The Cost-Benefit Group, LLC- Brochure

C GB THE COST BENEFIT GROUPwww.cost-benefit.comMeasuring the Economic and Financial Impactsof Environmental Hazardsand Real Estate Development ProjectsTHE COST BENEFIT GROUPThe Cost Benefit Group (CBG), formerly Damage Valuation Associates, specializes in evaluatingthe economic and financial impacts of environmental hazards and real estate development projects.CBG applies state-of-the-art economic and financial theory to assist clients in the following areas: - Determining the Effects of Environmental Damages Upon Property Values - Measuring the Economic Impacts of Environmental Hazards - Cost-Benefit/Risk Benefit/Cost Effectiveness Analysis - Litigation Support - Hedonic Damage Valuation - Real Estate Feasibility Analysis - Appraisal of Property Values - Valuations of life and health in personal injury and wrongful death casesWe are known for quantifying costs and benefits that others omit-from the decline in real estate pricesresulting from a toxic chemical leak, to the social costs arising from a body of water rendered unavailable forrecreational use, to the benefits of living an extra year resulting from cleaner air. We can also determine thenumber of jobs gained or lost from a variety of projects. We offer a unique combination of: - Simple--but effective--graphics presentations - State-of-the art computerized models - Computerized databases of cost benefit and damage studies that facilitate quick turnaround at moderate costs - Expertise in real estate, finance, economics, government, and environmental policy - Thorough searches of economic literature and databases - The creativity needed to measure all costs & benefits--even where effects appear to be impossible to quantifyThe Cost Benefit Group has produced studies of 800 projects worth more than 2 billion dollars in 140counties and 28 states. Our associates have also evaluated the economic and financial impacts of major powerplant construction projects (worth more than $10 billion), utility rates, and environmental hazards uponemployment, income, corporate balance sheets, real estate markets, municipalities and utilities. CBG hasappraised vacant land; shopping centers; apartment complexes; office buildings; automobile dealerships;industrial buildings; nursing homes; a marina; and hotels.These projects were commissioned by Citibank; Chemical Bank; Marine Midland Bank; the Bank ofMontreal; GMAC; the U.S. Department of Housing and Urban Development; the Federal Deposit InsuranceCorporation; Chinese American Bank; Home Savings of America; the State of New York; several law firms,and other institutions.OUR APPROACHIn all our projects the Cost Benefit Group attempts to optimize client-staff involvement. We prefer working closely with the clientto plan the scope of work and set objectives, so that the work dovetails neatly into the client's overall strategy, and the clientavoids false starts and misdirected resources.CONTENTSA SAMPLE OF PREVIOUS ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1RESUMES OF KEY ASSOCIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4SELECTED CASE STUDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11VALUATION OF CONTAMINATED PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12COMMERCIAL PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14RESIDENTIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24CREATION OF BENEFIT VALUATION DATABASE FOR THE U.S. EPA . . . . . . . . . . . . 30VALUATION OF GOVERNOR’S ISLAND NATIONAL MONUMENT PARK . . . . . . . . . . 30IMPACTS OF CON EDISON ELECTRIC SUBSTATION, NEW YORK, NY . . . . . . . . . . . . 40ECONOMIC IMPACT OF OPERATING THE SHOREHAM NUCLEAR PLANT . . . . . . . . 41FEASIBILITY STUDIES/APPRAISALS OF REDEVELOPMENT PROJECTS . . . . . . . . . . 42COST-BENEFIT ANALYSIS OF GREEN ROOF PROGRAM – NY CITY . . . . . . . . . . . . . . 44REAL ESTATE VALUATIONS/APPRAISALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48THE ACB COMPUTERIZED COST BENEFIT ANALYSIS SYSTEM . . . . . . . . . . . . . . . . . 51LOCATION OF GROUP HOMES FOR MENTALLY RETARDED-NEW YORK . . . . . . . . 52A BENEFIT ANALYSIS OF THE REDUCTION OF THEFT CRIMES . . . . . . . . . . . . . . . . . 52HEDONIC VALUATION TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 1A SAMPLE OF PREVIOUS ASSIGNMENTSProject: Valuation of Contaminated Commercial PropertyTasks: Appraise property values before and after contamination in Bedford, Commack, East Fishkill,Elmont, Franklin Square, Brooklyn, Lake Ronkonkoma, Mattituck, Mineola, Sag Harbor, ValleyStream & Yaphank New York; Burlington, Jersey City, Pittsgrove & Ridgewood, NJ; EastStroudsburg, PA for litigation, acquisition, disposition, redevelopment, condemnation, financingand tax reductionsClients: Techlaw, TRS, Certilman Balin, U.S. EPA, Rose, Breslin, Podvey Sachs, Meth Fessel Werbel,Zarin-Steinmetz, Law Offices of John Curley, Jersey City Redevelopment Agency, Elliott &Elliott.Project: Cost Benefit Analysis/Damage Valuation DatabaseTasks: Work with the U.S. EPA and Environment Canada and ERG to create a database of valuationstudy data on the Internet, now at www.evri.ca.Project: Shoreham Nuclear Plant Case Topics: Economic and environmental impact study of proposed rate increase, and construction ofalternatives. Study impacts upon businesses and property values.Clients: Government of Suffolk County, New York; Union AssociatesProject: Contaminated ResidencesTopics: Value impacts upon homes of TCE, gasoline, and other contaminants for litigation/tax certiorari.Brockport & Lindenhurst, NY; Alloway & Redbank, NJ, Laureldale, PA; Montgomery Al.Clients: Faraci & Lange, Cahn, Wishod & Lamb, Law Offices of John Brennan, Podvey Sachs; Elliot &Elliot, Gathings Law.Project: Garden State Plaza LitigationTopics: Determination of property values for disputed land in Paramus New Jersey. Our estimated valueof $45,000,000 was accepted by an arbitrator.Project: Governor’s Island Historic National Monument Park, New YorkTopics: Valued two historic forts -- "Castle Williams" and "Fort Jay" for U.S. General ServicesAdministration. Value arises from 1) Residential Income, 2) Commercial Revenues (restaurants,shops, lodging), 3) Transfer of Air Rights, 4) Increase in surrounding property values, 5) Netbenefits to tourists, 6) Net benefits to users of vacant land for recreational and other purposes, 7)Non-use values from existence of historical monuments and option of visiting themClient: U.S. General Services Administration, Grubb & EllisTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 2Project: Impacts of Con Edison Electric Substation, West 30 - 31st Street New York, NYthTopics: Estimate value diminution from electric substation due to public perceptions regarding the dangersof electromagnetic emissions, the risk of fire and accidents associated with such structures, noiseconcerns, increased dangers arising from potential terrorist attacks and the potentialincompatibility of the structure with neighboring uses. Project: Feasibility Studies/Appraisals of Redevelopment ProjectsTopics: Determine feasibility through analyses of regional and neighborhood economic and socialconditions; key sectors; supply and demand for real estate; the property, zoning, sale prices ofvacant land and of comparably improved properties; rents achieved in relevant markets; andabsorption and vacancy rates in Central Islip, Coram, Deer Park, East Meadow, East Patchogue,Fishkill, Flushing, Franklin Square, Greece, Kings Park, Long Beach, Manhattan & MountSinai, Oswego, Port Jefferson Station, St. James, Stony Brook, Uniondale, Webster, Yaphank,NY; Cape May, Fort Lee & Jersey City, NJ; Andover, Cambridge & Peabody, MA; & Annapolis,MD. Estimated value of these projects upon completion is far in excess of $1 billionProject: Cost-Benefit Analysis of Green Roof Program – New York CityTopics: Estimate potential benefits and costs of roofs covered with grass and plants, including: 1)ameliorating “urban heat island” effect, 2) lowering energy expenditures, 3) purifying the air, 4)reducing storm-water runoff, 5) increased roof service life, 5) Aesthetic/Recreational benefits, 6)reducing noise, and 7) generating jobs.Project: Health Care Real Estate ValuationsTopics: We are recognized as experts in the valuation of real estate utilized by health care institutions withunique databases and years of experience. Valuations include detailed descriptions of: regional andneighborhood demographic trends; supply and demand factors and more. Projects includehospitals in Bethpage, Brooklyn, East Meadow, and Manhattan, NY and Jersey City, NJ; NursingHomes in Edgemere, Oswego, Rockaway Park, Rockville Centre, Uniondale and Woodside, NYCape May, NJ, and Peabody, MA; Assisted Living Facilities in Brooklyn, Chester, Forest Hills& Plainview, NY, Montville, NJ, Cambridge, MA & Annapolis MD; and Medical Offices in GreatNeck, Old Bethpage & Plainview, NYProject: Turnberry Tower, 1438 Third Avenue, ManhattanTopics: Value 147 unit 14 story apartment building for client involved in foreclosure litigation.Project: Crown Sterling SuitesTopics: Value eight all-suite hotels in three states for potential sale (estimated value $152,000,000).Project: Valuation of Personal Injury DamagesTopics: Valuation of damages, including the present values of lost earnings, fringe benefits, householdchores, medical costs, in personal injury case.Client: Law Offices of Barry Montrose, P.C.Project: Townview Apartments, Fishkill, New YorkTopics: Feasibility study of potential $34,000,000 apartment development project.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 3Project: La Hacienda Apartments, Brownsville, TexasTopics: Appraise 227 unit apartment complex, include study of local economy, rents, zoning, andcomparable sales.Project: Rosewood Nursing Home, Peabody, MATopics: Feasibility study--development of 135 bed nursing home.Client: Jackson Associates LI; TRI Capital; US Department of HUDProject: Burnhamthorpe Square, Toronto, CanadaTopics: Appraise four office buildings with an estimated value of $32,000,000.Client: Jackson Associates LI; Angeles Mortgage Investment TrustProject: Seabrook Nuclear PlantTopics: Economic and environmental impact of proposed rate increase. Financial analysis of rateproposals.Clients: Union Associates; Coalition of businesses and consumer organizationsProject: Market Study of Eight New York CountiesTopics: Study optimal location of group homes for mentally retarded given locations of existing facilities,vacancy rates, rents & prices.Client: James Felt Realty/Grubb and Ellis; The State of New YorkProject: Reagan Square Shopping Center, Austin, TexasTopics: Appraise shopping center and evaluate local economy for portfolio valuation.Project: Suffolk Saturn, St. James, New YorkTopics: Feasibility study of new automobile dealership including appraisal of vacant land, and analysis oflocal economy and automobile dealership market.Note: Clients listed include institutions that commissioned other firms, with whom we served as subcontractors.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 4RESUMES OF KEY ASSOCIATESKENNETH ACKSEDUCATION:THE NYU STERN GRADUATE SCHOOLOF BUSINESS ADMINISTRATIONM.B.A. Finance, October 1988THE UNIVERSITY OF CHICAGO B.A. Economics and History, June 1977WORK HISTORY:1990-present The Cost-Benefit Group LLC (www.costbenefitgroup.com), formerly Damage ValuationAssociatesC Founder and chief executive of economic consulting and real estate analysis firm which produced studies of more than 900projects worth over $3.5 billion dollars in 140 counties and 28 states. Firm focuses upon estimating the economic impacts ofenvironmental hazards upon real estate, and has provided a wide range of other consulting services.C Worked with the U.S. Environmental Protection Agency and ERG Inc. to help create cost-benefit and valuation databases andanalysis systems.C Analyzed the effects of nuclear power plants, gasoline storage tanks, asbestos, groundwater contamination, oil leaks,construction projects, and utility rates upon property values, employment, income, corporate balance sheets, real estate markets,and municipalities.C Valued contaminated properties, office buildings, shopping centers, hotels, apartment buildings, vacant land, mobile homeparks, automobile dealerships, warehouses, factories, nursing homes, and marinas from Toronto Canada, to Los AngelesCalifornia, and to Tampa Florida, including more than 50 in Manhattan.C Conducted acquisition reviews, market analyses, and feasibility studies.C Prepared 135 page report on the New York City economy and real estate market to outline loan portfolio risks faced by currentand prospective stockholders of North Fork Bank.C Monitor, model, and forecast regional economic and financial developments.C Designed and estimated Econometric and Input/Output models.C Created the ACB Cost Benefit Analysis Software, which can significantly reduce the time and costs for determining impacts.C Furnished litigation support to more than 30 law firms regarding over 50 cases.C Testified as expert witness before the Supreme Court of the State of New York, a Superior Court in Morris County, NJ, andthe NY City Council.C Analyzed Costs and Benefits of Green Buildings, Green Roofs, Brownfields and Real Estate Development Projects.C Health care valuations/feasibility studies/market analyses of hospitals, nursing homes and assisted living facilities in Anapolis,MD; Cambridge and Peabody MA, Cape May and Montville NJ; and Brooklyn, Chester, Forest Hills, Plainview, Port Jefferson,and Syracuse NYC Estimated impacts upon property values of contamination for P residences in Brockport, Great Neck, New Hyde Park, and Lindenhurst, NY; Alloway, Jersey City, and Redbank NJ;Montgomery, AL, Town of Pines IndianaP commercial properties in Bedford, Commack, Fishkill, Plainview, Ronkonkoma, Sag Harbor, and Valley Stream, NY, JerseyCity and Ridgewood, NJ, and East Stroudsburg and Nesquehoning, PAC The above projects were commissioned by J.P. Morgan Chase, Citibank, HSBC, the Bank of Montreal, GMAC, Xerox, USEnvironmental Protection Agency, US Dept. of Housing and Urban Development, the Federal Deposit Insurance Corporation,Chinese American Bank, Amerasia Bank, National Amusements Inc., Grubb and Ellis, Landauer Realty, the Related Companies,the New York State Housing Finance Agency, The New York City Dept. of Housing Preservation & Development, Nassau andSuffolk Counties, the City of New Orleans, Jersey City, Federated Department Stores, Sheraton Hotels, Techlaw Inc., and over40 law firms.C Created the Environmental Valuation & Cost-Benefit Website www.costbenefitanalysis.org, (formerlywww.damagevaluation.com)http://www.damagevaluation.com which has drawn more than 63,000 visitors, been recognizedas a respected source of information by numerous organizations with links and favorable mentions, achieved good search engineplacement, and generated new business. 1994-present Editor and Publisher, Environmental Damage Valuation and Cost Benefit News(www.envirovaluation.org) C Design, edit and market an acclaimed newsletter, with paid subscribers in ten nations, including influential environmental policymakers. In recognition of its merits, the United States EPA and other organizations have devoted space on websites to backissues.C Created the Environmental Valuation & Cost-Benefit News Website and Newsfeed (October, 2005). According to AWSTATS,From July 1, 2005 through December 31, 2005 our sites welcomed an average of 15,440 unique visitors per month, who madea total of 197,219 visits and viewed 1,809,095 pages. 3,102 of our visitors felt that the site was worthy of a bookmark; 11,128spent between 5 and 15 minutes on the site; 10,865 between 15 minutes and 30 minutes, 15,737 between 30 minutes and 1 hour,and 22,719 spent more than an hour on-site. The Hit Count was 2,708,308. Site has achieved top, top five or top fifteen GoogleSearch status for such keywords as cost-benefit, environmental economics, cost-benefit analysis, and cost-benefit greenbuildings, brownfields, green roofs, ...Among those linking to the site have been the United States Environmental ProtectionAgency, Environment Canada, the Association of Environmental & Resource Economists, Resources for the Economists onthe Internet, the National Association of Business Economists, www.env-econ.net, the ISO 14000 Information Center, theCentre for Ecological Sciences of the Indian Institute of Science,..C Created unique Internet marketing campaign, including a "virtual intern" program. Ten interns located throughout the UnitedStates have written articles, and assisted with advertising and distribution to more than 8,500 decision makers in 65 countriesthrough a variety of avenues.1986-1988 Senior Analyst, Southmark Inc.C Structured $80 million in real estate syndications, published forecasts of the structure and performance of local and regionaleconomies in 7 states; and analyzed legal documents.1984-1986 Project Coordinator, NYC Department of Housing Preservation and DevelopmentC Analyzed, negotiated and underwrote loans for the rehabilitation and development of real estate; expedited governmentapprovals including environmental reviews; monitored legislation/determined impacts; supervised the creation andimplementation of databases; and assisted attorneys in closing loans and reviewing documents. The loans played a significantrole in revitalizing neighborhoods.1977-1982 Research Assistant, International Research Department Federal Reserve Bank of NYC Monitored and forecasted economic developments and produced special studies of capital flows, trade, exchange rates, interestrates, housing finance and money supply.PUBLICATIONS/SPEAKING:C "A Framework for Analyzing the Costs and Benefits of Green Roofs: Preliminary Results” Seminar presentations and articlefor the Columbia University Earth Institute, Columbia University School of International and Public Affairs, NASA GoddardInstitute for Space Studies, and New York Environmental Infrastructure Study (2004-2006)C "Tools for Resolving Community Opposition to Public Projects" Real Estate Review (Winter, 1995)C "Shooting In the Dark -- How Computer Software Can Improve the Quality of Government Policies" The EngineeringEconomist (Spring, 1995)C “Environmental Values” Carnegie Council on Ethics and International Affairs (May, 1998 speech)C "Measuring and Evaluating the Environment & Its Effects on Health" (March 25, 1999 speech at The Ethyl R. Wolfe Institutefor the Humanities in cooperation with the Environmental Studies Program of Brooklyn College of the City University of NewYork)C Valuation of Environmental Damages to Real Estate; The Benefits and Costs of Crime Policies; International Real EstateInvestment and Political Risk; Simultaneity Bias & Specification Error from the Omission of Socio-political factors inEconomic Models; Cognitive Determinants of Human Capital Investments and Productivity; Complexity, Change, andEconomic Analysis; C An Econometric Model of Political, Social and Econometric Change in Britain from 1895 to 1980COMPUTER SKILLS:Proficiency in using Lotus, Argus, Excel, Project, HTML (Website Design), Windows, G, and several database, econometric, andword processing computer programs. Computer models/programs have been used to discount cash flows, to estimate internalrates of return, to forecast regional economic growth, to create a