Vol 7 - NEL-1 to NEL-10

Vol 7 - NEL-1 to NEL-10
BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA
Application of Nevada Power Company d/b/a NV Energy
Seeking Acceptance of the First Amendment to its 20132032 integrated resource plan and its Energy Supply Plan
Update for 2015, which include an emissions reduction and
capacity replacement plan filed pursuant to NRS § 704.7311
et seq.
Docket No. 14-05___
VOLUME 7 OF 15
EMISSIONS REDUCTION AND CAPACITY REPLACEMENT PLAN
TECHNICAL APPENDIX
NELLIS PART 1 OF 3
ITEM
DESCRIPTION
PAGE NUMBER
NELLIS
NEL-1
NEL-2
NEL-3
NEL-4
NEL-5
NEL-6
NEL-7
NEL-8
NEL-9
NEL-10
Lease
Operating Agreement
Easement Agreement
Memo of Lease
Engineering, Procurement and Construction Agreement
REDACTED
Engineering, Procurement and Construction Agreement
Exhibits REDACTED
O&M PeGu Term Sheet REDACTED
Value of Land
Usage Analysis REDACTED
No Further Action Decision Document
2
138
150
178
190
192
194
196
346
348
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DEPARTMENTOFTHEAIRFORCE
SITEDEVELOPMENTLEASE
USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117
ONNELLISAIRFORCEBASE,
LASVEGAS,CLARKCOUNTY,NEVEDA
DatedApril15,2014
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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TABLEOFCONTENTS
CONDITION1TERMANDDELIVERYOFPOSSESSION.....................................................................3
CONDITION2REPRESENTATIONSANDWARRANTIES....................................................................4
CONDITION3EASEMENTSANDRIGHTSOFWAY...........................................................................5
CONDITION4CONDITIONOFLEASEDLAND..................................................................................6
CONDITION5CONSIDERATION...................................................................................................... 8
CONDITION6DEVELOPMENTOFPROJECT....................................................................................9
CONDITION7USEOFLEASEDLAND............................................................................................... 9
CONDITION8DEFAULT,REMEDIES,ANDTERMINATION............................................................10
CONDITION9TAXES...................................................................................................................... 13
CONDITION10RESTORATIONANDSURRENDER.........................................................................14
CONDITION11ENVIRONMENTALPROTECTION..........................................................................16
CONDITION12MAINTENANCEOFLEASEDLAND........................................................................23
CONDITION13COMPLIANCEWITHAPPLICABLELAWS...............................................................24
CONDITION14ACCESSANDINSPECTION....................................................................................24
CONDITION15GENERALINDEMNIFICATIONBYLESSEE.............................................................25
CONDITION16INSURANCE.......................................................................................................... 26
CONDITION17CONSTRUCTIONOFIMPROVEMENTS.................................................................30
CONDITION18UTILITIESANDSERVICES...................................................................................... 34
CONDITION19OPERATIONANDMANAGEMENTOFTHEPROJECT............................................35
CONDITION20NOTICES
................................................................................................................ 35
CONDITION21ASSIGNMENT,SUBLEASES,ANDLICENSES..........................................................37
CONDITION22LIENSANDMORTGAGES...................................................................................... 38
CONDITION23DISPUTES.............................................................................................................. 41
CONDITION24ENERGYFROMPROJECT…………………………………………………………………………………..42
CONDITION25REPORTINGPROVISIONS...................................................................................... 43
CONDITION26RIGHTSNOTIMPAIRED........................................................................................ 44
CONDITION27RENEWALOFTHELEASE...................................................................................... 46
CONDITION28GOVERNMENTREPRESENTATIVESANDTHEIRSUCCESSORS..............................46
CONDITION29AMENDMENTS..................................................................................................... 46
CONDITION30NOTUSED............................................................................................................. 47
CONDITION31GENERALPROVISIONS......................................................................................... 47
CONDITION32SPECIALPROVISIONS............................................................................................ 52
CONDITION33DEFINEDTERMS................................................................................................... 53
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
‹
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LISTOFEXHIBITS
ExhibitA
ExhibitB
ExhibitC
ExhibitD
ExhibitE
ExhibitF
ExhibitG
ExhibitH
DescriptionandMapoftheLeasedLand
ThirdPartyPropertyInterests
ListofEnvironmentalDocuments
ElectricInterconnectEquipment
ConstructionRequirements
FormofOperatingAgreement
FormofMemorandumofLease
FormofProjectEasement(s)
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
‹‹
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DEPARTMENTOFTHEAIRFORCE
LEASEFORNELLISAIRFORCEBASE,LASVEGAS,NEVADA
THISLEASE(“Lease”)ismadetobeeffectiveasofApril15,2014,(the“EffectiveDate”),
byandbetweenTHEUNITEDSTATESOFAMERICA,actingbyandthroughTHESECRETARYOF
THEAIRFORCE(the“Secretary”orthe“Government”)andNEVADAPOWERCOMPANY,d/b/a
NV ENERGY, a corporation created under the laws of the State of Nevada, with its principal
offices located at 6226 West Sahara Avenue, Las Vegas, Nevada 89146 (the “Lessee”). The
Government and the Lessee may sometimes be referred to jointly as the “Parties,” and each
separatelymaybereferredtoasa“Party.”
RECITALS
RͲ1 TheSecretary,undertheauthoritycontainedin10U.S.C.§2667(the“Enabling
Statute”),hasdetermined:
(i)
that the Leased Land (hereinafter defined) is not excess property as
definedby40U.S.C.§102(e)basedonthefollowing:
(a)
all of the Leased Land is essential to future mission flexibility,
operational changes, equipment changes, and for potential expansion of the current
operations/activitiesornew,aswellasrelocating,operationalunitbeddown;
(b)
with encroachment problems impacting Air Force facilities
nationwide, the Government’s continued ownership of the Leased Land ensures only
compatibleusesandprovidesanessentialbufferzoneagainstuncontrolledincompatibleuses
thatmayotherwisebeapprovedbylocalcommunityorprivateinterestsiftheLeasedLandwas
declaredexcessandtransferred;and
(c)
theLeasedLandislocatedwithintheboundariesoftheNellisAir
ForceBase(“NellisAFB”orthe“Installation”)perimeterfenceandprovidingpublicaccessto
thepropertyiftheLeasedLandwasdeclaredexcesswoulddisruptInstallationoperations.
(ii)
that,pursuanttothetermsoftheLease,theLesseewillprovideinͲkind
considerationinanamountthatisnotlessthanthefairmarketvalueoftheLessee’sleasehold
interestintheLeasedLandandthatnofurtherconsiderationofanykindshallbeduepursuant
tothisLease;
(iii)
thattheLeasedLandisnotforthetermofthisLeaseneededforpublic
(iv)
thataleaseoftheLeasedLandisadvantageoustotheUnitedStates;and
use;
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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(v)
thataleaseoftheLeasedLandforthetermestablishedinCondition1.1
willpromotethenationaldefenseorbeinthepublicinterest.
RͲ2 TheSecretaryhasfurtherdeterminedthattheomissionofaprovisiontopermit
theSecretarytounilaterallyrevokethisLeaseatanytimewillpromotethenationaldefenseor
beinthepublicinterest.
RͲ3 TheGOVERNMENThasadesiretoutilizerenewablesolarenergyutilityservices
andtopermittheLESSEEtogeneraterenewableenergyatNellisAFB.
RͲ4 LESSEEhastheelectricutilityfranchiseforNellisAFBandtheimmediateareain
accordancewithNevadalawanddesirestobuildarenewablesolarenergygeneratingfacility
onNellisAFB,asmorefullydescribedbelow.
RͲ5 TheGOVERNMENTisrequiredby40USC591topurchaseelectricityinamanner
thatisconsistentwithstatelawgoverningtheprovisionofelectricutilityservice,including:(1)
state utility commission rulings; and (2) electric utility franchises or service territories
establishedunderstatestatute,stateregulation,orstateͲapprovedterritorialagreements.As
of the Effective Date of this Lease, the Government purchases power from Lessee under an
existing Utility Service Contract No. F26600Ͳ80ͲD0005, dated March 1, 1980, between the
Parties(the“UtilityServiceAgreement”).
LEASEDLAND
NOW,THEREFORE,theGovernment,byvirtueoftheauthorityconferredbylaw,forthe
considerationsetoutbelow,herebyleasestotheLessee,andLesseeherebyacceptsfromthe
Government, the real property as more specifically described in Exhibit A to this Lease (the
“LeasedLand”),togetherwiththerighttogainaccesstosuchrealpropertythrougharouteor
routes designated from time to time by the Government, and to use the streets, driveways,
sidewalks,andwalkwaysonNellisAFBforthepurposesofpedestrianandvehicularingressand
egress to and from such real property in order to fulfill its contractual obligations for
completion,operation,andmaintenanceoftheProject,assuchobligationsaresetforthinthis
Lease.Anyimprovementsand/orpersonalpropertyconstructedorplacedupon,orcausedto
beconstructedorplacedupon,theLeasedLandbytheLessee,includingwithoutlimitation,the
Project and any associated infrastructure, shall be referred to herein as the “Leasehold
Improvements”.TheLesseeshallprovidethirty(30)DaysadvancednoticetotheGovernment
and obtain the Government’s written consent prior to engaging in any activities that would
disrupt or interfere with pedestrian and vehicular ingress and egress to and from the Leased
Land.Theterm“Project”shallrefercollectivelytothe15MWACballastedsolarphotovoltaic
generatingfacilityofthetypeandspecificationscontemplatedhereintobedevelopedbythe
LesseeontheLeasedLand(“PVFacility”),theNewSubstation,theFeedersandrelatedutility
infrastructure and personal property. The New Substation, the Feeders and related utility
infrastructureshallbereferredtohereinasthe“NellisAFBElectricInterconnectEquipment,”
and may be memorialized by one or more easements that shall expressly refer to this Lease
(“ProjectEasements”).TheGovernmentreservestherighttochange,modify,oreliminate,or
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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temporarilytoclose,anyportionorportionsofstreets,driveways,sidewalks,andwalkwayson
Nellis AFB; provided, however, that the Government agrees that it will not change, modify,
eliminate, or temporarily close such streets, driveways, sidewalks, and walkways in a manner
thatunreasonablyinterfereswiththeLessee’sconstruction,operation,maintenanceoruseof
theProjectontheLeasedLandorthevalueoftheLeasedLandunderthisLease,asdetermined
bytheGovernmentinitsreasonablediscretion.
ANDGRANTSTOTHELESSEEtherighttoconnecttheProjecttoutilitysystemsowned
and operated by the Government, and, subject to certain other terms and conditions, utility
systems owned and operated by nonͲGovernment entities, located on Nellis AFB and to
construct,operate,maintainandusesuchutilitysystemsonareimbursablebasisforsolongas
theGovernmentorsuchnonͲGovernmententityoperatessuchsystemsforthebenefitofthe
Project,subjecttothetermsandconditionsofthisLease;
RESERVING,HOWEVER,untotheGovernmentgeneralaccesstotheLeasedLandforits
officers, agents, employees, contractors and subcontractors for the purpose of exercising the
rights,interests,privileges,andbenefitscontainedinthisLease,totheextentthatthoserights,
interests, privileges, and benefits go across, include, or encompass all or part of the Leased
Land,including,specifically,theutilitysystems,ifany,locatedwithintheLeasedLand,andto
theextenttheyareneededbytheGovernmentfortheoperation,security,orsafetyofNellis
AFB,oritsassignedpersonnel,orforanyotherreasonablepurpose.
THISLEASEisgrantedsubjecttothefollowingconditions:
CONDITION1
TERMANDDELIVERYOFPOSSESSION
1.1
THIS LEASE shall be effective as of the later of (i) the Effective Date; or (ii) the
dateuponwhichtheLesseenotifiestheGovernmentthatallofthefollowingconditionshave
beensatisfiedorwaivedbytheLessee(thedateallsuchconditionsareallsatisfiedorwaived,
the“LeaseCommencementDate”):(a)executionoftheEPCAgreementbythepartiesthereto,
(b)approvalofthisLeaseandallassociatedagreementsandtheirunderlyingtransactionsand
ratesbythePublicUtilitiesCommissionofNevada(the“PUCN”)ontermsacceptabletoLessee
initssolediscretion(“PUCNApproval”),and(c)allgovernmentalandthirdpartyapprovalsand
permitsnecessaryfortheconstructionoftheProject(“ConstructionApprovals”).Thetermof
this Lease (the “Lease Term”) shall be for a period beginning at 12:01 a.m. on the Lease
CommencementDateandendingat12:00p.m.onthethirtyfirst(31st)anniversaryoftheLease
Commencement Date (the “Lease Expiration Date”) unless sooner terminated in accordance
withthetermscontainedinthisLease.TheLeaseTermshallhavenoeffectonthetermsset
forthinanyProjectEasements,whichsuchtermswillbeestablishedinreferencetotheuseful
lifeoftheapplicableNellisAFBElectricInterconnectEquipment.
1.2
IftheLesseeisunabletoobtainPUCNApprovalortheConstructionApprovalsor
obtainacceptabletermsfortheEPCAgreementoranyoftheassociatedagreementswithintwo
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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yearsofthedateofthisAgreement,theLesseemayterminatethisLeasebyprovidingnoless
than thirty (30) Days notice of such termination and, in such event, both Parties shall be
releasedfromanyfurtherliabilityunderthisLease.
CONDITION2
REPRESENTATIONSANDWARRANTIES
2.1
TheLesseerepresentsandwarrantsasoftheEffectiveDatethefollowing:
2.1.1 TheLesseeisacorporation,dulyorganizedandvalidlyexistingunderthe
lawsoftheStateofNevadaandisingoodstandingandqualifiedtodobusinessinNevadaand
ineveryotherstateinwhichthenatureofitsbusinessrequiressuchqualification.TheLessee
has full power and authority to own its properties and to carry on its business as now being
conductedandascontemplatedtobeconductedwithrespecttotheProject,andtoenterinto,
andtoperformandcarryoutthetransactionsprovidedforinthisLease.ThisLeasehasbeen
duly authorized, executed and delivered by the Lessee and constitutes the legal, valid and
bindingobligationoftheLessee,enforceableagainsttheLesseeinaccordancewithitsterms,
subjecttobankruptcy,insolvency,reorganization,moratoriumandothersimilarlawsaffecting
therightsofcreditorsgenerallyandgeneralequitableprinciples.
2.1.2 TheLessee’sexecution,delivery,andperformanceofthisLeasewillnot
violateanyprovisionoflaw,anyorderofanycourtorotheragencyofgovernment,oranyof
theorganizationalorothergoverningdocumentsoftheLessee,oranyindenture,agreementor
otherinstrumenttowhichLesseeisnowapartyorbywhichitoranyofitspropertiesorassets
isbound,orbeinconflictwith,resultinabreachoforconstituteadefault(withduenoticeor
thepassageoftimeorboth)underanysuchindenture,agreementorotherinstrumentorany
license,judgment,decree,law,statute,order,ruleorregulationofanygovernmentalagencyor
body having jurisdiction over the Lessee or any of its activities or properties or, except as
providedhereunder,resultinthecreationorimpositionofanylien,chargeorencumbranceof
anynaturewhatsoeveruponanyofthepropertyorassetsoftheLessee,exceptaspermitted
bythisLeaseorotherwiseapprovedbytheGovernment.
2.1.3 No litigation or proceeding is pending or, to the Lessee’s knowledge,
threatened against the Lessee or the Project which has a reasonable probability of having a
materialadverseeffectonthefinancialconditionorbusinessoftheLessee,orthetransactions
contemplatedbythisLeaseorthevalidityorenforceabilityofthisLeaseortheabilityofLessee
toperformitsobligationsunderthisLease.
2.1.4 There is no completed, pending or, to the Lessee’s knowledge,
threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether
voluntaryorinvoluntary,affectingtheLessee.
2.1.5 NoeventhasoccurredandnoconditionexistswithrespecttotheLessee
ortheProjectthatwouldconstitutean“EventofDefault”underthisLease,orwiththelapseof
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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time, if notcured, or with the giving of notice,or both, would become an “Eventof Default”
underthisLease.
2.1.6 No authorization, consent, approval, order, registration, declaration, or
withholding of objection on the part of or filing of or with any governmental authority not
alreadyobtainedormade(ortotheextentnotyetobtainedormade,theLesseehasnoreason
to believe that such authorizations, consents, approvals, orders, registrations, or declarations
willnotbeobtainedormadeinatimelyfashion)isrequiredfortheexecutionanddeliveryor
approval, as the case may be, of this Lease, or the performance of the terms and provisions
hereofbytheLessee.
CONDITION3
EASEMENTSANDRIGHTSOFWAY
3.1
ThisLeaseissubjecttoallexistingeasements,rightsofway,licensesandother
propertyrightsandinterests,whetherofpublicrecordornot,foranypurposewithrespectto
the Leased Land (collectively, “Third Party Property Interests”). The list of the Third Party
PropertyInterestsattachedasExhibitBheretoisacompletelistofsuchinterestsasmaintained
intheGovernmentsrecords.
3.2
Nothing herein shall preclude the Government’s creation of additional
easements, rightsͲofͲways, licenses or other property rights and interests with respect to the
Leased Land to meet its own or other public requirements (“Future Third Party Property
Interests”); however, any such Future Third Party Property Interests shall not unreasonably
interferewith,orposeanunreasonableriskofharmtotheProjectorLessee’sinterestinthe
Project under this Lease or Lessee’s rights set forth in this Lease, as determined by the
GovernmentandtheLessee,eachinitsreasonablediscretion.Further,wherethegranteesof
suchThirdPartyPropertyInterestsmayberequiredtocarrycommerciallyreasonableinsurance
policies, as determined by the Government in its reasonable discretion, such insurance shall
nameGovernmentandLesseeasanadditionalinsuredthereunder.TheholdersofThirdParty
Property Interests and Future Third Party Property Interests shall have reasonable rights of
ingressandegressovertheLeasedLandinordertoexercisetheirrightsandtheserightsmay
alsobeexercisedbyworkersengagedintheconstruction,installation,maintenance,operation,
repair,orreplacementoffacilitieslocatedontheFutureThirdPartyPropertyInterests,andby
anyFederal,state,orlocalofficialengagedintheofficialinspectionthereof.
3.3
At the request of the Lessee, the Government will grant, in accordance with
statutory requirements including without limitation the requirement, if applicable, for the
Government to receive consideration in an amount not less than fair market value of the
propertyinterest,easements,rightsͲofͲway,licensesorotherpropertyinterestswithrespectto
areas of Nellis AFB outside of the Leased Land for utilities and other purposes reasonably
necessary to the construction, maintenance and operation of the Project; provided, however,
anysucheasements,rightsͲofͲway,licensesorotherpropertyinterestsshallnotinterferewith
theoperationsoftheGovernmentonanyportionofNellisAFBnotwithintheLeasedLand,as
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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determinedbytheGovernmentinitsreasonablediscretion.Inaddition,theGovernmentmay
not unreasonably withhold or delay consent to requests for granting of easements, licenses,
rightsͲofͲway or other property interests for the Project, including utilities and the Nellis AFB
ElectricInterconnectEquipment,andotherpurposesreasonablynecessarytotheconstruction
and maintenance of the Project, including utilities and the Nellis AFB Electric Interconnect
Equipment,ontheLeasedLandbyLessee;provided,however,anysuchadditionaleasements,
licenses,rightsͲofͲwayorotherpropertyinterestsshallnotinterferewiththeoperationsofthe
GovernmentonanyportionofNellisAFBnotwithintheLeasedLand.
3.4
TheGovernmentacknowledgesandagreesthataccesstosunlight(“Insolation”)
is essential to the value to the Lessee of this Lease. Accordingly, the Government shall take
such actions as reasonably necessary and useful to prevent any unreasonable longͲterm
interferencewithInsolationon,atorsurroundingtheLeasedLand,specificallyintheairspace
above the Project’s solar energy panels. Without limiting the foregoing, to the extent
permitted by law, and other applicable requirements, including, but not limited to, Air Force
RegulationsandInstructions,theGovernmentshallnotconstructorpermittobeconstructed
any structure on or around the Leased Land that could materially and adversely affect
Insolation levels or permit the growth of foliage that could materially and adversely affect
Insolationlevels.Nothinghereinshallbesoconstruedastoprohibitincidentaloverflightofthe
LeasedLand.
CONDITION4
CONDITIONOFLEASEDLAND
4.1
TheLesseehasinspected,knowsandacceptstheconditionandstateofrepairof
the Leased Land. Except as otherwise provided in Condition 4.4 and Condition 11, it is
understood and agreed that the Leased Land is leased in an “AS IS,” “WHERE IS” condition
without any representation or warranty by the Government concerning its condition and
withoutobligationonthepartoftheGovernmenttomakeanyalterations,repairsoradditions.
Except for any violation of Condition 4.4 and Condition 11.5, the Government shall not be
liabletoLesseeforanydamagesorlosses,whetherdirectorconsequential,incurredbyLessee
as the result of the discovery of any latent or patent defect in the Leased Land. Except as
otherwise provided in Condition 4.4 and Condition 11, the Lessee acknowledges that the
Government has made no representation or warranty concerning the condition and state of
repairoftheLeasedLandnoranyagreementorpromisetoalter,improve,adapt,orrepairthe
LeasedLandwhichhasnotbeenfullysetforthinthisLease.
4.2
TheLesseerepresents,warrants,andacknowledgesthatithasenteredintothis
Lease on the basis of the information that the Government has made available to Lessee in
accordancewithCondition4.3andCondition4.4,theEBSanditsownfullinvestigationofall
factsrelatingto,andconditionsunderlying,theLeasedLandandthedevelopmentanduseof
the Leased Land, including without limitation, environmental conditions. Given the Lessee’s
knowledgeofthefactsandconditionsaffectingtheLeasedLandderivedfromthedocuments
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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providedtoLesseebytheGovernmentinconnectionwiththeProject,theLesseeshallexercise
an appropriate level of care when conducting any groundͲdisturbing activities to ensure that
suchactivitiesdonotresultinanunmanagedHazardousSubstancesRelease.TheLesseeshall
alsoberesponsibleforexercisinganappropriatelevelofcarewithrespecttoanyunderground
pipesandrelatedinfrastructurethatmayexistwithintheLeasedLand.TheLesseewaivesany
claimorcauseofactiontheLesseemayhaveagainsttheGovernmentunderanyFederal,state,
orlocallaw,ordinance,rule,orregulationnowexistingorhereafterenactedorpromulgated,
relating to environmental matters or conditions, in, on, under, about, or migrating from or
onto, the Leased Land, or by virtue of any common law right related to environmental
conditionsormattersin,on,under,about,ormigratingfromoronto,theLeasedLandexcept
for (i) environmental conditions (including, without limitation, the presence of Hazardous
Substances) existing on, under or within the Leased Land prior to the Effective Date; (ii)
HazardousSubstanceReleasesthatmigrateontotheLeasedLandandthatarenotexacerbated
by the Lessee (it being agreed that the presence, construction or operation of the Project
without other overt act will not be deemed to exacerbate such releases) and (iii) any
environmental condition (including, without limitation, any Hazardous Substance Release)
occurring after the Effective Date and caused by the Government, its officers, employees,
agents,contractorsandsubcontractors.TheprovisionsofthisCondition4.2shallsurvivethe
expirationorearlierterminationofthisLease.
4.3
The Lessee acknowledges receipt of the environmental baseline survey for the
Leased Land approved January 17, 2014 (“EBS”). A separate EBS for the Leased Land will be
prepared by the Government after the expiration or earlier termination of this Lease (“Final
EBS”). The Final EBS will be in a form and scope similar to the EBS and will be used by the
Government in determining whether the Lessee has fulfilled its obligations to maintain and
restoretheLeasedLandunderthisLease,including,withoutlimitation,allobligationssetforth
in Condition 10 and Condition 11. The items contained on Exhibit C, List of Environmental
Documents,includeallrecordspreparedbyorinthepossessionoftheGovernmentthatrelate
to environmental conditions or matters in, on, under, about or migrating from or onto the
Leased Land, including, without limitation, all records relating to (i) Hazardous Substance
Releasesin,on,under,aboutormigratingfromorontotheLeasedLand,(ii)ACMlocatedatthe
Leased Land, (iii) LBP materials located at the Leased Land, (iv) Nellis AFB Installation
Restoration Program, and (iv) Nellis AFB Military Munitions Response Program. The Lessee
acknowledges and agrees that it has received and reviewed the items provided by the
GovernmentassetforthonExhibitC,ListofEnvironmentalDocuments.
4.4
The Government shall not be liable to the Lessee for any damages or losses,
whether direct or consequential, incurred by the Lessee as the result of the discovery of any
latentorpatentdefectintheLeasedLand;provided,however,thatifaftercompletionofthe
Project thePV Facility is damagedas a resultof the subsurface instability of the Leased Land
causedsolelybylatentdefectsinthecappedlandfilltheLesseemay,asitssolerecourseagainst
the Government, either: (i) terminate this Lease, or (ii) submit a claim to the Government
pursuant to the terms of the Utility Service Agreement for payment of the Lessee's actual
damages (excluding any special, indirect or consequential damages whatsoever), which claim
NellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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shallnotexceedthelesserof(a)suchactualdamagesor(b)fiftymilliondollars($50,000,000).
TheLesseeshalluseeveryreasonableefforttomitigateitsdamagespriortopresentingsucha
claim and the Government's payment of any claim shall be subject to Condition 31.22. The
partiesagreethattheLesseeshallhavenoresponsibilityfordamagescausedtoanyadjacentor
neighboring property, including without limitation, the Excluded Land, as a result of the
subsurface instability of the Leased Land caused solely by latent defects in the capped LFͲ01
landfill.
CONDITION5
CONSIDERATION
5.1
ConsiderationtotheGovernmentforthisLeaseshallbepaidintheformofcash,
as set forth below, and/or inͲkind in the form of the engineering and construction of certain
improvements by Lessee, including the Nellis AFB Electric Interconnect Equipment, as
contemplatedherein,whichshallbeconstructedononeormoreProjectEasementsgrantedby
theGovernment.
5.1.1 DuringtheTermofthisLease,LesseeshallpayrenttotheGovernmentat
a value equal to Ten Dollars per month (“Rent”) commencing in the month immediately
following the month in which the Lease Commencement Date occurs, subject to no annual
escalation, and ending in the month in which the Lease Expiration Date occurs. The
Government and Lessee acknowledge and agree that the Nellis AFB Electric Interconnect
Equipment is substantially equal to the value of Leased Land for the duration of the Lease,
whichisreflectedintheRentamountsetforthherein.
5.1.1.2
Lesseeshall,inaccordancewiththeconstructionschedule
setforthinExhibitD,engineerandconstructtheNellisAFBElectricInterconnectEquipmentin
the manner as set forth in Exhibit D, at Lessee’s sole cost and expense. The Rent reflects a
reductionfortheagreeduponvalueofthebenefitprovidedbytheProjectandtheNellisAFB
Electric Interconnect Equipment. Lessee shall engineer and construct the Nellis AFB Electric
Interconnect Equipment in a manner that supports an emergency secondary interconnection
betweentheNVEnergyelectricalgridandNellisAFBthatatalltimesiscapableofsupporting
33MWofNellisAFBelectricloadatthepointofinterconnectionshownonExhibitD.
5.2
Rentshallbedueandpayableonthefirstdayofeachmonthwithoutnoticeor
demandfromtheGovernment.AllRentduefromtheLesseeshallbepaidinlawfulmoneyof
the United States of America without deduction or offset (except as otherwise provided
herein), prior notice or demand, to the Treasurer of the United States of America and
forwardeddirectlytotheInstallationCommander,99thABW/CC,4430GrissomAvenue,Suite
110,NellisAFB,NV89191,(the“Commander”),orsuchotherofficialastheGovernmentshall
designate,fordepositintotheSpecialTreasuryAccountestablishedundertheprovisionsof10
USC§2667(e).
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5.3
IfanyinstallmentofRentdueunderCondition5.2aboveisnotpaidwithinten
(10) business days after its due date, then such arrearage shall, consistent with the Debt
Collection Act of 1982 (31 U.S.C. § 3717), (i) bear interest from the due date at the rate
prescribedbytheSecretaryoftheTreasuryforamountspastduetotheFederalgovernment
until paid in full; (ii) include an administrative charge to cover the costs of processing and
handling delinquent debts; and (iii) include an assessment of an additional penaltycharge on
anyportionofadebtthatismorethanninety(90)Dayspastdue.
5.4
RentforapartialmonthduringtheTermofthisLeaseshallbeproratedbasedon
thenumberofdaysinsuchmonth.ThetotalconsiderationprovidedtotheGovernmentasset
forthinthisCondition5hasbeendeterminedbytheGovernmenttobenolessthanthefair
marketvalueoftheleasedinterest.
CONDITION6
DEVELOPMENTOFPROJECT
6.1
ThePartiesagreethatthepurposeofthisLeaseistosupporttheconstruction,
maintenance,operationanduseoftheProject.ByvirtueofthelocationoftheProjectonthe
LeasedLand,theProjectwilldeliverelectricitytotheGovernmentatNellisAFB.However,the
energy generated by the Project will be owned by Lessee exclusively and Lessee will be fully
entitledtodispatchtheenergyoutputoftheProjectasitseesfit;providedthattheexpectation
isthatsubstantiallyalloftheenergyoutputwillflowfirsttotheGovernmentatNellisAFBas
theclosestcustomerofLessee.
6.2
TheGovernmentandtheLesseewill,totheextentpracticable,coordinatetheir
respective obligations, subject to Condition 32. The Lessee shall not accept issuance of any
permitorlicenseinconnectionwiththedevelopmentoftheProjectwhichpurportstoimpose
ontheGovernmentanyobligationorliabilityforanyoperationsoractivitiescoveredbysuch
permit or license without the prior written consent of the Government unless Lessee is
obligated under this Lease to satisfy such obligation or liability or Lessee agrees in writing
pursuanttonoticetotheGovernmenttosatisfysuchobligationorliability.
6.3
Lessee shall comply with the requirements set forth in Exhibit E and the
construction schedule set forth in Exhibit D in its construction of the Project, including the
NellisAFBElectricInterconnectEquipment.
CONDITION7
USEOFLEASEDLAND
7.1
ThesolepurposeforwhichtheLeasedLandmaybeused,intheabsenceofprior
written approval of the Government for any other use, is for the demolition, design,
construction,renovation,operation,andmaintenanceoftheProjectandrelatedactivities,such
astemporaryaccessandastaginggroundforconstructionequipment.TheLesseeshallnotuse
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or occupy the Project in any manner that is unlawful or that shall constitute waste,
unreasonableannoyance,oranuisancetotheGovernment.TheLesseeandtheGovernment
hereby acknowledge and agree that operation and construction on the Leased Land of the
Project in a commercially reasonable manner shall not constitute waste, unreasonable
annoyanceoranuisancetotheGovernment.
7.2
Specifically,butwithoutlimitation,innoeventshalltheProjectbeusedbythe
LesseeforanyofthefollowingactivitieswithoutthepriorwrittenapprovaloftheGovernment:
7.2.1 UltraͲhazardous activities involving the storage, treatment,
transportation, disposal, or manufacture of Hazardous Substances, except as specifically
authorized by Condition 11. It is understood and agreed by the Government that the
photovoltaic panels to be utilized in the Project shall not be characterized in this Lease as a
HazardousSubstance.
7.2.2 Activities that the Government, in its sole discretion, determines
adverselyaffectthehealth,safety,morals,welfare,morale,anddisciplineoftheArmedForces,
such as the sale or use of drug abuse paraphernalia, illicit gambling, and prostitution. It is
understood and agreed by the Government that the presence, construction, operation and
maintenance of the Project shall not be characterized in this Lease as adversely affecting the
healthorsafetyoftheArmedForces.
7.2.3 Partisanpoliticalactivities.
7.2.4 ActivitiesbypersonsorentitiesadvocatingtheoverthrowoftheUnited
States.
7.3
AcompanionOperatingAgreementtothisLease,attachedheretoasExhibitF,
setsforthdetailedproceduresandrequirementstobefollowedbytheLesseeinitsuseofthe
Leased Land. In the event of any conflict, inconsistency or question of controlling document
between any provisions of the Operating Agreement and any provisions of this Lease, the
provisionsofthisLeaseshallcontrol.
CONDITION8
DEFAULT,REMEDIES,ANDTERMINATION
8.1
Anyoneormoreofthefollowingshallconstituteaneventofdefault(“Eventof
Default”)underthisLeasebytheLessee:
8.1.1 The Lessee’s failure to comply with any provision of this Lease in any
material respect (other than with respect to the payment of Rent), where such failure to
comply continues for thirty (30) Days after delivery of written notice thereof by the
GovernmenttotheLesseeandallApprovedMortgagees,ifany.If,however,suchdefaultisnot
reasonably susceptible to cure within such thirty (30) Day period, the Lessee shall have such
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longerperiodasisnecessarytocuresuchdefaultsolongastheLesseecommencescuringsuch
default within the initial thirty (30) Day period and diligently prosecutes such cure to
completion.
8.1.2 ThefailureoftheLesseetopayRentpursuanttoCondition5.2whendue
if such failure remains uncured for a period of ten (10) Days after delivery of written notice
thereofbytheGovernmenttotheLesseeandallApprovedMortgagees,ifany.
8.1.3 TheLessee’svoluntarilyfilingforbankruptcyprotectionundertheUnited
States Bankruptcy Code (“Bankruptcy Code”) or voluntarily becoming subject to any
reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to
anyotherfederalorstatelawaffectingdebtorandcreditorrights,orhavinganinvoluntarycase
commencedagainsttheLesseebyanycreditoroftheLesseepursuanttotheBankruptcyCode
or other federal or state law affecting debtor and creditor rights and is not dismissed or
dischargedwithinsixty(60)Daysafterfiling.
8.1.3.1 If any voluntary or involuntary petition is filed under the
BankruptcyCodebyoragainsttheLessee(otherthananinvoluntarypetitionfiledbyorjoined
inbytheGovernment),theLesseeshallnotassert,orrequestanyotherpartytoassert,that
theautomaticstayundertheBankruptcyCodeshalloperateorbeinterpretedtostay,interdict,
condition,reduce,orinhibittheabilityoftheGovernmenttoenforceanyrightsithasbyvirtue
ofanyagreementbetweentheParties,oranyotherrightsthattheGovernmenthas,whether
now or hereafter acquired, against any party responsible for the debts or obligations of the
Lesseeundersuchagreements.Furthermore,theLesseeshallnotseekasupplementalstayor
any other relief, whether injunctive or otherwise, pursuant to the Bankruptcy Code, to stay,
interdict,condition,reduce,orinhibittheabilityoftheGovernmenttoenforceanyofitsrights
undersuchagreementsagainstanypartyresponsibleforthedebtsorobligationsoftheLessee.
ThewaiverscontainedinthisCondition8.1.3.1areamaterialinducementtotheGovernment’s
willingnesstoenterintothisLeaseandtheLesseeacknowledgesandagreesthatnogrounds
existforequitablereliefthatwillbar,delay,orimpedetheexercisebytheGovernmentofits
rightsandremediesundersuchagreementsagainsttheLesseeoranypartyresponsibleforthe
debtsorobligationsoftheLessee.
8.1.3.2 If any or all of the Project or any interest in the Project
becomes the property of any bankruptcy estate or subject to any state or Federal insolvency
proceeding, then the Government shall immediately become entitled, in addition to all other
relief to which the Government may be entitled under law or any agreement between the
Parties, to obtain (i) an order from the Bankruptcy Court or other appropriate court granting
immediaterelieffromtheautomaticstaypursuanttotheBankruptcyCodesoastopermitthe
Governmenttopursueitsrightsandremediesatlawandinequityunderapplicablestatelaw,
and(ii)anorderfromtheBankruptcyCourtprohibitingtheLessee’suseofall“cashcollateral,”
asdefinedundertheBankruptcyCode.InconnectionwithsuchBankruptcyCourtorders,the
Lesseeshallnotcontendorallegeinanypleadingorpetitionfiledinanycourtproceedingthat
the Government does not have sufficient grounds for relief from the automatic stay. The
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Lessee acknowledges and agrees that any bankruptcy petition or other action taken by the
Lessee to stay, condition, or prevent the Government from exercising its rights or remedies
under this Lease or any other agreement between the Parties shall be deemed to be in bad
faith.
8.1.3.3 If any voluntary or involuntary petition is filed under the
BankruptcyCodebyoragainsttheLessee(otherthananinvoluntarypetitionfiledbyorjoined
in by the Government), the Lessee shall notify the Government of such filing within ten (10)
business days of receiving notice. If any or all of the Project or any interest in the Project
becomes the property of any bankruptcy estate or subject to any state or Federal insolvency
proceeding, then the Lessee shall notify the Government of such proceeding within ten (10)
businessdaysofreceivingnoticeoftheproceeding.
8.2
No Event of Default shall be deemed to have occurred for any period of time
duringwhichanExcusableDelayexistswithrespecttotheallegeddefaultortheLesseeandthe
Government are attempting to resolve a dispute about the alleged default as provided in
Condition23.ForanExcusableDelay,theLessee’speriodforcureshallbetolledfortheperiod
of time that the Excusable Delay exists. For a dispute, if, pursuant to the dispute resolution
procedures set forth in Condition 23, a default is determined to have occurred, the Lessee’s
periodforcureshallnotbeginuntiltheDayafterthefinaldecisiononthedisputeisissued,and
suchdefaultshallnotbecomeanEventofDefaultuntilanyapplicablecureperiodhasexpired.
8.3
SubjecttoCondition22.7,thisLeasemaybeterminatedasprovidedbelow:
8.3.1 The Government may terminate this Lease upon written notice to the
Lessee,andwithoutanycostorliabilitytotheGovernment,ifanEventofDefaultexists.Such
notice shallbe referredto as a “Default Termination Notice” and shall be effective as of the
datespecifiedtherein,whichshallbeatleastfive(5)butnotmorethanthirty(30)Daysafterits
receiptbytheLessee.
8.3.2 TheGovernment,theLesseeandanyApprovedMortgageemaymutually
agree to terminate this Lease in the event of Extensive Damage or Destruction of Leasehold
Improvements,asthattermisdefinedinCondition16.5.2andsubjecttotherequirementsof
Condition16.5.2.
8.3.3 Notused.
8.4
TheLesseeherebywaivesanyclaimsorsuitsagainsttheGovernmentarisingout
ofanyterminationofthisLeasepursuanttoCondition8.3.1and8.3.2.
8.5
IfanEventofDefaultexistsandallnoticesofsuchEventofDefaultrequiredby
thisLeasehavebeengiven,thensubjecttotherights,ifany,ofanyApprovedMortgagee,the
Government shall have the following rights and remedies in addition to all other rights and
remediesavailabletotheGovernmentatlaworinequity:
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8.5.1 TheGovernmentshallhavetherighttoenforcespecificperformanceby
the Lessee of its obligations under this Lease in any state or federal court of competent
jurisdiction.
8.5.2 The Government shall have the right to exercise any of the rights
providedinCondition10withrespecttotherestorationandsurrenderoftheLeasedLand.
8.5.3 The Government shall have the right to take possession of the Project
and operate, repair, restore, maintain, manage, and use the Project in accordance with the
provisionsofthisLease.
8.5.4 The Government shall have the right to obtain the appointment of a
receivertotakepossessionoftheProjectandoperate,repair,restore,maintain,manage,and
usetheProjectinaccordancewiththeprovisionsofthisLease,provided,however,thatsuch
rightshallbesubordinatetotherightsofanyApprovedMortgagee.
8.5.5 TheGovernmentshallhavetherighttocollectreimbursementsfromthe
LesseeforthecostofallrepairsandmaintenanceundertakenbytheGovernmentpursuantto
Condition8.5.3.
8.5.6 NotUsed.
8.5.7 The Government shall have the right to pursue more than one right or
remedyatthesametime.
8.6
TheLesseemayterminatethisLeaseuponwrittennoticetotheGovernmentas
providedinCondition1.2ofthisLease.
8.7
For the avoidance of doubt, this Lease shall not be subject to termination by
eitherpartysolelyasaresultoftheGovernmentnolongerpurchasingpowerfromtheProject.
8.8
Any termination of this Lease pursuant to the provisions herein shall have no
effect on the Project Easements, which may only be terminated pursuant the provisions set
forththerein.
CONDITION9
TAXES
9.1
TheLesseeshallpaytotheproperauthority,whenandasthesamebecomedue
andpayable,alltaxes,assessments,andsimilarchargeswhichatanytimeduringthetermof
thisLease,maybeimposedontheLesseeortheLessee’suseoftheProject.EachPartyshall
have the right, but not the obligation, at its own expense to (a) contest any such taxes,
assessmentsorsimilarcharges,and(b)takesuchactionsasmaybenecessaryandappropriate
(i)tocontestthevalidity,applicabilityoramountthereof;(ii)minimizesuchtaxes,assessments
or charges; or (iii) assert any exemption which may be available with respect to taxes,
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assessments or charges imposed on the Project. If and to the extent the Leased Land is later
made taxable by State or local governments under an Act of Congress, this Lease shall be
renegotiatedpursuantto10U.S.C.§2667(f).
CONDITION10
RESTORATIONANDSURRENDER
10.1 Nolaterthanonehundredeighty(180)daysaftertheLeaseExpirationDate,or
theeffectivedateofaDefaultTerminationNoticepursuanttoCondition8.3.1oragreementof
thePartiestoterminatetheLeaseasaresultofExtensiveDamageorDestructionofLeasehold
Improvements pursuant to Condition 8.3.2, as applicable, or a date mutually agreed to by
Lessee and the Government (the “Restoration Deadline”), the Lessee shall, at no cost to the
Government, remove all of the Leasehold Improvements and its other property from the
Leased Land and restore the Leased Land to the reasonable satisfaction of the Government,
ordinarywearandtearexcepted(“RemovalandRestorationObligation”);provided,however,
thattheGovernmentmustprovidetoLesseethenecessaryauthorizationsandrightsofaccess
onNellisAFBnecessaryforLesseetocompletetheRemovalandRestorationObligation.
10.2 Nolaterthanfive(5)yearspriortotheLeaseExpirationDateorwithinfortyͲfive
(45) Days after the Parties agree to terminate the Lease as a result of Extensive Damage or
Destruction of Leasehold Improvements, the Lessee shall provide to the Government (a) a
report(an“ImprovementRemovalReport”)preparedbyaconstructionanddemolitionexpert
approved by the Government, such approval not to be unreasonably withheld or delayed,
which report details and estimates the cost of performing the Removal and Restoration
Obligation(“EstimatedRestorationCosts”),and(b)awrittenplanwhichsetsforthhowLessee
proposestodischargeitsRemovalandRestorationObligationspursuanttothisCondition10.
10.3 Notused.
10.4 Notused.
10.5 AftercompletionofanydemolitionrequiredpursuanttothisCondition10ofany
structures, buildings and improvements of any kind on the Leased Land, whether placed
thereonormaintainedbyLesseeorothersbeforeoraftertheEffectiveDate,theLesseeshall
immediatelysurrenderpossessionoftheLeasedLandtotheGovernment.
10.6 IftheLesseedoesnotsatisfyitsRemovalandRestorationObligationpriortoor
bytheRestorationDeadline(“RestorationDefault”),thentheGovernmentmay,inadditionto
other available remedies but subject to the rights of any Approved Mortgagee, (a) take
ownershipoftheProjectLeaseholdImprovementswithoutcompensationtherefor,or(b)may
causesuchimprovementstoberemovedand/ordestroyed,withtherighttoretainallsalvage
value, and the Leased Land to be restored to its approximate original condition, reasonable
wearandtearexcepted,attheexpenseoftheLessee.IftheGovernmentelectstorestorethe
LeasedLandpursuanttothisCondition10.6,theGovernmentshallhavetheright,uponthirty
(30)dayspriorwrittennoticetotheLesseeandanyApprovedMortgagee,todirect,withoutthe
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consent of the Lessee, any Approved Mortgagee or any other Person, the disposition of any
formofsecurityprovidedinaccordancewithCondition10.8below,forthepurposeofpaying
the reasonable costs of such demolition, removal and restoration, and the Lessee shall not
exercise any authority or powers with respect to, or permit the withdrawal of, such funds,
except as necessary to accomplish any written disposition instructions issued by the
Government.IfthefundsavailabletotheGovernmentintheformofsecurityprovidedunder
Condition10.8below,togetherwithanysalvagevalue,areinsufficienttocoversuchremoval
andrestorationcosts,LesseeshallbeliabletotheGovernmentforanydeficiency.TheLessee
shall reimburse the Government for any expenses the Government incurs in removing
improvements and restoring the Leased Land within thirty (30) days after the Government
provides written notice to Lessee of the reimbursement amount, together with reasonable
documentation of such amount. To facilitate the remedy set forth in this Condition 10.6
caused by a Restoration Default, Lessee hereby pledges and grants to the Government a
continuing security interest in and to all of Lessee’s right, title, and interest in the Leasehold
Improvements (which security interest may be pursued only with respect to Leasehold
Improvements that remain on the Leased Land after the Restoration Deadline), subject and
subordinate only to any security interest in the Leasehold Improvements granted to any
Approved Mortgagee. Lessee shall not grant or allow any security interests in, liens to, or
encumbrances on the Leasehold Improvements, except for the security interest, if any, of an
Approved Mortgagee and the security interest of the Government created in this Condition
10.6. Lessee shall deliver to the Government for filing one or more financing statements, as
necessary,inconnectionwithperfectionoftheGovernment’ssecurityinterestintheLeasehold
Improvements, in the form reasonably required by the Government to properly perfect its
security interest under Nevada law. The Lessee shall have no claim for damages against the
Government, its officers, employees, agents, or contractors on account of the Government’s
exerciseofanyrightspursuanttothisCondition10.6.
10.7 DuringtheperiodaftertheLeaseExpirationDate,theeffectivedateofaDefault
Termination Notice, or the termination date agreed to by the Parties as a result of Extensive
DamageorDestructionofLeaseholdImprovements,asapplicable,untilthedateonwhichthe
LesseesatisfiesitsRemovalandRestorationObligationunderthisCondition10,orsuchlater
dateasmaybeprovided,allobligationssetforthinConditions10,11,13,15,16.2.2,16.4,and
23shallremaininfullforceandeffect.
10.8 Within sixty (60) Days after the fifteenth anniversary of the Lease
CommencementDate,andonceeveryfive(5)yearsduringtheLeaseTermthereafter,Lessee
shall provide the Government with a written report describing the salvage value of the
LeaseholdImprovementsandcomparingthattotheestimatedcostofperformingtheRemoval
and Restoration Obligation (the “Salvage Value Report”). Within sixty (60) Days after the
earliertooccurof(i)thedateofissuanceoftheImprovementRemovalReportinaccordance
withCondition10.2,or(ii)thedateofthefirstSalvageValueReportwhichconcludesthatthe
salvage value of the Leasehold Improvements does not exceed the estimated cost of
performingtheRemovalandRestorationObligation(the“DemolitionSecurityTriggerDate”),
LesseewillprovidetheGovernmentwithabond,irrevocableletterofcredit,guaranty,orother
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form of security as may be reasonably acceptable to the Government (Lessee shall have the
right to elect which type of security to provide) in the amount described in Condition 10.8.1
below,tobeusedtosecureLessee’sRemovalandRestorationObligation.
10.8.1 On January 1st of each calendar year following the Demolition Security
Trigger Date, and continuing every year thereafter for five (5) years or such earlier date that
Lessee satisfies its Removal and Restoration Obligations, the Lessee shall provide the
Government with the security described in Condition 10.8 above, in the amount of the
Estimated Restoration Costs minus the amount of the salvage value of the Leasehold
Improvements (“Demolition Security”). Upon the Government’s receipt of the Improvement
Removal Report pursuant to Condition 10.2, the Government shall have the right, following
consultationwiththeLesseeandanyApprovedMortgagee,torequiretheLesseetoincrease
theDemolitionSecuritythroughouttheremainderoftheLeaseTermtoensurethatuponthe
expiration or earlier termination of this Lease the total amount of security provided as
describedinCondition10.8aboveisnotlessthantheEstimatedRestorationCostsminusthe
amount of the salvage value of the Leasehold Improvements. In the event that, after the
expirationorearlierterminationofthisLease,thesecurityprovidedasdescribedinCondition
10.8 above is insufficient to satisfy the Lessee’s Removal and Restoration Obligation, Lessee
shallimmediatelycurethedeficiency.
10.8.2 AnyremainingportionofthesecurityprovidedasdescribedinCondition
10.8aboveuponeither(i)theexpirationorearlierterminationoftheLease,ifnodemolitionor
restorationisrequiredpursuanttoCondition10,or(ii)thirty(30)DaysfollowingtheLessee’s
satisfaction of its Removal and Restoration Obligations will be distributed to the Lessee or
otherwise returned or released by the Government as directed by Lessee. In addition,
periodically upon Lessee’s request, the outstanding amount of the security provided as
describedinCondition10.8shallbereduced(andreturnedand/orreleasedbytheGovernment
asdirectedbyLessee)inanamountequaltoLessee’sdocumentedcostsincurredinfulfillingits
RemovalandRestorationObligation;provided,however,thattheamountofsecurity(together
withthesalvagevalueofanyLeaseholdImprovementsremainingontheLeasedLand)shallat
all times remain sufficient to cover the costs of any remaining Removal and Restoration
Obligation.
CONDITION11
ENVIRONMENTALPROTECTION
11.1 TheLesseeshallcomplywithApplicableLawsthatareormaybecomeapplicable
toLessee’sactivitiesontheLeasedLand.
11.2 The Lessee shall obtain at its cost and expense any environmental permits
requiredforitsoperationunderthisLease,independentofanyexistingpermits.
11.3 The Lessee shall indemnify, defend, save, and hold harmless the Government
fromanyclaimsfordamages,response,remediationorothercosts,expenses,liabilities,fines,
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orpenaltiesresultinginanywayfromreleases,discharges,emissions,spills,storage,handling,
or disposal by acts or omissions of the Lessee, its officers, agents, employees, contractors,
subcontractors or any sublessees or licensees, or the invitees of any of them, giving rise to
Governmentliability,civilorcriminal,orresponsibilityunderApplicableLaws.
11.3.1 ThisCondition11.3shallsurvivetheexpirationorearlierterminationof
this Lease, and the Lessee’s obligations under this Condition 11.3 shall apply whenever the
GovernmentincurscostsorliabilitiesofthetypesdescribedinthisCondition11.
11.3.2 The Lessee is warned that the Leased Land may contain current and
formerimprovements,suchasbuildings,facilities,equipment,andpipelines,aboveandbelow
the ground that may contain ACM. The Lessee is cautioned to use due care during property
developmentactivitiesthatmayuncoverpipelinesorotherburiedACM.Priortoundertaking
such development activities, the Lessee is responsible for inquiring as to whether the
Governmenthasrecordsofthelocation,type,quantity,andcharacteristicsofasbestosinany
improvements prior to renovation, maintenance, repairs, or construction that may disturb
suspect materials. If the Government does not have adequate records to substantiate the
statusorpresenceofACM,theLesseeisrequiredtoobtainthenecessaryconfirmatorysamples
andobtainanalysisbyaStateofNevadacertifiedlaboratoryfortheanalysisofbulkmaterials
forasbestos.TheGovernmentisnotresponsibleforanyhandling,removalorcontainmentof
asbestos or ACM, or to the extent consistent with applicable law, for any liability related
thereto. The Lessee will perform any and all asbestos work required in connection with its
development of the Leased Land in accordance with Applicable Laws. Lessee shall have its
employees and agents trained and certified as required in accordance with the applicable
requirementsunderNevadalaw.TheLesseewillberesponsibleforremovalanddisposalofall
ACMfoundontheLeasedLandduringtheLeaseTermandwillsubmittotheGovernmentfor
approvalanasbestosdisposalplanifsuchremovalisrequired(“AsbestosDisposalPlan”).The
AsbestosDisposalPlanwillidentifytheproposeddisposalsitefortheasbestos.Removaland
disposalofACMmustbecarriedoutincompliancewithallapplicablefederal,state,andlocal
laws,rules,regulations,andstandards.TheLesseefurtheracknowledgesthattheGovernment
assumesnoliabilityforpropertydamagesordamagesforpersonalinjury,illness,disability,or
deathtotheLessee,ortoanyotherperson,includingmembersofthegeneralpublic,arising
fromorincidenttothepurchase,transportation,removal,handling,use,disposition,orother
activity causing or leading to contact of any kind whatsoever with asbestos on or from the
LeasedLand,whethertheLesseehasproperlywarned,orfailedtoproperlywarn,thepersons
injured.
11.4 IntentionallyOmitted.
11.5 Notwithstanding any other provision of this Lease to the contrary (other than
Conditions11.6and11.7),andexceptasprovidedinthisCondition,theLessee,asbetweenthe
Parties, does not assume any liability (including liability to third parties) or responsibility for
environmental impacts and damage caused by the Government’s use of toxic or hazardous
wastes,substances,ormaterialsonanyportionofNellisAFB,includingtheLeasedLand.The
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Lessee has no responsibility or obligation under this Lease to undertake the defense of any
claim or action, whether in existence now or brought in the future, alleging environmental
impacts and damage solely arising out of the use of or Release of any toxic or hazardous
wastes,substances,ormaterialsonorfromanypartofNellisAFB,includingtheLeasedLand,
occurringpriortotheEffectiveDate.Further,theLesseeshallhavenoobligationtoundertake
environmentalresponse,remediation,orcleanuprelatingtosuchuse orRelease.Asusedin
thisCondition11,theterms“toxicorhazardouswastes,substancesormaterials”shallinclude
any flammables, explosives, radioactive materials, or other hazardous wastes, substances, or
materials including, without limitation, substances defined as “hazardous substances”,
“hazardous materials”, or “toxic substances” in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”)(42 U.S.C. §§ 9601Ͳ9675), the Hazardous
MaterialsTransportationAct,andtheResourceConservationandRecoveryAct(“RCRA”),allas
now or hereafter amended. The Government acknowledges that pursuant to section 120 of
CERCLA,theGovernmentissubjecttoliabilityimposedbysection107ofCERCLAtotheextent
that it is responsible for the Release of a Hazardous Substance on the Leased Land. The
Government agrees, as between the Parties, that it will not consider, or seek to have others
consider,theLesseeapotentiallyresponsiblepartysolelyduetothepresenceofaHazardous
SubstanceontheLeasedLandontheEffectiveDate,providedthattheLesseehasnotbyitsacts
or omissions caused a further release of such Hazardous Substance, released or disposed of
neworadditionalHazardousSubstances,orincreasedthecostofarequiredresponseaction.
Nothinginthisacknowledgmentshallbeconstruedtoaffecttheliabilityofanypersonorentity
for its own actions, including the Lessee, under sections 106 or 107 of CERCLA. Further, the
Governmentaffirmsthatthepresence,constructionandoperationoftheProjectinaccordance
withitsordinaryuseandcompliancewithApplicableLaw,withoutotherovertact,willnotbe
deemedtohaveincreasedthecostofarequiredresponseaction.
11.5.1 For the purposes of this Condition 11, “defense” or “environmental
response,remediation,orcleanup”includesliabilityandresponsibilityforthecostsofdamage,
penalties,legal,andinvestigativeservicesrelatingtosuchuseorrelease.“Occupancy”or“use”
shall mean any activity or presence (including preparation and construction) in or upon the
LeasedLand.
11.5.2 ThisConditionshallsurvivetheexpirationorterminationofthisLease.
11.6 TheLesseemustcomplywithApplicableLawsrelatingtooccupationalsafetyand
health, the handling and storage of Hazardous Substances, and the proper generation,
handling,accumulation,treatment,storage,disposal,andtransportationofhazardouswastes.
11.7 Except as provided in this Condition 11.7 for the temporary accumulation of
toxicorhazardousmaterialontheProjectandCondition11.19,theLesseeshallobtainwritten
Governmentapproval,asrequiredby10U.S.C.§2692,andimplementedbyFAR252.223.7006,
ProhibitiononStorageandDisposalofToxicandHazardousMaterials,priortostoring,treating,
ordisposingofanytoxicorhazardousmaterialontheProject.Toxicorhazardousmaterial,for
purposes of compliance with this condition, includes any material that is a “hazardous
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substance” under section 101(14) of CERCLA, or designated a “hazardous substance” by the
U.S. Environmental Protection Agency under section 102 of CERCLA. The Lessee shall strictly
complywiththehazardouswastepermitrequirementsunderRCRA,asamended,oritsNevada
equivalent and Applicable Laws. The Lessee shall be liable for any violations of the
requirementssetforthinthisCondition11.7.TheLesseeshallbeliableforthecostofproper
disposalofanyHazardousSubstancegeneratedbyanysublesseeintheeventoffailurebythe
sublesseetodisposeofsuchwastesproperly.
11.7.1 The Lessee must provide, at its own expense, such hazardous waste
accumulationpoints,complyingwithalllawsandregulations,asitmayneedforthetemporary
accumulationofhazardouswastes priortosuchwastesbeingdisposedofinaccordancewith
ApplicableLaws.TheLesseewillnotuseGovernmentaccumulationpointsforhazardousand
other wastes and the Lessee will not permit its hazardous waste to be commingled with
hazardouswastesoftheGovernment.
11.7.2 Subject to the cure period provided in Condition 8.1.1, any violation of
therequirementsofthisCondition11.7shallconstituteanEventofDefault.
11.8 OnorbeforetheEffectiveDate,theGovernmentshallprovidetheLesseeaccess
to the Nellis AFB Installation Restoration Program (“IRP”) records, if any, and thereafter shall
provide to the Lessee a copy of any amendments to or restatements of the Nellis AFB IRP
recordsaffectingtheLeasedLand.TheLesseeexpresslyacknowledgesthatitfullyunderstands
that some or all of the response actions to be undertaken with respect to the Nellis AFB IRP
may impact the Lessee’s quiet use and enjoyment of the Project. The Lessee agrees that
notwithstandinganyotherprovisionofthisLease,theGovernmentshallhavenoliabilitytothe
LesseeoritssublesseesshouldimplementationoftheNellisAFBIRPorotherhazardouswaste
cleanuprequirements,whetherimposedbylaw,regulatoryagencies,ortheGovernmentorthe
Department of Defense, interfere with the Lessee’s or its sublessee’ use of the Project. The
LesseeshallhavenoclaimorcauseofactionagainsttheUnitedStates,oranyofficer,agent,
employee,contractor,orsubcontractorthereof,onaccountofanysuchinterference,whether
duetoentry,performanceofremedialorremovalinvestigations,orexerciseofanyrightwith
respecttotheNellisAFBIRPorunderthisLeaseorotherwise.
11.9 The Government and its officers, agents, employees, contractors, and
subcontractors shall have the right, upon reasonable notice to the Lessee, to enter upon the
ProjectforthepurposesenumeratedinthisCondition11.9.
11.9.1 To conduct investigations and surveys, including, where necessary,
drilling,soilandwatersamplings,testpitting,testingsoilborings,andotheractivitiesrelatedto
theNellisAFBIRP;
11.9.2 To inspect field activities of the Government and its contractors and
subcontractorsinimplementingtheNellisAFBIRP;
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11.9.3 ToconductanytestorsurveyrelatedtotheimplementationoftheNellis
AFB IRP or environmental conditions at the Project or to verify any data submitted to the
UnitedStatesEnvironmentalProtectionAgency(EPA)ortheNevadaDivisionofEnvironmental
ProtectionbytheGovernmentrelatingtosuchconditions;and
11.9.4 To construct, operate, maintain, or undertake any other response or
remedialactionasrequiredornecessaryundertheNellisAFBIRP,including,butnotlimitedto,
monitoringwells,pumpingwells,andtreatmentfacilities.
11.9.5 Anyinvestigationsandsurveys,drilling,testpitting,testsoilborings,and
otheractivitiesundertakenpursuanttothisCondition11.9shallbeconductedinamannerthat
is as inconspicuous as practicable. Any monitoring wells, pumping wells, and treatment
facilities required pursuant to this Condition shall be designed and installed to be as
inconspicuousaspracticable.TheGovernmentshallattempttominimizeanyinterferencewith
the Lessee’s quiet use and enjoyment of the Project arising as the result of such wells and
treatmentfacilities,andotherIRPactivities.TheGovernmentshall,subjecttotheavailabilityof
appropriations therefore, repair any damage caused by its exercise of the rights in this
Condition11.9.
11.10 TheLesseeagreestocomplywiththeprovisionsofanyhealthorsafetyplanin
effectundertheNellisAFBIRP(totheextenttheLesseehasreceivednoticethereof),orany
hazardous substance remediation or response agreement of the Government with
environmental regulatory authorities (to the extent the Lessee receives notice thereof if the
agreementisnotofpublicrecord)duringthecourseofanyoftheaboveͲdescribedresponseor
remedial actions. Any inspection, survey, investigation, or other response or remedial action
will,totheextentpracticable,becoordinatedwithrepresentativesdesignatedbytheLessee.
TheLesseeandanysublessees,assignees,licensees,orinviteesshallhavenoclaimonaccount
of such entries against the United States or any officer, agent, employee, contractor, or
subcontractorthereof,excepttotheextentpermittedunderFederallaw,includingtheFederal
TortClaimsAct.
11.11 The Lessee must maintain and make available to the Government all records,
inspection logs, and manifests that track the generation, handling, storage, treatment, and
disposal of hazardous waste, as well as all other records required by Applicable Laws. The
Government’srightsunderthisLeasespecificallyincludetherightforGovernmentofficialsto
inspect the Project, upon reasonable notice as provided under Condition 14, for compliance
with Applicable Laws,including environmental laws, rules, regulations, and standards relating
to the generation, handling, storage, treatment and disposal of hazardous waste, and the
dischargeorreleaseofHazardousSubstances,whetherornottheGovernmentisresponsible
for enforcing them. Such inspections are without prejudice to the right of duly constituted
enforcementofficialstomakesuchinspections.ViolationsidentifiedbytheGovernmentwillbe
reportedtotheLesseeandtoappropriateregulatoryagencies,asrequiredbyApplicableLaw.
