Dear Mr./Ms.:
(Name of Firm) is pleased to provide this completed appraisal review of the appraisal report prepared by ________________, MAI of (Name of Firm), pertaining to the _________ Community Facilities District No. ____‐__ (Improvements) or commonly referred to as “the
CFD.” The appraisal report date is ___________, with a date of value of ______,_____. The attached review report incorporates by reference the entire appraisal (___ pages, including the Addenda), referred to herein as “the Report”.
The purpose of the attached appraisal review is to provide my opinion as to the completeness,
accuracy, adequacy, relevance, and reasonableness of salient aspects of the written appraisal report in compliance with Review Standards 3 and 4 of the Uniform Standards of Professional Appraisal Practice (USPAP 2024). I assessed the appraisal’s compliance with Standards 1 and 2 of the USPAP and the Appraisal Standards for Land Secured Financing, published by the California Debt and Investment Advisory Commission (CDIAC).
Summary Observations and Conclusions
After my review of the Report, it is my opinion the report under review complies with Standards 1 and 2 of USPAP and the appraisal regulations issued in connection with CDIAC.
Furthermore, the market value opinions are consistent with the relevant market conditions and the market data presented in the report as of the date of value.
My opinions are summarized as follows:
The material under review is complete.
The data used is adequate and relevant.
The methods and techniques used are appropriate.
The value opinions stated in the Report are adequately supported and are credible, given the data and analyses presented. However, I express no opinions of value of the subject property.
In my judgment, the Report complies with the Uniform Standards of Professional Appraisal Practice.
I limited my review work solely to a review of the Report. I did not gather any substantial additional data. I inspected the subject property on ________, 20__, including the market Mr. / Ms.
City of Sacramento
Date
data. Furthermore, I did not complete any independent verification of the market data or market information.
Thank you for the opportunity to provide this appraisal review. Please contact me should you have questions.
Respectfully submitted,
Firm Name
_______________, MAI [or AI‐GRS]
California Certified General Real Estate
Appraiser License No.:
Telephone:
Email:
TABLE OF CONTENTS
TRANSMITTAL LETTER
TABLE OF CONTENTS
INTRODUCTION
Reviewer Identification 1
Client and Intended Users of the Review 1
Intended Use and Purpose of the Review 1
Appraisers 2
Subject Property Identification 2
Appraisal Report Information and Conclusions 4
Scope of Work 5
APPRAISAL REVIEW
Introduction
and Factual Descriptions 6
Subject Property Descriptions 7
Market Analysis and Highest and Best Use 7
Valuation Methodology 8
Cost Approach 9
Sales Comparison Approach 10
Income Capitalization Approach 12
Reconciliation, Final Value Conclusion & Insurable Replacement Cost 16 Additional USPAP and CDIAC Reporting Requirements 16
APPENDIX
A – Assumptions and Limiting Conditions
B – Extraordinary Assumptions and Hypothetical Conditions C – Certification Statement
D – Qualifications of Reviewer
1 INTRODUCTION
REVIEWER IDENTIFICATION
Company: Firm Name
Reviewer:
California Certified General Real Estate Appraiser #
Expires
Telephone:
Email:
Date of Review: _______ __. ____
CLIENT AND INTENDED USERS
OF THE REVIEW
Review Client: Mr./Ms._____________, City of Sacramento
Review Intended Users: City of Sacramento, CFD finance team and prospective CFD
bond investors. No other users are intended.
INTENDED USE AND PURPOSE
OF THE REVIEW
Intended Use: The intended use of this appraisal review is to assist the intended users’ reliance on the Report for underwriting the CFD bond financing secured by the subject property described in the Report. No
other uses are intended.
Purpose of the Review:
The purpose of the appraisal review is to develop and report a credible opinion of the quality of another appraiser’s work while considering the completeness, accuracy, adequacy, relevance, and reasonableness of the conclusions in the Report. This review is to determine if the results of the work under review are credible for the intended users’ intended use.
I also assessed the appraisal’s compliance with Standards 1 and 2 of the Uniform Standards of Professional Appraisal Practice (USPAP) and the appraisal regulations issued in connection with CDIAC.
