8545 Semiahmoo Dr. Information Packet by BuyerMax

All of the information provided in the following packet is included as a courtesy. Please do not contact any person from this packet. If you have questions, please direct them to Sally Webb at 360-224-1270. Thank you.

TABLE OF CONTENTS

Property Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Lease & Sublease Information . . . . . . . . . . . . . . . . . . . 19 Appraisal Information . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Septic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Vesting Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Seller Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 Email Packet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

PROPERTY PROFILE

geoAdvantage Property Profile

Page 1 of 2

Whatcom County Parcel Information

Parcel Information

Tax Information

Parcel #: 4051164870680000

Tax Account: 116922

Alt Parcel #: 149594

Tax Code Area:

Address: 8545 Semiahmoo Dr Blaine, WA 98230

Levy Rate: 10.4577214391 $94

Property Tax:

TRS: 40N01W16 - SE

(2016)

Taxpayer: Washington State Dept Of

Census Tract/Block: 010403 / 1005

Legal

Owner: Washington State Dept Of PO Box 47014 Olympia, WA 98504

STATE PLAT IN 16-40-1W LOT 8

Zoning: Rural (1 dwelling unit/5 acres) Present Use: RES 2 BDRM Total Land Value:

$271,450

Total Impr Value:

Total Value:

$271,450

Parcel Size: .87 Acres (37,897 SqFt) School District: BLAINE SCHOOL DISTRICT Waterfront: Puget Sound Recreation: -

Land Method: Frt Ft Waterfront Bank: Hi Bank Waterfront Beach:

Use: 1112 - Res 2 Bdrm

Class: Improv

View Type:

Topography: Clear

View Quality:

Topography Type: Level

Service: Abutting:

Improvement Building $0 Value: Condition: Foundation: Full Baths: 0 1st Floor: 0 SqFt Garage Type: Porch: 0 SqFt

Year Built:

Heating:

Type:

Use:

Siding:

Roof Cover:

Half Baths: 0

Bedrooms: 0

2nd Floor: 0 SqFt

Total Area: 0 SqFt

Garage: 0 SqFt

Carport: 0 SqFt

Deck: 0 SqFt

Patio: 0 SqFt

Transfer Information Rec. Date: 1/5/2006

Sale Price:

Doc Num: 2060100502

Doc Type: Q

http://geo.sentrydynamics.net/WA_Whatcom/ParcelList_Batch.aspx?Tag=Legacy... 12/9/2016

geoAdvantage Property Profile

Page 2 of 2

Whatcom County Parcel Information

Parcel Information Parcel #: 4051164870680001 Alt Parcel #: 149595 Address: 8545 Semiahmoo Dr Blaine, WA 98230 TRS: 40N01W16 - SE Census Tract/Block: 010403 / 1005 Owner: Erich R & Carol A Kozourek Jt 8545 Semiahmoo Dr Blaine, WA 98230 Zoning: Rural (1 dwelling unit/5 acres) Present Use: RES 2 BDRM Total Land Value:

Total Impr Value:

Total Value:

$226,823

Tax Information

Parcel Size: .00 Acres (0 SqFt)

Tax Account: 65022

School District: BLAINE SCHOOL DISTRICT

Tax Code Area:

Waterfront: Puget Sound

Levy Rate: 10.4577214391

Recreation: -

Property Tax:

$2,372

(2016)

Taxpayer: Erich R & Carol A Kozourek Jt

Legal

STATE PLAT IN 16-40-1W IMPROVEMENTS ONLY-HOUSE

Land Method:

Use: 1112 - Res 2 Bdrm

Class:

Service:

Waterfront Bank:

View Type:

Topography:

Abutting:

Waterfront Beach:

View Quality:

Topography Type:

Improvement Building $0 Value: Condition: AVG+ Foundation:

Year Built: 1975 Type: 1 STORY Siding: SI/ST

Full Baths: 1 1st Floor: 1,368 SqFt Garage Type: Attached Porch: 0 SqFt

Heating: F/A Use: HOUSE Roof Cover: SHAKE

Half Baths: 1

Bedrooms: 2

2nd Floor: 0 SqFt

Total Area: 1,368 SqFt

Garage: 378 SqFt

Carport: 0 SqFt

Deck: 288 SqFt

Patio: 0 SqFt

Transfer Information Rec. Date: 01/05/06

Sale Price:

Owner: KOZOUREK, ERICH R & CAROL A

Doc Type:

Grantor:

Orig. Loan Amt: Finance Type:

Doc Num: 2060100502

Title Co: Loan Type:

Lender:

Sentry Dynamics, Inc. and its customers make no representations, warranties or conditions, express or implied, as to the accuracy or completeness of information contained in this report.

http://geo.sentrydynamics.net/WA_Whatcom/ParcelList_Batch.aspx?Tag=Legacy... 12/9/2016

LEASE AND SUBLEASE INFORMATION

Here is what I know so far. In 1971 Washington State Department of Natural Resources (DNR) lease out one large parcel of land to a individual, who was given a master lease on the larger property for 99 years., the lease allowed this person to sub-lease the land to 28 separate sub-leases. The leases are to end in 2070. The owner of the property we have listed believes he does not owe a lease payment for roughly 10 years and his lease goes until 2070/ I spoke with DNR on Wednesday, they think this parcel may be one of the parcels that only has a lease until 2028, and if my folks want a extension they need to try and work something out. The folks at DNR oversee the master lease and the sub-leases. Its all recorded and approved. I have a call into the Master Lease holder and have not heard back yet. I will keep you posted. When Washington State and the US was divided up, the Government kept about one in every 36 tracts. The DNR folks may be able to explain it better. When it ends, I am not all the way sure what will happen? It has not happened in Washington State yet, this is a long lease and Washington is a young State. For the most part it just seems like a land lease which ends in 50 years. The current owner seems to believe there is a tax savings vs fee simple owned land. Have to say it is a little different, it is legit and overseen by Washington State.

Keith Cook â&#x20AC;&#x201C; Managing Broker (360) 739-5600 RE/MAX Whatcom County, Inc. 913 Lakeway Drive Bellingham, WA 98229

BUYERMAX.com

SUBLEASE AGREEMENT

Lot No.: Lessor:

JUNE PATRICIA MALONE, as trustee of the June Patricia Malone Living Trust

STATE OF WASHINGTON MASTER LEASE NO. 59909

THIS SUBLEASE, made this day of 20 (Effective Date) in triplicate, between JUNE PATRICIA MALONE, trustee of the June Patricia Malone Living Trust, hereinafter referred to as the "Lessor", of 10927 Greendale Drive, S.W., Tacoma, Washington, 98498 and , [(husband and wife),(an individual)] of , , Washington, , hereinafter called the "Lessee": WITNESSETH: WHEREAS, the Lessor is the owner of a 99-year term leasehold estate of real property described in a Master Lease commencing on the 15th day of September, 1971, and continuing to the 14th day of September, 2070, executed on the 28th day of September, 1981, under State of Washington File No. 59909, wherein the State of Washington, Department of Natural Resources, appears as Lessor therein, and the Lessor's predecessor hereof, Joseph T. Malone, Jr., appears as Lessee, as recorded on the 8th day of December 1981, under Whatcom County Auditor's File No. 1406941, and amended by that certain Lease Amendment, as recorded on the 9th day of November 2007, under Whatcom County Auditorâ&#x20AC;&#x2122;s File No. 2071101299, all by reference made a part hereof and incorporated herein; and

WHEREAS, the real property of the Master Lease has been subdivided into waterfront lots and upland tracts of which the Lot leased herein is a part, and this Lease is made in form and content subject to approval by the Master Lessor, as hereinafter set forth. NOW, THEREFORE, in consideration of the rent payable and the performance of all the terms, covenants, restrictions, and conditions of this Lease by the Lessee, the Lessor does hereby lease to the Lessee, subject to the Master Lease above-stated, the land and all right, title and interest now owned or hereafter acquired in buildings and improvements now or hereafter located on real property in WHATCOM COUNTY, WASHINGTON, described as: Lot , "Amended State Plat of Tracts 8 through 36 of State Plat in Section 16, Township 40 North, Range 1 West of W.M.", recorded in Volume 11 of Plats, pages 82 and 83, records of Whatcom County, Washington, except any portion lying within second class tidelands; together with those portions of the vacated public road dedicated on said plat and recorded in instrument on June 9, 1965, under Whatcom County Auditor's File No. 988449. ARTICLE I DEFINITIONS As used in this Lease, the following terms when capitalized are defined and shall be deemed to have a meaning within the context herein set forth. 1. Master Lease. The term "Master Lease" shall refer to that certain Lease under File No. 59909 and amendments described above. 2. Master Lessor. The term "Master Lessor" shall refer to the State of Washington, Department of Natural Resources, the "Lessor" named in the above-stated Master Lease. 3. Lease. The term "Lease" or "this Lease" shall refer to this Sublease, and the term "Leasehold" shall mean the leasehold estate created in the Lessee hereof. 4. Sublease. The use of the term "sublease" or reference to the use of the terms "sublessor" or "sublessee" in this Lease has been omitted, and the leasehold estate of the Lessee created and conveyed by the Lessor to the Lessee herein is and shall be deemed to be an assignment in full of the leasehold estate of the Lessor in the lot or tract herein described and of the ownership of the Lessor therein created by the Master Lease, subject thereto, and subject to the covenants, terms, restrictions and conditions of this Lease. The assignment of the leasehold estate in the real property above-described does not impose on the Master Lessor any obligations of the Lessor of this Lease so long as the Lessor is not in default as Lessee of the Master Lease and the

provisions of Article IX hereof have not become applicable. This Lease is expressly subordinate to the interests and rights of the Master Lessor in the real property and the Master Lease of said real property, and requires the Lessee to take no action in contravention of the terms of the Master Lease. ARTICLE II TERM The Master Lease commenced on September 15, 1971, and terminates on September 14, 2070. This Lease commences on the Effective Date, above, and shall continue to September 13, 2070 (Termination Date). This Lease supersedes all prior leases on the property described above and replaces the previous lease in its entirety with respect to the property described above. ARTICLE III USE OF PROPERTY 1. Permitted Use. The Lessee covenants to the Lessor that the site shall be used only for the purpose of a single family residence excluding mobile homes with wheels attached or detached, and that any breach of this covenant shall entitle the Lessor to cancel this Lease, and retain all lease payments as reasonable damages, in addition to any other remedy provided by law. 2. Public Authority. The Lessee shall conform to all public authority concerning planning, zoning, and other requirements, which may affect the leased site in the same manner as if the land was leased from a private owner, and Lessee agrees to construct on the site only those improvements in accord with the county approved development plan. 3. Debris and Refuse. The Lessee shall allow no debris or refuse to accumulate on the leased site. 4. Setbacks. It is desirable that Lessees of waterfront property have a view of the water that shall not be obstructed by improvements located on the adjoining lots. It is also necessary that the land and bank of each waterfront lot be preserved from erosion caused by the weight of improvements and drainage fields placed upon the land near the bank. Subject to all applicable building requirements and restrictions of governmental authorities, the Lessee covenants not to construct, or have constructed, on the waterfront lot within a distance of seventy-five (75) feet of the bank, or less, except without the written approval of the Master Lessor, the State of Washington, Department of Natural Resources, for cause shown as hereinafter stated, any of the following:

Any building on or above the surface of the land with either: foundation, walls, or roof; b) Any porch or deck that is raised above an adjoining waterfront lot surfaces; or c) Any drain field for septic tank or sewerage. The Lessee for cause shown of hardship caused by either: size, topography, or soil conditions preventing construction upon the waterfront lot in compliance with the above-stated covenant may apply for a variance to the Master Lessor, and the Master Lessor may grant a variance in its sole discretion upon the application made by the Lessee. ARTICLE IV PAYMENT 1. Rental. The Lessee shall pay to the Lessor, or any party having subsequently acquired ownership of all the rights of the Lessor in the Master Lease by way of assignment, or otherwise, an annual rent in advance of $ . Any rent due for a partial year based upon the Effective Date shall be prorated through September 14 and is due prior to the Effective Date. Thereafter, the full annual rent shall be paid in advance on September 15 of each year. 2. Annual Rental Adjustment. The annual rent above shall be adjusted each year during the term, by utilizing an adjustment factor which represents the average annual change in the Consumer Price Index (â&#x20AC;&#x153;AACPIâ&#x20AC;?) over the ten year period preceding the adjustment date, and the same AACPI shall be used throughout the then applicable ten year period. The first of these ten year periods commenced on September 15, 1992, and successive ten year periods commence on September 15, 2002, September 15, 2012, September 15, 2022, and so on, until the last one commencing on September 15, 2062. To illustrate, annual rent adjustments for the period September 15, 2002 through September 14, 2012, are based on an AACPI adjustment factor, calculated by using Consumer Price Index values for the period September 15, 1992 through September 14, 2002. Likewise, annual rent adjustments for the period September 15, 2012 through September 14, 2022, are based on an AACPI adjustment factor, calculated using Consumer Price Index values for the period September 15, 2002 through September 14, 2012. Reference is made to Exhibit A, attached and incorporated herein, which illustrates the foregoing calculations. 3. Rental Payments. The annual rental charge unpaid ten (10) days after the date it becomes due shall bear interest at a rate of twelve percent (12%) per annum from the date it

becomes due until paid in full, but this provision shall not be construed to relieve the Lessee from any default in making any rental payments at the time and in the manner herein specified. 4. Leasehold Tax. The Lessee shall pay to the Lessor, or any party having subsequently acquired ownership of all the right of the Lessor in the Master Lease by way of assignment, or otherwise, the leasehold tax as set forth in RCW 82.29A - Leasehold Excise Tax. The tax shall be due and payable at the same time the rental charged herein is due and payable. Failure to pay said tax when due and payable shall be considered a breach of the provisions of this lease and the Lessor shall be entitled to all remedies at law and the remedies provided herein for a breach of a provision of this lease. 5. Assessments. In the event for any one year there is an amount made payable or assessed against the ownership of the Lessor attributable to land of the leased premises for sewers, roads, or other public works assessed by a governmental agency, the Lessee agrees to pay the Lessor on the anniversary date, September 15th, of the year following the assessment an amount apportioned to Lesseeâ&#x20AC;&#x2122;s leasehold in accordance with standard practice of assessors in apportioning assessments to land according to square footage and front footage. The apportioned amount owed by the Lessee to the Lessor may be payable over a period of years according to the assessment periodic payment schedule. The Lessor shall notify the Lessee in writing of any adjustment in rent for an assessment together with a copy of said assessment at least sixty (60) days prior to date of the 15th of September of the year following the assessment. ARTICLE V ACCESS TO PREMISES The Master Lessor and the Lessor shall have access to the demised premises at all reasonable times for the purpose of securing compliance with the terms and conditions of this lease. So long as Lessee will perform the Lessee's covenants herein contained, Lessee shall peaceably hold and enjoy said premises for the term of this Lease, without hindrance or interruption by Lessor or any other person or persons lawfully claiming by, through, or under it as herein expressly provided. ARTICLE VI LIENS Lessee shall not permit to be enforced by way of sale, foreclosure, or otherwise against the lease premises (subject to the terms of Article XI below), or any part thereof, any liens arising from any work performed, materials furnished, mortgages, encumbrances, taxes, or obligations incurred

by Lessee (including alteration, repair and restoration work), but shall pay or cause to be paid any such lien before any action is brought to enforce the same; and Lessee hereby indemnifies and agrees to hold the Master Lessor and Lessor and said premises free and harmless from all liability for any such liens, together with all costs and expenses in connection therewith, provided that if Lessee shall in good faith contest the validity of any lien, claim, or demand, Lessee shall, at its expense, defend itself and Lessor against the same, and shall pay and satisfy any adverse judgment that may be rendered before the enforcement thereof against Lessor, Master Lessor, or said premises. ARTICLE VII IMPROVEMENTS 1. Lessor's Improvements. The Lessor is not required to make any improvements for roads, drainage, water, or electrical service to the leased land. The Lessor covenants to the Lessee that there is water service upon paying a hookup charge, and thereafter paying for water. 2. Lessee's Improvements. All buildings and improvements which are fixtures placed upon or attached to the leased premises, or any change made in their previous condition that has added value to the lands, excluding removable personal property and trade fixtures on the leased site erected by the Lessee, or any subsequent owner of the leasehold estate of the Lessee, will not be removed by the Lessee, but shall remain annexed to the real property and as annexed shall thereupon become the property of the State of Washington although this Lease may have been terminated or shall have expired. The ownership in said improvements of the State of Washington is and shall be subject to Article IX, Title to Improvements During Term. ARTICLE VIII INSURANCE 1. Fire and Extended Coverage Insurance. Lessee covenants during the continuation of the term of this lease to keep or cause to be kept the buildings and other improvements constructed by Lessee on the leased premises insured against loss or damage by fire with customary extended coverage and in an amount equal to the greater of all mortgages upon said buildings or one hundred percent (100%) of the full insurable value of said buildings in a responsible and reputable insurance company or companies authorized to do business in the State of Washington. 2. Lessor and Master Lessor to be Named as Insured. All policies of fire insurance carried or caused to be carried by Lessee shall be issued in the name of the Lessee, Lessor, Master

Lessor, and any leasehold mortgagees or holders of other security interests in the leasehold as designated by Lessee. The Lessee shall provide the Lessor a copy of all policies. ARTICLE IX TITLE TO IMPROVEMENTS DURING TERM Until the expiration date of the term of this lease or its earlier termination, title to any buildings or improvements upon the leased premises and all other items installed in said buildings and any approved alterations, changes, or additions shall remain solely in Lessee and the Lessee shall be deemed to be the sole owner of all of said buildings, improvements, approved alterations, changes, or additions for all purposes. ARTICLE X STATUS OF MASTER LEASE Termination of the Master Lease by cancellation or otherwise shall not serve to cancel this Lease and/or any assignment or transfer of the leasehold estate consented to in writing by the Lessor, but shall only operate as an assignment to the Master Lessor of the Lessor's interest in this Lease. Until Lessee or a subsequent owner or owners of the leasehold estate (the transfer or assignment of which the Lessor has consented to) is notified in writing by the State of Washington or the Lessor that the Master Lease has been terminated, the ownership of the leasehold estate of the Lessee, or owners, as the case may be, shall be protected by payment of rent and performance of the Lessee's covenants herein in the same manner as if termination of such Master Lease had not occurred. Following notice of termination of the Master Lease, should the owner of the leasehold estate, as above provided for, be in doubt as to whom or where to pay rent; whether termination of the Master Lease has occurred; or whether or not notice or purported notice of such termination has been received by the owner or owners of the leasehold estate, the owner or owners may pay rent to the State of Washington at the address to be used for mailing of notices to the State of Washington, Department of Natural Resources, Olympia, Washington, and such payment shall fully discharge said owner or owners' obligation with respect to the rent so paid.

ARTICLE XI ASSIGNMENT FOR SECURITY PERMITTED This lease may be assigned as security for a loan, or series of loans, and it is understood that the consent of the Lessor and the State shall not be required with respect to an assignment of this lease by any owner of the leasehold estate including an owner whose interest shall have been acquired by, through, or under any leasehold mortgage or shall have been derived from any holder thereof. Notice to the Lessor of such loan security arrangements will be made within thirty (30) days of the date of such agreements. The foreclosure of such security shall be accomplished in accordance with the requirements set forth in the Master Lease recorded under Whatcom County Auditor's File No. 1406941. ARTICLE XII DEVELOPMENT OF IMPROVEMENTS The Lessee covenants to the Lessor to submit a set of plans for any improvements upon the land by the Lessee to the Lessor, together with a copy of a building permit from Whatcom County, Washington. ARTICLE XIII DEFAULT If the Lessee shall violate or default any of the covenants and agreements herein contained, then the Lessor may cancel this Lease, provided that the Lessee has been notified of the violation or default sixty (60) days prior to such cancellation and such violation or default has not been corrected in the specified period of time. ARTICLE XIV MISCELLANEOUS 1. Notices. Any notice required or permitted under this Lease shall be given when actually deposited in the United States Mail as certified mail addressed as follows: JUNE PATRICIA MALONE, 10927 Greendale Drive S.W., Tacoma, Washington, 98498, or as otherwise specified in writing by the Lessor, to the Lessee. And, at the address given by the Lessee in the signature block of this Lease or as specified in writing by the Lessee, to the Lessor.

2. Changes. Neither this lease nor any term or provision hereof may be changed, waived, discharged, or terminated orally, but only by an instrument in writing signed by the party against which the enforcement of the change, waiver, discharge, or termination is sought. 3. Binding Effect. All of the terms, conditions, covenants, and agreements of this Lease shall extend to and be binding upon the State, Lessee, and their respective heirs, personal representatives, successors, and assigns, and upon any person or persons coming into ownership or possession of any interest in the leased property by operation of law or otherwise. 4. Non-Waiver. Any waiver by either party of strict performance of any provisions of this Lease shall not be a waiver of, nor prejudice, the party's right to require strict performance of the same provision in the future or of any other provision. 5. Attorney's Fees. Any legal action in court for the enforcement of this Lease by either party, resulting in relief by way of damages or otherwise to the successful party, shall entitle the successful party to reasonable attorney's fees and costs. 6. Representations. The Lessee covenants that the site has been inspected, and is accepted in its present conditions. 7. Time and Interest. Time is the essence of this agreement. The Lessee shall pay interest at the rate of twelve percent (12%) per annum to the Lessor on the default in payment of any obligation to pay money to the Lessor as set forth in this Lease after ten (10) days have expired from the date said payment or payments became due and payable by the Lessee. 8. Assignments and Transfers. The Lessee shall not subdivide the property or make any subdivision transfers of the leasehold estate to any other parties. The Lessee shall neither sublease nor assign this Lease to any other party without the written consent of the Lessor first having been made. The Lessor shall not withhold that consent if the obligations of the Lessee herein are not in default and the persons or parties acquiring the ownership of the Lessee accept and agree to perform all the obligations of the Lessee set forth in this Lease. Lessor’s consent to subleasing shall be conditioned upon the following requirements: a) Each sublease shall be for a term of month-to-month, with not more than six (6) months “locked.” b) Rent shall be payable in advance on a monthly basis with not more than two months’ rent prepaid. c) Each sublease agreement shall contain language expressly confirming that the sublease is subordinate to the interests and rights of the Master Lessor and Lessor in the real property and under the Master Lease and this Lease, and requires the sublessee to take no action in contravention of the terms of the Master Lease and this Lease.

ARTICLE XV CONDITIONS SUBSEQUENT Approval by the State. The rights and obligations of the Lessor and Lessee of this Lease are expressly subject to the condition subsequent that the Master Lessor, the State of Washington, Department of Natural Resources, shall have executed its approval as hereinafter set forth. Upon the execution of this Lease by the Lessor and Lessee, the Lessor is authorized and directed to deliver two executed copies of this Lease to the Master Lessor and obtain the written receipt and date of delivery thereof from the Master Lessor. In a reasonable time thereafter, the Master Lessor shall execute its approval on each of the copies as provided herein, and shall return one of the copies properly executed to the Lessor for closing and delivery to the Lessee. Upon delivery to the Lessee, all monies due and payable by the Lessee to the Lessor shall be paid to the Lessor. IN WITNESS WHEREOF, the parties have signed and sealed this Lease the day and year first above written. LESSOR

LESSEE

JUNE PATRICIA MALONE, as trustee for the June Patricia Malone Living Trust

STATE OF WASHINGTON ) )ss. COUNTY OF

)

On this day personally appeared before me JUNE PATRICIA MALONE, to me known to be the individual described in and who executed the within and foregoing instrument, and acknowledged that she signed the same as her free and voluntary act and deed, for the uses and purposes therein mentioned. GIVEN under my hand and official seal this

day of

Notary Public in and for the State of Washington. My commission expires STATE OF WASHINGTON ) ) ss. COUNTY OF

)

On this day personally appeared before me, , to me known to be the individual described in and who executed the within and foregoing instrument, and acknowledged that he/she signed the same as his/her free and voluntary act and deed, for the uses and purposes therein mentioned. GIVEN under my hand and official seal this

day of

Notary Public in and for the State of Washington. My commission expires STATE OF WASHINGTON ) ) ss. COUNTY OF

)

day of

Notary Public in and for the State of Washington. My commission expires

RECEIPT OF TWO EXECUTED COPIES

The Master Lessor hereby acknowledges on the day of , the receipt of two (2) duplicate executed copies of this lease.

STATE OF WASHINGTON DEPARTMENT OF NATURAL RESOURCES

APPROVAL BY MASTER LESSOR The State of Washington, Department of Natural Resources, acting through its duly constituted and delegated authority, as witnessed by the signature of the undersigned, does hereby on this day of , 20 , approve the foregoing Lease in its entirety as delivered and above receipted. STATE OF WASHINGTON DEPARTMENT OF NATURAL RESOURCES

EXHIBIT A Calculation of annual rental during the ten-year period beginning September 15, 2012 will be calculated as follows: Ri Ri-1 AACPI

Ri-1 x (1 + AACPI) where Ri is the annual lease rental in year i is the annual lease rental in the previous year is the average annual percentage increase in the CPI Index as described in Article IV, Paragraph 2, during the preceding 10-year period.

Example: Calculation of AACPI in this example is based on the period 2002 through 2012 and would be the AACPI for annual rent adjustments during the period 2012 through 2022.

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CPI 188.3 191.6 194 199.2 205.8 213.81 223.569 225.58 226.195 230.815 237.344

Annual Percentage Change 1.75% 1.25% 2.68% 3.31% 3.89% 4.56% 0.90% 0.27% 2.04% 2.83% 23.50 รท 10 =2.35% = AACPI

Therefore, if annual rent in 2011 is $8,000, then annual rent in 2012 and 2013 is calculated as follows: Ri = Ri-1 (1 + .0235) R2012 = R2011 x (1.0235) R2012 = $8,000 x 1.0235 = $8,188 and R2013 = $8,188 x 1.0235 = $8,380

When recorded return to: Michele Boudreau Chicago Title 1835 Barklay Blvd, #105 Bellingham, WA 98226

APPROVAL OF ASSIGNMENT OF SUBLEASE

Grantors (Assignors): Pat Malone, Successor to Joseph T. Malone, Jr., Deceased Grantees (Assignees):Johnny Dahm, II and Lindsey Osborn Legal Description:

Lot 12, AMENDED STATE PLAT OF LOTS 8 TO 36 OF STATE PLAT IN SECTION 26, TOWNSHIP 40 NORTH, RANGE 1 WEST OF W.M., WHATCOM COUNTY, WASHINGTON, ACCORDING TO THE PLAT THEREOF, RECORDED IN VOLUME 11 OF PLATS, PAGES 82 AND 83, IN THE AUDITOR’S OFFICE OF SAID COUNTY AND STATE.

Tax Parcel Account Numbers: 4051164940960000 Reference Number of Related Documents: 1514582, 1619335 Lot No. 20 Lessor: June Patricia Malone Living Trust Dated October 21, 1995 pursuant to the STATE OF WASHINGTON MASTER LEASE NO. 59909 (Department of Natural Resources) JUNE PATRICIA MALONE, also known as PAT MALONE, a widow, successor interest to JOSEPH T. MALONE, JR., deceased, and Trustee to the June Patricia Malone Living Trust dated October 21, 1995, does hereby acknowledge, agree and consent as follows: 1.

Pat Malone, as the successor in interest to her husband, Joseph T. Malone, Jr., deceased and as Trustee to the June Patricia Malone Living Trust dated October 21, 1995 is the successor in interest to the leases described in paragraphs 2 and 3 below.

A certain lease, denominated Lease No. 59909, was entered into by and between the State of Washington Department of Natural Resources, as Lessor, and Joseph T. Malone, Jr, as Lessee, dated September 28, 1981; and recorded December 8, 1981, under Whatcom County Auditor’s No. 1406941. Said instrument was originally dated August 5, 1971, and recorded August 9, 1971, under Whatcom County Auditor’s File No. 1099311.