website, to track client contact, and to estimate the impacts ofgovernment policies upon employment and income. PROFESSIONAL AFFILIATIONS/COMMUNITY ACTIVITIES:Fellow, World Innovation Foundation, www.thewif.org.uk, an independent international think tank consisting of 2,000individuals, including 60 Nobel Prize winners, providing advice regarding scientific, technological, engineering and appliedeconomics matters to non-aggressive governments and corporations, and designing, building and operating an Open ResearchEstablishment featuring Laboratories and Incubators throughout the worldAmerican Economic Association; Association of Environmental and Resource Economists; New York Association of BusinessEconomists; National Association of Forensic EconomistsCoach/Manager Long Beach Little League, Recreational Basketball 1997-2002THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 7QUALIFICATIONS OF KARA J. FISHMAN, Ph.D., MAIAppraisal ExperienceCommercial Appraiser, MAI: Principal in Fishman Appraisal Services, November 2004 – present.Specializing in the appraisal of commercial and income-producing properties, HUD multifamily loanprograms, and vacant land, both residential and commercial. Experience in the appraisal ofcommercial and investment properties, including office buildings (high rise, single tenant, multipletenant); warehouse and manufacturing uses; retail shopping centers (specialty, community,neighborhood), apartments (<10 - 900+ unit properties); vacant commercial land; land approved formulti-family development; contaminated properties; properties affected by stigma; and specialpurpose properties, including campgrounds, self-storage, junkyards, proposed golf courses;recreational facilities, and earth excavation operations. Experience in multi-family housing market analysis, investment analysis, and appraisal for USDepartment of Housing and Urban Development 221(d)(4) and 223(f) programs; MAP and TAPtrained. Commercial Appraiser, MAI: Partner in Merrifield Fishman Appraisal Services, LLC, December2003 – November 2004. Specializing in the appraisal of commercial and income-producingproperties, HUD multifamily loan programs, and small residential and mixed-use properties. Commercial Appraiser, MAI: Independent fee appraiser in Connecticut and Massachusetts,September 1995 – January 2001; May 2002-November 2003. Specializing in the appraisal ofcommercial and income-producing properties, environmental valuation, HUD multifamily loanprograms, and open space acquisition. Commercial Appraiser: Fee appraiser for Lavissiere Associates, a Connecticut appraisal firm,February 1990 – August 1994. Specialized experience in the valuation of special-use properties(junkyard, campground, resort health spa, proposed golf course) and affordable housingdevelopment.Residential Appraiser: Staff appraiser for Thomas Hoben, Litchfield, Connecticut, September 1989– January 1990. Collected data, analyzed market conditions, performed financial analysis andprepared appraisal reports of residential properties. Reviewer: Reviewer for economic, statistics, mathematics and government programs terminologyfor The Dictionary of Real Estate Appraisal, 4th Edition, to be published by the Appraisal Institute.Environmental and Economic ExperienceEnvironmental Analyst: Environmental analyst and economist for Mangi Environmental Group, Inc.,a consulting group in Virginia specializing in NEPA (National Environmental Policy Act) andwatershed assessments. Responsible for researching and writing on demographic, economic impact,recreation, land use and environmental justice issues. Agencies worked for include the U.S. ArmyTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 8Corps of Engineers, the Farm Service Agency of the United States Department of Agriculture, theU.S. Forest Service, and the National Park Service. Instructor: University of Connecticut, Department of Geography, Spring 2000. Taught“Environmental Planning and Management” to upper division undergraduate students. Research Assistant: University of Connecticut, Department of Agricultural and Resource Economics,“Economic Evaluation of Connecticut Lakes with Alternative Water Quality Levels.” Project fundedby the Connecticut Department of Environmental Protection to estimate the impact of changes inwater quality on social welfare property values and public site user values. Research Assistant: Analysis of farmland values and rates of return for real estate investment groupspecializing in agricultural land. Research Assistant: Eastern Research Group, Cambridge, Massachusetts. Reviewed empiricaleconomic studies for the “Environmental Valuation Reference Inventory” project jointly developedby the United States Environmental Protection Agency and Environment Canada.Planning Coordinator: Harlem Valley Planning Partnership, Amenia, New York. Only staff personto a five town rural planning group. Main projects were the adaptive reuse of a state hospital on850+ acres and regional recycling program.Housing Coordinator/Loan Specialist: Westchester County Planning Department, White Plains, NewYork. Processed and made underwriting recommendations on loans for housing rehabilitation andcommunity development projects funded under the federal Community Development Block Grantprogram. EducationUniversity of Connecticut: Storrs, CT, Ph.D., December 2000, Agricultural and ResourceEconomics. Specializing in environmental economics and policy, non-market valuation, and waterresources. University of Connecticut: Storrs, CT, M.S., May 1999, Agricultural and Resource EconomicsColumbia University: New York, NY, M.S., October 1987, Real Estate Development Northwestern University: Evanston, IL, B.A., June 1984, HistoryMembershipsAmerican Agricultural Economics AssociationAppraisal Institute (MAI designation since 1994) THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 9AN INTERDISCIPLINARY TEAM APPROACHWe have worked closely with a wide variety of firms which can offer specialized expertise that isnot available in-house. The Cost Benefit Group can rapidly furnish a coordinated interdisciplinaryteam to evaluate a variety of environmental and financial problems. We maintain working relationships with environmental service, survey research, and accountingfirms to insure that appropriate experts are called upon. Some of these firms are described in thefollowing pages.THE H2M GROUP--HOLZMACHER, McLENDON & MURRELL, P.C.H2M has served public and private sector clients for more than 60 years. H2M has staff resourcesof approximately 150, including 18 Licensed Professional Engineers, 4 Licensed Architects; 3Professional Planners; 5 Diplomates of the American Academy of Environmental Engineers,certified groundwater professionals, hydrogeologists, geologists, surveyors, constructioninspectors, chemists, and biologists. Services offered by H2M include: Architecture, Environmental Planning, Civil/Site Engineering;Structural Engineering; Surveying and Mapping; Water Supply and Distribution; WastewaterEngineering; Hydrogeology; Hazardous Waste Management; Industrial Services; RegulatoryCompliance; Remedial Investigations and Design; Air Pollution Control; Solid Waste Management;Resource Recovery/Recycling; Construction Management; and Environmental Testing at their ownlaboratory.Among the clients that H2M has served are Aetna Life & Casualty, Allstate Life, AmericanCyanamid Company, Ciba-Geigy Corp., Emerson Electric, Estee Lauder Inc., GrummanAerospace, ITT, Merck, Mobil Chemical, Nabisco, the U.S. Environmental Protection Agency, theNew York State Department of Environmental Conservation, The New Jersey Department ofEnvironmental Protection and Energy, Chase Manhattan Bank, the Bank of New York,Consolidated Edison, Jersey Central Power and Light, and the City of New York.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 10NRD MARKETINGNRD Marketing offers two decades of experience in fielding market surveys, and in using a varietyof methods to measure public opinion. NRD can field contingent valuation surveys whichdetermine the values individuals place upon environmental goods and disamenities. Such surveysare often the only means to determine the expected benefits from removing pollutants ormaintaining a habitat. NRD has the capacity and experience to field telephone surveys, in-personinterviews, and/or mail surveys. NRD has also fielded innovative on-site surveys at beaches andparks. Past clients include Bell Atlantic, Pathmark, Bradlees, R.L. Polk, Stop N Shop, and LongBeach Hospital.HOLTZ RUBENSTEIN & CO., Certified Public Accountants/Business AdvisorsHoltz Rubenstein was founded in 1975, and has a staff of approximately 50, including more thantwenty-five CPA's. Services rendered include litigation support, business valuation, audits offinancial statements, filings with the SEC, income tax planning and compliance, estate planning,business planning and strategy, merger and acquisitions analysis, financial management andbudgeting, workouts, operations management, inventory control, and employee benefit planning.Since 1978 Holtz Rubenstein & Co, continuously passed rigorous Peer Reviews required by theSEC Practice Section of the AICPA every three years. The reviews concluded that their systemof quality control was highly comprehensive, thoroughly documented, and reflected the highprofessional standards of the SEC Practice Section. Holtz Rubenstein was named by CPAServices Inc. as one of the Top 50 small to mid-size USA Firms.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 11SELECTED CASE STUDIESTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 12VALUATION OF CONTAMINATED PROPERTIESWe have estimated property value changes for numerous property types arising from a wide varietyof contaminants, including gasoline, MTBE, lead, perc, and asbestos. These reports generally feature detailed descriptions and analyses of contamination at thesubjects, of the area and neighborhood; of the subject site and improvements; of highest and bestuses for the property; of comparable sales and leases; of significant financial parameters; and ofother factors relevant to valuation. The analysis of contamination at the subject features a timelinelisting critical events including discovery of contamination, environmental tests, decisions bygovernment regulators, remediation activity, public reactions, publicity in various media, andimpacts upon sales, leases, and financing. The area and neighborhood analysis features historical,current, and projected economic and demographic statistics, including population, age distribution,average household size, employment, unemployment, types of jobs, largest employers, income,and income distribution; a discussion of the real estate market, including land uses, the supply ofand demand for particular types of property, rents, and sale prices; and area amenities includingschools, medical facilities, and recreational facilities. For special purpose properties such asnursing homes, hospitals, movie theaters, and automobile dealerships we provide in-depthanalyses of economic and regulatory factors influencing these markets. The property descriptionincludes a discussion of site and building features, zoning and taxes. Our valuation section utilizes the latest tools and data employed by real estate appraisers andenvironmental economists. Appraisal methods applied include the Cost, Sales Comparison,Income Capitalization, Discounted Cash Flow, Discounted Sellout, and Land Residual Approacheswhere indicated. Among the analytical weapons deployed by environmental economists that weconsider include Hedonic Valuation, Contingent Valuation and conjoint analyses. Courts and financial institutions have continually demanded increasing rigor over time. Wetherefore include comprehensive literature surveys discussing the latest theoretical and empiricalresearch on the impacts of environmental contamination and any other topics bearing upon thevalue of a particular property. However, for many of these assignments we reduce the scope ofwork in order to minimize costs to clients and to insure that the project is tailored to the client’sneeds.The table below summarizes projects analyzed, and more detailed descriptions follow:THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 13CONTAMINATED PROPERTIES ANALYZED# LOCATION STATE PROPERTY TYPECommercial1 Bedford NY Neighborhood Shopping Center2 Commack NY Industrial Building3 East Fishkill NY Free-Standing Retail Building, Auto RepairFacility, Vacant Land4 Elmont NY Gas Station5 Franklin Square NY Industrial Building/Residential Land6 Greenpoint, Brooklyn NY Industrial/Petroleum7 Lake Ronkonkoma NY Neighborhood Shopping Center8 Laurelton NY Vacant gasoline station9 Lawrence NY Vacant gasoline station10 Mattituck NY Airport11 Mineola NY Office Building12 Sag Harbor NY Free-Standing Retail Building13 Valley Stream NY Movie Theater14 Yaphank NY Vacant Industrially-Zoned Land15 Burlington NJ Shopping Center16 Jersey City NJ Vacant Land, Industrial Building, Residential17 Pittsford NJ Industrial/Grain Elevator18 Ridgewood NJ Office Building19 East Stroudsburg PA Industrial ParkResidential1 Brockport NY Single Family Homes2 Lindenhurst NY Single Family Homes3 Alloway NJ Single Family Home4 Redbank NJ Single Family Home5 Reading PA Single Family Homes6 Montgomery AL Single Family HomesNote: Several facts regarding the cases below have been altered or omitted to protectconfidentiality where necessary. Locations, land and building areas, chemicals, concentrationlevels, and estimated values have been altered. However, these cases are based largely uponactual work performed and reflect our experience.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 14COMMERCIAL PROPERTIESOld Post Road, Bedford, New YorkXXX Old Post Road (Route 22) in Bedford, New York is improved with a one-story 6,876+ squarefoot neighborhood strip shopping center situated on a 1.5 acre site. The property is listed by theNew York State Department of Conservation as an Inactive Hazardous Waste Disposal Sitebecause volatile organic chemicals were detected in 1978. A dry cleaner had been located at thesite. Tests wells found Tetrachloroethylene (300 parts per billion), Trichloroethylene (56 ppb), andcis-1,2-dichloroethylene (51 ppd) in the groundwater. We valued the property as ifuncontaminated, and then as if contaminated under two scenarios. In the first scenario the owneris not responsible for costs to remediate contamination, under the second the owner must cleanthe property.Modular Avenue, Commack, New YorkXXX Modular Avenue, in Commack, New York is improved with a one story industrial building ofmasonry construction with brick and masonry exterior walls containing 45,931+ square feet. It wasconstructed circa 1974. The building has three loading docks, three drive-ins, and one closeddock, 16 foot clear ceilings under the steel deck in the warehouse, and 5,244+ square feet of officespace (11.4%). The site contains a total of 246.59+ feet of frontage along Modular Avenue, andhas a total land area of approximately 3.1305 acres, or 136,365 square feet.The estimated market value of the property, assuming items of deferred maintenance, structuraldamages, and environmental contamination were cured, as of March 29, 1999 was $1,800,000.The value, “as is” given various maintenance deficiencies and assuming no environmentalcontamination was $1,740,000.Environmental Resources Management (ERM) conducted Phase I and Phase II Environmental SiteAssessments of the subject property. The Phase II identified four areas of concern: (1) StainingNear 1,000 gallon Above Ground Storage Tank (AST), (2) Fuel Oil Underground Storage Tank(UST), (3) Surface Soils In Container and Debris Storage Areas, and (4) On-Site Septic System.Total costs of approximately $130,000 were identified. All in all, the problems identified andprospective risks are relatively minor, and we believed that they did not have an inordinate impactupon property value given prospective industrial uses. Off-site risks were low due to the depth ofgroundwater and surrounding uses. The value of the property “as is” if these known environmentalconcerns were treated was $1,610,000. We estimated that stigma associated with this propertyreduced the value by 5% to 10%, with a most lively value of 7.5%. The final “as is” value was thus$1,490,000.Route 52, East Fishkill, New YorkXXX Route 52 in East Fishkill, New York contains 1.7+ acres (74,052+ square feet). The site isimproved with a former gasoline station containing a one-story 1,839+ square foot brick andconcrete block three-bay repair facility, with two storage rooms, front customer service area, backoffice, and men’s and women’s lavatories constructed circa 1969-1970. XXXX Route 52 (Lot 6256-04-700259) is a 12.5+ acre (544,500+ square foot) site improved with a 2,700+ square footdelicatessen and a 2,038+ square foot barn. According to a complaint filed with the Supreme Courtof the State of New York a major oil company has admitted that petroleum and/or petroleumadditives leaked from gasoline product lines, and that the contamination was not fully remediated.The owner of the station property and surrounding parcels filed a lawsuit to recover damagessuffered from this spill.The estimated Market Values and diminutions from the spill were as follows:THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 15Parcel UseValuesDamages10/1/95 1/1/00 1/1/03A Service Station $270,000 $380,000 --- $65,000B Deli $300,000 $450,000 --- $20,000C Vacant Land $370,000 $520,000 $650,000 $380,000The above estimates assumed that the properties would be remediated in a timely manner, andthat vacant land was contaminated as instructed by our client, despite the lack of testing resultsfor that property. If the vacant land was found merely to be adjacent to contaminated property andnot contaminated we estimate a diminution of value of between 5% and 10% with a most likelyvalue equal to 7.5% of $650,000, or $48,750, assuming that the oil company assumes fullresponsibility for the cleanup, that such cleanup occurs in a timely fashion in the future, and thatthe lack of contamination is well documented and supported by all government entities.New Hyde Park Road, Franklin Square, New YorkXXX New Hyde Park Road, Franklin Square, New York is comprised of a one-story on-slabindustrial building containing 7,588+/- square feet and a two-story residence converted to officescontaining 1,058+/- square feet, resulting in a gross building area of 8,646+/- square feet. Theimprovements are situated on a 24,000+/- square foot mid-block site located on twelve contiguoustax lots forming two rectangles together running block-through from New Hyde Park Road to KalbAvenue between Cathedral Road and Maple Drive.Since 1915 the facility chromed or nickel-plated small products such as automobile antennas, rabbitears, pen parts, kitchen strainers, bottle openers and other products. Over time, the productionactivities and the chemicals used in the electroplating process changed. The process performedat the site since 1959 involved dipping and advancing materials to be plated through a series ofprocessing tanks or vats. Degreasing and cleaning agents used in the processing vats includedvarious caustics, organic solvents (including 1,1,1-trichloroethane and trichloroethene) andhydrogen peroxide. Nickel, chrome, brass and zinc had been used for plating. Rinsing the metalparts between each processing tank generates wastewater which is discharged to the municipalsewer system for disposal.Prior to 1955, wastewater was discharged to the subsurface leaching pits located in the rear yardarea of the site. The facility also distilled spent solvent (1,1,1-trichloroethane) for re-use. Thesludge remaining from the distillation process was stored in two on-site storage tanks. The facilityis known to have discharged wastewater containing heavy metals as well as organic contaminantsinto four sub-surface leaching pits at the rear of the site. For four decades their effluent went intothe ground. There were no rules against this practice. In 1981 a Nassau County Department ofHealth (NCDH) inspection found that industrial wastewater continued to be discharged into theonsite leaching pits and ordered the owners to cease the discharge. As a result site ownerspartially excavated 3 or 4 leaching pits in March 1983. An estimated 36 cubic yards of material wasremoved from at a reported cost of approximately $100,000. The excavation was not completed.The New York State Department of Environmental Conservation (NYSDEC) commissionedWoodward-Clyde Consultants Inc, to investigate the site in 1983 to determine the potential threatposed by potential offsite migration of contaminants into the groundwater. As a result of thisinvestigation, the site was added to the National Priorities List (NPL) better known as Superfund.