2 I inspected the subject property on _______, ____ including the market data. Further, no independent verification of the market data or market information was made. This review report was completed and written in conformance with Standards 3 and 4 of USPAP, respectively.
APPRAISER
Company:
Appraiser:
_______________, MAI
California Certified General Appraiser,
License No:________, expires _______
SUBJECT PROPERTY IDENTIFICATION
The real property in the appraisal report under review is:
General Description of Subject.
Property Address:
Assessor’s Parcel Numbers and
Owners:
Zoning:
Use:
Land Area: The subject property includes ____ parcels totaling____ taxable
acres. The property has an approved final/tentative map for ___ lots totaling ____ gross acres or _____ taxable acres. (Refer to the Report for the entitlements.) The subject property also includes ____ acres of unmapped land, zoned_____.
Improvements:
The property is mostly vacant land/improved with streets curbs, gutters etc. Provide improvement description here.
3 APPRAISAL REPORT INFORMATION AND CONCLUSIONS
Date of the Report:
Date of Inspection:
Effective Date of Market Value:
Interest Appraised: Fee simple estate/Leasehold etc.
Report Type: The appraisal report is correctly identified as an Appraisal Report in accordance with Standards Rule 2‐2(a) of the Uniform Standards of Professional Appraisal Practice.
Valuation Approaches: Sales Comparison Approach, Subdivision Development Method, Land Residual Analysis and Assessed Values for finished homes conveyed to end users.
Market Value Descriptions: The only market values estimated are for the subject property as of the date of inspection.
Opinions of Market Value: Ownership/ Description/ Value by Ownership Name, #___ Taxable Acres/___ # lots: $
Name, #___ Taxable Acres/___ # lots: $
Name, #___ Taxable Acres/___ # lots: $
Total: $
Appraisal Client: Mr./Ms. __________, City of Sacramento
Appraisal Intended User: City of Sacramento, CFD finance team and prospective CFD bond investors.
Appraisal Intended Use: The
intended use of this report is to reasonably validate the estimated value‐to‐lien coverage for purposes of a land‐secured bond financing.
The appraisal is not intended for any other use or users.
4 SCOPE OF WORK
The Client/Reviewer agreed upon Scope of Work for this review assignment outlined as follows:
I read the submitted appraisal report in its entirety.
I determined the report’s compliance with Standards 1 and 2 of the Uniform Standards of Professional Appraisal Practice (USPAP) and compliance with CDIAC.
I developed opinions as to the completeness, accuracy, adequacy, relevance, and reasonableness of various salient aspects of the written report.
I did not provide my own market value opinion but during the review period I did provide comments and questions based on the draft reports provided by the Client prepared by the appraiser.
I determined the reliability of the market values reported in the appraisal based solely on the contents of the appraisal report under review and generally accepted appraisal methodology and valuation techniques.
I inspected the subject property. I reviewed the market data. Further, no independent verification of the market data or market information was made.
I completed this written appraisal review report in compliance with Standard 4 of the Uniform Standards of Professional Appraisal Practice (USPAP).
5 APPRAISAL REVIEW Checklist
INTRODUCTION AND FACTUAL DESCRIPTIONS YES NO N/A
1. Letter of transmittal accurately reflects the contents of the report? X
2. Is the property adequately identified through legal description, parcel number(s), parcel map, etc.? X
3. Does the appraisal correctly define and identify the real property interest appraised? X
4. Are the dates of inspection, date of report and effective date of value stated? If applicable, are retrospective and prospective values properly identified per USPAP?
X
5. Does the appraisal provide a definition of market value and cite the source of the definition? X
6. Are the intended use(s), client/intended user(s) and scope of work of the appraisal identified, including a description of the extent of collecting, confirming, and reporting data?