The Lessee’s interest therein as to the property legally described as follows: Lot 12, “Amended State Plat of Tracts 8 through 36 of State Plat in Section 26, Township 40 North, Range 1 West of W.M.”, Whatcom County, Washington. Subject to any easement for right-of-way for county road granted to Whatcom County on June 2, 1965, under Application No. 2702, Was subleased by Joseph T. Malone, Jr., as his separate property, to Horace Roy James, a single person, under that certain instrument recorded August 21, 1985, under Whatcom County Auditor’s File No. 1514582.

The interest of the original sublessee was subsequently assigned such that the sublessee’s interest is now held of record by Samuel T. Wu and Susan S. Wu, husband and wife, by Sale & Assignment of Leasehold Interest dated October 15, 1988 and recorded under Whatcom County Auditor’s File No. 1619336.

For valuable consideration, receipt of which is hereby acknowledged, Pat Malone does hereby approve the subsequent assignment of the assignee’s interest to purchasers of assignee’s interest, Johnny Dahm, II, a single person, and Lindsey Osborn, a single person, subject to all the terms and conditions of the State of Washington Department of Natural Resources Lease No. 59909; the Sublease Agreement executed by Joseph T. Malone, Jr., as Lessor to Horace Roy James recorded by instrument of Whatcom County Auditor File No. 1514582.

DATED this ____ day of ________________, 2015. THE JUNE PATRICIA MALONE LIVING TRUST DATED OCTOBER 21, 1995 by JUNE PATRICIA MALONE, Trustee

[4832-5579-6007]

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STATE OF WASHINGTON ) ) ss. County of _____________ ) I certify that I know or have satisfactory evidence that JUNE PATRICIA MALONE is the person who appeared before me, and said person acknowledged that she signed this instrument as her free and voluntary act and deed, for the uses and purposes mentioned in the instrument. DATED this _____ day of ___________, 2015.

Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

[4832-5579-6007]

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When recorded return to: Michele Boudreau Chicago Title 1835 Barklay Blvd, #105 Bellingham, WA 98226

ASSIGNMENT OF SUBLEASE AND ASSUMPTION OF SUBLEASE OBLIGATIONS Grantors (Assignors): Samuel T. Wu and Susan S. Wu Grantees (Assignees): John Dahm II, a single man, and Lindsey Osborn, a single woman Legal Description:

Tax Parcel Account Numbers: 4051164940960000 Reference Number of Related Documents: 1514582, 1619335 Lot No. 12 Lessor: June Patricia Malone Living Trust Dated October 21, 1995 pursuant to the STATE OF WASHINGTON MASTER LEASE NO. 59909 (Department of Natural Resources) Samuel T. Wu and Susan S. Wu (hereinafter referred to as “Assignor”), for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby assigns to John Dahm, II and Lindsey Osborn (“Assignee”) all of the Assignor’s interest under that certain Sublease Agreement pertaining to the above-described real property, dated May 30, 1985, and recorded August 21, 1985 under Whatcom County Auditor’s File No. 1514582 in which Joseph T. Malone (deceased) is Lessor and Horace Roy James, a single person, was the original Lessee (being a sublease of that Master Lease recorded under Whatcom County Auditor’s File No. 1406941 as amended by the Lease Amendment Recorded under Whatcom

County Auditor’s File No. 2071101299 and subsequently assigned by James to Assignor by assignment recorded on November 4, 1988 under Auditor’s File # 1619335 (the “Sublease”)). The terms of said Sublease are fully incorporated herein by this reference. Assignor hereby warrants that Assignor has the right to assign the sublease, and covenants that the leasehold interest is now free and clear of any encumbrances other than those arising through Assignee and those shown on attached Exhibit A. Assignee hereby accepts and agrees to perform all the obligations of the Lessee set forth in the Sublease Agreement, and to be bound by the terms of said Sublease Agreement. The Sublease dated May 30, 1985 and recorded August 21, 1985 under Whatcom County Auditor’s File No. 1514582 provides, in Article 14, Paragraph 8 “Assignments and Transfers,” that the original Lessees may assign the sublease with the written consent of the Lessor having first been obtained. The Lessor, in turn, shall not withhold that consent if the obligations of the Lessee are not in default and the persons or parties acquiring the ownership of the Lessee accept and agree to perform all of the obligations of the Lessee set forth in the Lease. Assignor therefore has the right to assign the Sublease with the Lessor’s approval. Assignor has given or will give Lessor notice of this Assignment and the Assignor’s address. In the event of a material default, forfeiture and non-fulfillment of the Purchase and Sale Agreement between the Assignor and Assignor, all rights, interest and obligations in the abovedescribed Sublease Agreement shall automatically revert to the Assignor. Assignors are not aware of any latent physical defects in the subject real property not visible from a close inspection. The Assignor’s are not aware of any problem(s) that would preclude a residence from being permitted and built upon the subject real property. To the best of Assignors’ knowledge and belief the assigned Sub-Lease interest is in full force and effect and there are no material defaults on the part of Assignors or the Sub-Lessor. Further, Assignors are not aware of any material defaults in the Master Lease. [4845-9771-1143]

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Assignors shall indemnify, defend and hold Assignees harmless from and against costs incurred by Assignors from any matters arising from ownership or use of the assigned SubLease and caused by the acts or failures to act of Assignors or their agents occurring up to Closing, including the cost of legal fees and related costs. Assignees shall indemnify, defend and hold Assignors harmless from and against costs incurred by Assignors from any matters arising from ownership or use of the assigned Sub-Lease and caused by the acts or failures to act of Assignees or their agents occurring after Closing, including the cost of legal fees and related costs.

This assignment and assumption is entered into between Assignor and Assignee this ____ day of ________________, 2015. ASSIGNORS:

ASSIGNEES:

SAMUEL T. WU

JOHN DAHM II

SUSAN S. WU LINDSEY OSBORN STATE OF WASHINGTON ) ) ss. County of ______________ ) I certify that I know or have satisfactory evidence that SAMMUEL T. WU is the person who appeared before me, and said person acknowledged that he signed this instrument as his free and voluntary act and deed, for the uses and purposes mentioned in the instrument. DATED this _____ day of ___________, 2015. Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

[4845-9771-1143]

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STATE OF WASHINGTON ) ) ss. County of ______________ ) I certify that I know or have satisfactory evidence that SUSAN S. WU is the person who appeared before me, and said person acknowledged that she signed this instrument as her free and voluntary act and deed, for the uses and purposes mentioned in the instrument. DATED this _____ day of ___________, 2015.

Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

[4845-9771-1143]

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STATE OF WASHINGTON ) ) ss. County of ______________ ) I certify that I know or have satisfactory evidence that JOHNNY DAHM, II is the person who appeared before me, and said person acknowledged that he signed this instrument as his free and voluntary act and deed, for the uses and purposes mentioned in the instrument. DATED this _____ day of ___________, 2015.

Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

STATE OF WASHINGTON ) ) ss. County of ______________ ) I certify that I know or have satisfactory evidence that LINDSEY OSBORN is the person who appeared before me, and said person acknowledged that she signed this instrument as her free and voluntary act and deed, for the uses and purposes mentioned in the instrument. DATED this _____ day of ___________, 2015.

Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

[4845-9771-1143]

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EXHIBIT A TITLE EXCEPTIONS

[4845-9771-1143]

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When recorded return to: Michele Boudreau Chicago Title 1835 Barklay Blvd, #105 Bellingham, WA 98226

ASSIGNMENT OF SUBLEASE AND ASSUMPTION OF SUBLEASE OBLIGATIONS Grantors (Assignors): Samuel T. Wu and Susan S. Wu Grantees (Assignees):Johnny Dahm, II and Lindsey Osborn Legal Description:

Tax Parcel Account Numbers: 4051164940960000 Reference Number of Related Documents: 1514582, 1619335 Lot No. 12 Lessor: June Patricia Malone Living Trust Dated October 21, 1995 pursuant to the STATE OF WASHINGTON MASTER LEASE NO. 59909 (Department of Natural Resources) Samuel T. Wu and Susan S. Wu (hereinafter referred to as “Assignor”), for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby assigns to Johnny Dahm, II and Lindsey Osborn (“Assignee”) all of the Lessee’s interest under that certain Sublease Agreement pertaining to the above-described real property, dated May 30, 1985, and recorded August 21, 1985 under Whatcom County Auditor’s File No. 1514582 in which Joseph T. Malone (deceased) is Lessor and Horace Roy James, a single person, was the original Lessees (being a sublease of that Master Lease recorded under Whatcom County Auditor’s File No. 1406941 as amended by the Lease Amendment

Recorded under Whatcom County Auditor’s File No. 2071101299). The terms of said Sublease Agreement are fully incorporated herein by this reference. Assignor hereby warrants that Assignor has the right to assign the sublease, and covenants that the leasehold interest is now free and clear of any encumbrances [if encumbrances identify at Exhibit A and add: other than those exceptions listed on Exhibit A attached hereto and incorporated herein by this reference, which exceptions are acknowledged and accepted by Assignee]. Assignee hereby accepts and agrees to perform all the obligations of the Lessee set forth in the Sublease Agreement, and to be bound by the terms of said Sublease Agreement. The Sublease dated May 30, 1985 and recorded August 21, 1985 under Whatcom County Auditor’s File No. 1514582 provides, in Article 14, Paragraph 8 “Assignments and Transfers,” that the original Lessees may assign the sublease with the written consent of the Lessor having first been obtained. The Lessor, in turn, shall not withhold that consent if the obligations of the Lessee are not in default and the persons or parties acquiring the ownership of the Lessee accept and agree to perform all of the obligations of the Lessee set forth in the Lease. Assignor therefore has the right to assign the Sublease with the Lessor’s approval. Assignor has given or will give Lessor notice of this Assignment and the Assignor’s address. In the event of default, forfeiture and non-fulfillment of the Purchase and Sale Agreement between the Assignor and Assignor, all rights, interest and obligations in the above-described Sublease Agreement shall automatically revert to the Assignor. This assignment and assumption is entered into between Assignor and Assignee this ____ day of ________________, 2015. ASSIGNORS:

ASSIGNEES:

SAMUEL T. WU

JOHNNY DAHM, II

SUSAN S. WU

LINDSEY OSBORN

[4845-9771-1143]

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EXHIBIT A

[4845-9771-1143]

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STATE OF WASHINGTON ) ) ss. County of ______________ ) I certify that I know or have satisfactory evidence that SAMMUEL T. WU is the person who appeared before me, and said person acknowledged that he signed this instrument as his free and voluntary act and deed, for the uses and purposes mentioned in the instrument. DATED this _____ day of ___________, 2015.

Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

[4845-9771-1143]

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Notary name printed or typed: Notary Public in and for the State of Washington, Residing at: My appointment expires:

[4845-9771-1143]

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APPRAISAL INFORMATION

Keith Cook Assistant From: Sent: To: Subject: Attachments:

Keith Cook Monday, November 06, 2017 9:47 AM Keith Cook Assistant FW: Lot 8 - 8545 Semiahmoo 14093-Semiahmoo Plat Appraisal 2014.pdf; Sublease Revised 5-19-14.docx

Keith Cook – Managing Broker (360) 739‐5600 RE/MAX Whatcom County, Inc. 913 Lakeway Drive Bellingham, WA 98229

BuyerMax.com From: Archer, Margaret [mailto:marcher@gth‐law.com] Sent: Monday, August 21, 2017 12:43 PM To: Keith Cook <keith@buyermax.com> Subject: Lot 8 ‐ 8545 Semiahmoo

Thank you for your phone call Keith. As we discussed, I am forwarding to you the appraisal that DNR provided to me in 2015 through the email below through which DNR advised its position on the minimal acceptable rent for extended subleases at that time. Lot 8 is included in this appraisal (see page 9) and at that time the base rent (based on the property value) was calculated at $13,281. As you can see from the email below, DNR has taken the position that the rent should not be less than 80% of the market rent as determined by the State’s appraiser – which for Lot 8, would calculate to no less than $10,625. Since the subleases are recorded in the public record, I am comfortable telling you base rents of two subleases accepted by DNR in the last couple of years for extended subleases. DNR accepted an annual base rent of $7,600 for Lot 17 – there were some shoreline erosion issues that were asserted in that negotiation. More recently, the owner of Lot 10 proposed and DNR accepted extension of their sublease for an annual base rent of $10,742. Your client is certainly free to retain his own appraiser to submit with a proposed base rent. I have also attached a copy of the form sublease that has been approved by DNR. Feel free to call me if you have further questions. Thanks. Margaret

Margaret Archer Attorney at Law T 253 620 6550 F 253 620 6565

From: RENNIE, RODNEY (DNR) [mailto:RODNEY.RENNIE@dnr.wa.gov] Sent: Thursday, June 04, 2015 8:45 AM To: Archer, Margaret Cc: Smith, Adrienne (ATG); HAYES, ANDREW (DNR) Subject: RE: lease offer

Dear Ms. Archer: 1

This is a follow‐up to my email to you of May 29th on the matter of fair market rents for sublease extensions. The purpose of the Gibbons appraisal was to obtain a professional’s opinion of what was reasonable market rent for sublease extensions, including factoring in each subtenant’s existing unexpired lease situation into the calculations (Gibbons refers to as “leasehold advantage”). As I mentioned previously, on page 43 of the Gibbons appraisal is the summary of the suggested 2014 rents for the 9 lots analyzed. Please note that Lot 16 was not part of the assignment because Mrs. Malone’s rent roll did not indicate it as a 55‐year lease. However, the results for Lot 16 would be approximately the same as lot 17. We have discussed the rent situation internally. Although Gibbons concludes, “In our opinion this is a minimum acceptable rent given the value of the property leased, irrespective of the thin rental market for land of this caliber,” DNR has concluded that negotiated rents for sublease extensions in 2015 that are within a range of 20% of the market rents determined by Gibbons in 2014 would be reasonable. Put another way, negotiated rents not lower than 80% of Gibbons’ figures would be reasonable. Please let me know if you have any additional questions. Sincerely,

Margaret Archer Attorney at Law T 253 620 6550 F 253 620 6565

From: RENNIE, RODNEY (DNR) [mailto:RODNEY.RENNIE@dnr.wa.gov] Sent: Friday, May 29, 2015 3:05 PM To: Archer, Margaret Cc: Smith, Adrienne (ATG); HAYES, ANDREW (DNR) Subject: RE: lease offer 2

Ms. Archer, Attached is the appraisal report as requested. The hard copy was sent you by the AG’s Office in September 2014, as the attached correspondence indicates. As information, the fair market rents for the subject lots are summarized on page 43 of the report. I am meeting with management next week to discuss this project, and will advise you of our discussions with respect to your question on the negotiated rent. Sincerely,

Rodney J. Rennie, RPA Commercial Property Manager Product Sales & Leasing Division Department of Natural Resources P.O. Box 47014 Olympia, WA 98504-7014 Off: 360-902-1166 Cell: 360-701-9317 Fax: 360-902-1789 rodney.rennie@dnr.wa.gov From: Archer, Margaret [mailto:marcher@gth‐law.com] Sent: Friday, May 29, 2015 2:19 PM To: RENNIE, RODNEY (DNR); Gene Hanacek (gene_o1@hotmail.com) Cc: Smith, Adrienne (ATG); HAYES, ANDREW (DNR); David Poore Subject: RE: lease offer Mr. Rennie, I do not believe I actually have a copy of the Gibbons appraisal. You have referenced it in our communications and perhaps it was provided to David Poore in the course of the Lachner litigation, but I do not have it in my files. Could you please provide a copy, as Mr. Poore is out of the country? If you have, in fact, previously provided me with the appraisal, I apologize for the inconvenience, but nonetheless need a copy. As for your assertion that DNR will not assert itself in the rent negotiations, that has not been my experience. Ms. Malone has been willing to accept rents that that she has deemed both reasonable for the local market and consistent with her financial goals, but those rents have been rejected by DNR. Thus, it would be helpful if DNR would, at the very least, advise Ms. Malone of what it deems the minimum acceptable fair market rent. Otherwise, Ms. Malone simply becomes a broker between the subtenant and DNR. If you are advising that the rents determined by Mr. Gibbons are the minimum fair market rents acceptable to DNR, please advise me of that fact when you provide a copy of the appraisal. Mr. Hanacek: With respect to your request for rents agreed to through extended subleases, as a courtesy, I prepared this morning a chart that identifies the lots for the subleases that have been extended to 2070. That chart is attached. The chart advises the date in which the lease was extended and the base rent (exclusive of tax) that was agreed to the year the sublease was extended. All of those base rents have been adjusted yearly, so they are not the current rents. But I thought that, to the extent rent data for the subleases was relevant to any market analysis, the information is more useful if put in context to the date the rents were negotiated. You will note that only two subleases have been extended in the last twelve months. The base rents agreed-to for those extended subleases were $3,600 for Lot 11 (which was negotiated in the context of litigation with DNR participation) and $7,600 for Lot 21 (which was the minimum rent that DNR would accept). Thereafter, the most recent lease extensions were in 2007, for Lots 15 and 3

23, and the agreed-t0 base rents were $4,381 and $9,395, respectively. Those extensions were entered into before my involvement. Thank you.

Margaret Archer Attorney at Law T 253 620 6550 F 253 620 6565

From: RENNIE, RODNEY (DNR) [mailto:RODNEY.RENNIE@dnr.wa.gov] Sent: Friday, May 29, 2015 1:43 PM To: Gene Hanacek; Archer, Margaret Cc: Smith, Adrienne (ATG); HAYES, ANDREW (DNR) Subject: RE: lease offer

Dear Mr. Hanacek and Ms. Archer: I am responding to your email messages on May 26 and 27, 2015, concerning setting rents for sublease extensions on several lots subleased under Patricia Malone’s master lease with the Department of Natural Resources. DNR does not intend to insert itself between Ms. Malone and her sublessees in rent negotiations. DNR will approve sublease rents Ms. Malone negotiates with her sublessees so long as they are within a reasonable range of fair market rent. Ms. Malone has been provided with a fair market rent appraisal completed in June 2014 by a professional appraiser, Anthony Gibbons, to assist her in establishing current fair market rents for extension purposes. Mr. Hanacek has requested a copy of current lease payments for all of the lots held by Ms. Malone. The best source of current rents would be from Ms. Malone and her accountant. Sincerely,

Dear Margaret and Rod, I would like a copy of all of the current lease payments for all of the leased lots currently held by Ms. Malone. I would also like to know when the current lease rate was established and when the leases received the extension to the 99 year lease. This information will be extremely helpful in determining how and when the current lease rates were established. I know in the past you have asked for my reasons for any proposal I may make for lot 17 and 32. This information will be extremely helpful in my formulation for a proposal to the State. Thank you for your assistance in this matter. Gene Hanacek From: marcher@gth‐law.com To: gene_o1@hotmail.com CC: RODNEY.RENNIE@dnr.wa.gov Subject: FW: lease offer Date: Tue, 26 May 2015 19:25:37 +0000 Dear Mr. Hanacek,

I apologize for the delay in responding to your email, but I wanted to sit down with Ms. Malone to discuss this with her personally. We had an opportunity to meet last week and we discussed the terms upon which you propose to extend your subleases of lots 17 and 32, as well as the terms described in your email for lots 16 and 19, owned by Hansen and Reichardt, respectively.

Based upon our experience with DNR in recent years, we believe it would be futile to present signed subleases with the rents you propose for lots 17 and 32. Though you propose a substantial extension in the terms of the leases, you are proposing only a minimal increase from $2,504 (exclusive of tax) to $3,000 per year for lot 17 and a decrease from $768.32 (exclusive of tax) to $ $500 per year for lot 32. With regard to lot 17, just last year, DNR withheld approval for a higher rent proposal for a similarly valued lot. While lot 32 has a lower value, Ms. Malone will not accept an extended term at a lower rent, and I am certain that DNR will not approve a decrease in the current rent. Accordingly, we believe that, to proceed forward, you need to propose higher base rent amounts. We would appreciate it if you would also include a brief explanation for the rent values proposed.

Additionally, Ms. Malone proposes that, for future dialogue regarding proposed rent amounts, that Mr. Rod Rennie be included. The terms for any sublease extension are set through the approved sublease form that I provided to you in my April 7 email. Thus, the only substantive issue presented in these sublease discussions is the amount of rent. DNR has taken the position that it has authority to approve or disapprove the amount of rent charged and has rejected proposed rents that were acceptable to Ms. Malone. Ms. Malone then essentially became a middle man for rent discussion between the subtenant and DNR. Accordingly, the most efficient way to proceed with these extension discussions is to directly include Mr. Rennie in the communications. To begin his direct inclusion in the discussions I have copied Mr. Rennie with this email. (Mr. Rennie – please note that the proposed rents for sublease extensions are set forth in the email chain below.)

Finally, as I indicated in my April 13 email, If the owners of Lots 16 and 19 wish to negotiate a lease extension through you, they need to contact me directly to advise that you are authorized to negotiate on their behalf. In the absence of such notification of consent, we should focus these discussions on your lots 17 and 32.

Thank you for your consideration. I look forward to your response and future discussion regarded extensions of your subleases. Margaret Archer

Margaret Archer Attorney at Law T 253 620 6550 F 253 620 6565

From: Gene Hanacek [mailto:gene_o1@hotmail.com] Sent: Thursday, May 21, 2015 8:38 AM To: Archer, Margaret Subject: Re: lease offer

Please advise as to the status of our request for lease extensions. Thank you Gene Hanacek Sent from my iPhone On Apr 21, 2015, at 9:49 AM, Gene Hanacek <gene_o1@hotmail.com> wrote: Hi Margaret, I know you have asked for lot owners of 16 and 19 to contact you directly regarding lease negotiations. I have spoken with them and they want to get things started so we propose the following: Each lot 16, 17,19 are willing to offer a $5,000 lump sum payment ($15,000 to Mrs. Malone) Each lot 16, 17, 19 are willing to have a new annual lease payment of $3,000 per year. As for my lot 32, since it is not water front and my lease payment is higher than my neighbor (lot 33) I'm prepared to offer $2,000 lump sum and a reduction in the payment to $500 per year. Please let me know if these are acceptable and also be assured that these offers are based on discussions with my neighbors. Thanks, Gene

RESTRICTED REPORT APPRAISAL of

Semiahmoo Plat

Current Market Valuation Current Market Rent Valuation Rent Forecast Recognizing Leasehold Advantage Lots 8, 9, 10, 11, 17, 19, 21, 24, & 32 Semiahmoo Drive Blaine, WA 98230 as of June 3, 2014 Effective Date of Value Rent Revision Commences September 15, 2014 Prepared for DNR Chief Appraiser c/o Karrie Knesal Appraisal Unit Department of Natural Rsources P.O. Box 47014 Olympia, WA 98504-7014 Prepared by Anthony Gibbons, MAI, CRE

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GIBBONS & RIELY PLLC

Real Estate Appraisal & Counseling and Mediation 261 Madison Avenue South, Suite 102 Bainbridge Island, Washington 98110-2579

Ref. 14093

RE SOLVE 

GIBBONS & RIELY PLLC Real Estate Appraisal, Counseling & Mediation 261 Madison Avenue South, Suite 102 Bainbridge, Washington 98110-2579 206-842-4887 TeleFax: 206-842-5082

Anthony Gibbons, MAI, CRE

Seattle Direct Dial 206 628-0885 Email: agibbons@realestatesolve.com

July 23, 2014 DNR Chief Appraiser

c/o Karrie Knesal, Appraisal Unit Department of Natural Resources P.O. Box 47014 Olympia, WA 98504-7014 RE:

Current market lease value for 9 residential lots (8, 9, 10, 11, 17, 19, 21, 24 & 32) Semiahmoo Drive Blaine, WA

Dear Mr. Rennie: At your request, we have appraised the current market value of the lots listed above, which are currently on 55-year subleases. These subleases were contracted under the original Master Lease (Lease #59909) which commenced in September 1971 and was set to expire in September 2026. We have been informed that some or all of these subtenants wish to extend their subleases to 2070, which is the end of expiration date for the master lease as amended in 1981. The lots constituting the remainder of the platted lots in the original lease are subleased under the amended and extended lease, and their term now expires in 2070. The master lessee and DNR are amenable to the extension of these subject subleases as described. Based on concluded lot values and on an appropriate capitalization rate, a market rent for each of the subject lots has been determined. An adjusted schedule of rents is presented which provides for a cash flow that balances the tenants’ advantage (resulting from the rental obligation for the twelve years remaining on the existing subleases) and the owner’s goal of obtaining a market based rent for the property. The lots have been appraised as though they were vacant and unimproved, and unencumbered by existing leases. However each subtenant’s leasehold advantage is taken into consideration in the proposed schedule of rents. The value conclusions are made subject to the limiting conditions and extraordinary assumptions described within the body of this report. The effective date of value is the date of inspection, June 3, 2014, but note that the rent schedules assume a September 15, 2014 start date for the revised rental amounts. This appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). It is presented as a restricted use report and complies with the reporting requirements of USPAP for such reports. Our conclusions of rent are provided herein. Respectfully submitted,

Anthony Gibbons, MAI, CRE Ref: 14093

TABLE OF CONTENTS APPRAISAL SUMMARY -------------------------------------------------------------------------------------------------------------------- 9 Identification of the Property --------------------------------------------------------------------------------------------------------------- 9 Description of the Property ----------------------------------------------------------------------------------------------------------------- 9 Property Valuation ---------------------------------------------------------------------------------------------------------------------------- 9 SUBJECT PHOTOGRAPHS -------------------------------------------------------------------------------------------------------------- 10 APPRAISAL INTRODUCTION ----------------------------------------------------------------------------------------------------------- 6 Identification of the Property --------------------------------------------------------------------------------------------------------------- 6 Location ------------------------------------------------------------------------------------------------------------------------------------------ 6 Scope of Appraisal ---------------------------------------------------------------------------------------------------------------------------- 6 Appraisal Content -------------------------------------------------------------------------------------------------------------------------- 6 Report Type ---------------------------------------------------------------------------------------------------------------------------------- 7 Purpose of Appraisal -------------------------------------------------------------------------------------------------------------------------- 7 Property Rights Appraised ------------------------------------------------------------------------------------------------------------------ 7 Intended User/Use of Appraisal------------------------------------------------------------------------------------------------------------ 7 Summary of the Appraisal Problem ------------------------------------------------------------------------------------------------------ 7 Extraordinary Assumptions & Hypothetical Conditions ---------------------------------------------------------------------------- 7 NEIGHBORHOOD DATA ----------------------------------------------------------------------------------------------------------------- 10 Overview --------------------------------------------------------------------------------------------------------------------------------------- 10 Neighborhood--------------------------------------------------------------------------------------------------------------------------------- 10 Single Family Residential Market ------------------------------------------------------------------------------------------------------- 10 Neighborhood Conclusion ----------------------------------------------------------------------------------------------------------------- 12 SUBJECT DATA ------------------------------------------------------------------------------------------------------------------------------ 13 Area and Shape ------------------------------------------------------------------------------------------------------------------------------- 13 Present Use ------------------------------------------------------------------------------------------------------------------------------------ 14 Utilities ----------------------------------------------------------------------------------------------------------------------------------------- 14 Topography------------------------------------------------------------------------------------------------------------------------------------ 14 Zoning ------------------------------------------------------------------------------------------------------------------------------------------ 16 Shoreline Designation ---------------------------------------------------------------------------------------------------------------------- 16 Improvement Descriptions ---------------------------------------------------------------------------------------------------------------- 17 Highest and Best Use. ---------------------------------------------------------------------------------------------------------------------- 17 SALES COMPARISON APPROACH ------------------------------------------------------------------------------------------------- 18 Introduction ----------------------------------------------------------------------------------------------------------------------------------- 21 Waterfront Comparable Data & Units of Comparison ----------------------------------------------------------------------------- 21 Waterfront Final Value Conclusion ----------------------------------------------------------------------------------------------------- 22 Upland Comparable Data & Units of Comparison ---------------------------------------------------------------------------------- 26 Final Value Conclusions ------------------------------------------------------------------------------------------------------------------- 26 Date of Value --------------------------------------------------------------------------------------------------------------------------------- 27 Exposure and Marketing Time ----------------------------------------------------------------------------------------------------------- 27

6 Job No. 14093

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Semiahmoo Plat

INCOME APPROACH ---------------------------------------------------------------------------------------------------------------------- 28 Introduction ----------------------------------------------------------------------------------------------------------------------------------- 28 Rental Rate Analysis ------------------------------------------------------------------------------------------------------------------------ 28 Comparable Ground Leases --------------------------------------------------------------------------------------------------------------- 29 Subject Contract Rents --------------------------------------------------------------------------------------------------------------------- 38 Merged Rents – Blend of Market and Contract -------------------------------------------------------------------------------------- 39 FINAL VALUE ESTIMATE -------------------------------------------------------------------------------------------------------------- 43 Conclusion ------------------------------------------------------------------------------------------------------------------------------------- 43 Discussion ------------------------------------------------------------------------------------------------------------------------------------- 43 ADDENDUM ------------------------------------------------------------------------------------------------------------------------------------ 44 Contract ---------------------------------------------------------------------------------------------------------------------------------------- 45 Appraiser’s Qualifications ---------------------------------------------------------------------------------------------------------------- 46

7 Job No. 14093

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Semiahmoo Plat

APPRAISER’S CERTIFICATION I certify that, to the best of my knowledge and belief:

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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 this report and no personal interest with respect to the parties involved. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. 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. My analyses, opinions, and conclusions were developed, and this appraisal has been prepared, in conformity with the Uniform Appraisal Standards for Federal Land Acquisitions The appraisal was made and the appraisal report prepared in conformity with the Appraisal Foundation’s Uniform Standards for Professional Appraisal Practice, and the Uniform Act (49 CFR, Part 24).. I have made a personal inspection of the property that is the subject of this report. I have afforded the owner or a designated representative of the property that is the subject of this appraisal the opportunity to accompany me on the inspection of the property. Persons providing significant professional assistance to the persons signing this report are identified herein. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I have disregarded any increase in Market Value caused by the proposed public improvement or its likelihood prior to the date of valuation. I have disregarded any decrease in Market Value caused by the proposed public improvement or its likelihood prior to the date of valuation, except physical deterioration within the reasonable control of the owner; This appraisal has been made in conformity with the appropriate State and Federal laws and requirements, and complies with the contract between the agency and the appraiser; I have performed no (or 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. As of the date of this report, Anthony Gibbons has completed the requirements under the continuing education program of the Appraisal Institute. As of the date of this report, Anthony Gibbons has completed the Standards and Ethics Education Requirement of the Appraisal Institute for Designated Members.

