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HomeMy WebLinkAbout03 PC REPORT APPEAL OF PARK IN-LIEU FEE 1381-1391 SAN JUAN STREET I AGENDA REPORT MEETING DATE: DECEMBER 11, 2018 TO: PLANNING COMMISSION FROM: DAVID A. WILSON, DIRECTOR, PARKS & RECREATION SERVICES SUBJECT: APPEAL OF PARK IN-LIEU FEE ASSESSMENT FOR 1381-1391 SAN JUAN STREET APPELLANT: FARIBA SHAYGAN NEXGEN MANAGEMENT LLC 4040 BARRANCA PARKWAY, SUITE 140 IRVINE, CA 92604 LOCATION: 1381-1391 SAN JUAN STREET TUSTIN, CA 92780 REQUEST Nassie Rowlett Law on behalf of NexGen Management LLC ("Appellant") has appealed the Park In-Lieu Assessment issued to their client on October 29, 2018 for the subdivision development located at 1381-1391 San Juan Street. The Appellant's November 6, 2018 written appeal is included as Attachment "D". RECOMMENDATION That the Planning Commission approve Resolution No. 4375 (Attachment "H") denying the appeal and establishing a fee based on the second addenda to the appraisal conducted by Pacific Real Estate Consultants in accordance with the Tustin City Code in the amount of $24,989 per unit or for a total of $124,945, for the property located at 1381-1391 San Juan Street. APPROVAL AUTHORITY Tustin City Code Section 9331 requires parkland dedication to implement the Conservation/Open Space/Recreation Element of the General Plan. The subdivider is to dedicate land or pay a fee in lieu thereof or a combination thereof. The purpose of the dedication and/or fee in lieu is for the purposes of developing or rehabilitating parks to serve the residential development. Planning Commission Report December 11, 2018 Appeal of Park In-Lieu Fee Assessment for 1381-1391 San Juan Street Page 2 Tustin City Code Section 933143 indicates if a subdivider objects to the fair market value used to determine the Park In-Lieu fee, an appeal may be made to the Planning Commission. Pursuant to Tustin City Code (TCC) Section 9321 h, the appeal shall be made in writing and shall specify the decision appealed from, the specific action or relief sought by the appellant in the appeal, and reasons why the decision body should be modified or reversed. BACKGROUND California Government Code Section 66477, commonly referred to as the Quimby Act (1975), requires residential subdivision developers to help mitigate the impacts of property improvements through parkland dedication and/or in-lieu fees. The act was designed to ensure adequate open space acreage for communities in which residential subdivisions would result in additional residents. It also authorizes local agencies to pass ordinances requiring that developers set aside land, donate conservation easements, or pay fees for park improvements. For residential subdivisions in Tustin, TGC Section 9331d details the provisions and methods on how the Quimby Act requirements are applied. In cases when parkland dedication is not required or provided, the developer must pay a park fee, on a per unit basis, reflecting the value of the land required for park purposes. The amount of the fee is based upon the fair market value of the amount of land which would otherwise be required for dedication. This fair market value is determined by a Master Appraisal Institute (MAI) certified appraiser pursuant to TCC Section 9331d3 and the determination shall consider the value of a buildable acre of land at the time the final map is to be recorded, as if otherwise the land would be fully developed to the residential density shown on the tentative map. Once the appraisal is established on a per acre value, the appropriate Parkland Acres per Dwelling Unit factor from the table in TCC Section 9331d2 is used to calculate the park in-lieu fees per dwelling unit. This total is then multiplied by the total number of dwelling units in the development to determine the total park in-lieu fee. Below is a summary of the three most recent development projects for which the City has received park in-lieu fees. All three were based on appraisals conducted by Pacific Real Estate Consultants. Date Location Appraisal Units D.U. Per Unit Pee (per acre (per acre 1129116 1872 San Juan St. $3,644,444 26 7.1-15 $31,342 1112117 1051 Bonita St. $3,400,000 4 15.1-25 $22,780 11120/17 61h & `B' St. $3,230,543 140 15.1-25 $21,645 Planning Commission Report December 11, 2018 Appeal of Park In-Lieu Fee Assessment for 1381-1391 San Juan Street Page 3 DISCUSSION NexGen Management is the developer of a 5-unit single-family detached residential condominium development on the combination of two lots (1381 & 1391 San Juan Street) totaling 0.37 of an acre. This residential project was approved by the Planning Commission on September 22, 2015, and is nearing final inspection for occupancy. In early September 2018, NexGen requested that they be allowed to use their own MAI certified appraiser(BBG Inc.)to provide an appraisal that would be used to calculate their park in-lieu fees. Staff agreed to this request once the MAI certification was verified. The appraisal received from BBG Inc. on September 25, 2018 (Attachment "A"), valued the property at $560,000, which equates to $1,513,680 per acre. This valuation is far below the appraised values of other recent subdivision sites in the City. Thus the City did not accept the appraisal provided. Because the BBG appraisal was inconsistent with others received over the past few years, staff chose to engage with Pacific Real Estate Consultants to conduct a second appraisal at the City's expense. Their appraisal, received on October 26, 2018 (Attachment "B"), valuated the property at $1,150,000, or $3,108,450 per acre. The following is a comparison of the park in-lieu fees calculated using the two appraisals: Value per Acre Per Unit i i Total BBG Inc. $1,513,680 $13,017 $65,088 Pacific Real Estate Consultants $3,108,450 $26,732 $133,663 The Inter-Office staff memo determining the fee (based on the Pacific Real Estate Consultants appraisal) and the letter transmitting the memo are included as Attachment sC„ Appeal On November 6, 2018, Nassie Rowlett Law submitted an appeal on behalf of NexGen Management (Attachment "D"). To address the issues brought up in this appeal, staff re- engaged with Pacific Real Estate Consultants to conduct a review of the BBG appraisal, and provide an addendum to their own appraisal with additional comparable properties. The appraisal review and addendum were received on December 3, 2018, and are included as Attachment "E" and Attachment "F". In the appraisal review report, Pacific Real Estate recommends that the appraisal from BBG Inc. not be accepted due to problems with the report's methodology, selection and value adjustments of comparable properties and overall valuation conclusion. Among several others, the following are three of the findings from Pacific Real Estate Consultants that led to this recommendation: • The market condition adjustments of a 3% increase per year for the comparable properties in the BBG Inc. appraisal is lower than reasonable and is not supported. Independent real estate research indicates home price increases in Tustin at 6.2% in 2016 and 6.9% in 2017. Planning Commission Report December 11, 2018 Appeal of Park In-Lieu Fee Assessment for 1381-1391 San Juan Street Page 4 • Value adjustments for location variances were not made for three (3) of the five (5) comparable properties even though they were located in Santa Ana, CA adjacent to industrial development. • The valuation of $560,000 is not reasonable considering the property acquisition costs ($648,600) the costs of obtaining approvals for development ($80,000) and a 3% annual increase rate (as set forth in the appraisal). The addendum to the Pacific Real Estate Consultant's October 26, 2018, appraisal provides a new valuation of the property with January 26, 2017, as a date of value (per Tustin City Code), instead of October 24, 2018, as in the prior appraisal. This new information was provided in response to Item II in NexGen Management's appeal regarding January 26, 2017, being the date when their project's final tract map was recorded. The addendum utilizes properties with recorded dates of sale between July 2014 and August 2017, to appraise the market value of the 1381-1391 San Juan property at $1,000,000 which equates to $2,703,000 per acre. A calculation of the park in-lieu fees based on this valuation is $23,245 per unit for a total of $116,225. In review of the addendum, the property is valued at "market value" not "fair market value." For consistency with the Tustin City Code, a second addendum was prepared by Pacific Real Estate Consultants to reflect the fair market value of the property. According to the second addendum, the fair market value of the subject property is $1,075,000 which equates to $2,905,725 per acre. A calculation of the park in-lieu fees based on this valuation is $24,989 per unit for a total of $124,945. Below is a summary table of fees for the Commission consideration. Value per Value of Per Unit Tota! Acre Property Applicant's Appraiser's determination $1,513,680 $560,000 $13,017 $65,088 City's Appraiser's determination $3,108,450 $1,150,000 $26,732 $133,663 City's Appraiser's 211d Addendum determination $2,905,725 $1.075,000 $24,989 $124,945 CONCLUSION Based on the foregoing, City staff recommends that the Planning Commission deny the Appellant's appeal set the park in-lieu fee based on the second addendum to the appraisal nducted by Pacific Real Estate Consultants in the amount of $24,989 per unit for a total Of $124,989. �1 D id A. Wilson Dire r, Parks & Recreation Services Planning Commission Report December 11, 2018 Appeal of Park In-Lieu Fee Assessment for 1381-1391 San Juan Street Page 5 Attachments: A. BBG Appraisal, 9/25/2018 B. Pacific Real Estate Consultants Appraisal, 10/26/2018 C. Park In-Lieu Fee Letter and Memo, 10/29/18 D. Park In-Lieu Fee Appeal from Nassie Rowlett Law, 1116/18 E. Pacific Real Estate Consultants Appraisal Review, 12/2/18 F. Pacific Real Estate Consultants Addendum to Appraisal Report, 1212118 G. Pacific Real Estate Consultants Second Addendum to Appraisal Report, 12/6/18 H. Planning Commission Resolution No. 4375 ATTACHMENT A BBG APPRAISAL, 9/25/2018 iAN APPRAISAL REPORT OF RESIDENTIAL DEVELOPMENT SITE 1381 & 1391 SAN JUAN STREET TUSTIN, ORANGE COUNTY, CA 92780 FOR MS. FARIBA SHAYGAN 4040 BARRANCA PARKWAY, SUITE 140 IRVINE, CA 92604 Date of Valuation,As Is:September 25,2018 Date of Report: September 25, 2018 BY BBG, INC. 11440 W. BERNARDO COURT, SUITE 104 SAN DIEGO, CA 92127 BBG September 25, 2018 Ms. Fariba Shaygan 4040 Barranca Parkway, Suite 140 Irvine, CA 92604 Re: Residential Development Site 1381 & 1391 San Juan Street Tustin, CA 92780 Dear Ms. Shaygan: We have appraised the above referenced property, the conclusions of which are set forth in the attached Appraisal Rep,,r r. "1 he t?-pe and definition of value sought in appraisal of the subject was an "As Is" Market Value )pinion of the fee simple interest in the subject's land only, with the hypothetical condition that the building improvements do not exist. The Land value is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. The report is subject to the general underlying assumptions and limiting conditions cited in the attached report. The subject of this appraisal includes two contiguous parcels totaling 16,117 square feet of land located on the southeast corner of San Juan Street & Utt Drive in Tustin, Orange County, CA. The subject has been developed with 5 SFR homes. Per the scope of the assignment,we are appraising the subject's land only. The owner purchased the subject as vacant in 2008 (Lot 01) and 2013 (Lot 02) with a SFR on it that was generating income. The intended users of this report are Ms. Fariba Shaygan and/or City of Tustin. Use by others is not intended by BBG, Inc. Furthermore, the intended use of this appraisal report is to estimate the market value for purpose of calculating the Park 1-ccs. The report has been prepared in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Foundation, as well as the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. SAM DIEGO P +838.793.0941 F+858-878 1888 11440 W.BERNARDO COURT+STE. 104 SAN DIEGO.CA 92127 BBGRES COM Ms. Fariba Shaygan September 25, 2018 Page 2 In view of the facts and data in conjunction with the appraisal, it is the opinion that the "As-Is" Market Value of the fee simple interest in the subject's 16,117 square feet of land, as of September 25, 2018, was as follows: $560,000 This appraisal is not subject to any extraordinary assumptions. The appraisal is, however, subject to the following hypothetical condition: • The scope of this assignment was to estimate the Market Value opinion of the fee simple inter- est in the subject's land only, with the hypothetical condition that the building improvements do not exist. The Land value estimate is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. The use of this Hypothetical Condition may have affected assignment results. Exposure Time/Marketing Period Based on exposure times of comparable sales and interviews with active participants in the local market, the Market Value opinion could be achieved with an exposure time of 6 to 9 months. Thi,, letter is intended only to transmit the attached report. However, it is considered a permanent part of the report and, therefore, must rcmain attached to the same for the opinions of value concluded therein to remain valid. Our firm appreciates the oppo rt u n i t, t o have performed this appraisal assignment on your behalf. If we may be of further service,please us. Respectfully submitted, BBG, Inc. IA--- John M. Browne, M \I California State C�rritaed General Real F.,i;tr� SaAtC and IACLL111t =.1C 03(,34w TABLE OF CONTENTS SUBJECTPHOTOGRAPHS.......................................................................................................................1 SUMMARY OF SALIENT FACTS.............................................................................................................S ASSUMPTIONS AND LIMITING CONDITIONS..................................................................................6 CERT'IFICATION.....................................................................................................................................10 INTRODUCTION.....................................................................................................................................11 REGIONALS AND LOCAL AREA ANALYSIS.........................................................................................14 RESIDENTIAL HOUSING MARKET OVERVIEW ..............................................................................25 SITEANALYSIS........................................................................................................................................27 HIGHEST AND BEST USE ANALYSIS..................................................................................................32 REAL ESTATE TAX ANALYSIS..............................................................................................................33 APPRAISAL PROCESS..............................................................................................................................34 SALES COMPARISON APPROACH OF LAND (AS-IS)........................................................................36 RECONCILIATION AND FINAL VALUE CONCLUSION .................................................................41 EXHIBITS..................................................................................................................................................42 BBG, Inc. SUBJECT PHOTOGRAPHS ALL PHOTOGRAPHS TAKEN OCTOBER 31, 2016 -. -.... . -.-__Y"""a_ a , # M 1� View of subject looking south across Utt Drive - I View from corner of Utt Drive and San Juan Street SSG, Inc. Page 1 1381 & 1391 San Juan Street SUBJECT PHOTOGRAPHS View looking south along San Juan Street, subject on the left u� t, r , I View looking east down Utt Drive, subject on the right BBG, Inc. Page 2 1381 & 1391 San Juan Street SUBJECT PHOTOGRAPHS View looking northeast across San Juan Street N'ieNi, of subject site looking south BBG, Inc. Paye 3 1381 & 1391 San Juan Street SUBJECT PHOTOGRAPHS r JL L y � k View looking northeast across site W" '011 M3 A Utilities on-site BBG, Inc. Page 4 1381 & 1391 San Juan Street SUMMARY OF SALIENT FACTS Property Residential Development Site 1381 & 1391 San Juan Street Tustin, CA 92780 Assessor Parcel Numbers (APNs) 500-081-01 & 02 Date of Inspection October 31, 2016; no new inspection was made per the scope agreed upon with the client. Dates of Valuation As-Is: September 25, 2018 Date of Report September 25, 2018 Interest Appraised Fee Simple interest Physical Data Land Area 16,117 SF (0.37 Acres) Flood Plain Zone X500, Panel No. 060235 - 06059CO277J Utilities All available to site Zoning Classification Multiple Family Residential (R3) Status Legal conforming use as proposed Highest an.' B._-st Use "As If\' Multifamily development to include detached homes. As Is Value Indications Sales Comparison Approach $560,000 Income Capitalization Appmach Nut applicable Cost Approach N)t applicable As Is Market Value Opinion $560,000 ($35 PSF of Land) Exposure Time 6 to 9 months Marketing Period 6 to 9 months BBG, Inc. Page 5 1381 & 1391 San Juan Street ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report has been made with the following general assumptions: 1. Any legal description or plats reported herein are assumed to be accurate. Any sketclhcs, sun cN°s, plats, photographs, drawings or other exhibits are included only to assist the intended user to better understand and visualize the subject property, the environs, and the competitive data. We have made no survey of the property and assume no responsibility in connection with such ni.tt- ters. 2. The appraiser has not conducted an� c n tii neering or architectural surveys in connection with this ;!l,i,raisal assignment. Information rrpc.)rted pertaining to dimensions, sizes, and areas is either l) iced on measurements taken by the appraiser or the appraiser's staff or was obtained or taken 1) )m referenced sources and k coil.cIJ red rrli:rhlc. No rc,,po>nsilfilM is assumed for the costs of i-eparation or for geotc•cl,nICAI archttectuial, or other types of studies, surveys, or inspections that require the expertise of a qualified professional. 3. No responsibility is assumed for matters legal in nature. Title is assumed to be good and marketa- ble and in fee simple unless otherwise stated in the report. The property is considered to be free and clear of existing liens,easements, restrictions, and encumbrances, except as stated. 4. !'nits• i,therwise stated herein, it is assumed there are no encroachments or violations of any zon- ing �a (,tlicr regulatk)n, .itfccting the sL117ject property and the utilizailt)n of the land and improve- ments is vk itliin Clic 1,,}undartes or property lines of the property described and that there are no trespasses or encroachments. 5. BBG, Inc. assumes there are no private deed restrictions affecting the property which would limit the use of the subject property in any way. G. It is assumed the subject property is not adversely affected by the potential of floods; unless oth- erwise stated herein. 7. It is assumed all water and sewer facilities (existing and proposed) are or will be in good working order and are or will be of sufficient size to adequately serve any proposed buildings. 8. Unless otherwise stated within the report, the depiction of the physical condition of the improve- ments described herein is based on visual inspection. No liability is assumed for the soundness of structural members since no engineering tests conducted. No liability is assumed for the con- dition of mechanical equipment, plumbing, or electrical components, as complete tests were not made. No responsibility is assumed for hidden, unahparent or masked property conditions or characteristics that were not clearly apparent during our inspection. 9. If building improvements are present on the site, no significant evidence of termite damage or in- festation was observed during our physical inspection, unless so stated in the report. No termite inspection report was available, unless so stated in the report. No responsibility is assumed for hidden damages or infestation. 10. Any proposed -it incomplete improvements included in this report are assumed to be satisfactorily completed in a rrkmanlike manner or will be thus completed within a reasonable length of time according to plan` .rnd specifications submitted. BBG, Inc. Paye 6 1381 & 1391 San Juan Street I ASSUMPTION AND LIMITING CONDITIONS 11. No responsibility is assumed for hidden defects or for conformity to specific ,,c3I,ernrnental re- quirements, such as fire, building, safety, earthquake, or occupancy codes, excapr a here specific professional or governmental inspections have been completed and reported in the appraisal re- port. 12. Responsible ownership and competent property management are assumed. 13. The appraisers assume no responsibility for any changes in economic or physical conditions which occur fi,11(m in,, the affective date of value within this report that would influence or potentially af- fect the analyses, opinions, or conclusions in the report. Any subsequent changes are beyond the scope of the report. H. 'I'he %:clue estimates rely rrccl herein apply to the entire property. Any proration or division of the total int( fnictional inten.'sts will invalidate the value estimates, unless such proration or division of interests is set forth in the report. 15. Any division of the land and improvement values estimated herein is applicable only under the program of utilization shown.These separate valuations are invalidated by any other application. 16. Unless otherwise stated in the report, only the real property is considered, so no consideration is given to the value of personal property or equipment located on the premises or the costs of mov- ing or relocating such personal property or equipment. 17. Unless otherwise stated, it is assumed that there are no subsurface oil,gas or other mineral depos- its or subsurface rights of value involved in this appraisal, whether they are gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered, unless otherwise stated. Unless ()111,r,-,ise stated it is also assumed that there are no air or development rights of value that may be tsar,t'(,rred. 1$. Any projections of income and e�penses, includ ng the reversion at time of ras.tic. ara not predic- tions of the future. Rather, thy°, ;tra our nest (-,rimate of current market th nk n,,; of what future trends will be. No warranty oi clrr n i� made that these projections will materialize. The real estate market k con,�r,n,k tluctuarin_­. and rlrant>in!r- It i,� n, rhe task of an appraiser to esti- mate the conditions of I future real estate market, but rather to reflect what the ins cstment com- munity envisions for the future in terms of expcc .loons of growth in rental rates, expenses, and supply and demand. The forecasis, pi Ir ;)perating cst.intates contained herein are based on current market cond r: n n r i e i it u c l �h-r i t; ;, apply .end demand factors, and a continued stable economy.Thc�,c i ,recasts arc, thcr t,�i c, subject m changes with future conditions. 19. Unless subsoil opinions based upon engineering core borings were furnished, it is assumed there are no subsoil defects present, which would impaLr dcW alopn ent of the land to its maximum per- mitted use or would render it more or less valuable. No responsibility is assumed for such condi- tions or for engineering which may be required to discover them. 20. BBG, Inc. representatives are not experts in determining the presence or absence of hazardous substances, defined as all hazardous or toxic materials, wastes, pollutants or contaminants (includ- ing, but not limited to, asbestos, PCB, UFFI, or other raw materials or chemicals) used in con- struction or otherwise present on the property. We assume no responsibility for the studies or anak-ses which would be required to determine the presence or absence of such substances or for 1,>ss .is a result of the prt sere(' of such substances. Appraisers are not qualified to detect such sub- stances. The client is ur ,�d to retain an expert in this field. 21. We are not experts in d.termining the habitat for protected or endangered species, including, but not limited to, animal or plant life (such as bald eagles, gophers, tortoises, etc.) that may be pre- 88G, Inc. Page 7 1381 & 1391 San Juan Street ASSUMPTION AND LIMITING CONDITIONS sent on the property. We assume no responsibility for the studies or anal �L-s which u,,,tid be required to determine the presence or absence of such species or for loss as .t result ot tilt pres- ence of such species. The appraiser hereby reserves the right to alter, amcnd, revise, or rescind any of the value opinions based upon any subsequent endangered species impact studies, re- search, and investigation that may be provided. 22. No environmental impact studies were either requested or made in conjunction with this analy- sis. The appraiser hereby reserves the right to alter, amend, revise, or rescind any of the value opinions based upon any subsequent environmental impact studies, research, and investigation that may be provided. 23. The appraisal is based on the premise that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in the report, further, that all applicable zoning, building, and use regulations and restrictions of all types have been complied with unless otherwise stated in the report; further, it is assumed that all required licenses, consents, permits, or other legislative or administrative authority, local, state, federal and/or private entity or organization have been or can be obtained or renewcd for any use considered in the value esti- mate. 24. Neither all nor any part of the contents of this report or copy thereof, shall be conveyed to the public through advertising, public relations, news, sales, or any other media,without the prior writ- ten consent and approval of the appraisers. This limitation pertains to any valuation conclusions, the identity of the analyst or the firm .and any rctcrcnce to the professional organization of which the appraiser is affiliated or to the desi;,;rnations thereof: 25. Although the appraiser has made, int, f,tr as is practical, every effort ,-it-v as factual and true all information and data set forth in this rel,()rt, no responsibility i,, i or the accuracy of any information furnished the appraiser either by the client or others. If io,, .;ny reason, future investi- gations should prove any data to be in substantial variance with that presented in this report, the appraiser reserves the right to alter or change any or all analyses, opinions, or conclusions and/or estimates of value. 26. If this report has been prepared in st ,t c.rlled "public non-disclosure" state, real estate sales prices and other data, such as rent,, prtcc,, �tnd financing, are not a matter of public record. If this i, such a "non-disclosure" stare, :alrht>,ih c,icn,iv c effort has been expended to verify pertinent data with buyers, sellers, brokers, icndcr,, lc,s �rti, Ic�.ces, and other sources considered reliable, it has not always been possible to indepen ltwk crit\ all significant facts. In these instances, the appraiser may have relied on verification obtained and reported by appraisers outside of our office. Also, as necessary, assumptions and adjustments have been made based on comparisons and analyses using data in the report and on interviews with market participants. The information furnished by oth- ers is believed to be reliable, but no warranty is given for its accuracy. 27. The American Disabilities Act (ADA) became effective January 26, 1492. The appraiser has not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a c fmpliance Survey of the property and a detailed analysis of the requirements of the ADA would rcvcal that the prop- erty is not in compliance with one or more of the requirements of the act. If so, this fact ct uld have a negative impact upon the value of the property. Since thL Appra>,cr ha, n-> direct CN ldcnce relating to this issue, possible noncompliance with the requirements of AIS.\ t=eat considered in estimating the value of the property. BBG, Inc. Page 8 1381 & 1391 San Juan Street ASSUMPTION AND LIMITING CONDITIONS 28. This appraisal report has been prepared for the cxcl i,lve benefit of the client. It ma,, be used or relied upon by any other party. Any other para \ lis) is not the identified client within this re- port who uses or relies upon any information in this report does so at their own risk. 29. The dollar amount of any value opinion herein rendered is based upon the purchasing power and price of the United States Dollar as of the effective date of value. This appraisal is based on market conditions existing as of the date of this appraisal. 30. The right is reserved by the appraiser to :01ti�'tmcnts to thy° ;�:�(�ses, ()pin.,ans, and conclu- sions set forth in this report as may be required by con idcr..ti 7n It .iddin(,n3l or more reliable data that may become available. No change of this report shall h, made by anyone other than the ap- praiser or appraisers. The appraiser(s) shall have no responsibility for any unauthorized change(s) to the report. 31. If the client instructions to the appraiser were to inspect only the exterior ()f the improvements in the appraisal process, the physical attributes ,�f the propertt were obserk ed f-om the street(s) as of the inspection date of the appraisal. Physical characteristics of thL property �%crc obtained from tax assessment records, available plans, if any, descriptive information, and intc°rOiewing the client and other knowledgeable persons. It is assumed the interior of the subject pro p�_rt\ is consistent with the exterior conditions as observed and that other information relied upon i> accurate. 32. The submission of this report constitutes completion of the services authorized. It is submitted on the condition the client will provide reasonable notice and customary= compensation, including ex- pert witness fees, relating to any subsequent required attendance at conferences, depositions, and judicial or administrative proceedings. In the cent the appraiser is subpoenaed for either an ap- pearance or a request to produce d{ c iurtenr< a effort will be made to notify thc client immedi- ately. The cl�.-nt has the sole 6,1- a protective order, providing legal instruction n( ro, Ipnear with the !Ll-,i t x,,d related work files and will answer all ques- tions pertaini: clic assignment, T I w preparation t the report, and the reasoning used to formu- late the estim i value. Unless paid in whole or in part by the p.:rrt isstdnl�i the subpoena or by another partm wt r:-st in the matter, the client is responsible t()r- ail unpaid tees resulting from the appearance or pre lt <«tion of documents regardless of who orders the work. 33. Use of this appraisal report constitutes acknowledgement and ;acceptance of the general assump- tions and limiting conditions, special assumptions (it any), extraurclinan- assumptions (if any), and hypothetical conditions (if any) on which this estimate of market value is based. 34. If provided, the estimated insurable value is included at the request of the client and has not been performed by a qualified insurance agent or risk management underwriter. This cost estimate should not be solely relied upon for insurable value purposes. The appraisers are not familiar with the definition of insurable value from the insurance provider, the local governmental underwriting regulations, or the types of insurance coverage available. These factors can impact cost estimates and are beyond the scope of the intended use of this appraisal. The appraisers are not cost experts in cost estimating for insurance purposes. BBG, Inc. Page 9 1381 & 1391 San Juan Street CERTIFICATION We certify that,to the best of our knowledge and belief: - The statements of fact contained in this report are true and correct. - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and is our personal, impartial, and unbiased professional analyses, opinions, and conclusions. - We have no direct or indirect interest, financial or otherwise, in the property appraised, or with regard to the parties involved in the assignment including, but not limited to, property owner, broker, or property manager. - We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. - Our engagement in this assignment was not contingent upon developing or reporting predetermined rt sults. - ()ur compensation for completing this assignment is not contingent upon the development or reporting of a predetermined �a'=_� ,�, 4,?irecrion in value that favors the cause of the client, the amount of the value opinion, the arr.r:nirunr (it A ,=Tulated result, or the occurrence of a subsequent event directly related to the intended use• ,t rhi< appr_risal. - Our analyses, opmi,,n:, and conch. �ii,ns were developed, and this report has been prepared, in conformity with ihc [ wt,,rin Standard (,I-1)r,t1,,;ional Appraisal Practice. - John M. Bre \�r,�, MAI in:ulc :r 1, r E,t,:rl inspc ri�,r, of the property that is the subject of this report last on Octobc-r 31, new insp(:ci ion was made per the scope agreed upon with the client. Per the scope of the �Nc arc appr:ir.ing the subject's land only with the hypothetical condition that the building inipr,,v�cntcnr, do) not esis - No one else provided signr meant real pr-,perty appraisal assistance to the person signing this certification. - The undersigned have ptrformcd ,k rti is l, as an appraiser regarding the pry�perty that is the subject of this rep-,rr %vithin the three-year p(:n,.„1 immediately preceding acceptance �,t rl i> .issignment. We ap- praised rhe subject once in 2016. - The rep,111Cd anai�ses, opinions, and conclusions were developed, and this rcp„rt has been prepared, in conf<,rn,ir” %ti'th the requirements of the Code of Professional Ethics and cl,c Simi Ards of Professional Appr:u�sl l)r.ictice of the Appraisal Institute. - The usr ;Pf this report is subject to the requirements of the Appraisal Institute relating to review by its duh- au+h .lied representatives. - 1, of t.,, :are of rhi,� report,John M. Browne, MAI has completed the requirements of the continuing CdLlCation program) t,,r Designated Members of the Appraisal Institute. As of the date of this report, John M. Browne has completed the appraisal licensing requirements of the state in which the subject is located. John M. Browne, MAI (.:ahfOrnia State Certified General Real Estate Appraiser S et t c and License #AG 036348 BBG, Inc. Page 10 1381 & 1391 San Juan Street INTRODUCTION Property Appraised Resicictinal Dc�clopment Site 1381 & 1391 San Juan Street Tustin, CA 92.80 Legal Description The subject's Assessor's Parccl Nunibet-s (,1PNs) per the County are 500-081-01 & 02. The legal de- scription is as follows: LEGAL.DESCIE'TION THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF TUSTIN, IN THE COUNTY OF ORANGE,STATE OF CALIFORNIA,AND IS DESCRIBED AS FOLLOWS: PARCEL L LOT 19 IN BLOCK "A" OF TRACT NO. 632, IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA.,AS PER N A.P RECORDED IN BOOK 20 PAGE 30 OF MISCELLANEOUS MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY- ASSESSOR'S PARCEL NO.500-081-01 PARCEL 2: LOT 20 IN BLOCK "A" OF TRACT NO. 632, IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA.AS PER MAP RECORDED IN BOOK 20 PAGE 30 OF MISCELLANEOUS MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. ASSESSOR'S PARCEL NO.500-OSI-02 Type of Value, Intended Use & Users 'I]IC t� and definition of value sought in appraisal of the subject was an "As Is" Market Value ()pinion of the Fee Simple interest in the subject's land only as of September 25, 2018, subject to the general underlying assumptions and limiting conditions cited in the attached report. Please reference the liyp,)thetical condition as stated in the report. The inrended users of this report are Ms. Fariba Shaygan and/or City of Tustin. Use by others is not intended b., 1313G, Inc. Furthermore, the intended use of this appraisal report is to estimate the mar- ket value for purpose of calculating the Park Fees. The report has been prepared in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal foundation, as well as the Code of Professional Ethics and Standards of P Practice of the Appraisal Institute. Property Rights Appraised FCC Simple intcrest. BBG, Inc. Page 11 1381 & 1391 San Juan Street INTRODUCTION History of the Subject Property Accordirg, to the San L))cgo ( )unty Tax :l,�sessor's records, ownership of the subject is currently- vested in NEXGEN Management, LLC of Che San Juan Strcct land Trust, dated August 27, 2014.. We are unaware of any sales transactions the subject within the three-year period immediately prior to the effective date of appraisal "I'l ��\tier purchased the subject as vacant in 2008 (Lot 01) and 2013 (Lot 02). The combined price \1.:t, ti(,-()"fl0; however, Lot 2 had a SFR on it that was generating income. Thus, the $670,000 dog� si(,r repro>ent the price for the land only. To the best of our knowledge, the subject is currently not under contract or being listed for sale. Please note, however, that this information is included only to s.iti tt the requirements of USPAP. It is not intended as a guarantee to the chain of title and a title search should be performed by a title company should a definitive abstract be desired.. Scope of Appraisal To render a credible value opinion for the property, only one of the traditional approaches to value was employed: 1) The Sales Comparison Approach. The procedures and methodologies employed in these 'approaches are outlined in the Appraisal Process section of this report. Following is a summary of steps completed by the appraiser in this assignment. • John M. Browne inspected the property last on October 31, 2010 -when it was vacant land. A thorough inspection of the property was made along with the general and immediate market areas. No new inspection was made per the scope agreed upon with the client. Per the scope of the assignment, we are appraising the subject's land only with the hypothetical condition that the building improvements do not exist. • Gathered information from various secondary data sources regarding regional and local eco- nomic and demographic data specifically relating to the regional, city and market area anal- yses. • Summarized trends in the single and multi-family market utilizing data compiled by Reis, Sandicor, Costar, and other housing data sources. • Brokers and developers active in this market were interviewed relative to new construction in the planning stages,as well as recently completed housing projects. • Researched the property's flood plain status relative to the same, and researched data relative to the subject's zoning and development restrictions. • Summarized the highest and best use of the site as vacant. Supply, demand and absorption potential, as well as construction costs and required yields, were analyzed relative to the sub- ject market and specifically the subject property. BBG, Inc. Page 12 1381 & 1391 San Juan Street INTRODUCTION • Confirmed sales of similar residential land parcels within the local market. The specific units of comparison analyzed were Sales Price per Square Foot (SP/SF) and Sales Price per Pro- posed Unit (SP/Unit). • Relevant data on the comparable improved sales was confirmed and the comparables ana- 1yzed in applying the Sales Comparison Approach. • Analyzed the data to reconcile an "As Is" market value indication. • Opined to exposure time and marketing period inherent in the Market Value opinion. • Prepared an Appraisal Report. The appraiser was provided v ith the following information with which to complete the assign- ment: • Condominium Plan TR 17665 Competency The appraiser involved in this assignment has considerable experience in appraising this property i,,,pe. The appraiser is actively engaged in appraisal work in the geographical area of the subject 1,X­e believe we have adequate knowledge of the property type and location to meet the requirements of USPAP. Extraordinary Assumptions and Hypothetical Conditions This appraisal is not subject to any ,zlinary asrurrrptr,>: �1 hr :� r:�. it is, however, subject to the following hypothetical condition: The scope of this assignment was to estimate the Market Value opinion of the fee simple in- terest in the subject's land only, with the hypothetical condition that the building improve- ments do not exist. The Land value estimate is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. The use of this Hypo- thetical Condition may have affected assignment results. BBG, Inc. Page 13 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Regional Area Overview The subject property is situated within the city of Tustin, Orange County, California. The County of Orange is within the Los Angeles-Long Beach-Santa Ana Metropolitan Statistical Area (MSA), which is in the southern portion of the State of California. In terms of population, the Los Angeles- Long Beach-Santa Ana MSA is the largest in the State of California and the second largest in the entire United States. Below is a map depicting where the subject property is situated within the regional area. j A Industry � � Chino 6 Chino Hills Rive Downey ; State Park Brea lyu! _ Yorha Linda Fullerton Corona Lakewood Anaheim El Cerrito fake Math � Es1e1Pr r.:a� Maunta!r _ Reserve Long reach 2 Tustin a A, Santa Ana 26, Silverado 55 Q Te Irvine Huntington Beach W Lake Forest Newport _ Beach Q Laguna Beach Laguna Niguel F0 Go gle Dana Point Map data®201 n Googly Regional Area Map BBG, Inc. Page 14 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Moody's Economy.com The follow tn, Paas are taken from the most recent dy's Erol> iO nw.com report available. It will give the most current view of the economic climate in the Oran,�c County area. OOANAHEIM-SANTA,-IRVINE ANALYTKS ECONOMIC DRNERS EMPLOYMENT GROWTHRANK RELATIVE COSTS VITALITY ra 11320 loam rnMlttf�,w/m U.S.fwx nsnrnesf ra.f.t�a.4m BUSINESS CYCLE STATUS ANALYSIS Recent Perkimmance. Anaheirri-Sanra Ana- which is furdied by the National Institutes of F Nddrarh Irvine's economy is malting headway,but year Health job growth in healthcare has slowed but ower-year growth in payroll employment has is well above the U.S. average year over year. p/Y{en slipped below the California and West averages Also,local ho-Otalswid benefitas Congress'hike early in 2018.)Db growth in high-wage industries in NIH fundingwill increase the availability,of re- 1i n e-In aaresslon Au R.IM has staided,and there are outright payroll cuts in search grants,wlrle the region'sagingpoputation manufacturing and trade- Educationlhealthcale will.4kpatient admissions.Demographics willbe is keeping employment from falling outright.At les supportive for healthcare than average.but 31%in March,the jobless rate is at a cyclical.Lora investment is pouring into ANA and will pae the STRENGTHS and well below the state and national averages way for more obs_Hospitals are expanding Fa- . Highly trained,well-educated tatx>r force part of the recent dip in uromptoymerht owes to citities to keep up with rising demand for general . Ample Job oppio tuiities In serves. contraction in the labor force after several years and specialty care.For example,City of Hope is ' Well-davaslfted economy of sturdy gains-%owerjob growth is making itseLf planning to build a S200 million cancer career Favorable age structure- felt in other pan of the economy,average hourly that would anchor a future medical campus in#r- Stable corisurner base_ earnings are up about half as much as rationally vine,and Children's Hospital of Orange Courttys WEAKNESSES year over year,and homebuilding is slowing autism center will open early in 2019_Strength Traffic corige itlan and no capaory for more air UCI.Robust emodme rut growth at the Univer- in healthcare will provide a sdid foundation of passenger and cargo service. silly of California-Irvine will ensure that govem- mid-wage jobs and Lift consumption_ ' Very high Ikktgcosts. ment paymlls in ANA hit an at[-tsme high this Strengths.ANA's solid economic fundamen- Single-famRy housing Isownealued. year.UCI is a top-five employer in the metro area, ta.0 and the metrodivision'sproximity to the Bay and this year the soiml received S2D0 million as Area present opportunities for stronger growth. e philanthropic and research funding the most for The region's universities chum cut large numl- SMt1RTTERM LONGTERM * a year in its history State education pajrdls have bers of college graduates who feed a large and risen steadily since 2C S0,and applications for the grcnving tech sector.Also,John Wayne Intema- RtSK EXPOSURE204 rwpssr fall 2018 semester are up 12%from a year earlier. tional Airport fosters integration with the global 'Ola-202-1V � rye►++ portend inghigher demand forfacullyand staff.As economy And while living costs are relatively a result of sturdy enrollment growth,the univer- high. they are competitive with those nearby UPSIDE sityrisalso expanding on-campus housing that will in San Francisco.San jam and San Diego Simi- UCI spurs faster private sector growth in high be ready for the fad semester next year A Larger !arty-business costs in ANA are above average, tech and healthcare Outsize gains in Pacific and Mountain state on-campus student population void o Lend but they are well bdow those in the Bay Area,so + In a economies,and Disneyland boost tourism by mrxdrneeded support to retailers Moreover,the there Is a cost incentive for firms seeking a Loca- mc,re that anticipated. university's stellar reputation,a wealthof research tion in the statewith a large,educated workforce DOWNSIDE opportunities,and mom high-payingjcInswiden- Employment growth In Maheirn-SantaMa- . A venture capital bust cc labor shortages hall Job courage students to not only attend UCI but stay Irvine will stow as the metra dMslan'r expan, growth In hqh-tech Indust les. in ANA,after graduation More siulied youth will Mori rnaures Healitfxare WILL be the prlimary . [killer rises more substantially,curbing improve the quality of the horiforce and ford rpt- growth engine, but UCi will chip k1 as we4L. International trade and tourism pansionbytech and healthpreproviders. ANAYALIbest the region lnthelong run thanks Healthcare.ANA will also capitalize an ex- to world-class universities,a highly educated .