HomeMy WebLinkAbout02-0347APR-24-2002 WED 08:5! AM PA OFF OF ATTY GEN ESTRN FAX NO. 2155602202 P.
S¢nl: viii telefax (717)249-7334
and f:irst Class U.S. Mail
COMMONW~r~LTH OF PENNSYLVANIA
OFFICE OF ATTORNEY GENERAL
April 23, 2002
A I"f OP, NEY ¢½ENERAL
Charitable Trusts and Or§anizations Section
21 S. 12th Street, 3rd Floor
Philadelphia, PA 19107-3603
Telephone: (215) 560.2402
Fax: (2.15) 560~2202
Sloven I. Fishman, Esquire
5alzman, DePaulis & Fishman
39 Alexander Spring Road, Suite 3
(;,wlish,, PA 1 ?01.3
Re: Newviile Medical Foundaliun
Mr. Fisllman:
I h~ve reviewed your April 19, 2002 correspondence and the Petition To Approve
.*;ale, 'l'r~n.~fer and Charitable Use of Nonprofit Corporation Assets of tl~e Newviile Medical
o~,~datinn with attachments, and have no objection to tho relief requested. I am writin~
confirm Ihe Ne~wille Medical Foundation's commitment to provide the amended
corpor.'tlo docUmelltS discuss~t in the Petition m~d to provide periodic reports and
rotmlinBs to Ihe Office of Attorney General on Ihe operation of the Foundation. As w(~
di:¢cu~mcd, the Newville Medical Foundation will provide annual reports to the Office of
A~lnCm~y (;choral, Charitable Trusts and Organizations Sedion for a five year (5) year
imriod beBinnin~ in June, 2003. These repo~s will include a brief narrative statement
thrums,ti ion on the implementation of Ihe Foundation's charitable mission and financial
sh~lnmt::nl~. The Foundation may submit its 99~PF tax returns in lieu of formal financial
~[..~t(.,~nenl~. The rel~orl~ should be sent to my attention.
PIc, ase forward a copy of any order entered by the Court so that I can complete my
fib:. '[hank you for your attention to Ibis matter. If you have any questions, please do not
h~'-,it,,le lo ~'ontact me at (215)560-21 72.
M(TK
Very trtlly yours,
Deputy Attorney General
NEWVILLE MEDICAL
FOUNDATION, A
PENNSYLVANIA NONPROFIT
CORPORATION
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS COURT DIVISION
No.
PETITION TO APPROVE SALE, TRANSFER AND
CHARITABLE USE OF NONPROFIT CORPORATION
ASSETS OF THE NEWVILLE MEDICAL FOUNDATION
AND NOW comes the Newville Medical Foundation, a Pennsylvania Nonprofit
Corporation, (herein "Petitioner") by and through its counsel, Steven J. Fishman, Esquire,
and petitions Your Honorable Court for approval of its Plan of Sale of Assets (which plan
includes the private sale of substantially all of its property) and in support hereof avers
and represents, as follows:
1. The Petitioner is a Pennsylvania Nonprofit, non-stock corporation, having been
incorporated January 27, 1972. The Petitioner operates under authority of Amended
Articles of Incorporation filed with the Department of State as of February 22, 1999.
A true and correct copy of Petitioner's Amended Articles of Incorporation is attached and
made a part hereof as Exhibit "1". The Petitioner's Board of Directors is a community
based, volunteer board, which controls its affairs and has no relationship other than as
landlord and tenant with the prospective purchaser of the assets described herein.
2. The Petitioner is a charitable organization as the same is defined in 20
Pa.C.S.A. §6101, and is recognized by the Internal Revenue Service ("IRS") as an
organization described in Section 501(c) of the Internal Revenue Code. A copy of the
Petitioner's determination letter from the Internal Revenue Service is attached and labeled
Exhibit "2".
3. This matter is within the mandatory jurisdiction of this Court pursuant to the
provisions of Section 711(21) of the PEF Code (20 Pa. C.S. 711(21)), and the provisions
of 15 Pa.C.S.A. §5547(b). Venue is properly in Cumberland County pursuant to Section
726 of the PEF Code, 20 Pa. C.S.A. §726.
4. The Petitioner has adopted a Plan of Sale of Assets pursuant to 15 Pa. C.S.A.
§5930(a) (herein the "Plan") and as a part thereof Petitioner's Board has unanimously
approved (as required by 15 Pa. C.S.A. §5546) the sale of the Petitioner's Real Property
and appurtenances. A copy of Petitioner's Plan of Asset Sale is attached and labeled as
Exhibit "3"
5. A copy of the Agreement of Sale for Petitioner's Real Estate and
appurtenances (herein the "Agreement"), which is the basis of its Plan of Sale, is attached
and made a part hereto as Exhibit "4". The said Agreement was amended by Agreement
dated March 19, 2002, a copy of which is attached hereto and made a part hereof asEx.
6. A copy of the deed for Petitioner's Real Estate is attached hereto and made a
part hereof as Exhibit "6".
7. Petitioner's Real Estate consists of a lot of ground and the improvements
erected and constructed thereon (together with the appurtenant fixtures and tangible
personality) which is commonly referred to as the "Graham Medical Clinic" (herein the
"Property") and which has an address of 100 South Big Spring Avenue, Newville,
Pennsylvania 17241. Since its incorporation, Petitioner has owned, improved,
maintained and leased the Property to the proposed purchasers and their predecessor
physician associates for the operation of the clinic.
8. The fair market value of the Petitioner's property at the time of execution of
the aforementioned Agreement of Sale was $575,000, as determined by the appraisal of
Steven W. Barrett, Certified Appraiser. The property was re-appraised by Larry E. Foote,
CGA, on April 11, 2001. This appraisal established a fair market value of $592,000.
Inasmuch as the Board believes that the purchase price as provided in the aforementioned
Agreement of Sale is binding on the Board and considering the potential difficulty of
finding another purchaser that could meet the health care needs of the community the
Board believes that the value for sale purposes is $575,000. A copy of each appraisal is
attached and made a part hereof as Exhibits "7" and "8".
9. There are attached hereto and labeled Exhibit "9" an affidavit of Steven W.
Barrett certified appraiser, which evidence (as required by Orphans Court Rules, Rule
No. 12.10):
a) That the present fair market value as of the date of the subject
Agreement of Sale for the Property is $575,000.
b) That the price and terms of the private sale under the Agreement
(Exhibit 4) are equal to or more than could reasonably be expected
from a public sale.
10. Under the terms of the private sale, the Petitioner will, after settlement, be
relieved of debt totaling $264,000 and will hold a full recourse note (secured by a second
lien mortgage) in the principal sum of approximately $311,000 with monthly
amortization payments as described in the Plan. The Petitioner will, after the sale,
continue to be able to undertake and/or support programs and activities for the
improvement of the health, welfare and medical services of the people of the Newville
Community. The sale will help assure that the clinic is staffed and operated as a medical
facility in the Newville community, in furtherance of the purposes of the Petitioner and
consistent with its charitable purposes. The sale does not constitute a failure to purpose or
a diversion of the Property from the objects to which it was originally dedicated.
11. The original funding (exclusive of borrowed funds) for Petitioner's project
was obtained as the result of a Cy Pres Order in the Estate of the late John Graham. A
copy of the Will, Cy Pres Petition and Final Decree of Your Court, dated July 21, 1972,
are attached hereto and labeled 10, 11, & 12 respectively. At or about the same time as
the original Cy Pres Order your Petitioner and the Board of Directors of the John
Graham Library of Newville (herein the "Graham Board") entered into an Agreement
dated June 21, 1972, and amended by a document entitled "Amended Articles of
Agreement" which was dated November 29, 1973, and which was recorded in the Office
of the Recorder of Deeds in and for Cumberland County, Pennsylvania in Miscellaneous
Book 209 at Page 831. A copy of the Amended Articles of Agreement is attached hereto
as Exhibit 13. The original Agreement of June 21, 1972 has been lost and no copies are
available or of record.
12. No member of the Foundation's Board or its employees will receive any
benefit, including financial or other benefits, such as employment contracts, as a result of
the proposed transaction.
13. The Petitioner will immediately commence to provide the services to be
carried on post-closing.
14. The proceeds of the sale will be kept in the Foundation's trust accounts until
such funds are needed to accomplish the services herein described.
15. The Petitioner plans to utilize both principal and interest as necessary to carry
out its plan of service.
16. Petitioner believes and therefore avers that its Plan of Sale of Assets and
future plans for programs in the Newville area are consistent with and in furtherance of
its obligation to serve the purpose of providing quality healthcare for the people of
Newville and vicinity.
17. A copy of this Petition and Plan and the notice of its filing have (as required
by the Orphans Court Rules) been given to the Commonwealth of Pennsylvania
Charitable Trust Division and additional information has been submitted thereto. No
other person or entity is required by law or rule of court to receive notice of this petition.
NOW, THEREFORE, in consideration of the foregoing, your Petitioner requests
that Your Honorable Court issue an order setting a hearing upon this Petition and
thereafter issue an Order approving the Plan of Sale of Assets (and the private sale
pursuant to the terms of the Agreement) and holding that the Plan of Sale is not a failure
of purpose and authorizing the Board to take such actions as may be necessary and
desirable to consummate the sale and carry out the plan. Notice of this Petition and the
hearing shall be served by citation on the Commonwealth of Pennsylvania Charitable
Trusts Division.
Respectfully submitted,
Steven J. Fishman, Esquire
Attorney ID#16269
Salzrnann, DePaulis, Fishman & Morgenthal, P.C.
95 Alexander Spring Road
Carlisle, PA 17013
(717) 249-6333
Newville Medical Foundation,
Petitioner,
Stanley L. Spencey/Chairman
VERIFICATION
I, STEVEN J. FISHMAN, ESQUIRE, of the firm of Salzmann, DePaulis,
Fishman & Morgenthal, P.C., attorneys for Newville Medical Foundation in the within
action, certify that the statements made in the foregoing Petition to Approve the Private
Sale of Substantially All of the Property of the Newville Medical Foundation Pursuant to
a Definitive Agreement and Plan in Accordance with 20 Pa. C.S. Section 711(21) and
Chapter 59 of the Pennsylvania Nonprofit Corporation Law are true and correct to the
best of my knowledge, information and belief. I understand that false statements herein
are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn
falsification to authorities.
Date:
Steven J. Fishman, Esquire
Attorney for Petitioner
Attorney ID# 16269
i111111 I., 1 VII URV
Microfilm Number.
Entity Number
AC,"T'IN~, 8ec:mlJy d tim ~
ARTICLE~ OF AMENDMENT - DOMES~G NONPROFIT CORPOFIATION
in compr~nce with the requirements d 1S Pa. 0.6. i rdllS (~ to ankles d amendment), ere undendgned nonpror~
b'orporagon, desiring to amencl its ani~lGs, hereby ~ thsl:
1, The name cd the corporaion ~ ~'-v~LT~ lW~nICA~ ~'OT~'DAT'rON
Tho address of this corporation's ctment (a) regtslemd ~ in this Gommemvealth or Co) commere~ registered office
provider and the county of venue is (Ihs Oepmmmm is hereby aullYxtzad te cane(~ the Iolowing address to conform to
Ihe records of the Depa~Ttem):
(a) 100 South Hig.~ St, PO Box 100, Newtlle PA 17241 Cumberland
Number md 81reJ4
:L The~ulebyofunde~whkll~wasincoq~orAed~: PA Nnn-P~nf~t Cnrn Ln%]. App. Mn? 5, 1933.
4. The dam d hs inco~ is: January 27, 1972
X__The amendment shall be et/We upon tiling these Articles d Amendment in the Department ot
___The amendment shall be elfective on:
6. (CIm~ one d me IolkNan~:
The amendment was adopted lay the membms putsuam to 15 Pa. C.$.
X.__~e amendmen~ was adopted by the board of dimclms pursuant to lS Pa. C.G. § 5914(b).
?. (Check. and il ~ em,mk~ me d the ~:
The amondment adopted by the corporation, set/onh in lull, is as follows:
PL 289
X The amendment adopted by the corporation as eat forth in full in Exhibit A, a~ached hereto and made a pag hereof.
FEB-2.1-99 SUN 01:23 PM HAMILTON DAVIS FAX NO, 717 630 6222 P, u3
114 'I'~cS'TIMO~ ~F. th, ~_~ him ~ th.~ d~t= be ,igned by ,duly
h-E~T~m~ 14EDTCAL
SUN 01:2 PM H ILTON D VIS NO, 717 530 5222 P, 05
PURPOSES OF
NL~_LLE HEDZ~L FOUNDXTZON
The corporation is incorporated
Corporation Law of the Commonwealth of
following purpose or purposes:
under the Nonprofit
Pennsylvania for the
(a} Generally to have the power to engage in any and all
lawful acts and activities incid~tal to its specific purposes, as
set forth herein, except as may be restri~ed hereinafter. All
references herein to the "CODE" shall be references to the Internal
Revenue Code of 1986 or the successors thereof or amendments
thereto.
(b) The corporation shall have unlimited power to engage in
and do any lawful act concerning any and all lawful purposes for
which Non-profit Corporations may be incorporated under the
Pennsylvania Non-Profit Corporation Law approved Nay 5, 1933, P.L.
289, as amended, and as an organization described in § 501(c)(4) of
the Code.
(c) The purpose of the Corporation is exclusively for the
promotion of ~he social welfare of the community (which includes
the Borough of Newville and the surrounding Townships, Cumberland
county, Pennsylvania) by fostering the general welfare and common
good of the people o£ the commtmity by the establishment and
maintenance of an adequate and modern medical facility (clinic) so
that medical services may be provided for the welfare and needs of
the people of the community. The net earnings of the Corporation
shall be devoted exclusively to carrying out this purpose and any
other related charitable purposes.
(d) The corporation shall neither have nor exercise any power,
nor shall it engage directly or indirectly in any activity, that
would invalidate its status (1) as a corporation which is exempt
from Federal Income Taxation as an organization described in
§501(c)(4) of the Code.
(e) No part of the net earnings of the corporation shall inure
to the benefit or be distributable to its members, directors,
officers, or other private persons, except that the corporation
shall be authorized and empowered to pay reasonable compensation
for services rendered and to make payments and distributions in
furtherance of the purposes set forth herein.
(f) Except as may be permitted by law, no substantial part of
the activities of the corporation shall consist of carrying on
propaganda, or otherwise attempting to influence legislation~ or
participating in, or intervening in, (including the publishing or
distributing of statements), any political campaign on behalf of
iiriiiil.,lul'l UrlV iD ri'lA l'lU, I ! I U,3U O,"~'," r, uU
any candidate for public office~ and the corporation
engage in any activities that are unlawful under
Federal, State or local laws.
shall not
applicable
(g) The corporation shall not operate for the purpose of
carrying on a trade or business for profit.
(h) Upon a dissolution of the corporation, the Board of
directors, after making provision for the payment of all the
liabilities of the corporation, shall arrange £orthe distribution
of all the assets of the corporation exclusively for the tax exempt
purposes of the corporation, either by direct distribution or.by
distribution to one or more orqanizations contributions to which
are deductible under §170(o)(2) of the Code, as the board of
directors may determine. Any of such assets not so distributed
within a reasonable period of time after the dissolution of the
corporation shall be disposed of in accordance with the direction
of any ccur~ having jurisdiction in the county in which the
principle office of the corporation last was located, exclusively
in such manner as in the judgment of such court, will best
accomplish the purposes for which ~he corporation was organized.
INTERNAL REVENUE SERVICE
DISTRICT DIRECTOR
P. O. BOX 2508
CINCINNATI, OH 45201
Date: ~ ~B ~
NEWVILLE MEDICAL FOUNDATION
C/O HAMILTON C DAVIS
PO BOX 375
SHIPPENSBURG, PA 17257
APR 12 1999
DEPARTMENT OF THE TREASURY
Employer Identification Number:
25-2106786
DLN:
17053061049029
Contact Person:
DAVID A DOEKER
Contact Telephone Number:
(877) 829-5500
Internal Revenue Code
Section 501(c) (4)
Accounting Period Ending:
December 31
Form 990 Required:
Yes
Addendum Applies:
No
ID# 31168
Dear Applicant:
Based on information supplied, and assuming your operations will be as
stated in your application for recognition of exemption, we have determined
you are exempt from Federal income tax under section 501(a) of the Internal
Revenue Code as an organization described in the section indicated above.
Unless specifically excepted, you are liable for taxes under the Federal
Insurance Contributions Act (social security taxes) for each employee to whom
you pay $100 or more during a calendar year. And, unless excepted, you are
also liable for tax under the Federal Unemployment Tax Act for each employee
to whom you pay $50 or more during a calendar quarter if, during the current
or preceding calendar year, you had one or more employees at any time in each
of 20 calendar weeks or you paid wages of $1,500 or more in any calendar
quarter. If you have any questions about excise, employment, or other Federal
taxes, please address them to this office.
If your sources of support, or your purposes, character, or method of
operation change, please let us know so we can consider the effect of the
change on your exempt status. In the case of an amendment to your organiza-
tional document or bylaws, please send us a copy of the amended document or
bylaws. Also, you should inform us of all changes in your name or address.
In the heading of this letter we have indicated whether you must file Form
990, Return of Organization Exempt From Income Tax. If Yes is indicated, you
are required to file Form 990 only if your gross receipts each year are
normally more than $25,000. However, if you receive a Form 990 package in the
mail, please file the return even if you do not exceed the gross receipts test.
If you are not required to file, simply attach the label provided, check the
box in the heading to indicate that your annual gross receipts are normally
$25,000 or less, and sign the return.
If a return is required, it must be filed by the 15th day of the fifth
month after the end of your annual accounting period. A penalty of $20 a day
is charged when a return is filed late, unless there is reasonable cause for
the delay. However, the maximum penalty charged cannot exceed $10,000 or 5
Letter 948 (DO/CG)
NEWVIL~.E MEDICAL FOUNDATION
-2-
percent of your gross receipts for the year, whichever is less. For
organizations with gross receipts exceeding $1,000,000 in any year, the
penalty is $100 per day per return, unless there is reasonable cause for the
delay. The maximum penalty for an organization with gross receipts exceeding
$1,000,000 shall not exceed $50,000. This penalty may also be charged if a
return is not complete, so please be sure your return is complete before you
file it.
You are not required to file Federal income tax returns unless you are
subject to the tax on unrelated business income under section 511 of the Code.
If you are subject to this tax, you must file an income tax return on Form
990-T, Exempt Organization Business Income Tax Return. In this letter we are
not determining whether any of your present or proposed activities are unre-
lated trade or business as defined in section 513 of the Code.
You are required to make your annual return available for public
inspection for three years after the return is due. You are also required
to make available a copy of your exemption application, any supporting
documents, and this exemption letter. Failure to make these documents
available for public inspection may subject you to a penalty of $20 per day
each day there is a failure to comply (up to a maximum of $10,000 in the case
of an annual return).
You need an employer identification number even if you have no employees.
If an employer identification number was not entered on your application,
a number will be assigned to you and you will be advised of it. Please use
that number on all returns you file and in all correspondence with the Internal
Revenue Service.
Donors may not deduct contributions to you because you are not an organ-
ization described in section 170(c) of the Code. Under section 6113, any
fundraising solicitation you make must include an express statement (in a
conspicuous and easily recognizable format) that contributions or gifts to you
are not deductible as charitable contributions for Federal income tax purposes.
This provision does not apply, however, if your annual gross receipts are
normally $100,000 or less, or if your solicitations are made to no more than
ten persons during a calendar year. The law provides penalties for failure to
comply with this requirement, unless failure is due to reasonable cause.
If we have indicated in the heading of this letter that an addendum
applies, the enclosed addendum is an integral part of this letter.
Because this letter could help resolve any questions about your exempt
status, you should keep it in your permanent records.
We have sent a copy of this letter to your representative as indicated in
your power of attorney.
Letter 948 (DO/CG)
NEWVILLE MEDICAL FOUNDATION
-3-
If you have any questions, please contact the person whose name and
telephone number are shown in the heading of this letter.
Sincerely yours,
.......... ~.,~?~
/~Director
Letter 948 (DO/CG)
NEWVILLE MEDICAL FOUNDATION
PLAN OF SALE OF ASSETS AND POST-SALE CHARITABLE ACTIVITIES
This Plan of Sale of Assets is adopted in accordance with law by the Newville Medical Foundation
(herein "foundation") pursuant to the provisions of 15 Pa.C.S.A. Section 5930(a). The terms of the Plan
are as follows:
1. The Foundation will sell substantially all of its assets, consisting of the improved real estate
(including fixtures and other personalty) to J. Anthony Townsend, Joseph A. Pion and Carol K.
Robinson, Partners (herein "Buyers"), for the total consideration of $575,000.
2. The Sale shall be in accordance with the terms of the Agreement of Sale, dated October 8, 1999 and
the Amendment thereto dated March 19, 2002, copies of which are attached hereto as Exhibits 4 and 5.
3. After closing, the Foundation will hold a full recourse Note of the Buyers, secured by a second lien
mortgage (second only to the existing first mortgage being assumed by the Buyers under said
Agreement of Sale) in the principal amount of approximately $311,000 with monthly amortized
payments of principal and interest of $1,814.17 from closing until April 13,2011 and thereafter in
payments of $5,333.00 monthly until paid in full. Interest shall accrue at the rate of seven (7%) on
unpaid principal. The Buyers shall have the privilege of prepayment without restriction.
Post Closing Activities:
4. Following the sale of the Real Estate Assets, Petitioner intends to remain in existence and will adopt
amended and restated articles of incorporation and bylaws which will cause it to become a charitable
health foundation whose purposes following the sale will be to engage in Section 501 (c)(3) activities to
promote the health and wellness of the Newville area by continuing and supplementing current programs
(including such activities as pre-natal education, well-baby clinics, school health education programs,
immunizations, health education programs and health screening for the elderly and needy), and
generally by:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Engaging in activities related to the promotion of health and the improvement of the
health status of persons in Petitioner's service area;
Providing resources for the restoration and maintenance of health;
Improving community health; _
Promoting health education
Bringing high quality health care services to the service area;
Supporting health related research benefiting residents in the service area;
Promoting the general health and wellness of persons in the service area; and
Engaging in certain fund-raising and related activities or programs.
Petitioner's amended articles of incorporation will add specificity to the general purposes already
authorized in its current articles, but will not expand such existing purposes.
5. Toward these objectives, Petitioner will, among other things, make grants to other nonprofit Section
501 (c)(3) organizations whose mission is to promote the health and wellness of the community served
and may either directly engage in indigent clinical care service activities and/or act as a supporting
organization to Section 501 (c)(3) organizations that provide indigent clinical care. Petitioner will
continually evaluate the Purchaser's operations and the programs and services that it provides, as
compared to the programs and services that the Foundation currently provides or that are otherwise
needed in the community served, and Petitioner will, to the extent possible, apply its assets to bridge any
gap between (a) community health services and programs now available and those that will
be available following the sale, and (b) community health services and programs available following the
sale and what community health services and programs are needed in the community served following
the sale.
6. In accordance with its current and future charitable purposes, Petitioner will use its assets to ensure
that the proposed sale will not create an adverse effect on the availability and affordability of health care
services to the community and will ensure that traditionally under-served populations in the community
maintain appropriate access to health care.
7. Following the transaction, and consistent with Petitioner's purposes under its existing Articles of
Incorporation, Petitioner will be dedicated to serving the community's unmet health and wellness needs,
particularly with regard to medically uninsured and under-served populations, and will focus on
improving health and wellness, including, among other things, improving access to services, enhancing
quality of care and addressing disease prevention and health promotion.
8. As a nonprofit, Section 501 (c)(3) organization, no part of Petitioner's net income will inure to the
benefit of or be distributable to any private person, Petitioner's assets will be dedicated in perpetuity to
tax-exempt purposes and the activities of Petitioner will be those permitted of a Section 501 (c)(3)
organization.
9. It is anticipated that the business and affairs of Petitioner will continue to be governed by a self-
perpetuating community based unpaid board of trustees. Because all of Petitioner's Post-Closing
activities are authorized under Petitioner's existing Articles of Incorporation, the transaction will not
result in a diversion of charitable assets.
10. The Foundation shall obtain court approval of this Plan (and the Sale) under the provisions of 15 Pa.
C.S.A. Section 5547(b)
CERTIFIED to be a True and Correct copy of the original duly adopted by the Foundation.
Date:
Secretary
F:\FILE$~)ATAFILEXDEEDS\g044-3.AGR
AGREEMENT OF SALE
THIS AGREEMENT, dated October, ~ , 1999, is between The Newville Medical
Foundation, Inc., of Newville, Cumberland County, Pennsylvania, called Seller, and J. Anthony
Townsend, Joseph A. Pion and Carol K. Robison, Partners, of Cumberland County, Pennsylvania,
called Buyer, the parties intending to be legally bound hereby:
1. PROPERTY Seller hereby agrees to sell and convey to Buyer, who hereby agrees to
purchase (the "Property"):
ALL THAT CERTAIN lot or piece of ground with buildings and improvements thereon
erected, if any, known as: 100 South High Street in the Borough of Newville, Cumberland
County, Pennsylvania, 17241. Tax ID# 28-20-1756-005, Cumberland County, Pennsylvania
Deed Book "T", Volume 24, Page 623.
Zoning Classification: R-1 low Density Residential
TERMS
(A)
Purchase Price $575,000.00 Dollars which shall be paid to Seller by Buyer by
assumption with current financial Farmer's National Bank of Newville, and the
balanced to be financed by the seller at 7% per annum with monthly payments of
$1,783.01 through April 13,2011 and monthly payments thereafter in the amount of
$5,333.00 with the last such payment to be adjusted as necessary to cause the
purchase price to be fully paid.
(B) Conveyance from Seller will be by fee simple deed of special warranty.
(C) Payment of transfer taxes will be divided equally between Buyer and Seller.
(D) The following shall be apportioned pro-rata as of and at time of settlement: taxes as
levied and assessed; rents; interest on mortgage assumptions; waste and/or sewer
rents, if any; together with any other lienable municipal services.
FIXTURES AND PERSONAL PROPERTY
INCLUDED in this sale and purchase price are all existing items permanently installed in the
Property, free of liens.
SPECIAL CLAUSES - The following conditions shall be met on or before 10/31/99,
otherwise this Agreement shall be terminated:
(A)
This is sale is contingent upon approval of Buyers assumption of existing financing
held by Farmers Bank~il
National le and Seller financing for the remaining
e
balance as set forth in paragraph 2 hereof.
(B) This sale is conditioned upon the approval of the Court of Common Pleas of
Cumberland County with respect to the sale by Seller, with closing to take place
within ten (10) business days thereof.
NOTICES AND ASSESSMENTS
(A) Seller represents, as of the execution of this Agreement, that no public improvement
assessments have been made against the Property which remain unpaid and that no
notice by any government or public authority has been served upon the Seller or
anyone on the Seller's behalf, including notices relating to violations of zoning,
housing, building, safety or fire ordinances which remain uncorrected, and that Seller
knows of no condition that would constitute violation of any such ordinances which
remains uncorrected, unless otherwise specified herein.
(B) Seller will be responsible for any notice of improvements or assessments received on
or before the date of settlement.
TITLE, SURVEYS, AND COSTS
(A) The Property is to be conveyed free and clear of all liens, encumbrances, and
easements, EXCEPTING HOWEVER, the following: existing building restrictions.
ordinances, easements of roads, easements visible upon the ground, privileges or
rights of public service companies, if any; otherwise the title to the above described
real estate shall be good and marketable and such as will be insured by a reputable
Title Insurance Company at the regular rates.
(B) In the event the Seller is unable to give a good and marketable title and such as will
be insured by a reputable Title Company, subject to aforesaid, Buyer shall have the
option of taking such title as the Seller can give without abatement of price or of
being repaid all monies paid by Buyer to Seller on account of the purchase price and
the Seller will reimburse the Buyer for any costs incurred by Buyer for those items
specified in paragraph 6(D) and in paragraph 6(E) items (1), (2), (3); and in the latter
event there shall be no further liability or obligation on either of the parties hereto
and this Agreement shall become NULL AND VOID and all copies will be returned
to Seller for cancellation.
Formal tender of an executed deed and purchase money is hereby waived.
(c)
7. POSSESSION
(A) Possession is to be delivered by deed, keys and physical possession to a vacant
building (if any) broom clean, free of debris at day and time of settlement, or by deed
and assignment of existing lease(s), together with any security deposits and interest,
at time of settlement if Property is tenant occupied at the execution of this
Agreement, or unless otherwise specified herein. Buyer will acknowledge existing
lease(s) by initialing said lease(s) at time of signing of this Agreement of Sale, if
Property is tenant occupied.
(B) Seller will not enter into any new leases, written extension of existing leases, if any,
or additional leases for the Property without expressed written consent of the Buyer.
8. MAINTENANCE AND RISK OF LOSS
(A) Seller shall maintain the Property, fixtures, and any personal property specifically
scheduled herein in its present condition, normal wear and tear excepted.
(B) Seller shall bear risk of loss from fire or other casualties until time of settlement. In
the event of damage to any property included in this sale by fire or other casualties,
not repaired or replaced prior to settlement, Buyer shall have the option of rescinding
this Agreement and receiving all monies paid on account or of accepting the Property
in its then condition together with the proceeds of any insurance recovery obtainable
by Seller. Buyer is hereby notified that Buyer may insure Buyer's equitable interest
in this property as of the time of the execution of this Agreement.
9. RECORDING
This Agreement shall not be recorded in the Office of the Recorder of Deeds or in
any other office or place of public record and if Buyer causes or permits this
Agreement to be recorded, Seller may elect to treat such act as a breach of this
Agreement.
10. DEFAULT - TIME OF THE ESSENCE
The said time for settlement and all other times referred to for the performance of any of the
obligations of this Agreement are hereby agreed to be of the essence of this Agreement. Should
Buyer violate or fail to fulfill and perform any other terms or conditions of this Agreement, then both
parties shall be released from further liability or obligation and this Agreement shall be NULL AND
VOID.
11.
REPRESENTATIONS
It is understood that Buyer has inspected the Property (including fLxtures and any
personal property specifically scheduled herein), or hereby waives the right to do so,
and has agreed to purchase it in its present condition. Buyer acknowledges that Seller
has not made an independent examination or determination of the structural soundness
of the Property, the age or condition of the components, environmental conditions, the
permitted uses, or of conditions existing in the locale where the Property is situated;
nor has Seller made a mechanical inspection of any of the systems contained therein.
NOTICE TO PARTIES: WHEN SIGNED, THIS AGREEMENT IS
CONTRACT.
WITNESS~ BUYER
~ ~/~ ~~ SEAL)
Seller hereby approves the above contract this / ~ day of
A BINDING
DATE
DATE
THIS AMENDMENT TO AGREEMENT OF SALE, made this /q~ day of
'-"c'v~,,.c~x ,2002, between The Newville Medical Foundation, Inc., of Newville,
Cumberland County, Pennsylvania ("Foundation") and Jay A. Towmend, M.D., Joseph A. Pion,
D.O. and Carol K. Robison, M.D., Parmers in a Pennsylvania general Parmership known as the
TPR Real Estate Parmership, also of Newville, Cumberland County, Pennsylvania CParmers")
WITNESSETH:
~WHEREAS, Foundation and Parmers entered into an Agreement of Sale dated October
8, 1999, wherein Foundation agreed to sell and Partners agreed to purchase the real estate located
at 100 South High Street, Newville, Cumberland County, Pennsylvania 17241; and
WHEREAS, Foundation is a charitable organization and the foregoing real estate
constitutes all or substantially all of Foundation's assets, thereby subjecting the sale, under
applicable Pennsylvania law, to scrutiny by the Attorney General of Pennsylvania and ultimate
approval by the Court; and
WHEREAS, the Attorney General has conducted a thorough review of the proposed sale
terms and has agreed not to interpose an objection to Court approval provided the parties agree
to certain post-sale obligations; and
WHEREAS, the parties desire to amend the Agreement of Sale to incorporate such
additional obligations.
NOW, THEREFORE, upon consideration of the mutual desire of the parties to expedite
the approval of the foregoing sale, the parties hereto, intending to be legally bound hereby, agree
as follows:
1. Effect of Amendments. The terms of this Amendment to Agreement of Sale shall
supplement and, to the extent of any inconsistency, supersede the terms of the Agreement of Sale.
Except as expressly set forth herein, the terms and conditions of the Agreement of Sale shall
continue in full force and effect.
2. Amendment of § 4. Section 4 of the Agreement of Sale (relating to Special
Clauses) is hereby amended to revise the date on or before which the conditions described
therein must be met. Said date shall henceforth be March 1, 2002.
3. Addition of New § 12. A new section shall be added to the Agreement of Sale to
provide as follows:
12. POST-SALE OBLIGATIONS
(A) Acknowledgement of Charitable
Obligations. The parties
acknowledge that Seller is a non-profit corporation and a
charitable organization as defined by Pennsylvania law. The
parties further acknowledge that the Property which is the
subject of this Agreement of Sale constitutes all or substantially
all of the assets of Seller, thereby requiring Court approval for
the sale. The parties likewise acknowledge that such approval
is required to assure that Seller will, after the sale, be able to
continue its charitable purpose of undertaking and/or supporting
programs and activities for the improvement of the health,
welfare and medical services of the people of the Newville
community.
(B) Buyer's Post-Sale Obligations. Buyer agrees that any furore sale
of the Property within ten (10) years of the date of Closing shall
be made only to persons or entities who specifically agree that
the Property shall continue to be used for the provision of health
care services to the people of the Newville community. Buyer
further agrees that, in the event Buyer sells the Property within
ten (10) years of the date of Closing to persons or entities who
do not specifically agree that the Property shall continue to be
used for the provision of health care services to the people of
the Newville community, Buyer will pay to Seller all proceeds
from such sale exceeding Five Hundred Ninety Two Thousand
Dollars ($592,000.00), less inflation and the costs of any
improvements made to the Property by Buyer.
IN WITNESS WHEREOF, the Parties have executed this Amendment to Agreement o~
Sale as of X(N~ ~ I~ ,2002.
,)
WITNESS:
ATTEST:
(SEAL)
IETWEEH
3011H R. GZX3JdMI end HARLKHE ~' BZLZJdMi, h£s viis, of ~. ~' 2,
Neville, C~=land countY, ps.sylvanS, part~es o~u,
H~XL~ ~DX~L' ~DATX~, ~C., a co.=at'on duly
WITH[SsETH, Iket in cenvkle~l~" 4 0O0 e'00} --.." "_i_q~,' de . keffeby S,~ql end
b ke*d peo., .-- .... that OO~l~ t, reot O~ il. and
convey lo tko ladd areolae , k~Td ' o ..__.=~X~[ and St~e of pennsylvanda,
Borough of HewvXXle, county oE
bounded an,4 des~ribnd &s follows,
· r · by V~na ~qt~gatl on the Bait by Sou~
un~sborge~,. · o~ VLoL*~of ~20 feet,
itl h St
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IH WITNESS WHEREOF. sold grantor.8 ho v,e..
day and year first above
ho~nunto tel ,&-.~e:J.~' J~ond B and seal B
Stat. of PENN SYT.VANIA
County of CUMBERLAND
On thl,, tho ~J). day of
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TABLE OF CONTENTS
Letter of Tr~smit~l ............................................
]~roper~- ldendfication ...........................................
Scope of Appraisal-MarkeGng Time ................................
Proper~ Description ............................................ 4
Description of Improvements .................................
$i~e Daea ................................................ 8
Zoning and Restrictions ................................ 9
Recording Data ...................................... 9
Location Analysis ............................................. 10
Regional Data ...........................................
~N]'eighborhood Data ....................................... 19
Assessment Analysis ...........................................
Highest and Best Use ...........................................
Purpose of Appraisal .................................
Appraisal Process ............................................. 26
Sales Comparison Approach ..................................... 28
income Approach ............................................. 39
Cost Approach ............................................... ,58
Correlation and Fhml Value ..................................... 70
Certification ................................................. 72
Certification and Statement of Limiting Conditions .................... 73
Resumes .................................................... 78
Photographs .................................................. 80
Addenda .................................................... 83
Se
W. BARRETT REAL ESTATE & APPRAISAL SERVICES
..... AppmisaI~ · Brok~m~ · Couns~Lkig
124-126 N. Hanover Street Carlisle, PA 17013-2455
.... ' ............... .i~i. Ph'-oa~(71~). 243-6646 lAX (717~ :~43:8-~2~- ................... i
Steven W. Barrett, SRPA, SPA, ASA
State Certified General Appratser
November 2. 1998
Mr. James E. Showvakcr. Loan Officer
Thc Farmers National Bank of Ncxx'villc
Big Spring Avcnuc
Ncxwilic. PA 17241
SUBJECT:
Ncwviiic Medical Foundation. Inc.
100 South Higl~ Street
Borough of Nc~viiic
Cumberland County. PA
Dear Mr. Sho~xvakcr'
In c,)mpl~;mcc with your ,.'quest. I.'~c have pcrsouaily inspcctcd thc above captioned property to cstmmtc
,..~.. ,,n.
as ,,' .s" ~ market value m a Self Contained Appraisal..
Thc value shox~n has bccn arrived at attcr carcful study of thc location and type of m~provcmcnts, their
prc:;cnt ph.x sic. al condition and their present usc. Therefore. l/xvt believe it to s'cflcct a tmc measure of thc
present-day market value "AS OF" October 9, 1998.
Value Reported:
FIVE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($575.000)
I ',:\:c I'..crcbv ccrtifx' that IA~c I,~,.,c no financial interest, p,'c:icut or contemplated, in this property, and that
ncilhcr 'thc cmolov~:cnt to make thc al:praisal nor thc compensation therefrom is contingent upon thc: aluc
ccportcd.
..qinc'.~rdy yours.
STEVEN W. BARRETT. SRPA. SRA. ASA
PA CERTIFIED GENERAL APPRAISER. GA-00(!?S-L
.cds
PROPERTY IDENTIFICATION
Property Address:
Owner of Record:
Recording Information:
Parcel Information:
Zoning:
Highest and Best Use:
Property Description:
Lot Size:
Appraisal Dates:
Date of Last Transfer:
Environmental Audit:
100 South High Street
Borough of Newville
Cumberland County, PA
Newville Medical Foundation, Inc.
Deed Book 24-T? Page 623
District 28, Map 20-1756, Parcel 004
R-2, Medium Density Residential
Current use or uses allowed by zoning.
One story, medical clinic containing 6,357 square feet of gross
building area.
40,591 Square Feet or approximately .93 Acre
Certification Date:
Inspection Date:
"AS OF DATE:"
November 2, 1998
October 9, 1998
October 9, 1998
The land last transferred August 14, 1972, for considcration of
$14,000.
No environmental audit report was provided to this appraiser.
Please see the Environmental Disclaimer located in the
Certification and Statement of Limiting Condition section.
2
SCOPE OF THE APPRAISAL
Extent of the process in which data are collected, confirmed, and reported.
The appraisal was completed in accordance with USPAP guidelines and conforms to all current appraisal
standards.
All information was verified through public record or personal contact or phone interviews with grantors,
grantees, brokers or other individuals involved within the sales and/or leasing transactions.
MARKETING PERIOD
The time it takes an interest in real property, to sell on the market subsequent to the date of an
appraisal.
Reasonable marketing time is an estimate of the amount of time it might take to sell an interest in
real property at its estimated market value during the period immediately at, er the effective date
of the appraisal; the anticipated time required to expose the property to a pool of prospective
purchasers and to allow appropriate time for negotiation, the exercise of due diligence, and the
consummation ora sale at a price supportable by concurrent market conditions. Marketing time
differs from exposure time, which is always presumed to precede the effective date of the
appraisal. (Advisory Opinion G-7 of the Appraisal Standards Board of The Appraisal
Foundation and Statement on Appraisal Standards No. 6, "Reasonable Exposure Time in
Manket Value Estimates" addresses the determination of reasonable exposure and marketing time.)
Market value estimates imply that an adequate marketing effort and reasonable time for exposure occurred
prior to the effective date of the appraisal. In the case of disposition value, the time frame allowed for
meting the propen3' fights is some~vhat limited, but the marketing effort is orderly and adequate. With
liquidation value, the time frame for marketing the property rights is so severely limited that an adequate
marketing program cannot be implemented (The Report of the Appraisal Institute Special Task Force
on Value Definitions qualifies marketing time in terms of the three above mentioned values.)
Subject property falls within normal market time in and for the County. of Cumberland for commercial
property, ranging from six months to two years.
DESCRIPTION OF IMPROVEMENTS
IMPROVEMENTS
The subject property is a one story., medical clinic, summarized below. The floor areas stated were drawn
from a building sketch, tax records and inspection. A narrative description of the building components
follow.
BUILDING SECTION
GROSS SQUARE FEET
Original Building - 1990
Addition- 1996
3,351
3,006
TOTAL 6,357
MAIN BUILDING:
The main building is one story, of brick veneer construction. The
original portion was constructed in 1990 and contained 3,351 gross
square feet. The addition of 3,006 gross square feet was completed in
1996.
There is a vestibule into a waiting room with play area and restroom.
The receptionist office, consultation and examining rooms, laboratory.
x-ray, emergency, lounge and restrooms complete the room count.
The improvements, overall, appear to be in good condition.
Foundation:
24' x 28' Concrete block basement, the remainder of the building is on
a slab.
5
Roof:
Gable with asphalt shingles over wooden deck
Exterior Walls:
Frame and brick veneer
Exterior Doors:
Steel
Loadine Docks:
Not Applicable
Frame:
Wood
Ceilings:
Drop Tile
Walls:
Dn~vail
Floors:
Wall-to-wall carpeting and vinyl
Windows:
Double hung, thermal
Mechanical Systems
Electrical:
800 Amp multi-phase system
Lighting:
Recessed, covered flouresccnt and emergency lighting
HVAC:
Txvo heat pumps with central air
Plumbing:
Nine restrooms, one with shower. It is presumed that the subject
pmpe~"s plumbing system conforms with all applicable building codes
and regulations.
6
Miscellaneous:
Securit3' system and fire alarms
Ace and Condition:
The building was constructed in two stages. The original section was
completed in 1990, and the newer section in 1996. The subject
improvements are in good condition. Periodic maintenance and upgrades
have extended the useful, economic life of the improvements.
Depreciation of the short-lived components (roof cover and parking lot
surface) is typical of a building in good condition. Based on inspection
of the propert3', effective age is estimated at approximately two years.
Estimated remaining economic life is the period during which
improvements continue to contribute to property value and is calculated
by subtracting effective age from total economic life. Based on the
original design of the subject, as well as updates-the utility, location in
the marketplace and physical attributes -the property's total economic
life is estimated at 45 years. Therefore, the remaining economic life of
the building is estimated at 43 years.
SITE DATA
Orientation:
Lot Size:
Shape:
Frontage:
Topo~rnohv:
Paving/Parkinv Soaces:
Landscaping:
Sidewalks/Curbs:
Curb Cuts:
Fencing:
Exterior Lighting,:
Utilities:
Southwest section of Nex~/illc Borough, on the west side of
South High Street
40,591 Square Feet
Irregular
Approximately 259 feet along West High Street
Level to sloping
Approximately 32 spaces, 22 in front, including two
handicapped, and 10 to the rear. Paved surfaces are in good
condition.
Foundation planting, in rear of property is natural tree and
shrub growth to creek
Front sidewalk 4' x 11' and rear patio 16' x 12'
Not Applicable
None
Not Applicable
Water, Sewer, Electricity. and Telephone
8
Flood Zone:
Easements & Deed Restrictions:
Flood Zones C and A*, No. 421579 0001 A, Effective Date:
Dec~mber 14, 1979.
*Improvements appear to be above flood plato with no adverse
effects.
None apparent
Favorable Attributes:
Located in Borough on main street easy access and good
visibility.
Unfavorable Site Attributes:
None apparent
ZONING
Thc subject property is zoned R-2, Medium Density Residential District. a permitted, nonconforming usc
to the cms-ting zoning ordinance. Please see Highest and Best Use for explanation and Addenda for Zoning
Ordinance. Any additional use and improvements are subject to existing zoning and restrictions, rights of
way or easements that ma5, be recorded in the Recorder of Deeds Office of Cumberland County or
Ne~vville Borough.
RECORDING DATA
The subject is recorded in the Office of the Recorder of Deeds in and for Cumberland County in Deed
Book 24-T, Page 623. Tax Identification Number is District 28, Map 20-1756, Parcel 004.
LOCATION ANALYSIS
REGIONAL DATA
1990 Census figures show that the Tri-County Harrisburg SMSA- Standard Metropolitan Statistical
Am-or Central Region, comprising Cumberland, Dauphin and Pen3.' Counties-is now home to 587,986
people after a growth rote increase of 6% since 1980, exceeding that of the state as a whole. The hub of
the area is Hamsburg, the state capital, one of the largest cities in southcentral Pennsylvania.
All these counties are ideally situated forming a transportation hub betxveen coastal and interior cities. The
arm's north/south and east/west highxvays converge around Harrisburg, affording convenient commuting
for business or pleasure from Central Pennsylvania to the Philadelphia, New York and Washington, D. C.,
comdors. Baltimore and Philadelphia are close enough that their suburban populations are now impacting
on thc southccntral region of the state.
Harrisburg continues to be the nucleus of economic strength in the Central Region offering a widely
diversified economic base including agricultural-featuring local farm markets, retail and wholesale trade,
manufacturing, warehousing, federal military installations, as well as being the Dauphin Count3.' seat.
One of thc key factors that supports a diversified economic base is thc extensive highway nee, york criss-
crossing thc region. Interstates 81, 83 and 76-the Pennsylvania Turnpike-and U. S. Routes 11 and 15,
as well as 22 and 322, all serve the Hamsburg area. Other transportation facilities include Hamsburg
International Airport served by American, Delta, United, Northwest, USAIR, Air Ontario and Air Tran,
plus several local commuter lines. Seven local commercial airports, three major railroads, Conrail to the
north, southwest and west, with Amtrak prodding passenger service; and numerous track terminal facilities
such as ABF, C-F Motor Freight, Daily Express, Roadway Express and Shaffer, to name a few, add to
the areas mobility.
10
Economies such as central Pennsylvania's which have been built on a goods-producing base are more
susceptible to the business cycle fluctuations and traditionally suffer greater cutbacks during recession.
The more severe the recession, and the 1982-83 recession was as severe as any, the more difficult it is to
reverse the effects ofcuthacks. Nevertheless, the area has bounced back far better than expected becoming
a more recession-resistant economy based on the service-producing industry.
Another indication of the economic health of the region is exemplified by the relatively low unemplo.~xnent
rate of 3.2% for the fall of 1997 in southcentral Pennsylvania. Cumberland County had a low of 2.9%
with Dauphin County at 3.3%.
There are various military installations situated in the region three of which are in Cumberland County:
U. S. Naval Supply Depot in Meehanicsburg, U. S. Army New Cumberland Depot located near New
Cumberland and U. S. Army War College located in Carlisle. In addition, Fort Indiantown Gap Military
Reservation, Lebanon County, lies within proximity of the metropolitan area. It is headquarters of thc U.
S. Army Pennsylvania National Guard and is used for summer training.
it is evident from the above that the largest employer in the Harrisburg SMSA is government, which
provides emplosxnent for approximately 25% of the work force.
COUNTY UNEMPLOYMENT RANKING-SEPTEMBER 1997'
COUNTY .~FATE RANK CURRENT VOLUME 1989 RATE DIFFERENCE
RATE
Cumberland I 2.9 3,600 2,9 0.0
Dauphin 4 3.5 5.000 4. I 0. ~
York 8 3.8 7.500 4.1 0.3
Perry 17 3.3 800 4.7 1.4
11
The 1990 Census also indicates Cumberland Coun~"s buying income per household is $35,540 with the
median age of 37.3 years. Approximately 65% of the households had incomes in excess of $25,000 and
another 44.8% in excess of $35,000. By 1996, Cumberland County's effective bu.ving income per household
was $39,231, while 2,600 households within the Harrisburg SMSA had effective buying income of $150,000
or more.
HOUSEHOLD AND PER CAPITA INCOME FOR 1989 *
COUNTY MEDIAN HOUSEHOLD MF. DIAN MEDIAN NON-FAMILY PER CAPITA INCOM~
INCOME FAMILY HOUSEHOLD INCOME
INCOM~
Cumberland 34,493 40,989 19,697 15,796
Dauphin 40,985 37,254 18,639 14,890
York 32,605 37,590 17,785 14,544
Adams 30,304 35,225 17,240 14,420
Perry 29,539 32,776 17,103 11,941
*PENNSYLVANIA DEPARTMENT OF LABOR AND INDUSTRY
12
Whatever your interest, you can find it, buy it and enjoy it in southcentral Pennsylvania. There are a wide
variety of cultural facilities within the Harrisburg Metropolitan area. These include a State Museum, The
Forum-facility to the Harrisburg Symphony, as well as visiting artists-and the State Library. The Hersh~
complex, only minutes away, includes a four-star hotel, an arena and the area's flagship amusement park
and zoo. Numerous shopping and outlet malls dot the region. Harrisburg is home to the Senators baseball
team and the Heat provides soccer entertainment.
