This document provides an overview of appraisal services and qualifications from Kent-Macpherson, an appraisal firm based in Kelowna, BC. It introduces the principals of the firm and their experience and qualifications. It then discusses what an appraisal is, the standards that govern them, and considerations like terms of reference and assumptions. Finally, it outlines the types of appraisals and services Kent-Macpherson provides including for First Nations land, projects, claims, and developments.

1. October 13, 2016
APPRAISAL & FIRST NATIONS
LAND/PROJECT VALUATION

2. 2
• About Kent-Macpherson
– Rod Cook & Cliff Smirl
• Our First Nations Clients
• What is an Appraisal?
– Purposes of Appraisals
– Key Definitions
– Market Value of Reserve Land Interests
– Terms of Reference
– Assumptions
– Highest and Best Use
– Types of Appraisals
Kent‐Macpherson

3. • Based in Kelowna and serving B.C.
• Established in 1973 – 43 yrs in Business
• Reputation for Professionalism and
High Standards
• Recognized as one of Western Canada’s leading authorities in Real
Estate Valuation and Consulting
• 20 Awesome People; including 10 Appraisers, plus Associates and
Support Staff
• Serving all of B.C. & special project assignments throughout Canada
3Kent‐Macpherson

4. • 39 years Commercial Appraisal
and Consulting experience
• Qualified as an expert witness before
– Supreme Court of B.C.
– Federal Court of Canada.
– Specific Claims Tribunal.
• First Nations Expertise
– Provides real estate appraisal and consulting services to 69 First Nations across
BC and Canada.
• Designations:
– AACI, (Accredited Appraiser) Appraisal Institute of Canada;
– RI, Professional Designation, Real Estate Institute of British Columbia.
– C. Arb., Chartered Arbitrator, Arbitration and Mediation Institute of Canada Inc.
– P. App., Professional Appraiser, Appraisal Institute of Canada.
4Kent‐Macpherson

5. • 10 years Commercial Appraisal
and Consulting experience
• Qualified as an expert witness before
– Supreme Court of B.C.
– Specific Claims Tribunal.
• First Nations Expertise
– Provides real estate appraisal and consulting
services to 32 First Nations across BC.
– Completing PhD in Aboriginal Housing Experiences.
• Designations:
– AACI, (Accredited Appraiser) Appraisal Institute of Canada;
– P. App., Professional Appraiser, Appraisal Institute of Canada;
– MAI, Appraisal Institute (Chicago, USA).
5

6. 6Kent‐Macpherson
First Nations Lands Valuation
Treaty Negotiations
First Nations Specific Claims
Special Use and Institutional Properties
Commercial Real Estate Valuation
Development, Impact and Feasibility Studies
Expropriation Valuation
Land Use Evaluation
Assessment Review, Negotiation and Appeal
Cost Benefit Analysis
Commercial Real Estate Lease
Evaluation
Right‐of‐Way Valuation and
Negotiation
Insurance Appraisals
Arbitration and Mediation Services
Expert Evidence and Litigation
Support
Ground Rent Reviews
Valuation for Mortgage Lending
Depreciation Reports/Reserve Fund
Studies

7. Adams Lake • Beecher Bay • Bonaparte • Boothroyd • Canim Lake
• Cayoose Creek • Cheam • Coldwater • Fort Nelson • Haisla Nation
• Iskatewizaagegan • Halfway River • Katzie • Kitselas
Ktunaxa • Lake Babine • Little Shuswap • Long Plain • Lower Nicola
• Lower Similkameen • Lyackson • Lytton • Metlakatla • Moberly
• Musqueam • Nadleh Whut’en • Namgis • Neskonlith • Nlaka’pamux
Okanagan • Osoyoos • Pauquachin • Penticton • Popkum • Sakimay • Seaspunkut
• Semiahmoo • Shoal Lake • Shuswap Tribal Council • Siksika • Simpcw • Siska
• Skway • Skeetchestn • Skuppah
Sliammon • Splatsin • Spuzzum • Squamish • Squiala • STÓ:LŌ
• Sucker Creek • Takla Lake • Teslin Tlingit • Tk'emlúps • Tsawwassen
• Tobacco Plains • Toosey • Tsleil-Waututh • Tsawout • Tzeachten
• Union Bar • Upper Nicola • Upper Similkameen • Westbank
• White Bear • Whispering Pines • Williams Lake • Xaxli’p
Appraisal, Development Consulting and Negotiations on First Nations Lands
69 Bands in BC and across Canada
7Kent‐Macpherson

8. Kent-Macpherson 8
1. What is an appraisal?
2. Who is qualified to prepare an appraisal?
Accredited appraisers with a national designation AACI
(Accredited Appraiser Canadian Institute) are the only
ones accepted by INAC and PWGSC, financial
institutions and government agencies
P. App. – Professional Appraiser
3. Appraisal standards; CUSPAP (Canadian Uniform Standards
of Professional Appraisal Practice)

9. 9
• The Appraisal Institute of Canada requires compliance
with Canadian Uniform Standards of Professional
Appraisal Practice (CUSPAP).
• While conformance with the Standards is important,
members are constantly encouraged to engage in “best
practices.”
• The rules are “principle based” (they allow members some
latitude in how they approach certain appraisal problems).
• However, some members are overly sensitive to client
requests or demands to complete work that may not suit
the end use due to fee constraints, time constraints, or
simplified Terms of Reference.