• / pansion in hevLthtare The metro division is a worldorce,arida dynamic set of industries- healthcare hub,it hosts one of the nation's top AbJrwlasr>d Siryh t-Boo-Z�53266 Aal COUNTY research hospitals. UC Irvine Medical Center. AfayWfS tx(pecaerrfea AS OF OCT 27,20iG 2012 20131 2015 Z016Y INDICATORS 118 2019 2020 2021 2`122 2021 211.6 216.5 225.8 233.9 2400 2455 Cams nrelmpmduct(CoirlK 255.1 260A 261.6 268.6 276.9 2832 3.0 2.3 4.3 3.6 2.6 2.3 %change 3.9 2i 0.5 27 3r 2.3 1.424,2 1,462.4 1,495.7 1,544.0 1,584,6 1b176 Tota t employment(tks) 1.641A 1,6617 L6641.6 1,666.0 1,61 .6 1,6943 26 27 I3 32 L6 2.1 %Lhwge 15 12 0.2 AT 1.0 (17 7.9 6.6 55 As 41 35 Unemployment rate 1%) 3.2 3A 3.7 46 49 5.1 8.0 -19 AS 8.0 45 48Perxnalincome gr7w&(%) 43 45 35 3.7 l4 39 146 75-5 77C 79-3 81.8 839 Median household income(S ths) 86.2 889 91.9 945 972 99.8 3,085.4 3,113.6 3,136-8 3,160.6 3,1777 3,1904 PYopuLWon(tits) 9,197.0 3.2022 3=6, 3,2152 32267 3.234.8 1.0 0.9 07 O.B a5 04 %change 0.2 02 0.2 42 OA 0.4 12.4 91 4o A$ 03 -37 Net nlldratlon(ft) -10.1 -T17 -113 -9.6 -55 -3.8 2.271 3.670 3.714 3,909 4357 4,935 Single-fan-Ay permas(3) 5,410 6.171 6D51 6,320 6.324 6.143 3,811 6,75.2 5,577 5$62 7,166 4167 MYlttfamlypennis(8) 43376 5.236 $.722 4,913 41177 3783 229.2 257.0 283,6 298.5 315.6 3355 FFiFA house Price(199591--W 3461 3481 356.0 36a.8 3842 403.1 MODOY',ARALYTICS ) N,4_154 U S Metro r 43yZ019 BBG, Inc. Page 15 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSTS PRfCIS(D U.S. METRO - Anaheim-Santa Ana-Irvine CA ECONOMIC HEALTH CHECK BUSINM CYCLE 3-MO MA JAN 2008=100 Nw V Dec 1T Im 18 Feb 18 Mata Apt 18 115 FTIP"M-t dura.Cmz o 110- MwT;preyr"t rxe.% jU3333 3.3 1.3 105umar nonce pamcrpayon rare.% 1 100&r*wymwd-to-popw_-wnraw.% 6L1 6IL4 95 A. ge keEK1y twwres,r go- NO intlustitalproGrreUOrt 201 .1aa 1:r 85 R.eWullaf pr rntts.9rrgle rn,ey,r NO a�aernatpew ntanragr NO 08 08 10 11 12 13 14 is 16 1? T LI11dw6d 6mr pft 3 4w MA ANA CA J.S. 5nuv:1$,Ce^nar 81pco4 Moo*.Am#yn s Lascc Fbmeij t"mi CURRENT EMPLOYMENTTRENDS DIFFUSION MIDEX %CHANGE YR AGO %CHANGE YR AGO,3-MO MA 3-DIGIT NAICS LEVEL,6-MO MA 5 Apr 17 Oct 17 Apr 1$ r2 4 faLll 2-0 20 L6 70 11.1" A1 inF _. ._ .__ 26A w 105 68 3 C•rsbuibun 3.9 5.4 43 66- 2_ rta,uaarlLnI z 03 -13 q tram 1D a-9 -0.6 Iff§LL f� 0.6 10- " so - 0- boxfosm_. 4.1 2.6 -0.0 58 FbLVA=ACNVNW 22 0.4 02 56 1 PNr&W78M19S 94M 0] 2.6 3.4 5411 i 13 14 15 16 17 18 Ift&HOUSM, 4,6 5-1 4.4 52 C G �Pry2-7 Z4 __2.4 13 14 15 16 17 19 pr vd•ssy x�t COW SeFvkm -0.0 44 -1.' r ■� meet 0.11 02 0, ANAce is sanrx&S.No�r'tA. Sa.asLs./4aorylArr.yiry - _ Sovm.11SMoudr'iA�?tds EMPLOYMENTREUTNE rHOUSE JAN 2008=100 FORECAST 1998Q1=100.NSA 120 4S.6 MO PRIOR 350 115 2-Yr S-Yr 3qp 250 105 109-1411C. 04 95150 go 100 es 50 -'28 09 TO 11 12 13 14 1s 16 17 18F 19F 20F 21F 22F 98 O1 04 07 10 13 16 ANA — CA — U.S. —ANA —CA US Scanner&S,ldx+d,aArxfj4u ` �.c FFPA.MmfijisA�Au VACANCY RATES HOUSE .S HOUSING AFFORDAWL11TY HOMEOWNER.%HOUSES FOR SALE % GREATER THAN 100=MORE AFFORDABLE 5 240 200- 3L 180 0 1 2 3 160 RENTAL.%INVENTORY FOR REAR 120 100 80 1a 2+3 40 20 0 1 2 3 4 5 6 7 98 01 OL 07 10 13 16 96 99 02 05 08 11 14 17 0 ANA 0 CA E US. E o,Q*.d ■ Uf w —ANA —CA —us. Sawn Ca Rtraw Aa Maa&/sArw"c6201d ;arr-es FF 'A,.Ileron�'tAemiytia Savea NUtNoadj'tA lyMs MC:QC+ SANALYTICS 1 MM-US.MM7u 1 K"2018 BBG, Inc. Page 16 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS POCIS'D U.S. METRO • Anaheim-Santa Ana-Irvine CA EMPLOYMENT AND INDUSTRY ENTREPRENEURSHIP TOP EMPLOYERS INDUSTRIALD1WRSITY EIMWYMEWINMWCOMPANIES,%OFTOTAd_ Mcsi otmu ps,) The\Ya:t 6crr Ca 29.Ci�;: 7 r1C St lr.!zF -yt I d! 060 Kacer.._r to.. ,..]_I 0,66 .. 00 as 1.0 1.5�'y1 nes] vial*lam semiee bre 6,w,: ■ MA 0 CA U.S. cz err,;srxe utak s r�1 0 4u lark at ACap c--i5': Scvrc Cat9e&ooxi�ASuo*tAu*b"wj 201 4VU I:r+et 3rrrAslr� S"4t3:: t• `Femori� fh�y.b.7e Sl4r OWN �h- NCr?orcalCarl Heulsta Sumo ._ 5.L1J'. tpS t D '/desks FarDs i Cax S T3': pwwwXcA"wicscOP 4l44L EMPLOYMENT VOLATILITY T-oat"NwNwe Gasp 4.3:c DuetoUS.fl- tions Retat✓iretoU.S. lair Co. 4.20£ 1011% "me p qk*bac. Edrmsals lales�aaca tlC 1,020 I� AcEertwm SousM�enn Calalnma Dwiriex+ l©1 a ��-a�44�a�.i,wlalrvec.rorc.ue�s/sarra�w 06,Cragar•rz"amt aythlszens,Zags Cw*Adam Favfa..74'tr e' 1 NOT Fed" PURLIC 11,308 Z% r a ASIA I LA B L E State 31.&9; 1oa1 � __ a7S�4 oaK. 2dv ■Notarattorls■naa®tuu ■ AM ■ UA. COMPARATIVE EMPLOYMENT AND INCOME 'A.Of TOTAL EMPLOYMENT AVERAGE ANNUAL EARNINGS S4!dor ANA CA U.S. ANA CJI U-$ N 0.0 of 0.4 $2$420 5 1223 590,606 Cmishtldlon 63 48 47 585.929 $76.117 S67_79 Marauaw lY 9.5 7A 0s $90.760 sloza5 580,835_ &AMM 732 6Z8 622 ad $1r6.086 $83;048 Allodwa a 26.8 37.2 ?r8 ad $eLM6 $77,168 REALOUTPUT PER WORKER.s vamp ttar'w 11 3.' 3 9 $53,261 s61,961 $64.184 TND aloyfaee 5.1 4.3 4.0� S95,345 $80.572 $80,930 t"Tfx* 95 101. 1:9 $44109 S41S52 $34,&29 woollo2ow 1-7 3' 13 $111,013 $x.335 $114,771 F#anW ACNOW 74 4 u 5 8 $644 956 $59,539 553.946 t, PNt am BUL SWAM 187 '5 3 14.0 $69.084 $17,632 $68,173 Fdw-acrd 48=SeMQs 13.3 157 S.8 555,383 $55.492 $54662 (a!lStae and.HosµSe km 135 116 11.0 $33,092 534,60_6 _ S27,790 Oth r=i.itM 31 3.4 35 SW'M $39.508 S)6 665 GaRfmlem 92 152 152 $97522 598.293 $17509.. ANA CA U.5 SwvmYaees6sfmdEmpiasla.n+t-yS�,Mma3%tAraJjig2lDEi'.Arnrogeaarwa'.a+r.+ge-IBA.M�,omy'sArvasfee->..2t7f5 LuroesBEA.MaadpsAa4yt�s2045 BUSINESS COSTS LEADING t U.5m100 HIGH-TECH Luoue11 Employees EMPLOYMENT rout NAlcs irrntstly Uoaert tns} Ths %of total 5511 Maraapemmt of i nKerQrees_ 13 31.0 Unll�Asr ANA 116.9 7.2 v 2382 &i13_ldri8 equorraent wasltaaas ._ -__ 261 = 5413 ArchiterturaC a ekwo*V d,r0 uv= _ 17 25.5 us. 7.046.4 4.8 5416 Mennt.scx4 t k&tedrad carWt srvrs -0 24 9 HOUSING-RELATED 9 `613 1s 512 Stoerandtoakiralts EMPLOYMENT 0i, sot-,. --rc 06 31+ 6.7i 1 Learn .,a zu Mr:ri hr.3d3L- p►'.. IF, TSIs %oltotal x225 Rmt3uranttandatSterratir+gplace s 12 12912 ANA 220.8 126 �t 567 Sean m m bt AdrV aro dwellings 15 31.5 0 S] too 150 20C -._... -- 9 lj2o In&v9dssskmid taniyservices 13 3T4 U.S. t3 8922 9S 7139__kra�wma 4wades 13.1 279 ■ 20110 ■ 2N5 4p Sam Moo*skwyou Sa crMw*sAma4a'a.20x7 Smom Alw*'sAs sOa 2017 MCOCY'5 ANA,'YTiCl- 1 Pf�,'SI j Met-o 7 "20% BBG, Inc. Page 17 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS PRtCIS0 U.S. METRO Anaheim-Santa Ana-Irvine CA SKILLSMISMATCH MIGRATION FLOWS X OF TOTAL M INTO ANAHEIM CA Less lhsti FG N ianber Of uw■mKium■d era•.a Or•rkrco•d M4"n s High Solos LOS Angeles CA 35,765 T AM �,L4R_ ItNew"CA 16, 5 sasris � Sall DIegO CA 5,401 Aeamirld• ■ • • Ph.,M AZ 1,817 Bat9leior• Index6. . OaldMW CA 1,673 ____ NewViork NY 1.657 Godub Gln coenl(Wk 0.47 I.120 LasVp�NV 1483 _.. Palma ratio 33 147 Sart Jose CA 1,4'37' 0 5 10 15 20 26 30 R3"_ late O% 317 Seattle WA 1.303 OaoupaAms wF'apJ4'im ',wcsri e,lssx,'-).MostegaFlOf CIkW#L 1.296 SarcecCmrsu&re■v,ALS,AdbadJiMeyts'g20Fa HOUSEHOLDS BY INCOME,% Tbita[krs'dyaticvF 101,832 PER CAPITA INCOME FROM ANAHEIM u O t 9999 Los Angeles CA 27,833 65 $TNS 211.00439 999 RNelslEe CA ZV66 40,0[1459,999 San Diego CA 6,358 6{1000 74.999 Phoenix AZ 2,6!61 57 75,E 99,999 Las Vegas NY 2,575 OWdafd CA 1794 10-000 padasTX1,735 48 t25.000-14%999 Seattle WA 1,655 150.00D-199.999 San Jose C A 1,535 39 2r10,L100r Sacramento CA 1,443 OB 09 10 11 12 13 14 15 16 17 0 5 10 15 20 25 7otafout-mlglratlon FF2.899 r ■AWA US_ hMt migration -11„067 � Soares:Ar0.NxdjYA•■lrbo Sai�Cee.sYo►er�.ACS..Mmad!/sA■ryirsC.a01b NET MIGRATION,# COMMVTER FLOWS RESIDENTS WHO WORK IN ANA WORKER$MATO LIVE IN ANA 61000 A,ODO 2.000 0- -2.000-- -4,000 -2.000-4,000 Top Fire outswe Sources of Jobs To/rhe Outside Sources o1 Woduers -6, Anaheim CA share Arlaflelm CA Share 14 16 1q 17 Los Angeles CA 11.6 LcaAPICOS CA 11.9 2014 2015 2016 2017 Riverside CA 1.9 BbersideCA 7.0 Domestic -8.657 -9,671 -14,078 -1T,"9 San Diego CA 0.7 San Diego CA — U229U229____L9_5 14,397 San Francisco CA OA Zkiard CA 12.653 11,165 _ --- —.----._-- - TOM 3 9 4,494 319 -3750 San __ CA 0A Phoenix A__Z 0.00 95-__. _.... _ Sow=CewruhrmMoo*FAn■!V*ma'gZW9-20x3 Saw=AU ftcnL 201C Cenm DwmL4"'j Aml-ia GENERATIONAL .• .NAL ATTAINMENT POPULATION PGPULATION BY GENERATION,% %OFADULTS 25 AND OLDER L75 M-74 100 4ae z -01 80044 an 55.E sew■4• 50-64 90 45-9 40-4 Ow x 4p 35-M l 30-34 Rimy araa 20-b 05 15-19 811"a 0 10-14 GF. 1p AWA CA U.'S. &9 a High Mhos Kw sr3rm9 0 5 10 16 20 25 30 f some adMige ■ Gdege 0 1 2 a 4 6 e 7 • AMA E u.a, r Gradrtlesdnd ■ANA ...,. LLS Ss■a>aCas�Bvao,M�■�sA••frfts20'!ti Sas�res:Cense■Hvt4u.IiCS.tiloady'rAnal 'rs,d716 SowxrxCensue&• ,Naadj'sArs■tyttr,[br8 .. r ANALYTICS ! PrOds*U5.Metro, 88G, Inc. Page 18 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS POCISO U.S. METRO • Anaheim-Santa Ana-Irvine CA GEOGRAPHIC 'I POPULATION DENSITY r p ^~ e •� 477 Residents per square mile w`y 16 87.84© HEDIAN HOUSEHOLD INCOME POPULATION&HOUSING CHARACTERISTICS �+�,,1� tlntks Yalue Rant• ;q 71 730-6 316 4 i A area 8.035.6 3 r 1 Lh. 3,190.4 12 .v,llte %of pogruta_sn _ All 3T1 Hispanic %of pop uLatrn 34.2 36 (!lack %of Populat'rn 1.6 345 Aslan %df paputat;cn 19.9 6 c,i'S Dollars U.S.clttren at birth %of pofuu.4n 683 394 t rtJq ZSt5+Jg1 Naturaltred U5.dtRen %af Pw"btrrl 16.4 T Nat a U.S.=en %of popuboan 143 18 MEDIAN COMMUTE TIME median age 371 219 ToW K-us 8 units th5 1,0901 18 Owner ocripled %b E total 53.6 M Renter occupled %of total 411 25 vacant %b of wtO A S3 387 1-urtt;detaehed %C(tos31 51..0 378 i-UnMadached %ctmug 12.1 i8 Muttffamll %bo1Latal 342 32 Median year bu k 1976 f MIf14tt'Y �aVd,#462 As[4d iY!!ls YId RmwOdiff1O6 3 Smscas Cetus 2&,MwMoody'sMyeck 2016 acts[Iandr 20%0 �u es-At,M-4 Gnr,a MCCC'+i ANA.i.}'7.ti i ± �r4cs^V 5 Wvta / May 2018 BBG, Inc. Page 19 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Employment The Los _n,,Lles-Long Beach-Santa Ana MSA c,411 }ri�cs one of the most diversified economic environments in the world. This region constitutes one of the top two largest centers for business services and international trade in the United States where numerous business firms listed in the Fortune 500 are headquartered here. Broadband hardware companies have emerged as a driving (but volatile) high tech force in Orange County, more so with the tLch downturn now spreading to telecom infrastructure related companies. A base of light industry, primarily in electronics manufacturing and distribution, boosts the metro area's trucking/warehousing employment well above average. The county lies outside the Los Angeles Basin's international trade artery that stretches from San Pedro Bay to the industrial districts of the interior deserts. Trucking/warehousing employment should continue to fall more in line with the U.S. rate. The table below lists Orange County's major employers. ORANGE COUNTY'S NtAJOR EMPLOYERS Employer Name Location Indust Allergan Inc Irvine Ophthalmic Goods Apria Healthcare Group Inc Costa Mesa Home Health Care Services Bank of America Fullerton Commercial Banks Beckman Coulter Inc Fullerton Measuring & Controlling Devices Boeing Aerospace Huntington Beach Aircraft& Parts CKE Restaurants Inc Anaheim Holding Offices Disneyland Anaheim Misc. Amusement, Recreation Services Fluor Daniel Aliso Viejo Offices &Clinics of Medical Doctors Hines Horticulture Inc Irvine Retail Nurseries&Garden Stores ICN Pharmaceuticals Inc Costa Mesa Drugs, Proprietaries,&Sundries Nordstrom Costa Mesa Department Stores Prandium Inc Irvine Eating&Drinking Places Ralphs Grocery Co Anaheim Grocery Stores St John Knits Inc Irvine Women's & Misses' Outerwear U/C, Irvine Medical Group In-ine Offices & Clinics of Medical Doctors Environmental Farces Orange County lies directly southeast of Los Angeles County and occupies a total of 798 square miles, stretching along 42 miles of Pacific Ocean coastline and extending some 25 miles inland. The eastern mountain region, which includes the Cleveland National Forest, is largely uninhabited, and the majority of the population is contained in the northwest and central portions of the county and stretching south along the coast. Other counties that border Orange County are Riverside to the east, San Diego to the south and San Bernardino to the northeast. Orange County has a climate that is mild and pleasant, generally with dry summers and wet winters. The County contains 9 beaches, 3 harbors, and approximately 38,694 acres of regional parkland. The land use mix in the county is reflected in the following table. 8&G, Inc. Page 20 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Residential: 127.601 acres Uncommitted: 126„406 acres Open Space: 83. 129 acres Com mercialli ndustrial/ Public Institutional: 68,269 acres Agriculture: 62,631 acres Transportation: 44,557 acres Transportation The Orange County transportation system is centered on an extensive freeway network,constituting one of the most expansive networks in the world. Major projects recently completed consisted of a widening of the Santa Ana (5) Frceway, nc«, carpool (diamond) lanes on the Riverside (91), Orange (57), Garden Grove (22) and Cos<ri Mesa (�5) freeways; and the improvement of streets like Beach Boulevard into a "super street.” Other pr(,Jccts recently completed include privately funded toll roads in the southern and eastern portions of the county. The regional rail system has also been expanded to Orange County, with numerous Metro-link stops during peak commuting times between Los Angeles and Orange County communities. This system provides alternative transportation for commuters and residents to numerous destinations throughout the metropolitan area including Los Angeles International Airport J-AX). Other modes of transportation consist of John \t,wne Airport, public bus service,Amtrak passenger rail service and several freight lines. Education Adding to the strong infrastructure in the region is a complete and diversified educational system. There are ma ire than 150 public and private univer-sitics and colleges throughout Southern California. ThL L: institutions provide a highly trained and skilled work force for high-IL-ch firms and businessc,, IOCAIctl in the area. There are also a number of two-year colleges,with c-xu rsion courses offered from various universities within the region. One of two major universities within Orange County is the University of California at Irvine. UCI has a present enrollment of over 14,000 undergraduate students and is recognized for its information technology, biotech and medical fields. Health Care The trip 5 hospitals in Orange County are shown in the following table. TOP 5 HOSPITALS: (Ranked by number of licensed beds) St. Joseph Hospital, Orange 525 beds Hoag Memorial Hospital, Newport Beach 498 beds UCI Medical Center, Orange 446 beds Fountain Valley Regional Hospital& Medical Center, Fountain Valley 400 beds St. Jude Medical Center, Fullerton 359 beds Source: Orange County Business Journal, Book of Lists (2010) BBG, Inc. Page 21 1381 & .1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Local Area Overview The subject is located in the city of Tustin located in Orange County, California, in the Los Angeles metropolitan area. As of the census of 2010, Tustin had a population of 75,540. The city is located next to the county seat, Santa Ana, and does not include the Tustin Foothills. Below is a local area map. + Mlainftce Wall Faorhaven Avu 55 a a f ooth'k FL Ave E Santa Clara Ave a 4 n m w North Tustin K 17th S! { 17tt,St E 411'1 St Prone HkvdL• �� 4 nta Ana E First S, Tustin Santa Ana Zoo:: w Mtam st E grain:S tae 4LI" a c- e The Market Plaice r IF ty�r ® �rna•ruu�n 3Q: Cie l�'� Map data 92016 Google Local Area Map BSG, Inc. Page 22 1381 & 1391 Sara Juan Street REGIONAL AND LOCAL AREA ANALYSIS Access The mari-.cr area is significantly influenced by Interstate 5. Interstate 5 provides north/south access to Los Angeles and San Diego respectively as well as within the market area. Interstate 5 runs along the western edge of the market area. Interstate 5 is a 12 lane divided freeway consisting of ten general access lanes and two HCV lanes. Other than Interstate 5, primary north/south ingress/egress throughout the market area is provided by CA 261 in the southern part of Tustin. The major east/west traffic carriers that provide access to Interstate 5 and to the interior of Tustin are: Newport Avenue, First Street and Main Street. Orange County Transit Authority services the market area and operates a system of medium to large capacin- l,.«es throughout the city. Major air transportation is accessed via John Wayne Airport, which is kw�ttcd approximately 5 miles to the south of the market area. Land Use Patterns Tustin is suburban in nature and culture. The city is mainly residential, although there are a number of offices and businesses within its city limits. The market area is approximately 80% developed with the following uses: Single-family 35% Multifamily 20% Retail 1 O'°/o Office/Medical 10% Industrial 5% Vacant Land 200/o Development within the market area includes low-density commercial/retail development along primary thoroughfares and residential developments located on secondary thoroughfares scattered throughout the area. The market area is approximately 80% developed. Tustin's topography is level and mostly built-out. Public Facility/Services The market area is adequately served by all public utilities and services, as summarized in the following table. UtilitylService Providers Sewer/Water Tustin Water Electricity Southern California Edison Gas The Gas Company Police/Fire City of Tustin Education Tustin Unified School District BBG, Inc. Page 23 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Life Stage and Trends The market arca, as hart of the City of Tustin, is considered to be a,,crage. The market area is in a stable to growing stage of its life c�-cle. Its reputation as a desirahic 111ACC to reside is evident from its growth over the past 10 to 12 %C111-11. Single-family, multifamily and commercial improvements in the area are in average to good condition, and the overall appearance of the market area is good. The market area has a good reputation with respect to most types of real estate. Existing structures within the market area appear to be adequately maintained and well occupied. Given its location proximate to Interstate 5, hospitals, retail facilities and Lake Mission Viejo the long-term outlook for the area is one of continued stability and growth. Public Facilities The subject neighborhood is adequately serviced by public utilities. All utilities are available to the subject site. Conclusion The market area is comprised City of Tustin. The market area is influenced by Interstate 5. The market area is considered desirable due to its location proximate to Interstate 5, Tustin, and employment generators for the greater Orange County area. The population rate in the City of Tustin is surrounding the subject is forecasted to grow at a moderate 3.4% over the next five years. BBG, Inc. Page 24 1381 & 1391 San Juan Street RESIDENTIAL HOUSING MARKET OVERVIEW National Development Land Market According to the 2,d (�riarl�r 21i16 Pricewaterlio�u,eCool)ers' (Pry(:'s) Deal Estate In csr��s Suri Gy "Compared to investors' re p mnses six months ago, a greater sense 1)t c-ikition is evident among our participants due to heightened uncertainty as it relates to the current pt ditical environment, capital markets, and the industry's position in the real estate cycle." Total spending on U.S. private construction was up 3.9% on a year -m er-%car basis in March 2018, accordii)g to the U.S. Ccii ,Lis BurL.lu, looking more closely at these figures, private residential spending was up 5.3% while priti-ate nc nrC;i(1L'ntial spending was up 2.2% — still positive, but well below its year-over-year growth in ,\1,1 rc li 2017 (+6.4%). rable DVL-r U.S.t ONSFKUCI710N SPENDING' March 20 t7 to Marsch 2018 Yes[hvc2Year Nonresidential Change Transpactaticm +382% Amusement&Recreaticm +t6.t% lbAging +84% Ccxnmen ial +73% FAUCa6on +6.6% Comm tniration +6.5% office +2.3% Health Ca re +2-t% Paver Manuf wWring Religious '.9% Total +2_2% Regdentiai +5.3% Total Private +3.9% •Privaw cmarQtim Emma US.C�Bureau rawnaily waled In the nonresidential sector, transportation, amusement and recreation, and lodging reported the highest year-over-year gains in spending as of March 2018. While still growing, noticeable slowdowns are reported for office and education. In contrast, spending for power, religious, and manufacturing construction declined year over year in March 2018. Growth rates for development expenses, such as amenities, real estate taxes, advertising, and admin- istration, typically range from 1.0 to 8.0% and average 4.4% For lot pricing, investors indicate a range from 2.0% to 8.0%; the avera;,c �rc,�crh rate is 3.8%. The absorption period required to sell an entire project varies significantly depending on such fac- tors as location, size, and property type. This quarter, our participants indicate preferred absorption BBG, Inc Page 25 1381 & 1391 San Juan Street RESIDENTIAL Ho USING MARKET OVERVIEW periods ranging from one to 20 years. The mean .:h,(,i-pilon PCT-iod is 9.3 \cars, comparable to the average a year ago. Over the next 12 months, surveyed investors hold nil m ,I n� Iii-ding value trends for the na- tional development land market. Their expectations i .ir,,c from -I,I.�I , to +10.0% with an average expected value change of +1.2%. This average is well bL!,)w where it was last year (+5.3%), as well as two years ago when it was +3.6%. BBG, Inc. Page 26 1381 & 1391 San Juan Street SITE ANALYSIS Description/Location: The subject property is located on the southeast corner of San Juan Street& Utt Drive in Tustin, Orange Coun- ty, CA. The subject is surrounded by residential on the south, east and north sides, with Tustin High School to the west and a retail center to the southwest. Size: 0.37 gross acres or 16,117 SF per the County Assessor. Shape: Rectangular in shape with approximately 110 feet of frontage on San Juan Street and 146 feet on Utt Drive. Access/Visibility: The subject site will have access from both San Juan Street & Utt Drive. The subject's proposed development will include tvvo and threc-stories, and once built, the vis- ibility is eXhcc:ed t,> be .i1 crage. The access is average-to- good. Topography/Drainage: The site topography is relatively level and at street grade. Flood Plain: According to the Federal Emergency Management Agency's Flood Insurance Rate Map, the property is cur- rently located within Zone X500. The subject property is located in Community Panel 060235 - 06();')(:0277) of the Flood Insurance Rate Map, dated December 3, 2009. Zone X500 is an area inundated by 500-year flooding; an area inundated by 100-year flooding with average depths of less than 1 foot or with drainage areas less than 1 square mile; or an area protected by levees from 100-year flooding. Soil/Subsoil Conditions: A geotechnical amik sis describing the soil and subsoil conditions at the siai)ject site was not furnished to BBG, Inc. No soi t �ii,iiia>ns \\ere observed by the appraiser that were c(�astruc�i as detrimental. The appraiser as- sumes there are no hidden or unapparent soil condi- tions that would render the site less valuable. BBG, Inc. Page 27 1381 & 1391 San Juan Street SITE ANALYSIS Manmade Improvements: The subject site is being appraised as vacant Isand. Environmental Hazards/Nuisances: An environmental stud} was not provided to BBG, Inc. The appraiser assumes that there are no hazardous con- ditions that would render tiic: ,ite less valuable. Development Restrictions: We were not provided with a current Preliminary Title Report to review. We do not know of any easements, encroachments, or restrictions that would adversely af- fect the site's use. All liens and encumbrances are as- sumed to be paid off or have no impact on the value of the subject property. Title is assumed to be free and clear of all encumbrances that may negatively impact the value of the subject property. Zoning: The subject site is zoned Multiple Family Residential (R3) zone by the City of Tustin. The following chart out- lines the primary regulations for the R3 zone. Multiple Family Residential (R3) Minimum Lot Area 7,200 5F Minimum Lot Width 70 feet Maximum Coverage 65% Maximum Height 35 feet Maximum Density 24 units per Acre Minimum Site Area/Unit 1,750 SF Front Yard Setback 15 feet Rear Yard Setback 10 feet Side Yard Setback 5 - 10 feet IParking 12.0 spaces per unit Based on our research, the subject represents a legal con- forming use as proposed. Detailed zoning studies are typ- ically performed by a zoning or land use expert,including attorneys, land use planners, or architects. The depth of our study correlates directly with the scope of this as- signment, and it considers all pertinent issues that have been discovered through our due diligence. We note that this appraisal is not intended to be a detailed determina- tion of compliance, as that determination is beyond the scope of this real estate appraisal assignment. Public Utilities/Services: All utilities are available to the subject site. BBG, Inc. Page 28 1381 & 1391 San Juan Street SITE ANALYSIS Surrounding Land Uses: The subject site is surrounded by a great deal of multi- family residential as well as single-family residential. Ad- ditionally, in close proximity there are two retail shopping centers, a higli sclio ol, middle school, and ele- merII,ir1 :School, plus Intcr,,t;ite 5 a few blocks to the Summary: The subject site is typical of residential parcels within the subject market area. Visibility is considered to be average and access to the site is average-to-good. No topographical characteristics are present which would detrimentally impact the development potential of the site.. Exhibits: r, h x •�• � G N �.� R C2 f � *Aerial view prior to devuQ)pment Aerial View of Subject 88G, Inc. Page 29 1381 & 1391 San Juan Street SITE ANALYSIS s00-08 "=m 1uw b 0.41...,0.0 m aoewcr y Q Q •` r � � � .o>•x Q i I 1G 0d . . a . p83 8 OREM W4LEr N S 5 (j) ID o'` o „ 0J . '•� ® s • s r s r � 0 - ,No.a.�ir• sue. RED N/L.( _. 2L _'LJ AVENUE MAFCH /976 FAAV8aN1'S SC1R td 3-39 O� rsser vo 63Z NM 217-30 r+ore .s5E5fcNs viOCx t AssEssots nur rAAT w ♦3/7 NN IY-17,1G' rA.CR Nu U eG6K500/4Gf 08CD PANffL MGP PN r/-19 1--IM CIRCUS COI.R"n dF CYUICl Plat Map 88G, Inc. Page 30 1381 & 1391 San Juan Street SITE ANALYSIS PLOT FLAN NE'LY LINE 4F TRACT NO,17665 M 49°28'15'W 109.8p' 57.7 52.1' to iy to N pm QD M r.g 31 4.a 2.9 wF- F- y :. M 27.7 28.3' a n m CN r' O z B M � LL h O civmixb z 55.a' 24 H M� D m LU � ri 4.4 b •. 17.9 26.3' b 20.5 26.E 43 N 44'213'15'W 95.4fi' SAN JUAN STREET Plot Plan BBG, Inc. Page 31 1381 & 1391 San Juan Street HIGHEST AND BEST USE ANALYSIS Highest and best use may be defined as the reasonably probable and legal use of vacant land or im- proved property, which is physically possible; appy,rpriarc ly supported, financially feasible, and that re- sults in the highest value. For highest and best use of land, as though vacant and property as improved, a use must meet four criteria as follows: 1) physically possible; 2) legally permissible; 3) financially feasible; and 4) maximally productive. Analysis Of Site As Vacant The site of the subject property is rectangular in shape and contains a total of 16,117 square feet. The site topograpl)� is relatively level and at street grade. The site does not appear to present any development limitations. All utilities are available and are sufficient for development as vacant. The site is considered conducive to multi-family development due to its zoning and surrounding uses. As such, the highest and best use of the subject site, as vacant, is considered to be a multi-family development to include detached homes as proposed. BBG, Inc. Page 32 1381 & 1391 San Juan Street REAL ESTATE TAXANALYSIS The property tax structure in California underwent a tremendous change in 1978 when the voters approved the Jarvis-Gann Amendment, popularly known as "Proposition 13". Under this law, the property tax for any property cannot exceed one percent of the sale price plus any bonded indebtedness for special assessments (road improvements, sewer lines, or other previously-existing or voter-approved debt). Another provision of the law was the reduction of the assessed value for all properties to the levels of 1975. The maximum annual increase in assessed value, under the law, is limited to two percent of the assessed value for the previous year and properties are reassessed to current market value only at times of construction or sale. In estimating the appropriate tax liability for the subject property, assessed values were utilized. The subject's 2017/2018 assessments, tax rates and the total tax liability for the subject property is shown within the following table. Summary of Subject Taxes Land Area Assessed (SF) 16,117 Land $679,669 Improvement $0 Total $679,669 Base Tax Rate 1.07223% Base Taxes $7,288 Plus Fixed Assessments $897 Total Property Taxes $8,185 Tax Liability/SF $0.51 Due to California's method of property taxation, tax rates gcncrall} �-ary between 1-2% of assessed value; but annual tax bills vary widely from property to property. The definition of market value used in this report assumes a sale of the subject property. If the subject property were sold, it would be reassessed according to the County Assessor's opinion of its market value, which is typically the sale price. Our projection assumes that the subject would be reassessed at the concluded value in this report. Therefore, taxes would be calculated using the current tax rate, plus direct assessments.. BBG, Inc. Page 33 1381 & 1391 San Juan Street APPRAISAL PROCESS Overview The three traditional approaches to valuing improved properties are: 1. Sales Comparison Approach - a comparison of the property appraised with reasonable similar, recently conveyed properties for which the price, terms and conditions of sale are known; 2. Income Capitalization Approach - tltt pr.,c�,�inu� of a projected net income into a valuation estimate via one or more capitalizatimi tuclmigpcs; and 3. Cost Approach - an estimate of the replacement cost of all structural improvements as if new, less loss in value attributable to dcpruciation from all causes plus the value of the land as if vacant. The Sales Comparison Approach is founded upon the principle of substitution that holds that the cost to acquire an equall` sul)stiwte property \\Hliout undue delay ordinarily sets the upper limit of value. At any given time, priccs pard for comp>trable properties are construed by many to reflect the value of the property appraised. The validity of a value indication derived by this approach is heavily dependent upon rize availability of data on recent sales of properties similar in location, size, and utility to the appraised property. The Income Capitalization Approach is based on the principle of anticipation that rcc,�,~mires the present value of the future income benefits to be derived from ownership in a particular property. The Income Approach is most applicable to properties that are bought and sold for investment purposes, and is considered very reliable when adequate income and expense data are available. Since income producing real estate is most often purchased by investors, this approach is valid and is generally considered the most applicable when the property being appraised was designed for, or is easily capable of producing a rental income. The Cost Approach is based on the premise that the value of a property can be indicated by the current cost to construct a reproduction or replacement for the improvements minus the amount of depreciation evident in the structures from all causes plus the value of the land and entrepreneurial profit. This approach to value is particularly useful for appraising new or nearly new improvements. The Appraisal Process is concluded by a review and re-examination of each of the approaches to value that was employed. Consideration is given to the type and reliability of data used, the applicability of each approach to the type of property being appraised and the value being sought. BBG, Inc. Page 34 1381 & 1391 San Juan Street APPRAISAL PROCESS Subject Specific This <1pJ nw;a1 employs one of the three traditional approaches to valuer 1) The S.fles Comparison 88G, Inc. Page 35 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (AS-IS) Introduction The value of the subject site as vacant has been developed by utilizing the sales comparison ap- proach. In developing this approach to value, recent residential sales transactions involving land in the vicinity of the subject property was undertaken in addition to similar sites in comparable markets in Orange County. In addition to the comparable research, real estate brokers were contacted who are active in the area and interviewed to derive information that is pertinent in arriving at a value of the subject site. The data which was gathered was checked for accuracy and then analyzed in relation to the subject prop- erty. Adjustments were abstracted from the market and made to quantify dissimilar characteristics evident in the sales. After applying the appropriate adjustments, an indication of the value of the sire as if vacant was developed. Analysis of Comparable Land Safes Tlw parameters for our research envoi,�cl rhr)se sales that occurred over the past several years, were similar to the subject site in size, and had �,inular land use capabilities. The land sales utilized were considered to represent the most comh;rr-able sites for comparison to the subject site and are em- ployed in this analysis to develop the value of the subject property. The factors influencing value, such as property rights conveyed, terms, conditions of sale, market conditions, location, corner,'tr()ntage, zoning, flood plain status, and size were considered in this analysis. The comm-,a-able � %%,TV adjusted for any dissimilarities as compared to the subject with the appropriate adj«1r,1!L'11r r.acrr yrs being derived from the marketplace (where possible). The Price Per Square Foot of Land ( f was considered to be the most appropriate unit of comparison for the subject in this market. The Sales Price per Unit was considered, but not utilized given the smaller land size. The sales utilized to develop a value for the subject site are summarized below, followed by a map. BBG, Inc. Page 36 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (AS-IS) COMPARABLE LAND SALES SUMMARY Date ot Sale Price No. Project Sale Ali Zoning Grantor Grantee Size(SF) Sales Price per SF Notes 1 1111-1121 Wass Street Jun-17 501-071-08,09 MFR,R1 SCEL RELCO 22,880 $675,ODD $30 -Listing broker,Dan Urantch Tustin,CA Properties Communiiias of Rodeo Realty Inc;on the LLC LLC market for approx.6 months with an asking price of $750,000 -Two contiguous residential lots; 1 SFR, 1 multi-family 2 2025 Cedar Street Oct-16 014-112-46 R1 Josephine - 5,227 $261,500 $50 -Listing broker,Gabriel Santa Ana,CA Nunez Albanez;on the market for less than 1 month,sold for more than the asking price -SFR infill development 3 West side of S.Hewes Street Sep-16 392-181-21 R2 Howard Rich Century 19,689 $950,000 $48 -Listing broker,Roger Niez of Orange,CA American NAI Capital;marketing time Development was not reported -Interior parcel,to be developed with 12 units (1BD/1BA+D);sold entitled 4 627 E.Washington Avenue Jul-16 398.150-02,398- UN-2 Lotus Pacific Legacy 26,933 $590,000 $22 -Listing broker,Triumph Real Santa Ana,CA 152-16 Consultants Real Estate& Estate Solutions;marketing LLC Investments time unknown -Undeveloped land, previously approved for 7 townhome units 5 202 E.Adams Street Jan-16 016-044.12 R2 Yaseen Loc Tran 9,148 $225,000 $25 -Listing broker,Sperry Santa Ana,CA Trading 8, Commercial Global Affiliates/ Investment Crisscross;confirmed via Inc. Costar and public records -Vacant paved lot,zoned multi-family Sub ect Sale R3 16,117 — BBG, Inc. Page 37 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (As-Is) Santiago Oaks I Park Regional Park Villa Park PLATINUM TRIANCLE Orange (37- ANAHEIM GD Park Acres Irvine RESORT Regional Pk Orange El Jena P ete's Canyon 55 Regional Park rove Q North Tustin "ARTESIA PIL4F; C241) Santa AnaORCHARD FlUt.5 Tuslinj xat Loma Ridge 55 io A 11 W 1)0 D 164E 7 RG 55 John Wayne Beacon Park Go gleAirport N!ap data%-M18 Googlel Comparable Land Sales Map BOG, Inc. Page 38 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (AS-IS) Adjustments `F'he comparable sales were adjusted for diffcrcriccs based on the cats mics discussed below. Please no�tc that the percentage adjustments are based on the appraiser's subjective judgment, and are not the result of paired sales analysis or any other strictly quantitative method. The percentage adjustments shown are based on the appraiser's experience, comparisons of the available c()reparable data, estimated cost differentials, the opinions of market participants, etc. The adjustments should therefore be viewed as a quantification of the appraiser's thought process, and not the result of a purely objective mathematical process. All the sales were conveyed in Fee Simple title; therefore, no adjustments were required for property rights conveyed. All of the sales were conveyed on a cash-to-seller basis or similar market terms; therefore, adjustments for favorable financing were not considered necessary for in this analysis. All of the sales were arm's-length, did not appear to occur under duress, and no special conditions requiring adjustment were noted. As such, no adjustments for conditions of sale were required. Market participants, developers and investors have generally all had the same consensus. Home pric- es have been increasing over the last few years. We made an adjustment for market conditions of 3% per annum.This applies to all sales. The location of the sales varied, but are generally similar to the subject as they are all located within five miles. No location adjustments were made for the sales. All of the sales were in an undeveloped condition, similar to the suhject. As such, no adjustments were considered necessary in the catcowrr of site conditions. Addlti,,tially, all sales required permit costs and fees to be paid. The suhjccr's land is being appraised .lfrLT the final tract map is recorded and the lot is entitled for residenti.3l development of 5 condominium homes. In this analysis,we first compare all of the sales to the subject based on not being; entrrled, and then consider the monies spent by the owner on entitlement costs (approximately S80,0 I()). Comp 3 sold entitled and was ad- justed downward. The subject property is zoned Multiple Family Rcsiden6al (R_). The subject has been developed with 5 single-family residential homes. All the sales were single or multi-family zoned sites. The density of the sale comparables are considered similar. The subject propert}- is a 1(x,1 1" scltrarc f6t)t site, %t hick is within the range of the land sales of 5,227 to 26,933 square feet. Typically, the larger the site size, tlic 1,ncer the price per square foot, and vice versa. Downward adjustments were made for Sales 2 and 5. YO L11- atrctmon is directed to the follm6ng adij i,stnncnt grid, which summarizes the adjustments clisc(]s,c,l '111nve. 88G, Inc. Page 39 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (AS-IS) SALES PRICE/SF ADJUSTMENT SUMMARY 627 E 2025 Cedar West side of Washington 1381&1391 till-1121 Wass Street S.Hewes Avenue 202 E.Adams San Juan Street Santa Ana, Street Santa Ana, Street Property Location Street Tustin,CA CA Orange, CA CA Santa Ana,CA Safe Date - ]un-17 pct-16 Sep-16 Jul-16 San-16 Size SF 16,117 22,880 5,227 19,689 26,933 9,148 Sale Price per SF $29.50 $50.03 $48.2.5 $21.91 $24.60 Rights Conveyed 0% 0% 0%n 4°io 0% Financing 0% 0% 0% 0% 0% Conditions 0% 0% 0% 0% 0% Subtotal Adjustments 0% 0% 0% 0% 0% Adjusted Sales Price $29.50 $50.03 $48.25 $21.91 $24.60 Market Conditions/Time 3.8% 5.7% 6.1010 6.6% 8.00/0 Adjusted Sales Price $30.63 $52.90 $51,21 $23.35 $26.57 Location 0% 0% 0% 0% 0% Entitlements 0% 0% -20% 0% 0% Zoning/Density 0% 0% 0% 0% 0% Site Conditions 0% 0% 0%m 0% 0% Utilities 0% 0% 0% 0% 0% Size 00/0 -20%u 0% 0% -10% Subtotal Net Adjustments 0°/9 -20% -20% 0% -100/0 Final Indicated Value $30.53 $42.32 $40.97 23.35 23.91 Value Summary Unadjusted Adjusted Minimum $21.91 $23.35 Maximum $50.03 $42.32 Mean $34.86 $32.24 Deviation 513 33 $9 07 Site Valuation - Conclusion After adju,,rment, the sales ranl-'E-d from $23.35 to $42.32 /SF with a mean of$32.24 /SF of land. Overall, we conclude w thin tlic nlid( le of the range at $30/SF for a non-entitled residential site. The owner spent approximarck x,0,000 or $5/SF of land area on permit and school fees and other entitlement costs. We believe it is prudent to consider this cost and conclude at $35/SF. The Land value conclusion is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. Given such, the value of the subject "As-Is" based on land value is shown below. Value/SF x Land Area = Value Indication $35/SF x 16,117 = $564,095 Rounded: $560,000 BBG, Inc. Page 40 1381 & 1391 San Juan Street RECONCILIATION AND FINAL VALUE CONCLUSION Reconciliation and co rrelat.ion of value is performed when more than one approach is used to value real property and weighs the relative significance, applicability, and defensibility of each value indication and relies most heavily on the one that is most appropriate to the type and definition of value sought. The conclusion drawn in the reconciliation is based on the appropriateness, accuracy, and quantity of evidence in the entire appraisal. This appraisal employs one of the three traditional approaches to value: 1) The Sales Comparison Approach. Our value conclusion was previously discussed and is shown below. In view of the facts and data in con unction with the appraisal, it is the opinion that the "As-Is" Mar- ket Value of the fee simple interest in the subject's 16,117 square feet of land, as of September 25, 2018,was as follows: $560,000 This appraisal is not subject to any eactraordinag assumptions. The appraisal is, however, subject to the following bypotbetical condition: • The scope of this assignment was to estimate the Market Value opinion of the fee simple in- terest in the subject's land only, with the hypothetical condition that the building improve- ments do not exist. The Land value estimate is after the final tract map is recorded and the lot is entitled for residential d.\dopment of S condominium homes. The use of this Hypo- thetical Condition may have a I r('L-(('(l .i i n rent results. Exposure Time/Marketing Period Per the Appraisal Standards Board (j��,I i) ()f the Appraisal Foundation, "reasonable marketing time" is an estimate of the amount of time it night take to sell a property interest at the estimated Market Value during the period immediatcly after the effective date of the appraisal. It is not intended to be a prediction of a specific date of sale and, therefore, may be expressed as a range. Exposure time is defined as the estimated length of time the property interest being. appraised «would have been offered on the market prior to the hypothetical consummation of a sale at :Market Value on the effective date of appraisal. Based upon the sales presented herein., an exposure period of 6 to 9 months is considered reasonable. 