RESTRICTION UPON DISCLOSURE & USE: Disclosure of the contents of this appraisal report is governed by the By-Laws & Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser or the firm with which (s)he is connected, or any reference to the Appraisal Institute or to the MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication without the prior written consent and approval of the undersigned. No part of this report or any of the conclusions may be included in any offering statement, memorandum, prospectus or registration without the prior written consent of the appraiser.

The property has been appraised for its fair market value as though owned in fee simple, or as encumbered only by the existing easements as described in the title report in the addenda; and of course rent assignments reflect lease encumbrances and advantages as described. The opinion of value expressed herein is the result of, and is subject to the data and conditions described in detail in this report. I made a personal inspection of the property that is the subject of this report on June 3, 2014. The Date of Value for the property that is the subject of this appraisal is June 3, 2014; but note that the lease computations assume a September 15, 2014 start date. Per the MARKET VALUE definition herein, the value conclusion for the property that is the subject of this appraisal is on a cash basis and is: MARKET VALUE & RENT, AND COMPUTATION OF MARKET RENT ADVANTAGE ..............................See Name: Date Signed:

Anthony Gibbons, MAI, CRE

report

Signature:

WA Cert # 1100854 July 23, 2014

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APPRAISAL SUMMARY Identification of the Property The subject of this appraisal is comprised of the following lots of the Semiahmoo Plat. They are located on Semiahmoo Drive just southwest of the city of Blaine, which is in the northeast corner of Whatcom County, Washington. The addresses of the properties are as follows:     

Lot 8: Lot 9: Lot 10: Lot 11: Lot 17:

8545 Semiahmoo Drive 8551 Semiahmoo Drive 8557 Semiahmoo Drive 8563 Semiahmoo Drive 8601 Semiahmoo Drive

   

Lot 19: Lot 21: Lot 24: Lot 32:

8609 Semiahmoo Drive 8615 Semiahmoo Drive 8621 Semiahmoo Drive 8604 Semiahmoo Drive

Description of the Property The subject lots are high-bank waterfront properties of between 0.79ac and 0.87ac with from 70’ to 130’ of high bank waterfront. The ninth (lot 32) is an upland lot of 2.24ac east of and across the street from the waterfront lots. The waterfront lots enjoy exceptional views to the west over Semiahmoo Bay. The sole upland lot is located across the street from the waterfront property and has no views; it is presently heavily vegetated. The highest and best use of all of the lots is continued use for single family residences, and in the case of lots 9 and 32, which are vacant, improvement with a single family residence. Property Valuation The attached table provides concluded values for the subject lots, as though owned in fee simple estate. Based on these value conclusions, market rent schedules are developed based on a starting ground lease rate of return (which is assigned at the low end of the range given the high value of the real estate – see report), and assuming a lease term and rental obligations that match those of a proposed lease extension. The proposed extensions terms are:  Lease term extension to September 14, 2070  Annual CPI adjustment based on the average change in the CPI for the decade immediately preceding a 10-year period of annual adjustments (9/15/22, ‘32, ‘42, ‘52 and ’62). The initial CPI adjustment is based on the historical average CPI change between 2002 and 2012 of 2.35%, which is then the annual escalator for the first eight years of the lease. Lot # Market Value Land Rate Lot 8 $455,000 5.00% Lot 9 $460,000 5.00% Lot 10 $460,000 5.00% Lot 11 $455,000 5.00% Lot 17 $450,000 5.00% Lot 19 $450,000 5.00% Lot 21 $376,000 5.00% Lot 24 $465,000 5.00% Lot 32 $150,000 6.50% Annual Average CPI Until 2022 Projected 2022 to 2032 Annual Projection thereafter

Market Rent $22,750 $23,000 $23,000 $22,750 $22,500 $22,500 $18,800 $23,250 $9,750

Contract $0 $0 $0 $0 $2,505 $2,505 $300 $2,505 $768

Blended $13,281 $13,427 $13,427 $13,281 $14,368 $14,368 $11,103 $14,806 $5,470 2.35%/yr 2.79%/yr 3.00%/yr

Rate on Mkt 2.92% 2.92% 2.92% 2.92% 3.19% 3.19% 2.95% 3.18% 3.65%

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SUBJECT PHOTOGRAPHS

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Department of Ecology Shoreline Photo (Does not include entire subject)

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Aerial Map with Photo Key (for exterior shots) (Subject lots are outlined in red) 12 Job No. 14093

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1. Subject frontage along Semiahmoo Drive, looking north. Lots 8-11

2. Lots 17 and 19 – frontage on Semiahmoo Drive 13 Job No. 14093

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3. Lots 21 and 24, Semiahmoo Drive frontage.

4. Lot 32 as viewed from Semiahmoo Drive. 14 Job No. 14093

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5. Typical view available from the top of the bluff (before clearing).

6. Picture of slide activity on Lot 21 – photo provided by resident and tenant. . 15 Job No. 14093

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APPRAISAL INTRODUCTION Identification of the Property The subject of this appraisal is comprised of lots 8, 9, 10, 11, 17, 19, 21, 24, and 32 of the Semiahmoo Plat. They can also be identified by their Whatcom County parcel numbers and addresses:         

Lot 8: Lot 9: Lot 10: Lot 11: Lot 17: Lot 19: Lot 21: Lot 24: Lot 32:

405116-487068; 405116-489074; 405116-491082; 405116-491089; 405116-504137; 405116-508152; 405116-513166; 405116-529187; 405116-550135.

8545 Semiahmoo Drive 8551 Semiahmoo Drive 8557 Semiahmoo Drive 8563 Semiahmoo Drive 8601 Semiahmoo Drive 8609 Semiahmoo Drive 8615 Semiahmoo Drive 8621 Semiahmoo Drive 8604 Semiahmoo Drive

Location The nine lots which constitute the subject of this report are located on Semiahmoo Drive just southwest of the city of Blaine, which is in the northeast corner of Whatcom County, Washington. The city has a population of about 5,000 inhabitants and its northern boundary is the Canadian border. Scope of Appraisal Appraisal Content The scope of work performed in this appraisal is in compliance with the specific guidelines of the Uniform Standards of Professional Appraisal Practice (USPAP). The subject lots have been valued through the Sales Comparison Approach, considering sales of waterfront and upland lots in the subject market area. This approach to valuation is based upon sales data obtained from public records as well as private databases including Realquest and the Northwest Multiple Listing Service. All sales comparisons have been inspected and verified with one or more parties to the transaction when possible. After determination of value, an Income Capitalization Approach is utilized. The market rental value of the subject lots has been derived through use of both a land capitalization rate, with a test of reasonableness provided by research of actual leases. Finally, an adjusted schedule of rents based on this research has been prepared which incorporates both the tenants’ leasehold advantage due to the years remaining on the current leases, and the market rental fees due for the period of extension. Please note that we have not researched or included any extension fee, or rental premium for the value of an extension, which is often sought for the extension of a ground lease. The assignment is solely to develop a financially equivalent rent based on the market and the current lease contract. We have also been instructed to ignore all improvement value, and assume that no reversionary interest exists in the improvements. 6 Job No. 14093

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The cost approach is not applicable to vacant land and is not employed in this appraisal. The tenants were not contacted as part of this assignment, and the subject properties were only inspected from the right-of-way. Report Type This report meets or exceeds the standards of a Restricted Use Report. The report is restricted to the client, and is not intended for any other parties. Familiarity with the property and lease situation is assumed. Purpose of Appraisal The purpose of this appraisal is to establish the market value of the subject property as of the date of appraisal, which is the most recent date of inspection. We have used the definition of "market value" as contained within the Uniform Appraisal Standards for Federal Land Acquisitions, defined as follows: Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal. In addition, fair market rents and an adjusted schedule of rents are presented, as described above. Property Rights Appraised This is an appraisal of the fee simple interest in the land as if vacant, unimproved, and unencumbered by the existing leases. The concluded values are utilized as a basis for calculating fair market rental rates. Finally the existing lease encumbrance is considered in a determination of rental value for an extension which discounts the market rent for the current leasehold advantage. Improvements are not appraised, and no reversionary interest in the improvements is considered in the calculation. Intended User/Use of Appraisal DNR is the client and the intended user. There is no other intended user. Summary of the Appraisal Problem The appraisal assignment is to determine the current market value of the lots listed above, and to use those values to conclude with a fair market rent for each lot. Finally we have also been asked to prepare an adjusted schedule of rents which provides for a cash flow that balances the tenantsâ&#x20AC;&#x2122; advantage resulting from the rental obligation for the twelve years remaining on the existing subleases, and the ownerâ&#x20AC;&#x2122;s goal of obtaining a market based rent for the property. Extraordinary Assumptions & Hypothetical Conditions 1. As instructed, in determining the market value and market rental value of the subject lots, we have assumed that the lots are vacant and unimproved, and unencumbered by the existing leases. 7 Job No. 14093

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2. In the determination of a rental rate for the extension, which considers the existing leasehold advantage, note the following: a. Typically, in providing for an extension, a landlord may leverage their advantage in a soon-to-expire ground lease, this being that the tenantâ&#x20AC;&#x2122;s investment in improvements made to the property will cease to exist at the end of the lease. This advantage comes in the form of either value to be gained over and above land value at the expiration of the lease, or the tenant loss associated with the expiration of the leasehold. Leaseholds are also hard to finance, and capital infusion is hard to justify, in the latter years of the lease, placing stresses on the tenantâ&#x20AC;&#x2122;s ability to fully realize the benefits of their leasehold position. Under these circumstances: i. Premiums may be extracted for extending the lease. ii. A lease extension fee may be considered. Our assignment does not include consideration of these issues. In particular we would note that that a peculiar aspect of the real estate is the high fee simple value. Lots of this caliber and size are rarely rented, as their value justifies development of a high-end home as opposed to a summer place, or smaller second residence. This tends to stress the market lease arrangement, as the decision to extend the lease needs to be married with the likelihood of a property of this type being leased in the first place. We have balanced these considerations with a determined market rental level at the low end of the range. Thus careful landlord consideration should be given to granting an extension. A logical response for a demanded rental below this level would be to not grant an extension. Please see the discussion in the report for more details concerning this issue. 3. The properties have only been inspected from the right-of-way, and tenants have not been contacted. If descriptions contained herein are inaccurate, or if tenants were to provide material value-impacting information about the properties they occupy, then the results of this analysis could require adjustment. 4. We have not appraised, and as noted in (2) above, not considered, improvements situated on the subject parcels. The properties are appraised as though development ready, but improvements are not considered in the value. In effect the assumption is that the improvements do not have a bearing on land rent. 5. We have been provided with information about bank instability on Lot 21, and we have assigned a market value reduction to this parcel, and those adjacent, for this condition. However that adjustment has been made without the benefit of a geotechnical study. Further investigation may be warranted.

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AREA MAP

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NEIGHBORHOOD DATA Overview The subject properties are located just over a mile southwest of the city of Blaine in western Whatcom County, roughly 23 miles northwest of Bellingham and about 100 miles north of Seattle. Blaine has approximately 5,000 inhabitants. Whatcom County, population 205,800, is the most northwesterly county in the continental United States. It comprises a land mass of 2,120 square miles and is twelfth in size among Washington counties. The countyâ&#x20AC;&#x2122;s northern boundary coincides with the 49th parallel, the longitudinal line which forms the Canadian-U.S. border, and the county is bounded to the West by both the Strait of Georgia and the Rosario Straits. Neighborhood The subject is located within the Semiahmoo neighborhood of Birch Point, a well-planned essentially residential community with higher than average home prices, and a mixture of larger expansive estate homes, to fairly modest condominiums. At the northernmost point of the Semiahmoo neighborhood, the spit is approximately 1.25 miles long and contains about 125 acres of land. The spit presents a very natural shoreline; it hosts the Semiahmoo County Park which includes over 300-acres of tidelands and three buildings from the Alaska Packers Association Cannery, the Beach Walker Villas, a nearly 300-slip marina and the 198 room Semiahmoo Resort. Birch Point is one of the most desirable locations in northwestern Washington for retirees and second home buyers, as it is an attractive rural destination with extensive water frontage, excellent views, and separation from other types of development. For these reasons, this region has historically supported significantly higher property values than other portions of Whatcom County, especially non-waterfront areas inland of I-5. These areas offer little potential for resort style community development or for desirable second home development with access to amenities. In addition, the development of the Semiahmoo master planned resort beginning twenty five years ago established this area as a prominent second home retirement destination with a strong image of successful marketing and continued appeal for resales. There are a variety of other resorts and residential communities located near the Semiahmoo resort community as well, attracting a mixture of retirees, second home buyers, and full time working residents. Single Family Residential Market The single family market in Whatcom is not particularly well-defined, varying from year-round dwellings on large holdings, to summer and winter homes used recreationally. The outlying Whatcom market saw some of the stronger price escalations usually seen in more urbanized locations during the exuberant market of 2006 and early 2007. The market flattened considerably in 2007, and the next two years saw declines in average pricing. 2010 and 2011saw the trend toward lower prices continue as unsold inventory and foreclosures put downward pressure on pricing. Since that time the market has behaved somewhat like a pebble on a stream bottom, partially rebounding at times, and then settling back down, with overall little change in pricing. Please see chart below.

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Whatcom County Area SFR Price Trends 2005 - 2014 Neighborhood Blaine/Birch Bay

MLS

880

2005 290,804

Ferndale

870

296,904

Bellingham

860

337,128

County

303,107

Whatcom County

Blaine Adjustment Ferndale Adjustment Bellingham Adjustment Whatcom Adjustment

$400,000

2005-to-2014 -8.82% -16.48% -4.32% -9%

880 860 870 860

2006 320,520 10.2% 325,976 9.8% 366,081 8.6% 328,724 8.5%

2006-to-2014 -17.27% -23.93% -11.89% -16%

MLS Historical Residential Closed Sales - Average Pricing

$ $ $ $

2007 326,986 2.0% 331,431 1.7% 371,636 1.5% 334,623 1.8%

2008 276,069 -15.6% 303,576 -8.4% 368,649 -0.8% 317,897 -5.0%

$ $ $ $

2007-to-2014 2008-to-2014 -18.91% -3.95% -25.18% -18.32% -13.21% -12.50% -17% -13%

$ $ $ $

2009 270,567 -2.0% 285,421 -6.0% 340,677 -7.6% 296,668 -6.7%

$ $ $ $

2010 264,928 -2.1% 268,284 -6.0% 332,492 -2.4% 284,724 -4.0%

$ $ $ $

2011 241,746 -8.8% 262,906 -2.0% 317,021 -4.7% 272,443 -4.3%

$ $ $ $

2012 289,048 19.6% 267,229 1.6% 322,275 1.7% 282,781 3.8%

$ $ $ $

2013 254,438 -12.0% 270,286 1.1% 340,847 5.8% 289,683 2.4%

thru Mar 2014 $ 265,161 4.2% $ 247,974 -8.3% $ 322,555 -5.4% $ 276,335 -4.6%

2009-to-2014 2010-to-2014 2011-to-2014 2012-to-2014 2013-to-2014 -2.00% 0.09% 9.69% -8.26% 4.21% -13.12% -7.57% -5.68% -7.21% -8.25% -5.32% -2.99% 1.75% 0.09% -5.37% -7% -3% 1% -2% -5%

SFR Sales in Select MLS Areas, 2005-2014

$380,000 $360,000 $340,000 $320,000 $300,000 $280,000 $260,000 $240,000 $220,000 $200,000 2004

2005

2006

Blaine/Birch Bay 880

2007

2008

2009

2010

Ferndale 870

2011

Bellingham 860

2012

2013

2014

2015

Whatcom County

The data for our subject’s MLS area, Blaine/Birch Bay 880, is somewhat misleading as the area includes two very distinct residential markets. In the northern portion of this area, Semiahmoo sets the tone for a very upscale resort destination. The area immediately to the south, generally referred to as Birch Bay, has been developed fairly densely over the past sixty years to include a hodgepodge of mobile home parks, RV parks, basic cottages, motels, and a timeshare resort, along with several slightly more upscale communities. Median home prices in this portion of MLS area 880 are often less than half the levels seen in the subject’s northern area, commonly called Birch Point. The subject occupies a position between these two extremes of the MLS area described. As the U.S. economy continues to improve and second home and retirement oriented demand builds, home sites in the northern portion of MLS area 880, particularly the limited number of waterfront properties, have significantly greater potential than other parts of Whatcom County, to recover and surpass their previous values.

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Neighborhood Conclusion The subject properties enjoy an attractive location in an area considered a gateway to the San Juan and Gulf Islands. Though without easily accessible beach, these lots benefit from scenic views, miles of nearby shoreline, hiking and biking trails, and many nearby recreational amenities. The neighborhood is readily accessible to local and regional services, being within minutes of Blaine’s downtown area, about 30 minutes from Bellingham, under an hour from Vancouver, Canada and less than two hours from Seattle. The subject’s resort oriented area in Birch Bay and Whatcom County more generally did not escape the impact of the recession, and achievable lot pricing was no doubt heavily impacted by the national credit crises and economic downtown. However, as of the date of value, unemployment had decreased substantially since the peak, residential SFR prices are on the rise, and the backlog of inventory and distressed homes has nearly been eliminated. The Semiahmoo Resort, which closed in December 2012, was purchased for $19.5 million by The Resort Semiahmoo LLC in June 2013 and was reopened in August 2013. This is expected to bring back at least 200 jobs, as well as to create a big boost in retail sales in the area, in addition to bringing in an estimated $150,000 in sales tax each year (City of Blaine data). As the economy picks up steam, it is expected that the area will benefit in terms of increased job growth and rising real estate values. Demand for retirement and second homes will also be positively impacted by the increasing number of baby boomers reaching retirement age. The outlook for the mid to long-term is for gradual property value appreciation over the next few years.

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SUBJECT DATA Area and Shape The nine subject lots are outlined below in red.

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The area and the waterfront footage of each subject lot are listed below:

Subject Property Lot 8 Lot 9 Lot 10 Lot 11 Lot 17 Lot 19 Lot 21 Lot 24 Lot 32

Size 0.87ac 0.86ac 0.84ac 0.84ac 0.79ac 0.79ac 0.84ac 0.73ac 2.24ac

Waterfront Wft/ac 70ft 80/ff/ac 75ft 87/ff/ac 75ft 89/ff/ac 70ft 83/ff/ac 75ft 95/ff/ac 76ft 96/ff/ac 107ft 127/ff/ac 130ft 178/ff/ac None

Present Use The master lease governing the use of the subject lots states that “the site(s) shall be only used for the purpose of single family residential lots, unless the Lessee first obtains written permission from the state to use the site for other purposes.” The approved sublease extension document which would govern the subject lots if it is accepted states that “the site shall be used only for the purpose of a single family residence,” and excludes mobile homes with wheels attached or detached. It also omits language allowing for the possibility of getting written permission for other uses. To the best of our knowledge, the lots comprising the subject are developed with single family homes, except for lots 9 and 32 which remain vacant. Utilities Homes in the Semiahmoo Plat are in the water service area of the Birch Bay Water and Sewer District. Sewer however is not available, and homes developed on the subject properties operate with individual on-site septic systems. In recent years the setbacks and other requirements for constructing septic facilities on waterfront properties have become more stringent, making use of designs such as Glendon systems (which are more costly than traditional septic designs) more common. The subject properties have electrical service, telephone, and cable either on the lot, or for the two lots still vacant (lots 9 and 32) nearby in the road. Topography The eight waterfront subject lots are high bank, with some erosion on most of the lots and with the effects of a recent landslide clearly visible on lot 21 (with photographs provided by the tenant’s attorney to the State). The maps presented on the following page depict an orange area representing marine landslide hazard/unstable slope. According to Andrew Wiser, a geologist and permit specialist with Whatcom County, these maps are Department of Ecology maps which are several decades old, but nothing newer is available. The red fan-shaped area represents a past slide, and while the recent slide at lot 21 is not shown on this map, the slide area is obviously proximate to this area of historic activity. Mr. Wiser explained that any building permit applications presented to the county for these lots would be reviewed by him individually with regards to limitations imposed to account for unstable slope/landslide hazard. He noted that shoreline regulations require a setback of either 100’ or 150’ (depending upon the shoreline designation), and a 10’ building setback beyond that. These setbacks would be measured from 14 Job No. 14093

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the ordinary high water mark (high tide limit), and the line would go straight back from the shoreline without regard to the rise of the bank. This would tend to place any permitted improvements quite far back on the lots, reducing the chance of damage from erosion or landslide activity. He also noted that historically soils damage in the subject area has consisted of slow erosion at the toe of the slope over the course of many years (especially at the curve where wave erosion is greater), with the loss of a foot or two some years, perhaps followed by years with no further erosion. He stated that events causing the loss of significant land in a single season have been rare.

We have heard from a number of real estate agents in the area however that slope instability has become a more significant issue since most of the forested area to the east (about 450 acres) has been cleared for development. Apparently water flowing to the west from the cleared property has caused drainage problems on some lots along Semiahmoo Drive, and a number of homeowners have suffered erosion or slumping of parts of the bluff. News photos below reveal sandbags positioned along Semiahmoo Drive intended to help alleviate the situation during a couple of storm events, and areas of driveway erosion.

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Zoning The subject properties are within unincorporated Whatcom County and carry the zoning designation R5A. This is a residential zoning category permitting one dwelling per five acres (the subject lots are legally non-conforming lots and can accommodate one dwelling each). The height limit is 35â&#x20AC;&#x2122; and the maximum lot coverage is 5,000sf or 20% of the total area, whichever is greater.

Shoreline Designation The eight waterfront lots pertaining to the subject property fall within the Shoreline Residential Area.

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This designation refers to areas which have been predominantly developed with single family or multifamily residential uses, or are planned and platted for residential development, such as the subject properties. If shoreline regulations conflict with standards in the zoning code, the more rigorous restriction applies. For example, though a maximum height of 35â&#x20AC;&#x2122; is stipulated for R5A zoning, the residential shoreline district maximum height is 30â&#x20AC;&#x2122;, and would be enforced. Development in the Shoreline District requires setbacks and buffers. Where there are legally nonconforming structures that encroach on the established setback/buffer, a common line setback is established. The code also limits clearing and thinning with the intent to create view corridors, in favor of conserving vegetation for the protection of shoreline ecological functions and aesthetics. Improvement Descriptions As instructed, we have not considered the value of improvements constructed on the subject lots. Highest and Best Use. The highest and best use of the property is for continued use as single family residential home sites, and in the case of lots 9 and 32 which are vacant, improvement with single family residences.

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SALES COMPARISON APPROACH

MAP OF WATERFRONT LOT SALES COMPARISONS

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Waterfront Wft/ac 80/ff/ac 70ft 87/ff/ac 75ft 89/ff/ac 75ft 83/ff/ac 70ft 95/ff/ac 75ft 96/ff/ac 76ft 127/ff/ac 107ft 178/ff/ac 130ft 105/ff/ac 85ft

Size 0.87ac 0.86ac 0.84ac 0.84ac 0.79ac 0.79ac 0.84ac 0.73ac 0.82ac

Subject Property Lot 8 Lot 9 Lot 10 Lot 11 Lot 17 Lot 19 Lot 21 Lot 24 Average Waterfront Lot

209/ff/ac

Low-bank 90ft

94/ff/ac

0.43ac 18,731sf

High bank 120ft

Blaine 6 93XX Bayview Avenue 400106 222046

1.27ac 55,321sf $260,550 241 days

$599,000

Indicated Value Indicated Value Indicated Value Indicated Value Indicated Value Indicated Value Indicated Value Indicated Value

Dec-13 Apr-13

Listing

Level building lot with all services, neighborhood with CCRs. Not private Comments sf 37,897sf 37,462sf 36,590sf 36,590sf 34,412sf 34,412sf 36,590sf Discounted 25% for slide 31,799sf 35,719sf $/ff $6,500/ff $6,133/ff $6,133/ff $6,500/ff $6,000/ff $5,921/ff $3,514/ff $3,577/ff $5,535/ff $/sf $12.01/sf $12.28/sf $12.57/sf $12.43/sf $13.08/sf $13.08/sf $10.28/sf $14.62/sf $12.54/sf May 20, 2014 $455,000 $460,000 $460,000 $455,000 $450,000 $450,000 $376,000 $465,000 $446,375

Lot in Semiahmoo Pointe , gated community, all services & amenities, geotech studies done. $2,895/ff

$4,493/ff

Drayton Hillside - private REO, unloaded quickly; building challenges

Lightly treed & sloped waterfront lot with all utilities. Needed $70,000 of work.

Lot in Boundary Ridge, shared amenities, CCRs, all utilities. 180 degree views of bay.

Lot 1 in subject plat but fee simple owership, slightly larger & more front footage.

