Appraisal Report Malheur County Development Corporation Irrigated Farm Property Appraiser: Lesley L. Miller, ARA Effective Date: October 16, 2019 Report Date: October 31, 2019 October 31, 2019 Greg Smith Malheur County Development Corporation 522 SW Fourth Street Ontario, OR 97914 RE: Malheur County Development Corporation – Irrigated Farm Property, Malheur County, Oregon Dear Mr. Smith, Enclosed is the appraisal report on the property vested in the name of Charles Warren Farmer (1/2 ownership) and James and Margaret Farmer (1/2 ownership). The subject property is in one contiguous tract, two miles north of Nyssa, Oregon in Malheur County. The report values the property as a total unit which is 290.35 deeded acres. Legal and physical access is provided by Arcadia Boulevard, Gem Avenue and Gamble Road, all paved county maintained roads. The appraisal of the subject is reflective of the legal description provided and included in the addenda of the appraisal report. The subject property is an unimproved irrigated farm property that includes a land use mix of irrigated crop and pasture lands. An allocation of the total value by land use type is shown starting on page 24. The subject possesses irrigation water rights provided by the State of Oregon. The water rights includes Certificate #45954 and Permit #16990. Water right Certificate #45954 provides a total of 227.60 acres of primary water rights and Permit #G-16990 provides a total of 50.6 acres of supplemental water rights. A complete description of the property can be found in the Property Description section of the report starting on page 6. The subject property was valued in an as is condition of the fee simple interest, surface rights only including the irrigation water rights. The value of the subject property, as of the effective date of this report, October 16, 2019 is: Two Million Fifty Thousand Dollars ($2,050,000) All information contained in this appraisal report is considered to be correct as stated in the Assumptions and Limiting Conditions. This appraisal report conforms to FIRREA and adheres to the USPAP. If you have any questions please feel free to contact me at (208)387-7993. Sincerely, Lesley L. Miller, ARA Agri-Access Certified General Appraiser Oregon License #C001252 expires 12/31/19 1087 West River Street Suite #100 Boise, ID 83702 Telephone: 208-387-7993 File # 19 MCDC Uniform Agricultural Appraisal Report Malheur County Development Corporation 290.35 Deeded Acres 2 miles north of Nyssa, Oregon Effective Date: October 16, 2019 Prepared For: Malheur County Development Corporation 522 SW Fourth Street Ontario, OR 97914 Intended User: Client: Malheur County Development Corporation (MCDC), Malheur County, and Oregon Department of Transportation (ODOT) Prepared By: Lesley L. Miller, ARA Certified General Appraiser 1087 West River Street Suite #100 Boise, ID 83702 Date Prepared: October 31, 2019 ©1998-2019 AgWare, Inc. All Rights Reserved. File # 19 MCDC UAAR® Table of Contents Page Title Report Summary Scope of Work Area Description Subject Land Description Property Comments Photos Subject History and Use Comparable Sales Summaries Sales Comparison Approach Income Approach Reconciliation UAAR Value Definition Limiting Conditions Appraiser Certification Qualifications Appraisal Report Addenda ©1998-2019 AgWare, Inc. All Rights Reserved. Page # 1 2 4 6 7 8 10 12 14 21 23 25 26 28 29 31 File # 19 MCDC UAAR® Uniform Agricultural Appraisal Report Property Identification Owner/Occupant: Property Address: State/County: Property Location: Highest & Best Use: Farmer/Malheur County Development Corp. Arcadia Boulevard Oregon Malheur / 2 miles north of Nyssa Irrigated Farm Property "As If" Vacant Irrigated Farm Property "As Improved" C-A1 Exclusive Farm Use/NUGA-Industrial 290.35 290.35 97913 Total Deeded Acres: Effective Unit Size: Zip Code: Property Code #: FAMC Comd'ity Gp: Primary Land Type: Primary Commodity: Irrigated Cropland Irrigated Crop Zoning: X Economic Sized Unit Unit Type: Supplemental/Add-On Unit NA FEMA Community # FEMA Map # FEMA Zone/Date: See Addenda Legal Description: SEC 17 TWP 19S RNG 47E Attached X To develop an opinion of market value for the subject property. Purpose of Report: Use/Intended User(s): Purchasing-Lending Decisions/Malheur County Development Corporation (Client), Malheur County and ODOT. Fee simple interest, surface rights only, including irrigation water rights. Rights Appraised: Value Definition: Attached X Assignment: Report Type: Appraisal Extent of Process/Scope of Work: This valuation is of the fee simple interest, surface rights only, in the real estate property as described in the attached legal description including the irrigation water rights. A preliminary title report was not provided to the appraiser. It is unknown if the mineral rights have been severed from the subject property. Mineral rights are of secondary concern to the typical buyer in this market and have minimal impact on value. The subject's mineral rights were not researched and are not included in this analysis. SEE NEXT PAGE FOR ADDITIONAL COMMENTS Summary of Facts and Conclusions 10/16/19 Date of Inspection: 10/16/19 Effective Date of Appraisal: Value Indication - Cost Approach: - Income Approach: - Sales Comparison Approach: Opinion of Value: (Estimated Marketing Time Cost of Repairs: 6-12 Allocation: Appraisal Report Summary months ) Cost of Additions: $ Land: $ Land Improvements: $ Structural Improvement Contribution: $ Non-Realty Items: $ Leased Fee Value (Remaining term of encumbrance Leasehold Value: $ 2,050,000 ) $ $ Overall Value: X Cash Rent Income and Other Data Summary: ( Income Multiplier 21.06 Expense Ratio % 2.50 Overall Cap Rate: % ) Area-Regional-Market Area Data and Trends: Above Avg. Avg. Below Avg. X Value Trend X Sales Activity Trend X Property Compatibility X Effective Purchase Power X Demand X Development Potential X Desirability ©1998-2019 AgWare, Inc. All Rights Reserved. Not Completed 2,010,000 2,050,000 2,050,000 $ $ $ $ $ $ $ $ $ $ $ 7,060 0 0 0 0 0 7,060 ( 100 %) ( 0 %) ( 0 %) ( 0 %) ( 0 %) ( 0 %) ( 100 %) / / / / / / / Share Owner/Operator FAMC Suppl. Attached 218.70 / (unit) Income Estimate: $ 46.05 / (unit) Expense Estimate: $ 172.65 / (unit) $ Net Property Income: Subject Property Rating: N/A Above Avg. Location Soil Quality/Productivity Improvement Rating Compatibility Rentability Market Appeal Overall Property Rating Avg. Below Avg. N/A X X X X X X X Page 1 of 31 UAAR® 19 MCDC File # Scope of Work The appraiser has considered this assignment and has developed a Scope of Work necessary to produce credible opinions and conclusions of value based on the subject property and market characteristics, property influences, and needs of the client. The appraiser has concluded that this Scope of Work is what would be expected of intended users or the appraisers' peers for similar assignments. If not identified elsewhere in the report, the following disclosure is provided to ensure that intended users will understand the Scope of Work performed. Information that was provided by the client includes: an engagement letter, purchase information, and water rights information. Information provided by a representative of the client includes: specific property information and characteristics, irrigation water right information, and answers to appraisers questions. Information gathered by the appraiser includes: area market data, area demographic information, area economic information, Malheur County tax and zoning information, FSA (Farm Service Agency) aerial maps provided by AgriData Inc., soils maps, water rights verification and other details observed during the property inspection. Lesley L. Miller completed an on site inspection of the property on October 16, 2019. Greg Smith, an employee of MCDC, Larry Wilson, Malheur County Commissioner, and Toni Parish, a board member on the committee of the MCDC were present and answered the appraisers questions at the time of inspection. The subject consists of one contiguous tax lot located two miles north of Nyssa, Oregon in Malheur County. Legal and physical access is provided by Arcadia Boulevard, Gem Avenue and Gamble Road, all paved county maintained roads. These roads along with other farm roads and areas walked were traveled during the property inspection. The roads and areas traveled are considered adequate for viewing the subject property. The majority of the land was seen and visible from these vantage points traveled. This is a common practice for inspecting properties of this nature and considered adequate to identify land uses, acreages, and quality of each land use type. The subject is vacant land and there are no structural improvements on the property. The total acreage appraised is per the legal description and county tax information. The subject is being appraised as a whole unit and possesses a mix of irrigated crop and pasture land use types. The irrigated cropland possesses irrigation water rights and is calculated using aerial maps provided by AgriData Inc. The pasture lands do not possess irrigation water rights and are made up of wetlands and drainage areas. Productivity of the land is based on the pertinent soils, and the appraisers estimates and comparisons with other area properties. Charles Warren Farmer (1/2 ownership) and James and Margaret Farmer (1/2 ownership) are in the process of selling the subject property to Malheur County. This is a direct sale between buyer and seller. The current purchase price for the property is $3,019,900 with an anticipated close date of December 31, 2019. Please see the Property History section of this report for a full description of the sales transaction. The area market data was obtained and verified through record searches, and/or, contact with buyers, sellers, agents, or other sources deemed to be reliable. All of the market data used in this report has been viewed and verified by the appraiser or another appraiser employed by Agri-Access. Parties familiar with each sale were interviewed in order to gain an understanding of the transaction. The inspection of the sales involved a drive by of each property in order to be aware of the general area and of any special attributes that may have affected the sales price. During the drive by inspection, the general market area is also observed. Sales from the area of the subject with similar attributes from Malheur County were considered in this valuation. The subject conforms well to the area and to the sales transactions. The appraiser is competent to complete this appraisal assignment based on her appraisal knowledge and experience and familiarity of the area, and of this type of property. Lesley L. Miller is in compliance with continuing education requirements for state certification as a "Certified General" appraiser under Oregon license number C001252, expiring 12/31/2019, and is an Accredited Rural Appraiser with the American Society of Farm Managers and Rural Appraisers (ASFMRA). The valuation process is accomplished through the application of specific steps. These steps are applied to the property being appraised to arrive at a well supported final value conclusion. This Appraisal Report is intended to comply with the reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), Standard Rule 2-2(a). This Appraisal Report presents summary discussions of the data. SEE NEXT PAGE FOR ADDITIONAL COMMENTS ©1998-2019 AgWare, Inc. All Rights Reserved. Page 2 of 31 UAAR® 19 MCDC File # Scope of Work Continued The depth of discussion included in the report is specific to the intended use of the report and the needs of the client and intended users. The appraiser is not responsible for the unauthorized use of this report. The Cost Approach is most applicable to improved properties with newer construction. This approach allows for the valuation of each individual land use type. This approach also includes the depreciated value of the subject's buildings, if any. The subject contains land use types typical to the area and is an unimproved property. The completion of this approach would likely be a restating of what can be accurately accomplished through the application of the Sales Comparison Approach. The Cost Approach to value is not considered applicable and will not be completed in this analysis. The omission of this approach is not considered to be misleading to the intended user of the report. The Income Approach is most applicable to properties with significant income potential. This approach considers sales of comparable nature to the subject from which to obtain market demonstrated rates of return. From the sales used, a representative cap rate is determined and applied to the net income of the subject. The reliability of the Income Approach depends upon the appraiser's estimate of production and ownership costs, and the overall comparability of the sales to the subject. This approach becomes less valid with rural residential properties, part-time farms, and properties located in recreational markets, as owners of these properties are typically less sensitive to the immediate financial return provided by the farm income, and are more concerned with rural lifestyle, long term investment, and pride of ownership. The subject is a production agriculture property with attributes that allow for generating income. The Income Approach will be completed to support the other completed approaches to value. The Sales Comparison Approach values the property on an overall dollar per deeded acre basis. There is adequate and reliable information from which to draw a conclusion of value through the application of this approach. There are area sales with comparable land use types and improvements compared to the subject. The Sales Comparison Approach will be completed. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 3 of 31 UAAR® Area-Regional Boundary: Area-Regional Description Major Commodities: The best lands are capable of producing cash crops. The more sloping and rolling lands will typically be utilized for feed crops and livestock enterprises. Above Avg. Avg. Unlikely Likely Taking Place X Change in Economic Base: From To N/A On and Off Property: Up Stable Market Availability: Down X X X X Value Trend: Sales Activity Trend: Population Trend: Employment Trend: Under Supply Balanced Over No Supply Influence X X X X Cropland Units: Livestock Units: Recreational Tracts: Rural Res Tracts: (Discuss social, economic, governmental, and environmental forces.) The market area for the subject property is the irrigated agricultural areas within Malheur County. The immediate market area includes the lands located near the populated service areas in northern Malheur County. Social forces in the area of the subject are the agricultural production potential of the lands, the rural life-style, recreational opportunities, and investor activities in the area. These forces constitute the primary social forces defined in the market area. A stable economic force is provided by ag production, and ag commodities within the defined market region. Residential and investment interests are considered to be a large influence in the market area. Governmental forces are considered to be county zoning ordinances that have been implemented, and regulate land splits and building permit availability. County zoning regulations provide avenues for land splits and continued building of rural homes. There are also governmental agencies that participate in cost sharing programs which have assisted with upgraded and improved irrigation and conservation projects. Environmental forces considered to be soil quality, topography, irrigation water rights and availability, and privacy or scenic features. Exposure Time: 6-12 months. (See attached definition and discussion) The specific market is generally defined as the agricultural farming areas located Specific Market Area Boundaries: near the populated service areas in northern Malheur County including Ontario, Nyssa and Vale. Market Area: Type Rural Suburb Stable X X X X Value Trend Sales Activity Trend Population Trend Development Trend Analysis/Comments: Urban Market Area: X Up Market Area Description Below Avg. X Off Property Employment: Forces of Value: 19 MCDC File # The area of consideration is the general farming area of northern Malheur County, Oregon. Down Property Compatibility Effective Purchase Power Demand Development Potential Desirability Above Avg. Avg. Below Avg. N/A X X X X X (Discuss positive and negative aspects of market area.) The real estate market contains a variety of properties varying from smaller acreages to improved larger acreage units. Ontario is the largest town in Malheur County, while Vale is the county seat. The subject is situated two miles north of Nyssa, which is a diverse farm area with the better lands producing row crops and the rougher bench lands being utilized as seed crops, feed crops, grains, and livestock bases. Irrigation water is provided by Irrigation Districts that typically maintain their season-long supply with storage reservoirs. There are some scattered supplemental wells that have been drilled. Irrigation water is spread by using many common methods, from center pivots, wheel lines, and flood using ditches and gated pipe. In the outlying areas situated near the area communities many improved properties have become appealing to the part time farm buyers. Many of these property owners are employed in town and desire rural living and lifestyles. Many times these owners lease out the farm land or desire the acreage for hobby farms or livestock interests. Investor buyers have also been interested in ag properties in the area. Typically these buyers purchase property for the potential resale and income production of the land. Access to the area is good with a complete system of county roads, most of which are paved. All of the outlying areas and towns have school systems. Nyssa is the closest town to the subject, and contains a school system as well as some limited services. Ontario is the largest town in Malheur County and possesses a Community College, hospital, and serves as one of the areas service centers. The Boise Metropolitan area is located approximately 60 miles to the southeast and contains many markets and services, as well as extensive medical facilities, educational opportunities, an international airport, shopping, and entertainment. SEE NEXT PAGE FOR ADDITIONAL COMMENTS ©1998-2019 AgWare, Inc. All Rights Reserved. Page 4 of 31 File # 19 MCDC UAAR® Additional Comments Currently the subject's market area is heavily driven by agricultural influences and motivations. There are also strong influences from part time farm buyers and investor buyers as well. Real estate listings in the area have fluctuated regularly. Quality agricultural tracts appear to be purchased more quickly and are not listed for extended periods of time. The lessor quality properties tend to stay on the market for a longer period of time. Recently commodity prices have decreased from very strong levels, financing has been favorable, and agriculturally motivated buyers have been dominant in the market. The current market participants have been neighboring operators and area operators, looking to expand current operations. Competition for quality ag properties has increased as well as rent rates and rent competition. Investor buyers have been interested in properties that can be improved and resold for profits, while residential buyers have been seeking properties that provide part time farm potential and the rural lifestyle. Industrial operations are in the area related to agriculture, and are mostly interested in smaller parcels of land close or within city limits. The current market has been experiencing a time where there are few market transactions in the immediate market area of the subject. The current growing year has had many challenges. Irrigation districts were able to supply a full allotment of water and reservoirs appear to be in good supply for the upcoming year. Commodity prices vary and generally are considered to be soft. The season has had many weather challenges as there was a long, wet and cold spring, which caused planting delays. Which was followed by late harvests and some wet harvest moisture. Through analyzing the available market activity, interviews with area realtors and other appraisers, it is determined that the current real estate market is considered to be stable. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 5 of 31 19 MCDC UAAR® File # Property Description: (Location, use and physical characteristics) The subject property consists of 290.35 total deeded acres located in one contiguous tract and is made up of one tax parcel. The property is located approximately 2 miles north of Nyssa, Oregon in Malheur County. Legal and physical access is provided by Arcadia Boulevard, Gem Avenue and Gamble Road, all paved county maintained roads. The subject is an unimproved farm property made up of irrigated crop and pasture lands. The subject is located in a quality farming area with many area properties utilized for agricultural production. The adjoining properties are utilized in a similar fashion to the subject with agricultural uses, as well as rural residential, part time farm, and investment properties. Land Use Subject Land Description Site Irrigated Cropland Irrigated Cropland B Dry Crop Pasture Range Other Total Deeded Acres Deeded Acres Unit Type 254.00 Acre 36.35 Acre 290.35 Total Units Unit Size 0.0%) ( ( 87.5%) 0.0%) ( 0.0%) ( ( 12.5%) 0.0%) ( 0.0%) ( 0.0%) ( 0.0%) ( 0.0%) ( ( 100 % ) Comments The total acreage appraised is per the legal description provided and Malheur County tax information. The lands of the subject were inventoried according to their use. The number of acres of each applicable land class is based on an on-site inspection, aerial photo of the property, county records, calculated from mapping software, and from the water rights assessed to the subject property. Subject Description: Location Legal Access Physical Access Contiguity Shape/Ease Mgt. Adequacy Utilities Services Rentability Compatibility Market Appeal FEMA Zone/Date Building Location Land Improvements: Domestic Water Livestock Water Interior Roads Drainage Above Below Avg. Avg. Avg. N/A X X X X X X X X X X NA NA Above Below Avg. Avg. Avg. N/A X X X X The irrigation equipment included with the subject is minimal and is considered inherent in the land value. Topography: X Yes X Supplement Attached Water Rights: No X No Mineral Rights: Yes Supplement Attached Comments: The water rights are described on the following page. A preliminary Site Irrigated Cropland Irrigated Cropland B Dry Crop Pasture Range Undulat- Roll- SlopLevel ing ing ing X title report was not provided to the appraiser, it is unknown if the mineral rights have been severed from the subject property. Mineral rights are of secondary concern to X the typical buyer in this market and have minimal impact on value. The subject's mineral rights were not researched and are not included in this analysis. X X Overall Topography Soils Description: Irrigated soils consist of Umapine silt loam, Class 3w; Turbyfill fine sandy loam, 0-2% slopes, Class 1e; Baldock silt loam, Class 3w; and Otoole silt loam, Class 4w. Please refer to the addenda for a detailed soils map. X Avg. Soil Quality/Production: Above Avg. Below Avg. N/A Supplement Attached 12-14 " Annual Precipitation 2,168 2,176 ' Elevation 60-90 Frost-Free Days Climatic: ' to None None None None None Telephone Utilities: Water Electric Sewer Gas 2.5 miles Schools 7 miles Hospital 2 miles Markets 1/2 mi Major Hwy. 2.25 mi Service Center Distance To: None were reported or observed. Nothing atypical Easements/Encroachments: (Conservation, Utility, Preservation, etc.) was reported or disclosed uncommon to a farm operation. Hazards and Detriments: See the property description comments for details. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 6 of 31 File # 19 MCDC UAAR® Property Comments The subject is mostly rectangular in shape with 254 acres of irrigated ground situated in nine fields. Irrigation water enters the subject from an irrigation canal that bisects the property from diversion points located on the property. The fields are flood irrigated via concrete lined ditches and siphon tubes. Topography is nearly level to slightly sloping for drainage. The irrigated soils primarily consist of Umapine silt loam, Class 3w; Turbyfill fine sandy loam, 0-2% slopes, Class 1e; and minimal amounts of Baldock silt loam, Class 3w and Otoole silt loam, Class 4w. These soils are average quality and are capable of growing crops typical to the area. The fields are well maintained and appear to have minimal weed growth. Irrigation water rights are provided by the State of Oregon and were researched and verified on the State of Oregon Water Resources Department. The water rights includes Certificate #45954 and Permit #16990. Water right Certificate #45954 provides a total of 227.60 acres of primary water rights and has a priority date of December 21, 1973. The water right certificate supplies surface water from the Snake River. Permit #G-16990 provides a total of 50.6 acres of supplemental water rights and has a priority date of August 24, 2011. The permit supplies ground water from an on-site well. There is sufficient water rights and irrigation water available for the acreage currently being irrigated on the subject property. An Irrigation Water Rights Summary and Water Right certificates are included in the addenda of this report that contains all pertinent irrigation water right details. The remaining acreage is considered as pasture lands. These lands do not possess irrigation water rights and are made up of the acreage that surrounds the irrigated cropland. This acreage benefits from sub-irrigation moisture from the ditches that run through the property. This acreage also provides habitat to local wildlife. The property has railroad frontage along the eastern property boundary. No items atypical of a farm operation were observed, no other concerns were reported to the appraiser. A preliminary title report was not provided to the appraiser. It is unknown if there are any atypical easements, it is assumed that the subject has typical easements for irrigation ditches, pipelines, roads, and utilities. These typical easements are not considered to be detriments to the subject property. It is unknown if the mineral rights have been severed from the subject property. The appraiser assumes that all mineral rights are included with the subject property. Mineral rights are of secondary concern to the typical buyer in this market and were not researched as part of this appraisal analysis. Regarding hazards or detriments no major items atypical of a farm or ranch operation were observed, no other concerns were reported to the appraiser. The appraiser is not trained as an environmental expert and does not know, in fact, that environmental or hazardous concerns do not exist on the subject property. The appraiser's observation is limited to reasonably apparent and accessible conditions and does not include hidden, latent conditions or those in inaccessible areas. The appraiser was not supplied an owner completed environmental disclosure. A summary of the property's positive attributes include the following: -The subject possesses average soils and is considered to be a productive ag property. -There are sufficient irrigation water rights for the acreages considered as irrigated. -Legal and physical access is provided by paved county roads on three sides. A summary of the property's negative attributes include the following: -None. This property would likely sell as one unit. Potential buyers would include part time farm buyers, area operators wanting to expand their current farming operations, or ag investment buyers. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 7 of 31 UAAR® File # 19 MCDC RIGHT: View of subject from northern property boundary LEFT: Irrigated cropland RIGHT: Irrigated cropland ©1998-2019 AgWare, Inc. All Rights Reserved. Page 8 of 31 UAAR® File # 19 MCDC RIGHT: Pasture lands LEFT: Irrigation canal bisecting property RIGHT: Eastern property boundary facing north ©1998-2019 AgWare, Inc. All Rights Reserved. Page 9 of 31 UAAR® File # X Ownership Longer Than 3 Taxes Zoning History Owner Previous: Present: Years Recording/Reference Date X Under Contract Optioned Malheur County Currently Listed SEE NEXT PAGE FOR PROPERTY HISTORY Terms $ $ Farmer Currently: Buyer: Price Paid 19 MCDC Contract Price: Listing Price: $ $ 3,019,900 Listing Date: C-A1 Exclusive Farm Use/NUGA-Industrial X Yes Current Zoning: Zoning Conformity: No X Unlikely Zoning Change: Probable To: Comments: Zoning is regulated by Malheur County in this area. The subject is formally zoned Exclusive Farm Use C-A1 and Nyssa Urban Growth Area-Industrial and is situated in an agriculture area. Zoning was verified with the Malheur County Planning and Zoning Department. A portion of the subjects zoning was changed in late 2018. The 213.413 acres zoned NUGA-I changed from C-A1. This change was initiated by the pending buyers. 