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 16A remedial investigation feasibility study (RI/FS) was conducted from 1988 through 1991 for theU.S. EPA. The results indicated the need for an interim groundwater remedial action, however, theU.S. EPA was unable to delineate the extent of the groundwater contamination plume beyond thesite. The site is located in a densely populated residential area. There are seven supply wells locatedwithin one mile of the site. The nearest is only 1,400 feet southeast of the site and supplies waterto approximately 20,000 people. Another 32,000 people are served by wells less than three milesaway from the site.Chromium, cadmium, nickel, copper, lead and zinc were detected in both onsite and off-sitegroundwater monitoring wells. In addition, on-site wells showed contamination by volatile organiccompounds (VOCs). The site scored 28.9 on a variety of factors, including the nature of thechemicals it used, its proximity to the homes that surround it and to wells providing drinking water.The limit for the Superfund list is 28.5.In a March 1991 Record of Decision, a remedy was selected which included the treatment of soilsby soil vapor extraction (SVE) for organics contamination, followed by excavation and off-sitetreatment for metals contamination. The remedy also included treatment of on-site groundwaterthrough extraction and treatment by precipitation, to remove inorganic contaminants and airstripping to remove organic contaminants. The treated groundwater was then to be reinjected.The design of the selected remedies was begun in late 1991. Construction activities for the SVEunit were initiated in May 1995 and were completed in July 1995. In June, 1995 all onsite debriswere removed and taken off-site. On October 5, 1995 the EPA announced its final decision thatno further cleanup action was warranted to address off-site groundwater contamination. TheAgency determined that the on-site groundwater and soil remedies provide full protection of publichealth and will adequately protect groundwater off-site.After approximately one year of operation, in May 1996, confirmatory soil sampling established thatthe soils had reached clean-up levels and the unit was shut down and dismantled. Approximately32,000 tons of soil were cleaned up. About 50 pounds of volatile and semi-volatile organics wereremoved during the SVE operation. During the summer of 1997 more than 5,500 tons ofcontaminated soil were removed from the site and replaced with native sand. The excavation ofsoils contaminated with metals was completed in the fall of 1997. As of March 29, 1999 theremedial design of a groundwater extraction and treatment unit was 35% complete. Articles on thesite appeared at least four times in Newsday since 1986. We estimated that the Market Value in this property as of April 6, 2000, with the existing buildingand without the proposed 10 foot by 20 foot treatment system at a location on the property to bedetermined, and assuming superfund stigma was $380,000. The value with the existing buildingand with the proposed treatment system, and assuming superfund stigma was $375,000. Thevalue without the existing building and without the proposed treatment system, assuming superfundstigma was $410,000. The value without the existing building and with the proposed treatmentsystem, and assuming superfund stigma was $400,000. The value as vacant and available forresidential development was estimated at $480,000 uncontaminated and excluding stigma.Meacham Avenue, Elmont, New YorkXXX Meacham Avenue, Elmont, New York consists of a nearly rectangular, generally level, lot witha total of 72.78+ feet of frontage on the west side of Meacham Avenue, and 93.05+ feet on thesouth side of a second thoroughfare. The total land area is 7,009+ square feet, or 0.16+ acres.The site is improved with a gasoline station containing an 1,161+ square foot brick repair facilityTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 17constructed circa 1956, with three pumps on one island containing three dispensers and fivenozzles. Two 4,000 and one 2,000 gallon underground fuel oil storage tanks, along with vent lines,and fill pumps were installed at the property in 1985. One of the tanks failed in 1999 and gasolinecontaminated soil at the subject property and leaked into groundwater. We estimated a marketvalue as uncontaminated of $200,000, and a diminution in value of 20% resulting from the spillassuming that all cleanup costs and liability were borne by other parties. To this estimate actualcleanup costs should be added in order to calculate total damages. The estimate only reflects thedifficulties in selling the property and stigma arising from the damage.Maspeth Avenue, Greenpoint, Brooklyn, New YorkXXX Maspeth Avenue, is comprised of four one and two-story on-slab industrial buildingscontaining 9,860+/- square feet. There are also four 110,000 gallon above ground tankssurrounded by a concrete wall, two 25,000 gallon tanks, a 150,000 gallon buried tank, fifteen20,000 gallon buried tanks, and a four bay truck loading shed on site. The improvements aresituated on a 81,110+/- square foot irregular generally level mid-block site located on the south sideof Maspeth Avenue between Varick Avenue and 47th Street in Greenpoint, Brooklyn, Kings County,City and State of New York. The site also abuts Newtown Creek.We estimated that the Market Value of this property as of June 6, 2000, with the existing building,and assuming cleanup of contamination to an industrial standard was $870,000. The Market Valueas vacant, and assuming cleanup of contamination to an industrial standard was $750,000:The property was registered in 1986 with the U.S. Environmental Protection (US EPA) as a largequantity generator and transporter of hazardous waste. In 1994 oil products contaminated withPolychlorinated Byphenils (PCBs) Aroclor 1242, Aroclor 1254, Aroclor 1250 (B002 Wastes) andhalogenated solvents (FO25 waste) were identified in 19 out of 21 tanks and in the associatedpiping. The refining facility was closed since that time. There were also thirty 55 gallon drums filledwith sludge from the petroleum refining process on the site. The total quantities of PCBs separatorsludge (KO51 and KOP52 Waste and halogenated solvents) was unknown. The integrity of theUnderground Storage Tanks (USTs) was unknown and the Above-ground Storage Tanks (ASTs)were rusting and may have been leaking into the soil. The ASTs secondary containment wascracked and could not contain a spill. The 21 tanks on the site showed signs of fatigue and thepossibility that the 557,680 gallons of PCB-contaminated oil products could spill, posing asignificant threat to the environment and to the aquatic life in the Newtown Creek. The site wason the CERCLIS Hazardous Waste Site list, but not on the National Priorities List (Superfund). Itwas categorized as a Class 2 site – a significant threat to the public health or the environment withaction required. For continued industrial use damage is relatively low as the site is not occupied by or near useswith full time residents or children, and users do not expect pristine sites. The site is in an M3-1zone which permits noxious uses. However, such properties potentially suffer from reduced valuesdue to stigma, risk of future problems of uncertain origins, potential time costs associated withresolving environmental issues, and other factors In our valuation as contaminated we used the Sales Approach, and the Hedonic PropertyRegression and Contingent Valuation techniques as well as a Discounted Sellout Approach whichcombines the above methods.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 18The techniques produced ranges of estimated effects as follows:Approach Range Most LikelyResidential IndustrialSales Approach 0% to -69% -15.0% -7.5%Hedonic Property Regression 0% to -16% -15.0% -10.0%Contingent Valuation Method -3.5% to -20% -15.0% -7.5%Discounted Sellout -22% N/A -22.0%Implicit Net Rental Value of Losses (1999 base) -24% -24.4%We concluded that the value of the properties have been reduced by between 5% and 20%, witha most likely diminution of about 12½% for industrial uses due to impairment less the present valueof costs to clean the site. Final value estimates are presented below:APPROACH AsUnimpairedAsImpairedSales Comparison Approach As Industrial Building $940,000 $822,500Sales Comparison Approach As Vacant Land $810,000 $708,750Income Capitalization Approach As Industrial Building $800,000 $700,000FINAL VALUE CONCLUSION $940,000 $822,500Smithtown Boulevard, Lake Ronkonkoma, New YorkXXX Smithtown Boulevard in Lake Ronkonkoma, New York is a 0.56 acre site improved with a one-story plus basement 4,806 square foot neighborhood shopping center. On or about September10, 1992 a tenant, a local printer, was given a Notice of Violation by the Suffolk County Departmentof Health Services for discharging toxic chemicals into a dry well and a cesspool at the property.A subsequent letter from the New York State Department of Health dated January 27, 1993 statedthat the Suffolk County Department of Health Services reviewed the results of tests performed atthe site, and found that they "indicate that some very slight residual contamination still remains inthe bottom soil”. However, “the conditions are such that no further remediation is required by thisoffice at this time." Based upon that letter and other factors, we found that the contamination didnot significantly reduce the value of the property.Tax Certiorari Valuation--Mattituck, New YorkXXX Airway Drive in Mattituck, New York consists of a 16-acre parcel of land with a 12-acre landingstrip. The property has been used to repair airplane engines. It contains a variety of structuresutilized for offices, assembly of engines, a machine shop, hangars, and storage with a total grossbuilding area of approximately 34,203 square feet.The property had been contaminated by a variety of chemicals. Cesspools have been polluted withkerosene-like petroleum solvents and metals siphoned off from engine washing. Halfway down therunway fluids have inhibited the growth of nearby vegetation. In 1978 Suffolk County investigatedthe site and required that the owner cease certain activities and remove some soil. The propertyincurred more than $60,000 in fines. The site lies above a sole source aquifer, and there are manywells in the area. It may constitute a threat to water supplies, but contamination has reportedly nottraveled far. The owner reported that due to contamination the property cannot be sold, andinsurance costs have increased significantly.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 19Our estimate of market value for the land uncontaminated was $17,500 per acre or $280,000 forthe site as vacant. Sales of industrial buildings indicate that the value of a 34,203 square footindustrial building on a two-acre site in this area would be roughly $12.50 per square foot ofbuilding area, or $427,538. Using the Income Approach, the buildings would command a rent ofapproximately $2.00 per square foot or $68,406 NNN. Assuming a vacancy rate of 20% resultsin an Effective Gross Income of $54,725, and costs of 10% indicate expected net operating incomeof $49,252. A capitalization rate of 12.5% lead to a value of $394,019, say $400,000.Because the Income Approach is emphasized by assessors we estimated a value of $400,000 forthe building. The value of the excess 14 acres was estimated at$17,500 per acre, or $245,000.The total value before contamination is thus approximately $645,000.To estimate the effects of pollution we derived changes in expected rents, vacancy rates,expenses, capitalization rates and sale prices based upon comparable situations. This proceduretakes into account increased costs resulting from contamination as well as well as the stigmaattached to polluted properties, which renders them less easily marketable. We estimated thatpollution reduced the value of the property by 50% to approximately $330,000.The property received a substantial tax reduction based upon our estimates.Old Country Road, Mineola, New YorkA 118,000+ square foot office building in Mineola, New York was suffering from declining rents andincreased vacancies due to market weaknesses in the early 1990s. In addition, the owners werefaced with the need to remove asbestos due to tenant demands and regulatory initiatives. Thesefactors reduced net income significantly. The tax assessment on the property was based on rosierscenarios, and preliminary calculations indicated that the building was overassessed.We conducted an extensive survey of market rents, and sale prices of land and buildings in thearea over a five year period. This survey confirmed our initial impressions and indicated that theproperty was overassessed for a period of four years.We evaluated the effects of the asbestos by (1) incorporating the effects of the removal into adiscounted cash flow model, (2) examining past studies of the effects of disamenities upon propertyvalues (including surveys), and (3) considering sales of buildings with varying degrees of asbestos.We were able to obtain a value for the building as contaminated.The owners negotiated a tax reduction of more than $2,000,000 based on our analysis.Sag Harbor-Bridgehampton Turnpike, Sag Harbor, New YorkXXXX Sag Harbor-Bridgehampton Turnpike in Sag Harbor, New York is improved with a one story1,800+ square foot commercial building situated on a 0.89+ acre site. Contaminated groundwaterfrom the Rowe Industries Superfund Site migrated to this site. Once again we appraised theproperty as uncontaminated, and after accounting for the effects of pollution.Nassau County , New YorkThe Cost-Benefit Group analyzed a property consisting of a one-story on concrete slab, 92,211+square foot, 15-screen 6,177-seat movie theater constructed circa 1973, with additional screensadded in 1979. The improvements are situated on a 20.40-acre site with 124+ feet of frontage.On October 2, 1992 the owners of a neighboring gasoline station reported an oil spill to the NewYork State Department of Environmental Conservation. By May 13, 1994 microwells were installedTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 20at the theater to determine the nature and extent of the petroleum plume. On October 27, 1998BTEX (Benzene, Toluene, Ethylbenzene, and Xylene) was detected in 15 of 23 wells with totalBTEX concentrations ranging from 0.81 to 69,200 micrograms per liter. MTBE (methyl tertiary butylether) compounds were detected in 17 of the wells sampled, with concentrations ranging from 1.3to 98,400 ug/l. Similar concentration levels were detected at other dates.In order to estimate the diminution in property value arising from contamination we first appraisedthe property as if uncontaminated, and then subtracted the diminution in value arising from thecontamination. We determined the value-in-use of the subject property by using the incomeapproach as of January 1, 1993, January 1, 1997, and January 1, 2001 including possible stigmadamages. It was our opinion, that the value-in-use of the subject property, assuming no contamination, as ofJanuary 1, 1993, was $9,300,000. The estimated diminution in property value arising fromcontamination originating at the neighboring gasoline station, as of January 1, 1993, was $650,000.This diminution estimate was contingent upon the premise that the owners of the gasoline stationassume all liability for the cleanup, and actually clean the property beginning on the valuation datein question. This also assumes that cleanup proceeds at a typical pace, that additionalcontamination is not discovered, and that redevelopment of the property is not likely to occur.The value-in-use of the subject property, assuming no contamination, as of January 1, 1997, was$10,900,000 under the above-described assumptions. The estimated diminution in property valuearising from contamination was $760,000. The value assuming no contamination, as of January1, 2001, was $10,200,000, and the estimated diminution in property value arising fromcontamination was $510,000. If the cleanup did not proceed expeditiously, the losses arising fromcontamination would be $1,300,000 on January 1, 1993; $1,530,000 on January 1, 1997, and$1,020,000 on January 1, 2001. If the owners of the adjacent property did not assumeresponsibility for the cleanup, the discounted sum of costs to clean the property should be includedin the diminution figures. Furthermore, damages would increase if the owners were seeking to redevelop the property witha megaplex theater or to dispose of the property for conversion to an alternative use, as investorswould not likely finance such a project, given the uncertainty surrounding the contamination.661.5 acre site in Yaphank, New YorkThe Cost Benefit Group analyzed value and profit potential for a 661.5 acre site in Yaphank, NewYork. Approximately 520.99 acres were in an L-1 Industrial Zone, 8.52 in a L-2 Zone, 99.33 in anL-3 Zone, 11.95 acres in an A-5 Residential Zone, and 0.74 acres in an A-10 Zone. We estimatedthat the site would yield a total of 173 industrial lots in consultation with engineers, appraisers, andplanners.Several site-specific factors complicated development potential. First, each of the proposed lotswould rely on site septic systems to dispose of generated sanitary waste. Second, the property islocated in the Suffolk County Department of Health Services Groundwater Management Zone III,which requires an allowable sanitary yield of 300 gallons per day per acre (gpd/acre). Assumingthat 20% of the total square footage will be office and the remaining building area industrial resultsin a sanitary flow generation factor of 0.44 gpd/square foot which results in a gross yield projectionof 3,757,107 square feet, of which 751,421 square feet is office and 3,005,686 industrial. Thesubject lots must be connected to the Suffolk County Water Authority