Comments

$13.91

$9.74

$909/ff

$2,785/ff

$4,861/ff

$5,200/ff

$/ff

$260,550 0% 0%

$539,100 -10% 0%

$3.02

$206,250 25% 0%

$165,000 524 days

Oct-12 Apr-11

145/ff/ac

Med bank 227ft

1.57ac 68,389sf

5542 Pine Sisken Road 405111 217120

XX Semiahmoo Drive 405121-370299

$4.99

$278,500 49% 0%

$187,500 144 days

Jul-13 Mar-13

78/ff/ac

Low-bank 100ft

1.28ac 55,757sf

Lot 12 Pintail Loop 405111 093257

$16.18

$700,000 0% 0%

$700,000 115 days

Mar-14 Dec-13

145/ff/ac

Med bank 144ft

0.99ac 43,255sf

9171 Great Blue Heron Ln 405110 482411

$10.85

$520,000 0% 0%

$520,000 163 days

Analysis

Jan-11 Aug-10

$/sf

91/ff/ac

Time / Conditions

Analysis Adjusted Price

High bank 100ft

Sales Data Price Sold DOM Listed

1.10ac 47,916sf

FF/ac Zoning

Waterfront Comparisons

Semiahmoo 1 8471 Semiahmoo Dr 405116-469006

No. Address/Location

Acres SqFt

Land Data Bank WtFt

SALES COMPARISON APPROACH – WATERFRONT LOTS Introduction The nine subject lots are appraised as though vacant, unimproved, and unencumbered with the existing leases. Two sets of comparisons are presented, for waterfront and upland property. Waterfront Comparable Data & Units of Comparison Waterfront lot sales in the subject market vary from as little as $150,000 to over $700,000. The variation in pricing reflects differences in the size of the lot, waterfront span, quality of the view, access to the beach, water and sewer availability, the prestige and amenities provided by subdivisions such as Boundary Ridge, and site work required by the presence of critical areas. The comparables researched and presented below are considered to provide the best indication of value for the subject. They are compared on overall price, $/sf, and $/ff, the most appropriate units of comparison for vacant waterfront property. No time adjustments are applied given the flat nature of the market. Comparable Sales Analysis for Waterfront Lots #1 – January 2011 - $520,000: 8471 Semiahmoo Drive: This is the sale of lot #1 in the subject plat, one of seven lots in the plat which are not leased but which are owned in fee simple. It is located at the southern end of the plat in an area with less erosion activity than is experienced further north on Semiahmoo Drive, and near a number of very high end homes. It is also somewhat larger than the subject waterfront lots at 1.1ac, with 100’ of waterfront footage. In addition, a completed septic design was included in the sale price. The lot sold for $520,000 on January 18, 2011, which sets an upper end indicator. #2 – March 2014 - $700,000: 9171 Great Blue Heron Lane: This lot of 0.993ac with 144’ of waterfront is at the top of the range of our comparables. The lot has exceptional panoramic views, and is located in one of the most prestigious neighborhoods in the area, Boundary Ridge, which offers numerous shared amenities – some agents have noted it was apparently the last remaining lot in Semiahmoo that was suitable for a large high-end home with a long driveway. It was also fully serviced with both water and sewer. It is therefore a high-end indicator for even the best of the subject lots. #3 – July 2013 – $187,500: Lot 12 Pintail Loop: At 2.2ac in size, this lot was considered by many brokers to be a bargain when it sold for $187,500 on July 26, 2013. The listing agent stated that the lot had significant critical areas constraints and needed $70,000 worth of site work, and remarked that the neighborhood lacked the amenities possessed by enclaves such as Boundary Ridge. Even with adjustment for the $70,000 plus 30% incentive (about an overall 50% adjustment), the sale is still regarded as a low indicator. #4 – October 2012 - $165,000: 5542 Pine Sisken Road: While not a bank or a short sale, this property was held by an owner who took it back in foreclosure and needed to sell it quickly according to the listing agent. Therefore at a sale price of $165,000 on October 4, 2012, the sale is considered distressed, warranting an adjustment of 25% for sale conditions. In addition to a very motivated seller, the property had drainage issues which were complicated by shoreline setback requirements, and in fact the neighborhood as a whole has experienced a number of building challenges. This is a very low indicator for the subject properties both as an overall sale price and on a per square foot basis. #5 – Active listing - $599,000: XX Semiahmoo Drive: Adjusted by negative 10% due to its status as a listing, this comparable provides an approximate value indicator at around $540,000. At 1.27ac with 120’ 21 Job No. 14093

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Semiahmoo Plat

of waterfront, it is larger than our subject lots and is also in a neighborhood, The Pointe at Semiahmoo, which enjoys shared amenities. The property has been surveyed, and has water, geotech studies, drainage work, and an installed septic. A lower value is indicated as appropriate for the subject. #6 – December 2013 - $260,550: 93XX Bayview Avenue: This waterfront lot is located across Drayton Harbor from the Semiahmoo Spit and falls within Blaine city limits. The location is inferior, with side-by homes in a less private and exclusive location. The property has both water and sewer available, but a 100’ sewer extension was required for development, this resulting in the significant drop in price from the original asking figure of $395,000. Also with a size at 0.43ac, the property rates at the low end of the scale on size and therefore also total lot value. Waterfront Final Value Conclusion The comparisons firmly support a value indicator above the low $300,000 range, but well below the top of the range at $700,000. Average pricing in the four to five hundred thousand dollar range is deemed reasonable for the properties Balancing lot acreage and extent of waterfront, we have concluded with the values indicated on the summary chart, ranging from $450,000 to $470,000. Lot 21, which is one of the larger lots, with over 100’ of waterfront, would typically be valued at the top of this range at $470,000, but has been discounted 25% on account of slide damage – the resulting value indication is $376,000. The value indications are presented in various graphs below.

Acres vs $/sf - Waterfront Lots

$20.00

Comps

$18.00

Subject lots

$16.00

$14.00 $12.00

$10.00 $8.00

$6.00 $4.00 $2.00 $0.00 0.20ac

0.40ac

0.60ac

0.80ac

1.00ac

1.20ac

1.40ac

1.60ac

1.80ac

22 Job No. 14093

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Semiahmoo Plat

Water ff/ac vs $/ff - Waterfront Lots $7,000/ff

Comps Subject

$6,000/ff

Power (Comps) Power (Subject)

$5,000/ff $4,000/ff $3,000/ff $2,000/ff $1,000/ff

$0/ff 50/ff/ac

70/ff/ac

90/ff/ac 110/ff/ac 130/ff/ac 150/ff/ac 170/ff/ac 190/ff/ac 210/ff/ac 230/ff/ac

Water ff/ac vs $/sf - Waterfront Lots $18.00 $16.00 $14.00 $12.00 $10.00

$8.00 $6.00

Series1

$4.00

Subject lots

$2.00

$0.00 50/ff/ac 70/ff/ac 90/ff/ac 110/ff/ac 130/ff/ac 150/ff/ac 170/ff/ac 190/ff/ac 210/ff/ac 230/ff/ac

23 Job No. 14093

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Semiahmoo Plat

MAP OF UPLAND LOT SALES COMPARISONS

24 Job No. 14093

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Job No. 14093

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Semiahmoo Plat

$1.70/sf

$144,000 0% 0% $144,000 572 days

Feb-14 Jul-12

Territorial

1.95ac 84,942sf

2.24ac 97,574sf

W 55th Terrace lot 3 390227-311319

Subject Property Lot 32 405116 550135 0000

$1.54/sf

$1.84/sf

$140,000 0% 0%

$140,000 479 days

Nov-13 Jul-12

Territorial

1.75ac 76,230sf

W 55th Terrace lot 4 390227-336318

$150,000 May 20, 2014

$2.23/sf

$194,250 -25% 0%

$259,000

Territorial, Bay Listing

2.00ac 87,120sf

Lot 12 Drayton Harbor 405113-34716600

Indicated Value As of:

$2.14/sf

$186,750 -25% 0%

$249,000

Listing

Territorial

2.00ac 87,120sf

Lot 11 Drayton Harbor 405113-34716600

Territorial

$1.16/sf

$294,000 0% 0%

$294,000 510 days

Jan-14 Aug-12

Partial mtn & Drayton H

5.82ac 253,519sf

Land $/sf $1.24/sf

8660 Drayton View Lot 405113-364202

Time / Conditions

$89,900 0% 0%

Analysis Adjusted Price

Sales Data Price Sold DOM Listed $89,900 Dec-13 24 days Nov-13

No. Address/Location 1 Lot 2 Great Blue Heron Ln 405110-533253

Land Data Acres View SqFt Territorial 1.66ac 72,310sf

Upland Lot Sales

Another lot in North View Estates.

Level building lot in North View Estates, shared well, needs septic but has drain field design.

Another lot in Drayton Harbor, better view.

Lot in Drayton Harbor area, gated community with CCRs to prohibit subdivision, view.

Comments Gated community in Semiahmoo in Boundary Ridge neighborhood. Amenities, utilities.

Upland Comparable Data & Units of Comparison Upland lot sales in the subject market vary from as little as $50,000 to highs of around $300,000. The variation in pricing reflects differences in the size of the lot, water and sewer availability, neighborhood influence and amenities, view, and the site work required by the presence of critical areas. The comparables researched and presented below are considered to provide the best indication of value for the subject. They are compared on overall price and $/sf, the most appropriate units of comparison for vacant upland property. Comparable Sales Analysis for Upland Lot #1 – December 2013 - $89,000: Lot 2 Great Blue Heron Lane: This is the sale of a level, 1.66ac lot in the prestigious Boundary Ridge neighborhood, with amenities including a wooded green belt, golf course, clubhouse, and community beach. The listing agent commented that the land market overcorrected after the recent recession, and was coming back faster in the Bellingham area than in the northern portions of Whatcom. Here pricing is probably below market, as the seller wanted the lot sold within thirty days to meet certain financial obligations. This sale then probably represents a below market value, and is a low indicator for the subject. #2 – January 2014 - $294,000: 8660 Drayton View: This 5.82ac lot in Heronswood with partial views of Drayton Harbor and mountains is located in a gated community with underground utilities (sewer though is not available), private trails, and sidewalks. At $294,000 it sold for 98% of its list price of $299,000, and is twice the size of the subject upland lot. #s 3 & 4 –Listings at $249,999 and $259,000 in Drayton Harbor: Lots 11 and 12 in the Heronswood development, at closer to the subject in size at 2ac each, are available for $249,000 and $259,000 respectively at this time. If they sold at 75% of their list price, they would achieve pricing of $186,750 or $2.14/sf and $194,250 or $2.23/sf. These prices are considered high indicators for the subject as the lots enjoy distant views and are in a planned community. # 5 - November 2013 - $140,000: W 44th Terrace lot 4: This comparable was the sale of a 1.75ac lot in North View Estates, which is a rural neighborhood near Ferndale with a shared well and CCRs limiting agricultural and livestock uses as well as home size and design. The site offered limited territorial views. It sold for an adjusted price of $141,581 or $1.86/sf. It is considered a slightly high indicator (on a per square foot basis) due to its closer-in location (Belllingham area) and its territorial views, and lower on an overall lot basis due to the smaller size of the parcel. #6 – February 2014 – $144,000: W 55th Terrace lot 3: This was the sale of a 1.95ac lot in North View Estates, slightly larger than comparable 2 but otherwise similar. Price per square foot is $1.70/sf. Final Value Conclusions The comparisons support a value indicator above the $90,000 mark but well below the high end of the range at $294,000 (or even the 2ac lots referenced at projected sales prices of around $190,000). The subject falls below the trendline shown on the graph below, as that line is heavily influenced by the sale and the two listings in Drayton Harbor which have superior attributes. As a large and well-located lot, but one which has no water view and no shared amenities, we conclude at the lower middle of the range with a value of $150,000 or $1.54/sf for lot 32. This conclusion graphs well with the balance of the sales on a size basis.

26 Job No. 14093

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$/sf vs sf - Upland Lot Sales

$2.40

Subject Comps

$2.20

Power (Comps) $2.00 $1.80

$1.60 $1.40 $1.20 $1.00

1sf

50,001sf

100,001sf

150,001sf

200,001sf

250,001sf

300,001sf

Date of Value The effective date of value is the date of inspection, June 3, 2014, but note that the values presented here are used to compute market and adjusted market rents for the property with an effective commencement date of September 15, 2014. Given the stable nature of the market, the slide in time frame without adjustment is considered reasonable. Exposure and Marketing Time We have forecast an exposure and marketing period of 6-9 months.

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INCOME APPROACH Introduction The section of the report concludes with market rent estimates for the subject property based on a rate of return analysis (applied to the market values determined in the previous section), this balanced and adjusted with a test of reasonableness applied with actual lease information on residential lots. Rental Rate Analysis The determination of market rent requires that a rental rate be applied to the concluded lot values. To assess a market rental rate a number of ground leases have been examined. The comparables are primarily analyzed on their initial negotiated terms, though two of the comparables are sales of sites under ground lease. The comparables are described below and presented in a summary table on the next page. Important to the conclusion of rental rate are the terms of the lease to which the rate will apply. For the subleases, the provided terms are:  



55-year term (September 15, 2015 to September 14, 2070) CPI per year, based on the prior decade average increase in the CPI o For 2014, the increase will be at the annual average CPI (AACPI) for 2002-2012 (2.35%) o For 2022, the increase will be based on the 2012-2022 AACPI o For projection purposes we are assuming a 3% CPI beyond 2014; for the 2012-2022 period, and given the CPI through 2014, the AACPI is projected at 2.785% No market rent adjustments during the term of the lease

The term of the lease is at a general minimum, as 55years would be considered a minimum for full amortization of good quality residential improvements - but overall it is considered quite favorable, as this is an extension, not a primary term, and all but two of the properties have improvements. The annual CPI adjustment is perhaps less common for ground leases – more typically ground leases have flat 5 or 10-year periods between adjustments, and stipulated steps between adjustments can often be less than CPI. All other things being equal, this higher escalation would be accommodated with a lower initial rate. Meanwhile the lack of periodic market adjustment calls for a higher initial rate. On the whole, land value increases outpace inflation, and thus the lack of a market adjustment over a term of 55-years is likely to (eventually) result in a contract rent that is below market.

Consumer Price Index - All Urban Consumers Original Data Value Series Id: Not Seasonally Adjusted Area: Item: Base Period: Years: Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2032 2042 2052 2062

CUURA423SA0,CUUSA423SA0 Seattle-Tacoma-Bremerton, WA All items 1982-84=100 1971 to 2014 Jan

Feb 176.1 184.0 187.6 191.3 193.5 197.6 203.6 211.704 221.728 224.737 226.085 229.482 235.744 239.898 242.770

Mar

Apr 177.8 184.2 188.8 192.3 194.3 201.3 207.4 215.767 223.196 225.918 226.513 231.314 237.931 240.823 246.616

HALF1 177.3 184.4 188.3 191.6 194.0 199.2 205.8 213.810 223.569 225.580 226.195 230.815 237.344 240.777

AACPI Calc & average

1.8% 1.3% 2.7% 3.3% 3.9% 4.6% 0.9% 0.3% 2.0% 2.8% 2.350% 1.4% 2.4% estimate based on April 3.0% assumption 3.0% " 3.0% " 3.0% " 3.0% " 3.0% " 3.0% " 3.0% 2.785% etc 3.000% etc 3.000% etc 3.000% etc 3.000%

A calculation of the AACPI to be used for annual adjustments appears opposite. It is known for the first eight years of the lease, while the remainder of the term needs to be projected. A 3% CPI assumption has been used for the future. 28 Job No. 14093

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Comparable Ground Leases In assessing the comparability of a lease example to the subject lease, primary elements of comparison are commencement date, term, rental rate, escalations and market revaluations. Combined, these factors result in an internal rate of return, which represents a reasonable apples to apples comparison for ground leases, as compared to simply the starting “cap” rate which is often referenced. An IRR analysis of each comparable’s lease terms and that of the subject’s are presented at the end of this section. Transactions of ground leases occur relatively infrequently. As such, the list of comparables stretches back more than ten years to 2003. In evaluating the ground leases and determining their internal rates of return, assumptions include an inflation rate of 3%, and land value appreciation of 4%, both assumptions drawn from historic regional trends. Obviously the assumptions are designed for an apples to apples comparison, with the result that the IRRs shown should still be considered in the context of their location (which might deliver more or less than 4% in appreciation). Summary of Ground Lease Comparisons No. Property 1 Confidential Restaurant North King County 2

Manson

Rate 6.25%

Terms 20-yr lease, $80k/mo, all operating expenses paid by tenant. 8% increase in rent every 5 years with four 5year options to renew.

2003

6.50%

50-yr term, no options. Market revaluation every five years.

10.05%

2004

8.25%

Flat 25-yr term; market adjm't at first 5-yr option period, each subsequent 5-yr options has a 10% adjm't, up to 75-yrs total term.

10.01%

South Duwamish Industrial 3

Big Box

Resulting IRR 8.47%

Year 2003

Woodinville 4

Nationwide Bank Site Lynnwood

2004

5.25%

25-yr lease, $110k/mo, all operating costs paid by tenant. 12% increase in rent every 5 years with four 5year options to renew.

7.94%

Downtown Land Parcel Seattle

2004

7.20%

99-yr lease, CPI every 5-yrs, revaluation clauses years 30, 45, 60, & 90.

10.23%

US Bank Property First Hill

2006

7.21%

Opus lessee for 75yrs to construct a 200,000sf office/apt building. $375,000 rent on $5.2m land value. Esc's estimated at 15% every five years.

9.75%

Confidential Downtown

2008

6.50%

Arbitrated lease adjustment in 99-yr lease; market every five years

10.05%

Confidential Redmond

2008

6.50% midpoint

Arbitrated lease adjusment in 20-yr lease (with 6x5-yr options), mkt adjustment every five years. Rate shown is midpoint rate of agreed upon range.

10.05%

Jack in the Box Everett

2010

6.32%

Acquired lease - 9-yrs remaining, plus four 5-yr options. 15% esc every five years.

9.50%

10 Sonic Bonney Lake

2012

7.42%

10% escalations every 5 years, Two 5 year options, first term expires 10/31/29, 18 years remaining at sale

9.96%

11 Jack in the Box Bellevue

2013

6.32%

55 year lease. Tenth year market reset. 7 5-yr options.

9.88%

12 Confidential - CBD Fringe Negotiated agreement, yet to close

2013

6.00%

75 year lease, 2 10-yr options; cpi/yr, no less than 1% no higher than 6%,; 15-yr revaluation based on H&B with rate capped at 10% of prior year rent.

9.04%

2014

6.00% to 7.0%

Lease renewal to 2070; no further market changes; annual increase based on CPI average change over previous decade.

8.93% to 9.8%

Subject

29 Job No. 14093

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The land value for each lease is set at $100 in 2003, for purposes of IRR calculation. If a lease commences later than 2003, the initial investment is appreciated at 4%/year. As an example, Comparable 6 begins in 2006 at an initial investment of $112.49. The IRR for each lease has been determined based on rental rate, lease duration and terms, with the market adjustment typically creating a “bump” over CPI for fixed steps, given the assumption of 1% real growth (4% overall as compared to 3% inflation). As analyzed, the leases indicate an IRR range of 7.94% to 10.23% for the ten year period. The first part of the period exhibited the most variability, while the more recent leases fell in a tighter range of nine to ten percent. Because ground leases tend to have a long “shelf-life”, some form of market adjustment is commonplace. Periodic percentage adjustments are also common, usually at or below CPI, and typically every five or ten years. For example Comparable 5 includes four revaluations over the 99 year term, as well as CPI adjustments every five years not falling on a revaluation adjustment. Others include one or the other. Comparables 1, 4, 6, 9, 10 and 12 have only percentage adjustments, while Comparables 2, 7, 8 and 11 have only market revaluations. Typically market revaluation adjustments are favored by lessors as land in the region has appreciated at a quicker pace than inflation, though a lack of market adjustments can be made up with a higher initial rental rate. An example is Comparable 3, which has the highest rental rate of the comparables at 8.25%. The lease is 75 years and remains flat the first 25 years with no adjustments (market or percentage). A market adjustment occurs at year 26 (the only one) followed by a 10% adjustment every 5 years. Overall then the net adjustment is comparatively low – 0% for the first 25 years and less than 2%/year after the market adjustment. The IRR is further constrained by the arrangement of the adjustments. The flat front-end of the revenue stream bonuses near-term revenues at the expense of future revenues. This is often a preferred arrangement for a tenant, as the economic profile of the property is well balanced at the initiation of the lease, but over time may become unbalanced as the improvements begin to depreciate or market forces change. The benefit for a lessor is near-term high revenues to which greater certainty is attached, as compared to a speculatively higher market in the future. Ultimately, though, the lease will get out of sync with (lag) market. Leases with modest escalations then tend to have higher initial rates of return, while leases with more aggressive escalations have lower initial rates. The subject’s annual CPI increase is perhaps a little better than market (which usually has flat five and ten year periods1), but the delayed average (which will perpetuate a below average rental rate environment until 2022), and the lack of market adjustments provide offsetting factors. There is a strong likelihood in fact that the contract rent will get out of sync with market - ultimately not rising as fast as the market – in the final decades of the lease. The Historic Yields chart on the next page compares the lease IRRS to historic 2003 to 2013 long-term mortgage rates, 10-year treasuries and the PwC yield indicator. The latter yield indicator is a composite IRR average of the markets surveyed by PricewaterhouseCoopers. The markets that make up the PwC Yield Indicator are national and regional office, retail, self-storage, warehouse, flex/R&D, apartment and land. The data trends provide a backdrop to the subject revaluation. Realistically a land investment IRR should be below that for an improved property owned in fee simple due to the lack of depreciating element; this would then put the IRR probably below 8%. At the same time, though, there is some recognition that a 1

The difference between a CPI per year, versus every 10 years is an increase in the IRR of a little over 50-basis points.

30 Job No. 14093

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ground lessor does not have the ability to control the direction of the asset, or take advantage of shortterm periods of value escalation. In the subject case, for example, a strong period of house price appreciation will only find its way into the analysis through the CPI, and that will be deferred for 10 years given the AACPI indexing used. Also the current low return environment is artificially subsidized by government lending practices, and this situation may not endure for the long-term, and yet a ground lease will carry on for decades. Given these issues and others, ground lessors are naturally reluctant to agree to an initial starting rent below a certain level, and typically rates cluster around the 6 or 7% mark. Taking these issues into consideration, and prior to consideration of the specific property type and issue, in our opinion a 6% to 7% initial starting rate range applied to land value as derived previously would represent a balanced rental. A resulting IRR range of 8.93% to 9.84% would be produced by this range â&#x20AC;&#x201C; see chart below.

Historic Yields & Market Comparables 12%

10%

Yield / IRR

10.23%

10.05%

9.75% 10.05%

10.01%

9.96%

10.05% 9.50%

8.47%

9.88%

9.84%

9.04%

8.93%

7.94%

0% 2002

2004

2005

2006

2008

2009

2010

PwC Yield Indicator

Long-term Mortgage

Comparables

Subject Range

2012

2013

2014

2016

10-Year Treasuries

Thus a starting out rate of 6 to 7% is probably reasonable and market. The starting rate is below most of the comparables, which is a consequence of the annual CPI adjustment. The latter is computed below for the past 10-year term, with estimates for future terms following. Details of the calculations used appear in the following pages.

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Dec-2003 Dec-2004 Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 Dec-2010 Dec-2011 Dec-2012 Dec-2013 Dec-2014 Dec-2015 Dec-2016 Dec-2017 Dec-2018 Dec-2019 Dec-2020 Dec-2021 Dec-2022 Dec-2023 Dec-2024 Dec-2025 Dec-2026 Dec-2027 Dec-2028 Dec-2029 Dec-2030 Dec-2031 Dec-2032 Dec-2033 Dec-2034 Dec-2035 Dec-2036 Dec-2037 Dec-2038 Dec-2039 Dec-2040 Dec-2041 Dec-2042 Dec-2043 Dec-2049 Dec-2052 Dec-2053 Dec-2057 Dec-2058 Dec-2062 Dec-2063 Dec-2069 Dec-2070 Dec-2071 Dec-2072 Dec-2078 Dec-2079 Dec-2080 Dec-2081 Dec-2082 Dec-2100 Dec-2101 Dec-2102 Dec-2103 Dec-2104 Dec-2105 Dec-2106 Dec-2107 Dec-2108

6 First Hill Med Office 7.21%

5 Seattle CBD Downtown 7.20%

4 Lynnwood Bank 5.25%

3 Woodinville Big Box 8.25%

2 Seattle So. Ind 6.50%

6.50%

7 Seattle CBD

11 Bellevue Fast Food 6.32%

10 Bonney Lake Fast Food 7.42%

9 Everett Fast Food 6.32%

8 Redmond 6.50%

6.00%

12 CBD Fringe

$100.00 $104.00 $108.16 $112.49 $116.99 $121.67 $126.53 $131.59 $136.86 $142.33 $148.02 $153.95 $160.10 $166.51 $173.17 $180.09 $187.30 $194.79 $202.58 $210.68 $219.11 $227.88 $236.99 $246.47 $256.33 $266.58 $277.25 $288.34 $299.87 $311.87 $324.34 $337.31 $350.81 $364.84 $379.43 $394.61 $410.39 $426.81 $443.88 $461.64 $480.10 $607.48 $683.33 $710.67 $831.38 $864.64 $1,011.50 $1,051.96 $1,331.07 $1,384.31 $1,439.68 $1,497.27 $1,894.53 $1,970.31 $2,049.12 $2,131.08 $2,216.33 $4,489.87 $4,669.47 $4,856.25 $5,050.49 $5,252.51 $5,462.62 $5,681.12 $5,908.36 $6,144.70 8.47%

($100.00) $6.25 $6.25 $6.25 $6.25 $6.25 $6.75 $6.75 $6.75 $6.75 $6.75 $7.29 $7.29 $7.29 $7.29 $7.29 $7.87 $7.87 $7.87 $7.87 $7.87 $8.50 $8.50 $8.50 $8.50 $8.50 $9.18 $9.18 $9.18 $9.18 $9.18 $9.92 $9.92 $9.92 $9.92 $9.92 $10.71 $10.71 $10.71 $10.71 $490.81

10.05%

($100.00) $6.50 $6.50 $6.50 $6.50 $6.50 $7.91 $7.91 $7.91 $7.91 $7.91 $9.62 $9.62 $9.62 $9.62 $9.62 $11.71 $11.71 $11.71 $11.71 $11.71 $14.24 $14.24 $14.24 $14.24 $14.24 $17.33 $17.33 $17.33 $17.33 $17.33 $21.08 $21.08 $21.08 $21.08 $21.08 $25.65 $25.65 $25.65 $25.65 $25.65 $37.97 $37.97 $748.64

10.01%

($104.00) $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $8.58 $22.87 $22.87 $22.87 $22.87 $22.87 $25.16 $25.16 $25.16 $25.16 $25.16 $27.68 $27.68 $27.68 $27.68 $30.44 $33.49 $33.49 $36.84 $36.84 $40.52 $40.52 $44.57 $49.03 $49.03 $49.03 $53.93 $2,024.24

($104.00) $7.49 $7.49 $7.49 $7.49 $7.49 $8.68 $8.68 $8.68 $8.68 $8.68 $10.06 $10.06 $10.06 $10.06 $10.06 $11.67 $11.67 $11.67 $11.67 $11.67 $13.52 $13.52 $13.52 $13.52 $13.52 $15.68 $15.68 $15.68 $15.68 $15.68 $24.29 $24.29 $24.29 $24.29 $24.29 $28.15 $28.15 $28.15 $28.15 $32.64 $43.74 $43.74 $50.71 $50.71 $58.78 $58.78 $78.77 $91.32 $91.32 $91.32 $105.86 $105.86 $122.72 $122.72 $122.72 $296.18 $296.18 $296.18 $5,347

10.23%

($104.00) $5.46 $5.46 $5.46 $5.46 $5.46 $6.12 $6.12 $6.12 $6.12 $6.12 $6.85 $6.85 $6.85 $6.85 $6.85 $7.67 $7.67 $7.67 $7.67 $7.67 $8.59 $8.59 $8.59 $8.59 $8.59 $9.62 $9.62 $9.62 $9.62 $9.62 $10.78 $10.78 $10.78 $10.78 $10.78 $12.07 $12.07 $12.07 $12.07 $621.00

7.94%

9.75%

($112.49) $8.11 $8.11 $8.11 $8.11 $8.11 $9.33 $9.33 $9.33 $9.33 $9.33 $10.73 $10.73 $10.73 $10.73 $10.73 $12.33 $12.33 $12.33 $12.33 $12.33 $14.18 $14.18 $14.18 $14.18 $14.18 $16.31 $16.31 $16.31 $16.31 $16.31 $18.76 $18.76 $18.76 $18.76 $18.76 $21.57 $21.57 $24.81 $28.53 $28.53 $32.81 $32.81 $37.73 $37.73 $43.39 $43.39 $43.39 $49.90 $57.39 $57.39 $57.39 $2,188