TheLesseewillbeliableforthepaymentofanyfinesandpenaltiesthatmaybeimposedasa
resultoftheactionsoromissionsoftheLessee.
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11.12 The Lesseeshall have an approved plan prior to commencement of operations
on the Leased Land for responding to hazardous waste, fuel, and other chemical spills (“Spill
Plan”). The Spill Plan shall comply with all applicable requirements and shall be updated as
required to comply with changes in site conditions or applicable requirements and shall be
approvedbyallagencieshavingregulatoryjurisdictionoversuchplan.TheSpillPlanshallbe
independent of Government spill prevention and response plans. Except for initial fire
responseand/orspillcontainment,theLesseeshallnotrelyonuseofNellisAFBpersonnelor
equipment in execution of its Spill Plan. Should the Government provide any personnel or
equipment,whetherforinitialfireresponseand/orspillcontainmentorotherwiseonrequest
of the Lessee or because the Lessee was not, in the opinion of the Government, conducting
timely cleanup actions, the Lessee agrees to reimburse the Government for its costs as
supplementalrent,andinaccordancewithApplicableLaws.
11.13 Prior to the storage, mixing, or application of any pesticide, as that term is
defined under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), the Lessee
shallprepareaplanforstorage,mixing,andapplicationofpesticides(“PesticideManagement
Plan”).ThePesticideManagementPlanshallbesufficienttomeetApplicableLaws.TheLessee
shall store, mix, and apply all pesticides within the Project only in strict compliance with the
PesticideManagementPlan.Thepesticideswillonlybeappliedbyalicensedapplicator.
11.14 The Lessee shall comply with all requirements of the Federal Water Pollution
Control Act, the National Pollutant Discharge Elimination System (NPDES), and any applicable
state or local requirements. If the Lessee discharges wastewater to a publicly or federally
owned treatment works, the Lessee must submit a Pretreatment Permit Application prior to
the Effective Date. The Lessee will be responsible for meeting all applicable wastewater
dischargepermitstandards.TheLesseewillnotdischargewastewaterundertheauthorityof
anyNPDESpermit,pretreatmentpermit,oranyotherpermitissuedtoNellisAFB.TheLessee
oritssublesseesshallmakenouseofanyseptictankinstalledonNellisAFB.
11.15 TheLesseemustnotifytheGovernmentoftheLessee’sintenttopossess,store,
oruseany“licensedorlicensablesourceorbyproductmaterials,”asthosetermsaredefined
under the Atomic Energy Act and its implementing regulations; of the Lessee’s intent to
possess, use, or store radium; and of the Lessee’s intent to possess or use any equipment
producing ionizing radiation and subject to specific licensing requirements or other individual
regulations, at least sixty (60) Days prior to the entry of such materials or equipment upon
Nellis AFB. Upon notification, the Government may impose such requirements, including
prohibition of possession, use, or storage, as deemed necessary to adequately protect health
and the human environment. Thereafter, the Lessee must notify the Government of the
presence of all licensed or licensable source or by product materials, of the presence of all
radium, and of the presence of all equipment producing ionizing radiation and subject to
specific licensing requirements or other individual regulation; provided, however, that the
Lessee need not make either of the above notifications to the Government with respect to
source andby productmaterial that is exemptfrom regulation under the Atomic EnergyAct.
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The Lessee shall not, under any circumstances, use, own, possess, or allow the presence of
specialnuclearmaterialontheProject.
11.16 The Lessee will comply with the Nellis AFB water conservation policy, as
amendedfromtimetotime(totheextentthatsuchpolicyexistsandappliestowateruseon
theLeasedLandandtheLesseereceivescopiesthereof).
11.17 TheLesseewilluseallreasonablemeansavailabletoprotectenvironmentaland
naturalresources,consistentwithApplicableLawsandthisLease.Wheredamagenevertheless
occurs,arisingfromtheLessee’sactivities,theLesseeshallbefullyliableforanysuchdamage.
11.18 The Lessee shall not remove or disturb, or cause or permit to be removed or
disturbed,anyhistorical,archeological,architectural,orotherculturalartifacts,relics,remains,
orobjectsofantiquity.IntheeventsuchitemsarediscoveredontheLeasedLand,theLessee
shall immediately notify the Government and protect the site and the material from further
disturbanceuntiltheGovernmentgivesclearancetoproceed.
11.19 TheLesseeacknowledgesthatthesurfacesoilontheLeasedLandmaycontain
elevated levels of pesticides and pesticideͲrelated chemicals applied in the normal course of
maintaining the Leased Land. The Lessee shall manage all such soil on the Leased Land in
accordancewiththerequirementsofApplicableLaws.TheGovernmentwillnotberesponsible
forinjuryordeathofanypersonaffectedbysuchsoilconditionswhetherthepersoniswarned
or not. To the extent that environmental testing detects chlordane on any portion of the
LeasedLand,theLesseeshall,atitssolecostandexpense,managesuchchlordaneinplaceto
the fullest extent permitted under Applicable Laws; provided, however, that the Lessee may
requestwrittenconsentfromtheGovernmenttoremovecontaminatedsoilaspermittedunder
Applicable Laws, which consent shall not be unreasonably withheld. The provisions of
Condition11.7shallapplytosuchchlordaneonlytotheextentthatitcannotbemanagedin
placeunderApplicableLaws.MovementofpesticideimpactedsoilontheLeasedLandbythe
Lessee does not constitute introduction of a Hazardous Substance onto the Leased Land for
purposesof10U.S.C.§2692.
11.20 If at any time either Party shall become aware, or have reasonable cause to
believe,thatanyHazardousSubstancehasbeenreleasedorhasotherwisecometobelocated
onorbeneaththeLeasedLandinamountsgreaterthaneitherthereportablequantitiesora
levelrequiringresponseaction(s)underanApplicableLaw,suchPartyshallimmediatelyupon
discovering the release or the presence or suspected presence of the Hazardous Substance,
givewrittennoticeofthatconditiontotheotherParty.Inaddition,thePartyfirstlearningof
the release or presence of any Hazardous Substance on or beneath the Leased Land, shall
immediately notify the other Party in writing of: (i) any enforcement, cleanup, removal, or
othergovernmentalorregulatoryactioninstituted,completed,orthreatenedpursuanttoany
ApplicableLaw;(ii)anyclaimmadeorthreatenedbyanypersonagainsttheGovernment,the
Lessee, or the Leased Land arising out of, or resulting from, the release or presence of
HazardousSubstances;and(iii)anyreportsmadetoanylocal,state,orFederalenvironmental
agencyarisingoutof,orinconnectionwith,anyreleaseofHazardousSubstances.
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11.21 Consistent with the requirements of Condition 13, the Project is subject to all
applicablefederalandstateenvironmentallawsandregulations,includingbutnotlimitedto,
the National Environmental Policy Act (NEPA) to include the CEQ NEPA regulations at 40 CFR
1500 Ͳ 1508 , the Air Force Environmental Impact Analysis Process (EIAP) under 32 CFR 989,
Executive Order 11990, Protection of Wetlands, and Executive Order 11988, Floodplain
Protection, the RCRA, the Toxic Substances Control Act (TSCA), The Atomic Energy Act (AEA),
the Hazardous Materials Transportation Act (HMTA), the Occupational Health and Safety Act
(OSHA), and the CERCLA. The Lessee shall be responsible for ensuring compliance with all
applicable federal and state environmental laws and implementing regulations. The Lessee
shallalsocomplywiththeNellisAFBIntegratedNaturalResourceManagementPlan(INRMP)
andNellisAFBCulturalResourceManagementPlan(CRMP),copiesofwhichwillbeprovidedto
LesseebyGovernment.TheGovernmentwillprovidetheLesseeareasonableopportunityto
review and comment on any proposed revisions to the INRMP or CRMP that may affect the
LeasedLand.
11.22 TheLesseewillnotadverselyaffectwaterdrainagepatternsonNellisAFB.
11.23TheLesseeshallensurenoinvasiveplantspeciesareintroducedontoNellisAFB
asaresultofconstructionactivitiesoroperationalactivities.Ifintroductionofinvasivespecies
occurswithin500feetoftheProject,theLesseewillberesponsibleforallcostsassociatedwith
eradication.
CONDITION12
MAINTENANCEOFLEASEDLAND
12.1 The Lessee, at no expense to the Government, shall at all times preserve,
maintain, repair, and manage the Project in an acceptable, safe, and sanitary condition in
accordancewiththisLease.TheLessee’ssolemaintenanceresponsibilityiswithrespecttothe
LeasedLandandnotforadjacentorexcludedpropertyownedbytheGovernmentoranythird
party.ThePartiesacknowledgethattheLesseewillinstalltheProjectontheLeasedLandand
theProjectEasementsandLesseeshallhavenomaintenanceresponsibilityforanyadjacentor
neighboringproperty,including,withoutlimitation,theExcludedLand.
12.1.1 TheLesseeshallberesponsiblefortheoperationandmaintenanceofthe
utilitysystemsownedand/orleasedbyitwithintheLeasedLand,including,butnotlimitedto,
water, gas, TV, electric, sanitary sewer, and storm systems. The Government assumes no
responsibilityunderthisLeaseforutilitysystemsleasedorownedbytheLessee.
12.1.2 The Lessee shall at all times maintain all roads, streets, curbing,
sidewalks,parkingareas,accessdrives,andappurtenantdrainagetheretowithintheProjectin
goodconditionandkeepthemfreeofdebrisandobstructionsofanykind;provided,however,
that Lessee’s obligations under this Condition 12.1.2 shall not requirethe Lessee to maintain
roads, streets, curbing, sidewalks, parking areas, access drives, and appurtenant drainage
theretoalongtherouteoftheFeeders.
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12.2 Subject to Section 12.1 above, if the Lessee damages or destroys any real or
personal property of the Government other than as required to construct the Project, the
Lessee shall promptly repair or replace such real or personal property to the reasonable
satisfaction of the Government. At the Government’s election, in lieu of such repair or
replacement the Lessee shall pay to the Government money in an amount sufficient to
compensateforthelosssustainedbytheGovernmentbyreasonofdamageordestructionof
Governmentproperty,includingnaturalresources.
CONDITION13
COMPLIANCEWITHAPPLICABLELAWS
13.1 The Lessee shall comply, at its sole cost and expense (except for matters for
which the Government remains obligated hereunder), with all federal, state, and local laws,
rules,regulations,orders,ordinanceswhichareapplicabletotheLesseeortheProjectduring
theLeaseTerm(collectively,the“ApplicableLaws”).AssetforthinCondition11,thescopeof
“ApplicableLaws”shallincludebutisnotlimitedtothosefederal,state,andlocallaws,rules,
regulations, orders, and ordinances, implementing NEPA, the Clean Water Act, Clean Air Act,
SafeDrinkingWaterAct,TSCA,RCRA,theAEA,OSHAandCERCLA.
13.2 Nothing in this Lease shall be construed to constitute a waiver of Federal
supremacyorFederalsovereignimmunity.OnlylawsandregulationsapplicabletotheProject
under the Constitution and statutes of the United States are covered by this Condition. The
United States presently exercises proprietary Federal jurisdiction over the Leased Land. The
Government reserves the right to change the jurisdiction and the Lessee shall have no claim
againsttheGovernmentonaccountoftheexerciseofthisreservedrighttochangejurisdiction.
13.3 Responsibility for compliance as specified in this Condition 13 rests exclusively
with the Lessee. The Government assumes no enforcement or supervisory responsibility,
exceptwithrespecttomatterscommittedtoitsjurisdictionandauthority.TheLesseeshallbe
liable for all costs associated with compliance, defense of enforcement actions or suits,
paymentoffines,penalties,orothersanctionsandremedialcostsrelatedtotheLessee’suse
andoccupationoftheProject.
13.4 TheLesseeshallhavetherighttocontestbyappropriateproceedingsdiligently
conductedingoodfaith,withoutcostorexpensetotheGovernment,thevalidityorapplication
ofanylaw,ordinance,order,rule,regulation,orrequirementofthenaturereferredtointhis
Condition13.TheGovernmentshallreasonablycooperatewiththeLesseeinsucheffortsas
necessary.
CONDITION14ACCESSANDINSPECTION
14.1 AnyagencyoftheUnitedStates,itsofficers,agents,employees,contractors,and
subcontractorsmayentertheProjectatalltimes,subjecttotheLessee’srighttoquietuseand
enjoymentoftheLeasedLandandsuchperson’swillingnesstofollowthesafetyrequirements
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applicabletotheProject,toconfirmcompliancebytheLesseewiththetermsofthisLease.The
GovernmentnormallywillentertheProjectduringregularbusinesshoursandgivetheLessee
atleasttwentyfour(24)hourspriornoticeofitsintentiontodoso,unlessitdeterminesthe
entry is required for safety, environmental, operations, or mission security purposes. The
LesseeshallhavenoclaimonaccountofanyentriesagainsttheUnitedStatesoranyofficer,
agent,employee,contractor,orsubcontractorthereof.
CONDITION15
GENERALINDEMNIFICATIONBYLESSEE
15.1 Except as otherwise provided in this Lease, the Government shall not be
responsiblefordamagestopropertyorinjuriesordeathtopersonsthatmayarisefrom,orbe
attributableorincidentto,theconditionorstateorrepairoftheLeasedLand,ortheuseand
occupation of the Leased Land, or for damages to the property of the Lessee, or injuries or
deathoftheLessee’sofficers,agents,servants,employees,orsublessees,orotherswhomay
beontheProjectattheirinvitationortheinvitationofanyoneofthem.
15.2 ExceptasotherwiseprovidedinthisLease,theLesseeagreestoassumeallrisks
oflossordamagetopropertyandinjuryordeathtopersonsbyreasonof,orincidentto,the
possession and/or use of the Project by the Lessee, the Lessee’s officers, agents, servants,
employees,orothers(excludingthoseemployeesoragentsoftheGovernmentwhoareonthe
LeasedLandforthepurposeofperformingofficialduties)whomaybeontheLeasedLandat
their invitation or the invitation of any one of them (the “Lessee Parties”), or the activities
conductedbyoronbehalfoftheLesseePartiesunderthisLease.TheLesseeexpresslywaives
allclaimsagainsttheGovernmentforanysuchloss,damage,bodilyinjury,ordeathcausedby,
or occurring as a consequence of, such possession and/or use of the Project by the Lessee
Parties,ortheconductofactivitiesortheperformanceofresponsibilitiesunderthisLease.The
Lesseefurtheragrees,totheextentpermittedbyApplicableLaws,toindemnify,save,andhold
harmless the Government, its officers, agents, and employees, from and against all suits,
claims, demands or actions, liabilities, judgments, costs, and attorneys’ fees arising out of,
claimed on account of, or in any manner predicated upon bodily injury, death, or property
damageresultingfrom,relatedto,causedby,orarisingoutofthepossessionand/oruseofany
portionoftheProject,oranyactivitiesconductedorservicesfurnishedbyoronbehalfofthe
LesseePartiesinconnectionwith,orpursuant,tothisLease,andallclaimsfordamagesagainst
theGovernmentarisingoutof,orrelatedto,theLease.TheagreementsofLesseecontainedin
this Condition 15.2 extend to claims caused, or alleged to by caused, by the sole or partial
simple negligence, gross negligence or willful misconduct of officers, agents or employees of
the United States, but only to the extent of contractual liability coverage under the Lessee’s
commercialgeneralliabilityinsurancerequiredunderthisLease.TheGovernmentwillgivethe
Lessee notice of any claim against it covered by this indemnity as soon as practicable after
learningofit.
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CONDITION16
INSURANCE
16.1 Except as set forth in Condition 4.4 or as otherwise set forth in this Lease, the
LesseeshallinanyeventandwithoutprejudicetoanyotherrightsoftheGovernmentbearall
risk of loss or damage or destruction to the Leased Land, and any Leasehold Improvements
thereon, arising from any causes whatsoever, with or without fault by the Government,
provided, however, the Government shall not be relieved of responsibility for loss or damage
thatissolelytheresultofthenegligenceorwillfulmisconductoftheGovernmenttotheextent
suchlossordamageisnotcoveredbycoverageofinsurancerequiredunderthisLeaseand(ii)
totheextentrecoveryisauthorizedunderApplicableLaws.
16.2 DuringtheentireLeaseTerm,theLessee(oritscontractorsorsublessees),atno
expensetotheGovernment,shallprocure,carryandmaintainthefollowinginsurance:
16.2.1 Uponthecommencementofany,demolition,renovationorconstruction
on the Leased Land, the Lessee (or its contractors or sublessees) shall procure, carry, and
maintain until completion of the Project allͲrisk property insurance with limits of coverage
equaltothefullreplacementcostvalueoftheProject.UponcompletionoftheProjectonthe
Leased Land, the Lessee shall procure, carry, and maintainat Lessee’scost a standard allͲrisk
propertyinsurancepolicyorpoliciesontheProject.Propertyinsurancecoveragewillbeona
replacement cost value basis with no coinsurance for full replacement value of the Project.
Such replacement value shall be determined by the Lessee, subject to adjustment not more
frequentlythanonceinanytwelveͲmonthperiodunlesstherehavebeensubstantialchanges
to the Project within such period. Property insurance shall have: (i) a deductible no greater
than $2,500,000, unless otherwise approved in writing by the Government, which may be
increasedwithouttheapprovaloftheGovernmentsolongasLesseemaintainsatangiblenet
worth of $500,000,000 or greater and affords such protection to the Government as if such
insurance coverage is in place; (ii) earthquake (including sinkhole collapse), flood, windstorm
andnamedwindstorm,andsewerbackup,withcommerciallyavailablelimitsanddeductibles
approvedbytheGovernment;(iii)terrorisminsurancewithlimitsanddeductiblesifavailableat
reasonable rates; (iv) ordinance and law coverage to include portions of the Project’s
undamagedbuilding(s),demolitionofbuilding(s),andbuilding(s)increasedcostofconstruction,
and(v)coverageforownedand/orrentedtoolsand/orequipmentbroughtontoand/orused
on the Project. Such property insurance policies shall provide that in the event of loss
thereunder,theproceedsofthepolicyorpolicies,attheelectionofLessee,shallbepayableto
Lessee to be used for the repair, restoration or replacement of the property damaged or
destroyed. Any balance of the proceeds not required for such repair, restoration or
replacement shall be paid to Lessee, or to a mortgagee of Lessee’s leasehold interest in this
Lease, as designated in writing by Lessee. The standard property allͲrisk and builders’ risk
insurancepoliciesissuedbytheinsurersshallbeforthemutualbenefitoftheGovernmentand
any Approved Mortgagee(s), and the Lessee will name the Government and any Approved
Mortgagee(s)asadditionalinsuredsand/orlosspayeesastotheirrespectiveinterests.
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16.2.2 Commercial general liability insurance issued on a claimsͲmade basis
insuring against claims for bodily injury, including death resulting therefrom, and property
damage suffered or alleged to have been suffered by any person(s) resulting from the
operationsoftheLesseeduringand/orafterconstructionattheLeasedLandundertheterms
of this Lease. Subject to the provisions of Condition 16.3, the commercial general liability
insurance shall insure the operations conducted in and on the Leased Land, including
independentcontractorsandcontractualliabilitycoverageandprovidethatanylossesshallbe
payablenotwithstandinganyact,failuretoact,ornegligenceoftheLessee,theGovernment,
anyApprovedMortgageeoranyotherperson.Commercialgeneralliabilityinsurancemustbe
effective at all times throughout the Lease Term, with limits of liability of $2,000,000 per
occurrence,generalaggregate,andproductsandcompletedoperationsaggregate,andinclude
coverageforfire,legalliability,andmedicalpayments.Generalaggregatelimitshallapplyon
eithera“perlocation”or“perproject”basis.TheGovernmentandotherappropriateentities
shallbelistedonthecommercialgeneralliabilityandanyexcessumbrellaliabilitypolicy(ies)as
additionalinsuredsandshallhaveequalstandingwithotheradditionalinsuredsforthepurpose
ofsubmittingclaimsdirectlywiththeinsurer.Thiscoverageshallbeprimary,nonͲcontributory
and may be provided under a combination of primary liability and umbrella excess liability
policies. The Additional Insured Endorsement shall be in the form of the Insurance Services
Offices Form CG 2026 1185; however, the Government shall have the right to specify an
equivalentformifthespecifiedformissupersededornolongeravailable.
16.2.3 Commercial business automobile liability insurance that insures against
claims for bodily injury (or death) and property damage arising from the ownership,
maintenance,oruseof“anyauto”andofanyotherequipmentrequiredtobelicensedforroad
usehavingatleastacombinedsinglelimitof$1,000,000.Thiscoveragemaybeprovidedunder
acombinationofprimaryliabilityandumbrellaexcessliabilitypolicies.TheGovernmentand
otherappropriateentitiesshallbelistedasadditionalinsureds.
16.2.4 Commercial workers’ compensation liability insurance having at least
limitsofliabilityasrequiredbytherespectivestatestatutorylaw(s).Waiverofsubrogationin
favoroftheGovernmentmustbeevidencedinthisinsurancecoverage.
16.2.5 Commercialemployers’liabilityinsurancetoincludethirdͲpartyproperty
coveragehavinglimitsofliabilityofatleast$1,000,000pereachbodilyinjurybyaccidenteach
accident,$1,000,000pereachemployeebodilyinjurybyoccupationaldisease,and$1,000,000
intheannualaggregatepereachbodilyinjurybyoccupationaldisease.
16.2.6 Lessee(oritscontractorsorsublessees)shallberequiredtopurchasethe
followingcommercialinsurancecoveragesifeachrespectiveexposure(s)exist(s),orotherwise
provide evidence satisfactory to the Government of selfͲinsurance in the amount(s) set forth
below:
(i)
Commercial environmental or pollution legal liability insurance for, but
notlimitedto,coverageforsudden&accidentalandnonͲsuddenpollutionconditions,bodily
injury(includingdeath),propertydamage(includingtheresultinglossofusethereof),cleanͲup
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costsanddefensecosts(includingcoverageformoldwhenavailable)withlimitsofliabilityofat
least$10,000,000perclaimand$10,000,000intheaggregate.
TheinsurancecarriedandmaintainedbytheLesseepursuanttothisCondition
16shallprovidecoveragetoprotecttheGovernmentfromanydamageandliabilityforwhich
theLesseeisliableorresponsibleoragreestoholdharmlessandindemnifytheGovernment
underthisLease.
16.3 Lessee may require any sublessees to procure, carry and maintain at their
expense portions of the insurance required hereby and Lessee shall not be required to carry
insuranceonsuchportionoftheProjectinsuredbyanysublessees,providedthattheinsurance
carriedbyanysublesseeisnolessthanthefollowing:
16.3.1 AllͲRisks Commercial Property insurance coverage for business personal
property and improvements and betterments made to the Leased Land having limits based
upon the full replacement cost value basis. In the event Lessee allows any sublessee rather
thantheLesseetoprovidetheallͲriskpropertyinsuranceonanyportionoftheProject,Lessee
shallnotifytheGovernmentandprovidetheGovernmentacopyofthecertificateofinsurance
withrespectthereto.
16.4 All insurance policies this Lease requires the Lessee to procure, carry, and
maintain,orcausetobeprocured,carried,ormaintainedpursuanttothisCondition16,shall
be effected under valid and enforceable policies in such forms and amounts as issued by
insurance company(ies) having a rating by A.M. Best’s Key Rating Guide of not less than “AͲ
/VIII”. All such required insurance policies shall provide that any losses shall be payable
notwithstanding any act or failure to act or negligence of the Lessee, the Government, any
ApprovedMortgagee,oranyotherperson.Eachrequiredinsurancepolicyshallprovidethatno
cancellation, reduction in amount, or material change in coverage thereof shall be effective
until at least ten (10) days after receipt by the Government and any Approved Mortgagee of
writtennoticethereof.Eachrequiredinsurancepolicyshallprovidethattheinsurershallhave
no right of subrogation against the Government or any Approved Mortgagee. Each required
insurancepolicyshallalsobereasonablysatisfactorytotheGovernmentinallotherrespects.
AllpropertyinsurancepoliciesrequiredbyCondition16.2.1shallbepayabletotheLesseeand
anyApprovedMortgageeinaccordancewiththisLeaseandCondition16.2.1.TheLesseeisnot
entitled to assign to any thirdͲparty rights of action that the Lessee may have against the
Government except for assignments to sublessees or mortgagees of Lessee hereunder.
Notwithstandingtheforegoing,anycancellationofinsurancecoveragebasedonnonpayment
ofthepremiumshallbeeffectiveuponten(10)days’writtennoticetotheGovernmentandany
Approved Mortgagee. The Lessee understands and agrees that cancellation of any insurance
coverage required to be carried and maintained by the Lessee under this Condition 16 will
constituteafailuretocomplywiththetermsofthisLease,andtheGovernmentshallhavethe
righttoterminatethisLeasefordefaultandbreachpursuanttoCondition8uponreceiptofany
suchcancellationnotice,butonlyiftheLesseefailstocuresuchnoncompliancetotheextent
allowed under Condition 8. The Lessee shall deliver certificates of insurance necessary to
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afford additional insured and/or loss payee status and evidence other conditions as required
perprovisionsabove.
In the event that any part of the Project is damaged (except de minimis damage) or
destroyed, the risk of which is assumed by the Lessee under Condition 16.1 (“Damaged or
Destroyed Property”), the Lessee shall promptly give notice thereof to the Government and
anyApprovedMortgagee.
16.4.1 The Lessee shall, as soon as reasonably practicable after the casualty,
restoretheDamagedorDestroyedPropertyasnearlyaspossibletotheconditionthatexisted
immediatelypriortosuchlossordamage,subjecttoCondition16.5.2.
16.4.2 Intheeventthatthecosttorepair,rebuild,orreplacetheDamagedor
DestroyedPropertywouldexceed$2,000,000ortherepairs,rebuilding,orreplacementofthe
DamagedorDestroyedPropertycannotreasonablybeexpectedtobesubstantiallycompleted
withinnine(9)monthsoftheoccurrenceofthecasualty(“ExtensiveDamageorDestructionof
LeaseholdImprovements”),LesseemayterminatethisLeaseasprovidedinCondition8.3.2.If
the Parties and any Approved Mortgagees mutually agree to repair, rebuild, and replace less
thanallDamagedorDestroyedProperty,thenLesseeshallnothavetherighttoterminatethis
LeaseasprovidedinCondition8.3.2withrespecttotheLeasedLandonwhichtheDamagedor
DestroyedPropertythatwillberepaired,rebuilt,andreplacedissituated.Inaddition,inthe
event that the repairs, rebuilding, or replacement of the Damaged or Destroyed Property
cannot reasonably be expected to be substantially completed within nine (9) months of the
occurrenceofthecasualtytheGovernmentmayterminatethisLeaseasprovidedinCondition
8.3.2.
16.4.3 Any insurance proceeds received as a result of any casualty loss to the
ProjectshallbeappliedfirsttorestoringtheLeasedLandandremovinganyrelateddebrisand
theexcess,ifany,shallbepaidtotheLessee.
16.5 Lessee shall require its insurance company or companies to furnish to the
Government a copy of the certificate or certificates of insurance evidencing the purchase of
such insurance and from time to time the renewal of such insurance as soon as each such
certificateismadeavailablebytheinsurerinaformreasonablyacceptabletotheGovernment,
and including such endorsements necessary to afford additional insured status or evidence
otherconditionsasrequiredperprovisionsabove,orboth.Theminimumamountofliability
insurancecoverageissubjecttoreasonablereviewbytheGovernmenteveryten(10)yearsor
upon renewal or modification of this Lease. If the amount of Lessee’s liability insurance is
reasonablycomparable to the liabilitycoverage generallycarried by other owners of projects
similartotheProject,thensuchinsuranceshallbedeemedacceptabletotheGovernment.
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CONDITION17
CONSTRUCTIONOFIMPROVEMENTS
17.1 TheGovernment’ssoleandexclusiveinterestinandliabilityunderthisLeaseare
limitedtothatofLessoroftheLeasedLand.TheLesseeshallretainandholdlegaltitletoand
possessionoftheProjectandallLeaseholdImprovementsthroughouttheLeaseTerm(except
forthosecertainimprovementstobelocatedtothenorthofthe“DemarcationPoint”asshown
onExhibitDinstalledbyLessee,includingallcabletobelocatednorthoftheswitcheslabeled
“NVESW#1”,“NVESW#2”,“NVESW#3”,and“NVESW#4”andalsoincludingthethree(3)
switcheslabeledas“DFͲ10's”onExhibitD,whichshallbeownedbytheGovernmentupontheir
completion); provided that the Lessee may lease or sublease the Project as contemplated
herein.TheLeaseholdImprovementsinstalledaspartoftheProjectshallbeatalltimesduring
the Lease Term remain the property of the Lessee separate and apart from the leasehold
interest and all other real property rights. Subject to the provisions of Condition 18, the
Governmentwillprovidewaterandelectricitywhereavailable.TheLesseeisresponsibleforall
hookups and shall return utilities to their original condition upon completion of construction.
The Lessee shall provide water and electric meter(s) and backflow preventer(s). The Lessee
shallexerciseresponsibleuseofallutilities.TheLesseeshallreportmonthlywaterandelectric
usagetotheGovernmentinthemannerprescribedintheOperatingAgreement.
17.2 TheLesseeshallberesponsibleforandobtain,atitssoleexpense,priortothe
commencement of any demolition, renovation or construction, and upon completion of said
demolition, renovation or construction, any approvals, permits, or licenses that may be
necessary to construct, occupy, and operate the Project in compliance with Applicable Laws,
includingwithoutlimitation,anycertificatesofoccupancy,andotherapplicableapprovalsfrom
governmentalauthoritiesnecessaryfortheconstruction,use,oroccupancyoftheProject.
17.2.1 The Government shall cooperate with Lessee to secure any necessary
approvalsfromtheNevadaDivisionofEnvironmentalProtectiontoallowLesseetoconstruct,
operate,maintain,dismantleandremovetheProjectontheLeasedLandasmayberequired
pursuant to that certain “Final Site LFͲ01 No Further Action Decision Document, ACC 4ͲBase
PBC,NellisAirForceBase,NV,”datedJune20,2007(the“NoFurtherActionDecision”),orany
subsequentrequirementoftheNevadaDivisionofEnvironmentalProtectionpertainingtothe
condition of the LFͲ01 landfill as it existed prior to the Effective Date. Lessee shall make all
reasonableeffortstoassistGovernmentinsecuringanynecessaryapprovalsfromtheNevada
DivisionofEnvironmentalProtection.
17.3 The Lessee shall submit to the Government for its review and approval
engineeringdesignplansanddrawingsforallLeaseholdImprovementsandNellisAFBElectric
InterconnectEquipment(includingwithoutlimitationallutilitysystems)andgrounds(including
withoutlimitationalllandscaping,roadsandtrafficflows)thataretobeapartoftheProject
(“DesignPlans”).ExceptfortheNellisAFBElectricInterconnectEquipment,DesignPlansshall
beprepared,signedandsealedbyadulyqualifiedengineerregisteredinthestateofNevada.
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DesignPlansshallbepreparedinaccordancewiththerequirementsof:(i)thisLease,(ii)any
Project Easements, (iii) Applicable Reliability Criteria, (iv) the State of Nevada building codes,
standards,regulationsandthefederallaws,astheymaybeamended,thatwouldapplytolike
development activities outside Nellis AFB and within the County of Clark (“County”) in which
the Installation is situated (“Applicable Codes”), and (v) Applicable Laws (collectively, the
“Design Criteria”). Upon the Government’s written approval, the Design Plans shall be
incorporated into and made a part of the Site Plan. The Government must approve or
disapprove of the Design Plans within thirty (30) Days of receipt, and any disapproval of the
Design Plans by Government shall provide specific grounds for disapproval and
recommendations for modification of such Design Plans so that they may be promptly
approved by Government upon revision and reͲsubmittal. The purpose of the Government
review is to ensure that the system design is compatible with the Air Force mission, base
architecturalstandards,andtheLease.Thegovernmentwillnotperformacodecomplianceor
detailed technical/engineering review of the design. The Government will not unreasonably
withhold, delay or condition its approval of the Design Plans. A copy of the final design
drawings shall also be provided to the Base Civil Engineer located at 99 CES/CC, 6020 Beale
Ave., Nellis AFB, NV, 89191Ͳ7007. Following review and approval by the Government of the
DesignCriteriafortheProject,theGovernmentagreestoholdLesseeanditsAffiliatesharmless
from damages to property or injuries or death to persons that may arise from, or be
attributable or incident to, the Nellis AFB Electric Interconnect Equipment or the
interconnection of the Project (including, without limitation, any damages or other adverse
impactstoNellisAFB’selectricdistributionsystem).
17.3.1 IfatanytimetheLesseeproposestomateriallychangetheDesignPlans
previouslyapprovedbytheGovernment,theLesseeshallsubmittheproposedchanges(“Plan
Alterations”)totheGovernment.PlanAlterationsmustbeprepared,signedandsealedbya
dulyqualifiedengineerregisteredinthestateofNevada.
17.3.2 IftheGovernmentbelievesthatanyPlanAlterationssubmittedtoitfor
its review and approval are not materially consistent with the Air Force mission, base
architectural standards, or the Lease, the Government may, in its reasonable discretion,
disapprovesuchPlanAlterationsorprovidewrittennoticetotheLesseeofsuchinconsistency
andanycorrectiveactionproposedbytheGovernment(a“PlanAlterationsExceptionNotice”)
within twenty (20) days of its receipt of the same. If the Lessee does not receive from
GovernmentaPlanAlterationsExceptionNoticewithintwenty(20)Daysaftersubmittingthe
PlanAlterationstotheGovernment,suchPlanAlterationswillbedeemedtobeunacceptable
totheGovernment.Ifwithintwenty(20)DaysafterdeliverytotheLesseeofaPlanAlterations
Exception Notice, the Lessee and the Government are unable to agree on whether the plans
can be made consistent with the development activities previously approved, such Plan
Alterationsshallbedeemeddisapproved. 17.4 TheLesseeshallnotundertakeanyconstructionworkuntilitreceivesa“Notice
toProceed”fromtheGovernment,whichshallbeprovidedassoonasreasonablypracticable
butnolaterthanfifteen(15)Daysfollowingthelaterof(i)theGovernment’sapprovalofthe
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proposed Design Plan or (ii) Nevada Division of Environmental Protection approval as
contemplated by Condition 17.2.1 (if such approval is required). Subject to Condition 17.6,
withintwentyeight(28)DaysafterissuanceofaNoticetoProceed,theLesseeshallcommence
and diligently proceed with construction of the Leasehold Improvements covered by such
NoticetoProceedinagoodandworkmanlikemannerandinaccordancewith:(i)thisLease,(ii)
Applicable Codes, (iii) the Site Plan including without limitation the Design Plans, and (iv)
ApplicableLaws(collectively,the“ConstructionRequirements”).Adherencetotheapproved
ConstructionRequirementsshallbesubjecttoExcusableDelays(asdefinedinCondition33).
17.5 Throughout the construction period, the Lessee will assure that the
workmanship and materials used by any contractor, subcontractor, or vendor satisfy the
Construction Requirements, and at the end of the construction period shall certify to the
Government that each phase of the Project has been completed in accordance with the
ConstructionRequirements.TheGovernmentshallhavetheright,atitselection,toparticipate
inanyoftheLessee’smeetingsinvolvingconstructionoftheProjectandLesseeshallallowthe
Governmenttoparticipateinsuchmeetings.
17.6 The Lessee must provide to the Government payment and performance bonds
withrespecttotheconstructionworktobeundertakenbytheLesseecoveredbyanyNoticeto
Proceed.Eachofthebondsmust:(i)beissuedbyaQualifiedSurety(asdefinedbelow);(ii)be
inaformsatisfactorytotheGovernmentandanyApprovedMortgageeandruninfavorofthe
Government and any Approved Mortgagee; (iii) be in the amount of the total cost of
constructing the portion of the Project covered by such Notice to Proceed, as such cost is
stipulated in the construction contract between the Lessee and its general contractor; (iv)
guarantee the performance of the contract for the construction of such improvements in
accordancewiththeConstructionRequirements;and(v)providethattheGovernmentandany
Approved Mortgagee are dual obligees on such bonds. A “Qualified Surety” is a corporate
suretyorinsurerauthorizedtodobusiness,andtoissuebondsforconstructionpaymentand
performance, in the state of Nevada and possessing a longͲterm unsecured debt rating from
anyRatingAgencyofnolowerthantworatingcategoriesbelowthehighestratingoutstanding
onthesecuritiesbackedbythistransaction.
17.7 The Government and its representatives, agents, and employees shall have
access to the Leased Land during construction of the Project for purposes of monitoring,
observing, making inquiries, taking samples of materials for testing, as well as such other
matters as the Government deems to be reasonably necessary for the Government to
determinetheLessee’scompliancewiththeConstructionRequirements.ThePartiesexpressly
understandandagreethat:(i)anyinspectionactivitybytheGovernmentshallnotrelievethe
Lessee of its responsibility for completing the Project in accordance with the Construction
Requirements; (ii) failure of the Government to make any onͲsite inspections or conduct any
testingshallnotlimit,orbeconstruedtolimit,anyoftheGovernment’srightsunderthisLease;
and(iii)noactionbytheGovernmentshallbedeemedtobeconfirmationthattheLeasehold
Improvements shown in the Design Plans approved by the Government comply with the
Construction Requirements and Applicable Laws. The Lessee’s failure to comply with the
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Construction Requirements following thirty (30) Days notice and the right to cure shall
constituteanEventofDefault
17.8 The Lessee, the Lessee’s general contractor and the Government shall attend
preͲconstruction conferences to acquaint the Lessee, the Government, and the other
participantswiththeConstructionRequirements(eacha“PreͲconstructionConference”).Each
PreͲconstruction Conference shall take place in accordance with the Construction
Requirements,andonsuchadditionaldatesastheGovernmentmayreasonablyrequire.Atthe
firstPreͲconstructionConference,theLesseeshallsubmitthepaymentandperformancebonds
requiredunderCondition17.6,andsuchotherdocumentsandinformationastheGovernment
mayrequire.
17.9 Any existing improvements that will be demolished by the Lessee shall be
demolished in accordance with the requirements of this Lease and the Demolition Plan
preparedbytheLesseeandapprovedbytheGovernment.
17.9.1 The Demolition Plan shall clearly set out a schedule of demolition
activities.
17.9.2 In the event there is suspected asbestosͲcontaining material or leadͲ
based paint within the improvements scheduled for demolition, the Demolition Plan shall
includeanasbestosandleadͲbasedpaintdisposalplanthatidentifiestheproposeddisposalsite
fortheasbestosandleadͲbasedpaintasrequiredunderthisLease.
17.9.3 TheDemolitionPlanshallcomplywithCondition11.19,formaintenance
ofsoilscontainingpesticideorpesticideͲrelatedchemicalcontaminants.
17.10 Allmattersofingress,egress,contractorhaulroutes,constructionactivity,and
dispositionofexcavatedmaterialinconnectionwiththisLeaseshallbeapprovedinadvanceby
theGovernment.
17.11 During the Lease Term, the Lessee shall have the right at its sole cost and
expense, to install such of its own machinery and equipment, to make Leasehold
Improvements, and to attach such removable fixtures in or upon the Leased Land as may be
necessary for its use of the Project pursuant to this Lease; and to remove such machinery,
equipment,leaseholdimprovements,andremovablefixturesatanytimepriortotheexpiration
orearlierterminationofthisLease.IntheeventoftheexpirationorterminationofthisLease,
the Lessee shall have a reasonable period of time following the expiration date or effective
terminationdate,toremovesuchproperty.
17.12 The Lessee shall not construct any permanent structure, including without
limitationanyadvertisingsigns,ormakeanystructuralmodifications,alternationsoradditions
ontheLeasedLandexceptasshownintheDesignPlansapprovedbytheGovernment.
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17.13 Upon completion of construction of the Project the Lessee shall make no
subsequentmajorstructuralmodifications,alterations,renovationsoradditionstotheProject
without the prior written consent of the Government, which shall not be unreasonably
withheld or delayed. Upon completion of construction of the Project and each subsequent
majorstructuralmodifications,alterations,renovationsoradditions,theLesseeshallfurnishto
theGovernment,exceptaspertainingtotheNellisAFBElectricInterconnectRequirements:(i)
certificates of each of a duly qualified engineer registered in the state of Nevada, a duly
qualified structural engineer registered in the state of Nevada, and any inspecting architect
confirming that the Project has been completed in accordance with the Construction
Requirements; (ii) a true, correct and complete copy of the permits and licenses, if any, that
were required in connection with the construction, renovation, and demolition of any of the
improvements,includingwithoutlimitation,anycertificatesofoccupancy,andotherapplicable
approvals from governmental authorities; (iii) an asͲbuilt plat of survey (prepared, to the
maximumextentpracticable,inaccordancewithALTA/ACSMStandards)oftheProjectdetailing
easements, the parcel boundaries and any encroachmentsto the boundaries, certified to the
Lessee, any Approved Mortgagees, and the Government; (iv) an electronic record contained
withinaGeographicInformationSysteminaformat,andwiththelevelofdetail,specifiedby
theGovernment,initsreasonablediscretion,providing(a)asͲbuiltdrawingsoftheLeasehold
Improvements shown in the Design Plans (contract drawings and specifications); (b) the final
Design Plans; and (c) any approved Plan Alterations; (v) evidence, which may consist of UCC
searches and a title insurance policy or an update endorsement to an existing title insurance
policyissuedbyatitleinsurancecompanyreasonablyacceptabletotheGovernment,thatthe
Project is free and clear of all liens (other than liens approved in accordance with Condition
22.2) arising out of, or connected with, the construction, renovation, and demolition of the
Project;and(vi)acertificateoftheLesseeconfirmingthattheLesseeisnotindefaultunderany
provisions of this Lease. All of the foregoing shall be satisfactory to the Government in its
reasonablediscretion.
CONDITION18
UTILITIESANDSERVICES
18.1 TheLesseeshallberesponsiblefortheconstruction,maintenanceandrepairof
allutilitydistributionandcollectionsystemsnecessaryfortheProject.
18.2 ThesaleofanyutilityservicebytheGovernmentwillbeinaccordancewith10
U.S.C. § 2686 and Air Force Instruction (AFI) 32Ͳ1061, Providing Utilities to US Air Force
Installations, as the same may beamended,modified or superseded from time to time. Any
purchaseofutilityservicesfromtheGovernmentissubjecttoConditions18.2.1and18.2.2.
18.2.1 TheLesseeagreestoenterintoaseparatecontractforeachutilityservice
procuredunderthisCondition18atratestobespecifiedineachcontractbytheGovernment.
18.2.2 The Government in no way warrants the continued provision,
maintenance, or adequacy of any utilities or services it may furnish to the Lessee. The
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Government, where economically feasible, may divest itself of its currently owned utility
systemsduringtheLeaseTerm.TheGovernmentmayelectinitssoleandabsolutediscretion
toceasefurnishinganyutilitiesorservices,andshallprovidewrittennoticetoLesseeatleast
one(1)yearpriortoitsterminationofsuchutilities.IntheeventthattheGovernmentnotifies
Lesseeofitsintenttoceasefurnishinganyoftheutilitiesorservicesthatarebeingprovidedon
the Effective Date, the Government shall enter into goodͲfaith negotiations with Lessee to
assist the Lessee in obtaining any necessary approvals, agreements, and/or permits for the
provisionofsuchutilitiesorservicesfromsourcesotherthantheGovernment.
18.3 The Lessee shall pay for any firefighting, fire protection, and police protection
servicesfurnishedbytheGovernmentforthebenefitoftheProjectduringtheLeaseTerm.
CONDITION19
OPERATIONANDMANAGEMENTOFTHEPROJECT
19.1 The Lessee agrees to operate and manage the Project, at its sole cost and
expense,inaccordancewithitsbusinessrequirements,thetermsofthisLeaseandApplicable
Laws.
CONDITION20
NOTICES
20.1 Except for notices delivered in accordance with the Operating Agreement,
whenevertheGovernmentortheLesseeshalldesiretogiveorserveupontheother(orinthe
caseoftheGovernment,alsoanyApprovedMortgagee)anynotice,demand,order,direction,
determination, requirement, consent or approval, request, or other communication with
respect to this Lease or with respect to the Leased Land and any Leasehold Improvements
located thereon, each such notice, demand, order, direction, determination, requirement,
consent or approval, request, or other communication shall be in writing and shall not be
effectiveforanypurposeunlesssameshallbegivenorservedbypersonaldeliverytotheparty
orpartiestowhomsuchnotice,demand,order,direction,determination,requirement,consent
orapproval,request,orothercommunicationisdirectedorbymailingthesame,induplicate,
tosuchpartyorpartiesthroughanationalrecognizedandreputableovernightdeliveryservice
attheregularmailingaddressforthepartyorpartiesspecifiedbelow.
IfintendedfortheLessee:
Withacopyto:
NevadaPowerCompany,dbaNVEnergy
Attn:VicePresident,Renewables&Origination
6226WestSaharaAve
LasVegas,Nevada89146
NevadaPowerCompany,dbaNVEnergy
Attn:GeneralCounsel
6226WestSaharaAve.,MS03A
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IfintendedfortheSecretaryof
theAirForce:
Withcopiesto:
Andto:
IftoanyApprovedMortgagee:
LasVegas,Nevada89146
DepartmentoftheAirForce
Chief,RealPropertyManagementDivision(CIM)
InstallationCenterofExcellence
AirForceCivilEngineerCenter
MailingAddress:
2261HughesAve.,Suite155
JBSALackland,TX78236Ͳ9853
DeliveryAddress:
3515S.GenMcMullen,Door2,Suite4003
SanAntonio,TX78226Ͳ1858
(Allnotices,requestsandothercommunicationstoany
party)
DepartmentoftheAirForce
Attn: ChiefCounsel,OfficeoftheGeneralCounsel
(Environment&Installations)
MailingAddress:
2261HughesAve.,Suite155
JBSALackland,TX78236Ͳ9853
DeliveryAddress:
3515S.GenMcMullen,Door2,Suite4003
SanAntonio,TX78226Ͳ1858
(Allnotices,requestsandothercommunicationstoany
party)
RealPropertyOfficer/DeputyBaseCivilEngineer
6020BealeAvenue
NellisAFB,NV89191
TheaddressprovidedtotheGovernmentpursuantto
Condition22.6.1.
20.2 Everynotice,demand,order,direction,determination,requirement,consentor
approval, request, or communication hereunder shall be personally served, sent by certified
firstͲclassmail,returnreceiptrequested,orbyrecognizedovernightdeliveryservice.Anysuch
notice,demand,order,direction,determination,requirement,consentorapproval,request,or
other communication shall be deemed to have been delivered on the date of the receipt of
suchdeliveryortransmissionattheaddresssetforthabove(orsuchotheraddressdesignated
pursuanthereto),or,ifsentbycertifiedfirstͲclassmail,returnreceiptrequested,anddeliveryis
refused,uponthedateofrefusaltoacceptservice.
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CONDITION21
ASSIGNMENT,SUBLEASES,ANDLICENSES
21.1 The Lessee shall neither transfer nor assign its interests in the Project or this
Lease(otherthantoanApprovedMortgageeoranAffiliateofLesseesubjecttothetermsof
thisLease),withoutthepriorwrittenconsentoftheGovernment,withsuchapprovalnottobe
unreasonably withheld, conditioned or delayed. The Government agrees to consent to such
assignmentortransferunlesstheproposedassignmentortransferistoapartywhichis,inthe
reasonable judgment of the Government, of a character or reputation or is engaged in a
business that would be harmful to the security or mission of the Installation, the health,
welfare,safetyorsecurityofpersonsontheInstallationorthemaintenanceofgoodorderand
discipline on the Installation, as established in law, regulation or military custom, or cannot
reasonablybeexpectedtoperformtheobligationsofLesseeunderthisLease.Forpurposesof
this Lease a transfer or assignment requiring written consent of the Government shall be
deemedtoincludethetransferofthedirectownershipinterestsinLesseethatexceeds50%of
the ownership interests in Lessee on a cumulative basis, unless an Affiliate of the original
Lessee hereunder continues to possess the right to direct or cause the direction of the
managementandpoliciesoftheLesseethroughtheownershipofvotingsecurities,bycontract
or other legally enforceable instrument. Notwithstanding the foregoing, Lessee shall provide
written notice to the Government prior to any proposed assignment, transfer or sublease of
thisLeasetoanAffiliatetoconfirmtherelationshipbetweenLesseeandtheproposedassignee,
and the Government shall be deemed to have confirmed that the proposed assignee is an
Affiliate of Lessee unless the Government shall have objected to such proposed assignee’s
status as an Affiliate within thirty (30) calendar Days of receiving notice of Lessee’s intent to
assign.
21.1.1 Any transfer, assignment or sublease granted by the Lessee shall be
consistentwithallofthetermsandconditionsofthisLease,andtherightsofthetransferee,
assignee or sublessee shall terminate no later than immediately upon the expiration or any
earlier termination of this Lease, without any liability on the part of the Government to the
Lesseeoranytransferee,assigneeorsublessee.Underanytransferorassignmentmade,with
or without consent, the transferee or assignee shall be deemed to have assumed all of the
obligationsoftheLesseeunderthisLease.Notransfer,assignmentorsubleaseshallrelievethe
Lessee of any of its obligations under this Lease unless the Government, in its discretion and
uponrequestofLessee,releasesLesseeinwritingfromsuchobligations.
21.1.2 TheLesseeshallfurnishtheGovernment,foritspriorwrittenconsent,a
copyofeachagreementofsubleaseorassignmentitproposestoexecute.Suchconsentmay
include the requirement to delete, add, or change provisions in the sublease or assignment
instrument as the Government shall deem necessary to protect its interests. Consent to any
subleaseorassignmentshallnotbetakenorconstruedtodiminishorenlargeanyoftherights
orobligationsofeitherofthePartiesunderthisLeaseincluding,withoutlimitation,therights
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andobligationsstatedinCondition22.2.Consentorrejectionofanyrequiredchangesshallbe
providedwithintwenty(20)businessdaysofreceiptoftheproposedagreement.
21.1.3 Any agreement of transfer, sublease or assignment must expressly
provide that: the transfer or assignment is subject to all of the terms and conditions of this
Lease;allrightsoftransfereeorassigneeshallterminatenolaterthanimmediatelyuponthe
expiration or any earlier termination of this Lease, without any liability on the part of the
GovernmenttotheLesseeoranytransferee,assigneeorsublessee;thetransfereeorassignee
shall assume all of the obligations of the Lessee under this Lease; and in case of any conflict
betweenanyprovisionsofthisLeaseandanyprovisionsoftheagreementoftransfer,sublease
orassignment,thisLeasewillcontrol.AcopyofthisLeasemustbeattachedtoanyagreement
oftransfer,subleaseorassignment.
21.1.4 FailuretocomplywiththisCondition21shallconstituteabreachofthis
Lease by the Lessee. The Government shall not be obligated to recognize any right of any
persontoaninterestintheProject,ortoownoroperateanyfacilitiesand/orimprovementsor
conductanyotheractivityoractivitiesontheLeasedLandauthorizedunderthisLeaseacquired
inviolationofthisCondition21.
21.2 The Government will not execute any Subordination and NonͲDisturbance
Agreements.
CONDITION22
LIENSANDMORTGAGES
22.1 Except as provided in Condition 22.2, the Lessee shall not: (i) engage in any
financingorothertransactioncreatinganymortgageorsecurityinterestupontheLeasedLand;
(ii)placeorsuffertobeplacedupontheLeasedLandanylienorotherencumbrance;(iii)suffer
anylevyorattachmenttobemadeontheLessee’sinterestsintheLeasedLand;or(iv)pledge,
mortgage, assign, encumber, or otherwise grant a security interest in the Leased Land or the
rents,issues,profits,orotherincomeoftheLeasedLandlocatedthereon.
22.2 DuringtheLeaseTerm,theLesseemayassignorencumberbymortgage,deed
of trust, sublease or security agreement its interest in the Project to secure financing for the
Project,subjecttoCondition22.3.Intheeventtheproposedholderofanysuchassignment,
mortgage,deedoftrust,orsecurityagreementisnotabank,itmustbeapprovedinwritingby
theGovernmentpriortotheexecutionofsuchloan,whichapprovalshallnotbeunreasonably
withheldordelayed.Anybank,othermortgageeapprovedbytheGovernmentorsuccessoror
assigneeofsuchmortgageeapprovedbytheGovernmentshallbereferredtointhisLeaseas
an“ApprovedMortgagee.”TheGovernmentagreestoexecuteanEstoppelCertificateandany
other similar documentation as may reasonably be required by any Approved Mortgagee to
evidencetheGovernment’sconsenttotheconditionalassignmentormortgageoftheLessee’s
interest in this Lease, to memorialize the terms of this Condition 22 between the Approved
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MortgageeandtheGovernmentandtocertifythestatusofthisLeaseandperformancebythe
LesseeofitsobligationsunderthisLeaseasofthedateofsuchcertification.TheGovernment
shall cooperate with Lessee and any Approved Mortgagee (and their consultants and
representatives) in connection with obtaining financing for the Project, including developing
andprovidinginformation,documents,certificatesandopinionsregardingtheProjectandthis
Leaseandanyothercertificatesandopinionsreasonablyrequestedinconnectiontherewith.
22.3 Nomortgageordeedoftrustshallextendtooraffectthefee,thereversionary
interest,ortheestateoftheGovernmentintheLeasedLand.Nomortgage,deedoftrust,or
security agreement shall be binding upon the Leased Land until it is approved by the
GovernmentandacopythereofhasbeendeliveredtotheGovernment.
22.4 TheLesseeshallnotifytheGovernmentpromptlyofanylienorencumbranceon
the Project, or the Lessee’s interest in the Project, whether created by act of the Lessee or
otherwise,ofwhichtheLesseehasnotice.
22.5 If any Approved Mortgagee or any Approved Mortgagee Affiliate acquires the
Lessee’sinterestintheProjectbydeedͲinͲlieu,ataforeclosureofitsmortgageordeedoftrust,
orotherwise,thisLeaseshallcontinueinfullforceandeffect.TheacquisitionoftheLessee’s
interest in the Project, by anyone other than any Approved Mortgagee or any Approved
Mortgagee Affiliate shall require the prior written approval of the Government. No agent or
nominee shall be appointed to operate and manage any portion of the Project without
obtaining the prior written approval of the Government. Such approval shall not be
unreasonablywithheldordelayedsolongastheproposedagentornomineehasdemonstrated
experienceorexpertiseinthedevelopment,management,andoperationoffacilitiessimilarto
the Project. Notwithstanding anything to the contrary contained in this Condition 22.5, the
Government may withhold approval of any purchaser of the Lessee’s interest in the Project
(otherthanwithrespecttoanyApprovedMortgageeoranyApprovedMortgageeAffiliate)ifin
theGovernment’ssolediscretionsuchpurchasercouldposeathreatorbreachofsecuritybyits
ownershiporuseoftheLeasedLandatNellisAFB.AsusedinthisCondition22.5,“Approved
Mortgagee Affiliate” means any corporation, limited liability company, or other entity that
controls, is owned or controlled by, or is under common ownership and control with, any
ApprovedMortgagee.
22.6 WithrespecttoanyApprovedMortgagees,thefollowingshallapply:
22.6.1 IfanyApprovedMortgageehasgivenwrittennoticetotheGovernment
of its address, any notice to the Lessee given pursuant to this Lease, including, without
limitation,noticeofadefaultoraterminationofthisLeaseshallbedeliveredsimultaneouslyto
anysuchApprovedMortgagee,andnonoticeofdefaultorterminationofthisLeasegivenby
theGovernmenttotheLesseeshallbedeemedeffectiveuntillikenoticeisgiventoanysuch
ApprovedMortgagee.
22.6.2 AnyApprovedMortgageeshallhavethesamerightstocureanydefault
as the Lessee has under this Lease with such additional time as may be afforded to any
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Approved Mortgagee pursuant to this Condition 22 and the Government shall accept
performancebysuchApprovedMortgagee,ifany,asiftheLesseehadperformed.
22.6.3 The Government will not accept any cancellation of this Lease by the
LesseewithoutthepriorwrittenconsentofeachApprovedMortgagee,ifany.TheLesseeshall
provide each Approved Mortgagee with notice of any proposed material modification or
cancellation.
22.6.4 If any Approved Mortgagee has taken possession of the Project in
foreclosure, no Approved Mortgagee, or purchaser at a foreclosure sale who has been
approved by the Government as required by Condition 22.5, shall be required to cure any
“Personal Default,” as defined below, of the Lessee. As used in this Condition 22, “Personal
Default” means any default of the Lessee thatcannot be cured by the payment of money or
performance of the development activities undertaken pursuant to this Lease, including any
bankruptcyoftheLessee.ExamplesofPersonalDefaultsinclude,withoutlimitation,defaultsin
Conditions25.2,31.1through31.4,and31.6ofthisLease.DefaultsunderCondition25also
shallconstitutePersonalDefaultstotheextentrecordsarenotavailabletopreparethereports
requiredbythatCondition.
22.7 IftheGovernmentelectstoterminatethisLeasepursuanttoCondition8.3,each
Approved Mortgagee, if any, shall have the right to postpone (“Mortgagee’s Right to
Postpone”) and extend the termination date specified in the Default Termination Notice,
subjecttothefollowingconditions:
22.7.1 PriortotheterminationdatespecifiedintheDefaultTerminationNotice,
any Approved Mortgagee must give the Government written notice of its exercise of the
Mortgagee’s Right to Postpone and simultaneously cure all monetary defaults and deliver to
theGovernmentassecurityforthecureofallotherdefaultsotherthanpersonaldefaultsan
amountsufficienttoeffectsuchcure.
22.7.2 TheMortgagee’sRighttoPostponeshallextendthedatespecifiedinthe
Default Termination Notice for the termination of this Lease for a period of up to six (6)
months, or such longer period as may be reasonably requested by any Approved Mortgagee
and approved by the Government, which approval shall not be unreasonably withheld. The
Government will grant a reasonable extension of the date for termination of this Lease
pursuanttotheMortgagee’sRighttoPostpone(“LeaseTerminationExtensionDate”)solong
as any Approved Mortgagee (i) promptly commences all steps necessary to cure any default
other than personal defaults of the Lessee, including such steps as may be required for any
ApprovedMortgageetoobtainpossessionorcontroloftheProject,anddiligentlyprosecutes
thesametocompletion;and(ii)providestheGovernmentwithmonthlyupdatesinwritingthat
describeinreasonabledetailthestepsanyApprovedMortgageehastakenandwilltakeinthe
futuretocureanysuchdefaults,andtheanticipatedtimeͲframeforcuringsuchdefaults.
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22.7.3 PriortotheterminationdatespecifiedintheDefaultTerminationNotice,
suchApprovedMortgagee,ifany,shallassumeperformanceandobservanceofthecovenants
andotheragreementsoftheLesseeinthisLease.
22.7.4 If prior to the Lease Termination Extension Date, all defaults under this
Lease other than personal defaults are cured or otherwise resolved as memorialized in a
writtenagreement,thentheGovernmentshallwithdrawtheDefaultTerminationNotice.
22.8 NothinginthisCondition22shallbedeemedtoimposeanyobligationonthe
partoftheGovernmenttodeliverphysicalpossessionoftheProjecttosuchApproved
Mortgagee orlimitanyrightofanApprovedMortgageetoobtainphysicalpossessionofthe
ProjectinaccordancewithsuchApprovedMortgagee’smortgageorsimilarsecurityagreement.
22.9 If more than one Approved Mortgagee shall seek to exercise any of the rights
providedforinthisCondition22,theholderofthemortgageordeedoftrusthavingpriorityof
lien over the other Approved Mortgagees shall be entitled, as against the others, to exercise
suchrights.ShouldadisputeariseamongtheApprovedMortgageesregardingthepriorityof
theirrespectiveliens,alloftheApprovedMortgageesmustprovidewrittenconfirmationtothe
Governmentthattheyhavesettledthatdispute;provided,however,thatanysuchdisputeshall
nottolltheterminationdatespecifiedintheDefaultTerminationNotice.
22.10 In the event this Lease is terminated by the Government for any reason or is
rejected in bankruptcy, the Approved Mortgagee(s) in the order of the priority of their
respectivemortgages,mayrequestanewlease(“NewLease”)fromtheGovernment,andthe
Government shall execute and deliver such New Lease provided the applicable Approved
Mortgagee(i)paysallpastdueamountsduetotheGovernmentpursuanttothetermsofthis
Lease,and(ii)curesorotherwiseresolvesinamanneracceptabletotheGovernmentanynonͲ
monetary defaults, except for personal defaults, of the Lessee under this Lease. Such New
Lease shall be for the remaining term of this Lease and shall be on the same terms and
conditionsassetforthinthisLease.
CONDITION23
DISPUTES
23.1 Disputes under this Lease are subject to Contract Disputes Act of 1978, as
amended,41U.S.C.§§7101etseq.
23.2 Ifadisputeshouldarise,thePartiesagreetofirstattempttoresolvethedispute
using unassisted negotiation techniques (i.e., without the assistance of a neutral third party).
Either Party may request in writing that unassisted negotiations commence. As part of the
unassistednegotiation,thePartiesshallconsideremployingjointfactͲfinding,ifmaterialfactual
disputes are involved, and shall use other early resolution techniques appropriate to the
circumstances.Ifthedisputeinvolvesmaterialissuesoffact,thePartiesmayemployaneutral
thirdpartytoprovideaconfidentialevaluationoftheissuesoffact.
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23.3 If the dispute is not resolved within 60 Days of the request for unassisted
negotiations, and the Parties do not mutually agree to continue the unassisted negotiations,
thePartiesshallemployalternativedisputeresolution(ADR)proceduresinvolvingnonbinding
mediationofthedisputebyaneutralthirdparty.TheADRproceduresemployedshallincludea
confidential evaluation of both the facts and the law and the issuance of confidential
recommendationsbytheneutralthirdparty.