2019 Tax Basis: Forecast: Assessment Year X Agricultural 8,446.62 Land $ Current Tax $ 8,447 Building(s) $ Estimated/Stabilized $ Combined 415,846 290.35 29.09 $ Or ( Ac.) =$ /acre Map 19S4717 415,846 Parcel #: Total Assessed Value $ Tax Lot 100 Assessed (Taxable) Value X Stable Trend: Up Down Tax information was gathered from the Malheur County Assessor and is reflective of the 2018 tax year. Comments: Highest & Best Use is defined as that reasonable and probable use that supports the highest present value, as defined, as of the effective date of the appraisal. Alternatively, that use, from among reasonably probable and legally alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in the highest land value. Highest & Best Use Analysis Analysis: (Discuss legally permissible, physically possible, financially feasible, and maximally productive uses) Legally Permissible: The subject is currently in agricultural use and is in compliance with county zoning regulations. The subject property has 213.413 deeded acres that is zoned Nyssa-UGA/Industrial and the remaining 76.937 deeded acres is zoned Exclusive Farm Use C-A1. There is some limited commercial activity forces in the immediate area situated south of the subject. This commercial activity is located closer to Nyssa City Center than the subject is located. Commercial properties are typically located closer to population centers, and many times within the city limits. The uses surrounding the subject are primarily agricultural uses. The subject is an unimproved irrigated farm property that is made up of irrigated crop and pasture land use types. The subject is located in a rural area north of town where the market is primarily influenced by agricultural operations, with influences from part time farm, recreational and investor buyers. The subject property is considered to be available for any legal use under the EFU Agricultural and NUGA-Industrial zoning of Malheur County with limiting legally permissible restrictions to the NUGA-Industrial zoned acreage, this acreage is to be reserved exclusively for the rail dependent uses and agricultural processing, warehouse, distribution, and support industrial uses that benefit from the location in a full service industrial park next to the proposed Treasure Valley Reload Center (TVRC). SEE NEXT PAGE FOR ADDITIONAL COMMENTS Highest and Best Use: "As if" Vacant Irrigated Farm Property "As Improved" Irrigated Farm Property Discussion: Value Methods SEE NEXT PAGE FOR ADDITIONAL HIGHEST AND BEST USE ANALYSIS COMMENTS X Income Approach X Sales Comparison Approach Valuation Methods: Cost Approach (Explain and support exclusion of one or more approaches) Please see the comments in the Scope of Work section of this report for the explanation supporting the exclusion of one of the approaches to value, and the support of the valuation methods used. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 10 of 31 UAAR® 19 MCDC File # Highest and Best Use Continued Property History Continued: Charles Warren Farmer (1/2 ownership) and James and Margaret Farmer (1/2 ownership) are in the process of selling the subject property to Malheur County. This is a direct sale between buyer and seller with no market exposure. The pending purchase price for the property is $3,019,900 with an anticipated close date of December 31, 2019. The buyers are pursuing the purchase of real estate for the development of the proposed TVRC. In this pursuit they advertised to area property owners to bring offers to them. The sellers proposed the subject property with the pending purchase price which was accepted by the buyer. Since the selection of the subject and the pending purchase agreement the buyers have initiated the recent change in zoning for a portion of the subject form C-A1 to NUGA-I. The sellers are retaining a 5 acre parcel (not yet determined) of industrial zoned land from the subject property. Highest and Best Use Continued: Physically Possible: Soil quality, terrain, location, and climate are the primary physical conditions that affect or restrict the highest and best use. The subject possesses irrigated cropland with soils that are considered to be productive and similar to many other area operations. These soils are capable of producing feed crops commonly grown in the area, as well as specialized row crops. There are sufficient irrigation water rights for the lands being irrigated from private water rights. Irrigation water is distributed by concrete ditches and siphon tubing. The irrigated cropland is level. The pasture lands are limited to wetlands due to not having irrigation water rights and following the natural contour of the land and irrigated fields. These lands benefit from sub-irrigation moisture and provide natural habitat to wildlife. The subject does possess railway frontage and is located two miles from the city center of Nyssa, an agricultural farming influenced town. The subject is also located in an area that is conducive to farming and possesses many similar operations. The adjoining lands to the subject are all utilized in an agricultural fashion. The subject would not be considered desirable to a part time farm buyer, due to the overall size and scale of the subject and due to the lack of improvements found on the subject property. Pure recreational buyers would likely be unmotivated for the property due to its lack of attributes desired by this buyer pool. Ag investment buyers have been present in the market and desire large blocks of irrigated lands, or properties that can be improved or developed for increased production. These buyers desire properties that can be purchased, leased for income, and held for future resale. The subject does possess irrigation water rights and an efficient irrigation system, and there are multiple area operators that would lease the subject. An investor buyer would likely find the subject desirable. Industrial buyers/operators typically desire smaller blocks of land for an operational unit and typically desire property close to city centers. The industrial uses will be impacted by the presence of the TVRC, and must support uses benefiting from this main center. Currently the TVRC is in the preliminary and planning stages and has not been constructed. It is reasonable that these factors may detour, or delay, investor buyers. Ag operators may have interest in the property due to its productive nature and efficient irrigation water rights. Area operators who are desiring additional irrigated lands may find the subject appealing. Area operators and ag investment buyers have been the most active market participants and are interested in ag properties as add on or expansion tracts. Financially Feasible and Maximally Productive: Agricultural production is typical for the immediate area with farms/livestock enterprises being owned and operated for a business profit, generally providing a reasonable return and demonstrating financial feasibility. Ag production buyers and investors will be most concerned with a monetary return on their purchase money. Residential and part time farm buyers have less monetary concerns and are more focused on the rural lifestyle, way of life, and enjoyment of the property. The area surrounding the subject property is an agricultural area and is heavily influenced by agricultural buyers. Considering the subject, the current market transactions and the overall market area, the highest and best use of the subject property "as if" vacant and "as improved", is as an irrigated farm property. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 11 of 31 UAAR® 19 MCDC File # Comparable Sales Summaries The following is a summary of the comparable sale properties that were used in the analysis of the subject, sales sheets can be found in the addenda of the report. Other area sales were considered when valuing the property with the following sales deemed as the most reflective of the current market and comparable to the subject property. 16001 The sale property consists of two parcels of ground that are located in the Nyssa Flat area, 2-3 miles north of Nyssa. The property consists of 534 deeded acres made up of non-contiguous parcels that were purchased from three different vesting's, but the purchase was negotiated all at one time and analyzed as one transaction. The property is made up of site, irrigated crop and other lands. Irrigation water is provided by a combination of the Old Owyhee Improvement District, the Owyhee Irrigation District and from private rights from the Nyssa Arcadia Drain. The irrigation water is delivered to the fields by a combination of gated pipe, concrete ditches, and a small amount of dirt ditches. The irrigated crop ground is all leveled and has good quality Class 1 and 2 soils, with a small amount of good quality Class 3 soils that are capable of growing all crops common to the area. The property is improved with several improvements that range from fair to average condition. The "other" lands on this parcel were not allocated value, as is typical with the sales of larger irrigated crop units in the market area. Access to the parcels is provided by numerous paved county roads, and all parcels have good physical and legal access. This property is mostly zoned C-A1, exclusive farm use with a small portion of the southern property boundary of the southern tract being zoned C-I1, County light industrial. The seller was retiring from farming, and the buyer is a large scale area ag operator who owns adjoining lands, and was seeking to expand land holdings. This transaction was handled privately. This property was never exposed to the market, nor was it opened up for competition. There were rumors of this property potentially being sold for the past several years, and there were several interested parties who likely would have paid more for the property. 17012 The sale property is located 2 miles northeast of Vale. The property consists of 297.52 acres dedicated to site, irrigated crop and other lands. The irrigated crop land is level in topography and is made up of six rectangular contiguous fields that are irrigated via concrete ditches. Irrigation water is supplied by Warm Springs Irrigation District and from the Malheur River via a lift pump. The irrigation district assesses the property for 107.2 acres but recognizes 136.7 acres as decreed water right. The irrigation water was considered to be typical to above average for the area. Soils consist of silt loams ranging from Class 2c-4s. Structural improvements include a house, GP buildings, machine shed, hay shed, grain bins and several other miscellaneous improvements. The improvements are well maintained and range from fair to good condition. The property is zoned C-A1 and has railroad frontage along the northern property boundary. Access is provided by Frontier Lane. The sale was a direct sale between buyer and seller. The parties had been involved in sale transactions in the past. The buyer grows onions and shallots and was seeking additional land for production and approached the seller about the property. The sellers offered the property for sale at $2,000,000 and the buyer accepted the terms. Two un-installed 1/4 mile pivots were included in the sale that the seller was planning on installing. The buyer sold the pivots and installed pipelines for an underground drip irrigation supply. The allocated value to the un-installed pivots is $50,000. 17002 The sale property is an improved tract of irrigated crop ground that is located approximately 2 miles northeast of Vale, in Malheur County. The property consists of 133 deeded acres dedicated to site, irrigated crop and pasture lands. The irrigated crop ground is broken up into 8 different fields that are irrigated by a combination of concrete ditches and gated pipe. These lands have a combination of Class 2-4 soils that are capable of growing both cash and feed crops. Irrigation water is provided by a primary private right (41141) for 17 acres with water from the Malheur river (covers the southern most field), as well as by a supplemental right (27142) for 80 acres with water from the Malheur River that covers the remainder of the irrigated ground. There is no formal primary water right for these lands, although the property has historically been fully irrigated. The water master is aware of this situation, but is allowing the property owners to continue to fully irrigate the property for the time being. This situation was not known to the buyers during the acquisition process. The pasture ground consists of dry pasture lands that are primarily situated north of Lagoon Dr. The improvements are located along the western boundary of the property, and include a house, manufactured house, machine shed two carports and numerous older miscellaneous outbuildings in fair to average condition. The larger parcel that makes up the property is zoned Vale UGA-Industrial and the smaller parcel (pasture) is zoned C-A1. The smaller parcel (pasture) has railroad frontage on the north side of Lagoon Drive. Access is provided by Lagoon Dr., which bisects the northern portion of the property, and by Foothill Ln, which forms the majority of the eastern boundary. The sellers were long time area residents/farmers, and the buyer was a Canadian firm that was looking at constructing a mushroom facility on the property after purchasing it. The buyer was considered motivated as they felt like the purchase was on the strong side, but it reportedly fit their needs well. SEE NEXT PAGE FOR ADDITIONAL COMMENTS ©1998-2019 AgWare, Inc. All Rights Reserved. Page 12 of 31 UAAR® 19 MCDC File # Comparable Sales Summaries Continued 18006 The sale property is an improved tract of farm ground that is located in the Ontario Flat area, 3 miles southwest of Ontario. The sale property consists of 227.76 deeded acres dedicated to site, irrigated crop and other lands. There were approximately 187 acres being irrigated at the time of the sale. These lands were broken up into 12 different fields that have all been leveled, and were being irrigated by a combination of dirt ditches, concrete ditches, and gated pipe. The soils on the irrigated crop ground are primarily Class I soils that are capable of growing all crops common to the area. Irrigation water is provided by the Old Owyhee Ditch Improvement District. The "other" lands are composed of ditches, roads, and waste/dry ground, and did not contribute value to the sale. The site area is situated in the northeast corner of the property, and contains an older average quality dwelling, GP building, machine shed, and several other older miscellaneous type outbuildings in fair to average condition. The property is zoned C-A1. The sale property is accessed by Butler Blvd and Clark Blvd, both of which are paved county roads. The sellers were a family estate selling out for cash, and the buyers are a local area farming family. The property initially listed for $1,900,000, and was reportedly only on the market for 2-3 months before it went pending at the purchase price. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 13 of 31 File # 19 MCDC UAAR® Sales Comparison Approach (1-5) Sale Data Sale Data Grantor (Seller) Grantee (Buyer) Source Date Eff Unit Size/Unit Sale Price Finance Adjusted CEV Price Multiplier Expense Ratio Subject 10/19 Eff 290.35 / Acre Sale #1 16001 Sale #2 17012 Sale #3 17002 App AW 01/16 533.93 3,255,714 Cash 3,255,714 Appraiser KB 03/17 297.52 2,000,000 Cash 1,950,000 Appraiser 09/17 133.23 1,008,000 Cash 1,008,000 Sale #5 Seller / Appraiser 08/18 227.76 1,675,000 Conventional Loan 1,675,000 18.04 31.61 30.68 Sale #4 18006 23.45 The Appraiser has cited sales of similar property to the subject and considered these in the market analysis. The description below includes a dollar adjustment reflecting market reaction to those items of significant variation between the subject and the sales documented. When significant items are superior to the property appraised, a negative adjustment is applied. If the item is inferior, a positive adjustment is applied. Thus, each sale is adjusted for the measurable dissimilarities and each sale producing a separate value indication. The indications from each sale are then reconciled into one indication of value for this approach. CEV Price/ Acre 6,097.64 6,554.18 7,565.86 7,354.23 LAND AND IMPROVEMENT ADJUSTMENTS 424.92 -680.54 7,098.61 943.48 -1,460.20 7,049.14 -270.63 -737.77 5,545.78 -72.22 -445.22 5,580.20 Land Adjustment Impvt. Adjustment Adjusted Price TIME ADJUSTMENTS X Yr X Smpl Auto Mo Periods Cmp Rate X Man Time Adjustment Time Adj. Price OTHER ADJUSTMENTS Sale Comparison Zoning Railroad Frontage Location C-A1/NUGA-I Adjustment Yes Adjustment 2 miles N of Nyssa Adjustment C-A1/C-I1 C-A1 C-A1/VUGA-I C-A1 No Yes Yes No 2-3 mi N of Nyssa 2 mi NE of Vale 2 mi NE of Vale 3 mi SW of Ontario Adjustment Adjustment Net Adjustments -517 -1,008 -517 ADJUSTED PRICE 5,581 5,546 7,049 Analysis/Comments: (Discuss positive and negative aspects of each sale as they affect value) -256 7,098 The Sales Comparison Approach is based on the premise that the market value of a property is directly related to the prices of comparable, competitive properties. The principle of substitution comes into play where the value of a property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability. A knowledgeable buyer will pay no more for a property than they would pay for a substitute of equal utility or desirability. The Sales Comparison Approach uses a direct comparison to other market transactions on some common unit of comparison such as acres, animal units, etc. The Sales Comparison Approach was completed on an overall dollar per total deeded acre basis. SEE NEXT PAGE FOR ADDITIONAL COMMENTS Sales Comparison Approach Summary: $ 1,610,000.00 to $ 2,060,000.00 Property Basis (Value Range): 290.35 Acre = $ 2,046,967.50 / Acre X 7,050.00 Unit Basis: $ Multiplier Basis: $ X (multiple) = $ ©1998-2019 AgWare, Inc. All Rights Reserved. Sales Comparison Indication: $ 2,050,000 Page 14 of 31 UAAR® 19 MCDC File # Sales Comparison Comments Sales from the market area of the subject were considered, with four representative sales included in this approach to value. One sale occurred in 2016, two sales occurred in 2017, and one in 2018. Please refer to the Comparable Sales Summaries, pages 12 and 13, for a brief discussion of each of the sales. Each of the sales was compared to the subject on a "head to head" basis to adjust for land allocation and building contribution differences. The sales adjustment pages 17 through 21 show these direct comparisons. The subject possesses a land mix of irrigated crop and pasture lands. All of the sales used contain irrigated crop as the primary land class. Two of the sales possessed pasture lands in their land use mix. Sales that possess land use types other than what is present on the subject are adjusted to become similar to the subject property. The sales that contain additional land classes are adjusted to be similar to the subject. The adjustments are made to make the sales "like" the subject in terms of land mix. All of the land adjustments are derived from market information and are not considered to be misleading to the reader of the report. As previously mentioned the subject is an unimproved farm property. From this point, comparisons can be made for other factors that may affect the overall value of the property. Adjustments for time, size, quality, location, and other physical differences are considered. The sales range from approximately 133 to 534 deeded acres in size, these sales are considered to be similar in size for irrigated farms/add on tracts and a size adjustment was not warranted. The sales are all considered to be current for the market area and date back to 2016. No time adjustment is considered to be warranted. The net adjustments on the previous page are market derived and are not considered to be misleading to the reader of the report. Some of these adjustment are large and all of the adjustments vary due to the land uses and acreage present on the sales. In the adjustment grid on the previous page qualitative comparisons are made between the sales and the subject for Zoning, Railroad Frontage and Location. This Zoning comparison states the zoning of the subject as well as the comparable sales. The subject is EFU Agricultural and NUGA-Industrial. The subject and the sales are all in ag production. Sales 16001 and 17002 are both zoned Ag and Industrial use. The remaining sales are zoned Ag Use only. There appears to be no differentiation of price paid per acre for land located under the Industrial zoning or the Ag zoning that are utilized for Ag production. The Railroad Frontage comparison states if the subject and the sales have railroad frontage. The subject and Sales 17012 and 17002 possess railroad frontage. There does not seem to a premium paid for properties with railroad frontage. The Location comparison indicates the distance the subject and the sales are from city centers/towns. The subject is located two miles north of Nyssa. The sales are all located within three miles from Nyssa, Vale and Ontario. These areas are similar to the subject with ag production being the main influence in these areas. These are comparisons only, and are not quantitative adjustments, they are only intended to enhance this approach to value. No other specific adjustments were isolated or applied in this analysis. After applying the land adjustments, the values indicated by the sales range from $5,546 to $7,098 per acre. Sale 17012 indicates the value at the bottom end of the range. This was a direct sale between buyer and seller. The parties had been involved in transactions before and the seller offered the property for sale and approached the buyer. The property is an irrigated farm property with railroad frontage 2 miles outside of Vale. The three remaining sales indicate a slightly tighter range of value from $5,581 to $7,098 per deeded acre. Sale 18006 indicates a value at the top end of the tightened range. This is a sale of irrigated cropland with Class 1 soils that sold to a local farming family that has other land holdings in the area. The property was listed for a few months prior to an offer being accepted. Sale 16001 indicates the value at the bottom end of the tightened range. This was a direct sale between buyer and seller with no market exposure. The seller was retiring and the buyer is a large scale operator with adjoining lands. The property is located just out of Nyssa and has a small amount of County Light Industrial zoning with the remainder of the property being zoned agricultural. Sale 17002 indicates a value of $7,049 per deeded acre. This was a direct sale between buyer and seller, the buyers were long time area farmers and the buyer is an out of area firm that was looking for a property they could construct a mushroom facility on. The buyer indicated that the property fit their needs well. The property has railroad frontage and is zoned Industrial and Agricultural. The subject property possesses irrigated lands with adequate irrigation water rights and typical soils to the area. The property also has railroad frontage and is zoned Agricultural and Industrial. The subject possesses similarities to each of the sales. Overall the subject possesses the most similarities to Sale 17002. SEE NEXT PAGE FOR ADDITIONAL COMMENTS ©1998-2019 AgWare, Inc. All Rights Reserved. Page 15 of 31 UAAR® 19 MCDC File # Sales Comparison Comments Considering the comparability of each sale to the subject, each sales individual characteristics compared to the subject were considered, as well as the total range of indicated values, and the tighter range of values expressed by the three sales. The subject fits well within the tightened range of values. The subject's influences from it's attributes, characteristics, water rights, irrigation system, location, and soils contribute to it's market value. The current market conditions, available market participants, most probably type of purchasers in the market, area competition and demand all contribute to a stable real estate market. The Sales Comparison Approach indicates the value of the subject property to be $7,050 per deeded acre, which when rounded values the subject property at $2,050,000, cash. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 16 of 31 UAAR® 19 MCDC File # Sales Comparison Approach - Land Adjustment for Sale# 1 Adjust each sale to the subject's land mix (land adjustment) using unimproved sales. This page allows for a "quantitative land adjustment" only. 16001 -72.22 Sales Comparison - Sale #1 Land Adjustment Amt. $ Land Use Sale Acres $/Acre Sale Unit Type Sale Units $/Unit Subj. Acres $/Acre Subj. Unit Site 6.00 6,250.00 6,250.00 Irrigated Cropland 476.88 6,250.00 254.00 6,250.00 Irrigated Cropland B Dry Crop Pasture 900.00 36.35 900.00 Range Other 49.49 0.00 0.00 Sale Land Contrib. 3,018,000.00 / Eff. Unit Size 533.93 = 5,652.43 Total 1,620,215 $/Unit Total 1,587,500 32,715 / Eff. Unit Size 290.35 = 5,580.21 Sales Comparison Approach - Improvement Adjustment for Sale# 1 Compare each set of sale improvements to the subject improvements making judgments regarding utility and condition. Then arrive at an improvement adjustment for each sale on a per acre or per unit basis. These adjustments are shown on the Sales Comparison Grid. Note: Appraiser must manually enter the $/Unit for the Subject Improvements -- either individually or as a lump sum. Sales Comparison - Sale #1 Sale Impt. Utl/Cond. Size / Fair 1,008 F House / A 2,240 Mach Sh A / Other 1 / AVG 2,352 House A / AVG 576 Carport A / AVG 1,560 GP Bldg A / AVG 2,720 GP Bldg A / AVG 2,080 Quonset A / AVG 7,200 Onion Stg A / AVG 3,600 Lean-To A / AVG 1,800 GP Bldg A / Other 1 / / / / / / / / Sale Effective Unit Size: Total Improvement Value = $ 16001 -445.22 Improvement Adjustment Amt. $: X $/Unit Contrib. Value Subject Impt. Utl/Cond. Size / 12,701 X $ 12.60 =$ / 7,840 X $ 3.50 =$ / 10,000 X $ 10,000.00 =$ / 52,920 X $ 22.50 =$ / 1,935 X $ 3.36 =$ / 18,876 X $ 12.10 =$ / 16,320 X $ 6.00 =$ / 8,320 X $ 4.00 =$ / 81,000 X $ 11.25 =$ / 9,720 X $ 2.70 =$ / 8,100 X $ 4.50 =$ / 10,000 X $ 10,000.00 =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ 533.93 237,714 $ Subject Effective Unit Size: 445.22 Total Improvement Value = $ / Acres Acre / X $/Unit X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ 290.35 0.00 Contrib. Value =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ $ / Acre The different land classes are unified into a single value for the total property. Land ratios are used to calculate values where individual land classes are not identified. The portion of the sale property's value contributed by buildings, if any, is also equalized through these calculations. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 17 of 31 UAAR® 19 MCDC File # Sales Comparison Approach - Land Adjustment for Sale# 2 Adjust each sale to the subject's land mix (land adjustment) using unimproved sales. This page allows for a "quantitative land adjustment" only. 17012 -270.63 Sales Comparison - Sale #2 Land Adjustment Amt. $ Land Use Sale Acres $/Acre Sale Unit Type Sale Units $/Unit Subj. Acres $/Acre Subj. Units Site 8.84 6,250.00 6,250.00 Irrigated Cropland 268.04 6,250.00 254.00 6,250.00 Irrigated Cropland B Dry Crop Pasture 625.00 36.35 625.00 Range Other 20.64 0.00 0.00 Sale Land Contrib. 1,730,500.00 / Eff. Unit Size 297.52 = 5,816.42 Total 1,610,219 $/Unit Total 1,587,500 22,719 / Eff. Unit Size 290.35 = 5,545.79 Sales Comparison Approach - Improvement Adjustment for Sale# 2 Compare each set of sale improvements to the subject improvements making judgments regarding utility and condition. Then arrive at an improvement adjustment for each sale on a per acre or per unit basis. These adjustments are shown on the Sales Comparison Grid. Note: Appraiser must manually enter the $/Unit for the Subject Improvements -- either individually or as a lump sum. Sales Comparison - Sale #2 Sale Impt. Utl/Cond. Size A / A 2,042 House GP Building A / A 648 Machine Shed A / A 1,792 Grain Bins A / F/A 1,000 GP Building A / A 2,232 Hay Shed A / A/G 4,000 / Other 1 / / / / / / / / / / / / / Sale Effective Unit Size: Total Improvement Value = $ 17012 -737.77 Improvement Adjustment Amt. $: X $/Unit Contrib. Value Subject Impt. Utl/Cond. Size / 122,520 X $ 60.00 =$ / 4,199 X $ 6.48 =$ / 9,569 X $ 5.34 =$ / 1,080 X $ 1.08 =$ / 24,106 X $ 10.80 =$ / 38,000 X $ 9.50 =$ / 20,000 X $ 20,000.00 =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ 297.52 219,500 $ Subject Effective Unit Size: 737.77 Total Improvement Value = $ / Acre Acre / X $/Unit Contrib. Value X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ 290.35 $ 0.00 / Acre The different land classes are unified into a single value for the total property. Land ratios are used to calculate values where individual land classes are not identified. The portion of the sale property's value contributed by buildings, if any, is also equalized through these calculations. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 18 of 31 UAAR® 19 MCDC File # Sales Comparison Approach - Land Adjustment for Sale# 3 Adjust each sale to the subject's land mix (land adjustment) using unimproved sales. This page allows for a "quantitative land adjustment" only. 17002 943.48 Sales Comparison - Sale #3 Land Adjustment Amt. $ Land Use Sale Acres $/Acre Sale Unit Type Sale Units $/Unit Subj. Acres $/Acre Subj. Units Site 5.00 8,000.00 8,000.00 Irrigated Cropland 95.00 8,000.00 254.00 8,000.00 Irrigated Cropland B Dry Crop Pasture 33.23 405.00 36.35 405.00 Range Other Sale Land Contrib. 