potable water mains. Inaddition, the property is located in the compatible growth area of the Central Pine Barrens.Properties located in the compatible growth area are limited to a 65% clearing limit. This clearingvalue is computed based on total clearing required to create the proposed subdivision. Finally,THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 21there are portions of the property that have been cleared for use in the Brookhaven NationalLaboratory groundwater contamination remediation effort. These clearing areas will impact thetotal permissible clearing computed for the property. We estimated that due to the contaminationat least 10 acres of the property will remain undevelopable.In order to estimate the absorption rate the appraisers conducted an extensive survey of demandfor, and supply of, vacant industrial land in the Towns of Brookhaven, Islip, Smithtown andRiverhead of Suffolk County, interviewed real estate brokers, owners, and appraisers andgovernment planners and economic development officials; and examined publications. Weestimated a stock of publicly available vacant industrial land in Yaphank of 966 acres plus 58 acreswest of Yaphank and 337 east of Yaphank. Omissions, unadvertised tracts, failed projects, etc.should increase the numbers significantly to at least 1,200 acres in Yaphank, 500 acres to the westand 500 to the east.According to site plans (land use proposals) filed with the Brookhaven Planning Department,between January 1997 and March 2001 223.06 acres of industrial land were absorbed. Thisindicates absorption of 52.5 acres per year. Due to saturation west of Brookhaven total absorptionin the area should double in the years ahead assuming moderate economic growth. The subjectaccounts for ½ the vacant land available, but it is inferior to others due to lack of Empire Zoning,subdivision and improvements. We thus estimate absorption of 50 acres per year at the subject@ $150,000 to $175,000 per acre, after subdivision and improvements are completed. Sale pricesin year 1 were estimated at $165,000 via the Sales Comparison Approach, and through extensivediscussions with real estate brokers and owners in this market. Gross Income is derived by multiplying the number of acres absorbed each year by the appropriatesale price. Net Income to a developer was obtained by subtracting expenses from the incomederived from lot sales. Soft costs of $375,000 were estimated for Architecture/Engineering, Survey& Soils, Accounting & Administration, Appraisal, Insurance, Market Study, Construction Interest,Permits, and Other Professional Services. Hard costs were estimated in consultation withengineers and use of the Marshall & Swift Manual. as follows:Cost Sq. Ft. Price/SF TOTALSite Prep 24,003,302 $0.10 $2,400,330Sq. Ft. Price/LFRoads 42,875 $225.00 $9,646,875AcresDevelopedPrice/AcreWater 551 $1,500 $826,560Septic 551 $3,140 $1,730,000Required Bridge $7,000,000Other Improvements $500,000Total Hard Costs $22,103,765The net cash flow for each period is discounted back to point zero to arrive at the present value ofthe net cash flows. The discount rate applied is derived from the market, and reflects the riskinvolved. An analysis of this data suggests that discount rates for comparable industrial propertiesranged from 11.0% to 14.0%. with a most likely rate for the subject of 13%. For the value ascontaminated we increased the discount rate to 14.0% to reflect increased risk.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 22We concluded that the value uncontaminated was $20,610,000 and the value contaminated was$12,770,000 due to increased risks and costs.Salem Road, Burlington City, New JerseyA property situated on the west side of Salem Road in the City of Burlington, New Jersey consistsof 11 tax lots zoned C-3 Commercial and R-2 Residential, with a total land area of approximately6.79 acres, or 295,772 square feet. It is irregular and level at street grade and contains a total of351.31+ feet of frontage along Salem Road and 33.92+ feet along Mott Avenue. The property wasvacant. It had been improved with three structures: 1) a one and partial two story former knittingmill containing approximately 71,700 square feet originally constructed circa 1910, and convertedinto an indoor retail outlet mall in 1977; 2) a one story 852+ block and steel industrial buildingformerly occupied by a shoe shop, and 3) a two story 1,070+ square foot frame semi detacheddwelling. The total building area was 73,622+ square feet.A Preliminary Assessment Report prepared by Environmental Resolutions, Inc. identified nineareas of concern where soil and groundwater may have been impacted by past discharges ofvolatile and semi-volatile organic raw materials and wastes due to foam rubber processing,chrome-plating operations and other activities.Our estimate of Market Value“as uncontaminated”, as of October 18, 1994 (one day prior to a fire)was $900,000. The estimated value “as contaminated”, was $300,000 with $250,000 attributableto the land and $50,000 to the building.Jersey Avenue, Jersey City, New JerseyBeginning in 2000 Kenneth Acks worked with Grubb & Ellis/Landauer Realty to evaluate thehighest and best use and value of three contaminated industrial tax lots on Jersey Avenue, JerseyCity, New Jersey. The sites are located in the Liberty Harbor North Redevelopment Zone. Theappraisal was for condemnation purposes as the sites are slated for condemnation and residentialredevelopment.Lot XX is an irregular, generally level, vacant 2.70+ acre (117,612+ square foot) parcel of land.The site has a westerly lot line of 346.3+ feet along an unimproved section of Jersey Avenue. Thesoutherly lot line is 343.17 feet, and lies under the Tide Water Basin. The site is improved with atwo-story 10,386+ square foot brick, block and masonry art-deco style industrial buildingconstructed circa 1938. Lot YY (Jersey Avenue/Morris Canal East) is a slightly irregular, generallylevel, 4.79+ acre (208,652+ square foot) parcel of land. The site is improved with two one-storycorrugated metal storage warehouse buildings with gross building areas totaling 14,545+ squarefeet constructed circa 1970. Lot ZZ is a slightly irregular, generally level, vacant 3.20+ acre(139,392+ square foot) parcel of land. The site offers 495.80+ feet of frontage on the Tide WaterBasin (also known as the Morris Canal Basin). It is improved with three one-story industrialbuildings having a total gross building area of 12,523+ square feet constructed circa 1948 with2,660+ square feet of office space.We received limited information regarding contamination at the subject site. As the result of aRemedial Investigation at the property an environmental service firm implemented a program ofpermanent remediation of impacted soils and shallow groundwater in one section of the site in thesummer of 1998. The program included removal of various pieces of equipment, including twoformer stationary hydraulic shears, excavation and off-site recycling and/or disposal of impactedsoils; active recovery of free phase hydraulic oil on the shallow ground water table; operation of a100 gallon per minute oil/water separator and carbon adsorption groundwater treatment system;installation of interception trenches; and restoration of the excavated areas through placement ofTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 23certified clean backfill. Approximately 8,644 tons of oil-impacted soils were removed from the siteand disposed off-site and an estimated 3,000 gallons of free-phase hydraulic oil were recoveredas a result of the remedial activities.Robinson Lane, Ridgewood, New JerseyIn late 1986 gasoline tanks at the Village of Ridgewood Garage were found to be leaking. Anenvironmental services firm (DRA) estimated that between 3,600 and 5,100 gallons of gasolinewere lost. The fate of an additional 25,300 gallons of gasoline was unknown. Product fumes werefirst noticed within the subject building on December 2, 1986.Since that date, the owners were forced to evacuate the building several times. In addition, floorsand walls were damaged. Engineering studies found significant amounts of oil below the surfaceof the subject property. The owners remediated some of the damage, but oil remains in thegroundwater. Potential damage from the oil had to be monitored continuously. DRA estimated thatit would take six to ten years for the current remediation program to clean the ground water.We first appraised the building as if it were unaffected by the gasoline leak utilizing four commonlyemployed valuation methods--(1) the Cost Approach, (2) the Direct Sales Comparison Approach,(3) Discounted Cash Flow Analysis, and (4) Income Capitalization.The appraisers evaluated the effects of the pollution by (1) incorporating the effects of theremediation and monitoring costs into a discounted cash flow model, (2) examining past studiesof the effects of disamenities upon property values including surveys, and (3) considering sales ofother contaminated buildings. We were then able to obtain a value for the building ascontaminated.XXX North Second Street, East Stroudsburg, PennsylvaniaXXX North Second Street, East Stroudsburg, Pennsylvania is situated on a 3.29+ acre lot. It isimproved with a one-story multi-tenanted masonry warehouse buildings containing 89,160+ squarefeet plus a 1,344+ two-story residence converted into low-quality office space. The improvementswere constructed at various times between 1912 and the mid 1980s and renovated circa 1990. In 1993 underground and aboveground storage tanks were removed from the property across thestreet. However, the tanks allegedly released and spilled onto the subject property. In July 1998the owners of the subject sought to refinance a mortgage. Laboratory tests for a Phase IIEnvironmental Site Assessment indicated petroleum contamination in the groundwater samples,including concentrations of benzene exceeding Pennsylvania Statewide Health Standards for usedaquifers (non-residential). One of four groundwater monitoring wells immediately downgradient ofthe neighboring facility, evidenced concentrations of benzene, ethylbenzene, and naphthaleneexceeding PA Statewide Health standards. Cleanup to industrial standards was expected to takethree to four years. If the cleanup goal is to achieve ground water quality as it existed before therelease the cleanup time would likely be at 20 to 50 years.We were provided with appraisals of the subject property as uncontaminated with estimated valuesof $2,520,000 in March 2001 and $2,570,000 in June 2002. We concluded that the averagediminution in market values would range from 5% to 40% with a most likely value of 12.5%. Thetotal diminution in value at the subject was estimated to range from $128,500 to $1,028,000, witha most likely value of $325,000.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 24RESIDENTIALOxford Street, Brockport, New YorkThe Cost-Benefit Group was given appraisals of eight homes on the west side of Oxford Street inBrockport, New York and asked by a law firm affiliated with Erin Brockavitch to evaluate propertyvalue changes arising from contamination. The homes are located just east of a former3M/Dynacolor facility in Brockport, Monroe County, New York. The 3.5-acre site and surroundingproperties housed industrial activities for more than 150 years. A remedial investigation of the 3M/Dynacolor Facility produced in July 2001 found that the averageconcentration of total cyanide in shallow soils was 36.23 mg/kg. Relatively high concentrationswere in three areas. The average concentration in deeper soils was 255.44 mg/kg. The tablebelow summarizes some of the findings of the report.Contaminant Shallow DeepSamples Concentrations Samples ConcentrationsContam-inatedTotal Average Max Contam-inatedTotal Average MaxCyanide 49 104 36.23 228 29 47 255.44 2,400Silver 59 71 25.44 5 21 22 8.45 26Lead 53 57 232.8 1,340 21 23 199.81 2,390Polycyclic AromaticHydrocarbons (PAHs)69 89 18.41 34 17 35 3.67 13Several Volatile Organic Compounds (SVOCs) including chrysene, benzo(a)anthracene,benzo(a)pyrene, benzo(b)fluoranthene, benzo(k)fluoranthene, dibenzo(a,h)anthracene, andindeno(1,2,3-ed)pyrene were detected in soil samples. The average of the sum of all SVOCcompounds was 11.3 mg/kg, and the values ranged from no SVOCs to 256 mg/kg.Due to the potential negative effects of the contamination several homes on the east side of thestreet were purchased by 3M and demolished. Four purchases of homes by 3M on the east sidewere recorded as of the date of the assignment. They occurred between April and June 2001 atprices ranging from $80,000 to $91,000. The area was covered with top soil and sod, and will notbe rebuilt. In our report we estimated the impacts of the following factors:1) Soil contamination2) Significant groundwater contamination with cyanide and VOC’s3) Demolition of homes across the streetWe estimated that value diminution ranged from 10% to 60% with a most likely value of 35%. Thetotal diminution in value of the seven homes with an estimated total market value of approximately$573,000 would range from $57,300 to $343,800, with a most likely value of $200,550Subsequent review of additional information indicated that value diminution in a wider area wouldlikely range between 5% for the properties most distant from the contamination to 50% or more forproperties actually contaminated. Groundwater Contamination, Lindenhurst, New YorkThe subjects of this report were four single family homes located in Lindenhurst, New York. Theyare immediately downgradient from the Active Industrial property, which has been classified as aninactive hazardous waste site by the New York State DEC following the discovery in 1987 thatTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 25tanks containing perchlorethylene had been leaking. A plume of contamination has been foundto run under the subject homes. The plume contains toxic chemicals associated withperchloroethylene, including trichloroethane, and trichloroethene.Also of concern was possible contamination of the groundwater under the subject homes fromgasoline. Testing of a private irrigation well on one of the subject homes in March, 1994 by theSuffolk County Department of Health Services found chemicals associated with perchloroethylenein the groundwater but also found constituents of gasoline such as benzene, toluene, and xylenein excess of state standards. Tanks at a nearby Texaco gasoline station were found to be leaking.Air testing in the subject homes later in 1994 showed the presence of low levels of gasolineconstituents.The appraisers first valued the properties as uncontaminated, and then determined the influenceof the toxic chemicals upon the estimates. Several techniques were used to estimate the effectsof toxic contamination. The techniques produced ranges of estimated effects as follows:Method Range Most LikelyCost Approach N/A -9%Sales Approach -20% to -69% -20%Income Approach N/A -30%Hedonic Property Regressions 0% to 16% -15%Contingent Valuation Method -3.5% to -20% -20%Health Effects N/A -7%Based on the above information, we concluded that the values of the properties have been reducedby at least 20% due to the presence of contaminants.Redbank, New JerseyXX Hubbard Park is a wood-framed, vinyl-sided, 8 room, 3 bedroom/2½ bath Victorian single familyhome constructed circa 1908 in excellent condition. It offers views of the Navesink River, afireplace, central air conditioning, a finished basement, a Jacuzzi, walk-in closets, an extensivedeck, an enclosed heated porch, full length Andersen Windows, an eat in kitchen, wall-to-wallcarpeting, a tool shed, a formal dining room, and an attached one-car garage. The house contains2,511 square feet above grade (1,323 sf on the first floor and 1,188 sf on the second floor) plusa 1,215 square foot finished basement. The site is irregular with 42 feet of frontage on HubbardPark and a total land area of approximately 17,562 square feet. On September 5, 1995 a gasoline spill discovered at the subject property was reported to the NewJersey Department of Environmental Protection. After tests disclosed gasoline saturated soil theNew Jersey Department of Environmental Protection (NJDEP) named a nearby convenience storewith gasoline pumps as the party responsible for the discharge. The NJDEP directed Welsh Farmsto take immediate response actions. In early October underground storage tanks were excavatedfrom the Welsh Farms property and contaminated soils were removed from the subject site. Soilsurrounding the excavated soil was heavily contaminated with gasoline, and piping from the tanksto the dispenser pump was found to be leaking. Between October 1995 and February 1996 wells were installed at the subject and at a nearby CopyCenter. Soil vapor extraction piping was placed at Welsh Farms and the Copy Center. In July1997 the NJ DEP approved a Remedial Investigation/Remedial Action Workplan. A groundwaterTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 26and vapor treatment system began operation in November 1997, but has been subject to periodicbreakdowns and shutdowns. In September 1999 The Whitman Companies conducted tests and reviewed documents todetermine the extent of damages and risks. According to Whitman the remediation program “hadnot been fully implemented, has not been fully effective, and has resulted in the furthercontamination of the property”. All five of the wells sampled registered concentrations of Benzeneexceeding New Jersey Ground Water Quality standards, and four had concentrations of MTBE thatexceed the criteria. It was Whitman’s opinion that groundwater on the Gaunt property wouldcontinue to be contaminated for at least another eight (8) years -- and probably longer.We appraised the property as if uncontaminated with two dates of valuation -- the date of theincident, September 5, 1995, and the date of inspection, October 25, 1999. We formed the opinionthat the market value of the properties assuming no contamination, as of September 5, 1995, was$390,000 and as of October 25, 1999, was $500,000.We concluded that the value of the property was reduced by between 30% and 40%, with a mostlikely diminution of 35%, yielding an estimated loss in 1999 of $175,000.Friedburg Road, Alloway, New JerseyAccording to a Remediation Investigation Report (RIR) conducted by Environmental Products &Services, Inc. renovations were being performed at a wood-framed single family home located onFriedburg Road in Alloway, New Jersey. Utilities, including the fill pipe to the fuel oil tank, weredisconnected during the renovation. On January 20, 1995 Woodruff Oil delivered 135.8 gallonsof heating oil to the residence which then drained into the basement floor. On January 26, 1995 an emergency cleanup crew used a vacuum truck to remove 171.4 gallonsof fuel oil from the basement floor and the tank by applying absorbent material. On February 13,1995, a cleanup crew washed the basement and sealed one area. Dry Lock paint was applied tothe floor of the room where the tank was located and the entire basement was pressure-washed.A hydrogeologist inspected the site on November 10, 1995 and observed recurring stains on thebasement floor. Brown stains on the walls above the sealed area indicated that product might haveremained in the cinder block walls. The wooden basement stairs were also stained. A pine-scented