23.4 IfthePartiesareunabletoresolvethedisputefollowingunassistednegotiations
and/or the ADR proceeding, the contracting officer shall issue a final decision under the
Contract Disputes Act of 1978, 41 U.S.C. §§ 7101 Ͳ 7109. Before the contracting officer can
issue a final decision on a contractor claim, the claim must be submitted in writing to the
contracting officer at the address provided in Condition 20, and must comply with all
requirementsof41U.S.C.§7103.Thecontractingofficer’sfinaldecisionmaybeappealedas
providedin41U.S.C.§§7101etseq.TOTHEFULLESTEXTENTPERMITTEDBYLAW,EACHOF
THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
LITIGATIONDIRECTLYORINDIRECTLYARISINGOUTOF,UNDERORINCONNECTIONWITHTHIS
LEASE.EACHPARTYFURTHERWAIVESANYRIGHTTOCONSOLIDATEANYACTIONINWHICHA
JURYTRIALHASBEENWAIVEDWITHANYOTHERACTIONINWHICHAJURYTRIALCANNOTBE
ORHASNOTBEENWAIVED.
23.5 ByenteringintothisLease,thePartieshavevoluntarilyadoptedADRprocedures
inaccordancewith5U.S.C.§572I.Theseproceduresshallnotbeemployedifdeterminedby
either Party to be inappropriate after taking into consideration the factors enumerated at 5
U.S.C. § 572(b). A Party rejecting ADR as inappropriate shall document its reasons in writing
and deliver them to the other Party. The Parties shall enter into a master written ADR
Agreement governing ADR proceedings that may be amended as needed to fit individual
proceedings.(AtemplateofanacceptableADRagreementmaybefoundatww.adr.af.mil.)
23.6 TheGovernment’sobligationtomakeanypaymentarisingoutofanagreement
resolvingadisputeunderthisLeaseiscontingentupontheavailabilityoffundsproperforsuch
payment.
CONDITION24
ENERGYFROMTHEPROJECT
FortheentiretyoftheLeaseTerm,thePartiesagreeasfollowsunderthisCondition24:
24.1 By virtue of the location of the Project on the Leased Land, the Project will
deliver electricity to the Government at Nellis AFB. However, the energy generated by the
Project will be owned by Lessee exclusively and Lessee will be fully entitled to dispatch the
energyoutputoftheProjectasitseesfit;providedthattheexpectationisthatsubstantiallyall
oftheenergyoutputwillflowfirsttotheGovernmentatNellisAFBastheclosestcustomerof
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Lessee.Lesseewillexclusivelyownalloftheenergyoutputandrelatedattributes(includingall
environmentalattributesorrenewableenergycredits)fromtheProject.
24.2 The Government agrees to purchase all of its electricity requirements from
LesseepursuanttotheUtilityServiceAgreement,orpursuanttoasuccessoragreementwith
substantially the same terms and conditions as set forth therein (subject to any contractual
rightstopurchaseelectricityfromthirdpartiesineffectasofthedatehereof).
24.3 Fortheavoidanceofdoubt,LesseeshallretainallRenewableEnergyAttributes
associated with the energy produced by the PV System, whether or not any such energy is
delivered to the Government pursuant to the Utility Service Agreement or otherwise.
“RenewableEnergyAttributes,”forpurposesofthisLease,includesanyandallrenewableand
environmental attributes, emissions reductions, credits, offsets, allowances or benefits,
however entitled, (a) allocated, assigned, awarded, certified or otherwise transferred or
granted to Lessee or the Government by any governmental authority in any jurisdiction in
connectionwiththeProjector(b)associatedwiththeproductionofenergyfromtheProjector
basedinwholeorpartontheProject’suseofrenewableresourcesforgenerationorbecause
theProjectconstitutesarenewableenergysystemorthelikeorbecausetheProjectdoesnot
producegreenhousegases,regulatedemissionsorotherpollutants,ineachcase,whetherany
such credits, offsets, allowances or benefits (x) exist now or in the future, (y) arise under
existinglaworanyfuturelaw(whethersuchcredit,offset,allowanceorbenefitoranylaw,or
the nature of such, is foreseeable or unforeseeable) or (z) arise in respect of energy that is
deliveredattheGovernmentorconstitutesstationusage.NVEnergywillretainownershipand
full control of the portfolio credits and all other nonͲenergy attributesproduced by the Solar
Power System and may use them as they see fit, including for NV Energy's compliance with
Nevada's Renewable Portfolio Standard under NRS 704.7822 (“Nevada RPS”). For the
avoidance of doubt, the Government will utilize the electrical power produced by the Solar
Power System for purposes of compliance with 10 U.S.C. §2911(e) and, solely in the
circumstancewheresuchelectricalpowerismatchedwithRECspurchasedfromthirdparties,
compliancewith section 203 of the Energy Policy Act of 2005 (EPACT 05). In complying with
thesestatutes,theGovernmentwill,innoway,consume,utilizeorencumbertheRenewable
EnergyAttributesproducedbytheProjectandtheGovernmentrepresentsthatitsactionswill
innowaylimittheabilityofLesseetousetheRenewableEnergyAttributesforanypurpose,
includingcompliancewiththeNevadaRPS.
CONDITION25
REPORTINGPROVISIONS
25.1 AtalltimesduringtheLeaseTerm,theLesseeshallmaintainatitsprincipalplace
ofbusinessorsuchotherplaceasagreedtobytheParties,acompleteandaccuratesetoffiles,
booksandrecordsofallbusinessactivitiesandoperationsconductedduringthepreviousthree
(3)yearsinconnectionwithperformanceunderthisLease.TheLessee’srecordsandaccounts
shallreflect,withrespecttotheLeasedLand,allitemsofrevenueandexpenseallocabletothe
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managementanddispositionofsuchasset,aswellasinformationregardingthestatusofsuch
assetincludingappraisal,titletoLeaseholdImprovements,marketingandotherinformationas
required.AtalltimesduringtheLeaseTerm,theGovernmentmay,atsuchreasonabletimes,
inspectandrequestcopiesofanyoftheLessee’srecords,files,reports,andmaterialsrelatedto
Lessee’sperformanceunderthisLease.
25.2 TheLesseeagreesthattheGovernment,theComptrollerGeneraloftheUnited
States, or the Auditor General of the United States Air Force, or any of its duly authorized
representatives, shall, until the expiration of three (3) years after the expiration or earlier
terminationofthisLease,haveaccesstoandtherighttoexamineanydirectlypertinentbooks,
documents,papers,andrecordsoftheLesseeinvolvingtransactionsrelatedtotheProject.The
Lessee shall keep and maintain accurate, true, and complete books and records (hereinafter
collectivelyreferredtoas“booksandrecords”),whichshallfullyreflectthefinancialcondition,
occupancy, physical condition, maintenance, and operational status of the Project, together
with all business licenses and permits required to be kept and maintained pursuant to the
provisionsofanyapplicablestateorlocallaw,regulation,orrulenoworhereafterineffect.All
books and records shall be kept at the Lessee’s principal office, or at the Project, or at such
other place as the Government and the Lessee both agree upon in writing. The Lessee shall
delivertotheGovernment,uponsuchscheduleastheGovernmentmayreasonablyestablish
from time to time, and in such media, including electronic media as the Government shall
reasonably select, all information and supporting documentation which the Lessee has
maintainedandwhichtheGovernmentneedsinorderfortheGovernmenttofileanyreportto
theDepartmentoftheAirForce,theDepartmentofDefense,orrequiredtobesubmittedby
theGovernmenttoanygovernmentalornongovernmentalagency,orwhichtheGovernment
needs to assess the financial condition, performance, occupancy, physical condition,
maintenance and operational status of the Project. Such items shall: (a) be in a form
satisfactory to the Government, (b) be certified to the Government as true, complete, and
accurate in all material respects by the Lessee, and (c) be taken from the books and records
maintainedbytheLesseeasaforesaid.
25.3 The Lessee shall provide the Government with copies of any and all default or
deficiency notices provided to the Lessee by any mortgagee on an approved loan, any
government agency, insurance company or other party within fifteen (15) Days following
Lessee’sreceiptofsame.
CONDITION26
RIGHTSNOTIMPAIRED
26.1 NothingcontainedinthisLeaseshallbeconstruedtodiminish,limit,orrestrict
any right, prerogative, or authority of the Government over the Leased Land relating to the
securityormissionoftheNellisAFB,thehealth,welfare,safetyorsecurityofpersonsonthe
NellisAFBorthemaintenanceofgoodorderanddisciplineontheNellisAFB,asestablishedin
law,regulation,ormilitarycustom,subjecttotheLessee’srighttoquietuseandenjoymentof
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theLeasedLand.Theforegoingrights,prerogativesandauthoritiesinclude,butarenotlimited
to,thefollowing:
26.1.1 Theauthoritytopromulgateandenforcesecurityregulationsandrestrict
public access to the Nellis AFB, to include regulations delineating parameters for authorized
entrytoorexitfromtheNellisAFB,pursuantto50U.S.C.§797.
26.1.2 TheauthoritytoconductbackgroundchecksutilizingtheNationalCrime
Information Center III data base of the Federal Bureau of Investigation pursuant to guidance
promulgatedbytheDirector,FederalBureauofInvestigation.
26.1.3 TheauthoritytobarindividualsfromtheNellisAFBpursuantto18U.S.C.
§1382.
26.1.4 The authority to conduct inspections or searches of individuals, the
LeasedLandortheProjectpursuanttoMilitaryRuleofEvidence314,10U.S.C.§802,etseq.,
and50U.S.C.§797.
26.1.5 Theauthoritytoissuesearchauthorizationsbasedonprobablecauseof
individuals,theLeasedLandortheProjectpursuanttoMilitaryRuleofEvidence315,10U.S.C.
§802,etseq.and50U.S.C.§797.
25.1.6 The authority to conduct disaster preparedness exercises and/or
emergency recovery operations on the Nellis AFB in accordance with 50 U.S.C. § 797 and
DepartmentofDefenseDirective5200.8orasuccessorauthority.
26.1.7 The authority to exercise emergency health powers on the Nellis AFB
pursuanttoDepartmentofDefenseDirective6200.3intheeventofapublichealthemergency
duetobiologicalwarfare,terrorism,orothercommunicablediseaseepidemic.
26.2 Anystatutes,directives,regulations,orinstructionsreferencedinsubparagraphs
26.1.1 through 26.1.7 above shall be deemed to refer to such authorities as in effect on the
EffectiveDate,asthesamemaybeamended,supplementedorsupersededfromtimetotime.
26.3 Each sublease shall include notice to and acknowledgement by the sublessee
that (a) the Project is located on the Nellis AFB and (b) such Project, including the subleased
LeaseholdImprovements,aresubjecttotheCommander’srights,privilegesandauthorities,as
providedinCondition26.1.
26.4 Anything contained in this Lease to the contrary notwithstanding, the
Commanderhastherightatalltimestoorderthepermanentremovalandbarmentofanyone
fromtheNellisAFB,includingbutnotlimitedtosublessees,iftheCommanderbelieves,inhis
orhersolediscretion,thatthecontinuedpresenceofthatpersonontheNellisAFBrepresents
a threat to the security or mission of the Nellis AFB, poses a threat to the health, welfare,
safety, or security of persons occupying the Nellis AFB or compromises good order and/or
disciplineontheNellisAFB.
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26.5 ExceptasprovidedinCondition26.1,nothinginthisLeaseshallbeconstruedto
diminish,limitorrestrictanyrightoftheLesseeunderthisLease,ortherightsofsublesseesas
prescribedunderorapplicablelaws.
26.6 The Lessee acknowledges its understanding that the Nellis AFB is an operating
military installation that could remain closed to the public and accepts that the Lessee’s
operationsmayfromtimetotimeberestrictedtemporarilyorpermanentlyduetotheneedsof
nationaldefense.AccesstotheInstallationmayalsoberestrictedduetoinclementweather
andnaturaldisasters.TheLesseefurtheracknowledgesthattheGovernmentstrictlyenforces
FederallawsandAirForceregulationsconcerningcontrolledsubstances(drugs)andpersonnel,
vehicles, supplies, and equipment entering the Nellis AFB are subject to search and seizure,
under18U.S.C.§1382.TheGovernmentwillusereasonablediligenceinpermittingtheLessee
access to the Project at all times, subject to the provisions of this Condition 26.
Notwithstandingtheforegoing,theLesseeagreestheGovernmentwillnotberesponsiblefor
losttimeorcostsincurredduetodelaysinentry,temporarylossofaccess,barringofindividual
employees from the Installation under Federal laws authorizing such actions, limitation, or
withdrawalofanemployee’sonͲbasedrivingprivileges,oranyothersecurityactionthatmay
causeemployeestobelateto,orunavailableat,theirworkstations,ordelayarrivalofparts
andsupplies.
CONDITION27
RENEWALOFTHELEASE
27.1 ThePartiesagreethatatanytimeduringtheLeaseTerm,arenewalofthisLease
maybenegotiatedandenteredintobytheParties,providedthattheProjectisbeingoperated
and maintained as required by this Lease, and the Lessee is not in default of any of its
obligationsunderthisLease.
CONDITION28
GOVERNMENTREPRESENTATIVESANDTHEIRSUCCESSORS
28.1 The Government, acting through the Secretary of the Air Force, may delegate
certainofitsresponsibilitiesunderthisLeasetoitsdulyappointedrepresentatives.
CONDITION29
AMENDMENTS
29.1 SubjecttoCondition22.6.3,thisLeasemaybeamendedatanytimebymutual
agreementofthePartiesinwritingandsignedbyadulyauthorizedrepresentativeofeachof
the respective Parties hereto. Amendments to this Lease executed on behalf of the
Government must be signed at the level of the Deputy Assistant Secretary of the Air Force
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(Installations) or higher, unless the authority to execute amendments on behalf of the
Governmenthasbeenotherwisedelegatedinwriting.
CONDITION30
NotUsed
CONDITION31
GENERALPROVISIONS
31.1 Covenant Against Contingent Fees. The Lessee warrants that no person or
agency has been employed or retained to solicit or secure this Lease upon an agreement or
understanding for a commission, percentage, brokerage, or contingent fee, except bona fide
employees or bona fide established commercial agencies maintained by the Lessee for the
purposeof securingbusiness.Forbreachorviolationofthiswarranty,theGovernmentshall
havetherighttoannulthisLeasewithoutliabilityor,initssolediscretion,torequiretheLessee
to pay to the Government the full amount of such commission, percentage, brokerage, or
contingentfee.
31.2 Officials Not to Benefit. No Member of or Delegate to the Congress of the
United States of America orResident Commissioner of theUnited States of America, shall be
admittedtoanyshareorpartofthisLeaseortoanybenefitthatmayarisetherefrom,butthis
provision shall not be construed to extend to this Lease if made with a corporation for its
generalbenefit.
31.3 FacilitiesNondiscrimination.AsusedinthisCondition31.3,theterm“Facility”
means lodgings, stores, shops, restaurants, cafeterias, restrooms, and any other facility of a
publicnatureinanybuildingcoveredby,orbuiltonlandcoveredby,thisLease.
31.3.1 TheLesseeagreesthatitwillnotdiscriminateagainstanypersonbecause
of race, color, religion, sex, or national origin in furnishing, or by refusing to furnish, to such
person or persons the use of any Facility, including any and all services, privileges,
accommodations,andactivitiesprovidedontheProject.Thisdoesnotrequirethefurnishingto
thegeneralpublictheuseofanyFacilitycustomarilyfurnishedbytheLesseesolelytotenants
ortoGovernmentmilitaryandcivilianpersonnel,andtheguestsandinviteesofanyofthem.
31.3.2 The Parties agree that in the event of the Lessee’s noncompliance with
thisCondition31.3,theGovernmentmaytakeappropriateactiontoenforcecompliance,and
subject to Condition 22.7 may terminate this Lease for default and breach as provided in
Condition 8 (after the expiration of any applicable cure periods provided in Condition 8), or
maypursuesuchotherremediesasmaybeprovidedbylaw.
31.4 Gratuities.
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31.4.1 The Government may, by written notice to the Lessee, terminate this
Leaseif,afternoticeandhearing,theSecretaryoftheAirForceoradesigneedeterminesthat
the Lessee, or any agent or representative of the Lessee, offered or gave a gratuity (e.g., an
entertainmentorgift)toanyofficer,official,oremployeeoftheGovernmentandintended,by
thegratuity,toobtaintheLeaseorotheragreementorfavorabletreatmentundertheLeaseor
otheragreementrelatedtotheProject,exceptforgiftsorbenefitsofnominalvalueofferedin
theordinarycourseofbusiness.
31.4.2 The facts supporting this determination may be reviewed by any court
havinglawfuljurisdiction.
31.4.3 If this Lease is terminated under Condition 31.4.1 above, the
GovernmentshallbeentitledtopursuethesameremediesagainsttheLesseeasinabreachof
thisLeasebytheLessee,andinadditiontoanyotherdamagesprovidedbylaw,toexemplary
damagesofnotlessthanthree(3)normorethanten(10)timesthecostincurredbytheLessee
ingivinggratuitiestothepersonconcerned,asdeterminedbytheGovernment.
31.4.4 The rights and remedies of the Government provided in this Condition
31.4shallnotbeexclusiveandareinadditiontoanyotherrightsandremediesprovidedbylaw
orunderthisLease.
31.5 No Joint Venture. Nothing contained in this Lease will make, nor will be
construed to make, the Parties hereto partners or joint venturers with each other, it being
understood and agreed that the only relationship between the Government and the Lessee
underthisLeaseisthatoflandlordandtenant.NeitherwillanythinginthisLeaserender,nor
beconstruedtorender,eitherofthePartiesheretoliabletoanythird partyforthedebtsor
obligationsoftheotherPartyhereto.
31.6 EqualOpportunityClause.ThefollowingclauseisapplicableunlessthisLeaseis
exemptundertherules,regulationsandrelevantordersoftheDepartmentofLabor(41C.F.R.
ch60).
31.6.1 DuringtheperformanceofthisLease,theLesseeagreestocomplywith
Conditions31.6.1.1through31.6.1.8below.
31.6.1.1 The Lessee shall not discriminate against any employee or
applicantforemploymentbecauseofrace,color,religion,sex,ornationalorigin.
31.6.1.2 TheLesseeshalltakeproactivestepstoensurethatapplicants
are employed, and that employees are treated during employment without regard to their
race, color, religion, sex, or national origin. Such action shall include, but not be limited to
employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or
termination,ratesofpayorotherformsofcompensation,andselectionfortraining,including
apprenticeship.
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31.6.1.3 The Lessee shall post, in conspicuous places available to
employeesandapplicantsforemployment,thenoticestobeprovidedbytheGovernmentfor
thisLeasethatexplainthisclause.
31.6.1.4 The Lessee shall, in all solicitations or advertisements for
employeesplacedbyoronbehalfoftheLessee,statethatallqualifiedapplicantswillreceive
considerationforemploymentwithoutregardtorace,color,religion,sex,ornationalorigin.
31.6.1.5 TheLesseeshallsendtoeachlaborunionorrepresentativeof
workerswithwhichithasacollectivebargainingagreementorothercontractorunderstanding,
the notice to be provided by the Lease Officer advising the labor union or workers’
representative of the Lessee’s commitments under this equal opportunity clause, and post
copies of the notice in conspicuous places available to employees and applicants for
employment.
31.6.1.6 TheLesseeshallcomplywithallprovisionsofExecutiveOrder
No.11246,asamended,andoftherules,regulations,andrelevantordersoftheDepartmentof
Labor.
31.6.1.7 TheLesseeshallfurnishallinformationrequiredbyExecutive
OrderNo.11246,asamended,andbytherules,regulations,andordersoftheDepartmentof
Labor,orpursuantthereto,andshallpermitaccesstoitsbooks,records,andaccountsbythe
leasing agency and the Department of Labor for purposes of investigation to ascertain
compliancewithsuchrules,regulationsandorders.
31.6.1.8 In the event of the Lessee’s noncompliance with the equal
opportunity clause of this Lease or with any of the said rules, regulations, or orders, the
Governmentmaytakeappropriateactiontoenforcecompliance,andsubjecttoCondition22.7
may terminate this Lease for default and breach as provided in Condition 8 above, and the
Lessee may be declared ineligible for further Government leases and other contracts in
accordancewithproceduresauthorizedinExecutiveOrderNo.11246,asamended,orbyrule,
regulation,ororderoftheDepartmentofLabor,orasotherwiseprovidedbylaw.
31.6.2 Notwithstanding any other provision in this Lease, disputes relative to
thisequalopportunityclausewillbegovernedbytheproceduresin41C.F.R.§601.1.
31.7 Remedies Cumulative; Failure of Government to Insist on Compliance. The
specified remedies to which the Government may resort under the terms of this Lease are
distinct,separate,andcumulative,andarenotintendedtobeexclusiveofanyotherremedies
ormeansofredresstowhichtheGovernmentmaybelawfullyentitledincaseofanybreachor
threatenedbreachbytheLesseeofanyprovisionsofthisLease.ThefailureoftheGovernment
toinsistinanyoneormoreinstances,uponstrictperformanceofanyoftheterms,covenants,
or conditions of this Lease shall not be construed as a waiver or a relinquishment of the
Government’srighttothefutureperformanceofanysuchterms,covenants,orconditions,but
the obligations of the Lessee with respect to such future performance shall continue in full
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forceandeffect.NowaiverbytheGovernmentofanyprovisionsofthisLeaseshallbedeemed
tohavebeenmadeunlessexpressedinwritingandsignedbyanauthorizedrepresentativeof
theGovernment.
31.8 Headings or Titles. The brief headings or titles preceding each Condition are
merely for purposes of identification, convenience, and ease of reference, and will be
completelydisregardedintheconstructionofthisLease.
31.9 Counterparts. This Lease may be executed in multiple counterparts each of
whichisdeemedanoriginalofequaldignitywiththeotherandwhichtogetheraredeemedone
andthesameinstrument.
31.10 EntireAgreement.Itisexpresslyagreedthatthiswritteninstrument,together
with the provisions of other documents that are expressly incorporated by reference by the
termsofthisLease,embodiestheentireagreementbetweenthePartiesregardingtheleaseof
the Leased Land by the Lessee. In the event of any inconsistency between the terms of this
Lease and of any provision that has been incorporated by reference, the terms of this Lease
shall govern. There are no understandings or agreements, verbal or otherwise, between the
Partiesexceptasexpresslysetforthherein.Thisinstrumentmayonlybemodifiedoramended
bymutualagreementofthePartiesinwritingandsignedbyeachofthePartieshereto.
31.11 PartialInvalidity.IfanytermorprovisionofthisLease,ortheapplicationofthe
termorprovisiontoanypersonorcircumstanceis,toanyextent,invalidorunenforceable,the
remainderofthisLease,ortheapplicationofthetermorprovisiontopersonsorcircumstances
otherthanthoseastowhichthetermorprovisionisheldinvalidorunenforceable,willnotbe
affectedbytheapplication,andeachremainingtermorprovisionofthisLeasewillbevalidand
willbeenforcedtothefullestextentpermittedbylaw.InsucheventthePartiesshallamend
thisLeasebyincorporatinganenforceableprovisioninlieuoftheunenforceableprovisionthat
replicatestheintentandeffectoftheunenforceableprovisiontothegreatestextentpossible.
31.12 InterpretationofLease.AllPartiesandtheirlegalcounselhaveparticipatedfully
inthenegotiationanddraftingofthisLease.ThisLeasehasbeenpreparedbyallPartiesequally
andistobeinterpretedaccordingtoitsterms.NoinferenceshallbedrawnthatthisLeasewas
preparedbyoristheproductofanyparticularPartyorParties.
31.13 Recording. A memorandum of this Lease, in substantially the form attached
heretoasExhibitGanddatedasofevendateherewith,shallbefiledforrecordbytheLessee,
atnocosttotheGovernment,intheappropriaterealestaterecordsonoraftertheEffective
Date.
31.14 Identification of Government Agencies, Statutes, Programs and Forms. Any
reference in this Lease, by name or number, to a government department, agency, statute,
regulation, program, or form shall include any successor department, agency, statute,
regulation,programorform.
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31.15 Approvals.AnyapprovalorconsentofthePartiesrequiredforanymatterunder
this Lease shall be in writing and shall not be unreasonably withheld or delayed unless
otherwiseindicatedinthisLease.
31.16 ThirdPartyBeneficiaries.Exceptasotherwiseexpresslyprovidedwithrespectto
Approved Mortgagees and Approved Transferees, and solely with respect to Condition 22 (i)
there shall be no third party beneficiaries of this Lease and (ii) none of the provisions of this
Leaseshallbeforthebenefitof,orenforceableby,anycreditorsoftheLessee.
31.17 No Individual Liability of Government Officials. No covenant or agreement
contained in this Lease shall be deemed to be the covenant or agreement of any individual
officer,agent,employeeorrepresentativeoftheGovernment,inhisorherindividualcapacity
andnoneofsuchpersonsshallbesubjecttoanypersonalliabilityoraccountabilitybyreasonof
theexecutionofthisLease,whetherbyvirtueofanyconstitution,statuteorruleoflaworby
theenforcementofanyassessmentorpenalty,orotherwise.
31.18 NonͲMerger. Notwithstanding anything contained herein to the contrary, it is
the intention of the Parties that the interest created hereunder shall remain separate and
distinctinterestsandtheleaseholdinterestofLesseeshallnotmergewiththefeetitleinthe
eventthattheLesseebecomestheowneroftheLeasedLand.
31.19 PaymentstotheGovernment.AllpaymentstotheGovernmentshallbemade
bytheLesseeasprovidedinthisLease.
31.20 AntiͲKickback Procedures. The Lessee warrants that it shall have in place and
followreasonableproceduresdesignedtopreventanddetect,initsownbusinessoperations,
anyofthefollowingactivitiesinconnectionwiththeLeaseoranysubcontractrelatingtothe
Lease or primary agreements: (i) persons providing or attempting to provide or offering to
provideanykickback;or(ii)personssoliciting,accepting,orattemptingtoacceptanykickback.
31.21TheLesseefurtherwarrantsthat,whenithasreasonablegroundstobelievethat
anyoftheactivitiesdescribedinCondition31.20mayhaveoccurred,itshallpromptlyreportin
writing such activities to the Government Representative and either the Air Force Inspector
General’sofficeortheDepartmentofJustice.TheLesseeshallcooperatefullywithanyFederal
agencyinvestigatingsuchactivities.
31.22 Government Obligations. Nothing herein shall be interpreted to require
obligationorpaymentoffundsinviolationoftheAntiͲDeficiencyAct,andnothinginthisLease
is intended to bind the Government to commit, obligate, appropriate or spend funds in
violation of the AntiͲDeficiency Act and other Applicable Laws respecting federal funding;
provided,however,thattheGovernment’sfailuretofundanysuchobligationmayconstitute
anExcusableDelay.
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CONDITION32
SPECIALPROVISIONS
32.1 The Lessee recognizes that Nellis AFB is an operating military installation and
that the Government’s military mission has priority and primacy over all other operations on
Nellis AFB, including those conducted on premises outleased to others. The Lessee
understandsandacceptsthatthepriorityofconductingGovernmentoperationsatNellisAFB,
including but not limited to normal baseͲrelated operations, the Nellis AFB IRP, Government
overflight, surges, exercises, contingencies, inspections and other Air Force operations
(collectively, “Government Operations”) may at times require delay in, modification or other
interruption of the Lessee’s operations, including its construction activities. The Government
shall, whenever possible, provide advance notice of activities that may impact Lessee’s
operationsandshallcoordinatesuchactivitiessothatanydisruptiontoLessee’soperationsis
minimized.
32.1.1 The Lessee hereby agrees that in case of any conflict between
Government Operations and Lessee’s operations, as determined by the Commander in the
Commander’ssoleandabsolutediscretion,theLesseewill,iftheCommandersodirects,delay,
modifyorotherwiseinterruptitsoperationsontheLeasedLandtoaccommodateGovernment
Operations.
32.1.2 The Lessee also understands and accepts that its operations on the
LeasedLandmay,fromtimetotime,behamperedbytemporaryrestrictionsonaccess,suchas
identitychecksandautosearchesbytheAirForce.TheLesseeunderstandsthattheAirForce
strictly enforces Federal laws and Air Force regulations concerning controlled substances
(drugs).
32.1.3 The Government acknowledges and agrees that the Project has been
reviewedandapprovedbytheGovernmentandwillnotconflictwiththeordinaryoperationof
theGovernmentatNellisAFB.Exceptasotherwisesetforth inthisLease,theLesseeagrees
thattheGovernmentshallnotbeliableorresponsibleunderthisLeaseforanylosttimeorany
costs incurred by the Lessee due to any disruption of its activities on the Leased Land
(regardless of frequency or duration of any such interruptions), including disruptions of its
commercialactivities,orforanydelaysinentry,temporarylossofaccess,barringofindividual
employeesfromthebaseunderFederallawsauthorizingsuchactions,limitationorwithdrawal
ofanemployee'sonͲbasedrivingprivileges,oranyothersecurityaction(collectively,"Security
Actions")thatmaycauseemployeestobelatetoorunavailableattheirworkstations,ordelay
arrival of parts and supplies. Except as otherwise set forth in this Lease, the Lessee hereby
expressly waives any claims or suits against the Government under this Lease caused by or
arising out of the priority of conducting Government Operations as carried out on the date
hereofandanySecurityActions.
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32.2 TheLesseeshallnotpermitgamblingontheLeasedLandorinstalloroperate,or
permittobeinstalledoroperatedonthem,anydevicethatisillegal.TheLesseeshallnotuse
theLeasedLandorpermitthemtobeusedforanyillegalbusinessorpurpose.
32.3 TheLesseeshallnotcarryonorconductorpermitthecarryingonorconductof
on the Leased Land any activity that would constitute a nuisance. The Government
acknowledgesandagreesthattheconstruction,operation,maintenanceanduseoftheProject,
aslongassuchconstruction,operation,maintenanceanduseisincompliancewiththeterms
ofthisLeaseandApplicableLaw,doesnotconstituteanuisance.
32.4 The Lessee shall not sell, store or dispense, or permit the sale, storage, or
dispensingofbeerorotherintoxicatingliquorsontheLeasedLand.
CONDITION33
DEFINEDTERMS
33.1 Capitalizedtermssetforthbelowshallhavethefollowingmeanings:
“ACM”means,collectively,asbestosorasbestosͲcontainingmaterial.
“Affiliate” means any corporation, limited liability company, or other entity that controls, is
ownedorcontrolledby,orisundercommonownershipandcontrolwithLessee.
“ALTA/ACSMStandards”meansthestandardsadoptedbytheAmericanLandTitleAssociation
andtheAmericanCongressonSurveyingandMapping.
“AntiͲDeficiencyAct”meansthatcertainlawpromulgatedat31U.S.C.1341.
“ApplicableCodes”shallhavethemeaningsetforthinCondition17.3.
“ApplicableLaws”shallhavethemeaningsetforthinCondition13.1.
“ApplicableReliabilityCriteria”meanstheindustrycodes,standards,practicesandpublished
criteria for planning and operating interconnected electrical transmission, distribution and
generatingsystems,including,butnotlimitedto,thereliabilitycriteriaoftheWesternElectric
Coordinating Council and the criteria of the North American Reliability Council for
interconnectedoperatingsystems.
“ApprovedMortgagee”shallhavethemeaningsetforthinCondition22.2.
“ApprovedMortgageeAffiliate”shallhavethemeaningsetforthinCondition22.5.
“ApprovedTransferee”meansanyaffiliateofLessee,andanyentitywhoseprimarypurposeis
toprovidefinancingfortheProject,including,withoutlimitation,a“taxͲequityfinancing,”loan
oranyothertypeoffinancingarrangement.
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“Armed Forces,” shall have the meaning set forth in 10 U.S.C. §101(a)(4), as amended from
timetotime.
“BankruptcyCode”shallhavethemeaningsetforthinCondition8.1.3.
“CERCLA”shallhavethemeaningsetforthinthedefinitionofHazardousSubstance.
“Commander”shallhavethemeaningsetforthinCondition5.2.
“Constitution”meanstheConstitutionoftheUnitedStatesofAmerica.
“County”shallhavethemeaningsetforthinCondition17.3.
“DamagedorDestroyedProperty”shallhavethemeaningsetforthinCondition16.4.
“Day”meansacalendardayunlessotherwisespecifiedinwritinginthisLease.
“DefaultTerminationNotice”shallhavethemeaningsetforthinCondition8.3.1.
“DemolitionSecurity”shallhavethemeaningsetforthinCondition10.8.1.
“DemolitionSecurityTriggerDate”shallhavethemeaningsetforthinCondition10.8.
“DesignCriteria”shallhavethemeaningsetforthinCondition17.3.
“DesignPlans”shallhavethemeaningsetforthinCondition17.3.
“EBS”shallhavethemeaningsetforthinCondition4.3.
“EffectiveDate”shallhavethemeaningsetforthinthePreamble.
“EnablingStatute”shallhavethemeaningsetforthintheRecitals.
“EPC Agreement” means the Engineering, Procurement and Construction Agreement entered
into in connection with the construction of the Project on terms acceptable to the parties
theretointheirsolediscretion.
“EstimatedRestorationCosts”shallhavethemeaningsetforthinCondition10.2.
“Estoppel Certificate” means a certificate used to evidence the Government’s consent to the
conditional assignment or mortgage of the Lessee’s interest in this Lease and to certify the
statusofthisLeaseandperformancebytheLesseeofitsobligationsunderthisLeaseasofthe
dateofsuchcertification.
“EventofDefault”shallhavethemeaningsetforthinCondition8.1.
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“Excluded Land” means that certain 4.32Ͳacre parcel of land containing a capped landfill cell
physicallysurroundedonallsidesbytheLeasedLand.
“Excusable Delay” means the Government and Lessee shall be excused from performing an
obligationorundertakingprovidedforinthisLease,andtheperiodfortheperformanceofany
suchobligationorundertakingshallbeextendedforaperiodequivalenttotheperiodofsuch
delay,solongassuchperformanceispreventedorunavoidablydelayed,retardedorhindered
by an act of God, fire, earthquake, flood, explosion, war, invasion, insurrection, riot, mob
violence, sabotage, act of terrorism, inability to procure or a general shortage of labor,
equipment, facilities, materials or supplies in the open market, failure or unavailability of
transportation,strike,lockout,actionoflaborunions,atakingbyeminentdomain,requisition,
laws,ordersofgovernmentorofcivil,militaryornavalauthorities(butonlysuchordersofa
general nature pertaining to the Leased Land and comparable properties in the State of
Nevada),governmentalrestrictions(includingwithoutlimitation,accessrestrictionsimposedby
the Government and arising without fault or negligence on the part of the Lessee that
significantlyhindertheLessee’sabilitytoaccesstheLeasedLandandperformitsconstruction
responsibilities in a timely manner), required environmental remediation or any other cause,
whethersimilarordissimilartotheforegoingnotwithinthereasonablecontrolandwithoutthe
faultornegligenceoftheGovernmentortheLessee,asthecasemaybe,and/oranyoftheir
respectiveofficers,agents,servants,employeesand/oranyotherswhomaybeontheLeased
Land at the invitation of the Lessee or the invitation of any of the aforementioned persons,
specificallyexcluding,however,delaysforadjustmentsofinsuranceanddelaysduetoshortage
or unavailability of funds (collectively, “Excusable Delays”). Nothing contained herein shall
excuseLesseefromtheperformanceorsatisfactionofanobligationunderthisLeasethatisnot
preventedordelayedbytheactoroccurrencegivingrisetoanExcusableDelay.
“Extensive Damage or Destruction of Leasehold Improvements” shall have the meaning set
forthinCondition16.4.2.
“Facility”shallhavethemeaningsetforthinCondition31.3.
“Feeders”meansthedistributionfeederstobeconstructedtoconnecttheProjecttotheNew
SubstationandtotheexistingelectricalinfrastructurelocatedonNellisAFB,asdescribedinthe
ProjectEasement(s).
“FinalEBS”shallhavethemeaningsetforthinCondition4.3.
“FutureThirdPartyPropertyInterests”shallhavethemeaningsetforthinCondition3.2.
“Government”shallhavethemeaningsetforthinthePreamble.
“Hazardous Substance” means any flammables, explosives, radioactive materials or other
hazardouswastes,substances,ormaterialsincluding,withoutlimitation,substancesdefinedas
“hazardous substances”, “hazardous materials”, or “toxic substances” in the Comprehensive
EnvironmentalResponseCompensationandLiabilityActof1980(“CERCLA”)(42U.S.C.§§9601Ͳ
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9675), the Hazardous Materials Transportation Act, and the Resource Conservation and
RecoveryAct(“RCRA”),allasnoworhereafteramended.
“ImprovementRemovalReport”shallhavethemeaningsetforthinCondition10.2.
“IRP”shallhavethemeaningsetforthinCondition11.8.
“Lease”shallhavethemeaningsetforthinthePreamble.
“LeaseCommencementDate”shallhavethemeaningsetforthinCondition1.1.
“LeaseExpirationDate”shallhavethemeaningsetforthinCondition1.1.
“LeaseTerm”shallhavethemeaningsetforthinCondition1.1.
“LeaseTerminationExtensionDate”shallhavethemeaningsetforthinCondition22.7.2.
“Leased Land” shall have the meaning set forth in the section of this Lease entitled “Leased
Land.”
“Lessee”shallhavethemeaningsetforthinthePreamble.
“LesseeParties”shallhavethemeaningsetforthinCondition15.2.
“Lessor”meanstheownerofrealpropertywhorentsittoalesseepursuanttoawrittenlease.
“Mortgagee’sRighttoPostpone”shallhavethemeaningsetforthinCondition22.7.
“NellisAFB”shallhavethemeaningsetforthintheRecitals.
“NellisAFBElectricInterconnectEquipment”shallhavethemeaningsetforthinthesectionof
thisLeaseentitled“LeasedLand.”
“NewLease”shallhavethemeaningsetforthinCondition22.10.
“New Substation” shall mean the 69/12 kV substation along with its two feeders and an
additional feeder from Lessee’s Lincoln Substation, together with all required electrical
infrastructure capable of interconnecting to the Project and, in the event of an outage at
NorthgateSubstation,capableofdeliveringenergysufficienttosatisfy33MWofloadatNellis
AFBtothepointofdemarcationassetforthinExhibitD.
“NoticetoProceed”shallhavethemeaningsetforthinCondition17.4.
“Party”or“Parties”shallhavethemeaningsetforthinthePreamble.
“PersonalDefault”shallhavethemeaningsetforthinCondition22.6.4.
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“PlanAlterations”shallhavethemeaningsetforthinCondition17.3.1.
“PlanAlterationsExceptionNotice”shallhavethemeaningsetforthinCondition17.3.2.
“Pretreatment Permit Application” means an application for the Lessee’s discharge that the
Lessee shall submit prior to the Lease Commencement Date if the Lessee discharges
wastewatertoapubliclyownedtreatmentworks.
“Project”shallhavethemeaningsetforthinthesectionofthisLeaseentitled“LeasedLand.”
“Project Easements” shall have the meaning set forth in the section of the Lease entitled
“LeasedLand.”
“PUCN”shallhavethemeaningsetforthinCondition1.1.
“PUCNApproval”shallhavethemeaningsetforthinCondition1.1.
“PVFacility”shallhavethemeaningsetforthinsectionoftheLeaseentitled“LeasedLand.”
“RCRA”shallhavethemeaningsetforthinthedefinitionofHazardousSubstance.
“Release” means any release, spill, emission, discharge, leaking, pumping, injection, deposit,
disposal, dispersal, leaching or migration into the indoor or outdoor environment (including,
withoutlimitation,ambientair,surfacewater,groundwaterandsurfaceorsubsurfacestrata)or
intooroutofanyproperty,includingthemovementofHazardousSubstancesthroughorinthe
air,soil,surfacewater,groundwaterorproperty.
“RemovalandRestorationObligation”shallhavethemeaningsetforthinCondition10.1.
“Rent”shallhavethemeaningsetforthinCondition5.1.1.
“RestorationDefault”shallhavethemeaningsetforthinCondition10.6.
“RestorationDeadline”shallhavethemeaningsetforthinCondition10.1.
“SalvageValueReport”shallhavethemeaningsetforthinCondition10.8.
“Secretary”shallhavethemeaningsetforthinthePreamble.
“SpillPlan”shallhavethemeaningsetforthinCondition11.12.
“ThirdPartyPropertyInterests”shallhavethemeaningsetforthinCondition3.1.
“UtilityServiceAgreement”shallhavethemeaningsetforthintheRecitals.
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EXHIBITA
DESCRIPTIONANDMAPOFLEASEDLAND
[SEEATTACHED]
ExhibitAtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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EXHIBITB
THIRDPARTYPROPERTYINTERESTS
[SEEATTACHED]
ExhibitBtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
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EXHIBITB
THIRDPARTYPROPERTYINTERESTS
GRANTEE
INSTRUMENT
NUMBER
START
DATE
ENDDATE
DESCRIPTION
NVEnergyROW forrelocatedpower trans
polelineto LincolnCounty PowerDistrict;
assignedto NevadaPower Companyin
1989
NevadaPower
Company
DA(S)04Ͳ203Ͳ
ENGͲ 1081
9/19/1960
Perpetual
Central
Telephone
Company
DACA09Ͳ2Ͳ96Ͳ
004
7/15/1994
7/14/2019 CentralTelephone Company Underground
phonelineNellis Blvd&Tyndall
CityofNorth
Las Vegas
DACA09Ͳ2Ͳ74Ͳ31
9/6/1973
Perpetual
CNLVROW36"underground water
pipeline (crossreference DACA09Ͳ2Ͳ73Ͳ
257for24"water line)
ClarkCounty
DACA09Ͳ2Ͳ77Ͳ
265
5/18/1977
Perpetual
ClarkCountyRoad R/WNellisBlvd.7.4
acreslocated attheintersection ofNellis
Blvd& GowanRd("I"StreetGate)Nellis
propertyline
ClarkCounty
PublicWorks
DACA09Ͳ2Ͳ01Ͳ
0001
7/6/2001
Perpetual
ClarkCounty PublicWorkswidenCarey
Aveandconstructa drainage swale.
NevadaPower
Company
DACA09Ͳ2Ͳ98Ͳ
006
3/1/1998
2/28/2023 NVEnergyinstall twopowerpoles with
two12KV circuitswith2/0 ASCRcablesfor
overhead electricallinesandguyline.
Nellis/Cheyenne
SouthernNV
Water
Authority
DACA09Ͳ2Ͳ01Ͳ
0003
4/1/2001
3/31/2026 SouthernNV W aterAuthority
transportation pipeline–mainbase
CityofNorth
Las Vegas
DACA09Ͳ2Ͳ73Ͳ
257
6/15/1973
Perpetual
ClarkCounty
ACCͲRKMFͲ2Ͳ96Ͳ
016
6/17/1996
6/16/2021 Clark County UG sewerline15' X 1336.88'
forClark CountySanitation District
CityofNorth
Las Vegas
USAFͲACCͲ
RKMFͲ1Ͳ08Ͳ0001
10/1/2008
9/30/2058 EULwithCityofNorth LasVegasͲadjacent
tosouth endofgolfcourse ExhibitB–ThirdPartyPropertyInterests
CNLVROW24"underground water
pipeline (crossreference DACA09Ͳ2Ͳ74Ͳ31
FOR36"waterline)
PageBͲ1
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GRANTEE
ClarkCounty
INSTRUMENT
NUMBER
DACA9Ͳ2Ͳ84Ͳ264
START
DATE
ENDDATE
1/4/1984
Perpetual
DESCRIPTION
Clark County 90' perpetualeasement for
floodcontrol channel,runsby Tyndall
gate,golf clubhousecourse ExhibitB–ThirdPartyPropertyInterests
PageBͲ2
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EXECUTION FINAL
EXHIBITC
LISTOFENVIRONMENTALDOCUMENTS
[SEEATTACHED]
ExhibitCtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
PageCͲ1
Page 75 of 396
([HFXWLRQ)LQDO
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Exhibit C – List of Applicable Environmental Documents
1. Final Environmental Assessment Outgrant for Construction and Operation of a Solar
Photovoltaic System in Area I, Nellis Air Force Base, Clark County, Nevada, Nellis Air Force
Base, March 2011
2. )LQDOPhase I Environmental Baseline Survey for Construction of a Solar Photovoltaic
System by NV Energy on Nellis Air Force Base, Clark County, Nevada, -DQXDU\ 201
3. )LQDO Phase I Environmental Baseline Survey for Construction of a Solar
Photovoltaic System by NV Energy on Nellis Air Force Base Clark County,
Nevada, -DQXDU\ 201
4. Final Integrated Natural Resources Management Plan and Environmental Assessment, Nellis
Air Force Base, February 2010
5. Site LF-01 No Further Action Decision Document ACC 4-Base PBC, Nellis AFB, Nevada,
June 2007
6. Air Force Form 813 RCS 13-1001, Install Portable Substation on Nellis AFB
7. Annual Groundwater Monitoring and Landfill Cap Inspection Report, January 2005
8. Nellis Air Force Base Site LF-01 and LF-02 Groundwater Monitoring Report, February
2006
9. NDEP correspondence to Nellis Air Force Base, dated January 27, 2011, confirming no
objections to use of Nellis AFB Landfill LF-01 site for proposed solar photovoltaic project
10. Closure report Active Cell for Construction Debris LF-01, May 1995
11. Final 2006 Base wide GW Monitoring Report ACC 4-Base PBC, December 2006
12. Final Cell Closure LF-01, July 1994
13. Final Design Analysis Site LF-01 & LF-02 Landfill Cover, January 1996
14. Geophysical Survey & Test Pit Data Summary LF-01, August 1994
15. Geotechnical Investigation & Boundary Delineation Volume 1, January 1995
([KLELW&/LVWRI(QYLURQPHQWDO'RFXPHQWV
Page 76 of 396
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EXHIBITD
NELLISAFBELECTRICINTERCONNECTEQUIPMENT
[SEEATTACHED]
ExhibitDtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
PageDͲ1
Page 77 of 396
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y,//d D
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Activity ID
NV ENERGY CONSTRUCTION ACTIVITY
NELLIS PV SOLAR FACILITY
Proj Mgt Project Management
PROJECT IN-SERVICE
PROJECT COMPLETE
Burrowing Owl Restriction 2015
Proj Mgt: AGREEMENTS/CONTRACTS
Lease Agreement with USAF-Execution Ready
NV Energy Bid & Award EPC
NV Energy File With PUCN
PUCN Approval
Nellis PV II Solar Facility
Preliminary Design
NDEP Approval
50% Drawings
50% Drawings Review
100% Drawings
100% Drawings Review
Procurement
Site Prep
Block Construction
Distribution Feeders
Commissioning
Nellis PV II 69/12 kV PDS Substation (Support)
Acquisition Activities
Permitting
Nellis PV II 69/12 kV PDS Substation
Preliminary Design
Civil Design
Physical Design
Electrical Design
Long Lead / Large Ticket Items
Civil / Structural Construction
Substation Construction
Relay Construction
Metering
Nellis PV II 69kV Tap to PDS
Preliminary Design
Detailed Engineering
Long Lead Material
Foundation Construction
Trans Line Outages
OH Construction
Nellis PV II 69/12 kV PDS Substation - Comm
Design
džŚŝďŝƚͲůĞĐƚƌŝĐ/ŶƚĞƌĐŽŶŶĞĐƚƋƵŝƉŵĞŶƚ;WĂŐĞϭŽĨϯͿ
Start
*Finish
3/15/15
12/31/2015
2/23/2016
9/1/2015
6/1/2013
12/31/2013
2/7/2014
3/15/2014
5/1/2014
12/31/2014
1/1/2015
1/15/2015
1/1/2015
2/1/2015
3/1/2015
4/15/2015
1/1/2015
2/1/2015
3/15/2015
5/15/2015
11/1/2015
1/15/2015
2/1/2015
2/1/2015
3/1/2015
4/15/2015
5/15/2015
4/1/2015
3/15/2015
10/15/2015
10/30/2015
12/31/2015
11/26/2014
2/25/2015
4/14/2015
5/19/2015
12/2/2013
1/1/2015
1/1/2015
1/1/2015
5/15/2014
2/5/2015
2/18/2015
12/2/2015
1/1/2015
1/29/2014
4/7/2015
2/10/2015
5/19/2015
10/30/2015
8/19/2015
12/1/2015
12/31/2015
12/8/2015
1/1/2015
1/27/2015
2/25/2015 6/17/2015
6/12/2015 10/19/2015
6/18/2015 6/24/2015
10/19/2015 11/9/2015
6/18/2015 12/11/2015
2/25/2015
8/26/2015
Page 78 of 396
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Fiber Installation
Construction
Nellis PV II PDS Substation-New Feeders & Station Service
Distribution ROW
Distribution Design
Distribution Trenching
Distribution Construction
11/2/2015
10/5/2015
11/9/2015
2/23/2016
1/21/2015
1/1/2015
2/4/2015
8/10/2015
4/8/2015
3/3/2015
9/30/2015
11/12/2015
* These are estimated dates for NV Energy construction, some tasks may begin prior to
PUCN approval
Page 79 of 396
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džŚŝďŝƚͲůĞĐƚƌŝĐ/ŶƚĞƌĐŽŶŶĞĐƚƋƵŝƉŵĞŶƚ;WĂŐĞϯŽĨϯͿ
NEL-1
EXECUTION FINAL
EXHIBITE
CONSTRUCTIONREQUIREMENTS
ExhibitEtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
PageEͲ1
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EXHIBITE
CONSTRUCTIONREQUIREMENTS
1.
General.
ThepurposeofthisExhibitistoproviderequirementsthatNVEnergywillbe requiredtoincorporate
in the design or follow while accessing the property and/or working within the AFB. Unless expressly set
forth herein to the contrary, all such requirements, including but not limited to engineering/design,
permitting, access to the property, security, construction facilities, construction, parts, materials and
coordinationwithNellisAFBpersonnelshallbeatNVEnergy’ssolecostandexpense.ExhibitDindicates
whichequipmentwillbeownedbyNellisAFBuponcompletionoftheproject.
2.
Engineering/Design.
In addition to engineering/design specifications cited in Exhibit A, the AFB requires that NV Energy
followtheguidelinesprovidedinTableA6Ͳ1“AFBGuidelines”foranyconstructionoutsideoftheLeasearea.
In addition the following design requirements are provided for any construction outside of the Lease
area:
2.1
Designreview–NVEnergyshallsubmittotheGovernment,forits reviewandapproval,design
plans and drawings of features and components for all facilities and improvements (including without
limitationallutilitysystems)andgrounds(includingwithoutlimitationall landscaping,roadsandtraffic
flows)thataretobeapartoftheProject (“DesignPlans”).DesignPlansshallbe35%,90%,and100%
construction drawings and designs and be prepared, signed and sealed by a duly qualified engineer
registeredinthestateofNevada.
2.2
Clearancerequiredfor distributionlineinclearzone –Theportionofthe distributionlinethat
runsthroughtheclear zone will require an AFB construction waiver. This waiver typicallyrequires 60
days to process and requires a lay out of the details of the distribution feeder in the area and the
completionandsubmittalofawaiverrequest.
2.3
Painting–Colorrequirementsfortheinterconnectfacilitieswillbe providedatalaterdate.
TABLEA6Ͳ1AFBGUIDELINES
FinalEnvironmentalAssessmentͲ Outgrantfor
Construction& OperationofaSolar
U.S.AirForce,March2011
Photovoltaic SysteminAreaI,NellisAirForce
Base,ClarkCounty,Nevada
DesignCompatibilityGuidelines
ExhibitE–ConstructionRequirements(NellisAFB)
NellisAirForceBaseNevada,August2011
SectionA.4ͲElectrical(Applicablefor
constructionoff ofleasedpropertyonly.)
PageEͲ1
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TABLEA6Ͳ1AFBGUIDELINES
3.
ScopeofWorkAsͲBuilt Requirements
Section1.5,AsͲBuiltDeliverables
(shapefile/GeodatabaseͲfileorpersonal)Ͳ
UTMWGS 84Zone11N(meters).CADinthe
sameprojection.
AutoCaddrawingswillalsoberequired.
ExteriorElectricalPower Distribution
UnifiedFacilitiesCriteria,UFCSͲ550Ͳ1July1,
2012(Applicableforconstructionoffof
leasedproperty only.)
NellisUndergroundConflicts
ProposedRouteConflicts.PDF
011100SummaryofWork Template
NellisAirForceBaseNevada,August2013
Security.
3.1
Construction equipment Ͳ All construction equipment must enter the site through the
NorthEntranceforsearchbyAFBsecurity.
3.2
Personnel–AnypersonnelrequiringentrancethroughtheAFBgatewillbe requiredto
provide legal name, social security number, drivers license number/state issued and date of
birth.
3.3
Securityfence–thePVgeneratingfacilitymustbefencedduringconstruction insucha
mannerthatcompletelyisolatesitfromtherestoftheAFB.
3.4
WhenaccessisfromEastCarey,NVEnergywillensurethatasecurityguardbepresent
at all times when the gate is open. The security guard must ensure a person or persons are
available to observe suspicious acts/medical situations as they arise. The security guard must
contact BDOC (law Enforcement Desk) at 652Ͳ2311 and relay all pertinent information as
needed.
3.5
FenceConstruction–TypeA2,Chainlink,1.8m(6ft)high,surmountedby3 strandsof
barbedwire,angledoutwardforatotalheightof2.1m(7ft)per AFH32Ͳ1084.
3.6
FenceMounting–Installmounting,toppingandstabilizationperAFIͲ31Ͳ101.
4.
ConstructionFacilities.
NVEnergymayacquirewaterandconstructionpowerviaapurchase arrangementinitiatedwiththeAFB
andcomplywithAFI32Ͳ1061,Providing UtilitiestoAirForceInstallations.
ExhibitE–ConstructionRequirements(NellisAFB)
PageEͲ2
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5.
Construction.
5.1
Craneheightrestrictions–Craneheightrestrictionswillbeprovidedlater.
5.2
Undergroundinterfaces–Undergroundexcavationpermitswillbe a requirementfromtheAFBforfeederlineconstruction.
6.
CoordinationwithAFBpersonnel.
CommunicationsprotocolwiththeAFBwillbeprovidedlater.
7.
NellisAFBElectricalUpgradeRequirements.
NV Energy will be required to incorporate in the design the following items described below: and
further depicted on the drawings labeled, Nellis AFB PV2 Electrical Interconnection South; Nellis AFB PV2
Electrical Interconnection Central;and, Nellis AFB PV2ElectricalInterconnectionNorth.
7.1
ThreeIsolationSwitches,oneeachforcircuits1,2,and9.Alloftheswitcheswould be4Ͳway
switches with all four sections rated at 600A. Having 4Ͳway switches would allow cross ties for
maintenance and emergency use. These switches would be located on the west side of Kinley
Drive, about 400ft south of the southerly curb of I Street, and about 10 to 15 feet west of Kinley
Drive's west curb. The switches should be staggered about 10 ft apart. Manholes will be required
under or nearthe switches. T h e l ocationisabout400ftsouthofsouthcurbofIStreetonwestside
of Kinley Drive. This itemisrequiredtoallowthebasetolockoutboththePVfeedandbasebackup
feed. 7.2
Ckt 1 Ͳ A new switch located approx. 240 ft east of Kinley along the south side of I Street
adjacent to an existing (recently installed) sectionalizer that will be required due to thecomplexity
oftheintertiewithexistingnearbyswitchesAV1Ͳ16,AV1Ͳ17,AV1Ͳ18. This new switch is to have 3Ͳ
600A sections and 1Ͳ200A VFI section. There are 500MCM 15KV UG cables running west from
AVlͲ16 to the sectionalizer. These cablesaretobeinterceptedandterminatedona600Asection. A
short piece (est. 15') of 15KV 500MCM UG cables in conduit is to be run from 600A section in the
switch to the sectionalizer. Cables on the sectionalizer running to the new AGE bldg(B180)areto
bemovedandplacedonthe200Asectionontheswitch.Seeitem 3forPVconnectiontothelast600A
sectionofswitch.
7.3
Ckt1ͲNew500MCMl15KVUGcablerunWSWapprox.215ftnorthofrunningtrack to a new
above ground pull/junction box/ manhole located just southwest of the sidewalkͲtrack
intersection, thence approx. 285ft almost due south along the track to another above ground
pull/junctionbox/manholewhichshouldbedueeastofthe#1isolation switch mentioned in item 1.
This cable should continue about 60 ft west under Kinley Drive to the manhole near #1 isolation
switch, racked in the manhole and continue to the #1 isolation switch. Kinley Drive to be cut and
patched per base standards. All cables arein 6" SCH40 PVC conduit and consist of 3Ͳ500MCM15KV
CU cable with tape shields and 1Ͳ500MCMTHHN isolated Neutral. A spare conduit withpullstringis
tobeprovided.
7.4
Ckt 2 &9Ͳ Each circuit having 500MCM 15KV UG cables in conduit runs from its isolation
switch NW about 380ft to a point in the rock bed about 100ft south of I Street where an above
ExhibitE–ConstructionRequirements(NellisAFB)
PageEͲ3
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ground pull/ junction box and manhole is to be located, thence 200 ft north crossing under 1St, to
anotheraboveground pull/terminalboxandmanhole northof1Street.,thenceENE380fttoanew
manhole to be located in the vicinity of an existing switch halfway between Freedom Circle and I
StreetonthewestsideofKinley Avenue.Itisrecommendedthatthecenterlinesoftheconduitsbea
minimum of 24" apart with 30" preferred. Conduit shall be a minimum of 40" deep with top of
concrete at a minimum of 36" deep ( 24" is minimum to top of concrete. Bottom of trench would
be 24"+6"for conduit+3"concrete top + 3" concrete bottom=36"total.) The connection to circuit 9
shall be made at this existing switch. A new sectionalizer for circuit 2 will be required in the
vicinity of this manhole and existing switch. Another new sectionalizer/junction box for circuit 2
will be required in the vicinity of SwitchAV0902.Theexistingcircuit2connectionatSW AV902isto
be relocated to here and a short piece of cable from the sectionalizer to SW AV902 is to be
installed.Thisroutinghasbeenchosentoavoidaproposedfutureroundaboutatthe intersectionof I
StreetandKinleyDrive.ThecablefromthesouthcarryingPVistobe landedonthisrsectionalizer.
7.5
Ckt 2Ͳ Routing ckt 2 north from the existing switch/new sectionalizer mentioned in item 4
withanewtrenchwith6"conduits950ftalong KinleyAvenueacrossthefrontof Freedom Park and
another 120 ft south to the existing switch. Two cuts at two places across Freedom Circle would
be required. A junction box/pull box/manhole willberequiredinthemiddleofthisrun.
7.6
Ckt 9 north of Freedom at Switch AV902 to switch AV9Ͳ4 along Kinley DriveͲ This is 30ft
section with 2/0 (rated 230A) or 1/0 CU(rated 200A) cable and 4" conduits is marginal for carrying
5MVA of PV current back to the substation. Replace with 1Ͳ 250MCM15kVUGtocarryPVcurrent.
7.7
Ckt 9northof Freedomat SwitchAV9Ͳ4toswitch AV9Ͳ3along KinleyDriveͲ Thisisa 1000ft
section with 1/0 CU cable (rated 200A) and 4" conduits is inadequate for carrying 5MVA of PV
current back to the substation. Replace with 1Ͳ250MCM to carryPVcurrent.
7.8
Ckt 9 Switch AV9Ͳ3 to switch AV9Ͳ2 at the south end of McCarran StreetͲ This is a 125ft
section with 1/0 CU cable (rated 200A) and 4" conduits is inadequate for carrying 5MVA of PV
current back to the substation. Replace with 1Ͳ250MCM to carry PV current.
8.
AdditionalMeteringRequirements.
8.1
NV Energy will install additional metering as required to assure that Nellis AFB will receive
credit for power purchased from third party contracts (ie. Solar Star NAFB and Western Area
Power Administration (WAPA)). For example, in order to separate the power purchased from Solar
Star NAFB and the power purchased from NV Energy, a meter may be required at the Northgate
Substation to measure excess power flowing from Nellis AFBtotheNVEnergyelectricsystem.
8.2
NVEnergywillinclude provisions for meters on each of the Nellis AFB isolation switches on
circuits1,2,and9.
ExhibitE–ConstructionRequirements(NellisAFB)
PageEͲ4
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EXECUTION FINAL
EXHIBITF
FORMOFOPERATINGAGREEMENT
[SEEATTACHED]
ExhibitFtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
PageFͲ1
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EXHIBITF
FORMOFOPERATINGAGREEMENT
BETWEEN
THEUNITEDSTATESOFAMERICA,
ActingbyandthroughTHESECRETARYOFTHEAIRFORCE
AND
NEVADAPOWERCOMPANY,d/b/aNVENERGY
THIS OPERATING AGREEMENT is made and entered into this 15th day of April, 2014, by and between the
UNITED STATES OF AMERICA, acting by and through the SECRETARY OF THE AIR FORCE ("Lessor" or
“Government”)andNEVADAPOWERCOMPANY,d/b/aNVENERGY("Lessee").LessorandLesseearesometimes
collectivelyreferredtohereinasthe“Parties”andindividuallyreferredtoasa“Party.”
WITNESSETH
WHEREAS, the Government under the authority contained in 10U.S.C. §2667 has determined (i) that
theLeasedLand(asdefinedintheLease),isnotexcesspropertyasdefinedbySection3oftheFederalProperty
andAdministrationServicesActof1949,asamended(40U.S.C.102),andisnotatthistimeneededforother
publicuse;(ii)thataleaseofsuchLeasedLandisadvantageoustotheUnitedStates;and(iii)thataleaseofsuch
LeasedLandonthetermssetforthhereinisinthepublicinterest;and
NOW, THEREFORE, for the consideration set forthbelow and as provided in the Lease, and subject to
the terms, conditions, covenants and agreements set forth in this Operating Agreement, the Parties agree as
follows:
Conditions
1.PURPOSE:ThisOperatingAgreementimplementsthetermsandconditionsofLeaseNo.USAFͲACCͲRKMFͲ14Ͳ
2Ͳ0117("Lease"),enteredintoonApril15,2014,betweentheLessorandLessee,forthedesign,construction,
maintenance and operation of solar photovoltaic arrays, new substation, feeders and related improvements
(collectivelythe“Project”)onNellisAirForceBase,Nevada.