88G, Inc. Page 41 1381 & 1391 San Juan Street EXHIBITS i GLOSSARY..................................................................................................................................................A LETTEROF ENGAGEMENT..................................................................................................................B QUALIFICATIONS OF APPRAISER.......................................................................................................0 BBG, Inc. Page 42 1381 & 1391 San Juan Street GLOSSARY BBG, Inc. Page A 1382 & 1391 San Juan Street Assessed Value. The value of a property according to the tax rolls in ad Economic Life: The period over which improvements to real property valorem taxation; may be higher or lower than market value,or based on an contribute to property value. ' assessment ratio that is a percentage of market value. t Effective Date: 1)The date on which the analyses,opinions,and advice in an Asset: appraisal,review,or consulting service apply.2)In a lease document,the date 1. Any item,the rights to which may have economic value,including upon which the lease goes into effect.' financial assets(cash or bonds),business interests,intangible assets (copyrights and trademarks),and physical assets(real estate and Effective Gross income Multiplier(EGIM):The ratio between the sale price personal property). (or value)of a property and h,effects%c:'TOSS ineomc. Z. In general business usage,somciliing owned by a business and reflected in the owner's busincs:sheet. Fffective Rent:Tntal ha,c 1,7:11. , n3inirmmt rent stipulated in a lease,over the iftedlet mIlicicntthatiseffectively paid bya Asset: A resource controlled by the er111ty as a result of past events and from1 7 .�11[:,I r 1 ,f financial c,m,c,;lrIn plmidcd by a handlord_ which future economic benefits are evp,ted to flow to the entity. h.xpo,urr Time: 1 i Tic time a properl} remains on the market. 2) The Capital Expenditure: Investments of Ca,h (or the creation of liability) to length of time the property interest being appraised would have been acquire or improve an asset, c Lindhtrilrliu z , buih9in, .<<hfiii n,. ;11 the market prioi to the hypothetical consummation of a sale at improvements,machinery,equipment,as distinguished trom cash outflows for �.,,alar on the eifeeti%e date of the appraisal. Comment: Exposuretime expense items that are normally considered part of the current period's r ,peC1i opinion based an an analysis of past events assuming a operations. ' „ npe i, :1nd,,pen market(USPAP 2016-2017-ed).' Cash Equivalency: An analytical process in which the sale price of a transaction with nonmarket financing or financing with unusual conditions or Extraordinary Assumptions: An assumption, directly related to a specific incentives is converted into a price expressed in terms of cash or its equivalent.' assignment,as of the effective date of the assignment results,which,if found to be false, could alter the appraiser's opinions or conclusions. Comment: Client: Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal,or economic characteristics of the subject property, or I. The individual,group,or entity who engages a valuer to perform a about conditions external to the property,such as market conditions or trends; service(USPAP 1 or about the integrity of data used in an analysis.(USPAP,2016-2017 ed).' 2. The party or p3rur,ticho engaze.by employment or contract,an appraiser to.1,pectis ;.1s,igi went Comment: The client maybe Fair Market Value: In nontechnical usage,a term that is equivalent to the ao individual.�!roop.w entity,and maty engage and communicate contemporary usage of market value.' with the appraiser directly or through an agent(USPAP, 2016-17-ed). Fair Share: That portion of total market supply accounted for by a subject 3. Generally the party or parties ordering the appraisal report. It does property. For example,a 100-key hotel in 1,000-kcy market has a fair share of not matter who pays for the work(CUSPAP,2014-ed).' 10%. ' Condominium Ownership: A form of fee ownership of separate units or Fair Value: portions of multiunit buildings that pr,,%i d C,for formal ft l i n u and recording of a divided interest in real property.' 1. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the Cost Approach: A set of proc:durc, tf}rou�h a-1111.11 .1 %;rluc indica ion is measurement date.(FASB) derived for the fee simple 1n?cr est ur: prnperty h c,1inl:uing the current coo to 2. The estimated price for the transfer of an asset or liability between construct a reprnductum !. (or replaCCrncnt I011 the er1.a u;:: ;trrrcurrc, identifiers knowledgeable and willing parties that reflects the including an entrepreneurial inert c. dcductiug (leprccrulwt ]Turn the 101dd respective interests of those parties.(This does not apply to cost,and adding the estimated land value Adjusun I ora. th,!)he made 1u 111,7 valuations for financial reporting.)(IVS).' indicated fee simple value of the subject propcit� to rcllccl :!tr value of the property interest being appraised. ° Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the Credible: measurement date-2 1. Worthy of belief,supported hsennh-si,nlrClc�.rnlInformation. Fee Simple Estate:Absolute ownership unencumbered by any other interest or Creditability is always measured in the context of intended use. estate,subject only to the limitations imposed by the governmental powers of (SVP) taxation,eminent domain,police power,and escheat.' 2. Worthy of belief. Comment: Creditable assignment results require support, by relevant evidence and logic, to the degree Floor Area Ratio (FAR): The relationship between the above-ground floor necessary for the intended use. (USPAP,2016-2017-ed.).' area of a building,as described by the zoning or building code,and the area of the phot on which it sand in planning and zoning, often expressed as a Deferred Maintenance:Needed repairs or replacement of item, rl,:1 .hould decimal.c., a rat m of_'JI indicates that the permissible floor area of a building have taken place during the course of normal maintenance. ' is twice the total land area ' Disposition Value: The moa pmhahle puce that a specified interest nt rr 1l Going-Concern Value: 1 r 73. An established and operating business having prohcrty should bring under the tI'l 100 1nL conditions: 1)Consummate, 4,1 1 an indefinite future It 1c._r 74. An organization with an indefinite life that is sale ,an'nn a sliccilic tinct:. t.h,ch 1, diort that, the typic l csposure 11111, 6r1 sufficiently long that, over time, all currently incomplete transformations such It property in Char nt:rrk,-i 't The prop cart i,, subjected to 1i�.,rket (transforming resources from one form to a different,more valuable form}will condition.,prc%Odin,a,of the d,ltc of taluation-31 both the buyer arI I 1,-r.lr r be completed.' actmg,pmdentl� and knoMod�e.Ihl, 49 Ihcsellcr n Under cornpul ion to;c11 ;p ]lie h,uyel i, tvpicaflti rnrrti%.r.c,: nl Eioth p,rruc, are acting u1 tisll,t lhc: Gross Building Area (GRA): 1) Total floor area of a building, excluding con,tLlet to he their bc,f ini ne;t, ?t -,n ado,luaiu murketingeffort�°,ll be made ur.en,:lo;ed arca,•, measured from the exterior of the walls of the above-grade dune__the cxposuic time `t r Pa-,nrent will be made In 13sh in 11 S dollar,((It uca T1u.,ltic ludes nic/caniTies and basements if and when typically included in the locale,:u1rreltcy)ur in tcrrtoa ul tinaneiai arrangement,Coinp"uuhlc dlcrcto 91 the risukei area of the t%pe of p,operty involved.2)Gross leasable area plus all The price represents the normal consideration of the pnlpert� ,1,1,! unuffcctcd r,nine m areas. ,f If, For residcniial space, the total area of all floor levels by special or creative financing or sales conccs,ion; :1ntc,i 9zs ;wn one iuvar urcd from the exterior of the%k alts and including the super structure and associated with the sale. This definition can also he Tiiodifled a pr,rs,dc iii ,:rt•siructurebasement;typicall% does not include garage space.' valuation with specified financing terms. ` Glossary Page l pop- Highest and Best Use: 1 I The reasonably probable use of property that results patterns is a proper method for developing market discount rates for use in in the highest value,The tour criteria that the highest and best use must meet are valuations to arrive at Ma r!,e!%slue. Used in discounted cash flow analysis to legal permissibility, ph},teal possibility, financial t a ability. and maximum find the implied or expecicd r:ne of return of the project,the IRR is the rate of productivity. 2) The u,e of an asset that maximize, it, po::nii.il and that is return which gives a zen, net ,resent value(NPV). See also equity yield rate P g p � ) �l Y possible,legally pemtissilife,and tintriuially feasihlc 1 h f i f:"t,1nri best use (YE); financial man,t e n at rttr of ic•tnrn (FMRR);modified internal rate of may be for continuation of an assci's exiting u,c nr leu a=mc aicrnntive use. return(MIRR);yield rate fY ' This is determined by the use that a market pnrticil,ant a null ha,c in mond for the asset when fnrniulating the price that it would be tc hid.(IVS I. 3) Investment Value: I)Th;urluc t a property to a particular investor or class [The]highest and incest profitable use for which the pi,=pert% i,adaptahlc and of investors based on the unc,t„r s sp eciii, requirements. investment value needed or likely to he needed in the reasonably new future (1 lei form Appraisal may be different from market ,aluc becansc it depends on a set of investment Standard,,for Federal Land Acquisiiionsy' criteria that are not nece sank T}pica)of the market.2)The value ofan asset to the owner or a prospedne wAnci ilei individual investment or operational I1'Np:rthctical Coudilion: I 1117.A ctrnihtion th,rt i;pue,te-ted t,=he 1111,^when objectives.(IVS)' it i, knn,,n to he hilae 0,V'Pi 2) A eoondition, dnc,:dv icl,c,•d iri a specific ,i-i-nntcrnt.%%hich k cointr:ir\ I,,•,,h,ii i,known by tlic al•preisci -,_„i,t on the Leasehold Interest:The right held by the lessee to use and occupy real estate cflccticc date of the asstuninent ie,uli,.but i,a used fin t}te I,�irpn,c ufaitalysis. for a statad ken»and under the conditions specified in the lease.' Comntcut_ Hypothetical con,litinn, anti eemtran w known !acts about physical, legal, or economic chi 11:1,ri;uc,of rhe suhlect propcit,. or about Leased Tree lute�resl:Tlee n„ricnhih intcicsi held bythe lessor,which includes conditions external to the property. such a> markvi c,,nclilioTi, or trends; or the rivJ,t to receive the coiitraci rent specified in the lease plus the reversionary about the integrity of data used in an.ur.ilvsk (USPAP._'u I o- (l17 ed.)r ri lien the lease expires. i Income Capitalization Approach: Shcciiic appraisal tc,ltni,lties applied to Liquidation Value: The most probably. piicc 111al a speellied interest in real develop a value indicatinii fw :, p:operty based on it, cainnnc ..ip.ihility and pr„l7em should bring under the following conditions: l)Consummation of a calculated by the capitalization ofproperty income. .ilc within a short time period; 2) The property is subjected to market c+nn,?itions prevailing a,of the date of valuation;3)Both the buyer and seller Inspection: PC117901131 n1,,,i', inion of the exterior w tin i.=t ,h'' real estate are acting prudently and know! ,igcahly, a) The seller is under extreme that is the subject i,f an i—jumnicnt performed i,, ,dcttuy the I=—pet-N compulsion In sell: 51 The buyer is typically motivated, 6) Both parties are characteristics that air r,,l., i il,c ,;signment, ,u.h as amenities, , iaul 0,11;,,2 in ,what ritcy consider to be their best interests. 7)A normal marketing physical conditiou. Lrid 'ur, i„nal utility. Note th.iithis isnot the inspection effort is not possible due to the briefexposuretime 8)Payment will bemade in process performed l}--, :r h—,r-,d orcertified buil,lnee.tnspcctor. ' cash in U,5 dollais or in terms offinancial aiia ngements comparable thereto. 41 The price represents the normal consideration for the property sold, Insurable Value:A type of%,l_,, ( ir,.n ancr f"111""es.' unaffected hg special or creative financing or sales concessions granted by an�ane ai sncma(ed with the sale. This definition can also be modified to Intangible Assets: 1) A non.^ionctan asoci it ,ii mutifests it,clf hs its , ,„ide for valuation wth specified financing terms. r economic properties.1't does not li.n c ut grant,might,and economic benefits to its owner. (IVSi ') A nonphysical asset +uch as a Load Factor: A mC.r,urc of the relationship of cominkin area to useable area franchise, trademark, patent, copyri_'ht, Lnodwill, equity. n•nicral rit'ht, and 11),:! fn+c the qu.tlit, .ind ctficiencv „I hnilding urea layout, with higher security,and contract(,r,di tin_:ui,hed lioni physical assets!:list, Frail right, load f:letUT” indication a Itiahrrr pciccnt,i c of common area to overall rentable and privileges, and hat cr +aloe fila the o,rnci (ASA). 31 All identifi;ihli, space than lower load I i :,ir,.calculated ht Subtracting the amount of usable nornannctaiy asset .without ph,;i,al sup>t,ince An asset is ,i r,-,AITCe Ihrit is area tin::,the ryniahlc:rr.0 and ihcn dildoes the difference by the usable area:r ,un:nrlle,i h} the entity an a result of pa,t evewi (fir o\-amplc- purchase of Load Factor- self-creationi gild from „lush 11uire ec000nnic henelit, ontlo,,, of cash or other assets) ars cxh.ctc,t [LAS ;t,8] Thu,. the 11iiee uric;nl attributes of an Rcntahlr Aica ltseabteArea) intangible asset are:idcnuliahility,control (power I,,obiaiii hcitctits !loin the Llsahlc Ai a asset), -future ccommnic benclits(such as res,cnue, (ai reduced future costs). (IAS 3R)' Market Value. fhc nnU n fora,n!'most rc.il property appraisal assignments. Doth ec,momic.ind Icga➢dclminon,of market value have been developed and Intangible property: Nonphysical assets, including but not limited to tied franchises,trademarks,patents,copyrights,goodwill, equities,securities,and contracts as distinguished from physical assets such as facilities and equipment. I I he Iiwyi wick!, acccntcrl components of market value are incorporated in (USPAP,2016-2017 ed.)` the i,ll,,wiing definition. The moss probable price that the specified property interest,mould sell for tib a connpctitivc market after a reasonable exposure time, Intended Use: 1)The valuer's intent as to how the re-port will be used.(SVP) as of a specified date, in cash, or in terms equivalent to cash, tinder all 2)The use or uses of an appraiser's reported appraisal or appraisal review conditions requisite to a fair sale, with the buyer and seller each acting assignment opinions and conclusions,as identified by the appraiser based on prudently,knowledgeably, foi --. i ,serest,and assuming that neither is under communication with the client at the time of the assignment. (USPAP, duress. 2016-2017 ed.)' 2. Market value is descnhr,l i,-,i dot ir,c,l in the Uniform Standards of Intended User: l)The party or parties the valuer intends will use the report. Professional Appraisal Practi ,: I i'.1i')as follows:A type ofvalue,stated as (SVP)2)The client and any other party as identified,by name or type,as users an opinion,that presumes the i , of a propert% i i.e.,a right of ownership or of the appraisal or appraisal review report by the appraiser on the basis of a bundle of such rights),as w ,:.rt yin date,11TI&T specific conditions set forth communication with the client at the time of the assignment. (USPAP, in the definition of the term i.: ,:ii cd by the :appraiser as applicable in an 2016-2017 ed.)' appraisal. Can1r.nt 1, :::.,n;_ _sn • pinnnn of market value is the purpose of many real pr0p':1L' 't"I" u,.ii znments, particularly when the client's Internal Rale of Return("iRR"):7 he 1111ILialized yield rate or rate of return intended use iiw la,lc,more Th j intended user.The conditions included in on capital that i, gcnartrtL:d of ciipahlc of being generale,c,1 within an market value definitions establish market perspectives for development of the investment of ponfnlio m cr a perii,,l of owmersiiip Aherll,wi ely, the opinion.These conditions may vary from definition to definition but generally indicated return of calwal assocmtcd ,k iih a pnrlccted or pro ftmnu inconne• fall into three categories: stream The discount t:00 i::ui cquatel the pr•sent vahre of tlir itct cavh flow,+,i a project with the p,ic ens•:alueofthe capital nn ,tmen t It i,the rate the relationship, knowledge, and motivation of the parties(i.e., seller and at uh.ich The Net PiQswil Vit lie iNI'V)equals zero. I he IRR re11ccts hoth lhe• buyer): return on invested capital and 'lx return of the original rnvcst:ne;t. ,which arc the terms ofsale(e.g.,cash,cash equivalent,or other terms);and basic considerations of potential investors. Therefore,deriving the IRR born the conditions of sale(e.g.,expo-sure in a competitive market for a analysis of market transactions of similar properties having comparable income reasonable time prior to sale). Glossary Page 2 USPAP also requires that certain items be included in ever-%,appraisal report, Market Value or the Total Assets of the Business:The market value of the Among these items,the following are directly related Io:h,rdclrmi n of 111,11kct :,,tal :r"ets of' the biTI is the market value of all of the tangible and value: int,,nLil�lc aswt_,of It to if sold in aggregate as a going concern. This Identifications ofthe specific property rights to be appraised. a"timcs that the business is expected to continue operations well into the Statement ofthe effective date ofthe value opinion. filrnre.d Specification as to whether cash, terms equivalent to cash, or other precisely described financing terms are assumed as the basis of the Marketing Time: An opinion ofthe amount of time it might take to sell a real appraisal o- rersnnal prorert} iter,,.,t at the concluded market value level during the If the appraisal is condirirmed upon financing or other terms, milt,,t inutnu.haick atter The effective date of an appraisal. Marketing time specificaticii n5 w whether the Gr.u,cin or terms are at, below, or t'.rf;en Iiom ceposuie Uine.%Shich is always presumed to precede the effective above market interest rate, and nl contain unusual conditions or date ul in appmisnl I Art%i:on Opinion 7 ofthe Appraisal Standards Board of incentives fhe terms of ahn.r- 'Ir below-market interest rites and/or -IIIc .krprai>;il F'oialI&Mint and Statement on Appraisal Standards No. 6, other specral inccntive,s mu>t i,eIcdrly set forth: their contribution to, .1 ,,aF l,.Fblc I'.spti„ure Tiric in Real Property Market Value Opinions"address or negati%r mlluc.nce on. %:LIC must lie described and e,;im;tted: and 1'w(k-tonwiuitionohreasonubleexposure and marketing time.).' the market data he opinion of value must br de:i;il,cd and explained- \et Lease: A lease in which the landlord passes on all expenses to the tenant. 3. The following market See al,n lease value is used by agencies that re Mate federally insured financial institution.;in the United States:The mosi pioballe price that a property shoul.l brio-, irr a \ct ]rentable Area (NRA): 1)The area on which rent is computed, 2)The competitive and open marker im;ler all a,ndiGi,ns requisite to .i fair sale. the R.ent:iblc;\Tca Fifa floor shall be computed by measuring to the inside finished buyer and seller each actin_- prudently and knotti Iedgeably,and a11urnin_- the c t;,,e nl the dominant portion of the permanent outer building walls, price is not affected by undue timulus linplicit in this definition is the Cl,,/aero,any major vertical penetrations ofthe floor.No deductions shall be consummation of a sale as of a specified date and the passing of title f in seller r.i,ide for column.and projections necessary to the building.Include space such to buyer under condwor.s,whereby; as mechanical room,janitorial room,restrooms,and lobby ofthe floor.s Bow r and seller arc typically motivated; Both panics arc well intoe need or well advised,and each acting in what they Penetration Ratio(Rate):The rate at which stores obtain sales from within a consider their own hest mter_��:,: trade area or sector relative to the number of potential sales generated;usualiy A reasonable time is alloy,%c,i f u eelwsurc in the open market: applied to existing facilities.Also called:penetration factor.' Payment is made in tern„ I,l :,I,li nr L.S dollars of in terms of financial arrangements comparable lh.r tt,:and Prospective opinion of value. A value opinion effective as of a specified The price represents the normal consideration for the property sold future date. The term does not define a type of value. instead it identifies a unaffected by special or creative fmancing or sales concessions granted by value opinion as being effective at some specific future date.An opinion of anyone associated with the sale. value as of a prospective date is frequently sought in connection with projects (12 C.F.R. Part 34.42(8); 55 Federal Register 34696,August 24, 1990,as that are proposed, under construction, or under conversion to a new use, or amended at 57 Federal Register 12202,April 9, 1992; 59 Federal Register those that have not yet achieved sellout or a stabilized level of long-term 29499,lune 7,1994) occu ane .' 4.The International Valuation Standards Council defines market value for the ' y purpose of international standards as follows:The estimated amount for which Reconciliation:A phase of a valuation assignment in which two or more value an asset or liability should exchange on the valuation date between a willing indications are processed into a value opinion,which may be a range of value,a buyer and a willing seller in an arm's length transaction,after proper marketing single point estimate,or a reference to a benchmark value.' and where the parties had each acted knowledgeably,prudently and without compulsion.(IVS) Reliable Measurement: [The IASiIFRS framework requires that]neither an asset nor a liability is recognized in the financial statements unless it has a cost 5.The Uniform Standard,lni Federal Land Acquisitions defines market value or value that can he measured reliably.' as follows: Market valuo I, the amount in cash, or on terms reason ably equivalent to cash,for !I,all probability the property would have soh/,+n Renininirip Economic Life: The estimated period over which existing the effective chic ofihe arrTju,TL oiler areasonable exposure uine on the opet, arc to contrdNu.: cco-nomically to a property; an competitive m3rkcl, fiom a ,willing and reasonably knowledvr;rhle se!Icr tt+a .',irnune Of t1IC nui1nbcr of s ars remainim2 in the economic life ofa structure or willing and reasonably knowledgeable buyer, with neither nctir_� antler any 1!TLILAILIJal Componcnis a, of ihC effective date of the appraisal; used in the compulsion to buy or sell,giving due consideration to all avaih[,Il """Tonne c:,,nomic ag-e-life method of estimating depreciation.' uses ofthe property at the time ofthe appraisal.(Uniform Apprai,:il St,tnd;li d, for Federal Land Acquisitions) Replacement Cost:The estim;ned,Fist to construct,at current prices as ofthe effective appraisal date_ a substitute for the building being appraised, using Market Value"As If Complete"On The Appraisal Date: modern niaterials and current standards,design,and layout.' Market value n,if ci,mhlete on the effective date ofthe apprukai i,;ar e,umntc of the in:trket value of' a property with all construction :om cr,ion, or Retrospective Value Opinion: A value opinion effective as of a specified. rehabilitation hypothetically completed,or under other spc,1 f CLI h\lwtlwlieal historical date.The term retrospective does not define a type of value.Instead, conditions as of the date of the appraisal. With regard to pr,,l,crt i cs whercir, it identifies a value opinion as being effective at some specific prior date.Value anticipated market conditions indicate that stabilized occupanrti i,not likelya, as of a historical date is frequently sought in connection with property tax ofthe date of completion,this estimate of value should rclL,t sir. :wrkel v;due appeals,damage models,lease renegotiation,deficiency judgments,estate tax, of the property as ifcomplete and prepared for occupancy by tenants. and condemnation.Inclusion of the type of value with this term is appropriate, e.g.,"retrospective market value opinion."' Market Value "As Is"On The Appraisal Date: Value As Is-Thr%a 41C of specific ownership rights to an identified parcel of real estate as of the effccliac date of rhe appraisal,relates to what physically exist,,nd is lc2.dii. permissible and excludes Al assumptions concemim, hypothcriaal market ,ondrnuns Or possible rezoning.See also effective date:prospe,ii%e opini,�n Glossary Page 3 M Sales Comparison Approach:The process of deriving a value indication for the subject property 1, comparing sales of similar properties to the property being appraised, idcntii}inU appropriate units of comparison, and malting adjustments to the sale pri r for unit prices,as appropriate)of the comparable properties based on relevant.niatk.t-derived elements of comparison.The sales comparison approach may I,c a tied to value improved properties,vacant land,or land being considered ,v though vacant when an adequate supply of comparable sales is availah lc ' Scope of Fork: 1)The t%p, f a.a.:and the ectent of research and analyses. (SVP), 21 I-lie type i:A extent Ll; research and analyses in an appraisal or appraisal ret icn a,ssignmcni,(USPAP_20162017 ed.) Stabilized t slue: A value opr.uo:: that excludes from consideration any abnormal relationship hetween supple and demand such as is experienced in boom period, +,Iwn o,;t and sale price may exceed the long-term value, or during periods of dcprz«ism When cost and sale price may fall short of long-term value.11 is akr �;SIG is opinion that excludes from consideration any transitory condition that mat cause excessive construction costs, e.g., a premium paid due to a temporary shortage of supply. Substitution:The principle of substitution states that when several similar or commensurate commodities, goods, services are available, the one with the lowest price will attract the greatest demand and widest distribution.This is the primary principle upon which the cost and sales comparison approaches are based.s Total Assets of a Business: Total assets of a business is dcllncd by the Appraisal Institute as "the tangible property (real property ,lire) perwonal property, including inventory and furniture, fixtures and equipment) and intangible property(cash,workforce,contracts,name,patents,copyriyl±ts,and other residual intangible assets,to include capitalized economic profit) Use Value: The value of a property assuming a specific use,which may oft m:ay nta K the property's highest and best use on the effective date of the appraisal. Use value may or may not be equal to market value but is different conceptually. ' 'Appraisal Institute,The Dictionary of Real Estate Appraisal,6th ed.(Chicago: Appraisal Institute 2010). 'Appraisal Institute, International Financial Reporting Standards for Real Property Appraiser, IFRS Wehsite, trtru_lA•s-ehooks.comlinder.htrn ;Appraisal Institute, The Appraisal of Real Estate, 13th ed.(Chicago:Appraisal Institute 2008)-'This definition is taken from"Allocation of Business Assets Into Tangible and Intangible Components: A New Lexicon," Journal of Real Estate Appraisal, January 2002, Volume LXX,Number 1. This terminology is to replace former phrases such as:value of the going concern. 'Financial Publishing Company, The Real Estate Dictionary,7'ed. 'U.S.Treasury Regulations Glossary Page 4 LETTER OF ENGAGEMENT BBG, Inc. Page B 1381 & 1391 San Juan Street I� i I ��! Sep ren,Ger 12,2018 N-I:. Fanbi Shaygan • 040 BArmanca Parkvvat•,SLIIrC 1,10 Imlic,CA 92604 I'.949 748-1-2-72 fcRri1,as64pACbC1J.nL r RE: 0.37 Acres of sand—Entitled for.r,Conde I 1 omec U81& 1.391 San]uan Street Tustin,CA 92780 Dctr ifs.Sha)Van: W"c are pleased to submit thic prctpc,sal and our 'Ferms and Condinons fi)r ihr, appraisal of thy referenced "I rsrate. PROPOSAL SPF,CIFICATIONS Purposr/Zraluation Premise: ] folkAving: I \1,-kc.t Value of rhe: land only, with the rl.:.,f condition dLkr the building Improvements . �. '111e Ltrul w.tlut is after rite: final tr:ra-r ,rttc d and the lot is entitled for residential I,rneni -y 'i cond-minium homes Property Fights Appraised: h'cc Simple Intt-rest Intended Use: L um:�re n""'l;ct value fOr purpc,se Of calculating; the Park Fees Intended User. Nk. 1'ariba S1'iuK an and or City cif Tustin Scope of Work: \nncip,trc usin,ktlrs (:r,rnpanson Approach Appraisal Standards: Uniform Stvrdards (If Pr„fcssiomg ApImlrsal Praciw (USP.\['), :incl (:.c_,de «f prafc.::,;ion:tl Ethics SAS DIEG,- P- _52 7i3 Jsi• ,1440 '.N 9_m;;NA'7CC .._„ . Ms. Sh't%F,111 Scprcrrlhrr 12, 2018 Page 2 arlcl the Scindards of Professional Apprlisal PrActicc Of the _lphr<usal InSUtute. Fee: $71311 Retainer: Ione Report.lrype: Wnusal Expenses: V1- quoted lneiudt*all mpenscc Payment Terms: Not 3pp6c thlt• Report Copies: 1 Final IJDF (l lard copic.available upolr requt-st) Delivery Date: Deli%-cr\ of ncc appr.usal conclusions and,/1)r rGport(s) will lac complued accort inp t„ the foll<nstng Delivery khedule. l.hujr R!port`. 2 weeks or less I-ra, Repon-. 3 day ;tftcr receipt of conuncrtts. if applicabie Acceptance Date: Iktte of h:xc-cutlon Tlrc attwbcd General Assumparins surd Luninng and Condltionc (F--X ibnt A) and Projxrty Dat-,t Regtrc»t (C-.hibit I3)arc deemed part of chis agrcctncnt as though set forth In lull herein. W"t apprrciatc this opportunirr to he tit' servj'c(: rel Vou an the. ;tcsigrtmt nt. If You have additinrl,sE c1ucs11()ns,please ca7nG►ct us. Sincerely. BBG,Inc. Kahn M. Brc,wric. N1.4ji Uinaging Dlrccrirr Phonc: 859 793-0941 E-marl: �hrn�vrlc�r hhw*res,c��rn MS. Shay;;ui &'ptc-rnhcr 12, 2018 AGREED AND ACCEPTED St ar-urc_ Hate Name 7�r1e Phone Number 1 Mail Address I QUALIFICATIONS OF APPRAISER BBG, Inc. Page C 1381 & 1391 San Juan Street John M. Browne, MAI Managing Director—San Diego Work: 858.793.0941 BBG Mobile: 858.204.8474 jbrowne@bbgres.com PROFILE Mr. Browne joined BBG in April of 2013. Prior to joining BBG, Mr. Browne worked at Cushman & Wakefield Inc. (C&W), Valuation & Advisory as a staff appraiser and then Senior Director in the San Diego office. He and his associate were responsible for opening up the San Diego office in the fall of 2004 and helped grow the office into a successful C&W location. His responsibilities included performing appraisal and consultation reports in all property types, with an emphasis on multi-family, office, industrial and retail. Mr. Browne started his appraisal career in 2002 with FMV Opinions, Inc., a business and real estate valuation firm in Orange County, California. From 2003 to the fall of 2004, he worked for Lipman Stevens & Thene, Inc., a boutique, full service commercial real estate appraisal and consulting firm in San Diego, California. Prior to his appraisal career, he worked in the private equity, financial services, and mergers and acquisitions (M&A) industries. Appraisal and consulting assignments have included vacant land, office buildings, shopping centers, industrial complexes, commercial properties, residential apartments, leasehold/leased fee, and investment properties primarily in Southern California, with an emphasis on San Diego, Riverside and Orange counties. Valuations have been made of proposed, partially completed, renovated and existing structures. PROFESSIONAL AFFILIATIONS Designated Member of the Appraisal Institute— MAI designation achieved 2008 General Certified Appraiser: California Certified General Real Estate Appraiser No. AG036348; through February 8, 2021 EDUCATION San Diego State University, San Diego, California, Graduated 2000 Degree: Bachelor of Science, Finance COURSEWORK Appraisal Institute Courses Standards (USPAP); Business Ethics; Appraisal Principles; Appraisal Procedures, Income Capitalization; Highest and Best Use and Market Analysis; Advanced Sales Comparison and Cost Approaches; Intro to Valuing Commercial Green Buildings; The Discounted Cash Flow Model; Concepts, Issues and Apps.; and USPAP Federal Land Acquisitions. � — gQ�Tm+Fx ry a Business, Consumer Services & 1-lottsing Agency r BUREAU OF REAL ESTATE APPRAISERS REAL ESTATE APPRAISER LICENSE John M. Browne has successfully met the requirements for a license as a residential and commercial real estate appraiser in the I State of California and is, therefore, entitled to use the title: 1 + "Certified General Real Estate Appraiser" r This license has been issued in accordance with the provisions of the Real Estate Appraisers Licensing and �.� Certification Law. BREA APPRAISER IDENTIFICATION NUMBER: AG 036348 Effective Date: February 9, 2019 Date Expires: February 8, 2421 `1) i Ji artin, Bureau Chief, BREA l 3042 941 . -0 ATTACHMENT B PACIFIC REAL ESTATE CONSULTANTS APPRAISAL, 10/26/2018 APPRAISAL REPORT 16,038 Sq.Ft. Multi-Family Zoned Lot NEC of San ,Juan Street & Utt Drive Tustin, California REAL ESTATE CONSULTANTS REAL ESTATE CONSULTANTS October 26, 2018 Our File No. 18-19 City of Tustin Parks and Recreation Services 300 Centennial Way Tustin, CA 92780 Attn: Mr. Chad Clanton, Deputy Director Re: Appraisal of a 16,038 Sq.Ft. Multi-Family Zoned Lot NEC of San Juan Street&Utt Drive Tustin, California Ladies & Gentlemen: Pursuant to your request and authorization, we have conducted the investigations and analyses necessary to form an opinion of the current market value of the fee simple interest in the 16,038 sq.ft. multi-family zoned lot located at the NEC of San Juan Street &Utt Drive, Tustin, California. This appraisal is predicated on the hypothetical assumption that the site is vacant, according to the instructions of the client. There is currently a 5-unit detached condominium project being constructed on the site. This appraisal does not include any value contribution from the improvements. Based on the investigations and analyses undertaken and upon our experience as real estate analysts and appraisers, we have formed the opinion that, as of October 24, 2018, and subject to the Assumptions and Limiting Conditions set forth in the report which follows,the market value of the fee simple estate is as follows: ONE MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS $1,150,000 The appraisal report which follows sets forth the data and analyses upon which our opinion of value is, in part, predicated. Respectfully submitted, Peter B. Finnerty, MAI Certified General Real Estate Appraiser California Certificate No. AGO01937 668 N. Coast Highway, Suite 1409, Laguna Beach, California 92651 (949) 752-9325 - E-Mail: pacrecon@pachell.net EXECUTIVE SUMMARY Property Type and Location: "Assumed to be Vacant" Multi-Family Zoned Lot NEC of San Juan Street &Utt Drive Tustin,California APN: 500-081-30 Date of Value: October 24, 2018 Property Rights: Fee Simple Site Data Size: 16,038 sq.ft., or 0.37 of an Acre Shape: Rectangular Du's/Ac: 13.5 Zoning: R3, Multi-Family Residential District The general plan land use designation is HDR,High Density Residential Improvement Data Type: N/A Year Built: N/A Building Area: N/A Status: Five unit detached condominium project under construction Highest and Best Use "As If Vacant": Development with a five unit detached residential condominium project. VALUATION SUMMARY: Sales Comparison Approach: $1,150,000 Value Opinion: $1,150,000 Exposure Time: 2 to 6 months AERIAL VIEW OF THE SUBJECT PROPERTY R 7 ,r r � Ar i r y� w i w TABLE OF CONTENTS INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SITE DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ASSESSED VALUATION AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 MARKET ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 HIGHEST AND BEST USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 VALUATION METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SALES COMPARISON APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I . . I . . . . . . . . . 25 VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 ADDENDA: Qualifications Partial List of Clients REAL ESTATE CONSULTAN-M INTRODUCTION Purpose of the Appraisal and Property. Identification The purpose of this appraisal is to provide an opinion of the market value of the fee simple interest in the 16,038 sq.ft. multiple-family zoned parcel of land located at the northeast corner of San Juan Street and Utt Drive,Tustin, CA 92780. This appraisal is predicated on the hypothetical assumption that the site is vacant, according to the instructions of the client. There is currently a 5-unit detached condominium project being constructed on the site. This appraisal does not include any value contribution from the improvements. The opinions set forth in this report are subject to the Assumptions and.Limiting Conditions presented beginning on page 4. Appraisal_Reporting Option In compliance with Standards Rule 2-2 of the Uniform Standards of Professional Appraisal Practice this appraisal report has been prepared under the written Appraisal Report option. Scope of the Appraisal Process The scope of the appraisal process involved applying the applicable recognized methods and techniques that are necessary in order to produce a credible appraisal. The procedures used for this appraisal assignment are summarized as follow: 1. Personal inspections of the subject property and the neighborhood were completed. 2. Analyses of the characteristics and development trends for the competing markets and the neighborhood were conducted. 3. An analysis of the highest and best use of the subject property was made,giving con- sideration to the existing zoning, as well as current and prospective uses for the property. 4. Research and analysis were conducted to collect and verify market data related to the subject property and comparable properties. 5. The appraisal was performed by developing a valuation opinion from the applicable valuation approach. 6. A report was prepared to provide an identification and description of the subject property, to summarize the market data considered, and to summarize the analysis and conclusions leading to the opinion of value. I REAL ESTATE CONSULTA 75 This appraisal and report have been prepared in conformance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation as well as the Code of Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and the requirements of the City of Tustin, in effect as of the date of the report. Date of Valuation The opinions expressed in this appraisal and report are as of October 24, 2018. The effective date of the report is the same date as set forth on the transmittal letter. Interest Appraised The property rights appraised are the fee simple estate. Market Value Defined The term "market value"' is defined as follows: Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably,and assuming the price is not affected by undue stimulus. Implicit in this defini- tion is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised,and each acting in what they consider their own best interest; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected b\ special or creative financing or sales concessions granted by anyone associated with the sale. 1 Office of the Comptroller of the Currency 12CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions (f). 2 REAL ESTATE corvsuLTANIS I This appraisal is predicated on an all cash to the seller transaction at x price equal to the value opinion set forth in this appraisal report along with a reasonable exposure time in the open market ranging from 2 months to 6 months prior to the date of value. Fee Simple Estate Defined i The term "fee simple estate ,2 is defined as follows: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Highest and Best Use Defined "Highest and Best Use"3 is an appraisal concept which has been defined as follows: 1. The reasonably probable use of property that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 2. The use of an asset that maximizes its potential and that is possible,legally permissible,and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating that price that it would be willing to bid. (International Valuation Standards) 3. The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonable near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Intended Use of the Appraisal and the Intended Users This appraisal is intended for use by the intended user(s), of whom we have knowledge, for their specific need. The intended user is the City of Tustin. The intended use of this appraisal is to aid in making calculations for determining the park in-lieu fee for this project. Use of this appraisal by anyone else for any other purpose is not intended. z The Dictionary of Real Estate Appraisal, (Chicago, Illinois:The Appraisal Institute 2015), 6th edition, p. 90. 3 Ibid, pg. 109 3 lC� REAL ESTATE CONSULTANTS Assumptions and Limiting Conditions The analyses and opinions set forth in this appraisal are subject to the following assumptions and limiting conditions. Note that the assumptions and limiting condin wis Could potentially have an impact on the value opinion reached in this appraisal. No responsibility is assumed by us for matters which are legal in nature. No opinion of title is rendered, and the subject property is appraised as though free of all encumbrances and the title is assumed to be marketable. No survey of the boundaries of the property was undertaken by us, All areas and dimensions furnished to us are presumed to be correct. Information contained in this appraisal has been gathered from sources which are believed to be reliable, and, where feasible, has been verified. No responsibility is assumed for the accuracy of information supplied by others. This appraisal is predicated on the hypothetical assumption that the site is vacant, according to the instructions of the client. There is currently a 5-unit detached condominium project being constructed on the site. This appraisal does not include any value contribution from the improvements. A preliminary title insurance policy prepared by Equity Title Company(Order No. 135293 1)dated June 13, 2013 on the 1391 San Juan Street property was uncovered during our investigations. According to the preliminary title insurance policy, an easement for pipelines in favor of Southern California Gas Company is indicated. According to the approved condominium map (Tract No. 17665)and our on-site inspection of the property,there are three easements in favor of the Southern California Edison for utilities plus a sewer easement. The utility easements do not appear to be detrimental to the value of the property. This appraisal is predicated on the assumption that the ex i stence of hazardous materials,which may or may not be present on the property, was not obser t ed by the appraisers, unless otherwise stated in the appraisal. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of substances such as asbestos or lead-based paint,or other potentially hazardous materials may affect the value of the property. The value opinion is predicated on the assumption that no such material exists on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. A Geotechnical Investigation and Liquefaction Evaluation Proposed Townhomes prepared by Southern California Geotechnical Inc.