Continuing education is available with man3' private and state supported colleges, as well as community
colleges.
Cumberland County is located directly west, across the Susquehanna River from Harrisburg in the heart of
the castem market. Comprised of 550 square miles, it incorporates the communities of Mechanicsburg,
Shiremanstoxvn, Camp Hill, New Cumberland, Lemoyne, West Fairview, Carlisle, as well as numerous
townships.
Cumberland County has had an increase in population, total number of households and average household
incomes--ranging from $21,716 in 1980 to $39,231 in 1996--showing a strong economic development.
Economic demographic, social and physical factors affecting the future marketabilit3' and value trends of
real estate in thc subject locale include:
A strong transportation center as a result of interstate highways and convenience to
the eastern market.
New construction of office buildings, truck terminals, warehouses and industrial
buildings, as well as service-producing facilities.
Expanding population base, including availability of skilled and unskilled workers.
14
The Hamsburg SMSA is expected to commue its steady growth in the future, due in part to its strategic
location, transportation and stable econol~nic base. Growth rates in the foreseeable future are predicted to
exceed that of the overall state average. Most likely, the Greater Harrisburg Area, as defined, will
experience the slowest rate of growth, while the less densely populated portions of the region are expected to
grow at a more rapid rate. Future growth rates in the subject Cumberland County. area are also predicted to
exceed those of the Greater Hamsburg Area, but be below the less densely populated portions of the
Hamsburg SMSA.
Harrisburg-Lebanon-Carlisle MSA
(Cumberland, Dauphin, Lebanon and Perry Counties)
August July August
1998p/ 1998 1997
qFARH ]O85 355,600 356,300 349,500
::)DS PRODUCING INDUSTRIES 59,800 S9,600 59,500
=onstmction ~r Mining 14,000 14,000 13,800
-lanufacturing 45,800 45,600 45,700
Durable Goods 22,000 22,000 21,800
Lumber Ar Wood, Incl Furniture 2,200 2, 100 2, 100
Prim 8z Fabricated Heul Prod 5,300 5,300 5,500
Hath, Electronic, Elect Equip I 1,400 I 1,500 I 1,200
Transportation Equipment 1,300 1,300 1,200
Nondurable Goods 23,B00 23,600 23,900
Food Ar Kindred Producu I 1,100 I 1,000 11,400
Textile Hill Products 2,200 2.200 2,1130
Apparel Ar Other Textiles 1,300 1,200 1,200
Paper Ar Allied Products 1,700 I °700 1,600
P'rinting ~Z Publishing 4,400 4,400 4,300
Rubber, Plastics, Leather 2,S00 2,500 2,600
Other Nondurable Goods 600 600 700
VICE PRODUCING INDUSTRIES 295,800 296,700 290,000
~'ransponalion Ar Public Ulils 23, I O0 23,400 21 °500
Vbolesale Trade 21 ,S00 21,600 21,200
'~etail Trade 59,300 59, 100 57,600
inance, Insurance, Real Estate 26,0OO 260100 25,8OO
services 102,6OO 102,SOO I00,000
Hovels Ar Other Lodging Places 4,8OO 4,8OO 4,700
Personal Services 2,9OO 3,000 2,900
Business Services 19,4OO 19, I OO 18,6OO
Auto ~r ivllsc Repair Services 3,500 3°500 3°4OO
Amusement, Recreation Services 7,8OO 7°700 7,800
Health Services 30,000 30, I O0 29,5OO
Hospitals 14,2OO 14°400 14, 100
Legal Services 2,3OO 2,3OO 2,2OO
Educational Services 5,0OO S° I OO 4,8OO
Social Sen~ices 7,4OO 7,3OO 7,400
Hembersbip O~ganizatimlS I I °8OO I 1,9OO I 1,3OO
Engineering Ar Hgmt Services 5,3OO 5°3OO 5,2OO
Total Government 63,3OO 64,0OO 63,9OO
Total Federal Government 12,7OO 12,8OO i 2,800
Total State Govermnem 30,5OO 30°500 30,4OO
Total Local Government 20, I OO 20,7OO 20,700
Area Labor Market Analyst: Wayne Schopf
For additional Information, call 7 ! 7-772-1370
· Total nonfarm jobs dedined 700 in August to 355,600...
remains 6,100 above last year.
· Manufacturing jobs increased 200...construction & mining
was unchanged.
· Service-producing industries declined 900 jobs...other local
government down 700...summer youth hiring programs
ended earlier this year...other sectors had only minor
changes.
· Average weekly manufacturing hours were 39.9...the same
as last August...average weekly earnings $554.21...up 4.4
percent over last year.
75,000
70.¢X10
65.(XX)
60.(KX)
50.()(X!
Long-Term Trends
{in thousands)
(;0()11~ PROI)I. JC! NG INI)IJSTILI ES
V~~~v~A u g
O0
35(I. IJ(X)
325.O00
3(JO.(XXI
275.0(X1
250.000
225.(x#)
200,(X)O
XX I ~ 1~! I 91 ] 92 I 93 I 94 I 95 I 96 I 97 I 9g
SERVICE I'IIOI)UCIN(; INI)US'I'RII.:S
O0
8g 189 [90 191 192 193 194 195 196 1~7 I~$
Averap Weekly Earnings
August July August
1998p/ 1998 1997
N U FACTURING 554.21 553.20 531.07
)urable Goods 581.50 584.63 552.97
Lumber Ar Wood, Incl Furniture 478.OO 475.16 455.46
Prim Ar Fabricated Hetal Prod 638.29 638.14 600.85
Macl~, Electronic, Elect Equip 562.47 SSS. 16 566.21
Transportation Equipment 618.61 675.45 383.52
qondurable Goods S31.35 S27.67 S 12.87
Food Ar Kind, ed Products 657.28 637.33 621.68
Apparel Ar Other Textiles 302.78 319.60 282.75
Paper ~t Allied Products 516.68 S21.56 486.81
Priming Ar Publishing 470.75 473.96 468.46
Rubber, Plastics, Leather 440.82 46 I. I 8 446.08
Average Weekly Hours
August July August
199811/ 19911 1997
39.9 40.0 39.9
41.3 41.2 40.6
40.0 39.4 39.4
41.8 41.6 41.9
40.7 40.2 41.0
46.9 45.7 28.2
38.7 39.0 39.3
39.S 39.1 39.8
37.8 40.1 37.7
41.5 42.3 40.5
37.6 38.1 39.3
37.2 38.4 39.9
Average Houdy Earnings
August July August
1998p/ 1998 1997
13.89 13.83 13.31
14.08 14.19 13.62
I 1.95 12.06 I 1.56
15.27 15.34 14.34
13.82 13.81 13.81
13.19 14.78 13.60
13.73 13.53 13.05
16.64 16.30 15.62
8.01 7.97 7.50
12.45 12.33 12.02
12.52 12.44 11.92
I 1.85 12.01 I 1.18
/ Preliminary data
aote: Data ,tot seasonally adiusted 16
Hcnns¥1vanla
CUMBERLAND COUNI~
CUMBEF, LAND
COUNTYSEAT: CARLISLE
LAND AREA (~ mi): 550.2 WATER AREA taq kin): 2.63
LONGITUDE: -077265050 LATITUDE: +40169850
HIGH SCHOOLGRAOS: 48,490 COLLEGE GRADS: 19,557
Chief Clink JOHN S. WARD
I Courthouse Square, Carlisle PA 17013.3387
Treasurer JOHN GROSS
SolicllM HORACE A. JOHNSON
1 Coudhouse Square, Carlisle, PA 17013
Plannim:j Con~ Chair DORSEY H. FRY
TYPE. COUNTY
YEARINC: 1750
POP DENSITY: 378
POST GRADS: 9,619'
Tel: (717)240-6150
(717}240-6380
(717)240.6150
(717)737-6622
FINANCIALS ',..~ r,...~ v.., ~....~
TOTAL REVENUE 70,123 TOTAL EXPENDITURE 63,238
Real Estate Taxes 16,726 OPERATIONS & MAINTENANCE 60,729
Federal Aid 7,862 General Administration 4,136
Slale Aid 14,984 Judicial 6,780
Local R avenue 3,8 ! 8 Hlgltwalm 2,486
General Government 3,421 ConecUon~ 5,591
Public Salary 0 Public Safely 299
Public Works 0 Human Senhces 34,735
Human Services 13,301 library 1,183
ConaanmUon & Development 203
TAXES PER CAPITA $94.40 Interest 555
ASSESSED PROPERTY VAL 731,360 CAPITAL EXPENDITURES 2,509
ASSESSMENT RATIO 7.0
TAX RATE(Mills) 24.500 EXPENDITURES PER CAPITA $323.87
ADJUSTED MILL RATE 1.715 TOTAL NET DEBT 0
Opa& Gan High- Public Human
Mainl Adman way~ Saleht Svcs
Expenditure Analysis
'~ in Ihou$1nda
HOUSING DEMOGRAPHICS
TOTAL UNITS 77,108 TOTAL HOUSEHOLDS 73,506 TOTAL '97 POP' 207,852
Occupied 73,452 Pe~soas per: one 17,641 Female 106.164
Vacant 3,656 Two-four 50,110 Male 100,858
TOTAL OCCUPIED UNITS Five + 5,755 RACE'
Pe/sonslunll 2.51
Median value/owned $65,000 Median Income $34,493 American Indian 324
Upper quartile $I 12.(XX) PLACE OF WORK Asian/Pac Island 3.609
Lower quadite $65,200 Iff Courtly 70,837 Black 4.114
White 198,995
Median Rent $378 Oullide Courtly 29,462
Upper quartile $455 Outalde Stale 951 HISPANIC ORIGIN' 1,927
Lower quartile $288 COMMUTING MINUTES 17.7 AGE'
TYPE OF STRUCTURE CHIEF INDUSTRIES 19 & under 53,455
Single unit attach 8.570
Single unit detach 47,042
Two or more/bldg 15,043
Olher lype 6,453
MEDIAN YEAR BUILT 1964
MEDIAN MONTHLY COST
Mortgaged $723
Nol mortgaged $214
HOME VACANCY RATE t .5 %
RENTAL VACANCY RATE 2.0 %
WATER. Public 56,853
Well 19,587
SEWER. Public 56,756
Septic t9,640
BUILDING PERMITS ISSUED
Total Residential Bldgs 988
& Value $I 13,810.731
Single Family House 963
& Value $108,454,432
Two Family House 5
& Value $1,258,405
Three-Four Family 14
& Value $2,228,205
Five & More Family 6
& Value $1.669,689
A Professional Sendces 20 to 39 62,034
B Retail 40 to 64 63,037
C Manufacturing 65 to 74 15,525
CHIEF OCCUPATIONS 75+ 12,991
A Administrative MARITAL STATUS
9 Laborers Married 95,404
C Prolessional Never Married 22,053
PER CAP INCOME $15.796 Divorced/widow 22,237
1970 1980 1990
Population Trend
F~rewo~l end Fecl~ You Should Know Ior
LIBRARY
~ COUNTY LIBRARY SYSTEM System Admin JONELLE PRETHER DAF
156 West High St, Carlisle PA 17013 2988 Tel: (717)240-6175 Fax.(717)240.7770
Pop Served 0 Tolal Volumes 4,874 Total Circulation 3.255
$174,166 Total Expenditure $133,580 Sale & Wages $89.59T
OFFICIALS
Chairwoman NANCY A. BESCH Tel (717)240.6150
Engineer BENATEC ASSOCIATES (7 t 7)763-7391
1998 NATIONAl- RESOURCE DIRECTORIES, INC
Ealonle~m, NJ 07724 (800)242-5511
CO 4
17
Pennsylvania
COUNTYSEAT. CARLISLE
LAND AREA Ixq mil: .4
LONGITUDE: -077401923
HIGH SCHOOL GRADS: 374
NEWVILLE
WATER AREA Isq km): 0.00
LATITUDE: '.40170872
COLLEGE GRADS: 57
Secretary SHERRY L. HERSHEY
4 Wesl Street, Newville PA 17241
Presidenl JERRY GILBERT
Tax Collector BETTY HOCKENSMITH
Solicitor RICHARD L. WEBBER
Zoning Board Chair
JANE GRAHAM
MUNICIPALITY TYPE BOROUGH
POP DEIISITY' 3.421
POST GRADS: 30
· Tel' (717)776-7633
(717)776-5727
(717)776-5511
(717)776-6566
(717)776.71 ! 3
FINANCIALS FIscll YIIf End 1~!
TOTAL REVENUE 456 TOTAL EXPENDITURE 527
Total Taxes Collected 156 OPERATIONS & MAINTENANCE 522
Real Estale Taxes 75 General Administration 49
Total Act 511 Taxes 83 Sanitation 8, Health 2
State & Federal Grants 79 Public Safety 1
Stale Highway Aid 0 Streets & Highways 143
CouflW Grants I Interest 0
· Waste Disposal 0 TOTAL CAPITAL OUTLAY 5
REVENUES PER CAPITA $337.72 Heallh & Sandation 0
TAXES PER CAPITA $117.08 Public Salely 5
Streets & Highways 0
ASSESSED VALUEIPROP'TY 2.830
MARKET VALUEIPROP'TY 40.429 EXPENDITURES PER CAPITA $390.95
TAX RATE(Malls) 29.000 TOTAL NET DEBT 0
ADJUSTED MILL RATE 2030
Opt & Sent& Public Sis& Capital
Malnl Haallh Salel¥ Hwl~ Oullay
Expenditure Analysis
'$ in Ihousand$
!
!
]
]
HOUSING DEMOGRAPHICS
TOTAL UNITS 610 TOTAL HOUSEHOLDS 574 TOTAL '96 POP'
Occupmd 575 Persons per: one 169 Female
Vacant 35 Two-fou~ 371 Male
TOTAL OCCUPIED UNITS Five * 34 RACE
Personslun,I 2.35
Median valuelowned $50,000 Median Income $23,276 American Indian
Upper quartile $65,600 PLACE OF WORK Asian/Pac Island
Black
Lower quartile $37,200 tn County 607 White
Median Rent $265 Outside Counly tot Other, n.e.c.
Upper quartile $334 Outside State 4 HISPANIC ORIGIN
Lower quartile $209 COMMUTING MINUTES 23.8
AGE
TYPE OF STRUCTURE CHIEF INDUSTRIES 17 & under
Single unit atlach 125
A Manulacluring 18 Io 39
Single und detach 252
B Prolessional Services 40 to 64
Two or more/bldg 218 C Retail 65 lo 74
Other Iype 15
MEDIAtl YEAR BUILT 1939 CHIEF OCCUPATIONS 75+
MEDIAN MONTHLY COST A Laborers MARITAL STATUS
Mortgaged $543 B Service Marred
Not mortgaged $193 C Administrative Never Married
HOME VACANCY RATE 0.g % PER CAP INCOME $10,718 Divorced/widow
RENTAL VACANCY RATE 2.2 %
WATER, Pubhc 595
Well 15
SEWER, Public 595
Sepl~c 15
BUILDING PERMITS ISSUED
Total ResKtenhal Bides 0
& Value $0
Single Famdy House 0
& Value $0
Two Family House 0
& Value $0
Three-Four Family 0
& Value $0
Five & More Family 0
& Value S0
1,354
702
647
0
1.33~
8
318
489
333
f32
77
1970 1980 1990
Population Trend
610 "
192 to, eapierllbOn of Oemogfeph¢l m Ibis litton
LIBRARY
JOHN GRAHAM PUBLIC LIBRARY
9 Parsonage St, Newville PA 17241 1399
Pop Served 10,306 Total Volumes 22,405
Total Income S96,612 Total Expense S94,050
Director SALLY ANN M SMITH
Tel. (717)776-5900 Fax (717)776-4408
Total Circulahon 42.837
Sals & Wages $53.343
SCHOOLS
System Name Admmistrator
BIG SPRING SD Superintendent DR WILLIAM K COWDEN
45 Mount Rock Road. Newville PA 17241.9466
Telephone
(7171776-2000
1998 NATIONAL RESOURCE DIRECTORIES. INC Eatontown. NJ 07724 (800)242-5511
388
18
NEIGHBORHOOD DATA
The subject property is located in southwestern Cumberland Count'. It is bounded on the north by the
Pennsylvania Turnpike, Route 76, and on the south by Interstate 81.
Newville is conveniently located to the suburban communities of Carlisle and Shippensburg, in addition to
the metropolitan areas of Harrisburg.
The site is in the South Ward of the Borough of Nexwille on the southwest comer of Vine Street and High
Street (SR 233), where the traffic is moderate.
Thc borough is typical of a small communit3', with a variety of uses. The neighborhood around thc subject is
developed with stores, banks, offices, markets, a senior living facilit3', restaurants and specialty shops as
well as single family homes.
It is anticipated the neighborhood will remain stable with steady grox~ in the forcsccablc future.
19
1
TAX AND ASSESSMENT ANALYSIS
The following is the assessment and tax liability for the subject property, as determined by the Cumberland
Count5.' Assessor's Office:
ASSESSMENT
$ 4,370
Land .........................................................
Improvements ................................................... $27,380
TOTAL ................................................. $31,750
MILLAGE RATES
County ......................................................
Municipality ..................................................
School .......................................................
TOTAL ...............................................
.0.0275
.0.0290
.0.1205
.0.1770
TAX LIABILITY
$ 873.13
County .......................................................
$ 920.75
Municipality ...................................................
School ...................................................... $3,825.88
TOTAL ............................................... $5,619.76
Cumbcrland County's last countywide assessment xvas in 1974. Assessments are performed on new
construction, or as building permits arc issued for existing properties. The Assessment Office considers
assessed value 25% of their calculated markct value. The subject compares similarly in assessment with other
neighboring properties. Reassessment is in process for all properties in the count3.' and is scheduled to be
complcted by the year 2000. This x~il not affect the estimated value or the future marketability of this property.
20
DEFINITION OF HIGHEST AND BEST USE
The reasonably probable and legal use of vacant land on an intproved property, which
is physically possible, appropriately supported, financially feasible and that results in the
highest value. The four criteria the highest and best use must meet are legal permissibility.
physical possibility, financial feasibili.tv and maximum profitability.
HIGHEST AND BEST USE OF LAND OR A SITE AS THOUGH VACANT
Among ali reasonable, alternative uses, the use that yields the highest present land value, after pa.~ents
are made for labor, capital and coordination. The use of a property based on the assumption that the parcel
of land is vacant or can be made vacant by demolishing any improvements.
HIGHEST AND BEST USE OF PROPERTY AS IMPROVED
Thc usc that should be made of a property, as it exists. An existing property should be renovated or
retained as is so long as it continues to contribute to the total market value of thc property, or until the
rcmm from a new improvement would more than offset the cost of demolishing thc existing building and
constructing a new one.
Taken from The DictionarF of Real Estate Appraisal, Third
Edition, 1993, Appraisal Institute, Chicago, Illinois.
21
HIGHEST AND BEST USE
The subject property is loc_at_~ in southwestern Cumberland CounW ~x4thin the Borough of Newville. The
subjec~ conforms to all neighborhood characteri~ics and has adequate road access to connect with major
interstates which also provide easy access to the northeast corridor and destinations south. The direct
neighborhood is a mixture of residential, office and other commercial uses.
The neighborhood is zoned R-2, Medium Density Residential District.
The highest and best use is that most reasonable use that supports the highest present value as of the
effective date of the appraisal. The highest and best use of the land (site) if vacant and available for use
may be different from the highest and best use of a property with improvements. The highest and best use
analysis requires the employment of various use categories to conclude that a given use is the highest and
best use of the land. The uses must meet four criteria:
1. Legally Permissible
2. Physically Permissible
3. Financially Feasible
4. Most Profitable
Lelallv Permissible
The subject property, is zoned R-2, Medium Density Residential District. Thc Borough Manager confirmed
the property is a permitted, nonconforming use and is allowed to function in the current manner. Therefore,
the existing use is legally permissible.
22
Physically Possible
The intent of the R-2, Medium Density, Residential District is for residential uses where centralized utilities
are provided. Certain community commercial uses conditionally are permitted in these districts in order
to alloxv the development of the neighborhood commercial services which are designed to meet the daily
needs of the surrounding residential areas and which protect the surrounding residential environment. Other
nonresidential uses are boarding, lodging or rooming houses, places of worship and educational
institutions.
Conditional uses are permitted after a public hearing is held by the commission and upon recommendation
by the commission for conditional uses. There are eight conditional uses allowed and full descriptions are
in the Zoning Ordinance in the Addenda of this report.
The site has sufficient size and acceptable topography features providing a suitable location for a medical
office complex. The shape of the lot has not diminished its utility and availability of public utilities
enhances the property. It has adequate visibility with ingress and egress.
The physical layout of the streets and utility connections provide utility to the site. It is physically
adaptable to support an office complex. Therefore, the subject property is physically possible.
Financially Feasible
Of the uses which are legally permissible and physically possible, the use which is capable of generating
a positive cash flow is considered financially feasible. The subject property, is located in an R-2, Medium
Density Residential neighborhood within Newville Borough. The site is conveniently located and has easy
access to all surrounding amenities and road networks. The direct neighborhood is a mixture of uses. The
medical clinic appears to be financially feasible.
23
Most Profitable
Of the uses which are considered financialh, feasible, the use must provide the highest rate of return over
the longest period of time in order to be considered the highest and best use of the propert3'. Since the
surrounding properties are a mixture of residential, commercial and office, the existing use appears to be
profitable. The profitability, test assumes competent management in the Highest and Best Use analysis.
Implied within these definitions is the recognition of the contribution of that specific use to the community
development goals, in addition to wealth maximization of the adjacent property owners and development
trend associated with the general area. The surrounding neighborhood consists of residential, commercial
and office properties. The neighborhood development trend appears to be stable and continues in its current
fashion.
It should be noted that the determination of the highest and best use for the subject property, is a result of
thc appraiser's judgement and analytical skill and represents an opinion, not fact. and in the appraisal
practice the concept of highest and best use represents the premises upon which value is based. The legal
possibilities that place controls on the potential use are zoning, deed restrictions and set back regulations.
Thc highest and best use, as if vacant, would be the same as improved. It can be said that the subject
propert3' as a medical clinic, is legal and consistent with the neighborhood use patterns. Therefore. the
current use is most profitable.
CONCLUSION OF HIGHEST AND BEST USE
Weighing all the aforcmentioned, lave have concluded that the highest and best use of the subject propert3'
is continued use "AS IMPROVED" and "AS VACANT"is as a medical clinic.
24
PURPOSE OF APPRAISAL
The purpose of the appraisal is to estimate the market value of the subject property, in fee simple title.
PROPERTY RIGHTS APPRAISED
This is an appraisal of the market value of the unencumbered fee simple title to the subject propert3';
subject only to easements, deed restrictions and zoning requirements described for the subject property.
Such title includes both the physical real estate, i.e., the physical land, the appurtenance including structure
affixed thereto and the interests, benefits, and rights inherent in thc ownership of thc physical real estate.
Personal property is not included in this valuation.
DEFINITION OF MARKET VALUE
Thc most probable price which a property should bring in a competitive and open market, under all
conditions requisite to fair sale, thc buyer and the seller, each acting prudently knowledgeable and
assuming thc price is not affected by undue stimulus. Implicit in this definition is thc consummation of a
sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised and each acting in what he considers his ox~m best
interest;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U. S. dollars or in terms of financial arrangements
comparable thereto; and
The price represents the normal consideration for the property, sold unaffected by special or
creative financing or sales.
25
APPRAISAL PROCES,g
The purpose of an appraisal is to estimate fair market value. The first step is to define the problem: the
work necessary to solve the problem is planned; and the data required is acquired, classified, analyzed and
interpreted into an estimate of value. Within this process, three basic approaches are used by the
appraiser/s. They are: Sales Comparison Approach, Income Approach and Cost Approach.
SALES COMPARISON APPROACH is based primarily upon the principle of substitution. This
principle holds that an informed purchaser would not pay more than the cost to purchase a comparable
property with similar utility. The major limitation to this approach is when there is an inactive market and
no valid comparable sales are available. This approach also is questionable when sales data cannot be
verified with principles to the transaction.
The appraiser/s selects sales of comparable properties for which the pertinent data is considered reliable.
Adjusmaents are developed for characteristics differences bctxvecn comparable. Then the sales are adjusted
to the subject. The appraiser/s then correlates the adjusted comparable sales data into an estimate of
market value by the Sales Comparison Approach.
INCOME APPROACH is based upon thc principles of substitution, contribution and anticipation. The
principle of substitution states that an informed buyer xvould pay no more for a property than he would for
a competitive type property, with a similar income stream.
The principle of contribution holds that the value of the property is measured by the contribution of the
component parts to the total economic unit, land and improvements. The principle of anticipation states
that value is the present worth of future benefits from property, ownership.
Capitalization is the process of converting net income into an indication of value. A direct sales overall
capitalization rote is developed from market data and is based on the relationship of net operating income
to the sales price.
26
The appraiser/s estimates gross income by analyzing the market for comparable rentals. Deductions for
vacant, and collection losses, operating and fi.xed expenses also are developed from market data. Thc final
results of these analyses is an estimate of net operating income. Net income is then capitalized into an
indication of market value by the Income Approach.
COST APPROACH is based on the principle of substitution. The principle of substitution holds that an
informed purchaser would not pax, more for a property than the cost to obtain a site and build a comparable
property with similar utility, without undue delay. One of the major limitations to this approach is
developing an accurate estimate of accrued depreciation from all sources.
The first step in the Cost Approach is to estimate the market value of the site, as though vacant and put
to its highest and best use. Site value is abstracted from market comparable land sales. Then an estimate
of reproduction cost new is developed for the improvements.
Dimimshed utility of accrued depreciation from physical, functional, or external causes is then deducted
from reproduction cost new. The estimate of market value by the Cost Approach is the summation of the
depreciated value of the improvements plus the market value of the site put to its highest and best use.
CONCLUSION OF APPRAISAL PROCESS
The last step in the Appraisal Process is the reconciliation of the three approaches into a single estimate
of value. Reconciliation is a process which considers the dependability and applicability of thc three
approaches and reconciles the three value indications into a final estimate of defined value.
27
SALES COMPARISON APPROACH
INTRODUCTION OF THE SALES COMPARISON APPROACH
The Sales Comparison Approach is a method of estimating market value where the subject property, is
compared with similar properties that have been sold. This approach is based on the principle of
substitution; therefore, your appraiser/s made a survey of properties that have sold in the general market
area. As it was impossible to find an identical proper13' to that of the subject, since no two buildings are
ever identical, it was necessar3' to make adju:~inients on each comparable sale as related to the subject
propert3'. Consideration was given and adjustments were made on each comparable sale as to the time of
thc sale, size, location and utility, as well as other factors that max' effect value.
Thc Sales Comparison is considered appropriate to most appraisal problems since it indicates the price
paid for similar properties by knowledgeable buyers in the marketplace. This approach is applicable when
there arc sufficient numbers of comparable sales. It is most reliable when competing properties of similar
nature are bought and sold on a regular basis.
Follow~ng are the improved comparable sales that have been found appropriate for this appraisal and the
and thc analvsis and conclusion.
28
COMPARABLE SALES
The subject property is a medical clinic considered Class B Offee. A coun .tywide search for comparable
sales was undertaken to find market data. There have not been similar sales in the western part of
Cumberland Count3' within ~he past five years. I/We have found five offce sales, two being medical offices
to use for our analysis. Following is a summary, of the sales data.
OFFICE SALES
NO. ADDRESS SALE SALE BLDG. LAND PRICE/
PRICE DATE SIZE SIZE/AC SF
I 1501 Commerce Drive $450,000 02-98 5,115 3.6 $87.98
South Middleton Township
2 21 State Avenue S545,000 01-97 5,408 .96 $100.78
South Middleton Township
3 4004 Trindle Road $424,842 01-97 3,667 .54 $115.86
Hampd~m Township
4 6230 Carlisle Pike $275,000 11-95 2,873 1.49 $95.72
Hampden Township
5 1358 Lutztown Road $187,813 01-94 !,920 2.12 $97.82
Monroe Township
29
COMPARABLE NO. I
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Eshenauer Fuels, Inc.
Elios, Damien/Sandra
1501 Commerce Drive
South Middleton Tox~ship
Cumberland County
Office Building
1986
Deed Book 172, Page 701
District 40, Map 09-0527, Parcel 023
C-l, Commercial
3.6 Acres
5,115 Square Feet
Water, Sewer, Electricity and Telephone
$450,000
February, 1998
$87.98
30
COMPARABLE NO. 2
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
lngrid J. Conner
Albert J. and Susan D. Apicella
21 State Avenue
South Middleton Township
Cumberland County
One-Sto~3', Detached, Brick Office Building in Good Condition
1994
Deed Book 152, Page 917
District 40, Map 09-0529, Parcel 051
C-O, Commercial Office
.96 Acre
5,408 Square Feet
Water, Sewer, Electricity and Telephone
$545,000
January 1997
$100.78
31
COMPARABLE NO. 3
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Berger, Marvin and Karla F.
Reager, David W.
4004 Trindle Road
Hampden Township
Cumberland
Two Story, Brick/Vinyl Office Building
1972
A-O-L, Apartment-Office Limited
Deed Book 152, Page 528
District 10, Map 21-0277, Parcel 312
23,700 Square Fcet
3,667 Square Feet
Water, Sewer, Electricity and Telephone
$424,842
January 23, 1997
$115.86
32
COMPARABLE NO. 4
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Boland, John E.
Ricks, John E. and Veronica K.
6230 Carlisle Pike
Hampden Township
Cumberland County
One Stow, Medical Office Building
1987
C-G, Commercial General
Deed Book 131, Page 802
District 10, Map 19-1606, Parcel 023A
1.49 Acres
2,873 Square Feet
Water, Sewer. Electricity and Telephone
$275,000
November 22, 1995
$95.72
33
COMPARABLE NO. 5
Grantor:
Grantee:
Address:
improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Kovacs, Donald J.
Yellow Breeches Family Practice Center
1358 Lutztown Road
Monroe Township
Cumberland County.
One Story, Frame, Medical Office Building. At the time of sale,
the building contained 1,920 gross square feet. An addition of
1,160 Square Feet was added after the sale.
1979
Deed Book 36-T, Page 159
District 22, Map 11-0282, Parcel 039
Agricultural
2.12 Acres
1,920 Square Feet
On-Site Well and Septic, Elcctricits.' and Telephone
$187,813
January. 11, 1994
$97.82
34
SALE
Sale Date
Sale Price
Size/Square Foot
Unadlusted Price per Square Foot
OFFICE SALES
SUBJECT 1
"AS OF" 10-98 02-98
N/A $450,000
6,357 5,115
N/A 587.98
Time/Conditions
Location
Condition of Improvements
Size of Improvements
Lot Size/Utility
Utilities
Zoning
Other
Total Percentage Adjustments
Ad'usted Price/S uare Foot
10-98
Average
Good
6,357
.93 Acre
Public
R-2
Medical Upgrad~
N/A
N/A
COMPARISON ANALYSIS
01-97 01-97
$545,000
.5,408
Sl00.78
ADJUSTMENTS
+4%
-I0%
0%
0%
0%
O%
-I0%
+10%
-6%
$94.7.3
+1%
-I0%
O%
O%
O%
O%
-I0%
+!0%
-9%
S80.06
$424,842
3,667
$115.86
+4%
-10%
O%
0%
O%
O%
-i0%
+i0%
-6%
$108.91
I 1-95
$275,000
2,873
$95.72
+6%
-10%
0%
O%
O%
O%
-I0%
O%
-14%
$82..32
01-94
$187,813
1,920
$97.82
+9%
-I0%
0%
0%
0%
+10%
0%
0%
+9%
35
ADJUSTMENT ANALYSIS
Time/Conditions:
Location:
Condition of Improvements:
Lot Size/Utility:
After eontaamg local commercial brokers, analyzing multi-list
data and revie~ving county sales and assessment da~ an
appropriate rate of 2% per year was found appropriate. This
rate varies throughout Cumberland County from 2% to 5%
annually. I/We have chosen the most conservative number for
this analysis. Each comparable was adjusted appropriately to
the nearest half per cent.
Comparable No. I Plus 1%
Comparable No. 2 & 3 Plus 4%
Comparable No. 4 Plus 6%
Comparable No. 5 Plus 9%
The subject propcrty is located in thc western section of
Cumberland County. in the Borough of Newvillc. All five market
comparables are from the eastern portion of Cumberland
County which offers more amenities, such as transportation,
shopping and convcniencc to the greater Harrisburg area. A
10% downward adjustment was taken for ali comparables.
No adjustment was required for the condition of thc
improvements. All five comparables are similar to thc subject
property.
Comparable Nos. 2 and 3 are similar in size to the subject.
Comparable Nos. 1, 4 and 5 have larger building lots. The
appraiser/s feel no adju~uuents are required because the
additional acreage is considered excess land and gives minimal
value to the overall property..
36
1
1
Utilities:
Other:
The subject property is serviced with public utilities.
Comparable Nos. I, 2, 3 and 4. Comparable No. 5 has on-site
well and septic systems and is considered inferior.
Comparable No. $ Plus 10%
The subject property is zoned R-2, Medium DensiW
Residential. Even though the subject properly fronts on the
main street in Newviile Borough, a variance or exception to
zoning would be required for development of the site in its
current manner. Comparables are zoned commercial.
Comparable No. 5 is zoned agricultural and required a variance
to be developed, also.
Comparable Nos. ! thru 4 Minus 10%
Comparable Nos. 4 and 5 are buildings already adapted to
medical use. Special features such as more plumbing fixtures,
lead walls for x-rays and other special amenities for the
profession. Comparable Nos. 1, 2 and 3 were considered
inferior.
Comparable No. 1, 2 & 3 Plus 10%
37
SALES COMPARISON ANALYSIS - OFFICE SALES
Sale Price
Value Range
Mean
Standard Deviation
Low
$187,813
$376,531
$143,210
Hieh
$545,000
Unadjusted Price Per Square Foot
Value Range
Mcan
Standard Deviation
$87.98
$99.63
$10.24
$115.86
Adjusted Price Per Square Foot
Value Range $80.06
Mean $94.53
Standard Deviation $13.34
$108.91
It is my/our opinion, after a careful study of thc value indicators and analyzing the market data. that most
weight be applied to the adjusted price per square foot.
FINAL CONCLUSION OF SALES COMPARISON APPROACH
All five sales were considered appropriate comparables for this analysis. Comparable Nos. 4 and 5 were
medical use building sales and were deemed the best sales for this analysis. It is the appraiser'sis' opinion
that the sale price will range from $85 to $95 per square foot. The final correlated value is 6,357 square
feet times $90 equaling $572,130. SAY $572,000.
38
INCOME APPROACH
INTRODUCTION TO INCOME APPROACH
The value of commercial property is strongly influenced by the amount, qualit3.' and derivation of the
income, in terms of rent, which it can generate for its o~vner. The Income Approach uses the potential
gross rent which the property is capable of generating in today's market, less expenses and collection for
vacancy and losses, to develop an indication of property's net income. The income is then counted into an
indication of the subject propertv. 's value by means of capitalization rate considered typical for the market,
the Wpe of properW being appraised and thc area in which the property is located.
CAPITALIZATION
Thc capitalization process "tra~lates" net operating income into a present value indication for thc property.
it assumes a present worth of expeeted future benefits. There are numerous ways to derive a capitalization
rate. Most real estate investors require a mortgage when purchasing real estate, thc Band of Investment
Technique is typically used. This method is developed by using mortgage rates provided by thc lender or
from surveys published by various research firms or organizations. Another method is actually taken from
thc marketplace. This method is considered "Direct Capitalization." Using actual sale prices and dividing
them into the net operating income of the actual sale to derive a rate from the marketplace. There must
be adequate market data available to utilize this method. Typically, "Market Data" is available to extract
a market derived capitalization rate. Our findings indicated a rate ranging from 10% to 15% for motel.
hotel and convention centers.
The Debt Coverage Formula Technique also was considered as supporting our market estimation of the
overall capitalization rate. This methodolo~' also takes into consideration the loan to value ratio, a
mortgage constraint and debt coverage factor.
39
Yield Capitalization is applicable in the analysis of properties with irregular income streams. In this
approach an income steam is projected over a specified holding period, and then calculating the present
worth of the income stream, plus the present worth of the reversionary interest at the end of the holding
period.
Published market data from such places as the American Council of Life Insurance, Appraisal Institute's
Market Sources, Korpac~ Report, The Boeckh Factor and economic reports supplied by local institutions
typically provide data on a regional basis for institutional grade properties relating to market statistics.
Capitalization rates, interest mtn, equity yield rotes, loan-to-value ratios and terms can be extracted from
these publications. These guides are broken down into regions and property, types. This information is
typically used in supporting the local market conditions.
Our conclusion will explain what methodology, we have chosen for this analysis.
The following direct pages are thc rental comparables that have been found appropriate for this approach
followed by the analysis and conclusion.
40
1
POTENTIAL GROSS INCOME
The prime consideration for any non-residential property, is the amount of rent that it can generate in the
open market. Lease information is not recorded; therefor; it is not easily verified. Realtors in the capital
region,, generally do not provide specific lease information. However, detailed information will remain in
my/our files in order to comply with the request for confidentiality. Several lease comparables were
identified. Typical leases in the subject market for office properties are on a net or modified net lease
basis. A net lease is one in which the tenant pays all property, expenses, in addition to stipulated rent. A
modified net lease is similar to a net lease, but with the property, owner paying minimal operating expenses.
The appraiser/s analyzed the following five office lease comparables.
OFFICE RENTAL DATA
I 5 Brookwood Avenue Gross 5,000 01-95 $13.00 3 Year l.casc with 2
South Middlcton Township 2,100 Year option
Medi~l Use
2 4910 Ritter Road Net Net Net 6,000 10-95 $11.50 6 Year Lease
Lower Allen Township 6,000 M~.~tical Use
3 101 Noble Boulevard Modified Net 23,000 07-96 $12.50 5 Year Term
Borough of Carlisle 2,400 Medical Use
4 205 Grandview Avenue Modified Net 56,000 08-95 $13.91 7 Year Term
East Pennsboro Township 10,500 Medical Use
5 5565 Tyler Court Net Net Net 13,000 Summer $15.00 Term Unknown
South Middleton Township 4,000 ' 98 Office
41
CONCLUSION OF RENTAL COMPARABLES
I/We have investigated five properties currently under lease for medical use. The range of value is from
$11.50 to $15.00 per square foot of rentable space. Each lease had varying rental conditions fi'om gross
rent to net net net.. The landlord, on a gross rent condition, pays all expenses and on a net net net rental
condition, the tenant pays all expenses. It is common in the marketplace to have a modified net term which
means the landlord and tenant each pay v-a~.~ng expenses regarding leased conditions. It is my/our opinion
thai a modified net lease is the most common lease within thc marketplace. Therefore, the typical expenses
paid by the property owner are real estate taxes, real estate insurance, management/lease fees,
miscellaneous and reserve for replacements. Ali other operating expenses are paid by the tenant, including
utilities.
PROJECTED ANNUAL PROPERTY EXPENSES
Real Estate Taxes
Current assessment for the subject property, is $31,750. Current total millage is. 1770, giving a tax liability
of $5,619.76 face rounded to $5,620.
Real Estate Insurance
I/We have contacted two insurance agents and were given a range of $200 to $500 per month for this
propert3'. I/We have reconciled the insurance expense at $250 per month, equaling $3,000 annually.
Manatement/Lease Fees
It is typical in general market for management finns to handle the operation and lease-up of this type of
properv/. The fee ranges from 5% to 8% of the annual gross income, l/We have considered 6% appropriate
for this analysis.
42
Miscellaneous
Generally, the property, ox~x~er pays unknown or unusual expenses, such as emergency' repairs, property
improvements, casual maintenance, etc., that occur during the term of the lease. I/We estimate these
expenses to be 1% of the potential, gross income.
M aintenance/Repair
The subject property is in good condition and will have minimal maintenance and repair items necessary.
T~ieal maintenance and repair estimates range between 1% and 5% of the gross income depending on age
and condition of the subject. It is my opinion that 2% or $.24 per square foot is appropriate for this
building.
Reserve for Replacements
A reserve for replacements account should be maintained to properly handle future building expenses. This
expense ranges between !% and 3% of the gross income. I/We have chosen 2% or thc subject.
Vacancy/Credit Loss
I/We have found that office vacancies fluctuate b~veen 1% and 5% ~Sthin the greater Harrisburg Market.
It is the appmiseffs opinion that vacancy and credit 10ss. _within the greater Newville area reflects closer to
a 5% range than the 2% range in the greater Harrisburg market. Therefore. I/we have projected 5% for
vacancy and credit loss.
'I
1
43
STABILIZED MARKET INCOME SCHEDULE
FILE: Newville Medical Foundation, Inc.
PROPERTY: 100 S. High St. Newville Pa. 17241
ANALYSIS DATE: 11-02-98
Income Item Gross Income Income
Units Per Year Per Unit
Medical Office 6,357 76,284 12.00
Total Income 6,357 $76,284 $12.00
Total Income $76,284
Vacancy/Credit Loss -3, 814
Effective Gross Income $72,470
Unit of
Measure
S.F.
STABILIXFD MARKET INCOME STATEMENT
FILE: Newville Medical Foundation, Inc.
PROPERTY: 100 S. High St. Newville Pa. 17241
ANALYSIS DATE: 11-02-98
Gross Income
Total Income
Vacancy / Credit Loss
Effective Gross Income
Amount % of Gross
$76,284 100.00%
-3,814. -5.00%
$72,470 95.00%
Per
Gross
S.F.
12.00
-0.6q
11.40
Fixed
Real Estate Taxes 5,620 7.37% 0.88
Insurance 3,000 3.93% 0.47
Operatin~j
Maintenance/Repair 1,526 2.00% 0.24
Management 4,577 6.00% 0.72
Miscellaneous 763 1.00% 0.12
Reserve
Reserve for replacement
Total Expenses
NET INCOME $55,459
~ 2.00%
$17,011 22.30%
72.70%
0.24
2.68
8.72
CAPITALIZATION
Stable Net Income Divided by Capitalization Rate = Value
$55,459 0.093167 $595,261
45
CAPITALIZATION RATE DEVELOPMENT
Three methods of estimating the over~l capitalization rate have been examined for this analysis. These are
Market Extractions from Local Sales Transactions, Published Sources and the Band of Investment
Technique supported by the Debt Coverage Ratio which is used by local institutions.
Market Extractions - Direct Capitalization
Thc first methodology is Market Extraction or Direct Capitalization that derives indicated overall rates
directly from the market by analyzing sales d~t~ The indicated, overall capitalization rate for a comparable
sale is the ratio of the indicated net operating income to thc sale price.
It is extremely difficult to find market sales to extract actual capitalization rates. Thc realtor or investor
usually do not divulge the actual gross income on sales transactions, therefore, making it extremely difficult
to formulate this methodology. I/We have found office sales transactions within thc general market place
range from 8% to 12% for properties similar to the subject. Under current market conditions, it is t.~pical
for thc capitalization rate to be at thc lower end of this range between 8% to 10%, say 9%.
Market Extractions - Published Sources
Data on capitalization rates extracted from sales of institutional grade properties was researched and
available from the American Cotmctl of Life Irtsttrartce~ the ,4ppraisal ]nstttttte :~ Market Sottrces and the
Korpacz Report. This data is summarized in the following table.
-3
46
American Council of Market Sources Korpacz
Life Insurance
Indicated 8.1% To 9.1% 8.5% To 9.4% 7.5% To 10.5%
Capitalization Rates First Quarter 1998 Fourth Quarter 1997 Second Quarter 1998
The three sources have a market Range from 7.5% to 10.5%. The American Council of Life Insurance
ranges from 8.1% for mixed properties to 9.1% for office for the first quarter of 1998. Thc Appraisal
lnstitute's Market Sources considers the major metropolitan areas within our general area for estimating
capitalization rates. Their range is from 8.5% to 9.4%. Cumberland County is located between thc four
metropolitan areas selected; therefore, minimal weight will be considered for Market Sources, but is used
as a guide. The Korpacz Report ranges between 7.5% to 10.5%. These reports take into consideration the
entire nation. I/We have reviewed the national industrial market and national suburban market to calculate
the range. It is my/our feeling that the subject property will be in the mid range of the national publications.
Most likely, it will be between 8.5% and 9.5%, say 9%. The Korpacz Report also projects a discount rate
which ranges between 10% and 13.5% with an average of 11.2.%. The general marketplace changes
betxveen 8% and 12% depending on risk. The subject is considered to be at the mid-point on the risk range.
The appraiser/s feels a 8.5% to 9.5% range is typical for the market and this property, say 9%.
The following pages have been taken from the publications stated above. Also included, is a summary of
the local market from Landmark Commercial Realty, for office and industrial market studies, and a chart
from Commercial Industrial Realty for the first quarter of 1998 for various t3q~es of pr°perties and
parameters. Both reflect cun=~t market conditions within the greater Harrisburg area. Newville is a sub-
market of Harrisburg, located in the southwestern section of Cumberland County.
--1
47
T'~'I~ I
T71~ of Lo-,, b7 lPropert7 TTFe
~ Lam ~ F. qu~ Poi~ Ddx Lc, m/
~ ~ ~ ~) ~ ~) ~) '
4,~7,627 7,~! 7.~ ' 7.20 154 !~ ~ 9.2 9.0 10/ 6
119~ 10,~l 7.17 730 Iii 1.7i 67.0 I.~ 1.6 I i/iD
Ij~)10 10,436 6.95 7.05 140 1.71 67.2
~49 4~81 7~1 7.42 i~ 132 69~ 9.1 9.1 I~ 6
7~37 4,8~7 7.01 7.13 149 I~ 68.~
276D12 ~.026 7J6 7D8 Ig~ l.g4 ~.9 10.0 9.6 I~ 2
I~,~ ~.6~7 7.11 7.29 17~ I 71.0 I.I · 91 0
119,~ 7,~4' 7.02 7.14 142 1.66 ~.7 9.4
13,~0 13,~ * * , · ,
13,~ 13,~ * * * * ·
JOl~r YZl~'tJRE 2 15,33S 7,668
Apmmcrd I 9,C)~0 9,00~
C~cl Bu~ld~ I 6,335
O~..K ~r Ic3AL FZATtJRI:3' 42 4,i5,36 i 10,604 7.O4 7.16 156 1.69 68.2 10.5 I.l 131 3
AF~,~t'd 5 33,90p 6,782 7.2'7 719 Il0 3.41 55.1 15.2 10.2 7/ 5
(~nc~ auild~ 7 211,420 30.203 6.73 6.84 129 1.~9 62.8 7.9 8.5 i I/ 9
Rc~l I lt.100 10,138 7.~ 7.86 210 !.60 ~.6 17.5 9.0 13/ I
~d 21 92,432 4,~ 6.~ 6~3 l~ I J3 67.0 I.S I.~ !~ I
"~ I 26,~00 26,J~ * * * * * * · ,
TOTAL 560 4,~01,923 1,030 7.09 7.20 155 i.66 67~ 9.4 9.0 10/
~ 85 902.253 10,615 7.11 7.31 161 1.83 66.7 9.1 rs I11
c)~c~ Bu~li~fll 141 !,60S,~ 11~88 6.92 7.03 139 1.69 ~.6 9.1 1.7
h~ 134 621D49 4,637 7~6 7.48 I~ I J2 ~A 10.2 9.1 10ft
~d 1~ 796,769 4,f~ 6~8 7.11 148 I J4 683 9~ 9.4 I~ 7
H~l 14 316.412 22,601 7~6 7.49 195 l.I! ~.~ 10.1 9.6 10/ 9
~-~ 3 I~,~ ~,6~7 7.18 7.29 17J * 71.0 t.! · 9/
~~ 17 119,~J. 7,~4 7.02 7.14 142 !.~ ~.7 9.4
Amlg, Life
10/3
8/7
7/10
7/5
8/2
7/11
·
·
8/3
4/7
9/0
9/6
6/6
8/8
10/0
7/8
7/5
7/11
19.1
30.1
12.0
15.6
6.1
3.1
2.7
03
03
03
0.2
0.1
9.9
0.l
4.7
2.1
0.6
100.0
20.0
3S,7
13,1
17.7
7.0
3.1
2*?
5m q~cndLx I'ar 5c~ md I~xioto~y of lb 5~'7.
O1~91 A,'~-'~ ~ o~ I.b'o '-,,~,,~ (AC~.~ ~,.,I I~mlqt Commm~ Ftra (~zrw. 1991 (1~. 1409)
Cap. CBp.