2.TERM
A.ThetermofthisOperatingAgreementshallbeforaperiodofthirtyͲone(31)years,unlessterminated
sooner in accordance with the provisions of this Operating Agreement and the Lease. The term of this
OperatingAgreementshallbeginontheLeaseCommencementDate,asthattermisdefinedintheLease.
B. Notwithstanding Section 2(A), this Operating Agreement shall automatically terminate upon the
terminationoftheLease.
3.GENERAL:
A. The Lease incorporates this Operating Agreement by reference. In the event of any inconsistency
between the provisions of the Lease and those of this Operating Agreement, the provisions of the Lease will
control.
ExhibitF–FinalFormofOperatingAgreement
Page1
Page 87 of 396
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EXECUTIONFINAL
B. The Lessee will, at all times, operate and manage the Project using good management practices
commontothesolarpowerindustryandconsistentwiththerequirementsofthisOperatingAgreement.
C.TheLessee’srightͲofͲentryanduseoftheLeasedLandarelimitedtotherightͲofͲentryanduseasset
forthintheLease.
D. The Lessee is responsible for all costs associated with designing, constructing, operating and
maintainingtheProjectduringthetermoftheLeaseandOperatingAgreement.
E.DefaultandTerminationConditionsinSection8oftheLeaseareapplicableherein.
F.RestorationandSurrenderprovisionsinCondition10oftheLeaseareapplicableherein.
G.GeneralIndemnificationprovisionsinCondition15oftheLeaseareapplicableherein.
H.InsuranceprovisionsinCondition16oftheLeaseareapplicableherein.
I.TheauthorizedrepresentativeforexecutingandamendingtheOperatingAgreementonbehalfofthe
LessoristheInstallationCommander,99thABW/CC,("Commander"),orsuchotherofficialastheCommander
shalldesignate.TheauthorizedrepresentativeforexecutingandamendingtheOperatingAgreementonbehalf
oftheLesseeistheVP,RenewableEnergy&Origination,NVEnergy.LesseeshallreimbursetheGovernmentfor
theactualcostsofprovidingsuchservicespromptlyuponreceiptofaninvoicefromtheGovernment.
J.TheGovernmentshallprovidefireprotectiontotheProject.Ifafireoccurs,theLessee,itsofficers,
agents, employees, independent contractors, or subcontractors shall call 911 and immediately advise the
operatorthataredirecttotheNellis AFBemergencyserviceoperatorisrequired.Lesseeshallreimbursethe
Government for the actual costs of providing such services promptly upon receipt of an invoice from the
Government.
4. LEGAL REQUIREMENTS: The Lessee will comply with all applicable federal, state, and local laws, codes,
license and permit requirements, including the payment of all applicable taxes and fees and any other
requirementwhatsoeverapplicabletoaProjectoperationwithintheCountyofClarkandtheStateofNevada.
Thisparagraphisnottobeconstruedtomakeapplicableanotherwiseinapplicablelaw,code,license,orpermit
requirement.Bywayofexampleandnotlimitation,theProjectwillbe,atalltimes,incompliancewiththelaws,
regulations,codesandpublicationsenumeratedinCondition13oftheLease.
5.ENVIRONMENTALPROTECTION:
A.Compliance: All work and Lessee operations shall comply with the requirements imposed by all
applicable federal, state, county, local, and Nellis AFB regulations and permits concerning environmental
protection.TheGovernmentshallprovidetoLesseecopiesorotherwiseidentifyforLesseethelocationofall
applicableNellisAFBregulationsorrequirements.
B.Permits: Lessee shall pay for and obtain all federal, state, county, local, and Nellis AFB permits
requiredforthesuccessfulexecutionoftheProject.
ExhibitF–FinalFormofOperatingAgreement
Page2
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C.Spills:ShouldanyhazardoussubstanceoroilspillsoccuronthisProject,inadditiontocontainingand
removingsuchspill,theLesseeshall:
i.Duringnormalworkinghours,immediatelyreportallspillsinquantitiesoffive(5)gallonsormore
to99CESEnvironmentalOfficeat702Ͳ652Ͳ6121,702Ͳ652Ͳ4287,or702Ͳ277Ͳ1977.
ii.After4:30p.m.oronweekends,immediatelycontacttheNellisCommandPostat702Ͳ652Ͳ2446.
iii.Forward a written, completed spill report to the Nellis Spills Program Manager, as identified by
GovernmenttoLesseeupontheeffectivedateofthisOperatingAgreement,withinthree(3)working
daysaftertheoccurrence.
D.WasteMaterials:AllwastematerialsgeneratedbyanyworkperformedontheLeasedLandshallbe
handled,transported,stored,anddisposedofbytheLesseeorsubͲcontractorsatalltimesinaccordancewithall
applicablefederal,state,county,andlocalordinances,regulations,courtorders,orothertypesofrulingshaving
theeffectoflaw.TheLesseeshallregularlycollectandproperlydisposeofallfugitivetrashanddebrislocated
onororiginatingfromtheLeasedLand.
E.StormWater(SoilErosion):TheLesseeshallprovideprotectivebarrierstopreventsoilerosiononall
requiredexcavations.TheLesseeshallprovideenvironmentalprotectiontopreventsedimentdrainageofsilts
into storm drains. The Lessee shall coordinate with the Nellis Storm Water Manager, as identified by
Government to Lessee upon the effective date of this Operating Agreement, concerning any storm water
questions.
F.Protection of Water Resources: The Lessee shall not pollute any streams, rivers, or waterways
throughdirectdischargeorbystormwaterrunoff.
G.ProtectionofAir,ControlofPollutants:Ifthisprojectinvolvesthemodification,replacement,ornew
installation of any of the following equipment, then the Lessee shall obtain an Authority to Construct Permit
(ATC)fromtheAirQualityOfficeatNellisAFB([email protected])tostartthepermittingprocess.The
approvalprocesscantakefrom3Ͳ6monthssoplanaccordingly.Thecontractorshallberesponsibleforallfees.
AllemissionunitsshallbepermittedBEFOREtheorderingandinstallationoftheemissionunit:
i.FuelsͲrelatedsystemsincludingbulkstoragetanks
ii.Externalcombustionboilers
iii.Incinerators
iv.Partsdegreaser
v.Hushhouse
vi.Enginepowergenerators
vii.Rockcrushers/mineralprocessingequipment
viii.Useorstorageofvolatileorganiccompounds(VOC)
ix.Paintbooths
x.Mediablasting
xi.Baghouses
xii.Coolingtowers
xiii.Any other unit that meets the definition of an emission unit per Clark County Air Quality
Regulations(AQR).
ExhibitF–FinalFormofOperatingAgreement
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H.SiteLFͲ01NoFurtherActionDecisionDocument(June2007):TheLesseeshallcomplywiththeLand
UseControls(LUCs)setforthintheSiteLFͲ01NoFurtherActionDecisionDocument(June2007)andotherwise
reasonably cooperate with Government in ensuring compliance with the aforementioned. Lessee shall also
provide reasonable assistance to 99 CES personnel in revising the Site LFͲ01 No Further Action Decision
Document(June2007)totheextentrequiredbytheNevadaDivisionofEnvironmentalProtection.
I.Access: TheLesseeshallgrantaccesstoNellisAFB99CES personnelto ensurecompliancewithall
applicable local, state or federal environmental requirements which pertain to the Leased Land; provided,
however, that Nellis AFB 99 CES personnel shall take all efforts reasonably necessary to avoid any adverse
effectsontheoperationoftheProject.
6.MANAGEMENTREVIEWCOMMITTEE:
A.TheLessorandLesseewillestablishaManagementReviewCommittee("Committee")todiscussand
resolveanyissuesrelatingtoroutineoperations,safety,security,andotherissuesandadministrativematters
pertainingtotheoperationandmaintenanceoftheProject.ThemembershipoftheCommitteeshallconsistof
theCommander,orhisorherdesignee,astheChairman,theVP,Renewables&Origination,NVEnergy,orhisor
herdesignee,andanyotherpersonsmutuallyagreedtobytheLessorandtheLessee.
B.TheCommitteeshallmeetatleastsemiͲannuallythroughoutthelifeoftheLeaseandfromtimeto
timeatthecalloftheChairmanortheLessee.TheagendaforeachmeetingshallbesetbytheChairmanat
leastseven(7)dayspriortothemeeting,exceptforunscheduledemergencymeetingscalledonlessthanten
(10)days'notice.MemberswillsubmitagendaitemstotheChairmanatleastfourteen(14)daysinadvanceof
anyscheduledmeeting.
C.MemberswillserveontheCommitteewithoutadditionalcompensation,andanyandallexpenses
incidenttotravelandresolutionofissueswillbebornebytherespectiveParties.
D.MinutesofeachmeetingwillbepreparedbytheChairmananddisseminatedtothemembers.
7.INSPECTIONS:
A.DesignatedrepresentativesoftheCommanderwillhavetherighttoconductperiodicinspectionsof
the grounds of the Project to ensure compliance with this Operating Agreement and the Lease. Each party’s
designatedrepresentativeswillreferallsignificantmattersofconcerndiscoveredduringtheinspectionstothe
Committeeforresolution.
B.Eachparty’sdesignatedrepresentativeswillusegoodmanagementpracticesandacceptedstandards
withinthesolarpowerindustrytojudgewhetheramatterofconcernshouldbereferredtotheCommittee.In
the case of imminent health, safety, security, and fire risks, the designated representatives shall immediately
notifytheLesseeandtheCommanderforappropriateaction.
8.SECURITY:
A.TheLessee,itsofficers,agents,employees,independentcontractors,andsubcontractorsaresubject
to the security requirements of Nellis Air Force Base as determined by the Commander. These security
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requirements apply to the Leased Land in the same manner as any other portion of the base. The Lessee is
responsibleforsecuringtheProjectattheendofeachworkday.
B. The Leased Land is subject to periodic inspection by security forces personnel in conjunction with
their official duties; provided, however, that such security forces personnel shall take all efforts reasonably
necessarytoavoidanyadverseeffectsontheoperationoftheProject.TheLesseewillreasonablycooperatein
theseinspections,totheextentrequired,toensurethatlawenforcementactivitiesarenothinderedandthat
security requirements are met. Security forces will provide law enforcement and security assistance at the
Leased Land and will investigate, along with the Office of Special Investigation and cognizant civil authorities,
any crimes on the Leased Land. The Lessee shall be fully responsible for the supervision, performance, and
conduct of its officers, agents, employees, independent contractors, and subcontractors at all times while on
NellisAirForceBase.
C. The Lessee, its officers, agents, employees, independent contractors, and subcontractors must
complywiththesecurityrequirementsofNellisAirForceBaseasdeterminedbytheInstallationCommander.
Oncesecurityrequirementsaremet,personnelwillbeissuedidentificationpassesfromthe99thSecurityForces
Squadron (“99 SFS”) for unescorted entry onto the installation. Vehicles of the aforesaid personnel must be
registered with 99 SFS and issued temporary passes before they may be driven on base. Such vehicles are
subject to inspection by security forces personnel, and drivers must have a valid driver’s license, valid vehicle
registration,andadequateinsurancebeforepasseswillbeissued.
D.TheGovernmentretainstherighttorefuseaccesstothebaseortotheLeasedLandtotheLessee,its
officers, agents, employees, independent contractors, and subcontractors during a national emergency or for
othersimilarcompellingreasonsasdeterminedbytheCommanderinhisorhersolediscretion,ortoejectany
personatanytimefromtheconfinesoftheLeasedLandorthebaseiftheCommanderdeterminessuchaction
isrequiredinthebestinterestandfortheprotectionoftheGovernment.
E.SecurityFencing.
i. Prior to commencing construction of the Project, Lessee shall bear all of its costs incurred in
installingandmaintainingatemporarysecurityfencetoprotecttheconstructionsite,topreventunauthorized
persons from entering on the site and tampering with the Project and to protect persons and property from
injuryordamage.Lesseeshallnotdamage,removeortieintotheinstallationboundaryfencewithoutprior
approvalfromLessor’scontactidentifiedinAttachmentAofthisOperatingAgreement.Alltemporaryfencing
activitiesshallcomplywithCondition17andExhibitEoftheLease.Followingcommencementofconstruction
oftheProjectandtheerectionofthesecurityfence,LesseemayerectaconstructionentrancegateintheNellis
AFBperimetersecurityfenceadjacenttotheLeasedLandandallowconstructionpersonneltoaccesstheLeased
Land without entering Nellis AFB through the permanent base security gates. Fencing shall meet the
specificationofAirForceManual(AFM)32Ͳ1084,FacilityRequirements,acopyofwhichhasbeenprovidedby
GovernmenttoLessee.
ii. When construction of the Project is completed, Lessee shall bear all of its costs incurred in
removing the temporary security fencing and temporary construction entrance gate and installing and
maintaining a permanent security fence for the term of the Lease to prevent unauthorized persons from
enteringonthesiteandtamperingwiththeProjectandtoprotectpersonsandpropertyfrominjuryordamage.
The permanent security fence shall be Type A2 chain link fence at least six (6) feet in height on all sides,
surmountedbythree(3)strandsofbarbedwire,angledoutwardforatotalheightof2.1m(7ft),andcomply
with Condition 17 and Exhibit E of the Lease. If Lessee desires to tie the Project security fence into the
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installationboundaryfence,LesseemustcontactLessor’sContactidentifiedinAttachmentAofthisOperating
Agreement. Upon installation of the permanent security fence, the Lessee will so advise the 99 CES/CC and
arrangeforafinalinspection.AnydeficiencieswillbecorrectedbytheLessee.
9.TOURS:
A. Upon request of the Installation Commander or appointed designee, Lessee shall provide, at no
expensetotheLessor,knowledgeablepersonneltoconducttoursoftheProject.TheInstallationCommander
shall provide Lessee reasonable notice of tour dates, times, expected length of tour, level of technical
information, number of guests, and any special accommodations required. The Installation Commander and
Lesseeshallreasonablycooperatetoensurethatsuchtoursareplannedfordatesandtimes,andconductedin
suchamannerthatwillavoidanyadverseeffectsontheoperationoftheProject.
B. Lessee, after providing reasonable notification to the Installation Commander and 99 SFS, may
scheduleandconducttoursoftheProject.Lesseemustprovidetourpurpose,dates,times,expectedlengthof
tour, list of attendees, and any personal information regarding tour guests as requested by the Installation
Commanderand99SFS.
10.UTILITYSERVICES:
A.Lessee shall bear all of its costs for all metered utilities during the term of the Lease. Lessee shall
purchase,install,andmaintainallmetersatitsowncostandwithoutcostandexpensetotheLessor.
B.Lessor shall provide water to the Lessee per AFI 32Ͳ1061, Providing Utilities to US Air Force
Installations.
C.Lessor shall provide electricity to the Lessee per AFI 32Ͳ1061, Providing Utilities to US Air Force
Installations.
D.LessorshallnotprovidesanitationandwastedisposalservicestotheLessee.
11.MAINTENANCE
A.Lesseeshallberesponsibleforallitscostsincurredinconnectionwithoperatingandmaintainingthe
ProjectforthepurposeofmeetingitsobligationsundertheLeaseandthisOperatingAgreement.
B. Except as otherwise specifically provided for in the Lease, Lessee shall at all times, and at no
expense to the Government, protect, preserve, repair, and maintain the Leased Land including any grounds
maintenanceandfence/gaterepairsduringthetermoftheLease.
C. IntheeventtheProjectrequiresisolationfromtheNellisAFBelectricaldistributionsystem,Lessee
and Lessor shall coordinate the isolation in accordance with the Electrical Distribution System Isolation Plan
procedures.ThisplanshallbedraftedbytheLessor,incoordinationwiththeLessee,followinginstallationof
theelectricaldistributionsystemandthehiringofamaintenancecontractorbytheLessee.
12.DISPUTES:AnydisputeconcerningaquestionoffactarisingunderthisOperatingAgreementwhichisnot
disposed of through other informal means, shall first be referred for resolution to the Committee. If a
satisfactory resolution of such dispute is not reached, the Chairman of the Committee shall then refer the
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disputefordecisioninaccordancewiththedisputeprovisionsoftheLease.Pendingfinaldecisionofadispute
hereunder, the Parties shall proceed diligently with the performance of their obligationsunder this Operating
Agreement.
13.NOTICES:
A.Anynotice,demand,order,direction,determination,requirement,consentorapproval,requestor
othercommunicationrequiredorpermittedbylaworanyprovisionoftheLeaseorthisOperatingAgreementto
begivenorservedoneitherPartyshallbeinwritingandaddressedtothePartyattheaddresssetforthbelow,
orsuchotheraddressesthePartymaydesignatefromtimetotimebynotice,and(i)depositedintheUnited
States mail, registered or certified, return receipt requested, postage preͲpaid, (ii) delivered by an overnight
privatemailservicewhichprovidesdeliveryconfirmationsuchas,withoutlimitation,FederalExpress,Airborne
orUPS,or(iii)personallydeliveredatsuchaddress.
Lessor:
Chief,RealPropertyManagementDivision(CIM)
InstallationsCenterofExcellence
AirForceCivilEngineerCenter
MailingAddress:
2261HughesAve.,Suite155
JBSALackland,TX78236Ͳ9853
DeliveryAddress:
3515S.GeneralMcMullen
SanAntonio,TX78226Ͳ2018
Andto:
InstallationCommander
99thABW/CC
4430GrissomAvenue,Suite110
NellisAFB,NV89191
Lessee:
VP,RenewableEnergyandOrigination
NVEnergy
6226W.SaharaAvenue
LasVegas,NV89146
B.EachpartyshallbeentitledtospecifyasitsproperaddressanyotheraddressintheUnitedStates,or
specifyanychangetotheaboveinformation,uponwrittennoticetotheotherpartycomplyingwiththisSection
13.
C.Each party shall designate on Attachment A the person(s) to be contacted with respect to specific
operationmatters.Eachpartyshallbeentitledtospecifyanychangetosuchperson(s)uponwrittennoticeto
theotherpartycomplyingwiththisSection13.
D.Everynotice,demand,order,direction,requirement,consentorapproval,requestorcommunication
delivered as set forth herein shall be deemed received by the addressee on the delivery date or the delivery
refusaldateshownonthereturnreceiptorthedeliveryconfirmation.
14.TERMINATIONANDMODIFICATION:ThisOperatingAgreementshallcontinueinfullforceandeffectforthe
termoftheLease,unlessterminatedearlyasprovidedintheLease.IftheLeaseisextendedorrenewed,then
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this Operating Agreement shall likewise be extended or renewed without further action and continue in full
forceandeffectfortheextendedtermoftheLease.
15.SEVERABILITY:IntheeventthatanyoneormoreoftheprovisionsofthisOperatingAgreementshallforany
reasonbeheldtobeunenforceableinanyrespectunderapplicablelaw,suchunenforceabilityshallnotaffect
any other provision of this Operating Agreement, but this Operating Agreement shall be construed as if such
unenforceableprovisionorprovisionshadneverbeencontainedherein.
16.FORCEMAJEURE:Neither party shall be liable for any delay or failure in performance of any part of this
Operating Agreement from any cause beyond its reasonable control, including but not limited to, unusually
severe weather, flood, fire, lightning, war, sabotage, aircraft accident, act of a public enemy, earthquake,
insurrection,riot,civildisturbance,strike,restraintbycourtorder,oranycombinationofthesecauses,whichby
the exercise of due diligence and foresight such Party could not reasonably have been expected to avoid and
whichbytheexerciseofduediligenceisunabletoovercome.
17.GOVERNINGLAW:ThisOperatingAgreementshallbeinterpreted,governedandconstruedunderthelaws
oftheStateofNevada,withoutregardtochoiceoflawprovisions.
18. AMENDMENTS: No amendment, modification, or supplement to this Operating Agreement shall be
effective,unlessitisinwriting,consistentwiththetermsandconditionssetforthintheLease,andsignedbythe
authorized representatives of both parties, and by reference incorporates this Operating Agreement and
identifies the specific sections that are amended, modified, or supplemented or indicates that the material is
new.NooralunderstandingoragreementnotincorporatedinthisOperatingAgreementisbindinguponeither
oftheParties.
19.CHANGEDCIRCUMSTANCES:ThePartiesacknowledgethatcompliancewithanyLegislativeactionorother
Executiveaction(whetherissuedbeforeoraftertheeffectivedateoftheLeaseandthisOperatingAgreement)
affecting this Operating Agreement, including but not limited to (i) base realignment or closure or (ii)
modificationofNellisAFBmission,mayrequirethatamendment(s)bemadetothisOperatingAgreement.
20.COUNTERPARTS:This Operating Agreement may be executed in one or more counterparts at different
times,eachofwhichshallberegardedasanoriginalandallofwhich,takentogether,shallconstituteoneand
thesameagreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Operating Agreement on the date or dates
indicatedbelow,tobeeffectiveasoftheeffectivedateoftheLease.
[SignaturesAppearontheFollowingPages]
ExhibitF–FinalFormofOperatingAgreement
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LessorSignaturePagetoOperatingAgreement
Agreedtothis15thdayofApril,2014
THE UNITED STATES OF AMERICA, acting by and through THE
SECRETARYOFTHEAIRFORCE
By______________________________________
TIMOTHYK.BRIDGES
DeputyAssistantSecretaryoftheAirForce
(Installations)
ExhibitF–FinalFormofOperatingAgreement
LessorSignaturePage
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LesseeSignaturePagetoOperatingAgreement
Agreedtothis15thdayofMarch,2014
NEVADA POWER COMPANY, a Nevada corporation doing
businessasNVENERGY
By_____________________________________
PAULJ.CAUDILL,President
6226WestSaharaAvenue
LasVegas,Nevada89146
ExhibitF–FinalFormofOperatingAgreement
LesseeSignaturePage
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ATTACHMENTA
TOOPERATINGAGREEMENT
LessorContacts:
Chief,RealPropertyManagementDivision(CIM)
InstallationsCenterofExcellence
AirForceCivilEngineerCenter
MailingAddress:
2261HughesAve.,Suite155
JBSALackland,TX78236Ͳ9853
DeliveryAddress:
3515S.GeneralMcMullen
SanAntonio,TX78226Ͳ2018
And:
InstallationCommander
99thABW/CC
4430GrissomAvenue,Suite110
NellisAFB,NV89191
LesseeContacts:
Renewables&OriginationDepartment
NVEnergy
6226WSaharaAve
LasVegas,NV89146
ExhibitF–FinalFormofOperatingAgreement
AttachmentA
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EXHIBITG
FORMOFMEMORANDUMOFLEASE
[SEEATTACHED]
ExhibitGtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
PageGͲ1
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EXHIBITG
FORMOFMEMORANDUMOFLEASE
THISINSTRUMENTWASPREPAREDBY,
ANDAFTERRECORDINGRETURNTO:
OfficeofDeputyGeneralCounsel
(Installations,Energy&Environment)
ChiefCounsel,SAF/GCNͲSanAntonio
2261HughesAvenue,Suite151
JBSALackland,TX782369853
MEMORANDUMOFLEASE
NellisAirForceBase,ClarkCounty,Nevada
THISMEMORANDUMOFLEASE(hereinafterreferredtoasthis“Memorandum”)isenteredinto
as of the 15th day of April, 2014 (the “Effective Date”), by and between THE UNITED STATES OF
AMERICA,actingbyandthroughtheSecretaryoftheAirForce(hereinafterreferredtoas“Lessor”);and
NEVADA POWER COMPANY, d/b/a NV ENERGY, a corporation created under the laws of the State of
Nevada(hereinafterreferredtoas“Lessee”).
BACKGROUND
LessorhasdemisedtoLessee,andLesseehasleasedfromLessor,acertaintractoflandsituated
in Clark County, Nevada, as more particularly described on Exhibit A attached hereto and by this
referenceincorporatedhereinandmadeaparthereof(hereinafterreferredtoasthe“LeasedLand”),
subjecttoallexistingeasements,rightsofway,licensesandotherpropertyinterestsofpublicrecordfor
anypurposewithrespecttotheLeasedLand,pursuanttothetermssetforthinthatcertainDepartment
oftheAirForceLeaseonNellisAirForceBase,ClarkCounty,Nevada(LeaseNumberUSAFͲACCͲRKMFͲ
14Ͳ2Ͳ0117)(hereincalledthe“Lease”),datedApril15,2014,betweenLessorandLessee.
NOW, THEREFORE, in consideration of the foregoing recitals, and for other good and valuable
considerationassetforthintheLease,LessorandLesseeagreeasfollows:
This Memorandum shall be recorded in the land records of Clark County, Nevada in lieu of
recordingtheentireLease,whichLeasecontains,withoutlimitation,thefollowingprovisions:
A.
DescriptionofLeasedLand.SeeExhibitAattachedhereto.
B.
Term. The original term of the Lease is for thirtyͲone (31) years, (the “Lease Term”)
unlesssoonerterminatedinaccordancewiththetermsoftheLease.
C.
Addresses.TheaddressesofLessorandLesseesetforthintheLeaseareasfollows:
ExhibitG–FormofMemorandumofLease(NellisAFB)
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Lessor:
WithCopyTo:
AndTo:
Lessee:
WithCopyTo:
Deputy Assistant Secretary of the Air Force
(Installations)
c/oDepartmentoftheAirForce
1665AirForcePentagon
Washington,DC20330Ͳ1665
OfficeofDeputyGeneralCounsel
(Installations,Energy&Environment)
ChiefCounsel,SAF/GCNͲSanAntonio
2261HughesAvenue,Suite151
JBSALackland,TX78236Ͳ9853
InstallationCommander
99thABW/CC
4430GrissomAvenue,Suite110
NellisAFB,NV89191
NevadaPowerCompany,d/b/aNVEnergy
Attn:VicePresident,Renewables&Origination
6226WestSaharaAvenue
LasVegas,NV89146
NevadaPowerCompany,d/b/aNVEnergy
Attn:GeneralCounsel
6226WestSaharaAvenue,MS03A
LasVegas,NV89146
INWITNESSWHEREOF,theLessorandLesseehavecausedthisMemorandumtobeexecutedby
theirdulyauthorizedrepresentativesasofthedatefirstwrittenabove.
[RemainderofPageIntentionallyLeftBlank]
ExhibitG–FormofMemorandumofLease(NellisAFB)
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LESSORSIGNATUREPAGETOMEMORANDUMOFLEASE
LESSOR:
THE UNITED STATES OF AMERICA, acting by and
throughtheSECRETARYOFTHEAIRFORCE
By:
_______________________________________
TIMOTHYK.BRIDGES
DeputyAssistantSecretaryofthe
AirForce(Installations)
ACKNOWLEDGMENT
§
§
§
COMMONWEALTHOFVIRGINIA
COUNTYARLINGTON Onthe_________dayof__________________,2014,beforeme,_______________________,
theundersignedNotaryPublic,personallyappearedTIMOTHYK.BRIDGES,personallyknowntometo
bethepersonwhosenameissubscribedtotheforegoingInstrument,andpersonallyknowntometobe
theDeputyAssistantSecretaryoftheAirForce(Installations),andacknowledgedthatthesamewasthe
actanddeedoftheSecretaryoftheAirForceandthatheexecutedthesameastheactoftheSecretary
oftheAirForceforthepurposesandconsiderationcitedtherein.
_____________________________________________
NotaryPublic,CommonwealthofVirginia
_____________________________________________
PrintedName
_____________________________________________
CommissionExpirationDate
ExhibitG–FormofMemorandumofLease(NellisAFB)
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LESSEESIGNATUREPAGETOMEMORANDUMOFLEASE
LESSEE:
NEVADAPOWERCOMPANY,d/b/aNVENERGY,a
Nevadacorporation
By:
_______________________________________
PAULJ.CAUDILL
President
ACKNOWLEDGMENT
§
§
§
STATEOFNEVADA
COUNTYOFCLARK
This instrument was acknowledged before me on _________________, 2014, by PAUL J.
CAUDILL,personallyknowntometobethePresidentofNevadaPowerCompany,aNevadacorporation
doingbusinessasNVEnergy.
_______________________________________
NotaryPublic,StateofNevada
_______________________________________
PrintedName
CommissionExpirationDate
ExhibitG–FormofMemorandumofLease(NellisAFB)
GͲ4
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EXHIBITA
LEGALDESCRIPTIONOFTHELEASEDLAND
[SEEATTACHED]
ExhibitG–FormofMemorandumofLease(NellisAFB)
GͲ5
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EXHIBITH
FORMOFPROJECTEASEMENTS
[SEEATTACHED]
ExhibitHtoNellisAFB,SiteDevelopmentLease(No.USAFͲACCͲRKMFͲ14Ͳ2Ͳ0117)
PageHͲ1
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EXHIBIT H
FORM OF PROJECT EASEMENT(S)
APNs: 140-16-401-007 140-16-801-001
After Recording Return To:
Property Services NV Energy
P.O. Box 98910 MS 9 Las Vegas, NV 89151-0001 State of Nevada
County of Clark
DEPARTMENT OF THE AIR FORCE
GRANT OF EASEMENTS FOR ELECTRIC SUBSTATION (“Grant of Easement”)
THE UNITED STATES OF AMERICA, acting by and through THE SECRETARY OF THE AIR
FORCE (“Grantor”), under and pursuant to the powers and authority contained in Title 10, United States
Code, Section 2668 and Title 40 United States Code, Section 1314, having found that the granting of the
easement contained herein will be in the public interest, that no more land than that needed for the
easement is included, and the easement will not substantially injure the interest of the United States in the
property affected thereby, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, does hereby grant unto NEVADA POWER COMPANY, a Nevada corporation, d/b/a
NV Energy (“Grantee”), its successors and assigns, the following five (5) easements (collectively, the
“Easements”):
(i) an exclusive easement and right to occupy the Grantor’s real property described in Exhibit A,
(the “Property”), within the area described on Exhibit B (the “Substation Easement Area”), for
the purpose of an electrical substation and/or switchyard for the transmission, distribution and
transformation of electricity and for communication facilities, and the right to construct, operate, add
to and maintain upon, over and under the Substation Easement Area, and to remove therefrom,
foundations, footings, pads, walls, fences and other real property improvements, together with
poles, guys, anchors, wires, cables, equipment, fixtures, apparatus and other communication and
electrical facilities and improvements (“Substation Facilities”), currently referred to as the
“Distribution Substation” (the “Substation”);
(ii) a nonexclusive easement over, under, upon and across the Property within the area described
on Exhibit C (the “Fence Easement Area”), for the purpose of constructing, maintaining,
inspecting, repairing and/or reconstructing the fence surrounding the Substation;
(iii) a nonexclusive easement over, under, upon and across the Property within the area described
on Exhibit D (the “Transmission/Distribution Easement Area”), for the purpose of constructing,
repairing, removing, relocating, replacing, inspecting, expanding, operating, and maintaining
aboveground and/or underground communication facilities and electric line systems for the
distribution and transmission of electricity, consisting of poles, other structures, wires, cables,
conduit, duct banks, manholes, vaults, transformers, service boxes, meter panels, cabinets,
bollards, anchors, guys, and other equipment, fixtures, apparatus, and improvements (“Utility
Facilities”);
ExhibitH–FormofProjectEasement(s)(NellisAFB)USAFͲACCͲRKMFͲ14Ͳ2Ͳ0118
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(iv) a nonexclusive easement over, under, upon and across the Property within the area described
on Exhibit E (the “Distribution Easement Area”), for the purpose of constructing, repairing,
removing, relocating, replacing, inspecting, expanding, operating, and maintaining above ground
and/or underground communication facilities and electric line systems for the distribution of
electricity, consisting of various Utility Facilities;
(v) A nonexclusive right of access to the Substation Easement Area, Fence Easement Area,
Transmission/Distribution Easement Area and Distribution Easement Area on the Nellis Air Force
Base’s (the “Installation’s”) streets and walkways in the area shown on Exhibit F (“Roadway
Easement Area”), in common with Grantor, provided that access will be granted in accordance
with the Installation’s procedures;
together with rights of ingress and egress over, upon and across the Substation Easement Area, Fence
Easement Area, Transmission/Distribution Easement Area, Distribution Easement Area and Roadway
Easement Area (collectively, “Easement Areas”) and that portion of the Property adjacent to the Easement
Areas (the “Adjacent Property”) to reasonably accommodate the exercise of the rights granted herein.
The foregoing Easements are granted upon the following additional terms and conditions:
1.
The Grantee shall maintain the Substation and the Utility Facilities in a manner that
supports an emergency secondary interconnection between Grantee’s electrical grid and Nellis Air Force
Base capable of supporting 33 MW of Nellis AFB electric load at the point of interconnection (as shown in
Exhibit D of the Solar PV Lease, as defined in Section 25 below) at all times during the term of this
easement. Provided Grantee is and at all times remains in compliance with this requirement, this grant
shall be for a term of forty (40) years, unless earlier terminated or renewed in accordance with the
conditions herein.
2.
Grantee’s use and occupation of the Easement Area and the exercise of the rights herein
granted shall be subject to such reasonable rules and regulations regarding ingress, egress, safety,
sanitation and security as Grantor, or its duly authorized representatives, may from time to time prescribe;
provided, however, that the use of the Easement Area shall be without charge to Grantee so long as
Grantee uses the Easements for the purposes herein described.
3.
Grantor, its representatives, agents, and invitees, reserves the right of access to and use of
the Fence Easement Area, Transmission/Distribution Easement Area, Distribution Easement Area and
Roadway Easement Area in a manner that does not interfere with Grantee’s rights herein, Grantee’s
electrical practices, and the National Electrical Safety Code. Grantor shall not construct any building,
structures or other improvements on or within the Easement Area without Grantee’s prior written consent.
Grantor may enter upon the Fence Easement Area, Transmission/Distribution Easement Area, Distribution
Easement Area and Roadway Easement Area at any time to inspect those areas and Grantee’s
improvements thereon to confirm compliance with the terms herein.
4.
Grantee agrees to exercise commercially reasonable efforts to minimize interference with
Grantor’s use of the Easement Area and the Property.
5.
Grantee shall take all actions and pay all costs necessary to maintain the Substation
Facilities and Utility Facilities in good and working condition in compliance with all applicable federal, state,
and local laws, rules, regulations, orders and ordinances (“Applicable Law”). Grantee shall be
responsible for and obtain, at its sole expense, prior to the commencement of any improvements, any
approvals, permits, or licenses which may be necessary to the construction and operation of such
improvements in compliance with Applicable Law.
6.
This Grant of Easement is made subject to existing utility and other public and private
easements or interests. Grantee shall coordinate its uses within the Easement Area in advance with any
third party owners of existing easements or interests.
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7.
Grantee shall, in the event of any disturbance or damage to the Easement Area or any
Adjacent Property incident to Grantee’s exercise of any of Grantee’s rights contained herein, promptly
restore the same as nearly as may be reasonably possible to the condition as existed prior to such
disturbance or damage to the reasonable satisfaction of Grantor.
8.
Grantor does further grant to Grantee the right to trim, cut and remove any tree branches,
roots, shrubs, plants, trees and vegetation that unreasonably interferes with or threatens the safe, proper or
convenient use, maintenance or operation of said facilities within the Easement Areas. Grantee shall use
commercially reasonable efforts to minimize the amount of disturbance caused by such activities within the
Easement Areas, and (subject to the first sentence in this Section 8) shall restore the Easement Area
following any disturbance, as set forth in Section 7 above.
9.
Grantee may, at no cost to Grantor, install or construct, repair or replace, maintain or make
improvements to the Substation and/or Utility Facilities or make reasonable changes, modification or
alterations to the Easement Area, as Grantee deems reasonably necessary in connection with the exercise
of the rights granted herein without the prior approval of Grantor, provided that, with the exception of
emergency repairs or replacements, Grantee shall provide Grantor notification at least seventy-two (72)
hours prior to undertaking such activities. No prior notice is required in cases of emergency, provided that
prompt notice shall be given after the fact to Grantor. Grantee will provide notice to:
Chief, Real Property Management Division (CIM) Installations Center of Excellence Air Force Civil Engineer Center Mailing Address: 2261 Hughes Ave., Suite 155
JBSA Lackland, TX 78236-9853
Delivery Address:
3515 S. General McMullen
San Antonio, TX 78226-2018
With copy to: Chief Counsel, SAF/GCN-San Antonio Office of Deputy General Counsel (Installations, Energy & Environment) Mailing Address:
2261 Hughes Ave., Suite 155
JBSA Lackland, TX 78236-9853
Delivery Address:
3515 S. General McMullen
San Antonio, TX 78226-2018
And to: Real Property Officer (RPO)/Deputy Base Civil Engineer 6020 Beale Avenue Nellis AFB, Nevada 89191
10.
If Grantor or Grantee shall, at any time after the initial installation of the Utility Facilities or
Substation Facilities, request to relocate the Utility Facilities or Substation Facilities to a different location or
locations, it shall do so at such location or locations as shall be mutually satisfactory to the parties hereto, in
accordance with any applicable Tariff Schedules of Grantee and at the sole cost and expense of whichever
of Grantor or Grantee requested such relocation, subject to the availability of appropriated funds. The
Government’s liability under this clause may not exceed appropriations available for such payment and
nothing contained in this agreement may be considered as implying that Congress will at a later date
appropriate funds sufficient to meet deficiencies. Grantee shall have the same rights and privileges in the
new location or locations as in the former location or locations. However, Grantee is not obligated to
relocate the Utility Facilities or Substation Facilities if Grantor requests the relocation and Grantor cannot or
does not secure appropriate funds.
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11.
Except as provided for in this Grant of Easement or to the extent Grantee has rights under
another agreement or Applicable Law, Grantee has no right of use, license, easement, servitude or usufruct
for any purpose, by necessity or otherwise, express or implied, on, over, across or under any of Grantor’s
real property, and Grantee agrees not to assert any such right or interest by reason of this Grant of
Easement.
12.
Grantee is self-insured up to $10,000,000 in commercial general and business automobile
liability and up to $10,000,000 in employer’s liability and reserves the right to increase such level of
self-insurance without the approval of the Government so long as Lessee maintains a tangible net worth of
$500,000,000 or greater and affords such protection to the Government as if such insurance coverage is in
place. Grantee will add Grantor as an additional insured on Grantee’s commercial general and business
automobile liability policies relative to Grantee’s obligations under this Grant of Easement.
13.
Except to the extent arising out of the negligence or willful misconduct of Grantor, its
agents or its employees, Grantor and its employees and agents shall not be responsible for damages to
property or injuries to persons or other claims incurred by Grantee or its employees, agents or guests in
connection with the exercise of the rights granted herein. Grantee shall, to the extent permitted by law,
indemnify and hold Grantor and its employees and agents harmless from and against any all claims, losses,
damages, liabilities, and/or expenses (including attorney’s fees and costs) arising at any time directly or
indirectly from or incident to the exercise of Grantee’s rights granted herein or a breach of the Grantee’s
obligations herein except to the extent arising out of the negligence or willful misconduct of Grantor, its
agents or employees. The foregoing indemnification and release provisions shall survive the expiration or
earlier termination of this Grant of Easement.
14.
Grantee shall comply with all applicable federal, state and local laws, regulations and
standards for environmental protection including, but not limited to, pollution control and abatement
(collectively, “Environmental Laws”), including without limitation, payment of any fines and assessments
resulting from Grantee’s failure to comply with such Environmental Laws. Grantee shall remediate any
environmental damage caused by Grantee, but Grantee shall have no obligation to remedy environmental
damage which occurred prior to the Effective Date of this Grant of Easement.
15.
Grantor, for itself and for the benefit of those local, state and federal governmental
agencies that have responsibility to oversee environmental regulatory compliance (the “Environmental
Agencies”) and their respective officials, agents, employees, contractors and subcontractors, shall have a
right of access to the Easement Areas to conduct inspections, investigations, testing, monitoring and all
other activities required by the Environmental Agencies, and for all such other purposes required under
Grantor’s installation restoration program; provided that these activities are conducted in a manner that
does not interfere with Grantee’s rights hereunder, Grantee’s electrical practices, and the National
Electrical Safety Code.
16.
Grantee shall, to the extent permitted by law, indemnify and hold Grantor and its
employees and agents harmless from and against any and all debts, obligations, liabilities, suits, claims,
demands, damages, losses, and/or expenses in any way related to, connected with, or arising out of,
Grantee’s failure to comply with any Environmental Laws or Grantee’s release of any hazardous
substances or wastes that may contaminate the Easement Area or the Property. This indemnification
provision shall survive the expiration or earlier termination of this Grant of Easement for a period of five (5)
years.
17.
Grantee’s (i) failure to comply with the terms herein, (ii) nonuse of any or all of the
Easements for more than a two (2) year period, or (iii) abandonment of any or all of the Easements for more
than a two (2) year period shall constitute a default of this Grant of Easement (“Default”). Grantee shall
have thirty (30) days following delivery of written notice of such Default from Grantor to cure the Default,
provided, however, that if any Default is such that it cannot be reasonably cured within thirty (30) days,
Grantee shall have a longer period to cure the Default so long as Grantee commences curing the Default
within the initial thirty (30) day period and diligently prosecutes such cure to completion in accordance with
a schedule approved in writing by Grantor, which approval shall not be unreasonably withheld. In the event
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Grantee does not cure a Default within the applicable time periods specified herein, Grantor shall have the
right, but not the obligation, to (a) terminate any or all of the Easements, (b) cure the Default and be
reimbursed by the Grantee for the costs of such cure; and/or (c) exercise all other rights and remedies
available at law and in equity, including injunctive relief.
18.
Unless earlier terminated in accordance with the terms herein, this Grant of Easement
shall terminate forty (40) years after the Effective Date. Upon termination of this Grant of Easement,
Grantee shall (at its discretion) relocate and/or remove all Utility Facilities and Substation Facilities. If
Grantee removes any Utility Facilities or Substation Facilities, it may cap and abandon any underground
facilities in place at Grantee’s discretion and in accordance with industry standards.
19.
Grantor may renew this Grant of Easement for one or more additional 5-year terms at
Grantor’s sole discretion and upon the same terms of this Grant of Easement, upon request presented by
Grantee within the year prior to the termination of the particular term of this Grant of Easement.
20.
The provisions and conditions of this Grant of Easement shall extend to and be binding
upon and shall inure to the benefit of the heirs, representatives, successors, and assigns of the Grantor and
Grantee.
21.
Grantee may not assign any of the Easements without the prior written consent of Grantor
at Air Force Civil Engineer Center, Real EstateTransactions East (AFCEC/CITE), 2261 Hughes Avenue,
Suite 155, JBSA Lackland, TX 78236; provided, however, that Grantee may assign any or all of the
Easements to an affiliate of Grantor, its successor in a merger or as required by Applicable Law without the
prior written consent of, but with notice to, Grantor. Any assignee of Grantee must comply fully with the
terms herein.
22.
This Grant of Easement shall be governed by and construed in accordance with the laws
of the State of Nevada.
23.
The parties agree that this Grant of Easement is a covenant that shall run with the land.
24.
The Easements granted herein (i) are not subject to Title 10, United States Code, Section
2662 and (ii) are subject to the provisions of Title 10, United States Code, Section 2668 and Title 40, United
States Code, Section 1314, as amended from time to time.
25.
To the extent any terms, conditions or provisions of this Grant of Easement conflict with
any terms, conditions or provisions of that certain Department of the Air Force Lease for Nellis Air Force
Base, Las Vegas, Nevada, Lease Number USAF-ACC-RKMF-14-2-0117, dated April 15, 2014, between
THE UNITED STATES OF AMERICA, acting by and through THE SECRETARY OF THE AIR FORCE, and
NEVADA POWER COMPANY d/b/a NV ENERGY (the “Solar PV Lease”), the terms, conditions and
provisions of the Solar PV Lease shall control.
The remainder of this page is intentionally blank and signature pages follow.
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GRANTOR SIGNATURE PAGE TO
GRANT OF EASEMENT ON NELLIS AFB, NV
IN WITNESS WHEREOF Grantor and Grantee have executed this Department of the Air Force
Grant of Easement for Electric Substation as of the same date as the Solar PV Lease (the “Effective Date”).
GRANTOR
THE UNITED STATES OF AMERICA, acting by and
through THE SECRETARY OF THE AIR FORCE
By:
COMMONWEALTH OF VIRGINIA
COUNTY OF ARLINGTON
____________________________________
TIMOTHY K. BRIDGES
Deputy Assistant Secretary of the Air Force
(Installations)
)
) SS.:
)
On the ______ day of ______________________, 2014, before me, _________________________, the
undersigned Notary Public, personally appeared Timothy K. Bridges, personally known to me to be the
person whose name is subscribed to the foregoing instrument, and personally known to me to be the
Deputy Assistant Secretary of the Air Force (Installations), and acknowledged that the same was the act
and deed of the Secretary of the Air Force and that he executed the same as the act of the Secretary of the
Air Force for the purposes and consideration cited therein.
__________________________________________
Notary Public, Commonwealth of Virginia
__________________________________________
Printed Name & Commission Expiration Date
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EXHIBIT A LEGAL DESCRIPTION OF PROPERTY
[SEE ATTACHED]
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EXHIBIT B SUBSTATION EASEMENT AREA [SEE ATTACHED]
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EXHIBIT C FENCE EASEMENT AREA
[SEE ATTACHED]
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EXHIBIT D TRANSMISSION/DISTRIBUTION EASEMENT AREA
[SEE ATTACHMENT]
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EXHIBIT E DISTRIBUTION EASEMENT AREA
[SEE ATTACHED]
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EXHIBIT F ROADWAY EASEMENT AREA [SEE ATTACHED]
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EXECUTIONFINAL
OPERATINGAGREEMENT
BETWEEN
THEUNITEDSTATESOFAMERICA,
ActingbyandthroughTHESECRETARYOFTHEAIRFORCE
AND
NEVADAPOWERCOMPANY,d/b/aNVENERGY
THIS OPERATING AGREEMENT is made and entered into this 15th day of April, 2014, by and between the
UNITED STATES OF AMERICA, acting by and through the SECRETARY OF THE AIR FORCE ("Lessor" or
“Government”)andNEVADAPOWERCOMPANY,d/b/aNVENERGY("Lessee").LessorandLesseearesometimes
collectivelyreferredtohereinasthe“Parties”andindividuallyreferredtoasa“Party.”
WITNESSETH
WHEREAS, the Government under the authority contained in 10U.S.C. §2667 has determined (i) that
theLeasedLand(asdefinedintheLease),isnotexcesspropertyasdefinedbySection3oftheFederalProperty
andAdministrationServicesActof1949,asamended(40U.S.C.102),andisnotatthistimeneededforother
publicuse;(ii)thataleaseofsuchLeasedLandisadvantageoustotheUnitedStates;and(iii)thataleaseofsuch
LeasedLandonthetermssetforthhereinisinthepublicinterest;and
NOW, THEREFORE, for the consideration set forthbelow and as provided in the Lease, and subject to
the terms, conditions, covenants and agreements set forth in this Operating Agreement, the Parties agree as
follows:
Conditions
1.PURPOSE:ThisOperatingAgreementimplementsthetermsandconditionsofLeaseNo.USAFͲACCͲRKMFͲ14Ͳ
2Ͳ0117("Lease"),enteredintoonApril15,2014,betweentheLessorandLessee,forthedesign,construction,
maintenance and operation of solar photovoltaic arrays, new substation, feeders and related improvements
(collectivelythe“Project”)onNellisAirForceBase,Nevada.
2.TERM
A.ThetermofthisOperatingAgreementshallbeforaperiodofthirtyͲone(31)years,unlessterminated
sooner in accordance with the provisions of this Operating Agreement and the Lease. The term of this
OperatingAgreementshallbeginontheLeaseCommencementDate,asthattermisdefinedintheLease.
B. Notwithstanding Section 2(A), this Operating Agreement shall automatically terminate upon the
terminationoftheLease.
3.GENERAL:
A. The Lease incorporates this Operating Agreement by reference. In the event of any inconsistency
between the provisions of the Lease and those of this Operating Agreement, the provisions of the Lease will
control.
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B. The Lessee will, at all times, operate and manage the Project using good management practices
commontothesolarpowerindustryandconsistentwiththerequirementsofthisOperatingAgreement.
C.TheLessee’srightͲofͲentryanduseoftheLeasedLandarelimitedtotherightͲofͲentryanduseasset
forthintheLease.
D. The Lessee is responsible for all costs associated with designing, constructing, operating and
maintainingtheProjectduringthetermoftheLeaseandOperatingAgreement.
E.DefaultandTerminationConditionsinSection8oftheLeaseareapplicableherein.
F.RestorationandSurrenderprovisionsinCondition10oftheLeaseareapplicableherein.
G.GeneralIndemnificationprovisionsinCondition15oftheLeaseareapplicableherein.
H.InsuranceprovisionsinCondition16oftheLeaseareapplicableherein.
I.TheauthorizedrepresentativeforexecutingandamendingtheOperatingAgreementonbehalfofthe
LessoristheInstallationCommander,99thABW/CC,("Commander"),orsuchotherofficialastheCommander
shalldesignate.TheauthorizedrepresentativeforexecutingandamendingtheOperatingAgreementonbehalf
oftheLesseeistheVP,RenewableEnergy&Origination,NVEnergy.LesseeshallreimbursetheGovernmentfor
theactualcostsofprovidingsuchservicespromptlyuponreceiptofaninvoicefromtheGovernment.
J.TheGovernmentshallprovidefireprotectiontotheProject.Ifafireoccurs,theLessee,itsofficers,
agents, employees, independent contractors, or subcontractors shall call 911 and immediately advise the
operatorthataredirecttotheNellis AFBemergencyserviceoperatorisrequired.Lesseeshallreimbursethe
Government for the actual costs of providing such services promptly upon receipt of an invoice from the
Government.
4. LEGAL REQUIREMENTS: The Lessee will comply with all applicable federal, state, and local laws, codes,
license and permit requirements, including the payment of all applicable taxes and fees and any other
requirementwhatsoeverapplicabletoaProjectoperationwithintheCountyofClarkandtheStateofNevada.
Thisparagraphisnottobeconstruedtomakeapplicableanotherwiseinapplicablelaw,code,license,orpermit
requirement.Bywayofexampleandnotlimitation,theProjectwillbe,atalltimes,incompliancewiththelaws,
regulations,codesandpublicationsenumeratedinCondition13oftheLease.
5.ENVIRONMENTALPROTECTION:
A.Compliance: All work and Lessee operations shall comply with the requirements imposed by all
applicable federal, state, county, local, and Nellis AFB regulations and permits concerning environmental
protection.TheGovernmentshallprovidetoLesseecopiesorotherwiseidentifyforLesseethelocationofall
applicableNellisAFBregulationsorrequirements.
B.Permits: Lessee shall pay for and obtain all federal, state, county, local, and Nellis AFB permits
requiredforthesuccessfulexecutionoftheProject.
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C.Spills:ShouldanyhazardoussubstanceoroilspillsoccuronthisProject,inadditiontocontainingand
removingsuchspill,theLesseeshall:
i.Duringnormalworkinghours,immediatelyreportallspillsinquantitiesoffive(5)gallonsormore
to99CESEnvironmentalOfficeat702Ͳ652Ͳ6121,702Ͳ652Ͳ4287,or702Ͳ277Ͳ1977.
ii.After4:30p.m.oronweekends,immediatelycontacttheNellisCommandPostat702Ͳ652Ͳ2446.
iii.Forward a written, completed spill report to the Nellis Spills Program Manager, as identified by
GovernmenttoLesseeupontheeffectivedateofthisOperatingAgreement,withinthree(3)working
daysaftertheoccurrence.
D.WasteMaterials:AllwastematerialsgeneratedbyanyworkperformedontheLeasedLandshallbe
handled,transported,stored,anddisposedofbytheLesseeorsubͲcontractorsatalltimesinaccordancewithall
applicablefederal,state,county,andlocalordinances,regulations,courtorders,orothertypesofrulingshaving
theeffectoflaw.TheLesseeshallregularlycollectandproperlydisposeofallfugitivetrashanddebrislocated
onororiginatingfromtheLeasedLand.
E.StormWater(SoilErosion):TheLesseeshallprovideprotectivebarrierstopreventsoilerosiononall
requiredexcavations.TheLesseeshallprovideenvironmentalprotectiontopreventsedimentdrainageofsilts
into storm drains. The Lessee shall coordinate with the Nellis Storm Water Manager, as identified by
Government to Lessee upon the effective date of this Operating Agreement, concerning any storm water
questions.
F.Protection of Water Resources: The Lessee shall not pollute any streams, rivers, or waterways
throughdirectdischargeorbystormwaterrunoff.
G.ProtectionofAir,ControlofPollutants:Ifthisprojectinvolvesthemodification,replacement,ornew
installation of any of the following equipment, then the Lessee shall obtain an Authority to Construct Permit
(ATC)fromtheAirQualityOfficeatNellisAFB([email protected])tostartthepermittingprocess.The
approvalprocesscantakefrom3Ͳ6monthssoplanaccordingly.Thecontractorshallberesponsibleforallfees.
AllemissionunitsshallbepermittedBEFOREtheorderingandinstallationoftheemissionunit:
i.FuelsͲrelatedsystemsincludingbulkstoragetanks
ii.Externalcombustionboilers
iii.Incinerators
iv.Partsdegreaser
v.Hushhouse
vi.Enginepowergenerators
vii.Rockcrushers/mineralprocessingequipment
viii.Useorstorageofvolatileorganiccompounds(VOC)
ix.Paintbooths
x.Mediablasting
xi.Baghouses
xii.Coolingtowers
xiii.Any other unit that meets the definition of an emission unit per Clark County Air Quality
Regulations(AQR).
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H.SiteLFͲ01NoFurtherActionDecisionDocument(June2007):TheLesseeshallcomplywiththeLand
UseControls(LUCs)setforthintheSiteLFͲ01NoFurtherActionDecisionDocument(June2007)andotherwise
reasonably cooperate with Government in ensuring compliance with the aforementioned. Lessee shall also
provide reasonable assistance to 99 CES personnel in revising the Site LFͲ01 No Further Action Decision
Document(June2007)totheextentrequiredbytheNevadaDivisionofEnvironmentalProtection.
I.Access: TheLesseeshallgrantaccesstoNellisAFB99CES personnelto ensurecompliancewithall
applicable local, state or federal environmental requirements which pertain to the Leased Land; provided,
however, that Nellis AFB 99 CES personnel shall take all efforts reasonably necessary to avoid any adverse
effectsontheoperationoftheProject.
6.MANAGEMENTREVIEWCOMMITTEE:
A.TheLessorandLesseewillestablishaManagementReviewCommittee("Committee")todiscussand
resolveanyissuesrelatingtoroutineoperations,safety,security,andotherissuesandadministrativematters
pertainingtotheoperationandmaintenanceoftheProject.ThemembershipoftheCommitteeshallconsistof
theCommander,orhisorherdesignee,astheChairman,theVP,Renewables&Origination,NVEnergy,orhisor
herdesignee,andanyotherpersonsmutuallyagreedtobytheLessorandtheLessee.
B.TheCommitteeshallmeetatleastsemiͲannuallythroughoutthelifeoftheLeaseandfromtimeto
timeatthecalloftheChairmanortheLessee.TheagendaforeachmeetingshallbesetbytheChairmanat
leastseven(7)dayspriortothemeeting,exceptforunscheduledemergencymeetingscalledonlessthanten
(10)days'notice.MemberswillsubmitagendaitemstotheChairmanatleastfourteen(14)daysinadvanceof
anyscheduledmeeting.
C.MemberswillserveontheCommitteewithoutadditionalcompensation,andanyandallexpenses
incidenttotravelandresolutionofissueswillbebornebytherespectiveParties.
D.MinutesofeachmeetingwillbepreparedbytheChairmananddisseminatedtothemembers.
7.INSPECTIONS:
A.DesignatedrepresentativesoftheCommanderwillhavetherighttoconductperiodicinspectionsof
the grounds of the Project to ensure compliance with this Operating Agreement and the Lease. Each party’s
designatedrepresentativeswillreferallsignificantmattersofconcerndiscoveredduringtheinspectionstothe
Committeeforresolution.
B.Eachparty’sdesignatedrepresentativeswillusegoodmanagementpracticesandacceptedstandards
withinthesolarpowerindustrytojudgewhetheramatterofconcernshouldbereferredtotheCommittee.In
the case of imminent health, safety, security, and fire risks, the designated representatives shall immediately
notifytheLesseeandtheCommanderforappropriateaction.
8.SECURITY:
A.TheLessee,itsofficers,agents,employees,independentcontractors,andsubcontractorsaresubject
to the security requirements of Nellis Air Force Base as determined by the Commander. These security
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requirements apply to the Leased Land in the same manner as any other portion of the base. The Lessee is
responsibleforsecuringtheProjectattheendofeachworkday.
B. The Leased Land is subject to periodic inspection by security forces personnel in conjunction with
their official duties; provided, however, that such security forces personnel shall take all efforts reasonably
necessarytoavoidanyadverseeffectsontheoperationoftheProject.TheLesseewillreasonablycooperatein
theseinspections,totheextentrequired,toensurethatlawenforcementactivitiesarenothinderedandthat
security requirements are met. Security forces will provide law enforcement and security assistance at the
Leased Land and will investigate, along with the Office of Special Investigation and cognizant civil authorities,
any crimes on the Leased Land. The Lessee shall be fully responsible for the supervision, performance, and
conduct of its officers, agents, employees, independent contractors, and subcontractors at all times while on
NellisAirForceBase.
C. The Lessee, its officers, agents, employees, independent contractors, and subcontractors must
complywiththesecurityrequirementsofNellisAirForceBaseasdeterminedbytheInstallationCommander.
Oncesecurityrequirementsaremet,personnelwillbeissuedidentificationpassesfromthe99thSecurityForces
Squadron (“99 SFS”) for unescorted entry onto the installation. Vehicles of the aforesaid personnel must be
registered with 99 SFS and issued temporary passes before they may be driven on base. Such vehicles are
subject to inspection by security forces personnel, and drivers must have a valid driver’s license, valid vehicle
registration,andadequateinsurancebeforepasseswillbeissued.
D.TheGovernmentretainstherighttorefuseaccesstothebaseortotheLeasedLandtotheLessee,its
officers, agents, employees, independent contractors, and subcontractors during a national emergency or for
othersimilarcompellingreasonsasdeterminedbytheCommanderinhisorhersolediscretion,ortoejectany
personatanytimefromtheconfinesoftheLeasedLandorthebaseiftheCommanderdeterminessuchaction
isrequiredinthebestinterestandfortheprotectionoftheGovernment.
E.SecurityFencing.
i. Prior to commencing construction of the Project, Lessee shall bear all of its costs incurred in
installingandmaintainingatemporarysecurityfencetoprotecttheconstructionsite,topreventunauthorized
persons from entering on the site and tampering with the Project and to protect persons and property from
injuryordamage.Lesseeshallnotdamage,removeortieintotheinstallationboundaryfencewithoutprior
approvalfromLessor’scontactidentifiedinAttachmentAofthisOperatingAgreement.Alltemporaryfencing
activitiesshallcomplywithCondition17andExhibitEoftheLease.Followingcommencementofconstruction
oftheProjectandtheerectionofthesecurityfence,LesseemayerectaconstructionentrancegateintheNellis
AFBperimetersecurityfenceadjacenttotheLeasedLandandallowconstructionpersonneltoaccesstheLeased
Land without entering Nellis AFB through the permanent base security gates. Fencing shall meet the
specificationofAirForceManual(AFM)32Ͳ1084,FacilityRequirements,acopyofwhichhasbeenprovidedby
GovernmenttoLessee.
ii. When construction of the Project is completed, Lessee shall bear all of its costs incurred in
removing the temporary security fencing and temporary construction entrance gate and installing and
maintaining a permanent security fence for the term of the Lease to prevent unauthorized persons from
enteringonthesiteandtamperingwiththeProjectandtoprotectpersonsandpropertyfrominjuryordamage.
The permanent security fence shall be Type A2 chain link fence at least six (6) feet in height on all sides,
surmountedbythree(3)strandsofbarbedwire,angledoutwardforatotalheightof2.1m(7ft),andcomply
with Condition 17 and Exhibit E of the Lease. If Lessee desires to tie the Project security fence into the
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installationboundaryfence,LesseemustcontactLessor’sContactidentifiedinAttachmentAofthisOperating
Agreement. Upon installation of the permanent security fence, the Lessee will so advise the 99 CES/CC and
arrangeforafinalinspection.AnydeficiencieswillbecorrectedbytheLessee.
9.TOURS:
A. Upon request of the Installation Commander or appointed designee, Lessee shall provide, at no
expensetotheLessor,knowledgeablepersonneltoconducttoursoftheProject.TheInstallationCommander
shall provide Lessee reasonable notice of tour dates, times, expected length of tour, level of technical
information, number of guests, and any special accommodations required. The Installation Commander and
Lesseeshallreasonablycooperatetoensurethatsuchtoursareplannedfordatesandtimes,andconductedin
suchamannerthatwillavoidanyadverseeffectsontheoperationoftheProject.
B. Lessee, after providing reasonable notification to the Installation Commander and 99 SFS, may
scheduleandconducttoursoftheProject.Lesseemustprovidetourpurpose,dates,times,expectedlengthof
tour, list of attendees, and any personal information regarding tour guests as requested by the Installation
Commanderand99SFS.
10.UTILITYSERVICES:
A.Lessee shall bear all of its costs for all metered utilities during the term of the Lease. Lessee shall
purchase,install,andmaintainallmetersatitsowncostandwithoutcostandexpensetotheLessor.
B.Lessor shall provide water to the Lessee per AFI 32Ͳ1061, Providing Utilities to US Air Force
Installations.
C.Lessor shall provide electricity to the Lessee per AFI 32Ͳ1061, Providing Utilities to US Air Force
Installations.
D.LessorshallnotprovidesanitationandwastedisposalservicestotheLessee.
11.MAINTENANCE
A.Lesseeshallberesponsibleforallitscostsincurredinconnectionwithoperatingandmaintainingthe
ProjectforthepurposeofmeetingitsobligationsundertheLeaseandthisOperatingAgreement.
B. Except as otherwise specifically provided for in the Lease, Lessee shall at all times, and at no
expense to the Government, protect, preserve, repair, and maintain the Leased Land including any grounds
maintenanceandfence/gaterepairsduringthetermoftheLease.