(Project No.06G130-1)dated March 20,2006 covering 1381 San Juan Street(APN 500-081-02) only. The geotechnical report indicated that the 1381 San Juan Parcel has fill dirt which will need to be excavated and recompacted in order to be suitable for construction of residential buildings. There is indicated to be low liquifaction hazard. It is assumed 4 REAL ESTATE CON5ULTAN7S that soil conditions are fairly stable and that the underlying geological formations are adequate to support any proposed highest and best use improvements. No representations,however, are made concerning these matters. It is assumed that the subject property is in compliance with the Americans with Disabilities Act (ADA) in reaching the valuation conclusions set forth in this appraisal. The regulations affecting the property are recorded under Title III of the ADA in 28 CFR, Part 36. The appraisers are not experts regarding the subject's compliance with this act. We assume no responsibility for economic or physical factors which may affect the opinions herein stated which may occur at some date after the date of value. Your appraiser has inspected,as far as possible,by observation,the land;however,it was impossible to personally inspect areas beneath the surface of the land; therefore, no representation is made as to these matters unless specifically considered in the appraisal. The subject property is appraised assuming that it is under responsible ownership and competent management. No opinion is expressed as to the value of sub-surface oil, gas, or mineral rights, or whether the property is subject to surface entry for the exploration or removal of such materials except as is expressly stated. No opinion is intended to be expressed on matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate consultants and appraisers. Maps, plats, and exhibits included herein are for illustration only, as an aid in visualizing matters discussed within the report.They should not be considered as surveys nor relied upon for any other purpose, nor should they be removed from, reproduced, or used apart from this report. We shall not be required,by reason of this appraisal,to give testimony or to be in attendance in court or any governmental or other hearing with reference to the subject property without prior arrangements having first been made with us relative to such additional employment. No engineering survey has been made by us. Except as specifically stated,data relative to size and area were taken from sources considered reliable. No encroachment of real property improvements is considered to exist, except where specifically set forth. The forecasts of future events which influence the valuation process are predicated on the continuation of historic and current trends in the market as perceived as of the date of value. The actual outcomes may differ due to changes in the environment between the date of value and the future date involved in the forecast. I 5 REAL ESTATE COIVSUL.TAN75 The signatory of this appraisal is a member of the Appraisal Institute. The Bylaws and Regulations of the Appraisal Institute require each member to control the use and distribution of each report signed by such member. Therefore,except as hereinafter provided,the party for whom this appraisal report was prepared may distribute copies of it,in its entirety,to such third parties as may be selected by the party for whom this report was prepared; however, selected portions of this report shall not be given to third parties without the prior written consent of the signatory of this report. Further, neither all nor part of this report shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media or other media for public communication without the prior written consent of the signatory of this report. Legal Description The legal description was formerly as follows: Lots 19 and 20 in Block "A" of Tract No. 632, in the City of Tustin, County of Orange, State of California, as per map recorded in Book 20, Page 30 of Miscellaneous Map, in the Office of the County Recorder of said county. The legal description is currently as follows: Lot 1 of Tract No. 17665, in the City of Tustin, County of Orange, State of California, as per map recorded in Book 963,Pages 1 and 2 of Miscellaneous Records,in the Office of the County Recorder of said county. Ownership The vesting of the fee simple estate in the subject property, as of the date of valuation, is as follows: Nexgen Management, LLC Trustee of the San Juan Street Land Trust Property Transfer History The current owner acquired the title to the property in two transactions. Reportedly, the corner parcel at 1381 San Juan Street was purchased in 2008 as a vacant site for a price of$220,000. The adjacent parcel at 1391 San Juan Street was reportedly purchased in 2013 for a price of$420,000. At the time of purchase,the property at 1391 San Juan Street included a single-family residence. The single-family residence was later demolished by the buyer at a cost of$8,600. The historical purchase price reported for both parcels was $648,600, prior to considering the cost of demolition. The historical purchase price equated to $40.44 for the 16,038 sq.ft. site. There have been no transfers of the fee simple estate in the subject property within the 3 year period prior to the date of value based on our research. 6 �," REAL E57ATE CONSULTANTS SITE DESCRIPTION Location The subject property is located at the northeast corner of San Juan Street and Utt Drive, Tustin, California. The street address is 1381 and 1391 San Juan Street, Tustin, CA 92780. A copy of the Plat Map for the subject property is included for reference on the following page. Street scene and subject property photographs are included beginning on page 12. Size and Shane The subject site is a rectangular shaped parcel that covers 16,038 sq.ft., or approx. 0.37 of an acre. The site area calculations are based on the measurements set forth on the approved condominium map (Tract No. 17665). The subject site has approximately 109' of frontage along the north side of San Juan Street and frontage of approximately 146' along the east side of Utt Drive. Topography and Drainage The topography of the subject site is fairly level at street grade. On-site drainage is via gravity flow toward the adjacent streets and then into the local flood control system. Soils and Geology A Geotechnical Investigation and Liquefaction Evaluation Proposed Townhomes prepared by Southern California Geotechnical Inc. (Project No. 06G 130-1)dated March 20, 2006 covering 1381 San Juan Street(corner portion of the subject parcel)only. The geotechnical report indicated that the 1381 San Juan Parcel has fill dirt which will need to be excavated and recompacted in order to be suitable for construction of residential buildings. There is indicated to be low liquifaction hazard. It is assumed that soil conditions are fairly stable and that the underlying geological formations are adequate to support any proposed highest and best use improvements. No representations,however,are made concerning these matters. Utilities Based on our on-site inspection of the property,it appears that all utility services are available. Suppliers of utility services in the local area are as follow: Water ....................................................................... City of Tustin Sewer ....................................................................... Orange County Sanitation District Electricity ................................................................ Southern California Edison Company Natural Gas ............................................................. Southern California Gas Company 7 REAL FSTATE CON5ULTAN7S PLAT MAP 09 at 3urr h DRIVE TRACT I r' ;• 3 Q FA/RBs3NN/fS r•,c 3 r1 i TRACT y 4J Q I rw. ietu j w 7, O S 24 a / a 7 ' l Jlj 11 M KI N K� ri 4 pI MI �a ear 9 Q BLK A zs t� tl! 26i 69 le. it O �.:/� �•„ 15 1] -'. s rrrr tart n+wr 3 GREEN VALLEY O r I $ &K 1 Of 1 .. 25 P fl a ! a i r4 ''� rl 'u. ` 14 � I �wr I r�i l � r +„+ W � •. t oat LJ I a 2s r' 0 32; 9 3 O rT SUS �a 4 »!1 ♦f N 'yam 'BRED HILL --- AiMNu£' x 9 s i x *a_o REAL ESTATE CONSULTAN715 Easements, Covenants, Conditions, and Restrictions A preliminary title insurance policy prepared by Equity Title Company(Order No. 135293 1) dated June 13, 2013 on the 1391 San Juan Street property was uncovered during our investigations. According to the preliminary title insurance policy,an easement for pipelines in favor of Southern California Gas Company is indicated. Based on the review of the preliminary title insurance policy on the 1391 San Juan Street (interior lot) portion of the subject property and our on-site inspection of the property, there are no apparent easements which would be detrimental to the value of the property. According to the approved condominium map (Tract No. 17665) and our on-site inspection of the property, there are three easements in favor of the Southern California Edison(SCE)for utilities plus a sewer easement which do not appear to be detrimental to the value of the property. Two of the three SCE easements are 6'wide. One of these two easements runs for 22'from San Juan Street and the other runs 109.8'from Utt Drive. The third SCE easement is triangular shaped and located just east of the westerly comer of the site. The sewer easement is a triangular shaped easement located at the westerly comer of the site. Nuisances and Hazards Based on a physical inspection of the subject site and the surrounding area, the subject site does not appear to be impacted with hazards or nuisances. The site is located in Flood Zone X. in an area within Ahc X00 year flood plain with no flood insurance required. The map is dated December 3, 2009 and the Cornrriunity Panel Number is 06059C 0277J. In addition, the site is not located in a designated seismic or geologic special study area according to the Alquist- Priolo Special Studies Zone Act Map. There is no visual or physical evidence that would indicate surface contamination due to spillage or disposal of hazardous chemicals at the site. However, no representations are made as to these matters. This appraisal is predicated on the assumption that the existence of hazardous materials,which may or may not be present on the property,was not observed by the appraisers,unless otherwise stated in the appraisal. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of substances such as asbestos or lead-based paint, or other potentially hazardous materials may affect the value of the property. The value opinion is predicated on the assumption that no such material exists on or in the property that would cause LL loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. Zoning and Planning The zoning of the subject property is R3, Multiple-Family Residential District. The general plan land use designation is HDR, High Density Residential. 9 I REAL ESTATE CONSULTAN M Allowed uses according to the R3 zoning include farming,home occupations,recreation areas,large family day care homes,community centers,social halls,lodges, clubs,rest homes,extended care facilities,convalescent hospitals, sanitariums,professional office use,swim schools,plus residential uses. The residential uses include single-family dwellings, duplexes, triplexes, boarding houses, condominiums, and multi-family dwellings or apartments. The site development standards for the R3, Multiple-Family Residential District, are set forth in the table which follows. City of Tustin Development Standards R3-Multi-Family Res. District Minimum Lot Area 7,000 Sq.Ft. Minimum Lot Width 70' Maximum Bldg. Height 35' Maximum Lot Covcrt e 65% Maximum Demit} 24.89 Du's/Ac Setbacks- Front Yard 15' -Side Yard 5'(10'corner side) -Rear Yard 10' Parking Requirements 2 covered spaces plus 0.25 guest space per unit Note that the allowed density of development according to the general plan land use designation is a maximum of 25 dwelling units per acre (Du's/Ac). The indicated density of development based the zoning requirements (1 unit for every 1,750 sq.ft. of site area),the maximum density of development for the subject site would be 9.1 units,rounded to 9 units. With 5 condominium units approved for development on a 16,038 sq.ft. site, the indicated density of development is 13.5 Du's/Ac. The subject property is "assumed to be" a vacant land parcel. The minimum lot size, lot width, and density of development are conforming to the zoning requirements. The remaining development standards relate to building structures. Since there are no building improvements included in this appraisal, comments regarding conformity to those development standards are not applicable. Streets & Access The subject property has access from both San Juan Street and Utt Drive. San Juan Street is a 64' wide asphalt paved street with 1 lane of traffic in each direction. Utt Drive is a 60'wide asphalt paved street with 1 lane of traffic in each direction. San Juan Street and Utt Drive are improved with concrete curbs and gutters,street lights,and fire hydrants. The Santa Ana Freeway(1-5)is located 0.4 of a mile to the southeast. This freeway is accessed via San Juan Street to the southeast to Red Hill Avenue, then southwest on Red Hill Avenue to the access ramps. The nearest commuter rail line is located approximately 2.5 miles to the southeast along Edinger Avenue to the southeast of Tustin Ranch Road. 10 06. REAL ESTATE CONSUL.TANIS Summary and Analysis The subject property is a multi-family zoned vacant land parcel that is fairly level in topography and has all utilities available. Access to the site is good with freeway accessibility within 0.4 of a mile and a commuter rail line within 2.5 miles. The zoning designation and the general plan land use allow a variety of residential uses. .9irrr�c� REAL ESTATE CONSULTANTS STREET SCENES r y •p� View of San Juan Street looking in a northwesterly direction mollk View of San Juan Street looking in a .,OLILlicasterly direction 12 REAL ESTATE CONSULTA X-M t View of Utt Drive looking in a northeasterly direction r View of tett Drive looking in a mmifox,,! ic1I) direction 13 P F A I FSTATE corrSULTn\-N SUBJECT PROPERTY PHOTOGRAPHS i 191 , e r cx i - alp , a View of the subject site looking in an easterly direction from the western corner of the site *A _ Magog raNrrr Ir 1 � View of the site looking in a iio i-i l�2,ly direction from the southern corner of the site I 14 REAL ESTATE CDNSULTAN-r1i ASSESSED VALUATION AND TAXES Real property taxes in California are limited to 1%of the market value of the property, as of a specified base year. The base year valuation is the 1975 Assessor's market value estimate,or market value indicated by a sale,or market value based upon reappraisal of the property which is triggered by new construction or leasing of the property on a long-term basis. In addition to the taxes at I% of the base year market value, there is an additional tax to amortize any previous voter-approved bonded indebtedness. The 2018-19 tax rate for the subject property, as of the date of value, is 1.07037%. To provide for inflation, if there is no sale, lease, or new construction, there is a maximum 2% per year increase allowed in the assessed values assigned to the land and improvements. The following taxes are based on the subject's land and improvements assessments, as of the date of value. 2018-19 Assessor's Property Direct Assess. Total Real Parcel No, Land Improvements Total Tax Rate Taxes Taxes Property Taxes 500-081-30 $693,262 $0 $693,262 1.07037% $7,420.46 $13.92 $7,434.38 In addition to the normal annual property taxes, there are direct assessment taxes for items such as mosquito/fire ant assessments, vector control, and MWD standby charge, which total $13.92. Including the direct assessment taxes with the normal real property taxes results in total real property taxes of $7,434.38. The indicated effective tax rate based on the 2018-19 assessments and the total taxes, including the direct assessment taxes, is 1.238479%. 15 REAL ESTATE CONSULTANTS MARKET ANALYSIS The subject property is located in the east-central portion of Orange County in the City of Tustin, California. A location map showing the area surrounding the subject land parcel is included on the following page for reference. The value of real estate is influenced by four basic forces. These environmental forces are categorized as physical, social, economic, and political. Physical Environment The physical environment affecting the subject property is composed of both natural and man-made resources. The region's physical environment can be described as providing the necessary elements to support a variety of residen- tial, recreational, industrial, and commercial real estate developments. The natural environment surrounding the subject property consists of positive aspects such as the temperate Southern California weather. The man-made environment includes a combination of various community facilities, an adequate public service infrastructure, adequate schools, and an overcrowded transportation network at peak travel times. There is also adequate police and fire protection, in addition to parks and community services. Social Environment The social environment within a 1 mile radius of the subject property can be described as a population that has a 2018 median household income that is 20% lower than the median household income for the County of Orange ($85,323) and 13% lower than the median household income for the City of Tustin. The local population growth rate is forecast to be approximately 0.63%per year on a compound annual basis between 2018 and 2023, which is lower than the forecast for the City of Tustin (0.92%/yr.) and for the County of Orange (0.86%a/yr.). The median age of the local population is 35 years old compared with 37 for the County of Orange. The local area average household size is approximately 3.10 people, which is higher than for the County of Orange(3.03 people). The percentage of the local population with a 4 year college degree is 23%, compared to 26% for the County of Orange. The housing stock in the local area is approx.38%owner-occupied housing,58%renter occupied,and 4%© vacant. Consequently,the area's population and social environment create average to good demand capacity for the products produced by the region's various industries. The percentage of the local area population during 2018 within the ages of 18-64(work force)equates to 649%of the population. The total local employed population was reported at 53.1% of the population. With a reported 3.9% unemployment rate, there is 7.9% of the working age population that is not in the work force. Comparatively during 2018, for the County of Orange, the work force equates to 63.2% and the total employed population is 50.014,. With a 3.9% unemployment rate, there is 9.3% of the working age population that is not in the work force 16 REAL ESTATE CONSU.TA\TS LOCATION MAP �`•Pasadena ArCVla ♦Duarte Glendora +3a' usa-# f ._ _ �. - Saar M,161-- Alta Alta Lorna ESWanda •Ssrinh Pasadena+ ♦ _ - Cade • Temple City �lrvvindale [ .--San Otmas .� Rancho Cucamonga Alhanrhra # „ - I lPpland • ♦Sail Gahrit Covina _ #Uaretunut B111w+r Park • tl erne v_ Rosemead* EI Monte West.0-AtI t ! � erateiey Part ♦ + ,�` +Ontario Guasii South EI 11,101.1a Pomona . orate til.0,South Fontana 1 'City Terrace • 'Bassett ♦ 61n117clak fir:,J East Los An eles .-- _._.-• g _�„y La Puente Nalnnt �, f I htantel,efl .7tl' ♦ « ` ”'. ♦Chinn Glen Avon ♦ " +Hacienda Heights -- 1 _ma =tswn Mil-t Loma +Ida woad Pico Rivesa Crtterbeln. ! 1 • Florence y • ♦Whittier Dlanrnud Bar Pedley. Rowland Heights+ r f •Los Serra♦ _ • Cudahy+ ♦Bellfiatdens -1 cxrno i r - * -LA Habra Heights 5nuth Gare Downey r5anra Fe Sprhrgs _,__ —_— __._, ',,.Sleepy Hallow 1 'Nolte • I La Hahra �+ lhino Hills -Lynwood La Irliiada - Brea --'Willow Brook Norwalk # t • ~ rem inn ♦ p rear anroaut I #Yo,lra Linda � Corona Muni .x Ca,+rPran #B'DIM1.e1 , -..�. Corona Fnllerinr ♦ acea Aftesla+ • .Aiwnnd . •LakowneJ r'La Palma .. Dominguez f + os "EI Cerrrtc • Lor°a y reki +gawafiarr her dens / ♦Villa Pact .471 illF ♦Cypress*Los Alainitns`45tauton.- Anaheim •Orange Park Acres \ Lang Beach ° ♦ ! Garden Grove ` PanoramaHeighiSUBJECTPROPERTY urreasrdesFca.arwenr,a,.;ealu rWesm,inslet Santa Ana •� Sihruado I'r5eaBeac1, #Midway City • • j Surfside y f ♦ Sunset Beaclr + #FnnuLtin Y.tlley �nnthrgtan Bench+ n,onrt-orau� L;"3 Exist Irvine , #Irvine r #TrabaceCal" ,Santa Ana Heights `- Rancho Scuta Margarita♦ ♦f_nsta Mesa Newport Beach rElToro ♦ Aliso Viejo Cornua del Mar • Mission Viejo San Juan Hot springs• ; r i�rysral Ceve � J Emerald Bay. .G ! Pacific +Laguna Beach !` Ocean r Laguna Niguel South Laguna• *San Juan Capishana Dnga poll[ 1 , +Capishann Beach San+Clemettte ILI fiff-IN r 1 . ! p r • Data use subject to license. ml 4 2005 OeLorme Street Adan USAS 2008 0 2 4 6 8 10 www delorme com MN(11 8°E) Data Zoom 9-0 17 REAL ESTATE CONSULTAA.TS Economic Environment The economic environment influencing the subject property is strongly related to the activity within the county and regional economic environment. The economic environment impacting the subject property is in an extended expansion phase. The economy is currently impacted by slow wage growth,the difficulty of obtaining credit,increasing,but still low, interest rates, as well as a large Federal budget deficit. The forecast is for a continued expansion of the economy during 2018. i The unemployment rate is at pre-recession levels with hiring in the trade,government,services,manufacturing,and financial sectors. The local area 2018 forecast unemployment rate is approximately 3.9%,compared to a rate of 3.7%© for the City of Tustin, and 3.9% for the County of Orange. The economic environment impacting the subject property is in a growth stage with a local unemployment rate similar to the rate being experienced county wide. Political Environment The political environment impacting the subject property is created by numerous governmental influences,including the State of California, the County of Orange, and the City of Tustin. All planning and developmental guidelines for the subject land parcel are the responsibility of the City of Tustin Community Development Department. The General Plan of the City of Tustin controls land uses and is aimed at balancing the growth. Regulations created by these governmental bodies affect the ownership, transfer, and development of real property. The regulations imposed by all levels of government have attempted to promote orderly growth,provide a mix of land uses, and create a desirable environment in which to work and live. The efforts in government regulations have focused on proper planning as well as environmental consequences of development. The County of Orange is the local taxing authority. The County collects taxes and distributes the funds to amortize such long term debts as school bonds, utility bonds, and direct assessment taxes. Surrounding Land Uses The subject property is located at the northeast corner of San Juan Street and Utt Drive, City of Tustin. The immediate land uses to the north,south.,east, and west are apartments. Further to the north,east,and west are primarily multi-family and single-family residential land uses. Further to the south is Tustin High School and the Santa Ana Freeway. An adult school and alternative high school are located to the northwest of the subject property along San Juan Street. 18 i REAL ESTATE CONSULTANTS The nearest neighborhood shopping area is located along Newport Avenue to the west at the end of San Juan Street. There are also commercial uses located along Red Hill Avenue to the southeast. Further to the southeast at El Camino Real and Jamboree Road is the nearest regional shopping area, the Tustin Marketplace. The Santa Ana Freeway(I-5) is located 0.4 of a mile to the southeast. This freeway its accessed via San Juan Street to the southeast to Red Hill Avenue, then southwest on Red Hill Avenue to the access ramps. The nearest commuter rail line is located approximately 2.5 miles to the southeast along Edinger Avenue to the southeast of Tustin Ranch Road. Residential Market Overview Based on the existing approvals,the number of units to be constructed on the subject lot is 5 detached condominium units. Since detached condominiums, are primarily purchased based on the Sales Comparison Approach and are not considered to be income properties, an overview of the single-family residential market has been performed. The residential market overview is included to set forth supply and demand data that impacts the value of the subject property. The residential market overview is based on a physical inspection of the surrounding area and a review of data on Orange County residential projects prepared by the Real Estate and Construction Report, published by the Real Estate Research. Council of Southern California as well as residential median price and sale data published by CoreLogic Information Systems. According to the Real Estate Research Council, construction of single-family units in Orange County was on an upward trend from 2010 through 2013. During 2014, the number of single-family homes for which permits were issued declined, followed by a very small increase in 2015 as well as larger increases during 2016 and 2017. A summary of the number of single-family units in Orange County for which building permits were issued on an annual bads since 2010 is set forth below. No.of Single-Family Year Units Permitted %Chani 2010 1,553 +12.86% 2011 1,898 +22.22% 2012 2,846 +4995% 2013 3,783 +32.92% 2014 3,519 (- 6.98%) 2015 3,523 + 0.11% 2016 4,116 +16.83% 2017 5,145 +25.00% During the first 2 quarters of 2018, the number of single-family homes for which permits were issued decreased by 19% compared to the level of activity over the same time period of 2017. A comparison of the number of new single-family dwellings constructed annually between January 2005 and January 2017 (2,975/yr. on average) in Orange County and the growth in single-family dwelling households 19 e,� REAC+[VSULTANTS (4,102/yr.on average over the 1/05 through 1/17 time frame)indicates that over the prior 12 years demand has been in excess of supply. In addition to fundamental demand generated by household formation within Orange County, the number of new home sales was also reviewed. Over the time period from 2010 through 2017, the average number of new home sales was indicated to be 3,390 per year. During 2017, 4,936 new home sales were reported. Over the first 2 quarters of 2018,2,326 new homes were sold, which reflects an increase of 9.4% in the number of transactions compared to the same time period during 2017. Prices for new homes sold during the second quarter 2018 reflected an increase of 17.6% compared to the swine time period during 2017. A further comparison of the average number of single-family units for which building permits were issued(supply of 3,298 avg. permits per year 2010-2017) with the average annual demand for new homes over the prior 8 years (demand of 3,390 avg. new home sales per year) indicates that the supply is not keeping pace with demand for single-family residences. Since the short term demand appears to be greater than the supply of new single-family homes,there is pressure for prices to rise and for additional units to be constructed. The following table includes median price and sales transactions figures for single family homes for the 92780 zip code area of the City of Tustin, which is the local zip code for the subject property. Year Median Price % Change No. of Transactions % Change 2010 $ 470,000 + 3.3% 236 (- 7.8%) 2011 $ 420,000 (-10.61/,-) 282 +19.5% 2012 $ 430,000 + 2.4 /"(' 289 + 2.5% 2013 $ 534,000 + 24.2��' 289 -0- 2014 $ 550,000 + 3.01ir 297 + 2.8% 2015 $ 588,000 + 6.9 /, 351 +18.2% 2016 $ 650,000 + I0.'�'/ 312 (-11.1%) 2017 $ 673,000 + 3.51/ 345 +10.6% During 2011, the median price decreased followed by increases during 2012 through 2017. The number of transactions moved in the opposite direction as price during 2010,2011,and 2016. When the price increased, the number of transactions declined, while when the price decreased, the number of transactions increased. During 2012, 2014, 2015, and 2017, both the median price and the number of transactions increased. With the increasing inventory of new homes and the plans for an increasing amount of new residential construction, there appears to be enough demand for increasing land prices. This trend was supported by our research and interviews of developers. 20 REAL ESTATE CONSULTANTS In conclusion,the residential market in Orange County reflects moderate,but slowly increasing,buyer demand with increasing prices, while inventory levels are also increasing. Because of the increasing demand for new homes during the prior 3 years, the price of land has been increasing. The construction of residential dwelling units in the local area is occurring in undeveloped areas throughout the City of Irvine including the former El Toro MCAS,now known as Five Points. New residential development is planned for the Legacy Planned Community in Tustin, which is to the south of the subject property. Additional new development is occurring further to the east and south as well as in the northeast portion of the county. Based on our review of supply and demand data regarding condominium residential properties, it appears that additions to supply have been increasing to meet growing demand for new housing in the local area. i Market Analysis Conclusions The impact of the physical,social,economic,and political forces is evidenced by the developments in the local area. The residential market overview supports the strength of demand in the local area. In addition, the fundamental demand characteristics are fairly strong for rental properties due to a high percentage of renters in the area, the median income levels, and the location close to shopping, schools, employment, plus good freeway access. Our analysis of the relationship between population and income levels indicates that demand for residential condominium unit,, alio exists within the local market. i i 21 to REAL ESTATE CQNSULTAN7S HIGHEST AND BEST USE Thi: "Hi-hest and Best Use" is that use which is most likely to produce the greatest return over a given period of time. Net return refers to the residual left over from gross yield after all costs have been deducted. Only those uses which are natural,probable,and legally permissible may be considered tenable. Thus, Highest and Best Use may be defined as the available use and program of future utilization that produces the highest present land value. We have investigated and analyzed the Highest and Best Use of the subject property "as if vacant" in regard to the following four considerations. Legally Permitted The subject property is zoned R3, Multiple-Family Residential. The General Plan designation for the subject site is High Density Residential. The allowed uses include a variety of residential uses plus office use. The existing use of the site is for the developnicnt with 5 condominium units that are almost completed. Based on the zoning and the existing approvals, the density of development allows 5 condominium units. This equates to a density of 13.5 Du's/Ac. q Y Physically Possible The physical characteristics of the subject property, such as its size, frontage, topography, accessibility and utilities appear to be adequate for development. Economically Feasible There is supporting evidence in the surrounding residential market for buyer and renter demand. Our market investigations indicated that prices are increasing in the local area. The subject's local market is viewed as being in an under supply condition with demand growing faster than supply. Due to limited additions to the supply of new homes and apartments in the immediate area, the market analysis indicates that enough demand exists to support residential development on the subject site. Since the demand for residential properties also contributes to the demand for residential land, it appears that over the short term, this demand has been increasing due to the growth in population and increasing home prices and rents. Over the long term, the population growth within the area should continue to add more pressure for increases to the supply of homes and apartments. Our analysis of the economic feasibility for the current development of a five unit condominium project on the subject site is based on a comparison of the land value opinion from the analysis of land sales and the land value indication from a cursory Developmental Analysis based on the construction of a 5 unit condominium project. The value comparisons indicate that development of the subject property, with a good quality 5 unit condominium project appears to be economically feasible. 22 4� .9, t'� REAL ESTATE CONSULTAMS Most Profitable The most profitable use conclusion is reached by taking the economic feasibility analysis one step further in which a recommendation for the most profitable use is reached from the various uses that were considered in the economic feasibility analyses. Based on the existing zoning and general plan land use designation, as well as considering the site size and width,development with 5 detached condominium units appears to economically feasible and most profitable. Therefore, the highest and best use "as if vacant" conclusion is based on the most probable use development of approximately 13.5 Du's/Ac, or 5 detached condominium units. Conclusion of Highest and Best Use After having applied the tests of availability,adaptability and demand,we have concluded that the highest and best use of the land "as if' vacant is for development with a five unit detached condominium project. 23 REAL L.S`TATE CONSULTA.R-rS VALUATION METHODOLOGY Basis of Valuation Valuation is based upon general and specific background experience, opinions of qualified informed persons, consideration of all data -,:ttliored during the investigative phase of the appraisal, and analysis of all market data available to the appraiser. Valuation Approaches Three basic approaches to value are available to the appraiser: the Cost Approach,the Income Approach,and the Sales Comparison Approach. Cost Approach This approach entails the preparation of a replacement or reproduction cost estimate of the subject property improvements as if they were new and then deducting for losses in value sustained through age, wear and tear, functionally obsolescent features,and external factors affecting the property. The land value is then added to the depreciated cost and entrepreneurial incentive to arrive at a value opinion. Income Approach This approach is based upon the theory that the vahW M pmpV rty tends to he set by the expected net income to the owner. It is in effect the capitalization of the exlwctcd Iiaturc income into present worth. This approach requires an estimate of net income,an analysis of all expense items'. the 1 tion of a capitalization technique,and the processing of the net income stream into a value indication. Sales Comparison Approach This approach is based upon the principle that the value of a property tends to be set by the price at which comparable properties have recently been sold or for which they ran hk� acquired. This approach requires a detailed comparison of sales of comparable properties with the subject property. One of the main requisites,therefore,is that sufficient transactions of comparable properties be available to provide an accurate indicator of value and that accurate information regarding price,terms,property description,and use be obtained through interview and observation. The value opinion of the fee simple interest in the subject property is supported through an application of a Sales Comparison Approach to support the current value of the "assumed to be vacant"land parcel. The Cost Approach is not applicable and was not utilized, since there are no existing building improvements,under the assumption that the site is vacant. No Income Approach was utilized, since buyer's and seller's of vacant land do not typically rely on an opinion of the capitalized land rental in making buy/sell decisions, when land sales are available. 24 c�e� RFAL ESTATE CO[NSULTA]NTS SALES COMPARISON APPROACH The Sales Comparison Approach to Value consists of a comparison of the entire property being appraised or various portions thereof with other similar properties which ha%e sold or which are offered for sale. The indication of market value is the price at which an equally desirable property has recently sold,or can be purchased in the open market. The value found by the study of comparable sales yields market value directly in accordance with its legal definition. This approach is based on the principle of substitution which asserts that,when a property is replaceable, its value tends to be set by the cost of acquisition of an equally desirable substitute property, assuming no costly delay is encountered in making the substitutions. Market Data Investigation A search was undertaken to uncover sales of comparable sized residential zoned land parcels in the City of Tustin and throughout the County of Orange between June 2017 and the date of value. No sales of vacant residential zoned land parcels under 20,000 sq.ft. in size within the City of Tustin over the prior 2 years were uncovered in our search. As the search area was expanded to uncover land sales outside the City of Tustin,the primary elements of comparability were considered to be the density of development and the size of the site. Our search uncovered five sales of land parcels located within the Cities of Tustin, Santa Ana,Garden Grove,and Anaheim that occurred between June 2017 and June 2018, which have been utilized in the valuation analyses. On the following page is a summary of the sale data that are used in the valuation analysis. On the page after the sales summary is a map indicating the location of the sale data in T-lation to the subject property. A photograph and plat map of each of the sale data are included on the pages following the map. Analysis of the Sale Data Five comparable closed land sales were ut i I ized in the analy-,P,to reach an opinion of the market value of the subject parcel of land with an approved density of development of approximately 14 Du's/Ac. Based on discussions with buyers and sellers of similar properties as well as active real estate agents in the residential land market, the unit of comparison used in the local market for residential zoned land is the price per unit and the price per sq.ft. of site area. Adjustments to all of the comparables were considered for property rights transferred,condition of sale,financing terms, demolition costs, date of sale or market conditions, status of development approvals, location, physical condition of the land, density of development, access, size of the site, and zoning differences. Adjustments to the land sale data were based on interviews with buyers, sellers, and agents active in the local market,general economic trends,analysis of the land sale data to extract matched-pair adjustments,where possible, and from our appraisal experience from analyzing similar data stets to extract similar adjustments. 2 REAL M- ATE CONSULTAX75 COMPARABLE MULTI-FAMILY RESIDENTIAL LAND SALE DATA SUMMARY Status of Data No./Location Recorded Zoning/Shape/ Land Area ConditionfropoJ Density Development Sale Price Grantor/Gram" APN/Doe.No. Date of Sale Access jtil.Avail. (Sy.Ft./Acresy Intended Use/Exp.Time Ae Approvals Total $/Unit $/Sg•Ft. Finars;inPJCmTmafion No.1 420 N.Magnolia Avenue 6/30/17 RS-4 97,();() Vacant 11 Approved Tent.Tract Map $5.247,000 $209,880 $54.08 Sic Acquisitions LLC Anaheim Irregular 2.23 Fairly Level Magnolia Cerritos 53 LLC 071.-491-32&34 Paved Road Access Construct 25 single-family homes All cash to seller #272662 All available 2 trios. Mike Hunter,agent of the seller No.2 SEC of Hazard Avenue&Figueroa Street 10/27/17 R2 17.628 Minimal improvements demolished 14.5 Max None $925,000 $185,0011 $52.47 Gnshkew ch Trust Santa Ana Rectangular 0.40 Fairly Level Basal on 5 units Coboraca Investtmms Inc. 198-161-48.49,&50 Paved Road Access Unknown 324E C NL #458555 All available 1 mos. Adrea Bigler,agent of the seller No.3 10641-10661 Garden Grove Boulevard 3!30/18 AR 29.966 Existing retail bldg.&res.to be demolished 15 In Process $2.250.000 $225,000 $75.04 Jennie Do Trust&HT Investments LLC GaTd­("hove Irregular 0.69 Fairly Level Golden Eagle Enterprises LLC ilti+1ry'.11„_'S,&26 Paved Road Access Construct 10 condo.plus 19,600 sf of offices All cash to seller All available 7 mos. Brian Tran,agent of the seller Nu. 9611 V-11+1.1,\.1.11Iril• 6/21/18 NMU 15.841 Existing bldg.to he demoli hM 19 Had approvals $1.100.01%1 $157,143 $69.44 Kin)L-R&1Lir�Nguyen GarJe i+1;++,., Rectangular 0.36 Fairly Ixvel Rowland A­­&,LU 133-0++1-1 g Paved Road Access Construct 7 apt.units All cash Ire,clic, #227u'!1 All available l3 mos, Long Nj;. cu sgcut u1 ns,eller No.5 SWC of Sixth Street At"B”Street 8/04/17 PC 296.817 Industrial park to be demolished 21 Approved Tent.Tract Map $21.230,000 $151.643 $71.53 Van Buren Plaza LLC Tustin Irregular 6.8t Fairly Level Taylor Morrison of California LLC 401-341-04 Paved Road Access Construct 140 condominiums All cash to seller #322163 All available N/A Angela Meyer,rept.of the buyer 26 REAL ESTATE CONSULTAN M COMPARABLE MULTI-FAMILY ZONED LAND SALE DATA MAP + t a Habra Heights ~� y t lespy Hollow \ _o- La Habra gp 1 �Chiao Hills ,\ eta X L9 INlrada m \ _ re.� :`s,a2 tFUT! 00 Yorha Linda \ A Fwsrianraun 'Placentia Atwpad U{ /J� I --- BnePark - FnNertnn +CeuiT 1 91 - *La Pelma at I LAND DATA NO.1 .. �t-YP � Villa Park _. arantan a e11k1 ra a Orange Park Acro&r t.osArrramNevaiA;sma LAND DATA NO.3 y Las A dr AAF eOrang. of /Barden Groff Panora a Heights. �Cowap Heights , -LAND DATA N0.4 ♦ _ •I Tustin Foothl9s .._.- +Westiniuster `}, htsy p LANG DATA NO.S g I\ 4'' h Midway City � Sant n eTt, �. LAND DATA N0-2 I 45 +Sunset Beach f f FountalnVailey SUBJECT PROPERTY �Hmaingtau Beach } Tustn MC 7-3 1 ' ast lruine } y B Two WAS t! Q+�'Pdt Irvine 1l0 t b ,o � q(eta Ana Heights ` - p ba fi`Ot ` 0 Mesa h 'Newport Beach A TMA eEl Toro Aliso V1 Jo e i un llw1 Carona del Mar �. a�F� Luynna Wands �Me w`Poh C 1s Pacific CrystaiCore e Ocean Emerald 94 a �' Laguna Beach Data use subject to isense- Mi 0 2005 DeLorme Street Atlas USA®2006 0 1 2 3 4 5 www.delorme cum MN(11 8'E) Data Zoom 10-C 27 .1-A, te( —�, REAL ESTATE CONSULTA "M .. - ,up r 1,.\NTD DATA NO. i i i R o E m h-14 m i 28 .�r4r fir REAL ESTATE CON5ULTA\TS LAND DATA NO. 2 J. J a 29 REAL ESTATE CONSULTANIS `�•` ► ,:; p ■ u w maw ------------- M„ LAND DATA NO. 3 9 m ® i J � 30 I£ r � t r � aryl O t e t t-T ivmcw py-2[i b 'ON diva ON '1 w.yf RFAL ESTATF CONSULTAN-TS r � � r v s� + � LAND DATA NO. 5 32 REAL ESTATE CONSULTANTS It is virtually impossible to quantify every necessary adjustment to equate the comparables to the subject property. Our analysis of the land sale data utilizes quantifiable adjustments where they can be extracted and qualitative adjustments when quantitative adjustments cannot be extracted. Price Per Unit Analysis Individual qualitative comparisons of the sale data to the subject property are set forth in a summary grid which is included on the following page. The adjustment grid summarizes the adjustments considered for each of the comparable land data to equate them to the subject property. Property Rights: The property rights appraised are the fee simple estate. All of the land sale data are transfers of the fee simple estate and no adjustments are warranted for property rights. Conditions of Sale All of the sale data were arm's length transactions at market prices, except for Land Data No. 1. Therefore, no adjustments are necessary for the conditions of sale to Land Data Nos. 2 through 5. Land Data No. 1 was originally marketed as a sale of the property owned by the seller. The seller eventually joined a joint venture with the buyer for the development of the land. According to the listing agent,the decrease in the price for the land contributed to the joint venture was approximately 29% below other offers that would have been for an outright purchase. Therefore, an upward adjustment of 29% was applied to this comparable to reflect the inferior conditions of sale that dial not include an outright sale,but the owner participating in a joint venture for the development of the land. Financing All of the transfers were all cash to the seller transactions and no adjustments are warranted for financing. Demolition Costs Land Data No. 1 was a v;icaiit site at the time of sale and no demolition costs adjustment is necessary. Land Data Nos. 2 through 5 have existing improvements that do not reflect the highest and best use of the land. The demolition costs represent an upward adjustment necessary to have a vacant site. The costs of demolition,based on cost data from the Marshall Valuation Cost Service,for Land Data Nos. 2 through 4, are estimated to be $5,000, S2�.000, and $20,000, respectively. The costs of demolition for Land Data No. 5, based on intcmnation provided by the verification source, are $553,625. 33 1r c REAL ESTATE CONSULTANTS LAND DATA ADJUSTMENT ANALYSIS MULT-FAMILY RESIDENTIAL LAND VALUATION- NEC OF SAN JUAN STREET At UTT DRIVE,TUSTIN,CA Subiect Praoerty Sale Data No.1 Sale Data No.2 Sale Data No.3 Sale Data No._4 Sale Data No.5 Address: NEC of San Juan Street&Utt Drive 420 N.Magnolia Avenue SEC of Hazard Avenue&Figueroa Street 10641-10661 Garden Grove Boulevard 9611 Alwood Avenue SWC of Sixth Street&"B"Street Tustin Anaheim Santa Ana Garden Grove Garden Grove Tustin Total Sale Price: N/A $5.247,000 $925,(0() $2,250,000 $1.100,0(10 $21.230.000 Pric/Unit: $209,880 $185.00() $225.01X! $157,143 $151.643 Price/Sq.Ft.: $54.08 $52.47 $75.04 $69.44 $71.53 Property Rights: Fee Simple Similar Similar Similar Similar Similar Conditions of Sale: Arm's Length Inferior Similar Similar Similar Similar $60.865 $0 $0 $0 $0 $15.69 $0.00 $(1.00 $0.00 $0.00 Financing: All Cash to Seller Similar Similar Simlar Similar Similar Demolition: None Similar Inferior Inferior lnfenor Inferior $0 $1,000 $2,500 $2.857 $16,071 $0.00 $0.28 $0.83 $1.26 $1.87 Date of Sale: 10/24/18 6/30/17 10/27/17 3/30118 6/21/18 8104/17 $21,6611 $11.160 $7.963 $3.200 $12.579 $5.58 $3.17 $2.66 $1.41 $5.50 Adjusted$/Unit Indicator: $292,405 5197,160 $235,463 $163,200 $180,293 Adjusted$/Sq.Ft Indicator: $75.34 $55.92 $78.53 $7211 $78.90 Location: Near Red Hell Ave.