cleaner masked all but a faint petroleum odor. The soil outside the basement window wasslightly discolored but no odor was detected.A formal site investigation was initiated on February 22, 1996, and concluded that the majority ofthe sample showed low or non-detectable concentrations of fuel oil contamination. However,several areas required additional sampling and/or remedial actions to minimize the remainingeffects. The groundwater from the water supply well showed low TPH concentrations at the levelof detection. However, no evidence of fuel oil components was detected in the more precisevolatile and semi volatile analyses. Further analyses were recommended. Finally, although thesoil beneath the basement did not exceed cleanup criteria, the residual fuel oil in the soil as wellas in the concrete walls and floor may have resulted in a release of vapors into the basement andthe living space as evidenced by the air sampling results.Additional site work was performed in June and July 1996, including soil excavation from beneaththe basement floor; installation of a petroleum vapor abatement system below the floor; pressurewashing and degreasing of the basement floor; application of Thoroglaze glazing to the floor, theTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 27bottom twelve inches of the basement walls and the wooden basement stairs; and removal ofexcavated soil from the site.A followup sampling of groundwater showed no concentrations of volatile organics above thedetection limits of 0.5 ug/l. Four analytes from the EPA Method 525.2 list were detected above thedetection limits; alph-Chlordane at 1.8 ug/l, gamma-Chlordane at 1.3 ug/l, Di (2-ethylhexy)phthalate at 0.8 ug/l and trans-Nonachlor at 1.1 ug/l. Di (2-ethylhexyl) phthalate cannot beaccurately measured at levels below about 2 ug/l, which is above that measure in this water sample(0.8 ug/l). The other three analytes are components of the pesticide Chlordane, which may haveresulted from gardening or landscaping activities, but did not result from the fuel oil release. Thus,the results from the sample show no evidence of effects from the release. Three air samples fromthe basement, and four from the first floor were collected on October 8, 1996. All showed no dieselfuel components above the detection limit of 40 mg. cubic meter.In November 1996 a Remedial Investigation Report was submitted to the New Jersey Departmentof Environmental Protection as part of a Memorandum of Agreement. The RIR concluded that allareas of environmental concern at the property were remediated to acceptable standards.Since the installation of the vapor abatement system, the owner has stated that petroleum vaporscontinue to be a nuisance within the residence. The owner's daughter, who lived in the home,wanted to move to West Virginia, but the lingering fuel odor problems as well as the stigmaresulting from the presence of contamination was preventing her from selling the house, Potentialbuyers who visited the home reportedly declined to bid on it because of the odor problem.The building is approximately 35 feet by 45 feet. The basement is constructed with concrete blockwalls and a concrete finished floor approximately 44 feet by 25 feet. It consists of two rooms: asmall room approximately 25 feet by 16 feet and a larger room 28 feet by 25 feet. We were provided with a comparative market analysis prepared by a local realtor. The analysisconcluded that the market value of the property as uncontaminated was between $120,500 and$126,000 based upon six comparable sales. The sales appear to justify the estimated marketvalue, and we utilized the midpoint of the range, $123,250, as the actual market value.We concluded that the value of the property has been reduced by between 20% and 25%, or22.5%, due to the presence of odors resulting from environmental contamination and stigma. Theestimated loss in market value as of June 15, 1997 was $28,000. The homeowners were awarded$56,088.62, including $30,000 due to depreciation of value from residual odor problems, indamages by the Superior Court of New Jersey in Salem County.Coliseum Boulevard Plume, Montgomery, AlabamaThe subjects of the Coliseum Boulevard Plume in Montgomery, Alabama include approximately1,009 households in north Montgomery where evidence of TCE contamination of groundwater hasarisen. The site covers at least 700 acres in the Chisolm neighborhood and the Eastern Meadowsand Vista View subdivisions in North Montgomery, Alabama. The Chisolm Community, which liesin the western portion of the site, consists of low-to-moderate income housing built in the 1940'sand 1950's. The Eastern Meadows subdivision was built in the 1980's and has a population ofapproximately 330 residents. The Vista View subdivision was built in the 1980's, and is still underconstruction. It has approximately 555 residents. The lot sizes range from 6,000 to 12,000 square feet. Typical units in Vista View and EasternMeadows are single-story detached brick and vinyl-sided homes with asphalt shingle roofs, singleTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 28hung aluminum windows with storm screens, and no basements. Three-bedroom homes containgross living areas ranging from 1,252 to 1,319 square feet. Typical units in Chisolm are single-storydetached brick ranches with asphalt shingle roofs, single hung aluminum windows with stormscreens, and no basements. Three-bedroom homes contain gross living areas ranging from 1,429to 1,521 square feet.Sometime shortly before September 1999 the owner entered into a contract to sell a lot in VistaView. The buyer required field screening of soil samples for Volatile organic compounds (VOCs).Because the screening produced indications of VOCs the buyer began a Phase II EnvironmentalSite Assessment (ESA). Acetone, methylene chloride and Total Petroleum Hydrocarbons weredetected in soil samples from the parcel and TCE in the two groundwater samples.TCE is a chlorinated organic solvent that has been listed by the EPA and the ATSDR as a potentialhuman carcinogen. It is commonly used to remove grease from machinery and in dry cleaning andother household products. TCE is approximately 1,465 times heavier than water and, therefore itis known as a dense non-aqueous phase liquid (DNAPL), which has the characteristic of sinkingrapidly through both surface soils and the uppermost aquifer until reaching a level where animpermeable barrier (such as clay lens) is encountered. TCE may then pool atop such a barrierand migrate as a separate phase along the topography of the subsurface impermeable barrier.Groundwater samples taken in October 1999 contained 0.029 and 0.008 mg/L trichloroethylene.The November 1999 found 0.030 and 0.014 mg/L trichloroethylene and 0.006 mg/l of TCE. Thegreatest concentrations of TCE were 0.952 mg/l.The contamination was discussed fairly widely in the local press. Public meetings drew hundreds.On November 14, 1999 Mike Sherman began an article entitled “Water problem creates uncertaintyabout property values” in The Montgomery Advertiser. In the second week of November, 2000 theAlabama Department of Public Health and Environmental Management distributed fliers thatwarned residents to stay away from a ditch east of Coliseum Boulevard where contaminationsurfaced. A November 15, 2000 article by Sherman entitled “Angry People Seek News AboutPlume” noted that hundreds of North Montgomery residents turned out for the first informationmeeting on chemical contamination and voiced concerns about possible damage to property valuesand personal health from the plume.In February, 2001 Geolex Inc. was retained to evaluate the contamination. They found1. The existence of elevated concentrations of trichloroethylene (TCE) in the shallowaquifers underlying the site presents an imminent and substantial endangerment to theenvironment. Concentrations up to approximately 2,000 times the maximum permissiblestandard for TCE, which is 5 ug/l or parts per billion (ppb) have been detected ingroundwater at the site.2. The TCE plume as of February 2001 covered an area of approximately 364 acres andvaries in concentration with depth in the uppermost aquifer. The highest concentrations ofTCE are located in the lowermost portion of the aquifer.3. Surface water samples taken by the Alabama Department of Environmental Managementin the northeast portion of the Vista View Subdivision have indicated levels of TCE insurface water as high as 168 ug/l, in excess of 30 times the permissible standard of 5 ug/l.4. Concentrations in hot spots are high enough to indicate the potential existence ofresidual DNAPLs in the lower portions of the uppermost aquifer, which can serve as anongoing source of TCE contamination for tens, if not hundreds, of years.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 29On May 24, 2002 Mike Sherman reported that cleanup of contaminated groundwater will takemillions of dollars and years of work, according to Alabama Department of Transportation Engineer,B.B. “Buddy: Cox. He was unable to say exactly how long it will take and how much it will cost andhow property values will be affected.We first estimated average home value through the following data from the Alabama Real EstateResearch and Education CenterYear VISTA VIEW EASTERN MEADOWS CHISOLM# ofSalesTotalValueAveragePricePercentChange# ofSalesTotalValueAveragePricePercentChange# ofSalesTotalValueAveragePricePercentChange1995 20 $1,551,326 $77,566 N/A 3 $172,999 $57,666 10 $330,146 $33,0151996 14 $1,126,681 $80,477 3.8% 4 $260,500 $65,125 12.9% 15 $439,669 $29,311 -11.2%1997 16 $1,407,001 $87,938 9.3% 2 $105,500 $52,750 -19.0% 9 $339,029 $37,670 28.5%1998 11 $891,650 $81,059 -7.8% 9 $505,450 $56,161 6.5% 16 $613,100 $38,319 1.7%1999 15 $1,233,526 $82,235 1.5% 1 $62,000 $62,000 10.4% 11 $352,400 $32,036 -16.4%2000 9 $742,410 $82,490 0.3% 0 N/A N/A N/A 16 $531,596 $33,225 3.7%2001 2 $158,000 $79,000 -4.2% 2 $126,600 $63,300 ?? 16 $560,200 $35,013 5.4%2002 N/A N/A N/A N/A 1 $64,500 $64,500 1.9% N/A N/A N/A N/A1998-1999 $85,135 $55,541 $38,085MONTGOMERY1998-1999 $114,915Percent Change 2002-1998/99 9.6%Current Values uncontaminated * $93,308 $60,873 $41,741Rounded To: $93,300 $60,900 $41,700AggregateValue240 $22,392,000 $93,300 102 $6,211,800 $60,900 667 $27,813,900 $41,700TOTAL FOR ALL AREAS 1,009 $56,417,700 $55,914* Current Values derived by applying percent change in Montgomery during first five months of2002 from average in 1998 and 1999 to average prices in applicable areas during 1998 and 1999.Current average values as uncontaminated were thus estimated to be $93,300 at Vista View,$60,900 at Eastern Meadows and $41,700 at Chisolm. The overall average is estimated at$55,914 and the total $56,417,700 as summarized in the table belowTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 30Section # ofHomesTotalValueAveragePriceVista View 240 $22,392,000 $93,300Eastern Meadows 102 $6,211,800 $60,900Chisolm 667 $27,813,900 $41,700TOTAL 1,009 $56,417,700 $55,914We estimated that the average diminution in market values range from 7.5% to 30% with a mostlikely value of 12.5%. Assuming an average home value of approximately $56,000 on June 1,2002, the total diminution in value of the 1,009 homes with an estimated total market value ofapproximately $56,420,000 would range from $2,820,000 to $14,1000,000, with a most likely valueof $7,050,000.CREATION OF BENEFIT VALUATION DATABASE FOR THE U.S. EPAThe Cost Benefit Group has worked with the U.S. Environmental Protection Agency, EnvironmentCanada and other consultants to create a database of benefit valuation estimates derived fromprevious studies. The database covers values derived for water, land, and air pollution through awide variety of methodologies. The database is available on the internet at www.evri.ca. Weconducted a comprehensive literature review to derive the raw materials for the dataset.VALUATION OF GOVERNOR’S ISLAND NATIONAL MONUMENT PARKfor US GENERAL SERVICES ADMINISTRATION (GSA)Governors Island is located off the southern tip of Manhattan in New York Harbor. New York Cityhad given the island to the federal government in 1800 for use as a military base, but the base wasbeing abandoned, and the City wanted it back. Kenneth Acks of the Cost-Benefit Group valuedtwo historic forts -- "Castle Williams" and "Fort Jay" in order to help the federal government assigna price.Castle Williams is a three-tiered circular 65,000 square foot fort built between 1807 and 1811. TheCastle was also used as quarters for troops and as a military prison. Fort Jay consists of fournearly identical Greek Revival styled buildings containing 44,314 square feet. It was in continuoususe as quarters for troops and officers from the 1830s until 1997. The forts were situated on20.68+/- acres (900,777 square feet) of land zoned R3-2. Some of the existing structures on theisland have been in poor condition and are neither functional nor historic, and therefore, do notcontribute value to the site. Those structures have a total building area of 212,916 square feet onthe entire island and 17,424 at the subject Historic Monument Park. In the early 1620s the Dutch established a trading post on the island, and in 1637 Governors Islandwas reputedly purchased from the Manahatas Native Americans by the Dutch West India Companyfor two ax heads, a string of beads and a handful of nails for use as an estate for Dutch governorsof New Netherlands. Between 1637 and 1755 the island was used as a governor's residence, alumber stand, a pasture for raising cattle and goats, a quarantine station, and a game preserve.The English took possession of the island under the terms of the Treaty of Westminster in 1674.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 31In 1755, during the French and Indian War, the British established the first military post on theisland. The first American command on Governors Island began following the temporary Britishwithdrawal from New York in 1775. During tensions with Britain over the XYZ Affair in themid-1790s volunteers representing different trades and militia forces were called upon to enlargethe existing fortifications (christened Fort Jay), and to construct additional defenses. On February15, 1800 New York State ceded the island to the United States in order to enhance defensecapabilities in the region. In 1806 Lieutenant Colonel Jonathan Williams designed and directed amajor reconstruction of the island's fortifications. The fort, renamed Fort Columbus, acquired itspresent dimensions while maintaining its four-bastioned square shape. The fort was able to mount104 guns. In 1807 Williams began construction of "Castle Williams", which was completed in 1811.The Castle was erected to guard the Channel between Governors Island and New York City. Thetwo forts may well have played a key roll in deterring the British forces from invading New Yorkduring the War of 1812.Since 1850 the Castle served a variety of penal functions: it accommodated Confederate prisonersduring the Civil War and served as the Eastern Branch of the United States Disciplinary Barracksuntil 1966. Walt Disney and Rocky Graziano both served time in Fort Williams for being absentwithout leave. The U.S. Army transferred the island to the U.S. Coast Guard in 1966. GovernorsIsland became the largest Coast Guard base in the world after its acquisition in 1966.In 1985 the U.S. Department of the Interior declared the 90 acres north of Division Road a nationallandmark. On December 7, 1988, President Reagan, President-Elect George Bush and SovietUnion Premier Mikhail Gorbachev met at the Admiral's House on the island for an important roundof Summit talks, and in 1993 the Island hosted United Nations sponsored talks to restoredemocratic rule in Haiti.Our highest and best use analysis indicated that a combined historical monument/residential usemaximized value at the park. Value at the Historic Monument Area arises from seven potentialsources.1) Residential Income2) Commercial Revenues (restaurants, shops, lodging)3) Transfer of Air Rights4) Increase in surrounding property values5) Net benefits to tourists6) Net benefits to users of vacant land for recreational and other purposes7) Non-use values from existence of historical monuments and option of visiting themBecause the value of this historical monument park is related to the historical value of the islandand its structures we included an extensive discussion of the history of Governor's Island, as wellas that of the subject site and buildings in the report. Below, we will summarize some of the moreinteresting elements of our analysis.The Income Approach was utilized to provide an estimate of value derived from potentialresidential, commercial, and tourist revenue flows. Estimates of residential income were derivedby examining rents and expenses at facilities most comparable to the subject. In order to estimatepotential tourist revenues and expenses we gathered information on attendance, charges, andincome generated from forts and from historical attractions in and around New York harbor as wellas historical military attractions in other parts of the state and country. The net operating incomewas then be capitalized to arrive at an estimate of value. Capital costs needed to generate thisrevenue were then subtracted from this estimate. Because the Sales, Income and CostTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 32Approaches typically employed by real estate appraisers are not likely to adequately estimate thevalue of a historical monument we considered the contingent valuation, travel cost, and hedonicvaluation methods as a supplement to the Sales and Income Approaches. Our estimate of the market value for the subject property “as is”, as of June 1, 2001 was$10,500,000. Estimated value components are in the table belowVALUE SUMMARYCOMPONENT VALUEVisitor Admissions $5,100,000Commercial (Refreshments & Souvenirs) $3,600,000Residential $12,000,000Transferable Development Rights $7,400,000Excess Vacant Land for Recreation & Open Space $0TOTAL VALUE FOR HISTORIC MONUMENT AREA UPON RENOVATION $28,100,000Less Restoration Cost $17,600,000“As Is” Value for Historic Monument Area $10,500,000Increase In Surrounding Property Values $14,500,000Non-Use Values to New Yorkers $10,900,000Non-Use Values to non-New-Yorkers $29,500,000Transferable Development RightsAs part of this assignment we needed to calculate developable area, and multiplied the result bythe price per square foot of permitted floor area, which was based upon comparable sales ofvacant land in comparable areas to arrive at the total value. The calculations are presented below:Item Entire Island HistoricMonumentBuilding Footprints for Structures to Remain 774,755 45,892Building to Be Demolished 212,816 17,424Paved Areas 2,143,076 N.A.Open Space 4,361,673 N.A.Total Upland Area 7,492,320 900,777Times 0.5 Floor Area Ratio (FAR) 3,746,160 450,389Less Existing Gross Building Area 2,771,487 130,874Total Projected Available Floor Area 974,673 319,515Plus Floor Area for Buildings to Be Demolished 106,408 8,712TOTAL FLOOR AREA AVAILABLE 1,081,081 328,227Value Per Square Foot Available $85Total Value $27,899,253THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 33Commercial IncomeVisitors to Historic SitesTo estimate commercial income we needed to project the number of visitors to a new one-of-a-kindhistorical monument. To do this we