C. IntheeventtheProjectrequiresisolationfromtheNellisAFBelectricaldistributionsystem,Lessee
and Lessor shall coordinate the isolation in accordance with the Electrical Distribution System Isolation Plan
procedures.ThisplanshallbedraftedbytheLessor,incoordinationwiththeLessee,followinginstallationof
theelectricaldistributionsystemandthehiringofamaintenancecontractorbytheLessee.
12.DISPUTES:AnydisputeconcerningaquestionoffactarisingunderthisOperatingAgreementwhichisnot
disposed of through other informal means, shall first be referred for resolution to the Committee. If a
satisfactory resolution of such dispute is not reached, the Chairman of the Committee shall then refer the
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disputefordecisioninaccordancewiththedisputeprovisionsoftheLease.Pendingfinaldecisionofadispute
hereunder, the Parties shall proceed diligently with the performance of their obligationsunder this Operating
Agreement.
13.NOTICES:
A.Anynotice,demand,order,direction,determination,requirement,consentorapproval,requestor
othercommunicationrequiredorpermittedbylaworanyprovisionoftheLeaseorthisOperatingAgreementto
begivenorservedoneitherPartyshallbeinwritingandaddressedtothePartyattheaddresssetforthbelow,
orsuchotheraddressesthePartymaydesignatefromtimetotimebynotice,and(i)depositedintheUnited
States mail, registered or certified, return receipt requested, postage preͲpaid, (ii) delivered by an overnight
privatemailservicewhichprovidesdeliveryconfirmationsuchas,withoutlimitation,FederalExpress,Airborne
orUPS,or(iii)personallydeliveredatsuchaddress.
Lessor:
Chief,RealPropertyManagementDivision(CIM)
InstallationsCenterofExcellence
AirForceCivilEngineerCenter
MailingAddress:
2261HughesAve.,Suite155
JBSALackland,TX78236Ͳ9853
DeliveryAddress:
3515S.GeneralMcMullen
SanAntonio,TX78226Ͳ2018
Andto:
InstallationCommander
99thABW/CC
4430GrissomAvenue,Suite110
NellisAFB,NV89191
Lessee:
VP,RenewableEnergyandOrigination
NVEnergy
6226W.SaharaAvenue
LasVegas,NV89146
B.EachpartyshallbeentitledtospecifyasitsproperaddressanyotheraddressintheUnitedStates,or
specifyanychangetotheaboveinformation,uponwrittennoticetotheotherpartycomplyingwiththisSection
13.
C.Each party shall designate on Attachment A the person(s) to be contacted with respect to specific
operationmatters.Eachpartyshallbeentitledtospecifyanychangetosuchperson(s)uponwrittennoticeto
theotherpartycomplyingwiththisSection13.
D.Everynotice,demand,order,direction,requirement,consentorapproval,requestorcommunication
delivered as set forth herein shall be deemed received by the addressee on the delivery date or the delivery
refusaldateshownonthereturnreceiptorthedeliveryconfirmation.
14.TERMINATIONANDMODIFICATION:ThisOperatingAgreementshallcontinueinfullforceandeffectforthe
termoftheLease,unlessterminatedearlyasprovidedintheLease.IftheLeaseisextendedorrenewed,then
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this Operating Agreement shall likewise be extended or renewed without further action and continue in full
forceandeffectfortheextendedtermoftheLease.
15.SEVERABILITY:IntheeventthatanyoneormoreoftheprovisionsofthisOperatingAgreementshallforany
reasonbeheldtobeunenforceableinanyrespectunderapplicablelaw,suchunenforceabilityshallnotaffect
any other provision of this Operating Agreement, but this Operating Agreement shall be construed as if such
unenforceableprovisionorprovisionshadneverbeencontainedherein.
16.FORCEMAJEURE:Neither party shall be liable for any delay or failure in performance of any part of this
Operating Agreement from any cause beyond its reasonable control, including but not limited to, unusually
severe weather, flood, fire, lightning, war, sabotage, aircraft accident, act of a public enemy, earthquake,
insurrection,riot,civildisturbance,strike,restraintbycourtorder,oranycombinationofthesecauses,whichby
the exercise of due diligence and foresight such Party could not reasonably have been expected to avoid and
whichbytheexerciseofduediligenceisunabletoovercome.
17.GOVERNINGLAW:ThisOperatingAgreementshallbeinterpreted,governedandconstruedunderthelaws
oftheStateofNevada,withoutregardtochoiceoflawprovisions.
18. AMENDMENTS: No amendment, modification, or supplement to this Operating Agreement shall be
effective,unlessitisinwriting,consistentwiththetermsandconditionssetforthintheLease,andsignedbythe
authorized representatives of both parties, and by reference incorporates this Operating Agreement and
identifies the specific sections that are amended, modified, or supplemented or indicates that the material is
new.NooralunderstandingoragreementnotincorporatedinthisOperatingAgreementisbindinguponeither
oftheParties.
19.CHANGEDCIRCUMSTANCES:ThePartiesacknowledgethatcompliancewithanyLegislativeactionorother
Executiveaction(whetherissuedbeforeoraftertheeffectivedateoftheLeaseandthisOperatingAgreement)
affecting this Operating Agreement, including but not limited to (i) base realignment or closure or (ii)
modificationofNellisAFBmission,mayrequirethatamendment(s)bemadetothisOperatingAgreement.
20.COUNTERPARTS:This Operating Agreement may be executed in one or more counterparts at different
times,eachofwhichshallberegardedasanoriginalandallofwhich,takentogether,shallconstituteoneand
thesameagreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Operating Agreement on the date or dates
indicatedbelow,tobeeffectiveasoftheeffectivedateoftheLease.
[SignaturesAppearontheFollowingPages]
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ATTACHMENTA
TOOPERATINGAGREEMENT
LessorContacts:
Chief,RealPropertyManagementDivision(CIM)
InstallationsCenterofExcellence
AirForceCivilEngineerCenter
MailingAddress:
2261HughesAve.,Suite155
JBSALackland,TX78236Ͳ9853
DeliveryAddress:
3515S.GeneralMcMullen
SanAntonio,TX78226Ͳ2018
And:
InstallationCommander
99thABW/CC
4430GrissomAvenue,Suite110
NellisAFB,NV89191
LesseeContacts:
Renewables&OriginationDepartment
NVEnergy
6226WSaharaAve
LasVegas,NV89146
OperatingAgreement
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PROJECT EASEMENT(S)
APNs: 140-16-401-007 140-16-801-001
After Recording Return To:
Property Services NV Energy
P.O. Box 98910 MS 9 Las Vegas, NV 89151-0001 State of Nevada
County of Clark
DEPARTMENT OF THE AIR FORCE
GRANT OF EASEMENTS FOR ELECTRIC SUBSTATION (“Grant of Easement”)
THE UNITED STATES OF AMERICA, acting by and through THE SECRETARY OF THE AIR
FORCE (“Grantor”), under and pursuant to the powers and authority contained in Title 10, United States
Code, Section 2668 and Title 40 United States Code, Section 1314, having found that the granting of the
easement contained herein will be in the public interest, that no more land than that needed for the
easement is included, and the easement will not substantially injure the interest of the United States in the
property affected thereby, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, does hereby grant unto NEVADA POWER COMPANY, a Nevada corporation, d/b/a
NV Energy (“Grantee”), its successors and assigns, the following five (5) easements (collectively, the
“Easements”):
(i) an exclusive easement and right to occupy the Grantor’s real property described in Exhibit A,
(the “Property”), within the area described on Exhibit B (the “Substation Easement Area”), for
the purpose of an electrical substation and/or switchyard for the transmission, distribution and
transformation of electricity and for communication facilities, and the right to construct, operate, add
to and maintain upon, over and under the Substation Easement Area, and to remove therefrom,
foundations, footings, pads, walls, fences and other real property improvements, together with
poles, guys, anchors, wires, cables, equipment, fixtures, apparatus and other communication and
electrical facilities and improvements (“Substation Facilities”), currently referred to as the
“Distribution Substation” (the “Substation”);
(ii) a nonexclusive easement over, under, upon and across the Property within the area described
on Exhibit C (the “Fence Easement Area”), for the purpose of constructing, maintaining,
inspecting, repairing and/or reconstructing the fence surrounding the Substation;
(iii) a nonexclusive easement over, under, upon and across the Property within the area described
on Exhibit D (the “Transmission/Distribution Easement Area”), for the purpose of constructing,
repairing, removing, relocating, replacing, inspecting, expanding, operating, and maintaining
aboveground and/or underground communication facilities and electric line systems for the
distribution and transmission of electricity, consisting of poles, other structures, wires, cables,
conduit, duct banks, manholes, vaults, transformers, service boxes, meter panels, cabinets,
bollards, anchors, guys, and other equipment, fixtures, apparatus, and improvements (“Utility
Facilities”);
(iv) a nonexclusive easement over, under, upon and across the Property within the area described
on Exhibit E (the “Distribution Easement Area”), for the purpose of constructing, repairing,
removing, relocating, replacing, inspecting, expanding, operating, and maintaining above ground
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and/or underground communication facilities and electric line systems for the distribution of
electricity, consisting of various Utility Facilities;
(v) A nonexclusive right of access to the Substation Easement Area, Fence Easement Area,
Transmission/Distribution Easement Area and Distribution Easement Area on the Nellis Air Force
Base’s (the “Installation’s”) streets and walkways in the area shown on Exhibit F (“Roadway
Easement Area”), in common with Grantor, provided that access will be granted in accordance
with the Installation’s procedures;
together with rights of ingress and egress over, upon and across the Substation Easement Area, Fence
Easement Area, Transmission/Distribution Easement Area, Distribution Easement Area and Roadway
Easement Area (collectively, “Easement Areas”) and that portion of the Property adjacent to the Easement
Areas (the “Adjacent Property”) to reasonably accommodate the exercise of the rights granted herein.
The foregoing Easements are granted upon the following additional terms and conditions:
1.
The Grantee shall maintain the Substation and the Utility Facilities in a manner that
supports an emergency secondary interconnection between Grantee’s electrical grid and Nellis Air Force
Base capable of supporting 33 MW of Nellis AFB electric load at the point of interconnection (as shown in
Exhibit D of the Solar PV Lease, as defined in Section 25 below) at all times during the term of this
easement. Provided Grantee is and at all times remains in compliance with this requirement, this grant
shall be for a term of forty (40) years, unless earlier terminated or renewed in accordance with the
conditions herein.
2.
Grantee’s use and occupation of the Easement Area and the exercise of the rights herein
granted shall be subject to such reasonable rules and regulations regarding ingress, egress, safety,
sanitation and security as Grantor, or its duly authorized representatives, may from time to time prescribe;
provided, however, that the use of the Easement Area shall be without charge to Grantee so long as
Grantee uses the Easements for the purposes herein described.
3.
Grantor, its representatives, agents, and invitees, reserves the right of access to and use of
the Fence Easement Area, Transmission/Distribution Easement Area, Distribution Easement Area and
Roadway Easement Area in a manner that does not interfere with Grantee’s rights herein, Grantee’s
electrical practices, and the National Electrical Safety Code. Grantor shall not construct any building,
structures or other improvements on or within the Easement Area without Grantee’s prior written consent.
Grantor may enter upon the Fence Easement Area, Transmission/Distribution Easement Area, Distribution
Easement Area and Roadway Easement Area at any time to inspect those areas and Grantee’s
improvements thereon to confirm compliance with the terms herein.
4.
Grantee agrees to exercise commercially reasonable efforts to minimize interference with
Grantor’s use of the Easement Area and the Property.
5.
Grantee shall take all actions and pay all costs necessary to maintain the Substation
Facilities and Utility Facilities in good and working condition in compliance with all applicable federal, state,
and local laws, rules, regulations, orders and ordinances (“Applicable Law”). Grantee shall be
responsible for and obtain, at its sole expense, prior to the commencement of any improvements, any
approvals, permits, or licenses which may be necessary to the construction and operation of such
improvements in compliance with Applicable Law.
6.
This Grant of Easement is made subject to existing utility and other public and private
easements or interests. Grantee shall coordinate its uses within the Easement Area in advance with any
third party owners of existing easements or interests.
7.
Grantee shall, in the event of any disturbance or damage to the Easement Area or any
Adjacent Property incident to Grantee’s exercise of any of Grantee’s rights contained herein, promptly
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restore the same as nearly as may be reasonably possible to the condition as existed prior to such
disturbance or damage to the reasonable satisfaction of Grantor.
8.
Grantor does further grant to Grantee the right to trim, cut and remove any tree branches,
roots, shrubs, plants, trees and vegetation that unreasonably interferes with or threatens the safe, proper or
convenient use, maintenance or operation of said facilities within the Easement Areas. Grantee shall use
commercially reasonable efforts to minimize the amount of disturbance caused by such activities within the
Easement Areas, and (subject to the first sentence in this Section 8) shall restore the Easement Area
following any disturbance, as set forth in Section 7 above.
9.
Grantee may, at no cost to Grantor, install or construct, repair or replace, maintain or make
improvements to the Substation and/or Utility Facilities or make reasonable changes, modification or
alterations to the Easement Area, as Grantee deems reasonably necessary in connection with the exercise
of the rights granted herein without the prior approval of Grantor, provided that, with the exception of
emergency repairs or replacements, Grantee shall provide Grantor notification at least seventy-two (72)
hours prior to undertaking such activities. No prior notice is required in cases of emergency, provided that
prompt notice shall be given after the fact to Grantor. Grantee will provide notice to:
Chief, Real Property Management Division (CIM) Installations Center of Excellence
Air Force Civil Engineer Center Mailing Address: 2261 Hughes Ave., Suite 155
JBSA Lackland, TX 78236-9853
Delivery Address:
3515 S. General McMullen
San Antonio, TX 78226-2018
With copy to: Chief Counsel, SAF/GCN-San Antonio Office of Deputy General Counsel (Installations, Energy & Environment) Mailing Address:
2261 Hughes Ave., Suite 155
JBSA Lackland, TX 78236-9853
Delivery Address:
3515 S. General McMullen
San Antonio, TX 78226-2018
And to: Real Property Officer (RPO)/Deputy Base Civil Engineer 6020 Beale Avenue
Nellis AFB, Nevada 89191
10.
If Grantor or Grantee shall, at any time after the initial installation of the Utility Facilities or
Substation Facilities, request to relocate the Utility Facilities or Substation Facilities to a different location or
locations, it shall do so at such location or locations as shall be mutually satisfactory to the parties hereto, in
accordance with any applicable Tariff Schedules of Grantee and at the sole cost and expense of whichever
of Grantor or Grantee requested such relocation, subject to the availability of appropriated funds. The
Government’s liability under this clause may not exceed appropriations available for such payment and
nothing contained in this agreement may be considered as implying that Congress will at a later date
appropriate funds sufficient to meet deficiencies. Grantee shall have the same rights and privileges in the
new location or locations as in the former location or locations. However, Grantee is not obligated to
relocate the Utility Facilities or Substation Facilities if Grantor requests the relocation and Grantor cannot or
does not secure appropriate funds.
11.
Except as provided for in this Grant of Easement or to the extent Grantee has rights under
another agreement or Applicable Law, Grantee has no right of use, license, easement, servitude or usufruct
for any purpose, by necessity or otherwise, express or implied, on, over, across or under any of Grantor’s
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real property, and Grantee agrees not to assert any such right or interest by reason of this Grant of
Easement.
12.
Grantee is self-insured up to $10,000,000 in commercial general and business automobile
liability and up to $10,000,000 in employer’s liability and reserves the right to increase such level of
self-insurance without the approval of the Government so long as Lessee maintains a tangible net worth of
$500,000,000 or greater and affords such protection to the Government as if such insurance coverage is in
place. Grantee will add Grantor as an additional insured on Grantee’s commercial general and business
automobile liability policies relative to Grantee’s obligations under this Grant of Easement.
13.
Except to the extent arising out of the negligence or willful misconduct of Grantor, its
agents or its employees, Grantor and its employees and agents shall not be responsible for damages to
property or injuries to persons or other claims incurred by Grantee or its employees, agents or guests in
connection with the exercise of the rights granted herein. Grantee shall, to the extent permitted by law,
indemnify and hold Grantor and its employees and agents harmless from and against any all claims, losses,
damages, liabilities, and/or expenses (including attorney’s fees and costs) arising at any time directly or
indirectly from or incident to the exercise of Grantee’s rights granted herein or a breach of the Grantee’s
obligations herein except to the extent arising out of the negligence or willful misconduct of Grantor, its
agents or employees. The foregoing indemnification and release provisions shall survive the expiration or
earlier termination of this Grant of Easement.
14.
Grantee shall comply with all applicable federal, state and local laws, regulations and
standards for environmental protection including, but not limited to, pollution control and abatement
(collectively, “Environmental Laws”), including without limitation, payment of any fines and assessments
resulting from Grantee’s failure to comply with such Environmental Laws. Grantee shall remediate any
environmental damage caused by Grantee, but Grantee shall have no obligation to remedy environmental
damage which occurred prior to the Effective Date of this Grant of Easement.
15.
Grantor, for itself and for the benefit of those local, state and federal governmental
agencies that have responsibility to oversee environmental regulatory compliance (the “Environmental
Agencies”) and their respective officials, agents, employees, contractors and subcontractors, shall have a
right of access to the Easement Areas to conduct inspections, investigations, testing, monitoring and all
other activities required by the Environmental Agencies, and for all such other purposes required under
Grantor’s installation restoration program; provided that these activities are conducted in a manner that
does not interfere with Grantee’s rights hereunder, Grantee’s electrical practices, and the National
Electrical Safety Code.
16.
Grantee shall, to the extent permitted by law, indemnify and hold Grantor and its
employees and agents harmless from and against any and all debts, obligations, liabilities, suits, claims,
demands, damages, losses, and/or expenses in any way related to, connected with, or arising out of,
Grantee’s failure to comply with any Environmental Laws or Grantee’s release of any hazardous
substances or wastes that may contaminate the Easement Area or the Property. This indemnification
provision shall survive the expiration or earlier termination of this Grant of Easement for a period of five (5)
years.
17.
Grantee’s (i) failure to comply with the terms herein, (ii) nonuse of any or all of the
Easements for more than a two (2) year period, or (iii) abandonment of any or all of the Easements for more
than a two (2) year period shall constitute a default of this Grant of Easement (“Default”). Grantee shall
have thirty (30) days following delivery of written notice of such Default from Grantor to cure the Default,
provided, however, that if any Default is such that it cannot be reasonably cured within thirty (30) days,
Grantee shall have a longer period to cure the Default so long as Grantee commences curing the Default
within the initial thirty (30) day period and diligently prosecutes such cure to completion in accordance with
a schedule approved in writing by Grantor, which approval shall not be unreasonably withheld. In the event
Grantee does not cure a Default within the applicable time periods specified herein, Grantor shall have the
right, but not the obligation, to (a) terminate any or all of the Easements, (b) cure the Default and be
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reimbursed by the Grantee for the costs of such cure; and/or (c) exercise all other rights and remedies
available at law and in equity, including injunctive relief.
18.
Unless earlier terminated in accordance with the terms herein, this Grant of Easement
shall terminate forty (40) years after the Effective Date. Upon termination of this Grant of Easement,
Grantee shall (at its discretion) relocate and/or remove all Utility Facilities and Substation Facilities. If
Grantee removes any Utility Facilities or Substation Facilities, it may cap and abandon any underground
facilities in place at Grantee’s discretion and in accordance with industry standards.
19.
Grantor may renew this Grant of Easement for one or more additional 5-year terms at
Grantor’s sole discretion and upon the same terms of this Grant of Easement, upon request presented by
Grantee within the year prior to the termination of the particular term of this Grant of Easement.
20.
The provisions and conditions of this Grant of Easement shall extend to and be binding
upon and shall inure to the benefit of the heirs, representatives, successors, and assigns of the Grantor and
Grantee.
21.
Grantee may not assign any of the Easements without the prior written consent of Grantor
at Air Force Civil Engineer Center, Real EstateTransactions East (AFCEC/CITE), 2261 Hughes Avenue,
Suite 155, JBSA Lackland, TX 78236; provided, however, that Grantee may assign any or all of the
Easements to an affiliate of Grantor, its successor in a merger or as required by Applicable Law without the
prior written consent of, but with notice to, Grantor. Any assignee of Grantee must comply fully with the
terms herein.
22.
This Grant of Easement shall be governed by and construed in accordance with the laws
of the State of Nevada.
23.
The parties agree that this Grant of Easement is a covenant that shall run with the land.
24.
The Easements granted herein (i) are not subject to Title 10, United States Code, Section
2662 and (ii) are subject to the provisions of Title 10, United States Code, Section 2668 and Title 40, United
States Code, Section 1314, as amended from time to time.
25.
To the extent any terms, conditions or provisions of this Grant of Easement conflict with
any terms, conditions or provisions of that certain Department of the Air Force Lease for Nellis Air Force
Base, Las Vegas, Nevada, Lease Number USAF-ACC-RKMF-14-2-0117, dated April 15, 2014, between
THE UNITED STATES OF AMERICA, acting by and through THE SECRETARY OF THE AIR FORCE, and
NEVADA POWER COMPANY d/b/a NV ENERGY (the “Solar PV Lease”), the terms, conditions and
provisions of the Solar PV Lease shall control.
The remainder of this page is intentionally blank and signature pages follow.
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EXHIBIT A LEGAL DESCRIPTION OF PROPERTY
[SEE ATTACHED]
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EXHIBIT B SUBSTATION EASEMENT AREA [SEE ATTACHED]
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EXHIBIT C FENCE EASEMENT AREA
[SEE ATTACHED]
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EXHIBIT D TRANSMISSION/DISTRIBUTION EASEMENT AREA
[SEE ATTACHMENT]
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EXHIBIT E DISTRIBUTION EASEMENT AREA
[SEE ATTACHED]
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EXHIBIT F ROADWAY EASEMENT AREA [SEE ATTACHED]
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Execution Final
MEMORANDUMOFLEASE
THISINSTRUMENTWASPREPAREDBY,
ANDAFTERRECORDINGRETURNTO:
OfficeofDeputyGeneralCounsel
(Installations,Energy&Environment)
ChiefCounsel,SAF/GCNͲSanAntonio
2261HughesAvenue,Suite151
JBSALackland,TX78236Ͳ9853
MEMORANDUMOFLEASE
NellisAirForceBase,ClarkCounty,Nevada
THISMEMORANDUMOFLEASE(hereinafterreferredtoasthis“Memorandum”)isenteredinto
as of the 15th day of April, 2014 (the “Effective Date”), by and between THE UNITED STATES OF
AMERICA,actingbyandthroughtheSecretaryoftheAirForce(hereinafterreferredtoas“Lessor”);and
NEVADA POWER COMPANY, d/b/a NV ENERGY, a corporation created under the laws of the State of
Nevada(hereinafterreferredtoas“Lessee”).
BACKGROUND
LessorhasdemisedtoLessee,andLesseehasleasedfromLessor,acertaintractoflandsituated
in Clark County, Nevada, as more particularly described on Exhibit A attached hereto and by this
referenceincorporatedhereinandmadeaparthereof(hereinafterreferredtoasthe“LeasedLand”),
subjecttoallexistingeasements,rightsofway,licensesandotherpropertyinterestsofpublicrecordfor
anypurposewithrespecttotheLeasedLand,pursuanttothetermssetforthinthatcertainDepartment
oftheAirForceLeaseonNellisAirForceBase,ClarkCounty,Nevada(LeaseNumberUSAFͲACCͲRKMFͲ
14Ͳ2Ͳ0117)(hereincalledthe“Lease”),datedApril15,2014,betweenLessorandLessee.
NOW, THEREFORE, in consideration of the foregoing recitals, and for other good and valuable
considerationassetforthintheLease,LessorandLesseeagreeasfollows:
This Memorandum shall be recorded in the land records of Clark County, Nevada in lieu of
recordingtheentireLease,whichLeasecontains,withoutlimitation,thefollowingprovisions:
DescriptionofLeasedLand.SeeExhibitAattachedhereto.
A.
B.
Term. The original term of the Lease is for thirtyͲone (31) years, (the “Lease Term”)
unlesssoonerterminatedinaccordancewiththetermsoftheLease.
C.
Addresses.TheaddressesofLessorandLesseesetforthintheLeaseareasfollows:
MemorandumofLease(NellisAFB)
Page1
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Lessor:
WithCopyTo:
AndTo:
Lessee:
WithCopyTo:
Deputy Assistant Secretary of the Air Force
(Installations)
c/oDepartmentoftheAirForce
1665AirForcePentagon
Washington,DC20330Ͳ1665
OfficeofDeputyGeneralCounsel
(Installations,Energy&Environment)
ChiefCounsel,SAF/GCNͲSanAntonio
2261HughesAvenue,Suite151
JBSALackland,TX78236Ͳ9853
InstallationCommander
99thABW/CC
4430GrissomAvenue,Suite110
NellisAFB,NV89191
NevadaPowerCompany,d/b/aNVEnergy
Attn:VicePresident,Renewables&Origination
6226WestSaharaAvenue
LasVegas,NV89146
NevadaPowerCompany,d/b/aNVEnergy
Attn:GeneralCounsel
6226WestSaharaAvenue,MS03A
LasVegas,NV89146
INWITNESSWHEREOF,theLessorandLesseehavecausedthisMemorandumtobeexecutedby
theirdulyauthorizedrepresentativesasofthedatefirstwrittenabove.
[RemainderofPageIntentionallyLeftBlank]
MemorandumofLease(NellisAFB)
Page2
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EXHIBITA
LEGALDESCRIPTIONOFTHELEASEDLAND
[SEEATTACHED]
ExhibitAtoMemorandumofLease(NellisAFB)
AͲ1
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NELLIS ENGINEERING, PROCUREMENT AND
CONSTRUCTION AGREEMENT
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CONFIDENTIAL MATERIALS
FILED UNDER SEAL
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NELLIS ENGINEERING, PROCUREMENT AND
CONSTRUCTION AGREEMENT EXHIBITS
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O&M PeGu TERM SHEET
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Self-Contained Appraisal Report
Nellis A.F.B. Photovoltaic Site
NE of Carey Ave & Christy Ln
Las Vegas, Clark County, Nevada 89156
Report Date: January 22, 2014
FOR
NV Energy
Ms. Brenda Shank
Director, Renewable Energy Strategy & Development
6226 W. Sahara Avenue MS#13
Las Vegas, NV 89146
Valbridge Property Advisors |
Lubawy & Associates, Inc.
3034 S. Durango Drive, Suite 100
Las Vegas, Nevada 89117
702-242-9369
702-242-6391 fax
valbridge.com
Valbridge Job No.:
NV01-14-0007-001
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January 22, 2014
Ms. Brenda Shank
Director, Renewable Energy Strategy & Development
NV Energy
6226 W. Sahara Avenue MS#13
Las Vegas, NV 89146
RE:
Self-Contained Appraisal Report
NE of Carey Ave & Christy Ln
Las Vegas, Clark County, Nevada 89156
Dear Ms. Shank:
In accordance with your request, we have prepared a real property appraisal of the above-referenced
property, presented in a self-contained appraisal report format. This appraisal report sets forth the
pertinent data gathered, the techniques employed, and the reasoning leading to our value opinions.
The subject property is located at the northeast corner of Carey Avenue and Christy Lane, and the site
consists of abandoned golf course land and a capped landfill on the grounds of Nellis Air Force Base, in
the northeast region of the Las Vegas Valley. The land is owned by the United States of America under
the administration of Nellis Air Force Base, which is an Air Combat Command Base of the United States Air
Force. The Base itself covers approximately 14,000 acres and has about 7,000 acres of unused land.
In 2007, Nellis, in cooperation with a private renewable energy company, developed its first solar facility
on the base that generates 14.2 megawatts of power, providing 25% of the base’s energy needs. The first
Nellis AFB photovoltaic power system was the largest in the United States, and all of its $100 million cost
was financed privately. The solar system saves the air base $1 million per year in energy costs, and power
from the system is sold to Nellis at a guaranteed rate for 20 years. Approximately 33 acres of the first solar
system site is a capped landfill on top of which are now solar panels.
The subject land is planned for development of a second solar energy facility for Nellis AFB use, and the
U.S. Air Force is committed to making renewable energy integral to its operations. The second solar power
facility will generate up to 18 megawatts of power. An outgrant by the U.S. Air Force to NV Energy of the
subject approximately 123.88 acres is proposed, and NV Energy will construct and operate the facility. As
indicated, the subject property is located in the Las Vegas Valley, Clark County, Nevada, 89156. The
subject is further identified as being portions of Assessor’s Parcel Numbers (APNs) 140-16-601-001, 140­
16-701-001 and 140-16-801-001. The site totals approximately 123.88 gross acres, or 5,396,213 gross
square feet.
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Ms. Brenda Shank
NV Energy
January 22, 2014
We developed our analyses, opinions, and conclusions and prepared this report in conformity with the
specific standards of the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA 2000 Edition),
and the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP). In some
instances, the UASFLA guidelines may require the invoking of USPAP’s Jurisdictional Exception Rule so as
to conform the appraisal with overriding Federal law relating to the valuation of real estate for
government purposes. UASFLA Standards require that appraisals be prepared so as to constitute a
“Complete” Appraisal as outlined in the 2000 edition of USPAP. However, the 2006 edition of USPAP
eliminated the use of the terms “Complete Appraisal” and “Departure Rule”. According to the 2006
Edition of USPAP, appraisals should be prepared according to the “Scope of Work” as agreed upon by the
client and the appraiser. This appraisal has been prepared to comply with the Scope of Work identified by
the client and to comply with the definition of a “Complete Appraisal” as identified under UASFLA
Standards. The appraisal also complies with the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute; and the requirements of our client.
The purpose of the appraisal is to form an opinion of the current market value of the subject property,
and the net present value of the annual rent for Areas 1 and 2, along with a net present value of the
easements in Area 3, based on the regulatory requirements, and the definition of market value presented
in the report; considering all applicable encumbrances and reservations. The supporting data, analyses,
and conclusions used to form the opinion of value are contained in the accompanying report and
addenda.
NV Energy is the client for this assignment. The intended user of the appraisal report is NV Energy and the
U.S. Government. The intended use of the report is to provide an opinion of value to assist NV Energy in
acquiring an outgrant of the subject land from the U.S. Air Force to allow for development of a
photovoltaic solar energy facility to provide a renewable energy source for Nellis Air Force Base
operations. The appraisal report is not intended for any other uses. The value opinion reported herein is
subject to the definitions, assumptions and limiting conditions, and certification contained in this report.
The acceptance of this appraisal assignment and the completion of the appraisal report submitted
herewith are contingent on the following extraordinary assumptions and/or hypothetical conditions:
Extraordinary Assumptions:
There are no extraordinary assumptions used in this appraisal assignment.
Hypothetical Conditions:
There are no hypothetical conditions used in this appraisal assignment.
Based on the analysis contained in the following report, our value conclusions involving the subject
property are summarized as follows:
VALUE CONCLUSIONS
Value Type
Value Premise
Market Value
Net Present Value
Net Present Value
As Is
Land Lease
Easements
Value Perspective
Interest
Appraised
Current
Current
Current
Fee Simple
Lease Payments
Easements
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Effective
Date
11/6/2013
11/6/2013
11/6/2013
Indicated Value
$3,780,000
$3,360,000
$110,000
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Ms. Brenda Shank
NV Energy
January 22, 2014
The Net Present Value is the market value of the lease payments over 31 years for Areas 1 and 2, and 40
years for Area 3 discounted to a present value.
The above opinions of value are subject to the following jurisdictional exception: The Uniform Appraisal
Standards for Federal Land Acquisitions (2000 Edition) prohibits the appraiser from linking a market value
to a specific exposure time. This is contrary to USPAP Standards Rule 1-2 (c) (iv) Comment. Therefore, the
USPAP Jurisdictional Exception Rule has been applied, and exposure time has not been linked to the
market value conclusion.
This letter of transmittal is not considered valid if separated from this report, and must be accompanied
by all sections of this report as outlined in the Table of Contents, in order for the value opinions set forth
above to be valid.
Respectfully submitted,
Valbridge Property Advisors | Lubawy and Associates, Inc.
Kendal Stewart
Senior Appraiser
Nevada License #A.0002588-CG
License Expires April 30, 2015
[email protected]
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Matthew Lubawy, MAI
Senior Managing Director
Nevada License #A.0000044-CG
License Expires April 30, 2015
[email protected]
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TABLE OF CONTENTS
Table of Contents
Table of Contents .................................................................................................................................................................................. i
Summary of Salient Facts .................................................................................................................................................................. 1
Introduction ............................................................................................................................................................................................ 6
Regional & Market Area Analysis ............................................................................................................................................... 11
City & Neighborhood Analysis .................................................................................................................................................... 15
Market Summaries and Analyses ................................................................................................................................................ 22
Site Description .................................................................................................................................................................................. 27
Zoning Information .......................................................................................................................................................................... 40
Assessment & Tax Data .................................................................................................................................................................. 41
Highest & Best Use........................................................................................................................................................................... 43
Appraisal Methodology .................................................................................................................................................................. 47
Land Valuation.................................................................................................................................................................................... 48
Annual Rent and Easement Valuation....................................................................................................................................... 65
Discounted Cash Flow Analysis.................................................................................................................................................... 84
Temporary Construction Easement Acquisitions.................................................................................................................. 93
Summary of the Valuation ............................................................................................................................................................. 99
General Assumptions & Limiting Conditions ....................................................................................................................... 100
Certification........................................................................................................................................................................................ 106
Addenda.............................................................................................................................................................................................. 108
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
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SUMMARY OF SALIENT FACTS
Summary of Salient Facts
Property Name:
Nellis A.F.B. Photovoltaic Site
Location:
The subject land is located at the northeast corner of Carey
Avenue and Christy Lane, on the grounds of Nellis Air Force
Base. The subject land is at the southwest corner of the air
base, and a portion of the site was used as a base golf
course for Air Force personnel. Another portion of the site is
a capped landfill that recent monitoring well data indicates
does not pose an environmental threat as there were no
contaminants of concern detected in the wells.
Map Latitude/Longitude:
36.204979; -115.051575
Assessor’s Parcel Numbers:
Portions of 140-16-601-001, 140-16-701-001 and 140-16­
801-001
Census Tract:
78.00
Property Rights Appraised:
Fee Simple
Purpose of Appraisal: The purpose of the appraisal is to form an opinion of the
current market value of the subject property, and the net
present value of the annual rent for Areas 1 and 2, along
with a net present value of the easements in Area 3, based
on the regulatory requirements, and the definition of market
value presented in the report; considering all applicable
encumbrances and reservations.
Client:
NV Energy
Intended User:
NV Energy and the U.S. Government is the intended user of
the appraisal report. Use of the report by others is not
intended.
Intended Use: The intended use is to assist NV Energy and the U.S.
Government in acquiring an outgrant of the subject land
from the U.S. Air Force to allow for development of a
photovoltaic solar energy facility to provide a renewable
energy source for Nellis Air Force Base operations.
Zoning:
M-1, Light Manufacturing
Site Size:
123.88 acres (5,396,213 square feet)
Extraordinary Assumptions:
There are no extraordinary assumptions used in this
appraisal assignment.
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SUMMARY OF SALIENT FACTS
Hypothetical Conditions:
There are no hypothetical conditions used in this appraisal
assignment.
Highest and Best Use
As Vacant:
Industrial
Date of Inspection:
November 6, 2013
Date of Report Preparation:
January 22, 2014
VALUE INDICATIONS & CONCLUDED VALUES
Value Type
Market Value
Net Present Value
Net Present Value
Value Premise
As Is
Land Lease
Easements
Value Perspective
Interest
Appraised
Effective
Date
Current
Current
Current
Fee Simple
Lease Payments
Easements
11/6/2013
11/6/2013
11/6/2013
Indicated Value
$3,780,000
$3,360,000
$110,000
The above opinions of value are subject to the following jurisdictional exception: The Uniform Appraisal
Standards for Federal Land Acquisitions (2000 Edition) prohibits the appraiser from linking a market value
to a specific exposure time. This is contrary to USPAP Standards Rule 1-2 (c) (iv) Comment. Therefore, the
USPAP Jurisdictional Exception Rule has been applied, and exposure time has not been linked to the
market value conclusion.
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AERIAL AND FRONT VIEW
AERIAL VIEW/BIRD’S EYE VIEW
LOOKING NORTH ACROSS THE SITE
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AERIAL AND FRONT VIEW
PROPOSED SOLAR ENERGY SITE AND POWER TRANSMISSION LINE ROUTE
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AERIAL AND FRONT VIEW
CLOSE-UP AERIAL OF THE SUBJECT LAND
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INTRODUCTION
Introduction
Client and Other Intended Users of the Appraisal
The client for this assignment is NV Energy. The intended user of this report is also NV Energy and the U.S.
Government. Use of the report by others is not intended.
Intended Use of the Appraisal
The intended use of this report is to assist NV Energy in acquiring an outgrant of the subject land from
the U.S. Air Force to allow for development of a photovoltaic solar energy facility to provide a renewable
energy source for Nellis Air Force Base operations. The appraisal report is not intended for any other use
Real Estate Identification
The subject property is located at the northeast corner of Carey Avenue and Christy Lane, on the grounds
of Nellis Air Force Base. The subject land is at the southwest corner of the air base, and a portion of the
site was used as a base golf course for Air Force personnel. Another portion of the site is a capped landfill
that recent monitoring well data indicates does not pose an environmental threat as there were no
contaminants of concern detected in the wells.
Because of aircraft noise and the potential for accident hazards from the air base operations, Nellis has
greatly influenced land uses in the northeast region of the Las Vegas Valley. Much of the land surrounding
Nellis AFB is used for industrial purposes, or has remained vacant, with nearly the entire area north of
Carey Avenue and east of Lamb Boulevard being master planned for Industrial, Business and Design
Research Park, or Commercial General use. The Clark County Assessor identifies the subject property as
being portions of Assessor Parcel Numbers 140-16-601-001, 140-16-701-001 and 140-16-801-001.
Legal Description
The subject property is legally identified as:
Being a portion of the East Half (E 1/2) of Section 16, Township 20 South, Range 62 East,,
M.D.B.M., Nellis Air Force Base, Clark County, Nevada
The site is further legally identified by maps contained in the appraisal report, and by detailed
legal descriptions for most of the subject land contained in the report Addenda.
Real Property Interest Appraised
We have appraised the fee simple interest in the subject property, subject to all applicable encumbrances
and reservations.
Definition of Market Value
The definition of market value is as follows:
Market Value: “The amount in cash, or on terms reasonably equivalent to cash, for which
in all probability the property would have sold on the effective date of appraisal, after a
reasonable exposure time on the open, competitive market, from a willing and reasonably
knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither
acting under any compulsion to buy or sell, giving due consideration to all available
economic uses of the property at the time of the appraisal.
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INTRODUCTION
Source: (Uniform Appraisal Standards for Federal Land Acquisitions, 5
Appraisal Institute, 2000), pg. 13.
th
Ed. (Chicago:
Please refer to the Glossary in the Addenda section for the definition(s) employed in this report.
Exposure/Marketing Time
Per Section A-9 of the 2000 Edition of the Uniform Appraisal Standards for Federal Land Acquisitions, it is
stated that:
Contrary to USPAP Standards Rule 1-2(c)(iv) Comment, UASFLA does not call for the
estimate of value to be linked to a specific exposure time estimate, but merely that the
property be exposed on the open market for a reasonable length of time, given the
character of the property and its market. Therefore, the appraiser’s opinion of market
value shall not be linked to a specific exposure time when conducting appraisals for
federal land acquisition purposes under these Standards.
It is recognized that some appraisers’ client groups (e.g. relocation companies, mortgage
lenders) may require appraisers to estimate a marketing time for the property under
appraisal. However, such estimates are inappropriate for, and must not be included in,
appraisal reports prepared for federal land acquisitions under these Standards. “The
request to provide a reasonable marketing time opinion exceeds the normal information
required for the conduct of the appraisal process” and is, therefore, beyond the scope of
the appraisal assignment under these Standards.
Based on the above instructions, neither an exposure time nor a marketing time for the subject land is
included in this appraisal analysis.
Effective Date of Value
The effective date of value is as follows:
Valuation
Current Market Value
Effective Date
November 6, 2013
Kendal Stewart inspected the property on November 6, 2013.
Date of Report
The date of this report is January 22, 2014, the date of the letter of transmittal. Our conclusions are
reflective of current market conditions.
Federal and USPAP Appraisal Standards
This appraisal report was prepared with the intention of conforming to the specific standards established
by the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA 2000 Edition), 43CFR, and the
Uniform Standards of Professional Appraisal Practice.
Priority of Appraisal Standards
The priority of appraisal standards is that Federal Regulations take precedence over non-regulatory
guidance. Both 49 CFR Part 24 and 43 CFR 2000 provide that the Uniform Appraisal Standards for Federal
Land Acquisitions are applicable to the extent appropriate. Furthermore, as per specific guidelines of the
Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA 2000 Edition), the appraisal
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INTRODUCTION
preparation, documentation, and reporting is to be undertaken with the intent of conforming with the
UASFLA Standards, which are compatible with standards and practices of both the appraisal industry and
the Uniform Standards of Professional Appraisal Practice (USPAP). However, in some instances, the UASFLA
guidelines may require the invoking of USPAP’s Jurisdictional Exception Rule so as to conform the
appraisal with overriding Federal law relating to the valuation of real estate for government purposes.
Appraisals prepared in accordance with the UASFLA Standards are considered, for the purposes of the
Standards, to constitute complete appraisals as defined by USPAP (UASFLA 2000 Edition, Documentation
and Appraisal Reporting Standards, Introduction, page 8).
Scope of Work
The scope of work includes all steps taken in the development of the appraisal. This includes 1) the extent
to which the subject property is identified, 2) the extent to which the subject property is inspected, 3) the
type and extent of data researched, 4) the type and extent of analysis applied, and the type of appraisal
report prepared. These items are discussed as follows:
Extent to Which the Property Is Identified
x Legal Characteristics
The subject was legally identified via information provided by the client and by Nellis Air Force
Base representatives.
x
Economic Characteristics
The subject property is vacant land and does not currently generate any income.
x
Physical Characteristics
The subject was physically identified via a Clark County Assessor's map, Clark County GIS aerial
mapping, and by a physical inspection by Kendal Stewart.
Extent to Which the Property Is Inspected
On November 6, 2013 the property was inspected by Kendal Stewart and photographs of the property
were taken as of that date. . Matthew Lubawy has not inspected the property that is the subject of this
report. Information concerning utilities was collected by a physical inspection as well as by contacting the
individual utility companies, when necessary. Information pertaining to dimensions, shape, and area was
taken from the Clark County Assessor’s Map. The description and analysis of topography, drainage, soils
conditions and surrounding land uses was based upon a physical inspection. It is imperative to note that
the appraisers are not experts in the analysis of soils conditions or environmental hazards; therefore, any
comment by the appraisers that might suggest the presence of such substances should not be taken as
confirmation of the presence of hazardous waste or questionable soils conditions. Such determination
would require investigation by qualified professionals in the field of environmental assessment or soils
testing. No responsibility is assumed for any environmental conditions or for any expertise or engineering
knowledge required to discover them. The appraisers’ descriptions and resulting comments are a result of
routine observations made during the appraisal process.
Type and Extent of the Data Researched
We researched and analyzed: 1) market area data, 2) property-specific, market-analysis data, 3) zoning
and land-use data, and 4) current data on comparable listings and sales in the competitive market area.
Data pertaining to the Las Vegas Metropolitan area and the subject neighborhood were provided by
publications such as the Las Vegas Perspective, The Las Vegas Review Journal, and information from the
local Chamber of Commerce and the Nevada Development Authority. Population information was
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INTRODUCTION
supplied by the Clark County Comprehensive Planning Department; information pertaining to visitor
volume, convention attendance, gaming revenue and total visitor revenue was supplied by the Las Vegas
Convention and Visitors Authority; data pertaining to the labor force, employment and unemployment
was supplied by the State of Nevada Employment Security Department; information pertaining to taxable
sales was provided by the Nevada Department of Taxation; and data pertaining to residential construction
building permits was collected from the governing jurisdictions. Additional neighborhood data was based
upon a physical inspection of the area.
Type and Extent of Analysis Applied
The subject site does not have improvements that contribute to an overall value that exceeds the land
value. Since there is no planned development of the subject land disassociated from the Nellis Air Force
Base operations, an intensive feasibility analysis is not warranted. We observed the physical constraints of
the subject property, surrounding land use trends, demand for the subject property, and relative legal
limitations in concluding to a highest and best use. We then valued the subject based on the highest and
best use conclusion, relying on the Sales Comparison Approach.
Land sales data was collected through various sources including CoStar, Property Line, LoopNet, the
Greater Las Vegas Association of Realtors (GLVAR) Multiple Listing Service (MLS), and from brokers,
owners, and developers. The information was verified with one or more of the parties involved in the
transaction including the grantor, grantee, broker, or other knowledgeable parties, when possible.
Verification of each sale is listed separately on each land sale abstract contained later in the report.
Approaches not used: Cost and Income Capitalization Approaches.
Type of Appraisal and Report Option
This is a Self-Contained report as defined by the Uniform Standard of Professional Appraisal Practice
under Standards Rule 2-2(A). This format provides a detailed and complete description of the appraisal
process, subject data and valuation.
Use of Real Estate as of the Effective Date of Value
The subject property was vacant land as of the effective date of the appraisal.
Use of Real Estate as of the Date of this Report
Same as Above.
Ownership and Sales History
The subject property is owned by the United States of America, and an analysis of the history of the
property is not applicable since the land has never been patented.
List of Items Requested but Not Provided
All data requested was provided to the appraisers.
Extraordinary Assumptions
There are no extraordinary assumptions used in this appraisal assignment.
Hypothetical Conditions
There are no hypothetical conditions used in this appraisal assignment.
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Summary of the Appraisal Assignment
The United States Air Force, acting as administrator of Nellis Air Force Base lands, intends to outgrant the
subject 123.88 acres to NV Energy to allow for development of a photovoltaic solar power facility to
provide a renewable energy source for Nellis Air Force Base operations. This appraisal assignment is to
provide a current opinion of market value of the subject land, and the net present value of the Areas 1
and 2 annual rent, along with the net present value for the easements in Area 3, to assist NV Energy in
securing the outgrant from Nellis AFB. As it relates to the assignment, no insurmountable considerations
were encountered during the appraisal process that might have resulted in concerns about completing
the assignment in a credible manner.
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REGIONAL & MARKET AREA ANALYSIS
Regional & Market Area Analysis
REGIONAL MAP
SUBJECT
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REGIONAL & MARKET AREA ANALYSIS
Summary of Clark County
Until the economic and real estate market collapse in 2008, the Las Vegas MSA (consisting of Clark and
Nye counties in Nevada and Mohave County in Arizona) had been rated in the top 10 for annual
population growth and near the top in terms of employment increase. According to Valuation
International Limited, a market research company, the growth had been primarily attributable to the
area’s favorable climate. Inc. magazine named Las Vegas the #1 city in America for starting or growing a
business in 2000, and Chief Executive Magazine named Nevada number 5 in 2010 on its list of Best States
for Business.
Despite an economic slowdown in 2001, and the negative effects of the events of September 11, 2001 on
tourism, Southern Nevada’s economy demonstrated resilience. In the immediate aftermath of the
September 11 attacks, hotels and gaming establishments laid off an estimated 12,000 to 15,000 workers,
and other tourism-related businesses such as airlines, curbside baggage handlers, taxicab companies, and
Grand Canyon tour operators suffered layoffs. Hotel occupancy rates fell dramatically, and many
conventions were cancelled. However, by mid-October 2001, weekend occupancy rates rose to their
normal level of approximately 95%, and midweek business improved to the point that one-fourth of the
laid-off workers were recalled.
By mid 2002, the consensus among economists was that the trend was for continuing economic strength
over the foreseeable future. This optimistic outlook had been supported by strong gaming profits and
tourism results reported from 2004 through 2007, and by a moderate unemployment rate. Since 2008, the
still recovering national and local economies have cut into the gaming revenues.
As of August 2013, the total labor force for the Las Vegas MSA was 934,361, with the unemployment rate
at 9.2%. The largest contributor to the labor force is the leisure and hospitality industry (hotels,
restaurants, etc.) accounting for 29% of the job force. The median household income for the Las Vegas
Valley is $54,255, and with the ongoing renovations, the planned construction and improving revenues in
the gaming industry, the labor market is expected to grow as new resorts and resort expansions move
forward in construction.
New home sales set a record in 2005 at 30,750 homes (not including 7,767 apartment-to-condominium
conversions), which was 5% higher than the previous record of 29,248 new homes sold in 2004. Sales of
existing homes in 2005 reached 54,663, which was 2.3% less than 2004’s total. The lower resale number
had provided optimism for a more stabilized market. However, the residential market softened in 2006,
and by 2011, new home sales totaled just 3,894. Homes available on the resale market increased in 2006
and 2007 to reach nearly 30,000 which is another indication of the soft market. Additionally, the new
home median price fell from $337,781 in 2006 to $269,474 in August 2013 (down 20%, but up 36% from
$197,490 in August 2011), and the median resale home price fell from $285,000 to $165,000 in August
2013 (down 42%, but up 54% from $107,000 in August 2011). Although the long-term health of the Las
Vegas housing market still looks good, the difficulties since 2008 with subprime mortgage defaults, the
financing markets, and the local economy are expected to extend the market softness through 2013.
However, foreclosures have declined, and home prices have been increasing. Banks are allowing more
short sales, and buyers have been active in the short sale market, with short sale homes selling rather
quickly. Additionally, home builders have purchased all of the available finished lots in desirable
neighborhoods, and they have been buying land at higher per-acre prices to begin developing new lots
as the new home market moves toward recovery.
According to the Lied Institute of Apartment Market Trends, 2nd Quarter 2013, the average vacancy rate for
rd
nd
apartments in the MSA has declined from 10.96% at its peak in the 3 Quarter, 2009 to 9.8% as of the 2
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Quarter 2013. The higher-than-frictional vacancy rate is attributable to the soft job market, and the
continued low home prices, which is resulting in increased competition from the single-family home rental
market that has several thousand rental homes renting for $600 to $800 per month (2012 Appraisal
nd
Institute Las Vegas Market Symposium). As of the 2 Quarter, 2013, average rental rates spread between
$456 and $1,253 per month, and the average vacancy rates fall between 0.0% and 24.3%. That said, the
local economy is recovering, and the housing market, though still not strong, is steadily improving. As a
result, apartment complex construction in desirable areas of the valley is occurring.
According to Second Quarter 2013 Industrial Market Survey prepared by Applied Analysis, there is
106,925,452 square feet of industrial space with a vacancy factor of 16.2%. This data indicates a decrease
from the 17.7% vacancy reported at the end of 2012 and the lowest reported vacancy since year-end
2009. Demand for industrial space remained elevated, with approximately 741,000 square feet of net
move-ins during the quarter. Through the first six months of the year, net absorption totaled 1.6 million
square feet, an impressive total given negative performances in 2009 through 2011. During 2012, a total
of 417,900 square feet of positive net absorption was recorded during the same timeframe. Average
asking rates increased slightly quarter-over-quarter to $0.52 per square foot per month, and this
represents the first increase in six quarters. Three projects totaling 422,100 square feet completed
construction during the quarter, bringing total inventory to 106.9 million square feet, and there are
currently seven projects under construction totaling over 1.5 million square feet. While recent investments
are primarily attributable to user-specific needs, an estimated 17.3 million square feet of space remains
vacant throughout the valley. Broader economic recovery will be a key factor in the absorption of idle
speculative space in Las Vegas.
According to Second Quarter 2013 Retail Market Survey prepared by Applied Analysis, there is 51,954,994
square feet of retail space contained in 347 centers with a vacancy factor of 9.8%. This data indicates a
decrease in vacancy reported in the previous quarter and the lowest since early 2009. The retail market
continued to report stabilizing conditions as vacancies improved. The vacancy rate fell to 9.8% during the
second quarter, down 30 basis points (0.3 percentage points) from the prior quarter (Q1 2013) and down
90 basis points (0.9 percentage points) from one year ago (Q2 2012). Average pricing increased slightly
during the quarter with average asking rates at $1.51 per square foot per month, up 1.1% from last
quarter. Compared to a year ago, rates are identical. Retail construction activity increased modestly during
the first half of 2013. Four anchored retail projects totaling 1.8 million square feet were under construction
by the end of the second quarter of 2013. In the past year, fundamentals in the retail sector have
improved, suggesting retail real estate should benefit. The pace of growth in taxable retail sales continues
to outpace income growth overall. Stabilizing fundamentals are expected to provide momentum for
retailers, along with retail center owners and developers.
According to Second Quarter 2013 Office Market Survey prepared by Applied Analysis, there is 52,447,139
square feet of office space contained in 1,905 buildings with a vacancy factor of 26.0%. This data
indicates an increase from the 25.7% reported at the end of 2012. The office sector reported
approximately 115,200 square feet of positive net absorption during the second quarter of 2013. Net
absorption through the first half of the year was negative 104,650 square feet due to nearly 220,000
square feet of net move-outs in the first quarter. Three office projects totaling 220,700 square feet are
currently actively under development throughout the valley. The current average asking rental rate is
$1.87, which is down 20.1% from year-end 2008, but second quarter 2013 is the first quarter that the
rental rate has held steady and not decreased since the first quarter of 2009. Office sector conditions
remain fragile, but the choppy performance in vacancy rates is a sign that the sector may be reaching the
bottom of the cycle. However, the office sector has a long way to go before it reaches toward anything
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that resembles pre-recession levels. With the vacancy rate nearly double where it stood at the onset of the
last national recession, the market would be required to absorb an estimated 6.7 million square feet to be
on par with levels reported nearly six years ago. The office market should likewise see improvement with
increased employment, but might also benefit from the potential for resort operators to move their back
office from their own properties to speculative office projects.
In conclusion, although the local real estate market softened as the economy weakened and financing
tightened; the economic and financing conditions have been improving. Additionally, the construction of
over 30,000+ hotel rooms a few years ago, along with new hotel construction, expansion, and renovation
since then, has helped to soften the local recession, and the Las Vegas metropolitan economy, as a whole,
should regain a position as one of the stronger metropolitan economies in the United States when the
current economic and construction financing problems are fully resolved.
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CITY AND NEIGHBORHOOD ANALYSIS
City & Neighborhood Analysis
NEIGHBORHOOD MAP
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Overview
The subject market area/neighborhood is located in the Northeast region of the Las Vegas Valley where
Nellis Air Force Base has greatly influenced land uses around the air base since it opened in 1941.
Market Area/Neighborhood Location and Boundaries
The subject market area/neighborhood is defined as that area bounded by the Centennial Parkway
alignment to the north, Sunrise Mountain to the east, Lake Mead Boulevard to the south, and Lamb
Boulevard to the west.
Market Area/Neighborhood Description
Over the years, the subject neighborhood has been heavily influenced by Nellis Air Force Base operations.
Excluding the Base, improved properties in the general area of the subject land cover a variety of uses
including government facilities, salvage and auto wrecking businesses, recycling yards, materials and
equipment storage yards, Air Force Base housing, fuel storage tanks for the Las Vegas Valley gas stations,
and moderately priced residential housing.
Government facilities in the vicinity include a youth correctional facility and a Nevada National Guard
recruiting and training center which are located north of the air base near the Range Road/I-15 freeway
underpass. There is also a women’s correctional facility at Lamb and I-15, and a veterans’ hospital (Mike
O’Callaghan Federal Hospital – MOFH) located just off Las Vegas Boulevard near Range Road. Much of
the defined neighborhood is within the Nellis AFB boundaries, and Clark County’s Sunrise Manor Land
Use Plan has indicated that “the area around the Base is impacted by both potential accident hazards and
high noise levels resulting from military aircraft operations”.
It should be noted that the subject site is at the outer edge of both the aircraft noise and the potential for
aircraft accident hazards, but because the subject neighborhood is heavily influenced by Nellis AFB flight
zones, there had historically not been much interest shown by local governments or developers in
extending utility lines through much of the area since the flight zones are incompatible with residential
use, and industrial land has been available in more desirable locations (i.e. closer to existing utilities,
community services, and key business districts).
A portion of the defined neighborhood is within North Las Vegas’ jurisdiction. The North Las Vegas area,
which generally begins north of the Nellis AFB boundaries, extends southwest and northeast along the I­
15 freeway, and is mostly master-planned industrial, which conforms to existing and planned land use in
the vicinity of the air base. Industrial use is compatible with the Nellis AFB environs since, as previously
stated, the area is in proximity to noise and potential accident hazards from the Base.
In addition to the government facilities, the recycling businesses, and the salvage yards near the subject
site, there is, as indicated, also a large petroleum terminal, owned by Kinder Morgan Corporation (CalNev), which has above-ground tanks for storing gasoline and diesel fuel used in the Las Vegas Valley.
Kinder Morgan’s terminal is located north of the intersection of Range Road and Las Vegas Boulevard.
The residential housing in the area is generally around the south/southeast boundaries of Nellis Air Force
Base, south of Carey Avenue and west of Nellis Boulevard. These areas contain middle income homes,
apartments, restaurants, small shopping centers, a Walmart store, convenience stores, nightclubs, mobile
home parks, etc., catering mostly to the air base personnel.
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A significant private development in the area is the $200+ million Las Vegas Motor Speedway, located
three miles northeast of the subject site. In terms of racing facilities, the Speedway was designed to place
Las Vegas in the top echelon of racing locations in the United States. The 1,200-acre Speedway opened in
late 1996 and features a 1.5-mile tri-oval track for stock and Indy car racing, a 2.5-mile road course for
Formula One racing, and a quarter-mile drag strip. The raised grandstands in the Speedway seat 142,000
spectators and there are 100 glass-enclosed, air-conditioned luxury suites with self-contained bar and
food services and closed-circuit television.
The Speedway has an industrial park which is intended for 2 million square feet of industrial space
(currently has 1.3 million square feet) to accommodate a variety of industrial uses including automotive
research and development, and possibly film production. There is also a 50-acre RV park, along with
racing and training centers for off-road vehicles, motorcycles, go-karts, bicycles, and mountain bikes.
Nellis Air Force Base is an integral part of the United States Air Force’s Air Combat Command, providing
advanced combat training for composite strike forces that include every type of aircraft in the US Air
Force. Nellis covers more than 14,000 acres and has a training range of 4,800 square miles. It also has
12,000 military and civilian personnel, making it one of the largest employers in Nevada.
Nellis AFB began as an air gunnery school in 1941, and quickly became an Air Force base because the
flying weather is ideal year round, more than 90% of the area north of the Base is unpopulated public
domain, the Base’s inland strategic location is excellent, rocky hills in Southern Nevada afford a natural
backdrop for cannon and machine-gun firing, and dry lake beds are available for emergency landings. In
recent years, the growth of the Las Vegas Valley has resulted in the U.S. Air Force being more vigilant in
working with local governments to restrict certain types of development under the aircraft flight zones.
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NELLIS AIR FORCE BASE FLIGHT ZONE MAP
SUBJECT
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Demographics
The 2013 Las Vegas Perspective is an informational publication with survey data and demographics on the
Las Vegas metropolitan area sponsored by the Las Vegas Review Journal, Nevada Development Authority,
NV Energy Company and Wells Fargo Company. This publication identifies 66 survey areas (by ZIP Code).
The subject’s zip code is 89156. This area is bound by Owens Avenue to the north, Charleston Boulevard
to the south, Sunrise Mountain to the east, and Nellis Boulevard to the west. The following demographic
information was derived for the survey area:
Survey Area
Las Vegas
89156
Survey Area
Total
No. of Households:
Population:
736,782
2,008,654
89156
Total
10,032 Type of Dwelling
28,005
Single-Family:
59%
63%
Apt./Duplex:
23%
17%
Condo/Townhome:
15%
10%
3%
11%
Mobile Home:
Age of Adults:
Under 18
Las Vegas
25%
29%
18-24:
9%
10%
25-34:
15%
13% Household Income:
35-44:
15%
14%
Under $15,000:
11%
10%
45-54:
13%
14%
$15,000-$24,999:
11%
11%
55-64:
11%
11%
$25,000-$34,999:
11%
12%
65+:
12%
10%
$35,000-$49,999:
16%
20%
$50,000-$74,999:
21%
25%
$75,000-$99,999:
12%
11%
$100,000+
18%
11%
$50,962
$47,656
Education of Adults:
Less than 9th Grade
Some High School:
7%
11%
9%
14%
High School Degree:
30%
34%
Some College:
25%
23% Med. Household Inc.:
College Degrees:
29%
19%
Employed:
62%
59%
Not in Labor Force
31%
30%
7%
11%
14%
16%
Employment
Unemployed
Unemployment Rate
Percentages may not add up to 100% due to rounding.
Source: Las Vegas Perspective 2013
Based on the statistics, approximately 36% of the adult population in the Las Vegas Valley is older than 45
years of age versus the 89156 area of 35%. The number of children in the area under age 18 is at 29%,
which is higher than the Las Vegas Valley at 25%. Education levels in the area are lower than the overall
valley, with 19% of the area residents having achieved a college degree or higher and 29% for the valley.
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Approximately 59% of the area is employed versus 62% for the Las Vegas Valley. The unemployment rate
for 89156 is at 16% versus 14% for the entire Las Vegas Valley. The area has 63% single family housing,
17% apartment/duplexes, 10% condos/townhouse, and 11% mobile homes. The Las Vegas Valley has
59% single family housing, 23% apartment/duplexes, 15% condos/townhouse, and 3% mobile homes.
Median household income reported for the area is $47,656 versus $50,962 for the entire Las Vegas Valley.
Transportation Routes
The market area/neighborhood is located in the northeastern portion of the Las Vegas Valley and is
considered to have good accessibility to all sections of the Las Vegas area. The primary access routes to
the neighborhood include the I-15 freeway, the I-215 freeway (i.e. the Beltway), Las Vegas Boulevard,
Craig Road, Cheyenne Avenue, and Nellis Boulevard.