813,458.00 / Eff. Unit Size 133.23 = 6,105.67 Total 2,046,722 $/Unit Total 2,032,000 14,722 / Eff. Unit Size 290.35 = 7,049.15 Sales Comparison Approach - Improvement Adjustment for Sale# 3 Compare each set of sale improvements to the subject improvements making judgments regarding utility and condition. Then arrive at an improvement adjustment for each sale on a per acre or per unit basis. These adjustments are shown on the Sales Comparison Grid. Note: Appraiser must manually enter the $/Unit for the Subject Improvements -- either individually or as a lump sum. Sales Comparison - Sale #3 Sale Impt. Utl/Cond. Size A / A 1,522 House Lean to A / A 483 Mach Shed F / F 1,024 Manf House A / A 1,512 Lean to A / A 1,200 / Other 1 / / / / / / / / / / / / / / Sale Effective Unit Size: Total Improvement Value = $ 17002 -1,460.20 Improvement Adjustment Amt. $: X $/Unit Contrib. Value Subject Impt. Utl/Cond. Size / 76,100 X $ 50.00 =$ / 3,864 X $ 8.00 =$ / 8,192 X $ 8.00 =$ / 63,882 X $ 42.25 =$ / 12,480 X $ 10.40 =$ / 30,000 X $ 30,000.00 =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ 133.23 194,542 $ Subject Effective Unit Size: 1,460.20 Total Improvement Value = $ / Acres Acre / X $/Unit Contrib. Value X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ X$ =$ 290.35 $ 0.00 / Acre The different land classes are unified into a single value for the total property. Land ratios are used to calculate values where individual land classes are not identified. The portion of the sale property's value contributed by buildings, if any, is also equalized through these calculations. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 19 of 31 UAAR® 19 MCDC File # Sales Comparison Approach - Land Adjustment for Sale# 4 Adjust each sale to the subject's land mix (land adjustment) using unimproved sales. This page allows for a "quantitative land adjustment" only. 18006 424.92 Sales Comparison - Sale #4 Land Adjustment Amt. $ Land Use Sale Acres $/Acre Sale Unit Type Sale Units $/Unit Subj. Acres $/Acre Subj. Units Site 3.00 8,000.00 8,000.00 Irrigated Cropland 187.00 8,000.00 254.00 8,000.00 Irrigated Cropland B Dry Crop Pasture 800.00 36.35 800.00 Range Other 37.76 0.00 0.00 Sale Land Contrib. 1,520,000.00 / Eff. Unit Size 227.76 = 6,673.69 Total 2,061,080 $/Unit Total 2,032,000 29,080 / Eff. Unit Size 290.35 = 7,098.61 Sales Comparison Approach - Improvement Adjustment for Sale# 4 Compare each set of sale improvements to the subject improvements making judgments regarding utility and condition. Then arrive at an improvement adjustment for each sale on a per acre or per unit basis. These adjustments are shown on the Sales Comparison Grid. Note: Appraiser must manually enter the $/Unit for the Subject Improvements -- either individually or as a lump sum. Sales Comparison - Sale #4 Sale Impt. Utl/Cond. Size A / Fair 2,569 House Mach Sh A / Fair 1,200 GP Bldg A / AVG 1,140 / Other 1 / / / / / / / / / / / / / / / / Sale Effective Unit Size: Total Improvement Value = $ 18006 -680.54 Improvement Adjustment Amt. $: X $/Unit Contrib. Value Subject Impt. Utl/Cond. Size / 102,760 X $ 40.00 =$ / 9,600 X $ 8.00 =$ / 19,950 X $ 17.50 =$ / 22,000 X $ 22,000.00 =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ / X$ =$ 227.76 155,000 $ Subject Effective Unit Size: 680.54 Total Improvement Value = $ / Acres Acre / X $/Unit X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ X$ 290.35 0.00 Contrib. Value =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ =$ $ / Acre The different land classes are unified into a single value for the total property. Land ratios are used to calculate values where individual land classes are not identified. The portion of the sale property's value contributed by buildings, if any, is also equalized through these calculations. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 20 of 31 UAAR® 19 MCDC File # Income Approach Basis of Income Estimate: Cash X Share Gross Income Estimate Unit Income Source Units Measure Irrigated Cropland 254.00 Acre Improvements Included in Land Rent Expenses Stabilized Yield Rent: $ FAMC Total Production See Attached Cash/Share/Owner's Income Stabilized $/Unit Gross Income Share % 250.00 63,500 100 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0 100 /mo., $ /yr. Income 63,500 $ $ $ $ $ $ $ $ 0 63,500 Stabilized Gross Income = $ (Typical area rental terms and conditions) The gross rental rates are market extracted, as verified with the comparable sales data sheets and current farming operations. Properties similar to the subject typically lease on a per production acre basis. Lease rates are consistent throughout the area. The real estate taxes are actual for the subject. The management and pumping costs are estimated. The cash operating expenses are the same items that were considered when evaluating the market area. A consistency of analysis methods between the market and the subject was maintained in order to achieve a realistic comparison. Comments: Expense Items: Cap Rate Info Owner/Operator Real Estate Tax $ Insurance $ Maintenance $ Management $ $ $ $ Sale Date 16001 01/16 17012 03/17 17002 09/17 18006 08/18 Additional Expenses: 8,447 Pump Cost 3,175 Size 533.93 297.52 133.23 227.76 $ $ $ $ $ $ $ Impvt % 7 11 19 9 Additional Expenses: 1,750.00 Additional Expenses: $ $ $ $ $ $ $ $ Total Expenses = $ Gross Income 119,298 63,340 31,025 65,700 Exp. Ratio 30.68 % 31.61 % 18.04 % 23.45 % % % % 13,372 Net Income 82,695 43,321 25,427 50,294 ( CEV Price 3,255,714 1,950,000 1,008,000 1,675,000 21.06 %) Cap Rate 2.54 % 2.22 % 2.52 % 3.00 % % % % Analysis/Comments: The Income Approach to value is based on the principle of anticipation in that the value of a property is equal to the present value of future anticipated economic benefits. In this approach, estimated net property income is capitalized into a value estimate based on an overall capitalization rate. The rates are derived from transactions in the market which reflect the market's reactions to the relationship between income and price. The Income Approach is completed on a cash basis. There are multiple methods to calculate and estimate the subject's net income. The cash basis is selected because it is the most common in the subject's market area, and is considered to be the least subjective by the appraiser. There is sufficient and reliable lease data available in the market. SEE THE NEXT PAGE FOR ADDITIONAL COMMENTS Total Deeded Acres: 290.35 Gross Income: $ 63,500 = $ 218.70 Expenses: ( $ 13,372 ) = $ 46.05 Net Income: $ 50,128 = $ 172.65 ©1998-2019 AgWare, Inc. All Rights Reserved. / / / Acre Acre Acre $ Net Income / Cap Rate 50,128 2.5000 / = Indicated Value 2,005,120 % =$ Income Approach Indication = $ 2,010,000 Page 21 of 31 File # 19 MCDC UAAR® Income Approach Comments This basis does not account for operational, management, or varying yield differences in its income projection. The income and expenses have been projected consistently for the subject property and the market sales. These projections are done on the landlord basis by applying typical rental terms, production, and prices. The sales and the subject are analyzed in a consistent fashion. Area sales were considered for this analysis from throughout the market area, with four sales selected and applied. The sales were selected for use in this approach based on their type of operation and location. All of the sales are considered to have locational similarities and have varying degrees of land use similarities. See the Comparable Sales Summaries found on pages 12-13, for a brief discussion of each sale. There are several factors that affect capitalization rates for ag properties. They include land use types, contribution to value by buildings, and expense to income relationships. Properties with significant income from irrigated land and public leases, tend to have higher cap rates than those with dry crop or pasture. Properties with larger contributions to value by buildings tend to have lower cap rates. Properties with higher expense to income ratios tend to also have lower cap rates. The combination of factors within the sales comparisons makes the selection of a specific cap rate difficult in many instances. The sales used in this analysis indicate capitalization rates in a range from 2.22% to 3.00%. This is considered to be a relatively tight range of cap rates. The subject is considered to be similar in size to sale 17012. This sale indicates a cap rate of 2.22%. The subject possesses 0% contribution to value from improvements. The sales all have varying degrees of improvement contribution from 7% to 19%. Generally the lower the contribution from buildings the higher the properties indicated cap rate. The subject is most similar to Sale 16001 which has a 7% improvement contribution and indicates a cap rate of 2.54%. The subject contains an expense ratio of 21.06%, which is within the indicated range. The range of expense ratios is from 18.04% to 39.76%. The subject is most similar to sale 18006. This sale contains an expense ratio of 23.45%, and indicates a cap rate of 3.00%. Typically sales with lower expense ratios result in higher cap rates. Overall the subject shares the most similarities with Sales 16001, 17012 and 18006, which span the range of cap rates. It is reasonable using these comparisons and the general capitalization rate trends, the selected cap rate should be selected from the middle to higher end of the range of cap rates. Considering the total range of indicated capitalization rates and the factors that affect cap rates, the size of the subject, the subject's expense ratio compared to the sales, the subject's improvement percentage, the subject's land use type; the rate selected and applied to the estimated net income of the subject is 2.50%. The selected cap rate of 2.50% is within the indicated range of cap rates, and is considered to be reasonable due to the influences of the factors above. When the cap rate is applied to the net income of the subject, it indicates a value from the Income Approach of $2,010,000. It is important to note that with capitalization rates in this wide of a range, and as low as those indicated for this type of property, a .25% change in the cap rate results in a change to the indicated value of 9.09% to 10%. The lower capitalization rates, multiple variables, and selective nature of this approach makes the indicated results volatile and in some instances less reliable. The Income Approach is considered to provide support for the final value conclusion. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 22 of 31 UAAR® 19 MCDC File # Discussion & Correlation of Values Summary Reconciliation and Opinion of Value Cost Approach $ Not Completed Income Approach $ 2,010,000 Sales Comparison Approach $ 2,050,000 Analysis of Each Approach and Opinion of Value: This appraisal is being presented in summary report form. All three of the approaches to value were considered in accordance with USPAP, with the Income and Sales Comparison Approaches to Value being completed. The subject is an irrigated farm property located near Nyssa, Oregon. The subject is an unimproved property made up of irrigated crop and pasture lands. The market area of the subject is heavily influenced by area operators expanding current operations as well as strong investor interest in the area. There are recent and comparable sales available from the subject's market area. The current real estate market is considered to be strong with stable land values. The sales utilized in this report are current and date back to 2016. The sales used all possess irrigated crop land as their primary land use type. The subject conforms reasonably well to the real estate market and reasonably well to the area sales. The historic use of the subject has been as an irrigated farm property, this use is considered to be the best utilization of the property. As noted earlier in the report the Cost Approach was not completed. The Income Approach considers area sales of comparable nature to the subject from which to obtain market demonstrated rates of return. From the four sales used, a representative cap rate is determined and applied to the net income of the subject. The reliability of the Income Approach depends upon the appraiser's estimate of production and ownership costs, and the overall comparability of the sales to the subject. The sales have reasonable overall similarity to the subject property, the selection of a specific cap rate is difficult, the low cap rate values, and the larger range of indicated values makes the approach much more volatile. It is noted that a .25% change in the cap rate results in a 9.09% to 10% change in the indicated value. The Income Approach is utilized for support to the Sales Comparison Approach. The Sales Comparison Approach considers area sales of comparable nature to the subject. Each sale is compared directly to the subject and is adjusted for land allocation contribution differences. This approach allows for additional adjustments apparent in the market for differences such as time, location, quality, size, and other physical characteristics. After adjustments the sales present a reasonable range of indicated values for the subject property. A strength of this approach is that similar methodology is applied by typical buyers in the market. The comparability of the sales to the subject and the resulting ranges of indicated values enhance the reliability of this approach to value. SEE NEXT PAGE FOR ADDITIONAL COMMENTS Allocation of Value Opinion Of Value (Estimated Marketing Time $ Cost of Repairs $ Cost of Additions Allocation: (Total Deeded Units: 6-12 months, see attached) 290.35 Land: $ ) Land Improvements: $ Structural Improvement Contribution: $ Value Estimate of Non-Realty Items: Value of Personal Property(local market basis) Value of Other Non-Realty Interests: Non-Realty Items: Leased Fee Value (Remaining Term of Encumbrance ) Leasehold Value Overall Value ©1998-2019 AgWare, Inc. All Rights Reserved. 2,050,000 $ $ $ $ $ $ 2,050,000 $ 2,050,000 $ $ $ 7,060 0 0 / / / ( ( ( 100 %) 0 %) 0 %) $ $ $ $ 0 0 0 7,060 / / / / ( ( ( ( %) %) %) 100 %) Page 23 of 0 0 0 31 UAAR® 19 MCDC File # Reconciliation Continued The two approaches indicate an overall value for the subject property from $2,010,000 to $2,050,000. The Income Approach is considered to be more subjective and volatile and is completed for support to the Sales Comparison Approach. While considering both approaches to value, the current real estate market, and the attributes and amenities of the subject property, the final value conclusion for the subject property with an effective date of October 16, 2019 is $2,050,000, cash. The following is an estimated allocation of value for the subject property's Tracts. This is an allocation only and should not be considered a separate appraisal of each tract and land type. The irrigation equipment is inherent in the irrigated cropland. All values are rounded. 