Rate mRent/sf-- % ChanKe -- Pdca/s!-- % ChanKe Rate --Rent/si-- % Chan~e -- Pflcelsf -- % Chin~e
4Qlr 4 Git 4 Qtr 4 Q~ 4Qir 4Q~ 4Git 4Qtr 4Qtr 4Git 4Qtr 4Qtr 4QIr 4Qb
lgg7 lgg6 lgg7 g6-97 1~ lg97 g~97 lgg7 lgg6 lgg7 g~-97 lgg6 lgg7 g6-97
Atlanta
8.8 23.42 24.42 4.27 137.16 141.34 3.05 9.4 22.36 23.80 6.44 124.98 133.53 6.84
Baltimore
Boston
Charlotte
Chicago
Cincinnati
Cleveland
Dallas-Ft. Worth
Denver
Detroit
Houston
Indianapolis
Kansas City
Las Vegas
Los Angeles
9.3 21.06 23.05 9.45 105.39 114.67 8.81 8.5
7.2 31.61 36.78 16.36 207.59 262.79 26.59 9.8
9.0 21.40 21.60 0.93 139.94 141.72 1.27 8.8
8.2 28.60 32.57 13.88 174.56 214.48 22.87 8.1
8.9 18.92 20.50 8.35 112.67 113.01 0.30 8.8
9.1 21.12 21.95 3.93 127.00 131.39 3.46 9.0
8.7 17.12 19.90 16.24 110.33 125.13 13.41 9.8
9.0 17.55 18.92 7.81 109.99 112.87 2.62 9.8
9.0, 18.07 20.00 10.68 112.23 123.95 10.44 9.0
10.0 15.50 17.92 15.61 · 91,87 98.61 7.34 9.1
9.4 16.45 16.91 2.80 116.22 111.32 (4.22) 9.2
9.0 18.01 19.58 8.72 117.15 120.38 2.76 9.2
9.3 24.90 26.70 7.23 155.88 158.02 1.37 9.7
8.8 24.21 25.06 3.51 140.60 159.48 13.43 7.5
Manhaltan Downiown 8.3 30.69 33.73 9.91 195.03 210.26 7.81 --
Manhattan Mtdtown 7.8 39.66 44.78 12.91 269.48 303.44 12.60 --
Miami 8.7 24.50 26.75 9.18 159.03 164.14 3.21 9.4
Milwa,kee 9.0 19.92 20.19 1.36 122.19 122.52 .0.27 9.4
Mi,meapolis-SI. Paid 9.1 27.53 28.88 4.90 145.72 152.15 4.41 8.7
Nashville 9.1 19.21 19.46 1.30 155.50 120.06 (22.79) 9.6
Nassau-Sul[olk 9.0 24.58 24.84 1.06 125.09 138.48 10.70 8.7
New Orleans 9.5 14.79 16.56 11.97 70.73 95.87 35.54 9.5
Oklahoma City 9.6 12.78 12.84 0.47 63.61 66.30 4.23 9.8
Orlando 8.6 21.19 23.13 9.16 129.44 135.10 4.37 9.2
Pl,ladelphia 9.4 22.78 24.67 8.30 139.01 146.12 5.11 9.1
Phoemx 9.3 20.45 22.40 9.54 114.11 132.13 15.79 9.0
Pillshurgh 9.1 23.59 25.33 7.38 132.75 137.58 3.64 9.4
Portland 8.6 21.61 23.29 7.77 121.61 134.09 10.26 8.9
SI. Louis 8.9 19.88 20.16 1.41 117.18 127.79 9.05 9.8
San Antonio 10.0 16,75 17.86 6.63 92.30 96.40 4.44 8.7
San Diego 9.0 18.84 20.81 10.46 115.20 124,62 8.18 8.6
San Francisco 8.6 31.46 35.44 12.65 173.63 195.61 12.66 9.5
Seatlle 9.1 23.22 26.22 12.92 142.73 156.03 9.32 9.8
Washington, D.C. 8.6 32.59 35.13 7.79 234.97 238.75 1.61 9.2
Sou(cas: Nahonal Real Estate Index
Nole: Dala ~ele, ID pmpe~tms located in the CBD m' a primary olfice sub-market
CBD -- -- Submban ~ Metropolilan
4Qb 9~ 4Qh 97 4Qh 96 4QIr 97 4QIr 96 4QIr 97
Allanta 17.0 15.2
Balhmore 18.3 16.0
Boston 5.7 4.5
Charlolle 6.0 4.6
Chicago 15.9 13.7
Cincinnati 13.9 10.1
Cleveland 17.0 15.0
Columbus 7.2 6.9
Dallas 34 9 29.0
Denver 14.1 10.3
Delroit 17.9 17.3
Ft. Lauderdale 6.7 4.9
FI. Worth 19.9 13.5
Itartford 23.5 17.7
Honolulu 16.1 15.2
Houston 21.9 18.1
Indianapolis 16.8 16.8
Jacksonville 13.6 13.2
Kansas City 16.5 13.8
Las Vegas 6.6 6.6
Los Angeles 20.8 17.3
Miami 21.4 18.0
Middlesex-
Somerset-
Hunterdon -- --
Somce: CB CommerctJI Vac,lnc¥ Index
8.6 7.6 10.8 9.5
8.3 6.2 11.6 9.7
7.8 7.7 6.8 6.3
11.2 9.3 8.9 7.2
11.4 9.0 14.0 11.7
10.1 7.9 12.1 9.1
9.1 8.2 14.2 12.7
8.9 6.6 8.2 6.7
11.2 9.1 17.0 14.0
9.4 7.4 11.0 8.4
9.4 8.3 11.2 10.2
10.5 9.4 9.7 8.5
12.3 10.6 15.1 11.6
21.0 17.5 21.7 17.6
12.9 12,5 14.6 13.9
17.8 12.9 18.8 14.2
7.9 9.6 12.1 13.0
7.8 7.3 10.8 10.2
10.5 7.8 12.6 9.9
11.1 14.5 10.6 13.9
17.7 15.3 18.3 15.7
12.3 11.3 15.6 13.6
14.9 11.2 14.9 11.2
19.80 20.60 4.04 117.50 122.80 4.51
27.21 32.77 20.43 137.77 146.05 6.01
17.39 17.83 2.53 124.74 122.45 (1.84)
22.65 24.36 7.55 153.03 182.89 19.51
17.63 18.19 3.18 101.30 116.50 15.00
18.94 20.12 6.23 111.17 116.26 4.58
22.12 25.10 13.47 113.27 138.25 22.05
21.98 23.51 6.96 121.97 128.51 §.36
19.77 22.00 11.28 111.11 118.54 6.69
15.89 17.71 11.45 91.60 96.69 5.56
18.29 19.97 9.19 11067 113.85 2.87
20.50 22.18 8.20 116.56 122.29 4.92
22.56 23.40 3.72 122.21 127.84 4.61
22.29 23.20 4.08 163.98 196.4.1 19.80
20.11 22.50 11.88 109.07 118.62 876
18.91 18.52 (2.06) 98.53 100.17 1.66
19.47 21.36 9.71 106.73 129.42 21.26
21.73 24.49 12.70 103.49 128.8.5 24.50
19.73 22.01 11.56 112.79 133.93 18.74
17.11 18.79 9.82 87.50 94.69 8.22
14.00 15.20 8.57 77.71 83 95 8.03
19.31 20.40 5.64 106.50 111.03 4.25
21.06 22.32 5.98 106.51 139.27 30.76
18.13 19.28 6,34 121.58 121.06 (0.43)
18.56 19.81 6.73 95.26 101.60 666
21.14 22.33 5.63 114.80 132.83 15.71
21.59 24.50 13.48 105.57 120.06 13.73
15.42 17.19 11.48 97.48 104.23 6.92
19.86 21.81 9.82 120,46 149.49 24.10
29.46 36.70 24.58 179.98 206.41 14.68
22.21 25.23 13.60 127.13 131.58 3.50
24.30 25.81 6.21 132.70 15942 20.14
CBD -- Suburban -- Mehopolilan
4Oh 96 401~ 97 4Git 96 4OI, 97 40h 9& 4Oh 97
Minneapolis-SI. Pa,I 7.6 7.0
Nashville 14.8 9.5
Nassali-St,ilolk -- --
New York-
Manhaltan
Down/
Midlown 19.1/8.411.7/6.0
Newark -- --
Oakland 12.1 14.1
Oklahoma City 28.8 29.9
Orange Co,nly ~ ~
Orlando 7.0 7.1
Philadelphia 16.2 14.4
Phoenix 13.9 12.9
Portland 7.4 5.4
Sacramento 7.7 7.4
St. Louis -18.6 17,2
Salt Lake City 7.3 4.7
San Diego 18.0 18.6
San Francisco 7.4 3.0
San Jose 9.5 2.1
Seatlle 6.3 5.0
Tampa-
St. Petersbmg 19.5 12.6
Tucson 22.3 20.3
Washinglon, D.C. 10.4 9.2
West Palm 0each -- --
49
5.5 ,I.4 6 6 5 7
6.3 ,I,I 8.6 6.7
10.5 9 6 10.5 9~
-- -- 11.6 77
12.6 10.0 12.6 100
8.9 9.1 9.6 10.2
8.1 7.4 15.9 15.8
12.6 10.5 12.6 10 5
8.6 6.2 8.1 6.5
10.7 8.0 13.2 109
7.2 7.6 9.5 94
6.5 4.9 7.0 5.1
10.2 10.1 9.6 9.4
7.4 5.0 11.4 9.1
4.1 4.9 5.8 4,8
11.3 8.3 12.8 10.5
7.1 3.9 7.3 3.4
4.9 2.3 6.0 2.3
9.9 5,1 8.1 5.0
9.0 78 115 8.9
5.8 4.3 9.0 73
7.1 60 83 72
118 14.8 118 148
I National Suburban Office Marl(et
Wilh buildings in some marl<els turn- ward cornrnilments. By laking some
lng over Ior II~e second and Ih!rd time
in lhis cycle, II'~e suburban oil!ce mar-
kel is still a very hot markel~ Transac-
lion activily is last and lurious despile
I~igh prices and intense compel!lion. It
is increasingly dill!cull to buy proper-
lies. "We can lind properlies within our
criteria, bul the picldngs are getling
slim," reports one participant. Olher
would-be inveslors are put oil by
prices Ihey consider out of line.
Properlies Ihey decide nol Io bid on
because Ihey Ih!ok Ihey would be
overpaying ellen go lot more Illan
Ihey would have paid.
REITs anti pensior, lunds conlinue
Io lead Ihe cornpelilion lot suburban
ollice pr@petites. REITs are perceived
Io be m~te inclined Io up Ihe bid.
especially il an acquisilion will give
them economies el scale in markols in
which they already own properly..
Some insHulional inveslors are
Iookincj lot oppoflunilies through Iof
leasing risk, tl'~ey are realizing belier
yields Ihan Item ex!sling buildings.
However, some are beginning Io be a
lilllo concerned aboul projecls where
Ihey are looking al Ihree Io lout
nrJor~ll~s Io groundbreaking and 15 Io
18 monlhs Ior building and slabiliza-
lion. II is dill!cull Io accuralely project
demand lhal lar gui.
More RI:ITs are gelling inlo the
developnmnl husir~ess. As prices Ior
ex!sling properlies in many markels
exceed replacemenl cosl, I-1EITs can
belier achieve Ibeir growlh objeclives
lhrough (leveloprner~l ralher Ihan
acquisilions el existing assels.
The pace'el new suburbarl office
conslruclion is acceleraling'nalion-
wide. Tile volume is anlicipaled Io be
double lhal el lasl year. Al year-end 74
million square leer el office space
were under way, wilb most el il in lite
suburbs, l'llal was Iriplo Ibe amount al
mid-year.
]
-]
-]
Table 9
National Suburban Office Market
SECOND QUARTER 1998
CURrlENT
KEY IfIDICATORS QUARTER
LAST YEAr!
QUARTER AGO
RAr,IGE 10.00%-13.50% 10.U0%-13.50% 10.00%-14.00%
AVERAGE I 1.29%, I 1.4 I% I 1.49%
flANGE 7.50%- I 0.50% 7.50%- 10.50% 7.50%- I 1.00%
AVERAGE , g.05% ' 9.10% 9.30,,.
-1
L
riAl IGE 0.00'/.- 10.go% 0.0O%-8.00% 0.00%-8.00%
AVERAGE 4.31% 4.04% 3.81%
riA,,GE z0o%-5.oo%. 3.oo%-5.0o% 3.0o%.-s.0o%
,..AV. E.?.~G E , ,..,- 3.58% 3.59% ' 3.63% '
RAUGE 8.25%-I 1.0o% 8.25%-t 1.00% 8.25%-I 1.00%
AVERAGE 0.65% ~.57%~ ; 0.~0%n- ·
a ~ale on un eye,aged, all-cash I~altS~ctl~lt
b. Inili~t ~ate el change
5O
Neverlheless, Ihere is still no wide-
spreacl concern about overbuilding in
Ihe near future. Suburban Allanta is
being walched closely because el the
arnount el new construction, but the
new buildings are lifting up. Anoll~er
booming markel is Dallas, where con-
slruction is juslilied by market de-
mand. However, Ihe dealmakers are
projecting vacancy and absorption
tales out. Io Ihe lime Ihat new con-
slruction would come on-line. Such
Ih!hiring is. I~elping Io cul back on
some o! Ihe construclion.
Prices in the national suburban
oil!ce mad<el have Ready lopped gui.
They range from 8Q0% Io 110.0% el
replacement cosl. The average price
is 0,1.4% of cost. The average proiecl-
ed price increase over II~e nexl !?
months is 4.G%.
Key value indicators are sl~own in
Table 9. This quarler Ihe average (lis-
counl tale (IRR) decreased 12 basis
points lo 11.29%. The average OAR
declined 13 basis points to 9.05%.
As prices el CBD ollico bud(lings
increase, the si)reads hetween value
indicalors in the nalional subt~rban
office ~narket and II ~ose in Ihe nalional
CBD ollice market is narrowing. Com-
parisons el value indicnlors show an
average sul)urban II'IR 26 basis poinls
lower II,an Ihal in Ihe CBD office mar-
kef. Tho suburban OAR dropped Iow-
er than Ihe CBD tale in first quarter
1996. This quarler the suburban OAR
is 0 basis p0inls lower Ihan Ihe CBD
tale. While Ihe average inilial markel
rant change rate in Ihe sdbufban mar-
kef is still hioher than the CBD rate. Ihe
spread is now ,12 basis points. Il was
60 basis poinls last quarler.
T.l'~e suburban markets tl'~at loves-
lots are most attracted Io include
Chicago, Dallas, Los Angeles. Miami.
New York, San Francisco, Portland,
and Seattle. Despite the amount el
builclincj, Atlanta is still on many tarcjet
lists, i
..... a 'g...e.
("enl~;d I'¢nn~.~ Iv;mia is :l FIC;d Id-','c Ihr I,nll.
I:lI.V iP, I IICI.N I lt'lll;lllll I'()r hi'rico llllll illllll~lli;IJ
-I~;ICL' l- high. I~lll;ll I;IICS ;IICI iSill~. ¥IlCiUIC)'
a,t' d~qq~in~ ami Imihling5 mc t'li;lll~itt~
~hil~ nl ;iff ;IvCCl~l';liill~ p;ICC. 5~vel';ll Rlffl'5 have
iii c~ll;li)liJJll;ll)' ;IcliV~ly (hll'fll~ Ihc IJlsl II;lJl' iff
IU()~ ( '(111~ cnlmliaJ wJsdmll Il.his dial IlllW ~S Iht
hif bllsillcsscs. ()lJ~lilS~ Illllch IIIlllC Ih;ill
~ ill~ i~ ~lili~hl ~l['['~s Ill Ih{' I~qmlali.n C{lll{IS
¥1111.. II;ihillUll~ ;llnl
('lllllll;lllieS hlllll ;llllllllll Ih{ Wllllll Ii1~
~1 ill[' Ih;il ( '~'llll ~ll llcllll~ Iv~l,i~l i~ Ih~ IIiMI ihulillll
Itoh h. II1~ I'hlllh~%l~l~lll I I.~. I.;lllllllllll~ I['C~lll-
~ lilly hll II1~1~1111. Mill.. II1~ w.lhl'~ I~nllin8 di~-
II IIMIIIII III I~{I ~1111;1{ ¥1111111111{'1 S illld
illt hitlc thc t'lillSIIllc'lilln i.I (]IHNI)'C;iI'S
I)lmlhmlim {'ClllCl h, Whilll,.)l
t.nl a icl'emir n,mmnt'~d I -I millitm ~F Incilil~
Illelt'l;ll le~ll e%l;ll~ ~t'l~ it'll. ~t' i]mvidt·
.l~ql;ll. L'ltlllhlenli;ll iI%~INlllIIC~ ill ~i1~
and denin~t, nldfic cvahmiit,i. Wc'v~ aim] linked
NAIl )P mid f{'l~l Iii i)mvid~ anti, mnliim
~l T~ TI .l[llllllll;Irl~l'r.t'lllll ;llllJ t'lllll;l¥1 I1~ willl ),11111
I~l~i;lclll
The ildormaUoll herein is not warranted and is
subject to correction o,' change without notice.
. Via assume no liability lot errors or on"st, ions.
Properly O.ne~ Ills Ihe rill~l to accept or ~elecl
ill oilers. Lilldlflal k Collllllercial Really. hie.. c31l
represenl Ihe ~uyer/Tenant as a b.yer's aSefK, or
the GurerlTena.z and Seller ILandlord as a d.il
alenl, bul unless othea~ise specified i~l w~ illllK.
Landma~ k Comme~ clal Really. hie.. is oldy ~epre-
sentm~ Ihe SellertLandlo~ d a~ a Seller's aKent.
^l'qw, xhmllcly .N.~O,INXI SIt iii'
..l~d in Illu I Inrl i~huiB MSA dur-
I Ivcmil ~'cup;mcy Icvcl~ have
Western Submnrkec
In I1~ Worm', ~uhmmkcl,
ur;igc uccnlm,cy I';llC~ h;ivc rc-
IllllillCll nl 97% si,cc Iht
nill[ .1' Iht ycar. Thc lack uf
ill Ih~ {:la~ I 5~[11~111. whidl had
'l]l~ ('hl~ III mid huln~lrinl I;1~
51, lllilm iff .lll.lill
Enster. Submarket:
ily ,wcr Iht Im~l yum' him Itcfl
cluff imlc~ Iii I~ in thc I~;]~lcrn
IIl;ll kCI. I)CSl)ilC SIIIII~ Ich~illilmx
Ill IICW~[ lllill kll ~cr I'n~ilili~, iii Iht
~l~[l~fli ~llhilllil~Cl, I'il~l half
li~ily lure Ix'cfi [ICnlCl' iff lira i~li~l-
till ~llhllilil~CI, wilh lilillill
Olllloo~:
~111111~ II~lllililll I~ir ~llli~C will
~lllllilllll: Ihllilll!hllilt lll~l~
I t~9'.l, ruuuh-
illg itt henry
I.'n~iillll llclivi-
IV. Scvcrnl
h,r~c Ch, s~ I
h,ihlings, m-
Inli,g
~l)(I,I)lll) ~1~
s~v~[.I re.re
are in Ihc plan-
nillg lllul
pmvnl
'l'hi~ n~w de-
iuB ~lmCC
IiIlllnL
()ur ~urvey
mid Ire'get wilh 51)ncc flvailnhlc
Iht (~1~1 llmlLCl. ()wucr (~'cupied
mul g,v~r, mcm ,wned
,re excluded. The (~la~c~
~l)itcc arc del'i,ed ;l~ f, llnw~:
. ( 'hls~ I: rollins hcighl g~eUlu~
2~'; ( 'hls~ I1: 2.1' In 2R' clmn;
II1: 16' h~ 2.r clem; ('l;l~ IV: I~
ire
I~liNh:.M i!lliwIh t'lilllhilwll Ihu-
ifil; tlR.' .~ct'tm41 Illl;lllCl Id I'~IX ns
~.1.11 ~1~ WIl~lNmilivcl~
ill IIIc I I;lllishlllg
Dow.town 8.slness District;
~li~hlly I'llllil Ii (lilicI Iii'II iiiIiiilcf,
'l'h~ ('ln~ II ~lll~lll ~ll.w~tl
Illl ~l~l illllll IIV~lill~lll li~ .~ I .~1~1 ~1
(~Clillilll~y I~v~i~ ill ill~ ('1~ III
~lll~lil ~l~lhili/.~d tiller 11
ilcclill~ ill IIm lir~l iiillilll'~.
I)' iii Ihi~ ~l'~lli~'lll ~lunlhl i:lillliliil~
III ililllillYC ~1~ lilt Iilll~ hk~'~ iff
~l~ll~'~ ~lll~ ~ll~lcd Ill
~lv;lilnhl~ IIVl~l' lira IK'~i IwII Illl~il'-
lul'~.
I~ll~llll)iillil illllll~ll lIjll~6 ~1
II~lill~ iii ilh~lil I)iil)ll ill ill~ ( '1~1~
~111~ill, (~111~ ~ I~'~ill~lli~~ I~h
S t u d y
Leasable Office Space
4.O
].$4145F ].721'1SF n %Vacincy
3.S i~ ~
2.5 __2.461tSF__
i.s
1.0
0.5 4~ ~
0.0 Class A Cla~ B* Chis B Cl~s~ C
* Owner occupied & governmenL ownid IJcdmes excluded
West Shore/1.s/ness District:
^hslnlllilnl
2,1.8,15 .~1:. 'l'h~
s.I)risi.B
lunt;mu..tl ;il 91'~1,~o. (
pt, tOy IcYcl.s
ilhslll Illil.I I~l;,Ic;I X.OI
I);I.cy slll)l]lll rclllain slnhlc (kCUl)aUcy h:vcls in IIm :lhcn41y
Ihil,ll~hlml Ih~ Ihilll ilillUlCl il~i lilt Ill, hi ( ~l~l~ ~ ~lll~l,l~ll Mi~llil~ Ill
· Ilu,[~l;t',T I'.sn~cc. VI'
51
J
J
J
J
J
J
J
]
J
:]
[J
Rank
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
3O
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Pennsylvania State Government
(Except Higher Education)
United States Government
Hershey Foods Corporation
Pennsylvania Blue Shield
AMP, Incorporated
Penn State University (Middletown and
Hershey Medical)
Giant Food Stores, Inc.
Harrisburg Polyclinic Hospital
Harrisburg Hospital
International Business Machines Corp. (IBM)
HERCO, INC.
Dauphin County Government
Holy Spirit Hospital
Weis Markets, Inc.
Capital Blue Cross
Central Dauphin School District
Electronic Data Systems Corporation
Roadway Express, Inc.
Harrisburg School District
BH/M-II Inc. (C. H. Masland)
Pennsylvania Higher Education (Includes
Shippensburg State University)
Sprint Telephone Company of Pennsylvania
Sears Roebuck & Company
Pizza Hut of America, Inc.
ABF Freight System, Inc.
United Parcel Service, Inc.
Kinney Service Corporation
Dauphin Deposit Bank & Trust Co.
Book-of-the Month Club, Inc.
Cumberland County Government
City of Harrisburg
Lebanon County Government
The Good Samaritan Hospital
Cumberland Valley School District
Exel Logistics - Grocery Services, Inc.
Harrisburg Area Community College
Bell Telephone Company of Pennsylvania
Boscov's Department Store
Carlisle Hospital
Milton Hershey School
Rite Aid Corporation
Capital Area Intermediate Unit (IR-15)
Fry Communications, Inc.
K-Mart Corporation
J F C Temps, Inc.
Nationwide Mutual Insurance Co.
Depar~-~nt of Labor and Industx~, Bureau of Research & Statistics
* Businesses that have closed or moved
out of the area have been removed.
13
Classificalion
New Conslruclion
C!ass A
Class !i
New Conslruclion
Class A
Class Ii
Low High PJ'fedive
Renlal RefilaiAveraRe
Rates IL~I~ Resd.'il
$11L00 $22,50 $19.1X)
$1,J.(X) $19.00 $15.50
$15.50 $1S.SO $~6.2.'~
$]6.25' $20.00 $17.50
$14.00 $17.00
Total
lnvenlo.n/
(Sq. Ft.)
0
2,000,000
9,600,000
75o,000
8,95o,000.
14,000,000
Bulk Warehouse
Man.fact.ring
I ligh 'Fech/R&l)
$3.45$3.90 $3.65
$2.50$4.00 $31)0
$7.00$10.75$9.75
.(10%
60,000,00O
35,000,000
2,850,000
$1L(X) $3(I.(1(I $12.IXI 500,000
$10.75 $16.00 $13.00 2.00% 23,200,000
$10.(}0 $1,1.50 .$10.75
2,8O0,000
$16.00 $381)0 $25.50 5.00% 4,000,000
Development Land (Price Per Acre)
Clnssificatio. ." Low High
office iii CBI) (l'er Ihiiltlable Pool) $100/SI~ .... $15(}/SP
I.aml in Office I'm'ks $gll,OllO.Oll $25(1,(111(1.00
l.aml in Industrial Parks $70,0(}11.(10 $105,000.00
Office/lnduslrial Land - Non l'ark$65,00(I.I)0 $250,000.00
Relail/Commercial Land ........ l. "$200,000.00 '~ $650,000.00
Residenlial
52
BAND OF INVESTMENT TECHNIQUE
l/We have completed a stud3. in the mortgage market as to what the most realistic terms and rates would
be available for this t39e of investment. A survey was performed contacting local lenders and commercial
real estate brokers to determine thc rates for mid yem' 1998. These rotes range from 7.5% to 9.5%. My/Our
survey concludes that a rate of 9% would be normal for an office under a $1,000,000 loan amount.
The majority of these loans are given for terms often to twenty years with the norm being fifteen years.
Most commercial mo~n~e rates are renegotiated after a three to five ~ar term, with typical holding period
of five to ten years. Most lenders will require a minimum of 20 to 30 equity position for this type of loan.
Investors are requiring a return on investment capital commensurate with this risk. Investor's market
indicated 8% to 12.5% return. I/We have projected a 10% return.
The appraiser/s has reviewed various publications, such as The Market Source~ published by Thc
Appraisal Institute, The Boeckh Factor, Korpacz Real 'Estate Investor Survey and The Mellon EconomW
& Financial Brtefin~ Retxort. I/We also contact various local commercial lenders when surveying rates.
Typically, these sources provide accurate rates for mortgage and yield estimation. They also provide debt
coverage ratio information which is used to support my/our final capitalization rate.
Following is an assumption of the terms and rates considered from the market to arrive at an overall ratc
that will be used in capitalizing the net operating income into a value indication.
I/Wc have used the following data as provided by the lender. The loan-to-value ratio based on 70%
mortgage, 30% equity, a term of 15 years, interest rate of 9% and 10% equity return were used to calculatc
the capitalization rate.
The overall capitalization rate per this methodology is 9.32%.
53
ADVANCED MORT_~~~~a~~
FILE: Newville Medical Foundation, linc.
PROPERTY: 100 S. High St. Newviil~, Pa. 17241
ANALYSIS DATE: 11-02-98
Input Variables
Projected Holding Pedod
Loan Ratio 1
Interest Rate
Loan Term
Investor Equity Portion
Required Investor Yield (IRR)
Growth Rate in Value per Year
Growth Rate in Net Income per Year
Soft Costs in Addition to Equity
Selling Expenses in Terminal Year
CALCULATION
Loan I x Constant
Equity x Required Yield
LESS Credit for Equity Build-up
(.70000 x 0.121712)
(.30000 x 0.100000)
RATIO x %PAID OFF x SINKING FUND
Loan 1 70.00 1.0000 0.031474
BASIC RATE
CAP RATE AT STABLE OPERATION
OVERALL RATE . ROUNDED TO
15 Years
70.00%
9.00%
15 Years
30.00%
10.000%
0.000%
0.000%
0.000%
0.000%
0.0851984
0.0300000
0.1151984
-0.0220316
0.0931668
0.0931668
9.32%
l
1
DEBT COVERAGE FORMULA TECHNIQUE
1
1
]
1
-I
l
This technique also was considered as supporting our market estimation &the overall capitalization rate.
The methodology also takes into consideration, the loan to value ratio, a mortgage constant and debt
coverage factor. The maximum loan under current conditions is 70%. The mortgage constant is
determined by normal lending rotes. The debt coverage factor ranges bev, vcen 1.10 to 1.40.
Debt Coverage Formula Technique is as folloxvs:
Debt Coverage Debt Service Loan To
Ratio Constant Value Ratio = Overall Rate
I 1.10 x .121712 x .70 = .0937
2 1.15 x .121712 x .70 = .0980
3 1.20 x .121712 x .70 = .1022
4 1.25 x .121712 x .70 = .1065
5 1.30 x .121712 x .70 = .1108
6 1.35 x .121712 x .70 = .1150
7 1.40 x .121712 x .70 = .1193
Thc debt coverage ratio for this loan will range between 1.10 to 1.15 which gives a value ratio range of
.0937 to .0980. This ratio supports our basic overall selected capitalization rate.
55
CONCLUSION OF CAPITALIZATION RATE
There are three techniques in determining the capitalization rate. They are the Direct Capitalization or
Market Derived rate, the extracted rates from publications and the Band of Investment Technique.
supported by the Debt Coverage Ratio Formula.
Direct Capitalization Chosen Indicator
Market Publications Chosen Indicator
Band of Investment Chosen Indicator
8.00% To 10% Say 9.0%
7.50% To 10.5% Say 9.5%
9.32% Say 9.3%
Therefore, based on the above extracted data, it is my/our conclusion that thc overall rate for the subject
properS., is 9.3%.
CONCLUSION OF THE INCOME APPROACH
Applying the indicated, overall capitalization rate of 9.3% to thc Stabilized Net Operating Income of
$55,459, yields an indicated stabilized market value "AS OF" October 9, 1998, of $596,333. SAY
$596,000.
56
I_NPUT VARIABLES I KEY NUMBERS
FILE: Newville Medical Foundation, Inc.
PROPERTY: 100 S. High St. Newville Pa. 17241
ANALYSIS DATE: 11-02-98
Inl~ut Variable~
Projected Holding Pedod
Loan Ratio 1
Interest Rate
Loan Term
Investor Equity Portion
Required Investor Yield (IRR)
Growth Rate in Value per Year
Growth Rate in Net Income per Year
Soft Costs in Addition to Equity
Selling Expenses in Terminal Year
Initial Cash Investment
Indicated Value
Overall Capitalization Rate
Positive Cash Flow Begins in Year
First Year Numbers
Annual Net Income
Debt Service
Annual Cash Flow
Cash on Cash Yield
Debt Coverage Ratio
15 Years
70.00%
9.00%
15 Years
30.00%
10.000%
0.000%
0.000%
0.000%
0.000%
$178,578
$ 595,261
9.32%
1
$ 55,459
($ 50,715)
$ 4,743
2.66%
1.09
57
COST APPROACH
INTRODUCTION TO COST APPROACH
In the Cost Approach to value, the value of the land and the improvcments are estimated separately and
then added together to develop a value indication for the entire property by means of the Cost Approach.
Land is usually valued "AS IF VACANT" and available for development to its highest and best use. For
this process, the Sales Comparison Approach is generally, the most reasonable method of valuation
considered applicable. This method involves compaxing similar land sales recently sold or offered for sale
with the subject propen3', a~ vacant; and a comparative analysis is made of factors affecting value. A sale
seldom possesses all the various characteristics of the subject property to the same degree. Therefore,
judgment must be exercised in arriving at a final estimate of value of the land.
Thc value of thc improvements is estimated by the reproduction cost of the structure and other site
improvements, then depreciated for physical deterioration, functional obsolescence, curable or incurable;
or external obsolescence if applicable for the subject property.
The following land sales are representative of properties within the general market area that could be used
for medical office sites.
COMPARABLE LAND SALES
No. Address Zoning Sale Date Sale Price Lot Size/AC Price/Acre
Price/SF
1 125 Walnut Bottom Road C-G 09-95 $165,000 2.39 $69,037
Shippensburg Township $1.58
2 North Spring Gardea~ Street C-3 01-95 $93,500 .78 $119,872
Borough of Carlisle
$2.75
3 38-40 Walnut Bottom Road C-G 04-97 $200,00 1.23 $163,132
Shippensburg Township $3.74
4 1538 Commerce Avenue C-I 05-97 $I 10,000 1.48 $74,324
South Middleton Township $ I. 17
A full detailed description of each transaction lbllows.
59
COMPARABLE NO. I
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
Swope, William A. and Pauline L.
A P Hotels of Pennsylvania, Inc.
Walnut Bottom Road
Shippensburg Township
Cumberland County
Vacant Land - Level
Deed Book 127, Page 942
District 36, Map 12-0320, Parcel 027
C-G, Commercial
Water, Sewer, Electricity and Telephone
2.39 Acres ( 104,108 Square Feet)
$165,000
September 6, 1995
$1.58
$69.037
60
COMPARABLE NO. 2
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
Vanek, Kent G.
Lehmnn, Wendell L. nnd Jeanne E.
North Spring Garden Street
Borough of Carlisle
Cumberland County
Vacant land with a commercial building currently being built on
the site.
Deed Book 117, Page 188
District 02, Map 21-0318, Parcel 359
C-3, General Commercial
Water, Sewer, Electricity and Telephone
.78 Acres (33,977 Square Feet)
$93,500
January 4, 1995
$2.75
$119,872
6!
]
]
]
]
]
]
]
l
t
I
I
I
I
COMPARABLE NO. 3
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
Highlands, Lester D.
Avalon Corporation
38-40 Walnut Bottom Road
Shippensburg Township
Cumberland County
Old house razed for fast food restaurant.
Deed Book 154, Page 436
District 36, 33-1871-Parcel 013
C-G, Commercial General
Water, Sewer, Gas, Electricity and Telephone
1.226 Acres (53,405 Square Feet)
$200,00O
April 1997
$3.74
$163,132
62
]
]
]
-_1
_1
]
]
]
]
]
i
]
]
]
]
]
]
]
COMPARABLE NO. 4
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
McCoy Business Center, et al
Oyer Brothers Partnership
1538 Commerce Avenue
South Middlcton Township
Cumberland Counuy
Vacant Land - Level
Deed Book 158, Page 491
District 40, Map 09-0527, Parcel 060
C-I, Commercial Industrial
Water, Sewer, Gas, Electricity and Telephone
1.48 Acres (64,469 Square Feet)
$110,000
May 30, 1997
$1.71
$74,324
63
]
]
]
]
]
]
]
]
COMPARABLE LAND SALES ANALYSIS
-----_ Sale Date 10-98 09-95 01-95 04-97 05 -97
--.-.-_ Sale Price ~ N/A $165,000 $93,500 $200,000 $110,000
-----. Lot Size/Acre .89 2.39 .78 1.23 1.48
Unadjusted Price/SF N/A $1.58 $2.75 $3.74 $1.71
-----.- ADJUSTMENT
Time/Condition 11-98 +6% +7% +3% +3%
_ Location Avera~e - ! 0% - 10% -20% - 10%
Zoning R-2 - 10% - 10% - 10% - 10%
Utilities Public 0% 0% 0% 0%
Lot Size/Utility .93 AC+/- 0% 0% 0% 0%
Other N/A 0% 0% 0% 0%
Total Percentage Adjustment N/A - 14% - 13% -27% - 17%
Adjusted Price/SF N/A $1 36 $2.39 $2.73 $1.42
-]
64
ADJUSTMENT ANALYSIS - LAND ONLY
]
]
]
]
]
]
]
-]
]
]
]
]
]
Time/Conditions:
Location:
Zonine:
Afar contacting local eonunercial brokers, analyzing multi-list data and
reviewing county sales and assessment data, an appreciation rate of 2%
per .x~ar was found appropriate. This rate varies throughout Cumberland
Count3.' from 2% to 5% annually. IAVe have chosen the most
conservative number for this analysis. Each comparable was adjusted
appropriately to the nearest half per cent. Therefore, the following
adjustments were made:
Comparable No. I Plus 6%
Comparable No. 2 Plus 7%
Comparables 3 & 4 Plus 3%
Comparable No. I is located in a rural area near an interstate exit with
higher visibility, and higher traffic count. Comparable No. 2 is a similar
in-town location in the Borough of Carlisle and was developed as a
laundromat. Comparable No. 3 is located abutting a community
shopping center with strong visibility and high traffic count. Comparable
No. 4 is located in a new, commercial office/warehouse/industrial area
with visibility from thc interstate.
superior to the subject property.
Comparable Nos. 1, 2 and 4
Comparable No. 3
All comparables arc considered
Minus 10%
Minus 20%
The subject property is zoned R-2, Medium Density ReSidential. All
four sales are zoned for commercial use which allow medical facilities
and are considered superior to the subject.
Comparable Nos. 1, 2, 3 and 4 Minus 10%
65
KISST~CTED APPRAISAL REPORT
GRAHAM MEDICAL CLINIC.
100 SOUTH HIGH STREET
NEWVILT .E, PENNSYLVANIA
PREPARED FOR
JOHN GRAHAM LIBRARY BOARD OF DIRECTORS
AND
NEWVILLE MEDICAL FOUNDATION
BY
LARRY E. FOOTE
DIVERSIFIED APPRAISAL SERVICES
35 EAST HIGH STREET, SUITE 101
CARLISLE, PENNSYLVANIA
17013-3052
(717) 249-2758
!
TABLE OF CONTENTS
PAGE NO.
Table of Contents .................................................................................................... 2
Letter of Transmittal ............................................................................................... 3
Summary of Important Facts and Conclusions ......................................................... 4
Appraisal Certificate ............................................................................................... 5
Purpose of the Appraisal ......................................................................................... 7
Location Analysis ................................................................................................... 8
Zoning .................................................................................................................. 10
Ownership History ................................................................................................ 11
Estimated Marketing Time ........................................................................ · ............ 11
Economic Trends .................................................................................................. 11
Site Description ..................................................................................................... 12
Improvements ....................................................................................................... 13
Taxes and Assessment ........................................................................................... 15
Highest and Best Use ............................................................................................ 16
Cost Approach ...................................................................................................... 19
Sales Comparison Approach ................................................................................. 22
Income Approach .................................................................................................. 26
Reconciliation and Final Value Estimate ............................................................... 29
Underlying Assumptions and Limiting Conditions ................................................ 30
Certificate of Appraisal ......................................................................................... 33
Qualifications of the Appraiser
Photographs of the Subject Property
Location Map
2
Diversified Appraisa/ Services
Real Estate Appraisers and Consultants
35 East High Street
Carlisle, PA 17013-3052
(717) 249-2758
FAX (717) 25~701
TO:
April 11, 2001
John Graham Library Board of Directors and Newville Medical Foundation
FM: Larry E. Foote
Restricted Appraisal Report
Graham Medical Clinic
100 South High Street
Newville, Pennsylvania
At your request, I have appraised the captioned property. The restricted appraisal
report, which follows this letter, is submitted in support of my opinion of Market Value
of the Fee Simple Interest in the property, as of March 8, 2001.
I hereby certify that, to the best of my knowledge and belief, the data, facts, and
opinions set forth therein, are accurate, subject to the Statement of Assumptions and Lim-
king Conditions that is also made a part of the report, and that the indicated Market Value
of the subject property, as of March 8, 2001 is:
FIVE HUNDRED AND NINETY-TWO THOUSAND DOLLARS
$592,000
This restricted appraisal has been made using the Departure Provision in accor-
dance with the guidelines set forth by the Appraisal Standards Board and is in conformity
with the standards of professional practice of the National Association of Realtors Ap-
praisal Section. I appreciate your having considered me for this assignment and trust that
you find the report entirely satisfactory.
Respectfully submitted,
Certified General Appraiser
GA-000014-L
3
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS
LOCATION:
TAX PARCEL NUMBER:
OWNERSHI~P:
LAND SIZE:
ZONING:
FLOOD HAZARD DATA:
100 South High Street
Newville, Pennsylvania
28-20-1756-005
Newville Medical Foundation, Inc.
40,591 square feet.
R-2, Medium Density Residential District.
The subject building is not located in a FEMA identified
flood hazard area according to map #421579-0001-A.
PROPERTY RIGHTS: Fee simple interest.
SCOPE OF ASSIGNMENT: The scope of the assignment included an analysis of the
subject's area, an inspection of the subject property, an es-
timation of the property's highest and best use, considera-
tion of all three approaches to value, and the application of
those relevant to the valuation of the subject.
IMPROVEMENTS: One-story detached medical center building.
OBJECTIVE: To estimate the market value of the subject property as un-
encumbered.
USE OF THE APPRAISAL: To establish a sale price.
EFFECTIVE DATE: March 8, 2001.
HIGHEST AND BEST USE: Continued use as a medical clinic.
COST APPROACH:
SALES APPROACH:
INCOME APPROACH:
VALUE CONCLUSION:
N.A.
N.A.
$583,000
$592,OOO
4
APPRAISAL CERTIFICATE
I hereby certify that upon application for valuation by:
JOHN GRAHAM LIBRARY BOARD OF DIRECTORS
NEWVILLE MEDICAL FOUNDATION
the undersigned personally inspected the following described property:
All that certain tract of land, with the improvements thereon erected, situate in the
Borough of Newville, Cumberland County, Pennsylvania, more particularly bounded and
described as follows:
Beginning at a railroad spike at the comer of land now or formerly of Viola Keck
and Vine Street; thence along the curb line of Vine Street North 65 degrees 45 minutes
East 210.00 feet to a railroad spike at the comer of Vine Street and South High Street;
thence along the curb line of South High Street South 23 degrees 04 minutes East 238.67
feet to a point in the middle of the Big Spring; thence along the middle of the Big Spring
South 89 degrees 18 minutes West 224~78 feet to a point in the middle of Big Spring;
thence along the land now or formerly of Viola Keck North 24 degrees 45 minutes West
143.83 feet to the place of beginning. Containing 40,591 square feet.
To the best of my knowledge and belief the statements contained in this report are
true and correct, and that neither the employment to make this restricted appraisal report
nor the compensation is contingent upon the value reported, and that in my opinion the
Market Value as of March 8, 2001 is:
FIVE HUNDRED AND NINETY-TWO THOUSAND DOLLARS
$592,000
5
The property was appraised as a whole, subject to the contingem and limiting
conditions outlined herein.
Larry E. Foote
Certified General Appraiser
GA-000014-L
PURPOSE OF THE APPRAISAL
The purpose of this restricted appraisal is to estimate the Market Value of the sub-
ject property as of March 8, 2001.
Market Value is defined as the most probable price which a property should bring
in a-competitive and open market under all conditions requisite to a fair sale, the buyer
and seller, each acting prudently, knowledgeably and assuming the price is not affected
by undue stimulus. Implicit in this definition is the consummation of a sale as of a speci-
fied date and the passing of title from seller to buyer under conditions whereby:
a. Buyer and seller are typically motivated.
b. Both parties are well informed or well advised, and each acting in
what he considers his own best interest.
c. A reasonable time is allowed for exposure in the open market.
d. Payment is made in terms of cash in U.S. dollars or in terms of fi-
nancial arrangements comparable thereto.
e. The price represents the normal consideration for the property sold
unaffected by special Or creative financing or sales concessions
granted by anyone associated with the sale.
7
LOCATION ANALYSIS
The subject property is located in the south central part of Pennsylvania in Cum-
berland County. Cumberland County has pronounced boundaries. The Susquehanna
River forms the eastern boundary shared with Dauphin County and the state capitol, Har-
risburg. The Yellow Breeches Creek forms the southeastern boundary with York County.
The boundary then extends to the southwest following the Paney and South Mountains.
That line also constitutes the southern boundary with Adams County. The southwestern
boundary with Franklin County is traced by Laughlin Run, Middle Spring Creek, Gum
Run, and Maines Run while the ridge line of Blue Mountain forms the northern boundary
with Perry County.
Based upon statistics from the Commonwealth of Pennsylvania Department of
Labor and Industry Bureau of Research and Statistics, total civilian labor force in the
Harrisburg-Carlisle-Lebanon MSA as of March, 2000 was 341,800, down 3,600 from
March, 1999, which was 345,400. The unemploymem rate for Cumberland County as of
March, 2000 was 2.3 percent, down .3 percem from March, 1999 which was 2.6 percem.
These figures of unemployment are lower than 4.4 percent for the commonwealth of
Pennsylvania. Over the year service producing industries are up 2,300 jobs and goods
producing industries are down 1,100 jobs.
Major east-west transportation links serving the general area are U.S. Route 22
and 322, Interstate Route 78, and Interstate Route 76. Major nearby north-south arteries
include Interstate Route 81, Interstate Route 83, and U.S. Routes 11 and 15. Rail service
is provided by Amtrak on ConRail's line. The rail terminal is located in downtown Har-
risburg. Air transportation includes four airports with Harrisburg International Airport
serving the major carriers of U.S. Air, American, and Pennsylvania Commuter Air Lines.
General aviation is also served by Capital City Airport and the Carlisle Business Airport.
Higher education is offered through the Harrisburg Area Community College, the
University Center at Harrisburg, Pennsylvania State University at Harrisburg, Dickinson
College and Dickinson Law School. ~_tllersville State University, Shippensburg State
University, Susquehanna University, Franklin and Marshall College, and York College,
among others, are all within a one hour drive of the general area.
Newville is located in the southeast section of central Pennsylvania, approxi-
mately thirty miles fi.om Harrisburg, the state capitol. The town itself is presently under-
going a considerable degree of renovation and restoration of older properties. Employ-
ment opportunities are good, with Commonwealth of Pennsylvania, Hershey Foods Cor-
poration, AMP Incorporated, Herco, Inc., Bethlehem Steel, Harrisburg Hospital, Penn-
sylvania Blue Shield, Rite Aid Corporation, Hershey Medical Center, Carlisle Barracks,
PPG Industries, Carlisle Tire and Wheel and Lear Corp. being the major employers in the
area. There are also manufacturers of crystals, paper products, and steel products in
nearby Carlisle.
9
ZONING
The subject property is located in an area which is zoned R-2, Medium Density
Residential District. These districts are primarily intended for medium density residential
uses where centralized utilities are provided. Certain community commercial uses are
conditionally permitted in these districts in order to allow the development of neighbor-
hood commercial services which are designed to meet the daily needs of surrounding
residential areas and which protect the surrounding residential environment.
In the Medium Density Residential District, no building or premises shall be used
and no building or part of a building shall be erected or altered which is arranged, in-
tended or designed to be used in whole or in part for any use except the following:
A. Any permitted use or accessory use as listed and regulated in the R-1 District.
B. Conversions of an existing residential structure from a one-family dwelling to
a two or more family dwelling, subject to the conditions listed in the Zoning
ordinance.
C. Boarding, lodging or rooming house.
D. Places ofworship.
E. Educational institutions.
10
OWNERSHIP HISTORY
The subject property is owned by Newville Medical Foundation, Inc. The vacant
property was purchased on August 14, 1972 for a reported consideration of' $14,000 and
ownership transferred on deed reference 24-T-623.
ESTIMATED MARKETING TIME
It is estimated that if the subject property were offered for sale at the indicated
Market Value, a reasonable marketing time would be six to twelve months. This estimate
is based upon quarterly sales figures published by Central Penn Multi List, Inc.
ECONOMIC TRENDS
Historically, rental income for similar properties has steadily increased, with va-
cancy rates remaining stable. Financing is readily available to qualified purchasers at
reasonable rates and terms.
11
SITE DESCRIPTION
The subject site is rectangular in shape, consists of a total area of approximately 40,591
square feet, and has approximately 238.67 linear feet of macadam road frontage along
South High Street. There is also approximately 210 linear feet of macadam road frontage
along¥ine Street.
The site is relatively level throughout and there does not appear to be any drain-
age problems. According to the Federal Emergency Management Agency map number
421579-0001-A, the building is not located in an area which is prone to flooding.
In the absence of core boring, it has been assumed that there are no mineral
deposits of a commercial nature underlying the subject site. For the same reason, it is
assumed that there are no unusual sub-soil conditions that would adversely affect the sub-
jeer site.
Access to the site is via South High Street and Vine Street, and visibility of the
site from these roadways is considered to be good.
Utilities available at the site include water, sewer, electricity and telephone ser-
vice. There appears to be sufficient capacity in each of these utilities to permit optimum
utilization of the site.
12
IMPROVEMENTS
The subject property is improved with a one-story detached building containing a
total of approximately 6,176 square feet of gross building area above grade, constructed
over a partial basement and crawlspace. This building, which was constructed in 1973
and expanded in 1995, is presently being utilized as a medical clinic.
The foUndation walls of this structure are of concrete block and the exterior walls
are of brick. Roofing is of the gable type, covered with asphalt shingles. Gutters and
downspouts are of painted aluminum. Windows are of the vinyl-clad thermopane type
and exterior doors are of insulated steel or insulated steel with glass in the upper one-half.
Attached to the fi.om of the building is a small covered porch, and there is a concrete
patio located at the rear of the building.
The interior of the building is divided into a vestibule, waiting room, receptionists
office, emergency room,.xray room, xray waiting room, laboratory, two storage rooms,
break room, twelve examination rooms, three private offices, patient education room, dic-
tation room, and seven restrooms. Interior floor coverings are of asphalt tile blocks and
carpet. Interior walls and ceilings are of painted drywall. Interior doors are of' painted
Masonite and interior trim is of painted wood.