The I-15 freeway extends north and south across Southern Nevada from California to Utah, and most of
the interstate business and tourist traffic uses I-15. The I-15 freeway also accommodates large volumes of
local business and commuter traffic since I-15 parallels the Las Vegas Boulevard resort corridor, and it
runs directly past the downtown Las Vegas and North Las Vegas central business districts. According to
the Nevada Department of Transportation (NDOT), the stretch of I-15 from Los Angeles to Las Vegas is
the second-busiest long distance corridor in the United States, with over 10 million person trips per year.
The I-215 freeway is part of the Las Vegas Beltway system, which encircles three-quarters of the valley.
The opening phase of the I-215 freeway is completed, and it interconnects with both the I-15 freeway and
the U.S. 95 freeway (which connects downtown Las Vegas with Henderson). The I-215 freeway is of major
importance in reducing traffic congestion and providing access to employment districts for the rapidlygrowing Las Vegas, North Las Vegas, and Henderson suburbs.
Las Vegas Boulevard extends north and south across the entire Las Vegas Valley, and basically parallels
the I-15 freeway. Prior to the construction of I-15, Las Vegas Boulevard was the main highway through
the valley and was part of the old Federal highway system linking Nevada to California and Utah.
Craig Road and Cheyenne Avenue are the primary east/west travel routes from Nellis Air Force Base to the
I-15 freeway. Nellis Boulevard is a major north/south community traffic arterial extending across most of
the east side of the valley, beginning at the triangular intersection of Nellis, Las Vegas Boulevard, and
Craig Road which is the intersection at the main entrance to Nellis AFB.
Assessed Value and Property Taxes
Taxes for the neighborhood fall within the range of other parts of the Las Vegas metropolitan area. The
neighborhood is located within Tax District Number 340, which has a 2013/14 tax rate of $2.9328 per
$100.00 of assessed value. Tax rates throughout the valley range from $2.5017 to $3.4030 per $100.00 of
assessed value. Taxes for the subject neighborhood appear sufficient to provide adequate public services,
and they are anticipated to increase at a moderate rate in coming years.
Utilities/Services
Public utility services are available to portions of the neighborhood. Electricity is supplied by NV Energy,
while solid waste disposal is handled by Republic Services. Telephone service is supplied by CenturyLink,
and natural gas is provided by Southwest Gas Corporation. Water is supplied in areas by the City of North
Las Vegas and in other areas by the Las Vegas Valley Water District, and sewer service is provided by both
North Las Vegas and the Clark County Water Reclamation District. Utility services are considered to be at
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adequate capacity for the neighborhood, but are not extended throughout the area because so much of
the land is within, or heavily influenced by, Nellis Air Force Base operations.
Neighborhood Land Use
Nellis Air Force Base occupies much of the defined market area/neighborhood, and the air base has been
in operation since 1941. Nellis Air Force Base has had a major influence on development in the subject
area, and apart from Air Force housing and businesses that cater to Nellis personnel, the area has salvage
yards, industrial businesses, a gasoline and diesel fuel terminal, a youth correctional facility, and a State of
Nevada women’s prison.
Also within the market area/neighborhood is a large auto auction business (north of I-15), and the 1,200­
acre Las Vegas Motor Speedway complex that has multiple tracks for automobile racing. The market
area/neighborhood has a lot of vacant land that is master planned for heavy industrial use, and the
industrial land is abundant along I-15 all the way north to, and including the large, mostly undeveloped,
Apex Industrial Park. Apex is located at the northeast corner of the Las Vegas Valley. Much of the defined
market area/neighborhood land has remained vacant because of the aircraft noise and the potential for
military aircraft accidents, and because utility line and other infrastructure is not widely distributed. Much
of the neighborhood land is in North Las Vegas’ jurisdiction, while the Air Force Base (including the
subject land) and the Las Vegas Motor Speedway are in Clark County’s jurisdiction.
Neighborhood Conclusion
The subject market area/neighborhood is greatly influenced by Nellis Air Force Base operations, which are
characterized by high noise levels and the potential for accident hazards. Private land around the air base
is primarily utilized as industrial acreage, or for housing and community services focused toward Nellis
personnel. Because of Nellis AFB operations, public utility lines and other public infrastructure needed to
promote development are limited in availability, and as a consequence, private land in the neighborhood
has not developed as rapidly as land elsewhere in the Las Vegas Valley.
Nellis Air Force Base is projected to remain in place in perpetuity, and its influence on the neighborhood
will not diminish. Therefore, the privately-owned neighborhood land closest to the Base operations is
expected to remain primarily industrial land, and expected to develop at a slow-to-moderate pace when
market conditions improve.
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Market Summaries and Analyses
The use potential of the subject property is influenced by continued Las Vegas Valley growth, and growth
has not been overly strong since 2007. However, the real estate market is showing initial signs of
improvement as Southern Nevada economic conditions improve. The following summaries of the
industrial and hotel/gaming markets provide an indication of current status of local conditions.
Subject Submarket Industrial Supply and Demand
The subject neighborhood is within District 3 (Northeast). According to the Second Quarter 2013
Industrial Market Survey, this district contains 12,685,831 square feet of industrial space contained in 430
buildings, representing 11.9% of the valley’s supply. The Applied Analysis survey is to be taken as a
snapshot of the market at the time that the report is published. Differences with prior reports are due to
additions and subtractions of competitive inventory and the most current information on existing
conditions. The historical figures for this district are as follows:
INDUSTRIAL DISTRICT DATA--DISTRICT 3
Year
2008
2009
2010
2011
2012
2013 Q1
2013 Q2
2013 YTD
No. of Buildings
424
427
427
427
428
430
430
430
Rentable Sq. Ft.
12,276,310
12,465,310
12,465,310
12,465,310
12,478,920
12,685,831
12,685,831
12,685,831
1,833,269
2,348,060
2,305,962
2,703,320
2,796,483
2,332,549
2,346,888
2,346,888
Vacant Sq. Ft.
Vacancy Rate
New Inventory
14.9%
18.8%
18.5%
0
21.7%
18.5%
Net Absorption
634,934
(325,881)
189,000
0
0
0
100,000
0
0
0
Planned Construction*
4,202,586
470,000
0
0
0
0
182,901
182,901
Avg. Lease Rate/Sq. Ft.
$0.57
$0.47
$0.40
$0.38
$0.37
$0.38
$0.38
$0.38
384,649
0
100,000
Under Construction*
(125,323)
100,000
18.5%
189,000
(475,910)
0
18.4%
853,569
44,598
0
22.4%
(14,339)
370,310
* At the end of 4th Quarter
As shown above, the vacancy rate for industrial space in District 3 was 18.5%, which is higher than the
vacancy rate for the entire Las Vegas Valley at 16.2%. This is one of the few areas that experienced
positive net absorption during 2010 and the first quarter of 2011. Negative absorption for the remaining
three quarters of 2011 and all of 2012, however, has resulted in increasing vacancy. First quarter of 2013
reported a significant amount of positive net absorption, which more than compensates for the negative
absorption during the second quarter. Old Dominion Freight Lines recently completed a 100,000-square­
foot distribution building, and Demeter Foods has a 182,901-square-foot distribution center planned.
The inventory has been broken down into the following property types:
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INVENTORY BY BUILDING TYPE
Building Type
Distribution
Manufacturing
R&D
Flex
Total
No. of Buildings
138
278
0
14
430
Rentable Sq. Ft.
9,710,404
2,756,624
0
218,803
12,685,831
Vacant Sq. Ft.
1,609,484
627,090
0
110,314
2,346,888
Percent Vacant
16.6%
22.7%
0.0%
New Inventory YTD
100,000
0
0
Net Absorption YTD
292,268
83,823
0
0
0
0
Under Const.
50.4%
0
(5,781)
18.5%
100,000
370,310
0
0
Planned Const.
182,901
0
0
0
182,901
Avg. Lease Rate
$0.34
$0.46
$0.00
$0.50
$0.38
The average lease rate in the submarket is $0.38 per square foot based on triple net rents and ranged
from $0.34 to $0.50 per square foot; however, this area has no R&D space which generally commands a
higher rent. The area has lower rents when compared to the entire Las Vegas Valley, which has rents
ranging from $0.47 to $0.68 per square foot per month, with an overall average of $0.52 per square foot.
Local Hotel and Gaming Market Summary
Since 1989, the local gaming industry has experienced tremendous growth, with emphasis on
constructing new megaresort hotels, more high-grade attractions, and family-centered entertainment and
recreation. As a result, the annual visitor volume to Las Vegas more than doubled since 1990, and the
larger gaming companies now derive only about 50% of their revenues from gambling.
Gaming companies are now focusing on the “resort” aspect of their business, and Glenn Schaeffer, past
president of Mandalay Resort Group, indicated that, “This isn’t the gaming industry, it’s the entertainment
industry”. He also noted that business growth will focus not so much on new hotels, but on giving
customers an entertainment experience that they can’t get anywhere else. The valley’s convention
business (which directly impacts the gaming industry) remained strong, and despite high fuel prices and a
sometimes less than robust national economy, Mr. Schaeffer stated that, “They’ll cut out (conventions) in
places like Atlanta and Dallas, but not Las Vegas”.
The Las Vegas gaming industry had been able to show sustained strength despite concerns that the
industry faced an uncertain future due to the effect of widespread gaming growth throughout the United
States. With the opening of Indian Reservation gaming, riverboat gaming, and land-based casinos, some
felt that it would cut into Nevada’s tourism market. Others argued that these developments would create
new gaming customers interested in “Nevada-style” activities. What is clear is that the gaming growth
outside Nevada has not hurt the local economy.
There was also some concern in the late 1990s that all the new resort hotel development would create
excess casino expansion that would eventually exhaust the market. Until 1997, the local gaming industry
defied the critics by generating substantial growth in gaming revenues that made the planning of new
resorts an easy business decision. However, despite increased tourism, Clark County casinos reported
only a 3.2% increase in gaming revenues in fiscal year 1997/98. Although this was an improvement over
the 1996/97 increase of just 1.5%, it was still not at the levels of prior years in the 1990s. Previous
increases were 12.5% in 1993/94, 9% in 1994/95, and 5.1% in 1995/96. However, by the late 1990s,
gaming revenue grew by 12.6% in 1998/99 and 12.4% in 1999/00. These were phenomenal and
unexpected performances by the gaming industry.
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From 2003 through 2007, gaming revenue growth improved continuously, creating bright prospects for
the future of gaming. However, gaming revenue in 2008 slowed with the weakness in the economy, and
there were opinions that the gaming recovery would be a long term proposition. That may not be the
case given improvement in 2011 in both visitor volume and gaming revenues. It clearly will take some
time for all the new hotel resort and casino facilities at CityCenter and the Cosmopolitan to achieve
desired profitability, but hotel renovations and expansions are being announced all along the Las Vegas
Strip.
Gaming revenue is closely linked with visitor volume, and 2008 and 2009 visitor volume for Clark County
was down from 2007 according to the Las Vegas Convention and Visitors Authority. However, as
indicated, the visitor volume increased in 2010 and 2011 and set a record in 2012. The following graph
shows the annual visitor volume since 2003:
Source: Las Vegas Convention and Visitors Authority
According to the Nevada Gaming Control Board, annual gaming revenues since 2003 for Clark County
were as follows:
Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Gaming Revenue
$7,831,273,707
$8,771,998,881
$9,717,372,388
$10,630,452,393
$10,868,455,573
$9,796,750,908
$8,838,053,367
$8,908,630,029
$9,167,200,000
$9,390,000,000
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Despite Clark County gaming revenues being lower in 2009 through 2012 than they were in 2005 through
2008, we agree with opinions of local gaming executives who indicated before the tightening of financing
and the slowdown in the national and local economies that the long term outlook for the Las Vegas
gaming market remains strong. What needs to happen now is continuing renewal of strength in the
tourism and vacation industry which was not a problem until the weakness in the economy began. It is
notable that a new growth period of megaresorts began in the mid 2000s with projects such as the $8.5
billion MGM Mirage CityCenter, but other projects have been delayed or are in bankruptcy. However, the
delayed and bankrupt construction projects should be completed eventually, and Station Casinos
Company successfully emerged from Chapter 11 bankruptcy in June 2011.
It is noted that in March 2013, Boyd Gaming sold the 87-acre Echelon Place site on the Strip to the
Genting Group, a Malaysian-based gaming company, for $350 million. Genting plans to develop Resorts
World Las Vegas on the property with a first phase 3,500-room hotel and a 175,000-square-foot casino
expected to open in 2016. Also, SBE Entertainment purchased the Sahara Hotel and is in the process of a
$415 million renovation of the property. It is scheduled to reopen in Fall 2014, and will be called SLS Las
Vegas Hotel & Casino. Lastly, MGM is spending $100 million to build a park and a public promenade
outside its New York-New York and Monte Carlo hotel-casinos, and Caesars is spending $185 million to
renovate Bill’s Gamblin’ Hall & Saloon across Las Vegas Boulevard rom Caesar’s Palace. Caesars’ $550
million Linq project consisting of restaurants, bars, and a large observation wheel to link its casinos is
scheduled to open in late 2013. The Strip is recovering, and new construction along with renovations are
significant in cost and scope.
Location of Competition
The Las Vegas Valley industrial development market is still soft but showing signs of stabilization. New
development is occurring with a 110,000-square-foot Heritage Foods facility recently constructed at
Cheyenne Avenue and Simmons Street in North Las Vegas, and 303,200 square feet of industrial space at
2880 North Lamb Boulevard was recently leased to Hand Air Express. Old Dominion Freight Lines also
recently completed a 100,000-square-foot distribution building at Cheyenne Avenue and Lamb Boulevard,
Switch Communications is building two data centers totaling 900,000 square feet in southwest Las Vegas,
and Demeter Foods has a 182,901-square-foot distribution center planned.
The industrial vacancy rate in the subject northeast Las Vegas Valley submarket is 18.5%, and the overall
Las Vegas Valley vacancy rate is 16.2%. There is a lot of existing vacant space in the subject submarket and
in the overall valley that needs to be absorbed, and until 2013, negative absorption had been occurring
year after year since 2009. The subject defined market area/neighborhood is not currently a preferred
industrial district in the Las Vegas Valley, and there is limited demand currently for new industrial
development in the area. There is plenty of existing space available to satisfy any speculative demand.
Conclusions
Development in the subject area has been slow over the years because of the presence of Nellis Air Force
Base. Nellis is a major air base and aircraft noise is high. There is also potential for aircraft accident
hazards, and public utility lines are not widely distributed in much of the area. Land in the subject area is
not near hotel-casino, local government, or significant retail/commercial employment districts in the
valley, and most housing around the market area is moderate to low-priced housing.
Development near Nellis Air Force Base is mostly older construction, and residential land parcels of any
significant size are mostly already developed. There remains a lot of industrial land within the Nellis Air
Force Base flight environs, but it has never been high demand industrial land. Big Box industrial land has
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been in demand over the years to the west of the base along Craig Road, Losee Road, and Cheyenne
Avenue. However, the most desirable industrial land is 10 miles away to the southwest along I-15 in the
south/southwest part of the valley near McCarran International Airport, the Las Vegas Strip hotel-casino
district, and newer master planned communities in south/southwest Las Vegas and Henderson.
The City of North Las Vegas has annexed the Apex Industrial District along I-15, north of the subject area,
and the city has committed to extending utility lines and providing other infrastructure to Apex to
promote development of 12,000+ acres of private Apex industrial land. Apex is easily accessed from I-15
heading west on U.S. 93, and Apex could be preferable for industrial development when compared to the
subject area because Nellis Air Force Base is not such a major influence at Apex.
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SITE DESCRIPTION
Site Description
The following description is based on our property inspection, assessor records, information provided by
the client, Nellis Air Force Base representatives, and/or brokers.
The subject property is located at the northeast corner of Carey Avenue and Christy Lane on the grounds
of Nellis Air Force Base in the northeast region of the Las Vegas Valley, Clark County, Nevada, 89156. The
subject is further identified as being portions of Clark County Assessor’s Parcel Numbers 140-16-601-001,
140-16-701-001 and 140-16-801-001 and the site is zoned M-1, Light Manufacturing, under the
jurisdiction of Clark County, within Census Tract Number 78.00.
Shape and Size
Information pertaining to the subject property dimensions, shape, and area was taken from data provided
by the client. The overall site is irregular in shape with maximum length and width dimensions of 2,961
feet by 2,640 feet. The land totals approximately 123.88 net acres or 5,396,213 square feet.
The property is divided into three parcels by the curving alignment of the concrete-lined Sloan flood
control channel, and by an underground pipeline easement extending out of the recently built North Las
Vegas wastewater treatment plant located adjacent to the southwest corner of the subject property. The
treatment plant pipeline is delivering treated wastewater into the Sloan Channel where it then flows into
the Las Vegas Wash wetlands and on to Lake Mead. An aboveground pipeline will be built above the
Sloan Channel to carry the wastewater, but that hasn’t happened yet.
Topography and Drainage
The subject property consists of land that was previously used for an Air Force Base golf course, and other
land that was used for Nellis waste disposal and wastewater treatment lagoons that is now a closed and
capped landfill. The landfill and the landfill cover create an above grade mound with a level top, and the
golf course land has typical golf course variations in grade. All of the subject land will be made level for
the photovoltaic panel array and energy generation facilities, and the landfill and golf course are not
challenging to make level.
The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 have
made the purchase of flood insurance mandatory for federally backed mortgages on structures located in
special flood hazard areas. According to the Federal Emergency Management Agency (FEMA) Flood
Insurance Rate Map (FIRM) for the area dated November 16, 2011, Community Panel No. 32003C2185F,
the subject property is located in a Zone X. The subject is outside the 0.2% annual chance floodplain and
does not require flood insurance. The FEMA Flood Insurance Rate Map is included in the addenda of this
report for reference.
It is emphasized that the concrete-lined Sloan flood control channel curves across land of which the
subject is a part, and it is an open channel constructed by Clark County to control flooding during major
storm events in the valley. The Sloan Channel is one of several channels totaling a combined 581 miles in
length, along with 90 flood detention basins built since 1996 at a cost of $1.7 billion, and the Sloan
Channel is expected to remain in place in perpetuity. There are bridges on the grounds of Nellis Air Force
Base built periodically to allow crossing of the channel.
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Ingress/Egress
The southwest corner of the subject land is adjacent to Carey Avenue, but Nellis Air Force Base is fenced
and has security patrols. Accessing the base is via the main gate at the intersection of Craig Road and Las
Vegas Boulevard. Air Force permission along with a visitor badge are necessary to enter the base, and
access for private operation of the photovoltaic solar generation facility will require adequate Air Force
Base protection. However, that was accomplished with the development of the North Las Vegas
wastewater treatment plant adjacent to the subject land, and that can be accomplished for the subject
land as well.
Environmental Conditions
Much of the subject land is occupied by a capped landfill. The overall landfill covers about 182 acres, and
the landfill received potentially hazardous wastes in the past, and continued to accept debris until 1994.
The landfill operated mostly from 1942 to 1985, and it was the primary base sanitary landfill. Much of the
landfill area was used for former wastewater treatment percolation ponds and effluent irrigation systems.
Also on the landfill site was a sewage sludge field that accepted fuel storage tank cleaning residue as
wells.
Groundwater under the capped landfill has been monitored since 2000 using wells, and in 2007, a No
Further Action Decision Document was issued indicating no potential environmental threats are posed by
the landfill. No contaminants of concern were detected in the monitoring wells above acceptable levels,
and monitoring is no longer required by the Nevada Department of Environmental Protection (NDEP). The
wells are still occasionally being monitored at the request of the NDEP, but that isn’t necessary if the Air
Force were to decide to stop the monitoring.
Rex Heppe with the Nevada Department of Environmental Protection stated to the appraiser that clean
monitoring results only indicate that there isn’t any contamination leaking into the groundwater. It
doesn’t mean that there are no toxic or hazardous materials in the landfill. He said building a permanent
structure on top of the capped landfill is possible, assuming the landfill soils and materials in the landfill
are stable enough to support a building. He also noted that the cap integrity must not be compromised.
The subject landfill has an earthen cap consisting mostly of clay, but concrete will be poured on top of the
cap in order to build the solar panel array.
Although there is no cost estimate for removing the subject landfill, based on the appraiser’s experience
with landfill appraisals, including an auto fluff capped landfill at the intersection of I-15, I-215, and Range
Road, along with contaminated land across Boulder Highway from the BMI industrial complex in
Henderson, and the closed and capped landfill on the slope of Sunrise Mountain used for decades for Las
Vegas Valley refuse, removing landfills is not commonly cost feasible. An adequate alternative landfill to
accept the landfill materials would need to be located, and excavating and trucking the materials would
require costly precautions and careful supervision. The auto fluff landfill, which is smaller than the subject
landfill, would have cost nearly $2 million to breach the cap, remove materials necessary to construct the
I-15/I-215 interconnect, and close the cap again. Instead, the I-15/I-215 interconnect was redesigned
somewhat to avoid the landfill (The appraiser was provided with the auto fluff landfill cost estimate when
appraising the right-of-way acquisitions for the I-215 construction in the 1990s).
In short, removing the capped landfill from the subject land to allow for development is not concluded to
be a financially prudent option.
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Easements and Encroachments
We were not provided with a title report that would disclose any encroachments or easements that may
adversely affect the subject land. However, it is emphasized that the subject land is Federal land that has
never been patented. There are easements affecting the site including an easement for the concrete-lined
Sloan flood control channel. The channel is 20 feet wide and it curves through the subject Air Fore
property, and extends for miles across the east side of the Las Vegas Valley.
There is also a pipeline easement from the recently-constructed North Las Vegas wastewater treatment
plant that extends from the plant into the Sloan Channel. Treated wastewater flows through the pipeline
into the channel. Finally, there is a flood channel along the east side of the property that empties into the
Sloan Channel. The flood channels and the wastewater treatment plant easement divide the subject land
into three parcels, and the channels and easement are not included as part of the subject land.
Mineral Deposits/Water Rights
A Las Vegas mineral report approved on April 1, 2003 by Mark Chatterton, BLM Certified Mineral
Examiner, indicates that there are prospectively valuable leasable minerals for oil, gas, sodium, and
potassium in Township 20 South, Range 62 East, Section 16 (i.e. the area of the subject property). There
are also potential saleable minerals in the area, including possibly on the subject site. However, it is not
felt that mineral or oil and gas extraction reflects the highest and best use of the land given that no oil or
gas companies have ever developed significant extraction operations in the Las Vegas Valley or in the
surrounding mountain ranges. There are also no oil/gas companies or sodium/potassium companies that
we are aware of that are reserving land in and around the valley to hold for future oil and gas drilling or
mining operations. It is also emphasized that the subject is within the boundaries of Nellis Air Force Base
where mining operations are unlikely to be allowed. Consequently, the subject’s highest and best use
value is not concluded to be mining.
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NV ENERGY PLAT MAP
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3.96 ACRES BEING EXCLUDED FROM AREA 1 LEASE
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ASSESSOR’S AERIAL PHOTOGRAPHS
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SITE DESCRIPTION
MAP SHOWING THE SUBJECT SITE
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AERIAL OF THE SUBJECT LAND AND ENERGY TRANSMISSION LINE ROUTE
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AERIAL OF FORMER SEWER POND LAGOONS AND LANDFILL ON THE SUBJECT SITE
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General Data
Location:
Assessor Parcel Numbers:
The subject property is at the northeast corner of Carey Avenue and
Christy Lane in the northeast region of the Las Vegas Valley. The site
is on the grounds of Nellis Air Force Base. Nellis Air Force Base is a
14,000-acre base that is a primary Air Combat Command Base of the
United States Air Force. Use of the air base grounds is restricted to Air
Force-related operations and facilities, and Nellis has had a major
influence on land uses around the base since it was established in
1941. Nellis has more squadrons than any other USAF base, and the
Nellis work force totals 12,000 military and civilian personnel.
The subject land has been identified for outgrant to NV Energy to
construct and operate a photovoltaic solar facility to provide a
renewable energy source for Nellis Force Air Base operations. The
base already has a solar energy facility built in 2007 alongside Range
Road roughly 2.5 miles away from the subject to the north. The
subject site and the earlier solar site both have capped landfills that
are usable lands for the solar arrays.
Portions of 140-16-601-001, 140-16-701-001 and 140-16-801-001
Adjacent Land Uses
North:
South:
East:
West:
To the north is the remaining Nellis Air Force Base golf course
followed by aircraft runways.
To the south is a relatively large mobile home park that was built in
1955.
To the east and southeast are blocks of subdivision homes built from
the 1960s to the early 2000s, followed by the north end of Sunrise
Mountain and the Lake Mead Boulevard pass through the mountain
to Lake Mead.
To the west is the new North Las Vegas wastewater treatment plant
surrounded by industrial scrap yards, automobile and materials
storage yards, and recycling businesses.
Physical Characteristics
Site Area:
Shape:
Topography:
Parcel Location:
5,396,213 net square feet, or 123.88 net acres
Irregular but functional
The subject has rolling golf course lands and a large, capped landfill
that rises roughly six feet above the natural grade of the east side of
the site, and then has a large, level earthen (mostly clay) top. The west
side of the landfill does not appear to be as much above grade as the
east side, and driving around on the land is not difficult.
The parcel is an interior parcel with only the tip of the southwest
corner of the site having frontage on a public street.
Primary Access
Street Name:
Street Type:
Carey Avenue
Carey Avenue is a half Section-line street that extends east/west
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At Signalized Intersection:
Overall Visibility:
across the northeast and north central portions of the valley. Carey
has an overpass over I-15, and it extends from the base of Sunrise
Mountain to Rancho Drive. Most neighborhoods alongside Carey
Avenue are of older development from primarily the 1950s through
the 1970s, but there are newer home subdivisions as well at intervals
along Carey Avenue.
No
Poor because of the land’s interior location.
Site Improvements
Off-Site Improvements:
Utilities:
On-Site Improvements:
Carey Avenue is paved but not fully improved in the immediate area
of the subject site.
All public utility lines and services are directly available to the subject
property
None of market value
Flood Zone Data
Flood Map Panel:
Flood District:
Floodplain Status:
32003C2185F dated November 16, 2011
X
The subject is outside the 0.2% annual chance floodplain and does
not require flood insurance.
Other Site Conditions
Soils:
Environmental Issues:
The subject soil consists of Glencarb silt loam, a course textured soil
that is developable. However, the natural soil is covered with
imported organic loam on the abandoned golf course grounds, and
imported clay material in the landfill cap.
Much of the subject property is covered with a capped landfill. The
landfill was the primary sanitary landfill for Nellis Air Force Base from
1942 to 1985, and it continued to accept debris until 1994. Much of
the landfill area was used for sewage treatment lagoons. Another area
accepted sewage sludge from the sewage treatment facility, and fuel
storage tank cleaning residue was also dumped there as well.
The primary contaminant concern was trichloroethylene (TCE) in
groundwater. After the landfill was closed and capped, monitoring
wells were drilled to test the groundwater. Testing results showed no
contaminants above acceptable levels in the groundwater, and a No
Further Action Decision Document was issued indicating there is no
potential environmental threat posed by the landfill.
Rex Heppe with the State of Nevada Environmental Protection Agency
stated that clean monitoring results indicate there isn’t contamination
leaking into the groundwater. It doesn’t mean that there are no toxic
or hazardous materials in the landfill. The landfill has been properly
closed with a stable cover, and there are land use controls and
inspection requirements in place to insure future protection of the
environment around the landfill.
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Easements & Encroachments:
Earthquake Zone:
Other:
The subject property is within the Nellis Air Force Base AE 65 to AE 75
noise environs. The aircraft noise is readily evident when visiting the
site as the aircraft take off. The federal government has greatly
reduced its flight environs development restrictions around McCarran
International Airport because new commercial aircraft technology has
lessened the noise levels from those airplanes. However, noise
reduction on air force aircraft doesn’t seem to have occurred yet, and
even if it had occurred, it is unlikely the U.S. Air Force would allow any
new residential development within the Nellis Air Force Base environs.
Nellis is too important to the Air Force to allow resident complaints
and danger to residents from potential accidents to increase. That has
been the Air Force’s position over years as the Air Force has
consistently challenged development proposals that might interfere
with the air base operations.
The subject land is part of parcels that contain easements for the
Sloan flood control channel, and an easement for a pipeline extending
out of the new North Las Vegas wastewater treatment plant. The
easement lands are not included in the proposed subject solar power
generation lands, but the easements divide the subject land into three
parcels. Getting from one parcel to another will require construction
of a bridge (Bridges are constructed across the Sloan Channel
elsewhere on the Nellis AFB grounds.).
None of any concern
None
Zoning Designation
Zoning Code:
Zoning Jurisdiction:
General Plan Designation:
M-1, Light Manufacturing
Clark County
Nellis AFB allowed use
Analysis/Comments on Site:
The subject property is located at the northeast corner of the intersection of Carey Avenue and Christy
Lane. The tip of the southwest corner of the subject property is the only frontage the site has on a public
street, so visibility and accessibility is limited. The subject land is on the grounds of Nellis Air Force Base,
and public access to the base is limited to the main gate at the intersection of Las Vegas Boulevard and
Craig Road. Permission to enter the base must be officially authorized, and personal identification must be
presented at the entry gate office to receive a visitor`s badge. Security patrols continuously drive the base
grounds, and being anywhere other than where authorized is not allowed.
However, although the base is fenced and guarded, the subject land is located at the outside edge of the
base, and like the adjacent North Las Vegas wastewater treatment plant on Nellis Air Force Base land,
access can be accommodated without interfering with the base security. Public utility lines and
community services are closely available to the subject property, and the site is not located in a FEMAdesignated flood zone.
The subject land consists partly of abandoned golf course land, but mostly the site is capped landfill land,
and the landfill is expected to remain in place in perpetuity. The landfill was used for decades for sewage
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treatment lagoons and sanitary waste for the air base, and although the capped landfill does not pose any
environmental concern, the cap must remain sound, and materials in the landfill must remain covered and
intact. Consequently, use of the surface of the site is contingent on not compromising the integrity of the
landfill or the cap.
The site totals 123.88 acres, and the property includes three parcels separated by the concrete-lined Sloan
flood control channel, and by a pipeline easement extending out of the North Las Vegas wastewater
treatment plant. A bridge(s) will likely need to be constructed to adequately tie the solar generation
facilities together.
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ZONING DESCRIPTION
Zoning Information
Zoning Designation
Zoning Code:
Zoning Designation:
Purpose:
M-1
Light Manufacturing
The M-1 zoning is established to provide areas suitable for the
development of light manufacturing establishments and to
prohibit the development of incompatible uses.
Permitted Uses
Permitted uses under the M-1 zoning include, but are not limited to, batch plant; beverage plant; brewery;
caterer; cemetery; club; composting facility; construction storage; copy center; distillery; distribution
center; dry cleaning plant; electric generating station; electronic equipment sales and service; food
processing; freight terminal; fuel storage yard; hazardous materials or waste storage; home improvement
center; hospital; hotel/motel; ice and cold storage plant; janitorial service; jewelry making-excluding
smelting of metal; laboratory, laundry service; manufactured home sales; manufacturing; mini-warehouse;
monument sales; nightclub; outside storage; park and ride; parking lot; passenger terminal; plant nursery;
print shop; public utility structures; recreational facility; recyclable collection; sewage treatment plant;
towing service; transportation services (including tour guide services); truck stop; union hall; vehicle
dismantling yard; vehicle maintenance and repair; and warehouse storage.
Development Regulations
Uses Prohibited:
Residential.
Area, Width, Yard:
20’ minimum from front property line to width line of
street; no side yard except when adjoined to residential
neighborhood which requires 20’ minimum. Corner lots
side yard requires 20’ minimum.
Coverage:
Maximum coverage of the improvements is 80% of the
lot.
Height:
The height of the improvements shall not exceed 50 feet.
Outdoor Uses:
Construction materials storage, vehicle storage,
recyclable materials, storage, vehicle dismantling storage
Parking:
Varies depending on use.
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ASSESSMENT & TAX DATA
Assessment & Tax Data Assessment Methodology
Property taxes are based upon an appraisal of the property performed by the Clark County Assessor’s
Office. An appraisal is conducted every five years on properties located within Clark County and the
values are updated each year by an index computed by the State of Nevada Department of Taxation.
According to personnel at the Assessor’s Office, improved properties are appraised for taxable value
based upon the cost approach. This approach to value is performed by estimating the replacement cost
new of a property less depreciation of 1.5% per year of effective age, up to a maximum of 75%. State
Statute 361.227 indicates that the taxable value of the property must not exceed the current market value.
Since the cost approach in some instances may provide an indication higher than current market value,
the sales comparison approach and/or income capitalization approach may be used to establish the
taxable value of the property. Property taxes are calculated by multiplying 35% of the taxable value by
the tax rate.
Tax Rates
The subject is within Tax District 340 (SUNRISE MANOR), which has a current tax rate of $2.93280 per
st
th
$100.00 of assessed value for the 2013/14 tax year. The fiscal year starts July 1 and ends on June 30 of
every year.
TAX YEAR
2013/14
2012/13
2011/12
2010/11
TAX RATE
$2.9328
$2.9328
$2.9328
$2.9412
Please note that property tax increases were capped by Nevada Legislature Assembly Bill 489, which was
passed on April 6, 2005. The tax increase caps are 3% per year for a primary residence and 8% per year on
all other properties.
Assessed Values and Property Taxes
The Federal government does not pay property taxes. However, the site has been given an assessed value.
Consequently, if property taxes were paid, the subject’s assessed value, applicable tax rate and total taxes
including direct assessments are shown in the following chart:
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ASSESSMENT & TAX DATA
SUMMARY OF ASSESSED VALUES AND PROPERTY TAXES
Tax Year
2014
County Appraised Value
Tax Parcel No.
Land
Improvements
Taxable Value
Assessment Ratio
Assessed Value
Tax Rate
Combined Parcels
$9,953,989
$0
$9,953,989
35.0%
$3,375,978
$2.9328
Tax Rate Per
$100
Tax Amount
$99,011
Special Assessments
Total Taxes
Payment Status
Amount Due
$0
$99,011
Exempt
$0
Conclusions
The taxes reflect the current assessed value and the new tax rates that went into effect July 1, 2013.
According to the Clark County Assessor’s Office, the subject’s property taxes were exempt as of the date
of value. Tax rates have been stable and should increase at a moderate rate in the future.
Please note that the subject land includes portions of APNs 140-16-601-001, 140-16-701-001, and 140­
16-801-001 that have assessed values of $6,291/AC, $27,252/AC, and $6,736/AC, respectively. The lower
values, according to the Assessor’s Office, are associated with the golf course use. The golf course is
abandoned on the subject land, and therefore, the $27,252 per acre was applied to the subject 123.88
acres yielding a total assessed value of $3,375,978. Please note that the Assessor’s Office did not know
that there is a capped landfill on the subject land. The Assessor’s Office recommended that NV Energy
contact them regarding consideration of the landfill in the assessed valuation of the property.
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HIGHEST & BEST USE
Highest & Best Use
The Highest and Best Use of a property is the reasonably probable and legal use of vacant land or an
improved property that is: physically possible, appropriately supported, financially feasible, and that
results in the highest value.
Improved properties may have a highest and best use that is different than the existing use. The existing
use will generally continue however, until land value exceeds the total value of the property in its existing
use plus demolition costs.
Analysis of Highest and Best Use as if Vacant
In determining the highest and best use of the property as though vacant, we focus on: 1) the existing
use, 2) a projected development, 3) a subdivision, 4) an assemblage, or 5) holding the land as an
investment.
Legally Permissible
The appraised site is zoned M-1, Light Manufacturing. The M-1 zoning is established to provide areas
suitable for the development of light manufacturing establishments and to prohibit the development of
incompatible uses. Permitted uses under the M-1 zoning include any uses under C-P zoning (Office
Professional), C-1 zoning (Local Business), C-C zoning (Shopping Center), C-2 zoning (General
Commercial), and M-D zoning (Designed Manufacturing).
The M-1 zoning allows the following uses (some uses require a conditional or special use permit):
Contractor Storage Yards
Freight Terminals
Recyclable Collection
Heavy Equipment/Machinery Sales
Hazardous Materials/Waste Storage
Beverage Plant
Distribution Center
Electric Generating Station
Offices
Convenience Store
Manufacturing
Hotels/Motels
Sewage Treatment Plant
Recreational Facility
Vehicle Dismantling
Brewery
Warehousing
Outside Storage
Retail Sales
Restaurants
The M-1 zoning is pretty much all inclusive of commercial and industrial uses. Uses that would be
incompatible with light manufacturing establishments are prohibited. Such uses would primarily be
residential uses.
The subject land is on the grounds of Nellis Air Force Base, and the base is on U.S.A. public land. The
Nellis Air Force Base land has not been made available for private purchase, and although being
outgranted for solar power generation, the subject land will remain public ownership land in perpetuity.
With regard to the highest and best use of the subject land, public uses are not considered to be
economic uses of the property. The Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA
2000 Edition, Section B-3) states that, “Highest and best use is driven by economic considerations and
market forces, not by public interest. Therefore, a non-economic highest and best use is not a proper
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basis for the estimate of market value [thus] a highest and best use of conservation, preservation, or other
use that requires the property to be withheld from economic production in perpetuity, is not a valid use
upon which to estimate market value.”
Sections A-14 and B-3 of the UASFLA reiterate several times that the appraiser’s estimate of highest and
best use must be an economic use. Some of the non-economic government or public uses to be avoided
in estimating the highest and best use of a property include conservation, natural lands, preservation,
park, airfield, habitat conservation, public space, park-like area, missile test range, etc., unless there is a
prospect and competitive demand for that use by other than the government.
With the above in mind, and given the location of the subject land near the Air Force Base runways, and
near industrial uses to the west and southwest in the Nellis AFB flight environs, if the land were made
available for sale, a market would be expected to exist for industrial use of the land. In summary, the
legally permissible use of the subject land is an M-1 allowed use compatible with the Air Force Base
operations, and with the existing private industrial uses in the flight zone environs.
Physically Possible
Multiple factors affect the uses with which the land may be developed. These factors are considered
below.
The appraised site is irregular but functional in shape and totals 5,396,213 square feet (123.88 acres). All
public utility lines and services are directly available to the subject property. The site is on the grounds of
Nellis Air Force Base, and the southwest corner of the property has frontage at the intersection of Carey
Avenue and Christy Lane. The frontage is small, and that is the only frontage the site has on a public
street. The property is not in a FEMA-designated flood zone, but the concrete-lined Sloan flood control
channel curves through the land of which the subject is a part, creating separate subject parcels that will
require bridge crossing to tie the parcels together.
A pipeline easement extending out of the new North Las Vegas wastewater treatment plant to the Sloan
Channel also divides the subject land, and the Sloan Channel and pipeline easement are expected to
remain in place in perpetuity. The subject land includes an abandoned portion of the Nellis Air Base golf
course, and that land has rolling topography typical of golf course greens and bunkers. That land can be
fully graded.
Most of the subject site is covered with a capped landfill. The landfill was used for decades for sewage
treatment lagoons and as a sanitary landfill for the base, and after it was capped, wells were drilled to
monitor the groundwater for contamination. No contamination was detected, and the surface of the cap
might even be usable for permanent structure development as long as the cap is not compromised, and
under the assumption the landfill is stable enough to support a permanent structure.
Public utility lines are directly available to the subject property, and community services are nearby. In
summary the physical attributes of the subject property are challenging, but types of industrial use are
physically possible.
Financially Feasible
All uses that are expected to produce a positive return are regarded as financially feasible. However, when
analyzing the most economically feasible uses of a site, emphasis is placed on existing land use patterns
within the neighborhood, with particular emphasis on land uses in the immediate area of the site. The
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most feasible uses would both complement and be compatible with existing and proposed development
in the area.
Financial feasibility of an industrial use of the subject land is directly affected by supply and demand
factors. Prior to 2008, there had been, for several years, impressive growth in the Las Vegas Valley, and
although the growth slowed significantly since 2008, a change to increasing growth is expected to again
occur as economic and tight financing conditions improve. It is clear that since 2008, depressed economic
conditions together with tight construction financing have significantly weakened the local real estate
market, but those conditions are improving, and the market is projected to regain its strength. Therefore,
because of the expected recovery of growth in the Las Vegas Valley, legal use of the subject property is
considered to be financially feasible.
Maximally Productive
Among the financially feasible uses, the use that results in the highest value (the maximally productive
use) is the highest and best use. We have concluded that the highest and best use of the subject land
would be an industrial use appropriate for the property’s physical challenges, and compatible with the
property’s location in the Nellis Air Force Base flight environs, and near private industrial use and
development nearby to the west. The use of the subject land must not compromise the integrity of the
landfill cap, or the stability of the landfill.
Conclusion of Highest and Best Use as though Vacant
In conclusion, the highest and best use of the subject land is an industrial use appropriate for the
property’s physical challenges, and compatible with the property’s location in the Nellis Air Force Base
flight environs, and near private industrial use and development nearby to the west. The use of the subject
land must not compromise the integrity of the landfill cap, or the stability of the landfill.
Most Probable Buyer/User
As of the date of value, the most probable buyer of the subject land is a specialty user such as a solar
power generation company, or an industrial or recreational user with uses that would not compromise the
landfill cap, or the stability of the landfill.
Larger Parcel Analysis
The “larger parcel” concept was incorporated into the UASFLA to assist appraisers involved in Federal land
acquisitions for eminent domain assignments and land exchanges and places certain requirements on
how appraisers must consider the properties in their before and after conditions. When vast acreages are
involved in an acquisition, it is often difficult to determine what constitutes the whole property comprising
the part acquired and the remainder. Because of this difficulty, tests have been established to determine
the larger parcel. In the typical Federal acquisition appraisal, the appraiser will apply the tests of unity of
ownership, of unity of highest and best use, and of contiguity or proximity as it bears on unity of use in
determining the larger parcel.
The subject property and contiguous lands to the north and northwest of the subject property are under
ownership and beneficial control of a single entity – the Federal government. Therefore, the contiguous
Federal lands are considered to have a unity of ownership. However, when appraising lands that are part
of a much larger holding, appraisers must bear in mind the distinction between a residue whose integrity
is destroyed (or impaired) and what are merely other parcels or holdings.
It has been found that to meet the unity of use test, all parts of the whole must actually be devoted to a
unitary use. To meet this test, the subject lands must have the same, or an integrated, highest and best
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use. In the subject’s case, the land was used for a sanitary landfill and a portion of a golf course at Nellis
Air Force Base. The landfill is now capped, and the subject portion of the golf course has been abandoned.
None of the subject land is currently necessary for base operations, and there would be no diminution in
value of the remainder Nellis lands if the subject land were outgranted or sold and taken out of Federal
ownership.
The intended use of this appraisal is to assist Nellis in an outgrant of the subject property by establishing
the current market value for the fee simple estate, based on the stated scope of work, the purpose of the
appraisal, the regulatory reporting requirements, and the definition of market value presented in the
appraisal report. The proposed outgrant of the subject property by the Federal government involves an
outgrant of a single property between a willing owner and a willing user. Since the subject property could
be marketed and developed as a single economic unit and meets the “larger parcel” requirements of
“unity of ownership, contiguity, and unity of use,” the subject land is considered to be its own “larger
parcel” and a before and after “larger parcel” analysis is not required.
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APPRAISAL METHODOLOGY
Appraisal Methodology
Three Approaches to Value
There are three of the traditional approaches to estimating real property value: the cost, sales comparison,
and income capitalization approaches.
Cost Approach
The cost approach is based upon the principle of substitution, which states that a prudent purchaser
would not pay more for a property than the amount required to purchase a similar site and construct
similar improvements without undue delay, producing a property of equal desirability and utility. This
approach is particularly applicable when the improvements being appraised are relatively new or when
the improvements are so specialized that there is little or no sales data from comparable properties.
Sales Comparison Approach
The sales comparison approach involves the direct comparison of sales and listings of similar properties,
adjusting for differences between the subject property and the comparable properties. This method can
be useful for valuing general purpose properties or vacant land. For improved properties, it is particularly
applicable when there is an active sales market for the property type being appraised – either by ownerusers or investors.
Income Capitalization Approach
The income capitalization approach is based on the principle of anticipation, or the assumption that value
is created by the expectation of benefits to be derived in the future, such as expected future income flows.
Its premise is that a prudent investor will pay no more for the property than he or she would for another
investment of similar risk and cash flow characteristics. The income capitalization approach is widely used
and relied upon in appraising income-producing properties, especially those for which there is an active
investment sales market.
Subject Valuation
The subject property is vacant land and the Sales Comparison Approach was used in forming an opinion
of the value of the property. The Cost and Income Capitalization Approaches were not used as those
approaches are not typically applicable to valuing vacant land.
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LAND VALUATION
Land Valuation Methodology
Land is valued using the Sales Comparison Approach. This approach is based on the premise that a buyer
would pay no more for a specific property than the cost of obtaining a property with the same utility. In
the sales comparison approach, the opinion of market value is based on closed sales, listings, and
pending sales of properties similar to the subject property.
A systematic procedure for applying the sales comparison approach includes the following steps: (1)
researching and verifying transactional data, (2) selecting relevant units of comparison, (3) analyzing and
adjusting the comparable sales for differences in various elements of comparison, and (4) reconciling the
adjusted sales into a value indication for the subject site.
Unit of Comparison
The unit of comparison depends on land use economics and how buyers and sellers use the property. The
unit of comparison in this analysis is the price per square foot.
Elements of Comparison
Elements of comparison are the characteristics of properties and transactions that cause the prices of real
estate to vary. The main elements of comparison in sales comparison analysis are as follows: (1) real
property rights conveyed; (2) financing terms; (3) conditions of sale; (4) expenditures made immediately
after purchase; (5) market conditions; (6) location; (7) physical characteristics; (8) economic characteristics;
(9) zoning/use; and (10) non-realty components of value.
Comparable Sales Data
The land sales data was derived from a search of data sources and public records, a field survey, and
interviews with knowledgeable real estate professionals.
We selected sales for our analysis that are the most appropriate for forming an opinion of market value.
These sales are summarized in a table on the next page, followed by a location map. Following those are
comparable sales sheets with additional data and a discussion of the specific adjustments.
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LAND VALUATION
COMPARABLE LAND SALES SUMMARY
Subject
Address
City
Sale Price
Sale # 1
Sale # 2
Sale # 3
Sale # 4
SWC Lamb &
NWC Losee Rd Ss Oquendo Smiley / NS NEC & NWC
NE of Carey Ave &
& Lone
Rd, E of Ft
Lone
Craig Rd &
Christy Ln
Mountain Rd Apache Rd
Mountain,
Bruce St
W. of Lamb
Las Vegas
North Las
Las Vegas
North Las
North Las
N/A
$930,000
$3,780,000 $7,354,582
$3,700,000
Sale # 5
Sale # 6
NEC Mt
Hood &
Azure Ave
NEC Ann Rd
& Linn Lane
Las Vegas
$1,367,784
Las Vegas
$3,196,548
Date of Sale
N/A
4/16/2012
12/27/2012
1/29/2013
2/11/2013
4/30/2013
7/22/2013
Adjusted Sale Price
N/A
$930,000
$3,780,000
$7,354,582
$3,700,000
$1,367,784
$3,196,548
5,396,213
N/A
435,600
$2.13
1,537,232
$2.46
2,349,626
$3.13
1,894,860
$1.95
762,300
$1.79
1,427,897
$2.24
123.880
N/A
10.000
$93,000
35.290
$107,112
53.940
$136,347
43.500
$85,057
17.500
$78,159
32.780
$97,515
Land Sq Ft
Price / SF of Land
Land Acres
Price / Acre
Zoning Code
Zoning Description
M-1
Light
Manufacturing
C-1
C-2
General
Neighborhood
Commercial
Commercial
District
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M-2
PUD
M-2
M-2
General
Industrial
Planned Unit
Development
General
Industrial
General
Industrial
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COMPARABLE SALES MAP
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LAND VALUATION
Land Comparable 1
Property Type:
Address:
County:
Tax ID/APN:
Confirmed With:
Transaction Information
Status:
Closed
Recording Date:
April 16, 2012
Recording #:
20120530:01993
Sale Price:
$930,000
Adjusted Sales Price:
$930,000
Grantor:
2010-1 CRE NV Land,
LLC
Grantee:
Samimi, LLC
Property Rights
Rights Conveyed:
Financing:
Conditions of Sale:
Marketing Time (Days):
Fee Simple
All Cash to Seller
Arm's Length
32
Price Per Gross Acre:
Price Per Gross SF:
$93,000
$2.13
Land
Northwest corner of Losee
Road and Lone Mountain
Road, North Las Vegas,
Nevada 89081
Clark
124-35-803-006
Confirmed By:
Mr. Bill Lenhart with
Sunbelt Development &
Realty Partners, LLC
Andrew J. Johnson
Land Description
Gross Acres:
Gross SF:
10.00
435,600
Zoning:
C-1, Neighborhood
Commercial
Zoning Jurisdiction: North Las Vegas
Utilities:
All are to the site
Off-Sites:
None
Frontage:
600.00
Shape:
Rectangular
Topography:
Level, at grade
In Flood Plain:
No
Encumb./Easements: None
Proposed Improvements
Proposed Use:
Commercial
Comments:
This was the sale of an 8.53 net acre parcel (10 gross acres) located at the northwest
corner of Losee Road and Lone Mountain Road. It sold with no SIDs in place. The site is just outside the
North Las Vegas Golden Triangle industrial district and one-half mile away from the Cannery Hotel and
Casino on Craig Road. Per our conversation with listing broker, Mr. Bill Lenhart, it was indicated that the
FDIC was involved in this sale, and that Colony Capital managed the site. Although the FDIC was involved,
Mr. Lenhart indicated it was his opinion that it was an arm's-length transaction, with no special sales
conditions. He indicated that this parcel was adequately marketed, and sold at a fair market price. He also
indicated that the buyer of this parcel was an investor.
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LAND VALUATION
Land Comparable 2
Property Type:
Address:
County:
Tax ID/APN:
Confirmed With:
Transaction Information
Status:
Closed
Recording Date:
December 27, 2012
Recording #:
20121227:02884
Sale Price:
$3,780,000
Adjusted Sales Price:
$3,780,000
Grantor:
Branch Banking & Trust
Company
Grantee:
Juliet Companies, LLC
Property Rights
Rights Conveyed:
Financing:
Conditions of Sale:
Marketing Time (Days):
Fee Simple
All Cash to Seller
Arm's Length
206
Price Per Gross Acre:
Price Per Gross SF:
$107,112
$2.46
Land
South side of Oquendo
Road, east of Fort Apache
Road, Las Vegas, Nevada
89113
Clark
163-32-201-013, 024, 025
Confirmed By:
Rick Hildreth, listing agent
at Land Advisors (702­
262-9199)
Tammy O'Rourke
Land Description
Gross Acres:
Gross SF:
35.29
1,537,232
Zoning:
C-2, General Commercial
District
Zoning Jurisdiction: Clark County
Utilities:
At or near site
Off-Sites:
Paved Street
Frontage:
990.00
Shape:
Irregular
Topography:
Level
In Flood Plain:
No
Encumb./Easements: No known adverse
easements or
encumbrances.
Proposed Improvements
Proposed Use:
Hold for Investment
Comments:
This property involves contiguous parcels of land on the west side of the I-215 Beltway
and the south side of Oquendo Road. The parcels surround an existing medical office building on the
south side of Oquendo Road. All utilities are close-by, however, Mr. John Stewart, Principal with Juliet
Properties (buyer) estimates a lift station is needed for sewer service and a concrete-lined drainage
channel will be necessary across the southeast corner of the site; these items are stated to cost $775,000
and $400,000 (for commercial use) respectively. Oquendo Road is a two lane paved street in this area, and
the beltway frontage road along the east boundary provides one way traffic. Listing agent Rick Hildreth
indicated he marketed the property for a couple of months and reported numerous offers. The buyer was
the most aggressive and quickest close of escrow, which was desirable to the bank. A listing price was not
advertised and information regarding the other offers was not provided.
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Land Comparable 3
Property Type:
Address:
County:
Tax ID/APN:
Transaction Information
Status:
Closed
Recording Date:
January 29, 2013
Recording #:
20130129:02799 &
02800
Sale Price:
$7,354,582
Adjusted Sales Price:
$7,354,582
Grantor:
Mendenhall Family Trust
& TML Mendenhall LP
Grantee:
NBC Fourth Realty Corp
Property Rights
Rights Conveyed:
Financing:
Conditions of Sale:
Marketing Time (Days):
Fee Simple
All Cash to Seller
Typical
Not Available
Price Per Gross Acre:
Price Per Gross SF:
$136,347
$3.13
Confirmed With:
Confirmed By:
Land
SWC Lamb Blvd & Smiley
Rd; NS Lone Mountain Rd,
W. of Lamb Blvd, North
Las Vegas, Nevada 89031
Clark
123-31-702-001, 123-31­
703-001, 123-31-801-002
(now por. 123-31-702­
002)
Costar & Public Records
Andrew J. Johnson, Kendal
Stewart
Land Description
Gross Acres:
Gross SF:
53.94
2,349,626
Zoning:
Zoning Jurisdiction:
Utilities:
Off-Sites:
Frontage:
Shape:
Topography:
In Flood Plain:
Encumb./Easements:
M-2, General Industrial
City of North Las Vegas
All are to the site
Asphalt-paving
1,280.00
L-Shaped
Level
No
None known
Proposed Improvements
Proposed Use:
Unknown
Comments:
One of the parcels is located along the north side of Lone Mountain Road, west of Lamb
Boulevard. The other two parcels are located at the southwest corner of Lamb Boulevard and Smiley Road,
very close to the I-15/ Lamb Boulevard freeway interchange. Public utilities are directly available to the
site. This property sold in two consecutive transactions to the same buyer on the same day. The total
price paid was $7,354,582. The buyer owns a large warehouse/ distribution building with a large parking
lot for semi truck-trailers and employees directly to the south ( APNs 123-31-802-001 & 002 totaling 36.9
acres ).
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Land Comparable 4
Property Type:
Address:
County:
Tax ID/APN:
Confirmed With:
Transaction Information
Status:
Closed
Recording Date:
February 11, 2013
Recording #:
20130211:02303
Sale Price:
$3,700,000
Adjusted Sales Price:
$3,700,000
Grantor:
Comerica Bank
Grantee:
T M L Mendenhall LP
Property Rights
Rights Conveyed:
Financing:
Conditions of Sale:
Marketing Time (Days):
Fee Simple
All Cash to Seller
Arm's Length
30
Price Per Gross Acre:
Price Per Gross SF:
$85,057
$1.95
Land
The northeast corner and
northwest corner of Craig
Road and Bruce Street,
North Las Vegas, Nevada
89081
Clark
139-02-215-001 &139-02­
612-001
Confirmed By:
Chris Lane, listing agent at
Colliers International (702­
836-3728)
Kendal Stewart
Land Description
Gross Acres:
Gross SF:
43.50
1,894,860
Zoning:
PUD, Planned Unit
Development
Zoning Jurisdiction: North Las Vegas
Utilities:
All are to the site
Off-Sites:
Paved street, curbs,
gutters, and streetlights
Frontage:
2,362.26
Shape:
Irregular
Topography:
Level, at grade
In Flood Plain:
No
Encumb./Easements: No known adverse
easements or
encumbrances.
Proposed Improvements
Proposed Use:
Unknown
Comments:
This property fronts fully improved Craig Road, and the site is across Craig Road from the
Cannery Hotel and Casino. The Golden Triangle Industrial Park is a quarter of a mile away to the east, and
there are industrial warehouse and distribution buildings all around the Cannery Hotel to the south. The
sale was an all cash transaction at a fair market price.
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Land Comparable 5
Property Type:
Address:
County:
Tax ID/APN:
Confirmed With:
Transaction Information
Status:
Closed
Recording Date:
April 30, 2013
Recording #:
20130430:01749
Sale Price:
$1,367,784
Adjusted Sales Price:
$1,367,784
Grantor:
Centennial West L L C
Grantee:
ABC Manufacturing
Properties LLC
Property Rights
Rights Conveyed:
Financing:
Fee Simple
Assumed All Cash to
Seller
Conditions of Sale:
Typical
Marketing Time (Days): 1,051
Price Per Gross Acre:
Price Per Gross SF:
$78,159
$1.79
Land
Northeast corner of Mt.
Hood Street and Azure
Avenue, Las Vegas,
Nevada 89115
Clark
123-27-510-001
Confirmed By:
Jennifer Levine, Voit Real
Estate Services, 702-734­
4500
Kylie Richter
Land Description
Gross Acres:
Gross SF:
17.50
762,300
Zoning:
Zoning Jurisdiction:
Utilities:
Off-Sites:
Frontage:
Shape:
Topography:
In Flood Plain:
Encumb./Easements:
M-2, General Industrial
City of North Las Vegas
All are to the site.
Paved Street
660.00
Rectangular
Natural Desert
No
There are no known
adverse easements or
encumbrances.
Proposed Improvements
Proposed Use:
Owner/ User
Comments:
This is the sale of a vacant parcel of land located in North Las Vegas near the Las Vegas
Motor Speedway. Nellis Air Force Base is located less than a mile away to the south. Sysco Food Services
distribution and warehouse facility is adjacent to the west. According to the listing broker, there were no
unusual conditions of sale, and this site included all offsites and utilities.
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LAND VALUATION
Land Comparable 6
Property Type:
Address:
County:
Tax ID/APN:
Confirmed With:
Transaction Information
Status:
Closed
Recording Date:
July 22, 2013
Recording #:
20130722:03219
Sale Price:
$3,196,548
Adjusted Sales Price:
$3,196,548
Grantor:
Valley Bank of Nevada
Grantee:
Lex Las Vegas LP
Property Rights
Rights Conveyed:
Financing:
Conditions of Sale:
Marketing Time (Days):
Fee Simple
All Cash to Seller
Arm's Length
1,189
Price Per Gross Acre:
Price Per Gross SF:
$97,515
$2.24
Land
NEC Ann Rd & Linn Ln,
Las Vegas, Nevada 89115
Clark
123-28-801-003
Confirmed By:
Jarrad Katz, buyer's agent
at MDL Group (702-388­
1800)
Kendal Stewart
Land Description
Gross Acres:
Gross SF:
32.78
1,427,897
Zoning:
Zoning Jurisdiction:
Utilities:
Off-Sites:
Frontage:
Shape:
Topography:
In Flood Plain:
Encumb./Easements:
M-2, General Industrial
North Las Vegas
All are to the site
Asphalt-paving
1,020.00
Rectangular
Level
No
None known
Proposed Improvements
Proposed Use:
Commercial
Comments:
This site is in close proximity to I-15, the 215 Beltway and the Las Vegas Motor Speedway.
The site is also close to the existing Nellis Air Force Base solar generation facility on Range Road. The
Nellis AFB runways are located approximately 1.5 miles to the south. This was an all cash sale at a fair
market price.
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LAND VALUATION
Land Sales Comparison Analysis
We analyzed the sales and made adjustments for differences in the elements of comparison. The
comparable sales are adjusted to the subject: if the comparable sale was superior to the subject, we
applied a negative adjustment to the comparable sale. A positive adjustment to the comparable property
applied if it was inferior to the subject. A summary of the elements of comparison follow.
Transaction Adjustments
These items are applied prior to the application of property adjustments. Transaction adjustments include
1.
2.
3.
4.
5.
Real Property Rights Conveyed
Financing Terms
Conditions of Sale
Expenditures Made Immediately After Purchase
Market Conditions
The adjustments are discussed as follows:
Real Property Rights Conveyed
Before a comparable sale property can be used in the Sales Comparison Approach, the appraiser must
first ensure that the sale price of the comparable property applies to property rights that are similar to
those being appraised. In the case of the subject property, a fee simple interest is being appraised. All of
the sales should reflect a similar interest or an adjustment would be required for this element of
comparison.
All of the sales involved transfers of fee simple rights. Therefore, no adjustments were necessary for
property rights conveyed.
Financing Terms
The transaction price of one property may differ from that of an identical property due to different
financial arrangements. All of the sales used should involve typical market terms by which the sellers
received cash or its equivalent and the buyers tendered typical down payments and obtained
conventional financing at market terms for the balance. If otherwise, an adjustment would be required for
this element of comparison.
For this analysis, the subject property has been valued based upon cash equivalent terms. The comparable
sales transferred on an “all cash” basis or with financing that did not affect the sales price. As a result, no
adjustments for financing were needed for any of the comparables.
Conditions of Sale
When the conditions of sale are atypical, the result may be a price that is higher or lower than that of a
normal transaction. Adjustments for conditions of sale usually reflect the motivations of either a buyer or
a seller who is under duress to complete the transaction. Another more typical condition of sale involves
the downward adjustment required to a comparable property’s for-sale listing price, which usually reflects
the upper limit of value. All of the comparable sales should involve typical conditions for closed
transactions, or an adjustment would be required for this element of comparison.
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LAND VALUATION
The comparable sales used in this analysis represent arm’s length transactions with no adverse conditions
affecting the sales. Therefore, no adjustments are necessary.
Expenditures Made Immediately After Purchase
A knowledgeable buyer considers expenditures that will have to be made upon purchase of a property
because these costs affect the price the buyer agrees to pay. Such expenditures may include: (1) costs to
demolish and remove any portion of the improvements, (2) costs to petition for a zoning change, and/or
(3) costs to remediate environmental contamination. The relevant figure is not the actual cost that was
incurred but the cost that was anticipated by both the buyer and seller. Unless the sales involved
expenditures made immediately after purchase, no adjustments to the comparable sales are required for
this element of comparison.
The subject property and Sales 1, and 3 through 6 do not require any expenditures immediately after
purchase, and no adjustments were necessary for Sales 1, and 3 through 6. Comparable Sale 2 required
construction of a sewer system lift station ($775,000) and a portion of a concrete-lined flood control
channel ($400,000) that are not required for the subject or the other sales. The total cost of $1,175,000
equates to $0.76 per square foot for Sale 2’s 1,537,232 square feet (35.29 acres), and as a result, Sale 2
was adjusted upward $0.76 per square foot.