X
7. Are all applicable extraordinary assumptions and/or hypothetical conditions disclosed and presented in a clear and conspicuous manner in the report? X
8. Is a statement of ownership history of the subject property provided, and is any listing, option, or pending contract disclosed and discussed? X
9. Are the discussion and analyses of regional and neighborhood data and trends relevant and adequate considering the scope of the assignment? X
10. In cases where third-party reports are considered and disclosed, does the appraisal address the reasonableness of the reported conclusions or provide analysis and support for any different conclusions?
X
Comments:
The transmittal letter (TL) provides the appraised values of each of the owners and the total.
The introduction and factual descriptions in the General Information section sufficiently present the subject identification, history, current ownership and sale history, the facilities and costs the City will finance by way of bonds issued on behalf of a CFD, and the purpose and use of the appraisal. The correct property rights appraised, and the market value definitions are provided.
Additionally, a separate section reports the developer’s marketing and development strategy (refer to report page __).
The Report provides a detailed Scope of Work section. The Report employs Extraordinary
Assumptions (EAs) and Hypothetical Conditions (HC). Given the stated scope of work and the intended use, the assumptions and conditions are appropriate. (Refer to the TL, the Reconciliation, and the Final Value section.) I recommend that the intended users carefully review the assumptions and conditions that are premises for the valuation.
The Regional and Neighborhood analyses are detailed and relevant. A history of the subject is included. The approved entitlements as of ____are reported and analyzed.
6 SUBJECT PROPERTY DESCRIPTIONS YES NO N/A
1. Is the site description adequate, including size, shape, frontage, drainage, and discussion of surrounding properties? X
2. Are easements, flood plain, wetlands, earthquake zone, and/or other encumbrances adequately identified and addressed? X
3. Are environmental hazards identified and addressed or standard disclaimer included? X
4. Are zoning and tax analysis adequately addressed? X
5. Is the description of improvements adequate, including photographs, site plan and drawings of improvements? X
6. Is improvement conformance with land use zoning considered? X
Comments:
Provide detailed comments here.
MARKET ANALYSIS AND HIGHEST AND BEST USE YES NO N/A
1. Is the historical performance of the market presented and analyzed? X
2. Is the position (such as design of the project or the marketing efforts) of the subject property within the market considered? X
3. Is the level of market analysis compliant with the terms of the engagement and the size and complexity of the subject property?
X
4. Does the appraisal follow the four criteria of highest and best use analysis? X
5. Is highest and best use as vacant analyzed? X
6. Is highest and best use as improved (proposed) analyzed? X
7. Are any probable physical, legal, or external changes considered, such as a pending change in zoning that may impact property value? X
8. Does the appraisal provide an adequate discussion of the potential for an expansion of, or changes to, the existing improvements?
X
7 Comments:
Provide detailed comments here.
VALUATION METHODOLOGY YES
NO N/A
1. Are exclusions of one or more of the three traditional approaches to value properly disclosed? X
2. Is the rationale for the exclusion of one or more of the three traditional approaches to value reasonable? X
Comments:
Provide detailed comments here:
COST APPROACH YES
NO N/A
1. Are land sales current, comparable, and appropriately adjusted? X
2. Is the land value conclusion logical and reasonable? X
3. Is the basis for the replacement cost estimate properly documented? X
8 4. Does the estimated cost to complete proposed improvements include leasing expenses and/or holding cost during construction? X
5. Are all forms of accrued depreciation considered and supported? X
6. Does the appraisal account for and adequately support entrepreneurial profit obtained from non‐confidential or proprietary sources? X
7. Is the cost approach conclusion logical and reasonable? X
Comments: The Report deemed the cost approach to not be applicable to the development of credible assignment results for the valuation analyses. Nevertheless, parts of the appraisal utilize cost estimates that have support and appear credible (supported by developer’s budgets and costs, cost comparables, and a cost service) for the cost estimates for construction in the land residuals.
The costs used appear reasonable and supported.
Provide developer expenditure on horizontal improvements comments here.
Provide expenditure on vertical improvements here.
If applicable:
Standard Rule 1‐4 (f) of USPAP states: “When
analyzing anticipated public or private
improvements, located on or off the site, the appraiser must analyze the effect on value, if any, of such anticipated improvements to the extent they are reflected in market actions.” Since significant construction has been completed on (name of structure of improvements the market would recognize value of the improvements completed on the site. The USPAP Standard Rule 1‐4 (f) is also consistent with the CDIAC guidelines.