10.05%

($121.67) $7.91 $7.91 $7.91 $7.91 $7.91 $9.62 $9.62 $9.62 $9.62 $9.62 $11.71 $11.71 $11.71 $11.71 $11.71 $14.24 $14.24 $14.24 $14.24 $14.24 $17.33 $17.33 $17.33 $17.33 $17.33 $21.08 $21.08 $21.08 $21.08 $21.08 $25.65 $25.65 $25.65 $25.65 $25.65 $37.97 $37.97 $37.97 $46.19 $46.19 $56.20 $56.20 $83.19 $83.19 $83.19 $83.19 $101.22 $123.14 $123.14 $123.14 $123.14 $269.82 $269.82 $269.82 $269.82 $328.28 $328.28 $328.28 $6,237

10.05%

9.50%

($131.59) $8.32 $8.32 $8.32 $8.32 $9.56 $9.56 $9.56 $9.56 $9.56 $11.00 $11.00 $11.00 $11.00 $11.00 $12.65 $12.65 $12.65 $12.65 $12.65 $14.55 $14.55 $14.55 $14.55 $14.55 $16.73 $16.73 $16.73 $411

9.96%

($142.33) $10.56 $10.56 $10.56 $10.56 $10.56 $11.62 $11.62 $11.62 $11.62 $11.62 $12.78 $12.78 $12.78 $12.78 $12.78 $14.06 $14.06 $14.06 $14.06 $14.06 $15.46 $15.46 $15.46 $15.46 $15.46 $17.01 $427

9.88%

($142.33) $9.00 $9.00 $9.00 $9.00 $9.00 $10.94 $10.94 $10.94 $10.94 $10.94 $13.32 $13.32 $13.32 $13.32 $13.32 $16.20 $16.20 $16.20 $16.20 $16.20 $19.71 $19.71 $19.71 $19.71 $19.71 $23.98 $23.98 $23.98 $23.98 $23.98 $29.18 $35.50 $35.50 $43.19 $875

9.04%

($148.02) $8.88 $9.15 $9.42 $9.71 $10.00 $10.30 $10.60 $10.92 $11.25 $11.59 $11.94 $12.29 $12.66 $13.04 $13.43 $13.84 $14.25 $14.68 $15.12 $15.57 $16.04 $16.52 $17.02 $17.53 $18.05 $18.60 $19.15 $19.73 $20.32 $20.93 $24.99 $27.31 $28.13 $31.66 $32.61 $36.70 $37.80 $45.14 $46.49 $47.89 $49.32 $58.89 $60.66 $62.48 $64.35 $66.29 $112.85 $116.23 $119.72 $123.31 $127.01 $130.82 $134.74 $5,912.41

CPI/yr Escalations 8% every 5 yrs Mkt Adj @ 5 yrs Flat for 25 yrs 12% every 5 yrs CPI every 5 yrs 15% every 5 yrs Mkt Adj @ 5 yrs Mkt Adj @ 5 yrs 15% every 5 yrs 10% every 5 yrs Mkt Adj @ 5 yrs 6 5-yr options 4 5-yr options 2 5-yr options 7 5-yr options 2 10-yr options No options 10 5-yr options 4 5-yr options 30/45/60/90 yr No options Period 4 5-yr options Re-evaluations 10% adj/option 75 years 10th yr reset 18 yrs at sale 9 yrs at sale 20 years 99 years 75 years 99 years 25 years 25 years 50 years 20 years Initial Term 95 years 55 yrs 28 years 29 years 50 years 99 years 75 years 99 years 45 years 75 years 50 years 40 years Total Term 2013 2013 2012 2010 2008 2008 2006 2004 2004 2004 2003 2003 Commencement Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Cashflows Land Value

1 Comp No. Location N King County Restaurant Use 6.25% Rental Rate

Internal Rate of Return (Over the life of the lease)

Year End

3.0%

4.0%

-11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 35 38 39 43 44 48 49 55 56 57 58 64 65 66 67 68 86 87 88 89 90 91 92 93 94

Historic CPI

Land Value Appreciation

$100

Land Value As of January 2003

Comparable Leases and Derived Internal Rates of Return

8.93%

($153.95) $9.24 $9.45 $9.68 $9.90 $10.14 $10.37 $10.62 $10.87 $11.17 $11.48 $11.80 $12.13 $12.47 $12.81 $13.17 $13.54 $13.92 $14.30 $14.73 $15.17 $15.63 $16.10 $16.58 $17.08 $17.59 $18.12 $18.66 $19.22 $19.80 $23.64 $25.83 $26.61 $29.95 $30.85 $34.72 $35.76 $42.70 $1,428

No reset 52 years 9/14/2014 Cashflows

9.84%

($153.95) $10.78 $11.03 $11.29 $11.55 $11.83 $12.10 $12.39 $12.68 $13.03 $13.39 $13.77 $14.15 $14.55 $14.95 $15.37 $15.80 $16.23 $16.69 $17.19 $17.70 $18.23 $18.78 $19.35 $19.93 $20.52 $21.14 $21.77 $22.43 $23.10 $27.58 $30.14 $31.04 $34.94 $35.99 $40.50 $41.72 $49.82 $1,436

No reset 52 years 9/14/2014 Cashflows

CPI/yr

7.00% No options

CPI/yr

6.00% No options

Semiahmoo Residence

Subject Subject Market Range Semiahmoo Residence

Test of Reasonableness with Actual Lot Leases A test of reasonableness with actual leases, however, suggests a modification. As might be expected, long-term residential lease comparables are rare. We are aware of a negotiation in progress for an extension of a residential lease on tribal land, with an agreed upon rate of return of 7%, with the mechanism for annual adjustment as well as certain unique expense obligations still under negotiation. The Swinomish and Tulalip tribes also regularly engage in lease transactions, but each situation is a little unique, and most of the leases are continuations of past arrangements – some of these examples are presented on the following page, together with the price paid for the leasehold, this a capitalization of a leasehold benefit that we have converted to rent assuming a 15-year (or longer to the end of the term) amortization and 7% interest. It is also noted that the Tulalip leases come with a quoted cap rate of 10%. The data is also supplemented with two water-fronting mobile home parks in the Puget Sound market. While the characteristics of these properties are very different, clearly they help set a lower-end parameter; obviously a higher rent than $10,000 a year is called for. From a rate of return standpoint, the transactional rate information would suggest 6.5% is quite reasonable and potentially low. However a significant issue emerges with consideration of the value of the home-site, as the use can change from summer cabin to high-end residence for example, depending on the quality of the land. This in turn creates a change in the economics of the lease arrangement. Most residential home owners would not choose to rent land, and particularly not in a situation where construction of a home several times the value of the lot is intended. This tends to focus rental activity on smaller lots, where the intent is to provide for a less expensive second or generally modest retirement home and cabin, perhaps in a community with good amenities. Renting of such properties is more routine, and often desirable, if the initial entry-price into the arrangement is a key consideration. In our experience, average lot sizes for these types of properties rarely exceed half an acre, and a value of $200,000 – more typically lot pricing is $100,000 or less. At a typical new home-to-lot ratio of say one third, a lot value of $100,000 would typically dictate a total package price of around $300,000. In this circumstance a 7% to even as much as a 10% rate of return on the lot price might be expected, and certainly the latter with a less expensive lot – witness the mobile home pads. The calculated range in rent - $7,000 to 10,000 per year in this example – would be well supported by the rental data. In the subject case, the average lot value for the waterfront lots is around $450,000 – 4.5x this example. Full use of these lots would typically call for home values in the $1.0M to $1.5M range or higher investments that would not typically be made on leased land. In the subject’s case, this is an extension, not an original term, though, and clearly the return has to be high enough to motivate a transaction from the landlord side of the equation, otherwise the lease would be allowed to simply expire. In addition, we have to recognize that no prudent tenant would construct/maintain improvements likely to have a life longer than the lease; and likewise no prudent landlord would assume any reversionary improvement value. Given this situation, and the higher value of the lots, reasonably we might forecast a return requirement at the lower end of the scale, in this case 5%, this providing for an IRR of just over 8% probably a minimum for this type of situation. This puts the concluded rent for the waterfront lots at about double that of most of the comparisons at around $22,000 per year. The upland lot, meanwhile, with a value of $150,000, warrants a 6.5% return close to the other end of the scale, this resulting in a rent of nearly $10,000 per year. With these conclusions, the previously provided charts are adjusted as below. A summary of the lease information discussed above is presented initially, with a comparison of the 5% and 6.5% rates applied to the waterfront properties, and a conclusion of 6.5% applied to the upland lot. 33 Job No. 14093

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Semiahmoo Plat

Job No. 14093

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Semiahmoo Plat

Property DNR lease Sold in Nov 2013 $285,000

Type

Del Ray Mobile Home Park Des Moines

Subject Property Lot 8 Lot 9 Lot 10 Lot 11 Lot 17 Lot 19 Lot 21 Lot 24 Lot 32

0.87ac 0.86ac 0.84ac 0.84ac 0.79ac 0.79ac 0.84ac 0.73ac 2.24ac

Size 37,897sf 37,462sf 36,590sf 36,590sf 34,412sf 34,412sf 36,590sf 31,799sf 97,574sf

Lot Value $455,000 $460,000 $460,000 $455,000 $450,000 $450,000 $376,000 $465,000 $150,000

Ground Rates 5.0% rate 6.5% rate $29,575 $22,750 $29,900 $23,000 $29,900 $23,000 $29,575 $22,750 $29,250 $22,500 $29,250 $22,500 $24,440 $18,800 $30,225 $23,250 $9,750

12.84% $3,797 $3,839 $3,839 $3,797 $3,756 $3,756 $3,138 $3,881 $1,252

Tenant WSG WSG WSG WSG WSG WSG WSG WSG WSG

5.0% rate $22,750 $0.60/sf $23,000 $0.61/sf $23,000 $0.63/sf $22,750 $0.62/sf $22,500 $0.65/sf $22,500 $0.65/sf $18,800 $0.51/sf $23,250 $0.73/sf

6.5% rate $0.88/sf $33,372 $0.90/sf $33,739 $0.92/sf $33,739 $0.91/sf $33,372 $0.96/sf $33,006 $0.96/sf $33,006 $0.75/sf $27,578 $1.07/sf $34,106 $0.11/sf $11,002

$1.61/sf $8,460 ? $120 ? $360 ? $360 No $9,300

5,250sf

Wtft mobile home park

Waterfront 70ft 75ft 75ft 70ft 75ft 76ft 107ft 130ft None

$1.81/sf

$1.17/sf $9,060

$17,500 No $120

Yes No $360

Yes No

None

$9,900

$17,500

5,000sf

15,000sf

Wtft mobile home park

A hi-bank lot that rented on Mission Beach 12/12

Mobile Home Parks 8 Seashore Villa Olympia

10%/yr of appraised value of lot if non-tribal

$1.66/sf $12,437 Yes Yes Yes

None

$9,000 $3,437

$31,300 7% 15yrs

$33,700

7,500sf

28-Feb-13 $65,000

Swinomish lease Pull & Be Damned

17892 Cobahud Road La Conner

15, 25 & 30 yr leases, wtft lots

$1.94/sf $10,877 Yes Yes

Yes

None

$9,000 $1,877

$17,100 7% 15yrs

$67,900

5,610sf

28-Feb-13 $85,000

Swinomish lease Pull & Be Damned

18002 Cobahud Road La Conner

Tulalip Leases 6 Tulalip Tribe leases Tulalip

$2.02/sf $17,634 Yes

Yes

None

$7,500 $10,134

$92,300 7% 15yrs

$57,700

8,712sf

18-Mar-14 $150,000

$1.26/sf

$0.54/sf

$7,260

$19,209

Yes

None

LET $406.75

Net Rate w/LET $/sf $/lot

$7,260 $2,635

$3,168 $16,448

Tenant Expenses Rent & LH pmt Prop tax Water Sewer Garbage

$24,000 7% 15yrs

$230,000 7% 57yrs

Leasehold

Swinomish lease Pull & Be Damned

$55,000

Imp Value

17888 Cobahud Road La Conner

5,750sf

35,284sf

Listing $30,000

17-Nov-13 $285,000

Sale Date Sale Price

Swinomish: Pull & Be Damned Leases Swinomish lease-vacant 2 111 Capet Zalsiluce Pull & Be Damned La Conner

Semiahmoo 1 Lot 26 Semiahmoo Plat Blaine

Lease Comparables

Job No. 14093

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Semiahmoo Plat

$0.00/sf

$0.50/sf

$1.00/sf

$1.50/sf

$2.00/sf

$2.50/sf

0sf

20,000sf

40,000sf

60,000sf

80,000sf

Rent/sf v. Lot Size

100,000sf

120,000sf

Power (Subject Wft 6.5%)

Expon. (Comps)

Subject Wft 5%

Subject Upland 6.5%

Subject Wft 6.5%

Comps

Job No. 14093

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Semiahmoo Plat

12 CBD Fringe 6.00%

11 Bellevue Fast Food 6.32%

10 Bonney Lake Fast Food 7.42%

9 Everett Fast Food 6.32%

8 Redmond 6.50%

7 Seattle CBD 6.50%

6 First Hill Med Office 7.21%

5 Seattle CBD Downtown 7.20%

4 Lynnwood Bank 5.25%

3 Woodinville Big Box 8.25%

2 Seattle So. Ind 6.50%

10.05%

10.01%

10.23%

7.94%

9.75%

10.05%

9.50%

($131.59) $8.32 $8.32 $8.32 $8.32 $9.56 $9.56 $9.56 $9.56 $9.56 $11.00 $11.00 $11.00 $11.00 $11.00 $12.65 $12.65 $12.65 $12.65 $12.65 $14.55 $14.55 $14.55 $14.55 $14.55 $16.73 $16.73 $16.73 $411

9.96%

($142.33) $10.56 $10.56 $10.56 $10.56 $10.56 $11.62 $11.62 $11.62 $11.62 $11.62 $12.78 $12.78 $12.78 $12.78 $12.78 $14.06 $14.06 $14.06 $14.06 $14.06 $15.46 $15.46 $15.46 $15.46 $15.46 $17.01 $427

9.88%

9.04%

1 Comp No. Location N King County Restaurant Use 6.25% Rental Rate

Internal Rate of Return (Over the life of the lease)

Year End

3.0%

4.0%

-11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 35 38 39 43 44 48 49 55 56 57 58 64 65 66 67 68 86 87 88 89 90 91 92 93 94

Historic CPI

Land Value Appreciation

$100

Land Value As of January 2003

Comparable Leases and Derived Internal Rates of Return

8.93%

No reset 52 years 9/14/2014 Cashflows

9.84%

No reset 52 years 9/14/2014 Cashflows

8.04%

($153.95) $7.70 $7.88 $8.06 $8.25 $8.45 $8.65 $8.85 $9.06 $9.31 $9.57 $9.83 $10.11 $10.39 $10.68 $10.98 $11.28 $11.60 $11.92 $12.28 $12.65 $13.02 $13.42 $13.82 $14.23 $14.66 $15.10 $15.55 $16.02 $16.50 $19.70 $21.53 $22.17 $24.96 $25.71 $28.93 $29.80 $35.58 $1,421

No reset 52 years 9/14/2014 Cashflows

CPI/yr

5.00% No options

CPI/yr

7.00% No options

CPI/yr

6.00% No options

Subject Wft Adjusted Semiahmoo Residence

Semiahmoo Residence

Subject Subject Market Range Semiahmoo Residence

Job No. 14093

REď ˇSOLVE

Semiahmoo Plat

Yield / IRR

10.05%

0% 2002

10%

12%

2004

8.47%

2010

Series5

2009

Comparables

2008

9.50%

Long-term Mortgage

2006

9.75% 10.05%

10.05%

PwC Yield Indicator

2005

7.94%

10.01%

10.23%

2012

9.96%

2013

8.93%

9.04%

2014

8.04%

9.84%

9.88%

10-Year Treasuries

Historic Yields & Market Comparables

2016

Subject Contract Rents The current rental rates for the subject properties appear below highlighted in yellow (provided by Mrs. Malone). Some lots have prepaid rent, others show nominal amounts of $300/year, and a few are at around $2,500 per year. The subleases all expire in September of 2026. The current lease amounts result in a significant leasehold advantage, but one that is short in duration. Current Rent Roll Lease Master

Lot 8 Lot 9 Lot 10 Lot 11 Lot 17

Name Malone

Morris Kozourek Blevins Lewis Rawlings Bridger Lachner Stenvall Hanacek

Orig Date Orig Term Term am. Sep-71 Sep-26 Sep-70 1981 1991 2001 2011 Jan-72

Sep-26

Aug-71

Sep-26

Jun-71

Purchase leasehold

Lump sum Amort ann up front contrib. Due ann

Staley Reichhardt

40% 40% 40% 40% None

None

$6,000

None

Sep-26

$8,750

None

Dec-71

Sep-26

$6,000

None

Aug-71

Sep-26

$3,000

Jul-73

Lot 21 Goodridge Aug-72 Landslide Halpin Lot 24 Ekstrom Aug-73

Vacant

$188

Sep-26

$3,000

$188

Sep-26 Sep-26

$8,000

Nov-79

Sep-26

1981 1991 2001 2011 2021

$652 $913 $1,278 $1,789 $2,505 $3,507

40% 40% 40% 40% 40%

$652 1981 1991 2001 2011 2021

$652 $912.80 $1,278 $1,789 $2,505 $3,507

40% 40% 40% 40% 40%

$300 $3,000

$188

projected Hanacek

Annual Rent

projected

Lot 32 Vacant

adj due to adj due to base rent cpi inc

$9,000

projected Lot 19

Adjusted $7,890 $11,043 $15,460 $21,644 $30,302

$5,000

$321

projected

Default

$2,504.73

Default

$2,504.73

None

$652 1981 1991 2001 2011 2021

$652 $912.80 $1,278 $1,789 $2,505 $3,507

$200 1981 1991 2001 2011 2021

$200 $280 $392 $549 $768 $1,076

40% 40% 40% 40% 40% 40% 40% 40% 40% 40%

$300.00 Default

$2,504.73

Default

$768.32

When base rent of master lease is adjusted, subleases are adjusted by the same percentage. No appraisals have been requested prior to this date. Calculation of annual rent in subsequent ten year periods is calculated by avg annual % inc in preceding 10-yr period, but capped at 40%. Old sublease language essentially defaulted to a 40% increase at ten year intervals, unless no increases at all were included in agreement due to prepaid rent.

While the contract rent creates a leasehold advantage, the remaining term of the lease is short, and the motivation to extend is significant, even at a significantly higher annual cost. An extension of the lease will alleviate the typical pressures that occur towards the end of a ground lease, these including: ď&#x201A;ˇ Capital investment considerations. When the typical amortization of a required capital investment exceeds the remaining lease term, and yet the capital expense is required to provide for continued utility, the tenant leasehold position suffers. Examples include new appliances, roofs, and heating systems.

38 Job No. 14093

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Semiahmoo Plat



Financing considerations. Typically conventional lenders will not entertain loans on leased land, when the remaining term of the loan is less than a typical loan amortization. Higher rates and shorter amortization requirements may apply.

Merged Rents – Blend of Market and Contract Under the current proposal, the lease extensions will though take into accounting the existing belowmarket lease situation, by merging the revised market rent calculation previously provided into the existing lease. The method of merging to the two situations is intended to preserve the present leasehold benefit; or put another way, to maintain the current leased fee valuation at its present level, while restructuring the lease to provide for an immediate rental increase, that then grows at the AACPI. Taking Lot 8 as an example, the fee simple value of the lot is $455,000. The market rent for this lease is forecast at $22,750/year, escalating at the AACPI annually, with an expected yield over 55 years of 8.04%. Presuming that same yield requirement on the current contract arrangement, which calls for no rent until the property reverts in 2026 at an expected 4% inflated value of $728,470, results in a leased fee interest value of $288,044. The leasehold benefit thus in place is around $166,956 ($455,000 less $288,044). Simply the leasehold benefit would translate into a rent reduction of around 5.0% of this figure annually (about $8,350 per year), as this is the rate of return, but actually it is a little higher than that, as the fee simple rate of return implicitly assumes a reversion, while there is none for the leasehold position. The method of calculation is to solve for the annual rent necessary to provide for a leased fee value of $288,044, but with an extended lease term. Allowing for the same reversionary interest in 2070 as the market rent calculation, the payments to the leased fee to provide for this conclusion start out at $13,281, rising at the AACPI annually. This is 4.6% of the leased fee value of $288,044, less than the 5.0% for the fee position, as proportionally more of the return comes from the reversion. The net benefit of the leasehold is then the fee simple rent of $22,750 less this figure, or about $9,469/year. In effect the market rent is reduced by around 42%, reflecting the value of the current contract in place. The resulting leased fee rent on total fee simple market value ($13,281/$455,000) is 2.92%. Note that the calculations here include no incentive fee for the landlord to extend the lease. In the market place we might expect to see a fee for providing an extension, and/or lease terms that provide for a greater incentive for the landlord to push off the reversionary interest for 50-years. Part of the incentive is of course found in the nearer term cash flow – about an additional $165,000 over the next 12-years - a time during which no income would be received under the current contract. But then the entirely of the property would revert. Obviously the merged market and contract terms strive to financially equalize these positions, but given the higher leverage possessed by the landlord during the final years of a ground lease, better than financially equivalent terms are typically demanded. Below, calculations for the other lots are provided. In most cases, the rent reduction – from market - is about half for the extended lease term.

39 Job No. 14093

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Semiahmoo Plat

Market Rent, Contract Rent, and Merged Cashflows

AACPI Escalators

2012 2022 2032 2042 2052 2062

Combined Rental Analysis

Assumptions Land Escalation Rate 4.0% AACPI See opposite Starting Market Rate 5.00% for waterfront lots 6.50% for upland lot

YE Date Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Sep-27 Sep-28 Sep-29 Sep-30 Sep-31 Sep-32 Sep-33 Sep-34 Sep-35 Sep-36 Sep-37 Sep-38 Sep-39 Sep-40 Sep-41 Sep-42 Sep-43 Sep-44 Sep-45 Sep-46 Sep-47 Sep-48 Sep-49 Sep-50 Sep-51 Sep-52 Sep-53 Sep-54 Sep-55 Sep-56 Sep-57 Sep-58 Sep-59 Sep-60 Sep-61 Sep-62 Sep-63 Sep-64 Sep-65 Sep-66 Sep-67 Sep-68 Sep-69 Sep-70 NPV IRR

2.35% 2.79% 3.00% 3.00% 3.00% 3.00%

Lot Market value Leased Fee LH Adv Lot Market value Leased Fee LH Adv Lot Market value Lot 8 $455,000 $288,044 $166,956 Lot 9 $460,000 $291,210 $168,790 Lot 10 $460,000 Rate 5.00% 2.92% on fee value Rate 5.00% 2.92% on fee value Rate 5.00% Land Value Market Contract Mkt-LH Adv Land Value Market Contract Mkt-LH Adv Land Value Market $455,000 ($455,000) ($288,044) ($288,044) $460,000 ($460,000) ($291,210) ($291,210) $460,000 ($460,000) $473,200 $22,750 $0 $13,281 $478,400 $23,000 $0 $13,427 $478,400 $23,000 $492,128 $23,285 $0 $13,593 $497,536 $23,540 $0 $13,742 $497,536 $23,540 $511,813 $23,832 $0 $13,912 $517,437 $24,094 $0 $14,065 $517,437 $24,094 $532,286 $24,392 $0 $14,239 $538,135 $24,660 $0 $14,396 $538,135 $24,660 $553,577 $24,965 $0 $14,574 $559,660 $25,239 $0 $14,734 $559,660 $25,239 $575,720 $25,552 $0 $14,916 $582,047 $25,832 $0 $15,080 $582,047 $25,832 $598,749 $26,152 $0 $15,267 $605,329 $26,439 $0 $15,435 $605,329 $26,439 $622,699 $26,767 $0 $15,626 $629,542 $27,061 $0 $15,797 $629,542 $27,061 $647,607 $27,512 $0 $16,061 $654,723 $27,814 $0 $16,237 $654,723 $27,814 $673,511 $28,278 $0 $16,508 $680,912 $28,589 $0 $16,690 $680,912 $28,589 $700,452 $29,066 $0 $16,968 $708,149 $29,385 $0 $17,154 $708,149 $29,385 $728,470 $29,875 $728,470 $17,441 $736,475 $30,204 $736,475 $17,632 $736,475 $30,204 $757,608 $30,708 $17,926 $765,934 $31,045 $18,123 $765,934 $31,045 $787,913 $31,563 $18,426 $796,571 $31,910 $18,628 $796,571 $31,910 $819,429 $32,442 $18,939 $828,434 $32,798 $19,147 $828,434 $32,798 $852,206 $33,346 $19,466 $861,571 $33,712 $19,680 $861,571 $33,712 $886,295 $34,274 $20,008 $896,034 $34,651 $20,228 $896,034 $34,651 $921,747 $35,229 $20,566 $931,876 $35,616 $20,792 $931,876 $35,616 $958,616 $36,286 $21,183 $969,151 $36,685 $21,416 $969,151 $36,685 $996,961 $37,374 $21,818 $1,007,917 $37,785 $22,058 $1,007,917 $37,785 $1,036,839 $38,496 $22,473 $1,048,233 $38,919 $22,720 $1,048,233 $38,919 $1,078,313 $39,650 $23,147 $1,090,163 $40,086 $23,401 $1,090,163 $40,086 $1,121,446 $40,840 $23,841 $1,133,769 $41,289 $24,103 $1,133,769 $41,289 $1,166,303 $42,065 $24,557 $1,179,120 $42,527 $24,827 $1,179,120 $42,527 $1,212,956 $43,327 $25,293 $1,226,285 $43,803 $25,571 $1,226,285 $43,803 $1,261,474 $44,627 $26,052 $1,275,336 $45,117 $26,338 $1,275,336 $45,117 $1,311,933 $45,966 $26,834 $1,326,350 $46,471 $27,129 $1,326,350 $46,471 $1,364,410 $47,345 $27,639 $1,379,404 $47,865 $27,942 $1,379,404 $47,865 $1,418,986 $48,765 $28,468 $1,434,580 $49,301 $28,781 $1,434,580 $49,301 $1,475,746 $50,228 $29,322 $1,491,963 $50,780 $29,644 $1,491,963 $50,780 $1,534,776 $51,735 $30,201 $1,551,641 $52,303 $30,533 $1,551,641 $52,303 $1,596,167 $53,287 $31,108 $1,613,707 $53,872 $31,449 $1,613,707 $53,872 $1,660,013 $54,886 $32,041 $1,678,255 $55,489 $32,393 $1,678,255 $55,489 $1,726,414 $56,532 $33,002 $1,745,386 $57,153 $33,365 $1,745,386 $57,153 $1,795,470 $58,228 $33,992 $1,815,201 $58,868 $34,366 $1,815,201 $58,868 $1,867,289 $59,975 $35,012 $1,887,809 $60,634 $35,397 $1,887,809 $60,634 $1,941,981 $61,774 $36,062 $1,963,321 $62,453 $36,459 $1,963,321 $62,453 $2,019,660 $63,627 $37,144 $2,041,854 $64,327 $37,552 $2,041,854 $64,327 $2,100,447 $65,536 $38,258 $2,123,528 $66,256 $38,679 $2,123,528 $66,256 $2,184,464 $67,502 $39,406 $2,208,469 $68,244 $39,839 $2,208,469 $68,244 $2,271,843 $69,527 $40,588 $2,296,808 $70,291 $41,034 $2,296,808 $70,291 $2,362,717 $71,613 $41,806 $2,388,681 $72,400 $42,265 $2,388,681 $72,400 $2,457,225 $73,762 $43,060 $2,484,228 $74,572 $43,533 $2,484,228 $74,572 $2,555,514 $75,974 $44,352 $2,583,597 $76,809 $44,839 $2,583,597 $76,809 $2,657,735 $78,254 $45,682 $2,686,941 $79,114 $46,185 $2,686,941 $79,114 $2,764,044 $80,601 $47,053 $2,794,418 $81,487 $47,570 $2,794,418 $81,487 $2,874,606 $83,019 $48,465 $2,906,195 $83,932 $48,997 $2,906,195 $83,932 $2,989,590 $85,510 $49,918 $3,022,443 $86,450 $50,467 $3,022,443 $86,450 $3,109,174 $88,075 $51,416 $3,143,341 $89,043 $51,981 $3,143,341 $89,043 $3,233,541 $90,717 $52,959 $3,269,074 $91,714 $53,541 $3,269,074 $91,714 $3,362,883 $93,439 $54,547 $3,399,837 $94,466 $55,147 $3,399,837 $94,466 $3,497,398 $96,242 $56,184 $3,535,831 $97,300 $56,801 $3,535,831 $97,300 $3,637,294 $99,129 $57,869 $3,677,264 $100,219 $58,505 $3,677,264 $100,219 $3,782,786 $102,103 $59,605 $3,824,355 $103,225 $60,260 $3,824,355 $103,225 $3,934,097 $105,166 $61,393 $3,977,329 $106,322 $62,068 $3,977,329 $106,322 $4,091,461 $4,199,782 $4,154,696 $4,136,422 $4,245,934 $4,200,352 $4,136,422 $4,245,934 $455,000 $288,044 $288,044 $460,000 $291,210 $291,210 $460,000 8.04% 8.04% 8.04% 8.04% 8.04% 8.04% 8.04%