considered the history of the property, and investigatedattendance at the following potential comparable attractions and others:SITE LOCATION ATTENDANCE FEENYC AREAStatue of Liberty and Ellis Island NY Harbor 5,370,015 $7 rideCastle Clinton Battery Park, Manhattan 4,467,492 FreeThe Intrepid Sea-Air-Space Museum West Side, Manhattan 460,000 $12.00The South Street Seaport Museum Downtown Manhattan 454,169 $6.00The Cloisters Upper Manhattan 245,717 $10.00The New York Historical Society Manhattan 125,000 $5.00General Grant National Memorial West Side, Manhattan 118,000 FreeHistoric Richmond Town Staten Island, NY 100,000 $4.00OTHER NYS/NJSaratoga National Historical Park Saratoga, NY 150,000 $2.00Old Fort Niagara Niagara, NY 101,400 $6.75Fort Ticonderoga Ticonderoga, NY 102,469 $10.00Morristown National Historical Park Morristown, NJ 678,000 $4.00Sackett Harbor Battlefield Site Sackett Harbor, NY 109,285 $1.00OTHER US, NPS FORTSFort Caroline Jacksonville, FL 176,230 FreeFort Frederica St. Simons Island, GA 281,437 $2.00Fort Matanzas St. Augustine, FL 579,385 FreeFort McHenry Baltimore, MD 682,012 $5.00Fort Point San Francisco, CA 1,682,903 FreeFort Pulaski Savannah, GA 358,710 $3.00Fort Raleigh Manteo, NC 246,094 Free?Fort Sumpter Charleston Harbor, SC 301,420 $11.00Fort Washington Park Fort Washington, MD 248,131 $2.00The number of visitors ranged from 100,000 at Fort Richmond to 5,370,000 to the Statue of Libertyand Ellis Island. After eliminating Fort Point, because it attracts many not interested in a history,visitation ranges from 176,230 at Fort Caroline to 682,012 at Fort McHenry. The large number ofvisitors to Liberty and Ellis Islands demonstrates that location on an island in New York Harborshould not prove a significant detraction for the Governors Island Historical Monument. The best indications are provided by the Intrepid (460,000 visitors) and Fort McHenry (682,012visitors). Fort McHenry has superior historical value, but an inferior location with respect to the poolof visitors. The location, on the other hand, does face less competition from other attractions. TheIntrepid offers a somewhat superior location as it is easily accessible by car, but it is not in the heartof Midtown, and offers inferior views. After considering the nature of the attraction, the pool of potential visitors, likely developmentscenarios for the island, and assuming 1) renovation of the facilities,2) sufficient publicity, and3) enhancement of the facilities through exhibits, lectures, and eventswe estimated that 450,000 visitors each year would likely pay $5.50 plus transportation costs to visitthe Governors Island Historical Monument Park. This estimate is relatively conservative and it isTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 34possible that 1,000,000 or more visitors would be willing to pay as much as $8.00 per visit plustransportation costs if the publicity, exhibits and events were sufficient. Reserving one building (4units) from Fort Jay for tourist uses rather than residential use would further enhance the touristrevenue potential. Poor publicity, maintenance, exhibits, access and/or events, on the other handcould reduce the number to 150,000 at $3.00 per person. We note that in a report prepared for the Regional Plan Association, Economic ResearchAssociates estimated annual attendance of 350,000. They emphasized attendance at sixmuseums: Children's Museum of Manhattan, The Cloisters, The Frick Collection, the Intrepid Sear-Air-Space Museum, the Museum of the City of New York and the National Museum of the AmericanIndian. The museums had annual attendance ranging from 250,000 - 450,000 resulting in anaverage penetration factor of 3.6% of the total visitor market of 8,600,000. Using a penetrationfactor of 4% the estimated annual attendance for the attraction would be approximately 350,000visitors. Contingent Valuation SurveysBecause historical attractions are not typically operated by for-profit entities, charges and incomeflows do not necessarily reflect value. We therefore examined information from surveys todetermine value.The contingent valuation method attempts to estimate values for public goods by asking individuals,in survey or in experimental settings, to reveal their personal valuations of increments ordecrements in unpriced goods by using hypothetical, contingent markets. These markets definevery specifically the good or amenity of interest, the status quo level of provision, the offeredincrement or decrement, the institutional structures, and the methods of payment. Researchersattempt to determine amounts that individuals would be willing to pay, or willing to accept, forpreserving resources, or for accepting damages. Techniques range from purely hypothetical directevaluations asking respondents for dollar bids, to hypothetical questions asked of households andrecreators concerning changes in behavior. Preferences are then imputed. Households areconfronted with possible changes in an environmental attribute and asked for a valuation.The method is subject to numerous biases, and has been attacked by many economists. After all,it is easier to tell a researcher that one would be willing to pay $100 to save the spotted owl thanto actually take that sum out of one's pocket--which would provide a truer indication of willingnessto pay.However, such surveys are often the only means to estimate values. They were endorsed in 1992by an advisory panel of economists including two Nobel laureates. Alaska used the contingentvaluation method to calculate that the Exxon Valdez Oil spill had done nearly $3 billion in damagebeyond the amount actually spent on cleanup. Brookshire, et. al. (1976) found that the averagebid per family to prevent one additional power plant near Lake Powell was $2.77 in 1974 dollars.The method can also be applied to restricted samples of experts. On January 7, 1994 the NationalOceanic and Atmospheric Administration said that although contingent valuation could be a validtool for assessing environmental damage, it would be better to underestimate than to overestimatedamage by relying too heavily on that method. The proposal suggested discounting by 50 percentthe value that people attach to unspoiled resources, and would require exhaustive and expensivestatistical tests among large numbers of respondents to validate results.We considered estimates from previous studies to value the benefits of the historic forts. Becauseanalyses of environmental attributes rarely afford enough time or resources to develop newTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 35estimates that apply to a specific attribute a variety of pragmatic "benefit transfer" methods haveevolved that use existing benefit or cost measures for similar situations to develop benefitestimates for specific environmental attributes. We supplemented our analyses through the"benefits transfer" approach to estimate values through studies listed below. We were able to obtain data from a recent study of two forts, but due to differences in location,historical significance, and size we considered data from other surveys regarding the value ofhistoric buildings. The data indicate that our estimate of a willingness to pay of $5.50 per visitappears to be conservative.A team of economists including Robert Unsworth of Industrial Economics Inc. completed contingentvaluation surveys of visitors to two historic forts -- Fort Sumpter (Charleston, SC) and El Morro (SanJuan, Puerto Rico). The values they generated are use values (not preservation or other non-usevalues). Using payment cards they found that visitors were willing to pay an average of between$5 and $7 to visit El Morrow and $10 to $12 plus the cost of a necessary boat ride to visit FortSumpter. El Morro is larger than the subject, and Fort Sumpter offers greater historicalsignificance, but these surveys provide a valuable indication of willingness to pay. The currentcharge for El Morro is $2 indicating a surplus ranging from $3 to $5)In "Contingent Valuation of Quasi-public Goods: Validity, Reliability, and Application to Valuing aHistoric Site" by Catherine M Chambers; Paul E Chambers; John C Whitehead, surveyrespondents were presented with a mailed questionnaire. They are informed about the currentstatus of, and threats to, the Ste. Genevieve Academy. Ste. Genevieve was founded by Frenchsettlers in about 1750. It was the first permanent settlement in what later became the state ofMissouri. The Academy is one of the oldest school buildings west of the Mississippi River.Construction of the academy began in 1808 and was completed in 1810 (one year before thecompletion of Castle Williams). The structure is listed on the National Register of Historic Places,and was unoccupied. Respondents were informed that the building was owned by the State ofMissouri. However, the academy may be sold to private owners and converted to a bed andbreakfast inn. The following valuation question was presented: Suppose a special trust fund was established. The trust fund would accept one-time moneydonations that would only be used to purchase the Ste. Genevieve Academy andpermanently maintain it as a historic site. How much money would your household bewilling to donate to the trust fund? Remember this would be a one-time donation. Respondents could choose among seven donation categories in a payment card type format: $0,$1-$5, $6-$10, $11-$25, $26-$50, $51-$100, and more than $100. Follow-up questions were thenpresented to determine reasons for contributing to the trust fund or answering with a donation of$0. A random sample of 151 household names was drawn from telephone directories in St. Louis, 64miles from the preservation site, and 154 from Warrensburg, Missouri, a rural area 269 miles fromthe site, which represents the rest of the state. Samples of 151 and 154 households were drawnfrom the St. Louis and Warrensburg phone books. The most frequent Willingness To Pay ("WTP") response was $0. This result is not surprising,since the Ste. Genevieve Academy is a relatively obscure historical resource. Respondents whogave a zero WTP response were then asked to choose a statement that best described why theyTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 36were not willing to pay anything. Of 84 respondents, 4% answered "I do not support historicpreservation," 25% answered "I do not have enough money," 7% said "I do not think the moneywill be used for this project," 11%: "I do not like these kinds of questions," 30%: "I do not think theconversion will significantly change the building," and 24%: "some other reason." Respondentswho did not think that the money would be used for the project might have a positive economicvalue for the project but apparently did not believe the contingent market scenario. Theserespondents were flagged as "protest zero" responses and were deleted from the empiricalanalysis. The two next most frequent categories of WTP are $1-$5 and $6-$10. Only about 13% of thesample stated a WTP greater than $11. None of the respondents stated a WTP greater than $100.Respondents who stated a positive WTP were asked to choose a statement that reflected the bestreason for their answer. Of forty-eight respondents, the majority (54%) indicated a reason thatreflected non-use, or bequest, values: "I want to preserve history for future generations." The nextmost common answer (25%) reflected use values: "I like to visit historic buildings." Because thenumber of respondents who chose this response is double the number of respondents who gavea positive WTP, and had seen the Ste. Genevieve Academy in the past, these responses suggestthat a major motivation for WTP is option demand or future use value. Of the other respondents,13% answered "I value all historic preservation," 4% answered "I think the bed and breakfast innwill significantly change the building," and 2% answered "this sounds like a good cause" and "someother reason."Over four-fifths of the sample had no prior knowledge about the Ste. Genevieve Academy beforethe survey was conducted. After learning about the Academy through information presented in thesurvey instrument, almost one half of the respondents stated that they were at least "somewhatconcerned" about the potential changes. Almost one third of the sample had traveled to Ste.Genevieve, but only 8% had seen the academy. This suggests that a large portion of WTP can bedescribed as non-use values, such as the value of the knowledge of historical preservation orbequests to future generations. Willingness to pay ranged from $5.07 to $6.48 per household. The estimate of the aggregatenonmarket value of preservation of the Ste. Genevieve Academy was in the $.86 million to $1.1million range (1994 dollars). The academy was listed for sale from the State of Missouri's HistoricalProperty Offering with an asking price of $55,000We also considered studies of Stonehenge, 100 Washington Monuments, Lincoln Cathedral, anda study asking respondents whether they would be willing to contribute to a fund-raising effort topreserve buildings, outdoor art, and historic cemeteries in the context of reduced local revenues,and our own independent research. Heritage Travel StatisticsGeneral statistics on heritage travelers can help provide a further indication of willingness to payfor visits, and auxiliary spending at the Governors Island Historic Monument Park as well as ademographic profile of potential visitors. The demographic profile can help to refine theprojections.The Travel Industry Association of America (TIAA) estimates that Americans traveling 100 milesor more from home in 1997 spent $443 billion. In addition, an estimated 51 million foreigners spent$81 billion while visiting the United States. The industry accounts for approximately 6% of thenation's Gross Domestic Product. The domestic portion included more than 1.2 billion trips toTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 37destinations 100 miles or more from home. The TIAA reported that over one-fourth of U.S. adults(53.6 million) took at least one trip in 1996 that included a historic component, and that the averagesuch trip involved a $614 outlay ($340 median). In New Jersey, which has been studied in greater depth than New York with respect to historicpreservation, 163 million adult trips of all distances during 1995 generated $11 billion in travelerexpenditures. Heritage travel made up about 5% of all these trips. Travel expenditures of NewJersey heritage travelers, counting only the spending attributable to the heritage portion of theirtravels, amounted to $433 million annually. Heritage travelers spend an average of $252 for an overnight trip, 60% more than the $157 spentby the general New Jersey traveler. They also stay longer in New Jersey, an average of 4.7 nights.Of overnight travelers who spend $1,000 or more on a trip, 18% are heritage tourists comparedwith 8% for the general New Jersey traveler. Heritage travelers spend more on lodging – 84%compared with 59% by the general traveler. Day-trippers with historic destinations spend about20% more than travelers with no interest in history. They spend significantly more on meals andshopping.Of the 15,530 jobs created from heritage tourism, 7,085 stay in New Jersey, with more than halfserving the restaurant and lodging industries. Slightly more than $383 million in income is createdfrom visits to historic sites, with $168 million staying in New Jersey. Of the overall figure more thanhalf is in retail and services, particularly lodging, restaurants and bars. Of the $559 million inwealth generated from heritage tourism $287 million stays in New Jersey. Services and retailaccount for 45% of that overall figure, including a significant amount from the lodging and diningindustries.Federal, state and local governments gain $216 million in tax revenue from heritage tourism in NewJersey. Slightly more than half that money goes to federal coffers, while nearly 36% goes to stategovernments and 13% to local communities.Historic sites and organizations attract more than 6.4 million visitors annually. They also create1,438 jobs, generating $33 million in income, producing $13 million in taxes, and $43 million inwealth.CostIn estimating cost we utilized National Park Service data and emphasized costs at Fort McHenry,Fort Sumpter, the Home of Franklin Delano Roosevelt, and Saratoga, based on location, size, andnumber of visitors. These costs were $1,573,000, $1,164,000, $1,550,000, and $1,334,000respectively. With the exception of the Statue of Liberty costs at all other attractions were lower.We requested but did not receive detailed breakdowns of operating costs by category (e.g. labor,repairs and maintenance, security, etc.) for comparable structures. To these basic costs we addeda management fee at 10% and reserves of $1.00 per square foot. The reserve figure is high dueto the age of the structures and the high costs associated with maintaining the integrity of thesehistoric structures.Net Operating Income from TourismNet Operating Income and Value are derived in the table below:THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 38VALUE FROM ADMISSIONSCharge $5.50Admissions 450,000Total Revenues $2,475,000Costs $1,500,000Net Admission Revenues $975,000Management Fee for Admissions @10% $247,500Reserves @.90/SF $67,500Additional Expenses $315,000Net Operating Income $660,000Capitalization Rate 13.00%Capitalized Value $5,076,923Rounded To: $5,080,000Additional income and value is derived from concessions, etc. based upon concessions andsouvenirsInfluence on Surrounding Property ValuesIn an unpublished paper entitled “The Internal and External Impact of Historical Designation onProperty Values” N. Edward Cousin of Penn State and Robin M. Leichenko of Rutgers Universityutilized a database of approximately 7,600 properties from Taylor County, Texas, including 160designated as historic either by the National Register of Historic Places (NRHP) or by the localhistorical commission in the City of Abilene. Local designation requires owners to obtain a“Certificate of Appropriateness” for all proposed changes. In return, the owner receives apermanent reduction in city property taxes of either 20% or $200, whichever is greater, and aproject tax break of up to 50% that can last as long as 10 years for approved improvements.For the youngest historical dwellings (up to 46 years of age) the price difference between ahistorically designated house and one not designated is $19,907, more than half the mean valueof $39,165. The price differential declines with age and hits zero at 77.6 years of age. Fornationally designated buildings the difference at 46 years old is $28,618 and declines to zero at91.5. Houses in census tracts with more historical buildings have higher prices after controlling forhouse quality. House values increase $406 for each historic house in the district but fall $6 withthe number squared. Benefits are maximized at about 33.8 buildings. The aggregate rise inproperty value was over $18,000,000.The City of Athens Georgia, founded in 1807, was named for the Greek center of culture andlearning. Approximately 600 properties, sampled from six of Athens’ historic districts, wereexamined to determine whether property values in local or national designated districts increasedat a faster pace than those located in non-designated areas. Two districts sampled