&N101-5 Slightly Superior Inferior Similar Inferior Similar Approvals: Approved Condo,Map Slightly Inferior Inferior Inferior Slightly Infenor Slightly Inferior Topography&Shape: Fairly level&Rectangular Similar Similar Similar Similar Similar Access: Paved Road Similar Similar Similar Similar Sirndar Physical Condition: Finished Lot Similar Similar Similar Similar Similar Zoning&Density; R3/13.5 Du's/Ac Slightly Lower Density Similar Higher Overall Density Higher Density Higher Density Site Arca(Acres): 16,038 97,030 17,628 29.986 15,841 296.817 Overall Comparison: Price per Unit Analysis: Superior Slightly Inferior Slightly Superior inferior Inferior Price per Sq.Ft.Analysis: Slightly Superior Inferior Slightly Superior Similar Slightly Superior 34 REAL ESTATE CONSULTANTS Market Conditions Based on ou r iiiv c,,tigations and analysis,upward adjustments for market conditions were supported at a rate of 6%per year(0.5%per month)during 2017 and through the date of value based on home price trend, and land price trends. Location The location adjustment includes consideration of differences in location, being an intei-lor site versus a comer site, visibility, and access. Land Data No. 1 is in a slightly superior location adjacent to a golf course, while Land Data Nos. 2 and 4 are in inferior locations in the Cities of Santa Ana and Garden Grove. Adjustments for these differences have been considered in the comparative analysis. Land Data Nos. 3 and 5 are in locations considered to be similar to the subject property's location and no adjustments are supported. Physical Condition The adjustment for physical characteristics includes comparisons of shape, availability of utilities, existing street improvements, and street access. All of the land sale data are in similar physical condition compared to the subject property and no adjustments for physical condition are warranted. Topography The subject property is a fairly level parcel in topography. All of the land data have similar topography and no adjustments are warranted. Zoning The comparable land sale data have a variety of zoning designations. The allowed uses under the zoning have been modified during the process of receiving approvals for development to allow residential development. Comparatively, after considering the approvals for development, all of the land sale data allow residential land uses with the only difference being the allowed density of development. Adjustments for zoning differences are implicitly included with the status of approvals and density adjustments and no additional zoning adjustments are warranted. Status of Approvals The subject property has a final condominium map allowing subdivision of the site for 5 detached condominium units. Land Data Nos. 1 and 5 are slightly inferior to the subject property with only 35 REAL ESTATE CONSULTANTS an approved tentative tract map at the time of sale. Land Data No. 2 does not have any approvals for development, which is inferior. Land Dilor No. 3 was in the process of obtaining approvals at the time of sale, which is interior. Land Data No. 4 had approvals for construction of an apartment project, which is slightly inferior to having an approved condominium map. Upward adjustments to all of the comparable land sale data were made due to their inferior or slightly inferior status of approvals. Density The subject property has an approved density of development of approximately 14 Du's/Ac. Land Data Nos. 1 has a lower density of development, which results in the necessity for a downward adjustment to the price per unit indicator. Land Data Nos. 4 and 5 have a higher density of development,which results in the necessity for an upward adjustment to the price per unit indicator. Land Data No. 2 has a fairly similar density of development compared to the subject property and no adjustment was supported based on the comparative analysis. Lirnd Data No. 3 has a fairly similar density of residential development compared to the subject property, but also has an additional 0.64 FAR of office use planned for the site. After considering the additional office density,the LIcnsitN of do ti cIopment of this comparable is higher than the subject property. Since the office density is not reflected in the price per unit indicator, a downward adjustment to the price per unit indicator from Land Data No.3 is supported due to the higher overall density from the office space component. Site Size The site size adjustment was based on a comparative analysis of the adjusted indicators for all of the sale data, after making all of the previously discussed adjustments. Land Data Nos. 2 and 4 are similar in size to the subject property and no site size adjustments are warranted. Land Data No. 3 is slightly larger in size, while Land Data Nos. I and 5 are larger in site size. Typically, the smaller the size of the site the higher the price per unit. In many cases, this comparison is not true due to the utility of scale in residential development of parcels larger than 0.5 of an acre compared to less than 0.5 acre in size. The comparative analysis did not provide any market support for a size adjustment to Land Data Nos. 3, 4, or 5. The price per unit indicators from the comparable land data range from $151,643 to$225,000, before making any adjustments. After adjustments were considered for property rights transferred, condition of sale, financing, demolition costs, and time of sale or market conditions, the indicated price range per unit for the subject site from the comparables is from $163,200 to $292,405. 36 .l�rrr fif� REAL ESTATE CONSULTANTS Qualitative adjustments were considered for the elements of comparison including location, status of development approvals, density of development, zoning, access, physical condition of the land, topography, and site size. On an overall basis after considering all of the elements of comparison discussed, Land Data No. l is considered to be superior to the subject property, Land Data No. 3 is considered to be slightly superior, Land Data No. 2 is considered to be slightly inferior, and Land Data Nos. 4 and 5 are inferior to the subject property. A summary of the adjusted price per unit indicators of V�ilue for the subject site from the analysis of the land sale data is included in the following table. Sale Data Bio. Comparison Adjusted !Unit 1 Su erior $292,405 3 Slightly Superior $235,463 2 Slightly Inferior $197,160 5 Inferior $1so'N3 4 Inferior $163,200 Subject Pm)elt $210,000 to$210 0(11 Land Data No. I is a larger parcel in size located in a slightly superior location in the City of Anaheim adjacent to a golf course. This parcel sold with a tentative` tract map approvals for the development of 25 single-family homes, which is slightly inferior. This parcel has a low c density of development compared to the subject property. Under the price per unit analysis. the lower the density the higher the price per unit. Due to the slightly superior location and the higher density of development of the subject property, the value indication for the subject property should be substantially lower than the adjusted price per unit indicator from Land Data No. 1, Land Data No. 3 is in a location that is considered to be similar overall and the density of development is superior due to the condominium density plus additional office density. The status of approvals is inferior and the site size is slightly larger, The superior aspects of the density outweigh the inferior aspects of the status of approvals and site size. Overall,the value indication for the subject property should be lower than the adjusted indicator from this comparable. Land Data No. 2 is slightly inferior to the subject property in the price per unit analysis due to the inferior location and inferior status of approvals. This comparable is slight]% inferior overall and the value indication for the subject property should be slightly higher than the adjusted indiciltor from this comparable. Land. Data No. 5 is similar in location, has a higher allowed density of development, a slightly inferior status of approvals, and a larger site size. The upward adjustments for the higher density of development, slightly inferior status of approvals, as well as the larger site size result in this parcel being inferior overall compared to the subject site. Therefore, the value indication for the subject property should be above the adjusted indicator from this comparable. Land Data No. 4 is inferior in location, has a higher approved density of development, a slightly inferior status of approvals, while the site size is similar. This comparable is considered to be inferior overall due to the inferior location,the higher density of development, and the slightly inferior status of approvals. The value indication for the subject property should be above the adjusted indicator from this comparable. 37 RFAt f57'ATE�NSULTAPv'"I'S The lower end of the reasonable value range from the analysis of the sale data appears to be above the adjusted value indicator from Land Data No. 2 ($197,160/unit), or approximately $200,000 per unit. The upper end of the reasonable value range from the analysis of the sale data appears to be below the adjusted value indicator from Land Data No. 3 ($235,463/unit), or approximately $230,000 per unit. Based on the comparative analysis performed,the indicated opinion of the market value range for the subject land parcel is from $200,000 to $230,000 per unit. The calculation of the value range from the price per unit analysis, based on the potential for the development of 5 units, is set forth as follows: 5 Units X $200,000/Unit = $1,000,000 5 Units X $230,000/Unit = $1,150,000 Say $1,000,000 to $1,150,000 Price Per Sq.Ft. Analysis The price per sq.ft. analysis was performed in the same manner as the price per unit analysis. All of the elements of comparison utilized in the price per unit analysis have also been utilized in the price per sq.ft. analysis. Note that the price per sq.ft.adjustment under the density analysis is the opposite as under the price per unit analysis. Under the price per sq.ft. analysis, typically the higher the density of development, the higher the price per sq.ft. indicator. Therefore an adjustment to reflect a lower level of density compared to a higher level of density would be a downward adjustment to the comparable with the higher density of development. On an overall basis after considering all of the elements of comparison discussed, Land Data No. 1, 3, and 5 are considered to be slightly superior to the subject property, Land Data No. 4 is considered to be similar, while Land Data No. 2 is inferior to the subject property under the price per sq.ft. analysis. A summary of the adjusted price per sq.ft. indicators cif\al iii for the subject site from the analysis of the land sale data is included in the following table. Safe Data Nu. Comparison Adjusted IS .Ft. 5 Slightly Superior $78.90 3 Slightly Superior $78.53 1 Slightly Superior $75.34 4 Similar $72.11 Inferior $55.92 Subject Pro rt $70 to$73 Land Data No. 5 is similar in location, has a higher allowed density of development, a slightly inferior status of approvals, and a larger site size. Under the price per sq.ft. analysis,the higher the density the higher the price per unit. The superior aspect of the higher density of development,outweighs the inferior aspects of the slightly inferior status of approvals and the larger site size. Overall, this parcc;l is considered to be slightly superior compared to 38 REAL ESTATE CONSULTANTS the subject site. Therefore,the value indication for the subject property should be below the adjusted indicator frortl this comparable. Land Data No. 3 is in a location that is considered to be similar overall and the density of development is superior due to the condominium density plus additional office density. The status of approvals is inferior and the site size is slightly larger. The superior aspects of the density outweigh the inferior aspects of the statu.s of approvals and site size. Overall,the value indication for the subject property should be lower than the adjusted indicator from this comparable. Land Data No. I is a larger parcel in size located in a slightly superior location in the City of Anaheim adjacent to a golf course. This parcel sold with a tentative tract map approvals for the development of 25 single-family homes, which is slightly inferior. This parcel has a lower density of development compared to the subject property, which is slightly inferior. The superior aspect of the location appears to more than offset the inferior aspects of slightly lower density, larger site size, and slightly inferior appro\als. Overall, this comparable is considered to be slightly superior and the value indication for the subject property shOLIId be slightly lower than the adjusted price per sq.ft. indicator from Land Data No. 1. Land Data No. 4 is inferior in location, has a higher approved density of development, which is superior, plus a slightly inferior status of approvals,while the site size is similar. This comparable is considered to be similar overall with the superior and inferior aspects being offsetting. The value indication for the subject property should be similar to the adjusted indicator from this comparable. Land Data No. 2 is inferior to the subject property in the price per sq.ft, analysis due to the inferior location and inferior status of approvals. The value indication for the subject property should be above the adjusted indicator from this comparable. The lower end of the reasonable value range from the analysis of the sale data appears to be slightly below the adjusted value indicator from Land Data No. 4 ($72.11/sq.ft.), or approximately $70 per sq.ft. The upper end of the reasonable value range from the analysis of the sale data appears to be below the adjusted value indicator from Land Data No. I ($75.34/sq.ft.), or approximately $73 per sq.ft. Based on the comparative analysis performed, the indicated opinion of the market value range for the subject land parcel is from$70 to $73 per sq.ft. The calculation of the value range from the price per sq.ft. analysis is set forth as follows: 16,038 Sq.Ft. X $70/Sq.Ft. = $1,122,660 16,038 Sq.Ft. X $73/Sq.Ft. = $1,170,774 Say $1,125,000,000 to $1,170,000 39 -Or REAL ESTATE CONSULTAA-IS Sales Comparison Approach Reconciliation The price per unit analysis resulted in a land value range from $1,000,000 to $1,150,000. The price per sq.ft. analysis resulted in a value range from $1,125,000 to $1,170,000. The greatest weight was given to the price per unit analysis since that is the unit of comparison that is most relied upon by developers. The price per sq.ft. analysis was given secondary weight since that unit of comparison is not relied as frequently as the price per unit analysis for residential land. In this appraisal both valuation analyses provide support for each other with overlapping value ranges. Based on the reasons set forth previously,the opinion of the market value for the subject land parcel is$1,150,000. The value opinion of$1,150,000 for the 16,038 sq.ft. site results in an indication of the value per sq.ft. of$71.70 and a price per unit indicator of$230,000 based the potential for 5 detached condominium units to be constructed. 40 RF L Esra n CaNSULTANIS VALUATION Based on the investigations and analyses undertaken and upon our experience as real estate analysts and appraisers, we have formed the opinion that the market value of the fee simple estate in the subject property, as of October 24, 2018, and subject to the Assumptions and Limiting Conditions set forth in this report, is as follows. ONE MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS $1,150,000 .4i .Z ��` - REAL ESTATE COiNSULTAN75 CERTIFICATION I certify that,to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses,opinions,and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal,impartial,and unbiased professional,analyses,opinions,and conclusions. - I have no present or prospective interest in the property that is the subject of this report,and no personal interest with respect to the parties involved. I have not performed appraisal services involving the subject property for this client within the 3 year period preceding the date of this report. I have no bias with respect to the property that is the subject of this report or the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. - My compensation for completing this assignment is not contingent upon the development or reporting of a predctermined �aluc or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. The reported analyses,opinions,and conclusions were developed,and this report ht:C'n pr c arLd,in conformity with the requirements of the Code of Professional Ethics & Standards of 11rofession.il Apllrcusal Practice of the Appralkill Institute,which include the Uniform Standards of Professional Appraisal. Praciicr (if the Appraisal Foundation. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Peter B. Finnerty has completed the continuing education program of the Appraisal Institute. I have made a personal inspection of the properties that are the subject of this report. No one provided significant real property appraisal assistance to the person signing this certification. I am competent to appraise the property that is the subject of this report based on my previous experience appraising similar types of properties. Respectfully submitted, Peter B. Finnerty,MAI Certified General Real Estate Appraiser California Certificate No. AGO01937 42 ADDENDA QUA LI FICATI0NS QUALIFICATIONS OF PETER B. FINNERTY, MAI PROFESSIONAL BACKGROUND Actively engaged in the real estate profession since 1977. President and Principal of Pacific Real Estate Consultants,Inc.,with offices at: 668 N. Coast Highway,Suite 1409 Laguna Beach, California 92651 Before starting Pacific Real Estate Consultants, was employed as Vice-President at Real Estate Analysts of Newport,Inc.(REAN),in Costa Mesa,California. Prior to that,was a Senior Appraiser, Bank of America, in Anaheim,California. PROFESSIONAL ORGANIZATIONS Member of Appraisal Institute,with the MAI designation LEED AP,Green Building Certification Institute Member of National Association of Realtors Member of California Association of Realtors Member of Orange Coast Association of Realtors Associate Member of Urban Land Institute INSTRUCTOR AIREA Basic Valuation Procedures Course AIREA Capitalization Theory & Techniques,Part A AIREA Capitalization Theory& Techniques, Part B How to Value your Corporate Real Estate Assets, Seminar for International Association of Corporate Real Estate Executives, Inc. Real Estate Appraisal 342,Coastline Community College Finance 448, Income Property Appraisals,California State University at Long Beach Appraisal Institute Appraisal Procedures Course Appraisal Institute Capitalization Theory & Techniques,Part B Appraisal Institute Advanced Applications Course Appraisal Institute Non-Residential Demonstration Appraisal Report Writing Seminar Appraisal Institute Small Hotel/Motel Valuation EXPERT WITNESS Superior Court of Orange County Superior Court of Los Angeles County Superior Court of Riverside County Superior Court of San Diego County Federal District Court Federal Bankruptcy Court Arbitration Proceedings LICENSES Licensed California Real Estate Broker Certified General Real Estate Appraiser,State of California EDUCATIONAL ACTIVITIES B.S., Real Estate Administration, Indiana University, 1976. Special courses in Real Estate: Principles of Real Estate Real Estate Appraisals Case Studies in Real Estate Real Estate Law Residential Construction and Design Survey of Real Estate and Land Economics Courses sponsored by American Institute of Real Estate Appraisers: Course I-A Principles,Methods,and Techniques of Real Estate Appraising Course I-B Capitalization Theory and Techniques Course 11 Urban Properties Course VI Introduction to Investment Analysis SCOPE OF EXPERIENCE Vacant Land Single-family residential sites, multi-family residential sites, commercial and industrial sites, acreage, planned communities. Residential Single-family residences,duplexes,apartments,condominiums,planned unit developments,mobile homes. Commercial Shopping centers (regional, neighborhood and community), retail stores, general office buildings, medical office buildings,car dealerships,banks. Industrial Single-and multi-tenant warehouses and manufacturing buildings,truck terminals,business parks,R& D buildings, garages,nuni-warehouses. Special Purpose Churches, veterinary hospitals, hotels and resorts, restaurants, theaters, mobile home parks, submerged tidelands, mixed-use developments,landfill properties,contaminated properties. PARTIAL LIST OF CLIENTS Lending Institutions American S:n ings&Loan Assn. Great Western S & L Assn. Bauk ai Arimiica Itrnne Federal S&L of San Dieco B.rnk of British Columbia Imperial S&L Assn. Belcrk Hills S &L \brit Sarvim"s Bank BuuLciIieldSaeings Mitxri hldffid"Wturers Bunk Cal itwni,r Caanaoiiani Bank \lrrtiouI Ciu;rranitie Trust Co. California Federal S & L Assn. Al;tirttla�_c Guaram� In., C'orh Cana-lian Commercial Bank P�rriIic Mulual Life Insurance Chemical Bank k;rinier Mortgage Uitit�ank San Dievo Ferieral S&L Assn. Columbia Savings&Loan SL^,unity 11;rciti Nat'l.Bank Coast Savings&Loan \alencia Bank Gibraltar Savings Western Empire Savings&Loan Glendale Federal S&L Assn. Wells Fargo Bank Goldman Sachs Public Agencies 1Surhai.k i_c_iti.gid School Dist. [)FMWC County Dept.of Real Property Services Calif.Dept.n� Real Estate Services Or;rn'-e C Cunt% Cllart el'�01 fico City of Irvine bolted Staler Postul Sure i�:c Feder:' [n,arance Corp. ( niltd Sdnle�; ;lrmv C'nnjrs tit Fngineers PC")h!;wil 'I tri,. Corponuion l rtucd Statl S JLISII�e Dejlsrtment Grove Unified School King County, �tia,hiu�tnir Developers and Landowners Birtcher-Pacific Norland Properties Butler Housing Corporation Nu-West Development Company Cadillac Fairview Homes West Pipefttters Welfare Education and Pension Carlton-Browne and Co.,Inc. Regis Homes Carma Developers(Canada) S,mt<i Anita Development Company Catena-Sandling Group D:run Development Save-Most Development,Inc. Genstar T&S Development Company The Irvine Company Trammel-Crow Company The Koll Company Valencia Corporation Lincoln Property Warmington Group Meister Company Robert P.Warmington Company Mola Development Company William Lyon Company Newhall Land&Farming Company Law Firms Davis&Digrazia McDermott,Will&Emery Gibson,Dunn&Crutcher Morrison&Foerster Lrtht iw v,, Nk+ vkins Paul,Hastings,Janofsky&Walker Lc%%is, D'Amaw. Brisbois,&Bisgaard Rhodes&Bidna McCutchen, Black,Verlager and Shey Rosenfeld,Meyer&Susman Rutan&Tucker Urland,Morello,Dunn&Maynard Corporations and Institutions AMF Voit,Incorporated W R.Grace Company ATO Corporation I- F Hutton Development,Inc. Baldwin United Corporation Kennz�tlr Leveiiihal & A,tioc University of California at L.A. 01Mt �a.SiliconCorporation Campeau Corporation Fluor C'orpoi,i ion f ATTACHMENT C PARK IN-LIEU FEE LETTER AND MEMO, 10129/2018 CITY OF TUSTIN Inter-Com DATE: October 29, 2018 TO: Justina Willkom, Assistant Director of Community Development FROM: David A. Wilson, Director, Parks and Recreation Services SUBJECT: Park Dedication Fees — 1381-1391 San Juan Street My office was requested to calculate Park In-Lieu Fees for the 0.37 Net Acres of Residential Zoned Land located at 1381-1391 San Juan Street. Pacific Real Estate Consultants conducted a professional real estate appraisal of the property to determine the value so that we could proceed with the calculations as per the provisions specified in the Tustin City Code Section 9331. Project Information: 0.37 net acres Standard Formula: 7.1 — 15 Factor: 0.0086 Value: $3,108,450.00 per acre Calculation: 0.0086 x $3,108,450.00 = $26,732.67 per dwelling unit Dwelling Units: 5 In Lieu Fee: 5 dwelling units x $26,732.67 = $133,663.35 If you have any questions or concerns please feel free to contact me at extension 3329. Regards, Dv-:.d A- W;.Q"s, David A. Wilson Director, Parks and Recreation Services 5'.Pat Duh .F_ i ATTACHMENT D PARK IN-LIEU FEE APPEAL FROM NASSIE ROWLETT LAW, 11/6/2018 3972 Barranca Pkwy., Suite 301, Irvine, alifornia 9260 NASSI E I ROWLETT LAW PH:(949) 757-14501 eFaxC(949)265-9041 REMOVED November 6, 2018 N0V a 7 2018 TUSUN PERSONAL DELIVERY ($1500 FEE FOR APPEAL ALSO ENCLOSED) ga d9WR OFFICE City of Tustin City Clerk, Planning Commission 300 Centennial Way Tustin, CA 92780 Re: Appeal of Parks and Recreation 10/29/2018 Park In-Lieu Fee Assessment for Final Tract Map-1 7665 at 1381-1391 San Juan St., Tustin CA 92780 Tustin City Code 9321h For Developer: Fariba Shaygan NexGen Management LLC 4040 Barranca Pkwy., Ste. 140 Irvine, CA 92604 To the Planning Commission for the City of Tustin: Our law firm represents NexGen Management LLC, the developer of the lots commonly known as 1381-1391 San Juan St., Tustin, CA 92780 ("Property"). On 1012912018, the Parks and Recreation Department ("P&R") issued a Park In-Lieu Fee Assessment of the Final Tract Map 17665 for the Property ("Assessment") (Ex. 1). Tustin City Code' Section 9321(b) provides that the subdivider shall pay a park fee on a per unit basis. The amount of such fee shall be based on fair market value of the amount of land which would otherwise be required for dedication. Ail section cites herein are to the Tustin City Code. 1 i BACKGROUND FACTS The Property consists of a 5-unit residential condominium and is zoned R312700. It is a combination of two lots, which total 16,117 square feet (.37 of an acre). NexGen's final tract map for the Property was recorded January 2.6, 2017 (Recorded final tract map, Ex. 2). As requested by P&R, in September 2018, NexGen submitted to P&R for approval an MAI Appraiser, BBG Inc. (Ex. 3). P&R explicitly approved BBG (Ex, 3), and thus, NexGen retained BBG at its own expense. On September 25, 2018, BBG's Appraisal was submitted to the City (Ex. 4). It showed a valuation of$560,000 for .37 of an acre. On October 2, 2018, P&R rejected the reasonable appraisal of BBG, the MAI Appraiser which it had previously approved "[b]ecause the appraised value is inconsistent with the appraised values of other recent subdivision sites in the City" (Ex. 5). Instead, P&R spent $4,700.00 of City funds for another appraisal by Pacific Real Estate Consultants ("Pacific")(Ex. 6). Pacific's Appraisal considered, inter alfa, recent values one year and a half after the 1381-1391 San Juan final tract Map was recorded. Its valuation was more than double BBG's-- $1,513,513.51. BASIS FOR APPEAL: WHY THE ACTION TAKEN BY THE DECISION BODY SHOULD BE MODIFIED OR REVERSED NexGen appeals the Assessment on several grounds as follows: I. THE FAIR MARKET VALUE SHALL BE DETERMINED BY A MASTER APPRAISAL INSTITUTE MAI APPRAISER ACCEPTABLE TO THE CITY AND AT THE EXPENSE OF THE SUBDIVIDER Section 9331(d)(3) states: The fair market value shall be determined by a Master Appraisal Institute (MAI) appraiser acceptable to the City and at the expense of the subdivider, and the determination shall consider the value of a buildable acre of land at 3 the time the final map is to be recorded, as if otherwise the land would be fully developed to the residential density shown on the tentative map for I 2 i which the fees are required. Here, the subdivider, NexGen followed all the city requirements and provided the proper appraisal for calculation of the park fee. NexGen submitted to P&R for approval an MAI Appraiser, BBG Inc. (Ex. 3). P&R explicitly approved BBG (Id.), and thus, NexGen retained BBG at its own expense. P&R's retention and use of another appraiser, when there is a legitimate appraisal prepared by MAI appraiser pre-approved by P&R, are not authorized procedure and improper. Thus, Pacific's Appraisal should be disregarded. II. BBD'S APPRAISAL PROPERLY CONSIDERED VALUES OF A BUILDABLE ACRE OF LAND AT THE TIME OF THE FINAL MAP IS OR IS TO BE RECORDED (112612017 i Section 9331(d)(3) states in pertinent part, "The [FMV] determination shall consider the i value of a buildable acre of land at the time the final map is to be recorded, as if otherwise the land would be fully developed to the residential density shown on the tentative map for which the fees are required." NexGen's final tract map was recorded January 26, 2017 (Recorded final tract map, Ex. 2). In accordance with the guidelines of the City Code, BBG's Appraisal properly considered the values of a buildable acre of land at the time of the final map is or is to be recorded (Ex. 4). The values used in BBG's Appraisal are all shortly before or shortly after January 26, 2017 (Ex. 4, pages 37-40). In contrast, Pacific's Appraisal for P&R, improperly and erroneously considered property values months and over a year after the time the final map was recorded-- June, October, i August of 2017 and March and June of 2018 (Ex. 6, pages 26-40). The valuation comparables used by Pacific are irrelevant, unacceptable and/or inconsistent with the requirements of Section 9331(d)(3). Acccrdingly, Pacific's Appraisal should be disregarded as an invalid basis for the calculation of the park fees. 3 i III. BBG'S APPRAISAL PROPERLY CONSIDERED VALUES OF PROPERTIES SIMILAR IN CHARACTER, LOCATION, ZONING, SIZE AND TIME OF THE RECORDING OF THE FINAL TRACT MAP (1128120'17) Section 9331(d)(3) also provides: For purposes of this section, the determination of fair market value of a buildable acre shall consider, but not necessarily be limited to, the approval of and conditions of the tentative subdivision map, the General Plan, zoning, property location, off-street improvements facilitating use of the property, and site characteristics of the property. BBC's Appraisal properly considered the values of properties during the stated requisite time frame and with similar zoning, property location, off-street improvements facilitating use of the property, and site characteristics of the property (Ex. 4, pages 37-40). Contrarily, Pacific's Appraisal improperly evaluated properties considerably different and distinguishable in character, location, zoning and size. The lots considered therein are: 1) Zoned RS-4, AR, NMU and PC, which is completely distinguishable from the R-3 zoning and character of the Property (Ex. 6, p. 26-40). 2) Much larger in square footage: 97,030 square feet, 17,628 square feet, 29,986 isquare feet, and 296,817 square feet (Ex. 6, p. 26-40). The lot sizes considered by BBG range from 9148 square feet, 26,933 square feet, 19,689 square feet, 5,227 i square feet, 22,880 square feet, which are closer to the 16,000 square footage of the Property (Ex. 4, pages 37-40). Accordingly Pacific's Appraisal should also be disregarded as a basis to calculate the park fees, because it did not use lots that are similar in zoning and/or size to the Property. SPECIFIC ACTION PLAN OR RELIEF SOUGHT NexGen respectfully requests that: 1. The Appraisal prepared by BBG be used as the basis to calculate the park fees. 2. The Appraisal prepared by Pacific Real Estate Consultants be disregarded. 4 4 Damages for de 1,1, r, i-. a. Loss of rent due to inability to obtain certificate of occupancy for 5 weeks and additional several weeks for the hearing and Planning Commission's decision at the rate of $3,800 per month given November 21, 2018 estimated date of completion. b. Construction loan interest payments at the rate of 6.75°/x. Notwithstanding the above, NexGen is open to discussions with P&R for a mutually agreeable solution. It also reserves its right to provide supplemental, additional and new information and documentation. Thank you for your consideration and attention to this matter. Sincerely, jx��� Catherine Rowlett, Esq. Exhibits attached 5 1 j i N I r 4 E EXHIBIT 96 P i { I � Community Development DepTuSTINartment z a u October 29, 2018 5 Fariba Shaygan HISTORY NEXGEN Management LLC BUILDING OUR FUTURE HONORING OUR PAST 4040 Barranca Parkway, Suite 140 Irvine, CA 92604 SUBJECT: PARK IN-LIEU FEE FOR FINAL TRACT MAP 17665 AT 1381-1391 SAN JUAN STREET Dear Ms. Shaygan: Please find enclosed a Memorandum from David A. Wilson, Director of Parks and Recreation Services,addressed to Justina Willkom, Assistant Director of Community Development and dated October 29, 2018, which provides the calculation and amount due for the Park In-Lieu Fees for 1381-1391 San Juan Street. This is your official determination that the Park In-Lieu Fee payment that is due to the City of Tustin is $133,663.35. If you object to the fair market value as determined by the MAI Appraiser, Peter Finnerty, you may appeal the determination to the Planning Commission. As the subdivider, you have the burden of proof in contesting the appraised fair market value. If you wish to appeal the appraised fair market value as referenced above, you must file your appeal within ten (10)calendar days of the date of the determination to the City Clerk, along with a fee equal to half of your application deposit, which was a $3,000.00 deposit for the subdivision map. Based on the deposit, the appeal fee is $1,500.00. Pursuant to Tustin City Code 9321h, the appeal shall be made in writing and shall specify the decision appealed from, the specific action or relief sought by the appellant in the appeal, and reasons why the action taken by the decision body should be modified or reversed. Timely filing of a written appeal will automatically stay all actions and put in abeyance all approvals or permits which may have been granted; and neither the applicant nor any enforcing agency may rely upon the decision, approval, or denial or other action appealed from, until the appeal has been resolved. Failure to file a written appeal in accordance with this subsection shall constitute a waiver thereof. The appeal shall be scheduled for consideration by the Planning Commission within thirty (30) days of receipt of an appeal. If there is no regular meeting of the Planning Commission within the next 30 days for which notice can be given, the appeal may be heard at the next regular meeting for which notice can be given. 300 Cen[ennial Wav, Tustin, CA L)2-18(1 0 P: (7 141 573 31uo • } i7141 573-31 13 • WW�V rusfinca Inh 1381-1391 San Juan Street October 29, 2018 Page 2 I have enclosed a copy of Tustin City Code Sections 9321 and 9331 and a copy of the appraisal for your convenience, Should you have any questions, please do not hesitate to contact me at sreeksor (714) 573-3016, Sincerely, Scott Reekstin Principal Planner I Attachment: ' Memorandum dated October 29, 2018 Tustin City Code Sections 9321 and 9331 Appraisal Report dated October 26, 2018 I cc: Shaygan Family Trust, c/o Farzad Shaygan, 19 Spike Moss, Irvine, CA 92603 S:\Cdd\CDD Staff(cirrent)SCDTT\Subdlvisbons\Park!n-lieu fee deterrnina:lon ietter.doc I I I f ti t i CITY OF TUSTIN Inter-Com ` i i DATE: October 29, 2018 TO: Justina Willkom, Assistant Director of Community Development FROM: David A. Wilson, Director, Parks and Recreation Services SUBJECT: Park Dedication Fees — 1381-1391 San Juan Street My office was requested to calculate Park In-Lieu Fees for the 0,37 Net Acres of Residential Zoned Land located at 1381-1391 San Juan Street, Pacific Real Estate Consultants conducted a professional real estate appraisal of the property to determine the value so that we could proceed with the calculations as per the provisions specified in the Tustin City Code Section 9331. Project Information: 0.37 net acres Standard Formula: 7.1 — 15 Factor. 0,0086 Value: $3,108,450,00 per acre Calculation: 0.0086 x $3,108,450.00 = $26,732.67 per dwelling unit Dwelling Units: 5 In Lieu Fee: 5 dwelling units x $26,732.67 = $133,663.35 If you have any questions or concerns please feel free to contact me at extension 3329. Regards, '1 N W444, David A. Wilson i Director, Parks and Recreation Services i i I 1 1 i f ' 4 i i i f 1 f r i t 1 EXHIBIT 11211 SHEET 1 OF 2 SHEETS ALTENTATIVE NO..17666 TRACT N O. 17665 A^,lZ 17685 TED AND PIED AT THE 1 NUMBERED LOT REQUEST OF t S LETTERED LOT IN THE CITY OF Tt,S IN,COUNTY OF ORANGE, STATE OF CALIFORNIA TITI.Eass GROSS AREA-16,038 S F NET AREA.16,967 S.F. BEING A SUBDIVISION 0r LOTS 15 AND 20,BLOCK A OF TRACT N0.632, DATE :E4ne_4rrl� PER MAP RECORDED IN BOOK 20,PAGE 30 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TIME R`A gL FEE:$-. V,?-- FOR CONbOMINIUM PURPOSES "sTRuaAENTIi°.z GILBERT ENGINEERING COMPANY,INC, ED ECKER7.L.S 52711 BOOK!" _PAGE 7Z M/-AA DATE CF SURVEY:NOVEMBER,2015 ' HUGH NGUYEN COUNTY CLERK-RECORUER OWNERSHIP CERTIFICATE: WE,THE UNDERSIGNED,BETNG ALL PARTIES HAVING ANY RECORD TITLE INTEREST IN DY THE.LAND COVERED BY THIS MPP,DO HEREBY CONSENT TO THE PREPARARTION AND RECORDATION OF SAID MAP,AS SHOWN WITHIN THE DISTINCTIVE BORDER LINE. WE ALSO HEREBY DEDICATE IN FEE TITLE.TO THE CITY OF TUSTIM LOT A FOR PUBLIC SIOEWALK AND STREET PURPOSES AS SHOWN ON SAID MAP. SURVEYOR'S STATE. T: THIS MAP WAS PREPARED SY ME OR UNDER AAI'DIitECTION ANO IS BASED UPON A FMLO SURYFY I IN CONFORMANCE WITH THE REQUIREMENTS OF THE SUBDIVISION,MAP ACT AND LOCAL i ORDINANCES AT THE REQUEST OF FARZAD S+iAYSAN ON NOY,1,HIS.1 HEREBY STATE THAT (] NEXGEN MANAGEMENT,LLC,TRUSTEE OF THE SAN JUAN STREET LAND TRUST, ALL MONUMENTS ARE OF THE CHAR-1CTER AND DCCUPY THE POSITIONS INDICATED AND THAT DATED AUGUST 27.2014,RECORDED NOVEMBER 1S,2014 AS INSTRUMENT NO. SAID MONUMENTS ARE 8UFFICIENT TO ENAELE THE SURVEY TO BE RETRACED.I HEREBY 2014000405S72,OF OFFICIAL RECORDS OF ORANGE COUNTY. STATE THATTHIS FINAL MAP SUBFTANTIALly OChFDRMS To THE APPROVED TENTATIVE MAP. N,7RU9TEE -A" ED ky n-it �`wE ED ECKERT-L.S.5279 EXPIRES'DEC.31.2017 CEI,TLQ 'CE OF APPROVAL: ON BBEHALF OF THE CITY COUNCIL,PURSUANT TO TUS'TN CITY CODE SECTION 9326;AND IN ACCORDANCE WITH SECTION N48BID)OF THE S'UBDMSION MAP ACT,I _ HEREBY APPROVE THIS MAP, A h 3'ARY PUBLIC OR UTHER OFFICER COMPLETING THIS CLE-f FICATF. VE P.PtS ON Y THE IDENTrIY OF THE INDIVIDUAL WHOSIGNED THE DA7E0 THi$,f __DAY OF. Q G rbc _.2$S6 I DC EN 1011,HICh THIS CERTIFICATE IS ATTACHED AND NOT THE I i TC fF. J F _ACCURACY,OR VALIDITY OF THATDOCUMENT. '. I STA-F CF LA Ca,1h Fr CF - r )�SS ELkZA8ETH S!NS,,C wK ON_. t �ej� 'SkFOIRE ME, '�)w..if AA �+' ,wf✓.�. DI?E OR pF C� AML�t11TY 0E`IELOP�lIEV7 PERSONALLY Ai.:.`:E W110 PAW o 1C aeL C,y THE BMISOF SAITSFACTORY EVIDENCE TO BE THE PERSON Y1"HOSE a IHEREe �IA1P THAI IA .L)ASi h 1]D THIS MAP ANOEOUND IT TO BE NAME ARE J511GWED TO THE WiTHI NSTRUMENTAND ACKNOWLEDGED TO SUBS T I f i N 'R.!� I"_'TENTAY'.VE MAP,IF REQUIRED,AS FILED TIIATH HE -xeCUTEDTHEWENHE EIRALIFIRMEDC.APACITYY AND THAT WITH le wnFC:4rr AP:'P E FY TIE ITYPLANNRIGCOMMISSION;THAT ALL SYtI HEIR !0„IATURE94ONTHE INS'UMENTIHEKRSO)".ORTH ENTIIYUPON PRCV`3i N ,Dl NF SU5D. S t ,?A%A_,AND CITY SUBDIVIS!ON REGJLATIONS BEIiALf WHIG' -.E PERSON(S(ACTED,EXECUTED THE HBTRUAIEKT. HAVE BEEN COMPLIED WI Tn.. I CERTIFYVNCFA I-"-:W4LTY OF pER,0.JRY UNDERTHE LAWS OFTHESIATEOF CAUFORNtA THAT IN ADDF;;ON,: THE FOREGOING PARA"H IS TRUE AND CORRFOT. ON BEHALF OF THE CITY COUNCIL,PURSUANT TO TUSTIN CITY COOP.SECTION 8326, WITNESS MY HAND ANO OPTICAL SEAL AND IN ACCORDANCE WITH SECTION 68458(01 OF THE SUBDIVISION ACT.I HEREBY ACCEPT.SUBJECT TO IMPROVEMENTS,THE FOLLOVONG DEDICAT',ON: MY PRINCIPAL PLACE OF BUSINESS LOT A DEDICATED!N F`rG TITLE FOR PUBLIC SIDEWALK AND STREET PURPOSES. /lo6(FaWALSO APPROVE SUBJECT MAP PURSUANT TO THE PROVISIONS OF SECTION IS IN d7,- . .COUNTY. 6043Nm)(3)(A)OF THL SUDDAr1810N MAA ACT (signature) NOTARY PUBLIC IN AND 'LklA'1lJE� ' FOR SAID STATE DATEC THISIg_GAY OF �' ,2018 ..F� ' t4ii .r V. AA (Print name) MY COMWEISION EXPIRES: s lyp5�� OOLK;rl4IIq S.STACK,CITY EN3INEER,CITY OF"TIN 'S ME.$4637 TRATION EXPIRES:DECEMBER 31,2017 COUNTY SURVEYOR'S STATEMEN]� [HEREBY STATE THAT I NAVE F"%41NFD THIS MAP AND HAVE FOUND THAT IT CONFORMS`NITH MAPPING PROVISIONS OF THE SUBOIVISON MAP ACT AND 1 ' AAA SATISFIED SATO MAP IS TECHN!CAL.Y CORRI=CT, OA7EC THIS 23- DAY CF_ w wry ,2017 — uo ��..KEVIN R.HILLS,COUNTY SURVEYORL.S 6517 GOON Y TREASURER:_TAX 00?1ECTOR'3 CERTIFICAT E ! STATE CF CALIFORNIA'63 COU'N`Y OF ORANGE) I HEREDY CERTIFY THAT ACCOROW0 TO THE RECORDS OF MY OFFICE,THERE ARE NO LIENS AGAINST THE LAND COVERED BY THIS MAP OR AN"PART THEREOF } FOR UNPAD STATE,COUNTY,MUN101PAL OR LOCAL"AXES OR SP---CAI ASSESSMENTS # COLLECTED AS TAXE;;MES NOT YES �u1s1E1NS'�HM1:P�+1AVE$EBI %GNATURE OMISSIONS ON 44 if. 4616�kg&04W4TP�.. PURSUANT TO THE PROVISIONS OF SECT<N 3 ir;;a ,"t iF SUBGNI5JN / MAP ACT,THE FOLLOWING SH3NA'Tu RF A : _=`, F''("" C' DATED TH49q-,DAY OF 2018 SOUTHERN OALIFORNIAGAS COP-1,14'Y Al F`„EMENTFOR PIPELINES RECORDED SEPTEMBER 7 'oe h;?JCr �';' p::*c 249❑F DEEDB1 + (UNABLE TO PLOY FROM RECORD) 50Lft1VI IJ LAM FORMA EDISON CC14?ANY I-OL"R OF FSJ EAISE!+SC,�ETAFFw SHARI L FREIDENRICH BY: !JNDE.RGRdJNDERposELAL9L)PPLY/LNflCgMUNTICAT{- BY57Mn� COUNTY TREASURER-TAXCOLL_CTOR TREASUR f LLL�.,TO 1NCIDE.NTDL.i1(1RpDSESRECORDED,HjM E 22,�I6 AS1NSTFLUMCTST TM, 7D16I10D'L162B52 DFOf:"ILIALPVLORDS.. SHEET 2 OF 2 SHEETS /^1 �\ �'1/�►r ALL OF TENTATIVE TRACT MAP TRACT NO.�. 1 7�' 65 NO.17685 W �J /// V V VVV 1 NUMBERFD LOT I LETTERED LOT IN THE CITY OF TUSTIN, COUNTY OF ORANGE,, STATE OF CALIFORNIA GROSS AREA=18,038 5.P NET AREA d15961S.F. FOR CONDOMINIUM PURPOSES MONUMENT NOTES GUIERT ENGINEERING COMPANY,INC, ED ECKE:RT•L S.5.73 iFOUNC AS NOTED DATE OF SJE,VE'-',NCVEMH�'R.2016 OCS OPS CONTROL STATION MONUMVNT PER. DATUM STATEMENT R:'COROS ON FILE,IN THE OFFIGF.OF THE -_ (TRANCE COUNTYBURYEYOR COORDINATES SMOW'N ARe BASED ON THE CALIFORNIA 000RGPIATe SYSTEIA(OCS71 q g IN 2,27,,3d13a.E 6,088,47[=�_ O r I.P.,LB 6278.FLUBM-TO BE ORT ZONE VL 1813 NAD[3007.00 EPOCH OCS G%AD.IUSTNENTJ,.LLL D15TANCES SHOWN TO.PUNCHED 2 114'O.c,s 1311.44S CAP7c .4SRPFu ARE OR011NO UNLOS OTHERWISE NOTED.TC OBTAIN ORD DISTANCES MJLTIPLY 714E BURV�,1' NOTES OROL9UDWANCEDYTHS COOKAp6N FACTOR CFU9995179SPECUTC TO THIR PROJECT. a'OEC 1R80',CN.O.0I'INWELL MOF:P.I AL S 19)6 I F-IN0ICATP.B RPOORO PER TRACT No 632.M.M.20730 CR 2003.7254 ] IN0ICATEB RECOROPER TRACTNn.4334,M.MA53713.14 { I-INPICATEBHECURO PER TRACTNa.43`17,M.M.t62717.18 BASIS OF BEARING NATE OR -INDICATES CORNER RECORD— TAE PEAR*=940Am ICON ARF eAsm CN THE ar-AFA 0 OEPREEN ORARM COUNTY ; SURlrt17OR8 ND91zaNrLL Og07ROL STATIC«OP.S.N'a 4s26AY0OP.S,No 4819 wm BRYAN LANCE DRIVE N76.6F'Ir%PER REOORDRON Pit N TNF.OFFICE OF THE DRA14OF COUNTY ailMTIR �A -- �_ FO SPK.W.8 rAO.L.S.8424, f PER C.R.84.217.ON.Ir A IN 1 v TR 4317 _ SCALE 1" W ! 002•LP A TAO.RCE 10170.PFA TR NO MV 152/11— 82.01'PER ON 2909.19'13 - r L2 �� 4317.M.M.15m7-1e,0N.r N 4 1.9P9' f 9'309Iw f - I I 30 NE'LY LINE OF TRACY NO.e32 M_M 2W,4 ESTARLIAME13 PER FCUNO MOMMENTE, FD.LEAD.TK a TAO, M i (N 5.07'" [.130.42} 3147 PER CA 20WA923 I;11,�'_ N49-102rw _ 3041 1 L[ / u�6s E ABANDONED PER BOOK 5804.173 O,R...—N,o- 7.- FD.SPK.a W.ILLEGIBLE !! M eo°OT WI (2To.a7l3ff FLUSH,PER CR 2016.1774 x,31' ACCEPTED AS E.O. ! NT.Y LINE OF LOTS 1 ARD 10,BLOCK A.TRACT NO.832,-7 y M.M.2030 ESTABLISHED PER SAM 7RAC7 1 '10 �-' 'c f I 49'Jo'32.09 � ! 0 0!3'P40 —I F6 TAO ON WALK L8 4489 1 700.11923 PER OR 20W-423uj f y Cry 2003-1923 > !! I { I 1 1 N,9.10'35• Q r II F 1 C --- cN V-127 M•TAD ON WALK.La 4469 rf 1- ( j 1 PER CR203•:923 W t,ff I 3 12 9 Ir Z1 N 49-MVP W F 1 w I 3.97 f I �• .-..._ —.-. _ 3.,1' R FC LE-1—RC. 1 — — GN xCt uta 19104 PFA t 82001-1923 1 ANDREWS STREET4 � I 7 TR 163 1J N 49 •or 9 -_y-- — ,...,_FD.LEAD WITH MAIL .q —. 6J.. MV 2t]/3C --. ----- - HOLE PER OR 2003-1923 1 I 6 15 I I 1 7 - 16 4LOT A �f } SEWER EASEMENT ! 1 � 17 Lil ' DETAIL or 1 a 30' I 3D NF.'LY L1Nes OF LOIS 19-23, I1NCL.UME•®LOCM A,TRAOT NO,832 M �W=90TA!309"EmBySCI!FASEAIENT PESO k-PRORATION PER SAID"ACT REC..NNE 22.2018 AS ER 270.39'RID 9r I 1 g I O INET NO.tat 6CQ02a2962iso ar) 3! 1 19 $ 20 Z !nr _ r Lu Lu �, 1 LOT $;1 $r ``I 22 23 W Lu ! SAx NENET T �' i TR 1632 � I z15.057 8 !r C7 1w A ft E'"Ea MtJ 12c)/70 ¢ , !r y 3Q ea SWC `s^ A I I 3D e O tin = I (IBC e0 (27487) I z rr! m x 14.x' LOT A g kla'4z7ryY o VVV — 41ST SII (3396ra — e r11E} — ta3oe61 r 1 1]1161' `,f/- 33942' 19061• 33D 13 i--— k4rwiopw —'�r 681 25 N (841 75) SAN JUAN STREET1 PO.AVL a TAG w FD BPK aw 1LL�DIe:.E- t .LS 002, FLUSH,PER CR 2WD•942 I ^, 11 PER OR 97479 FLUSH FD.W24.BRASS N 7TAO, L S.6824,PPA CR 97-430 I ,p a 1 EXHIBIT "3" From: fariba shaygan 17r t�>> nacbell net B Subject: Scotts email telling me the director approved us using B8G please include as exhibit of the appeal Date: November 6,201 Bat 5:11 PM To: Catherine Rowlett niasierowlett cont Cc: Daniel Massie rlar l assterowlen corn, FARIBA SHAYGAN faribas_'parbell net Begin forwarded message. From: "Reekstin, Scott" <SReekstin@tustinca.org> Subject:RE:another company for tustin land appraisal Date: September 11, 2018 at 11:15:57 AM PDT To: fariba shaygan 4aribas(ipacbell.net> Hi Fanba. s received approval from the Parks and Recreation Department for you to use Mr John Browne with 88G to do the new appraisal Attached is an excerpt from the Tustin City Code which states "The fair market value shall be determiner)by a Master Appraisal Institute(MAI)appraiser acceptable to the City and at the expense of the subdivider,and the determination shall consider the value of a buildable acre of land at the time the final map is to be recorded, as if otherwise the land would be fully developed to the residential density shown on the tentative map for which the fees are required If more than one(1)year elapses between the appraisal and recording of the final map,the City will require that a new appraisal be prepared at the expense of the subdivider For purposes of this section,the determination of fair market value of a buildable acre shall consider,but not necessarily be limited to the approval of and conditions of the tentative subdivision map. the General Plan, zoning, property location.off-street improvements facilitating use of the property,and site characteristics of the property- Please forward this information to your appraiser Thanks Scott -----Original Message----- From fariba shaygan<faribas@pacbell.neb Sent Monday.September 10. 