The building is heated and cooled by five Weatherking electric heat pumps. Wa-
ter is heated by an eighty-gallon electric water heater, and plumbing is of plastic and cop-
per. Electricity is distributed by an 800-ampere circuit breaker electrical service. The
building is equipped with a hard-wired smoke, fire and burglar alarm system; and a Li-
thonia emergency lighting system.
13
The site is further improved with a lawn with mature trees and shrubs, and ap-
proximately 12,216 square feet of asphalt parking areas which are illuminated by pole-
mounted and wall-mounted lamps.
All improvements are considered to be in good condition on the interior and on
the exterior, with mechanical systems appearing to be adequate and functioning properly.
14
TAXES AND ASSESSMENT
The real estate tax assessment, synonymous with assessed value, is the official
valuation level of property for advalorem tax purposes. Since the assessment is a dollar
mount assigned to taxable property by the assessor for the purposes of taxation, it may
not reflect the independent value conclusions found within this report. The following is
the assessment and tax liability for the subject property as determined by the County As-
sessor's Office:
Assessment:
Land $ 77,540
Improvements 510,330
Total $587,870
Mill Rates:
Borough
County
School
Total
.0016657
.0018820
.0126940 pr~eaed
.0162417
Tax Liability:
Borough
County
School
Total
$ 979.22
1,106.37
7,462.42
$9,548.01
15
HIGHEST AND BEST USE
Highest and Best Use is defined by the Appraisal Terminology and Handbook,
published by the Appraisal Institute, as "the most profitable likely use to which a prop-
erty can be put". The opinion of such use may be based on the highest and most profit-
able continuous use to which the property is adapted and needed, or likely to be in de-
mand, in the reasonable near future.
However, elements affecting value that depend upon events or a combination of
occurrences which, while within the realm of possibility, are not fairly shown to be rea-
sonably probable, should be excluded from consideration. Als°, if the intended use is
dependent on an uncertain act of another person, the intention cannot be considered.
The following tests must be passed in determining the highest and best use of the
subject property.
a.
The use must be physically possible. The size, shape, and topography of the
site affect possible uses for which it can be developed.
b. The use must be legal, i.e., permitted under zoning and other municipal,
county, state, or federal regulations.
c. The use must be financially feasible, probable, and not speculative. There
must be an economic, social, or market demand for the existing or proposed
use. All uses that are expected to produce a positive return are regarded as fi-
nancially feasible.
d. Finally, the highest and best use must be that which produced the highest pos-
sible net return for the longest period of time.
16
The highest and best use of the site as vacant may be different fi.om the highest
and best use as currently improved. This is most likely to occur with older properties,
where physical condition, market changes, and neighborhood changes have been signifi-
cant since the period when originally constructed.
HIGHEST AND BEST USE AS VACANT:
..... The highest and best use of the property as vacant assumes the site has no existing
improvements. This concept is important to the appraisal report as it is carried through to
the valuation of the land in the cost approach, if applicable. It assists in the selection of
comparable sales of vacant sites to apply to the subject site. Considering the physical
characteristics of the site, neighborhood uses, current zoning, location, and financial pa-
rameters, it is my opinion that the highest and best use of the subject property, as vacant,
would be for construction ora multi-family residential building.
HIGHEST AND BEST USE AS IMPROVED:
The analysis of highest and best use of a property as improved addresses what use
should be made of the current improvements. Possible choices include renovation, ex-
pansion, demolition, or maintaining its current use with no changes. Considering the
physical characteristics of the property, neighborhood uses, current zoning, location, and
financial parameters, it is my opinion that the highest and best use of the subject property,
as improved, is for continued use as a medical center building.
17
THE APPRAISAL PROCESS
Three approaches to value are generally included in an appraisal report. These
techniques include the cost approach, sales comparison approach, and income approach
to value.
--- The cost approach to value is based on the assumption that the reproduction cost
of a building plus land value, tends to set the upper limit to value. A key assumption is
that a newly constructed building would have advantages over the existing building,
therefore an evaluation focuses upon disadvantages or deficiencies (depreciation) of the
existing building compared to a new facility.
The sales comparison approach to value assumes that under normal conditions, a
given number of parties acting intelligently and voluntarily, tend to set a pattern fi.om
which value can be estimated. Application of this approach relies on a comparison of the
subject with a sufficient number of recent transactions of comparable properties in the
market, based on a common unit, such as price per square foot &building area.
The income approach concerns itself with present worth of the future potential
benefits of a property. The initial estimate involves the net income, which a fully in-
formed person is justified in assuming the property will produce during its remaining use-
ful life. This estimated net income is then capitalized into a value estimate, based upon
the level of risk as compared with that of a similar type and class.
At the request of the client and in accordance with the departure provision of the
Uniform Standards of Professional Appraisal Practice, only the income approach to value
has been applied to the subject property and is subsequently presented.
18
THE COST APPROACH
The cost approach to value is based on the principle of substitution, which pro-
poses that an informed buyer will pay no more than the cost of providing a substitute
property with similar utility.
..... In estimating the value of the subject property by the cost approach, the following
steps must be completed:
a. Estimate the value of the site to its highest and best use as though vacant,
which we have done.
b. Estimate the reproduction or replacement cost of the improvements on the ef-
fective date of the appraisal. This includes direct and indirect costs.
c. Estimate other costs incurred after construction to being the new, vacant
building up t° market conditions and occupancy levels.
d. Estimate entrepreneurial profit, when appropriate, from an analysis of the
market.
e. Add estimated replacement or reproduction cost, indirect costs, and entrepre-
neurial profit, often expressed as a percentage of total direct and indirect costs
to arrive at the total replacement or reproduction cost of the primary structure.
f. Estimate the amount of accrued depreciation in the structure, which is divided
into three major categories; physical deterioration, functional obsolescence,
and external obsolescence.
19
g. Deduct the estimated depreciation from the total reproduction or replacement
cost of the structure to derive an estimate of the structure's depreciated repro-
duction or replacement cost.
h. Estimate reproduction or replacement costs and depreciation for any acces-
sory buildings and site improvements, and then deduct estimated depreciation
from the reproduction or replacement costs of these improvements. Site im-
provements and minor building improvements are ot~en appraised at their net
value, i.e., directly on a depreciated cost basis.
i. Add the depreciated reproduction of replacement costs of the structure, the
accessory buildings, and the site improvements to obtain the estimated total
depreciated reproduction or replacement cost of all improvements.
j. Add the land value to the total depreciated reproduction or replacement cost
of all improvements to arrive at the indicated value of the fee simple interest
in the property.
k. Adjust the indicated fee simple value to reflect the property interest being ap-
praised, if necessary, to produce an indicated value for the interest in the sub-
ject property.
Comparison is the essence of the cost approach to value, similar to the sales
comparison and income approaches. Construction costs, plus land values, are
compared to the values of existing improved properties. The four principles used
for the sale comparison approach (substitution, supply and demand, balance, and
externalities), are also applicable to the cost approach.
20
So the cost approach to value can be derived and equitably compared with
the other approaches to value, adjustments for accrued depreciation from all
causes are deducted from the reproduction cost, including:
a. Physical Deterioration: Physical wearing out of property.
b. Functional Obsolescence: Lack of desirability in terms of layout, style
and design as compared to that of a new property, serving the same func-
tion.
c. External Obsolescence: Loss of value from causes outside the property it-
self.
The cost approach to value is most applicable for new properties, where
the components of physical deterioration and functional and external obsoles-
cence are small. The Marshal Valuation Service is used in this approach with
actual costs for the subject property.
The Marshall Valuation Service is a complete, dependable appraisal guide
for developing replacement costs, depreciated values, and insurable values of
buildings and other improvements. Modifiers are applied to make the cost
applicable to any size building in any locality. Known costs for locally con-
structed properties are also analyzed and compared with derived cost esti-
mates.
The land value is based on comparable land sales using the same tech-
niques as applied in the sales comparison approach.
21
At the request of the client, and in accordance with the departure provision
of the Uniform Standards of Professional Appraisal Practice, the cost ap-
proach to value has not been included in this appraisal report.
22
TIlE SALES COMPARISON APPROACH
The sales comparison approach is a process of comparing market data, that is, the
prices paid for similar properties, prices asked by owners, offers made by prospective
purchasers willing to buy, and rents and leases.
..... In applying the sales comparison approach, various appraisal principles are ap-
plied, ensuring that all relevant issues have been included in the analysis. The principles
of primary importance are supply and demand, balance, substitution, and externalities.
Additionally, a fundamental premise of the sales comparison approach is the concept, that
from analysis of sales of reasonably similar properties, an appraiser has a factual basis
upon which to estimate the v. alue of the subject. Proper application of the sales compari-
son approach requires that:
a. Only market transactions be weighed, and the date of each transaction be con-
finned to the greatest extent possible.
b. The degree of comparability of each sale to the subject be considered.
c. The value conclusion be consistent with the analysis of the sales data.
A definition of market value is: "The most probable price which a property
should bring in a competitive and open market under all conditions requisite to a fair sale,
the buyer and seller, each aCting prudently, knowledgeably and assuming the price is not
affected by undue stimulus. Implicit in this definition is the consummation of a sale as of
a specified date and the passing of title from seller to buyer under conditions whereby:
a. Buyer and seller are typically motivated.
23
b. Both parties are well informed or well advised, and each acting in what he
considers his own best interest.
c. A reasonable time is allowed for exposure in the open market.
d. Payment is made in terms of cash in U.S. dollars or in terms of financial ar-
rangements comparable thereto.
The price represents the normal consideration for the property sold unaffected
by special or creative financing or sales concessions granted by anyone asso-
ciated with the sale.
The degree of comparability that exists between a sale and the subject is often a
function of the volume of sales activity in a market. For any class of real estate, if
sales are infrequent, the market area must be expanded in scope of time and or
geography to whatever extent is necessary to accumulate sufficient data on which
to base a judgment.
To judge the degree of comparability between a sale and the subject, sev-
eral guidelines can be applied.
a. The sale should be in the same market as the subject. To the extent
that a market is a meeting place for buyers and sellers of real estate of
a given type, the boundaries of the market are set by the participants in
merchandising and absorbing competitive properties. The boundaries
of a market area are consequently economic in character, and not
purely physical or geographic.
24
b. Physical characteristics of the sale and subject should be as similar as
possible in terms of size and amenities customarily found within the
applicable class of real estate.
c. Real estate price trends over time must be taken into consideration.
d. The functional adequacy of the sale property and the subject should be
competitive in terms of the ability of each to support similar functions.
At the request of the client, and in accordance with the departure provision
of the Uniform Standards of Professional Appraisal Practice, the sales comparison
approach to value has not been included in this appraisal report.
25
THE INCOME APPROACH
The income approach is a method of converting income streams into present
worth Income and expense data for the subject property has been collected from the
property owner's income and expense summary and adjusted to include a property man-
agement fee. The present lease rate of $5,300 per month is equal to $10.30 per square
foot of gross building area per year. This rate is considered to be less than fair market
rent level, based upon office rental rates from medical office buildings in the Carlisle
area. Therefore, the fair market rental rate of $12 per square foot has been used in the
income and expense summary contained in this appraisal report. Analysis of this data
resulted in a projected annual net operating income of $52,603.
Using this approach, the net operating income should be sufficient to cover total
mortgage payments and offer a return on equity investment. The net operating income is
capitalized to obtain an estimate of value by income approach.
Using the band of investment technique to develop a capitalization rate, the ap-
praiser contacted lending institutions to determine the availability and terms of invest-
ment capital, and the equity return desired by investors in this type investment. It was
found that eighty percent of the property value could be borrowed at seven and three-
fourths percent interest per annum for a term of twenty years, adjusted at the end of five
years. Also, investors desire an equity yield of five percent.
The mortgage constant under the above terms would be .098514. Applying the
band of investment technique, the overall capitalization rate is developed in the following
mamaer:
26
.80 x .098514 = .078811
.20 x .050000 = .010000
.088811
Based upon the above, capitalizing the net operating income at the overall capi-
talization rate of .088811 indicates a value of $52,603/.088811 = $592,302.76. There-
fore, the Market Value of the subject property by the income approach is best estimated
at $592,000.
27
INCOME AND EXPENSE SUMMARY
SCHEDULED INCOME:
6,176 square feet ~ $12 =
$74,112
OPERATING EXPENSES:
Water and sewer
Security alarm services
Projected property taxes
Repairs and maintenance
Property management at 5%
Replacement reserve
Total Operating Expenses
1,443
895
9,548
5,417
3,706
500
21,509
NET OPERATING INCOME:
$52,603
28
RECONCILIATION AND FINAL VALUE ESTIMATE
Reconciliation is the analysis of alternative conclusions to arrive at a final value
estimate. Reconciliation is required because different value indications result from the
use of multiple approaches to value and within the application of a single approach.
.... The final value estimate is not derived simply by applying technical and quantita-
tive procedures; rather, it involves the exercise of judgment. The value conclusion
reached must be consistent with market thinking.
The parts of this appraisal report are the following approaches to value your ap-
praiser used:
Value Indicated by Cost Approach N.A.
Value Indicated by Sales Comparison Approach N.A.
Value Indicated by Income Approach $592,000
These approaches are representative of the market value of the property. I have
carefully examined each step in each method, and I believe the conclusions accurately
reflect the attitude of typical purchasers of this type property in this neighborhood. It is
my belief that this reexamination has confirmed the original conclusions.
As a result of this restricted appraisal and analysis, it is this appraiser's considered
judgment and opinion that the Market Value of the subject property, as of March 8, 2001
FIVE HUNDRED AND NINETY-TWO THOUSAND DOLLARS
$592,000
29
UNDERLYING ASSUMPTIONS AND LIMITING
CONDITIONS SUBJECT TO Ti:liS APPRAISAL
1. I assume no responsibility for matters legal in nature, nor do I render any opinion
as to the title, which is assumed to be marketable. The property is appraised as
..... though under responsible ownership.
2. The legal description used herein is correct.
3. I have made no survey of the subject property, and the boundaries are taken from
records believed to be reliable.
4. I assume that there are no hidden or unapparent conditions of the property, subsoil
or structures which would render it more or less valuable. I assume no responsi-
bility for such conditions or for engineering which might be required to discover
such factors.
5. The information, estimates, and opinions furnished to me and contained in this re-
port were obtained from sources considered to be reliable and believed to be true
and correct. However, no responsibility for accuracy can be assumed by me.
6. This appraisal report is to be used in its entirety and only for the purpose for
which it was rendered.
7. Neither all nor any part of the contents of this appraisal report, (especially any
conclusions as to value, the identity of the appraiser or the firm with which he is
connected) shall be reproduced, published, or disseminated to the public through
advertising media, public relations media, sales media, or any other public means
30
of communication, without the prior written consent and approval of the ap-
praiser.
8. Unless otherwise stated in this report, the existence of hazardous material, includ-
ing without limitation asbestos, polychlorinated biphenyls, petroleum leakage, or
agricultural chemicals, which may or may not be present on the property, was not
.... observed by the appraiser. The appraiser has no knowledge of the existence of
such materials on or in the property. The appraiser, however, is not qualified to
detect such substances. The presence of substances such as asbestos, urea-
formaldehyde foam insulation, or other potentially hazardous materials may affect
the value of the property. The value estimate is predicated on the assumption that
there is no such material on or in the property that would cause a loss in value.
No responsibility is assumed for any such conditions, or for any expertise or engi-
neering knowledge required to discover them. The client is urged to retain an ex-
pert in this field, if desired.
9. I do not have knowledge or experience required to evaluate whether physical
changes have to be made to existing facilities to conform to the Americans With
Disabilities Act regulations or whether alterations or new construction meets the
requirements. Therefore, the value reported is based upon the assumption that the
subject property conforms to the ADA regulations. The client is urged to retain
an expert in this field, if desired.
10. Acceptance of and/or use of this appraisal report constitutes acceptance of the
foregoing assumptions and limiting conditions.
31
11. Adherence to the confidentiality requirement of the Uniform Standards of Profes-
sional Appraisal Practice requires that, prior to making any copies of the appraisal
report or having discussions related to this appraisal assignment with anyone
other than the client, approval from the client be obtained in writing. Upon re-
ceipt of said written authorization, copies of the appraisal report shall be produced
.... or discussions with a third party may be held. Fees for these additional services
shall be mutually agreed upon and are payable in advance.
12. This appraisal was prepared for the exclusive us of the client identified in this ap-
praisal report. The information and opinions contained in this appraisal set forth
the appraiser's best judgment in light of the information available at the time of
the preparation of this report. Any use of this appraisal by any other person or en-
tity, or any reliance or decisions based on this appraisal are the sole responsibility
and at the sole risk of the third party. The appraiser accepts no responsibility for
damages suffered by any third party as a result of reliance on or decisions made or
actions taken based on this report.
32
CERTIFICATE OF APPRAISAL
Your appraiser hereby certifies that:
1. I have no present or contemplated future interest in the subject property.
2. I have no personal interest or bias with respect to the subject matter of this ap-
..... praisal report or the parties involved. My findings are not based on the employ-
ment to make the restricted appraisal, a requested minimum valuation, a specific
valuation, or the approval of a loan.
3. To the best of my knowledge and belief, the statements of fact contained in this
appraisal report, upon which the analyses, opinions, and conclusions expressed
herein are based, are true and correct.
4. This restricted appraisal report sets forth all of the limiting conditions (imposed
by the terms of my assignment or by the undersigned) affecting the analyses,
opinions, and conclusions contained in this report.
5. This restricted appraisal report has been made in conformity with the Uniform
Standards of Professional Appraisal Practice adopted by the Appraisal Standards
Board of the Appraisal Foundation, and is subject to the requirements of the Code
of Professional Ethics and Standards of Professional Conduct of the Appraisal
Section of the National Association of Realtors.
6. No one other than the undersigned prepared the analyses, conclusions, and opin-
ions concerning real estate that are set forth in this restricted appraisal report.
7. This restricted appraisal rePort has been completed in a manner that does not mis-
lead or confuse the client or the intended users of the report.
33
8. The appraiser has advised the client that the assignment calls for something less
than, or different from the work required by the specific guidelines.
9. The client has agreed that the performance of a restricted appraisal would be ap-
propriate.
Larry E. Foote
Certified General Appraiser
GA-000014-L
34
LARRY E. FOOTE
RE.~ ESTATE APPRAISER
EXPERIENCE:
1979-Present: Chief Appraiser, Diversified Appraisal Services, Carlisle, Pa.
Principal Broker, LaRue Development Company, Carlisle, Pa.
1976-1979: Associate Broker, Coloni~al Realty, Carlisle, Pa.
1972-1976: Realtor Associate, Jack Gaughen Realtor, Carlisle, Pa.
Appraisal experience included undeveloped land, farms, building lots, single-family dwellings,
mobii~ home parks, medical centers, nursing homes, motels, apartment buildings and complexes,
office buildings, service stations, veterinary clinics, rehabilitation centers, retail buildings, day-
care centers, warehouses, and manufacturing facilities.
EDUCATION:
Bachelor of Business Administration, Pennsylvama State University, 1976.
Associate Bachelor of Business Administration, Harrisburg Area Community
College, 1974.
Diploma, Carlisle Senior High School, 1965.
Certificate, Pennsylvania Realtors Institute, GRI I, GRI II, GRI III.
Certificate, Realtors National Marketing Institute, CI 101, CI 102, CI 103, CI 104,
CI 105.
Standards of Professional Practice, American Institute of Real Estate Appraisers.
Real Estate Appraisal Principles, American Institute of Real Estate ApPraisers.
Residential Valuation, American Institute of Real Estate Appraisers.
Appraisal Procedures, Appraisal Institute.
Principles of Income Property Appraising, Appraisal Institute.
Case Studies in Real Estate Valuation, Appraisal Institute.
Report Writing and Valuation Analysis, Appraisal Institute.
PROFESSIONAL LICENSES:
General Appraiser #GA-000014-L, Commonwealth of Pcnnsylva~a.
Peal Estate Broker #RB-029729-A, Commonwealth of Pennsylvania.
PROFESSIONAL DESIGNATIONS:
Gill: Graduate of the Pennsylvania RealtOrs Institute, awarded by the Pennsyl-
v~nio_ Association of Realtors.
CRS: Certified Residential Specialist, awarded by the Realtors National Market-
ing Institute of thc National Association of Realtors.
CCIM: Certified Commercial Inveshnent Member, awarded by the Realtors
National Marketing Institute of the National Association of Realtors.
PROFESSIONAL ORGANIZATION AFFILIATIONS:
National Association of Realtors Appraisal Section.
Carlisle Association of Realtors.
Pennsylvania Association of Realtors.
National Association of Realtors.
RealWrs National Marketing Institute.
35
PAST CLIENTS:
Borough of Carlisle
Keystone Financial Mortgage
Cornerstone Federal Credit Union
Pennsylvania State Bank
Commerce Bank
Cumberland-Perry Association for Retarded Citizens
Carlisle Suburban Authority
Members 1~ Federal Credit Union
Pennsylvama National Bank
Evans Financial Corporation
..~ -Greenawalt & Company, CPA
Smith's Transfer Corporation
Carlisle Department of Parks and Recreation
Executive Relocation Services
Carlisle Area School District
Messiah Homes, Incorporated
ERA Eastern Regional Services
Pennsylvania Turnpike Commission
Chase Home Mortgage Corporation
Defense Activities Federal Credit Union
Pennsylvania State Employees Credit Union
PNC Mortgage Corporation
F&M Trust Company
National City Mortgage Corporation
Washington Mutual Home Loans, Inc.
Prudential Relocation Services
Lender's Choice
Market Intelligence, Incorporated
United Telephone Employees Federal Credit Union
Cumberland County Commissioners
Allstate Enterprises Mortgage Corporation
Dickinson College
PPG Industries, Incorporated
Gettysburg College
Redevelopment Authority of Cumberland County
Record Data Appraisal Services, Incorporated
First United Federal Savings Association
Fulton Bank
United States Marshall Service
GMAC Mortgage Corporation
O,,~town Bank
Letterkenny Federal Credit Union
BancPlus Mortgage Corporation
Coldwell Banker Relocation Services, Incorporated
Central Pennsylvania Savings Bank
Mellon Bank
Provident Home Mortgage Corporation
Various law firms and individuals
36
/
/
/
21003
AL'TEAl'ON
SPRING FIELO
CUIIIiINGSTOWN
\
CLEVERSOURG
LEVERSB(JRG
6REYTHORNE
PENN
OKE
LAUREL
SUBJECT PROPERTY
LOCATIO~ MAP
DI
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
: SS.
:
AFFIDAVIT
AND NOW COMES, STEVEN W. BARRET , who
duly sworn acc~rdin~ to law, deposes --~
=~ says that:
being
1. He is a sui juris adult individual who resides .at
/~ ~/~ ~/~ ~. C~A/I~/~ ~ and whose office
address is 124 -126 NORTH HANOVER STREET, CARLISLE, PA
17013 ·
2. He is familiar with the property of the Newville Medical
Foundation, Inc., located at
Newville, Pennsylvania 17241,
100 South High Street,
(herein "The Property")
and has personally inspected the same.
3. He is acquainted with the value of Real Estate in the
locality of The Property by virtue of ~ years
experience in the Real Estate Brokerage business in
Cumberland County, Pennsylvania, and by virtue of
personal knowledge.
EXHIBIT
4. He has performed the appraisal of The Property dated as
of October 9, 1998, and is of the opinion that the
present fair market value of The Property remains at $
575,00.000 as determined by that appraisal.
5. He has examined the Sale Contract dated October 8, 1999,
for the proposed private sale of The Property.
6. He is not in any manner personally interested in the
proposed sale of The Property.
7. He is of the opinion that the proposed consideration (and
terms of the proposed sale) is more than can be obtained
at public sale.
STEVENW. BARRETT
SWORN TO AND SUBSCRIBED
before me, the undersigned
Notary Public, on this ~
day of ~C4-~be,- , 1999.
Nota~_~ublic
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
: SS.
:
AFFIDAVIT
AND NOW COMES, William A. Bassett , who
being duly sworn according to law, deposes and says that:
1. He is a sui juris adult individual who resides at 913 Arm-
strohK Road, Carlisle~ Pennsylvania and whose office
address is 33 South Pitt Street~ Carlisle~ PA 17013
2. He is familiar with the property of the Newville Medical
Foundation, Inc., located at 100 South High Street,
Newville, Pennsylvania 17241, (herein "The Property")
and has personally inspected the same.
3. He is acquainted with the value of Real Estate in the
locality of The Property by virtue of 14 years
experience in the Real Estate Brokerage business in
Cumberland County, Pennsylvania, and by virtue of
personal knowledge.
4. He is familiar with the appraisal of The Property
prepared by Steven Barrett dated as of October 9, 1998,
and is of the opinion that the present fair market value
of The Property remains at $ 575,00.000 as determined by
that appraisal.
5. He has examined the Sale Contract dated October 8,
for the proposed private sale of The Property.
6. He is not in any manner personally interested in the
proposed sale of The Property.
7. He is of the opinion that the proposed consideration (and
terms of the proposed sale) is more than can be obtained
at public sale.
DATED: November 15. 1999
SWORN TO AND SUBSCRIBED
before me, the undersigned
Notary Public, on this 15th
day of November , 1999.
William A. Bassett
PA General Certified Appraiser
PA Associate Broker
Notary ~ublic ~' -
death fllea according to lawJ"
.;
Witness my hand,
: ~ "V · ~ ,c.~ wII,I~ AND T~.$TAM~IT OB'
, ~-~
l, Joh~ Graham, of the Borough of Ne?~vllle,Cou_-.ty of Cumberlafl
-d, and St,~te of Pennsylvania, being cf sound =l.-.d,=--=ory and
· i~: -.-d_.rstandin~°,do make %his my ~'~st will and testament,hereby revoking ail wills by me at
~r · - ,_ .~.
~-k~f -~-..-; time heretofore made.
~'~-~ xl' :.z~'~. I .direct that all my Just debts and ~eral ezp~nees Oe paid as s~o= ~ '"
.. -
l~., d=~h ~s m~y be convenient.
-$ ( { ~=-.-'-d. All the ~est mhd residue of my estate, exoept the specific legacies h~r:lnafter
'~'[ ~ ~:~ . ', -~ Carlisle,
~Q.~ ' = -- athed b~ me, I'~ive devise, and O.~ueath to the C~rllsl~ Trust.Company,~f
s ~- out at
' ?~rmsylvania, IN TRUST, that the said Company do and shall put and plac~ .th~ a -
ir.t~rest on go~d re~l estate security or make such investments as In its JufiE~m~nt shall
~ ~ safe and secure, leaving th~ same to its discretion, any thing in the Consti:uticn of
Pennsylvania or in the laws thereof to the contrary,with direction and power :o sell my
'real estate (except the real estate specifically devised by me) and to make gcod and
sufficient deeds therefor mnd deliver the same to the.purchaser or purch=sers thereof,
~-nd to sell said re~l estate either at public or private sale as mm)[ be mos.', ad:'anta~eous
interests of my estate .so as t~ realize the most therefor, aDd with d!::ct,.~., and
!
.~:~'~!']'"" ' - .............. +--e and to ~old the said residuary
: ~ ~'.. ~iven)for ~d durtn~ her ri,tut,1 life,free and divested of any and all debts fha, may be cont
~ ~'~:: i . , der the ~e~s of this
~ , .:. ~y my amid wire. Should my said ~lfe,Katherine,decl!ne to take un .
hen' I direct my executors hereinafter named to carry out ~he pr~visions of this my last will
ut of such estate as nay remain after my said wife shall have received such part of my estate
is she m~¥ be entltlel ~i under the law. Should my wife, K~therine, elect to take under thr tern!
If this ~y will,then the provisions hereinafter made shall become affective mt her death.
B. W~EREA$.It is my desire and wish that the'burial ground surrounding the BIG SPRING PR'.ESBYTEF.~
HUnCH,of Newvllle,Per,nsylvania, shail ~e kep~ in good order and repair,and that the fence surro:-
. .. iding ~he same shall be kept in repair until such time as a sufficient fund. shall accrue t~
e the present fence with a substantial stone,brick o~ concrete fence that may be permanent
· ~hat the said burial gro,mnds and the plot surrounding the church may be beautified:
· ..'[ ~ow to carry out these purposes,I give,devise ~nd bequeath to the Trustees of the aforesaid
lg SprinE Presbyterian Church the income an d in,crest of the sum of twenty thousand ($20 000)
Iollars, to be set apmrt by my trustee ~nd called the John Grmhmm ~md,to be invested by the
,,.~ · .... + .~,,~v ce be borou~h of Carlisle,CountY 3f Cumberland and State of Pennsylvania,
o: ;ht~ .~y-''.~,~l,:h*..-. '-.-.-' ~.'~'.l~-ions herein,~%er =~:Je ."'.'.:~1~- teco'-'e af~ecti;'e ~ he.,-
PR rLSBY'~ ~:R! ....
SPRING ....... '
B, WHE..':~',S, :t is ..y :es' * ,~nd wi~h that %he burial gre'..'nd sub, rounding ~he BIG
and th'~t the fence .surrou-
C:~U,~h,of Ne:vvill:,P:.-_-.sy!vanla, shall be kep~ in good order and repair,
nding the same eh°-:! k: ?.;pt in repair until such tiue as a sufficient fund shall accrue to rep[a-
und
ce the pre~ent font: - '" a substantiml stone,brick o~ ,:oncre~e fence that may be permanent
'th.~t the said burial"_~::u-uds and the plot su~ro,undlng the church may be beautified:
Now to carry out k.se purposes,I give,devise and bequeath to the Trustees of the aforesaid
~lg SprlnE P~esbYte-~?-a ,.---urch the income an d interest of the sm~ of twenty thousand ($20 000)
.i
Holl,~s, to be set aTmrt ny my trustee and called the Jo~n Graham ~md, to be invested by the
!~rllsl~. Trust Company, of h~ borough of Carlisle,County ~f Cumberland and State of Pennsylv~ni,-,
l ruste as eforesaid,=--! devote the income only arising from he same to the following purposes:
~. To k.;:p in good ord:r and repair my monument and lot in said cemetery.
~ To keep in good end:.- ~d repal~ the plot ehere£n my father,mother and brothers mhd sisters are
~uried.
~. To appropiate mhe ~z!~uce of ~he income arising herefrom for the purpose of b~autlfying the said
~lg Spring Cemetery and grounds s~x. roundxng the Church and in Meeping in repair, the present fence,
Until the surplus acc,~:iatlon of income will provide for t~.e erectio~ of a pemanent substantial
~tone,brlck or ooncret: wail around said burying ground and church property. And I would suggest
~hat & plan for this 7:rpose be adopted under comp.etent advice so that harmony of purpose and plan
ed
"T'o' X~P :in 'g'Ood order ,tnd r-pair ~/' C~onument ~nd ~o: ~n"~'r~'td'oeme'%~r~;
To keep in good o:de~ s.d ~ep~lr ~he plo~ ~here~n my f~%het,zo%he~ and brothers und sis%e~s
mried.
~ . To ~ppropiat, ~he b~a~oe of the income ~risi~ herefv°~ for the purpose of ~eautifyin~ ~he said
i~ Sp~n~ Ce~ter~ and sro~ds ~u~.ro~d~ns the Church and In ~eeping in repair, the present fence,
~til the surplus accumulation of income w~ll provide for the erection of a permanent substantial
~tone,brick or concrete w~ll arced s~d bur~n~ gro~d ~d church property. And I would
t a plan for this purpose be ~dopted under co~p.etent advice ~o that har~on~ of purpose ~nd
n~y prevail.
L ~E~A~, I desire to confer · benefit upon the to~ of Ne~ll~ 8nd the surrounding country, ~nd
' ' ~elieve that ~ well selected public ~ibrar~ ls · ~reat he~p and ~id In ass~stln~ ~ ~he ~ormation
'- ..... ~eath ~o the
-' ~' orrect habits of ~lFe: To carry out hh~s purpose, I ~ve ~
......... · .~ m~mnn Oleus of C~berl~nd County,Pennsylvan , ·
' ' ~Ch&rter of inoorpor&tlon ro~ %Re uouru ~-
W'H }ioC'~ea~ Edwin MoC~dlish, J~es W. Sh~rpe, Robert ~{. g~am, Jr. ,J. Clair
.oCullo~h mhd Jmmes '~nlap, for the corporation to be kno~ ~s the"John Gr~n~ blor~ry ~,
. ..~., ,] feet , ~ ..... ~-:,es ~d ~lterationu in said residence so
l ve ~d bequeath for the purpose or maK~n~ u .... u ........ ~ ,~ .... . .. ~.v be
I give and bequeath to said "John Graham Lil~rarF!'su°h sum out of the income -~f =~ estate
not to e.xoeed T~c ThoUsand FiVe l~undred ($2 500 00) dollar~, per ~e~r as n~' ~e
for the purchase of .bpoks, equipment'~'~d the maintenance of said building and !i~rary_ ·
said Board. Any ta[auce of sbo~'e .
under rules and regulati°n~ to be established by the
with a s~ sufl~i~ient to r,~ke up th~ additional
b~,4uezt of ten thous~d dollars together
~'m%en thousand dollars, I give and bequeath to %h~ s~id "JO~ GR~;J'. LiB~;-?'Y'f°r the
~ ol.~Elna~ purpose of books and equipment. Should any of the Dlt~i~rs die b~f:~e my
residuarF estate Is ~vallabl'Z %ocarr}' out m~' wishes under the terms cf n~' r;ill
should I not s-ub~ti%~%e others in their stead,then L ~u~horl~e ~h= su~vivcr~ :f said bo~
%o ~11 such v~o~c~ or v~oanoies.
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direct th~% the s~of ene hundred dollars u~u~ll~ be paid %o th~ L~iles .a~fi ~.d
l~n% SocietY' of }le~llle for the relief of the need~ and distress=d cf ?' p::ou~h o~
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~rmuailY %o the Session,.of the BiE Spring Presbyteri~ church for thc '~'
poor of said church; that one h~tdred dollars ecyca~be paid the Trustee~ cf said .~. m~rn~,se of m.~lntainir, g t~o frec pews %~ be
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IN RE: ESTATE OF
JOIIN GPJ~IIAM, I)ECI::ASF. D
: IN TIlE COURT OF COMMOM PLEAS OF
: CUMBERLAND COImlT¥, PEMNSYLVANTA
: ORI'~I[ANS' CO[IR'P DTVTSTON
: W[I,[, (:~ee WJ.I'I. llook 29, p.31.0)
EA & MCCREA
].'I':T'ET'ION '1'0 APPr,Y CY PRl,:.r| DOC'['IIINI.:
TO T}~. HONORABLE JUDGES OF THE SAID COURT:
1. Your petitioner is the President and member of the
Board of Directors of the John Graham Library, hereinafter called
the "Board" as appointed or elected under the terms of the Last
Will and Testament of John Graham of Newville, Cumberland County,
Pennsylvania.
2. By Will dated January 13, 1916, John Graham, herein-
after called "Settlor", transferred to the Carlisle Trust Company
of Carlislef'now existing as its successor bank The Dauphin
Deposit and Trust Company, hereinafter called "Trustee", that
part of his tot~ estate excepting certain specific legacies there:
mentioned and less all debts and' funeral expenses, in trust to pa]
the income therefrom, for life to Katherine Cartmel Graham, his
wife, and upon her death to provide certain funds to be admini-
stered by the therein appointed John Graham Library Board of
Directors for the purpose of "purchasing a site, erecting a
building and equi~ng the same to be called THE NEWVILLE HOSPITAL
JOHN GRAHAM FOUNDATION for the purpose of providing treatment,
nursing and care of the sick and ~fflicted of Ne~ille and
vicinity". The following amounts were provided:
(a) The sum of Six Thousand ($6,000.00) Dollars,
or so much thereof as may be necessary to purchase
a site or lot.
(b) The sum of Thirty Thousand ($30,000.00) Dollars,
or so much thereof as may be necessary to erect the
necessary buildings for said Hospital and equip the
same.
& MI: r-IlEA
(c) The sum of Five Thousand ($5,000.00) Dollars
or so much thereof as may be necessary for tke
purpose of maintaining and operating said. Hospital,
which funds were to be paid annually from the
income of the Trust Estate. A copy of the Will is
set forth as Exhibit A of this Petition.
3. The Trustee accepted the trust and has administered
it according to its terms.
4. On September 26, 1962, Katherine Cartmel Graham died
and the TrustFund is now to be expended for the construction of
a hospital as specified in the Will creating the Trust.
5. The Board has made a thorough examination and has
concluded that the fund held by the-Trustee is inadequate to
construct and maintain a hospital as directed.
6. Theprincipal held in trust is $30,930.93, and the
balance of income accrued since the date of death cf ~atherine
Cartmul Graham is $12,810.56.
7. The Board has examined the construction and maintenan¢
costs of several small hospitals in the state and finds that the
smallest hospital would cost more to construct and maintain than
the trust now holds or which it could expect to receive as income.
8. The direction by the Settlor that a hospital be
created to provide medical care and service for the people of
Newville and vicinity shows an intent to make a charitable gift.
9. The Newville Medical Foundation, hereinafter called
the "Foundation", is a corporation founded under the provision'of
the Non-Profit Corporation Law of May 5, .1933 P.C. 289 as amended
with a registered address at P.O. Box 100, Newville, cumberland
County, Pennsylvania.
10. Thc purpose of said Foundation is to establish and
maintain adequate medical facilities for the Borough of Newville
and surrounding townships.
--2--
11. The Foundation intends to construct a modern medical
facility in the Borough of Newville Which will provide medical
services adequate for the needs of Newville and vicinity.
12. The Fund held by the Trustee and by the Board
accumulated under Section K of the Will is sufficient to construc
such a facility which would consist of one floor with a total
floor space of 3500 feet and including six examination rooms, .and
emergency room, an x-ray room, physical therapy room, two
consultation rooms as well as a waiting room and business office.
13~ The facility' could be constructed at a cost of
approximately Eighty-three Thousand ($83,000.00) Dollars, includi
land acquisition-
14. The Foundation is willing to name the'facility The
Newvil~e Medical Center, John Graham Foundation as requested in
paragraph F of the Will of John Graham as set forth in Exhibit A
an~ to insert appropriate notice to this effect and, .in addition,
to designate two rooms'in the clinic to be called The Isabella
Sterrett Graham and Jennie M. Sterrett room~ in accordance with
sub-paragraph (c) of Paragraph F of thc John Craham Will.
15. The Foundation agrees to maintain and operate the
facility from the balance of the fund as far as such balance iu
sufficient.
16. If the balance of the fund is insufficient for %he
maintenance of the facility, the Foundation agrees to maintain th~
facility out of its general funds. ,
17. The petitioner requests that the Court apply the Cy
Pres Doctrine and direct the Trustees of said fun~ ~o ~urn such
fund over to the petitioner to use as provided above.
18. The petitioner has given the Attorney General notice
of the presentation of this Petition, by notifying the Attorney
-3-
Ganeral of the Commonwealth of Pennsylvania, by letter addressed
to him at Harrisburg, pennsylvania.
Board of Directors
John Graham Library
COM~DNWEALT~L OF PENNSYLVANIA :
SS
COUNTY OF CUMBERL/~ND ~.
ANNA H. ALLWEIN, being duly sworn according to law,
deposes and says that she is the President of the Board of
Directors of the John Graham Library and that 'the facts set forth
in the foregoing Petition to Apply Cy Pres Doctrine are true and
correct to the best of his knowledge, information and belief.
Anna ~. Allwein
sworn to and subsgribed
before me this ;:;A day
-.'":?'#}?,i';ll of
"'"":"
. ,~. ....:.., :-~,:.- ..-. / '. ..~..r./
.'~ ~ OF '.. :.i' .~ ,'i '."..' / ' ..'~"~"-'~'~'? ,' ':' ~
~"" *'" '~' ,.'.?Il ¢ ~NO~R¥ PUBLTC
Cfl~
IN R~: ESTATE OF
~OHN GRAHAM, DECEASED
IN TIIE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
WILL (See Will Book 29, p.310)
· ORDE*R OF COURT
AND NOW, this /6 day of ~ , .1972, upon
consideration of the Per'rio 'e in resented the
-~.~r4~ , 1972,.is set fo~ a hearin- on ~0 s~e.~~~
IN RE: ES'.['ATE OF : IN TIlE COURT OF COMMON PLEAS OP
: CUMUEI~AND COUNTY, I'ENNSYLVANIA
JOHN GRAHAM, DECEASED : ' ORPHANS' COURT DIVISION
: WILL (WAll BOOk 29, ~agO
ORDER OF COURT
FINAL DECREE
~D NOW, this ~ / day of July, 1972, it appearing that a
hearing was held July 7, 1972 at 10:00 a.m. on the petition of th~
Directors of the John Graham Library for an Order directing that
unexpended funds amounting to $44,512.05 held by the Dauphin
D~posit Trurth Col.~pauy, q'l-lln[:~%, tll]d¢~l: L:h,~ W.i. ll of J¢)hli Gr[lhalll,
Deceased, bn t:rnnnFnrrnd I:n I:hom fnl? purpnn[~s of nil'~
construction and equippage of a medical clinic facility in the
Borough of Newville, and it appearing that after due deliberation
said petition was granted in all respects subject to final confir
mation of said Order and Decree, and it appearing that a confirma-
tion hearing was set for Friday, the 21st day of July, 1972 at
10:g0 ~.m. in Courtroom 1 of the Cumberland County Court llouse,
Carlisle, and it appearing to the satisfaction of ~he Co~r~ tha~
notice of said hearing was duly published in the Valley Times-Sta]
ou July 12, 1972 and in the Cumberland Law Journal on July 14,
1972, and it appearing to the satisfaction of the Court
notice was given by ordinary mail of the said hearing to the heir:
at-law of John Graham, deceased, whose whereabouts and relation-
ships to the late John Graham were known to petitioner, now upon
motion of W. H. McCrea, Jr., attorney for petitioner IT IS HEREBY
ORDERED:
1. The Order of Court made July 7, 1972 is hereby confirmed
and the Petition of the Directors of the John Graham Library is
granted in all respects.
2. Dauphin Deposit Trust Company, Trustee, is directed to
transfer to petitioner the unexpended funds amounting to $44,512.. 5,
it now holds as Trustee of the Estate of John Graham. Upon
transferring said funds, said Trustee shall be fully discharged
and exonerated from all liability to acceun% for said funds.
BY THE COURT:
Al,II#lTl AT LAW
AIqENDEi) ARTICLES OF AGRI:.EblENT
TIIIS AGREE[.IENT, made the 29thday of November, 1973, by and
between the Board of Directors of the John Graham Library of
Newville, Cumberland County, Pennsylvania (hereinafter called
"Board") and the Newville Medical Foundation, Inc., a non-profit
corporation of Newville, Cumberland County, Pennsylvania
(hereinafter called "Foundation"):
lfliEREAS, Board and Foundation previously entered into an
agreement whereby Foundation was to purchase a site, construct
and maintain and administer a medical clinic in the Borough of
Newville and Board was to provide funds for these purposes from
certain principal and income amounts generated by the Estate of
the late John Graham of Newville, Cumberland County, Pennsylvania
AND WHEREAS, the said funds have been paid by the Board to
~h_e..~oundatio'n and the.said medical, clinic.has__be~u__gonstrucKed
and is currently in operation;
AND $~IIEREAS, the Board has since the date of the original
agreement provided to the Foundation additional funds belonging
to the Estate or arising out of the Estate of the said John
Graham;
AND WIIEREAS, the parties desire to specifically provide that
all additional funds received to the date of this amended agree-
ment and all similar funds which may be received hereafter will
be used and administered pursuant to the terms and conditions of
the agreement made June 21, 1972.
NOW THEREFORE, the parties have covenanted and agreed as
follows:
-'FIR3'[: ^11 of'the piovisivns o£ the agreement made June ~1,
1972, between the parties are hereby reinacted and incorporated
into this amended agreement by reference heret~
~oo~ 209 act 831
EA ~ MCCREA
SECOND: Foundation covenants alld agrees to use such
additiol~al funds as have been provided and such funds as may in
tile future he provided by the Board exclusively for the maintenanc
and administration of the John Graham-Newville Hedical Clinic.
THIRD: The Foundation does further specifically agree and
covenant that said clinic will at all times be administered
hereafter for tile sole purpose o£ providing a quality health care
for the people of Newville and vicinity and does specifically
further covenant and agree that if at any time in the future the
Foundation fails to serve this purpose faithfully, full right~
title and ownership of the clinic and any contracts, leases or
other agreements relating to its operation, m~intenance and
administration will be assigned, covenanted and set over to the
Board; such determination to be made by the Courts o£ the
Commonwealth. of Pennsylvania.
I~ WITNESS IVtIEREoF, the said parties to this agreement have
hereto set their hands and seals the day and y~ar first above
writteJi.
Witness
John Graham Library
By Robert E. Graham, President
· f~te of Pe.nsylv~,.i~~ . prYesidentY L. Sp~cer, Jr.,
~ou~ty of Cumberland
SS
~ecor,~d in fL~, olfice ~or fhe recordln9 of Dee~,
,tc.,. in ~nd ~or (h-,,b~':and Counfy. Pe.
A & ~CCR£A
STATE OF PENNSYLVA[]IA ::
:: SS
COUNTY OF CUMBERLAND : ..
On this 29th day of November, 1973, before me, a Notary
Public in and for said State and County, personally appeared
Robert E. Graham who acknowledged himself to be President of the
Board of Directors of the John Graham Library, and that he as
such President, being authorized to do so, executed the foregoin,
instrument for the purposes therein contained by signing the
name of the John Grabs, Library by himself as President.
In Witness whereof, I hereunto set my hand and official sea]
Notary Public
Shippensburg, Cumberland County, Pa.
My Comm. expires: July 8, 1974
STATE OF PENNSYLVANIA ::
;; Ss
COUNTY OF CUMBERLAND : .-
On this 29th day of November, 1973, before me, a Notary
Public in and for said State and County, personally appeared
Stanley L. Spencer, Jr. who acknowledged himself to be President
of the Newville Medical Foundation, Inc., and that he as such
President, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name
of the Newville Medical Foundation by himself as President.
IN WITNESS whereof, ! hereunto set my hand and ~f..fi=~a;( ....
Shippensburg, Cumberka~4"C~unty.~'pa.
My Comm. expires Ju{¥,.,~e:,~?4
1N RE: NEWVILLE MEDICAL FOUNDATION, A
PENNSYLVANIA NONPROFIT CORPORATION
1N THE COURT OF COMMON PLEAS
ORPHANS' COURT DIVISION
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 21-2002-0347
CITATION
WE COMMAND, you that laying aside all business and excuses whatsoever, you be and appear in your
proper person before the Honorable Judges of the Court of Common Pleas, Orphans' Court Division at a
session of the said Court there to be held, for the County of Cumberland to show cause why , if any there
may be, why the Petition of Newville Medical Foundation for Approval of the Private Sale of substantially
all of the property_ of the Newville Medical Foundation pursuant to a Definitive Agreement and Plan in
accordance with 20 Pa. C.S. 711(21) and Chapter 59 of the Pennsylvania Nonprofit Corporation, should not
be granted.
Citation returnable the 29th day of May, 2002 at 9:30 o'clock A.M. in Courtroom Number 3 at which time
this Court will accept testimony in support of the aforementioned Petition, Agreement and Plan and the
transfers and uses contemplated thereby.
Witness my hand an official seal of office at Carlisle, Pennsylvania, this 12th day of April, 2002.
Cletq~_ Ol/phans' Court Division
Cumberland County, Carlisle, PA
My Commission Expires on the 1st Monday
January, 2006
/IPR 0 5 ZO0~..~
NEWVILLE MEDICAL
FOUNDATION, A
PENNSYLVANIA NONPROFIT
CORPORATION
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
· ORPHANS COURT DIVISION.
·
: PETITION TO APPROVE SALE, TRANSFER
: AND CHARITABLE USE OF NONPROFIT
: CORPORATION ASSETS
PRELIMINARY DECREE
NOW, this ~__ day ,2002, upon
AND
consideration
of the annexed Petition, a Citation is a directed to (1) THE PENNSYLVANIA
OFFICE OF ATTORNEY GENERAL, CHARITABLE TRUSTS DIVISION to show
cause, if any there may be, why the Petition of Newville Medical Foundation for
Approval of the Private Sale of substantially all of the property of the Newville Medical
Foundation pursuant to a Definitive Agreement and Plan in accordance with 20 Pa. C.S.
§711 (21) and Chapter 59 of the Pennsylvania Nonprofit Corporation, should not be
granted.
Citation returnable the o~ ~' day of d/da ,~, 2002 at ~).'3 d o'clock
~.m. in Courtroom Numb?_ ~ at which time this Court will accept testimony in
support of the aforementioned Petition, Agreement and Plan and the transfers and uses
contemplated thereby.
BY THE COURT,
r,President Judge
NEWVILLE MEDICAL
FOUNDATION, A
PENNSYLVANIA NONPROFIT
CORPORATION
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
: ORPHANS COURT DIVISION
· No.