Market Conditions
Market conditions may change between the time of sale of a comparable property and the date of the
appraisal of the subject property. Changes in market conditions may be caused by inflation, deflation,
fluctuations in supply and demand, or other factors. Market conditions that change over time create the
need for an adjustment. If market conditions have changed, an adjustment would be required for this
element of comparison.
The comparable sales occurred from April 2012 to July 2013, which was after the dramatic decline in real
estate pricing from late 2008 through 2009, and after prices had bottomed out and began showing a
degree of stability. Consequently, an adjustment for market conditions was not determined to be
necessary, and no adjustment was made.
Property Adjustments
Property adjustments are usually expressed quantitatively as percentages that reflect the increase or
decrease in value attributable to the various characteristics of the property. These adjustments are based
on locational and physical characteristics and are applied after the application of transaction adjustments.
The adjustments include:
1.
2.
3.
4.
Location
Physical Characteristics
Encumbrance or Easements
Zoning/Use
Location
Location adjustments may be required when the locational characteristics of a comparable property are
different from those of the subject property. These include, but are not limited to, general neighborhood
characteristics, freeway accessibility, street exposure, corner versus interior lot location, neighboring
properties, view amenities, and other factors.
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LAND VALUATION
The subject property and Sales 1, 4, 5, and 6 are in the North Las Vegas industrial market, and when
comparing these four sales, an adjustment for location was not determined to be necessary. Sale 2 is in
the southwest region of the Las Vegas Valley in a newer market where industrial rents are higher than in
North Las Vegas. A downward adjustment is needed for Sale 2, and the adjustment was analyzed by
making the following sales comparisons:
($3.22/SF Sale 2 - $2.13/SF Sale 1) ÷ $3.22 = 34%
($3.22/SF Sale 2 - $1.95/SF Sale 4) ÷ $3.22 = 39%
($3.22/SF Sale 2 - $2.24/SF Sale 6) ÷ $3.22 = 30%
The above comparisons indicate a range for adjustment of 30% to 39%. After consideration, a downward
adjustment of 35% was concluded to be supportable, and was applied to Sale 2.
Sale 3’s location was of special interest to the buyer of that site because the Sale 3 land is adjacent to a
large warehouse/distribution building owned by the buyer. The Sale 3 land allows for expansion, and Sale
3 was not marketed; it was a direct sale between the buyer and the seller. When comparing Sale 3 with
the other sales, a downward adjustment for Sale 3 is in order. The adjustment was determined by making
the following sales comparisons:
($3.13/SF Sale 3 - $2.13/SF Sale 1) ÷ $3.13 = 32%
($3.13/SF Sale 3 - $1.95/SF Sale 4) ÷ $3.13 = 38%
($3.13/SF Sale 3 - $2.24/SF Sale 6) ÷ $3.13 = 28%
The above comparisons indicate a range for adjustment of 28% to 38%. After consideration, a downward
adjustment of 35% was concluded to be supportable, and was applied to Sale 3.
Physical Characteristics
If the physical characteristics of a comparable property and the subject property differ, each of the
differences may require comparison and adjustment to the comparable. The most notable physical
differences for comparable sales in this market include size, shape, utility availability, offsites/onsites,
topography, and flood hazards.
Size
The subject property totals 123.88 gross acres while the sales range in size from 10 to 53.94 gross acres.
The subject property is significantly larger than the comparable sales, and an adjustment is needed. The
adjustment was analyzed by comparing the following sales from Pahrump, Nevada. The Pahrump sales
were usable because the subject land is not strong demand development land in even a good market, and
for the size adjustment, the Pahrump sales comparisons in the healthy 2004 to 2006 market are more
appropriate in the appraiser’s opinion, than sales comparisons available in the Las Vegas Valley.
It is noted that the sales used later for the use/zoning adjustment from Apex are in the size range of the
subject property, and as a result, that adjustment gives added support for this size adjustment as well.
Pahrump is in Southern Nevada, 60 miles west of Las Vegas, and Pahrump has grown in association with
growth in the Las Vegas Valley. Amargosa Valley near Pahrump has attracted strong interest for solar
energy generation. The size comparisons are as follows:
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LAND VALUATION
Identification
Ws Hafen Ranch Road, S of Manse
APN 045-101-37
Ss Thousandaire, W of Homestead
APN 044-561-30 & Pleasant Valley #2
Closing
Date
Gross
Acres
Price/
Acre
5/23/04
41.98
$26,125*
6/10/04
109.91
$21,836
Percent
Difference
16%
*The first sale above was adjusted upward at 12% annualized for one-half month to the date of the second
sale to reflect market conditions at the time. The first sale originally sold at $25,995 per acre.
Identification
Ws Adams Road, S of Dutch Ford
APN 036-351-18
Es Becky Lane, S of Fort Churchill
APNs 027-291-29-30
Closing
Date
Gross
Acres
Price/
Acre
7/20/06
30.0
$37,188*
11/17/06
160.0
$32,000
Percent
Difference
14%
*The first sale above was adjusted upward at 20% annualized for 3.75 months to the date of the second sale
to reflect market conditions at the time. The first sale originally sold at $35,000 per acre.
Identification
Ws Corbin Street, S of Madeline Court
APN 027-571-08
NEc Blackrock and Fort Churchill
APN 027-271-03
Closing
Date
Gross
Acres
Price/
Acre
6/14/06
40.0
$28,977
3/13/06
200.00
$26,250*
Percent
Difference
9%
*The second sale was adjusted upward at 20% annualized for three months to the date of the first sale to
reflect market conditions at the time. The first sale originally sold at $25,000 per acre.
The above comparisons indicate a range for adjustment of 9% to 16%. After consideration, an adjustment
of 12% was concluded by the appraiser to be appropriate and supportable and was applied as a
downward adjustment to all of the comparable sales used in this analysis.
Topography
This adjustment considers each comparable in relation to the subject concerning land contours, grades,
natural drainage, soil conditions, view, and general physical usability. The subject property has rolling golf
course, and mounded landfill topography while the comparable sales have generally level topography.
However, the landfill, although above grade, has a level top, and grading the golf course land would be
easily accomplished. For a solar power generation facility, the subject property and the comparable sales
are all concluded to be similar in topography. Also, the subject and the sales are not in flood zones.
Therefore, no adjustments were necessary.
Shape
The subject has an irregular but functional shape. The comparable sales also have functional shapes and
no adjustments were necessary.
Utilities/Offsites/Onsites
The subject property and the sales are all similar in the availability of utilities and offsite improvements,
and no adjustments are necessary.
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LAND VALUATION
Corner Influence
Neither the subject property nor the sales are at significant corner location that would warrant an
adjustment, and no adjustments were made.
Flood Hazards
The subject and the sales are not located in floodplains, and no adjustments are necessary.
Environmental Concerns
Most of the subject land is a capped landfill that for decades was used for Nellis Air Force Base sewage
pond lagoons, and for sanitary landfill disposal at the base. The capped landfill is going to remain capped,
and use of the surface of the cap for solar power generation will not compromise the cap. For solar power
generation or other similar surface use, the subject and the sales are similar with regard to environmental
concerns, and no adjustments are necessary.
Encumbrance or Easements
The subject land is divided into three parcels by the concrete-lined Sloan flood control channel, and the
pipeline easement from the new North Las Vegas wastewater treatment plant to the Sloan Channel. The
channel and pipeline easement are not desirable features on a development site, but they are
manageable with bridge crossings. The comparable sales are not similarly impacted by encumbrances and
easements, but any needed adjustment will be addressed in the zoning/use adjustment below.
Zoning/Use
The highest and best use of comparable sale properties should be very similar as that of the subject
property. When comparable properties with the same zoning as the subject are lacking or scarce, parcels
with slightly different zoning but a highest and best use similar to that of the subject may be used as
comparable sales. These sales may have to be adjusted for differences in utility if the market indicates that
this is appropriate.
The subject property is not a typical industrial development site. The capped landfill would meet with
market resistance if the subject land were offered for sale, and the landfill is not likely cost feasible for
removal. Most of the subject land is suitable for solar power generation or some other likely non-building
structure use such as an RV park, open storage, or recreation. In contrast, the comparable sales are all fully
developable sites.
There have been recent land sales at the Apex Industrial Park located a few miles north of the Las Vegas
Valley that sold for development of solar generation facilities. Details of the sales are as follows:
Buyer/APN
Fotowatio Nevada Solar
103-17-010-002
Mountain View Solar
103-16-010-004 & 011
Date
Of Sale
8/24/2011
Acres
154.27
Price
$4,446,000
10/31/2012
155.00
$5,425,000
Price/AC
Price/Sq. Ft.
$28,820
$0.66
$35,000
$0.80
These sites, as indicated, are in the Apex Industrial Park alongside I-15 that totals 10,000 acres (not
including the Republic Services, Chemical Lime Company, and Georgia Pacific sites). The park was annexed
by the City of North Las Vegas to provide public utility and other infrastructure bonding, and a power
plant and a few other businesses have been constructed. As indicated, the above sites were purchased to
develop solar power projects. The U.S. Department of Energy provided loan guarantees for project
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LAND VALUATION
development and power companies had committed to purchase the energy produced. The sale prices for
the properties were strong for Apex land because of the solar project use and development conditions
that included a loan guarantee from the Federal government and a contract for pre-sold energy to be
produced at the sites.
The subject land and the above land sales are similar in having elements for successful development of
solar facilities and having sales of the energy produced already in place before the land was acquired.
However, the subject land has the Sloan Channel and pipeline easement issues which will require a
bridge(s) over the channel to tie the three subject parcels together. There is also the need to import dirt
to level the subject capped landfill. Therefore, the lower per square foot price of the Apex Fotowatio sale
at $0.66 per square foot is concluded to be more appropriate for valuing the subject land.
The range of value reflected by the comparable sales used to value the subject land, just prior to this
zoning/use adjustment, is $1.58 to $1.97 per square foot, with four of the six sales in the range from $1.72
to $1.88 per square foot. A point value of $1.80 per square foot is concluded by the appraiser to be
appropriate, and therefore, the adjustment for zoning/use is calculated as follows:
($1.80/SF Point Value - $0.66/SF Fotowatio Sale) ÷ $1.80 = 63%, rounded to 60%
Based on the above analysis, the comparable sales were adjusted downward 60% for zoning/use
limitations of the subject land.
Summary of Adjustments
Based on the preceding comparative analysis, we have summarized adjustments to the comparable sales
on the following table. We performed a quantitative analysis. These adjustments are based on our best
judgment and experience in the appraisal of similar properties.
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LAND VALUATION
COMPARABLE LAND SALES ADJUSTMENT GRID
Property Name
Address
Subject
Nellis A.F.B.
Photovoltaic
Site
Sale # 1
Vacant
Commercial
Land
NE of Carey NWC Losee Rd
Ave & Christy
& Lone
Ln
Mountain Rd
City
Las Vegas
Land Area SF
Land Area in Acres
Price/Buildable SF
Site Improvements
Location Classification
Shape
Utilities Description
Site Improvements
Recording Date
Sale Price
Unadjusted Price/SF
Property Rights
Adjusted Price/SF
5,396,213
123.880
North Las
Vegas
435,600
10.000
N/A
None of
None
N/A
N/A
Irregular
Rectangular
All public utility All are to the
None of
None
N/A
4/16/2012
N/A
$930,000
N/A
$2.13
$0.00
$2.13
Sale # 2
Sale # 3
Sale # 4
Sale # 5
Sale # 6
N/A
Industrial Land
N/A
N/A
Industrial Land
Ss Oquendo
Rd, E of Ft
Apache Rd
SWC Lamb &
Smiley / NS
Lone
Mountain, W.
of Lamb
NEC & NWC
Craig Rd &
Bruce St
NEC Mt Hood
& Azure Ave
NEC Ann Rd &
Linn Lane
Las Vegas
North Las
Vegas
North Las
Vegas
Las Vegas
Las Vegas
1,537,232
35.290
N/A
None
N/A
Irregular
At or near site
None
12/27/2012
$3,780,000
$2.46
$0.00
$2.46
2,349,626
53.940
N/A
None
N/A
L-Shaped
All are to the
None
1/29/2013
$7,354,582
$3.13
$0.00
$3.13
1,894,860
43.500
N/A
N/A
Good
Irregular
All are to the
N/A
2/11/2013
$3,700,000
$1.95
$0.00
$1.95
762,300
17.500
N/A
None
N/A
Rectangular
All are to the
None
4/30/2013
$1,367,784
$1.79
$0.00
$1.79
1,427,897
32.780
N/A
None
N/A
Rectangular
All are to the
None
7/22/2013
$3,196,548
$2.24
$0.00
$2.24
Terms/Financing
Adjusted Price/SF
$0.00
$2.13
$0.00
$2.46
$0.00
$3.13
$0.00
$1.95
$0.00
$1.79
$0.00
$2.24
Conditions of Sale
Adjusted Price/SF
$0.00
$2.13
$0.00
$2.46
$0.00
$3.13
$0.00
$1.95
$0.00
$1.79
$0.00
$2.24
Expenditures After Purchase
Adjusted Price/SF
$0.00
$2.13
$0.76
$3.22
$0.00
$3.13
$0.00
$1.95
$0.00
$1.79
$0.00
$2.24
$0.00
$2.13
$0.00
$3.22
$0.00
$3.13
$0.00
$1.95
$0.00
$1.79
$0.00
$2.24
Location
Size
Topography
Utilities
Corner Influence
Zoning/Use
Offsite Improvements
Environmental Issues
Encumbrance or Easement
Economic Characteristics
Non-Realty Components
$0.00
-$0.26
$0.00
$0.00
$0.00
-$1.13
$0.00
$0.00
$0.00
$0.00
$0.00
-$1.13
-$0.25
$0.00
$0.00
$0.00
-$1.10
$0.00
$0.00
$0.00
$0.00
$0.00
-$1.10
-$0.24
$0.00
$0.00
$0.00
-$1.07
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-$0.23
$0.00
$0.00
$0.00
-$1.03
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-$0.22
$0.00
$0.00
$0.00
-$0.95
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-$0.27
$0.00
$0.00
$0.00
-$1.18
$0.00
$0.00
$0.00
$0.00
$0.00
Total Adjustments
Adjusted Price/SF
-$1.39
$0.74
-$2.48
$0.74
-$2.41
$0.72
-$1.26
$0.69
-$1.17
$0.62
-$1.45
$0.79
Adjustments After Market Conditions
Net % Adjustments
Net $ Adjustments
Gross % Adjustments
Gross $ Adjustments
-65.3%
-$1.39
65.3%
$1.39
-77.0%
-$2.48
77.0%
$2.48
-77.0%
-$2.41
77.0%
$2.41
-64.6%
-$1.26
64.6%
$1.26
-65.4%
-$1.17
65.4%
$1.17
-64.7%
-$1.45
64.7%
$1.45
$0.74
$0.74
$0.72
$0.69
$0.62
$0.79
Market Conditions Through
Adjusted Price/SF
Adjusted Price/SF
11/6/2013
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LAND VALUATION
Conclusion
From the market data available, six sales in competitive market areas were selected as most comparable
to the subject. The unadjusted sale prices for the comparable sales ranged from $1.79 to $3.13 per sf.
After adjustments, the range of value was $0.62 to $0.79 per sf with four of the six sales in the range from
$0.69 to $0.75 per square foot.
Primary weight for the reconciliation was given to the tightest portion of the range, and to Sales 5 and 6
which are Nellis Air Force Base area sales. After consideration, the current market value of the subject
property was correlated to $0.70 per square foot.
Based on this analysis, the indicated value for the subject land in fee simple ownership, subject to the
assumptions and limiting conditions contained herein, as of November 6, 2013, is summarized as follows:
VALUE INDICATION
Land Value Conclusion
Subject Site
Indicated Unit Value
5,396,213
Land SF
$0.70
per SF
Indicated Value
$3,777,349
Rounded
$3,780,000
The above opinion of value is subject to the following jurisdictional exception: The Uniform Appraisal
Standards for Federal Land Acquisitions (2000 Edition) prohibits the appraiser from linking a market value
to a specific exposure time. This is contrary to USPAP Standards Rule 1-2 (c) (iv) Comment. Therefore, the
USPAP Jurisdictional Exception Rule has been applied, and exposure time has not been linked to the
market value conclusion.
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ANNUAL RENT AND EASEMENT VALUATION
Annual Rent and Easement Valuation The purpose of this section of the report is to provide current opinions of the Lease Value (i.e. annual
market rent) for Area 1 (102.73 acres) and Area 2 (19.70 acres), as depicted on the drawing provided by
NV Energy, along with opinions of the value for long-term easements in Area 3, and a temporary
construction easement.
The land lease for Areas 1 and 2 will cover a total of 122.43 acres (102.73 acres in Area 1 and 19.70 acres
in Area 2). The 102.73 acres in Area 1 encompasses a capped landfill, and the 19.70 acres in Area 2 is an
abandoned strip of golf course land. The Area 3 easement land is also part of the abandoned golf course
land.
The lease rate (annual market rent) for the 122.43 acres is based on the market value of the Larger Parcel
at $0.70 per square foot, or $3,132,443 for 102.73-acre Area 1, and $600,692 for 19.70-acre Area 2. The
following formula summarizes the method to be used in establishing the market rent for the subject land:
Market Value of Property x Rate of Return = Annual Market Rent
The above formula is the method to be used in determining the annual rent for the property, and the rate
of return on the underlying land value commonly used for calculating land lease rates for private
enterprise developments is abstracted from the market.
That noted, rates of return for various investments are detailed as follows. Currently, the prime lending
rate is 3.25% and mortgage interest rates range from 3.54% to 4.52%. Government Treasury Bonds yield
between .05% and 2.87%, and corporate bond rates average approximately 2% to 10%.
For build-to-suit real estate offerings, survey data indicates that the required rate of return is based upon
a property’s attributes, alternative investments, the illiquidity of the improved real estate, and the
previously mentioned financial markets. Occasionally, the required rate of return on structural
improvements may be slightly above the required rate of return on the land component depending upon
the particular investor and their criteria. This division between the rates of return appears to recognize
that building improvements depreciate whereas the land component does not. The following are
examples of returns in the local market when conditions are reflective of a typical healthy market.
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MAP OF AREAS 1, 2, AND 3 ON THE SITE
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3.96 ACRES BEING EXCLUDED FROM AREA 1 LEASE
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RATE OF RETURN COMPARABLES
No.
Address
Land Size
Rent/SF/Yr.
Rate of Return
13.09 Acres
$1.00
10.0%
1.
5400 Haven Street, Las Vegas, NV
2.
7980 S. Rainbow Blvd. Las Vegas, NV
.65 Acres
$2.86
10.0%
3.
200 N. Main St. Las Vegas, NV
1.18 Acres
$1.04
8.0%
4.
100 Stewart Ave. Las Vegas, NV
2.77 Acres
$0.79
7.9%
5.
3185 Market St. Carson City, NV
10.96 Acres
$0.66
9.4%
6.
70 Damonte Ranch, Reno, NV
7.
8.
SWC Mill St. and Rock Blvd. Reno, NV
655 Rock Blvd. Reno, NV
8.6 Acres
$1.48
9.3%
15.14 Acres
23.15 Acres
$0.38
$0.40
8.0%
8.0%
The aforementioned comparables range from 7.9% to 10.0%. In the case of the above comparables, there
is no discernible difference in the rates between size or use; however, based on surveys and prior
appraisals, lower rates of return are typically associated with land that has not been rezoned. Parcels that
have been zoned for their intended use tend to get a higher return. This is due to the amount of work it
takes to re-zone a property; as a result more profit in the form of a higher return is required.
The following is a survey of market participants on various rates of return in the local market:
In August 2010, Keith Spencer with CB Richard Ellis, a real estate agent who works
primarily with land, said that average rates of return were anywhere from 8% to 10% for
land based on location and risk associated with the property. He was aware of several
offerings and deals being done within this range.
In August 2010, we spoke with Kevin Boeve, Vice President of Investments, with Marcus &
Millichap. He has assisted in generating dozens of ground leases for retail properties and
restaurants in the western United States. He said that premium land would generate a
rate of return anywhere from 8% to 11% with 9% being “about average.” Additional
considerations he mentioned included the term of the lease, zoning, highest and best use
of the property, and the guarantee of the tenant.
Doc Holiday’s Saloon, located at 8450 Westcliff Drive, was a build-to-suit property. The
total construction cost for this property was $813,000. The negotiated rental rate has a
base amount of $101,808 per year which equates to a 12.5% rate of return overall.
A Checker Auto Parts Store was constructed at 2451 North Jones Boulevard. The
property was a built-to-suit and lease back. The terms of the lease were based upon a
10% return on the total investment including both land and improvements.
According to Mr. Eli Applebaum, a real estate developer and investor, he has negotiated
leases with rates of return ranging from 11% to 14% depending mostly on the credit
strength of the tenant. He also stated that the rates of return on machinery, equipment,
and other forms of personal property are the same as land and improvements.
Mr. David Bonanni with Las Cal Corporation, operates Taco Bell franchises within the Las
Vegas Valley. He indicated build to suit properties are leased upon a two-tiered rate of
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return method. The land value is provided at a 10% return and the improvements at a
12% rate of return. The blended rate of return was 11%.
In September 2006, ground leases for C2 zoned commercial land located at the southeast
corner of Rainbow Boulevard and Badura Avenue were available based on a 10% rate of
return on the land value.
In November 2006, a ground lease was available for C2 zoned commercial land located
along the south side of Ann Road, east of Decatur Boulevard (APN 124-31-101-014),
based on a rate of return of 7.2%.
An office/warehouse building located at 985 White Drive in Las Vegas was constructed
under a partial owner occupied and a build-to-suit arrangement where the developer
bought and constructed the interior improvements and leased the facility. The building
totals approximately 4,700 square feet. The annual rent was approximately 11.1% of the
projected cost of the property.
The above data suggests that rates of return for land in a typical healthy market range from 7% to 12%.
The improvements, on the other hand, have rates of return that are slightly higher and generally range
from 11% to 14%. However, it appears that most properties have rates of return of approximately 12% for
the improvements and 10% for the land component. Based upon the above analysis, we have determined
that the typical rate of return for the land component in a healthy market is around 10%. The
aforementioned rates include an entrepreneurial incentive for management, coordination, and expertise
involved in a build to suit transaction..
Mr. Richard Worthington with the Molasky Group indicated that they build their rate of return based on
the 30 year bond rate, adding an illiquidity rate of 100 basis points, a real estate risk factor (minimum of
50 basis points for credit tenants) and an entrepreneurial component from 0 basis points to 500 basis
points depending on the level of work, management, coordination, and expertise provided by the
developer.
Using the above formula, a rate of return can be calculated. Currently, the 30 year bond rate is 3.83%.
Adding 100 basis points for illiquidity and 100 basis points for real estate risk for a typical tenant, a rate of
5.83% is derived. However, this does not account for any entrepreneurial incentive. Also, the subject lease
land could require some management, coordination, or other expertise, and therefore, an additional 200
basis points is being added. The total rate of return therefore equates to 7.83%.
We also spoke with local real estate brokers and agents who have had active listings of land for rent
recently in the Las Vegas Valley. Robert Reel with Reel Investment Group, LLC has several listings of land
for lease, and he indicated the market is still soft. He noted that low return investments currently yield
only 1% to 2%, while commercial loans have interest rates of 5% to 6%. He said land investors want 6% to
8% return in the current market for land leases.
Mr. Reel, along with all the real estate professionals contacted, said that the intended use of the land
significantly affects the rate of return that can be negotiated. He said land that receives entitlements and
valuable improvements under the lease agreement that can revert to the landowner would result in a
lower lease rate. He further indicated that good location where demand for the land exists affects the
lease rate, and full payment upfront of the lease rent will lower the rate. Mr. Reel said he leased a site
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recently in Florida where all the rent was paid up front, and the lease rate was low. Mr. Reel uses the rate
of return method to establish the lease rate. He said land leases are not occurring frequently enough in
the current market to use rent rates per square foot of land as the basis for the land lease rate.
Ron McMenemy with McMenemy Investments indicated land lease rates currently are in the 6.5% to 8%
range, and that he uses the rate of return method to establish the lease rate [i.e. (Current Market Value of
the Land x the Rate of Return) ÷ 12 months = Land Lease Rent per Month]. He said the percentage rate of
return depends on location, the extent of infrastructure in place (such as utilities, streets, etc.), and other
variables. He emphasized that rent for outlying and outskirts land would be lower. Mr. McMenemy did a
large land lease recently in the valley at a 6.5% return.
Jeremy Foley with Gatski Commercial indicated a 6% to 8% rate of return in the current market is fair. He
said $0.08 per square foot of land is the top of the market for most land leases occurring in the local
market today. Mr. Foley said the lease rate is dependent on what is going to be put on the land. He said
there are lots of variables that affect the lease rate including location, infrastructure in place, the term of
the lease, whether rent is paid up front, etc.
D. Kent Boswell with Prudential Americana indicated that 7% to 8% return is the current lease rate range
for land. He said the market is still down and land leases aren’t occurring much, so lease rates must reflect
what the market will bear. He also noted that if a landowner isn’t using the land, and no one is interested
in leasing it, the asking lease rate obviously needs to be low.
Jennifer Levine with NAI Global emphasized that the market is down, and for two of the sites she was
offering for lease, the landowner only wanted to recoup property taxes. She said she leased a 45-acre site
in the valley in 2011 at $0.035 per square foot per month. Ms. Levine believes land lease rates possible in
a recovering, still soft market would be $0.04 per square foot of land per month in town, and half that
amount in more outskirts areas.
Keith Spencer with CBRE indicated recently that he still tries to initiate land leases at a 10% return, but he
recognizes that market conditions are down. Consequently, his leases have a negotiable rate change
within a period of time to reflect the true ongoing condition of the market. Mr. Spencer typically expects
to cap the rate change at no more than 20% up or down.
Mr. Bill Lenhart, Managing Member, Sunbelt Development & Realty Partners, LLC stated he thinks an 8%
to 10% rate of return for land is still expected in today’s market although values and prices have dropped
substantially over the last several years.
Paul Callister with Allbright Callister and Associates, LLC emphasized that the land market is still
recovering, and he indicated land rentals are seldom occurring. He said landowners try to get what they
can for land rentals. He leased 2.5 acres in the southwest part of the valley in March 2012 at $4,500 per
month ($.04 per square foot of land) to Precision Partners, LLC.
Please also note that the real estate brokers and agents indicated that asking rents that are advertised via
LoopNet, Property Line, etc. are only asking rents subject to change when potential land lessees come
forward. The asking rents currently range from generally $.03 to $.25 per square foot per month, but few
leases are actually being consummated in the current market, and the real estate professional are
negotiating what the market will bear. There are several industrial parcels near Nellis Air Force Base being
offered currently for land lease at from primarily $.03 to $.06 per square foot.
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Rate of Return Reconciliation
After reviewing all of the above, and given the current recovering but still soft real estate market with few
land leases occurring, and considering that the subject property is within the Nellis Air Force Base
boundaries, in an out-of-the-way portion of the base, with no frontage on a significant arterial, and very
little frontage on any public road, we have concluded to a rental rate of 8.0% per year. The rate is in line
with the range of opinions from local real estate brokers and agents who are currently active in leasing
land in the Las Vegas Valley, and reflects the out-of-the-way location of the property, near older salvagetype industrial businesses. Therefore, the current opinion of annual market rent for subject Areas 1 and 2
is summarized as follows:
Identification
Area 1 (102.73 AC)
Rounded to
Area 2 (19.70 AC)
Rounded to
Market
Value
$3,132,443
x
.08
=
$600,692
X
.08
=
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Annual Rent
$250,595
$250,000
$48,055
$48,000
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Valuation of the Proposed Long Term Easements Affecting Area 3 Land
Besides the subject land planned for lease, there is also land in Area 3 planned for long term easements.
The easement land totals 3.81 acres, and includes areas for exclusive and nonexclusive easements. A
breakdown of the easement areas is as follows:
Electric Substation Easement
Substation Fence Easement
Transmission Line Easement
Distribution Line Easement
Access Easement
17,600 Sq. Ft.
2,800 Sq. Ft.
7,777 Sq. Ft.
3,200 Sq. Ft.
134,600 Sq. Ft.
NV Energy identifies some easement areas as exclusive, and other easement areas as nonexclusive to
indicate what lands can or cannot be used by others. The subject easements are for a term of 31 years.
The Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA) describes an easement as:
An easement can generally be described as an interest in land of another entitling the
owner of that interest to a limited use of the land in which it exists, or a right to preclude
specified uses in the easement area by others. An easement is an interest less than the fee
estate, with the landowner retaining full dominion over the realty subject only to the
easement; the landowner may make any use of the realty that does not interfere with the
easement holder’s reasonable use of the easement and is not specifically excluded by the
terms of the easement.
Source: 2000 Edition of the Uniform Appraisal Standards for Federal Land Acquisitions; Section A-9
To help in analyzing the effect of the easement on the property owner’s overall ownership rights, The
th
Appraisal of Real Estate, 13 Edition, states that real property ownership can be compared to a bundle of
sticks, with each stick representing a separate right or interest inherent in the ownership. The complete
bundle of rights includes the right to sell an interest, the right to lease an interest, the right to mortgage
an interest, the right to give an interest away, and the right to do none or all of these things.
Ownership in fee simple interest is equivalent to ownership of the complete bundle of sticks, while one or
more of the sticks can represent a partial interest in a specific property. Each individual right in the
bundle, including an easement interest, has some potential value although the value may not be
quantifiable. (Total ownership rights are defined as 100% of the bundle of rights that are inherent in the
ownership of real estate, free and clear of any easements, restrictions, encumbrances, subject only to the
limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat).
The following are drawings of the planned easements in Area 3.
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AIR FORCE PROPERTY WHERE EASEMENTS ARE LOCATED
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ELECTRICAL SUBSTATION EASEMENT
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SUBSTATION FENCE EASEMENT
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DISTRIBUTION EASEMENT
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TRANSMISSION EASEMENT
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ACCESS EASEMENT
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Factors to consider when valuing easements include:
1. Purpose of the easement (i.e., How does a sale of an easement affect the remainder
property interests and adjacent lands under the same ownership.)
2. Length of time of use (i.e. term or permanent easement)
3. Construction proposed (i.e. Is the easement required for surface, subsurface, air
rights, etc. improvements?)
4. Extent of rights for use, maintenance and other purposes
5. Location and physical limits of the easement area (i.e. Does the easement affect the
potential utilization of the land?)
6. Terms and conditions of the easement agreement (i.e. Do the conditions of the
easement create loss or impose hardship?)
rd
Source: Encyclopedia of Real Estate Appraising, 3 Edition, 1978, Chapter 33, pg. 752.
Federal Easement Policy specifies that an easement is part of a unitary holding (a “whole”) where the
“whole” is commonly referred to as the “larger parcel”. The easement is valued as part of the “whole”
(larger parcel), and is not valued as a separate parcel. Consequently, a separate highest and best use
analysis for the easement area is not applicable.
There are several methods that may be used to value easements. However, for this appraisal, an Easement
Utilization Factor, or EUF will be applied to the subject Larger Parcel unit indicator value (i.e. the per
square foot value of the subject Larger Parcel), then multiplied by the easement square footage (Per Sq.
Ft. Value of subject Larger Parcel x EUF x Sq. Ft. of Easement Area = Easement Value). It is noted that the
Federal government indicates that the use of a before-and-after method of valuation is not required when
the government sells an easement interest.
Federal Easement Policy indicates that when appraising long-term easements, the sum of the parts may or
may not equal the whole. The sum of the parts may actually exceed 100% of the “whole” value. This is
because the value of the Larger Parcel and the value of the Long-Term Easement(s) are two distinct,
separate appraisal assignments and sometimes there are multiple non-exclusive right-of-way grants
(ROWs)/easements that occupy some of the same physical space. The Federal government requires that
each easement and right-of-way be treated separately, even if co-located with other ROWs/easements,
and no discounts or adjustments shall be made in the appraisal for co-located ROWs/easements. Each
ROW/easement holder must pay 100% of the easement value based on the per square foot value of the
“whole”, disregarding any co-located ROWs/easements. Also, there can be no discount for the
ROWs/easements being located in a building setback area because setback restrictions and co-located
ROWs/easements are only considered in the valuation of the Larger Parcel, not in the valuation of the
ROWs/easements.
Since all ROWs/easements are valued based on the same Larger Parcel unit indicator value with no
discounts applied, when multiple ROWs/easements occupy the same physical space, the aggregate values
of the component parts, as indicated above, can typically be greater than the value of the property as a
whole. This is acceptable since there is nothing in the Federal Land Policy and Management Act (FLPMA)
that prevents the Federal government from receiving more than 100% of the value of the whole.
Consequently, no attempt should be made to allocate the Larger Parcel value into component parts, or
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vice versa. The Federal government requires reporting of one Larger Parcel value and one value for each
Long-Term Easement.
The Federal government also requires that the Larger Parcel unit indicator must be reported on a gross
site area basis because the legal descriptions used to transfer lands out of Federal ownership are generally
on a gross area basis. Additionally, when valuing the Long-Term Easements, any adjustments made to the
Larger Parcel unit indicator for ROW or Easement encumbrances during the valuation of the Larger Parcel
must be reversed prior to arriving at a unit indicator for the Long-Term Easement indicator. In other
words, no discounts or adjustments shall be made for existing or proposed ROWs/Long-Term Easements
as each ROW/Easement is liable for full value to the United States, regardless of any encumbrances.
It is emphasized that the ROW/Easement deductions used when valuing the Larger Parcel represent the
appraiser’s opinion of how the ROWs/Easements are perceived in the market. Since valuing the LongTerm Easement is a separate and independent assignment, no attempt should be made to value the
Long-Term Easement by multiplying the deduction used in the Larger Parcel data set times the easement
area.
The EUF (Easement Utilization Factor) represents the percent of use taken from the Larger Parcel unit
indicator by the Long-Term Easement. Easements involve subsurface, surface, and overhead easements,
and the EUF for each easement type varies based on the appraiser’s evaluation of the “rights conveyed”
by the creation of the easement. EUFs based on actual sales of easements, or paired sales analyses that
clearly reflect the value of the easement would be preferable, but such sales and adequate paired sales
analyses are not easily found without making substantial subjective adjustments.
Another more common approach to establishing EUFs is by interviewing market participants (buyers,
sellers, brokers, and other appraisers), and by using market surveys of buyers, sellers, and brokers. How
the easement is intended to be used is an important factor in establishing an appropriate EUF, and the
subject easement land includes an area referred to as the “Substation Easement Area” for the purpose of
an electrical substation and/or switchyard for the transmission, distribution and transformation of
electricity and for communication facilities, and the right to construct, operate, add to and maintain upon,
over and under the Substation Easement Area, and to remove therefrom, foundations, footings, pads,
walls, fences and other real property improvements, together with poles, guys, anchors, wires, cables,
equipment, fixtures, apparatus and other communication and electrical facilities and improvements.
Another of the Area 3 easements is referred to as the “Fence Easement Area” that will be used to
construct a fence to enclose the substation facility. There will also be “Transmission/Distribution”
easements for strips of land adjacent to and extending out of the substation that will be used for
aboveground and underground electric line systems, and communication facilities. Finally, there will be an
access “Roadway Easement Area” to provide ingress and egress from Carey Avenue to the substation and
the solar array panel land.
With regard to an appropriate EUF for the subject Long-Term Easements, it is noted that the appraisers
have valued many easements over the years for power lines and substations, and we have utilized EUFs
ranging from 5% to 100%, with the low EUFs applicable to already encumbered areas where there were
existing easements and rights-of-way, and to building setback areas where permanent building structures
cannot be developed. However, for the subject Long-Term Easements, existing or long term rights-of-way
and easement encumbrances, and setback areas, must be disregarded when valuing the easements.
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The local OVS office (Ron Hawkins, MAI/SRA) conducted a survey of EUFs used by utility companies,
appraisers in easement valuations, and other real estate professionals in their work with establishing
easement prices. Actual sales of easements were not available from any of the professionals contacted
including Michael Stuart, Sr. Vice President of Colliers International in Las Vegas who indicated no one in
his office had any information on easement sales. NV Energy declined to provide any information to the
OVS concerning purchases/sales of easements. Ted Brooks, Managing Director of Integra Realty
Resources, DFW, LLP responded on behalf of Donald Sherwood, author of Easement Valuation in the
May/June 2006 Right Of Way magazine, that their firm values many easements each year, but they did not
have any actual easement sales. Mr. Sherwood, SR/WA presented an EUF matrix in his magazine article to
provide a general guide in looking at the effect easements may have on the total bundle of ownership
rights. The matrix is as follows:
EASEMENT VALUATION MATRIX
Percentage
of Fee
Comments
Potential Types
of Easements
Overhead electric
Flowage easements
Railroad ROW
Irrigation canals
Access roads
Pipelines
Drainage easements
Flowage easements
90% - 100%
Severe impact on surface use
Conveyance of future uses
75% - 89%
Major impact on surface use
Conveyance of future uses
51% - 74%
Some impact on surface use
Conveyance of ingress/egress rights
Pipelines
Scenic easements
Balanced use by both owner and
easement holder
Water or sewer lines
Cable line
Telecommunications
26% - 49%
Location along a property line,
location across non-usable land area
Water or sewer line
Cable lines
11% - 25%
Subsurface or air rights that have
minimal effect on use and utility
Location with a setback
Air rights
Water or sewer line
0% - 10%
Nominal effect on use and utility
Small subsurface easement
50%
It should be noted that in the above chart, the “Percent of Fee” EUFs below 50% are not applicable for this
assignment because Federal Easement Policy does not allow discounts for co-locations and setback areas.
Mr. Lee Smith with Lee Smith & Associates in Carson City, Nevada teaches the A-250 Eminent Domain
course for the American Society of Farm Managers and Rural Appraisers (ASFMRA), and the course
includes the valuation of easements. He told Ron Hawkins at OVS that he did not have any actual
easement sales, that actual sales are almost impossible to find in the market, and most appraisers rely on
published ratios. Mr. Smith said that survey information from easement users is considered to be a form
of market data that can be relied upon in appraisals.
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Others contacted by Ron Hawkins at OVS indicated the following:
x
Albert Allen, SR/WA who does considerable easement valuation work had no actual easement
sales but stated EUFs typically range between 50% and 100%, with overhead power lines at 75%
to 100%.
x
Daniel Beardsley, SR/WA, who developed the International Right of Way Association (IRWA)
“Legal Aspects of Easements” Course 802, had no actual easement sales, but thought the
Sherwood matrix was a good guide to follow.
x
Steve Carlson with Blacksmith, Bethard & Carlson said the EUF range he uses is 10% to 100%, with
overhead transmission lines falling in the 75% to 100% range. He said he develops the EUF factors
based on “interviews, scheduled guidelines and anecdotal evidence.”
x
Karen J. Mason, Staff Appraiser with Bonneville Power Administration (BPA) indicated that BPA
typically pays 90% to 100% of fee value for overhead power line easements.
x
Jim Looney with Arizona Public Service (APS) Company indicated they pay 75% to more than
100% for transmission line easements. APS is investor owned and not limited to paying fair
market value for easements.
x
Dennis Lopez, MAI is an appraiser in Tempe, Arizona who has substantial experience in easement
valuations, and he relies on various publications to determine appropriate EUFs. He considers 75%
for overhead power lines as reasonable and fairly consistent.
x
Mark A. Keller, SR/WA, Salt River Project (SRP) in Phoenix, Arizona indicated that when
considering the Federal government’s easement sale requirements, a ratio of 50% would be
reasonable for underground uses, with 75% to 85% for overhead transmission lines, and 100% for
surface use. Mr. Keller could not provide any specific sale data because of confidentiality
requirements.
Given the Federal Easement Policy for Long-Term Easement sales, and considering all of the above
information, and our experience with easement valuations, an EUF of 100% is concluded to be
supportable for surface use easements, 75% is supportable for overhead Long-Term Easements, and 50%
is concluded to be supportable for underground Long-Term Easements.
All of the subject Long-Term Easements are described in the “Department of the Air Force Grant of
Easements for Electrical Substation (‘Grant of Easement’)” document as being easements for use over,
under, upon, and across the affected land. The easements, as indicated, are for a term of 31 years.
The Larger Parcel unit indicator was $0.70 per square foot of land. The easements are valued using the
same unit indicator as the Larger Parcel, so based on the sizes of the easement areas, the concluded to
EUF of 100% for surface use (effectively covering the over, under, upon, and across use of the proposed
easement land), and the Larger Parcel indicator value at $0.70 per square foot, the Area 3 easements were
valued as follows:
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Valbridge Job Number: NV01-14-0007-001 Page 82
Page 283 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
ANNUAL RENT AND EASEMENT VALUATION
Indication of Easement Value
Substation Easement Area
(17,600 SF x $0.70/SF) x 100% =
Fence Easement Area
(2,800 SF x $0.70/SF) x 100% =
Transmission/Distribution Easement
(7,777 x $0.70/SF) x 100%
Distribution Easement
(3,200 SF x $0.70/SF) x 100% =
Roadway Easement
(134,600 SF x $0.70/SF) x 100% =
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Opinion of
Easement Value
$12,300 Rounded
$2,000 Rounded
$5,400 Rounded
$2,200 Rounded
$94,200 Rounded
Valbridge Job Number: NV01-14-0007-001 Page 83
Page 284 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
Discounted Cash Flow Analysis
The purpose of this section of the appraisal is to address the net present value of the lease payments over
a 31 year term, and the net present value of the easements over a 40 year term. The 31 years reflects the
lease term for the Areas 1 and 2 leases, while the 40 years reflects the useful life of the substation to be
constructed on the Area 3 land. In order to provide a net present value for the easements over a 40-year
term, the easement values are converted to annual rent using the same rate of return as indicated for the
land lease at 8%. The opinions of annual rent for the easements are as follows:.
Identification
Substation Easement:
Fence Easement:
Transmission Easement:
Distribution Easement:
Roadway Easement
Total
Rounded to
Market Value
$12,300
$2,000
$5,400
$2,200
$94,200
x
x
x
x
x
0.08
0.08
0.08
0.08
0.08
=
=
=
=
=
Annual
Rent
$984
$160
$432
$176
$7,536
$9,288
$9,300
It is emphasized that the long-term easement values are not comparable to linear rights-of-way granted
by the Federal government in utility line corridors. Rents for those linear rights-of-way are based on
Federal formulas that result in very low annual rents for holders of the rights-of-way grants. Those rents
seldom reflect market value rents for typical commercial sites in the non-government, private market.
As indicated, the purpose of this discounted cash flow analysis is to provide a “net present value of the
future annual rent cash flows” for the land leases for Areas 1 and 2, along with a net present value for the
annual rent cash flows that would be applicable for the easements. Those analyses are presented on the
following pages.
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Valbridge Job Number: NV01-14-0007-001 Page 84
Page 285 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
MAP OF AREAS 1, 2, AND 3 ON THE SITE
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Valbridge Job Number: NV01-14-0007-001 Page 85
Page 286 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
3.96 ACRES BEING EXCLUDED FROM AREA 1 LEASE
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Valbridge Job Number: NV01-14-0007-001 Page 86
Page 287 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
Net Present Value of Land Lease Payments
The leased land in Areas 1 and 2 has an opinion of value of current annual market rent totaling $298,000
($250,000 for Area 1 and $48,000 for Area 2). Area 1 is capped landfill land, and Area 2 is abandoned golf
course land.
Present Value of the Annual Rent Cash Flow
The rent payments for the Area 1 and Area 2 land leases will be for a term of 31 years. Any expenses
applicable to the leases will be deducted from the income stream, and the cash flow is then discounted at
an appropriate discount rate to arrive at a present value of the rent over the lease term. Variables and
assumptions used in the analysis are discussed below.
Income
As indicated, the opinion of value of current annual market rent for the Area 1 and Area 2 land is
$298,000. The local real estate market is in recovery, but still has a long way to go when considering the
industrial land market in Southern Nevada. Additionally, interest rates remain low nationally, including
rates of return on U.S. Treasury bonds and money markets. Rates of return also remain low for local land
leases in areas similar to the subject location. Consequently, and after careful consideration, it was
concluded that the annual rent for Areas 1 and 2 should be increased, but only at 2.5% per year to reflect
inflation.
Expenses
The Area 1 and Area 2 land leases, once in place, would have virtually no expenses associated with the
leases. The leased land will be walled off from Nellis AFB activities, and there will be no need on the part
of the base to monitor the leased land or to add any more security than the base already has.
A single annual payment of the rent from NV Energy will not require added administrative staff at the
base, including accounting personnel. Therefore, it is not concluded that any expenses will be involved
with the leases once they are in place, and no expenses are being deducted in this analysis.
Discount Rate
An appropriate discount rate for the net present value analysis should reflect an adequate return for the
granting of use of the Area 1 and 2 land, with consideration for the risk of receiving the rental income
consistently over a 31-year period. The discount rate is a yield rate for the land reflecting the investment
performance expected from the land.
The rate of return used to calculate the market rent for Areas 1 and 2 was 8%. An additional 250 basis
points is added to the 8.0% rate of return to reflect the annual appreciation of 2.5% per year in the lease
rate; therefore, the total discount rate would equate to 10.5%.
The following discounted cash flow analysis provides a present value estimate of the projected cash flow
from the rent payments over a 31-year term.
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Valbridge Job Number: NV01-14-0007-001 Page 87
Page 288 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
NET PRESENT VALUE OF LAND LEASE PAYMENTS (AREAS 1 AND 2)
ASSUMPTIONS
Start Date
Jan-14
FEE SIMPLE (MARKET)
$298,000
Annual Rent
INFLATION
2.5%
Annual Rent Appreciation
RATES
Discount Rate
Jan-14
1
Period
Annual Rent
10.5%
Jan-15
2
Jan-16
3
Jan-17
4
Jan-19
6
Jan-20
7
Jan-21
8
Jan-22
9
Jan-23
10
$298,000 $305,450 $313,086 $320,913 $328,936 $337,160 $345,589 $354,228 $363,084 $372,161
Less Expenses
$0
Net Income
$0
$0
$0
$0
$0
$0
$0
$0
$0
$298,000 $305,450 $313,086 $320,913 $328,936 $337,160 $345,589 $354,228 $363,084 $372,161
Discount Factor @
P. V. of Cash Flows
10.50%
Present Value
0.9050
0.8190
0.7412
0.6707
1
1
1
1
1
1
0.6070
0.5493
0.4971
0.4499
0.4071
0.3684
$269,683 $250,159 $232,048 $215,248 $199,664 $185,209 $171,800 $159,362 $147,825 $137,122
Jan-24
11
Period
Annual Rent
$0
Net Income
Jan-26
13
Jan-27
14
Jan-28
15
Jan-29
16
Jan-30
17
Jan-31
18
Jan-32
19
Jan-33
20
$0
$0
$0
$0
$0
$0
$0
$0
$0
$381,465 $391,002 $400,777 $410,796 $421,066 $431,593 $442,383 $453,442 $464,778 $476,398
Discount Factor @
P. V. of Cash Flows
Jan-25
12
$381,465 $391,002 $400,777 $410,796 $421,066 $431,593 $442,383 $453,442 $464,778 $476,398
Less Expenses
Present Value
Jan-18
5
10.50%
1
1
1
1
1
1
1
1
1
1
0.3334
0.3018
0.2731
0.2471
0.2236
0.2024
0.1832
0.1658
0.1500
0.1358
$94,171
$87,353
$81,029
$75,162
$69,721
$64,673
$127,195 $117,986 $109,444 $101,521
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Valbridge Job Number: NV01-14-0007-001 Page 88
Page 289 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
Jan-34
21
Period
Annual Rent
$0
Net Income
Jan-37
24
Jan-38
25
Jan-39
26
Jan-40
27
Jan-41
28
Jan-42
29
Jan-43
30
Jan-44
31
$0
$0
$0
$0
$0
$0
$0
$0
10.50%
Totals
$625,075 $13,708,081
$0
$0
$488,308 $500,515 $513,028 $525,854 $539,000 $552,475 $566,287 $580,444 $594,956 $609,829
Discount Factor @
Present Value
Jan-36
23
$488,308 $500,515 $513,028 $525,854 $539,000 $552,475 $566,287 $580,444 $594,956 $609,829
Less Expenses
P. V. of Cash Flows
Jan-35
22
$0
$625,075 $13,708,081
1
1
1
1
1
1
1
1
1
1
1
0.1229
0.1112
0.1006
0.0911
0.0824
0.0746
0.0675
0.0611
0.0553
0.0500
0.0453
$59,991
$55,648
$51,619
$47,882
$44,415
$41,200
$38,217
$35,450
$32,884
$30,503
$28,294
Rounded:
$3,362,477
$3,360,000
The above analysis provides a net present value of the projected cash flow at:
NET PRESENT VALUE OF RENT PAYMENTS (AREAS 1 AND 2)
THREE MILLION, THREE HUNDRED SIXTY THOUSAND DOLLARS
$3,360,000
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Valbridge Job Number: NV01-14-0007-001 Page 89
Page 290 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
Net Present Value of Easements
The easement land in Area 3 has an opinion of value of current annual market rent totaling $9,300. Area 3
is vacant land and abandoned golf course land.
Present Value of the Annual Rent Cash Flow
The rent payments for the easements would be for a term of 40 years. Any expenses applicable to the
easements will be deducted from the income stream, and the cash flow is then discounted at an
appropriate discount rate to arrive at a present value of the rent over the lease term. Variables and
assumptions used in the analysis are discussed below.
Income
As indicated, the opinion of value of current annual market rent for the Area 3 is $9,300. The local real
estate market is in recovery, but still has a long way to go when considering the industrial land market in
Southern Nevada. Additionally, interest rates remain low nationally, including rates of return on U.S.
Treasury bonds and money markets. Rates of return also remain low for local land leases in areas similar
to the subject location. Consequently, and after careful consideration, it was concluded that the annual
rent for the Area 3 easement land should be increased, but only at 2.5% per year to reflect inflation.
Expenses
The Area 3 easements, once in place, would have virtually no expenses associated with them. The
easement land will be walled off from Nellis AFB activities, and there will be no need on the part of the
base to monitor the leased land or to add any more security than the base already has.
A single annual payment of the rent from NV Energy would not require added administrative staff at the
base, including accounting personnel. Therefore, it is not concluded that any expenses will be involved
with the easements once they are in place, and no expenses are being deducted in this analysis.
Discount Rate
An appropriate discount rate for the net present value analysis should reflect an adequate return for the
granting of use of the Area 3 land, with consideration for the risk of receiving the rental income
consistently over a 40-year period. The discount rate is a yield rate for the land reflecting the investment
performance expected from the land.
The rate of return used to calculate the market rent for Area 3 was 8%. An additional 250 basis points is
added to the 8.0% rate of return to reflect the annual appreciation of 2.5% per year in the lease rate;
therefore, the total discount rate would equate to 10.5%.
The following discounted cash flow analysis provides a present value estimate of the projected cash flow
from the rent payments over a 40-year term.
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Valbridge Job Number: NV01-14-0007-001 Page 90
Page 291 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
NET PRESENT VALUE OF LAND LEASE PAYMENTS (AREA 3)
ASSUMPTIONS
Start Date
Jan-14
FEE SIMPLE (MARKET)
$9,300
Annual Rent
INFLATION
2.5%
Annual Rent Appreciation
RATES
Discount Rate
Period
Annual Rent
Less Expenses
Net Income
10.5%
Jan-14
1
Jan-15
2
Jan-16
3
Jan-17
4
$9,300
$9,533
$9,771
$10,015
$10,265
$10,522
$10,785
$11,055
$11,331
$11,614
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$9,300
$9,533
$9,771
$10,015
$10,265
$10,522
$10,785
$11,055
$11,331
$11,614
1
1
1
1
1
1
0.9050
0.8190
0.7412
0.6707
0.6070
0.5493
0.4971
0.4499
0.4071
0.3684
$6,717
$6,231
$5,780
$5,362
$4,973
$4,613
$4,279
Jan-27
14
Jan-28
15
Jan-29
16
Jan-30
17
Jan-31
18
Discount Factor @
P. V. of Cash Flows
10.50%
Present Value
$8,416
Jan-24
11
Period
Annual Rent
Less Expenses
Net Income
Discount Factor @
P. V. of Cash Flows
Present Value
10.50%
$7,807
Jan-25
12
$7,242
Jan-26
13
Jan-18
5
Jan-19
6
Jan-20
7
Jan-21
8
Jan-22
9
Jan-32
19
Jan-23
10
Jan-33
20
$11,905
$12,202
$12,507
$12,820
$13,141
$13,469
$13,806
$14,151
$14,505
$14,867
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$11,905
$12,202
$12,507
$12,820
$13,141
$13,469
$13,806
$14,151
$14,505
$14,867
1
1
1
1
1
1
1
1
1
1
0.3334
0.3018
0.2731
0.2471
0.2236
0.2024
0.1832
0.1658
0.1500
0.1358
$2,726
$2,529
$2,346
$2,176
$2,018
$3,970
$3,682
$3,416
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
$3,168
$2,939
Valbridge Job Number: NV01-14-0007-001 Page 91
Page 292 of 396
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Nellis A.F.B. Photovoltaic Site
DISCOUNTED CASH FLOW ANALYSIS
Jan-34
21
Period
Annual Rent
10.50%
Present Value
Less Expenses
Net Income
Discount Factor @
P. V. of Cash Flows
Present Value
10.50%
Jan-39
26
Jan-40
27
Jan-41
28
Jan-42
29
Jan-43
30
$16,411
$16,821
$17,242
$17,673
$18,115
$18,567
$19,032
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$15,239
$15,620
$16,011
$16,411
$16,821
$17,242
$17,673
$18,115
$18,567
$19,032
1
1
1
1
1
1
1
1
1
1
0.1229
0.1112
0.1006
0.0911
0.0824
0.0746
0.0675
0.0611
0.0553
0.0500
$1,193
$1,106
$1,026
$952
Jan-52
39
Jan-53
40
Totals
Jan-44
31
Annual Rent
Jan-38
25
$16,011
$1,872
Period
Jan-37
24
$15,620
Discount Factor @
P. V. of Cash Flows
Jan-36
23
$15,239
Less Expenses
Net Income
Jan-35
22
$1,737
Jan-45
32
$1,611
Jan-46
33
$1,494
Jan-47
34
$1,386
Jan-48
35
$1,286
Jan-49
36
Jan-50
37
Jan-51
38
$19,507
$19,995
$20,495
$21,007
$21,532
$22,071
$22,623
$23,188
$23,768
$24,362
$626,844
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$19,507
$19,995
$20,495
$21,007
$21,532
$22,071
$22,623
$23,188
$23,768
$24,362
$626,844
1
1
1
1
1
1
1
1
1
1
0.0453
0.0410
0.0371
0.0335
0.0304
0.0275
0.0249
0.0225
0.0204
0.0184
$883
$819
$760
$705
$654
$606
$563
$522
$484
Rounded:
$449
$110,498
$110,000
The above analysis provides a net present value of the projected cash flow at:
NET PRESENT VALUE OF EASEMENTS (AREA 3)
ONE HUNDRED TEN THOUSAND DOLLARS
$110,000
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Valbridge Job Number: NV01-14-0007-001 Page 92
Page 293 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
TEMPORARY CONSTRUCTION EASEMENT ACQUISITIONS
Temporary Construction Easement Acquisitions
To construct the solar power generation facility, NV Energy needs to acquire a temporary construction
easement totaling 6.72 acres, as shown on the drawing below. Of the 6.72 acres, the previously valued
3.81 acres of easements will commence on or before the beginning of the construction easement term.
Consequently, 2.91 acres of the temporary construction easement is compensable.
TEMPORARY CONSTRUCTION EASEMENT
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Page 294 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
TEMPORARY CONSTRUCTION EASEMENT ACQUISITIONS
Market Value of the Temporary Construction Easements
In order to construct the solar power facility, a temporary construction easement is needed for a projected
24-month period. As indicated earlier, 2.91 acres of the 6.72-acre temporary construction easement is
compensable.
The Uniform Appraisal Standards for Federal Land Acquisitions (2000 Edition) specifies that “the
appropriate measure of compensation for the acquisition of a temporary easement is the fair rental value
for the term of the easement adjusted as may be appropriate for the rights of use, if any, reserved to the
owner” (Section B-20). Further, “damages that result from temporary construction easements are usually
based on the economic rent or market rent of the affected area for the term of the temporary easement”
(Section D-10). Given the absence of rental data for vacant land parcels similar to the subject, a
reasonable rate of return on the land will be estimated and applied to the unencumbered land’s fee value
for the term of the easement. Additionally, because of the duration of the easement at 24 months, the
easement will be converted to a present value through the application of a discount rate (Section D-10).
The compensation for the temporary construction easement is based on the estimated rental income that
the land could generate if offered for rent in the open marketplace. The projected rental income is
determined by multiplying the market value per square foot of the subject land by an appropriate rate of
return.
For this analysis, we have considered various rates of return. Currently, the prime lending rate is 3.25%
and mortgage interest rates range from 3.54% to 4.52%. Government Treasury Bonds yield between .05%
to 2.87%. Corporate bond rates average approximately 5% to 10%
For build-to-suit real estate offerings, survey data indicates that the required rate of return is based upon
a property’s attributes, alternative investments, the illiquidity of the improved real estate, and the
previously mentioned financial markets. Occasionally, the required rate of return on structural
improvements may be slightly above the required rate of return on the land component depending upon
the particular investor and their criteria. This division between the rates of return appears to recognize
that building improvements depreciate whereas the land component does not. The following are
examples of returns in the local market when conditions are reflective of a typical healthy market.
Doc Holiday’s Saloon, located at 8450 Westcliff Drive, was a build-to-suit property. The
total construction cost for this property was $813,000. The negotiated rental rate has a
base amount of $101,808 per year which equates to a 12.5% rate of return overall.
A Checker Auto Parts Store was constructed at 2451 North Jones Boulevard. The
property was a built-to-suit and lease back. The terms of the lease were based upon a
10% return on the total investment including both land and improvements.
According to Mr. Eli Applebaum, a real estate developer and investor, he has negotiated
leases with rates of return ranging from 11% to 14% depending mostly on the credit
strength of the tenant. He also stated that the rates of return on machinery, equipment,
and other forms of personal property are the same as land and improvements.
Mr. David Bonanni with Las Cal Corporation, operates Taco Bell franchises within the Las
Vegas Valley. He indicated build to suit properties are leased upon a two-tiered rate of
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Valbridge Job Number: NV01-14-0007-001 Page 94
Page 295 of 396
NEL-8
Nellis A.F.B. Photovoltaic Site
TEMPORARY CONSTRUCTION EASEMENT ACQUISITIONS
return method. The land value is provided at a 10% return and the improvements at a
12% rate of return. The blended rate of return was 11%.
In September 2006, ground leases for C2 zoned commercial land located at the southeast
corner of Rainbow Boulevard and Badura Avenue were available based on a 10% rate of
return on the land value.
In November 2006, a ground lease was available for C2 zoned commercial land located
along the south side of Ann Road, east of Decatur Boulevard (APN 124-31-101-014),
based on a rate of return of 7.2%.
An office/warehouse building located at 985 White Drive in Las Vegas was constructed
under a partial owner occupied and a build-to-suit arrangement where the developer
bought and constructed the interior improvements and leased the facility. The building
totals approximately 4,700 square feet. The annual rent was approximately 11.1% of the
projected cost of the property.
In August 2010, Keith Spencer with CB Richard Ellis, a real estate agent who works
primarily with land, said that average rates of return were anywhere from 8% to 10% for
land based on location and risk associated with the property. He was aware of several
offerings and deals being done within this range.
In August 2010, we spoke with Kevin Boeve, Vice President of Investments, with Marcus &
Millichap. He has assisted in generating dozens of ground leases for retail properties and
restaurants in the western United States. He said that premium land would generate a
rate of return anywhere from 8% to 11% with 9% being “about average.” Additional
considerations he mentioned included the term of the lease, zoning, highest and best use
of the property, and the guarantee of the tenant.
The above data suggests that rates of return for land in a typical healthy market range from 7% to 12%.
The improvements, on the other hand, have rates of return that are slightly higher and generally range
from 11% to 14%. However, it appears that most properties have rates of return of approximately 12% for
the improvements and 10% for the land component. Based upon the above analysis, we have determined
that the typical rate of return for the land component is around 10%. However, the aforementioned rates
include an entrepreneurial incentive for management, coordination, and expertise involved in a build to
suit transaction. The subject temporary construction easement does not require a lot of management or
development expertise.
Mr. Richard Worthington with the Molasky Group indicated that they build their rate of return based on
the 30 year bond rate, adding an illiquidity rate of 100 basis points, a real estate risk factor (minimum of
50 basis points for credit tenants) and an entrepreneurial component from 0 basis points to 500 basis
points depending on the level of work, management, coordination, and expertise provided by the
developer.
Using the above formula, a rate of return can be calculated. Currently, the 30 year bond rate is 3.83%.
Adding 100 basis points for illiquidity and 100 basis points for real estate risk for a typical tenant, a rate of
5.83% is derived. However, this does not account for the location on the Nellis Air Force Base grounds
where security is tight. The subject construction easement area could require some close monitoring,
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added coordination, or other expertise, and therefore, an additional 200 basis points is being added. The
total rate of return therefore equates to 7.83%.
We also spoke with local real estate brokers and agents who have active listings of land for rent in the Las
Vegas Valley. Robert Reel with Reel Investment Group, LLC has several listings of land for lease, and he
indicated the market is soft. He noted that low return investments currently yield only 1% to 2%, while
commercial loans have interest rates of 5% to 6%. He said land investors want 6% to 8% return in the
current market for land leases.
Mr. Reel, along with all the real estate professionals contacted for this analysis, said that the intended use
of the land significantly affects the rate of return that can be negotiated. He said land that receives
entitlements and valuable improvements under the lease agreement that can revert to the landowner
would result in a lower lease rate. He further indicated that good location where demand for the land
exists affects the lease rate, and full payment upfront of the lease rent will lower the rate. Mr. Reel said he
leased a site recently in Florida where all the rent was paid up front, and the lease rate was low. Mr. Reel
uses the rate of return method to establish the lease rate. He said land leases are not occurring frequently
enough in the current market to use rent rates per square foot of land as the basis for the land lease rate.