2018 7 44 PM To Reekstin, Scott<SReekslin@tustinca.ora> Subject He another company for tustin land appraisal Ok I will ask him and find out On Sep 10. 2018, at 4:49 PM, Reekstin,Scott<SReekstin@lushnca.orq>wrote: The Tustin City Code only allows us to accept appraisals by MAI designated appraisers -----Original Message----- From fariba shaygan<faribas@j;jg_r=belt.net> Sent Monday September 10,2018 4 17 PM To Reekstin. Scold<SReekstin@tustinca.org> Subject. Re another company for tustin land appraisal Not sure but it was acceptable to city of Bell flower and they did not have any problem with it On Sep 10.2018, at 4:02 PM,Reekstin, Scott<SReekstin@ tusttnca.orq>wrote. Are you sure that this appraiser is MAI designated) I tried to look him up on the MAI website and could not find him listed. ----Original Message--- From lanba shaygan<fanbas@ acp__,_bell.neb Sent Monday,September 10,2018 3 36 PM To Reekstin, Scott<SReeksfin@tustinca.org> Cc Farzad shaygan<Farzadsh@pacbell neb;Fariba Shaygan<fanbashaygan427@gmai1.com> Subject another company for tustin land appraisal Hi Scoff. Here is another company that we used for our Bell flower project. Farzad wants me to use this company Can you please also run this company by the city and get them to approve him as our second appraiser Thank you. Fariba 11 parkland dedica...t.docx i i i i i i i i i i i i i EXHIBIT "4" i' AN APPRAISAL REPORT OF RESIDENTIAL DEVELOPMENT SITE 1381& 1391 SAN JUAN STREET TUSTIN, ORANGE COUNTY, CA 92780 FOR MS. FARIBA SHAYGAN 4040 BARRANGA PAR"'AY, SUITE 140 IRVINE, CA 92604 Dale of 1'alualion, .els Is. September 25, 2018 Date of Report. September 25, 2018 BY BBG, INC. 11440 W. BERNARDO COURT, SUITE 104 SAN DIEGO, CA 92127 BBG September 25,2018 Ms. Fariba Shaygan 4040 Barranca Parkway,Suite 140 Irvine, CA 92604 Re: Residential Development Site 1381&1391 San Juan Street Tustin, CA 92780 Dear Ms. Sha�.gan: We have appraised the above referenced property, the conclusions of which are set forth in the attached Appraisal Report. The type and definition of value sought in appraisal of the subject was an "As Is" Market Value opinion of the fee simple interest in the subject's land only, with the hypothetical condition that the building improvements do not exist. The Land value is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. The report is subject to the general underlying assumptions and limiting conditions cited in the attached report. The subject of this appraisal includes two contiguous parcels totaling 16,117 square feet of land located on the southeast comer of San Juan Street & Utt Drive in Tustin, Orange County, CA. The subject has been developed with 5 SIR homes. Per the scope of the assignment,we are appraising the subject's land only. The owner purchased the subject as vacant in 2008 (I-ot 01) and 2013 (I of 02) with a SFR on it that was generating income. The intended users of this report are Ms. Fariba Shaygan and/or City of Tustin. Use by others is not intended by BBG, Inc. Furthermore, the intended use of this appraisal report is to estimate the market value for purpose of calculating the Park Fees. The report has been prepared in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Foundation, as well as the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. SAN DIEGO 1144C '., 3E^NA:RCC 'ZOO,=T + STE 104 E E • Ms. rariba Shaygan E September 25, 2018 Page 2 In view of the facts and data in conjunction with the appraisal, it is the opinion that the "As-Is" Market Value of the fee simple interest in the subject's 16,117 square feet of land, as of September 25,2018,was as follows: E $560,000 . Y This appraisal is not subject to any extraordinary assut*fions, the appraisal is, however, subject to the following hypothetical condition; • 'Ile scope of this assignment was to estimate the Market Value opinion of the fee simple inter- a est in the subject's land only, with the hypothetical condition the-. the building improvements do not exist. The Land value estimate is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. The use of this Hypothetical Condition may have affected assignment results. Exposure Time/Marketing Period Based on exposure times of comparable sales and interviews with active participants in the local market, the Market Value opinion could be achieved with an exposure time of 6 to 9 months. This letter is intended only to transmit the attached report. However, it is considered a permanent part of the report and, therefore, must remain attached to the same for the opinions of value concluded therein to remain valid. Our firm appreciates the opportunity to have performed this appraisal assignment on your behalf. If we may be of further service,please contact us. Respectfully submitted, Bl3G, Inc. John M. Browne,MAI California State Certified General Real Estate Appraiser State and License #AG 036348 i i I I - TABLE OF CONTENTS SUBJECT PHOTOGRAPHS.......................................................................................................................1 SUMMARY OF SALIENT FACTS.............................................................................................................5 ASSUMPTIONS AND LIMITING CONDITIONS..................................................................................6 CERTIFICATION.....................................................................................................................................10 INTRODUCTION.....................................................................................................................................11 REGIONAL AND LOCAL AREA ANALYSIS.........................................................................................14 RESIDENTIAL HOUSING MARKET OVERVIEW ..............................................................................25 SITEANALYSIS........................................................................................................................................27 HIGHEST AND BEST USE ANALYSIS......................................................................... ........................32 REAL ESTATE TAX ANALYSIS..............................................................................................................33 APPRAISALPROCESS..............................................................................................................................34 SALES COMPARISON APPROACH OF LAND (AS-IS)........................................................................36 RECONCILIATION AND FINAL VALUE CONCLUSION.................................................................41 EXHIBITS..................................................................................................................................................42 i BBQ,Znc. 4 SUBJECT PHOTOGRAPHS ALL PHOTOGRAPHS TAKEN OCTOBER 31, 2016 MR _�•_'�-._`- °� ,;fir,', # � r�"a r not Lift View of subject looking south across Utt Drive OF M Nk View from corner of Utt Drive and San Juan Street BBG, Inc. Page 1 1381 & 1391 San Juan Street SUBJECT PHOTOGRAPHS i View looking south along San Juan Street,subject on the left 4 Y View looking east dawn Utt Drive,subject on the right BBG, Inc. ' Page 2 1381 & 1391 San Juan Street SUBJECT PHOTOGRAPHS OV, 1! IL View looking northeast across San Juan Street View of subject site looking south 8BG, Inc. Page 3 1381 & 1391 San Juan Street SUBJECT PHOTOGRAPHS i View looking; northeast across site 1 Utilities on-site BBG, Inc. Page 4 1381 & 1391 San Juan Street SUMMARY OF SALIENT FACTS Property Residential Development Sita 1381 & 1391 San Juan Street 1 Tustin, CA 92780 Assessor Parcel Numbers (APNs) 500-081-01 & 02 Date of Inspection October 31, 2016; no new inspection was made per the scope agreed upon with the client. I Dates of Valuation As-Is: September 25, 2018 Date of Report September 25, 2018 Interest Appraised Fee Simple interest Physical Data Land Area 16,117 SF (0.37 Acres) Flood Plain 'Lone X500, Panel No. 060235 00(159), 2771 Utilities All available to site Zoning Classification Multiple Family ResiLicti lal ,R 3 Status Legal conforming use as pr(gio,eUd Highest and Best Use "As If Vacant" Multifamily development to include detached homes. As Is Value Indications Sales Comparison Approach $560,000 Income Capitalization :Nppr0�.ic1-. Not applicable Cost Approach Not applicable i As Is Market Value Opinion $560,000 ($35 P5F of Land) }1 Exposure Time 6 to 9 months l Marketing Period 6 to 9 months I BBG, Tnc. Page 5 1361 & 1391 San Juan Street I I ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report has been madc wirh the follc)wing general assumptions: 1. Any legal description or plats reported herein are assumed to be accurate.Any sketches, surveys, plats, photographs, drawings or other exhibits are included only to assist the intended user to better understand and visualize the subject property, the environs, and the competitive data. We have made no survey of the property and assume no responsibility in connection with such mat- ters. 2. The appraiser has not conducted any engineering or architectural sun�eys in connection with this appraisal assignment. Information reported pertaining to dimensions, sizes, and areas is either based on measurements taken by the appraiser or the appraiser's staff or was obtained or taken from referenced sources and is considered reliable. No responsibility is assumed for the costs of preparation or for arranging geotechnical engineering, architectuc.:l, or other types of studies, i surveys, or inspections that require the expertise of a qualified profs sional. 3. No responsibility is assumed for matters legal in nature. Title is asswned to be good and marketa- ble and in fee simple unless otherwise stated in the report. The prup<•.,y is considered to be free ' and clear of existing liens,easements, restrictions,and encumbrances,except as stated. 4. Unless otherwise stated herein, it is assumed there are no encroachments or violations of any zon- ing or other regulations affecting the subject property and the utilization of the land and improve- ments is within the boundaries or property lines of the property described and that there are no trespasses or encroachments. 5. BBU, Inc. assumes there are no private deed restrictions affecting the property which would limit the use of the subject property in any way. 6. It is assumed the subject property is not adversely affected by the potential of floods; unless oth- erwise stated herein. 7. It is assumed all water and sewer facilities (existing and proposed) are or will be in good working order and are or will be of sufficient size to adequately serve any proposed buildings. 8. Unless otherwise stated within the report, the depiction of the physical condition of the improve- ments described herein is based nn visual inspection. No liability is assumed for the soundness of structural members since no eni� ncering tests were conducted. No liability is assumed for the con- dition of mechanical equipment, plumbing, or electrical components, as complete tests were not i made, No responsibility is assumed for hidden, unapparent or masked property conditions or characteristics that were not clearly apparent during our inspection. 9. If building improvements are present on the site, no significant evidence of termite damage or in- festation was observed during our physical inspection, unless so stated in the report. No termite inspection report was available, unless so stated in the report. No responsibility is assumed for hidden damages or infestation. 10, Any proposed or incomplete improvements included in this report are assumed to be satisfactorily completed in a workmanlike manner or will be thus completed within a reasonable length of time according to plans and specifications submitted. BBG,ZnC. Page 6 1382 & 1391 San Juan Street f ASSUMPTION AND LrMITING CONDITIONS 11. No responsibility is assumed for hidden defects or for conformity to specific governmental re- quirements, such as fire, building, safety, earthquake, or occupancy codes, except where specific professional or governmental inspections have been completed and reported in the appraisal re- port. 12. Responsible ownership and competent property management are assumed. 13. The appraisers assume no responsibility for any changes in economic or physical conditions which occur following the effective elate of value within this report that would influence or potentially af- fect the analy,,cs, opinions, or conclusions in the report. Any subsequent changes are beyond the scope of the report. 14. The value estimates reportell. }-orcin di - entire property. Any proration or division of the ` total _n;c tracricin.tl interest ., i in,;aiiciare rine value estimates,unless such proration or division of interests is set forth in the rcpurt. 15. Any division of the land and improvement values estimated herein is applicable only under the program of utilization shown.These separate valuations are invalidated by any other application. 16. Unless otherwise stated in the report, only the real prc�perrt} is considered, so no consideration is J given to the value of personal property or equipment located on rhe premises or the costs of mov- ing or relocating such pc rsonal property or equipment. 17. Unless otherwise r t- assumed that there are no subsurface e)i%gas or other mineral depos- its or subsurface nglhts of %.ilue involved in this appraisal, whether they are gas, liquid, or solid. Nor are the riE>h,t associated with extraction or exploration of such elements considered; unless otherwise stated. Unless otherwise stated it is also assumed that there are no air or development i rights of value that may be transferred. i 18. Any projections of income and expenses, including the reversion at time of resale, are not predic- tions of the future. Rather, thev are our best estimate of current market thinking of what future ' trends will be. No warrarin or representation is made that these projections will materialize. The real estate market is c(>::stanri4 Cuctuating and changing. It is not the task of an appraiser to esti- mate the conditions of a future real estate market, but rather to reflect what the investment corn- munity envisions for the future in terms of expectations of growth in rental rates, expenses, and supply and demand. The forecasts, pre)jections, or operating esdmar:cs contained herein are based on current market conditions, :anticipated short-term supply and demand factors, and a continued stable cconntny. 'These forecast, Lrc, there subject to changes with future conditions. 19. t 'n1c,s subsoil opinions based upon engineering core borings were furnished, it is assumed there j are no subsoil defects present, which would impair development of the land to its maximum per- mittcd use or would render it more or less valuable. No responsibihit 15 assumed for such condi- tions or for engineering which may be required to discover them. 20. BBG, Inc. representatives are not experts in determining the presence or absence of hazardous substances, defined as all hazardous or toxic materials, wastes, pollutants or contaminants (includ- ing, but not limited to, asbestos, PCB, UFFI, or other raw materials or chemicals) used in con- struction or otherwise present on the property. V'e assume no responsibility for the studies or analyses which would be required to determine the presence or absence of such substances or for loss as a result of the presence of such substances, .Appraisers are not qualified to detect such sub- stances.The client is urged to retain an expert in this field. 21. We are not experts in determining the habitat for protected or endangered species,including,but not limited to, animal or plant life (such as bald eagles, gophers, tortoises, etc.) that may be pre- BBG, rnc. Page 7 1381 & 1391 San .Juan Street �I ASSUMPTION AND LIMITING CONDITIONS sent on the propertv. We assume no responsibility for the studies or analyses which would be required to determine the presence or absence of such species or for loss as a result of the pres- MCC of ILICll species. A},c :appraiser hereby reserves the right to alter, amend, revise, or rescind any of the value opinions 1)ased upon any subsequent endangered specics impact studies, re- search,and investigation that may be provided. 1 22. No environmental impact studies were either requested or made in cwiiunction with this analy- sis. The appraiser hercby reserves the right to alter, amend, t(.-%Inc, �)r rescind any of the value opinions based upon any subsequent environmental impact studies, research, and investigation that may be provided. 23. The appraisal is based on the premise that there i, trill critnphancc with all applicable federal, state, and local environmental regularlons and laws unles,, otlicmise stated in the report; further, that all applicable zoning, building;, and use regulations and restrictions of all types have been complied with unless otherwise stated in the report; further,it is assumed that .ill required licenses, consents, permits, or other legislative or administrative authority, local, state, fL'Ilcral and/or private entity or iorganization have been or can be obtained or renewed for any ,,- considered in the value esti- mate. 24. Neither all not any part of the contents of this report or cop ;l, t of, shall be conveyed to the ! public through advertising,public relations,news, sales, or any other media,without the prior writ- ten rit ten consent and approval of the appraisers. 'ibis limitation pertains to any valuation conclusions, the identity of the analyst or the firm and any reference to the professional organization of which the appraiser is affiliated or to the designations thereof. 25. Although the appraiser has made, insofar as is practical, even effort t�,verify as factual and true all information and data set forth in this report. P, 'I"Umed for the accuracy of any information furnished the appraiser either b, i,, clicnr or other, *Or any reason, future investi- gations should prove any data to be in substantial %ariance vvrh rh;c presented in this report, the appraiser rescrves the right to alter or change any of all analyses, opinions, or conclusions and/or estimates of value. 26. If this report has been prepared :n a so called "public non-disclosure" state, real estate sales prices and other data,such as rents, pnccs, and financing, are not a matter of public record. If this is such a "non-disclosure" state, although extensive effort has been expended to verify pertinent data with buver,, selicrs, brokers, lenders, lessers, lessees, and other sources considered reliable, it has not always preen possible to independently vcnft al', ,1,giiihcant facts, In these instances, the appraiser may have relied on verification obtained and rcp()rtcd by appraisers outside of our office, Also, as necessary,assumptions and adjustments ha,c hcc-n made based on comparisons and analyses using data in the report and on interviews with market participants. ' he Mformation furnished by oth- ers is believed to be reliable, but no warranty is given for its accuracy. 27. The American Disabilities Act (ADA) became effective January 26, 1992. The appraiser has not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a compliance survey of the property and a detailed anal'sis of the requirements of the ADA would reveal that the prop- erty is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative impact upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the value of the property. BBG, Inc. Page 8 1381 & 1391 San Juan Street i 4 I � ASSUMPTION AND LIMITING CONDITIONS 28. This appraisal report has been prepared for the exclusive benefit of the client. It ma` not. be used or relied upon by any other party. Any other party who is not the identified client within this re- port who uses or relies upon any information in this report does so at their own risk. 29. The dollar amount of any value opinion herein rendered is based upon the purchasing power and price of the United States Dollar as of the effective date of value. This appraisal is based on market conditions existing as of the date of this appraisal. 30. The right is reserved by the appraiser to make adjustments to the analyses, opinions, and conclu- sions set forth in this report as may be required by consideration of additional or more reliable data that may become available. No change of this report shall be made by anyone other than the ap- praiser or appraisers. The appraiser(s) shall have no responsibility for any unauthorized change(s) to the report. 31, if the client instructions to the appraiser were to inspect only the exterior of the improvements in the appraisal process, the physical attributes of the property were ob,cn•ed from the strect(s) as of the inspection date of the appraisal. Physical characteristics of the prc.jj):rr). were obtained from tax assessment records, available plans, if att}, descriptive informanon, and tt;terviewing the client and other knowledgeable persons. It is assut'rXd rh, interior of the st.:bject property is consistent with `l the exterior conditions as observed and that other information rehed upon is accurate. 32. I'he subm.':ion of this report constituters completion of the services authorized. It is submitted on the condit:;�n the client will provide reasonable notice and customary compensation, including ex-- pert fees, rel:sting to any subsequent required attendance at conferences, depositions, and judicial or : dministnirive proceedings. In the event the appraiser is subpoenaed for either an ap- t pea-ancc o- a request i o produce documents, a best effort evill be made to notify the client immedi- atel.. Th, `1'_ent ha- the sole responsibility for obtaining a protective order, providing legal instrucuon not to apl,t•ar with the appraisal report and related work files and will answer all quos- dons pertaining to tl,s J: i,vnment, the preparati,,n of the repro-t. and the reasoning used to formu- late the estimate of :less paid in whale 7r in Dart lr, the: party issuing the subpoena or by anotho r is rl,e matter, the c1icrit is responsible for all unpaid fees resulting from the appeanil,(i ;,)11)�iuction of d,-,uments rcgarcile s rpt who orders the work. 1 33. Use of this apl>raisa report constitutes acknowledgement and acceptance of the general assump- tions and limiting conditions, special assumptions (if any), extraordinary assumptions (if any), and hypothetical conditions (if any) on which this estimate of market value is based. 1 1 34. It provided, the estimatc.l i:..,�urable value is included at the request of the client and has not been performed by a qualifier: i:-;utancc went or risk management underwriter. This cost estimate i should not be solely u:)on for is-isutable value purlio�se;. l nr appraisers are not familiar with the definition of insurab',: %-a ue from the insurance prr>vider, the ideal ;governmental underwriting regulations, or the h p, : :: surance coverage available. "l hese, factcir�, can impact cost estimates and are beyond the scopr r r r';c intended use of thi; appraisal. Ihe• appratsets are not cost experts in cost estimating for insurance purposes. ` BBG, rnc. Page 9 1381 & 1391 San Juan Street I f CERTIFICATION We certify that, to the best of our knowledge and belief. - The statements of fact contained in this report arc true and correct, f'he reported analyses, opinions, and conclusions are limited only by the reported a,��wiptions and limiting conditions and is our personal, impartial, and unbiased professional analyses, ()pinions, and conclusions. - We have no direct or indirect interest, financial or otherwise,in the property appraised, or with regard to the parties involved in the assignment including, but not limited to, property owner, broker, or property manager. - We have no bias with respect to the property that is the subject of this report or to the pasties involved with this assignment. - Our engagement in this assignment was 'not contingent upon developing or reporting predetermined + results. - Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value I' opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to l the intended use of this appraisal. - Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the.Uniform Standards of Profe>sionat Appraisal Practice. - John M. Brownc, MAT made a personal inspcctic n of rhe property that is the subject of this report last on October 31, 2016. No nc%v in pectirrn was rnadr ncr the scope agreed upon with the client. Per the scope of the a,.,ignrnent, wr are apprisirrg the subject's land oily with the hypothetical condition that the building cments do not csi�,t. - No one ckc :,,­, ided significant real property appraisal assisr.rnrc t,) tl)( . rson signing this certification. - The uneitir;i r td have performed service as an appraiser rcgarcirtg the i roperty that is the subject of this report v it:itn the three-year period inunediatel% preceding accep'a31)cc of this assignment. We ap- praised the ti abject once in 2016. The reported analyses, opinions, and conclusions were developed, and this report has been prepared,in conformity with the requirements cif the Code of Professional Ethics and the Standards of Professional Appraisal Practice of tic Apprai�zl Institute. ! - The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report,John M. Browne, MAI has completed the requirements of the continuing 1 education program for Designated Members of the Appraisal Institute. As of the date of this report, Johr. M. Browne has completed the appraisal licensing requirements of the state in which the subject is t located. j r i John M.Browne, MAI California State Certified General Real Estate Appraiser State and License#AG 036348 l BBG, Xac. Page 10 1381 & 1391 San Juan Street 1 INTRODUCTION Property Appraised Residential Development Site 1381 & 1391 San Juan Street Tustin, CA 92780 Legal Description The subject's Assessor's Parcel Numbers (APNs) per the County are 500-081-01 & 02. The legal de- scription is as follows: LEGA-L DESCRIPTION THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CrrY OF T{:STIN- II+ THE COUNTY OF OR_k GE STATE OF CALIFORNZA AND IS DESCRIBED AS FOLLOWS PARC EL 1. LOT 19 IN BLOCK --A- OF TRACT NO 632. IN THE CTrY OF TGSTIN- COUNTY OF ORANGE. STATE OF C_ALIFORNTA.AS PER%LAP RECORDED IN BOOK 20 PAGE 30 OF MISCELLANEOUS'.LAPS.LN THE OFFICE OF THE COUNTY RECORDER OF SAID COLWFY. ASSESSORS PARCEL NO. 300-[IASL-01 PARCEL_2- LOT 20 IN BLOCK .-A OF TF-ACT NO 632. 0; THE Crit OF TL'STIN. COUNTY OF ORANGE. STATE OF CALiFORNLA"AS PER SLAP RECORDED IN BOOK 20 PAGE 30 OF tiiISCELLANEOL'S NLAPS.IN THE OFFICE OF THE COLWTti RECORDER OF SAID C OLNCY. AS SE SSOR-S PARCEL NO.300-081-0 Type of Value, Intended Use & Users The tt-pc and definition of value sought in appraisal of the subject was an "As Is" Market Value opinion of the Fee Simple interest in the subject's land only as of September 25, 2018, subject to the general underlying assumptions and limiting conditions cited in the attached report. Please reference. the hypothetical condition as stated in the report. The intended users of this report are Ms. Fariba Shaygan and/or City of Tustin. Use by others is not intended by BBG, Inc. Furthermore, the intended use of this appraisal report is to estimate the mar- ket value for purpose of calculating the Park Fees. The report has been prepared in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Foundation, as well as the Code of Pr-4cssional Ethics and Standards of Professional Practice of the Appraisal Institute. Property Rights Appraised I cc Simple interest. BBG, Inc. Page 11 1381 & 1391 San Juan Street i INTRODUCTION History of the Subject Property According to the San Diego County Tax Assessor's records, ownership of the subject is currently vested in NFXGEN Management, LLC of the San Juan Street Land Trust, dated August 27, 2014. We are unaware of any sales transactions involving the subject within the three-year period immediately prior to the effective date of appraisal. The owner purchased the subject as vacant in 2008 (Lot 01) and 2013 (Lot 02). The combined price was $670,000;ho\ ever,Lot 2 had a SFR on it that was generating income.'Thus, the$67,0,(100 cls eS not represent the price for the land only. To the best of out knowledge, the subject is currently not under contract or being listed for sale. Please note, however, that this information is included only to satisfy the requirements of USPAP, It is not intended as a guarantee to the chain of title and a title search should be performed by a title company should a definitive abstract be desired. Scope of Appraisal To render a credihIe value opinion for the property, only one of the traditional approaches to value was employed: 1) The Sales Comparison Approach.The procedures and methodologies employed in these approaches are outlined in the Appraisal Process section of this report. Following is a summary of steps completed by the appraiser in this assignmcnt, • John M. Browne inspected the property last on October 31, 2016 when it was vacant land. A i thorough inspection of the property was made along with the general and immediate market t areas. No new inspection was made per the scope agreed upon with the client. Per the scope of the assignment, we are appraising the subject's land only with the hypothetical condition that the building improvements do not exist. • Gathered information from various secondary data sources regarding regional and local eco- nomic and demographic data specifically relating to the regional, city and market area anal- yses. a Summarized trends in the single and multi-fancily market utilizing data compiled by Reis, Sandicor,Costar,and other housing data sources. 0 Brokers and developers active in this market were interviewed relative to new construction in the planning stages, as well as recently completed housing projects. • Researched the property's flood plain status relative to the same, and researched data relative to the subject's zoning and development restrictions. • Summarized the highest and best use of the site as vacant. Supply, demand and absorption potential, as well as construction costs and required yields,were analyzed relative to the sub- ject market and specifically the subject property. BBG, Inc. Page 12 1381 & 1391 San Juan Street INTRODUCTION • Confirmed sales of sitnilar residential land parcels within the local market. The specific units of comparison analyzed were Sales Price per Square Foot (SP/Sly) and Sales Price per Pro- posed Unit (SP/Unit). • Relevant data on the cornparable improved sales was confirmed and the comparables ana- lyzed in applying the Sales Comparison Approach. + Analyzed the data to reconcile ar "Az, Is" market value indication. • Opined to exposure time 2nLi rnarkering period inherent in the Market Value opinion. ' • Prepared an Appraisal Report, The appraiser was provided with the following information with which to complete the assign- ment: i • Condominium Plan TR 17665 t Competency The appraiser involved in this assignment has considerable experience in appraising this property type. The appraiser is actively engaged in appraisal work in the geographical area of the subject property. We believe we have adequate knowledge of the property type and location to meet the competency requirements car t'SPAP. Extraordinary Assumptions and Hypothetical Conditions This appraisal is not ;il, a c, i,> ani jj,vmpi ow. 7he appraisal is, however, subject to the following hypothetical vondiftorr + The scope of this assignment was to estimate the Marker V; llic ( Minion of the fee simple in- serest in the subject's land only, with the hypothetical c , '.clrr.:,t chat the building improve- ments do not exist. The Land value estimate is after the final -:: r ,,il) is recorded and the lot is entitled for residential development of 5 condominiun-, �lr: "l l,c Hypo- thetical.Condition may have affected assignment results. t 4 BOG, Ync. Page 13 1381 S 1391 San]van Street REGIONAL AND LOCAL AREA ANALYSIS Regional Area Overview The subject property is situated within the city of Tustin,Orange County, California. The County of Orange is within the Los Angeles-Dong Beach-Santa Ana Metropolitan Statistical Area (MSA), which is in the southern portion of the State of California. In terms of population, the Los Angeles- I,ong Beach-Santa Ana MSA is the largest in the State of California and the second largest in the entire United States. Below is a map depicting where the subject property is situated within the regional area. Industry _ Chino qV t Chino Hills Downey ('a;, Sf,afe Park � River Brea Yorba Linda -1' V Fullerton Corona Lakewood Anaheim EI Cernt© +� Lake Mathr, Mount�7rr Peserve ► Long Beach 4 �'Tustin Santa Anal ae' Silverado Q Te 1'l]i Irvine Huntington r:j Beach Lake Forest Nev.,porf Beach FQ =1 Cl Laguna Beach Niguel Q Cin C111'' Dana Poini 1,1ap Data 0016 Goog1e Regional Area Map BSG, Inc. Page 14 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Moody's Economy.com The following pages are taken from the most recent Moody's Economy.corn report available. It will give the most current view of the economic climate in the (Mange County area. •f ANA- OkNALYTKS ECONOMIC DRIVERS EMPLOYMENT GROWTH RANK RELATIVE COSTS VITALITY r t , 18:13- . I t � 1 Yt[-r-xer�10! tlS�lr10'If e[S�rlaarl IYro-L1MX;�ue BUSINESS CYCLE STATUS ANALYSIS Recent Performance Anaheim-Santa Ana- which is Fursded t,e Tl�National Institutes of EVans d 1-De,e[cncmy is maling head,aay,Wt year- Health art dr-iwffi m he3kheare has slowee'dtut Inti -year growth m paytol emptcyrrram has s well kc,-: the U= average year'"r year aecrtery ;bippoi below the Cahlibmu and.A,ea averages Also,Local hospitalswill.tenefitasCongress'hoe early in 2011$Job grvath in high-wage industries in Niki funding wiit in_rea;e the availatifrty of re- in � At vi,r has staled.and there an 7uttight Payrollcut:in search grant;whik the region's aging population manufacturing and trade Eduauan'healthcar? vAlbit patient acirrasions Demcgraphic3vaUbe is keeping emplvyhtierii from failing Outright At less VADrion"for healthcare than average.tut 3.1)6 inMa.-hthe jcbless rate isataycli_itloh ininstmentispounnginto AMA and will pave the STRENGTHS and well befcw the state and national aver3gn way for more pbs Hospitals are expanding fa• . Hie*tahrnd.w•all<MurarPdlaborfiw,e Part ofthe recent dip inunemploymentrnsestc• •crRitiestokeep upwith rising demand for general . Ampiefob off-:rtuutvs In ?yes contraction in the lats�r force after ss!.eral Tzars and speciake care For example City of Hope is . wel.dt erslflei a_rncrny of sturdy gains Stow'er job growth is mat rig itself planning to build a SZC-)mithon cancer enter . Formable age structurefelt in other parts of the e:orowrry.a4erage hourly that would anchor a future medical campus in Ir. . Stable cortwm±r base- earnings are up;t.+cut half as much as nationally wine,and Children's Hospital of Orange Count,; WEAKNESSES ,earoveryear,and hlmeturl?ingisslowing autism center will open earhyinZUIS Strength, Traffic c,rVesuco and noca(a_rty for more air UCI.Robust enrolment growth at the Uniwr- in fwalthc3re"I provide a sciid fcundsticti of passeriger and cargo service city of Cahfcmia-Irvine will ensure that govern- mid-.sage jobs and lift consumption r Veryy tri IWUV costs ment payrolts in ANA hit an al-tame high this Strengths-APt4s solid economic funciamerr • Single-family huusng is r4,ervalued year.UCl is a to-fr a ember in the metro area, tats anJ the metrodivision s F P Y p+axrmrtJ 97 the Bay and this year the school feceivej$ZOO million as Arta present oppurtunities for stronger gro%th • ptularithropi:and research loading,ttv m•ist per The region's universibes chum cut large num- SWRTTERM LONGTERM ayear in its history.Stateedmationparr•-113 have bers of colege gnduat_-•who k• d a larg,-and risenstasadihy since ZM,and appikaticn; graving tech sector Alla I]hn Wayne Intema- R06t90(FrdsuRE 204 ardgelrsteat a02 fat 2018 semester are up 12'*fwm a year earlier, tionai Airport fosters integration with the,global portending higher Jarnanj forfaculty 3.sd;tiff w_ N-oncr y And vrtu7e living costs are ret3trvely a result of scurfy enrollment growth.the unv?s high r e r are mmpetib.e with those naarby UPSIDE sityisalsoexpardingcn-campushout ngthatwil in:scan Francisca.San Jose and San Diego cirri- • tkii spurs faster private sectu gorwah in high be ready fcr the fail semester nest year A larger tart'.business coasts in ANA.are above average Mch and heals"ve . Ctttsue gains in Pacific and Mounuta state on-campus student population will Azo lend but they are well t+1.7.v those in the Bay Area y3 e.;rvwmies,and Disneyland b:asttrunsm by much-needed support to retailer,Mcraover the there is a cit in_:nave fax firms seeking a Ic,:a- mote than anticipated. unnerikys stelar reputation,avvealtlh,of research tion in the statev ith 3large.ufucatej v.crl:mor_= DOWNSIDE opportunities.and mom huJh-paym5lotsvnllen- Employment,g7owthIriAnahekr+Santa Ana- r A varorrE apital bu stcr labor shcrtaees halt job courage students to not only attend UCI twit stay Irvine will slow as the metra division's expan- grrrartb in high-Zech industries in ATI'.aft4r graduation More AdILyJ youth will sion matures Healthcare will.be the pnmarf t oliar rlsesmoie subA4ritially;ambling imprv.'the quality of the m:4foicce and suet a-- growth engine,but UCI will chip In as well to i L,r natimal trade and tourlsitr pansion by tech and heatth.:are prwrars ANA will best the region in the tang run than ks Healthcare.ANA wit also capitalize on ex- to world-class urrversitles,a highly educated ear S RATING pansion in healthcare The metro dMson is a worltforte,and a dynamic set of industries health am hubit hosts one of the nation's tcp A'.ixtasha S,yaa :-566-275-3266 /'Icor 1 AS OF COUNOCT 2TY 7.20f6 research hospitals. UC Irvine Medical Center. Mayw,,8 t*i,&-cahmy.ccm 1 r • 2013 2014t +16 2017 INDICATORSr r r 2020 2021 2W202 211.6 2165 275.8 233.9 249 9 245-5 Gross metro product(cogs hiQ 2551 260.4 261.6 268.6 Z76.9 283.2 3.0 2.3 4.3 3.6 2.6 23 %clranrje 3.9 21 0.5 27 31 2.3 1.4242 1,4624 1,4957 1544.0 1 846 1.617,6 Tota l emptOgtnent(ths) 1,641.4 1,6617 1.6616 1,666.0 116626 1,694.1 Z6 27 2.3 32 2.6 2.r %charge 15 12 02 011 1.0 0,7 7.9 6.6 55 45 41 35 Unemployment rate fes) 3.2 3A 37 46 4.9 5.1 8.0 -1.9 49 8.0 43 48 Personal tncwnegrowth(,%) 4.3 45 3S 33 44 3.9 746 75.5 77.0 79.3 81.6 939 Medianhouseholdincome(Sthsi 86.2 08.9 919 943 972 998 3.085.4 3.113.6 3.136.8 3,160.6 3,1777 3.19014 Ftpulation(ths) 3,197.0 3.202.2 3207.0 3.2152 3226.7 3.2398 t0 09 07 0.0 05 0.3 %chal9e 0.2 0-2 02 02 0.4 r-.1 IZ4 9.8 40 45 Q3 -37 Net migration itfrs) -10.1 -11.7 -163 -9.6 -55 -3 3 2.271 3.670 3.714 3.809 4,357 4.935 singie-fatuity,permits(s) 5.410 6.171 6.051 6.320 6.324 6.143 3,811 &752 5.577 4562 7,166 +6467 Multifamily Permits(s) 4.376 5.236 5.722 4.913 4.177 3.783 229.2 257.0 203.6 298.5 315.6 335.5 FHFA house price f1995Qh=100) 346.1 348.1 356.0 368.8 3842 4P31 BBG, Inc. Page 15 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS POCIS1 U.S. METRO - Anaheim-Santa Ana-Irvine CA ECONOMIC HlEALTH CHECK BUSINESS CYCLE INDEX 3-MO MA JAN 2008=100 Now 17 Dec 1T Jan 18 Feb 18 War 18 Apr 18 115 ; Z0 110 tlnenFioyment rate,% 3.3 3.3 3.3 33 105 I ,cr r1r.:a r Y, 63.6 53.S� t00 [zlptu�rtent-tc.pcgut�U�n rat�.1 51 4 95 90 IW4%ta31p(Wvtc)rk 2012-10W -... N 85 Aes,]er€[tatF�^s-I':;.sln;lr•anlly.a Py,�. 80 peodetupersalts.m(dTirmrty't C19 09 To it 12 r3 14 15 16 17 18 TB,� 1Jrw*rS?C hr n ter: ?T C rtA ANA — C5 U.S. "Arm_-X:i Lrs^ys 8:rrsa.4 :Arnryt,:: ".Y.r a!4 air r a:�Irr^es CURRENT EMFLOYMENTTRENDS DIFFUSIONINM eF CHANGE YRAGO Tota':HANC E rR ACG 's-MO MA 3-DK;lT NMCS LEVEL.6-M0 MA Apr V Oct V W IS 72 tcrtat 20 1.0 14 713 rrnnt 2,55.6 ?t F 603 63- 3- 33 C19MUCHM 39 5.4 43 CYE Marnr*acterrre 2.1 03 .13 64 R30e t.0 0.9 4 5 1 rramrUtIVI-M .16 10 22 ,bts itrNxrlmolt 4,R 26 � `3 Rensctal 4,Y1vitles 2.2 04 1] 1 PT-3f 3 susnest Svcs. Q i 26 3. 5 4 13 14 15 rE, tr 13 E &W-31tnS.+s db 51 4. Gc.v^rrn tl Cita&D%xl�,lg Lel%le&HfJ'i(,'13 ty 2. 1.4 2.0 1,3 I1 15 it; 1. 11 0UW Ser Ices C c l 41 2 �. .to sovur Govemrtrerd -is .12 ]* AKA C A *"'" U< _.,... 'v r".,-•:^.,.r-::r,: Scuces 9 i.U:..�j'a�s`re:3 }rv-r. B k� :•.r, ,'vin;;. KUTIVE EMPLOYMENT • ' HOUSE PRICE JAN 2008=100 FORECAST 1199811=13Q.NSA 12C+ VS 6 MO f RI OR 115 2-Yr S-yr 330 11L 2W r 105 100 ,� �♦ 95 1513 9C1 43rD 65 :•3 1)Q t' I2 13 14 15 1c 3- :a 301 21F :F 9d 01 04 07 1C 13 lc APLA — CA us —ANA — CA — i 5 ':'::w^rr.A i,ti*c.:Cj sAray3:: Fcs.r;r FdisA.r 1,,•i ,s,-_rr:_ 'VACANCY RATES HOUSE wE TRENDS HOUSING + 'G HOMEOWNER.%HOUSES FOR SALE GREATER THAN 100=MDR E AFFORDABLE 2 3v 2'�C 2V a' 19Ole L-64 G t c 3 117 RENTAL,*,INVENTORY FOR RENT 1 tor` E6: 2 3 4 5 c 7 4 Q 05 co 17 11 11 78 01 14 0- 11] Ci 1 f . ,a,�A . i..3 . �a �rvaa CA _L 5 - cu­-14yt.E"'*:t.srrcw BBG, Xnc. Page 16 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS PRtCIS L U.S. METRO • AnahIan-Santa Ana-IrVIllt_: TOP EMPLOYERS INDUSTRIAL DIVERS IT Er~"PL=YMENrINNEWCOMPANIE5.`OFT-,41 Drv�ejianx Pry- 30.5}I: Mcctvlr NSj l6eWaµlCtsxltC_ 29.c0c 100- 71 63`71.63` St:_sE�h Hetllt 1'97. ago 4acm 0.rn-a--.rta T.69a 0,66 05 1.D 1,5 $cart Ca 6173 a Wal Man stc'r Inc 5.Crlt .11-A . CA ;l Ca.Iartna:xate ne�rsetp 5 r81 9arkMArry�.da'F 5.J4C 04 lspt&wJs 14,aV kmaris,-im ul Pwtyle-wan 7,=tt 3 71 fr'ensa�ateHeat�ipr.en- 5.?IlC .rertr Zrwr.� Wxtli f arp S Cc VIC PanmmcAvo„s Cpm q.(rar. EMPLOYMENT VOLATILITY 1a• F1,4tt-om Gera 4,)of DUe td U.S.IlUctttatK n5 RelaWe to U 5. inire Ga 4;0( rcr% i+, ne Dept 9re IA04 F 4wx^d:L te:�-rra.I 4.CI:t .L.frcrt:,an:;auJ•.rr. =:�r-y.:C•aruar tJR Sri% PUBLIC ` ,, NOT ii.9111 XV AVAILABLE state 31.4,34 1003 W S 4 tl% ■Pwt4urE .1:4 N us COMPARATIVE EMPLOYMENT AND INCOME %OF TOTAL JMV.4YMENT AVERAGE ANNUAL EARNINGS Sector ANA CA U-S. AM CA U S mime a r, 0' a 4 W&424 571.263 S9d,606 Wislrial n 43 42 47 SM 929 $76= W.319 Hars,actunrw 9s '3 65 S90760 S'02,995 560,135 'Jurat" r)1 r21 62.2 ,17 5"7E,'96 M049 raottdlrlme 262 372 37a -d 39IQ16 S.7,t6E Es1GUT#U 1+Ei yti'ntifrEFi.S Tt orVUt1117as 17 17 33 553261 561,96' S 63.184 wt,olesle Tralde 51 43 4.1 S95.M 58,3.5 n SIM.33a ltet39Trale 35 U)a it 9 Se2.IC; 5,31352 $34.924 Ihfami3tim I.T 31 13 5'1'.013 5`61335 5111.771 FIrlrvd.AAct-vtss 74 49 59 5i4 95,1 51x9.$39 $53.946 P-Of and Btts SMIC3 r9 7 153 14.0 S69.:,9s S7F 632 S66'."n wir am Neattn Setvlc,S III Ts 7 15 9 S35.393 '55 4S-2 554 W INsweand Hosp Servlrr 135 116 11.0 i33-l9Z S34 6C6 $1.190 ,t1 v Serrlces 3 r 3 s 3 9 537293 539.5,33 $366,55 Gmeremer+: 49 15 2 152 5%`.32: SW 233 $77Sa4 ■ ANA. . ' � o '.rr.r,Pcce+r k:rta e'M1r�A'.^mt e:. �:.�$..Gnirrc.-:w,'{t:A.a'age ars ri cagy 17<d.!+cnc. dv'et•�tai: .trr�AF u.,.',r.4,`at.3 - - COSTSBUSINESS . F U 5=100 MGM-TECH EMPLOYMENTwc3taun `lF4ll�411s��"' NAI CS fncpayzr, ;Zts4')aR I Tns %of1013! 55TI Naragerrare c-c�&aue7i%s 13 315 2 2312 PA Art 13 261 04A 1169 12 2 7_77_7_____... = 511: dzifitr:tur>en4ineenr A at-crus i1 75.5 U.S. 'I 1,046.4 4.2 SA 16 P%Mnt KMtmc$tectn�i.ccr•+1s r z 19 741 st�tna.s a. HOUSING-RELATED g 3+13 I�tlayrnsen:rvm: 15 Ssa EMPLOYMENT = �v'i 5tacC.rernRerl ii 3'1 S:;t Cercra.Z *Cl WW�Zr..il Sccuaal: rl: 27 rrx an Ths %ortotai F725 12 1292 4NA 210.6 136 # my S..to6WdrvaroA.Wi•p 1.5 31.5 C, A zIC, 1',"1 '___ 9 6241 66YWW w41 Nn*sw am "3 ]7i mit .'+.3•g 115. 13,997.z !s rT31 Aemv:vn pwluwWwcudm 131 7r_9 BBG, Inc. Page 17 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS PRkIS-1'U.S. METRO • Anaheim-Santa Ana-Irvine CA SKILLS MISMATCH MIGRATION FLOWS 3o OF TOTAL 'An INTO ANAHEIM CA Late fun HSN umb4r of VM&mduammad So" 0.mdammd Migrants IighSdod TANA ♦us Nps Mgeles CA 35,765 Sonia CnRega Rleerslde CA 16.375 San Diego CA 5.401 Ammmata's PhoeriDc AL 1,017 6achalws CSakiand CA 1.673 www 2016 Rank i,**York NY 1,657 G®Quye Cm coe11RC*m 047 120 Las Vegas NV 1.483 Cama ratio d 8 147 San Jose CA 1.437 0 6 10 18 20 28 30 Po"r&te 110% 317 Seattle WA 1,303 ■ Cimaniviiaris ■Poprtadon •Abse unequa.