for the study, Woodlawn and Boulevard, are both listed in the NationalRegister of Historic Places and locally designated. Over a twenty-year period, beginning in 1976,the property assessment values sampled rose at a rate of 47.75% after inflation. For two districtsappearing only on the national register -- Milledge Circle and West Hancock -- average assessmentvalues increased at a rate of only 22.94%, approximately half the rate of the locally designatedTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 39areas. The third comparison group consists of three non-designated neighborhoods: Cloverhurst,King, and Pulaski Heights. These non-designated properties show an increase in value of 33.87%,which surpasses that of the combined nationally registered districts, but is below that of the localdistrict. Values in the four designated areas outpace their three non-designated counterpartsbetween 1988 and 1996. The assessment values in historic districts rose at 65.1%, and theassessment values in non-designated neighborhoods rose at a rate of 60.6%. We also looked at studies in Virginia, Galveston, TX, Cleveland Ohio, Chicago, IL, Washington,DC, Philadelphia, PA, a 1979 Department of the Interior Study, Denver, CO. The studies generallyfind positive impacts of historic designation upon property values, but several found no evidenceof benefits. Most of the studies relied upon assessed values, which are not considered goodindicators of market value, and most did not conduct rigorous statistical tests or analyze alternativefactors thoroughly. Furthermore most studies analyzed the effects of designation rather than thepresence of the historic property itself. In addition, some of the studies were presented by, orprepared for, preservation groups or preservationists, and we suspect would therefore be biasedupward despite, or because of, the best of intentions. We assigned a positive but small impactupon surrounding properties of 5%. General Impact StudiesSeveral studies have examined the general economic impacts of historic designation and heritagetourism. Most of these studies use input-output models, standard tools for assessing impacts,which are based upon the work of the Nobel Prize winning economist Wassily Leontief. Thesemodels utilize special datasets containing information on inputs required to generate outputs,based upon data from actual companies.We ran the National Park Service’s Money Generation Model (MGM2), which can be found athttp://msu.edu/user./stynes/npsmgm. The model summarizes economic impacts in terms of sales,income, employment and value added.National Parks impact the local economy in several ways, including the following:1) visitor spending in the region2) park operations: payroll and purchases of goods and services from local suppliers3) construction activities4) economic development in the region induced by the presence of the parkThe basic components are summarized in the following equationEconomic impacts = Number of Visitors * Average spending per visitor * Economic MultipliersThe primary inputs are visits, average spending and multipliers. Spending averages can be inputby the user or from predefined tabulations derived from surveys taken at parks. MGM2 also offersseveral sets of multipliers derived from input-output models (the IMPLAN model), or the user caninput their own.The model estimates direct effects, secondary or multiplier effects, indirect effects and inducedeffects. It reports impacts in terms of sales, jobs, personal income and value added.Visitors are divided into eight distinct subgroups (1. local, 2. non-local day visitors, 3. visitors inmotel/cabin/lodge inside the park, 4. campers inside the park, 5. visitors staying in back-countrysites, 6. visitors in motel/B&B, cabin, rented condo outside the park, 7. campers staying outsideTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 40the park, and 8. visitors staying overnight in the area in seasonal homes, with friends and relativesor other private home)The model indicated direct spending effects of $8,856,000, with 210 jobs, and generation of$3,351,000 in personal income. Total effects after multipliers were estimated at $13,609,000, with275 jobs, and personal income generation of $5,077,000.IMPACTS OF CON EDISON ELECTRIC SUBSTATION, NEW YORK, NYIn an affidavit filed in the Supreme Court of the State of New York on behalf of the Herald SquareSouth Civic Association; Kenneth Acks of the Cost Benefit Group estimated that a proposedelectrical Substation between 30th and 31st Street and between Broadway and Fifth Avenue inManhattan, New York could lead to value losses of 5.0% to 20% in certain neighboring properties.Estimated losses resulted from public perceptions regarding the dangers of electromagneticemissions, the risk of fire and accidents associated with such structures, noise concerns, increaseddangers arising from potential terrorist attacks and the potential incompatibility of the structure withneighboring uses. The proposed substation was located at 15 and 25 West 30th Street and 24-26 West 31st Streets(Block 832, Lots 25, 27, 59 and 60). The site consists of four rectangular tax lots forming anL-shaped parcel running block through between West 30th and 31st Streets. The total site areais 34,054 square feet, or 0.78 acres. It is zoned M1-6 with a maximum floor area ratio (FAR) of10.0, indicating a maximum buildable area of 340,540 square feet. The site offers195 feet offrontage on West 31st Street and 155 feet along West 30th Street. Consolidated Edison Companyof New York proposed the construction of an electric utility substation, ranging from one to fourstories and containing a total of approximately 45,100 square feet. The structure would containspace for five transformers with the capacity to generate 250 megawatts of power, and otherequipment. Lots 25, 29 and 60 were purchased from Eljan Parking in January 2003 for$11,200,000, and Lot 27 from Crosstown Parking in February 2003 for $26,000,000.The preliminary estimate, indicated that the cumulative loss in real estate value for Block 832adjoining the proposed Substation site would be in the approximate range of $4.9 – $19.4 million,and on Block 833 across from the proposed site, in the range of $10.2 to $40.8 million, due to thecommencement of construction and operation of the proposed electrical Substation. Given thecurrent Class IV tax rate of 11.580 which would be applicable to most of the properties near thesubject, the loss in tax revenues to the City of New York would range between $784,688 and$3,138,752 every year assuming that assessment changes accurately reflected value changes.Mr. Acks noted that in 1979, Colwell and Foley estimated a value loss of 2% - 9% for propertiesin close proximity to transmission lines, and between 6% and 9% of value at a distance of 50 feet.They found that the reduced value declines in magnitude with an increase in distance and visualimpairment such as the growth of trees. The study used a regression equation, which includeddistance to the line as an index of the extent of damage.In “Impact of Power Transmission Lines on Property Values: A Case Study,” which appeared in theJuly 1992 issue of The Appraisal Journal, Jul Hsian Kung and Charles Seagle analyze the impactof power transmission lines on residential property values and the marketability of real estate inMemphis and Shelby County, Tennessee. The homeowners stated that had they been aware ofthe potential health risks associated with the presence of the electromagnetic fields emitted bytransmission lines, 87% said that the price they had been willing to pay for their home would havebeen adversely affected or they would have looked in other areas for comparable housing.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 41Forty-three respondents (91%) said that they thought the market for these homes would declineif negative health effects were widely publicized. A public poll taken in 1993 by CambridgeReports/Research showed that 63% of all adult Americans were aware of the EMF issue, up from31% in 1989. Half responded that they were "extremely worried" about it. The reason for thegrowing awareness has been the increased reporting of residential and school cancer clusterinvestigations near power lines, along with numerous studies of occupational exposure showingan increased frequency of cancer in workers who have had higher exposure levels to EMF.In another 1992 article, which appeared in The Journal of Real Estate Research, Delaney andTimmons found a loss of about 10 percent from power lines. The measurement tools used werematched paired sales, public and MLS data on sales, discussions with the public and appraiseropinion. A review of 100 Houston residential properties, which abutted a power line corridor, foundthat in 1993 there was a measurable loss of value relative to non-abutting peer properties (Boltonand Sick 1999; Bolton 1994). A late 1994 California matched-sales analysis showed that vacantlot values were adversely affected by 18-53.8 percent (Bolton and Sick 1999). Two 1995 studiesalso found that immediate proximity to, or direct view on, a pylon caused house prices to drop, from5% at a distance of 50 meters, or 160 feet to more than 27% at 10 meters, or 33 feet (Callanan andHargreaves, 1995; and Hamilton and Schwann, 1995). An extensive evaluation of 12,907residential real estate transactions in Vancouver, British Columbia, from 1985 through 1991established “an undeniable drop in value . . . [of] 6.3 percent . . . due to proximity and visualimpact.” Additional studies were also considered.ECONOMIC IMPACT OF OPERATING THE SHOREHAM NUCLEAR PLANTKenneth Acks was part of a team of analysts, economists, and engineers hired by the SuffolkCounty Government to evaluate the economic impact of charging ratepayers for the cost of theShoreham nuclear plant, of operating the plant, and of selected alternatives.Scope of Work: Mr. Acks studied the economic impact of charging the full projected completioncosts to the ratepayers, and of constructing alternative generating facilities. He investigatedimpacts upon employment, corporate balance sheets, business location decisions, consumers,governments, homebuyers, the housing market, and property values. Through surveys,Input/Output models and econometric analyses Mr. Acks obtained estimates of welfare losses, anda thorough tally of costs and benefits arising from the operation of the plant. Findings werepresented in testimony to the state utility commission as well as to blue ribbon panels establishedby the County Legislature and the governor of the state. Results were also utilized in the RICOcase against LILCO, which resulted in the award of $23 million in damages by a jury.Findings: Mr. Acks and his fellow consultants forecast a loss of over 35,000 jobs in the LILCOservice area, assuming that the full cost of the plant were to be put into the rate base. A declinein local business and consumer income would cause a loss of 20,853 jobs; and an additional14,288 jobs would be lost due to flight of manufacturing industries from Long Island.Through both a macro-economic analysis and survey of area businesses, Mr. Acks identifiedspecific industries which would suffer severely by major rate hikes. For example, the energy-intensive plastics industry would be forced to move or close down because locally applied ratehikes would cause it to lose competitive standing vis a vis neighboring non-LILCO areacompetitors.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 42A unique hedonic property value study found that Shoreham's operation would reduce home valuesnear the plant by 7.1% and by lesser amounts as far as 20 miles from the plant. The total loss inhome values was projected at $410 million. Property tax collections would fall by $12 million peryear (assuming the reductions in property values were properly recorded by assessors).VALUATION OF PERSONAL INJURY DAMAGESDamage Valuation Associates, the predecessor of The Cost Benefit Group was called upon tovalue damages resulting from a care accident which severely injured a patient and impaired hismental abilities. We summed the present values of lost earnings, fringe benefits, householdchores, medical costs, and of lost enjoyment of life. The economists estimated damages basedupon four scenarios. The following estimated present values were presented:Type of Damage Past (thru 12/95)Future Total RoundedLost Earnings $210,945 $241,694 $452,639 $450,000Fringe Benefits 84,691 131,461 216,152 220,000Household Chores 12,045 15,838 27,883 30,000Medical Costs 25,792 30,559 56,351 60,000Enjoyment of Life 653,269 1,553,672 2,206,941 2,210,000TOTAL 986,742 1,973,224 2,959,966 3,000,000FEASIBILITY STUDIES/APPRAISALS OF REDEVELOPMENT PROJECTSThe Cost Benefit Group is often called upon to evaluate the feasibility of potential developmentprojects. In order to determine whether projects make sense we conduct extensive analyses of:regional and neighborhood economic and social conditions; key sectors; supply and demand in realestate and industry markets; the property, zoning, sale prices of vacant land and of comparablyimproved properties; rents achieved in relevant markets; and absorption and vacancy rates. Theestimated value of these projects upon completion is far in excess of $1 billion. We take pride inhaving observed the creation of more than 1,000 housing units following these reports. Some ofthese analyses were used to determine appropriate compensation in condemnation cases tofacilitate redevelopment.We also work together with environmental service and engineering firms to evaluate vacant landparcels with respect to the presence of environmental hazards, soil conditions, danger of flooding,availability of utilities, drainage, and topography. Risks posed by site characteristics, if any, arefactored into our analyses.Our experience with a wide variety of property types facilitates our ability to understand the highestand best uses of properties. Some of these projects have involved Low Income Housing TaxCredits and other special financing arrangements. We factor in the value and profit implicationsof these and other benefits. We have also appraised more than 40 dilapidated/vacant propertieswith more than 300 units for the Neighborhood Entrepreneurs Program and others sponsored bythe Division of Alternative Management Programs of the New York City Department of HousingPreservation and DevelopmentTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 43Feasibility studies and appraisals analyzing vacant land or redevelopment projects conducted inthe past or currently in process, involve many of the larger development projects in the metropolitanarea, and include the following:Project Name Location Project TypeSt. Brigids Roman Catholic Church New York, NY Church - Nursing HomeA. Holly Patterson Geriatric Center Uniondale, NY Redevelopment of Nursing HomeNassau University Medical Center East Meadow, NY Expansion of Medical Office SpaceJersey City Medical Center Jersey City, NJ Convert Medical Center to ResidentialGyrodyne St. James & Stony Brook, NY Purchase/Condemnation by UniversityLong Beach Superblock Long Beach, NY Mixed Use Project on Vacant LandGovernor’s Island Monument Park Governor’s Island, NY Residential/Tourism Use661.5+ acres Vacant Industrial Land Yaphank, NY IndustrialPatchogue Senior Apartments East Patchogue, NY Affordable & Senior HousingBrookview Apartments Deer Park, NY Senior HousingRanches at Mount Sinai Mount Sinai TownhousesPinewood Apartments Coram Senior Housing95-99 Main Street Fort Lee RetailLiberty Harbor North Jersey City, NJ Vacant & Industrial to ResidentialCentral Islip Psychiatric Center Central Islip, NY Minor League Ball Park & Law SchoolKings Park Psychiatric Center Kings Park, NY Vacant Land at Psychiatric HospitalGenzale Plating Franklin Square Industrial to ResidentialTownview Apartments Fishkill, NY Garden ApartmentsRosewood Nursing Home Peabody, MA Nursing HomeBroadhurst Willows Apartments Manhattan, NY Affordable HousingDraper Hall Apartments Andover, MA HousingCadbury Commons Health Care Cambridge, MA Assisted LivingBaytowne Apartments Webster, NY ApartmentsSt. Luke's Nursing Home Oswego, NY Nursing Home ExpansionAnnapolitan Health Care Annapolis, MD Assisted LivingSuffolk Saturn St. James, NY Automobile DealershipEnglish Station Apartments Greece, NY ApartmentsWoodcrest Estates Port Jefferson Station, NY Senior HousingNorth Cape Convalescent Center Cape May, NJ Nursing Home100,000 SF Parcel of Vacant Land Flushing, New York Mixed Use – Retail, Apartment, HotelTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 44COST-BENEFIT ANALYSIS OF GREEN ROOF PROGRAM – NY CITYA green roof covers a building’s upper surface with lightweight engineered growing medium whichcan be outfitted with a wide variety of plants while protecting the integrity of the underlyingstructure. In addition to providing green spaces and gardens for residents, green roofs mayprovide important environmental and human health benefits including:1) ameliorating the “urban heat island” effect, 2) lowering energy expenditures, 3) purifying the air, and 4) reducing storm-water runoff. On summer days, temperatures in cities can be up to seven degrees hotter than readings insurrounding areas, as they become incubators for smog, threaten public health, and increaseenergy demand -- a situation known as the “urban heat island” effect. By replacing the heat-absorbing tar and other dark roofing materials that contribute significantly to higher urbantemperatures with plants and grasses, green roofs may reduce warmth. Storm-waterrun-off—which carries contaminants, including heavy metals, from paved surfaces and rooftopsto waterways—has been identified as a major source of water pollution. By absorbing up to 75%of rain that falls upon them green roofs may cut demands placed upon sewage systems, andproduce cleaner waterways. Green roofs fall into two categories, extensive and intensive. Extensive green roofs are lower inweight, cost, and maintenance than intensive systems. Plants for extensive green roofs tend torequire only a few inches of soil and little additional irrigation or care. Extensive roofs are oftenunable to accommodate regular human traffic and are not suitable for many structures. Intensivegreen roofs, though heavier, more costly, and in need of more maintenance can accommodatevegetables, shrubs, and trees. Because these are deep-rooted plants, at least 12 inches of soilmay be required.Initially inspired by the sod roofs of rural Scandinavia which have been in existence for centuries,green roofs have been adopted by municipalities throughout the world. In Germany it has beenestimated that 10% of buildings now have green roofs. Under “Tokyo Plan 2000” useable rooftopspace atop new buildings larger than 1,000 square meters must be 20% green. Closer to home,green roofs have been incorporated into city planning in Chicago, Portland, Oregon, and Toronto,Canada. In Chicago, where there is a 20,000 square-foot green roof atop the city hall, the ChicagoEnergy Conservation Ordinance, requiring all new or refurbished roofs to contain green roofs orreflective roofing, was passed on June 3, 2002.The Cost-Benefit Group is working with the Columbia University-NASA Goddard Institute of SpaceStudies (GISS), the Earth Pledge Foundation (much of the above information is derived from