement which is the subject of the reviewed appraisal report. Certain information used in compiling this report was furnished the appraiser by outside sources that he considers reliable. The appraiser, however, does not warrant the accuracy of such data, although so far as possible has checked the information and believes it to be correct. Neither I, nor anyone employed by me, has any present or contemplated interest in the property reviewed/appraised. The appraiser, by reason of this report, is not required to give court testimony unless arrangements have been previously made therefore. Unless stated otherwise in this report, no responsibility is assumed for physical or legal defects in the subject property which would not be readily ascertainable upon typical visual inspection, including but not limited to subsoil, drainage, hazardous material contamination and boundary. No environmental audit was provided for my consideration and no responsibility is assumed for such matters, which are beyond the scope of this real estate review/appraisal. This is a “summary/memo appraisal report” which does not contain all of the supporting data typically found in a “summary” or “self-contained” appraisal report. All such material is maintained in my files and is incorporated herein by reference. Any user of this limited scope report may need further assistance, explanation and/or documentation to properly understand and use this report. The appraiser assumes no responsibility or liability for any misuse of this limited scope report that may result from failure of the client or the identified intended users to obtain further assistance. There are no intended users of this report other than the client as identified in this report. Market value, as used in this appraisal, is defined as: 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 is 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 United States 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.

Disclosure of the contents of this appraisal report is governed by the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and by the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser or the firm with which he is connected, or any reference to the Appraisal Foundation or to the MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media, or any other public means of communication without the prior written consent and approval of the undersigned.


QUALIFICATIONS OF THE APPRAISER

Stanley B. Reed, MAI Employment: 1970 - Present: Real estate appraiser, Lakeland, Florida Education: University of Florida, BSBA Degree, 1970, major in Real Estate and Urban Land

Studies Professional MAI - Member, Appraisal Institute (formerly American Institute of Real Affiliations: Estate Appraisers), Certificate No. 5941, awarded May, 1979 Florida Dept State Certified General Appraiser, Certification Number 0072445, of Professional awarded January, 1990; later changed to RZ000007l Regulation: Real Estate Broker, License Number BK 0072445 Appraisal Experience: Most types of real property Qualified as Expert Witness: Circuit Courts, Federal Court (Tampa) Appraisal Commercial banks; savings and loans; cities of Lakeland, Winter Haven, Clients: Ft. Meade, Lake Wales and Plant City; Polk County Board of

Commissioners; Polk County School Board; State of Florida Department of Environmental Protection; FDOT; agencies of the federal government; investors and developers, attorneys; individuals; corporations; utility companies (electric, gas, water, sanitary sewer, rail); phosphate companies; social service agencies; churches


CERTIFICATE OF APPRAISER

The undersigned does hereby certify that, except as otherwise noted in the appraisal review report: 1. I have no present or contemplated interest in the real estate that is the subject of this appraisal

review report. 2. I have no personal interest or bias with respect to the subject matter of this appraisal review

report or the parties involved. My compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report.

3. To the best of my knowledge and belief the statements of fact contained in this appraisal review

report, upon which the analyses, opinions and conclusions expressed herein are based, are true and correct.

4. This appraisal review report sets forth all of the limiting conditions (imposed by the terms of my

assignment or by the undersigned) affecting the analyses, opinions and conclusions contained in this report.

5. This appraisal review has been made in conformity with and is subject to the requirements of the

Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute (formerly the American Institute of Real Estate Appraisers of the National Association of REALTORS), which includes the provision for peer review.

6. As of the date of this report, Stanley B. Reed has not completed the requirements of the

continuing education program of the Appraisal Institute. This program is voluntary. The mandatory requirements have been met. The requirements of the State of Florida have been met.

7. No other than the undersigned prepared the analyses, conclusions and opinions concerning real

estate that are set forth in this appraisal review report. The undersigned did not make a personal inspection of the appraised-reviewed property.

REED APPRAISAL COMPANY Stanley B. Reed, MAI President State-Certified General Appraiser Certificate # 71 f:\word reports\2008\2008-018.rpt(usf-ouc).doc

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