: PETITION TO APPROVE SALE, TRANSFER
: AND CHARITABLE USE OF NONPROFIT
: CORPORATION ASSETS
DECREE
AND NOW, thi~_~~day of~[/ ., 2002, upon consideration of
the within Petition of Newville Medical Foundation to Approval Sale, Transfer and
Charitable Use of Nonprofit Corporation Assets Pursuant to a Definitive Agreement and
Plan in accordance with 20 Pa. C.S. Section 711 (21) and Chapter 59 of the Pennsylvania
Nonprofit Corporation Law, and after hearing held on April 24,2002, the Court makes the
following findings of fact and conclusions of law, and it is further ORDERED,
ADJUDGED AND DECREED that:
1. This Court has jurisdiction over the within Petition and the parties to the sale
pursuant to Sections 5547(a) and (b) and 5930 of the Pennsylvania Nonprofit Law of
1988, as amended, (the "Nonprofit Law"), 15 Pa. C.S.A. Sections 5547(a) and (b) and
5930, and under Sections 6102, 6110 and 711(21) of the Pennsylvania Probate, Estates
and Fiduciary Code, (the "PEF Code") 20 Pa. C.S.A. Sections 6102, 6110 and 711(21);
and under Rule 2156 of the Pennsylvania Rules of Judicial Administration.
2. Pursuant to Section 726 of the PEF Code, 20 Pa. C.S.A. Section 726, venue of
the within Petition is proper in Cumberland County, Pennsylvania where Petitioner's
registered office and facilities are located.
3. Pursuant to the Pennsylvania Office of Attorney General's Review Protocol for
Fundamental Change Transactions Affecting Healthcare Non-Profits, dated December
23, 1997, notice of the parties' intention to consummate the sale, substantial additional
information about the parties and the terms of the proposed arrangement, and notice of
presentation of the Petition and the proceedings thereunder, were given to the Attomey
General, as parents patriae for the Commonwealth of Pennsylvania. Proper notice of
hearing was given to all parties in interest as directed by this Court, and proofs of any
necessary publication were filed of record in this proceeding.
4. Capitalized terms not defined in this Decree have the meanings assigned to
them in the accompanying Petition.
5. Upon consideration of the within Petition, and the record presented at the
hearing before this Court, this Court determines that the sale of assets as described in the
Petition and the Definitive Agreement, (the "Sale" or "Plan of Sale") is in the long-term
best interest of Petitioner, its charitable purposes and the community that it serves, given
the substantial, fair and reasonable price which will be paid and the benefits accruing to
the Newville community by the continued commitment of the Foundation to continue to
support health care services, including indigent care services, in the community.
6. This Court further concludes that because all of Petitioner's post-Sale activities
are authorized under Petitioner's existing articles of incorporation, the Plan of Sale, and
subsequent use of charitable assets by Petitioner as described in the Petition, will not
result in a diversion of charitable assets from, or the violation of, any charitable objects or
trust purpose for which any such property or assets may have been given, granted,
devised or dedicated.
7. This Court further concludes that the Plan of Sale as described in the Petition
and in the Definitive Agreement attached to the Petition, as amended, and subsequent use
of charitable assets by Petitioner, is hereby approved.
NOW, THEREFORE, it is ordered and decreed that the Agreement, and the
associated documents and agreements, and the Plan of Sale and the ultimate use of
charitable assets, which contemplates, among other things, the sale of assets pursuant to
the Agreement of Sale hereto attached, is hereby approved. This Court retains continuing
jurisdiction over the parties, who shall file reports and accounts with this Court at such
time and in such form as this Court may direct. It is further ordered that the Petitioner
shall provide copies of all reports filed by Petitioner with the Attorney General,
Charitable Trusts and Organizations as required by said Office.
BY THE COURT,
L ~ono/~le~el~rg[tE?[I°ffer, l~esident Judge
NEWVILLE MEDICAL
FOUNDATION, A
PENNSYLVANIA NONPROFIT
CORPORATION
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
:
: ORPHANS COURT DIVISION
:
: No.
PETITION TO APPROVE SALE, TRANSFER AND
CHARITABLE USE OF NONPROFIT CORPORATION
ASSETS OF THE NEWVILLE MEDICAL FOUNDATION
AND NOW comes the Newville Medical Foundation, a Pennsylvania Nonprofit
Corporation, (herein "Petitioner") by and through its counsel, Steven J. Fishman, Esquire,
and petitions Your Honorable Court for approval of its Plan of Sale of Assets (which plan
includes the private sale of substantially all of its property) and in support hereof avers
and represents, as follows:
1. The Petitioner is a Pennsylvania Nonprofit, non-stock corporation, having been
incorporated January 27, 1972. The Petitioner operates under authority of Amended
Articles of Incorporation filed with the Department of State as of February 22, 1999.
A true and correct copy of Petitioner's Amended Articles of Incorporation is attached and
made a part hereof as Exhibit "1". The Petitioner's Board of Directors is a community
based, volunteer board, which controls its affairs and has no relationship other than as
landlord and tenant with the prospective purchaser of. the assets described herein.
2. The Petitioner is a charitable organization as the same is defined in 20
Pa.C.S.A. §6101, and is recognized by the Internal Revenue Service ("IRS") as an
organization described in Section 501 (c) of the Intemal Revenue Code. A copy of the
Petitioner's determination letter from the Internal Revenue Service is attached and labeled
Exhibit "2".
3. This matter is within the mandatory jurisdiction of this Court pursuant to the
provisions of Section 711(21) of the PEF Code (20 Pa. C.S. 711(21)), and the provisions
of 15 Pa.C.S.A. §5547(b). Venue is properly in Cumberland County pursuant to Section
726 of the PEF Code, 20 Pa. C.S.A. §726.
4. The Petitioner has adopted a Plan of Sale of Assets pursuant to 15 Pa. C.S.A.
§5930(a) (herein the "Plan") and as a part thereof Petitioner's Board has unanimously
approved (as required by 15 Pa. C.S.A. §5546) the sale of the Petitioner's Real Property
and appurtenances. A copy of Petitioner's Plan of Asset Sale is attached and labeled as
Exhibit "3".
5. A copy of the Agreement of Sale for Petitioner's Real Estate and
appurtenances (herein the "Agreement"), which is the basis of its Plan of Sale, is attached
and made a part hereto as Exhibit "4". The said Agreement was amended by Agreement
dated March 19, 2002, a copy of which is attached hereto and made a part hereof asEx.
6. A copy of the deed for Petitioner's Real Estate is attached hereto and made a
part hereof as Exhibit "6".
7. Petitioner's Real Estate consists of a lot of ground and the improvements
erected and constructed thereon (together with the appurtenant fixtures and tangible
personality) which is commonly referred to as the "Graham Medical Clinic" (herein the
"Property") and which has an address of 100 South Big Spring Avenue, Newville,
Pennsylvania 17241. Since its incorporation, Petitioner has owned, improved,
maintained and leased the Property to the proposed purchasers and their predecessor
physician associates for the operation of the clinic.
8. The fair market value of the Petitioner's property at the time of execution of
the aforementioned Agreement of Sale was $575,000, as determined by the appraisal of
Steven W. Barrett, Certified Appraiser. The property was re-appraised by Larry E. Foote,
CGA, on April 11,2001. This appraisal established a fair market value of $592,000.
Inasmuch as the Board believes that the purchase price as provided in the aforementioned
Agreement of Sale is binding on the Board and considering the potential difficulty of
finding another purchaser that could meet the health care needs of the community the
Board believes that the value for sale purposes is $575,000. A copy of each appraisal is
attached and made a part hereof as Exhibits "7" and "8".
9. There are attached hereto and labeled Exhibit "9" an affidavit of Steven W.
Barrett certified appraiser, which evidence (as required by Orphans Court Rules, Rule
No. 12.10):
a) That the present fair market value as of the date of the subject
Agreement of Sale for the Property is $575,000.
b) That the price and terms of the private sale under the Agreement
(Exhibit 4) are equal to or more than could reasonably be expected
from a public sale.
10. Under the terms of the private sale, the Petitioner will, after settlement, be
relieved of debt totaling $264,000 and will hold a full recourse note (secured by a second
lien mortgage) in the principal sum of approximately $311,000 with monthly
amortization payments as described in the Plan. The Petitioner will, after the sale,
continue to be able to undertake and/or support programs and activities for the
improvement of the health, welfare and medical services of the people of the Newville
Community. The sale will help assure that the clinic is staffed and operated as a medical
facility in the Newville community, in furtherance of the purposes of the Petitioner and
consistent with its charitable purposes. The sale does not constitute a failure to purpose or
a diversion of the Property from the objects to which it was originally dedicated.
11. The original funding (exclusive of borrowed funds) for Petitioner's project
was obtained as the result of a Cy Pres Order in the Estate of the late John Graham. A
copy of the Will, Cy Pres Petition and Final Decree of Your Court, dated July 21, 1972,
are attached hereto and labeled 10, 11, & 12 respectively. At or about the same time as
the original Cy Pres Order your Petitioner and the Board of Directors of the John -
Graham Library of Newville (herein the "Graham Board") entered into an Agreement
dated June 21, 1972, and amended by a document entitled "Amended Articles of
Agreement" which was dated November 29, 1973, and which was recorded in the Office
of the Recorder of Deeds in and for Cumberland County, Pennsylvania in Miscellaneous
Book 209 at Page 831. A copy of the Amended Articles of Agreement is attached hereto
as Exhibit 13. The original Agreement of June 21, 1972 has been lost and no copies are
available or of record.
12. No member of the Foundation's Board or its employees will receive any
benefit, including financial or other benefits, such as employment contracts, as a result of
the proposed transaction.
13. The Petitioner will immediately commence to provide the services to be
carried on post-closing.
14. The proceeds of the sale will be kept in the Foundation's trust accounts until
such funds are needed to accomplish the services herein described.
15. The Petitioner plans to utilize both principal and interest as necessary to carry
out its plan of service.
16. Petitioner believes and therefore avers that its Plan of Sale of Assets and
future plans for programs in the Newville area are consistent with and in furtherance of
its obligation to serve the purpose of providing quality healthcare for the people of
Newville and vicinity.
17. A copy of this Petition and Plan and the notice of its filing have (as required
by the Orphans Court Rules) been given to the Commonwealth of Pennsylvania
Charitable Trust Division and additional information has been submitted thereto. No
other person or entity is required by law or rule of court to receive notice of this petition.
NOW, THEREFORE, in consideration of the foregoing, your Petitioner requests
that Your Honorable Court issue an order setting a hearing upon this Petition and
thereafter issue an Order approving the Plan of Sale of Assets (and the private sale
pursuant to the terms of the Agreement) and holding that the Plan of Sale is not a failure
of purpose and authorizing the Board to take such actions as may be necessary and
desirable to consummate the sale and carry out the plan. Notice of this Petition and the
hearing shall be served by citation on the Commonwealth of Pennsylvania Charitable
Trusts Division.
Respectfully submitted,
Steven J Fishman~, Esquire
Attorney ID#16269
Salzmann, DePaulis, Fishman & Morgenthal, P.C.
95 Alexander Spring Road
Carlisle, PA 17013
(717) 249-6333
Newville Medical Foundation,
Petitioner,
BY: 'S~~leY L.~SP nc?r, ~
VERIFICATION
I, STEVEN J. FISHMAN, ESQUIRE, of the firm of Salzmann, DePaulis,
Fishman & Morgenthal, P.C., attorneys for Newville Medical Foundation in the within
action, certify that the statements made in the foregoing Petition to Approve the Private
Sale of Substantially All of the Property of the Newville Medical Foundation Pursuant to
a Definitive Agreement and Plan in Accordance with 20 Pa. C.S. Section 711(21) and
Chapter 59 of the Pennsylvania Nonprofit Corporation Law are tree and correct to the
best of my knowledge, information and belief. I understand that false statements herein
are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn
falsification to authorities.
Steven J. Fishman, E~squire
Attorney for Petitioner
Attorney ID#16269
[*E,C--E.I--O0 DUI1 UI,CO i-ii iirtilJ. L. ltJl~i UI'tVLD
Microlilm Number,
Entity Number
ARTICLES OF AMENDMENT - DOMESTIC NONPROFIT CORPORATION
In compliance with the requirmnenm al 15 Pa. C.S. ~ ,f915 (relating to reticles al ~nem:lmm~, ~'m ur~lmslgned nonpror~
corporation, desiring to amend its articles, hereby atmas thI:
1. The name af the ~ ~ ~TET~TT~T,£ L~'DICA~ FOUNDATION
Tho address ol this coqaoration's cunent (a) tegismmd aKme in thL1 Gommanamalth or (la) comnmmlai registered cdllce
provider and the county al venue is (the 0epamm~ is hereby authc~ized to ¢anect the Iolawing address to ¢onlonn to
Ihe regords of the Depmtment):
(~ 100 Sottth HiS.h.S.t, PO Box 100, Newville PA 17241 Cumberland
Number md Ir~ CW 8~ 3ap Co(Jmy
(b)
For B ~n ~~ W ~ ~~ ~ ~ ~. ~ ~ ~ ~) ~ ~ ~ ~ ~ In ~ ~
~n ~ I~ fu v~ ~ ~ p~ ~
3. ~e ~ by ~ ~d~ wh~ ~ w~ i~~ ~ PA Naa-Prnft ~ Cnr~ ~n~ ADD. Mny 5. 1933.
4. ~e ~ ~ ~ i~~ b: 3aaunty 27, 1972
s. (c~ ~ ~~~ ~~~:
The ~nd~ ~ ~ ~ the mm~ ~ to 15 P~ C.S. ~ 5914(a).
7. (c~, ~ v ~~ ~Mh~:
PL 289
X .The amendment adopted by the corporation as I forth in full in F.v~b~ A, a~a~hed hereto and made a part h~'eof.
FEB-21-99 SUN 01:23 PM
HAMILTON DAVIS
VAX NO, Y1Y 530 5222
~. Tr:ST~MO~ Vm.~mEOF, a~ ~_wqx.!do.' h,m ~ th.,~ .,~ of .rvm. d..,~ to b~ dOr,,d by ~ d~
m,dhorizedo~th~thi. /ff~dmyd~lO Y~ .
~.L2~ZCAL FOUNDATIO~
HAMIL'I'ON DAVIS
NO. 'llY b3U 5222
V, Ub
~OB~B OF
The corporation is incorporated
Corporation Law of the Commonwealth of
following purpose or purposes:
under the Nonprofit
Pennsylvania for the
(a} Oenerally to have the power to engage in any and all
lawful acts and activities incidental to its specific purposes, as
set forth herein, except as may be restricted hereinafter. Ail
references herein to the "CODE" shall be references to the Internal
Revenue Code of 1986 or the successors thereof or amendments
thereto.
(b) The corporation shall have unlimited power to engage in
and do any lawful act concerning any and all lawful purposes for
which Non-profit Corporations may be incorporated under the
Pennsylvania Non-Profit Corporation Law approved May 5, 1933, P.L.
289, aSa mended, and as an organization described in S 501(c)(4) of
the Code.
(c) The purpose of the Corporation is exclusively for the
promotion of the social welfare of the community (which includes
the Borough of Newville and the surrounding Townships, Cumberland
County, Pennsylvania) by fostering the general welfare and common
good of the people of the commtmit¥ by the establishment and
maintenance of an adequate and modern medical facility (clinic) so
that medical services may be provided for the welfare and needs of
the people of the community. The net earnings of the Corporation
shall be devoted exclusively to carrying out this purpose and any
other related charitable purposes.
(d) The corporation shall neither have nor exercise any power,
nor shall it engage directly or indirectly in any activity, that
would invalidate its status (1) as a corporation which is exempt
from Federal Income Taxation as an organization described in
§501(c)(4) of the Code.
(e) No part of the net earnings of the corporation shall inure
to the benefit or be distributable to its members, directors,
officers, or other private persons, except that the corporation
shall be authorized and empowered to pay reasonable compensation
for services rendered and to make payments and distributions in
furtherance of the purposes set forth herein.
Cf) Except as may be permitted by law, no substantial part of
the activities of the corporation shall consist of carrying on
propaganda, or otherwise attempting to influence legislation; or
participating in, or intervening in, (including the publishing or
distributing of statements), any political campaign on behalf of
t-~.u F...I-OO DUI'I UI*E-H 1'1'1
1'11'1[11 L 1 UI~I UpIV 1.'~
FIIA I~IU, Itl OOU
[~ UU
any candidate for public office; and the corporation
engage in any activities that are unlawful under
Federal, State or local laws.
shall not
applicable
(g] The corporation shall not operate for the purpose of
carrying on a trade or business for pro,it.
(h) Upon a dissolution of the corporation, the board of
directors, after making provision for the payment of all the
liabil'ities of the corporation, shall arrange £or~he distribution
of all the assets of the corporation exclusively for the t ax exempt
purposes ?f the corporation, either by direct distribution or by
distribut=on to one or more organizations contributions to which
are deductible under §170(=)(2) of the Code, as the board of
directors may determine. Any of ~uch assets not so distributed
within a reasonable period of time after the dissolution of the
corporation shall be disposed of in accordance with the direction
of any cour~ having jurisdiction in the county in which the
principle office of the corporation last was located, exclusively
in such manner as in the judgment of such court, will best
accomplish the purposes for which the corporation was organized.
INTERNAL REVENUE SERVICE
DISTRICT DIRECTOR
P. O. BOX 2508
CINCINNATI, OH 45201
NEWVILLE MEDICAL FOUNDATION
C/O HAMILTON C DAVIS
PO BOX 375
SHI PPENSBURG, PA 17257
. PR 12 1999
Employer Identification Number:
25-2106786
DLN:
17053061049029
Contact Person:
DAVID A DOEKER
Contact Telephone Number:
(877) 829-5500
Internal Revenue Code
Section 501(c) (4)
Accounting Period Ending:
December 31
Form 990 Required:
Yes
Addendum Applies:
No
ID# 31168
Dear Applicant:
Based on information supplied, and assuming your operations will be as
stated in your application for recognition of exemption, we have determined
you are exempt from Federal income tax under section 501(a) of the Internal
Revenue Code as an organization described in the section indicated above.
Unless specifically excepted, you are liable for taxes under the Federal
Insurance Contributions Act (social security taxes) for each employee to whom
you pay $100 or more during a calendar year. And, unless excepted, you are
also liable for tax under the Federal Unemployment Tax Act for each employee
to whom you pay $50 or more during a calendar quarter if, during the current
or preceding calendar year, you had one or more employees at any time in each
of 20 calendar weeks or you paid wages of $1,500 or more in any calendar
quarter. If you have any questions about excise, employment, or other Federal
taxes, please address them to this office.
If your sources of support, or your purposes, character, or method of
operation change, please let us know so we can consider the effect of the
change on your exempt status. In the case of an amendment to your organiza-
tional document or bylaws, please send us a copy of the amended document or
bylaws. Also, you should inform us of all changes in your name or address.
In the heading of this letter we have indicated whether you must file Form
990, Return of Organization Exempt From Income Tax. If Yes is indicated, you
are required to file Form 990 only if your gross receipts each year are
normally more than $25,000. However, if you receive a Form 990 package in the
mail, please file the return even if you do not exceed the gross receipts test.
If you are not required to file, simply attach the label provided, check the
box in the heading to indicate that your annual gross receipts are normally
$25,000 or less, and sign the return.
If a return is required, it must be filed by the 15th day of the fifth
month after the end of your annual accounting period. A penalty of $20 a day
is charged when a return is filed late, unless there is reasonable cause for
the delay. However, the maximum penalty charged cannot exceed $10,000 or 5
Letter 948 (DO/CG)
NEWVILLB MEDICAL FOUNDATION
-2-
percent of your gross receipts for the year, whichever is less. For
organizations with gross receipts exceeding $1,000,000 in any year, the
penalty is $100 per day per return, unless there is reasonable cause for the
delay. The maximum penalty for an organization with gross receipts exceeding
$1,000,000 shall not exceed $50,000. This penalty may also be charged if a
return is not complete, so please be sure your return is complete before you
file it.
You-are not required to file Federal income tax returns unless you are
subject to the tax on unrelated business income under section 511 of the Code.
If you are subject to this tax, you must file an income tax return on Form
990-T, Exempt Organization Business Income Tax Return. In this letter we are
not determining whether any of your present or proposed activities are unre-
lated trade or business as defined in section 513 of the Code.
You are required to make your annual return available for public
inspection for three years after the return is due. You are also required
to make available a copy of your exemption application, any supporting
documents, and this exemption letter. Failure to make these documents
available for public inspection may subject you to a penalty of $20 per day
each day there is a failure to comply (up to a maximum of $10,000 in the case
of an annual return).
You need an employer identification number even if you have no employees.
If an employer identification number was not entered on your application,
a number will be assigned to you and you will be advised of it. Please use
that number on all returns you file and in all correspondence with the Internal
Revenue Service.
Donors may not deduct contributions to you because you are not an organ-
ization described in section 170(c) of the Code. Under section 6113, any
fundraising solicitation you make must include an express statement (in a
conspicuous and easily recognizable format) that contributions or gifts to you
are not deductible as charitable contributions for Federal income tax purposes.
This provision does not apply, however, if your annual gross receipts are
normally $100,000 or less, or if your solicitations are made to no more than
ten persons during a calendar year. The law provides penalties for failure to
comply with this requirement, unless failure is due to reasonable cause.
If we have indicated in the heading of this letter that an addendum
applies, the enclosed addendum is an integral part of this letter.
Because this letter could help resolve any questions about your exempt
status, you should keep it in your permanent records.
We have sent a copy of this letter to your representative as indicated in
your power of attorney.
Letter 948 (DO/CG)
NEWVILLE MEDICAL FOUNDATION
-3-
If you have any questions, please contact the person whose name and
telephone number are shown in the heading of this letter.
Sincerely yours,
..........
/~Director
Letter 948 (DO/CG)
NEWVILLE MEDICAL FOUNDATION
PLAN OF SALE OF ASSETS AND POST-SALE CHARITABLE ACTIVITIES
This Plan of Sale of Assets is adopted in accordance with law by the Newville Medical Foundation
(herein "foundation") pursuant to the provisions of 15 Pa.C.S.A. Section 5930(a). The terms of the Plan
are as follows:
1. The Foundation will sell substantially all of its assets, consisting of the improved real estate
(including fixtures and other personalty) to J. Anthony Townsend, Joseph A. Pion and Carol K.
Robinson, Partners (herein "Buyers"), for the total consideration of $575,000.
2. The Sale shall be in accordance with the terms of the Agreement of Sale, dated October 8, 1999 and
the Amendment thereto dated March 19, 2002, copies of which are attached hereto as Exhibits 4 and 5.
3. After closing, the Foundation will hold a full recourse Note of the Buyers, secured by a second lien
mortgage (second only to the existing first mortgage being assumed by the Buyers under said
Agreement of Sale) in the principal amount of approximately $311,000 with monthly amortized
payments of principal and interest of $1,814.17 from closing until April 13, 2011 and thereafter in
payments of $5,333.00 monthly until paid in full. Interest shall accrue at the rate of seven (7%) on
unpaid principal. The Buyers shall have the privilege of prepayment without restriction.
Post Closing Activities:
4. Following the sale of the Real Estate Assets, Petitioner intends to remain in existence and will adopt
amended and restated articles of incorporation and bylaws which will cause it to become a charitable
health foundation whose purposes following the sale will be to engage in Section 501 (c)(3) activities to
promote the health and wellness of the Newville area by continuing and supplementing current programs
(including such activities as pre-natal education, well-baby clinics, school health education programs,
immunizations, health education programs and health screening for the elderly and needy), and
generally by:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Engaging in activities related to the promotion of health and the improvement of the
health status of persons in Petitioner's service area;
Providing resources for the restoration and maintenance of health;
Improving community health; _ ..
Promoting health education
Bringing high quality health care services to the service area;
Supporting health related research benefiting residents in the service area;
Promoting the general health and wellness of persons in the service area; and
Engaging in certain fund-raising and related activities or programs.
Petitioner's amended articles of incorporation will add specificity to the general purposes already
authorized in its current articles, but will not expand such existing purposes.
5. Toward these objectives, Petitioner will, among other things, make grants to other nonprofit Section
501 (c)(3) organizations whose mission is to promote the health and wellness of the community served
and may either directly engage in indigent clinical care service activities and/or act as a supporting
organization to Section 501 (c)(3) organizations that provide indigent clinical care. Petitioner will
continually evaluate the Purchaser's operations and the programs and services that it provides, as
compared to the programs and services that the Foundation currently provides or that are otherwise
needed in the community served, and Petitioner will, to the extent possible, apply its assets to bridge any
gap between (a) community health services and programs now available and those that will
be available following the sale, and (b) community health services and programs available following the
sale and what community health services and programs are needed in the community served following
the sale.
6. In accordance with its current and future charitable purposes, Petitioner will use its assets to ensure
that the proposed sale will not create an adverse effect on the availability and affordability of health care
services to the community and will ensure that traditionally under-served populations in the community
maintain appropriate access to health care.
7. Following the transaction, and consistent with Petitioner's purposes under its existing Articles of
Incorporation, Petitioner will be dedicated to serving the community's unmet health and wellness needs,
particularly with regard to medically uninsured and under-served populations, and will focus on
improving health and wellness, including, among other things, improving access to services, enhancing
quality of care and addressing disease prevention and health promotion.
8. As a nonprofit, Section 501 (c)(3) organization, no part of Petitioner's net income will inure to the
benefit of or be distributable to any private person, Petitioner's assets will be dedicated in perpetuity to
tax-exempt purposes and the activities of Petitioner will be those permitted of a Section 501 (c)(3)
organization.
9. It is anticipated that the business and affairs of Petitioner will continue to be govemed by a self-
perpetuating community based unpaid board of trustees. Because all of Petitioner's Post-Closing
activities are authorized under Petitioner's existing Articles of Incorporation, the transaction will not
result in a diversion of charitable assets.
10. The Foundation shall obtain court approval of this Plan (and the Sale) under the provisions of 15 Pa.
C.S.A. Section 5547(b). ~ .
CERTIFIED to be a True and Correct copy of the~rigin, al duly adopted(~e ~Foundation.
S~c}e~ry ~' ~
F:\FILESXDATAFILEVDEEDS\8044-3.AGR
AGREEMENT OF SALE
THIS AGREEMENT, dated October ,. ~ ,1999, is between The Newville Medical
Foundation, Inc., of Newville, Cumberland County, Pennsylvania, called Seller, and J. Anthony
Townsend, Joseph A. Pion and Carol K. Robison, Partners, of Cumberland County, Pennsylvania,
called Buyer, the parties intending to be legally bound hereby:
1. PROPERTY Seller hereby agrees to sell and convey to Buyer, who hereby agrees to
purchase (the "Property"):
ALL THAT CERTAIN lot or piece of ground with buildings and improvements thereon
erected, if any, known as: 100 South High Street in the Borough of Newville, Cumberland
County, Pennsylvania, 17241. Tax ID# 28-20-1756-005, Cumberland County, Pennsylvania
Deed Book "T", Volume 24, Page 623.
Zoning Classification: R-1 low Density Residential
2. TERMS
(A) Purchase Price $575,000.00 Dollars which shall be paid to Seller by Buyer by
assumption with current financial Farmer's National Bank of Newville, and the
balanced to be financed by the seller at 7% per annum with monthly payments of
$1,783.01 through April 13,2011 and monthly payments thereafter in the amount of
$5,333.00 with the last such payment to be adjusted as necessary to cause the
purchase price to be fully paid.
(B) Conveyance from Seller will be by fee simple deed of special warranty.
(C) Payment oflxansfer taxes will be divided equally between Buyer and Seller.
(D) The following shall be apportioned pro-ram as of and at time of settlement: taxes as
levied and assessed; rents; interest on mortgage assumptions; waste and/or sewer
rents, if any; together with any other lienable municipal services.
3. FIXTURES AND PERSONAL PROPERTY
INCLUDED in this sale and purchase price are all existing items permanently installed in the
Property, free of liens.
4. SPECIAL CLAUSES - The following conditions shall be met on or before 10/31/99,
otherwise this Agreement shall be terminated:
(A) This is sale is contingent upon approval of Buyers assumption of existing financing
held by Farmers National Bank of Nexa~,ille and Seller financing for the remaining
i EXHIBIT
e
balance as set forth in paragraph 2 hereof.
(B) This sale is conditioned upon the approval of the Court of Common Pleas of
Cumberland County with respect to the sale by Seller, with closing to take place
within ten (10) business days thereof.
NOTICES AND ASSESSMENTS
(A) Seller represents, as of the execution of this Agreement, that no public improvement
assessments have 'been made against the Property which remain unpaid and that no
notice by any government or public authority has been served upon the Seller or
anyone on the Seller's behalf, including notices relating to violations of zoning,
housing, building, safety or fire ordinances which remain uncorrected, and that Seller
knows of no condition that would constitute violation of any such ordinances which
remains uncorrected, unless otherwise specified herein.
(B) Seller will be responsible for any notice of improvements or assessments received on
or before the date of settlement.
TITLE, SURVEYS, AND COSTS
(A) The Property is to be conveyed free and clear of all liens, encumbrances, and
easements, EXCEPTING HOWEVER, the following: existing building restrictions,
ordinances, easements of roads, easements visible upon the ground, privileges or
fights of public service companies, if any; otherwise the title to the above described
real estate shall be good and marketable and such as will be insured by a reputable
Title Insurance Company at the regular rates.
(B) In the event the Seller is unable to give a good and marketable title and such as will
be insured by a reputable Title Company, subject to aforesaid, Buyer shall have the
option of taking such title as the Seller can give without abatement of price or of
being repaid all monies paid by Buyer to Seller on account of the purchase price and
the Seller will reimburse the Buyer for any costs incurred by Buyer for those items
specified in paragraph 6(D) and in paragraph 6(E) items (1), (2), (3); and in the latter
event there shall be no further liability or obligation on either of the parties hereto
and this Agreement shall become NULL AND VOID and all copies will be returned
to Seller for cancellation.
Formal tender of an executed deed and purchase money is hereby waived.
tc)
7. POSSESSION
(A) Possession is to be delivered by deed, keys and physical possession to a vacant
building (if any) broom clean, flee of debris at day and time of settlement, or by deed
and assignment of existing lease(s), together with any security deposits and interest,
at time of settlement if Property is tenant occupied at the execution of this
Agreement, or unless otherwise specified herein. Buyer will acknowledge existing
lease(s) by initialing said lease(s) at time of signing of this Agreement of Sale, if
Property is tenant occupied.
(B) Seller will not enter into any new leases, written extension of existing leases, if any,
or additional leases for the Property without expressed written consent of the Buyer.
8. MAINTENANCE AND RISK OF LOSS
(A) Seller shall maintain the Property, fixtures, and any personal property specifically
scheduled herein in its present condition, normal wear and tear excepted.
(B) Seller shall bear risk of loss from fire or other casualties until time of settlement. In
the event of damage to any property included in this sale by fire or other casualties,
not repaired or replaced prior to settlement, Buyer shall have the option of rescinding
this Agreement and receiving all monies paid on account or of accepting the Property
in its then condition together with the proceeds of any insurance recovery obtainable
by Seller. Buyer is hereby notified that Buyer may insure Buyer's equitable interest
in this property as of the time of the execution of this Agreement.
9. RECORDING
This Agreement shall not be recorded in the Office of the Recorder of Deeds or in
any other office or place of public record and if Buyer causes or permits this
Agreement to be recorded, Seller may elect to treat such act as a breach of this
Agreement.
10. DEFAULT - TIME OF THE ESSENCE
The said time for settlement and all other times referred to for the performance of any of the
obligations of this Agreement are hereby agreed to be of the essence of this Agreement. Should
Buyer violate or fail to fulfill and perform any other terms or conditions of this Agreement, then both
parties shall be released from further liability or obligation and th/s Agreement shall be NULL AND
VOID.
11.
REPRESENTATIONS
It is understood that Buyer has inspected the Property (including fixtures and any
personal property specifically scheduled herein), or hereby waives the right to do so,
and has agreed to purchase it in its present condition. Buyer acknowledges that Seller
has not made an independent examination or determination of the structural soundness
of the Property, the age or condition of the components, environmental conditions, the
permitted uses, or of conditions existing in the locale where the Property is situated;
nor has Seller made a mechanical inspection of any of the systems contained therein.
NOTICE TO PARTIES: WHEN SIGNED, THIS AGREEMENT IS
CONTRACT.
WITNESS
(SEAL)
Seller hereby approves the above contract this
/ ~ day of ~
SEI~LF/R
A BINDING
DATE
DATE
AMENDMENT TO AGREEMENT OF SALE
THIS AMENDMENT TO AGREEMENT OF SALE, made this /~ day of
'-X'r,O..~.r_2,,. ,2002, between The Newville Medical Foundation, Inc., of Newville,
Cumbedand County, Pennsylvania ("Foundation") and Jay A. Townsend, M.D., Joseph A. Pion,
D.O. and Carol K. Robison, M.D., Parmers in a Pennsylvania general Parmership known as the
TPR Real Estate Parmership, also of Newville, Cumberland County, Pennsylvania ("Parmers')
WITNESSETH:
.~. ~WHEREAS, Foundation and Partners entered into an Agreement of Sale dated October
8, 1999, wherein Foundation agreed to sell and Partners agreed to purchase the real estate located
at 100 South High Street, Newville, Cumberland County, Pennsylvania 17241; and
V~rHEREAS, Foundation is a charitable organization and the foregoing real estate
constitutes all or substantially all of Foundation's assets, thereby subjecting the sale, under
applicable Pennsylvania law, to scrutiny by the Attorney General of Pennsylvania and ultimate
approval by the Court; and
WHEREAS, the Attorney General has conducted a thorough review of the proposed sale
terms and has agreed not to interpose an objection to Court approval provided the parties agree
to certain post-sale obligations; and
WHEREAS, the parties desire to amend the Agreemem of Sale to incorporate such
additional obligations.
NOW, THEREFORE, upon consideration of the mutual desire of the parties to expedite
the approval of the foregoing sale, the parties hereto, intending to be legally bound hereby, agree
as follows:
1. Effect of Amendments. The terms of this Amendment to Agreement of Sale shall
supplement and, to the extent of any inconsistency, supersede the terms of the Agreement of Sale.
Except as expressly set forth herein, the terms and conditions of the Agreement of Sale shall
continue in full force and effect.
2. Amendment of § 4. Section 4 of the Agreement of Sale (relating to Special
Clauses) is hereby amended to revise the date on or before which the conditions described
therein must be met. Said date shall henceforth be March 1, 2002.
3. Addition of New § 12. A new section shall be added to the Agreement of Sale to
provide as follows:
12. POST-SALE OBLIGATIONS
(A) Acknowledgement of Charitable Obligations.
The parties
acknowledge that Seller is a non-profit corporation and a
charitable organization as defined by Pennsylvania law. The
parties further acknowledge that the Property which is the
subject of this Agreement of Sale constitutes all or substantially
all of the assets of Seller, thereby requiring Court approval for
the sale. The parties likewise acknowledge that such approval
is required to assure that Seller will, after the sale, be able to
continue its charitable purpose of undertaking and/or supporting
programs and activities for the improvement of the health,
welfare and medical services of the people of the Newville
community.
(B) Buyer's Post-Sale Obligations. Buyer agrees that any furore sale
of the Property within ten (10) years of the date of Closing shall
be made only to persons or entities who specifically agree that
the Property shall continue to be used for the provision of health
care services to the people of the Newville community. Buyer
further agrees that, in the event Buyer sells the Property within
ten (10) years of the date of Closing to persons or entities who
do not specifically agree that the Property shall continue to be
used for the provision of health care services to the people of
the Newville community, Buyer will pay to Seller all proceeds
from such sale exceeding Five Hundred Ninety Two Thousand
Dollars ($592,000.00), less inflation and the costs of any
improvements made to the Property by Buyer.
IN WITNESS WHEREOF, the Parties have executed this Amendment to Agreement
Sale as of x~,~ x~ I~ , 2002.
WITNESS:
ATTEST:
(SEAL)
THE I;tth ,., 0, & ~2~LLd~
IETWEEH
and
JOIIN H. BZLLMAH and HARLEHE P. BZLIJ4AH, h~s vL~e, o~ R. R. 2e
He~l~e, C~land County, Pe~sylvunh, para,es o~ ~e
N~ZL~ ~DZ~ ~DATZOH, ~C., a coronation duZy
o~gen/zed a~ ex~o~lng u~ ~ Ava o~ ~e Co~we~I~
og PennsyZvanin, v/th Lta prinaLpal 'pz~e o~ ~sineas In the
Bo~ugh of NMLlle, Coun~ of ~rh~ a~ S~te of
Penneylvanh, ~r~y o~ ~he 8ea~.~r~,,...: ..... Glee .
*.. - -----,--, ,our,... ,ho.uand ."
(~'~- 4,000,'00) .... .q';--' ...... . . -- hllm,
In ke,d paid. Ihs fica,pt Mi h J~feby ock~ow~dood, b odd gre~! .. de, . hmeby grant end
convey Jo the tdd greeleo . ALL 'that cerUin tract or :land sAtuate An the
Borough of HewA1Ze, county of Cunberl'A~d and State of PennsylvanAa,
bounded and descrAbed ag ~ollovs,
· BOt~BED.on thegNs'rrb by VAne ~tE~atr on the East by South
IILgh Street~"on the, So~th by the BAg S~rthgl and on (:ho Hist by
property foz~uerly or D. H. Iluntshorga~,..nov or Viola H. Kick.
Containing 210 feat, more or lass, on'Vln, e Street, a depth ~rom Vinn
Street ~o the Spring, and on the Hisl~irn.'*L~no a dAn~anoa or 120 feet,
more or lees~ ; *'
A more de,siZed dencrL*ptLon of tho abb~e property according to the
survey of ~ichard F. Zinn, R.S. dated'**Junl ~, ~972 ~s al
'BEGZHHTHG at a ~aLlroad epAk~ It tho corner of land of VAils
Kick and Vine Strcot~ thence along tho curb LAne o£ V4ne Street
SS degrees 4S minutes Rib, 210.00 feet to a railroad spAke it the
corner of Vine Street and South Iligh Stceet~ thence, along the curb
line of South High Street South 23 degrees.04 minu~es htr 238.67
feet to a point An the middle or th~ BLS 8pring~ thence along the
middle of the Big SprAng South 89 deqrlee 18.~Lnutes His~ 224.78
~o a point in the n~Lddle of BAg Sprin~ thence aAong the land of .
Viola Xeck Hirsh 24 degrees 45 n~Lnutes Heat 143..83 .feet to the phce
of BEGZHHZHG. ConUin~ng 40,59A square feet.
BETHG the same tract of land vhAch SA~LA~J-~7. Mentzer'and Ilea .B.
Menczer, his'Vt,e, by SheAr deed dated 'thb 2nd day or JanUary, 1'970,
and recorded An tho of£Aco of the Recorder o£ Deeds'LA and rot
Cumberland' County In Deed Book t4, Volbmo 23~ page ??la granted and
conveyed untb John #. BAA,nan and HarAe~5 P..BAIXIML!J, his:
Grantors herman named.-
AIqO Ihs said granlefSheeeby ~oven~! emi opel Ibel Ihly Iud eoeb Il lbom will
generally lbo groperty hereby cof~veyud.
IN WITNESS WHEREOF, said grantor.8 ha V,el,. hmeunlo ,et
· Ihe day and ~eor flrl~ Qbove ~tle& . "' '. '
~ SI=II of PENNSYLVANIA ~.
his wi~e,
~; ....... ~:~.~eat, and acknowledged that ' . ~ey e~uled ~ame for Ih. p~o,e~.~h~reln contained.
/ ~.' .. · ,, ~.: ~ .' .~ ~ ".):~.. . · . ·. .. ..
AIIorney for
· '' . ' '
...... · -'I ................... :"; ..... :' "$~ · .... ' ....
· ' ..... ': I ,, .... ~,..;,,,~ ..,k'J .d.,,,~.:
/../ -- ~. ~....~,~,, ~:::":~.. ~ .,...~. ..
cG... of/ ~' L-~~~ ~ / ' ' :'~? ;%~,." ? %': ? .... ~."
~ " . ' . ,t=~ '~ · ~ ~'"' ':~,.~ .......... ' ~ .
. . . ...~.~..~., '.,..., ~ · . . .~.
~.,.~ ~
be said office . date :above wr~lea.
Given under my hand and
~KordlK
93 "
TABLE OF CONTENTS
L~tte,- of T,',~smie,~l ............................................ 1
Proper%- Identiflcatlon ...........................................2
Scope of Appralsal-/g[arkefing Time ................................ 3
Property Description ............................................ 4
Description of I,m,ro,,emex~t~ ................................. 5
Site Dao, ................................................ 8
Zoning and Restrictio.~s ................................9
Recordi.~g Data ...................................... 9
Location Analysis ............................................. 10
Regional Data ........................................... 10
Neighi, orhood Data ....................................... 19
Assessme.~i Analysis ........................................... 20
Highest ,md Best Use ........................................... 2 1
Purl, ose of Am, ralsal ................................. ~ .........2£~
Appraisal Process ............................................. 26
Sales Comparison Am, roach ..................................... 28
Income Approach ............................................. ;59
Cost Av~,roa& ............................................... 58
Cor,-el,.tion and Fh~al Value .....................................70
Certificafion ................................................. 79.
Certification and Statement of Limifing Conditions .................... 73
R~su,,,es .................................................... 78
Photo~a~hs .................................................. 80
Addenda .................................................... 83
Se
W. BARRETT REAL ESTATE & APPRAISAL SERVICES
......... Appraisals · Brakn'n~ · Counseling
124-126. N,~Hanover .S_t_ .r~_.t._____C?r_lisl~ ~ PA_. ! 7__0_1.3_- 2 4.~5. _5_ ..........
........................ Phone.CT!7)..~3~ ....... FAX. (717.) 243.'.8~2.~
Steven W. Barrett, SRPA, SPA, ASA
State Certified General Appraiser
November 2. 1998
Mr. James E. Shoxvvakcr. Loan Officer
Thc Farmers National Bank of Nm~viile
Big Spring Avenue
Nmwill¢. PA 17241
SUBJECT:
Ncxx,,,illc Medical Foundation, Inc.
I00 South Higl~ Street
Borough of Nc~ville
Cumberland County. PA
Dear Mr. Sho~xvakcr'
In c,~mpl~;mo: with 5'our h:quc~t. I.'~C have personally inspected thc abovc captioned property to cstnnalc
as......,~,,.,,'-'s""t market value in a Self Contained Appraisal..
Thc value shox~n has bccn arrived at attcr carcfui study of the location and type of improvements, thc,'
prc:;cnt ph.x sical condition and their present usc. Therefore. l/xvt believe it to reflect a tmc mcasur'.: of thc
present-.day market value "AS OF" October 9, 1998.
Value Reported:
FIVE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($575,000)
1 Wc hcrcbv ccrtifx' that I/x~c l,c,.,c no fimmcial interest, present or contemplated, m this p~ cpcrty, and that
ncifl~cr thc cmolov~ncnt to make tl~c al:pmisal nor the compensation therefrom is co~tingcnt upou thc '. aluc
reported.
STEVEN W. BARRETT. SRPA. SRA. ASA
PA CERTIFIED GENERAL APPRAISER. GA-0002t]8-L
.cds
PROPERTY IDENTIFICATION
Proper~ Address:
Owner of Record:
Recording Information:
Parcel Information:
Zoning:
Highest and Best Use:
Property Description:
Lot Size:
Appraisal Dates:
Date of Last Transfer:
Environmental Audit:
100 South High Street
Borough of Newville
Cumberland County, PA
Newville Medical Foundation, Inc.
Deed Book 24-T? Page 623
District 28, Map 20-1756, Parcel 004
R-2, Medium Densit3' Residential
Current use or uses allowed by zoning.
One story, medical clinic containing 6,357 square feet of gross
building area.
40,591 Square Feet or approximately .93 Acre
Certification Date:
Inspection Date:
"AS OF DATE:"
November 2, 1998
October 9, 1998
October 9, 1998
The land last transferred August 14, 1972, for consideration of
$14,000.
No environmental audit report was provided to this appraiser.
Please see the Environmental Disclaimer located in thc
Certification and Statement of Limiting Condition section.
2
SCOPE OF THE APPRAISAL
Extent of the process in which data are collected, confirmed, and reported.
The appraisal was completed in accordance with USPAP guidelines and conforms to all current appraisal
standards.
All information was verified through public record or personal contact or phone interviews with grantors,
grantees, brokers or other individuals involved within the sales and/or leasing transactions.
MARKETING PERIOD
The time it takes an interest in real property to sell on the market subsequent to the date of an
appraisal.
Reasonable marketing time is an estimate of'he amount of time it might take to sell an interest in
real property at its estimated market value during the period immediately al~cr the effective date
of the appraisal; the anticipated time required to expose the property to a pool of prospective
purchasers and to allow appropriate time for negotiation, the exercise of due diligence, and thc
consummation of a sale at a price supportable by concurrent market conditions. Marketing time
differs from exposure time, which is always presumed to precede the effective date of the
appraisal. (Advisory Opinion G-7 of the Appraisal Standards Board of The Appraisal
Foundation and Statement on Appraisal Standards No. 6, "Reasonable Exposure Time in
Maxket Value Estimates" addresses the determination of reasonable exposure and marketing time.)
Market value estimates imply that an adequate marketing effort and reasonable time for exposure occurred
prior to the effective date of the appraisal. In the case of disposition value, the time frame allowed for
rnatk~ the property fights is somewhat limited, but the marketing effort is orderly and adequate. With
liquidation value, the time frame for marketing the property rights is so severely limited that an adequate
3
marketing program cannot be implemented (The Report of the Appraisal Institute Special Task Force
on Value Definitions qualifies marketing time in terms of the three above mentioned values.)
Subject property, falls within normal market time in and for the County of Cumberland for commercial
property ranging from six months to two years.
4
DESCRIPTION OF IMPROVEMENTS
IMPROVEMENTS
The subject property is a one story, medical clinic, summarized below. The floor areas stated were drawn
from a building sketch, tax records and inspection. A narrative description of the building components
follow.
BUILDING SECTION
GROSS SQUARE FEET
Original Building - 1990
Addition- 1996
3,351
3,006
TOTAL 6357
MAIN BUILDING:
The main building is one story, of brick veneer construction. Thc
original portion was constructed in 1990 and contained 3,351 gross
square feet. The addition of 3,006 gross square feet was completed in
1996.
There is a ve~bule into a waiting room with play area and restroom.
The receptiomst office, consultation and examining rooms, laboratory.
x-ray, emergency, lounge and restrooms complete the room count.
The improvements, overall, appear to be in good condition.
Foundation:
24' x 28' Concrete block basement, the remainder of the building is on
a slab.
Roof:
Gable with asphalt shingles over wooden deck
Exterior Walls:
Frame and brick veneer
Exterior Doors:
Steel
Loading Docks:
Not Applicable
Frame:
Wood
Ceilings:
Drop Tile
Walls:
Dry,vail
Floors:
Wall-to-xvall carpeting and vinyl
Windows:
Double hung, thermal
Mechanical Systems
Electrical:
800 Amp multi-phase system
Lighting:
Recessed, covered flourescent and emergency lighting
HVAC:
Txvo heat pumps with central air
Plumbing:
Nine restrooms, one with shower. It is presumed that the subject
propert3"s plumbing system conforms with all applicable building codes
and regulations.
Miscellaneous;
Securit3' system and fire alarms
Ace and Condition:
The building was constructed in two stages. The original section xvas
completed in 1990, and the newer section in 1996. The subject
improvements are in good condition. Periodic maintenance and upgrades
have extended the useful, economic life of the improvements.
Depreciation of the short-lived components (roof cover and parking lot
surface) is typical of a building in good condition. Based on inspection
of the property, effective age is estimated at approximately two years.
Estimated remaining economic life is thc period during which
improvements continue to contribute to property value and is calculated
by subtracting effective age from total economic life. Based on the
original design of the subject, as well as updates-the utility, location in
the marketplace and physical attributes -the property's total economic
life is estimated at 45 years. Therefore, the remaining economic life of
thc building is estimated at 43 years.
7
SITE DATA
Orientation:
Lot Size:
Shape:
Frontaee:
Topography:
Paving/Parkine Soaces:
Landscaping:
Sidewalks/Curbs:
Curb Cuts:
Fencing:
Exterior Liehting:
Utilities:
Southwest section of Nex~Mlle Borough, on the west side of
South High Street
40,591 Square Feet
Irregular
Approximately 259 feet along West High Street
Level to sloping
Approximately 32 spaces, 22 in front, including two
handicapped, and l0 to the rear. Paved surfaces are in good
condition.
Foundation planting, in rear of property is natural tree and
shrub growth to creek
Front sidewalk 4' x 11' and rear patio 16' x 12'
Not Applicable
None
Not Applicable
Water, Sewer, Electricity. and Telephone
8
Flood Zone:
Easements & Deed Restrictions:
Flood Zones C and A", No. 421579 0001 A, Effective Date:
December 14, 1979.
*Improvements appear to be above Hood plato with no adverse
effects.
None apparent
Favorable Attributes:
Located in Borough on main street easy access and good
visibility.