254 Acres of Irrigated Crop @ $8,000 per acre 36.35 Acres of Pasture @ $495 per acre Total $2,049,993, rounded to $2,050,000 Charles Warren Farmer (1/2 ownership) and James and Margaret Farmer (1/2 ownership) are in the process of selling the subject property to Malheur County. The pending purchase price for the property is $3,019,900 and the reconciled appraised value is $2,050,000, a $969,900 or a 32% difference. The difference in appraised value and purchase is considered to be the buyers motivation for the property as it fits their needs for the proposed Treasure Valley Reload Center. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 24 of 31 File # 19 MCDC UAAR® MARKET VALUE DEFINITION Regulations published by federal regulatory agencies pursuant to title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) 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. 2. 3. 4. 5. Buyer and seller are typically motivated; Both parties are well informed or well advised, and acting in what they consider their best interests; A reasonable time is allowed for exposure on the open market; Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and 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. Other: Market value means the most probably price that 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, knowledgeably, and assuming neither is under duress. Implicit in this definition is the consummation of a sale as 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 sale concessions granted by anyone associated with the sale. Source: 12 CFR Part 614 Subpart F EXPOSURE AND MARKETING TIME ESTIMATES Market value (see above definition) conclusion and the costs and other estimates used in arriving at conclusion of value is as of the date of the appraisal. Because markets upon which these estimates and conclusions are based upon are dynamic in nature, they are subject to change over time. Further, the report and value conclusion is subject to change if future physical, financial, or other conditions differ from conditions as of the date of appraisal. 6-12 In applying the market value definition to this appraisal, a reasonable exposure time of months has been estimated. Exposure time is the estimated length of time the property interest being appraised would have been offered in the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; exposure time is always presumed to precede the effective date of the appraisal. Marketing time, however, is an estimate of the amount of time it takes to sell a property interest at the market value conclusion during the period after the effective date of the appraisal. An estimate of marketing time is not intended to be a prediction of a date of sale. It is inappropriate to assume that the value as of the effective date of appraisal remains stable during a marketing period. Additionally, the appraiser(s) have considered market factors external to this appraisal report and have concluded that a reasonable marketing 6-12 time for the property is months. The estimated marketing times have their basis from conversations with local real estate agents and supported by past sales activities. Comments: ©1998-2019 AgWare, Inc. All Rights Reserved. Page 25 of 31 UAAR® 19 MCDC File # Assumptions and Limiting Conditions The certification of the Appraiser(s) appearing in the appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth in the report. 1. The Appraiser(s) assume no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor does the Appraiser(s) render any opinion as to title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. 2. Sketches in the report may show approximate dimensions and are included only to assist the reader in visualizing the property. The Appraiser(s) have made no survey of the property. Drawings and/or plats are not represented as an engineer's work product, nor are they provided for legal reference. 3. The Appraiser(s) are not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made. 4. Any distribution of the valuation in the report applies only under the existing program of utilization. The separate valuations of components must not be used outside of this appraisal and are invalid if so used. 5. The Appraiser(s) have, in the process of exercising due diligence, requested, reviewed, and considered information provided by the ownership of the property and client, and the Appraiser(s) have relied on such information and assumes there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The Appraiser(s) assume no responsibility for such conditions, for engineering which might be required to discover such factors, or the cost of discovery or correction. 6. While the Appraiser(s) X have have not inspected the subject property and X have have not considered the information developed in the course of such inspection, together with the information provided by the ownership and client, the Appraiser(s) are not qualified to verify or detect the presence of hazardous substances by visual inspection or otherwise, nor qualified to determine the effect, if any, of known or unknown substances present. Unless otherwise stated, the final value conclusion is based on the subject property being free of hazardous waste contaminations, and it is specifically assumed that present and subsequent ownerships will exercise due diligence to ensure that the property does not become otherwise contaminated. 7. Information, estimates, and opinions furnished to the Appraiser(s), and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the Appraiser(s) can be assumed by the Appraiser(s). 8. Unless specifically cited, no value has been allocated to mineral rights or deposits. 9. Water requirements and information provided has been relied on and, unless otherwise stated, it is assumed that: a. All water rights to the property have been secured or perfected, that there are no adverse easements or encumbrances, and the property complies with Bureau of Reclamation or other state and federal agencies; b. Irrigation and domestic water and drainage system components, including distribution equipment and piping, are real estate fixtures; c. Any mobile surface piping or equipment essential for water distribution, recovery, or drainage is secured with the title to real estate; and d. Title to all such property conveys with the land. 10. Disclosure of the contents of this report is governed by applicable law and/or by the Bylaws and Regulations of the professional appraisal organization(s) with which the Appraiser(s) are affiliated. 11. Neither all nor any part of the report, or copy thereof, shall be used for any purposes by anyone but the client specified in the report without the written consent of the Appraiser. 12. Where the appraisal conclusions are subject to satisfactory completion, repairs, or alterations, the appraisal report and value conclusion are contingent upon completion of the improvements in a workmanlike manner consistent with the plans, specifications and/or scope of work relied upon in the appraisal. 13. Acreage of land types and measurements of improvements are based on physical inspection of the subject property unless otherwise noted in this appraisal report. 14. EXCLUSIONS. The Appraiser(s) considered and used the three independent approaches to value (cost, income, and sales comparison) where applicable in valuing the resources of the subject property for determining a final value conclusion. Explanation for the exclusion of any of the three independent approaches to value in determining a final value conclusion has been disclosed in this report. 15. SCOPE OF WORK RULE. The scope of work was developed based on information from the client. This appraisal and report was prepared for the client, at their sole discretion, within the framework of the intended use. The use of the appraisal and report for any other purpose, or use by any party not identified as an intended user, is beyond the scope of work contemplated in the appraisal, and does not create an obligation for the Appraiser. 16. Acceptance of the report by the client constitutes acceptance of all assumptions and limiting conditions contained in the report. 17. Other Contingent and Limiting Conditions: 18. This appraisal has been prepared for the sole and specific needs of Malheur County Development Corporation (Client), Malheur County and ODOT. To the extent any third party relies upon or uses this appraisal, Agri-Access, and the person making this appraisal, hereby disclaim any liability for the contents and for any changes that may have occurred since the date of the appraisal. SEE NEXT PAGE FOR ADDITIONAL COMMENTS ©1998-2019 AgWare, Inc. All Rights Reserved. Page 26 of 31 File # 19 MCDC UAAR® Assumptions and Limiting Conditions 19. Irrigation water rights are provided by the State of Oregon and were researched and verified on the State of Oregon Water Resources Department. The water rights includes Certificate #45954 and Permit #16990. Water right Certificate #45954 provides a total of 227.60 acres of primary water rights and has a priority date of December 21, 1973. Permit #G-16990 provides a total of 50.6 acres of supplemental water rights and has a priority date of August 24, 2011. There is sufficient water rights and irrigation water available for the acreage currently being irrigated on the subject property. An Irrigation Water Rights Summary and Water Right certificates are included in the addenda of this report that contains all pertinent irrigation water right details. 20. No items atypical of a farm operation were observed, no other concerns were reported to the appraiser. A preliminary title report was not provided to the appraiser. It is unknown if there are any atypical easements, it is assumed that the subject has typical easements for irrigation ditches, pipelines, roads, and utilities. These typical easements are not considered to be detriments to the subject property. It is unknown if the mineral rights have been severed from the subject property. The appraiser assumes that all mineral rights are included with the subject property. Mineral rights are of secondary concern to the typical buyer in this market and were not researched as part of this appraisal analysis. Regarding hazards or detriments no major items atypical of a farm or ranch operation were observed, no other concerns were reported to the appraiser. The appraiser is not trained as an environmental expert and does not know, in fact, that environmental or hazardous concerns do not exist on the subject property. The appraiser's observation is limited to reasonably apparent and accessible conditions and does not include hidden, latent conditions or those in inaccessible areas. The appraiser was not supplied an owner completed environmental disclosure. 21. Charles Warren Farmer (1/2 ownership) and James and Margaret Farmer (1/2 ownership) are in the process of selling the subject property to Malheur County. The sellers are retaining a 5 acre parcel (not yet determined) of industrial zoned land from the subject property. The property is appraised "As-Is" as 290.35 deeded acres. 22. The subject property is considered to be available for any legal use under the EFU Agricultural and NUGA-Industrial zoning of Malheur County with limiting legally permissible restrictions to the NUGA-Industrial zoned acreage, this acreage is to be reserved exclusively for the rail dependent uses and agricultural processing, warehouse, distribution, and support industrial uses that benefit from the location in a full service industrial park next to the proposed Treasure Valley Reload Center (TVRC). ©1998-2019 AgWare, Inc. All Rights Reserved. Page 27 of 31 UAAR® 19 MCDC File # Appraiser Certification I certify that, to the best of my knowledge and belief: 1. the statements of fact contained in this report are true and correct. 2. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial and unbiased professional analysis, opinions, and conclusions. X no 3. I have the specified present or prospective interest in the property that is the subject of this report and X no I have the specified personal interest with respect to the parties involved. X 4. I have performed no the specified services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. my engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. X have 9. I have not made a personal inspection of the property that is the subject of this report. 