RockSpringCluB-Hendricks Appraisal.pdf

CONDITION As previously noted, the appraiser did not observe any adverse environmental problems, conditions or contamination etc. during the inspection. | nonetheless advise the client as to the potential of adverse contamination due to the utilization of the property over the years and the possibility of soil contamination-migration. The appraiser has not been provided with any reports, studies, documents or other information with regard to potential adverse environmental conditions as it relates to Rock Spring Club. The foregoing includes both man-made and naturally occurring conditions such as environmentally sensitive areas, including wetlands and related transition-buffer areas. In the absence of any information of this type, | have assumed that the property is unencumbered with any such conditions. However, should a subsequent investigation reveal information to the contrary, this appraisal and its conclusions may be subject to revision. INCOME ANALYSIS The Rock Spring Club had been organized and operated as a private member only, 501(c)-3 non-profit corporation under Internal Revenue Service codes and regulations since October 1940, The status of the tax-exemption is unknown as of the date of this appraisal. Furthermore, this appraiser has not been provided with any current actual or historical income and expense information. Generally speaking, a private country club such as Rock Spring Club is rarely, if ever, leased for rental income purposes. It’s very premise and existence is based upon private equity membership and the quality, exclusivity and reputation of the club itself. In this regard, the proper application of an Income Approach requires a sufficient number of directly and truly comparable private golf course-country club facilities which have been leased in order to estimate a Market Rental for the subject property. This appraiser is unaware of any such private country club-golf course facilities being leased or rented for income producing for profit purposes. The fact that the subject property along with most, if not all similar private country club-golf course facilities have been held and operated as not for profit corporations and are tax exempt under IRS Rule 501c, effectively eliminates the applicability of a direct capitalization (Income Approach) of the net income utilizing actual revenues and expenses. In adcition, a

s and are tax exempt under IRS Rule 501c, effectively eliminates the applicability of a direct capitalization (Income Approach) of the net income utilizing actual revenues and expenses. In adcition, a stabilization of revenue and expense based on a survey of other private golf and country club facilities, which are also organized and operated as not for profit tax exempt entities under the same or similar IRS rules, would have the same effect. The foundation of an Income Approach requires the existence of profit motivation by the owner. In this instance, and under IRS rules, the profit motivation is entirely absent. Therefore, in this appraisal, other then in support of the highest and best use conclusion, | have not employed a direct capitalization (Income) approach in the estimate of Market Value. 50. [T] a REAL ESTATE APPRAISALS & RESEARCH