Unfnvornble Site Attributes:
None apparent
ZONING
Thc subject property is zoned R-2, Medium Density Residential District. a permitted, nonconforming usc
to thc existing zoning ordinance. Please see Highest and Best Use for explanation and Addenda for Zoning
Ordinance. Any additional use and improvements are subject to existing zoning and restrictions, rights of
way or easements that may be recorded in the Recorder of Deeds Office of Cumberland Count3.' or
Newville Borough.
RECORDING DATA
The subject is recorded in the Office of the Recorder of Deeds in and for Cumberland County in Dccd
Book 24-T, Page 623. Tax Identification Number is District 28, Map 20-1756, Parcel 004.
9
LOCATION ANALYSIS
REGIONAL DATA
1990 Census figures show that the Tri-CounV,.' Hamsburg SMSA- Standard Metropolitan Statistical
Area--or Central Region, comprising Cumberland. Dauphin and Pen3,' Counties-is now home to 587,986
people after a growth rate increase of 6% since 1980, exceeding that of the-state as a whole. The hub of
the area is Hamsburg, the state capital, one of the largest cities in Southcentrai Pennsylvania.
All these counties are ideally situated forming a transportation hub between coastal and interior cities. The
area's north/south and east/west highways converge around Harrisburg, affording convenient commuting
for business or pleasure from Central Pennsylvania to the Philadelphia, New York and Washington, D. C.,
comdors. Baltimore and Philadelphia are close enough that their suburban populations are now impacting
on the southcentrai region of the state.
Harrisburg continues to be the nucleus of economic strength in the Central Region offering a widely
diversified economic base including agricultural-featuring local farm markets, retail and wholesale trade,
manufacturing, warehousing, federal military installations, as well as being the Dauphin Count3.' scat.
One of the key factors that supports a diversified economic base is the extensive highway net~vork cms-
crossing thc region. Interstates 81, 83 and 76-the Pennsylvania Turnpike-and U. S. Routes 1 ! and 15,
as well as 22 and 322, all serve the Hamsburg area. Other transportation facilities include Hamsburg
International Airport served by American, Delta, United, Northwest, USAIR, Air Ontario and Air Tran,
plus scveral local commuter lines. Seven local commercial airports, three major railroads. Conrail to the
noah, southwest and west, with Amtrak prodding passenger service; and numerous track terminal facilities
such as ABF, C-F Motor Freight, Daily Express, Roadway Express and Shaffer, to name a few, add to
the areas mobility.
10
Economies such as central Pennsylvania's which have been built on a goods-producing base are more
susceptible to the business cycle fluctuations and traditionally suffer greater cutbacks during recession.
The more severe the recession, and the 1982-83 recession was as severe as any, the more difficult it is to
reverse the effects of cutbacks. Nevertheless, the area has bounced back far better than expected becoming
a more recession-resistant economy based on the service-producing industry.
Another indication of the economic health of the region is exemplified by the relatively low unemplo.~nent
rate of 3.2% for the fall of 1997 in southcentral Pennsylvania. Cumberland County had a low of 2.9%
with Dauphin County at 3.3%.
There are various militaW installations situated in the region three of which are in Cumberland Count).':
U. S. Naval Supply Depot in Mechanicsburg, U. S. Army New Cumberland Depot located near New
Cumberland and U. S. Army War College located in Carlisle. In addition, Fort Indiantown Gap Military
Reservation, Lebanon County, lies within proximity of the metropolitan area. It is headquarters of thc U.
S. Army Pennsylvania National Guard and is used for summer training.
It is evident from the above that the largest employer in the Harrisburg SMSA is government, which
provides emplo.x~nent for approximately 25% of the work force.
COUNTY UNEMPLOYMENT RANKING -SEPTEMBER 1997,
COUNTY STATE RANK CURRENT VOLUME 19~9 RATE DIFFERENCE
RATI~
Cumberland ! 2.9 3.600 2.9 0.0
Dauphin 4 3.5 5.000 4. I 0.5
York 8 3.8 7.500 4. I 0.3
Perry 17 3.3 g00 4.7 1.4
The 1990 Census also indicates Cumberland Count3"s buying income per household is $35,540 with the
median age of 37.3 years. Approximately 65% of the households had incomes in excess of $25,000 and
another 44.8% in excess of $35,000. By 1996, Cumberland County's effective bu.ving income per household
~x~ $39,231, while 2,600 households within the Harrisburg SMSA had effective bu.ving income of $150,000
or more.
HOUSEHOLD AND PER CAPITA INCOME FOR 1989 *
COUNTY MEDIAN HOUSEHOLD M~DIAN MEDIAN NON-FAMILY PER CAPITA IN~M~
XNCOM~ FAMILY HOUSEHOLD INCOM~
XNCO~
Cumberland 34,493 40,989 19,697 15,796
Dauphin 40,985 37,254 18,639 14,890
York 32,605 37,590 17,785 14,544
Adams 30,304 35,225 17,240 14,420
Perry 29,539 32,776 17,103 11,941
*PENNSYLVANIA DEPARTMENT OF LABOR AND INDUSTRY
12
Whatever your interest, you can find it, buy it and enjoy it in southcentral Pennsylvania. There are a wide
variety of cultural facilities within the Harrisburg Metropolitan area. These include a State Museum, The
Forum-facility to the Harrisburg Symphony, as well as visiting artists-and the State Library. The Hershey.
complex, only minutes away, includes a four-star hotel, an arena and the area's flagship amusement park
and zoo. Numerous shopping and outlet malls dot the region. Harrisburg is home to the Senators baseball
team and the Heat provides soccer entertainment.
Continuing education is available with man3' private and state supported colleges, as well as community
colleges.
Cumberland Count3.' is located directly west, across the Susquehanna River from Harrisburg in the heart of
the eastern market. Comprised of 550 square miles, it incorporates the communities of Mechanicsburg,
Shircmanstown, Camp Hill, New Cumberland, Lemo.vne, West Fairview, Carlisle, as well as numerous
toxxaaships.
Cumberland County has had an increase in population, total number of households and average household
incomes--ranging from $21,716 in 1980 to $39,231 in 1996-showing a strong economic development.
Economic demographic, social and physical factors affecting thc future marketability and value trends of
real estate in thc subject locale include:
A strong transportation center as a result of interstate highways and convenience to
the eastern market.
New construction of office buildings, truck terminals, warehouses and industrial
buildings, as well as service-producing facilities.
Expanding population base, including availability of skilled and unskilled workers.
14
The Hamsburg SMSA is expected to continue its steady growth in the furore, due in part to its strategic
location, transportation and stable econolnic base. Growth rates m the foreseeable furore are predicted to
exceed that of the overall state average. Most likely, the Greater Harrisburg Area, as defined, will
experience the slowest rote of grovah, while the less densely populated portions of the region are expected to
grow at a more rapid rate. Future growth rates in the subject Cumberland County. area are also predicted to
exceed those of the Greater Harrisburg Area, but be below the less densely populated portions of the
Hamsburg SMSA.
15
Harrisburg-Lebanon-Carlisle HSA
[CumbeFiand, Dauphin, Lebanon and Perry Counties)
August ]uly August
1998p/ 1998 1997
4FARI'4 JOBS 355,600 356.300 349,500
:)DS PRODUCING INDUSTRIES 59,800 59,600 s9,500
~onstroction ~r Mining 14,000 14,000 13,800
4anufacturing 45,800 45,600 45,700
Durable Goods 22,000 22°000 21,800
Lumber J~ Wood, Incl Furniture 2,200 2,100 2, 100
Prim Ju Fabricated ldeul Prod 5,300 S,300 5,500
Math, Elet~tonic, Elect Equip 11,400 11,500 11,200
Transponation Equipment 1,300 1,300 1,200
Nondurable Goods 2.3,800 23,600 23,900
Food A~ Kindred Producu 11,100 I 1,000 I 1,400
Textile Mill Produc~s 2,200 2.200 2,100
Apparel AT Other Textiles 1,300 1,200 1,200
Paper AT Allied Products 1,700 1,700 1,600
Printing AT Publishing 4,400 4,400 4,300
Rubber, Plastics, Leadler 2,S00 2,500 2,600
Otl~er Nondurable Goods 600 600 700
VICE PRODUCING INDUSTRIES 295,800 296,700 290,000
7ransponation AT Public Uflls 23, I O0 23,400 21,500
Vholesale Trade 21 ,SOO 21,600 21,200
,etail Trade S9,300 59,100 S7,600
inance, Insurance, Real Estate 26,000 26,100 25,800
~ervices 102,600 102,500 100,000
Hotels AT Other Lodging Places 4,800 4,800 4,700
Personal Services 2,900 3,000 2,900
Business Services 19,400 19,1 00 18,600
Auto AT kllsc Repair Services 3,500 3,500 3,400
Amusement, Recreatlo, Services 7,800 7,700 7,800
Health Services 30,000 30,1 00 29,500
Hospitals 14,200 ! 4,400 I 4, 100
Legal Services 2,300 2,300 2,20o
Educational Services 5,000 S, 1 00 4,800
Social Services 7,400 7,300 7,400
Membership Organizations I 1,800 I 1,900 I 1,300
Englneefitt8 AT Hgm[ Services 5,300 5,300 5,200
;'oral Govemmem 63,300 64,000 63,900
Toral Federal Government 12.700 12.800 12,800
Total State Government 30,500 30,500 30,400
Total Local Governmem 20,100 20,700 20,700
Area Labor Market Analyst: Wayne Schopf
For additional Information, call 717-772- ! 370
tO Total nonfarrn jobs declined 700 in August to 355,600...
remains 6,100 above last year.
· Manufacturing jobs increased 200...construction & mining
was unclmnged.
· Service-producing industries declined 900 jobs...other local
government down 700...surnrner youth lilting programs
ended earlier this year...other sectors had only minor
changes.
· Average weekly manufacturing hours were 39.9...the same
as last August...average weekly earnings $55,t.21...up 4.4
percent over last year.
70.(X)O
65.(XX)
6(L(XJ0
$0,(XX)
3.5(LIJ(K)
300,0(X)
250.(X)0
200.(J(XJ
Long-Term Trends
[in thousands:]
(;()()I)S PI{OI)tJCING INI)IJSTRIES
A u g
00
SEIt¥1CI': I'ROI)UC'I N(;
I10
8x 18~ 190 191 192 193 {~,M 19.5 Ig('~ I~)7 1~8
Average Weekly Earnings
August July August
1998p/ 1998 1997
NUFACTURING 554.21 553.20 531.07
)urabie Goods 581.50 584.63 552.97
Lumber AT Wood, Incl Furniture 478.00 475.16 455.46
Prim AT Fabricated Metal Prod 638.29 638.14 600.85
Math. Electronic, Elect Equip 562.47 555.16 566.21
Transportation Equipment 618.61 675.45 383.52
'~ondurahle Goods 531.35 527.67 S 12.87
Food ~r KInd~ed Products 657.28 637.33 621.68
Apparel AT O~her Textiles 302.78 319.60 282.75
Paper AT Allied Products 516.68 521.56 486.81
Printing AT Publishing 470.75 473.96 468.46
Rubber, Plastics, Leather 440.82 46 I. 18 446.08
Average Weekly Hours
August July August
1998p/ 1998 1997
39.9 40.0 39.9
41.3 41.2 40.6
40.0 39.4 39.4
41.8 41.6 41.9
40.7 40.2 41.0
46.9 45.7 28.2
38.7 39.0 39.3
39.S 39.1 39.8
37.8 40.1 37.7
41.5 42.3 40.S
37.6 38.1 39.3
37.2 38.4 39.9
Average Hourly Eamlngs
August ]uly August
1998p! 1998 1997
13.89 13.83 13.31
14.08 14.19 13.62
I 1.95 12.06 I 1.56
15.27 15.34 14.34
13.82 13.81 13.81
13.19 14.78 13.60
13.73 13.53 13.05
16.64 16.30 15.62
8.01 7.97 7.50
12.45 12.33 12.02
12.52 12.44 I 1.92
I 1.85 12.01 I 1.18
/ Prelimina~ data
~o[e: Dala not seasonally adjusted ].6
I~Cnns¥1Vanla
Om m UNTY
CUMBERLAND
, COUNTYSEAT: CARLISLE
LAND AREA {~q mi): 550.2 WATER AREA isq kml: 2.63
LONGITUDE: -077265050 LATITUDE: *40169850
HIGH SCHOOL GRADS: 48.490 COLLEGE GRADS: 19.557
Chief Clink JOHN S. WARD
1 Courthouse Square, Carlisle PA 17013-3387
Treasurer JOHN GROSS
Solicitor HORACE A. JOHNSON
I Couflhouse Square. Carlisle, PA 17013
Planning Corem Chair DORSEY H. FRY
TYPE. COUNTY
YEARINC: 1750
POP DENSITY: 378
POST GRADS: 9,619
Tel: (717)240-6150
(717)240.6380
(717)240-6150
(717)737-6622
TOTAL REVENUE 70,123 TOTAL EXPENDITURE 63,238
Real Estate Taxes 16,726 OPERATIONS & MAINTENANCE 60,729
Federal Aid 7,662 General Administration 4,136
Slate Aid 14,984 Judicial 6,780
Local Revenue 3,818 Highways 2,486
General Government 3,421 CorrecUone 5,591
Public Salety 0 Public Salely 299
Public Winks 0 Human Services 34,735
Human Services 13.301 Ubrary 1.183
Consewatlon & Development 203
TAXES PER CAPITA $94.40 Interest 555
ASSESSED PROPERTY VAL 731,360 CAPITAL EXPENDITURES 2,509
ASSESSMENT RATIO 7.0
TAX RATE(Mills) 24.500 EXPENDITURES PER CAPITA $323.87
ADJUSTED MILL RATE !.715 TOTAL NET DEBT 0
Op'& Oen High- Public Human
Main Admin ways Safely Svcs
Expenditure Analysis
~ in Ihousandl
HOUSING DEMOGRAPHICS
TOTAL UNITS 77.108 TOTAL HOUSEHOLDS 73.506 TOTAL '97 POP' 207.852
Occupied 73,452 Persons per: one 17.641 Female 106,184
Vacant 3,656 Two-four 50,110 Male 100,856
TOTAL OCCUPIED UNITS Five + 5.755 RACE'
Pefsons/untl 2.51
Median value/owned $85,000 Median Income $34,493 American Indian 324
Upper quartile $112.000 PLACE OF WORK Asian/Psc Island 3,609
Lower cluadile $65.200 Iff County 70.837 Black 4.114
While 198,995
Medmn Rent $378 Outside Courtly 29.462
Upper quartile $455 Outside Stale 951 HISPANIC ORIGIN' 1,927
Lower quadile $288 COMMUTING MINUTES 17.7 AGE'
TYPE OF STRUCTURE CHIEF INDUSTRIES 19 & under 53,455
Single und attach 8,570
Single unit detach 47.042
Two or mom/bldg 15,043
Olhm lype 6.453
MEDIAN YEAR BUILT I964
MEDIAN MONTHLY COST
Mortgaged $723
Not mortgaged $214
HOME VACANCY RATE 1.5 %
RENTAL VACANCY RATE 2.0 %
WATER. Public 56.853
Well 19.587
SEWER. Public 56.756
Septic 19,640
BUILDING PERMITS ISSUED
Total Residential Bldgs 988
& Value $113,810,731
Single F emily House 963
& Value $108,454,432
Two Family House 5
& Value $ 1,2S8,405
Three-Four Family 14
& Value $2,228,205
Five & More Family 6
& Value $1,869,659
A Professional Services 20 to 39 62.034
B Relall 40 lo 64 63,037
C Manufacturing 65 Io 74 15,525
CHIEF OCCUPATIONS 75+ 12,991
A Administrative MARITAL STATUS
9 Laborers Married 95,404
C Proleseional Never Married 22.053
PER CAP INCOME $15.796 Divorced/widow 22,237
1970 1980 1990
Population Trend
LIBRARY
COUNTY LIBRARY SYSTEM System Admin JONELLE PRETHER DAF
158 West High St, Carlisle PA 17013 2968 Tel: (717)240-6175 F~x.(717)240-7770
Pop Sewed 0 Total Volumes 4.874 Total Circulation 3.258
Total Income $174,168 Total Expenditure S133,560 Sals& Wages $89.59=-
OFFICIALS
Chain.)man NANCY A. BESCH Tel (717)240-6150
Engineer BENATEC ASSOCIATES (7 t 7)763.7391
~ lcj98 NATIONAL RESOURCE DIRECTORIES, INC
Eatontown, NJ 07724 (8OO)242-5511
CO 4
17
Pennsylvania
COUNTYSEAT. CARLISLE
LAND AREA tsq mil: .4
LONGITUDE: 4)77401923
HIGH SCHOOL GRADS: 374
NEWVILLE
Secretary SHERRY L. HERSHEY
4 West Street, Newville PA 17241
President JERRY GILBERT
Tax Collector BETTY HOCKENSMITH
Solicitor RICHARD L. WEBBER
MUNICIPALITY 'FYPE BOROUGH
WATER AREA (-q kal; 0.00
LATITUDE: +40170872 POP DEIJSITY' 3,421
COLLEGE GRADS: 57 POST GRADS. 30
· 'Tel' (717)776-7633
(7 t 7)776-5727
(717)776-5511
(717)776-6566
Zoning Board Chai~
JANE GRAHAM
(717)776-7 t 13
TOTAL REVENUE 456
Total Taxes Collected 158
Real Estate Taxes 75
Total Act 5! t Taxes 83
State & Federal Granls 79
Stale Highway Aid 0
County Grants
· Waste Disposal 0
REVENUES PER CAPITA $337,72
TAXES PER CAPITA St f7.08
ASSESSED VALUEIPROP'TY 2,830
MARKET VALUEIPROP'TY 40,429
TAX RATE(Mills! 29.000
ADJUSTED MILL RATE 2.030
FINANCIALS 'L~.., ~,.., 'fei, i::fl.i ,.
TOTAL EXPENDITURE 527
OPERATIONS & MAINTENANCE 522
General Administralion 49
Sanilalion & Health 2
Public Safety 109
Slreets & Highways 143
Inlerest 0
TOTAL CAPITAL OUTLAY 5
Health & Sandalmn 0
Public Salety S
Slreels & Highways 0
EXPENDITURES PER CAPITA $390.95
TOTAL NET DEBT 0
eps& Sent& Public Sis,& Capilal
Mainl Heallh Salely Hwys Oullay
Expenditure Analysis
'$ in Ihousand$
HOUSING
TOTAL UNITS 610
Occupied 575
Vacant 35
TOTAL OCCUPIED UNITS
Persons~umt 2.35
IVlechan value/owned $50.000
Upper quadile $65,800
Lower quartile $37,200
Mid;an Rent $265
Upper quartile $334
Lower quarlde $209
TYPE OF STRUCTURE
Stogie und attach 125
Single und detach 252
Two or morelbldg 218
Other type 15
MEDIAtl YEAR BUILT 1939
MEDIAN MONTHLY COST
Mortgaged S543
Not mortgaged S 193
HOME VACANCY RATE 0.9 %
RENTAL VACANCY RATE 2.2 %
WATER. Public 595
Well 15
SEWER. Public 595
Sepllc 15
BUILDING PERMITS ISSUED
Total Reslaenl~al Blclgs 0
& Value $0
Single Famlly House 0
& value $0
Two Famdy House 0
& Value $0
Three-Four Family 0
& Value $0
Five & Mole Family 0
I & Vatue $0
DEMOGRAPHICS
TOTAL HOUSEHOLDS 574 TOTAL '96 POP'
Persons per: one 169 Female
Two-lout 371 Male
Five + 34 RACE
Median Income $23.276 American Indian
PLACE OF WORK Asian/Pac Island
In County 607 Black
White
Outside Courtly 101 Other, ne.c.
Outside Slale 4 HISPANIC ORIGIN
COMMUTING MINUTES 23.8
AGE
CHIEF INDUSTRIES 17 & under
A Manulacturing 18 Io 39
B Prolesslonal Services 40 lo 64
C Retail 65 Io 74
CHIEF OCCUPATIONS 75+
A Laborers MARITAL STATUS
B SefWCe Mamed
C Administrative Never Married
PER CAP INCOME $10,718 Divorced/widow
1.354
702
647
0
1.33~
8
318
489
333
132
77
1970 1980 1990
Population Trend
610
15~ * l~J~ Cirlsus est*mile Pleise gee
192 t01 elpliP. IbOn Of C)emogflph~l m Ihlt
LIBRARY
JOHN GRAHAM PUBLIC LIBRARY
9 Parsonage SI, Newville PA t7241 1399
Pop Served 10.306 Total Volumes 22.405
Tolal Income $96.612 Tolal Expense $94.050
Director SALLY ANN M SMITH
Tel. (717)776-5900 Fax'(717)776-,t408
Total Circulation 42.837
Sals & Wages $53343
SCHOOLS
System Name Administrator
BIG SPRING SD Superinlendent DR WILLIAM K COWDEN
45 Mount Rock Road. Newville PA 17241-9466
Telephone
(717)776-2000
1998 NATIONAL RESOURCE DIRECTORIES, INC Eatontown, NJ 07724 (800)242-5511
388
18
NEIGHBORHOOD DATA
The subject property is located in southwestern Cumberland Count'. It is bounded on the north by the
Pennsylvania Turnpike, Route 76, and on the south by Interstate 81.
Nexwillc is conveniently located to the suburban communities of Carlisle and Shippensburg, in addition to
the metropolitan areas of Harrisburg.
The site is in the South Ward of the Borough of Newville on the southwest comer of Vine Street and High
Street (SR 233), where the traffic is moderate.
The borough is typical of a small communit3', with a variety of uses. The neighborhood around the subject is
developed with stores, banks, offices, markets, a senior living facility, restaurants and specialty shops as
~vcll as single family homes.
it is anticipated thc neighborhood will rcmain stable with steady grox~ in thc foreseeable future.
19
TAX AND ASSESSMENT ANALYSIS
The following is the assessment and tax liability for the subject property, as determined by the Cumberland
Count3.' Assessor's Office:
ASSESSMENT
$ 4,370
Land .........................................................
Improvements ................................................... $27,380
TOTAL ................................................. $:31,750
MILLAGE RATES
County ......................................................
Municipality ..................................................
School .......................................................
TOTAL ...............................................
.0.O275
.0.0290
.0.1205
.0.1770
TAX LIABILITY
$ 873.13
County .......................................................
$ 92O.75
Municipality ...................................................
School ...................................................... $3,825.88
TOTAL ............................................... $5,619.76
1
l
Cumberland County's last countywide assessment was in 1974. Assessments are performed on new
construction, or as building permits are issued for existing properties. Thc Assessment Office considers
assessed value 25% of their calculated markct value. The subject compares similarly in assessment with other
neighboring properties. Re, assessment is in process for all properties in the count3.' and is scheduled to be
completed by the year 2000. This x~ll not affect the estimated value or the future marketabiliw of this property.
20
DEFINITION OF HIGHEST AND BEST USE
The reasonably probable and legal use of vacant land on an intproved property, which
is physically possible, appropriately supported, financially feasible and that results in the
highest value. The four criteria the highest and best use must meet are legal permissibili .ty.
physical possibility, financial feasibili.tv and maximum profitabili.ty.
HIGHEST AND BEST USE OF LAND OR A SITE AS THOUGH VACANT
Among all reasonable, alternative uses, the usc that yields the highest present land value, after pa)xnents
are made for labor, capital and coordination. The use ora property based on the assumption that the parcel
of land is vacant or can be made vacant by demolishing any improvements.
HIGHEST AND BEST USE OF PROPERTY AS IMPROVED
Thc usc that should be made of a property, as it exists. An existing property should be renovated or
retained as is so long as it continues to contribute to the total market value of the property, or until the
return from a new improvement would more than offset the cost of demolishing the existing building and
constructing a new one.
Taken from The DictionarF of Real Estate Appraisal, Third
Edition, 1993, Appraisal Institute, Chicago, Illinois.
21
HIGHEST AND BEST USE
The subject property is loc_~)_~ in southwestern Cumberland County within the Borough of Newville. The
subject conforms to all neighborhood characteristics and has adequate road access to connect with major
interstates which also provide easy access to the northeast corridor and destinations south. The direct
neighborhood is a mixture of residential, office and other commercial uses.
The neighborhood is zoned R-2, Medium Density Residential District.
The highest and best use is that most reasonable use that supports the highest present value as of the
effective date of the appraisal. The highest and best use of the land (site) if vacant and available for use
may be different from the highest and best use of a property with improvements. The highest and best use
analysis requires the employment of various use categories to conclude that a given use is the highest and
best use of the land. The uses must meet four criteria:
1. Legally Permissible
2. Physically Permissible
3. Financially Feasible
4. Most Profitable
Legally Permissible
The subject property is zoned R-2, Medium Density. Residential District. Thc Borough Manager confirmed
the property is a permitted, nonconforming use and is allowed to function in the current manner. Thcrcfore,
the existing use is legally permissible.
22
Physically Possible
The intent of the R-2, Medium Density, Residential District is for residential uses where centralized utilities
are provided. Certain community commercial uses conditionally are permitted in these districts in order
to allow the developmem of the neighborhood commercial services which are designed to meet the daily
needs of the surrounding residential areas and which protect the surrounding residential environment. Other
nonresidential uses are boarding, lodging or rooming houses, places of worship and educational
institutions.
Conditional uses are permitted after a public hearing is held by the commission and upon recommendation
by the commission for conditional uses. There are eight conditional uses allowed and full descriptions are
in the Zoning Ordinance in the Addenda of this report.
The site has sufficient size and acceptable topography features providing a suitable location for a mcdical
office complex. The shape of the lot has not diminished its utility and availability of public utilities
enhances the property. It has adequate visibility, with ingress and egress.
Thc physical layout of the streets and utility connections provide utility to thc site. It is physically
adaptable to support an office complex. Therefore, the subject property is physically possible.
Financially Feasible
Of the uses which are legally permissible and physically possible, the use which is capable of generating
a positive cash flow is considered financially feasible. The subject property, is located in an R-2, Medium
Density. Residential neighborhood within Nexwiile Borough. The site is conveniently located and has easy
access to all surrounding amenities and road networks. The direct neighborhood is a mixture of uses. The
medical clime appears to be financially feasible.
23
Most Profitable
Of the uses xvhich are considered financially feasible, the use must provide the highest rate of return over
the longest period of time in order to be considered the highest and best use of the propert3.'. Since the
surrounding properties are a mixture of residential, commercial and office, the existing use appears to be
profitable. The profitability, test assumes competent management in the Highest and Best Use analysis.
Implied within these definitions is the recognition of the contribution of that specific use to the community
development goals, in addition to wealth maximization of the adjacent property owners and development
trend associated with the general area. The surrounding neighborhood consists of residential, commercial
and office properties. The neighborhood development trend appears to be stable and continues in its current
fashion.
It should be noted that the determination of the highest and best use for the subject property, is a result of
thc appraiser's judgement and analytical skill and represents an opinion, not fact, and in the appraisal
practice the concept of highest and best use represents the premises upon which value is based. The legal
possibilities that place controls on the potential use are zoning, deed restrictions and set back regulations.
Thc highest and best use, as if vacant, would be the same as improved. It can be said that thc subject
property as a medical clinic, is legal and consistent with the neighborhood use patterns. Therefore. the
current use is most profitable.
CONCLUSION OF HIGHEST AND BEST USE
Weighing all the aforementioned, I/we have concluded that the highest and best use of the subject propcrD.'
is continued use "AS IMPROVED" and "AS VACANT"is as a medical clinic.
24
PURPOSE OF APPRAISAL
Thc purpose of the appraisal is to estimate the market value of the subject propert? in fee simple title.
PROPERTY RIGHTS APPRAISED
This is an appraisal of the market value of the unencumbered fee simple title to the subject property;
subject only to easements, deed restrictions and zoning requirements described for the subject property.
Such title includes both the physical real estate, i.e., the physical land, the appurtenance including structure
affixed thereto and the interests, benefits, and rights inherent in the ownership of the physical real estate.
Personal property is not included in this valuation.
DEFINITION OF MARKET VALUE
The most probable price which a property, should bring in a competitive and open market, under all
conditions requisite to fair sale, the buyer and the seller, each acting prudently knowledgcable and
assuming the price is not affected by undue stimulus, implicit in this definition is the consummation of a
sale as ora specified date and the passing of title from seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised and each acting in what he considers his ox~aa best
interest;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U. S. dollars or in terms of financial arrangements
comparable thereto; and
The price represents the normal consideration for the property, sold unaffected by special or
creative financing or sales.
25
APPRAISAL PROCES.q
The purpose of an appraisal is to estimate fair market value. The first step is to define the problem: the
work necessary to solve the problem is planned; and the data required is acquired, classified, analyzed and
interpreted into an estimate of value. Within this process, three basic approaches are used bv the
appraiser/s. They are: Sales Comparison Approach, Income Approach and Cost Approach.
SALES COMPARISON APPROACH is based primarily upon the principle of substitution. This
principle holds that an informed purchaser would not pay more than the cost to purchase a comparable
property with similar utility. The major limitation to this approach is when there is an inactive market and
no valid comparable sales are available. This approach also is questionable when sales data cannot be
verified with principles to the transaction.
The appraiser/s selects sales of comparable properties for which the pertinent data is considered reliable.
Adjustments are developed for characteristics differences bctxvecn comparable. Then the sales am adjusted
to the subject. The appraiser/s then correlates thc adjusted comparable sales data into an estimate of
market value by the Sales Comparison Approach.
INCOME APPROACH is based upon the principles of substitution, contribution and anticipation. The
principle of substitution states that an informed buyer would pay no more for a property than he would for
a competitive type property, with a similar income stream.
Thc principle of contribution holds that the value of the property, is measured by the contribution of thc
component parts to the total economic unit, land and improvements. The principle of anticipation states
that value is the present worth of future benefits from property, ownership.
Capitalization is the process of converting net income into an indication of value. A direct sales overall
capitalization rate is developed from market data and is based on the relationship of net operating income
to the sales price.
26
The appraiser/s estimates gross income by analyzing the market for comparable rentals. Deductions for
v~,an~.., and collection losses, operating and fi.xed expenses also are developed from market data. Thc final
results of these analyses is an estimate of net operating income. Net income is then capitalized into an
indication of market value by the Income Approach.
COST APPROACH is based on the principle of substitution. The principle of substitution holds that an
informed purchaser would not pax' more for a property than the cost to obtain a site and build a comparable
property with similar utility, without undue delay. One of the major limitations to this approach is
developing an accurate estimate of accrued depreciation from all sources.
The first step in the Cost Approach is to estimate the market value of the site, as though vacant and put
to its highest and best use. Site value is abstracted from market comparable land sales. Then an estimate
of reproduction cost new is developed for the improvements.
Diminished utility of accrued depreciation from physical, functional, or external causes is then deducted
from reproduction cost new. The estimate of market value by the Cost Approach is the summation of the
depreciated value of the improvements plus the market value of the site put to its highest and best use.
CONCLUSION OF APPRAISAL PROCESS
The last step in the Appraisal Process is the reconciliation of the three approaches into a single estimate
of value. Reconciliation is a process which considers the dependability and applicability of thc three
approaches and reconciles the three value indications into a final estimate of defined value.
27
SALES COMPARISON APPROACH
INTRODUCTION OF THE SALES COMPARISON APPROACH
The Sales Comparison Approach is a method of estimating market value where the subject property, is
compared with similar properties that have been sold. This approach is based on the principle of
substitution; therefore, your appraiser/s made a survey of properties that have sold in the general market
area. As it was impossible to find an identical property to that of the subject, since no two buildings are
ever identical, it was necessary to make adjustments on each comparable sale as related to thc subject
property. Consideration was given and adjustments were made on each comparable sale as to thc time of
thc sale, size, location and utility, as well as other factors that max' effect value.
Thc Salcs Comparison is considered appropriate to most appraisal problems since it indicates thc price
paid for similar properties by knowledgeable buyers in the marketplace. This approach is applicable when
thcm arc sufficient numbers of comparable sales. It is most reliable when competing propcrtics of similar
nature arc bought and sold on a regular basis.
Follo~/ng arc the improved comparable sales that have been found appropriate for this appraisal and thc
and thc analvsis and conclusion.
28
COMPARABLE SALES
The subject property is a medical clinic considered Class B Office. A coun .tyxvide search for comparable
sales was undertaken to find market dam. There have not been similar sales in the western part of
Cumberland County within the past five ye. ars. I/We have found five office sales, two being medical offices
to use for our analysis. Following is a summary, of the sales data.
OFFICE SALES
NO. ADDRESS SALE SALE BLDG. LAND PRICE/
PRICE DATE SIZE SIZE/AC SF
I 1501 Commerce Drive $450,000 02-98 5,115 3.6 $87.98
South Middleton Township
2 21 State Avenue $545,000 01-97 5,408 .96 $100.78
South Middleton Tovmship
3 4004 Trindlc Road $424,842 0 i-97 3,667 .54 $115.86
Hampden Township
4 6230 Carlisle Pike $275,000 11-95 2,873 1.49 $95.72
Hampden Township
5 1358 Lutzto~a~ Road $187,813 01-94 i,920 2.12 $97.82
Monroe Township
29
COMPARABLE NO. I
Grantor:'
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Eshenauer Fuels, Inc.
Eiios, Damien/Sandra
1501 Commerce Drive
South Middleton Tox~aship
Cumberland County
Office Building
1986
Deed Book 172, Page 701
District 40, Map 09-0527, Parcel 023
C-l, Commercial
3.6 Acres
5,115 Square Feet
Water, Sewer, Electricity and Telephone
$450,000
February 1998
$87.98
30
COMPARABLE NO. 2
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
lngrid J. Conner
Albert J, and Susan D. Apicella
21 State Avenue
South Middleton To~ship
Cumberland County
One-Story, Detached, Brick Office Building in Good Condition
1994
Deed Book 152, Page 917
District 40, Map 09-0529, Parcel 051
C-O, Commercial Office
.96 Acre
5,408 Square Feet
Water, Sewer, Electricity and Telephone
$545,000
January 1997
$100.78
33.
COMPARABLE NO. 3
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Berger, Marvin and Karla F.
Reager, David W.
4004 Trindle Road
Hampden Township
Cumberland
Two Story, Brick/Vinyl Office Building
1972
A-O-L, Apartment-Office Limited
Deed Book 152, Page 528
District 10, Map 21-0277, Parcel 312
23,700 Square Feet
3,667 Square Feet
Water, Sewer, Electricity and Telephone
$424,842
January 23, 1997
$115.86
32
COMPARABLE NO. 4
Grantor:
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Boland, John E.
Ricks, John E. and Veronica K.
6230 Carlisle Pike
Hampden Township
Cumberland County
One Stow, Medical Office Building
1987
C-G, Commercial General
Deed Book 131, Page 802
District ! 0, Map 19-1606, Parcel 023A
1.49 Acres
2,873 Square Feet
Water, Sewer. Electricity and Telephone
$275,000
November 22. 1995
$95.72
33
COMPARABLE NO. 5
Grantor:-
Grantee:
Address:
Improvements:
Year Built:
Recording Information:
Tax Identification:
Zoning:
Lot Size:
Building Size:
Utilities:
Sale Price:
Sale Date:
Price Per Square Foot:
Kovacs, Donald J.
Yellow Breeches Family Practice Center
1358 Lutztown Road
Monroe Township
Cumberland County.
One Story, Frame, Medical Office Building. At the time of sale,
the building contained 1,920 gross square feet. An addition of
1,160 Square Feet was added al[er the sale.
1979
Deed Book 36-T, Page 159
District 22, Map 11-0282, Parcel 039
Agricultural
2.12 Acres
1,920 Square Feet
On-Site Well and Septic, Electricit3' and Telephone
$187,813
January. !1, 1994
$97.82
34
OFFICE SALES COMPARISON ANALYSIS
SALE
Sale Date
Sale Price
Size/Square Foot
Unadjusted Price per Square Foot
SUBJECT
"AS OF" 10-98
N/A
6,357
N/A
i
02-98
$450,000
5,115
587.98
Time/Conditions
Location
Condition of Improvements
Size of Improvements
Lot Size/Utility
Utilities
Zoning
Other
Total Percentage Adjustments
Adiusted Price/S~
2
01-97
$545,0O0
5,408
S100.78
3
01-97
$424,842
3,667
$115.86
ADJUSTMENTS
10-98
Average
Good
6,357
.93 Acre
Public
R-2
Medical Upgrades
N/A
+1%
-i0%
O%
O%
0%
O%
-10%
+10%
-9%
N/A S80.06
+4%
-I0%
0%
0%
O%
O%
-10%
+10%
-6%
594.73
+4%
-10%
0%
0%
0%
0%
-10%
+10%
-6%
Si08.91
il-95
$275,OO0
2,873
$95.72
-I0%
0%
O%
0%
O%
-10%
0%
-14%
$82.32
0 i-94
$187,813
i,920
$97.82
+9%
-I0%
0%
0%
O%
+i0%
0%
0%
+9%
35
]
]
ADJUSTMENT ANALYSIS
Time/Conditions:
Location:
Condition of Improvements:
Lot Size/Utility:
After contacting local commercial brokers, analyzing multi-list
data and revie~ving county sales and assessment data, an
appropriate rate of 2% per year was found appropriate. This
rate varies throughout Cumberland Count3' from 2% to 5%
annually. I/We have chosen the most conservative number for
this analysis. Each comparable ~vas adjusted appropriately to
the nearest half per cent.
Comparable No. 1 Plus 1%
Comparable No. 2 & 3 Plus 4%
Comparable No. 4 Plus 6%
Comparable No. 5 Plus 9%
The subject propcrt3' is located in thc western section of
Cumberland County, in the Borough of Ne~vville. All five market
comparables arc from the eastern portion of Cumberland
County which offers more amenities, such as transportation,
shopping and convenience to the greater Harrisburg area. A
10% downward adjustment was taken for all comparables.
No adjustment was required for the condition of thc
improvements. All five comparables are similar to the subject
property.
Comparable Nos. 2 and 3 are similar in size to the subject.
Comparable Nos. 1, 4 and 5 have larger building lots. The
appraiser/s feel no adjustments are required because the
additional acreage is considered excess land and gives minimal
value to the overall property..
36
--]
Utilities.'
Other:
Thc subject property is serviced with public utilities.
Comparable Nos. 1, 2, 3 and 4. Comparable No. 5 has on-site
well and septic systems and is considered inferior.
Comparable No. 5 Plus 10%
The subject property is zoned R-2, Medium Density
Residential. Even though the subject property fronts on the
main street in Nex~wille Borough, a variance or exception to
zoning would be required for development of the site in its
current manner. Compambles are zoned commercial.
Comparable No. 5 is zoned agricultural and required a variance
to be developed, also.
Comparable Nos. I thru 4 Minus 10%
Comparable Nos. 4 and 5 are buildings already adapted to
medical use. Special features such as more plumbing fixtures,
lead walls for x-rays and other special amenities for the
profession. Comparable Nos. 1, 2 and 3 were considered
inferior.
Comparable No. 1, 2 & 3 Plus 10%
37
SALES COMPARISON ANALYSIS - OFFICE SALES
Sale Price
Value Range
Mean
Standard Deviation
Low
$187,813
$376,531
$143,210
Hieh
$545,000
Unadjusted Price Per Square Foot
Value Range
Mcan
Standard Deviation
$87.98
$99.63
$I0.24
$115.86
Adjusted Price Per Square Foot
Value Range $80.06
Mean $94.53
Standard Deviation $13.34
$108.91
It is my/our opinion, a.~r a careful study of thc value indicators and analyzing thc market data. that most
weight be applied to the adjusted price per square foot.
FINAL CONCLUSION OF SALES COMPARISON APPROACH
All five sales were considered appropriate comparables for this analysis. Comparable Nos. 4 and 5 were
medical use building sales and were deemed the best sales for this analysis. It is the appraiser's/s' opinion
that the sale price will range from $85 to $95 per square foot. The final correlated value is 6,357 square
feet times $90 equaling $572,130. SAY $572,000.
38
INCOME APPROACH
INTRODUCTION TO INCOME APPROACH
The value of commercial property is strongly influenced by the amount, quality and derivation of the
income, in terms of rent, which it can generate for its owner. The Income Approach uses thc potential
gross rent which thc property is capable of generating in today's market, less expenses and collection for
vacancy, and losses, to develop an indication of property's net income. The income is then counted into an
indication of the subject property's value by means of capitalization rate considered typical for the market,
thc t3q~e of property being appraised and thc area in which thc property is located.
CAPITALIZATION
The capitalization process "translates" net operating income into a present value indication for thc property.
it assumes a present worth of expected futura benefits. There are numerous ~vays to derive a capitalization
rate. Most real estate investors require a mortgage when purchasing real estate, the Band of Investment
Technique is typically used. This method is developed by using mortgage rates provided by the lender or
from surveys published by various research firms or organizations. Another method is actually taken from
thc marketplace. This method is considered "Direct Capitalization." Using actual saic prices and dividing
them into the net operating income of the actual sale to derive a rate from the marketplace. There must
be adequate mmket data available to utilize this method. Typically, "Market Data" is available to extract
a market derived capitalization rate. Our findings indicated a rate ranging from 10% to 15% for motel.
hotel and convention centers.
The Debt Coverage Formula Technique also was considered as supporting our market estimation of the
overall capitalization rate. This methodolo~' also takes into consideration the loan to value ratio, a
mortgage constraint and debt coverage factor.
39
Yield Capitalization is applicable in the analysis of properties with irregular income streams. In this
approach an income steam is projected over a specified holding period, and then calculating the present
worth of the income stream, plus the present worth of the reversionary interest at the end of the holding
period.
Published market data from such places as the American Council of Life Insurance. Appraisal Institute's
Market Sources, Korpac'z Report, The Boeckh Factor and economic reports supplied by local institutions
typically provide data on a regional basis for institutional grade properties relating to market statistics.
CapitaliTation rates, interest rat~, equity, yield rates, loan-to-value ratios and terms can be extracted from
these publications. These guides are broken down into regions and property, types. This information is
typically used in supporting the local market conditions.
Our conclusion will explain what methodology, we have chosen for this analysis.
The following direct pages are the rental comparables that have been found appropriate for this approach
followed by the analysis and conclusion.
1
1
1
40
1
POTENTIAL GROSS INCOME
The prime consideration for any non-residential property is the amount of rent that it can generate in the
open market. Lease information is not recorded; therefor; it is not easily verified. Realtors in the capital
region,, generally do not provide specific lease information. However, detailed information will remain in
my/our files in order to comply with the request for confidentiality. Several lease comparables were
identified. Typical leases in the subject market for office properties are on a net or modified net lease
basis. A net lease is one in which the tenant pays all property, expenses, in addition to stipulated rent. A
modified net lease is similar to a net lease, but with the property, owner paying minimal operating expenses.
The appraiser/s analyzed the following five office lease comparables.
OFFICE RENTAL DATA
I 5 Brookwood Avenue Gross 5,000 01-95 $13.00 3 Year Lease with 2
South Middleton Township 2,100 Year option
Medical Use
2 4910 Ritter Road Net Net Net 6,000 10-95 $I 1.50 6 Year Lease
Lower Allen Township 6,000 Medical Use
3 101 Noble Boulevard Modified Net 23,000 07-96 $12.50 5 Year Term
Borough of Carlisle 2,400 Medical Use
4 205 Grandview Avenue Modified Net 56,000 08-95 $13.91 7 Year Term
East Pennsboro Township 10,500 Medical Use
5 5565 Tyler Court Net Net Net 13,000 Summer $15.00 Term Unknown
South Middleton Township 4,000 '98 Office
41
CONCLUSION OF RENTAL COMPARABLES
I/We have investigated five properties currently under lease for medical use. The range of value is from
$11.50 to $15.00 per square foot of rentable space. Each lease had varying rental conditions from gross
rent to net net net.. The landlord, on a gross rent condition, pays all expenses and on a net net net rental
condition, the tenant pays all expenses. It is common in the marketplace to have a modified net term which
means the landlord and tenant each pay var3./rig expenses regarding leased conditions. It is my/our opinion
that a modified net lease is the most common lease within the marketplace. Therefore, the typical expenses
paid by the property owner are real estate taxes, real estate insurance, management/lease fees,
miscellaneous and reserve for replacements. All other operating expenses are paid by the tenant, including
utilities.
PROJECTED ANNUAL PROPERTY EXPENSES
Real Estate Taxes
Current assessment for the subject property, is $31,750. Current total millage is. 1770, giving a tax liability
of $5,619.76 face rounded to $5,620.
Real Estate Insurance
I/We have contacted two insurance agents and were given a range of $200 to $500 per month for this
propert3,. I/We have reconciled the insurance expense at $250 per month, equaling $3,000 annually.
Manatement/Lease Fees
It is typical in general market for management firms to handle the operation and lease-up of this t.~e of
property. The fee ranges from 5% to 8% of the annual gross income. I/We have considered 6% appropriate
for this analysis.
42
Miscellaneous
Generally, the property, owner pays unknown or unusual expenses, such as emergency repairs, property
improvements, casual maintenance, etc., that occur during the term of the lease. I/We estimate these
expenses to be 1% oftbe potential, gross income.
Maintenance/Repair
The subject property is in good condition and will have minimal maintenance and repair items necessary.
Typical maintenance and repair eanimates range ~ 1% and 5% of the gross income depending on age
and condition of the subject. It is my opinion that 2% or $.24 per square foot is appropriate for this
building.
Reserve for Replacements
A reserve for replacements account should be maintained to properly handle future building expenses. This
expense ranges between 1%o and 3% of the gross income. I/We have chosen 2% or the subject.
Vacancy/Credit Loss
I/We have found that office vacancies fluctuate b~veen 1% and 5% within the greater Harrisburg Market.
It is the appraiseffs opinion that vacancy and credit 10Ss. _within the greater Newville area reflects closer to
a 5% range than the 2% range in the greater Harrisburg market. Therefore, I/we have projected 5% for
vacancy and credit loss.
1
1
1
43
STABILIZED MARKET INCOME SCHEDULE
FILE: Newville Medical Foundation, Inc.
PROPERTY: 100 S. High St. Newville Pa. 17241
ANALYSIS DATE: 11-02-98
Income Item Gross Income Income
Units Per Year Per Unit
Medical Office 6,357 76,284 12.00
Total Income 6,357 $76,284 $12.00
Total Income $76,284
Vacancy/Credit Loss -3,814
Effective Gross Income $72,470
Unit of
Measure
S.F.
STABI! !Tr=D MARKET INCOME STATEMENT
FILE: Newville Medical Foundation, Inc.
PROPERTY: 100 S. High St. Newville Pa. 17241
ANALYSIS DATE: 11-02-98
Gross Income
Total Income
Vacancy / Credit Loss
Effective Gross Income
Amount % of Gross
$76,284 100.00%
-3.814 -5.00%
$72,470 95.00%
Per
Gross
S.F.
12.00
11.40
Fixed
Real Estate Taxes 5,620 7.37%
Insurance 3,000 3.93%
Operatinq
Maintenance/Repair 1,526 2.00%
Management 4,577 6.00%
Miscellaneous 763 1.00%
Reserve
Reserve for replacement 1,526 2.00%
Total Expenses $17,011 22.30%
NET INCOME $55,459 72.70%
0.88
0.47
0.24
0.72
0.12
0.24.
2.68
8.72
CAPITALIZATION
Stable Net Income Divided by Capitalization Rate = Value
$55,459 0.093167 $595,261
CAPITALIZATION RATE DEVELOPMENT
Three methods of estimating the overall capitalir~tion rate have been examined for this analysis. These are
Market Extractions from Local Sales Transactions, Published Sources and the Band of Investment
Technique supported by the Debt Coverage Ratio which is used by local institutions.
Market Extractions - Direct Capitalization
The first methodology is Market Extraction or Direct Capitalization that derives indicated overall rates
directly from the market by analyzing sales data. The indicated, overall capitalization rate for a comparable
sale is the ratio of the indicated net operating income to the sale price.
It is extremely difficult to find market sales to extract actual capitalization rates. The realtor or investor
usually do not divulge the actual gross income on sales transactions, therefore, making it extremely difficult
to formulate this methodology. I/We have found office sales transactions within the general market place
range from 8% to 12% for properties similar to the subject. Under current market conditions, it is t.~pical
for the capitalization rate to be at the lower end of this range between 8% to 10%, say 9%.
Market Extractions - Published Sources
Data on capitalization rates extracted from sales of institutional grade properties xvas researched and
available from the American C_ ounctl of Life Insurance, the Appraisal lnstttute :~ Market Sottrces and the
Korpacz Report. This data is summarized in the following table.
46
American Council of Market Sources Korpacz
Life Insurance
Indicated 8.1% To 9.1% 8.5% To 9.4% 7.5% To 10.5%
Capitalization Rates First Quarter 1998 Fourth Quarter 1997 Second Quarter 1998
The three sources have a market Range from 7.5% to 10.5%. The American Council of Life Insurance
ranges from 8.1% for mixed properties to 9.1% for office for the first quarter of 1998. The Appraisal
lnstitute's Market Sources considers the major metropolitan areas within our general area for estimating
capitalization rates. Their range is from 8.5% to 9.4%. Cumberland County is located between the four
metropolitan areas selected; therefore, minimal weight will be considered for Market Sources, but is used
as a guide. The Korpacz Report ranges between 7.5% to 10.5%. These reports take into consideration the
entire nation. I/We have reviewed the national industrial market and national suburban market to calculate
the range. It is my/our feeling that the subject property will be in the mid range of the national publications.