The developer has expended $___________ on improvements as of the effective date of value.
The Report considers the contributory value of such improvements in arriving at a total value of the property. The value indication is $___,____ by the Build‐Up method, which would be considered by market participants for the “as is” value in the partially‐completed condition. The residual analysis is discussed in the following income approach section.
SALES COMPARISON APPROACH (SCA) YES NO N/A
1. Are improved sales current and reasonably comparable? X
2. Are the improved sales sufficiently identified and the descriptions adequate? X
3. Is the appropriate unit of comparison analyzed? X
4. Is the reasoning and analysis employed adequate and are the sales properly adjusted? X
5. Is the final value conclusion of the sales comparison approach logical and reasonable? X
Comments
(SCA):
Detailed description of the SCA here per land use type. Benchmark land use values and their adjustments etc.
9 LDR lots:
MDR lots:
HDR acreage:
Non‐residential acreage:
Describe valuation ranges before and after adjustments, reliability of market data and reasonableness, quality and credibility of opinion of value.
INCOME CAPITALIZATION APPROACH (ICA) YES
NO N/A
1. Is a rent roll and/or income history provided? X
2. Are contract rents appropriately analyzed? (There is one lease.) X
3. Are improved rent comparables current and
reasonably similar? X
4. Are the rent comparables appropriately analyzed and adjusted? Is market rent supported? X
5. Is income from all sources considered? X
6. Is vacancy and collection loss reasonable and
supported? X
7. If applicable, is the absorption forecast reasonable and adequately supported? (Some consideration is
given to the market study.)
X
8. Is an expense history provided? (Market expenses
used in the Residual analyses.) X
9. Are expenses appropriately analyzed and supported? X
10. Are overall, terminal capitalization rates and discount rates reasonable and supported? X
11. Are pro forma income statements and/or discounted
cashflow (DCF) assumptions and projections
reasonable and supported?
X
12. Is the income capitalization approach conclusion
logical and reasonable? X
Comments (ICA): Discuss the Income Approach/Discounted Cash Flow (DCF)/Subdivision Development Method
10 Land Use
Acres
Unit of
Comparison
Sales
Comparison
Other
Comparison
Approach
% Weight between
approache
Conclusion
The next step in the Report is the assignment of specific land values to the subject parcels using the benchmark land values and applying lot specific adjustments.
Discuss benchmark price per lot.
Discuss Market Absorption Analysis:
Discuss development costs
Discuss any large land sales as a check of reasonableness.
Discuss value of finished homes with Final Inspection (Assessed Values or Base Model Pricing)
Discuss non‐ revenue lots (HOA lands, buffer strips, dedications, etc.)
Discuss DCF inputs.
RECONCILIATION, FINAL VALUE CONCLUSIONS YES
NO N/A
1. Is the estimated exposure time disclosed and reasonable? X
2. Is the final value appropriately divided between realty and non‐realty items? Is the impact of their inclusion/exclusion on the estimate of value discussed?
X
3. Are final value estimates consistent with the data presented, and sufficient documentation included to assess the appraisal's logic, reasoning, judgment, and analysis?
X
4. Is the as‐is value appropriately analyzed? X
11 5. Are discounts for rent loss, future tenant improvements, etc. appropriate? X
6. Are discounts/enhancements attributable to non‐market leases appropriate? X
7. Is excess land properly considered? X
REVIEWER’S CONCLUSIONS
Summary Comments:
The appraisal appropriately valued the subject based on methods peers would use and users of the service would expect.
The conclusion of $_____________ appears reasonably supported by the market data and analyses included within the appraisal.
Discuss Strengths of Report
Discuss Weakness of Report
ADDITIONAL USPAP & CDIAC REPORTING REQUIRMENTS YES NO N/A
1. Are general assumptions and limiting conditions reasonable? X
2. Are the extraordinary assumptions and hypothetical conditions reasonable and prominently disclosed? X
3. Is certification signed by appraiser(s) who prepared the report? X
4. Are qualifications included in the report for all appraisers providing a significant contribution to the completion of the appraisal assignment?