Leased Fee LH Adv $291,210 $168,790 2.92% on fee value Contract Mkt-LH Adv ($291,210) ($291,210) $0 $13,427 $0 $13,742 $0 $14,065 $0 $14,396 $0 $14,734 $0 $15,080 $0 $15,435 $0 $15,797 $0 $16,237 $0 $16,690 $0 $17,154 $736,475 $17,632 $18,123 $18,628 $19,147 $19,680 $20,228 $20,792 $21,416 $22,058 $22,720 $23,401 $24,103 $24,827 $25,571 $26,338 $27,129 $27,942 $28,781 $29,644 $30,533 $31,449 $32,393 $33,365 $34,366 $35,397 $36,459 $37,552 $38,679 $39,839 $41,034 $42,265 $43,533 $44,839 $46,185 $47,570 $48,997 $50,467 $51,981 $53,541 $55,147 $56,801 $58,505 $60,260 $62,068 $4,200,352 $291,210 $291,210 8.04% 8.04%

40 Job No. 14093

REď ˇSOLVE

Semiahmoo Plat

Lot Market value Leased Fee LH Adv Lot Market value Leased Fee LH Adv Lot 11 $455,000 $288,044 $166,956 Lot 17 $450,000 $306,626 $143,374 Rate 5.00% 2.92% on fee value Rate 5.00% 3.19% on fee value Land Value Market Contract Mkt-LH Adv Land Value Market Contract Mkt-LH Adv $455,000 ($455,000) ($288,044) ($288,044) $450,000 ($450,000) ($306,626) ($306,626) $473,200 $22,750 $0 $13,281 $468,000 $22,500 $2,505 $14,368 $492,128 $23,285 $0 $13,593 $486,720 $23,029 $2,505 $14,706 $511,813 $23,832 $0 $13,912 $506,189 $23,570 $2,505 $15,052 $532,286 $24,392 $0 $14,239 $526,436 $24,124 $2,505 $15,405 $553,577 $24,965 $0 $14,574 $547,494 $24,691 $2,505 $15,767 $575,720 $25,552 $0 $14,916 $569,394 $25,271 $2,505 $16,138 $598,749 $26,152 $0 $15,267 $592,169 $25,865 $3,507 $16,517 $622,699 $26,767 $0 $15,626 $615,856 $26,472 $3,507 $16,905 $647,607 $27,512 $0 $16,061 $640,490 $27,210 $3,507 $17,376 $673,511 $28,278 $0 $16,508 $666,110 $27,968 $3,507 $17,860 $700,452 $29,066 $0 $16,968 $692,754 $28,747 $3,507 $18,357 $728,470 $29,875 $728,470 $17,441 $720,464 $29,547 $723,971 $18,869 $757,608 $30,708 $17,926 $749,283 $30,370 $19,394 $787,913 $31,563 $18,426 $779,254 $31,216 $19,934 $819,429 $32,442 $18,939 $810,425 $32,085 $20,490 $852,206 $33,346 $19,466 $842,842 $32,979 $21,060 $886,295 $34,274 $20,008 $876,555 $33,898 $21,647 $921,747 $35,229 $20,566 $911,617 $34,842 $22,250 $958,616 $36,286 $21,183 $948,082 $35,887 $22,917 $996,961 $37,374 $21,818 $986,005 $36,964 $23,605 $1,036,839 $38,496 $22,473 $1,025,446 $38,073 $24,313 $1,078,313 $39,650 $23,147 $1,066,463 $39,215 $25,042 $1,121,446 $40,840 $23,841 $1,109,122 $40,391 $25,794 $1,166,303 $42,065 $24,557 $1,153,487 $41,603 $26,567 $1,212,956 $43,327 $25,293 $1,199,626 $42,851 $27,364 $1,261,474 $44,627 $26,052 $1,247,611 $44,137 $28,185 $1,311,933 $45,966 $26,834 $1,297,516 $45,461 $29,031 $1,364,410 $47,345 $27,639 $1,349,416 $46,824 $29,902 $1,418,986 $48,765 $28,468 $1,403,393 $48,229 $30,799 $1,475,746 $50,228 $29,322 $1,459,529 $49,676 $31,723 $1,534,776 $51,735 $30,201 $1,517,910 $51,166 $32,674 $1,596,167 $53,287 $31,108 $1,578,626 $52,701 $33,655 $1,660,013 $54,886 $32,041 $1,641,771 $54,282 $34,664 $1,726,414 $56,532 $33,002 $1,707,442 $55,911 $35,704 $1,795,470 $58,228 $33,992 $1,775,740 $57,588 $36,775 $1,867,289 $59,975 $35,012 $1,846,770 $59,316 $37,879 $1,941,981 $61,774 $36,062 $1,920,640 $61,095 $39,015 $2,019,660 $63,627 $37,144 $1,997,466 $62,928 $40,186 $2,100,447 $65,536 $38,258 $2,077,365 $64,816 $41,391 $2,184,464 $67,502 $39,406 $2,160,459 $66,760 $42,633 $2,271,843 $69,527 $40,588 $2,246,878 $68,763 $43,912 $2,362,717 $71,613 $41,806 $2,336,753 $70,826 $45,229 $2,457,225 $73,762 $43,060 $2,430,223 $72,951 $46,586 $2,555,514 $75,974 $44,352 $2,527,432 $75,140 $47,984 $2,657,735 $78,254 $45,682 $2,628,529 $77,394 $49,423 $2,764,044 $80,601 $47,053 $2,733,670 $79,716 $50,906 $2,874,606 $83,019 $48,465 $2,843,017 $82,107 $52,433 $2,989,590 $85,510 $49,918 $2,956,738 $84,570 $54,006 $3,109,174 $88,075 $51,416 $3,075,007 $87,107 $55,626 $3,233,541 $90,717 $52,959 $3,198,008 $89,721 $57,295 $3,362,883 $93,439 $54,547 $3,325,928 $92,412 $59,014 $3,497,398 $96,242 $56,184 $3,458,965 $95,185 $60,784 $3,637,294 $99,129 $57,869 $3,597,324 $98,040 $62,608 $3,782,786 $102,103 $59,605 $3,741,216 $100,981 $64,486 $3,934,097 $105,166 $61,393 $3,890,865 $104,011 $66,421 $4,091,461 $4,199,782 $4,154,696 $4,046,500 $4,153,631 $4,114,913 $455,000 $288,044 $288,044 $450,000 $306,626 $306,626 8.04% 8.04% 8.04% 8.04% 8.04% 8.04%

Lot Market value Leased Fee LH Adv Lot 19 $450,000 $306,626 $143,374 Rate 5.00% 3.19% on fee value Land Value Market Contract Mkt-LH Adv $450,000 ($450,000) ($306,626) ($306,626) $468,000 $22,500 $2,505 $14,368 $486,720 $23,029 $2,505 $14,706 $506,189 $23,570 $2,505 $15,052 $526,436 $24,124 $2,505 $15,405 $547,494 $24,691 $2,505 $15,767 $569,394 $25,271 $2,505 $16,138 $592,169 $25,865 $3,507 $16,517 $615,856 $26,472 $3,507 $16,905 $640,490 $27,210 $3,507 $17,376 $666,110 $27,968 $3,507 $17,860 $692,754 $28,747 $3,507 $18,357 $720,464 $29,547 $723,971 $18,869 $749,283 $30,370 $19,394 $779,254 $31,216 $19,934 $810,425 $32,085 $20,490 $842,842 $32,979 $21,060 $876,555 $33,898 $21,647 $911,617 $34,842 $22,250 $948,082 $35,887 $22,917 $986,005 $36,964 $23,605 $1,025,446 $38,073 $24,313 $1,066,463 $39,215 $25,042 $1,109,122 $40,391 $25,794 $1,153,487 $41,603 $26,567 $1,199,626 $42,851 $27,364 $1,247,611 $44,137 $28,185 $1,297,516 $45,461 $29,031 $1,349,416 $46,824 $29,902 $1,403,393 $48,229 $30,799 $1,459,529 $49,676 $31,723 $1,517,910 $51,166 $32,674 $1,578,626 $52,701 $33,655 $1,641,771 $54,282 $34,664 $1,707,442 $55,911 $35,704 $1,775,740 $57,588 $36,775 $1,846,770 $59,316 $37,879 $1,920,640 $61,095 $39,015 $1,997,466 $62,928 $40,186 $2,077,365 $64,816 $41,391 $2,160,459 $66,760 $42,633 $2,246,878 $68,763 $43,912 $2,336,753 $70,826 $45,229 $2,430,223 $72,951 $46,586 $2,527,432 $75,140 $47,984 $2,628,529 $77,394 $49,423 $2,733,670 $79,716 $50,906 $2,843,017 $82,107 $52,433 $2,956,738 $84,570 $54,006 $3,075,007 $87,107 $55,626 $3,198,008 $89,721 $57,295 $3,325,928 $92,412 $59,014 $3,458,965 $95,185 $60,784 $3,597,324 $98,040 $62,608 $3,741,216 $100,981 $64,486 $3,890,865 $104,011 $66,421 $4,046,500 $4,153,631 $4,114,913 $450,000 $306,626 $306,626 8.04% 8.04% 8.04%

41 Job No. 14093

REď ˇSOLVE

Semiahmoo Plat

Lot Market value Leased Fee LH Adv Lot Market value Leased Fee LH Adv Lot 21 $376,000 $240,289 $135,711 Lot 24 $465,000 $316,122 $148,878 Rate 5.00% 2.95% on fee value Rate 5.00% 3.18% on fee value Land Value Market Contract Mkt-LH Adv Land Value Market Contract Mkt-LH Adv $376,000 ($376,000) ($240,289) ($240,289) $465,000 ($465,000) ($316,122) ($316,122) $391,040 $18,800 $300 $11,103 $483,600 $23,250 $2,505 $14,806 $406,682 $19,242 $300 $11,364 $502,944 $23,796 $2,505 $15,154 $422,949 $19,694 $300 $11,631 $523,062 $24,356 $2,505 $15,510 $439,867 $20,157 $300 $11,904 $543,984 $24,928 $2,505 $15,875 $457,461 $20,630 $300 $12,184 $565,744 $25,514 $2,505 $16,248 $475,760 $21,115 $300 $12,470 $588,373 $26,113 $2,505 $16,630 $494,790 $21,611 $300 $12,763 $611,908 $26,727 $3,507 $17,020 $514,582 $22,119 $300 $13,063 $636,385 $27,355 $3,507 $17,420 $535,165 $22,735 $300 $13,427 $661,840 $28,117 $3,507 $17,905 $556,572 $23,368 $300 $13,801 $688,314 $28,900 $3,507 $18,404 $578,835 $24,019 $300 $14,185 $715,846 $29,705 $3,507 $18,917 $601,988 $24,688 $602,288 $14,581 $744,480 $30,532 $747,987 $19,444 $626,068 $25,376 $14,987 $774,259 $31,382 $19,985 $651,110 $26,083 $15,404 $805,230 $32,257 $20,542 $677,155 $26,809 $15,833 $837,439 $33,155 $21,114 $704,241 $27,556 $16,274 $870,936 $34,078 $21,702 $732,411 $28,323 $16,727 $905,774 $35,028 $22,306 $761,707 $29,112 $17,193 $942,005 $36,003 $22,928 $792,175 $29,986 $17,709 $979,685 $37,083 $23,616 $823,862 $30,885 $18,240 $1,018,872 $38,196 $24,324 $856,817 $31,812 $18,787 $1,059,627 $39,342 $25,054 $891,089 $32,766 $19,351 $1,102,012 $40,522 $25,805 $926,733 $33,749 $19,932 $1,146,093 $41,738 $26,580 $963,802 $34,762 $20,530 $1,191,936 $42,990 $27,377 $1,002,354 $35,804 $21,145 $1,239,614 $44,279 $28,198 $1,042,449 $36,879 $21,780 $1,289,198 $45,608 $29,044 $1,084,147 $37,985 $22,433 $1,340,766 $46,976 $29,916 $1,127,512 $39,124 $23,106 $1,394,397 $48,385 $30,813 $1,172,613 $40,298 $23,799 $1,450,173 $49,837 $31,737 $1,219,517 $41,507 $24,513 $1,508,180 $51,332 $32,689 $1,268,298 $42,752 $25,249 $1,568,507 $52,872 $33,670 $1,319,030 $44,035 $26,006 $1,631,247 $54,458 $34,680 $1,371,791 $45,356 $26,786 $1,696,497 $56,092 $35,721 $1,426,663 $46,717 $27,590 $1,764,357 $57,775 $36,792 $1,483,729 $48,118 $28,418 $1,834,931 $59,508 $37,896 $1,543,079 $49,562 $29,270 $1,908,329 $61,293 $39,033 $1,604,802 $51,049 $30,148 $1,984,662 $63,132 $40,204 $1,668,994 $52,580 $31,053 $2,064,048 $65,026 $41,410 $1,735,754 $54,157 $31,984 $2,146,610 $66,977 $42,652 $1,805,184 $55,782 $32,944 $2,232,475 $68,986 $43,932 $1,877,391 $57,456 $33,932 $2,321,774 $71,055 $45,250 $1,952,487 $59,179 $34,950 $2,414,645 $73,187 $46,607 $2,030,586 $60,955 $35,999 $2,511,230 $75,383 $48,006 $2,111,810 $62,783 $37,079 $2,611,680 $77,644 $49,446 $2,196,282 $64,667 $38,191 $2,716,147 $79,974 $50,929 $2,284,133 $66,607 $39,337 $2,824,793 $82,373 $52,457 $2,375,499 $68,605 $40,517 $2,937,784 $84,844 $54,031 $2,470,519 $70,663 $41,732 $3,055,296 $87,389 $55,652 $2,569,339 $72,783 $42,984 $3,177,507 $90,011 $57,321 $2,672,113 $74,966 $44,274 $3,304,608 $92,711 $59,041 $2,778,997 $77,215 $45,602 $3,436,792 $95,493 $60,812 $2,890,157 $79,532 $46,970 $3,574,264 $98,357 $62,636 $3,005,764 $81,918 $48,379 $3,717,234 $101,308 $64,516 $3,125,994 $84,375 $49,831 $3,865,924 $104,347 $66,451 $3,251,034 $86,907 $51,326 $4,020,561 $107,478 $68,445 $3,381,075 $3,470,589 $3,433,941 $4,181,383 $4,292,085 $4,251,881 $376,000 $240,289 $240,289 $465,000 $316,122 $316,122 8.04% 8.04% 8.04% 8.04% 8.04% 8.04%

Lot Market value Lot 32 $150,000 Rate 6.50% Land Value Market $150,000 ($150,000) $156,000 $9,750 $162,240 $9,979 $168,730 $10,214 $175,479 $10,454 $182,498 $10,699 $189,798 $10,951 $197,390 $11,208 $205,285 $11,471 $213,497 $11,791 $222,037 $12,119 $230,918 $12,457 $240,155 $12,804 $249,761 $13,160 $259,751 $13,527 $270,142 $13,904 $280,947 $14,291 $292,185 $14,689 $303,872 $15,098 $316,027 $15,551 $328,668 $16,018 $341,815 $16,498 $355,488 $16,993 $369,707 $17,503 $384,496 $18,028 $399,875 $18,569 $415,870 $19,126 $432,505 $19,700 $449,805 $20,291 $467,798 $20,899 $486,510 $21,526 $505,970 $22,172 $526,209 $22,837 $547,257 $23,522 $569,147 $24,228 $591,913 $24,955 $615,590 $25,704 $640,213 $26,475 $665,822 $27,269 $692,455 $28,087 $720,153 $28,930 $748,959 $29,797 $778,918 $30,691 $810,074 $31,612 $842,477 $32,560 $876,176 $33,537 $911,223 $34,543 $947,672 $35,580 $985,579 $36,647 $1,025,002 $37,746 $1,066,003 $38,879 $1,108,643 $40,045 $1,152,988 $41,247 $1,199,108 $42,484 $1,247,072 $43,759 $1,296,955 $45,071 $1,348,833 $1,395,257 $150,000 9.38%

Leased Fee LH Adv $88,056 $61,944 3.65% on fee value Contract Mkt-LH Adv ($88,056) ($88,056) $768 $5,470 $768 $5,599 $768 $5,730 $768 $5,865 $768 $6,003 $768 $6,144 $1,076 $6,288 $1,076 $6,436 $1,076 $6,615 $1,076 $6,799 $1,076 $6,989 $241,230 $7,183 $7,383 $7,589 $7,800 $8,018 $8,241 $8,471 $8,725 $8,986 $9,256 $9,534 $9,820 $10,114 $10,418 $10,730 $11,052 $11,384 $11,725 $12,077 $12,439 $12,812 $13,197 $13,593 $14,001 $14,421 $14,853 $15,299 $15,758 $16,230 $16,717 $17,219 $17,735 $18,267 $18,816 $19,380 $19,961 $20,560 $21,177 $21,812 $22,467 $23,141 $23,835 $24,550 $25,286 $1,374,878 $88,056 $88,056 9.38% 9.38%

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FINAL VALUE ESTIMATE Conclusion This appraisal has resulted in the following conclusions of market value, market rent, and a “merged rent” based on a preservation of the leasehold and leased fee values, but applied to an extended lease structure. Lot # Market Value Land Rate Lot 8 $455,000 5.00% Lot 9 $460,000 5.00% Lot 10 $460,000 5.00% Lot 11 $455,000 5.00% Lot 17 $450,000 5.00% Lot 19 $450,000 5.00% Lot 21 $376,000 5.00% Lot 24 $465,000 5.00% Lot 32 $150,000 6.50% Annual Average CPI Until 2022 Projected 2022 to 2032 Annual Projection thereafter

Market Rent $22,750 $23,000 $23,000 $22,750 $22,500 $22,500 $18,800 $23,250 $9,750

Contract $0 $0 $0 $0 $2,505 $2,505 $300 $2,505 $768

Blended $13,281 $13,427 $13,427 $13,281 $14,368 $14,368 $11,103 $14,806 $5,470 2.35%/yr 2.79%/yr 3.00%/yr

Rate on Mkt 2.92% 2.92% 2.92% 2.92% 3.19% 3.19% 2.95% 3.18% 3.65%

Discussion The lower rates of return applied to the more valuable lots is a function of the investment required to support a lot value of this level (typically more than a summer or second home, or modest retirement home), and thus the thin rental market for such properties, balanced with the need for the landlord to achieve a minimum return (forecast at an 8% yield) in order to incentivize the extension. In our opinion this is a minimum acceptable rent given the value of the property leased, irrespective of the thin rental market for land of this caliber. The higher rate of return forecast for the upland lot reflects the more favorable leasing opportunity.

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ADDENDUM

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Contract

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Appraiser’s Qualifications

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Real Estate Appraisal, Counseling & Mediation ANTHONY GIBBONS, MAI, CRE Mr. Gibbons graduated from King's College, University of London with a Bachelor Degree in Geography in July 1982. He graduated top of his Geography class, with a First Class Honors degree, and a diploma in Religion and Medical Ethics. At University, Mr. Gibbons was awarded the 1980 Barry Prize for top score in his class for Religion/Medical Ethics finals; the 1981 Leathes Prize for second highest score in Religion/Medical Ethics finals; the Stamford Geographical Prize in 1981 for the most promising geography student; and the Geoid Prize, also in 1981, by the London School of Economics–King's College Joint School of Geography Association for his work on behalf of the Association. Mr. Gibbons entered private appraisal practice with the firm of Shorett & Riely in January of 1983 and formed the company of Wronsky Gibbons & Riely in December 1994. With his partners retiring in 1998 and 1999, in July of 1999 Mr. Gibbons formed RESOLVE – a company providing real estate appraisal, counseling, mediation and arbitration services. Completed American Institute of Real Estate Appraisers Courses 1A-1, Real Estate Principles and 1A-2, Basic Valuation Procedures in May of 1983. Completed Courses 1B-A and 1B-B, Capitalization Theory & Techniques in June of 1984. Completed Course 2-1, Case Studies in Real Estate Valuation, and 2-2, Valuation Analysis and Report Writing in March of 1985. Completed Course 2-3, Standards of Professional Practice, in April of 1986. Received credit for Demonstration Appraisal Report in August of 1987, and a passing grade on the Comprehensive Examination in September of 1987. Awarded the MAI designation by the American Institute of Real Estate Appraisers (AIREA) on June 14, 1988, Member Number 7857. Mr. Gibbons was elected President of the Seattle Chapter, in 1999, and served on the Chapter Board for eight years. He is past Chairman of the local chapter Education Committee, and currently a Regional Member for the Counseling and Ethics Administration Division of the Appraisal Institute. As of the date of this report, Mr. Gibbons has completed the requirements of the continuing education program of the Appraisal Institute, and is certified through 12/31/2017. He is licensed as a certified real estate appraiser, general classification, by the State of Washington, license no. 1100854. Mr. Gibbons was invited to join The Counselors of Real Estate in December of 1997. Membership in the Counselors is by invitation based on an individual’s reputation for knowledge, integrity, experience and judgment in rendering advice on real estate matters. The approximate 1,000 or so individuals holding the CRE designation have pledged to maintain the highest standards of professional conduct and service in the field of real estate counseling. Mr. Gibbons is past President of the Pacific Northwest Chapter of the Counselors of Real Estate. Mr. Gibbons has participated as faculty in Washington State Bar Association and Law Seminars International seminar offerings. He is an instructor for the University of Washington’s Certificate Program in Real Estate, and has taught in the lecture series for the years 2001 through 2009. Mr. Gibbons was also the lead instructor for the University of Washington’s (Tacoma) Certificate Program in Real Estate for 2006 to 2009.

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A partial list of clients follows: Prudential Insurance Company Teachers Insurance & Annuity Association Equitable Real Estate Citicorp Key Bank Bank of America Washington Mutual Savings Bank Wells Fargo Bank First Bank of Alaska Allied Shopping Centers, Northwest Cadillac Fairview US Western Region Sabey Corporation Pope Resources Urbis Partners Seattle Marina, Inc. Kennedy Associates Bellevue Square Managers, Inc. Ocean Crest Resort The Boeing Company Weyerhaeuser Company Weyerhaeuser Venture Co. Washington Transit Authority Pfizer, Inc. King County Pierce County Kitsap County Snohomish County Thurston County Mason County Lawyers Title First American Title Commonwealth Title Pacific Northwest Title Chicago Title Fidelity Title (National Law Group United States Postal Service Federal Deposit Insurance Corporation Pine Street Development Vulcan

Wright Runstad & Company NANA Development Corporation Swedish Hospital Medical Center Group Health Fred Hutchinson Cancer Research Center Cairncross & Hempelmann K&L Gates Tousley Brain Stephens Foster, Pepper & Shefelman Witherspoon, Kelley, Davenport & Toole Hornsby & Whisenand Culp Guterson & Grader Williams, Kastner & Gibbs Riddell Williams Bullitt & Walkinshaw Davis Wright Tremaine Lane Powell Spears Lubersky Perkins Coie Miller Nash Heller Ehrman Rodgers Deutsch & Turner University of Washington Seattle Pacific University Bainbridge Island School District Mercer Island School District Bellevue School District City of Seattle City of Kirkland City of Bainbridge Island City of Woodinville Washington State Liquor Board Washington State Department of Transportation Washington State Dept of Natural Resources Port of Seattle Port of Grays Harbor Port of Everett Port of Olympia Port of Allyn Port of Shelton Port of Edmonds

Court Experience: King Co., Washington Superior Court Snohomish Co., Washington Superior Court Pierce Co., Washington Superior Court Kitsap County Superior Court Skagit County Superior Court Federal Court US Bankruptcy Court

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Real Estate Appraisal, Counseling & Mediation July 23, 2014

EXPERT TESTIMONY

ANTHONY GIBBONS, MAI, CRE Mr. Gibbons has provided testimony in the following cases (4+-year history). Those cases in bold involved actual court or arbitration testimony. Italicized entries went to the deposition stage. Date

2014 2014 2013 2012 2012 2012 2012 2012 2012 2012 2012 2011 2011 2011 2011 2011 2011 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2008 2008 2008 2008-10 2008 2008 2007

Proceeding

Key Development v. Port of Tacoma Bellevue v. Galpin Overlake Farm Partition Action James v. James First Citizens v. Buchan Polygon v. Syre Pierce Co. v. Shepard of the Hill First Citizens v. Reed et al MRA v. MILP – sup court Capmark v. GM Pine Street Garage Fisher et al v. WSDOT – sup court Berch v. Berkman - arbitration OPUD v. WA State DNR Banchero v. Banchero Zema v. Ehling – arbitration WSDOT v. Cocusa – sup court BPCLP v. BP Tower COA Monteiff v. Herbrand – sup court KCPHD#4 v. MHC LTRA HTK adv. Ampco - arbitration Olson v. Hirji Snohomish County v. Duane Smith Hogan v. Borders – sup court Hogan v. Key Bank White v. First American - arbitration Seattle v. Eitel - hearing ST v. Broadway Investments ST v. Bonney Watson Seattle v. Bon Stables - hearing MDA v. George Scott – sup court Trinity vs. Port of Tacoma Seattle v. T&L Enterprises First American v. River Bend LLC Snohomish County v. YG3 Doherty v. Sissons - arbitration WSDOT v. Suelo Marina WSDOT v. Clark Jefferson Square v. Seattle School District Kitsap PUD v Orr Struthers/Otrubova v. Seattle Frank v. Seattle Woodinville v. Hollywood Vineyards - sc Pierce Transit v Schuh Miller Shingle v. MAP Swinomish Tribe Rental Arbitration - arb

Client

Baetz Lamka Clark (for Key) Rodgers Deutsch & Turner (Galpin) Socius Law Group Gordon Wilcox (Carol James) Tousley Brain Stephens (Buchan) Hall Zanzig et al (Syre) Pierce County Dorsey & Whitney Ryan Swanson Crocker Law Schwabe Williamson (for Fisher) Berkman State AG’s office Scruggs & Mackin Savitt, Bruce & Willey (for Ehling) Cairncross & Hempelmann (for Cocusa) Tousley Brain Stephens (for BPTCOA) Groth Murphy (for Herbrand) Foster Pepper (for Hospital District) Hillis Clarke (for HTK) Marten Law (for Hirji) Williams Kastner (for Smith) Vandeberg Johnson (Hogan) Vandeberg Johnson (Hogan) Socius Law Group (First American) Schwabe Williamson (Eitel) Williams & Williams (Broadway) Richard Bersin (Bonney Watson) Gordon Durr (Bon Stables) Jameson Babbitt (Scott) Hall Baetz (for Trinity) Williams Kastner (for T&L) Stoel Rives (for First American) Lane Powell (for YG3) Martin Ziontz (for Sissons) State AG’s office State AG’s office Kipling Law Group (for SSD) Waldo (for Orr) Savitt & Bruce (Seattle) Seattle Hollywood Vineyards K&L Gates (Pierce Co. Transit) Brewe Layman (for MAP) Graham & Dunn (for Tribe)

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Real Estate Appraisal, Counseling & Mediation