Most likely, it will be between 8.5% and 9.5%, say 9%. The Korpacz Report also projects a discount rate
which ranges between 10%o and 13.5% with an average of 11.2.%. The general marketplace changes
bct~veen 8%and 12% depending on risk. The subject is considered to be at the mid-point on the risk range.
The appraiseffs feels a 8.5% to 9.5% range is typical for the market and this property, say 9%.
The following pages have been taken fi.om the publications stated above. Also included, is a summao' of
the local market from Landmark Commercial Realty. for office and industrial markct studies, and a chart
from Commercial Industrial Realty for the first quarter of 1998 for various types of pr0Pcrties and
parameters. Both reflect cu, m~t market conditions within the greater Harrisburg area. NexsMlle is a sub-
market of Harrisburg, located in the southwestern section of Cumberland County.
47
TGI, I
Type of Loan by Propefl7 Ty?e
AmlWu
4,027,627 7,821 7.09 · 7.20 154 !.66 ~J 9.2 9.0 I0/ 6
8J9~ IO.~l 7.17 7~0 Iii l.?l 67.0 I.B 1.6 i !/10
1~80 10.436 6.9J 7.0J 140 1.71 67.2 9.2 1.7 I~ 3
~.249 4~88 7~1 7.42 !~ 1~2 69~ ~.1 9.1 I~ 6
7~37 4.lj7 7.01 7.13 149 I~J 68.J 9.6 9.~ 9/9
276~12 ~.026 7~6 7~S It~ i.84 ~.9 10.0 ~.6 I~ 2
I~,~ ~,667 7.18 7.29 17~ · 71.0 t.I * ~/0
t 19,~ 7,~4' 7.02 744 142 1~6 ~.7 9.4 S.6 9/7
13,~0 13,~ ' ' ' ' · · . .
13.~ 13.~ ' ' ' ' · . . .
JOINT V~TINJRE 2 I J.33 J 7,661 ' ' ' ' · · . .
Afxflncr~ I 9,000 9.~ ' ' ' - ' · .
Ofl~c. BulldOg I 6.335 6.33J ' ' ' ' ' · . .
OTRER SPEt~tl. IT..ATURI:S' 42 44:I.361 10,604 7.04 7.16 1~6 1.69 68.2 10.$ t.g 13/ 3
~ J 33,909 6.7S2 7.T7 7.39 180 3.41 Si.! Ii.3 10.2 7/J
OFT1=, Buildiq 7 211,420 30.203 6.73 6.84 129 I J9 62.8 7.9 8.$ I i/ 9
actall 8 ll.10O 10,138 7.73 7.86 210 1.60 90.6 17.5 9.0 13/ 8
i~s~hf 21 92,43:2 4,40'2 6.gO 6.93 140 l.J3 67.0 S.8 8.9 16/ 8
flo~l/A4o~J I 26,J00 26,$00 ' ' ' ' ' · . .
TOTAL J60 4.J01,923 1,039 7.09 7.20 lJJ 1.66 67.5 9.4 9.0 10/9
Ap,flmcnt tJ 902.253 10,61J 7.18 7.31 161 1.83 66.7 9.1 8.6 11/;
O~c.c Bald-mS 141 i,60J,73J i !.38S 6.92 7.03 139 1.69 66.6 9.1 8.7 10/ 6
Rmi] 134 621.349 4,637 7.36 7.48 177 l J2 72.2 10.2 9.1 10/I !
If~u~d 166 796,769 4,800 6.98 7.11 148 1.~4 68~3 9.~ 9.4 10/7
Ho~l~l 14 316.412 22,601 7.36 7.49 19J IJl 60.7 lO.! 9.6 10/ 9
)~-~ 3 1 40,000 4~.667 7.18 7.29 17~ · 71.0 LI · 9/ 0
~ C~mmcr~ 17 119,40S. 7,0'24 7.02 7.14 142 !.66 6'7.7 9.4 8.6 9/7
8/9
10/3
7/10
7/~
8/2
?/11
t/3
4/7
9/0
9/6
6/ 6
8/8
10/0
7/8
7/11
19.1
30.1
12.0
ii.6
6.1
3.1
2.7
0.3
0.3
03
0.2
0.1
9.9
0.8
4.7
1.8
2.1
0.6
100.0
20.0
2J.7
13,8
17.7
7.0
3.1
2.7
Atlanta
CID
Cap. Cap.
Rate ~Rent/sf~ % Change --Price/al- % Change Rile
4Git 4 Orr 4 Otf 4 O~ 4Olr 4Qb 4Qtr 4Olr
lg97 lg96 1997 96-97 lg96 lg97 96-97 1997
~UBURBA~
4Qlr 4Qtr 4Ql~ 4Qt~ 4Qtr 4Ql~
lgg& 1997 96-97 lg96 lg97 96.97
8.8 23.42 24.42 4.27 137.16 141.34 3.05 9.4
Baltimore
8oston
Charlotte
Ch,cago
Cincinnati
Cleveland
Dallas-FI. Worlh
Denver
Detroit
Houston
indianapolis
Kansas Cily
Las Vegas
Los Angeles
9.3 21.06 23.05 9.45 105.39 114.67 8.81 8.5 19.80 20.60 4.04 117.50 122.80 4.51
7.2 31.61 36.78 16.36 207.59 262.79 26.59 9.8
9.0 21.40 21.60 0.93 139.94 141.72 1.27 8.8
8.2 28.60 32.57 13.88 174.56 214.48 22.87 8.1
8.9 18.92 20.50 8.35 112.67 113.01 0.30 8.8
9.1 21.12 21.95 3.93 127.00 131.39 3.46 9.0
8.7 17.12 19.90 16.24 110.33 125.13 13.41 9.8
9.0 17.55 18.92 7.81 109.99 112.87 2.62 9.8
9.0, 18.07 20.00 10.68 112.23 123.95 10.44 9.0
10.0 15.50 17.92 15.61 ' 91.87 98.61 7.34 9.1
9.4 16.45 16.91 2.80 116.22 111.32 (4.22) 9.2
9.0 18.01 19.58 8.72 117.15 120.38 2.76 9.2
9.3 24.90 26.70 7.23 155.88 158.02 1.37 9.7
8.8 24.21 25.06 3.51 140.60 159.48 13.43 7.5
Manhallan Downtown 8.3 30.69 33.73 9.91 195.03 210.26 7.81 t
Manhatlan Midlown 7.8 39.66 44.78 12.91 269.48 303.44 12.60 m
Miami 8.7 24.50 26.75 9.18 159.03 164.14 3.21 9.4
Milwaukee 9.0 19.92 20.19 1.36 122.19 122.52 0.27 9.4
Minneapolis-SI. Pat,I 9.1 27.53 28.88 4.90 145.72 152.15 4.41 8.7
Nashville 9.1 19.21 19.46 1.30 155.50 120.06 (22.79) 9.6
Nassau-Sulfolk 9.0 24.58 24.84 1.06 125.09 138.48 10.70 8.7
New Orleans 9.5 14.79 16.56 11.97 70.73 95.87 35.54 9.5
Oklahoma Cily 9.6 12.78 12.84 0.47 63.61 66.30 4.23 9.8
Orlando 8.6 21.19 23.13 9.16 129.44 135.10 4.37 9.2
Philadelphia 9.4 22.78 24.67 8.30 139.01 146.12 5.11 9.1
Phoen:x 9.3 20.45 22.40 9.54 114.11 132.13 15.79 9.0
Piltsbmgh 9.1 23.59 25.33 7.38 132.75 137.58 3.64 9.4
Portland 8.6 21.61 23.29 7.77 121.61 134.09 10.26 8.9
St. Louis 8.9 19.88 20.16 1.41 117.18 127.79 9.0~ 9.8
San Antonio 10.0 16.75 17.86 6.63 92.30 96.40 4.44 8.7
San Diego 9.0 18.84 20.81 10.46 115.20 124.62 8.18 8.6
San Francisco 8.6 31.46 35.44 12.65 173.63 195.61 12.66 9.5
Scatlle 9.1 23.22 26.22 12.92 142.73 156.03 9.32 9.8
Washington, D.C. 8.6 32.59 35.13 7.79 234.97 238.75 1.61 9.2
Sources: Nahonal Real Eslale Index
Nole: Dala taler Io properties located in Ihe CBD or a prlma~y ollke sub.markel
22.36 23.80 6.44 124.98 133.53 6.84
27.21 32.77 20.43 137.77 146.05 6.01
17.39 17.83 2.53 124.74 122.45 (1.84)
22.65 24.36 7.55 153.03 182.89 19.51
17.63 18.19 3.18 101.30 116.50 15.00
18.9,1 20.12 6.23 111.17 116.26 4.58
22.12 25.10 13.47 113.27 138.25 22.05
21.98 23.51 6.96 121.97 128.51 5.36
19.77 22.00 11.28 111.11 118.54 6.69
15.89 17.71 11.45 91.60 96.69 5.56
18.29 19.97 9.19 110.67 113.85 2.87
20.50 22.18 8.20 116.56 122.29 4.92
22.56 23.40 3.72 122.21 127.84 4.61
22.29 23.20 4.08 163.98 196.4.1 19.80
20.11 22.50 11.88 109.07 118.62 8.76
18.91 18.52 (2.06) 98.53 100.17 1.66
19.47 21.36 9.71 106.73 129.42 21.26
21.73 24.49 12.70 103.49 128.85 24.50
19.73 22.01 11.56 112.79 133.93 18.74
17.11 18.79 9.82 87.50 94.69 8.22
14.00 15.20 8.57 77.71 83 95 8.03
19.31 20.40 5.64 106.50 111.03 4.25
21.06 22.32 5.98 106.51 139.27 30.76
18.13 19.28 6.34 121.58 121.06 (0.43)
18.56 19.81 6.73 95.26 101.60 6.66
21.14 22.33 5.63 114.80 132.83 15.71
21.59 24.50 13.48 105.57 120.06 13.73
15.42 17.19 11.48 97.48 104.23 6.92
19.86 21.81 9.82 120.46 149,49 24.10
29.46 36.70 24.58 179.98 206.41 14.68
22.21 25.23 13.60 127.13 131.58 3.50
24.30 25.81 6.21 132.70 159.42 20.14
CBO -- -- Submban ~ Melmpolilan
4Qtr 96 4Qlr 97 4Qh g6 4Qlr 97 4Qlr96 4QIrg7
Allanla 17.0 15.2 8.6 7.6 10.8 9.5
Ballsmore 18.3 16.0 8.3 6.2 11.6 9.7
Boston 5,7 4.5 7.8 7.7 6.8 6.3
Charlotle 6.0 4.6 11.2 9.3 8.9 7.2
Chicago 15.9 13.7 11.4 9.0 14.0 11.7
Cincinnati 13.9 10.1 10.1 7.9 12.1 9.1
Cleveland 17.0 15.0 9.1 8.2 14.2 12.7
Columbus 7.2 6.9 8.9 6.6 8.2 6.7
Dallas 34.9 29.0 11.2 9.1 17.0 14.0
Denver 14.1 10.3 9.4 7.4 11.0 8.4
Delroil 17.9 17.3 9.4 8.3 11.2 10.2
Ft. Laude~dale 6.7 4.9 10.5 9.4 9.7 8.5
FI. Worlh 19.9 13.5 12.3 10.6 15.1 11.6
Itarllord 23.5 17.7 21.0 17.5 21.7 17.6
Honolulu 16.1 15.2 12.9 12.5 14.6 13.9
Houston 21.9 18.1 17.8 12.9 18.8 14.2
Indianapolis 16.8 16.8 7.9 9.6 12.1 13.O
Jacksonville 13.6 13.2 7.8 7.3 10.8 10.2
Kansas Cily 16.5 13.8 10.5 7.8 12.6 9.9
Las Vegas 6.6 6.6 11.1 14.5 10.6 13.9
Los Angeles 20.8 17.3 17.7 15.3 18.3 15.7
Miami 21.4 18.0 12.3 11.3 15.6 13.6
Middlesex-
Somerset-
Hunterdon ~ ~ 14.9 11.2 14.9 11.2
$omce: CB Commefcfal Vacancy Index
~ CBD-- SubuJban ~ Mehopoiilan
401! gs 401r 97 401r gG 4QIr 97 4Oil 9& 4Oh 97
Minneapolis-St. Paul 7.6 7.0
Nashville 14.8 9.5
Nassa.-Sullolk -- --
New York-
Manhatlan
Down/
Midlown 19.1/8.411.7/6.0
Newark -- --
Oakland 12.1 14.1
Oklahoma City 28.8 29.9
Orange Co.nty -- --
Orlando 7.0 7.1
Philadelphia 16.2 14.4
Phoenix 13.9 12.9
Pmltand 7.4 5.4
Sacramento 7.7 7.4
SL Louis -18.6 17.2
Salt Lake Cily 7.3 4.7
San Diego 18.0 18.6
San Francisco 7.4 3.0
San Jose 9.5 2.1
Seallle 6.3 5.0
Tampa-
St. Petersb,rg 19.5 12.6
Tucson 22.3 20.3
Washington, D.C. 10.4 9.2
West Palm 0each ~ ~
49
5.5 ,I.4 66 57
6.3 ,I.,I 8.6 67
10.5 96 10.5 9~
-- -- 11.6 77
12.6 10.0 12.6 100
8.9 9.1 9.6 10.2
8.1 7.4 15.9 15.8
12.6 10.5 12.6 105
8.6 6.2 8.1 6.5
10.7 8.0 13.2 109
7.2 7.6 9.5 94
6.5 4.9 7.0 5.1
10.2 10.1 9.6 9.4
7.4 5.0 il.4 9.1
4.1 4.9 5.8 4.8
11.3 8.3 12.8 10.5
7.1 3.9 7.3 3.4
4.9 2.3 6.0 2.3
~.9 5.1 8.1 5.0
9.0 7.8 115 8.9
5.8 4.3 9.0 73
7.1 6.0 8.3 7.2
11.8 14.8 118 148
National Suburban Office Marl(et
Wilh buildings in some markets turn- ward commilmenls. By laldng some
lng over for Ihe second and Ihird lime
in Ibis cycle, Ihe suburban ollice mar-
kel is still a very hot markel~ Transac-
lion aclivily is fast and lurious despile
high prices and intense compelilion. II
is increasingly dillicull Io buy proper
lies. "We can find properlies wilhin our
crileria, bul the picldngs are gelling
slim," reporls one parlicipant. Giber
would-be inveslors are pul o1! by
prices Ihey consider out el line.
Properties Uley decide nol Io bid on
because Ihey Ihink Ihey would be
overpaying ellen go for more Ihan
Ihey would have paid.
REITs and pensior, lunds conlinue
Io lead Ihe cornpelilion Ior suburl)an
ollice prgperlies REITs are perceived
Io be m~i'e inclined to up Ihe bid.
especially il an acquisilion will give
Ulem economies el scale in markels in
which they already own p~'operly..
Some inshlutional investors are
looking lot oppodunilies Ihrough Iof
leasing risk, they are realizing belier
yields Ihan Item existing buildings.
However, some are beginning Io be a
lilllo concerned aboul projects where
they are looking al Ihree Io four
monlhs Io groundbmaldr~g and 15 lo
18 monlhs Ior building and slabiliza-
lion. '11 is dillicull Io accuralely projecl
demand Ihat lar GUI.
More RI:ITs are gelling inlo Ihe
developm'enl husiness. As prices lot
exisling properlies in many markels
exceed replacemenl cosl, ItEITs can
belier achieve lheir growlh objoclives
Ihrough developrnenl ralher II'~an
acquisilions 01 exisling assols.
The pace el new suburbarl ollice
conslruclion is acceleraling'nalion-
wide. The volume is anlicipaled Io be
double Iha! el lam year. Al year-end 74
nlillion square leer of ollice space
were under way, wilh most el il in Ihe
suburbs. Tllal was triple Ihe arnounl al
mid-year.
]
-]
-]
Table 9
National Suburban Ollice Market
SECOND QUARTER 1998
CURrlENT
KEY IHDICATORS QUARTER
I.~ST YEAll
QUARTER AGO
RANGE 10.00%-13.50% 10.00%-13.50% 10.00%-14.00%
AVERAGE 11.29%, I 1.4 I% I 1.49%
RANGE 1.)~- )0,~0~,
AVE RAGE 0.05% 9. I
]
-1
'1
L
RAI'IGE 0.00%- t 0.00% 0.00',t,- 8.00% 0.00%.-8.00%
AVERAGE 4.31% 4.04% a.m%
CHANGE (aasJ~'po,~,~)~'l.~.~z"~'.:~] .~ ' ~ ~ ~ ~ ~.'R~' 0 ','"] rl
'.:". ................ "' '." ;:~'..'~...",I:.C~F$~,tF.,~ Ff.~'.,'i~. !-~.".:...,~i,
n,,,,GE 2.0o%-~.oo,-,.. :~.oo-~.-,,.oo-,,. -',.o0%.8.o~-,,.
RAI IGE 8.25%-I 1.00% e.25%-t 1.00% 6.25%- I 1.00",'--
._AVERAGE 0.E5% 9.67%
b. Inilinl ral~ el chang~
5O
m
Nevertheless, lhere is slill ilo wide-
si)read concern aboul overbuilding in
Ibe near lulure. Suburban Allanla is
being walched closely because el Ihe
arnounl el new conslruction, bul tile
new bt,ildings are lilling t,p. Anolher
booming market is Dallas, where con-
slruclion is juslilied by markel de-
mand. However, Ihe dealmakers are
projecling vacancy and absorption
rales oul. lo Ihe time Ihal new con-
slruclion would come on-line. Such
Ihinldng is. helping Io CL,I back on
some el Ihe construction.
Prices in the nalional suburban
ollice markel have nemly lopped oul.
They range from 80.0% Io 110.0% el
rel)lacemenl cosl. The average price
is 0,1.4% el cost. The average projecl-
ed price increase over Ihe nexl I."'
monlhs is 4.6%.
Key value indicators are sl~own in
Table 9. This quarler the average dis-
count tale (IRR) decreased 12 basis
poinls Io 11.29%. The average OAR
decli,,o¢l 13 basis points Io 9.05%.
As prices el CBD ollico buiklings
increase, Ihe si)roads helween value
indicalors in Ihe national sul)urban
ollice market and Ihose in Ihe nalional
CBD olfice markel is narrowing. Com-
parisons o[ value indicalors shrew an
average suburban IRR 26 basis poinls
lower Ihan Ihal in Ihe CBD office mar-
kef. Tho suburban OAR dropped Iow-
er Illan Ihe CBD tale in lirsl quarler
1996. This quarler Ihe suburban OAR
is 0 basis p0inls lower U'~an Ille CBD
tale. While Ihe average inilial markel
mn! change tale in Ihe suburban mar-
kef is sim higher Ihan Ihe CDD rate, Ihe
spread is ,low 42 basis points. II was
60 basis poinls lasl quarler.
The suburban markels Ihal inves-
lots are mosl allracled Io include
Chicago. Dallas, Los Angeles, Miami.
New York, San Francisco. Porlland,
and SealUe. Despile the amounl el
building, Allanla is still on many largel
lists. III
('emi:il I'¢ml,.)Iv:mia i.~ ii I~l¢:il Id:,c¢ liar
I:ll)' ll~l,.'i.% l l¢illilllll lilf id'lice lllltl ind,,.~il'i:d
-i~:1~'¢ i, high. ii:m;d I ;il¢.S II1¢ I i.%ill~. ¥11t'llllC)° I'lll~s
IL'L'¢IIII~ :iCtlllil~'J illl'lL'L'. %%'illchotlSC :,lld I.,hli¢
qHI;I.~¢ ~'lUl,l,lcx¢~ i,I the: alii:il L'lllllillllill~ ;I Iii:lid
,,I ¢~li:,uldill;.y ;,~li¥ily ihlrmL~ Ih¢ Ihsl hall' iii'
~ Iii L h i1~. hl~ ~'li~l id IJ~ ill~. d~llll CliVillilllil~lll
illlll ;lilll~l~' Illihll~'~ (IIIl' ~l'~ll~lll highway iici-
I~ Ih~ Ihl~l. ;l~ ~¢11 ,~ iIl~iilll fills ~1~11
¥1ill.. II;ihillllllc ;mil
Cllii~. Ill;il ( '~'iillill ll~iill~) Ivllili~l i% llIc
l) il¢~ldl;ll~'ll ilk' ~il~ HI ~l I.~ aCl~ lillY1 hll Ihc
lllli,lili~'llllil OI ;I I I Illillillll ~1; iIiMlihlllilm lll-
~ Itiiv h, hl~l;llll- ~lici.. Ih~ ~¥Ol hl'~ I~lllill~ dis-
~llldil¥1~ ()lh~l Illl~ I()1)~ I,lliC~'l~
I)l~liihlllit.I ('~'ill~l hi, Whilll~Nd ['illllllllaiilli
I.~iiidiil;il~ ~'iill cllli11¢¢1 )'llll hi Ihi~ iMiiWill~
III.llJ,~'ll~l;l¢~'..-~ .i iii,il ill ii, il hill Iilll~
.llqi;ll. ~'tiillhl~'lllilll ~l~l~l~lliC¢ iii ~11~
Jllll ll~'lllll~lallhiC ~'v;Ihl;lliltll. ~l¢'v~ liJMi lin~cd
lllll d~llah;l~c ~ilh Ihll~ iii ~I()R.
~A Il )P ~llill ~CIM iii i,.vi,l~ illl~ll ill;ii,iii, lift iiii1'
phl~' I'i~.%~ I~1 11~¢ Ill ¥i~il illll wch~.iic
The i,lormation herein it ilo[ warranted and is
SUbieC[ lO Corfe[[lOiI or chin[e wRho.t nodce.
Ill offers. Lindmil k Contmerci~i Real[y. Inc.. can
represent the ~uyerlTenin( as a b.yer's a~efl[, or
the BuyerlTenant and Setlel/Landlord is · dllil
[~ndmzl k ~oinmet c:al Realty. Inc.. is o,ly I epre-
sem.~[ tl~e SellerlLa.dlo~ d zs z Seller's agent.
^plmlximululy .'I.SI),IXXI Si
ilidllslr|nl I~ilX~
~111 ~l ill II~ i Inll i~Ril'y ~SA iIiif-
Welle~l
ItlnillCd nl i)?~, siltc¢ thc I~l~ill-
ni.~ .f Iht y~ar. Thc lack
arliVily. Y~I. npl,am,ilic~ rCmai,
in Iht (:1~ 1 ~c~llmnl, which hnd
'13m ('hiss III mid h.l.~.i.I Flex
=. iii,ira .1' ,lll.llll ~1~,
Eflstent Submarket:
ily .yin lira i~s~l yem' IGL~ Icc, ami
ClllllittllCS fib I~ ill I1~ I~l~cru ~uh*
mm ~¢1. I )~pilc ~..m :ckcalim~x
I. newer mid ha ~t'l' Ihcililic~ in
Crll Suhmal~¢l. wilh .Imm
2INI,(XXI ~1;
Oudook:
~hmt~ dcmm. I G.' ~l.~C will
I ~J99. roeslh-
i.l~ i. heavy
iV. Scwral
large Clam I
huihli.gs, I.-
lali,g .ver
XI)l),Olll) SI;
511'llCliilll, and
several Ill(IfC
nm i. Ihe I)hm-
ninK nmi ap-
Imwal
'rhi~ .~w
Nimuld hcIp
hl~ ~paL'~
().r ~.rvuy
ami larger wilh 51x~c nvaii;ddc IIII
lira lll~ll liilll'~l. ()Wli~r I~'L'ul~i~d
nail ~llV~l~llll~lll ilWll~ll I~lcilili~
ii1'~ ~xchld~d. Thc (thl~ iii'
I~l~Nk:..d i!lllwlh t'iillliluwll dill
'lilt Iht .~riliul tl,I;lltCI td I')'lX
.N6. I.I I ~1~ Wll.~ i.L~iliv~ly
ill Iht I I;lll'i~hlll[~
DOWfltOWfl B.sJ.ess DIs(rfct:
Aha,. I~il., I.lalml 2-I.XIX) SI:
iiit ~iC~l iliillill¥~lll~il111~ .~ 1.71~i ~1
WaS idlsllll~ll llll, I I 'lil~ ~ i~il-
lllilil'~ I~w~is It'lilliiil Shllll[~ Iii
( ~t'llllllllC)' Icvci~ iii II~ ( 'h~s Ii
IIc~'lill~ ill Ih~ lirsl Illllllll'r. Acli~i-
I), ill ihi~ ~l'~lil¢ill shllllhl cIIIIlillii~
spncc ;ll't~ ~.~ll~cl~tl Ill
I~'1'~.
Eflst ~/Ior~ ~llSilleSS ~istricl:
hdnl~ ~vc~c nlG'clcd hy a
Study
Leasable O[fice Space
'L, 4.0
~ ].S414SF ].721iSF C] ',; Vacanc ~,
,~ 3.5 ~,~
~3.0
,__ .5 --2.4614SF__
//_
'~ 0.5 -- __ 468KSF --
> Class A Class B+ Class B Class C
t Owner occupied & [overmttent owned 13cdmes excluded
West Shore RIjs/.ess
Ah~ll, IIli.,I
2.1.8,1.5 SI;. 'rhu
I~lR, mud well .s IX~t'illl;lllt:y I~V-
.%ho,lid ciiiiIiilil¢. ;lllht)u,..'h ituIhcr
,i:nl:dn&-d Ill 90%. (:lass II I-
~ I~m hmil~l.I ~.~].~ S~. ~ :~ 1
I);incy sh.llhl rullsai,i slahlc
II~V CIIIISIill¢lillll is
51
J
:]
[]
HARRISBURG - T.~a%NON - CARLISLE MSA
FIFTY LARGEST EMPLOYERS*
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
2O
21
22
23
24
25
26
27
28
29
3O
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Nam~ of
Pennsylvania State Goverrunent
(Except Higher Education)
United States Government
Hershey Foods Corporation
Pennsylvania Blue Shield
AMP, Incorporated
Penn State University (Middletown and
Hershey Medical)
Giant Food Stores, Inc.
Harrisburg'Polyclinic Hospital
Harrisburg Hospital
International Business Machines Corp. (IBM)
HERCO, INC.
Dauphin County Government
Holy Spirit Hospital
Weis Markets, Inc.
Capital Blue Cross
Central Dauphin School District
Electronic Data Systems Corporation
Roadway Express, Inc.
Harrisburg School District
BH/M-II Inc. (C. H. Masland)
Pennsylvania Higher Education (Includes
Shippensburg State University)
Sprint Telephone Company of Pennsylvania
Sears Roebuck & Company
Pizza Hut of America, Inc.
ABF Freight System, Inc.
United Parcel Service, Inc.
Kinney Service Corporation
Dauphin Deposit Bank & Trust Co.
Book-of-the Month Club, Inc.
Cumberland County Government
City of Harrisburg
Lebanon County Government
The Good Samaritan Hospital
Cumberland Valley School District
Exel Logistics - Grocery Services, Inc.
Harrisburg Area Community College
Bell Telephone Company of Pennsylvania
Boscov's Department Store
Carlisle Hospital
Milton Hershey School
Rite Aid Corporation
Capital Area Intermediate Unit (IR-15)
Fry Communications, Inc.
K-Mart Corporation
J F C Temps, Inc.
Nationwide Mutual Insurance Co.
Depar~-~nt of Labor and Industry, Bureau of Research & Statistics
* Businesses that have closed or moved
out of the area have been removed.
13
Clflssiflcfllion
New Construction
Class A
Class !!
New Conslruclion
Class A
Class Il
Bulk Warehouse
Mannfachn-ing
I iigh 'Fech/R&D
I )()WIIh)wI1
Neil~hl)orhn()d
Service Centers
Commt,nily
I'ower Cenlers
ional Malls
Iow HIRh P2'l'Klive
Rental Refilal AverflRe
Rnl~ Kales itenllil
$11L00 $22.50 $19.(J0
$1,I.(X) $19.00 $15.50
$15.50 $1830$16.25
$16.25' $20.00 $17.50
$14..00 $17.00
$3.45 .~'j.~) $3.6s
$2.5o $4.00 $31)0
$7.00 $11).75 $0.75
Total
Invenln.ry
(Sc!. Fi.)
0
2,000,000
9,600,000
750,000
~,9~o, ooo.
60,000,00(I
35,000,000
2,850,000
$1L(X) $30.00 $12.(X1 6.00% 500,000
$10.75 $16.00 $13.00 23,200,000
$10.00 $1,1.50 .$10.75
6.0O $38.O0 $25.50
2,800,000
4,000,000
Developrnent Land (Price Per Acre)
Classificatio, ." Low High
Office iu CBI) fl'e,' Ihiihlablu !%)1) $1(10/SI; $150/SF
i. I.ami in Office l)arks . $9(1,000.00 $25(1,(1(1{).00
I.and itl lndtlsh'ifll parks $7(I,0(}0.(IO $105,000.00
Office/Induslrifll Land- Non l'ark $65,000.00 $250,000.00
Retail/Commercial LmM .......... $2{}0,000.{10 "$650,000.00
I(esidenlial
52
BAND OF INVESTMENT TECHNIQUE
I/We have completed a stud3' in the mortgage market as to what the most realistic terms and rates would
be available for this t3pe ofinve~anent. A survey was performed contacting local lenders and commercial
real estate brokers to determine the rates for mid year 1998. These rates range from 7.5% to 9.5% My/Our
survey concludes that a rate of 9% would be normal for an office under a $1,000,000 loan amount.
The majority of these loans are given for terms often to twenty years with the norm being fifteen years.
Most commercial mo~ rates are renegotiated afar a three to five year term, with typical holding period
of five to ten yeats. Most leaders will require a minimum of 20 to 30 equity position for this type of loan.
Investors are requiring a return on investment capital commensurate with this risk. Investor's market
indicated 8% to 12.5% return. I/We have projected a 10% return.
The appraiser/s has reviewed various publications, such as The Market Source, published by Thc
Appraisal Institute, The Boeckh Factor, Korpacz Real Estate Investor Survey and The Mellon Economic
& Financial Bnefinff Retort. I/We also contact various local commercial lenders when surveying rates.
T)~ically, these sources provide accurate rates for mortgage and yield estimation. They also provide debt
coverage ratio information which is used to support my/our final capitalization rate.
Following is an assumption of the terms and rates considered from the market to arrive at an ovcrall rate
that will be used in capitalizing the net operating income into a value indication.
I/We have used the following data as provided by the lender. The loan-to-value ratio based on 70%
mortgage, 30% equity, a term of 15 years, interest rate of 9% and 10% equity return were used to calculate
the capitalization rate.
The overall capitalization rate per this methodology is 9.32%.
53
ADVANCED MORT~
FILE: Newville Medical Foundation,
PROPERTY: 100 S. High St. Newvffi~ Pa. 17241
ANALYSIS DATE: 11-02-98
Input Variable~
Projected Holding Pedod
Loan Ratio 1
Interest Rate
Loan Term
Investor Equity Portion
Required Investor Yield (IRR)
Growth Rate in Value per Year
Growth Rate in Net Income per Year
Soft Costs in Addition to Equity
Selling Expenses in Terminal Year
CALCULATION
Loan 1 x Constant
Equity x Required Yield
LESS Credit for Equity Build-up
(.70000 x 0.121712)
(.30000 x 0.100000)
RATIO x %PAID OFF x SINKING FUND
Loan 1 70.00 1.0000 0.031474
BASIC RATE
CAP RATE AT STABLE OPERATION
OVERALL RATE - ROUNDED TO
15 Years
70.00%
9.00%
15 Years
30.00%
10.000%
0.000%
0.000%
0.000%
0.000%
0.0851984
0.0300000
0.1151984
-0.0220316
0.0931668
0.0931668
9.32%
DEBT COVERAGE FORMULA TECHNIQUE
1
1
]
.1
1
t
1
This technique also was considered as supporting our market estimation of the overall capitalization rote.
The methodology also takes into consideration, the loan to value ratio, a mortgage constant and debt
coverage factor. The maximum loan under current conditions is 70%. The mortgage constant is
determined by normal lending rates. The debt coverage factor ranges bev. veen I. 10 to 1.40.
Debt Coverage Formula Technique is as follows:
Debt Coverage Debt Service Loan To
Ratio Constant Value Ratio = Overall Rate
I 1.10 x .121712 x .70 = .0937
2 1.15 x .121712 x .70 " .0980
3 1.20 x .121712 x .70 -~ .1022
4 1.25 x .121712 x .70 = .1065
5 1.30 x .121712 x .70 = .1108
6 1.35 x .121712 x .70 = .1150
7 1.40 x .121712 x .70 = .1193
Thc debt coverage ratio for this loan will range between 1.10 to 1.15 which gives a value ratio range of
.0937 to .0980. This ratio supports our basic overall selected capitalization rate.
1
55
CONCLUSION OF CAPITALIZATION RATE
There are three techniques in determining the capitalization rate. They are the Direct Capitalization or
o
Market Derived rate, the extracted rates from publications and the Band of Investment Technique.
supported by the Debt Coverage Ratio Formula.
Direct Capitalization Chosen Indicator
Market Publications Chosen Indicator
Band of Investment Chosen Indicator
8.00% To 10% Say 9.0%
7.50% To I0.5% Say 9.5%
9.32% Say 9.3%
Therefore, based on the above extracted data, it is my/our conclusion that thc overall rate for the subject
properS., is 9.3%.
CONCLUSION OF THE INCOME APPROACH
Applying the indicated, overall capitalization rate of 9.3% to the Stabilized Net Operating Income of
$55,459, yields an indicated stabilized market value "AS OF" October 9, 1998, of $596,333. SAY
$596,000.
56
I~NPUT VARIABLES I KEY NUMBERS
FILE: Newville Medical Foundation, Inc.
PROPERTY: 100 S. High St. Newville Pa. 17241
ANALYSIS DATE: 11-02-98
input Variable~
Projected Holding Pedod
Loan Ratio 1
Interest Rate
Loan Term
Investor Equity Portion
Required Investor Yield (IRR)
Growth Rate in Value per Year
Growth Rate in Net Income per Year
Soft Costs in Addition to Equity
Selling Expenses in Terminal Year
Initial Cash Investment
Indicated Value
Overall Capitalization Rate
Positive Cash Flow Begins in Year
First Year Numbers
Annual Net Income
Debt Service
Annual Cash Flow
Cash on Cash Yield
Debt Coverage Ratio
15 Years
70.00%
9.00%
15 Years
30.00%
10.000%
0.000%
0.000%
0.000%
0.000%
$178,578
$ 595,261
9.32%
1
$ 55,459
($ 50,715)
$ 4,743
2.66%
1.09
57
COST APPROACH
INTRODUCTION TO COST APPROACH
1
1
1
1
!-1
L1
In the Cost Approach to value, the value of the land and the improvements are estimated separately and
then added together to develop a value indication for the entire property by means of the Cost Approach.
Land is usually valued "AS IF VACANT" and available for development to its highest and best use. For
this process, the Sales Comparison Approach is generally the most reasonable method of valuation
considered applicable. This method involves comparing similar land sales recently sold or offered for sale
with the subject propert),, as vacant: and a comparative analysis is made of factors affecting value. A sale
seldom possesses all the various characteristics of the subject property to the same degree. Therefore,
judgment must be exercised in arriving at a final estimate of val-e of the land.
Thc value of thc improvements is estimated by the reproduction cost of the structure and other site
improvements, then depreciated for physical deterioration, functional obsolescence, curable or incurable;
or external obsolescence if applicable for the subject property.
58
Thc following land sales arc representative of properties within thc general market area that could bc used
for medical office sites.
COMPARABLE LAND SALES
No. Address Zoning Sale Date Sale Price Lot Size/AC Price/Acre
Price/SF
1 125 Walnut Bottom Road C-G 09-95 $165,000 2.39 $69,037
Shippensburg Township $1.58
2 North Spring Garden Street C-3 01-95 $93,500 .78 $119,872
Borough of Carl isle
$2.75
3 38-40 Wnlnut Bottom Road C-G 04-97 $200,00 i.23 $163,132
Shippensburg Township $3.74
4 1538 Conunerce Avenue C-I 05-97 $110,000 1.48 $74,324
South Middleton To'+~lship $ I. 17
A full detailed description of each transaction lbiiows.
59
]
]
1
]
]
1
-]
]
]
]
-]
]
]
COMPARABLE NO. 1
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
Swope, William A. and Pauline L.
A P Hotels of Pennsylvania, Inc.
Walnut Bottom Road
Shippensburg Township
Cumberland County.
Vacant Land - Level
Deed Book 127, Page 942
District 36, Map 12-0320, Parcel 027
C-G, Commercial
Water, Sewer, Electricity and Telephone
2.39 Acres ( 104,108 Square Feet)
$165,000
September 6, 1995
$1.58
$69.037
60
COMPARABLE NO. 2
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
Vanek, Kent G.
Lehman, Wendell L. and Jeanne E.
North Spring Garden Street
Borough of Carlisle
Cumberland County
Vacant land wi~ a commercial building currently being built on
the site.
Deed Book 117, Page 188
District 02, Map 21-0318, Parcel 359
C-3, General Commercial
Water, Sewer, Electricity and Telephone
.78 Acres (33,977 Square Feet)
$93,500
January 4, 1995
$2.75
$119,872
i
COMPARABLE NO. 3
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
· Highlands, Lester D.
Avalon Corporation
38-40 Walnut Bottom Road
Shippensburg Township
Cumberland County
Old house razed for fast food restaurant.
Deed Book 154, Pagc 436
District 36, 33-1871-Parcel 013
C-G, Commercial General
Water, Sewer, Gas, Electricity and Telephone
1.226 Acres (53,405 Square Feet)
$200,000
April 1997
$3.74
$163,132
62
]
]
]
]
]
]
]
]
]
]
]
]
]
]
]
COMPARABLE NO. 4
Grantor:
Grantee:
Address:
Property Description:
Recording Information:
Tax Identification:
Zoning:
Utilities:
Lot Size:
Sale Price:
Sale Date:
Price Per Square Foot:
Price Per Acre:
McCoy Business Center, et al
Oyer Brothers Partnership
1538 Commerce Avenue
South Middleton Township
Cumberland County
Vacant Land - Level
Deed Book 158, Page 491
District 40, Map 09-0527, Parcel 060
C-I, Commercial Industrial
Water, Sewer, Gas, Electricity and Telephone
1.48 Acres (64,469 Square Feet)
$110,000
May 30, 1997
$1.71
$74,324
63
_]
_]
]
]
]
]
]
]
]
]
]
COMPARABLE LAND SALES ANALYSIS
Sale Number
Sale Date
Sale Price
Lot Size/Acre
Unadjusted Price/SF
10-98
N/A
.89
NIA
09-95
$165,000
2.39
$1.58
Time/Condition
Location
Zoning
Utilities
Lot Size/Utility
Other
Total Percentage Adjustment
Ad usted Price/SF
ADJUSTMENT
! 1-98 +6%
Average - i 0%
R-2 -10%
Public
.93 AC+/-
N/A
N/A
N/A
O%
-14%
$1.36
01-95
$93,500
.78
$2.75
-10%
-10%
0%
0%
0%
-13%
$2.39
04-97
$200,000
1.23
$3.74
+3%
-2O%
-10%
0%
O%
0%
-27%
$2.73
05-97
$110,000
1.48
$1.71
+3%
-10%
-10%
0%
0%
-17%
$1.42
]
]
-]
-]
64
ADJUSTMENT ANALYSIS - LAND ONLY
]
]
]
]
]
]
]
]
]
]
]
]
]
Time/Conditions:
Location:
Zoning:
After contacting local commercial brokers, analyzing multi-list data and
reviewing county sales and assessment data, an appreciation rate of 2%
per )'ear was found appropriate. This rate varies throughout Cumberland
Count3.' from 2% to 5% annually, l/We have chosen thc most
conservative number for this analysis. Each comparable was adjusted
appropriately to the nearest half per cent. Therefore, thc following
adjustments were made:
Comparable No. I Plus 6%
Comparable No. 2 Plus 7%
Comparables 3 & 4 Plus 3%
Comparable No. I is located in a rural area near an interstate cxit with
higher visibility and higher traffic count. Comparable No. 2 is a similar
in-town location in the Borough of Carlislc and was developed as a
laundromat. Comparable No. 3 is located abutting a community
shopping center with strong visibility and high traffic count. Comparable
No. 4 is located in a new, commercial office/warehouse/industrial arca
with visibility from thc intcrstate.
superior to the subject property.
Comparable Nos. 1, 2 and 4
Comparable No. 3
All comparablcs arc considered
Minus 10%
Minus 20%
The subject property is zoned R-2, Medium Density ReSidential. All
four sales are zoned for commercial use which allow medical facilities
and are considered superior to the subject.
Comparable Nos. 1, 2, 3 and 4 Minus 10%
65
RESTRICTED APPRAISAL REPORT
GRAHAM MEDICAL CLINIC
100 SOUTH HIGH STREET
NEWVILLE, PENNSYLVANIA
PREPARED FOR
JOHN GRAHAM LIBRARY BOARD OF DIRECTORS
AND
NEWVILLE MEDICAL FOUNDATION
BY
LARRY E. FOOTE
DIVERSIFIED APPRAISAL SERVICES
35 EAST HIGH STREET, SUITE 101
CARLISLE, PENNSYLVANIA
17013-3052
(717) 249-2758
TABLE OF CONTENTS
PAGE NO.
Table of Contents .................................................................................................... 2
Letter of Transmittal ............................................................................................... 3
Summary of Important Facts and Conclusions ......................................................... 4
Appraisal Certificate ............................................................................................... 5
Purpose of the Appraisal ......................................................................................... 7
Location Analysis ................................................................................................... 8
Zoning .................................................................................................................. 10
Ownership History ................................................................................................ 11
Estimated Marketing Time ........................................................................ · ............ 11
Economic Trends .................................................................................................. 11
Site Description ..................................................................................................... 12
Improvements ....................................................................................................... 13
Taxes and Assessment ........................................................................................... 15
Highest and Best Use ............................................................................................ 16
Cost Approach ...................................................................................................... 19
Sales Comparison Approach ................................................................................. 22
Income Approach .................................................................................................. 26
Reconciliation and Final Value Estimate ............................................................... 29
Underlying Assumptions and Limiting Conditions ................................................ 30
Certificate of Appraisal ......................................................................................... 33
Qualifications of the Appraiser
Photographs of the Subject Property
Location Map
2
Diversified Appraisal Services
Real Estate Appraisers and Consultants
35 East High Street
Carlisle, PA 17013-3052
(717) 249-2758
FAX (717) 258-4701
April 11, 2001
TO: John Graham Library Board of Directors and Newville Medical Foundation
FM: Larry E. Foote
Restricted Appraisal Report
Graham Medical Clinic
100 South High Street
Newville, Pennsylvania
At your request, I have appraised the captioned property. The restricted appraisal
report, which follows this letter, is submitted in support of my opinion of Market Value
of the Fee Simple Interest in the property, as of March 8, 2001.
I hereby certify that, to the best of my knowledge and belief, the data, facts, and
opinions set forth therein, are accurate, subject to the Statement of Assumptions and Lim-
king Conditions that is also made a part of the report, and that the indicated Market Value
of the subject property, as of March 8, 2001 is:
FIVE HUNDRED AND NINETY-TWO THOUSAND DOLLARS
$592,000
This restricted appraisal has been made using the Departure Provision in accor-
dance with the guidelines set forth by the Appraisal Standards Board and is in conformity
with the standards of professional practice of the National Association of Realtors Ap-
praisal Section. I appreciate your having considered me for this assignment and trust that
you find the report entirely satisfactory.
Respectfully submitted,
Certified General Appraiser
GA-000014-L
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS
LOCATION:
TAX PARCEL NUMBER:
OWNERSHIP:
LAND SIZE:
ZONING:
FLOOD HAZARD DATA:
100 South High Street
Newville, Pennsylvania
28-20-1756-005
Newville Medical Foundation, Inc.
40,591 square feet.
R-2, Medium Density Residential District.
The subject building is not located in a FEMA identified
flood hazard area according to map #421579-0001-A.
PROPERTY RIGHTS: Fee simple interest.
SCOPE OF ASSIGNMENT: The scope of the assignment included an analysis of the
subject's area, an inspection of the subject property, an es-
timation of the property's highest and best use, considera-
tion of all three approaches to value, and the application of
those relevant to the valuation of the subject.
IMPROVEMENTS: One-story detached medical center building.
OBJECTIVE: To estimate the market value of the subject property as un-
encumbered.
USE OF THE APPRAISAL: To establish a sale price.
EFFECTIVE DATE: March 8, 2001.
HIGHEST AND BEST USE: Continued use as a medical clinic.
COST APPROACH:
SALES APPROACH:
INCOME APPROACH:
VALUE CONCLUSION:
N.A.
N.A.
$583,000
$592,000
4
APPRAISAL CERTIFICATE
I hereby certify that upon application for valuation by:
JOHN GRAHAM LIBRARY BOARD OF DIRECTORS
NEWVILLE MEDICAL FOUNDATION
the undersigned personally inspected the following described property:
All that certain tract of land, with the improvements thereon erected, situate in the
Borough of Newville, Cumberland County, Pennsylvania, more particularly bounded and
described as follows:
Beginning at a railroad spike at the comer of land now or formerly of Viola Keck
and Vine Street; thence along the curb line of Vine Street North 65 degrees 45 minutes
East 210.00 feet to a railroad spike at the comer of Vine Street and South High Street;
thence along the curb line of South High Street South 23 degrees 04 minutes East 238.67
feet to a point in the middle of the Big Spring; thence along the middle of the Big Spring
South 89 degrees 18 minutes West 224.78 feet to a point in the middle of Big Spring;
thence along the land now or formerly of Viola Keck North 24 degrees 45 minutes West
143.83 feet to the place of beginning. Containing 40,591 square feet.
To the best of my knowledge and belief the statements contained in this report are
true and correct, and that neither the employment to make this restricted appraisal report
nor the compensation is contingent upon the value reported, and that in my opinion the
Market Value as of March 8, 2001 is:
FIVE HUNDRED AND NINETY-TWO THOUSAND DOLLARS
$592,000
5
The property was appraised as a whole, subject to the confingem and limiting
conditions outlined herein.
Larry E. Foote
Certified General Appraiser
GA-000014-L
PURPOSE OF THE APPRAISAL
The purpose of this restricted appraisal is to estimate the Market Value of the sub-
ject property as of March 8, 2001.
Market Value is defined as the most probable price which a property should bring
in a competitive and open market under all conditions requisite to a fair sale, the buyer
and seller, each acting prudently, knowledgeably and assuming the price is not affected
by undue stimulus. Implicit in this definition is the consummation of a sale as of a speci-
fied date and the passing of title from seller to buyer under conditions whereby:
a. Buyer and seller are typically motivated.
b. Both parties are well informed or well advised, and each acting in
what he considers his own best interest.
c. A reasonable time is allowed for exposure in the open market.
d. Payment is made in terms of cash in U.S. dollars or in terms of fi-
nancial arrangements comparable thereto.
e. The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
7
LOCATION ANALYSIS
The subject property is located in the south central part of Pennsylvania in Cum-
berland County. Cumberland County has pronounced boundaries. The Susquehanna
River forms the eastern boundary shared with Dauphin County and the state capitol, Har-
risburg The Yellow Breeches Creek forms the southeastern boundary with York County.
The boundary then extends to the southwest following the Paney and South Mountains.
That line also constitutes the southern boundary with Adams County. The southwestern
boundary with Franklin County is traced by Laughlin Run, Middle Spring Creek, Gum
Run, and Maines Run while the ridge line of Blue Mountain forms the northern boundary
with Perry County.
Based upon statistics from the Commonwealth of Pennsylvania Department of
Labor and Industry Bureau of Research and Statistics, total civilian labor force in the
Harrisburg-Carlisle-Lebanon MSA as of March, 2000 was 341,800, down 3,600 from
March, 1999, which was 345,400. The unemployment rate for Cumberland County as of
March, 2000 was 2.3 percent, down .3 percent from March, 1999 which was 2.6 percent.
These figures of unemployment are lower than 4.4 percent for the commonwealth of
Pennsylvania. Over the year service producing industries are up 2,300 jobs and goods
producing industries are down 1,100 jobs.
Major east-west transportation links serving the general area are U.S. Route 22
and 322, Interstate Route 78, and Interstate Route 76. Major nearby north-south arteries
include Interstate Route 81, Interstate Route 83, and U.S. Routes 11 and 15. Rail service
is provided by Amtrak on ConRail's line. The rail terminal is located in downtown Har-
risburg. Air transportation includes four airports with Harrisburg International Airport
serving the major carriers of U.S. Air, American, and Pennsylvania Commuter Air Lines.