-r,Wr Chicago IL 1.796 SarcesGmsus Ber.rK ACI.Aroeety'iAndreucx 2074 Tddi drt<rtY�atiM 1 J 1.832 HOUSEHOLDS BY INCOME,% INCOMEPER CAPITA FROM ANAHEIM CA U 1$9B9 Los Angeles CA 27.933 65 STH$ 20.000,39.999 Riverside CA 23766 440D0,59.949 San D sego CA 6.358 60.011Q7A%9 Phoenix 4Z 2.661 T5 m499 999 Las Vegas Nb' 2.575 121999 Caaklatd CA 1790 DaRasTX 1735 48 1125.000.14(j.999 Seattle WA I1655 15Q-00D-?K91)9 San Jose CA 1335 39 240.000, Sacramento CA 1.443 TC[al Cert-nogratfm 1!2,899 06 09 10 11 12 13 14 15 18 17 0 5 10 15 20 25 0 AMA — US Net migration -11,067 Soarre.11E0.Pka6Xl.4ajrtiu Sccrces.Ceeora J&r1,u.ACS,Nocdl'eAaal�mc�.201d NET MIGRATION,# COMMLITER FLOWS RESIDENTS WHO WORK IN ANA WORKERS WHO LVE IN ANA 6,000 4,OOD 2.000 a -2.000 x1,000 Top Five OutSlde Soul'OB5 of Jobs Top Fire Outside Sources 01 Worlaim .00A Anaheim CA Sham Anaheim CA share 14 15 18 17 Los Angele5CA 12.8 lees Angeles CA 11.5 2014 2015 2016 2017 RNWSideCA 1.9 Riverside CA 7.0 [eXA4Stlt 9,55T 9.671 -14,074 -4,989 R San MCISieto A 0.7 San Diego CA 0.9 Fr�■t 12453 14,165 14,31W 11,239 Sall 2n[NSCb CA 0.0 award CA 0.1 Sanjose CA 0.0 Phoenv AZ 0.0 Total 3,996 4.494 319 4750 ScseeeesC"_ �aerwANeal,,'rAmoo,rrg2009.201t Saxca.fRS(ecv1.X0 6.Censor94remu.Moody2Aen#*ar • rr41 4 r • POPULATION BY GENERATION,'4 %OFAC}ULTS 25 AND OLDER a7 t 70-74 BII-611 8D 55-59 wren r M-54 40-44 40 40 35.39 30-.14 awe erne. 20 r 25-29 30.24 sirs& 0 N5-1$ 10 if oaare AMA CA U•� S9 1 s High-id 0 Pigh xhmi f14 0 Is 10 18 20 26 30 ■ Some auale ! Caller o 1 7 s 4 5 • r r ANA 0 U.S. ■ Grad{a..e xroa 0 ANA ..... us .:9u•wu,M:-:_y'sAaaJr7"20N3 Soaron.Ce+wa9l,rcmAC3.Moocy'sAna*ocy2Pl6 Jcvc"C--;w&re>, Neo,*;AM 5m"?'OI6 BBG, Inc. Page 18 I381 & 1391 San Juan Street l REGIONAL AND LOCAL AREA ANALYSIS PRECIS r.•U.S. METRO Anaha-aj i-5anea Alia-Rr ml C-A E' �ULATION DENS ITr R, qtajlg e ir * .I, r Cr?gs(l MEDIAN HI)USEHOLD INCOME POPULATION&HOUSING CHARACTERISTICS i Uu[s V71110 RAW • -Wa,tang area ig rl F aZ.b 31L '_pl.a.i_n ransu; r=•.�auPll.:tK.n r_f.�rd yt,a ],t J3., 3 3 'Ota.P_PL.auur Jc: 3.1► s 1: Whl,: �rc�utrr_n i'.Y 317' � w e 3L. 31, �Bla w'pulx cn ?L it: f I!- ' la5ctlrciatt••th 4p•:tpuaukr'cn r,53 3133 hxuralueG L S dozen iLd Mi,--;AN TIME �-ecar3y :?°1 h_us.agiN's tSL rrj+ ►.r 0*ner acclpled {:t 3 r: RV ttf Orsi+lEd 719T H 1 t tma i'.. 3817 ►r t:3e£arhee .T j)!: 3F9 :..,, Mul'1amHV >=1-012V 3t 3. rr �� }. ",w 17. 1�Rn..- .. .:A _1"�s;t t?'l tJL.WnY a:,yrY-. t:'90<<•.'iS ia�i aT_a.9,�': BBG, Inc. Page 19 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Employment The Los Angeles-Long Beach-Santa Ana MSA comprises one of the most diversified economic environments in the world. 'Phis region constitutes one of the top two largest centers for business services and international trade in the United States where numerous business firms listed in the Fortune 500 are headquartered here. Broadband hardware companies have emerged as a driving; (but volatile) high tech force in Orange County, more so with the tech downturn now spreading to telecom infrastructure related. companies, A base of light industry, primarily in electronics I manufacturing and distribution, boosts the metro area's trucking/warehousing employment well above average.. The county lies outside the Los Angeles Basin's international trade artery that stretches from San Pedro Bay to the industrial districts of the interior deserts. '1'rucking/E�-�archouaing employment should continue to fall more in line with the U.S. rate. The table bclwn,,- lists Orange County's major employers. i ORANGE COUNTY'S MAJOR EMPLOYERS Employer Name Location Industry Allergan Inc Irvine C17ilithalmic Goods Apria Healthcare C_iroup Inc Costa Mesa Honic Health Care Services Bank of America Fullerton C'oitn iercial Banks Beckman Coulter Ino Fullerton Measuring&Controlling Devices Boeing Aerospace Huntington Bench Aircraft& Parts CKE Restaurants Inc Anaheim Holding Offices Disneyland Anaheim Misc. Amusement,Recreation Services Fluor Daniel Ali,,o Viejo Offices & Clinics of Medical Doctors Miles Horticulture Inc Irvine Retail Nurseries&Garden Stores IC'N pharmaceuticals Inc Costa Mesa Drugs,Proprietaries, & Sundries Nordstrom Costa Mesa Department Stores Prandium Inc It1'ine Eating &Drinking Places Ralphs Grocery Co Anaheim Grocery Stores St John Knits Inc It-Ville Women s& Misses'Outerwear U/C,Irvine Medical Group Irvine Offices & Clinics of Medical Doctors Environmental Forces Orange County lies dircctly southcast of Los Angeles County and occupies a total of 798 square miles, stretching along 42 miles of Pacific Ocean coastline and extending some 25 miles inland. The eastern mountain region, which includes the Cleveland National Forest, is largely uninhabited, and the majority of the population is contained in the northwest and central portions of the county and stretching south along the coast. Other counties that border Change County are Riverside to the I east,San Diego to the south and San Bernardino to the northeast. I Orange County has a climate that is mild and pleasant, generally with dry summers and wet winters. j The County contains 9 beaches, 3 harbors, and approximately 38,694 acres of regional parkland. The land use mix in the county is reflected in the following table. BBQ, Inc. Paye 20 1381 & 1391 San Juan Street 1 REGIONAL AND LOCAL AREA ANALysrs f Residential: 127,001 acres Uncommitted: 126,405 acres Open Space; 83,129 acres Corn mercial/industrials [ Public Institutional: 68,269 acres i Agriculture: 62,031 acres Transportation: 44,557 acres Transportation The Orange County transportation system is centered on an extensive freeway network, constituting one of the most expansive networks in the world. Major projects recently completed consisted of a widening of the Santa Ana (5) Freeway, new carpool (diamond) lanes on the Riverside (91), Orange i (57), Garden Grove (22) and Costa Mesa (55) freeways; and the improvement of streets like Beach Boulevard into a "super street." Other projects recently completed include privately funded toll roads in the southern and eastern portions of the county. The regional rail system has also been expanded to Orange County, with numerous Metro-link stops during peak commuting times between J,os Angeles and Orange County communities. This system provides alternative transportation for commuters and residents to numerous destinations throughout the metropolitan area including Los Angeles International Airport (LAX). Other modes of transportation consist of John Wayne Airport,public bus service, Amtrak passenger rail service and several freight lines. s Education Adding to the strong infrastructure in the region is a complete and diversified educational system. 'There are more than 150 public and private universities and colleges throughout Southern California. These institutions provide a highly trained and skilled work force for high-tech firms and businesses located in the area. 'There axe also a number of two-year colleges,with extension courses offered from various universities within the region. One of two major universities within Orange County is the University of California at Irvine. UCI has a present enrollment of over 14,000 undergraduate students and is recognized for its information technology,biotech and medical fields. Health Care T'he top 5 hospitals in Orange County arc si mvn in the fallowing table. TOP 5 HOSPITALS: (Ranked by number of licensed beds) St. Joseph Hospital, ©range 525 beds Hoag Memorial Hospital, Newport Beach 498 beds UCI Medical Center, Orange 446 beds Fountain Valley Regional Hospital& Medical Center, Fountain Valley 400 beds St.Jude Medical Center, Fullerton 359 beds j Source. Orange County Business Journal, Book of Lists (2010) I SBG, Inc. Page 21 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Local Area Overview The subject is located in the city of Tustin located in Orange County, California,in the Los Angeles metropolitan area. As of the census of 2010, Tustin had a population of 75,540. The city is located next to the county seat, Santa Ana, and does not include the Tustin Foothills. Below is a local area map. - A MainPlace Mall Nnn, iuni- . d o nta Ana + r.:, Tustin Santa Ana Zoo R 5�, v n The Market Place � � n naTuurn Cao yle rvlap as cratb GoogEe Local Area Map BBG, Inc. Page 22 1381 & 1391 San Juan Street REGIONAL AND LOCAL AREA ANALYSIS Access The market area is significantly influenced by Interstate 5. Interstate 5 provides north/south access to Los Angeles and San Diego respectively as well as within the market area. Interstate 5 runs along the western edge of the market area. Interstate 5 is a 12 lane divided freeway consisting of ten general access lanes and two HOV lanes. Other than Interstate 5, primary north/south ingress/egress throughout the market area is provided by CA 261 in the southern part of'Tustin. The major east/west traffic carriers that provide access to Interstate 5 and to the interior of"Tustin are: Newport Avenue, First Street and Main Street. Orange County Transit Authority services the market area and operates a system of medium to large capacity buses throughout the city. Major air transportation is accessed via John Wayne Airport, which is located approximately 5 miles to the south of the market area. Land Use Patterns Tustin is suburban in nature and culture. The city is mainly residential, although there are a number of offices and businesses within its city limits. The market area is approximately 80% developed with the following uses: MARKET • ' Single-family 35% Multifamily 20% Retail 10% Office/Medical 10% Industrial 5% Vacant Land 20% Development within the market area includes low-density commercial/retail development along primary thoroughfares and residential developments located on secondary thoroughfares scattered throughout the area. The market area is approximately 80% developed. Tustin's topography is level and mostly built-out. Public Facility/Services The market area is adequately served by all public utilities and services, as summarized in the following table. Utility/Service Providers Sewer/Water Tustin Water Electricity Southern California Edison Gas The Gas Company Police/Fire City of Tustin Education ITustin Unified School District 88G, Inc. Page 23 1381 & 1391 San Juan Street i REGIONAL, AND LOCAL. AREA ANALYSIS Life Stage and Trends The mar k-eT area, as part of the City of Tustin, is considered to be average. The market area is in a stable to growing stage of its life cycle. Its reputation as a desirable place to reside is evident from its growth over the past 10 to 12 years. Single-family, multifamily and commercial improvements in the area are in average to goad condition, and the overall appearance of the market area is good. The market area has a good reputation with respect to most types of real estate. Existing structures within the market area appear to be adequately maintained and well occupied. Given its location proximate to Interstate 5, hospitals,retail facilities and Lake Mission Viejo the long-terra outlook for the area is one of continued stability and growth. Public Facilities E The subject neighborhood is adequately serviced by public utilities. All utilities are available to the subject site. Conclusion The market area is comprised City of Tustin. The market area is influenced by Interstate 5. The market area is considered desirable due to its location proximate to Interstate 5, Tustin, and employment generators for the greater Orange County area. The population rate in the City of Tustin is surrounding the subject is forecasted to grow at a moderate 3.4°io over the next five years. I l f BBG, Inc. Page 24 1381 & 1391 San Juan Street t ' I i RESIDENTIAL HOUSING MARKET OVERVIEW National Development Land Market 3 According to the TO Quarter 2018 PricewaterhouseCoopers' (Pwcs) heal Estate Investor Survey, "Compared to investors' response six months ago, a greater sense of caution is evident among our participants due to heightened uncertainty as it relates to the current political environment, capital markets, and the industry's position in the real estate cycle," Total spending on U.S. private construction was up 3.9% on a year -over--year basis in March 2018, according to the U.S. Census Burcau. When looking more closely at these figures, private residential spending was up 5.3% while private nonresidential spending was up 2.2% — still positive, but well below its year-over-year growth in March 2017 (+6.41/o). Table Dv1r1 U.N.(`.tlNS"I'Iti'T_'T7UN SPENDING' Year-Over-Year r :tinnreAdendal Change 'T'ramportatim +3R.2% rlfIIsrHettlH43 RKmaltion +16.1% Lodging +13494 Caarnlerdal +7,1% Fi IU011iA11 +6.696 Cornrminkution �6.g46 offm +2.1% HeNith Care +2.1% Manufaduring Re6gican.H Totnl +2.2% [te,iderltiu! +,.3%, Total lerirmte +$.g% 'PT16g4tivnsP�fian Mime CS.(Rrm"Burette w&%a naily mfin-eed In the nonresidential sector, transportation, amusement and recreation, and lodging reported the highest year-over-year gains in spending as of March 2018. While still growing, noticeable t slowdowns are reported for office and education. In contrast, spending for power, religious, and l manufacturing construction declined year over year in March 2018. Growth rates for development expenses, such as amenities, real estate taxes, advertising, and admin- istration, typically range from 1.0% to 8.0% and average 4.4% For lot pricing, investors indicate a range from 2.0% to 8.0%; the average growth rate is 3.8%. The absorption period required to sell an entire project varies significantly depending on such fac- tors as location, size, and property type. This quarter, our participants indicate preferred absorption BBG, Inc. Page 25 1381 & 1391 San Juan Street RESIDENTIAL HOUSING MARKET OVERVIEW periods ranging from one to 20 years. The mean absorption period is 9.5 years, comparable to the average a year ago. Over the next 12 months surveyed investors hold mined opinions regarding value trends for the na- tional development land market. Their expectations range from -10.0% to +10.0% with an average expected value change of+1.2%. This average is well below where it was last year (+5.3%), as well I as two years ago when it was +3.6%. 1 4 1 F r F 8RG, zn' Page 26 1381 & 1391 San Juan Street i SITE ANALYSIS Description/Location: The subject property is located on the southeast corner of San Juan Street &Utt Drive in Tustin, Orange Coun- ty, C.A. The subject is surrounded by residential on the south, east and north sides, x%ith Tustin High School to the west and a retail center to the southwest. I Size: 0.37 gross acres or 16,917 SF per the County Assessor. Shape: Rectangular in shape with approximately 110 feet of frontage on San Juan Street and 146 feet on U tt Thrive. i Access/Visibility: The subject site will have access from, both San Juan Street& Utt Drive. The subject's proposed development will include two and three--stories, and once built, the vis- ibility is expected to be average. The access is average-to- r g ood. Topography/Drainage: The site topography is relatively level and at street grade. Flood Plain: According to the Federal Emergency Management Agency's Flood Insurance Rate Map,the property is cur- rently located within 'Lone X500. The subject property is i located in Community Panel 060235 - 06059CO277J of the Flood Insurance Rate Map, dated Decctnber 3,2009. Zone X500 is an area inundated by 500-year flooding; an i area inundated by 100-year flooding uith average depths of less than 1 foot or with drainage areas less than 1 square mile; or an area protected by levees from 100-year flooding. Soil/Subsoil Conditions: A geotechnical analysis describing the soil and subsoil conditions at the subject site was not furnished to BBG, iInc. No sail conditions were observed by the appraiser that weree construed as detrimental. The appraiser as- surncs rhere are no hidden or unapparent soil condi- I ijon, that would render the site less valuable. BBG, Inc. Page 27 1381 & 1391 San Juan Street SITE ANALYSIS Manmade Improvements: The subject site is being appraised as vacant land. Environmental Hazards/Nuisances: An environmental study was not provided to BBG, Inc. The appraiser assumes that there are no hazardous con- ditions that would render the site less valuable. Development Restrictions: We were not provided with a current Preliminary Title Report to review. We do not know of any easements, encroachments, or restrictions that would adversely af- fect the site's use. All liens and encumbrances are as- sumed to be paid off or have no impact on the value of the subject property. Title is assumed to be free and clear of all encumbrances that may negatively impact the value of the subject property. Zoning: The subject site is zoned Multiple Family Residential (R3) zone by the City of Tustin.The following chart out- lines the primary regulations for the R3 zone. Multiple Family Residential (R3) Minimum Lot Area 7,200 SF Minimum Lot Width 70 Feet Maximum Coverage 650/Q Maximum Height 3S feet Maximum Density 24 units per Acre Minimum Site Area/Unit 1,750 SF Front Yard Setback 15 feet Rear Yard Setback 10 feet Side Yard Setback 5 - 10 feet Tarking 2.0 spaces per unit Based on our research, the subject represents a legal con- forming use as proposed. Detailed zoning studies are typ- ically performed by a zoning or land use expert, including attorneys, land use planners, or architects. The depth of our study correlates directly with the scope of this as- signment, and it considers all pertinent issues that have been discovered through our due diligence. We note that this appraisal is not intended to be a detailed determina- tion of compliance, as that determination is beyond the scope of this real estate appraisal assignment. Public Utilities/Services: All utilities are available to the subject site. SSG, Inc. Page 28 1381 & 1391 San Juan Street I i SITE ANALYSIS Surrounding Land Uses: The subject site is surrounded by a great deal of multi- family residential as well as single-family residential. Ad- ditionally, in close proximity there are two retail shopping centers, a high school, middle school, and ele- mcntary school, plus Interstate 5 a few blocks to the I West. Summary: The subject site is typical of residential parcels within the subject market area. Visibility is considered to be average and access to the site is average-to-good. No topographical characteristics are present which would detrunentally impact the development potential of the i site, Exhibits: i i 1 l 1 z *Aerial view prior to development Aerial View of Subject 88G, Inc. Page 29 1381 & 1391 San Juan Street SITE ANALYSIS 92 1 a rkl 5 Faa6A*X5 ,ren LJ e � u Q Q I!•4 N I eRll'°N L•LLLl1' o Ax w , o " 000a � Ooo o' o eo . ® e K Q •,NO 4317 J" SG49 u L �A�e MLL L AKNuE 9 "ARC 1976 f3ow s sue L..A 3 39 05 P•'X7 All632 MN M-30 NOPF l Asss LLOLE A ASlESSOA'!ALV 7R.47.M 4317 uN rm-/7,19 PASM NLAOM MOO[SMPAG[Oe PARCEL A"P PAP 71-41 RIO—N C4KLn COIWIY OF O•YIGF Plat Map BBG, Inc. Page 30 1381 & 1391 San Juan Street SITE ANALYSIS PLOT PLAN NEILY LINE OF TRACT NO.17666 N4V2VIVW 57.,r 52,1' c E 3.0 4.0' 2.9 Lij > 20.617.8' x —1�-_27.3' 0 z LL o Lu ry Lu Fj 3.0 4.V 4.(r w 17.6' 20.6 28.3' N 49*25I5O W 95.46 SAN JUAN STREET Plot Plan BBG, Inc. Page 31 1381 11 1391 San Juan Street i HIGHEST AND BEST USE ANALYSIS Highest and best use may be defined as the reasonably probable and legal use of vacant land or im- proved property, wbich is physically possible; appropriately supported, financially feasible, and that re- sults in the highest value. For highest and best use of land, as though vacant and property as improved, a use must meet four criteria as follows:. 1) physically possible; 2) legally permissible; 3) financially feasible; and 4) maximally productive. Analysis Of Site As Vacant The site of the subject property is rectangular in shape and contains a total of 16,117 square feet. 'the site topography is relatively level and at street grade. The site does not appear to present any development limitations. All utilities are available and ate sufficient for development as vacant, The site is considered conducive to multi-family development due to its zoning and surrounding uses. As such, the highest and best use of the subject site, as vacant, is considered to be a multi-family development to include detached homes as proposed, i r 1 1 i I 1 4 886, 1'/!C. Page 32 1381 1391 San Juan Street REAL ESTATE TAX ANALYSIS The property tax structure in California underwent a tremendous change in 1978 when the voters approved the Jarvis-Gann Amendment, popularly known as "Proposition 13". Under this law, the property tax for any property cannot exceed one percent of the sale price plus any bonded indebtedness for special assessments (road improvements, sewer lines, or other previously-existing or voter-approved debt). Another provision of the law was the reduction of the assessed value for all properties to the levels of 1975. The maximum annual increase in assessed value, under the law, is limited to two percent of the assessed value for the previous year and properties are reassessed to current market value only at times of construction or sale. In estimating the appropriate tax liability for the subject property, assessed values were utilized. The subject's 2017/2018 assessments, tax rates and the total tax liability for the subject property is shown within the following table. Summary of Subject Taxes Land Area Assessed (SF) 16,117 Land $679,669_ Improvement $0 Total $679,669 Base Tax Rate 1.072230l0 Base Taxes $7,288 Plus Fixed Assessments $897 Total Property Taxes $8,185 Tax Liability/SF $0.51 Due to California's method of property taxation, tax rates generally vary between 1-2% of assessed value; but annual tax bills vary widely from property to property. The definition of market value used in this report assumes a sale of the subject property. If the subject property were sold, it would be reassessed according to the County Assessor's opinion of its market value, which is typically the sale price. Our projection assumes that the subject would be reassessed at the concluded value in this report. Therefore, taxes would be calculated using the current tax rate, plus direct assessments. BBG, Inc. Page 33 1381 & 1391 San Juan Street APPRAISAL PROCESS Overview The three traditional approaches to valuing improved properties are 1. Sales Comparison Approach - a comparison of the property appraised with reasonable similar, recently conveyed properties for which the price, terms and conditions of sale are known; 2. Income Capitalization Approach - the processing of a projected net income into a valuation estimate via one or more capitalization techniques;and 3. Cost Approach - an estimate of the replacement cost of all structural improvements as if new, less loss in value attributable to depreciation from all causes plus the value of the land as if vacant. I The Sales Comparison Approach is founded upon the principle of substitution that holds that the cost to acquire an equally desirable substitute property without undue delay ordinarily sets the upper limit of value. At any given time, prices paid for comparable properties are construed by many to reflect the value of the property appraised. The validity of a value indication derived by this approach is heavily dependent upon the availability of data on recent sales of properties similar in location, size,and utility to the appraised property. t The Income Capitalization Approach is based on the principle of anticipation that recognizes the present value of the future income benefits to be derived from ownership in a particular property. The Income Approach is most applicable to properties that are bought and sold for investment purposes, and is considered very reliable when adequate income and expense data are available. Since income producing real estate is most often purchased by investors, this approach is valid and j is generally considered the most applicable when the property being appraised was designed for, or is easily capable of producing a rental income. The Cost _Approach is based on the premise that the value of a property can be indicated by the current cosi to construct a reproduction or replacement for the improvements minus the amount of i depreciation evident in the structures from all causes plus the value of the land and entrepreneurial profit.This approach to value is particularly useful for appraising new or nearly new improvements. { The Appraisal Process is concluded by a review and re-examination of each of the approaches to 1 value that was employed. Consideration is given to the type and reliability of data used, the applicability of each approach to the type of property being appraised and the value being sought. I l BBG, Inc. Page 34 1381 & 1391 San Juan Street I I APPRAISAL PROCESS lSubject Specific This appraisal employs one of the three traditional approaches to value: 1) The Sales Comparison Approach. i r i i BBG, Inc. Page 35 1381 & 1391 San.Juan Street t SALES COMPARISON APPROACH OF LAND (AS-IS) Introduction The value of the subject site as vacant has been developed by utilizing the sales comparison ap- proach. In developing tivs approach to value, recent residential sales transactions involving land in the vicinity of the subject property was undertaken in addition to similar sites in comparable markets in Orange County. In addition to the comparable research, real estate brokers were contacted who are active in the area and interviewed to derive information that is pertinent in arriving at a value of the subject site. The data which was gathered was checked for accuracy and then analyzed in relation to the subject prop- erty. Adjustments were abstracted from the market and made to quantify dissimilar characteristics evident in the sales. After applying the appropriate adjustments, an indication of the value of the site as if vacant was developed, s Analysis of Comparable Land Sales The parameters for our research involved these sales that occurred over the past several years, were similar to the subject site in size, and had similar land use capabilities. The land sales utilized were considered to represent the most comparable sites for comparison to the subject site and are em- ployed in this analysis to develop the value of the subject property. The factors influencing value, such as property rights conveyed, terms, conditions of sale, market conditions, location, comer/frontage, zoning, flood plain status, and size were considered in this analysis. 7'he comparable sales were adjusted for any dissimilarities as compared to the subject with the appropriate adjustment factors being derived from the marketplace (where possible). 11-ie Price Per Square Foot of Land ($/Sl') was considered to be the most appropriate unit of comparison for the subject in this market.The Sales Price per Unit was considered,but not utilized given the smaller land size. The sales utilized to develop a value for the subject site are summarized below, followed by a map. i i BBG, Inc. Page 36 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (AS-IS) COMPARABLE LAND SALES SUMMARY Date of Sale Price No. Project Sale APIN Zoning Grantor Grantee Size(SF) Sales Price per SF Notts 1 1111-1121 Wass Street Jun-17 501-071-08,09 MFR,R1 SCEL REECO 22,880 5675,000 $30 Listing broker,Dan Drantch Tustin,CA Properties Communities of Rodeo Realty Inc;on the LLC LLC market for approx.6 months with an asking price of $750,000 -Two contiguous residential lots; I SFR, 1 multi-family 2 2025 Cedar Street Oct-16 014-112-46 R1 Josephine - 5,227 $261,500 $50 -Listing broker,Gabriel Santa Ana,CA Nunez Albanez;on the market for less than 1 month,sold for more than the asking price -SFR Infill development 3 west side of S.Hewes Street Sep-16 392-181-21 R2 Howard Rich Century 19,689 $950,000 $48 -Listing broker,Roger Niez of Orange,CA American NAI Capital;marketing time Development was not reported -Interior parcel,to be developed with 12 units (16D/16A+D);sold entitled 4 627 E,Washington Avenue Jul-16 398-150-02,398- UN-2 Lotus Pacific Legacy 26,933 $590,006 $22 -Listing broker,Triumph Real Santa Ana,CA 152-16 Consultants Real Estate& Estate Solutions;marketing LLC Investments time unknown -Undeveloped land, previously approved for 7 townhome units 5 202 E.Adams Street ]an-16 016-644-12 R2 Yaseen Loc Tran 9,148 $225,000 s25 -Listing broker,Sperry Santa Ana,CA Trading& Commercial Globot Affiliates! Investment CrissCross;Confirmed via Inc. Costar and public records ,Vacant paved lot,zoned multi-family Subject Sale R3 16,117 — BBG, Inc. Page 37 1381 & 1391 San Juan Street SALES COMPARMON APPROACH OF LAND (AS-IS) Santiago OakS ( Regional Park 1 � T Villa Park Orange (aa 1 55} Park Acres Irvine Regional Pk Orange _ 1 . POIT,111�,�.,n1 Peters Canyon ' Regional Park, we d. North TUStIn Santa Aria ;xa} TusliI (ze l i l c}ma Ridge L.S �J Ix> 1c�hn Vl gay*e beacon ParK rJ i 1 Air'ort hfap data• '0 18 Gc-ee Comparable Land Sales Map ROG, Inc. Page 38 1381 & 1391 San Juan Street i SALES COMPARISON APPROACH OF LAND (AS-IS) Adjustments The cornpa.rable sales were adjusted for differences based on the categories discussed below. Please note that the percentage adjustments are based on the appraiser's subjective judgment, and arc not the result of paired sales analysis or any other strictly quantitative method. The percentage i adjustments shown are based on the appraiser's experience, comparisons of the available comparable data, estimated cost differentials, the opinions of market participants, etc. The adjustments should therefore be viewed as a quantification of the appraiser's thought process, and not the result of a purely objective mathematical process. All the sales were conveyed in Fee Simple title; therefore,no adjustments were required for property i rights conveyed. All of the sales were conveyed on a cash--to-seller basis or similar market terms; therefore, adjustments for favorable financing were not considered necessary for in this analysis. All of the sales were arm's-length, did not appear to occur under duress, and no special conditions requiring adjustment were noted. As such, no adjustments for conditions of sale were required. Market participants, developers and investors have generally all had the same consensus. Horne pric- es have been increasing over the last few years. We made an adjustment for market conditions of 3% 5 per annum. This applies to all sales. The location of the sales varied, but are generally similar to the subject as they are all located within five miles. No location adjustments were made for the sales. I All of the sales were in an undeveloped condition, similar to the subject. As such, no adjustments were considered necessary in the category of site conditions. Additionally, all sales required pertnit costs and fees to be paid. The subject's land is being appraised after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. In this areal.sis,we first compare all of the sales to the subject based on not being entitled, and then consider the monies spent by the owner on entitlement costs (approximately $80,000). Comp 3 sold entitled and was ad- justed downward. The subject property is zoned Multiple Family Residential (R3). The subject has been developed with 5 single-family residential homes. All the sales were single or multi-family zoned sites. The density of the sale comparables are considered similar. The subject property is a 16,117 square-foot site,which is within the range of the land sales of 5,227 to 26,933 square feet. Typically, the larger the site size, the lower the price per square foot, and vice versa. Downward adjustments were made for Sales 2 and 5. Your attention is directed to the following adjustment grid, which summarizes the adjustments discussed above. BBG,Inc. Page 39 1381 & 1391 San Juan Street SALES COMPARISON APPROACH OF LAND (AS-IS) ADJUSTMENTSALES PRICE/SF 627 1. 2025 Cedar West side of Washington Orange,1381 &1391 1111-1121 Wass Street :5.Hewes Avenue 202 E.Adams San luan Street Santa Ana, Street Santa Ana, Street Property Location Street Tustin,CA CA Sale Date - Jun-17 Ott-16 Sep-16 Jul-16 ]an-16 Size SF 16,117 22,880 5,227 19,689 26,933 9,148 Sale Price per SF $29.50 $50.03 $48.25 $21.91 $24.60 Rights Conveyed 0% 0% 00/0 0% 0% Financing 0% 0% 00/0 0% 0% Conditions 0% 0% 0% 0% 0% Subtotal Adjustments 0% 0% 0/. 0% 0% Adjusted Sales Price $29.50 $50.03 $48.25 $21.91 $24.60 Market Conditions/Time 3.8% 5.7% 6.1% 6.6% 8.0% Adjusted Sales Price $30.63 $52.90 $51.21 $23.35 $26.57 Location 0% 0% o% 0% 0% Entitlements 0% 0% 20% 0% 0% Zoning/Density 0% 01% 0% 0% 0% Site Conditions 0% 0°/n a% 0% 0% Utilities 0% 0% 0% 0% 0% Size 0% -20% 01% 0% -10% Subtotal Net Adjustments 0% 20% -2001. 00/. -10% Final Indicated Value $30.63 $42.32 540,97 $23.35 523.91 Value Summary Unadjusted Adjusted Minimum $21.91 $23.35 Maximum $50.03 $42.32 Mean $34.86 $32.24 Deviation $13.33 $9.07 Site Valuation - Conclusion After adjustment, the sales ranged from $23.35 to $42.32 /SF with a mean of$32.24 /SF of land. Overall, we conclude within the middle of the range at $30/SF for a non-entitled residential site. The owner spent approximately $$0,000 or $5/SF of land area on permit and school fees and other entitlement costs. We believe it is prudent to consider this cost and conclude at $35/SF. The Land value conclusion is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. Given such, the value of the subject "As-Is" based on land value is shown below. Valuc/SF x Land Area = Value Indication S35/SF x 16,117 = $564,095 Rounded: $560,000 88G, Inc. Page 40 _ 1381 & 1391 San Juan Street RECONCILIATION AND FINAL VALUE CONCLUSION Reconciliation and corrcla6wi of value is performed when more than one approach is used to value real properLN and wui hs the relative significance, applicability, and defensibility of each value indication and relics most heavily on the one that is most appropriate to the type and definition of i value sought. The conclusion drawn in the reconciliation is based on the appropriateness, accuracy, and quantity of evidence in the entire appraisal. This appraisal employs one of the three traditional approaches to value: 1) The Sales Comparison Approach. Our value conclusion was previously discussed and is shown below, Il In view of the facts and data in conjunction with the appraisal,it is the opinion that the "As-Is" Mar- ket Value of the fee simple interest in the subject's 16,117 square feet of land, as of September 25, 2018,was as follows: ` $560,000 i . 'Phis appraisal is not subject to any extmorrlinury assumptions. The appraisal is, however, subject to the following h;aheli�ul condition- • The scope of this assignment was to estimate the Market Value opinion of the fee simple in- terest in the subject's land only, with the hypothetical condition that the building improve- ments do not exist. The Land value estimate is after the final tract map is recorded and the lot is entitled for residential development of 5 condominium homes. The use of this Hypo- thetical Condition may have affected assignment results. Exposure Time/Marketing Period Per the Appraisal Standards Board (ASB) of the Appraisal Foundation, "reasonable marketing time" is an estimate of the amount of time it might take to sell a property interest at the estimated Market Value during the period immediately after the effective date of the appraisal. It is not intended to be a prediction of a specific date of sale and, therefore, may be expressed as a range. Exposure time is defined as the estimated length of tune the property interest being appraised would have been offered on the market prior to the hypothetical consurnmation of a sale at Market Value on the effective date of appraisal. Based upon the sales presented herein, an exposure period of 6 to 9 months is considered reasonable. BBG, Inc. Page 41 1381 A 1391 San Juan Street i EXHIBITS GLOSSARY..................................................................................................................................................A LETTEROF ENGAGEMENT..................................................................................................................II QUALIFICATIONS OF APPRAISER .......................................................................................................0 I I E BBG, Inc. Page 42 1581 & 1391 San Juan Street I I I I GLOSSARY i i BBG, Inc. Page A 1381 & 1391 San Juan Street Assessed Value: The value of a property according to the tax rolls in ad Economic Life: 'Che period over which improvements to real property valorem taxation;may be higher or lower than market value,or based on an contribute to property value,t assessment ratio that is a percentage of market value.r Effective Date:1)The date on which the an3ly.scs.opinions,and advice in an Asset: appraisal,review,or consulting service apply 2)In a lease document,the date 1 1, Any item,the rights to which may have economic value,including upon which the lease goes into effect. financial assets(cash or bonds),business interests,intangible assets (copyrights and trademarks),and physical assets(real estate and Effective Gran Income Multiplier(FLINT):The ratio between the sale price personal property). (or value)of a property and its cffr•w Jke gross i n;:c me.t s. In general business usage,something owned by a business and reflected in the owner's business short. Effective Rent:Total base rcpt,or minimum rent shpt t a lease,over the 11 specified lease term minus matt concessions,the tc n!r! a p,ti,l h Asset; resource controlled by the entity as a result of pa,t .tiC2ts and From tenant net of financial concessiuns provided by a landlord which future economic benefits are expected to Flow to the Exposure Time: 1) The time a property remains on the market, 2) The Capital Expenditure: Investments e.g., a cash (or the building nF Iiti ilii)) to estimated length of time the property interest being appraised would have been acquire or improve an asset, e.g., land, buildings, building ad;litinn,, sit, offered on the market prior to the hypothetical consummation of a We at improvements,machinery,equipment;as distinguished from cash outflaKs for market value on the efl'cctrve date oFthe appraise(. Comment: Hxposure tints expense items that are normally considered part of the current period's is a retros ctivc opinion based on an analysis of t events assuming a Pc P I� g operations,i competitive and open market(USPAP 2016-2017-ed).' Cash Equivalency: An analytical process in which the sale price of a transaction with noctmarket financing or financing with unusual conditions or Extraordinary Assumptions- An assumption, directly related to a specific incentives is converted into a price expressed in terms of cash or its equivalent.' assignment,as of the effective date of the assignment results,which,if found to be, false, could alter the appraiser's opinions or conclusions. Comment: Client: Extraordinary assumptions presume as fact otherwise uncertain information about physical,legal, or economic characteristics of the subject property, or 1. The individual,group,or entity who engages a valuer to perform a about conditions extcmal to the property,such as market conditions or trends; service(USPAP) or about the integrity of data used in an analysis.(USPAP,2016-2017 od).t 2. The party or parties who engage,by employment or contract,an appraiser in a specific assignment. Comment: The client maybe Fair Market Value. In nontechnical usage, a term that is equivalent to the an individual,group,or entity,and may engage and communicate contemporary usage of market value. with the appraiser directly or through an agent(USPAP, 2016-17-ed), Fair Share; That lxmion of total nurrkcl supply accounted fox by a subject 3. Generally the party or parties ordering the appraisal report. It does property. For example,a 100-key hotel in 1,L)Wkey market has a fair share of not matter who pays for the work(CUSPAP,2014-ed),' to%.t Condominium Ownership: A form of fee ownership of separate units or Fair Value: portions of multiunit buildings that provides for formal filing and recording of a divided interest in real property.s I The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the i Cost Approach; A set of procedures through which a value indication is measurement date.(FASB) derived for the fee simple interest in a property by estimating the current cost to 2. The estimated price for the transfer of an asset or liability between construct a reproduction of (or replacement for) the existing structure, identified knowledgeable and willing parties that reflects the including an entrepreneurial incentive, deducting depreciation from the total respective interests of those parties,(This does not apply to cost,and adding the estimated land value,Adjustments may then be made to the valuations for financial reporting.)(IVS).' indicated fee simple value of the subject property to reflect the value of the property interest being appraised. ` Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the Credible measurement date.' 1, Worthy of belief,suppone4i by (analysis of rcictiant lnfnrmation, Fee Simple Estate:Absolute ownership unencumbered by any other interest or Creditability is always m,a urcd in the context of intendcd use. estate,subject only to the limitations imposed by the governmental powers of (SVP) taxation,eminent domain,police power,and escheat 2. Worthy of belief. Comment: Creditable assignment insults require support, by relevant evidence and logic, to the degree Floor Area Ratio(FAR):The relationship between the aboveground floor necessary for the intended use. (USPAP.2016-2017-ed.).' area of a building,as described by the zoning or building code,and the area of the plot on which it stands; in planning and zoning, often expressed as a Deferred Maintenance: Needed repairs or replacement of items that should decimal,e.g.,a ratio of 2.0 indicates that the permissible floor area of a building have taken place during the course of normal maintenance.t is twice the total land area.t { Disposition Value: The most probable price that a specified interest in real Going-Concern Value: 1)73. An established and operating business having. property should bring under the following conditions: 1)Consummation of a an indefinite future life.2)74. An organization with an indefinite life that is sale within a specific time,which is short than the typical exposure time for sufficiently long that, over time, all currently incomplete transformations such a property in that market. 2) The property is subjected to market [transforming resources from one form to a different,more valuable form]will conditions prevailing as of the date of valuation.3)Both the buyer and seller are be completed, acting prudently and knowledgeably,4)The seller is under compulsion to sel1. S)The buyer is typically motivated. 6) Both parties are acting in what they Gross Building Area (GBA): l) Total floor area of a building, excluding consider to be their best interests.7)An adequate marketing effort will be made unenclosed areas,measured from the exterior of the walls of the above-grade during the exposure time,8)Payment wi;', be made in cash in U.S.dollars(or area.This includes mezzanines and basements if and when typically included in the local currency)or in terms of financial arrangements comparable thereto.9) the market area of the type of property involved.2)Gross leasable area plus all The price represents the normal consideration of the property sold, unaffected common arm,1111. For residential space, the total area of all floor levels by special or creative financing or sales concessions granted by anyone measured from the exterior of the walls and including the super structure and associated with the sale.This definition can also be modified to provide for substructure basement;typically does not include garage space, valuation with specified financing terms. t Glossary Page l Highest and Best Use; 1)The reasonably probable use of property that results patterns is a proper method for developing market discount rates for use in { in the highest value The four criteria that the highest and best use must meet are valuations to arrive at Market Value. Used in discounted cash Flow analysis to legal permissibility, physical possibility, financial feasibility, and maximum find the implied or expected rate of return of the project,the IRR is the rate of productivity. 2)The use of an asset that maximims Its potential and that is return which gives a zero net present value(NPV).See also equity yield rate possible,legally permissible,and financially feasible.'Tho hivhcst and best use (YF): financial management rate of return(FMRR);modified internal rate of may be for continuation of an asset's existing use or for :n:,:aitcm love uu sc. re ,rn(KURR);yield rate(Y). ' This is determined by the use that a matl.cr;Iartieipant%r onld hav to mind for the asset when formulating the pri�c that it would be willing to bid ([VS', 3) 1 nvestment Value:1)Tho ti alue of a property to a particular investor or class [The]highest and most profitab:, u,c l„v v.hich the proNrty :s adaptahlc incl of investors based on the investor's specific requirements. Investment value needed or likely to be needed in th,-reasonably nearfuture.