X
5. Does the appraisal conform to generally accepted appraisal standards as evidenced by the USPAP and the appraisal regulations of CDIAC? X
6. Is the appraisal written with sufficient information and analysis to support the City's decision to move forward with a CFD bond financing?
X
7. Does the appraisal analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non‐market lease terms, and tract developments with unsold units?
X
8. Did state licensed or certified appraisers prepare the appraisal? X
12 9. If information was unavailable, is that fact disclosed and explained in the report? X
10. Are engagement instructions and other appraiser correspondence included in the report? X
11. Is the appraisal misleading?
X
12. Are third party studies well supported, incorporated into the appraisal or are the conclusions of the third‐party studies modified with supporting data by the appraiser to justify the changes?
X
Comments: In my opinion, given the reasons put forth previously in this review, the appraisal and the report comply with USPAP and CDIAC appraisal requirements.
APPENDIX A, ASSUMPTIONS AND LIMITING CONDITIONS – (or insert company’s standard assumptions and limiting conditions)
This review is subject to the following assumptions and limiting conditions:
1. No responsibility is assumed for matters of law or legal interpretation.
2. It is assumed all market information, estimates, and opinions contained within the reviewed appraisal were obtained from reliable sources and are believed to be true and correct as developed by the appraiser. Further, no responsibility for the accuracy of the copy of the appraisal submitted for the review is assumed.
3. The Report is to be considered in its entirety and use of only a portion thereof will render the review invalid.
4. Except for the client specified in the Report, as well as client successors or assigns and the Appraisal Institute, neither all, nor any part of the content of this review report, or copy thereof, should be used for any purpose by anyone without the previous written consent and approval of the reviewer.
5. The liability of _name of firm and its employees/subcontractors for errors/ omissions, if any, in this work is limited to the amount of its compensation for the work performed in this assignment.
6. No change of any item in the Report shall be made by anyone other than the reviewer. No responsibility for any such unauthorized change is assumed.
7. Disclosure of the contents of this review report is governed by the USPAP and the bylaws and regulations of the Appraisal Institute.
8. Acceptance and/or use of the Report constitutes acceptance of all assumptions and limiting conditions stated in this report.
APPENDIX B, ADDITIONAL EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS
Discuss extraordinary assumptions (EAs) and hypothetical conditions (HCs) and their effect on the review results.
Example.
There were no extraordinary assumptions (EAs) or hypothetical conditions (HCs) that affected the review results expressed in this review report. Unless otherwise stated, all the assumptions and limiting conditions contained in the appraisal report
under review are also conditions of this report.
APPENDIX C, CERTIFICATION
I certify that, to the best of my knowledge and belief:
the statements of fact contained in this report are true and correct.
the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.
I have no present or prospective interest in the property that is the subject of the work under review and no personal or prospective interest with respect to the parties involved.
I have not performed other services, as an appraiser or in any other capacity, regarding the property that is the subject of the work under review within the three‐year period immediately preceding acceptance of this assignment.
I have no bias with respect to the property that is the subject of the work under review or to the parties involved with this assignment.
my engagement in this assignment was not contingent upon developing or reporting predetermined results.
my compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in this review or from its use.
my compensation for completing this assignment is not contingent upon the development or reporting of predetermined assignment results or assignment results that favors the cause of the client, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal review.
my analyses, opinions, and conclusions were developed, and this review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice.
I have made a personal inspection of the subject of the work under review.
no one provided significant appraisal, appraisal review, or appraisal consulting assistance to the person signing this certification.
the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
I certify that my State of California general real estate appraiser license has never been revoked, suspended, cancelled, or restricted.
I have the knowledge and experience to complete this appraisal review assignment. Please see the Qualifications of Reviewer for additional information.
_____________________________
Name, MAI or AI‐GRS
State General Real Estate Appraiser License No. ________ Expires: ____________
Date: , 20