General aviation is also served by Capital City Airport and the Carlisle Business Airport.
Higher education is offered through the Harrisburg Area Community College, the
University Center at Harrisburg, Pennsylvania State University at Harrisburg, Dickinson
College and Dickinson Law School. Millersville State University, Shippensburg State
University, Susquehanna University, Franklin and Marshall College, and York College,
among others, are all within a one hour drive of the general area.
Newville is located in the southeast section of central Pennsylvania, approxi-
mately thirty miles from Harrisburg, the state capitol. The town itself is presently under-
going a considerable degree of renovation and restoration of older properties. Employ-
ment opportunities are good, with Commonwealth of Pennsylvania, Hershey Foods Cor-
poration, AMP Incorporated, Herco, Inc., BetNehem Steel, Harrisburg Hospital, Penn-
sylvania Blue SNeld, Rite Aid Corporation, Hershey Medical Center, Carlisle Barracks,
PPG Industries, Carlisle Tire and Wheel and Lear Corp. being the major employers in the
area. There are also manufacturers of crystals, paper products, and steel products in
nearby Carlisle.
ZONING
The subject property is located in an area which is zoned R-2, Medium Density
Residential District. These districts are primarily intended for medium density residential
uses where centralized utilities are provided. Certain community commercial uses are
conditionally permitted in these districts in order to allow the development of neighbor-
hood commercial services which are designed to meet the daily needs of surrounding
residential areas and which protect the surrounding residential environment.
In the Medium Density Residential District, no building or premises shall be used
and no building or part of a building shall be erected or altered which is arranged, in-
tended or designed to be used in whole or in part for any use except the following:
A. Any permitted use or accessory use as listed and regulated in the R-1 District.
B. Conversions of an existing residential structure fi.om a one-family dwelling to
a two or more family dwelling, subject to the conditions listed in the Zoning
ordinance.
C. Boarding, lodging or rooming house.
D. Places of worship.
E. Educational institutions.
10
OWNERSHIP HISTORY
The subject property is owned by Newville Medical Foundation, Inc. The vacant
property was purchased on August 14, 1972 for a reported consideration of $14,000 and
ownership transferred on deed reference 24-T-623.
ESTIMATED MARKETING TIME
It is estimated that if the subject property were offered for sale at the indicated
Market Value, a reasonable marketing time would be six to twelve months. This estimate
is based upon quarterly sales figures published by Cemral Penn Multi List, Inc.
ECONOMIC TRENDS
Historically, rental income for similar properties has steadily increased, with va-
cancy rates remaining stable. Financing is readily available to qualified purchasers at
reasonable rates and terms.
11
SITE DESCRIPTION
The subject site is rectangular in shape, consists of a total area of approximately 40,591
square feet, and has approximately 238.67 linear feet of macadam road frontage along
South High Street. There is also approximately 210 linear feet of macadam road frontage
along-Vine Street.
The site is relatively level throughout and there does not appear to be any drain-
age problems. According to the Federal Emergency Management Agency map number
421579-0001-A, the building is not located in an area which is prone to flooding.
In the absence of core boring, it has been assumed that there arc no mineral
deposits of a commercial nature underlying the subject site. For the same reason, it is
assumed that there are no unusual sub-soil conditions that would adversely affect the sub-
ject site.
Access to the site is via South High Street and Vine Street, and visibility of the
site from these roadways is considered to be good.
Utilities available at the site include water, sewer, electridty and telephone ser-
vice. There appears to be sufficient capacity in each of these utilities to permit optimum
utilization of the site.
12
IMPROVEMENTS
The subject property is improved with a one-story detached building containing a
total of approximately 6,176 square feet of gross building area above grade, constructed
over a partial basement and crawlspace. This building, which was constructed in 1973
and expanded in 1995, is presently being utilized as a medical clinic.
The foundation walls of this structure are of concrete block and the exterior walls
are of brick. Roofing is of the gable type, covered with asphalt shingles. Gutters and
downspouts are of painted aluminum. Windows are of the vinyl-clad thermopane type
and exterior doors are of insulated steel or insulated steel with glass in the upper one-half.
Attached to the front of the building is a small covered porch, and there is a concrete
patio located at the rear of the building.
The interior of the building is divided into a vestibule, waiting room, receptionists
office, emergency room, xray room, xray waiting room, laboratory, two storage rooms,
break room, twelve examination rooms, three private offices, patient education room, dic-
tation room, and seven restrooms. Interior floor coverings are of asphalt tile blocks and
carpet. Interior walls and ceilings are of painted drywall. Interior doors are of painted
Masonite and interior trim is of painted wood.
The building is heated and cooled by five Weatherking electric heat pumps. Wa-
ter is heated by an eighty-gallon electric water heater, and plumbing is of plastic and cop-
per. Electricity is distributed by an 800-ampere circuit breaker electrical service. The
building is equipped with a hard-wired smoke, fire and burglar alarm system; and a Li-
thonia emergency lighting system.
13
The site is further improved with a lawn with mature trees and shrubs, and ap-
proximately 12,216 square feet of asphalt parking areas which are illuminated by pole-
mounted and wall-mounted lamps.
All improvements are considered to be in good condition on the interior and on
the exterior, with mechanical systems appearing to be adequate and functioning properly.
14
TAXES AND ASSESSMENT
The real estate tax assessment, synonymous with assessed value, is the official
valuation level of property for advalorem tax purposes. Since the assessment is a dollar
amount assigned to taxable property by the assessor for the purposes of taxation, it may
not reflect the independent value conclusions found within this report. The following is
the assessment and tax liability for the subject property as determined by the County As-
sessor's Office:
Assessment:
Land $ 77,540
Improvements 510,330
Total $587,870
Mill Rates:
Borough
County
School
Total
.0016657
.0018820
.0126940 prQe~ed
.0162417
Tax Liability:
Borough
County
School
Total
$ 979.22
1,106.37
7,462.42
$9,548.01
15
HIGHEST AND BEST USE
Highest and Best Use is defined by the Appraisal Terminology and Handbook,
published by the Appraisal Institute, as "the most profitable likely use to which a prop-
erty can be put". The opinion of such use may be based on the highest and most profit-
able.continuous use to which the property is adapted and needed, or likely to be in de-
mand, in the reasonable near future.
However, elements affecting value that depend upon events or a combination of
occurrences which, while within the realm of possibility, are not fairly shown to be rea-
sonably probable, should be excluded from consideration. Also, if the intended use is
dependent on an uncertain act of another person, the intention cannot be considered.
The following tests must be passed in determining the highest and best use of the
subject property.
a.
The use must be physically possible. The size, shape, and topography of the
site affect pOssible uses for which it can be developed.
b. The use must be legal, i.e., permitted under zoning and other municipal,
county, state, or federal regulations.
c. The use must be financially feasible, probable, and not speculative. There
must be an economic, social, or market demand for the existing or proposed
use. All uses that are eXPected to produce a positive return are regarded as fi-
nancially feasible.
d. Finally, the highest and best use must be that which produced the highest pos-
sible net return for the longest period of time.
¸16
The highest and best use of the site as vacant may be different from the highest
and best use as currently improved. This is most likely to occur with older properties,
where physical condition, market changes, and neighborhood changes have been signifi-
cant since the period when originally constructed.
HIGHEST AND BEST USE AS VACANT:
..... The highest and best use of the property as vacant assumes the site has no existing
improvements. This concept is important to the appraisal report as it is carded through to
the valuation of the land in the cost approach, if applicable. It assists in the selection of
comparable sales of vacant sites to apply to the subject site. Considering the physical
characteristics of the site, neighborhood uses, current zoning, location, and financial pa-
rameters, it is my opinion that the highest and best use of the subject property, as vacant,
would be for construction of a multi-family residential building.
HIGHEST AND BEST USE AS IMPROVED:
The analysis of highest and best use of a property as improved addresses what use
should be made of the current improvements. Possible choices include renovation, ex-
pansion, demolition, or maintaining its current use with no changes. Considering the
physical characteristics of the property, neighborhood uses, current zoning, location, and
financial parameters, it is my opinion that the highest and best use of the subject property,
as improved, is for continued use as a medical center building.
17
THE APPRAISAL PROCESS
Three approaches to value are generally included in an appraisal report. These
techniques include the cost approach, sales comparison approach, and income approach
to value.
..... The cost approach to value is based on the assumption that the reproduction cost
of a building plus land value, tends to set the upper limit to value. A key assumption is
that a newly constructed building would have advantages over the existing building,
therefore an evaluation focuses upon disadvantages or deficiencies (depreciation) of the
existing building compared to a new facility.
The sales comparison approach to value assumes that under normal conditions, a
given number of parties acting intelligently and voluntarily, tend to set a pattern from
which value can be estimatedi Application of this approach relies on a comparison of the
subject with a sufficient number of recent transactions of comparable properties in the
market, based on a common unit, such as price per square foot of building area.
The income apProach concerns itself with present worth of the future potential
benefits of a property. The initial estimate involves the net income, which a fully in-
formed person is justified in assuming the property will produce during its remaining use-
ful life. This estimated net income is then capitalized into a value estimate, based upon
the level of risk as compared with that of a similar type and class.
At the request of the client and in accordance with the departure provision of the
Uniform Standards of Professional Appraisal Practice, only the income approach to value
has been applied to the subject property and is subsequently presented.
18
THE COST APPROACH
The cost approach to value is based on the principle of substitution, which pro-
poses that an informed buyer will pay no more than the cost of providing a substitute
property with similar utility.
..... In estimating the value of the subject property by the cost approach, the following
steps must be completed:
a. Estimate the value of the site to its highest and best use as though vacant,
which we have done.
b. Estimate the reproduction or replacement cost of the improvements on the ef-
fective date of the appraisal. This includes direct and indirect costs.
c. Estimate other costs incurred after construction to being the new, vacant
building up to market conditions and occupancy levels..
d. Estimate entrepreneurial profit, when appropriate, from an analysis of the
market.
e. Add estimated replacement or reproduction cost, indirect costs, and entrepre-
neurial profit, often expressed as a percentage of total direct and indirect costs
to arrive at the total replacement or reproduction cost of the primary structure.
f. Estimate the amount of accrued depreciation in the structure, which is divided
into three major categories; physical deterioration, functional obsolescence,
and external obsolescence.
19
g. Deduct the estimated depreciation from the total reproduction or replacement
cost of the structure to derive an estimate of the structure's depreciated repro-
duction or replacement cost.
h. Estimate reproduction or replacement costs and depreciation for any acces-
sory buildings and site improvements, and then deduct estimated depreciation
from the reproduction or replacement costs of these improvements. Site im-
provements and minor building improvements are often appraised at their ne~
value, i.e., directly on a depreciated cost basis.
i. Add the depreciated reproduction of replacement costs of the structure, the
accessory buildings, and the site improvements to obtain the estimated total
depreciated reproduction or replacement cost of all improvements.
Add the land value to the total depreciated reproduction or replacement cost
of all improvements to arrive at the indicated value of the fee simple interest
in the property.
k. Adjust the indicated fee simple value to reflect the property interest being ap-
Praised, if necessary, to produce an indicated value for the interest in the sub-
ject property.
Comparison is the essence of the cost approach to value, similar to the sales
comparison and income approaches.' Construction costs, plus land values, are
compared to the values of existing improved properties. The four principles used
for the sale comparison approach (substitution, supply and demand, balance, and
externalities), are also applicable to the cost approach.
20
So the cost approach to value can be derived and equitably compared with
the other approaches to value, adjustments for accrued depreciation from all
causes are deducted from the reproduction cost, including:
a. Physical Deterioration: Physical wearing out of property.
b. Functional Obsolescence: Lack of desirability in terms of layout, style
and design as compared to that of a new property, serving the same func-
tion.
c. External Obsolescence: Loss of value from causes outside the property it-
self.
The cost approach to value is most applicable for new properties, where
the components of physical deterioration and functional and external obsoles-
cence are small. The Marshal Valuation Service is used in this approach with
actual costs for the subject property.
The Marshall Valuation Service is a complete, dependable appraisal guide
for developing replacement costs, depreciated values, and insurable values of
buildings and other improvements. Modifiers are applied to make the cost
applicable to any size building in any locality. Known costs for locally con-
structed properties are also analyzed and compared with derived cost esti-
mates.
The land value is based on comparable land sales using the same tech-
niques as applied in the sales comparison approach.
21
At the request of the client, and in accordance with the departure provision
of the Uniform Standards of Professional Appraisal Practice, the cost ap-
proach to value has not been included in this appraisal report.
22
THE SALES COMPARISON APPROACH
The sales comparison approach is a process of comparing market data, that is, the
prices paid for similar properties, prices asked by owners, offers made by prospective
purchasers willing to buy, and rents and leases.
~- In applying the sales comparison approach, various appraisal principles are ap-
plied, ensuring that all relevant issues have been included in the analysis. The principles
of primary importance are supply and demand, balance, substitution, and externalities.
Additionally, a fundamental premise of the sales comparison approach is the concept, that
from analysis of sales of reasonably similar properties, an appraiser has a factual basis
upon which to estimate the value of the subject. Proper application of the sales compari-
son approach requires that:
a. Only market transactions be weighed, and the date of each transaction be con-
firmed to the greatest extent possible.
b. The degree of comparability of each sale to the subject be considered.
c. The value conclusion be consistent with the analysis of the sales data.
A definition of market value is: "The most probable price which a property
should bring in a competitive and open market under ali conditions requisite to a fair sale,
the buyer and seller, each acting prudently, knowledgeably and assuming the price is not
affected by undue stimulus. Implicit in this definition is the consummation of a sale as of
a specified date and the passing of title from seller to buyer under conditions whereby:
a. Buyer and seller are typically motivated.
23
b. Both parties are well informed or well advised, and each acting in what he
considers his own best interest.
c. A reasonable time is allowed for exposure in the open market.
d. Payment is made in terms of cash in U.S. dollars or in terms of financial ar-
rangements comparable thereto.
The price represents the normal consideration for the property sold unaffected
by special or creative financing or sales concessions granted by anyone asso-
ciated with the sale.
The degree of comparability that exists between a sale and the subject is often a
function of the volume of sales activity in a market. For any class of real estate, if
sales are infrequent, the market area must be expanded in scope of time and or
geography to whatever extent is necessary to accumulate sufficient data on which
to base a judgment.
To judge the degree of comparability between a sale and the subject, sev-
eral guidelines can be applied.
a. The sale should be in the same market as the subject. To the extent
that-a market is a meeting place for buyers and sellers of real estate of
a given type, the boundaries of the market are set by the participants in
merchandising and absorbing competitive properties. The boundaries
of a market area are consequently economic in character, and not
purely physical or geographic.
24
b. Physical characteristics of the sale and subject should be as similar as
possible in terms of size and amenities customarily found within the
applicable class of real estate.
c. Real estate price trends over time must be taken into consideration.
d. The functional adequacy of the sale property and the subject should be
competitive in terms of the ability of each to support similar functions.
At the request of the client, and in accordance with the departure provision
of the Uniform Standards of Professional Appraisal Practice, the sales comparison
approach to value has not been included in this appraisal report.
25
THE INCOME APPROACH
The income approach is a method of converting income streams into present
worth. Income and expense data for the subject property has been collected from the
property owner's income and expense summary and adjusted to include a property man-
agement fee. The present lease rate of $5,300 per month is equal to $10.30 per square
foot of gross building area per year. This rate is considered to be less than fair market
rent level, based upon office rental rates from medical office buildings in the Carlisle
area. Therefore, the fair market rental rate of $12 per square foot has been used in the
income and expense summary contained in this appraisal report. Analysis of this data
resulted in a projected annual net operating income of $52,603.
Using this approach, the net operating income should be sufficient to cover total
mortgage payments and offer a return on equity investment. The net operating income is
capitalized to obtain an estimate of value by income approach.
Using the band of investment technique to develop a capitalization rate, the ap-
praiser contacted lending institutions to determine the availability and terms of invest-
ment capital, and the equity return desired by investors in this type investment. It was
found that eighty percent of the property value could be borrowed at seven and three-
fourths percent interest per annum for a term of twenty years, adjusted at the end of five
years. Also, investors desire an equity yield of five percent.
The mortgage constant under the abOVe terms would be .098514. Applying the
band of investment technique, the overall capitalization rate is developed in the following
manner:
26
.80 x .098514 = .078811
· 20 x.050000 = .010000
.088811
Based upon the above, capitalizing the net operating income at the overall capi-
talization rate of .088811 indicates a value of $52,603/.088811 = $592,302.76. There-
fore, the Market Value of the subject property by the income approach is best estimated
at $592,000.
27
INCOME AND EXPENSE SUMMARY
SCHEDULED INCOME:
6,176 square feet ~ $12 =
$74,112
OPERATING EXPENSES:
Water and sewer
Security alarm services
Projected property taxes
Repairs and maintenance
Property management at 5%
Replacement reserve
Total Operating Expenses
1,443
895
9,548
5,417
3,706
5OO
21,509
NET OPERATING INCOME:
$52,603
28
RECONCILIATION AND FINAL VALUE ESTIMATE
Reconciliation is the analysis of alternative conclusions to arrive at a final value
estimate. Reconciliation is required because different value indications result from the
use of multiple approaches to value and within the application of a single approach.
.~- The final value estimate is not derived simply by applying technical and quantita-
tive procedures; rather, it involves the exercise of judgment. The value conclusion
reached must be consistent with market thinking.
The parts of this appraisal report are the following approaches to value your ap-
praiser used:
Value Indicated by Cost Approach N.A.
Value Indicated by Sales Comparison Approach N.A.
Value Indicated by Income Approach $592,000
These approaches are representative of the market value of the property. I have
carefully examined each step in each method, and I believe the conclusions accurately
reflect the attitude of typical purchasers of this type property in this neighborhood. It is
my belief that this reexamination has confirmed the original conclusions.
As a result of this restricted appraisal and analysis, it is this appraiser's considered
judgment and opinion that the Market Value of the subject property, as of March 8, 2001
FIVE HUNDRED AND NINETY-TWO THOUSAND DOLLARS
$592,000
29
UNDERLYING ASSUMPTIONS AND LIMITING
CONDITIONS SUBJECT TO THIS APPRAISAL
as to the title, which is assumed to be marketable.
..... though under responsible ownership.
2.
3.
I assume no responsibility for matters legal in nature, nor do I render any opinion
The property is appraised as
The legal description used herein is correct.
I have made no survey of the subject property, and the boundaries are taken from
records believed to be reliable.
4. I assume that there are no hidden or unapparent conditions of the property, subsoil
or structures which would render it more or less valuable. I assume no responsi-
bility for such conditions or for engineering which might be required to discover
such factors.
5. The information, estimates, and opinions furnished to me and contained in this re-
port were obtained from sources considered to be reliable and believed to be true
and correct. However, no responsibility for accuracy can be assumed by me.
6. This appraisal report is to be used in its entirety and only for the purpose for
which it was rendered.
7. Neither all nor any part of the contents of this appraisal report, (especially any
conclusions as to value, the identity of the appraiser or the firm with which he is
connected) shall be reproduced, published, or disseminated to the public through
advertising media, public relations media, sales media, or any other public means
30
of communication, without the prior written consent and approval of the ap-
praiser.
8. Unless otherwise stated in this report, the existence of hazardous material, includ-
ing without limitation asbestos, polychlorinated biphenyls, petroleum leakage, or
agricultural chemicals, which may or may not be present on the property, was not
-~- observed by the appraiser. The appraiser has no knowledge of the existence of
such. materials on or in the property. The appraiser, however, is not qualified to
detect such substances. The presence of substances such as asbestOs, urea-
formaldehyde foam insulation, or other potentially hazardous materials may affect
the value of the property. The value estimate is predicated on the assumption that
there is no such material on or in the property that would cause a loss in value.
No responsibility is assumed for any such conditions, or for any expertise or engi-
neering knowledge required to discover them. The client is urged to retain an ex-
pert in this field, if desired.
9. I do not have knowledge or experience required to evaluate whether physical
changes have to be made to existing facilities to conform to the Americans With
Disabilities Act regulations or whether alterations or new construction meets the
requirements. Therefore, the value reported is based upon the assumption that the
subject property conforms to the ADA regulations. The client is urged to retain
an expert in this field, if desired.
10. Acceptance of and/or use of this appraisal report constitutes acceptance of the
foregoing assumptions and limiting conditions.
31
11. Adherence to the confidentiality requirement of the Uniform Standards of Profes-
sional Appraisal Practice requires that, prior to making any copies of the appraisal
report or having discussions related to this appraisal assignment with anyone
other than the client, approval fi.om the client be obtained in writing. Upon re-
ceipt of said written authorization, copies of the appraisal report shall be produced
..... or discussions with a third party may be held. Fees for these additional services
shall be mutually agreed upon and are payable in advance.
12. This appraisal was prepared for the exclusive us of the client idemified in this ap-
praisal report. The information and opinions contained in this appraisal set forth
the appraiser's best judgment in light of the information available at the time of
the preparation of this report. Any use of this apPraisal by any other person or en-
tity, or any reliance or decisions based on this appraisal are the sole responsibility
and at the sole risk of the third party. The appraiser accepts no responsibility for
damages suffered by any third party as a result of reliance on or decisions made or
actions taken based on this report.
32
CERTIFICATE OF APPRAISAL
Your appraiser hereby certifies that:
1. I have no present or contemplated future interest in the subject property.
2. I have no personal interest or bias with respect to the subject matter of this ap-
.... praisal report or the parties involved. My findings are not based on the employ-
ment to make the restricted appraisal, a requested minimum valuation, a specific
valuation, or the approval of a loan.
3. To the best of my knowledge and belief, the statements of fact contained in this
appraisal report, upon which the analyses, opinions, and conclusions expressed
herein are based, are true and correct.
4. This restricted appraisal report sets forth all of the limiting conditions (imposed
by the terms of my assignment or by the undersigned) affecting the analyses,
opinions, and conclusions contained in this report.
5. This restricted appraisal report has been made in conformity with the Uniform
Standards of Professional Appraisal Practice adopted by the Appraisal Standards
Board of the Appraisal Foundation, and is subject to the requirements of the Code
of Professional Ethics and Standards of Professional Conduct of the Appraisal
Section of the National Association of Realtors.
6. No one other than the undersigned prepared the analyses, conclusions, and opin-
ions concerning real estate that are set forth in this restricted appraisal report.
7. This restricted appraisal report has been completed in a manner that does not mis-
lead or confuse the client or the intended users of the report.
33
8. The appraiser has advised the client that the assignment calls for something less
than, or different from the work required by the specific guidelines.
9. The client has agreed that the performance of a restricted appraisal would be ap-
propriate.
Larry E. Foote
Certified General Appraiser
GA-000014-L
34
LARRY E. FOOTE
REAL ESTATE APPRAISER
EXPERIENCE:
1979-Present: Chief Appraiser, Diversified Appraisal Services, Carlisle, Pa.
Principal Broker, LaRue Development Company, Carlisle, Pa.
1976-1979: Associate Broker, Colonial Realty, Carlisle, Pa.
1972-1976: Realtor Associate, Jack Gaughen Realtor, Carlisle, Pa.
Appraisal experience included undeveloped land, farms, building lots, single-family dwellings,
mobii~ home parks, medical centers, nursing homes, motels, apartment buildings and complexes,
office buildings, service stations, veterinary clinics, rehabilitation centers, retail buildings, day-
care centers, warehouses, and manufacturing facilities.
EDUCATION:
Bachelor of Business Administration, Pennsylvania State University, 1976.
Associate Bachelor of Business Administration, Harrisburg Area Community
College, 1974.
Diploma, Carlisle Senior High School, 1965.
Certificate, Pennsylvania Realtors Institute, GRI I, GRI II, GRI III.
Certificate, Realtors National Marketing Institute, CI 101, CI 102, CI 103, CI 104,
CI 105.
Standards of Professional Practice, American Institute of Real Estate Appraisers.
Real Estate Appraisal Principles, American Institute of Real Estate Appraisers.
Residential Valuation, American Institute of Real Estate Appraisers.
Appraisal Procedures, Appraisal Institute.
Principles of Income Property Appraising, Appraisal Institute.
Case Studies in Real Estate Valuation, Appraisal Institute.
Report Writing and Valuation Analysis, Appraisal Institute.
PROFESSIONAL LICENSES:
General Appraiser #GA-000014-L, Commonwealth of Pennsylvania.
Real Estate Broker #RB-029729-A, Commonwealth of Pennsylvania.
PROFESSIONAL DESIGNATIONS:
GRI: Graduate of the Pennsylvania Realtors Institute, awarded by the Pcnnsyl-
vania Association of Realtors.
CPS: Certified Residential Specialist, awarded by the Realtors National Market-
ing Institute of the National Association of Realtors.
CCIM: Certified Commercial Investment Member, awarded by the Realtors
National Marketing Institute of thc National Association of Realtors.
PROFESSIONAL ORGANIZATION AFFILIATIONS:
National Association of Realtors Appraisal Section.
Carlisle Association of Realtors.
Pennsylvania Association of Realtors.
National Association of Realtors.
Realtors National Marketing Institute.
35
PAST CLIENTS:
Borough of Carhsle
Keystone Financial Mortgage
Cornerstone Federal Credit Union
Pennsylvania State Bank
Commerce Bank
Cumberland-Perry Association for Retarded Citizens
Carlisle Suburban Authority
Members 1~ Federal Credit Union
Pennsylvania National Bank
Evans Financial Corporation
-- 43reenawalt & Company, CPA
Smith's Transfer Corporation
Carlisle Department of Parks and Recreation
Executive Relocation Services
Carlisle Area School District
Messiah Homes, Incorporated
ERA Eastern Regional Services
Pennsylvania Turnpike Commission
Chase Home Mortgage Corporation
Defense Activities Federal Credit Union
Pennsylvania State Employees Credit Union
PNC Mortgage Corporation
F&M Trust Company .~
National City Mortgage Corporation
Washington Mutual Home Loans, Inc.
Prudential Relocation Services
Lender's Choice
Market Intelligence, Incorporated
United Telephone Employees Federal Credit Union
Cumberland County Commissioners
Allstate Enterprises Mortgage Corporation
Dickin~qon College
PPG Industries, Incorporated
Gettysburg College
Redevelopment Authority of Cumberland County
Record Data Appraisal Services, Incorporated
First United Federal Savings Association
Fulton Bank
United States Marshall Service
GMAC Mortgage Corporation
orrstown Bank
Letterkenny Federal Credit Union
BancPlus Mortgage Corporation
Coldwell Banker Relocation Services, Incorporated
Central Pennsylvania Savings Bank
Mellon Bank
Provident Home Mortgage Corporation
Various law firms and individuals
36
:
.-" ..-D'PPE R
· .o.PRI NK FO
W~$T HILL
21003
CLEVERSBURG
WALNUT
~OOtHAYS 6ROYE
6REYTHORNE
PENN
CUMliItNGSTOWN
OKE
DI
LAUREL
SUBSECT PROPP_.~TY
I~OCAT~O~ MAP
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
: SS.
:
AFFIDAVIT
AND NOW COMES, STEVEN W. BARRET , who
duly sworn acccrdin~ to ~ ....
~w, deposes --=
~ says that:
being
1. He is a sui juris adult individual who resides at
/g~ ~/e ~/~/~ ~. C/~/t~ /~ ~ and whose office
address is 124 -126 NORTH HANOVER STREET, CARLISLE, PA
17013
2. He is familiar with the property of the Newville Medical
Foundation, Inc., located at
Newville, Pennsylvania 17241,
100 South High Street,
(herein "The Property")
and has personally inspected the same.
3. He is acquainted with the value of Real Estate in the
locality of The Property by virtue of ~ years
experience in the Real Estate Brokerage business in
Cumberland County, Pennsylvania, and by virtue of
personal knowledge.
4. He has performed the appraisal of The Property dated as
of October 9, 1998, and is of the opinion that the
present fair market value of The Property remains at $
575,00.000 as determined by that appraisal.
5. He has examined the Sale Contract dated Qctober 8, 1999,
for the proposed private sale of The Property.
6. He is not in any manner personally interested in the
proposed sale of The Property.
7. He is of the opinion that the proposed consideration (and
terms of the proposed sale) is more than can be obtained
at public sale.
STEVENW. BARRETT
SWORN TO AND SUBSCRIBED
before me, the undersigned ~
Notary Public, on this ~
day of ~C~-~b~ , 1999.
Nota~ublic
NOTAMAL .f~AL
TI~a M. BKXS~k~S, NMa/y ~br, c
~pp~,,~siwrg Box'u, C. urnl)M,kznd. C~., PA
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
: SS.
:
AFFIDAVIT
AND NOW COMES, William A. Bassett ,
being duly sworn according to law, deposes and says that:
who
1. He is a sui juris adult individual who resides at 913 Arm-
strohK Road, Carlisle~ Pennsylvania and whose office
address is 33 South Pitt Street~ Carlisle~ PA 17013
2. He is familiar with the property of the Newville Medical
Foundation, Inc., located at 100 South High Street,
Newville, Pennsylvania 17241, (herein "The Property")
and has personally inspected the same.
3. He is acquainted with the value of Real Estate in the
locality of The Property by virtue of 14 years
experience in the Real Estate Brokerage business in
Cumberland County, Pennsylvania, and by virtue of
personal knowledge.
4. He is familiar with the appraisal of The Property
prepared by Steven Barrett dated as of October 9, 1998,
and is of the opinion that the present fair market value
of The Property remains at $ 575,00.000 as determined by
that appraisal.
5. He has examined the Sale Contract dated October 8, 19~
for the proposed private sale of The Property.
6. He is not in any manner personally interested in the
proposed sale of The Property.
7. He is of the opinion that the proposed consideration (and
terms of the proposed sale) is more than can be obtained
at public sale.
DATED: November 15. 1999
SWORN TO AND SUBSCRIBED
before me, the undersigned
Notary Public, on this 15th
day of November , 1999.
William A. Bassett
PA General Certified Appraiser
PA Associate Broker
~o-t a-ry fubiic
Christine E. Shughart, Notary Public
Carlisle Boro, C_umbertandCounty
_My Commission Expires Oct. 9, 2000
Memt~r. Pennsylvania As$oci.~tio. of NOUIfl~II
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IN RE: ESTATE OF
JOIIN GI~J~IIAM, DECh:ASF. I)
: IN TIlE COURT OF COMMON PLEAS OF
: C[IMRERT,AND COI~IT¥, PENNSYLVANIA
: ORI?IIANS ' (lOl)l~'? DYVT.qTON
: I,".'J;10[, (:~o.(,. Wi].'l. Hook 29, p.310)
;A & MCCREA
' "' ' "" '1'0
I.I,I'[IION . APPF,Y CY l~,Rl,:.q DOC'['htTNI.:
TO Tt~. HONORABLE JUDGES OF THE SAID COURT:
1. Your petitioner is the President and member of the
Board of Directors of the John Graham Library, hereinafter called
~he "Board" as appointed or elected under the terms of the Last
Will and Testament of John Graham of Newville, Cumberland County,
Pennsylvania.
2. By Will dated January 13, 1916, John Graham, herein-
after called "Settlor", transferred to the Carlisle Trust Company
of Carlisle, now existing as its successor bank The Dauphin
Deposit and Trust Company, hereinafter called "Trustee", that
part of his tot~ estate excepting certain specific legacies there:
mentioned and less all debts and' funeral expenses, in trust to pa]
the income therefrom, for life to Katherine Cartmel Graham, his
wife, and upon her death to provide certain funds to be admini-
stered by the therein appointed John Graham Library Board of
Directors for the purpose of "purchasing a site, erecting a
building and equi~ng the same to be called THE NEWVILLE HOSPITAL
JOHN GRAHAM FOUNDATION for the purpose of providing treatment,
nursing and care of the sick and ~fflicted of Ne~ille and
vicinity". The following amounts were provided:
(a) The sum of Six Thousand ($6,000.00) Dollars,
or so much thereof as may be necessary to purchase
a site or lot.
(b) The sum of Thirty ThousaDd ($30,000.00) Dollars,
or so much thereof as may be necessary to erect the
necessary buildings for said tlospital and equip the
same.
& H{~rtl{~A
(c) The sum of Five Thousand ($5,000.00} Dollars
or so much thereof as may be necessary for
purpose of maintaining and operating said. Hospital,
which funds were to be paid annually from the
income of the Trust Estate. A copy of the Will is
set forth as Exhibit A of this Petition.
3. The Trustee accepted the trust and has administered
it according to its terms.
4. On September 26, 1962, Katherine Cartmel Graham died
and the TrustFund is now to be expended for the construction of
a hospital as specified in the Will creating the Trust.
5. The Board has made a thorough examination and has
concluded that the fund held by the- Trustee is inadequate to
construct and maintain a hospital as directed.
6. The. principal held in trust is $30,930.93, and the
balance of income accrued since tko date of death of Katherine
Cartmul Graham is $12,810.56.
7. The Board has examined the construction and maintenan~
costs of several small hospitals in the state and finds that the
smallest hospital would cost more to construct and maintain than
the trust now holds or which it could expect to receive as income
8. The direction by the Settlor that a hospital be
created to provide medical care and service for the people of
Ne~ville and vicinity shows an intent to make a charitable gift.
9. The Newville Medical Foundation, hereinafter called
the "Foundation", is a corporation founded under the provision'of
the Non-Profit Corporation Law of May 5, .1933 P.C. 289 as amended
with a registered address at P.O. Box 100, Newville, Cumberland
County, Pennsylvania.
10. Tile purpose of said Foundation is ko establish and
maintain adequate medical facilities for the Borough of Newville
and surrounding townships.
--2--
11. The Foundation intends to construct a modern medical
facility in the Borough of Newville which will provide medical
services adequate for the needs of Newville and vicinity.
12. The 'Fund held by the Trustee and by the Board
accumulated under Section K of the Will is sufficient to construct
such'a facility which would consist of one floor with a total
floor space 'of 3500 feet and including six examination rooms, .and
emergency room, an x-ray room, physical therapy room, two
consultation rooms as well as a waiting room and business office.
13~ The facility- could be constructed at a cost of
approximately Eighty-three Thousand ($83,000.00) Dollars, includil
lan~ acquisition-
14. The Foundation is willing to name the 'facility The
Newvil~e Medical Center,' John Graham Foundation as requested
paragraph F of the Will of John Graham as set forth in Exhibit A
an~ to insert appropriate notice to this effect and, .in addition,
to designate 'two rooms'in the clinic to be called The Isabella
Sterrett Graham and Jennie M. Sterrett room~ in accordance with
sub-paragraph (c) of Paragraph F of thc John Graham Will.
15. The Foundation agrees to maintain and operate the
facility from the balance of the fund as far as such balance
sufficient.
16. If the balance of the fund is insufficient for %he
maintenance of the facility, the Foundation agrees to maintain th~
facility out of its general funds.
17. The petitioner requests that the Court apply the Cy
Pres Doctrine and direct the Trustees of ~ai~ fun~ ~o ~urn such
fund over to the petitioner to use as provided above.
18. The petitioner has given the Attorney General notice
of the presentation of this Petition, by notifying the Attorney
-3-
General of the Commonwealth of Pennsylvania, by letter addressed
to him at Harrisburg, Pennsylvania.
/?..** ., ........ . t1
AJlu.,~. I1. Ai.-'.'J.~.'.J.~,
Board of Directors
John Graham Library
COM~DNWEALT~ OF PENNSYLVANIA :
SS
COUNTY OF CUMBERL~ND ~.
ANNA H. ALLWEIN, being duly sworn according to law,
deposes and says that she is the President of the Board of
Directors of the John Graham Library and that 'the facts set forth
in the foregoing Petition to Apply Cy Pres Doctrine are true and
correct to the best of his knowledge, information and belief.
Anna F~. Allwein
Sworn to and subsgribed
before me this I:*~":' day
of June, 1972.
· ,...~ ,.~ ..,. I.. ...~3,.,,;..-;,? .' ',:
.¥' COMMI~SIG['4 'F-,v. pIR?S ~&G, JGI I~'~
IN TIIE COURT OF COMMON PL~.AS OF
CUMBERLAND COUNTY, PENNSYLV;%NIA
ORPHANS' COURT DIVISION
WILL (See Will Book 29,
IN R~: ESTATE OF
JOHN ~RAHAM, DECEASED
· ORDER OF COURT
AND NOW, this /~ day of ~ , .1972, upon
consideration of the Pet~tio~ ~er. ein presented, the ~ay' of
~~ ~, ~ ~_~t.''~ '~' :~~'~z~: ,~-~;- J
IN RI:.:: ES'.['ATE OF
,'J'OlhXl GRAHAM, DF-CEASED
: IN THE COURT OF COMMON PLEAS OF
:..CUMBEI~LAND COUNTY, PENNSYLVANIA
: · ORPIIANS' COURT DIVISION
: WILL (Will Book 29, [~agQ
ORDER OF COURT
FINAL DECREE
~D NOW, this ~ /~ay of July, 1972, it appearing that a
hearing was held July 7, 1972 at 10:00 a.m. on the petition of th
Directors of the John Graham Library for an Order directing that
unexpended funds amounting to $44,512.05 held by the Dauphin
DoDonlt Trun~ Com]?any, qb'un[:o(~, undcu7 tll(~ Will o£ John Graham,
Dec~ased, lan t:rans~nrrnd ko I:hom for Dllrpns~m of s~l'n nCqll~.nit:i~u
construction and equippage of a medical clinic facility in the
Borough of Newville, and it appearing that after due deliberation
said petition was granted in all respects subject to final confir-
mation of said Order and Decree, and it appearing that a confirma-
tion hearing was set for Friday, the 21st day of July, 1972 at
10:00 a.m. in Courtroom 1 of the Cumberland County Court IIouse,
Carlisle, and it appearing to the satisfaction of the Court that
notice of said hearing was duly published in the Valley Times-Sta
on July 12, 1972 and in the Cumberland Law Journal on July 14,
1972, and it appearing to the satisfaction of the Court that
notice was given by ordinary mail of the said hearing to the hei~
at-law of John Graham, deceased, whose whereabouts and relation-
ships to the late John Graham were known to petitioner, now upon
motion of W. H. McCrea, Jr., attorney for petitioner IT IS HEREBY
ORDERED:
1. The Order of Court made July 7, 1972 is hereby confirmed
and the Petition of the Directors of the John Graham Library is
granted in all respects.
2. Dauphin Deposit Trust Company, Trustee, is directed to
transfer to petitioner the unexpended funds amounting to $44,512.
it now holds as Trustee of the Estate of John Graham. Upon
transferring said funds, said Trustee shall be fully discharged
and exonerated from all liability to acceun% for said funds.
BY THE COURT:
~CC~EA
Ar L~w
A~IENDF. II ARTICLES OF AGREE~IENT
TiIIS AGRF. E[.IENT, made the 29thday of November, 1973, by and
between the Board of Directors of the John Graham Library of
Newville, Cumberland County, Pennsylvania (hereinafter called
"Board") and the Newville btedical Foundation, Inc., a non-profit
corporation of Newville, Cumberland County, Pennsylvania
(hereinafter called "Foundation"):
I~IIEREAS, Board and Foundation previously entered into an
agreement g, hereby Foundation was to purchase a site, construct
and maintain and administer a medical clinic in the Borough of
Newville and Board was to provide funds for these purposes from
certain principal and income amounts generated by the Estate of
the late John Graham of Newville, Cumberland County, Pennsylvania.:
AND ~/IiEREAS, the said funds have been paid by the Board to
t.h_e._.F_oundatio'n and the.said medical, clini~as._b~n ~:o~Ls.truct. ed
and is currently in operation;
AND tqIIEREAS, the Board has since the date of the original
agreement provided to the Foundation additional funds belonging
to the Estate or arising out of the Estate of the said John
Graham;
AND WIIEREAS, the parties desire to specifically provide that
all additional funds received to the date of this amended agree-
ment and all similar funds which may be received hereafter will
be used and administered pursuant to the terms and conditions of
the agreement made June 21, 1972.
NOW THEREFORE, the parties have covenanted and agreed as
follows:
''FIRST: ^il ur. tile plovisiuus of the agreement made June Zl,
1972, between the parties are hereby reinacted and incorporated
into this amended agreement by ieference heret(z)~~~-~o~'~'°°~'~'°°~°'~*
[A ~ HCCREA
SECOrlD: Foundation covenants and agrees to use such
additional funds as ]lave been provided and such funds as may in
the future be provided by the Board exclusively for the maintenan~
and administration of the John Graham-Newville Medical Clinic.
TIIIRD: The Foundation does further specifically agree and
covenant that said clinic will at all times be administered
hereafter for the sole purpose of providing a quality health care
for the people of Newville and vicinity and does specifically
further covenant and agree that if at an), time in the future the
Foundation fails to serve this purpose £aithfully, full right,
title and ownership of the clinic and any contracts, leases or
other agreements relating to its operation, maintenance and
administration will be assigned, covenanted and set over to the
Board; such determination to be made by the Courts of the
Commonwealth. of Pennsylvania.
IN WITNF. SS TVIIEREOF, the said parties to this agreement'-have
hereto set their hands and seals the day and y~ar first above
writ
Witness
BOard of Directors
John Graham Library
By Robert E. Graham, President
>fete of Pennsylvania
Oounty of Cumberland } SS
.aecor'i~d ;n fL,, oZf;-_,~ ~or fhe recording of Dee~,
Witness my hd,~d a,,~ )~el ef office, at
By Stanley L. S Jr.
President ' '
STATE OF PL'HNSYLVAHIA ::
: : SS
COUHTy OF CU[IBERLAND ::
On this 29tl, (lay of November, 1973, before me, a Notary
Public in and for said State and County, personally appeared
Robert E. Graham who acknowledged himself to be President of the
Board of Directors of the ,?ohn Graham Library, and that he as
such President, being authorized to do so, executed the fore¢
instrument for tile purposes therein contained by signing the
name of the John Grabs, Library by himself as President.
In Witness whereof, I hereunto set my hand and official sea
Notary Public
Shippensburg, Cumberland County, Pa.
My Comm. expires: July 8, 1974
STATE OF PENNSYLVANIA :..
;; SS
COUNTY OF CUMBERLAND ....
On this 29th day of November, 1973, before me, a Notary
Public in and for said State and County, personally appeared
Stanley L. Spencer, Jr. who acknowledged himself to be President
of the Newville Medical Foundation, Inc., and that he as such
President, being authorized to do so, executed the foregoing
~nstrument for the purposes therein contained by signing the name
of the Newville Medical Foundation by himself as President.
IN WITNESS whereof, ! hereunto set my hand and ~ffi~fm .
seal. % ~ . .
-- //J~,J, (..~jl'~
' Notary Pub~ .
Shippensburg, C~er1~4'~t~,.pa.
My Co~. expires
NEWVILLE MEDICAL
FOUNDATION, A
PENNSYLVANIA NONPROFIT
CORPORATION
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
· O~ DIVISION
NO,
: AND CHARITABLE USE OF NONPROFIT
: CORPORATION ASSETS
PRELIMINARY DECREE
ANDNOW, this /gr~dayof ~j ,2002, upon consideration
of the annexed Petition, a Citation is awarded directed to (1) THE PENNSYLVANIA
OFFICE OF ATTORNEY GENERAL, CHARITABLE TRUSTS DIVISION to show
cause, if any there may be, why the Petition of Newville Medical Foundation for
Approval of the Private Sale of substantially all of the property of the Newville Medical
Foundation pursuant to a Definitive Agreement and Plan in accordance with 20 Pa. C.S.
§711 (21) and Chapter 59 of the Pennsylvania Nonprofit Corporation, should not be
granted.
Citation returnable the 24TH day of April, 2002 at 11 o'clock a.m. in Courtroom
Number 3 at which time this Court will accept testimony in support of the
aforementioned Petition, Agreement and Plan and the transfers and uses contemplated
BY THE COURT,
thereby.
President Judge
IN RE: NEWVILLE MEDICAL FOUNDATION, A
PENNSYLVANIA NONPROFIT CORPORATION
IN THE COURT OF COMMON PLEAS
ORPHANS' COURT DIVISION
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 21-2002-0347
CITATION
WE COMMAND, you that laying aside all business and excuses whatsoever, you be and appear in your
proper person before the Honorable Judges of the Court of Common Pleas, Orphans' Court Division at a
session of the said Court there to be held, for the County of Cumberland to show cause why , if any there
may be, why the Petition of Newville Medical Foundation for Approval of the Private Sale of substantially
all of the propert~ of the Newville Medical Foundation pursuant to a Definitive Agreement and Plan i,
accordance with 20 Pa. C.S. 711 (21) and Chapter 59 of the Pennsylvania Nonprofit Corporation, shouh I
not be granted.
Citation returnable the 24th day of April, 2002 at 11:00 o'clock A.M.in Courtroom Number 3 at which tim~:
this Court will accept testimony in support of the aforementioned Petition, Agreement and Plan and th,,
transfers and uses contemplated thereby.
Witness my hand an official seal of office at Carlisle, P s~nia,r}~OfApril, 2002.
Clerk, t~r~har~' o~9_~.Divisio~ ' ' '~/i ~'-~
C.u~ounty, Carlisle, PA c/~ l/h~ ~ ~,
My Commission Expires on the 1 ~t Monday ]x~f_J [ ~
January, ..2006
NEWVILLE MEDICAL
FOUNDATION, A
PENNSYLVANIA NONPROFIT
CORPORATION
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
: ORPHANS COURT DIVISION
· NO. oZi- O3--3q-'7
: PETITION TO APPROVE SALE, TRANSFER
: AND CHARITABLE USE OF NONPROFIT
: CORPORATION ASSETS
DECREE
AND NOW, this ZL'[-~day of /Off'~l~ I L , 2002, upon consideration of
the within Petition of Newville Medical Foundation to Approval Sale, Transfer and
Charitable Use of Nonprofit Corporation Assets Pursuant to a Definitive Agreement and
Plan in accordance with 20 Pa. C.S. Section 711 (21) and Chapter 59 of the Pennsylvania
Nonprofit Corporation Law, and after hearing held on April 24,2002, the Court makes the
following findings of fact and conclusions of law, and it is further ORDERED,
ADJUDGED AND DECREED that:
1. This Court has jurisdiction over the within Petition and the parties to the sale
pursuant to Sections 5547(a) and (b) and 5930 of the Pennsylvania Nonprofit Law of
1988, as amended, (the "Nonprofit Law"), 15 Pa. C.S.A. Sections 5547(a) and (b) and
5930, and under Sections 6102, 6110 and 711(21) of the Pennsylvania Probate, Estates
and Fiduciary Code, (the "PEF Code") 20 Pa. C.S.A. Sections 6102, 6110 and 711(21);
and under Rule 2156 of the Pennsylvania Rules of Judicial Administration.
2. Pursuant to Section 726 of the PEF Code, 20 Pa. C.S.A. Section 726, venue of
the within Petition is proper in Cumberland County, Pennsylvania where Petitioner's
registered office and facilities are located.
trust purpose for which any such property or assets may have been given, granted,
devised or dedicated.
7. This Court further concludes that the Plan of Sale as described in the Petition
and in the Definitive Agreement attached to the Petition, as amended, and subsequent use
of charitable assets by Petitioner, is hereby approved.
NOW, THEREFORE, it is ordered and decreed that the Agreement, and the
associated documents and agreements, and the Plan of Sale and the ultimate use of
charitable assets, which contemplates, among other things, the sale of assets pursuant to
the Agreement of Sale hereto attached, is hereby approved. This Court retains continuing
jurisdiction over the parties, who shall file reports and accounts with this Court at such
time and in such form as this Court may direct. It is further ordered that the Petitioner
shall provide copies of all reports filed by Petitioner with the Attorney General,
Charitable Trusts and Organizations as required by said Office.
BY THE COURT,
Honorable George E. Hoffer, President Judge
3. Pursuant to the Pennsylvania Office of Attorney General's Review Protocol for
Fundamental Change Transactions Affecting Healthcare Non-Profits, dated December
23, 1997, notice of the parties' intention to consummate the sale, substantial additional
information about the parties and the terms of the proposed arrangement, and notice of
presentation of the Petition and the proceedings thereunder, were given to the Attomey
General, as parents patriae for the Commonwealth of Pennsylvania. Proper notice of
hearing was given to all parties in interest as directed by this Court, and proofs of any
necessary publication were filed of record in this proceeding.
4. Capitalized terms not defined in this Decree have the meanings assigned to
them in the accompanying Petition.
5. Upon consideration of the within Petition, and the record presented at the
hearing before this Court, this Court determines that the sale of assets as described in the
Petition and the Definitive Agreement, (the "Sale" or "Plan of Sale") is in the long-term
best interest of Petitioner, its charitable purposes and the community that it serves, given
the substantial~ fair and reasonable price which will be paid and the benefits accruing to
the Newville community by the continued commitment of the Foundation to continue to
support health care services, including indigent care services, in the community.
6. This Court further concludes that because all of Petitioner's post-Sale activities
are authorized under Petitioner's existing articles of incorporation, the Plan of Sale, and
subsequent use of charitable assets by Petitioner as described in the Petition, will not
result in a diversion of charitable assets from, or the violation of, any charitable objects or