10. X no one certification. the specified persons Effective Date of Appraisal: 10/16/19 provided significant real property appraisal assistance to the person signing this Opinion of Value: $ 2,050,000 Appraiser: X Yes 10/16/19 Signature: Property Inspection: Inspection Date: Name: Lesley L. Miller, ARA License #: C001252 Exp: 12/31/19 Certification #: Appraiser has X inspected the sales contained herein. No X verified X analyzed Date Signed: 10/31/19 ©1998-2019 AgWare, Inc. All Rights Reserved. Page 28 of 31 File 19 MCDC QUALIFICATIONS LESLEY L. MILLER, ARA Appraiser i Agri-Access 1087 W. River Road Suite 100 Boise, ID 83702 PROFESSIONAL LICENSES Certified General Real Estate Appraiser California License 4 March 2015 to Present Idaho License 4 June 2016 to Present Oregon License l/C001252 August 2016 to Present State of California. Realtor License #01871570 4 2009 to Present PROFESSIONAL APPRAISAL EXPERIENCE Certi?ed Appraiser 7 July 2016 to Present FARM CREDIT WEST Certi?ed Appraiser 4 March 2015 to June 2016 Appraiser Trainee June 2012 to February 2015 PROFESSIONAL AF FILIATIONS AMERICAN SOCIETY OF FARM MANAGERS AND RURAL APPRAISERS (ASFMRA) Associate Member since February 2016, Accredited in 2018 APPRAISAL EDUCATIONAL BACKGROUND APPRAISAL INSTITUTE Course 101GR Basic Appraisal Procedures (10/15/12) Course 15? Hour National USPAP Course (5/30/13) Course 401 General Appraiser Sales Comparison Approach (7/03/13) Course 402G General Appraiser Site Valuation Cost Approach (8/13/13) Course N300GR Real listatc Finance, Statistics, and Valuation Modeling (9/20/15) Course N400G General Appraiser Market Analysis and Highest Best Use 29/ 14) Course N403G General Appraiser Income Approach Part 1 8/ 14) Course N404G General Appraiser Income Approach Part 2 1 6/ 14) Course General Appraiser Report Writing and Case Studies (10/27/14) Seminar Federal and California Statutory and Regulatory Laws (12/11/15) Course 2016?2017 7?Ilour National SPAP Update Course (2/18/16) AMERICAN SOCIETY OF FARM MANAGERS AND RURAL APPRAISERs Course A101 Basic Appraisal Principles (2/20/13) Seminar Technology Applications in Appraisal Google Earth (9/30/15) Seminar Financial Aspects of Agriculture (10/1/15) Course A250 Eminent Domain (3/7/16) Course A315 Valuation of Conservation Easements (3/10/16) ?1998-2019AgWare, Inc. All Rights Reserved. Page 29 of 31 File 19 MCDC Seminar Seminar eminar Webinar Course A3 04 Seminar Seminar Seminar Course Course A400 Course A500 Using Excel in Speci?c Appraisal Applications (1/26/17) Intro to Excel Statistical Analysis to Determine Adjustments (1/27/17) Water Rights Survival Course for Real Estate Appraisers (1/27/17) Best in Business Ethics (2/10/17) Integrated Approaches to Value (3/27/17) Economics of Farmland/Water Investing (1/25/18) Agricultural Consulting for the Appraiser (1/25/18) Soil Survey Fundamentals Land Capability Classi?cations (1/25/18) 2018-2019 7-Hour National USPAP Update Course (1/26/18) Advanced Rural Case Studies (4/30/2018) Advanced Appraisal Exam Preparation Course (10/27/2018) EDUCATIONAL BACKGROUND CALIFORNIA STATE UNIVERSITY, Chico, CA (201 1) Bachelor of Science in Agricultural Business FEATHER RIVER COMMUNITY COLLEGE 7 Quincy, CA (2 009) Associate Degree of Science in Agricultural Business Page 2 of 2 ?1998-2019 AgWare, Inc. All Rights Reserved. Page 30 of 31 File #19 MCDC ?1998-2019 AgWare, Inc. All Rights Reserved. Page 31 31 File # 19 MCDC Addenda UAAR® Addenda Table of Contents Page Title SUBJECT INFORMATION Subject Locator Map Aerial Photograph Plat Map Soils Map Topography Map County Assessor Map 19S4717 Zoning Map Legal Description Water Rights Summary Water Right Certificate 45954 Permit G_16990 Engagement Letter SALES INFORMATION Sales Locator Map Sale # 16001 Sale # 17012 Sale # 17002 Sale # 18006 ©1998-2019 AgWare, Inc. All Rights Reserved. Page # 1 2 3 4 5 6 7 8 9 10 11 12 17 18 19 20 25 28 31 File 19 MCDC Addenda Subject Information ?1998-2019AgWare, Inc. All Rights Reserved. Page 1 of 33 File # 19 MCDC Addenda UAAR® Subject Locator Map ©1998-2019 AgWare, Inc. All Rights Reserved. Page 2 of 33 File # 19 MCDC Addenda UAAR® Aerial Photograph ©1998-2019 AgWare, Inc. All Rights Reserved. Page 3 of 33 UAAR® File # 19 MCDC Addenda Plat Map ©1998-2019 AgWare, Inc. All Rights Reserved. Page 4 of 33 File # 19 MCDC Addenda UAAR® Soils Map ©1998-2019 AgWare, Inc. All Rights Reserved. Page 5 of 33 File # 19 MCDC Addenda UAAR® Topography Map ©1998-2019 AgWare, Inc. All Rights Reserved. Page 6 of 33 UAAR® File # 19 MCDC Addenda County Assessor Map 19S4717 ©1998-2019 AgWare, Inc. All Rights Reserved. Page 7 of 33 UAAR® File # 19 MCDC Addenda Zoning Map ©1998-2019 AgWare, Inc. All Rights Reserved. Page 8 of 33 File # 19 MCDC Addenda UAAR® Legal Description ©1998-2019 AgWare, Inc. All Rights Reserved. Page 9 of 33 UAAR® File # 19 MCDC Addenda Water Rights Summary ©1998-2019 AgWare, Inc. All Rights Reserved. Page 10 of 33 UAAR® File # 19 MCDC Addenda Water Right Certificate 45954 ©1998-2019 AgWare, Inc. All Rights Reserved. Page 11 of 33 UAAR® File # 19 MCDC Addenda Permit G_16990 ©1998-2019 AgWare, Inc. All Rights Reserved. Page 12 of 33 UAAR® File # 19 MCDC Addenda Permit G_16990 Continued ©1998-2019 AgWare, Inc. All Rights Reserved. Page 13 of 33 UAAR® File # 19 MCDC Addenda Permit G_16990 Continued ©1998-2019 AgWare, Inc. All Rights Reserved. Page 14 of 33 UAAR® File # 19 MCDC Addenda Permit G_16990 Continued ©1998-2019 AgWare, Inc. All Rights Reserved. Page 15 of 33 UAAR® File # 19 MCDC Addenda Permit G_16990 Continued ©1998-2019 AgWare, Inc. All Rights Reserved. Page 16 of 33 UAAR® File # 19 MCDC Addenda Engagement Letter ©1998-2019 AgWare, Inc. All Rights Reserved. Page 17 of 33 File 19 MCDC Addenda Sales Infarmatiun ?1998-2019AgWare, Inc. All Rights Reserved. Page 18 of 33 File # 19 MCDC Addenda UAAR® Sales Locator Map ©1998-2019 AgWare, Inc. All Rights Reserved. Page 19 of 33 UAAR® Sale Analysis Index # 16OR045.001 Database # Sale # 904 3,255,714 Grantor Sales Price Grantee Other Contrib. 533.93 Deeded Acres Net Sale Price 01/11/16 / Sale Date/DOM $/Deeded Acre Prior Sale Date Financing Prior CEV Price % Fin. Adj. S67 Analysis Code CEV Price App AW Source SCA Unit Type Open Market Motivation Eff. Unit Size Agriculture Highest & Best Use SCA $/Unit 533 Gem Ave Address Multiplier Unit Nyssa City Multiplier No. Malheur County Legal Access OR / State/Zip Physical Access N / / View Region/Area/Zone 4 S Cairo Location Utilities Legal Description: Ref #: 9611, 9612, 9614, 9615, 9623, 9650, 9770, 9771 3,255,714 6,097.64 Cash 3,255,714 Acres 533.93 6,097.64 Yes Yes Yes File # 16001 Property Type Primary Land Use Condition Zoning Shape Topography Marketing Time Soils Irr Type Irr Source 19 MCDC Addenda Improved Sale Irrigated Irr Crop Avg/Good C-A1/C-I1 Irregular Level Not Listed I-III Flood Old Owyhee/ Owy/ Prvt Year Verified Tax ID/Recording Sec/Twp/Rge 2016 20160102 mult / 19S / 47E Land Mix Analysis Land-Mix Analysis Land Use Site Irr Crop Irr Crop B Dry Cropland Pasture Rangeland Other Ratios % % % % % % % % % % Totals CEV Price $ 3,255,714 Acres 6.00 476.88 $/Acre Ac. 6,250.00 Ac. 6,250.00 Ac. Ac. 900.00 Ac. Ac. 49.49 Ac. Ac. Ac. Ac. 532.37 Ac. 5,668.99 - Land Contribution $ Unit Size 3,018,000 Unit Type $/Unit Total Unit Value 37,500 X $ =$ 2,980,500 X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ 3,018,000 X $ =$ 237,714 = Improvement Contribution $ Income Analysis Income Analysis Income Estimate Basis: Income Source Actual X Estimated Irrigated Cropland Improvements X Units 476.88 Cash Unit Measure Acres Share Stabilized Yield 1.00 Improvements Included in Land Rent Owner/Operator Total Production Cash/Share/Owner Income Stabilized $/Unit Gross Income Share % Income $ 225.00 107,298 100 107,298 1,000.00 /mo Expense Items: Expenses (cont.): 9,372 Irr Water Real Estate Tax $ $ 16,307 3,306 Insurance $ $ 1,653 Maintenance $ $ 5,965 Management $ $ 36,603 119,298 Total Expenses / Stabilized G.I. = Expense Ratio 82,695 3,255,714 Net Income / CEV Price = Cap Rate ©1998-2019 AgWare, Inc. All Rights Reserved. 12,000 100 /yr Stabilized Gross Income = $ Expenses (cont.): $ $ $ $ 30.68 % Total Expenses = $ 2.54 % Net Income = $ Page 12,000 119,298 36,603 82,695 20 of 33 UAAR® File # Index # 16OR045.001 Database # Sale # 904 Improvement Analysis Improvement Analysis Item: Type Size Unit Utility Condition Age Remaining Life RCN/Unit RCN % Physical Depreciation RCN Remainder After Phys. Depr. % Functional Obsolescence RCN Rem. After Phys./Funct. Depr. % External Obsolescence Total Impt. Contribution Contribution $/Unit Improvement Analysis Item: Type Size Unit Utility Condition Age Remaining Life RCN/Unit RCN % Physical Depreciation RCN Remainder After Phys. Depr. % Functional Obsolescence RCN Rem. After Phys./Funct. Depr. % External Obsolescence Total Impt. Contribution Contribution $/Unit 64 Physical Depreciation 661,232 Total RCN $ Impt. #1 Impt. #2 Impt. #3 Impt. #4 Other House Mach Sh House 1 2,352 2,240 1,008 Sq Ft Sq Ft Sq Ft A A F AVG A Fair 39 30 45 16 10 10 75.00 10,000.00 14.00 70.00 176,400 10,000 31,360 70,560 70 75 82 52,920 10,000 7,840 12,701 19 MCDC Addenda 16001 Replacement Cost Impt. #5 Carport 576 Sq Ft A AVG 40 15 12.00 6,912 72 1,935 Impt. #6 GP Bldg 1,560 Sq Ft A AVG 18 22 22.00 34,320 45 18,876 Impt. #7 GP Bldg 2,720 Sq Ft A AVG 28 12 20.00 54,400 70 16,320 Impt. #8 Impt. #9 Impt. #10 Quonset Onion Stg Lean-To 7,200 2,080 3,600 Sq Ft Sq Ft Sq Ft A A A AVG AVG AVG 22 30 22 18 10 18 25.00 16.00 6.00 180,000 33,280 21,600 55 75 55 8,320 9,720 81,000 12,701 7,840 10,000 52,920 1,935 18,876 16,320 8,320 81,000 9,720 12,701 12.60 7,840 3.50 10,000 10,000.00 52,920 22.50 1,935 3.36 18,876 12.10 16,320 6.00 8,320 4.00 81,000 11.25 9,720 2.70 Impt. #11 Impt. #12 Impt. #13 Impt. #14 Impt. #15 Impt. #16 Impt. #17 Impt. #18 Impt. #19 Impt. #20 Other GP Bldg 1 1,800 Sq Ft A AVG 30 10 10,000.00 18.00 10,000 32,400 75 8,100 10,000 8,100 10,000 8,100 4.50 10,000 10,000.00 64 % Functional Obsolescence % External Obsolescence % Total Depreciation 237,732 7 Total Improvement Contribution: $ Improvement As % of Price % % Comments The sale property consists of two parcels of ground that are all located in the Nyssa Flat area of Malheur County, OR. There were three different vestings (all related parties) for the purchased parcels (see Courthouse Summary for breakout and names), but the purchase was negotiated all at one time and is analyzed as one transaction. Access to the parcels is provided by numerous paved county roads, and all parcels have good physical and legal access. Northwest Parcel: This parcel consists of a total of 406.68 acres. Access to this parcel is provided by Imperial Ave, Hwy 201, and Gem Ave. The lands of this parcel are composed of a mixture of approximately 366.44 acres of Irrigated crop ground, an approximately 2 acre site area that contains all of the improvements that are considered to contribute value, and approximately 38.24 acres of "other" lands (roads, ditches, waste ground, etc.). The irrigated crop ground on this parcel is all leveled, and is situated in approximately 19 different fields. The irrigated crop ground has good quality Class I soils (with a small amount of good quality Class II soils also present) that are capable of growing all crops common to the area. Irrigation ©1998-2019 AgWare, Inc. All Rights Reserved. 21 of 33 Page UAAR® File # 19 MCDC Addenda Comments Continued water is provided by a combination of the Old Owyhee Improvement District, and the Owyhee Irrigation District - Shoestring Ditch. The irrigation water is delivered to the fields by a combination of gated pipe, concrete ditches, and a small amount of dirt ditches. The site area on this parcel is accessed by Gem Ave., and contains an older fair/poor quality home, a fair quality machine shed, and other miscellaneous site improvements that are not considered to warrant any specific individual value. There are two older concrete silos that are located amidst the farm fields in the northwestern portion of this parcel that are not considered to contribute any value. The "other" lands on this parcel were not allocated value, as is typical with the sales of larger irrigated crop units in the market area. The property is zoned C-A1. Southern Parcel: This parcel consists of a total of 127.25 deeded acres. Access to this parcel is provided by Hwy 201. This parcel has water rights for 104 acres, however the buyer indicated it was purchased on the basis of 112 irrigated acres, so the 112 acre figure was utilized for sales analysis. Also, there is approximately 4 acres of total site area, and 11.25 acres of "other" lands (roads, ditches, waste ground, etc.). The irrigated crop ground on this parcel has all been leveled, and is situated in 6 different fields. The soils on the irrigated crop ground are primarily good quality Class I and II soils, with a small amount of good quality Class III soils also present, that are capable of growing all crops common to the area. Irrigation water is provided by private rights from the Nyssa Arcadia Drain, and are delivered to the fields via concrete ditches. There are two site areas on this parcel. The main site area is situated along the western boundary, near the middle of the parcel, and contains a fair quality home with an attached carport, a GP building/Shop, a quonset building, an onion storage shed, and several other miscellaneous outbuildings that were not allocated any individual value consideration and were included in the "other" category. The second site area is located along the western boundary, in the northern portion of this parcel. This site area contains an older GP building. See the improvements pages for a detailed description of the improvements on this parcel. This property is mostly zoned C-A1, exclusive farm use with a small portion of the southern property boundary being zoned C-I1, County light industrial. The seller was retiring from farming, and the buyer is a large scale area ag operator who owns adjoining lands, and was seeking to expand land holdings. This transaction was handled privately. This property was never exposed to the market, nor was it opened up for competition. There were rumors of this property potentially being sold for the past several years, and there were several interested parties who likely would have paid more for the property. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 22 of 33 UAAR® Index # 16OR045.001 File # Database # 904 19 MCDC Addenda Sale # 16001 Aerial ©1998-2019 AgWare, Inc. All Rights Reserved. Page 23 of 33 UAAR® Index # 16OR045.001 File # Database # 904 19 MCDC Addenda Sale # 16001 Aerial ©1998-2019 AgWare, Inc. All Rights Reserved. Page 24 of 33 UAAR® Sale Analysis Index # 17OR045.012 Database # 1,950,000 Acre 297.52 6,554.18 File # 17012 Property Type Primary Land Use Condition Zoning Shape Topography Marketing Time Soils Irr Type Irr Source Paved Gravel Typical Yes Year Verified Tax ID/Recording Sec/Twp/Rge Sale # 871 2,000,000 50,000 1,950,000 6,554.18 Cash Grantor Sales Price Grantee Other Contrib. 297.52 Deeded Acres Net Sale Price 03/01/17 / Sale Date/DOM $/Deeded Acre Prior Sale Date Financing Prior CEV Price % Fin. Adj. T19 Analysis Code CEV Price Appraiser KB Source SCA Unit Type Motivation Eff. Unit Size Agricultural Highest & Best Use SCA $/Unit 1500 Frontier Lane Address Multiplier Unit Vale City Multiplier No. Malheur County Legal Access OR / 97918 State/Zip Physical Access / / View Region/Area/Zone 2 miles NE Vale Location Utilities Legal Description: Ref: #13894, Map: 18S4522, Tax Lot: #100 19 MCDC Addenda Unimproved Sale Irrig Crop Irrigated Cropland Avg C-A1 Blocked Level Direct Class 2-4 Flood Warm Springs ID 22 2017 20170648 / 18S / 45E Land Mix Analysis Land-Mix Analysis Land Use Site Irr Crop Irr Crop B Dry Crop Pasture Range Other Ratios % % % % % % % % % % Totals CEV Price $ 1,950,000 Acres 8.84 268.04 $/Acre Ac. 6,250.00 Ac. 6,250.00 Ac. Ac. 625.00 Ac. Ac. 20.64 Ac. Ac. Ac. Ac. 297.52 Ac. 5,816.42 - Land Contribution $ Unit Size 1,730,500 Unit Type $/Unit Total Unit Value 55,250 X $ =$ 1,675,250 X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ 1,730,500 X $ =$ 219,500 = Improvement Contribution $ Income Analysis Income Analysis Income Estimate Basis: Income Source Actual X Estimated Irr Crop Improvements X Units 268.70 Cash Unit Measure Acres Share Stabilized Yield 1.00 Improvements Included in Land Rent Owner/Operator Total Production Cash/Share/Owner Income Stabilized $/Unit Gross Income Share % Income $ 200.00 53,740 100 53,740 800.00 /mo Expense Items: Expenses (cont.): 6,075 Water Cost 4,266 Real Estate Tax $ $ 1,675 Pump Cost 4,000 Insurance $ $ 837 Maintenance $ $ 3,167 Management $ $ 20,019 63,340 Total Expenses / Stabilized G.I. = Expense Ratio 43,321 1,950,000 Net Income / CEV Price = Cap Rate ©1998-2019 AgWare, Inc. All Rights Reserved. 