ARBITRATION AND MEDIATION SERVICES _________________________ ANTHONY GIBBONS, MAI, CRE Mr. Gibbons has been involved in real estate appraisal and counseling in the Puget Sound area for 20 years. He became a member of the American Institute of Real Estate Appraisers (MAI) in 1988, and was invited to join the Counselors of Real Estate (CRE) in December of 1997. In the local chapter of the Appraisal Institute, serving most of western Washington, he served as education chairman for a number of years, and pioneered a series of special educational offerings and seminars for his chapter. As a result of this work, the Chapter awarded him a plaque for “outstanding leadership and services given towards professional advancement”. He has continued to work for the professional advancement of the Appraisal Institute in his capacities as a chapter board member, Secretary, Treasurer, and Vice-President. In 1999, he was elected to the office of President. In a regional capacity, he has served as an assistant regional chair, and regional member for the Review and Counseling Division of the Institute, and in 1997 was appointed to the post of Regional Member, Region 1, Ethics and Counseling Division. With the recognition of his peers, Mr. Gibbons is often requested to perform real estate counseling services in connection with real property valuation disputes. This arbitration and mediation work has included the following work:                        

Arbitrator for purchase option; north Seattle Industrial Land - Jointly retained by both parties Arbitrator for professional office space, Downtown Seattle - Jointly retained by both parties Arbitrator for anchor tenant in Downtown High-rise Arbitrator for Downtown Restaurant – market rental determination Arbitrator for Suburban Office Building, single tenant lease renewal. Arbitrator for Parking Rental Dispute for Downtown Garage - Jointly retained by both parties Arbitrator for hotel ground lease revaluation - Jointly retained by both parties Arbitrator for School District Lease – Shopping Center ground lease revaluation - Jointly retained by both parties 1,000 acre lease negotiation between the Boeing Company and the Tulalip Tribe Jointly retained third Mediator/Arbitrator for King County Airport/Boeing Rental dispute involving over 100 acres of airport property - Jointly retained by both parties Valuation testimony in front of an IRS Hearings Officer on behalf of a property owner Arbitrator for Seattle Packaging on purchase option Market and rental valuation arbitration on a specialized manufacturing building Value Resolution for the Navy and City of Seattle – Jointly retained by both parties Value resolution for DNR and the Shoreline Water District - Jointly retained by both parties Ground lease rental rate arbitration for a golf and country club - Jointly retained by both parties Value resolution for Department of Natural Resources (DNR) and City of Seattle - Jointly retained by both parties Arbitration between DNR and City of Seattle Value resolution for attorneys for First Interstate Bank and a trust - Jointly retained by both parties Value resolution for DNR and the Bainbridge Island Parks and Recreation District - Jointly retained by both parties Purchase option arbitration for a log yard depot in Port Townsend - Jointly retained by both parties Value resolution for US Fish and Wildlife and the Port of Grays Harbor - Jointly retained by both parties Rental rate resolution for King County and Manson Construction - Jointly retained by both parties Mediation assistance for Washington State versus a condemnee

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                                      

Mediation assistance for a professional mediator (former superior court judge) in a rental dispute - Jointly retained by both parties Mediation assistance for a condemnee with the Port of Seattle Mediation assistance for market rent dispute concerning over 300,000sf of office space Arbitrator for joint venture buyout on downtown office building Arbitration for market rental clause concerning 1.5 floors of downtown office space Expert for rental rate dispute for 5 floors of downtown office space Third Arbitrator for the Oxbow site in South Seattle - Jointly retained by both parties Arbitration expert for claim of damages in regard to a shopping center site. Mediation expert for 15-acre site proximate to Seattle CBD Market valuation of superfund site for property trustee and municipal buyer - Jointly retained by both parties Arbitrator for ground lease renewal rent for Seattle industrial site. Jointly retained by both parties Arbitrator for lease option buyout clause for auto sales service. Jointly retained by both parties Arbitrator for Jack-in-the-Box lease renewal. Mediator for rental rate adjustment for industrial waterfront property. Arbitrator for industrial site rental rate determination. Arbitrator for market rent adjustment on truck terminal with parking rights. Arbitrator for leasehold purchase option right in commercial shopping center. Jointly retained by both parties Arbitrator for market rent adjustment in professional suite, Seattle CBD. Jointly retained by both parties. Arbitrator for shopping center site, ground lease rental adjustment. Arbitrator for market rental adjustment for downtown office space. Jointly retained by both parties. Arbitrator for market rental adjustment for medical clinic space on First Hill. Jointly retained by both parties. Arbitrator for partnership dissolution on HUD apartment project, Seattle. Third arbitrator, jointly retained. Arbitrator for parking market rate determination, Seattle. Sole arbitrator, jointly retained by both parties. Appraiser for WSDOT and Property owner re condemnation valuation. Jointly retained by both parties. Arbitrator for downtown super-block rental dispute: ground rent determination. Arbitrator for downtown restaurant market rental adjustment. Jointly retained by both parties. Arbitrator for suburban restaurant market rental adjustment. Jointly retained by both parties. Arbitrator for partnership dissolution on HUD apartment project, Seattle. Third arbitrator, jointly retained. Arbitrator for branch bank ground lease, Redmond. Third arbitrator, jointly retained. Arbitrator for specialized industrial property, ground lease. Third arbitrator, jointly retained. Arbitrator for rent diminution clause for retail property. Arbitrator for ground rent determination, downtown tavern. Appointed by court. Arbitrator for three separate airport properties, ground leases. Third arbitrator, jointly retained. Arbitrator for branch bank ground lease, Kirkland. Third arbitrator, jointly retained. Expert for ground lease arbitration for downtown property. Arbitrator for ground rent renewal for supermarket. Arbitrator for ground rent renewal for cinema pad in shopping center Arbitrator for suburban restaurant Market Rent Adjustment. Third arbitrator, jointly retained. Arbitrator for commercial marine waterfront land. Third arbitrator, jointly retained.

In over half of the above cases cited, Mr. Gibbons was selected as the third or sole arbitrator, mediator or expert, hired jointly by both parties to help resolve the value or rental dispute.

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PUBLICATIONS, SEMINARS & EDUCATIONAL LECTURES ____________________________________________________________________________ ANTHONY GIBBONS, MAI, CRE Publications Mr. Gibbons has authored the following publications: 

2001 update to Chapter 50, "Real Estate Appraisal", of the Washington Real Property Desk book published by the Washington State Bar Association.



Seattle Office Market Analysis, published by the Downtown Seattle Association, for the years: o 2004 o 2005 o 2006 o 2007 o 2008 o 2009 o 2010



2008 and prospective 2014 update to Chapter 50, "Real Estate Appraisal", of the Washington Real Property Desk book published by the Washington State Bar Association.

Seminars & Lectures He is a frequent speaker for Law Seminars International, and has spoken in the following lecture series:  Commercial Leases  Real Estate Purchases and Sales  Eminent Domain Mr. Gibbons has participated as faculty in Washington State Bar Association Seminars:  2001 “Condemnations/Takings” Seminar  2006 Seminar on the “Arbitration of a Real Estate Case” University Course Instructor Mr. Gibbons is an instructor for the University of Washington’s Certificate Program in Real Estate, and has taught in the lecture series for the years 2001 through 2013. Mr. Gibbons was the lead instructor for the University of Washington’s (Tacoma) Certificate Program in Real Estate 2006 to 2008. Boards Mr. Gibbons is on the Advisory Board and serves on the Executive Board of the University of Washington’s Runstad Center for Real Estate Studies.

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TAX INFORMATION

Whatcom County Assessor & Treasurer - Property Details - 149595 ERICH R &... Page 1 of 4

Whatcom County Assessor & Treasurer Property Search Results > 149595 ERICH R & CAROL A KOZOUREK JT for Year 2016 2017 Property Account Property ID: Parcel # / Geo ID: Type: Tax Area: Open Space: Historic Property: MultiFamily Redevelopment: Township: Range:

STATE PLAT IN 16401W IMPROVEMENTS ONLYHOUSE

149595 4051164870680001 Real 3035 503 F21 BBWS BBBPR N N N T40N R1W

Legal Description: Agent Code:

8545 SEMIAHMOO DR BLAINE, WA 1130012000 SFRLOT 1130012000

Mapsco: Map ID:

1DW_05AC

ERICH R & CAROL A KOZOUREK JT 8545 SEMIAHMOO DR BLAINE, WA 982309310

Owner ID: % Ownership:

65022 100.0000000000%

Land Use Code 11 DFL N Remodel Property: N Section: Legal Acres:

16 0.0000

Location Address: Neighborhood: Neighborhood CD:

Owner Name: Mailing Address:

Exemptions:

Pay Tax Due There is currently No Amount Due on this property.

Taxes and Assessment Details Property Tax Information as of 09/26/2017 NOTE: If you plan to submit payment on a future date, make sure you enter the date and click RECALCULATE to obtain the correct total amount due.

Amount Due if Paid on:

Click on "Statement Details" to expand or collapse a tax statement.

Year

Statement ID

Statement Details 2017 101265 Statement Details 2016 101819

First Half Base Amt.

Second Half Base Amt.

Penalty

Interest

Base Paid

Amount Due

$1140.29

$1140.16

$0.00

$2280.45

$0.00

$1186.10

$1185.96

$0.00

$2372.06

$0.00

Values (+) Improvement Homesite Value: (+) Improvement NonHomesite Value: (+) Land Homesite Value: (+) Land NonHomesite Value: (+) Curr Use (HS): (+) Curr Use (NHS):

+ + + + + +

(=) Market Value: (–) Productivity Loss:

= –

(=) Subtotal: (+) Senior Appraised Value: (+) NonSenior Appraised Value:

= + +

(=) Total Appraised Value: (–) Senior Exemption Loss:

= –

$0 $226,422 $0 $0 $0 $0 $0 $0 $226,422 $0 $226,422 $0 $226,422 $226,422 $0

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/26/2017

Whatcom County Assessor & Treasurer - Property Details - 149595 ERICH R &... Page 2 of 4

(–) Exemption Loss:

–

$0 = $226,422

(=) Taxable Value:

Map List Map No.

Map Area

Whole section

SE Quarter

Taxing Jurisdiction Owner: % Ownership: Total Value: Tax Area:

ERICH R & CAROL A KOZOUREK JT 100.0000000000% $226,422 3035 503 F21 BBWS BBBPR

Levy Code Description

Levy Rate

BBWSB

BIRCH BAY WATERSEWER BOND

0.0000000000

$226,422

CFL

CONSERVATION FUTURES

0.0400333349

$226,422

$9.06

FCZDL

FLOOD CONTROL ZONE

0.1290186123

$226,422

$29.21

FD021AX13 FIRE #21 LTGO2012

0.0611745624

$226,422

$13.85

FD021EXP

FIRE #21 EXPENSE FUND

1.4149636456

$226,422

$320.38

PRD002

BLAINEBIRCH BAY PARK & REC EXPENSE

0.0485979545

$226,422

$11.00

PRD002CI

BLAINEBIRCH BAY PARK & REC CAP IMP

0.0091864081

$226,422

$2.08

PRD002RF

BLAINEBIRCH BAY PARK & REC RESERVE FUND 0.0306213603

$226,422

$6.93

PTBOND

PORT OF BELLINGHAM GO BOND

0.0471608131

$226,422

$10.68

PTGEN

PORT OF BELLINGHAM GENERAL FUND

0.2171595219

$226,422

$49.17

PTRDA

PORT OF BELLINGHAM RDA

0.0002876911

$226,422

$0.07

RDDIV

COUNTY ROAD DIVERSION

0.0607135936

$226,422

$13.75

RDGEN

COUNTY ROAD FUND

1.4191767644

$226,422

$321.33

RLIBGEN

RURAL LIBRARY

0.4872582765

$226,422

$110.33

SD503B

BLAINE SCHOOL #503 BOND

0.8554424983

$226,422

$193.69

SD503MO

BLAINE SCHOOL #503 M&O

1.6405244563

$226,422

$371.45

WA STATE GENERAL FUND

2.2335007897

$226,422

$505.71

WCCE

COUNTY CURRENT EXPENSE

1.0330216255

$226,422

$233.90

WCCT

COUNTY MENTAL HEALTH

0.0122938121

$226,422

$2.78

WCDD

COUNTY DEVELOPMENTAL DISABILITY

0.0122938121

$226,422

$2.78

WCER

COUNTY ELECTION RESERVE

0.0132532771

$226,422

$3.00

WCVR

COUNTY VETERANS RELIEF

0.0110644310

$226,422

$2.51

WCEMS

WHATCOM COUNTY EMS

0.2950000000

$226,422

$66.79

Total Tax Rate:

10.0717472408 Taxes w/Current Exemptions:

$2,280.45

Taxes w/o Exemptions:

$2,280.45

Appraised Value

Taxable Value Estimated Tax $0.00

Improvement / Building Improvement #1: 1 STORY

State Code: 1112 1368.0 sqft Value: $226,422

Exterior Wall: SI/ST Fireplace: FSTANFAIR Fixtures: 7 Floor Cov Adj: Base Allowance Flooring: CARPT Full Baths: 1 Half Baths: 1 Heating/Cooling: F/A Interior Finish: FIN Number of Bedrooms: 2 Roof Covering: SHAKE Type

Description

Class CD

ATTCH Deck Basement MA

Attached Garage Deck RESUnfinished Basement Main Area 1

AVG AVG AVG AVG

Sub Class CD * * * *

Year Built

Area

1975 1975 1975 1975

378.0 288.0 1368.0 1368.0

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/26/2017

Whatcom County Assessor & Treasurer - Property Details - 149595 ERICH R &... Page 3 of 4

Other

Other Improvement

AVG

1975

0.0

Sketch No sketches available for this property.

Property Image This property contains TIFF images. Click on the button(s) to download the full image (which may contain multiple pages).

Land No land segments exist for this property.

Roll Value History Year

Improvements

Land Market

Current Use

Total Appraised

Taxable Value

2017

N/A

2016

$226,422

2015

$226,823

2014

$217,064

2013

$214,698

Deed and Sales History # Deed Date

Type

Description

Grantor

Grantee

Volume Page Sale Price

Excise Number

Deed Number

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/26/2017

Whatcom County Assessor & Treasurer - Property Details - 149595 ERICH R &... Page 4 of 4

12/22/2005 QUIT CLAIM

QUIT CLAIM DEED

ERICH R KOZOUREK

ERICH R & CAROL A KOZOUREK JT

$0.00 2006118278 2060100502

11/01/2001 QUIT CLAIM

QUIT CLAIM DEED

PETER & FRIEDA ANNATOUR

RICK KOZOUREK

$0.00 200164870

2011102115

09/26/2000 TRUSTEE'S

TRUSTEE'S DEED

CS WOOD FR TRUSTEE TO

PETER & FRIEDA ANNATOUR & RICK KOZOUREK

$0.00 200053655

2000902751

Payout Agreement No payout information available..

Assessor Home Website version: 9.0.40.29

Treasurer Home

Database last updated on: 9/26/2017 1:37 AM

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/26/2017

Whatcom County Assessor & Treasurer - Property Details - 149594 WASHING...

Page 1 of 3

Whatcom County Assessor & Treasurer Property Search Results > 149594 WASHINGTON STATE DEPT OF for Year 2016 2017 Property Account Property ID: Parcel # / Geo ID: Type: Tax Area: Open Space: Historic Property: MultiFamily Redevelopment: Township: Range:

STATE PLAT IN 16401W LOT 8 KOZO2500

149594 4051164870680000 Real 3035 503 F21 BBWS BBBPR N N N T40N R1W

Legal Description: Agent Code:

8545 SEMIAHMOO DR BLAINE, WA 1130650200 1130650200

Mapsco: Map ID:

1DW_02WF

WASHINGTON STATE DEPT OF NATURAL RESOURCES STATE LANDS DIVISIONS PO BOX 47014 OLYMPIA, WA 985047014

Owner ID: % Ownership:

116922 100.0000000000%

Exemptions:

Land Use Code 11 DFL N Remodel Property: N Section: Legal Acres:

16 0.8700

Location Address: Neighborhood: Neighborhood CD:

Owner Name: Mailing Address:

Pay Tax Due There is currently No Amount Due on this property.

Taxes and Assessment Details Property Tax Information as of 09/19/2017 Amount Due if Paid on:

NOTE: If you plan to submit payment on a future date, make sure you enter the date and click RECALCULATE to obtain the correct total amount due.

Click on "Statement Details" to expand or collapse a tax statement.

Year

Statement ID

Statement Details 2017 101264 Statement Details 2016 101818

First Half Base Amt.

Second Half Base Amt.

Penalty

Interest

Base Paid

Amount Due

$47.00

$0.00

$94.00

$0.00

$47.00

$0.00

$94.00

$0.00

Values (+) Improvement Homesite Value: (+) Improvement NonHomesite Value: (+) Land Homesite Value: (+) Land NonHomesite Value: (+) Curr Use (HS): (+) Curr Use (NHS):

+ + + + + +

(=) Market Value: (–) Productivity Loss:

= –

(=) Subtotal: (+) Senior Appraised Value: (+) NonSenior Appraised Value:

= + +

$0 $0 $0 $275,000 $0 $0 $0 $0 $275,000 $0 $275,000 $0 $275,000

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/19/2017

Whatcom County Assessor & Treasurer - Property Details - 149594 WASHING...

(=) Total Appraised Value: (–) Senior Exemption Loss: (–) Exemption Loss:

Page 2 of 3

= – –

$275,000 $0 $275,000 = $0

(=) Taxable Value:

Map List Taxing Jurisdiction Owner: % Ownership: Total Value: Tax Area:

WASHINGTON STATE DEPT OF 100.0000000000% $275,000 3035 503 F21 BBWS BBBPR

Levy Code Description

Levy Rate

BBWSB

BIRCH BAY WATERSEWER BOND

0.0000000000

$275,000

$0.00

CFL

CONSERVATION FUTURES

0.0400333349

$275,000

$0.00

FCZDL

FLOOD CONTROL ZONE

Appraised Value

Taxable Value Estimated Tax

0.1290186123

$275,000

$0.00

FD021AX13 FIRE #21 LTGO2012

0.0611745624

$275,000

$0.00

FD021EXP

FIRE #21 EXPENSE FUND

1.4149636456

$275,000

$0.00

PRD002

BLAINEBIRCH BAY PARK & REC EXPENSE

0.0485979545

$275,000

$0.00

PRD002CI

BLAINEBIRCH BAY PARK & REC CAP IMP

0.0091864081

$275,000

$0.00 $0.00

PRD002RF

BLAINEBIRCH BAY PARK & REC RESERVE FUND 0.0306213603

$275,000

PTBOND

PORT OF BELLINGHAM GO BOND

0.0471608131

$275,000

$0.00

PTGEN

PORT OF BELLINGHAM GENERAL FUND

0.2171595219

$275,000

$0.00

PTRDA

PORT OF BELLINGHAM RDA

0.0002876911

$275,000

$0.00

RDDIV

COUNTY ROAD DIVERSION

0.0607135936

$275,000

$0.00

RDGEN

COUNTY ROAD FUND

1.4191767644

$275,000

$0.00

RLIBGEN

RURAL LIBRARY

0.4872582765

$275,000

$0.00

SD503B

BLAINE SCHOOL #503 BOND

0.8554424983

$275,000

$0.00

SD503MO

BLAINE SCHOOL #503 M&O

1.6405244563

$275,000

$0.00

WA STATE GENERAL FUND

2.2335007897

$275,000

$0.00

WCCE

COUNTY CURRENT EXPENSE

1.0330216255

$275,000

$0.00

WCCT

COUNTY MENTAL HEALTH

0.0122938121

$275,000

$0.00

WCDD

COUNTY DEVELOPMENTAL DISABILITY

0.0122938121

$275,000

$0.00

WCER

COUNTY ELECTION RESERVE

0.0132532771

$275,000

$0.00

WCVR

COUNTY VETERANS RELIEF

0.0110644310

$275,000

$0.00

WCEMS

WHATCOM COUNTY EMS

0.2950000000

$275,000

$0.00

Total Tax Rate:

10.0717472408 Taxes w/Current Exemptions: Taxes w/o Exemptions:

$0.00 $2,769.73

Improvement / Building Sketch No sketches available for this property.

Property Image

No image available for this property.

Land #

Type

Description

Acres

Sqft

Eff Front

Eff Depth

1112

RES 2 BDRM

0.0000

0.00

61.00

0.00

Market Value

Prod. Value

$275,000

Roll Value History Year

Improvements

Land Market

Current Use

Total Appraised

Taxable Value

2017

N/A

2016

$275,000

2015

$271,450

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/19/2017

Whatcom County Assessor & Treasurer - Property Details - 149594 WASHING...

2014

$271,450

2013

$298,900

Page 3 of 3

Deed and Sales History #

Deed Date

Type

Description

Grantor

Grantee

Volume Page Sale Price

Excise Number

Deed Number

12/22/2005 QUIT CLAIM

QUIT CLAIM DEED

ERICH R KOZOUREK

ERICH R & CAROL A KOZOUREK JT

$0.00 2006118278 2060100502

11/01/2001 QUIT CLAIM

QUIT CLAIM DEED

PETER & FRIEDA ANNATOUR

RICK KOZOUREK

$0.00 200164870

2011102115

09/26/2000 TRUSTEE'S

TRUSTEE'S DEED

CS WOOD FR TRUSTEE TO

PETER & FRIEDA ANNATOUR & RICK KOZOUREK

$282,254.00 200053655

2000902751

Payout Agreement No payout information available..

Assessor Home Website version: 9.0.40.29

Treasurer Home

Database last updated on: 9/19/2017 1:42 AM

http://property.whatcomcounty.us/propertyaccess/Property.aspx?cid=0&year=201... 9/19/2017

SEPTIC INFORMATION

TITLE COMMITMENT

ALTA COMMITMENT FOR TITLE INSURANCE Commitment Number: Issued By agent:

245395204

CHICAGO TITLE INSURANCE COMPANY, a Florida corporation (â&#x20AC;&#x153;Companyâ&#x20AC;?), for a valuable consideration, commits to issue its policy or policies of title insurance, as identified in Schedule A, in favor of the Proposed Insured named in Schedule A, as owner or mortgagee of the estate or interest in the land described or referred to in Schedule A, upon payment of the premiums and charges and compliance with the Requirements; all subject to the provisions of Schedules A and B and to the Conditions of this Commitment. This Commitment shall be effective only when the identity of the Proposed Insured and the amount of the policy or policies committed for have been inserted in Schedule A by the Company. All liability and obligation under this Commitment shall cease and terminate six (6) months after the Effective Date or when the policy or policies committed for shall issue, whichever first occurs, provided that the failure to issue the policy or policies is not the fault of the Company. The Company will provide a sample of the policy form upon request. This Commitment shall not be valid or binding until countersigned by a validating officer or authorized signatory. IN WITNESS WHEREOF, CHICAGO TITLE INSURANCE COMPANY has caused its corporate name and seal to be affixed by its duly authorized officers on the date shown in Schedule A. Chicago Title Insurance Company By:

President Countersigned By:

Authorized Officer or Agent

Attest:

Secretary

Copyright American Land Title Association. All rights reserved. The use of this Form (or any derivative thereof) is restricted to ALTA licensees and ALTA members in good standing as of the date of use. All other uses are prohibited. Reprinted under license from the American Land Title Association. ALTA Commitment (Adopted: 06.17.2006)

Printed: 09.26.17 @ 12:39 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON ISSUING OFFICE: Title Officer: Dave Morris Chicago Title Company of Washington 1835 Barkley Boulevard, Suite 105 Bellingham, WA 98225 Phone: 360-752-6530 Fax: 866-465-1972 Main Phone: (360)734-7000 Email: Dave.Morris@titlegroup.fntg.com

COMMITMENT NO. 245395204 FOR SETTLEMENT INQUIRIES, CONTACT:

SCHEDULE A ORDER NO. 245395204 1. Effective Date: September 19, 2017 at 08:00 AM 2. Policy or Policies to be issued: a. ALTA Owner's Policy 2006 Proposed Insured: TO BE DETERMINED Policy Amount: To Be Determined Premium: Tax: Total:

To Be Determined To Be Determined To Be Determined

3. The estate or interest in the land described or referred to in this Commitment is: Subleasehold estate, including its terms, covenants and provisions contained in instruments; Lease: Dated: Recorded: Recording Nos: Lessor: Lessee:

August 5, 1971 and September 28, 1981 August 9, 1971 and December 8, 1981 1099311 and 1406941 State of Washington Joseph T. Malone, Jr.

Amendments thereto: Recorded: Recording Nos:

February 22, 1996 and November 9, 2007 960222143 and 2071101299

Sublease Agreements: Recording Nos:

1158342, 1391714 and 1578593

4. Title to the estate or interest in the land is at the Effective Date vested in: Erich R. Kozourek, who acquired title as a married man as his separate estate and Carol A. Kazourek, who acquired title as a married woman as her separate property, as joint tenants with right of survivorship and not as tenants in common

Printed: 09.26.17 @ 12:39 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

SCHEDULE A (continued) 5. The land referred to in this Commitment is described as follows: LOT 8, AMENDED STATE PLAT OF LOTS 8 TO 36 OF STATE PLAT IN SECTION 16, TOWNSHIP 40 NORTH, RANGE 1 WEST OF W.M., ACCORDING TO THE PLAT THEREOF, RECORDED IN VOLUME 11 OF PLATS, PAGES 82 AND 83, RECORDS OF WHATCOM COUNTY, WASHINGTON. SITUATE IN WHATCOM COUNTY, WASHINGTON. END OF SCHEDULE A

Printed: 09.26.17 @ 12:39 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

SCHEDULE B Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company: GENERAL EXCEPTIONS A. Rights or claims of parties in possession, or claiming possession, not shown by the Public Records. B. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. C. Easements, prescriptive rights, rights-of-way, liens or encumbrances, or claims thereof, not shown by the Public Records. D. Any lien, or right to a lien, for contributions to employee benefit funds, or for state workers' compensation, or for services, labor, or material heretofore or hereafter furnished, all as imposed by law, and not shown by the Public Records. E. Taxes or special assessments which are not yet payable or which are not shown as existing liens by the Public Records. F. Any lien for service, installation, connection, maintenance, tap, capacity, or construction or similar charges for sewer, water, electricity, natural gas or other utilities, or for garbage collection and disposal not shown by the Public Records. G. Unpatented mining claims, and all rights relating thereto.

H. Reservations and exceptions in United States Patents or in Acts authorizing the issuance thereof.

I. Indian tribal codes or regulations, Indian treaty or aboriginal rights, including easements or equitable servitudes. J. Water rights, claims or title to water. K. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the Public Records, or attaching subsequent to the effective date hereof but prior to the date the proposed Insured acquires of record for value the estate or interest or mortgage thereon covered by this Commitment.

Printed: 09.26.17 @ 12:44 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

SCHEDULE B (continued) SPECIAL EXCEPTIONS

As to any portion of said land now, formerly or in the future covered by water: Questions or adverse claims related to (1) lateral boundaries of any tidelands or shorelands; (2) shifting in course, boundary or location of the body of water; (3) rights of the State of Washington if the body of water is or was navigable; and (4) public regulatory and recreational rights (including powers of the USA) or private riparian rights which limit or prohibit use of the land or water.

Covenants, conditions, restrictions, recitals, reservations, easements, easement provisions, dedications, building setback lines, notes, statements, and other matters, if any, but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, or source of income, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth on Amended State Plat of Tracts 8 Thru 36: Recording No: Volume 11 of Plats, Pages 82 and 83

Exceptions and reservations contained in Deed whereby the grantor excepts and reserves all oils, gases, coal, ores, minerals, fossils, etc., and the right of entry for opening, developing and working mines, etc., provided that no rights shall be exercised until provision has been made for full payment of all damages sustained by reason of such entry; From: STATE OF WASHINGTON Records of: Whatcom County, Washington

Real estate excise tax of 1.78% upon any sale of said Land, if unpaid. Beginning July 1, 2005, an additional $5.00 Real Estate Excise Tax Electronic Technology Fee must be included in all excise tax payments.