10. There are various purposes for appraisals, i.e.
Current Market Value
Kent-Macpherson 10

11. Historic Value
Specific Claims
Loss of Use
Kent-Macpherson 11

12. Prospective or Future Value Appraisal / Feasibility
Studies
Kent-Macpherson 12

13. 13
Appraisals for Litigation
Tsleil‐Waututh – Dollarton Highway
‐ 1931
‐ Value of R/W
‐ Damages!

14. 1. Market Value
2. Market Rent
3. Highest and Best Use
4. Lease
5. Leasehold Interest
6. Fee Simple Interest
7. Lessee’s Interest
8. Lessor’s Interest
Kent-Macpherson 14

15. • The Terms of Reference are critical in
every appraisal.
• They lay the foundation or basis for
the premise of value.
15

16. • What Interest in the land is to be valued?
• Is it the Leased Fee interest?
• Is it the Leasehold interest?
• Is it to be considered on an “as if fee
simple” basis?
• What Assumptions are to be made?
–Are they reasonable?
–Does it matter?
16

17. • Example of the importance of clear Terms of Reference
• Is this land to be valued as remote oceanfront acreage
with no services? or…. Potential deep sea port? If as a
Port, are all approvals to be considered in the valuation?
Kent-Macpherson 17

18. • Example of the importance of clear Terms of
Reference
174.56 acres
$ 3,280,000 per annum
(Market Rent as a special use property)
18Kent‐Macpherson

19. 19
• Is the interest in the land marketable?
– Leasehold Interests:
• Prepaid Head Lease (typically long-term in nature)
• A lease with predetermined step-ups or participation clauses
• The more traditional lease with periodic rent reviews
$100K
$120K
$140K
$100K
?
?

20. • The market value of a prepaid leasehold
interest is primarily a function of the
permitted use and term.
• Generally attracts the most substantial
developments.
• Can be readily subleased (if done
correctly☺).
20

21. • Market value of land as freehold typically
establishes the upper limit of value for long-term
prepaid leases as…
– The lessee doesn’t enjoy full bundle of rights.
– The leasehold interest is more difficult to finance.
– The term is finite.
– Permitted uses are often limited and defined.
– Political climate on the Reserve can impact value.
• The value of a long-term prepaid lease relates
more to "market value” than "rental value.”
21

22. • Market Analysis – Supply/Demand
• Servicing Issues (water, sewer, gas)
• Topography (flat, steep)
• Soils (gravel, swamp, clay)
• Environmental
• Sara Legislation (Set backs, leave strips)
• Archaeological Concerns
22Kent‐Macpherson

23. SHELTER BAY
MARINA
Can be very complex…
23Kent‐Macpherson
IR # 10 Westbank

24. Shelter Bay/Concord Pacific
24Kent‐Macpherson
$1 Billion
Buildout
(Until 2008
financial
meltdown)

25. • Can be complex
25Kent‐Macpherson
Before…
…After

26. • Separate the politics from the
development and approval process.
• Set out a complete, clear, straight-
forward approval & leasing process
with timelines, costs, etc.
26

27. 27
Lease Structure & Land Use:
• Determine type of lease you would accept
(Prepaid or periodic rent review).
• Term of lease (25, 49, 99 year lease and beyond).
• Identify land uses you and the Band would
support.
• Be patient.

28. • Identify potential land uses with broad
land use planning;
• Identify Multi-family, Commercial & Industrial
sites in urban settings.
• Forestry, Tourism/Recreational, Agriculture in
rural or remote locations.
• Set aside areas for Band housing, Cultural &
Administrative facilities.
28

29. Residential & Recreational Waterfront Lots
29Kent-Macpherson

30. Tk'emlúps First Nation ‐ Mt. Paul Industrial Park
30Kent-Macpherson
• 5 year rent reviews
• Great long term cash flow

31. Market Value Appraisal / Advice
Proposed Retail/Commercial Development
Westbank First Nation
31Kent‐Macpherson

32. Hotel / Hospital Feasibility Analysis
Westbank First Nation
32Kent‐Macpherson

33. Area 27
Osoyoos Indian Band
33Kent‐Macpherson

34. • The Highest and Best use of the land must
be assessed.
• The lease indenture must be secured for
sublease.
• Sound advice from qualified, experienced
appraisers, lawyers, and financial advisors
is essential.
• The market will always be the driving force
for development on Reserve lands.
34

35. • Specific Claims need to be addressed in a
fair and reasonable manner.
• Incredible development opportunities exist
and will materialize over the next decade
as Reserve lands occupy some of the best
real estate available for development.
35

36. INAC
DOJ
R/W
Highest & Best Use
Financing
CWS
SARA
QUESTIONS?
36Kent‐Macpherson

37. Cliff Smirl, AACI, P.App, MAI
304-1708 Dolphin Ave, Kelowna
British Columbia, V1Y 9S4
Phone: 250-763-2236
Fax: 250-763-3365
csmirl@kent-macpherson.com