Ron McMenemy with McMenemy Investments indicated land lease rates currently are in the 6.5% to 8%
range, and that he uses the rate of return method to establish the lease rate [i.e. (Current Market Value of
the Land x the Rate of Return) ÷ 12 months = Land Lease Rent per Month]. He said the percentage rate of
return depends on location, the extent of infrastructure in place (such as utilities, streets, etc.), and other
variables. He emphasized that rent for outlying and outskirts land would be lower. Mr. McMenemy did a
large land lease recently in the valley at a 6.5% return.
Jeremy Foley with Gatski Commercial indicated a 6% to 8% rate of return for a power substation type
lease is fair. He said $0.08 per square foot of land is the top of the market for most land leases occurring
in the local market today. Mr. Foley said the lease rate is dependent on what is going to be put on the
land. He said there are lots of variables that affect the lease rate including location, infrastructure in place,
the term of the lease, whether rent is paid up front, etc.
D. Kent Boswell with Prudential Americana indicated that 7% to 8% return is the current lease rate range
for land. He said the market is still down and land leases aren’t occurring much, so lease rates must reflect
what the market will bear. He also noted that if a landowner isn’t using the land, and no one is interested
in leasing it, the asking lease rate obviously needs to be low.
Jennifer Levine with NAI Global emphasized that the market is down, and for two of the sites she was
offering for lease, the landowner only wants to recoup property taxes. She said she leased a 45-acre site in
the valley in 2011 at $0.035 per square foot per month. Ms. Levine believes land lease rates possible in a
recovering, still soft market would be $0.04 per square foot of land per month in town, and half that
amount in more outskirts areas.
Keith Spencer with CBRE still tries to initiate land leases at a 10% return, but he recognizes that market
conditions are down. Consequently, his leases have a negotiable rate change within a period of time to
reflect the true ongoing condition of the market. Mr. Spencer typically expects to cap the rate change at
no more than 20% up or down.
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Mr. Bill Lenhart, Managing Member, Sunbelt Development & Realty Partners, LLC stated he thinks an 8%
to 10% rate of return for land is still expected in today’s market although values and prices have dropped
substantially over the last several years.
Paul Callister with Allbright Callister and Associates, LLC emphasized that the land market is still
recovering, and he indicated land rentals are seldom occurring. He said landowners try to get what they
can for land rentals. He leased 2.5 acres in the southwest part of the valley in March 2012 at $4,500 per
month ($.04 per square foot of land) to Precision Partners, LLC.
Please also note that the real estate brokers and agents indicated that asking rents that are advertised via
LoopNet, Property Line, etc. are only asking rents subject to change when potential land lessees come
forward. The asking rents currently range from $.03 to $.25 per square foot per month, but few leases are
actually being consummated in the current market, and the real estate professional are negotiating what
the market will bear.
After reviewing all of the above, and given the Nellis Air Force Base location of the temporary construction
easement, where tight security and added monitoring of activities is essential, we have concluded to a
rental rate of 10.0% per year. The rate is at the high end of opinions from local real estate brokers and
agents who are currently active in leasing land in the Las Vegas Valley.
The proposed temporary construction easement will be granted for an estimated 24-month period. Land
values had been increasing until economic conditions weakened and financing tightened, which resulted
in declining prices for land beginning in 2008. It is not known when industrial land values around Nellis
Air Force Base will show clear signs of improvement. Therefore, for purposes of this analysis, the per
square foot subject land value will neither be increased nor decreased for the period of the temporary
construction easement.
The subject land has an opinion of market value as of November 6, 2013 at $0.70 per square foot of land.
The 2.91 acres of compensable temporary construction easement land equates to 126,760 square feet,
and the rent for the temporary construction easement is calculated as follows:
Rent
Months 1-12
(126,760 SF TCE x $0.70/SF Land Value) x 10% Rent Factor =
$8,873
Months 13-18
(126,760 SF TCE x $0.70/SF Land Value) x 10% Rent Factor =
$8,873
Since the compensation for the temporary construction easement covers a 24-month period, the present
value of the rent over the easement term will be determined by discounting the rent at a reasonable
discount rate.
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The discount rate for this analysis is based on institutional grade property rates for the fourth quarter
2013 published by PwC Advisors. The rates average from 5% to 12% for retail, office, and industrial
properties, with the Phoenix market at 10.06%, and 8.13% for the San Diego market. No rates were
published for the Las Vegas market, so after consideration the appraiser has selected a discount rate at
10% as being appropriate for this analysis. The discount rate is applied to the rent as follows:
Discount
(Present
Projected Rent
Value Factor)
Months 1 – 12
$8,873
X
0.917
Months 13 – 24
$8,873
X
0.842
Net Present Value of the Temporary Construction Easement Rent
Rounded to
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
=
=
Net Present Value
of the Rent
$8,137
$7,471
$15,608
$15,600
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SUMMARY OF THE VALUATION
Summary of the Valuation
This appraisal provides opinions of value for annual market rent for subject land Areas 1 and 2, together
with a present value for the rent payments over 31 years, along with Long-Term Easement values in Area
3, and a temporary construction easement value, also in Area 3. The requested opinions of value with an
effective date of November 6, 2013 are as follows:
Value Type
Market Value
Market Value
Present Value
Market Value
Market Value
Market Value
Market Value
Market Value
Present Value
Market Value
Interest
Appraised
Value Premise
Ground Lease - Area 1
Leased Fee
Ground Lease - Area 2
Leased Fee
Area 1 and 2 Land Lease (31 Years) Lease Payments
Substation Easement
Easement
Fence Easement
Easement
Transmission Easement
Easement
Distribution Easement
Easement
Roadway Easement
Easement
Area 3 Easements (40 Years)
Easements
Temporary Construction Easement
Easement
Effective
Date
Indicated Value
11/6/2013
$250,000/Yr
11/6/2013
$48,000/Yr
11/6/2013
$3,360,000
11/6/2013
$12,300
11/6/2013
$2,000
11/6/2013
$5,400
11/6/2013
$2,200
11/6/2013
$94,200
11/6/2013
$110,000
11/6/2013
$15,600
The first three values above are opinions of the annual lease rates and the net present value for 31 years
of rent for Areas 1 and 2 as shown on the map. The other values are opinions of market value for the
various easements in Area 3.
The above opinions of value are subject to the following jurisdictional exception: The Uniform Appraisal
Standards for Federal Land Acquisitions (2000 Edition) prohibits the appraiser from linking a market value
to a specific exposure time. This is contrary to USPAP Standards Rule 1-2 (c) (iv) Comment. Therefore, the
USPAP Jurisdictional Exception Rule has been applied, and exposure time has not been linked to the
market value conclusions.
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GENERAL ASSUMPTIONS & LIMITING CONDITIONS
General Assumptions & Limiting Conditions
This appraisal is subject to the following limiting conditions:
1.
The legal description – if furnished us – is assumed to be correct.
2.
No responsibility is assumed for legal matters, questions of survey or title, soil or subsoil
conditions, engineering, availability or capacity of utilities, or other similar technical matters. The
appraisal does not constitute a survey of the property appraised. All existing liens and
encumbrances have been disregarded and the property is appraised as though free and clear,
under responsible ownership and competent management unless otherwise noted.
3.
Unless otherwise noted, the appraisal will value the property as though free of contamination.
Valbridge Property Advisors | Lubawy and Associates, Inc. will conduct no hazardous materials or
contamination inspection of any kind. It is recommended that the client hire an expert if the
presence of hazardous materials or contamination poses any concern.
4.
The stamps and/or consideration placed on deeds used to indicate sales are in correct
relationship to the actual dollar amount of the transaction.
5.
Unless otherwise noted, it is assumed there are no encroachments, zoning violations or
restrictions existing in the subject property.
6.
The appraiser is not required to give testimony or attendance in court by reason of this appraisal,
unless previous arrangements have been made.
7.
Unless expressly specified in the engagement letter, the fee for this appraisal does not include the
attendance or giving of testimony by Appraiser at any court, regulatory, or other proceedings, or
any conferences or other work in preparation for such proceeding. If any partner or employee of
Valbridge Property Advisors | Lubawy and Associates, Inc. is asked or required to appear and/or
testify at any deposition, trial, or other proceeding about the preparation, conclusions or any
other aspect of this assignment, client shall compensate Appraiser for the time spent by the
partner or employee in appearing and/or testifying and in preparing to testify according to the
Appraiser’s then current hourly rate plus reimbursement of expenses.
8.
The values for land and/or improvements, as contained in this report, are constituent parts of the
total value reported and neither is (or are) to be used in making a summation appraisal of a
combination of values created by another appraiser. Either is invalidated if so used.
9.
The dates of value to which the opinions expressed in this report apply are set forth in this report.
We assume no responsibility for economic or physical factors occurring at some point at a later
date, which may affect the opinions stated herein. The forecasts, projections, or operating
estimates contained herein are based on current market conditions and anticipated short-term
supply and demand factors and are subject to change with future conditions.
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GENERAL ASSUMPTIONS & LIMITING CONDITIONS
10.
The sketches, maps, plats and exhibits in this report are included to assist the reader in visualizing
the property. The appraiser has made no survey of the property and assumed no responsibility in
connection with such matters.
11.
The information, estimates and opinions which were obtained from sources outside of this office,
are considered reliable. However, no liability for them can be assumed by the appraiser.
12.
Possession of this report, or a copy thereof, does not carry with it the right of publication. Neither
all, nor any part of the content of the report, or copy thereof (including conclusions as to property
value, the identity of the appraisers, professional designations, reference to any professional
appraisal organization or the firm with which the appraisers are connected), shall be disseminated
to the public through advertising, public relations, news, sales, or other media without prior
written consent and approval.
13.
No claim is intended to be expressed for matters of expertise which would require specialized
investigation or knowledge beyond that ordinarily employed by real estate appraisers. We claim
no expertise in areas such as, but not limited to, legal, survey, structural, environmental, pest
control, mechanical, etc.
14.
This appraisal was prepared for the sole and exclusive use of the client for the function outlined
herein. Any party who is not the client or intended user identified in the appraisal or engagement
letter is not entitled to rely upon the contents of the appraisal without express written consent of
Valbridge Property Advisors | Lubawy and Associates, Inc. and Client. Client shall not include
partners, affiliates, or relatives of the party addressed herein. The appraiser assumes no
obligation, liability or accountability to any third party.
15.
Distribution of this report is at the sole discretion of the client, but no third-parties not listed as
an intended user on the face of the appraisal or the engagement letter may rely upon the
contents of the appraisal. In no event shall client give a third-party a partial copy of the appraisal
report. We will make do distribution of the report without the specific direction of the client.
16.
This appraisal shall be used only for the function outlined herein, unless expressly authorized by
Valbridge Property Advisors | Lubawy and Associates, Inc.
17.
This appraisal shall be considered in its entirety. No part thereof shall be used separately or out of
context.
18.
Unless otherwise noted in the body of this report, this appraisal assumes that the subject property
does not fall within the areas where mandatory flood insurance is effective. Unless otherwise
noted, we have not completed nor have we contracted to have completed an investigation to
identify and/or quantify the presence of non-tidal wetland conditions on the subject property.
Because the appraiser is not a surveyor, he or she makes no guarantees, express or implied,
regarding this determination.
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19.
If the appraisal is for mortgage loan purposes 1) we assume satisfactory completion of
improvements if construction is not complete, 2) no consideration has been given for rent loss
during rent-up unless noted in the body of this report, and 3) occupancy at levels consistent with
our “Income & Expense Projection” are anticipated.
20.
It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or
structures which would render it more or less valuable. No responsibility is assumed for such
conditions or for engineering which may be required to discover them.
21.
Our inspection included an observation of the land and improvements thereon only. It was not
possible to observe conditions beneath the soil or hidden structural components within the
improvements. We inspected the buildings involved, and reported damage (if any) by termites,
dry rot, wet rot, or other infestations as a matter of information, and no guarantee of the amount
or degree of damage (if any) is implied. Condition of heating, cooling, ventilation, electrical and
plumbing equipment is considered to be commensurate with the condition of the balance of the
improvements unless otherwise stated.
22.
This appraisal does not guarantee compliance with building code and life safety code
requirements of the local jurisdiction. It is assumed that all required licenses, consents, certificates
of occupancy or other legislative or administrative authority from any local, state or national
governmental or private entity or organization have been or can be obtained or renewed for any
use on which the value conclusion contained in this report is based unless specifically stated to
the contrary.
23.
When possible, we have relied upon building measurements provided by the client, owner, or
associated agents of these parties. In the absence of a detailed rent roll, reliable public records, or
“as-built” plans provided to us, we have relied upon our own measurements of the subject
improvements. We follow typical appraisal industry methods; however, we recognize that some
factors may limit our ability to obtain accurate measurements including, but not limited to,
property access on the day of inspection, basements, fenced/gated areas, grade elevations,
greenery/shrubbery, uneven surfaces, multiple story structures, obtuse or acute wall angles,
immobile obstructions, etc. Professional building area measurements of the quality, level of detail,
or accuracy of professional measurement services are beyond the scope of this appraisal
assignment.
24.
We have attempted to reconcile sources of data discovered or provided during the appraisal
process, including assessment department data. Ultimately, the measurements that are deemed
by us to be the most accurate and/or reliable are used within this report. While the measurements
and any accompanying sketches are considered to be reasonably accurate and reliable, we cannot
guarantee their accuracy. Should the client desire a greater level of measuring detail, they are
urged to retain the measurement services of a qualified professional (space planner, architect or
building engineer). We reserve the right to use an alternative source of building size and amend
the analysis, narrative and concluded values (at additional cost) should this alternative
measurement source reflect or reveal substantial differences with the measurements used within
the report.
In the absence of being provided with a detailed land survey, we have used assessment
department data to ascertain the physical dimensions and acreage of the property. Should a
25.
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GENERAL ASSUMPTIONS & LIMITING CONDITIONS
survey prove this information to be inaccurate, we reserve the right to amend this appraisal (at
additional cost) if substantial differences are discovered.
26.
If only preliminary plans and specifications were available for use in the preparation of this
appraisal, then this appraisal is subject to a review of the final plans and specifications when
available (at additional cost) and we reserve the right to amend this appraisal if substantial
differences are discovered.
27.
Unless otherwise stated in this report, the value conclusion is predicated on the assumption that
the property is free of contamination, environmental impairment or hazardous materials. Unless
otherwise stated, the existence of hazardous material was not observed by the appraiser and 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. No responsibility is assumed for any such conditions, or for any
expertise or engineering knowledge required for discovery. The client is urged to retain an expert
in this field, if desired.
28.
The Americans with Disabilities Act (“ADA”) became effective January 26, 1992. We have not made
a specific compliance survey of the property to determine if it is in conformity with the various
requirements of the ADA. It is possible that a compliance survey of the property, together with an
analysis of the requirements of the ADA, could reveal that the property is not in compliance with
one or more of the requirements of the Act. If so, this could have a negative effect on the value of
the property. Since we have no direct evidence relating to this issue, we did not consider possible
noncompliance with the requirements of ADA in developing an opinion of value.
29.
This appraisal applies to the land and building improvements only. The value of trade fixtures,
furnishings, and other equipment, or subsurface rights (minerals, gas, and oil) were not
considered in this appraisal unless specifically stated to the contrary.
30.
If any claim is filed against any of Valbridge Property Advisors, Inc. a Florida Corporation, its
affiliates, officers or employees, or the firm providing this report, in connection with, or in any way
arising out of, or relating to, this report, or the engagement of the firm providing this report, then
(1) under no circumstances shall such claimant be entitled to consequential, special or other
damages, except only for direct compensatory damages and (2) the maximum amount of such
compensatory damages recoverable by such claimant shall be the amount actually received by
the firm engaged to provide this report.
31.
No changes in any federal, state or local laws, regulations or codes (including, without limitation,
the Internal Revenue Code) are anticipated, unless specifically stated to the contrary.
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32.
Any income and expense estimates contained in the appraisal report are used only for the
purpose of estimating value and do not constitute prediction of future operating results.
Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated
events may occur that will likely affect actual performance.
33.
Any estimate of insurable value, if included within the scope of work and presented herein, is
based upon figures developed consistent with industry practices. However, actual local and
regional construction costs may vary significantly from our estimate and individual insurance
policies and underwriters have varied specifications, exclusions, and noninsurable items. As such,
we strongly recommend that the Client obtain estimates from professionals experienced in
establishing insurance coverage. This analysis should not be relied upon to determine insurance
coverage and we make no warranties regarding the accuracy of this estimate.
34.
The data gathered in the course of this assignment (except data furnished by the Client) shall
remain the property of the Appraiser. The appraiser will not violate the confidential nature of the
appraiser-client relationship by improperly disclosing any confidential information furnished to
the appraiser. Notwithstanding the foregoing, the Appraiser is authorized by the client to disclose
all or any portion of the appraisal and related appraisal data to appropriate representatives of the
Appraisal Instituted is such disclose is required to enable the appraiser to comply with the Bylaws
and Regulations of such Institute now or hereafter in effect.
35.
You and Valbridge Property Advisors | Lubawy and Associates, Inc. both agree that any dispute
over matters in excess of $5,000 will be submitted for resolution by arbitration. This includes fee
disputes and any claim of malpractice. The arbitrator shall be mutually selected. If Valbridge
Property Advisors | Lubawy and Associates, Inc. and the client cannot agree on the arbitrator, the
presiding head of the Local County Mediation & Arbitration panel shall select the arbitrator. Such
arbitration shall be binding and final. In agreeing to arbitration, we both acknowledge that, by
agreeing to binding arbitration, each of us is giving up the right to have the dispute decided in a
court of law before a judge or jury. In the event that the client, or any other party, makes a claim
against Lubawy and Associates, Inc. or any of its employees in connections with or in any way
relating to this assignment, the maximum damages recoverable by Valbridge Property Advisors |
Lubawy and Associates, Inc. for this assignment, and under no circumstances shall any claim for
consequential damages be made.
36.
Valbridge Property Advisors | Lubawy and Associates, Inc. shall have no obligation, liability, or
accountability to any third party. Any party who is not the “client” or intended user identified on
the face of the appraisal or in the engagement letter is not entitled to rely upon the contents of
the appraisal without the express written consent of Valbridge Property Advisors | Lubawy and
Associates, Inc. “Client” shall not include partners, affiliates, or relatives of the party named in the
engagement letter. Client shall hold Valbridge Property Advisors | Lubawy and Associates, Inc. and
its employees harmless in the event of any lawsuit brought by any third party, lender, partner, or
part-owner in any form of ownership or any other party as a result of this assignment. The client
also agrees that in case of lawsuit arising from or in any way involving these appraisal services,
client will hold Valbridge Property Advisors | Lubawy and Associates, Inc. harmless from and
against any liability, loss, cost, or expense incurred or suffered by Valbridge Property Advisors |
Lubawy and Associates, Inc. in such action, regardless of its outcome.
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37.
The value opinion(s) provided herein is subject to any and all predications set forth in this report.
38.
The Valbridge Property Advisors office responsible for the preparation of this report is
independently owned and operated by Lubawy and Associates, Inc. Neither Valbridge Property
Advisors, Inc., nor any of its affiliates, has been engaged to provide this report. Valbridge Property
Advisors, Inc. does not provide valuation services, and has taken no part in the preparation of this
report.
39.
This report and any associated work files may be subject to evaluation by Valbridge Property
Advisors, Inc., or its affiliates, for quality control purposes.
40.
Acceptance and/or use of this appraisal report constitutes acceptance of the foregoing general
assumptions and limiting conditions.
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CERTIFICATION
Certification
We certify that, to the best of our knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions
and limiting conditions and legal instructions and are the personal, unbiased professional
analyses, opinions, and conclusions.
3. We have no present or prospective interest in the property that is the subject of this report and
no personal interest with respect to the parties involved.
4. Kendal Stewart has provided previous services, as an appraiser, regarding the property that is the
subject within the three-year period immediately preceding acceptance of this assignment.
Matthew Lubawy, MAI has provided previous services, as an appraiser or in any other capacity,
regarding the property that is the subject within the three-year period immediately preceding
acceptance of this assignment.
5. We have no bias with respect to the property that is the subject of this report or to the parties
involved with this assignment.
6. Our engagement in this assignment was not contingent upon developing or reporting
predetermined results.
7. Our compensation for completing this assignment is not contingent upon the development or
reporting of a predetermined value or direction in value that favors the cause of the client, the
amount of the value opinion, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this appraisal.
8. The reported analyses, opinions and conclusions were developed, and this report has been
prepared, in conformity with the Appraisal Foundation’s Uniform Standards of Professional
Appraisal Practice, except to the extent that the Uniform Appraisal Standards for Federal Land
Acquisitions required applying USPAP’s Jurisdictional Exception Rule, as described in Section D-1
of the Uniform Appraisal Standards for Federal Land Acquisitions.
9. On November 6, 2013 Kendal Stewart has personally inspected the subject property. Matthew
Lubawy has not personally inspected the subject property.
10. No one provided significant real property appraisal assistance to the appraisers signing this
certification.
11. The reported analyses, opinions and conclusions were developed, and this report has been
prepared, in conformity with the requirements of the Code of Professional Ethics and the
Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform
Standards of Professional Appraisal Practice (USPAP).
12. The use of this report is subject to the requirements of the Appraisal Institute relating to review
by its duly authorized representatives.
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CERTIFICATION
13. As of the date of this report, Matthew Lubawy has completed the continuing education program
of the Appraisal Institute.
We certify that, in our opinion, the requested values, as of November 6, 2013, are as follows:
Value Type
Value Premise
Market Value
Net Present Value
Net Present Value
As Is
Land Lease
Easements
Value Perspective
Interest
Appraised
Current
Current
Current
Fee Simple
Lease Payments
Easements
Effective
Date
Indicated Value
11/6/2013
11/6/2013
11/6/2013
$3,780,000
$3,360,000
$110,000
The above opinions of value are subject to the following jurisdictional exception: The Uniform Appraisal
Standards for Federal Land Acquisitions (2000 Edition) prohibits the appraiser from linking a market value
to a specific exposure time. This is contrary to USPAP Standards Rule 1-2 (c) (iv) Comment. Therefore, the
USPAP Jurisdictional Exception Rule has been applied, and exposure time has not been linked to the
market value conclusion.
Kendal Stewart
Senior Appraiser
Nevada License #A.0002588-CG
License Expires April 30, 2015
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Matthew Lubawy, MAI
Senior Managing Director
Nevada License #A.0000044-CG
License Expires April 30, 2015
[email protected]
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ADDENDA
Addenda
Glossary
Subject Photographs
Legal Descriptions
Zoning Map
Flood Map
Purchase Order
Qualifications of the Appraisers
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Glossary
th
Definitions are taken from the Dictionary of Real Estate Appraisal, 5 Edition (Dictionary), the Uniform
Standards of Professional Appraisal Practice (USPAP) and Building Owners and Managers Association
International (BOMA).
Absolute Net Lease
A lease in which the tenant pays all expenses including
structural maintenance, building reserves, and
management; often a long-term lease to a credit tenant.
(Dictionary)
Additional Rent
Any amounts due under a lease that is in addition to
base rent. Most common form is operating expense
increases. (Dictionary)
Amortization
The process of retiring a debt or recovering a capital
investment, typically though scheduled, systematic
repayment of the principal; a program of periodic
contributions to a sinking fund or debt retirement fund.
(Dictionary)
As Is Market Value
The estimate of the market value of real property in its
current physical condition, use, and zoning as of the
appraisal date. (2010 Interagency)
Base (Shell) Building
The existing shell condition of a building prior to the
installation of tenant improvements. This condition
varies from building to building, landlord to landlord,
and generally involves the level of finish above the
ceiling grid. (Dictionary)
Base Rent
The minimum rent stipulated in a lease. (Dictionary)
Base Year
The year on which escalation clauses in a lease are
based. (Dictionary)
Building Common Area
The areas of the building that provide services to
building tenants but which are not included in the
rentable area of any specific tenant. These areas may
include, but shall not be limited to, main and auxiliary
lobbies, atrium spaces at the level of the finished floor,
concierge areas or security desks, conference rooms,
lounges or vending areas food service facilities, health or
fitness centers, daycare facilities, locker or shower
facilities, mail rooms, fire control rooms, fully enclosed
courtyards outside the exterior walls, and building core
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and service areas such as fully enclosed mechanical or
equipment rooms. Specifically excluded from building
common areas are; floor common areas, parking spaces,
portions of loading docks outside the building line, and
major vertical penetrations. (BOMA)
Building Rentable Area
The sum of all floor rentable areas. Floor rentable area is
the result of subtracting from the gross measured area
of a floor the major vertical penetrations on that same
floor. It is generally fixed for the life of the building and
is rarely affected by changes in corridor size or
configuration. (BOMA)
Certificate of Occupancy (COO)
A statement issued by a local government verifying that
a newly constructed building is in compliance with all
codes and may be occupied.
Common Area (Public) Factor
In a lease, the common area (public) factor is the
multiplier to a tenant’s useable space that accounts for
the tenant’s proportionate share of the common area
(restrooms, elevator lobby, mechanical rooms, etc.). The
public factor is usually expressed as a percentage and
ranges from a low of 5% for a full tenant to as high as
15% or more for a multi-tenant floor. Subtracting one
(1) from the quotient of the rentable area divided by the
useable area yields the load (public) factor. At times
confused with the “loss factor” which is the total
rentable area of the full floor less the useable area
divided by the rentable area. (BOMA)
Common Area Maintenance (CAM)
The expense of operating and maintaining common
areas; may or may not include management charges and
usually does not include capital expenditures on tenant
improvements or other improvements to the property.
CAM can be a line-item expense for a group of items
that can include maintenance of the parking lot and
landscaped areas and sometimes the exterior walls of
the buildings. CAM can refer to all operating expenses.
CAM can refer to the reimbursement by the tenant to the
landlord for all expenses reimbursable under the lease.
Sometimes reimbursements have what is called an
administrative load. An example would be a 15% addition
to total operating expenses, which are then prorated
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among tenants. The administrative load, also called an
administrative and marketing fee, can be a substitute for
or an addition to a management fee. (Dictionary)
x
Condominium
x
A form of ownership in which each owner possesses the
exclusive right to use and occupy an allotted unit plus
an undivided interest in common areas.
A multiunit structure, or a unit within such a structure,
with a condominium form of ownership. (Dictionary)
Conservation Easement
An interest in real property restricting future land use to
preservation, conservation, wildlife habitat, or some
combination of those uses. A conservation easement
may permit farming, timber harvesting, or other uses of
a rural nature to continue, subject to the easement. In
some locations, a conservation easement may be
referred to as a conservation restriction. (Dictionary)
Contributory Value
The change in the value of a property as a whole,
whether positive or negative, resulting from the addition
or deletion of a property component. Also called
deprival value in some countries. (Dictionary)
Debt Coverage Ratio (DCR)
The ratio of net operating income to annual debt service
(DCR = NOI/Im), which measures the relative ability to a
property to meet its debt service out of net operating
income. Also called Debt Service Coverage Ratio (DSCR).
A larger DCR indicates a greater ability for a property to
withstand a downturn in revenue, providing an
improved safety margin for a lender. (Dictionary)
Deed Restriction
A provision written into a deed that limits the use of
land. Deed restrictions usually remain in effect when title
passes to subsequent owners. (Dictionary)
Depreciation
1) In appraising, the loss in a property value from any
cause; the difference between the cost of an
improvement on the effective date of the appraisal and
the market value of the improvement on the same date.
2) In accounting, an allowance made against the loss in
value of an asset for a defined purpose and computed
using a specified method. (Dictionary)
Disposition Value
The most probable price that a specified interest in real
property is likely to bring under the following
conditions:
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x
x
x
x
x
x
x
Consummation of a sale within a exposure time
specified by the client;
The property is subjected to market conditions
prevailing as of the date of valuation;
Both the buyer and seller are acting prudently and
knowledgeably;
The seller is under compulsion to sell;
The buyer is typically motivated;
Both parties are acting in what they consider to be
their best interests;
An adequate marketing effort will be made during
the exposure time specified by the client;
Payment will be made in 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 concessions granted by anyone
associated with the sale. (Dictionary)
Easement
The right to use another’s land for a stated purpose.
(Dictionary)
EIFS
Exterior Insulation Finishing System. This is a type of
exterior wall cladding system. Sometimes referred to as
dry-vit.
Effective Date
1) The date at which the analyses, opinions, and advice
in an appraisal, review, or consulting service apply. 2) In
a lease document, the date upon which the lease goes
into effect. (Dictionary)
Effective Rent
The rental rate net of financial concessions such as
periods of no rent during the lease term and above- or
below-market tenant improvements (TIs). (Dictionary)
EPDM
Ethylene Diene Monomer Rubber. A type of synthetic
rubber typically used for roof coverings. (Dictionary)
Escalation Clause
A clause in an agreement that
adjustment of a price or rent based
index. e.g., a provision to increase
expenses increase; also called an
clause or stop clause. (Dictionary)
provides for the
on some event or
rent if operating
expense recovery
Estoppel Certificate
A statement of material factors or conditions of which
another person can rely because it cannot be denied at
a later date. In real estate, a buyer of rental property
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typically requests estoppel certificates from existing
tenants. Sometimes referred to as an estoppel letter.
(Dictionary)
elevator lobbies, and public corridors which are available
primarily for the use of tenants on that floor. (BOMA)
Excess Land
Full Service (Gross) Lease
Land that is not needed to serve or support the existing
improvement. The highest and best use of the excess
land may or may not be the same as the highest and
best use of the improved parcel. Excess land may have
the potential to be sold separately and is valued
separately. (Dictionary)
Expense Stop
A clause in a lease that limits the landlord’s expense
obligation, which results in the lessee paying any
operating expenses above a stated level or amount.
(Dictionary)
Exposure Time
1) The time a property remains on the market. 2) The
estimated length of time the property interest being
appraised would have been offered on the market prior
to the hypothetical consummation of a sale at market
value on the effective date of the appraisal; a
retrospective estimate based on an analysis of past
events assuming a competitive and open market.
(Dictionary)
Extraordinary Assumption
An assumption, directly related to a specific assignment,
which, if found to be false, could alter the appraiser’s
opinions or conclusions. Extraordinary assumptions
presume as fact otherwise uncertain information about
physical, legal, or economic characteristics of the subject
property; or about conditions external to the property
such as market conditions or trends; or about the
integrity of data used in an analysis. (Dictionary)
Fair Market Value
The price at which the property should change hands
between a willing buyer and a willing seller, neither
being under any compulsion to buy or sell and both
having reasonable knowledge of relevant facts. [Treas.
Reg. 20.2031-1(b); Rev. Rul. 59-60. 1959-1 C.B. 237]
Fee Simple Estate
Absolute ownership unencumbered by any other
interest or estate, subject only to the limitations
imposed by the governmental powers of taxation,
eminent domain, police power, and escheat. (Dictionary)
Floor Common Area
Areas on a floor such as washrooms, janitorial closets,
electrical rooms, telephone rooms, mechanical rooms,
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A lease in which the landlord receives stipulated rent
and is obligated to pay all of the property’s operating
and fixed expenses; also called a full service lease.
(Dictionary)
Going Concern Value
x
x
The market value of all the tangible and intangible
assets of an established and operating business
with an indefinite life, as if sold in aggregate; more
accurately termed the market value of the going
concern.
The value of an operating business enterprise.
Goodwill may be separately measured but is an
integral component of going-concern value when it
exists and is recognizable. (Dictionary)
Gross Building Area
The total constructed area of a building. It is generally
not used for leasing purposes (BOMA)
Gross Measured Area
The total area of a building enclosed by the dominant
portion (the portion of the inside finished surface of the
permanent outer building wall which is 50% or more of
the vertical floor-to-ceiling dimension, at the given point
being measured as one moves horizontally along the
wall), excluding parking areas and loading docks (or
portions of the same) outside the building line. It is
generally not used for leasing purposes and is calculated
on a floor by floor basis. (BOMA)
Gross Up Method
A method of calculating variable operating expense in
income-producing properties when less than 100%
occupancy is assumed. The gross up method
approximates the actual expense of providing services
to the rentable area of a building given a specified rate
of occupancy. (Dictionary)
Ground Lease
A lease that grants the right to use and occupy land.
Improvements made by the ground lessee typically
revert to the ground lessor at the end of the lease term.
(Dictionary)
Ground Rent
The rent paid for the right to use and occupy land
according to the terms of a ground lease; the portion of
the total rent allocated to the underlying land.
(Dictionary)
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HVAC
Heating, ventilation, air conditioning. A general term
encompassing any system designed to heat and cool a
building in its entirety.
Highest & Best Use
The reasonably probable and legal use of vacant land or
an improved property that 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 1) legal permissibility, 2)
physical possibility, 3) financial feasibility, and 4)
maximally profitability. Alternatively, the probable use of
land or improved –specific with respect to the user and
timing of the use–that is adequately supported and
results in the highest present value. (Dictionary)
Hypothetical Condition
That which is contrary to what exists but is supposed for
the purpose of analysis. Hypothetical conditions assume
conditions contrary to known facts about physical, legal,
or economic characteristics of the subject property; or
about conditions external to the property, such as
market conditions or trends; or about the integrity of
data used in an analysis. (Dictionary)
Industrial Gross Lease
A lease of industrial property in which the landlord and
tenant share expenses. The landlord receives stipulated
rent and is obligated to pay certain operating expenses,
often structural maintenance, insurance and real estate
taxes as specified in the lease. There are significant
regional and local differences in the use of this term.
(Dictionary)
Insurable Value
A type of value for insurance purposes. (Dictionary)
(Typically this includes replacement cost less basement
excavation, foundation, underground piping and
architect’s fees).
Investment Value
Leased Fee Interest
A freehold (ownership interest) where the possessory
interest has been granted to another party by creation
of a contractual landlord-tenant relationship (i.e., a
lease). (Dictionary)
Leasehold Interest
The tenant’s possessory interest created by a lease.
(Dictionary)
Lessee (Tenant)
One who has the right to occupancy and use of the
property of another for a period of time according to a
lease agreement. (Dictionary)
Lessor (Landlord)
One who conveys the rights of occupancy and use to
others under a lease agreement. (Dictionary)
Liquidation Value
The most probable price that a specified interest in real
property should bring under the following conditions:
x
x
x
x
x
x
x
x
x
Consummation of a sale within a short period.
The property is subjected to market conditions
prevailing as of the date of valuation.
Both the buyer and seller are acting prudently and
knowledgeably.
The seller is under extreme compulsion to sell.
The buyer is typically motivated.
Both parties are acting in what they consider to be
their best interests.
A normal marketing effort is not possible due to the
brief exposure time.
Payment will be made in cash in U.S. dollars or in
terms of financial arrangements comparable
thereto.
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. (Dictionary)
The value of a property interest to a particular investor
or class of investors based on the investor’s specific
requirements. Investment value may be different from
market value because it depends on a set of investment
criteria that are not necessarily typical of the market.
(Dictionary)
Loan to Value Ratio (LTV)
Just Compensation
Stairs, elevator shafts, flues, pipe shafts, vertical ducts,
and the like, and their enclosing walls. Atria, lightwells
and similar penetrations above the finished floor are
included in this definition. Not included, however, are
vertical penetrations built for the private use of a tenant
occupying office areas on more than one floor.
In condemnation, the amount of loss for which a
property owner is compensated when his or her
property is taken. Just compensation should put the
owner in as good a position as he or she would be if the
property had not been taken. (Dictionary)
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The amount of money borrowed in relation to the total
market value of a property. Expressed as a percentage of
the loan amount divided by the property value.
(Dictionary)
Major Vertical Penetrations
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Structural columns, openings for vertical electric cable or
telephone distribution, and openings for plumbing lines
are not considered to be major vertical penetrations.
(BOMA)
Market Rent
The most probable rent that a property should bring in a
competitive and open market reflecting all conditions
and restrictions of the lease agreement including
permitted uses, use restrictions, expense obligations;
term, concessions, renewal and purchase options and
tenant improvements (TIs). (Dictionary)
Market Value
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 and 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;
b. Both parties are well informed or well advised, and
acting in what they consider their own best
interests;
c. A reasonable time is allowed for exposure in the
open market;
d. Payment is made in terms of cash in United States
dollars or in terms of financial arrangements
comparable thereto; and
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.
Market Value As If Complete
Marketing Time
An opinion of the amount of time it might take to sell a
real or personal property interest at the concluded
market value level during the period immediately after
the effective date of the appraisal. Marketing time
differs from exposure time, which is always presumed to
precede the effective date of an appraisal. (Advisory
Opinion 7 of the Standards Board of the Appraisal
Foundation and Statement on Appraisal Standards No.
6, “Reasonable Exposure Time in Real Property and
Personal Property Market Value Opinions” address the
determination of reasonable exposure and marketing
time). (Dictionary)
Master Lease
A lease in which the fee owner leases a part or the entire
property to a single entity (the master lease) in return
for a stipulated rent. The master lessee then leases the
property to multiple tenants. (Dictionary)
Modified Gross Lease
A lease in which the landlord receives stipulated rent
and is obligated to pay some, but not all, of the
property’s operating and fixed expenses. Since
assignment of expenses varies among modified gross
leases, expense responsibility must always be specified.
In some markets, a modified gross lease may be called a
double net lease, net net lease, partial net lease, or
semi-gross lease. (Dictionary)
Option
A legal contract, typically purchased for a stated
consideration, that permits but does not require the
holder of the option (known as the optionee) to buy,
sell, or lease real property for a stipulated period of time
in accordance with specified terms; a unilateral right to
exercise a privilege. (Dictionary)
Market value as if complete means the market value of
the property with all proposed construction, conversion
or rehabilitation hypothetically completed or under
other specified hypothetical conditions as of the date of
the appraisal. With regard to properties wherein
anticipated market conditions indicate that stabilized
occupancy is not likely as of the date of completion, this
estimate of value shall reflect the market value of the
property as if complete and prepared for occupancy by
tenants.
Partial Interest
Market Value As If Stabilized
Prospective Future Value Upon Completion
Market value as if stabilized means the market value of
the property at a current point and time when all
improvements have been physically constructed and the
property has been leased to its optimum level of long
term occupancy.
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Divided or undivided rights in real estate that represent
less than the whole (a fractional interest). (Dictionary)
Pass Through
A tenant’s portion of operating expenses that may be
composed of common area maintenance (CAM), real
estate taxes, property insurance, and any other expenses
determined in the lease agreement to be paid by the
tenant. (Dictionary)
Market value “upon completion” is a prospective future
value estimate of a property at a point in time when all
of its improvements are fully completed. It assumes all
proposed construction, conversion, or rehabilitation is
hypothetically complete as of a future date when such
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effort is projected to occur. The projected completion
date and the value estimate must reflect the market
value of the property in its projected condition, i.e.,
completely vacant or partially occupied. The cash flow
must reflect lease-up costs, required tenant
improvements and leasing commissions on all areas not
leased and occupied.
Prospective Future Value Upon Stabilization
Market value “upon stabilization” is a prospective future
value estimate of a property at a point in time when
stabilized occupancy has been achieved. The projected
stabilization date and the value estimate must reflect the
absorption period required to achieve stabilization. In
addition, the cash flows must reflect lease-up costs,
required tenant improvements and leasing commissions
on all unleased areas.
Replacement Cost
The estimated cost to construct, at current prices as of
the effective appraisal date, a substitute for the building
being appraised, using modern materials and current
standards, design, and layout. (Dictionary)
Reproduction Cost
The estimated cost to construct, at current prices as of
the effective date of the appraisal, an exact duplicate or
replica of the building being appraised, using the same
materials, construction standards, design, layout, and
quality of workmanship and embodying all of the
deficiencies, superadequacies, and obsolescence of the
subject building. (Dictionary)
Retrospective Value Opinion
A value opinion effective as of a specified historical date.
The term does not define a type of value. Instead, it
identifies a value opinion as being effective at some
specific prior date. Value as of a historical date is
frequently sought in connection with property tax
appeals, damage models, lease renegotiation, deficiency
judgments, estate tax, and condemnation. Inclusion of
the type of value with this term is appropriate, e.g.,
“retrospective market value opinion.” (Dictionary)
Sandwich Leasehold Estate
The interest held by the original lessee when the
property is subleased to another party; a type of
leasehold estate. (Dictionary)
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Sublease
An agreement in which the lessee (i.e., the tenant) leases
part or all of the property to another party and thereby
becomes a lessor. (Dictionary)
Subordination
A contractual arrangement in which a party with a claim
to certain assets agrees to make his or her claim junior,
or subordinate, to the claims of another party.
(Dictionary)
Substantial Completion
Generally used in reference to the construction of tenant
improvements (TIs). The tenant’s premises are typically
deemed to be substantially completed when all of the
TIs for the premises have been completed in accordance
with the plans and specifications previously approved by
the tenant. Sometimes used to define the
commencement date of a lease.
Surplus Land
Land that is not currently needed to support the existing
improvement but cannot be separated from the
property and sold off. Surplus land does not have an
independent highest and best use and may or may not
contribute value to the improved parcel. (Dictionary)
Triple Net (Net Net Net) Lease
A lease in which the tenant assumes all expenses (fixed
and variable) of operating a property except that the
landlord is responsible for structural maintenance,
building reserves, and management. Also called NNN,
triple net leases, or fully net lease. (Dictionary)
(The market definition of a triple net leases varies; in
some cases tenants pay for items such as roof repairs,
parking lot repairs, and other similar items.)
Usable Area
The measured area of an office area, store area or
building common area on a floor. The total of all the
usable areas or a floor shall equal floor usable area of
that same floor. The amount of floor usable area can
vary over the life of a building as corridors expand and
contract and as floors are remodeled. (BOMA)
Value-in-Use
The value of a property assuming a specific use, which
may or may not be the property’s highest and best use
on the effective date of the appraisal. Value in use may
or may not be equal to market value but is different
conceptually. (Dictionary)
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Subject Photographs
LOOKING NORTH ACROSS THE SUBJECT PROPERTY
LOOKING SOUTH ACROSS THE SUBJECT PROPERTY
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LOOKING EAST ACORSS THE SUBJECT PROPERTY
LOOKING WEST ACORSS THE SUBJECT PROPERTY
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SUBJECT GOLF COURSE LAND
ANOTHER VIEW NORTH ACORSS THE SUBJECT PROPERTY
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ANOTHER VIEW NORTH ACROSS THE SUBJECT PROPERTY
ANOTHER VIEW SOUTH ACROSS THE SUBJECT PROPERTY
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ANOTHER VIEW SOUTHEAST ACROSS THE SUBJECT PROPERTY
VIEW NORTHWEST ACROSS THE SITE
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VIEW NORTHEAST ACROSS THE SITE
ANOTHER VIEW SOUTHEAST ACROSS THE SITE
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SOUTH FENCE LINE OF THE PROPERTY
SLOAN FLOOD CHANNEL LOOKING NORTHWEST
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SLOAN FLOOD CHANNEL LOOKING SOUTHEAST
VIEW ACROSS CHANNEL AT FUTURE SOLAR SUBSTATION SITE
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FEEDER LINE LOCATION FOR SOLAR POWER AT WEST ROUTE
FEEDER LINE DIRECTION LOOKING NORTH
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Legal Descriptions
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Zoning Map
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Flood Map
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Purchase Order
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ADDENDA
Qualifications of Kendal Stewart
Senior Appraiser
Valbridge Property Advisors | Lubawy & Associates, Inc.
Independent Valuations for a Variable World
State Certifications
State of Nevada
License #A.0002588-CG
Education
Bachelor of Science
Business Administration
Brigham Young University
MBA, University of Las Vegas
Nevada
Contact Details
702-242-9369 (p)
702-242-6391 (f)
Valbridge Property Advisors |
Lubawy & Associates
3034 S. Durango Drive
Suite 100
Las Vegas, NV 89117
www.valbridge.com
[email protected]
Membership/Affiliations:
Candidate:
Appraisal Institute
Appraisal Institute & Related Courses:
Real Estate Appraisal Principles
Basic Valuation Procedures
Report Writing and Valuation Analysis
Case Studies in Real Estate Valuation
Ethics and Standards of Professional Practice
BLM Appraisal Compliance Workshop
Experience:
Senior Appraiser
ValbridgePropertyAdvisors|Lubawy & Associates (2013-Present)
Senior Appraiser
Lubawy & Associates(2000-2013)
Senior Appraiser
Kenneth Lamb & Associates (1994-2000)
Senior Vice President-Real Estate Acquisitions
Minami Development Corp. (1988-1994)
Financial Consultant
Merrill Lynch (1986-1988)
Controller and Director of Real Estate Investments
Realty Holdings Group (1978-1986)
Appraisal/valuation and consulting assignments include: BLM, U.S.
Fish and Wildlife Service, U.S. National Park, and U.S. Army Corp of
Engineer lands; sites for master planned communities, energy
projects, mining, landfills and other large acreage uses; right-of-way,
easement, and other eminent domain appraisals; farm and ranch
properties; apartment buildings; retail stores, shopping centers; office
buildings; hotels, motels; industrial properties; restaurants; residential
subdivisions; auto dealerships; vacant commercial, residential and
industrial land; flood channel, freeway, and airport lands and
facilities; and water rights.
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Qualifications of Matthew Lubawy, MAI
Senior Managing Director
Valbridge Property Advisors | Lubawy & Associates, Inc.
Independent Valuations for a Variable World
State Certifications
Nevada License
# A.0000044-CG
Education
Bachelor of Science
Business Administration
University of Nevada,
Vegas
Las
Contact Details
702-242-9369 (p)
702-242-6391 (f)
Valbridge Property Advisors |
Lubawy & Associates, Inc.
3034 S. Durango Dr. #100
Las Vegas, NV 89117
www.valbridge.com
[email protected]
Membership/Affiliations:
Member:
Appraisal Institute - MAI Designation #10653
Director - (2008 – 2011)
President of Las Vegas Chapter (1998 - 1989)
st
1 V.P. of Las Vegas Chapter (1997 – 1998)
nd
2 V.P. of Las Vegas Chapter (1996 – 1997)
Board Member: Valbridge Property Advisors
Vice-Chairman of the Board (2011 – Present)
Member:
National Association of Realtors
Member:
GLVAR
Board Member: Nevada State Development Corporation
Chairman of the Board (2008-Present)
Experience:
Senior Managing Director
ValbridgePropertyAdvisors|Lubawy & Associates (2013 to Present)
Principal
Lubawy & Associates (1994-2013)
Independent Fee Appraiser and Real Estate Consultant
Timothy R. Morse and Associates (1992 – 1994)
Staff Appraiser/Assistant Vice President
First Interstate Bank (1988 - 1992)
Independent Fee Appraiser and Real Estate Consultant
The Clark Companies (1987 - 1988)
Appraisal/valuation and consulting assignments include: vacant land;
apartment buildings; retail buildings; shopping centers; office
buildings; industrial buildings; religious and special purpose
properties including schools, churches hotel/casinos air hangars,
automobile dealerships, residential subdivisions, and master-planned
communities. Other assignments include tax credit valuations,
Fannie Mae and Freddie Mac reports, and HUD MAP valuations and
market studies.
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Appraisal Institute & Related Courses:
Fundamentals of Separating Real Property, Personal Property, and Intangible
Business Assets, Appraisal Institute
7-Hour National USPAP Update Course, Appraisal Institute
2010-2011 National USPAP Update, Appraisal Institute
Appraising Distressed Commercial Real Estate, Appraisal Institute
Understanding the Home Valuation Code of Conduct, Appraisal Institute
Introduction to Valuation for Financial Reporting, Appraisal Institute
Argus Based Discounted Cash Flow Analysis, Appraisal Institute
National Uniform Standards of Professional Practice Course 400, Appraisal Institute
Online Scope of Work: Expanding Your Range of Services, Appraisal Institute
Online Rates and Ratios: Making sense of GIMs, OARs and DCF, Appraisal Institute
Forecasting Revenue, Appraisal Institute
Law of Easements: Legal Issues & Practical Considerations,
Lorman Education Services
Analyzing Operating Expenses, Appraisal Institute
Valuation of Detrimental Conditions in Real Estate, Appraisal Institute
2007 National USPAP Update, Appraisal Institute
Analyzing Commercial Lease Clauses, Appraisal Institute
Analyzing Distressed Real Estate, Appraisal Institute
Uniform Appraisal Standards for Federal Land Acquisitions,
Appraisal Institute
Online Analyzing Distressed Real Estate, Appraisal Institute
Business Practices and Ethics, Course 420, Appraisal Institute
USPAP Update – Course 400, Appraisal Institute
Litigation Appraising: Specialized Topics and Applications
Separating Real & Personal Property from Intangible Business Assets
So. NV Public Land Mgt. Act BLM Appraisal Compliance Workshop
Income Capitalization
Appraising Non-Conforming and Difficult Properties
Appraiser Liability
2003 National USPAP
Valuation of Partial Acquisitions, Course 401 through IRWA
Partial Interest Valuation – Divided, Course A7414
Highest & Best Use and Market Analysis
Subdivision Analysis
Writing the Narrative Appraisal Report
USPAP 1999 Revisions A7415ES
Reporting Sales Comparison Grid Adj. for Residential Properties
USPAP 1999 Revisions – A7415ES
Litigation Appraisal and Expert Testimony
USPAP (Parts A & B)
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
March 2012
January 2012
January 2010
July 2009
June 2009
June 2009
June 2009
April 2009
April 2009
April 2009
October 2008
August 2008
May, 2007
April, 2007
March, 2007
February, 2007
February, 2007
October 2005
September 2005
September 2005
February 2005
October 2004
September 2003
May 2003
March 2003
March 2003
March 2003
February 2003
October 2000
April 2000
March 2000
January 2000
November 1999
March 1999
March 1999
March 1998
June 1997
1996
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Ethics - USPAP Statements
Comprehensive Appraisal Workshop
Current Issues and Misconceptions in Appraisal
Standards of Professional Appraisal Practice, Part B
Land Faire Nevada
Appraising From Blueprints and Specifications
Accrued Depreciation
Standards of Professional Appraisal Practice, Part A
Report Writing and Valuation Analysis; Exam 2-2
Case Studies; Exam 2-1
Capitalization Theory and Techniques, Part B; Exam 1-BB
Capitalization Theory and Techniques, Part A; Exam 1-BA
Basic Valuation; Exam 1A2
Principles of Real Estate Appraisal ; Exam 1A1
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
March 1995
July 1994
December 1993
1992
July 1992
September 1992
September 1992
1991
June 1991
June 1991
June 1990
June 1990
May 1989
May 1989
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Information on Valbridge Property Advisors
Valbridge covers the U.S. from coast to coast, and is one of the Top 3 national commercial real estate
valuation and advisory services firms based on:
x
x
x
Total number of MAIs (145 on staff)
Total number of office locations (59 across the U.S.)
Total number of staff (600 strong)
Valbridge is owned by our local office leaders. Every Valbridge office is led by a senior managing
director who holds the MAI designation of the Appraisal Institute.
Valbridge services all property types, including:
x
x
x
x
x
x
x
Office
Industrial
Retail
Apartments/multifamily/senior living
Lodging/hospitality/recreational
Land
Special-purpose properties
Valbridge welcomes single-property assignments as well as portfolio, multi-market and other
bulk- property engagements. Specialty services include:
x
x
x
x
x
x
x
x
x
x
x
x
Portfolio valuation
REO/foreclosure evaluation
Real estate market and feasibility analysis
Property and lease comparables, including lease review
Due diligence
Property tax assessment and appeal-support services
Valuations and analysis of property under eminent domain proceedings
Valuations of property for financial reporting, including goodwill impairment, impairment or
disposal of long-lived assets, fair value and leasehold valuations
Valuation of property for insurance, estate planning and trusteeship, including fractional interest
valuation for gifting and IRS purposes
Cost segregation studies
Litigation support, including expert witness testimony
Business and partnership valuation and advisory services, including partial interests
Independent Valuation for a Variable World
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
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ADDENDA
Office Locations
Corporate Office
Valbridge Property Advisors
2240 Venetian Court
Naples, FL 34109
239-325-8234 phone
239-325-8356 fax
Alabama
Valbridge Property Advisors |
Real Estate Appraisers, LLC
4732 Woodmere Boulevard
Montgomery, AL: 36106
334-277-5077 phone
334-277-5078 fax
Arizona
Valbridge Property Advisors |
MJN Enterprises, Inc.
6061 E. Grant Road, Ste.121
Tucson, AZ 85712
520-321-0000 phone
520-290-5293 fax
California
Valbridge Property Advisors |
Hulberg & Associates, Inc.
225 Crossroads Boulevard
Ste. 326
Carmel, CA 93923
831-917-0383 phone
925-327-1696 fax
2813 Coffee Road, Ste.E-2
Modesto, CA 95355
209-569-0450 phone
209-569-0451 fax
One North Market Street
San Jose, CA 95113
408-279-1520 phone
408-279-3428 fax
California, cont.
Valbridge Property Advisors |
Cummings Appraisal Group, Inc.
99 S. Lake Avenue, Ste.21
Pasadena, CA 91101
626-744-0428 phone
626-744-0922 fax
Florida
Valbridge Property Advisors |
Armalavage Valuation, LLC
2240 Venetian Court
Naples, FL 34109
239-514-4646 phone
239-514-4647 fax
Valbridge Property Advisors |
Penner & Associates
1370 N. Brea Boulevard, Ste. 255
Fullerton, CA 92835
714-449-0852 phone
714-738-4371 fax
Valbridge Property Advisors |
Beaumont, Matthes & Church, Inc.
603 Hillcrest Street
Orlando, FL 32803
407-839-3626 phone
407-839-3453 fax
Valbridge Property Advisors |
Ribacchi & Associates
10301 Placer Lane, Ste. 100
Sacramento, CA 95827
916-361-2509 phone
916-361-2632 fax
Valbridge Property Advisors |
Broom, Moody, Johnson &
Grainger, Inc.
121 W. Forsyth Street, Ste. 1000
Jacksonville, FL 32202
904-926-3000 phone
904-296-8722 fax
Colorado
Valbridge Property Advisors |
Bristol Realty Counselors
5345 Arapahoe, Ste. 7
Boulder, CO 80303
303-443-9600 phone
303-443-96223 fax
Connecticut
Valbridge Property Advisors |
Italia & Lemp, Inc.
rd
6 Central Row, 3 Floor
Hartford, CT 06103
860-246-4606 phone
17 High Street, Ste. 214
Norwalk, CT 06851
203-286-6520 phone
3160 Crow Canyon Place, Ste.245
San Ramon, CA 94583
925-327-1660 phone
925-327-1696 fax
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Valbridge Property Advisors |
Entreken Associates, Inc.
1100 16th Street N
St. Petersburg FL 33705
727-894-1800 phone
727-894-8916 fax
Georgia
Cantrell Miller, LLC
2675 Paces Ferry Road, Ste. 145
Atlanta, GA 30339
678-644-4853 phone
Idaho
Valbridge Property Advisors |
Auble Jolicoeur & Gentry, Inc.
1875 N. Lakewood Drive, Ste. 100
Coeur d’Alene, ID 83814
208-292-2965 phone
208-292-2971 fax
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Office Locations
Idaho, cont.
Valbridge Property Advisors |
Mountain States Appraisal &
Consulting, Inc.
1459 Tyrell Lane, Ste. B
Boise, ID 83706
208-336-1097 phone
208-345-1175 fax
Louisiana
Valbridge Property Advisors |
Argot, Derbes, Graham, Shuffield
& Tatje, Inc.
10455 Jefferson Highway, Ste. 200
Baton Rouge, LA 70809
225-292-3443 phone
225-292-3473 fax
Indiana
Valbridge Property Advisors |
Mitchell Appraisals Inc.
820 Fort Wayne Avenue
Indianapolis, IN 46204
317-687-2747 phone
317-687-2748 fax
512 N. Causeway Boulevard
Metairie, LA 70001
504-833-8324 phone
Iowa
Valbridge Property Advisors |
Roy R. Fisher, Inc.
th
2010 E. 38 Street, Ste. 201
Davenport, IA 52807
563-355-6606 phone
563-355-6612 fax
Kansas
Valbridge Property Advisors |
Shaner Appraisals, Inc.
10990 Quivira, Ste. 100
Overland Park, KS 66210
913-451-1451 phone
913-529-4121 fax
Kentucky
Valbridge Property Advisors |
Allgeier Company
th
214 S. 8 Street, Ste. 200
Louisville, KY 40202
502-585-3651 phone
502-589-7480 fax
7607 Fern Avenue, Ste.104
Shreveport, LA 71105
318-797-0543 phone
318-797-8030 fax
Maryland
Valbridge Property Advisors |
Lipman Frizzell & Mitchell LLC
6240 Old Dobbin Lane, Ste. 140
Columbia, MD 21045
410-423-2300 phone
410-423-2410 fax
Nevada
Valbridge Property Advisors |
Lubawy & Associates, Inc.
3034 S. Durango Drive, Ste. 100
Las Vegas, NV 89117
702-242-9369 phone
702-242-6391 fax
North Carolina
Valbridge Property Advisors |
John Bosworth & Associates, LLC
4530 Park Road, Ste. 100
Charlotte, NC 28209
704-376-5400 phone
704-376-1095 fax
Valbridge Property Advisors |
Paramount Appraisal Group, Inc.
412 E. Chatham Street
Cary, NC 27511
919-859-2666 phone
919-859-859-2667
Ohio
Valbridge Property Advisors |
Akron Appraisal Group, Inc.
Massachusetts
333 Massillon Road, Ste. 16
Valbridge Property Advisors |
Akron, OH4431
Bullock Commercial Appraisal, LLC
330-899-9900 phone
21 Muzzey Street, Ste. 2
253-484-3302 fax
Lexington, MA 02421
781-652-0700 phone
Valbridge Property Advisors |
781-652-0707 fax
Allgeier Company
9277 Centre Point Dr. Ste. 350
Michigan
West Chester, OH 45069
Valbridge Property Advisors |
513-785-0820 phone
The Oetzel-Hartman Group
513-563-3539 fax
321 Woodland Pass, Ste. 200
East Lansing, MI 48823
517-336-0001 phone
517-336-0009 fax
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Oklahoma
Valbridge Property Advisors |
Walton Property Services, LLC
8282 S. Memorial Drive, Ste. 302
Tulsa, OK 74133
918-712-9992 phone
918-742-3061 fax
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Office Locations
Pennsylvania
Valbridge Property Advisors |
Barone, Murtha, Shonberg &
White, Inc.
4701 Baptist Road, Ste. 304
Pittsburgh, PA 15227
412-881-6080 phone
412-881-8040 fax
Valbridge Property Advisors |
Lukens & Wolf LLC
1626 Spruce Street
Philadelphia, PA 19103
215-545-1900 phone
215-545-8548 fax
South Carolina
Valbridge Property Advisors |
Robinson Company
610 N. Main Street
Greenville, SC 29601
864-233-6277 phone
864-233-8577 fax
South Carolina
Valbridge Property Advisors |
Robinson Company
610 N. Main Street
Greenville, SC 29601
864-233-6277 phone
864-233-8577 fax
Valbridge Property Advisors |
Atlantic Appraisals, LLC
1250 Fairmont Avenue\
Mt. Pleasant, DC 29464
843-884-1266 phone
843-881-7532 fax
800 Main Street, Ste. 220
Hilton Head, SC 29926
843-342-2302 phone
843-342-2304 fax
Tennessee
Valbridge Property Advisors |
C&I Appraisal Services, Inc.
6750 Poplar Avenue, Ste. 706
Memphis, TN 38138
901-753-6977 phone
Valbridge Property Advisors |
Meridian Realty Advisors, LLC
213 Fox Road
Knoxville, N 37922
865-522-2424 phone
865-522-0030 fax
Valbridge Property Advisors |
R.K. Barnes & Associates, Inc.
112 Westwood Place, Ste. 300
Brentwood, TN 37027
615-369-0670 phone
615-369-0671 fax
Texas
Valbridge Property Advisors |
The Gerald A. Teel Company, Inc.
400 North St. Paul, Ste. 550
Dallas, TX 75201
214-446-1611 phone
974 Campbell Road, Ste 204
Houston, TX 77024
713-467-5858 phone
713-467-0704 fax
1001 Texas Avenue, Ste. 150
Lubbock, TX 79401
806-744-1188 phone
806-744-1189 fax
Valbridge Property Advisors |
Dugger, Canaday, Grafe, Inc.
111 Soledad, Ste. 800
San Antonio, TX 78205
210-227-6229 phone
210-227-8520 fax
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
Utah
Valbridge Property Advisors |
Free & Associates, Inc.
260 South 2500 West, Ste. 301
Pleasant Grove, UT 84062
801-492-9328 phone
801-492-1420 fax
1100 East 6600 South, Ste. 201
Salt Lake City, UT 84121
801-262-3388 phone
801-262-7893 fax
20 North Main, Suite 304
St. George, UT 84770
435-773-6300 phone
435-773-6298 fax
Virginia
Valbridge Property Advisors |
Axial Advisory Group, LLC
656 Independence Parkway,
Ste. 220
Chesapeake , VA 23320
757-7410-1222 phone
757-345-070 fax
7400 Beaufont Springs Drive,
Ste. 200
Richmond, VA 23225
804-672-4473 phone
4732 Longhill Road, Ste. 3202
Williamsburg, VA 23188
757-345-0010 phone
757-345-0170 fax
Washington
Valbridge Property Advisors |
Allen Brackett Shedd
419 Berkley Avenue, Ste. A
Fircrest, WA 98466
253-274-0099 phone
253-564-9422 fax
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Office Locations
Washington, cont.
Valbridge Property Advisors |
Allen Brackett Shedd
th
12320 NE 8 Street, Ste. 200
Bellevue, WA 98005
425-450-4040 phone
425-688-1819 fax
Valbridge Property Advisors |
Auble, Jolicoeur & Gentry, Inc.
324 N. Mullan Road
Spokane Valley, WA 99206
509-747-0999 phone
509-747-3559 fax
Wisconsin
Valbridge Property Advisors |
Vitale Realty Advisors, LLC
12660 W. North Avenue
Brookfield, WI 53005
262-782-7990 phone
262-782-7590 fax
VALBRIDGE PROPERTY ADVISORS | Lubawy & Associates, Inc.
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