General and special taxes and charges, payable February 15; delinquent if first half unpaid on May 1 or if second half unpaid on November 1 of the tax year (amounts do not include interest and penalties): Year: Tax Account No.: Key No./Property No: Tax Code/Located In: Assessed Value:

2017 405116 487068 0001 149595 3035 $226,422.00

General and Special Taxes: Billed: $2,280.45, Full Year Paid: $2,280.45 Unpaid: $0.00 Affects Improvements Only

Printed: 09.26.17 @ 12:44 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

SCHEDULE B (continued) Prior to close of escrow, please contact the Tax Collector's Office to confirm all amounts owing, including current fiscal year taxes, supplemental taxes, escaped assessments and any delinquencies. 6.

2017 405116 487068 0000 149594 3035 $275,000.00

General and Special Taxes: Billed: $94.00, Full Year Paid: $94.00 Unpaid: $0.00 Affects Fee interest Prior to close of escrow, please contact the Tax Collector's Office to confirm all amounts owing, including current fiscal year taxes, supplemental taxes, escaped assessments and any delinquencies. 7.

Assessments, Dues and/or fees levied by Birch Bay Water and Sewer District.

The search did not disclose any open mortgages or deeds of trust of record, therefore the Company reserves the right to require further evidence to confirm that the property is unencumbered, and further reserves the right to make additional requirements or add additional items or exceptions upon receipt of the requested evidence.

A lease with certain terms, covenants, conditions and provisions set forth therein. Dated: Lessor: Lessee: Recording Date: Recording No.: Affects:

10.

August 5, 1971 State of Washington Joseph T. Malone,Jr. August 9, 1971 1099311 Said premises and other property

A lease with certain terms, covenants, conditions and provisions set forth therein. Dated: Lessor: Lessee: Recording Date: Recording No.:

September 15, 1971 State of Washington Joseph T. Malone, Jr. December 8, 1981 1406941

Printed: 09.26.17 @ 12:44 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

SCHEDULE B (continued) Lessee's interest thereunder assigned by instrument; Recording Date: Recording No.: Assignee:

February 22, 1996 960222143 The June Patricia Malone Living Trust, June Patricia Malone, trustee

Lease Amendment; Recording Date: Recording No.:

November 9, 2007 2071101299

11.

Terms, covenants, conditions and provisions of the lease and subleases referred to in Schedule A.

12.

In the event that the Land is occupied or intended to be occupied by the owner and a spouse or registered domestic partner as a homestead, the conveyance or encumbrance of the Land must be executed and acknowledged by both spouses or both registered domestic partners, pursuant to RCW 6.13 which now provides for an automatic homestead on such Land.

13.

If the proposed insured is a married person or member of a registered domestic partnership acquiring title as his/her separate estate, the Company will require a Deed be executed by the spouse or registered domestic partner of the proposed insured to establish separate property. A deed from the spouse or registered domestic partner will not eliminate the requirement that both spouses or registered domestic partners execute any new monetary encumbrances to comply with the automatic homestead provisions of RCW 6.13.060 if both spouses or registered domestic partners intend to reside on the Land.

14.

Your application for title insurance was placed by reference to only a street address or tax identification number. Based on our records, we believe that the legal description in this report covers the parcel(s) of Land that you requested. If the legal description is incorrect, the seller/borrower must notify the Company and/or the settlement company in order to prevent errors and to be certain that the correct parcel(s) of Land will appear on any documents to be recorded in connection with this transaction and on the policy of title insurance.

15.

Note: The name(s) of the proposed insured(s) furnished with this application for title insurance is/are: No names were furnished with the application. Please provide the name(s) of the buyers as soon as possible.

16.

Contact Rod Rennie at the Washington State Department of Natural Resources at (360)902-1166 prior to closing any transactions in this plat.

END OF EXCEPTIONS

Printed: 09.26.17 @ 12:44 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

SCHEDULE B (continued) NOTES The following matters will not be listed as Special Exceptions in Schedule B of the policy. There will be no coverage for loss arising by reason of the matters listed below because these matters are either excepted or excluded from coverage or are not matters covered under the insuring provisions of the policy. Note A:

Note: The Public Records indicate that the address of the improvement located on said Land is as follows: 8545 Semiahmoo Drive Blaine, WA 98230

Note B:

Note: FOR INFORMATIONAL PURPOSES ONLY: The following may be used as an abbreviated legal description on the documents to be recorded, per Amended RCW 65.04.045. Said abbreviated legal description is not a substitute for a complete legal description within the body of the document: Lot(s): 8 State Plat in Section 16 Township 40 North, Range 1 West Tax/Map ID(s): Tax Account No.: 149595, 405116 487068 0001, 149594 and 405116 487068 0000

Note C:

The forthcoming policy, if issued, will include an ALTA 13-06 Leasehold Endorsement.

Note D:

Notice: Please be aware that due to the conflict between federal and state laws concerning the cultivation, distribution, manufacture or sale of marijuana, the Company is not able to close or insure any transaction involving Land that is associated with these activities. END OF NOTES END OF SCHEDULE B

Printed: 09.26.17 @ 12:44 PM WA-CT-FNBG-02150.622444-SPS-1-17-245395204

CHICAGO TITLE COMPANY OF WASHINGTON

COMMITMENT NO. 245395204

CONDITIONS 1.

The term mortgage, when used herein, shall include deed of trust, trust deed, or other security instrument.

If the proposed Insured has or acquired actual knowledge of any defect, lien, encumbrance, adverse claim or other matter affecting the estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule B hereof, and shall fail to disclose such knowledge to the Company in writing, the Company shall be relieved from liability for any loss or damage resulting from any act of reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed Insured shall disclose such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse claim or other matter, the Company at its option may amend Schedule B of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurred pursuant to paragraph 3 of these Conditions.

Liability of the Company under this Commitment shall be only to the named proposed Insured and such parties included under the definition of Insured in the form of policy or policies committed for and only for actual loss incurred in reliance hereon in undertaking in good faith (a) to comply with the requirements hereof, or (b) to eliminate exceptions shown in Schedule B, or (c) to acquire or create the estate or interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount stated in Schedule A for the policy or policies committed for and such liability is subject to the insuring provisions and Conditions and the Exclusions from Coverage of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein.

This Commitment is a contract to issue one or more title insurance policies and is not an abstract of title or a report of the condition of title. Any action or actions or rights of action that the proposed Insured may have or may bring against the Company arising out of the status of the title to the estate or interest or the status of the mortgage thereon covered by this Commitment must be based on and are subject to the provisions of this Commitment.

The policy to be issued contains an arbitration clause. All arbitrable matters when the Amount of Insurance is $2,000,000 or less shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. You may review a copy of the arbitration rules at http://www.alta.org.

END OF CONDITIONS

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RECORDING REQUIREMENTS

Effective January 1, 1997, document format and content requirements have been imposed by Washington Law. Failure to comply with the following requirements may result in rejection of the document by the county recorder or imposition of a $50.00 surcharge. First page or cover sheet: 3” top margin containing nothing except the return address. 1” side and bottom margins containing no markings or seals. Title(s) of documents. Recording no. of any assigned, released or referenced document(s). Grantors names (and page no. where additional names can be found). Grantees names (and page no. where additional names can be found). Abbreviated legal description (Lot, Block, Plat Name or Section, Township, Range and Quarter, Quarter Section for unplatted). Said abbreviated legal description is not a substitute for a complete legal description which must also appear in the body of the document. Assessor’s tax parcel number(s). Return address (in top 3” margin). **A cover sheet can be attached containing the above format and data if the first page does not contain all required data. Additional Pages: 1” top, side and bottom margins containing no markings or seals. All Pages: No stapled or taped attachments. Each attachment must be a separate page. All notary and other pressure seals must be smudged for visibility. Font size of 8 points or larger.

Recording Requirements WA00000837.doc / Updated: 05.14.10

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FIDELITY NATIONAL FINANCIAL PRIVACY NOTICE Effective: May 1, 2015; Last Updated: March 1, 2017 At Fidelity National Financial, Inc., we respect and believe it is important to protect the privacy of consumers and our customers. This Privacy Notice explains how we collect, use, and protect any information that we collect from you, when and to whom we disclose such information, and the choices you have about the use of that information. A summary of the Privacy Notice is below, and we encourage you to review the entirety of the Privacy Notice following this summary. You can opt-out of certain disclosures by following our opt-out procedure set forth at the end of this Privacy Notice. Types of Information Collected. You may provide us with certain personal information about you, like your contact information, address demographic information, social security number (SSN), driver's license, passport, other government ID numbers and/or financial information. We may also receive browsing information from your Internet browser, computer and/or mobile device if you visit or use our websites or applications.

How Information is Collected. We may collect personal information from you via applications, forms, and correspondence we receive from you and others related to our transactions with you. When you visit our websites from your computer or mobile device, we automatically collect and store certain information available to us through your Internet browser or computer equipment to optimize your website experience.

Use of Collected Information. We request and use your personal information to provide products and services to you, to improve our products and services, and to communicate with you about these products and services. We may also share your contact information with our affiliates for marketing purposes.

When Information Is Disclosed. We may disclose your information to our affiliates and/or nonaffiliated parties providing services for you or us, to law enforcement agencies or governmental authorities, as required by law, and to parties whose interest in title must be determined.

Choices With Your Information. Your decision to submit information to us is entirely up to you. You can opt-out of certain disclosure or use of your information or choose to not provide any personal information to us.

Information From Children. We do not knowingly collect information from children who are under the age of 13, and our website is not intended to attract children.

Privacy Outside the Website. We are not responsible for the privacy practices of third parties, even if our website links to those parties' websites.

International Users. By providing us with you information, you consent to its transfer, processing and storage outside of your country of residence, as well as the fact that we will handle such information consistent with this Privacy Notice.

The California Online Privacy Protection Act. Some FNF companies provide services to mortgage loan servicers and, in some cases, their websites collect information on behalf of mortgage loan servicers. The mortgage loan servicer is responsible for taking action or making changes to any consumer information submitted through those websites. Your Consent To This Privacy Notice. By submitting information to us or by using our website, you are accepting and agreeing to the terms of this Privacy Notice.

Privacy Statement SSCORPD0911.doc / Updated: 03.08.17

Access and Correction; Contact Us. If you desire to contact us regarding this notice or your information, please contact us at privacy@fnf.com or as directed at the end of this Privacy Notice.

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FIDELITY NATIONAL FINANCIAL PRIVACY NOTICE Effective: May 1, 2015; Last Updated: March 1, 2017 Fidelity National Financial, Inc. and its majority-owned subsidiary companies providing title insurance, real estateand loan-related services (collectively, "FNF", "our" or "we") respect and are committed to protecting your privacy. We will take reasonable steps to ensure that your Personal Information and Browsing Information will only be used in compliance with this Privacy Notice and applicable laws. This Privacy Notice is only in effect for Personal Information and Browsing Information collected and/or owned by or on behalf of FNF, including Personal Information and Browsing Information collected through any FNF website, online service or application (collectively, the "Website"). Types of Information Collected We may collect two types of information from you: Personal Information and Browsing Information. Personal Information. FNF may collect the following categories of Personal Information: • contact information (e.g., name, address, phone number, email address); • demographic information (e.g., date of birth, gender, marital status); • social security number (SSN), driver's license, passport, and other government ID numbers; • financial account information; and • other personal information needed from you to provide title insurance, real estate- and loan-related services to you. Browsing Information. FNF may collect the following categories of Browsing Information: • Internet Protocol (or IP) address or device ID/UDID, protocol and sequence information; • browser language and type; • domain name system requests; • browsing history, such as time spent at a domain, time and date of your visit and number of clicks; • http headers, application client and server banners; and • operating system and fingerprinting data. How Information is Collected In the course of our business, we may collect Personal Information about you from the following sources: • applications or other forms we receive from you or your authorized representative; • the correspondence you and others send to us; • information we receive through the Website; • information about your transactions with, or services performed by, us, our affiliates or nonaffiliated third parties; and • information from consumer or other reporting agencies and public records maintained by governmental entities that we obtain directly from those entities, our affiliates or others. If you visit or use our Website, we may collect Browsing Information from you as follows: • Browser Log Files. Our servers automatically log each visitor to the Website and collect and record certain browsing information about each visitor. The Browsing Information includes generic information and reveals nothing personal about the user. • Cookies. When you visit our Website, a "cookie" may be sent to your computer. A cookie is a small piece of data that is sent to your Internet browser from a web server and stored on your computer's hard drive. When you visit a website again, the cookie allows the website to recognize your computer. Cookies may store user preferences and other information. You can choose whether or not to accept cookies by changing your Internet browser settings, which may impair or limit some functionality of the Website. Use of Collected Information Information collected by FNF is used for three main purposes: • To provide products and services to you or any affiliate or third party who is obtaining services on your behalf or in connection with a transaction involving you. • To improve our products and services. • To communicate with you and to inform you about our, our affiliates' and third parties' products and services, jointly or independently. Privacy Statement SSCORPD0911.doc / Updated: 03.08.17

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When Information Is Disclosed We may provide your Personal Information (excluding information we receive from consumer or other credit reporting agencies) and Browsing Information to various individuals and companies, as permitted by law, without obtaining your prior authorization. Such laws do not allow consumers to restrict these disclosures. Please see the section "Choices With Your Personal Information" to learn how to limit the discretionary disclosure of your Personal Information and Browsing Information. Disclosures of your Personal Information may be made to the following categories of affiliates and nonaffiliated third parties: • to third parties to provide you with services you have requested, and to enable us to detect or prevent criminal activity, fraud, material misrepresentation, or nondisclosure; • to our affiliate financial service providers for their use to market their products or services to you; • to nonaffiliated third party service providers who provide or perform services on our behalf and use the disclosed information only in connection with such services; • to nonaffiliated third party service providers with whom we perform joint marketing, pursuant to an agreement with them to market financial products or services to you; • to law enforcement or other governmental authority in connection with an investigation, or civil or criminal subpoena or court order; • to lenders, lien holders, judgment creditors, or other parties claiming an interest in title whose claim or interest must be determined, settled, paid, or released prior to closing; and • other third parties for whom you have given us written authorization to disclose your Personal Information. We may disclose Personal Information and/or Browsing Information when required by law or in the good-faith belief that such disclosure is necessary to: • comply with a legal process or applicable laws; • enforce this Privacy Notice; • investigate or respond to claims that any material, document, image, graphic, logo, design, audio, video or any other information provided by you violates the rights of a third party; or • protect the rights, property or personal safety of FNF, its users or the public. We maintain reasonable safeguards to keep your Personal Information secure. When we provide Personal Information to our affiliates or third party service providers as discussed in this Privacy Notice, we expect that these parties process such information in compliance with our Privacy Notice or in a manner that is in compliance with applicable privacy laws. The use of your information by a business partner may be subject to that party's own Privacy Notice. Unless permitted by law, we do not disclose information we collect from consumer or credit reporting agencies with our affiliates or others without your consent. We reserve the right to transfer your Personal Information, Browsing Information, and any other information, in connection with the sale or other disposition of all or part of the FNF business and/or assets, or in the event of our bankruptcy, reorganization, insolvency, receivership or an assignment for the benefit of creditors. You expressly agree and consent to the use and/or transfer of the foregoing information in connection with any of the above described proceedings. We cannot and will not be responsible for any breach of security by a third party or for any actions of any third party that receives any of the information that is disclosed to us. Choices With Your Information Whether you submit Personal Information or Browsing Information to FNF is entirely up to you. If you decide not to submit Personal Information or Browsing Information, FNF may not be able to provide certain services or products to you. The uses of your Personal Information and/or Browsing Information that, by law, you cannot limit, include: • for our everyday business purposes – to process your transactions, maintain your account(s), to respond to law enforcement or other governmental authority in connection with an investigation, or civil or criminal subpoenas or court orders, or report to credit bureaus; • for our own marketing purposes; • for joint marketing with financial companies; and • for our affiliates' everyday business purposes – information about your transactions and experiences.

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You may choose to prevent FNF from disclosing or using your Personal Information and/or Browsing Information under the following circumstances ("opt-out"): • for our affiliates' everyday business purposes – information about your creditworthiness; and • for our affiliates to market to you. To the extent permitted above, you may opt-out of disclosure or use of your Personal Information and Browsing Information by notifying us by one of the methods at the end of this Privacy Notice. We do not share your personal information with non-affiliates for their direct marketing purposes. For California Residents: We will not share your Personal Information and Browsing Information with nonaffiliated third parties, except as permitted by California law. Currently, our policy is that we do not recognize "do not track" requests from Internet browsers and similar devices. For Nevada Residents: You may be placed on our internal Do Not Call List by calling (888) 934-3354 or by contacting us via the information set forth at the end of this Privacy Notice. Nevada law requires that we also provide you with the following contact information: Bureau of Consumer Protection, Office of the Nevada Attorney General, 555 E. Washington St., Suite 3900, Las Vegas, NV 89101; Phone number: (702) 486-3132; email: BCPINFO@ag.state.nv.us. For Oregon Residents: We will not share your Personal Information and Browsing Information with nonaffiliated third parties for marketing purposes, except after you have been informed by us of such sharing and had an opportunity to indicate that you do not want a disclosure made for marketing purposes. For Vermont Residents: We will not share your Personal Information and Browsing Information with nonaffiliated third parties, except as permitted by Vermont law, such as to process your transactions or to maintain your account. In addition, we will not share information about your creditworthiness with our affiliates except with your authorization. For joint marketing in Vermont, we will only disclose your name, contact information and information about your transactions. Information From Children The Website is meant for adults and is not intended or designed to attract children under the age of thirteen (13).We do not collect Personal Information from any person that we know to be under the age of thirteen (13) without permission from a parent or guardian. By using the Website, you affirm that you are over the age of 13 and will abide by the terms of this Privacy Notice. Privacy Outside the Website The Website may contain links to other websites. FNF is not and cannot be responsible for the privacy practices or the content of any of those other websites. International Users FNF's headquarters is located within the United States. If you reside outside the United States or are a citizen of the European Union, please note that we may transfer your Personal Information and/or Browsing Information outside of your country of residence or the European Union for any of the purposes described in this Privacy Notice. By providing FNF with your Personal Information and/or Browsing Information, you consent to our collection and transfer of such information in accordance with this Privacy Notice. The California Online Privacy Protection Act For some FNF websites, such as the Customer CareNet ("CCN"), FNF is acting as a third party service provider to a mortgage loan servicer. In those instances, we may collect certain information on behalf of that mortgage loan servicer via the website. The information which we may collect on behalf of the mortgage loan servicer is as follows: • first and last name; • property address; • user name and password; • loan number; • social security number - masked upon entry; • email address; • three security questions and answers; and • IP address.

Privacy Statement SSCORPD0911.doc / Updated: 03.08.17

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The information you submit through the website is then transferred to your mortgage loan servicer by way of CCN. The mortgage loan servicer is responsible for taking action or making changes to any consumer information submitted through this website. For example, if you believe that your payment or user information is incorrect, you must contact your mortgage loan servicer. CCN does not share consumer information with third parties, other than (1) those with which the mortgage loan servicer has contracted to interface with the CCN application, or (2) law enforcement or other governmental authority in connection with an investigation, or civil or criminal subpoenas or court orders. All sections of this Privacy Notice apply to your interaction with CCN, except for the sections titled "Choices with Your Information" and "Access and Correction." If you have questions regarding the choices you have with regard to your personal information or how to access or correct your personal information, you should contact your mortgage loan servicer. Your Consent To This Privacy Notice By submitting Personal Information and/or Browsing Information to FNF, you consent to the collection and use of the information by us in compliance with this Privacy Notice. Amendments to the Privacy Notice will be posted on the Website. Each time you provide information to us, or we receive information about you, following any amendment of this Privacy Notice will signify your assent to and acceptance of its revised terms for all previously collected information and information collected from you in the future. We may use comments, information or feedback that you submit to us in any manner that we may choose without notice or compensation to you. Accessing and Correcting Information; Contact Us If you have questions, would like to access or correct your Personal Information, or want to opt-out of information sharing with our affiliates for their marketing purposes, please send your requests to privacy@fnf.com or by mail or phone to: Fidelity National Financial, Inc. 601 Riverside Avenue Jacksonville, Florida 32204 Attn: Chief Privacy Officer (888) 934-3354

Privacy Statement SSCORPD0911.doc / Updated: 03.08.17

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EXHIBIT "A" Order No.:

245395204

LOT 8, AMENDED STATE PLAT OF LOTS 8 TO 36 OF STATE PLAT IN SECTION 16, TOWNSHIP 40 NORTH, RANGE 1 WEST OF W.M., ACCORDING TO THE PLAT THEREOF, RECORDED IN VOLUME 11 OF PLATS, PAGES 82 AND 83, RECORDS OF WHATCOM COUNTY, WASHINGTON. SITUATE IN WHATCOM COUNTY, WASHINGTON.

VESTING DEEDS

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SELLER DISCLOSURE

EMAIL PACKET

8545 Semiahmoo Drive Blaine Waterfront Home for Sale •

• • • •

• •

Home perched on a bluff overlooking the Salish Sea, Point Roberts, & Canada Large parcel of land totaling .87 Acres 75 feet of Saltwater Frontage Estate-type setting Septic set up for 2 bedrooms, but there are 2 additional Finished rooms in the lower level 3 Bathrooms MLS# 1177870

$499,000

9/14/2017

Matrix

Cross P roperty Client Full 8545 Semiahmoo Dr, Blaine 98230

MLS#: 1177870 Status: Active Area: 880 - Blaine/ Birch Bay Commty: Semiahmoo

LP:

$499,000

County: W hatcom Remarks Endless Sunsets aw ait from this Birch P oint / Semiahmoo W aterfront Home, perched on a bluff overlooking the Salish Sea, P oint Roberts and Canada visible in the distance. Large parcel of land totaling .87 of an acre w ith 75 Feet of Saltw ater Frontage. Estate type setting. According to the Tax Assessor this is a 2 bedroom home, how ever the home also has 2 additional Extra-Finished rooms in the low er level. 3 Bathrooms, Open Living Room, Vaulted Ceilings. Low er level just refinished. Dramatic View s Offers: Seller intends to review offers upon receipt

Prop Type: Beds: Yr Built: Elementary: Snr High: Map Book: Mnth Dues: Mntly Rent: Directions:

Single Family 2 1975 Blaine Elem Blaine High

Baths: Price/SF:

General Information Sub Prop: 2.75 SF: $182.38 Lot Size: Jr High: School Dist: Gd/Map:

Residential 2,736 SF Source: tax records .870 ac/ 37,897 sf Blaine M id Blaine ,

H/O Incl: Cat/Dog: Stay North on Birch Bay Drive, w hich turns into Birch P oint w hich turns into Semiahmoo Drive, House w ill be on the w aterfront side of the road. Built Green Information Cnstrct Mthds: Standard Frame Listing Information Ann Taxes: $2,372 Tax Year: 2016 Snr Expt: No Form 17: P rovided Ttl Cvr Prk: 2 Prk Spc: Prk Typ: Garage-Attached Style Code: 16 - 1 Story w / Bsmnt. Bld Nm: Bld Cond: Good Bld Info: Built On Lot Bsmnt: Daylight, Fully Finished Roof: Composition Foundation: P oured Concrete Exterior: W ood Seller's Sewer: Septic First Refusal: No Concess: View: Bay, Ocean, Sound Waterfront: 75/ Bank-High, Saltw ater Lot Top/Veg: Garden Space, Level, P artial Slope, Sloped Lot Dtls: P aved Street Site Feat: Deck, RV P arking Interior Features Main Beds: 2 M 1/2 Baths: 0 M 3/4 Baths: 0 M F Baths: 2 Upper Beds: U 1/2 Baths: 0 U 3/4 Baths: 0 U F Baths: 0 Lw Beds: L 1/2 Baths: 0 L 3/4 Baths: 1 L F Baths: 0 Ttl Beds: 2 Ttl 1/2 Baths: 0 Ttl 3/4 Baths: 1 Ttl F Baths: 2 Ttl Baths: 2.75 Main Fplc: 0 Upper Flpc: 0 Lw Fplc: 0 Ttl Fplc: 0 Heat/Cool: Forced Air Energy: Oil Wtr Heatr Electric / Ty/Loc: Floor Cvr: Hardw ood, Vinyl, W all to W all Carpet Appliances: Dryer, Range/ Oven, Refrigerator, W asher Interior Ft: Bath Off M aster, Dbl P ane/ Storm W indw , Dining Room Room Information Room Level Dimensions Description Bathroom - 3/ 4 Low er FamilyRoom Low er RecRoom Low er Bathroom - Full M ain Bathroom - Full M ain Bedroom M ain M aster Bd M ain Kit w ES M ain DiningRoom M ain LivingRoom M ain

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geoAdvantage Property Profile

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Whatcom County Parcel Information

Parcel Information

Tax Information

Parcel #: 4051164870680000

Tax Account: 116922

Alt Parcel #: 149594

Tax Code Area:

Address: 8545 Semiahmoo Dr Blaine, WA 98230

Levy Rate: 10.4577214391 $94

Property Tax:

TRS: 40N01W16 - SE

(2016)

Taxpayer: Washington State Dept Of

Census Tract/Block: 010403 / 1005

Legal

Owner: Washington State Dept Of PO Box 47014 Olympia, WA 98504

STATE PLAT IN 16-40-1W LOT 8

Zoning: Rural (1 dwelling unit/5 acres) Present Use: RES 2 BDRM Total Land Value:

$271,450

Total Impr Value:

Total Value:

$271,450

Parcel Size: .87 Acres (37,897 SqFt) School District: BLAINE SCHOOL DISTRICT Waterfront: Puget Sound Recreation: -

Land Method: Frt Ft Waterfront Bank: Hi Bank Waterfront Beach:

Use: 1112 - Res 2 Bdrm

Class: Improv

View Type:

Topography: Clear

View Quality:

Topography Type: Level

Service: Abutting:

Improvement Building $0 Value: Condition: Foundation: Full Baths: 0 1st Floor: 0 SqFt Garage Type: Porch: 0 SqFt

Year Built:

Heating:

Type:

Use:

Siding:

Roof Cover:

Half Baths: 0

Bedrooms: 0

2nd Floor: 0 SqFt

Total Area: 0 SqFt

Garage: 0 SqFt

Carport: 0 SqFt

Deck: 0 SqFt

Patio: 0 SqFt

Transfer Information Rec. Date: 1/5/2006

Sale Price:

Doc Num: 2060100502

Doc Type: Q

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geoAdvantage Property Profile

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Whatcom County Parcel Information

Total Impr Value:

Total Value:

$226,823

Tax Information

Parcel Size: .00 Acres (0 SqFt)

Tax Account: 65022

School District: BLAINE SCHOOL DISTRICT

Tax Code Area:

Waterfront: Puget Sound

Levy Rate: 10.4577214391

Recreation: -

Property Tax:

$2,372

(2016)

Taxpayer: Erich R & Carol A Kozourek Jt

Legal

STATE PLAT IN 16-40-1W IMPROVEMENTS ONLY-HOUSE

Land Method:

Use: 1112 - Res 2 Bdrm

Class:

Service:

Waterfront Bank:

View Type:

Topography:

Abutting:

Waterfront Beach:

View Quality:

Topography Type:

Improvement Building $0 Value: Condition: AVG+ Foundation:

Year Built: 1975 Type: 1 STORY Siding: SI/ST

Full Baths: 1 1st Floor: 1,368 SqFt Garage Type: Attached Porch: 0 SqFt

Heating: F/A Use: HOUSE Roof Cover: SHAKE

Half Baths: 1

Bedrooms: 2

2nd Floor: 0 SqFt

Total Area: 1,368 SqFt

Garage: 378 SqFt

Carport: 0 SqFt

Deck: 288 SqFt

Patio: 0 SqFt

Transfer Information Rec. Date: 01/05/06

Sale Price:

Owner: KOZOUREK, ERICH R & CAROL A

Doc Type:

Grantor:

Orig. Loan Amt: Finance Type:

Doc Num: 2060100502

Title Co: Loan Type:

Lender:

Sentry Dynamics, Inc. and its customers make no representations, warranties or conditions, express or implied, as to the accuracy or completeness of information contained in this report.

http://geo.sentrydynamics.net/WA_Whatcom/ParcelList_Batch.aspx?Tag=Legacy... 12/9/2016