theirwebsite and www.GreeningGotham.org which they created); Hydroqual Inc.; the Gaia Institute; TheColumbia University School of Public Health; The Center for International Earth ScienceInformation Network (CIESIN), Comcarto Graphics; and others to measure the degree to whichgreen roofs provide benefits and then to attach a dollar value to these benefits. To date we have generated rough estimates of the following potential costs and benefits:THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 45BENEFITSPrivate(1) Service Life(2) Cooling,(3) Heating,(4) Agricultural, (5) Aesthetics/Recreation, and(6) SoundSocial/Public(1) Water Runoff Capital Spending,(2) Water Runoff Operating Expenditures,(3) Energy/Heat Island Cooling,(4) Greenhouse Gases,(5) Air Quality (Particulates, NOX, Ozone, SO2, Carbon Monoxide removed)COSTSPrivate(1) Net Cost of Green Roofs v. Non-Green(2) MaintenanceSocial(1) Program Administration and Setup, (2) Program MaintenanceWe also estimated income generated, jobs created (construction and permanent), and fiscalimpacts (changes in tax revenues)Estimating individual cost and benefit items requires breaking down the above items into morebasic elements, and converting physical data into dollars and cents terms. For example, toestimate the benefits of air quality improvements we considered 1) the possible scope of theprogram, (say 10,000 roofs averaging 5,000 square feet), 2) the likely reduction in particulates(0.018587 per square foot), and 3) the benefits of this reduction per household $4.47/kg).The attached spreadsheet presents crude preliminary estimates and a framework for analysis. Itis flexible, permitting modification of assumptions and improvements in data.COSTS & BENEFITS OF GREEN ROOF PROGRAM NEW YORK CITYGreen Roofs 9,841Avg. Sq. Ft. 5,000Total Sq. Ft. Greened 49,205,205Present Value Per Per Total BasisNet Benefits/Costs Building Sq. Ft. AnnualizedBENEFITSPrivateService Life (lowers costs below)Cooling $71,230,238 $7,238 $1.45 $5,109,796 Cut cooling costs 20% from $0.30/SF/year x total square footageHeatingFood $72,473,979 $7,364 $1.47 $5,199,017 Hotel produced C$25,000 x .72 to get US$ divide by 2,100 SF to get $/SF multiply by prob. of 1%Consumption/Aesthetics/Recreation $55,019,418 $5,591 $1.12 $3,946,891 5 people per building would pay an average of $50 per year + 5 pay $25 + 5 pay $10Sound $23,987,537 $2,438 $0.49 $1,720,778 Cut 4 decibels, increases property value 1.3% per decibel, average building value = $100/SFSocial/PublicWater Runoff Capital Expenditures $30,993,020 $3,149 $0.63 $2,223,325 Decrease Stormwater 60% on each greened roof (5% of all roofs covering 0.6% of all surface area)Water Runoff Operating Expenditures $6,641,361 $675 $0.13 $476,427 Decrease Stormwater 60% on each greened roof (5% of all roofs covering 0.6% of all surface area)Energy/Heat IslandCooling $54,799,132 $5,568 $1.11 $3,931,088 Program (50,000,000 SF green roofs) cuts city temperature 1 degree cuts $.40/SF costs 2%GreenHouse GasesCarbon Dioxide $8,998,034 $914 $0.18 $645,486 Greening all Toronto roofs cuts GHG 2.4 megatons multiply by NY population/TorontoAir QualityParticulates removed $70,249,901 $7,138 $1.43 $5,039,470 1m2 (10.76 ft2) of grass roof can remove .2 kg airborne particles per year so 1 SF cuts .01859 kg xvalue of $4.78/kg removedNOX Removed $26,578,295 $2,701 $0.54 $1,906,629 physical reduction = 25% of particulate reduction x value removed from NowakOzone Removed $26,589,968 $2,702 $0.54 $1,907,467 physical reduction = 25% of particulate reduction x value removed from NowakSO2 Removed $6,314,409 $642 $0.13 $452,972 physical reduction = 25% of particulate reduction x value removed from NowakCarbon Monoxide Removed $3,928,965 $399 $0.08 $281,850 physical reduction = 25% of particulate reduction x value removed from NowakTOTAL BENEFITS $394,392,620 $40,076 $8.02 $28,292,278 COSTSPrivateNet Cost of Green Roofs v. Non-Green ($269,366,208) ($27,372) ($5.47) ($19,323,342) Green Roofs @ $17.50/SF last 36 years, Non-Green @ $9 .00/SF last 16 yearsSocialProgram Administration and Setup ($5,674,193) ($577) ($0.12) ($407,046) 1% of initial costsProgram Maintenance ($23,678,736) ($2,406) ($0.48) ($1,698,626) 12 employees earn an average of $60,000 + $30,000 per employee in other costsTOTAL COSTS ($298,719,137) ($30,354) ($6.07) ($21,429,014)NET BENEFITS $95,673,483 $9,722 $1.94 $6,863,264 BENEFIT/COST RATIO 1.32 RETURN ON NET INVESTMENT 32.0%Initial Expenditures Green Roofs ($885,693,690) Estimates For Illustrative Purposes OnlyInitial Expenditures on Non-Green RoofsForegone($418,244,243)Income Generated $492,990,775 $50,095 $10.02 $35,365,347 Jobs (construction) 3,592 0.36500.000073 258Jobs (permanent) 1,276 0.12960.000026 92Fiscal Impacts $26,822,025 $2,726 $0.55 $1,924,114 THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 47THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 48REAL ESTATE VALUATIONS/APPRAISALSThe Cost Benefit Group has appraisals virtually every type of real estate. The table belowdescribes the distribution of valuation projects. Most of these projects included detaileddescriptions of: regional and neighborhood economic and social conditions; supply and demandin real estate and industry markets; the property, zoning, assessments, taxes, highest and bestuses, financial indicators, sale prices of and rents in comparable properties; and absorption andvacancy rates.Valuations in Selected Areas #New York, New York 53Other New York City Boroughs, NY 27Nassau County New York 65Hamptons, New York 8Other Suffolk County, New York 23New Jersey 18Pennsylvania 4Other States 125Valuations By Property TypeMixed Use 12Single Family Residential 5Multi-Family Residential 52Shopping Center 11Free-Standing Retail 35Restaurants 10Office 22Industrial 37Vacant Land 47Hospitals 3Nursing Homes 12Hotels 11Other 10We are often called upon to perform more complex valuations of special purpose properties suchas hospitals, nursing homes, hotels, marinas, auto dealerships, ... In these analyses we featuredetailed descriptions of trends in the industry and unusual valuation factors. Our experience witha wide variety of property types facilitates our ability to understand the highest and best uses ofproperties. Some of the property types analyzed are listed below.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 49HEALTH CARE VALUATIONSWe are recognized as experts in the valuation of real estate utilized by health care institutions. Wehave unique databases, and experience in valuing such real estate not available to mostcompetitors. Among the health care properties evaluated are the following.Name Location StateHOSPITALSNassau University Medical Center East Meadow NYBeth Israel Kings Highway Medical Center Brooklyn NYMid Island Medical Center Bethpage NYHospital for Special Surgery New York NYJersey City Medical Center Jersey City NJNURSING HOMESBoulevard Care Center W oodside NYA. Holly Patterson Geriatric Center Uniondale NYPark Nursing Home Rockaway Park NYRockaway Care Center Edgemere NYRockville Manor Rockville Centre NYRosewood Nursing Home Peabody MASt. Luke's Nursing Home Oswego NYASSISTED LIVING FACILITIESSavoy at Brooklyn Brooklyn NYEsplanade/Atria at Chestnut Ridge Chester NYCastle Senior Living at Forest Hills Forest Hills NYChelsea at Montville Montville NJCastle Senior Living at Plainview Plainview NYMEDICAL OFFICESNorthern Boulevard Great Neck NYOld Country Road Plainview NYSunrise Highway Central Islip NYOld Bethpage & Haypath Roads Old Bethpage NYHEALTH CARE DEVELOPMENT PROJECTSRosewood Nursing Home Peabody MACadbury Commons Health Care Cambridge MASt. Luke's Nursing Home Oswego NYAnnapolitan Health Care Annapolis MDNorth Cape Convalescent Center Cape May NJSt. Mary’s New York NYA. Holly Patterson Geriatric Center Uniondale NYSt. Brigids Roman Catholic Church New York NYTHE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 50HOSPITALITY VALUATIONSOur hospitality valuations featured detailed industry descriptions and analyses of income andexpense, trends in the industry and in specific markets by location and type of hotel. Previousprojects included the following:Name Location StateMeadowlands Hilton Secaucus NYCherry Hill Hyatt/Hilton Cherry Hill NJEatontown Sheraton Eatontown NJHudson Valley Resort & Conference Center Ulster NYDeauville Hotel New York NYThe Greenporter Chester PADevelopment Site Flushing NY570 Sunrise Highway W est Babylon NYDune Point & Sand Piper Inns Fire Island NYCarmen Mill Road Massapequa NY400 Carman Hill Road New York NYCrown Sterling Minneapolis NYCrown Sterling San Francisco CACrown Sterling Napa CACrown Sterling Tampa FLCrown Sterling Los Angeles CAOFFICE BUILDINGS (Partial List)Address Location State Square Feet580 Fifth Avenue New York NY 401,000100 Chestnut Street Rochester NY 320,347800 Long Ridge Road Stamford CT 255,00022 W est 43 Street New York NY 200,332rd600 Old Country Road Garden City NY 193,724901 Stewart Avenue Bethpage NY 190,574120 Eagle Rock Avenue East Hanover NJ 173,4821776 Broadway/229 W est 57 Street New York NY 148,900th170 Old Country Road Mineola NY 118,00029-28 41 Avenue Long Island City NY 114,000st535 Broadhollow Road New York NY 101,545141-07 20 Avenue College Point NY 85,000th314-334 East 38 Street New York NY 83,038th10 W est 47 Street New York NY 71,738th1895 W alt W hitman Road Melville NY 54,412245-265 Great Neck Road Great Neck NY 48,500315 Fifth Avenue New York NY 46,475400 South Oyster Bay Road Hicksville NY 40,193THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 51THE ACB COMPUTERIZED COST BENEFIT ANALYSIS SYSTEMThe Problem. Although the economic theory of social costs and benefits of government policy andof private development projects is fairly well developed, few decisionmakers avail themselves ofthese tools. The dichotomy between theory and practice arises because of the expense and timeinvolved in measuring complicated phenomena. Therefore, policy tends to be made, notsystematically, but in an ad hoc intuitive fashion, which is more susceptible to political manipulation.In addition, important costs and benefits are often omitted due to the cost of collecting information.The above failures can also lead to the inability to negotiate mutually beneficial compromises.The System. The ACB system reduces the costs of social cost-benefit analysis by creating a menudriven centralized database of information generated by previously published studies which willprovide rough first guess estimates of the costs and benefits of various proposals. The systemallows the policymaker to change assumptions and will also serve a bibliographic function.The studies on the database can also be used to determine damages in lawsuits. In terms of crime, the program, upon the users selection of various menu choices, presentscoefficients from studies showing the extent to which the hiring of a policeman tends to increasearrests. It then multiplies these results by the coefficients of studies measuring the extent to whichan increase in arrests cuts crime, and finally by estimates of the costs of crime.The information used for this database consists of regression coefficients, survey results and costestimates derived from studies previously published in academic journals, or by official governmentagencies. The academic journals include the American Economic Review, the Journal of EconomicLiterature, the Journal of Political Economy, the Review of Economics and Statistics, the Journalof Environmental Management, the Journal of Public Economics, Land Economics, and the Journalof Urban Economics. The system: 1) takes data from studies, 2) places the data into comparable groups, 3) converts theunits of each study into a common base, 4) derives a single representative (weighted average)number for each group by weighting the elements of the studies. One scheme attaches greatersignificance to studies performed in later years (in terms of data and publishing date), and alsoutilizes subjective weights based on the apparent quality of the study, and 5) produces a series ofpotential cost benefit scenarios based on different types of analyses.A description of the system appeared in the April 1995 issue of The Engineering Economist.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 52LOCATION OF GROUP HOMES FOR MENTALLY RETARDED-NEW YORKKenneth Acks directed a study to determine optimal location of group homes given siting of existingfacilities, community opposition, vacancy rates and prices. The study was sponsored by the NYSOffice of Mental Retardation and James Felt Realty/Grubb & Ellis.Scope of Work. The Cost Benefit Group studied supply and demand for housing, property values,rents, and vacancy rates in each of New York City's 59 community districts and 3 suburbancounties. We delineated economic activity, population, age distribution, income, incomedistribution, zoning, land uses, and the stock of housing. We also investigated changes in stock,rehabilitation, and construction activity. Vacancies were disaggregated by type, size, rent, andduration. A model was created to determine the expected number of vacancies and rents forsupported apartments and group homes.We also determined appropriate locations in terms of price, level of community opposition, safety,and extent of previous public activity. Prices and vacancy rates were forecasted. Hedonic studiesof property values and wages were explored to determine the premiums that must be paid for clientand staff safety. Prices, rents, and construction costs in other areas of New York State werecompared to those in New York City.A BENEFIT ANALYSIS OF THE REDUCTION OF THEFT CRIMESKenneth Acks provided research support for a study of the costs and benefits of crime reductionprograms for Professor Albert Madansky, the Center for the Study of Public and NonProfitInstitutions of the University of Chicago, and the U.S. Department of Labor.Scope of Work: Analyzed benefits, both nationally and state-by-state, of a reduction in the criminalpopulation. Seven cost elements were evaluated:(1) The dollar value of the thefts perpetrated in a year(2) The annual dollar of savings in police protection costs(3) The annual dollar savings in judicial costs(4) The annual dollar savings in incarceration costs(5) The annual savings in personal anti-theft and insurance costs(6) The annual savings in public welfare costs(7) The annual net benefit of an additional ex-offender in the labor forceFindings: Average Benefit From Cutting the Criminal Population by 100 Theft Criminals.# Effect Average Optimistic1 Dollar Value of Thefts $247,853 $309,8162 Police Protection Savings $46,020 $225,5003 Judicial Cost Savings $787 $52,9904 Incarceration Savings $10,297 $679,6145 Anti-theft Savings $614,669 $618,1516 Public Welfare Savings $35,200 $35,2007 Labor Force Value Added -- $278,000THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 53HEDONIC VALUATION TECHNIQUESIn order to quantify what others omit The Cost Benefit Group often employs "Hedonic ValuationTechniques" and the "Contingent Value" Method.Hedonic Valuation Techniques estimate the pleasures that individuals derive from goods, fromcharacteristics of goods, from natural resources, from activities, from particular aspects of health,or even from life itself. They are most commonly employed when markets and prices do not exist,or where distortions cause prices to deviate from true values. For example, no markets directlyprice the value of the loss of hearing, of lung disease, of the loss in property values resulting fromhigh powered transmission lines, or of death due to negligence.Although less well defined, these estimates are needed to evaluate the propriety of regulations, toallocate expenditures optimally, and to determine the true value of damages in lawsuits.To estimate values economists estimate how much individuals are willing to pay for derivingbenefits, or willing to accept in payment for bearing burdens. Ten types of data have beenemployed (along with statistical methods) to estimate implicit valuations: 1) survey questionnaires,2) wage premiums for dangerous jobs, 3) property value differentials through time and acrosslocalities 4) travel costs, 5) expenditures on safety equipment, 6) avoidance expenditures, 7) publicexpenditures, 8) laboratory experiments, 9) relocation costs, and 10) insurance premiums.In using safety expenditures economists divide the dollars that consumers are willing to pay forsuch devices as smoke detectors or automobile air bags by an estimate of risk reductions. Forexample, consumers might be willing to spend $20 for a smoke detector that has one chance in100,000 of saving a life--which implies a value of life of $20/(1/100,000) or $2,000,000.Wage and property value studies utilize multiple regression analyses. For example, researcherstake a large sample of homes and compare sales prices with the degree of pollution, while holdingother factors (such as the number of bedrooms) constant. The relationship may look somethinglike this: home prices | . | . . . . | . . . | . | . . . . | ... air pollutionFrom this graph it is apparent that high levels of pollution tend to be associated with low homeprices. Regressions, essentially draw a line through the middle of the dots, minimizing the distancebetween the line and the dots. The slope of the line determines the extent of the reductions. Asteep line indicates a large effect, while a slow descent reflects a mild influence. The economistcan then conclude that a 1% increase in air pollution is associated with a 3% fall in property values--and is worth $3,000. These estimates are superior to techniques typically employed by appraisersbecause they systematically incorporate a wide range of data.THE COST BENEFIT GROUP, LLC – QUALIFICATIONS PACKAGE 54In Sherrod v. Berry a jury awarded hedonic damages equal to 2.83 times the size of conventionaleconomic losses. The Association of Trial Lawyers of America has endorsed the technique.Government agencies also set values on life and property through hedonic methods when doingcost benefit analyses of regulations and spending. The Occupational Health and SafetyAdministration uses a value of $3.5 million for life, while the Environmental Protection Agencyassigns price tags between $400,000 and $8.5 million. Although the use of these methods to valuelife is controversial they are routinely employed for many purposes.Thus, hedonic analyses place values on goods, or characteristics where markets do not exist.Although such estimates are less certain than market prices, vast misallocations of resources andgross injustices occur when valuations are omitted.Nearly all public expenditures and regulations involve goods where prices either do not exist or failto convey accurate information. Yet these techniques are often overlooked because of the highcosts associated with conducting such studies. By creating a computerized database of previoushedonic and cost benefit analyses The Cost Benefit Group can produce these valuations atreasonable costs. C GBTHE COST BENEFIT GROUP 400 East 77 StreetthSuite 16ANew York, New York 10021(212) 763-5520(E)Fax: (516) 941-0798E-Mail: info@cost-benefit.comWebsites: http://www.cost-benefit.com, http://www.costbeneitanalysis.org, http://www.costbenefitgroup.com10 Monroe Boulevard, Suite 4ALong Beach, New York 11561(516) 897-9728(E)Fax: (516) 941-0798 Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58