9,600 100 /yr Stabilized Gross Income = $ Expenses (cont.): $ $ $ $ 31.61 % Total Expenses = $ 2.22 % Net Income = $ Page 9,600 63,340 20,019 43,321 25 of 33 UAAR® 19 MCDC Addenda 17012 Sale # File # Index # 17OR045.012 Database # 871 Improvement Analysis Improvement Analysis Item: Type Size Unit Utility Condition Age Remaining Life RCN/Unit RCN % Physical Depreciation RCN Remainder After Phys. Depr. % Functional Obsolescence RCN Rem. After Phys./Funct. Depr. % External Obsolescence Total Impt. Contribution Contribution $/Unit 33 Physical Depreciation 329,123 Total RCN $ Impt. #1 Impt. #2 Impt. #3 Impt. #4 Impt. #5 Impt. #6 Impt. #7 Impt. #8 Other House GP Building Machine Shed Grain Bins GP Building Hay Shed 1 1,000 4,000 2,042 648 1,792 2,232 BU Sq Ft Sq Ft Sq Ft Sq Ft Sq Ft A A A A A A F/A A/G A A A A 16 2 24 16 16 16 24 38 36 24 24 24 20,000.00 1.80 10.00 100.00 10.80 8.90 18.00 20,000 1,800 40,000 204,200 6,998 15,949 40,176 40 5 40 40 40 40 1,080 38,000 20,000 122,520 4,199 9,569 24,106 122,520 4,199 9,569 1,080 24,106 38,000 20,000 122,520 60.00 4,199 6.48 9,569 5.34 1,080 1.08 24,106 10.80 38,000 9.50 20,000 20,000.00 Impt. #9 Impt. #10 33 % Functional Obsolescence % External Obsolescence % Total Depreciation 219,474 11 Total Improvement Contribution: $ Improvement As % of Price % % Comments The sale property is located at the northeast corner of Frontier Lane and Lagoon Drive, 2 miles northeast of Vale in Malheur County. The property consists of 297.52 acres dedicated to site, irrigated crop and other lands. The irrigated crop land is level in topography and is made up of six rectangular contiguous fields that are irrigated via concrete ditches. Irrigation water is supplied by Warm Springs Irrigation District and from the Malheur River via a lift pump. The irrigation district assesses the property for 107.2 acres but recognizes 136.7 acres as decreed water right. The typical allocation is 3.5 acre feet per assessed acre. The 2017 assessment was $39/irrigated acre plus $85 account fee. The total cost for district water was $4,265.80. The Malheur River lift pump consists of a 30 HP Parma Water Lifter Pump and delivers approximately 2,500-3,000 GPM. The reported cost was $28-32/acre per year or $4,000 - $4,500. The irrigation water was considered to be typical to above average for the area. Soils consist of silt loams ranging from Class2c-4s. Structural improvements include a house, GP buildings, machine shed, hay shed, grain bins and several other miscellaneous improvements. The improvements are well maintained and range from fair to good condition. The sale was a direct sale between buyer and seller. The parties had been involved in sale transactions in the past. The buyer grows onions and shallots and was seeking additional land for production and approached the seller about the property. The sellers offered the property for sale at $2,000,000 and the buyer accepted the terms. This was a direct sale between buyer and seller. Two un-installed 1/4 mile pivots were included in the sale that the seller was planning on installing. The buyer sold the pivots and installed pipelines for an underground drip irrigation supply. The allocated value to the un-installed pivots is $50,000. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 26 of 33 UAAR® Index # 17OR045.012 File # Database # 871 19 MCDC Addenda Sale # 17012 Aerial ©1998-2019 AgWare, Inc. All Rights Reserved. Page 27 of 33 UAAR® Sale Analysis Index # OR04517.002 Database # Grantor Grantee 133.23 Deeded Acres 09/19/17 / Sale Date/DOM Prior Sale Date Prior CEV Price Miller, Lesley T19 Analysis Code Appraiser Source Motivation Agriculture Highest & Best Use 1497 Frontier Ln Address Vale City Malheur County OR / State/Zip V / / Region/Area/Zone East Vale Location Legal Description: Ref #'s 13825 & 13823 Sale # 872 1,008,000 Sales Price Other Contrib. Net Sale Price $/Deeded Acre Financing % Fin. Adj. CEV Price SCA Unit Type Eff. Unit Size SCA $/Unit Multiplier Unit Multiplier No. Legal Access Physical Access View Utilities 1,008,000 7,565.86 Cash 1,008,000 Acres 133.23 7,565.86 File # 17002 Property Type Primary Land Use Sale Method Condition Zoning Shape Listing Time Soils Irr Type Irr Source Location Source 19 MCDC Addenda Improved Sale Irrigated Cropland Irrigated Cropland Private Avg VUGA-I/C-A1 Irregular Not Listed Class 2c/e-4s Private Surface 1.5 mi W of Vale NWFCS/AW YES Paved Yes Tax ID/Recording Sec/Twp/Rge 21 20173776 / 18S / 45E Land Mix Analysis Land-Mix Analysis Land Use Site Irrigated Cropland Irrigated Cropland B Dry Cropland Pasture Rangeland Other Ratios % % % % % % % % % % Totals CEV Price $ 1,008,000 Acres 5.00 95.00 $/Acre Ac. 8,000.00 Ac. 8,000.00 Ac. Ac. 33.23 405.00 Ac. Ac. Ac. Ac. Ac. Ac. 133.23 Ac. 6,105.67 - Land Contribution $ Unit Size 813,458 Unit Type $/Unit Total Unit Value 40,000 X $ =$ 760,000 X $ =$ X $ =$ X $ =$ 13,458 X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ 813,458 X $ =$ 194,542 = Improvement Contribution $ Income Analysis Income Analysis Income Estimate Basis: Income Source Actual X Estimated Cropland Irrig Improvements X Units 95.00 Cash Unit Measure Acre Share Stabilized Yield 1.00 Improvements Included in Land Rent Owner/Operator Total Production Cash/Share/Owner Income Stabilized $/Unit Gross Income Share % Income $ 175.00 16,625 100 16,625 1,200.00 /mo Expense Items: Expenses (cont.): 3,047 Real Estate Tax $ $ 1,000 Insurance $ $ Maintenance $ $ 1,551 Management $ $ 5,598 31,025 Total Expenses / Stabilized G.I. = Expense Ratio 25,427 1,008,000 Net Income / CEV Price = Cap Rate ©1998-2019 AgWare, Inc. All Rights Reserved. 14,400 100 /yr Stabilized Gross Income = $ Expenses (cont.): $ $ $ $ 18.04 % Total Expenses = $ 2.52 % Net Income = $ Page 14,400 31,025 5,598 25,427 28 of 33 UAAR® 19 MCDC Addenda 17002 Sale # File # Index # OR04517.002 Database # 872 Improvement Analysis Improvement Analysis Item: Type Size Unit Utility Condition Age Remaining Life RCN/Unit RCN % Physical Depreciation RCN Remainder After Phys. Depr. % Functional Obsolescence RCN Rem. After Phys./Funct. Depr. % External Obsolescence Total Impt. Contribution Contribution $/Unit Comments 40 Physical Depreciation 323,792 Total RCN $ Impt. #1 House 1,522 Sq Ft A A 30 30 100.00 152,200 50 76,100 Replacement Cost Impt. #2 Impt. #3 Impt. #4 Impt. #5 Impt. #6 Impt. #7 Other Lean to Mach Shed Manf House Lean to 1,024 1 483 1,200 1,512 Sq Ft Sq Ft Sq Ft Sq Ft F A A A F A A A 20 30 18 18 20 30 32 32 16.00 16.00 30,000.00 16.00 65.00 16,384 7,728 30,000 19,200 98,280 50 50 35 35 8,192 3,864 12,480 30,000 63,882 76,100 3,864 8,192 63,882 12,480 30,000 76,100 50.00 3,864 8.00 8,192 8.00 63,882 42.25 12,480 10.40 30,000 30,000.00 Impt. #8 Impt. #9 Impt. #10 40 % Functional Obsolescence % External Obsolescence % Total Depreciation 194,518 19 Total Improvement Contribution: $ Improvement As % of Price % % The sale property is an improved tract of irrigated crop ground that is located approximately 2 miles northeast of the town of Vale, in Malheur County, OR. Access is provided by Lagoon Dr., which bisects the northern portion of the property, and by Foothill Ln, which forms the majority of the eastern boundary. The lands of the sale property consist of approximately 95 acres of irrigated crop ground, approximately 33.23 of pasture ground, and approximately 5 acres of total site area that contains all of the improvements. The irrigated crop ground is broken up into 8 different fields that are irrigated by a combination of concrete ditches and gated pipe. These lands have a combination of Class II, III and IV soils that are capable of growing both cash and feed crops. Irrigation water is provided by a primary private right (41141) for 17 acres with water from the Malheur river (covers the southern most field), as well as by a supplemental right (27142) for 80 acres with water from the Malheur River that covers the remainder of the irrigated ground. There is no formal primary water right for these lands, although the property has historically been fully irrigated. The water master is aware of this situation, but is allowing the property owners to continue to fully irrigate the property for the time being. This situation was not known to the buyers during the acquistion process. The pasture ground consists of dry pasture lands that are primarily situated north of Lagoon Dr. The improvements are located along the western boundary of the property, and include: an average quality stick built home with an attached carport, an average quality manufactured home with an attached carport, a fair quality machine/livestock shed, and numerous older miscellaneous outbuildings that were included in the "other" category along with the typical site improvements. The sellers were long time area residents/farmers, and the buyer was a Canadian firm that was looking at constructing a mushroom facility on the property after purchasing it. The buyer felt like the purchase was on the strong side, but it reportedly fit their needs well. The property has railroad frontage on the north side of Lagoon Drive. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 29 of 33 UAAR® Index # OR04517.002 File # Database # 872 19 MCDC Addenda Sale # 17002 Aerial ©1998-2019 AgWare, Inc. All Rights Reserved. Page 30 of 33 UAAR® Sale Analysis Index # 18OR045.006 Database # Sale # 902 Grantor Sales Price Grantee Other Contrib. 227.76 Deeded Acres Net Sale Price 08/09/18 / 295 Sale Date/DOM $/Deeded Acre Prior Sale Date Financing Prior CEV Price % Fin. Adj. S67 Analysis Code CEV Price Seller / Appraiser Source SCA Unit Type Open Market Motivation Eff. Unit Size Agriculture Highest & Best Use SCA $/Unit 3991 Clark Blvd Address Multiplier Unit Ontario City Multiplier No. Malheur County Legal Access OR / State/Zip Physical Access O / / View Region/Area/Zone 2 W Ontario Location Utilities Legal Description: Map 18S4613 TL: 100 Ref# 7515 1,675,000 1,675,000 7,354.23 Conventional Loan 1,675,000 Acres 227.76 7,354.23 Yes Yes Yes File # 18006 Property Type Primary Land Use Condition Zoning Shape Topography Marketing Time Soils Irr Type Irr Source Year Verified Tax ID/Recording Sec/Twp/Rge 19 MCDC Addenda Improved Sale Irrigated Irr Crop Good C-A1 Blocked Level 10 months Irr Class I Flood Old Owyhee 13 2018 2018-3262 / 18S / 46E Land Mix Analysis Land-Mix Analysis Land Use Site Irr Crop Irr Crop B Dry Cropland Pasture Rangeland Other Ratios % % % % % % % % % % Totals CEV Price $ 1,675,000 Acres 3.00 187.00 $/Acre Ac. 8,000.00 Ac. 8,000.00 Ac. Ac. 800.00 Ac. Ac. 37.76 Ac. Ac. Ac. Ac. 227.76 Ac. 6,673.69 - Land Contribution $ Unit Size 1,520,000 Unit Type $/Unit Total Unit Value 24,000 X $ =$ 1,496,000 X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ X $ =$ 1,520,000 X $ =$ 155,000 = Improvement Contribution $ Income Analysis Income Analysis Income Estimate Basis: Income Source Actual X Estimated Cash Rent - Crop Improvements X Units 187.00 Cash Unit Measure Acre Share Stabilized Yield 1.00 Improvements Included in Land Rent Owner/Operator Total Production Cash/Share/Owner Income Stabilized $/Unit Gross Income Share % Income $ 300.00 56,100 100 56,100 800.00 /mo Expense Items: Expenses (cont.): 5,793 Irr Water 4,828 Real Estate Tax $ $ 750 Insurance $ $ 750 Maintenance $ $ 3,285 Management $ $ 15,406 65,700 Total Expenses / Stabilized G.I. = Expense Ratio 50,294 1,675,000 Net Income / CEV Price = Cap Rate ©1998-2019 AgWare, Inc. All Rights Reserved. 9,600 100 /yr Stabilized Gross Income = $ Expenses (cont.): $ $ $ $ 23.45 % Total Expenses = $ 3.00 % Net Income = $ Page 9,600 65,700 15,406 50,294 31 of 33 UAAR® 19 MCDC Addenda 18006 Sale # File # Index # 18OR045.006 Database # 902 Improvement Analysis Improvement Analysis Item: Type Size Unit Utility Condition Age Remaining Life RCN/Unit RCN % Physical Depreciation RCN Remainder After Phys. Depr. % Functional Obsolescence RCN Rem. After Phys./Funct. Depr. % External Obsolescence Total Impt. Contribution Contribution $/Unit 44 Physical Depreciation 275,220 Total RCN $ Impt. #1 Impt. #2 Mach Sh House 1,200 2,569 Sq Ft Sq Ft A A Fair Fair 20 28 20 27 16.00 80.00 19,200 205,520 50 50 9,600 102,760 Impt. #3 Impt. #4 Impt. #5 Other GP Bldg 1 1,140 Sq Ft A AVG 12 28 22,000.00 25.00 22,000 28,500 30 22,000 19,950 102,760 9,600 19,950 22,000 102,760 40.00 9,600 8.00 19,950 17.50 22,000 22,000.00 Impt. #6 Replacement Cost Impt. #7 Impt. #8 Impt. #9 Impt. #10 44 % Functional Obsolescence % External Obsolescence % Total Depreciation 154,310 9 Total Improvement Contribution: $ Improvement As % of Price % % Comments The sale property is an improved tract of farm ground that is located in the Ontario Flat area of Malheur County, OR. The sale property is accessed by Butler Blvd and Clark Blvd, both of which are paved county roads that form the northern and eastern boundaries of the property, respectively. The sale property is composed of one tax lot, and has a total of 227.76 deeded acres. There were approximately 187 acres being irrigated at the time of the sale. These lands were broken up into 12 different fields that have all been leveled, and were being irrigated by a combination of dirt ditches, concrete ditches, and gated pipe. The soils on the irrigated crop ground are primarily Class I soils that are capable of growing all crops common to the area. Irrigation water is provided by the Old Owyhee Ditch Improvement District, with 195.9 acres assessed at a rate of $150 for the first acre, and $24 for each additional acre. The "other" lands are composed of ditches, roads, and waste/dry ground, and did not contribute value to the sale. The site area is situated in the northeast corner of the property, and contains an older average quality dwelling that has received some updating over the years, an average quality GP building, a fair to average quality machine shed, and several other older miscellaneous type outbuildings that were included in the "other" category along with the typical site improvements. The sellers were a family estate selling out for cash, and the buyers are a local area farming family. The property initially listed for $1,900,000, and was reportedly only on the market for 2-3 months before it went pending at the purchase price. ©1998-2019 AgWare, Inc. All Rights Reserved. Page 32 of 33 UAAR® Index # 18OR045.006 File # Database # 902 19 MCDC Addenda Sale # 18006 Aerial ©1998-2019 AgWare, Inc. All Rights Reserved. Page 33 of 33