(Unifomi Appraisal MAYhe different from m:srL er value because it depends on a set of investment Standards for Federal Land Acquis itions)r ritcr3a(ba(are not r:ccc,sarily ty pica!of the market 2)The value of an asset to the owner or a pruspecme owner for indkidual intC3tment or operational i Hypothetical Condition: 1)117.A condition that is presumed to be true when objectives.(IVS) it is known to be false. (SVP). 2) A condition,directly related to a specific I assignment,which is contrary to what is known by the appraiser to exist on the Leasehold Interest:The right held by the lessee to use and occupy real estate ! effective date of the assignment results,but is used for the purpose of analysis. for a stated term and under the conditions specified in the lease.' Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property;or about Lcased Fee Interest:The ownership interest held by the lessor,which includes conditions external to the property, such as market conditions or trends;or :he right to receive the contract rent specified in the lease plus the reversionary about the integrity of data used in an analysis.(USPAP,2016-2017 ed.) right when the least expires, r Incorue Capitalization Approach: Specific appraisal techniques applied to , Liquidation Value: The most probable price that a specified interest in teal develop a value indication for a property based on its earning capability and propctty should bring under the following conditions: 1)Consummation of a calculated by the capitalization of property income t sale within a short time period; 2) The property is subjected to market conditions prevailing as of the date of valuation;3)Both the buyer and seller Inspection: Personal observation of the exterior or tt ,i.r of th_, <<al estate arc acting prudently and knowledgeably; 4) The seller is under extreme that is the subject of an assignment performed I t,; ”, ;hc property compulsion to sell; 5)The buyer is typically motivated. 6)Both parties are characteristics that are relevant to the assignment, such.- amenities,general acting in what they consider to be their best interests.7)A normal marketing physical condition, and functional utility. Note that this i, not the inspection effort is not possible due to the brief exposure time 8)Payment will be made in i process performed by a licensed or certified building inspc tor.' cash in U.S.dollars or in terms of financial arrangements comparable thereto. 9) The price represents the normal consideration for the property sold, Insurable Value:A type of value for insurance purposes,' unaffected by special or creative financing or sales concessions granted by anyone associated with the sale, This definition can also be modified to Intangible Assets: 1) A nonmonetary asset that manifests itself by its provide for valuation with specified financing terms. ' economic properties.It does not have physical substance but grants rights and economic benefits to its owner, (IVS). 2) A nonphysical asset such as a Load Factor:A measure of the relationship of common area to useable area franchise, trademark, patent, copyright, goodwill, equity, mineral right, and therefore the quality and efficiency of buildin- arca layout,with higher security,and contract(as distinguished from physical assets)that grant rights load factors indicating a higher percentage of common arca to overall rentable and privileges, and have value for the owner. (ASA). 3) An identifiable space than lower load factors;calculated by subtracting the amount of usable nonmonetary asset without physical substance. An asset is a resource that is area from the rentable area and then dividing the difference by the usable area:t controlled by the entity as a result of past events (fur ex-ample, purchase or Load Factor= self-creation)and from which future economic benefits (inflows of cash or other assets)are expected.[IAS 38,8] Thus,the three critical m(ributes of an (Rentable Area—Uscable Area) Intangible asset are: 'identifiability,control(power to chwin ixnefiis from the Usable Arca asset), future economic benefits(such as revenues or reduced future costs). (]AS 38)r Markel Value.The major focus of most real property appraisal assignments. Both economic and legal definitions of market value have been developed and Intangible property: Nonphysical assets, including but not limited to refined.* franchises,trademarks,patents,copyrights,goodwill,equities,securities,and contracts as distinguished from physical assets such as facilities and equipment. 1.The most widely accepted components of market value are incorporated in (USPAP,2016-2017 ed.)' the following definition: The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, Intended Use: 1)The valuer's intent as to how the re-port wit]be used.(SVP) as of a specified date, in cash, or in terms equivalent to cash, under all 2) The use or uses of an appraiser's reported appraisal or appraisal review conditions requisite to o fair solo, with the buyer and seller each acting assignment opinions and conclusions,as identified by the appraiser based on prudently,knowledgeably,for self-interest,and assuming that neither is under communication with the client at the time of the assignment. (USPAP, duress. 2016-2017 ed,)" 2. Ntarket value is described, not defined, in (h—, Uniform Standards of Intended User: 1)The party or parties the valuer intends will use the report. Po,fvc sronal Appraisal Practice(USPAP)as follows:A type of value,stated as (SVP)2)The client and any other party as identified,by name or type,as users an opinion,that presumes the transfer of a property(Le.,a right of ownership or or the appraisal or appraisal review report by the appraiser on the basis of a bundle of such rights),as of a certain date,under specific conditions set forth communication with the client at the time of the assignment. (USPAP, in the definition of the term identified by the appraiser as applicable in an 2016-2017 ed,)' appraisal, Commcr.t Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client's ° Internal Rate of Return("IRR"):The annualized yield rate or rate of return intended use includes more than one intended user.The conditions included in on capital that is generated or capable of being generalized within an market value definitions establish market perspectives for development of the investment of portfolio over a period of ownership. Alternatively, the opinion.These conditions may vary from definition to definition but generally l indicated return of capital associated with a projected or pro forma income fall into three categories: stream. The discount rate that equates the present value of the net cash flows of a project with the present value of the capital investment. It is the rate the relationship, knowledge,and motivation of the parties{i.e,seller and at which the Net Present Value(NPV)equals zero, The IRR reflects both the buyer); retum on invested capital and the return of the original investment,which are the terms of sale(e.g.,cash,cash equivalent,or other terms);and basic considerations of potential investors. Therefore,deriving the IRR from the conditions of sale(e.g.,expo-sure in a competitive market for a analysis of market transactions of similar properties having comparable income reasonable time prior to sale). 4 Glossary Page 2 USPAP also requires that certain items be included in every appraisal report, Market Value of the Total Assets of the Business;The market value of the Among these items,the following am directly related to the definition of market total assets of the business is the market value of all of the tangible and !$ value: intangible assets of a business as if sold in aggregate as a going concern. This Identifications of the specitie property rights to be appraised. assumes that the business is expected to continue operations well into the Statement of the effective date of the value opinion, future.i Specification as to whether cash, terms equivalent to cash, or other precisely described financing terms are: assumed as the basis of the Marketing Time: An opinion of the amount of time it might take to sell a real appraisal, or personal property interest at the concluded market value level during the If the appraisal is conditioned upon financing or other terms, period immediately after the effective date of an appraisal. Marketing time specification as to whether the financing or terms are at, below, or differs from exposure time,which is always presumed to precede the effective i above market interest rates and/or contain unusual conditions or date of an appraisal.(Advisory Opinion 7 of the Appraisal Standards Board of Incentives. The terms of above- or below-market interest rates and/or The Appraisal Foundation and Statement on Appraisal Standards No, 6, other special incentives must be clearly set forth; their contribution to, "Reasonable exposure Time in Real Property Market Value Opinions"address or negative influence on, value must be described and estimated; and the determination of reasonable exposure and marketing time,).3 the market data supporting the opinion of value must be described and explained. Net Lease:A lease in which the landlord passes on all expenses to the tenant. 3. The following definition of market See also lease,' value is used by agencies that regulate federally insured F nancia!institutions in the United States:The most probable price that a proprrt, ,h0L]h1 bring in a Net Rentable Area CSMA): 1)The area on which rent is computed. 2)The competitive and open market under all conditions rcyui,ilc to a fair rlc, the Rentable Area ore floor shall becomputed by measuring to the inside finished buyer and seller each acting prudently and knowlcdtcahly, arid a,ssurning the surface of the dominant portion of the permanent outer building walls, price is not affected by undue stimulus, Implicit in this definition is the excluding any major vertical penetrations of the floor.No deductions shall be consummation of a sale as ofa specified date and the passing of title from seller made for columns and projections accessary to the building.Include space such to buyer under conditions whereby: as mechanical room,janitorial room,restrooms,and lobby of the floor.' Buyer and seller are typically motivated; Both parties are well Informed or well advised,and each acting in what they penetration Ratio(Rate):The rate at which stores obtain sates from within a consider their own best interests; trade area or sector relative to the number of potential sales generated;usually A reasonable time is allowed for exposure In the open market; applied to existing facilities,Also called:penetration factor,' Payment is made in terms of cash in U.S.dollars or in terms of financial arrangements comparable thereto;and Prospective opinion of value. A value opinion effective as of a specified The price represents the normal consideration for the property sold future date. The term does not define a type of value. Instead It Identifies a. unaffected by special or creative financing or sales concessions granted by value opinion as being effective at some specific future date. An opinion of 0 anyone associated with the sale. value as of a prospective date is frequently sought in connection with projects l (12 C.N.R.Yarn 34.42(g);55 Federal Register 34696,Augu.A 24, 1 c)90, as that are proposed, under construction, or under conversion to a new use, or amended at 57 Federal Register 122172,April 9, 1992; 59 Federal Register those that have not yet achieved sellout or a stabilized level of long-term 29499,June 7,1994) occupancy.' 4,The International Valuation Standards Council defines market value for the purpose of in(emational standards as follows:The estimated amount for which Reconciliation:A phase of a valuation assignment in which two or more value i an asset or liability should exchange on the valuation date between a willing indications are processed into a value opinion,which may be a range of value.,a buyer and a willing seller in an arm's length transaction,after proper marketing single point estimate,or a refercnce to a benchmark value,t and when:the patties had each acted knowledgeably, prudently and without compulsion,JVS) Reliable Measurement. [The IAS/IFRS framework requires that]neither an asset nor a liability is recognized in the financial statements unless it has a cost 5.The Uniform Standards for Federal Land Acquisitions defincs market value or value that can be measured teliably,1 as follows: Market value is the amount in cash, or on terms reason ably equivalent to cash,for which in all probability the property would have sold on Retraining Economic Life: The estimated period over which existing the effective date of the appraisal,after a reasonable exposure time on the open improvements are expected to contribute eco-nomically to a property; an competitive market,from a willing and reasonably knowledgeable seller to a estimate of the number of years remaining in the economic life of a structure or willing and reasonably knowledgeable buyer, with neither acting under any structural components as of the effective date of the appraisal; used in the 1 compulsion to buy or sell,giving due consideration to all available economic economic agc-life method of estimating depreciation.' uses of the property at the time of the appraisal.(Uniform Appraisal Standards for Federal Land Acquisitions) Replacement Coat:The estimated cost to construct,at current prices as of the effective appraisal date, a substitute for the building being appraised, using Market Value"As If Complete"On The Appraisal Date: modern materials and current standards,design,and layout, Market value as if complete on the effective date of the appraisal is an estimate of the market value of a property with all construction, conversion, or Retrospective Value Opinion: A value opinion effective as of a specified rehabilitation hypothetically completed,or under other specifiiod hypothetical historical date.The term retrospective does no(define a type of value,Instead, conditions as of the date of the appraisal. With regard to properties wherein it identifies a value opinion as being effective at some specific prior date.Value anticipated market conditions indicate that stabilized occupancy is not likely as as of a historical date is frequently sought in connection with property tax of the date of completion,this estimate of value should reflect the market value appeals,damage models,lease renegotiation,deficiency judgments,estate tax, of the property as if complete and prepared for occupancy by tenants, and condemnation.Inclusion of the type of value with this term is appropriate, e.g.,"retrospective market value opinion."' Market Value"As Is"On The Appraisal Date:Value As Is-The value of specific ownership rights to an identified parcel of real estate as of the effective date of the appraisal;relates to what physically exists and is legally permissible and excludes all assumptions umcerning hypothetical market conditions or possible rezoning,See also effective date;prospective value opinion. I Glossary Page 3 Sales Comparison Approach:The process of deriving a value indication for the subject property by comparing sales of similar properties to the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices(or unit prices,as appropriate)of the comparable properties based on relevant.market-derived elements of comparison.The sales comparison approach may he used to value improved properties.vacant land,or land being considered as though vacant when an adequate supply of comparable sales is available.' Scope of Work: 1)The type of data and the extent of research and analyses. (SVP). 2) The type and extent of research and analyses in an appraisal or appraisal review assignment,(USPAP,20162017 ed.)' Stabilized value: A value opinion that excludes from consideration any abnormal relationship between supply and demand such as is experienced in boom periods when cost and sale price may exceed the long-term value, or during periods of depression, when cost and sale price may fall short of long-term value.it is also a value opinion that excludes from consideration any transitory condition that pray cause excessive construction costs, e.g., a premium paid due to a temporary shortage of supply. Substitution:The principle of substitution states that when several similar or commensurate commodities, goods,services are available, the one with the lowest price will at the greatest demand and widest distribution.This is the primary principle upon which the cost and sales comparison approaches are based.3 Total Assets or a Business: Total assets of a business is defined by the Appraisal Institute as "the tangible property (real property and personal property, including inventory and furniture, fixtures and equipment) and intangible property(cash,workforce,contracts,name,patents.copyrights,and other residual intangible assets.to include capitalized economic profit)." Use Value: The value of a property assuming a specific use,which may or may not be the property's highest and hest use on the effective date of the appraisal.Use value may or may not be equal to market value but is different conceptually. ' 'Appraisal Institute,The Dictionary of Real Estate Appraisal,6th ed.(Chicago: Appraisal Institute 2010). 'Appraisal Institute, International Financial Reporting Standards for Real Property Appraiser, IFRS Website, ++t+�+ ifi a&,nks.cr,rrdutdr.r.ht,�rl. 'Appraisal Institute, The Appraisal of Real Estate, 13th ed.(Chicago: Appraisal Institute 2008).'This definition is taken from"Allocation of Business Assets Into Tangible and Intangible Components: A New Lexicon," Journal of Real Estate Appraisal,January 2002, Volume LXX,Number 1. This terminology is to replace former phrases such as:value of the going concern. 'Financial Publishing Company, The Real P-state Dictionary,7 ed. °U.S.Treasury Regulations Glossary Page 4 1 . LETTER OF ENGAGEMENT t . BBG, Inc. Page B 1381 & 1391 San Juan Street B J k Suptember 12, 2018 Ms. Fat,I,a Shamin •1040 C3aranca € arJcr ay,Suite 140 irvinc,CA 926t14 T-9143 748-7272 fc,rilr.,s�r�p;urizell.ner JOE: 0.37 Acres of Land—Entitled for 5 Condo 1 lomrs ' 1381 & 1391 San Jttan Street t 'l'ustsn, CA 92780 i I7e:ir Nts.Shityga,tr WL are Teased to submit this lircrlx,sal and our Tc•rms .unci Conditions for 111e apprx;:al of thc- rc�fcreni:ecl rr,:al cSGttC. PROPOSAL SPECIFICATIONS 11u,pose/Valuation Premise: Form oprninri of rhe,fi,llc,wi,ig. + :1s-(= tilarket Vafc ,r r)f the land only, with the hyl)orher,cal condition rh ur fliv build IN'.rmprovu,nenrs circ not cxisr. '1'Ire J.an4J valuc ,.s after the hurl tract nup is reworded mid ,hc lot is entitled for ro�;icicntial devel4,}imenr of i condominium hc,rnc—, Property Rights Appraised: Fm Simp)c. Interest Intended Use: E etiflilte itustrlcet value for purpc:sc of calcr,latpg the Park fees Intended User, 111x. Nirrlr,, Slvy.(rart and/or Cary ofTusrin Scope of Work. Antxipw-t4 easing;;xrlt s Comparison Approach Appraisal Standardair Uniform Srandards 4 Pr-ofcssional Aplsrm.t1 Practice (USPAP), wid Code of Plntc: .siu mll Ethics 4 i SA% eiEcc NEC, ShilY&Ln SePtLinher 1.2,2018 J�,Jgc 2 :ttid the Srandarxis of I�rc)Ecssinir.tl :if,pr,rtxal I'r;tctiGc- of the Appr�iusal Irnwilte. Fee: $751) Retainer: Kum RtTort Type: APP", q:11 s E:tpenses: l`lr llu(Ifed tnclutlla all ( Ere rrs s Payment Terms- Not ;rpplrcahlc• Report Copies: l Iain;tl PDF (l tard c-npitw avadal)le ut)nt, rektut.`,q) Delivery Date: I`7elivu) (if rhe appt.risail Conclusions and/or rqjort(:t) will the conipletecl ,t c(trtiinp f0ltmvrng OJivi ry Schedule. IYrgft It piet 2 weeks 4,r lrss banal%pon, 3 d',tvS .tact rceupt nl l't�n11Y1tilt;+, 1f;ipplil.al>lc Acceptance Date: I):ire of hsrcution 71ty aftulwd Gene N, Assumprionc And L.irnrting and (:catrctfion-4 (Fxhilut A) arid Prc,prrty I)i;tt,r Requ(xt (E hibir 13) arc dectned Fri of thi agrectnent;rs though scat forth in full herein. We Iipprtuatr this opportunity to Inc 01 Scivice to �.E,u on this ;1csi�rrmcrtr. if Yw,u ltiv( additional filuu:lions,please Contact u5. . �tnCrrLl1`. BBG, lntc. john M. Browne. NIM `tan;!,ging Dircciur 1'I�c>nc: 5A79.1-0941 E-mail: ibrowncicf"$h1kk►res.l+'�trl , I I Nis. shaypv) olulptcinbor 12, 2018 AGREED AND ACCEPTED Si Ature u -57 Phone Number ,Zg /�47f 1 IMU'l Addresq L i QUALIFICATIONS OF APPRAISER i i a i f k 88G, Inc. Page C 1381 & 1391 San Juan Street John M. Browne, MAI Managing Director— San Diego Work: 858.793.0941 BBG Mobile; 858.204.8474 jbrowne@bbgres.com PROFILE Mr. Browne joined BBG in April of 2013. Prior to joining BBG, Mr. Browne worked at Cushman & Wakefield Inc. (G&W), Valuation & Advisory as a staff appraiser and then Senior Director in the San Diego office. He and his associate were responsible for opening up the San Diego office in the fall of 2004 and helped grow the office into a successful C&W location. His responsibilities included performing appraisal and consultation reports in all property types, with an emphasis on multi-family, office, industrial and retail. Mr. Browne started his appraisal career in 2002 with FMV Opinions, Inc., a business and real estate valuation firm in Orange County, California. From 2003 to the fall of 2004, he worked for Lipman Stevens & Thene, Inc., a boutique, full service commercial real estate appraisal and consulting firm in San Diego, California. Prior to his appraisal career, he worked in the private equity, financial services, and mergers and acquisitions (M&A) industries. Appraisal and consulting assignments have included vacant land, office buildings, shopping centers, industrial complexes, commercial properties, residential apartments, leasehold/leased fee, and investment properties primarily in Southern California, with an emphasis on San Diego, Riverside and Orange counties. Valuations have been made of proposed, partially completed, renovated and existing structures. PROFESSIONAL AFFILIATIONS Designated Member of the Appraisal Institute — MAI designation achieved 2008 General Certified Appraiser: California Certified General Real Estate Appraiser No. AG036348; through February 8, 2021 EDUCATION San Diego State University, San Diego, California, Graduated 2000 Degree: Bachelor of Science, Finance COURSEWORK Appraisal Institute Courses Standards (USPAP); Business Ethics; Appraisal Principles; Appraisal Procedures; Income Capitalization; Highest and Best Use and Market Analysis; Advanced Sales Comparison and Cost Approaches; Intro to Valuing Commercial Green Buildings; The Discounted Cash Flow Model: Concepts, Issues and Apps.; and USPAP Federal Land Acquisitions. w� . ., . ._...n.... ....W�. Business, Consumer Services & Housing Agency _ j, CO BUREAU OF REAL ESTATE APPRAISERS ., REAL ESTATE APPRAISER LICENSE { John M. Browne has successfully met the requirements for a license as a residential and commercial real estate appraiser in the l State of California and is, therefore, entitled to use the title: "Certified General Real Estate Appraiser" This license has been issued in accordance with the provisions of the Real Estate Appraisers' Licensing, and Certification Law. BREA APPRAISER IDENTIFICATION NUMBER: A(F 036349 :} Lfdective Date: February 9, 2019 Date Expires: February S, 2021 Ji actin, Bureau Chief, BREA 3042941 r r • I i f s t t EXHIBIT (1511 i On Oct 2, 2018, at 2:48 PM, Reekstin, Scott <SReekstin@tustinca.org> wrote: Hi Fariba, The Director and Deputy Director of the Parks and Recreation Department have reviewed the submitted appraisal. Because the appraised value is inconsistent with the appraised values of other recent subdivision sites in the City, they will be asking another MAI-certified appraiser to do the appraisal (at the City's expense). Once that appraisal is completed I will forward a copy of it to you, along with the determination of the in-lieu park fees. If you have any questions about this matter, you should reach out to Chad Clanton, Deputy Director of Parks and Recreation at 714.573.3332 or cclanton@tustinca.org. Scott --_--Original Message----- From. fariba shaygan <faribas@pacbell.net> Sent: Tuesday, September 25, 2018 3:10 PM To: Reekstin, Scott <SReekstin@tustinca.org> Cc: Farzad shaygan <Farzadsh@pacbell.net> Subject: The entitled land appraisal for park fee calculation Hi Scott, I just received the appraisal for the entitle land value of 1381 San Juan. Please let me know what the park fees are. We are making good progress and should be done with the flat work next Thursday and the Landscaping is starting on Monday October 1st we expect to be 100% done with the homes by November 10th. All the insides are done with the exception of paint touch up , grout and appliance and fireplace installation which will all be done throughout the month of October. I can give you a personal Tour November Tuesday November 6th or any other time that works for you Please feel free to invite anyone else from the city that is interested to see the finish product. Thank you, for all the time and energy you put and all the support you gave me by always answering my phone and my questions I appreciate it and I am very excited about finally seeing the light at the end of the tunnel. Best Regards, Fariba 1 I I i 1 i I i EXHIBIT 116" APPRAISAL REPORT 16,0313 Sq.Ft. Multi-Family Zoned Lot NEC of Sari Juan Street& Utt Drive Tustin, California 4 �a I irl REAL ESTATE CONSULTANTS EXECUTIVE SUMMARY Property Type and Location: "Assumed to be Vacant"Multi-Family Zoned Lot NEC of San Juan Street &Utt Drive Tustin, California APN; 500-081-30 Date of Value: October 24, 2018 Property Rights: Fee Simple Site Data Size; 16,038 sq.ft.,or 0.37 of an Acre f Shape: Rectangular Du's/AC: 13.5 Zoning: R3, Multi-Family Residential District The general plan land use designation is HDR, High Density Residential Improvement Data Type: N/A Year Built: N/A Building Area: N/A Status: Five unit detached condominium project under construction Highest and Best Use "As If Vacant": Development with a five unit detached residential condominium project. VALUATION SUMMARY: Sales Comparison Approach: $1,150,000 Value Opinion: $1,150,000 R Exposure Time: 2 to 6 months I � TABLE OF CONTENTS INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I SITE DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ASSESSED VALUATION AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 MARKET ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . , . . . 16 s HIGHEST AND BEST USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 . . . 22 i VALUATION ME'T'HODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SALES COMPARISON APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 VA.LUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 ADDENDA: Qualifications Partial List of Clients i t REAL ESTATE CONSULTA:\'75 This appraisal and report have been prepared in conformance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation as well as the Code of Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and the requirements of the City of Tustin, in effect as of the date of the report. Date of Valuation 'I he opinions expressed in this appraisal and report are as of October 24, 2018. 1-11., ,ffective date of the report is the same date as set forth on the transmittal letter. Interest Appraised The property rights appraised are the fee simple estate. Market Value Defined 1 1, t�rrn "market value"' is defined as follows: Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably,and assuming the price is not affected by undue stimulus. hnplicit in this defini- tion is the consummation of a gale as of'a specified date and the passing of title fi-om seller to buyer under conditions whereby: I. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised,and each acting in what they consider their own best interest; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consici,,r_: ion fi)r tll,: t=, ,old unaffected by special or creative financing or sales cu r i. _ 11 Cd h—u ,ane associated with the sale. ' Office of the Comptroller of the Currency l2CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions (1). REAL ESTATE CONSULTANTS Assumptions and Limiting Conditions The analyses and opinions set forth in this appraisal are subject to the following assumptions and limitin, conditions. Note that the assumptions and limiting conditions could potentially have an impact on the value opinion reached in this appraisal. No responsibility is assumed by us for matters which are legal in nature. No opinion of title is rendered, and the subject property is appraised as though free of all encumbrances and the title is assumed to be marketable. No survey of the boundaries of the property was undertaken by us. All areas and dimensions furnished to us are presumed to be correct. Information contained in this appraisal has been gathered from sources which are believed to be reliable, and, where feasible, has been verified. No responsibility is assumed for the accuracy of information supplied by others. This appraisal is predicated on the hypothetical assumption that the site is vacant, according to the instructions of the client. There is currently a 5-unit detached condominium project being constructed on the site. This appraisal does not include any value contribution from the improvements. A preliminary title insurance policy prepared by Equity Title Company(Order No. 135293 1)dated June 13, 2013 on the 1391 San Juan Street property was uncovered during our investigations. According to the preliminary title insurance policy, an easement for pipelines in favor of Southern California Gas Company is indicated. According to the approved condominium map (Tract No. l 7665)and our on-site inspection of the property,there are three easements in favor of the Southern California Edison for utilities plus a sewer easement. The utility easements do not appear to be detrimental to the value of the property. This appraisal is predicated on the assumption that the existence of hazardous materials,which may or may not be present on the property, was not observed by the appraisers, unless otherwise stated in the appraisal. The appraisers have no knowledge of the existence of such materials on or in the property I Inc appraisers. however, are not qualified to detect such substances. The presence of substance:-, �rtch as }:h,,: ), or lead-based paint,or other potentially hazardous materials may affect the value r'. p,op,,ra. . The value opinion is predicated on the assumption that no such material exists on or i:' ii i:_. 11 operty that would cause a loss in value. No responsibility is assumed for any such conditik,i r any expertise or engineering knowledge required to discover them. A Geotechnical Investigation and Liquefaction Evaluation Proposed Townhomes prepared by Southern California Geotechnical Inc.(Project No. 06G 130-1)dated March 20,2006 covering 1381 San Juan S'treet(APN 500-081-02)only. The geotechnical report indicated that the 1381 San Juan Parcel has till dirt which will need to be excavated and recompacted in order to be suitable for construction of residential buildin,s. There is indicated to be low liquifaction hazard It is assumed 4 REAL ESTATE CONSUCTANM The signatory of this appraisal is a member of the Appraisal Institute. The Bylaws and Regulations of the Appraisal Institute require each member to control the use and distribution of each report signed by such mcinher. Therefore,except as hereinafter provided,the party for whom this appraisal report was prepared may distribute copies of i t, in its entirety,to such third parties as may be selected by the party for whom this report was prepared: however, selected portions of this report shall not be given to third parties without the prior written consent of the signatory of this report. Further, neither all nor part ofthis report shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media or other media for public communication without the prior written consent of the signatory of this report. Legal Description The legal description was formerly as follows: Lots 19 and 20 in Block "A" of Tract No. 632, in the City of Tustin, County of Orange, State of California, as per map recorded in Book 20, Page 30 of Miscellaneous Map, in the Office of the County Recorder of said county. The legal description is currently as follows: Lot 1 of Tract No. 17665, in the Cite (d' l ustin, (Clung o+ '()r ii`c, State of California, as per map recorded inBook963, Pages I and of-MiseellaflCOU, P1L2cords, in thzOfficeof theCounty Recorder of said county. Ownershita The vesting of the fee simple estate in the subject prohert�. its of the &11C 01 �dtLiatiuia. is as follows: Nexgen Management, LLC Trustee of the San Juan Street Land Trust Property Transfer History The current owner acquired the title to the property in two transactions. Reportedly,the comer parcel at 1381 San Juan Street was purchased in 2008 as a vacant site for a price of$220,000. The adjacent parcel at 1391 San Juan Street was reportedly purchased in 2013 for a price of$420,000. At the time of purchase, the property at 1391 San Juan Street included a single-family residence. The single-family residence was later demolished by the buyer at a cost of$8,600. The historical purchase price reported for both parcels was $648,600, prior to considering the cost of demolition. The historical purchase price equated to $40.44 for the 16,038 sq.ft. site. There have been no transfers of the fee simple estate in the subject property within the 3 year period prior to the date of value based on our research. 6 W V 3+�MiJ `37NV7 9 f n• a rl I oC is J�i•f,� , it-1r.� iI3lY�f�� ATPS/ _ .+ M O b � t 7_ �s ; ��� aoo ® . Q •oa ® Mo- � -� ,. 13.�d1S: rrnr ,vvS: W REAL ESTATE CONSULTAN-1`5 Allowed uses accordin-to the 1� ortirl,g include farming,home occupations,recreation areas,large family day care homes,community centers, )ectal halls, lodges,clubs, rest homes,extended care facilities,convalescent hospitals, sanitariums,profcssis)nal office use,swim schools,plus residential uses. The residential uses include single-family dwellings, duplexes, triplexes, boarding houses, condominiums, and multi-family dwellings or apartments. The site development standards for the R3, Multiple-Family Residential District, are set forth in the table which fol[ows. Cit% of Tustin Development Standards R3- Multi-Family Res. District Minimum Lot Area 7,000 Sq.Ft. Minimum Lot width 70' Maximum Bldg.Height 35' Maximum Lot Coverage 651% Maximum Density 24.89 Du's/Ac Setback-,-Front Yard 15' Side Yard 5'(10'coater side) Rear Yard 10' Parking Requirements 2 covered spaces plus 0.25 guest space per unit Note that the allowed density of development according to the general plan land use designation is a maximum of 25 dwelling units per acre(Du's/Ac). The indicated density of development ha,cd the zoning requirements (I unit for every 1,750 sq.ft. of site area),the maximum density of development for the subject site would b,9.1 units, rounded to 9 units. With 5 condominium units approved for development on a 16,01 sq.ft. site., tht indicated density of development is 13.5 Du's/Ac. The subject property is "assumed to be" a vacant land parcel. The minimum lot size, lot width, and density of development are conforming to the zoning requirements. The remaining development standards relate to building, structures. Since there are no building improvements included in this appraisal, comments regarding conformity to those development standards are not applicable. Streets & Access The subject property has access from Doth San Juan Street and Utt Drive. San Juan Street is a 64' wide asphalt paved street kvith 1 lane of traffic iii tits h direction. Utt Drive is a 60'wide asphalt paved street with t lane of traffic in each direction. San Juan Street mid f Ott Dnr care improved with concrete curbs and gutters,street lights,and fire hydrants. The Santa Ana Freeway(1-5) is located 0.4 of a mile to the southeast. This freeway is accessed via San Juan Street to the southeast to Red Hill Avenue, then southwest on Red Hill Avenue to the access ramps, Vhe nc, re,t commuter rail line is located approximately 2.5 miles to the southeast along Edinger Avenue to the outhc asi of Tustin Ranch Road. 10 J RFAL ESTATE CONSL71-TAN-FS STREET SCENES w MIN .i f r r, �.__ tom--h ��_ •ted/�"i = . r loom View of San Juan Street looking in a northwesterly direction 1 • ^ A f S .ry View of San Juan Street looking in a southeasterly direction �1 REAL ESTATE CONSULTAN75 SUBJECT PROPERTY PHOTOGRAPHS View of ffie abject site looking in an easterly direction from the western comet-of the site Vr 'a View of the subject site looking in a northerly direction from the southern corner of the site 14 REAL ESTATE CONSULTA.\M MARKET ANALYSIS Che SUbject property is located in the east-central portion of Orange County in the City of Tustin, California. A location map showing the area surrounding the subject land parcel is included on the following page for reference. he value of real estate is influenced by four basic forces. These environmental forces are categorized as physic:ll. social, economic, and political. Physical Environment The physical environment affecting the subject property is cornposed of both natural and man-made resources. The region's physical environment can be described as providing the necessary elements to support a variety of residen- tial, recreational, industrial, and commercial real estate developments. The natural environment surrounding the subject property consists of positive aspects such as the temperate Southern California weather. The man-made environment includes a combination of various community facilities, an adequate public service infrastructure, adequate schools, and an overcrowded transportation network at peak tra, cl times. There is also adequate police and fire protection, in addition to parks and community services. Susi tl Environment the social environment within a 1 mile radius of the subject property can be described as a population that has a _(HS median household income that is 20% lower than the median household income for the County of Orange i SX x.313 i and 131.10 lower than the median household income for the City of Tustin. The local population growth r.ito is forecast to be approximately 0.63%per year on a compound annual basis between 2018 and 2023,which is iu}.�er than the forecast for the City of Tustin(0.92%/yr.) and for the County of Orange(0.860/o/yr.), The median age of the localpopulation is 35 years old compared with 37 for the County of Orange. The local area average household size is approximately 3.10 people,which is higher than for the County of Orange(3.03 people). The percentage of the local population with a 4 year college degree is 23%, compared to 26% for the County of Orange. The housing stock in the local area is approx.38%owner-occupied housing,58%renter occupied,and 4% vacant. Consequently,the area's population and social environment create average to good demand capacity for the products produced by the region's various industries. The percentage of the local area population during 2018 within the arcs ul' 18-64(work force)equates to 64.9%of the population. The total local employed population was reported at 53 1 I the population. With a reported 3.9% unemployment rate, there is 7.9%of the working age population that i� r of in thy: work force. Compar,ttivek during, 2018, for the County of Orange, the work force equates to ol.2% and the total employed population i, �t).O`a. With a 3.9Oio unemployment rate, there is 9.3% of the working age population that is not in the work force. 16 I REAL FSTATE CONSULTA\75 Economic Environment The economic environment influencing the subject property is strongly related to the activity within the county and regional economic environment. The economic environment impacting the subject property is in an extended expansion phase. The economy is currently impacted by slow wage growth,the difficulty of obtaining credit,increasing,but still low, interest rates, as well as a large Federal budget deficit. The forecast is for a continued expansion of the economy during 2018. The unemployment rate is at pre-recession levels with hiring in the trade,government,services,manufacturing,and financial sectors. The local area 2018 forecast unemployment rate is approximately 3.9%,compared to a rate of 3.7% for the City of Tustin, and 3.9% for the County of Orange, The economic environment impacting the subject property is hi a growth stage with a local unemployment rate similar to the rate being experienced county wide. Political Enviurorunent The political environment impacting the subject property is created by nun r,2r ULI ti governmental influences,including the State of California,the County of Orange, and the City of Tustin. All planning and developmental guidelines for the subject land parcel are the responsibility of the City of Tustin CoEnnlunity Development Department. The General Plan of the City of Tustin controls land uses and is aimed at balanc i rig the growth. Regulations created by these governmental bodies affect the ownership, transfer, and development of real property. The regulations imposed by all levels of government have attempted to promote orderly growth, provide a mix of land uses, and create a desirable environment in which to work and live. The efforts in government regulations have focused on proper planning as well as environmental consequences of development. The County of Orange is the local taxing authority. The County collects taxes and distributes the funds to amortize such long term debts as school bonds, utility bonds, and direct assessment taxes. Surroundine Land Uses The subject property is located at the northeast corner of San Juan Street and Utt Drive, City of Tustin. The immediate land uses to the north, south,east, and west are apartments. Further to the north,east, and west are primarily multi-family and single-family residential land uses. Further to the south is Tustin High School and the Santa Ana Freeway. All adult school and alternative high school are located to the northwest of the subject property along San Juan Street. is .9 r�r�ic REAL ESTATE CONSULTAN75 (4,102/yr.on average over the 1105 through 1/17 time frame)indicates that over the prior 12 years demand has been in excess of supply. In addition to fundamental demand generated by household fonmition w ithin Orange County, the number of new home sales was also reviewed, Over the time period frons 2010 throe<`"h 2017, the average number of new home sales was indicated to be 3,390 per year. During 2017, 4,936 rne�4 home sales were reported. Over the first 2 quarters of 2018,2,326 new homes were sold, which reflects an increase of 9.4%in the number of transactions compared to the same time period during 2017. Prices for new homes sold during the second quarter 2018 reflected an increase of 17.6% compared to the same time period during 2017. A further comparison of the average number ofs] I% un i t; kw w h 1,Ji building permits were issued(supply of 3,298 avg. permits per year 2010-2017) with the average annual (icrn.rrui tier- new homes over the prior 8 years (demand of 3,390 avg. new home sales per year) indicates that the su11111y is not keeping pace with demand for single-family residences. Since the short term demand appears to be greater than the:,Lii)l)ly ingle-family homes, there is pressure for prices to rise and for additional units to be constructed. t-hc Fol lo%k ing table includes median price and sales transactions figures for single family homes for the 92780 zip code arcs of the City of Tustin, which is the local zip code for the subject property. Year Median Price °o C'lianue No. of Transactions °ro C.hanFe 2010 $ 470,000 + 3.31"o 236 (- 7.80,0) 2011 $ 420,000 (-10.60/1,) _182 +19.5% 2012 $ 430,000 + 2.40ro 289 + 2.5% 2013 $ 534,000 + 24.2% 289 -0- 2014 $ 550,000 + 3.0% 297 + 2.8% 2015 S 588,000 + 6.9% 351 +18.2% 2016 S 650,000 + 10.5% 312 (-11.1%) 2017 S 673,000 + 3.5% 345 +10.6% During 2011, the median price decreased followed by increases during 2012 through 2017. The number-of transactions moved in the apposite direction as price during 2010,2011,and 2016. When the price increased, the number of transactions declined, while when the price decreased, the number of transactions increased. 2012, 2014, 2015, and 2017, both the median price and the number of transactions increased. With the homes and the plans for an increasing amount of new residential construction, there attic tis to be enough ciernand for increasing land prices. This trend was supported by our research and interviews of developers. 20 l AREALASULTAWS HIGHEST AND BEST USE The "Highest and Best Use" is that use which is most likely to produce the greatest return over a given period of time. Net return refers to the residual left over frown gross yield after all costs have been deducted. Only those uses which are natural, probable, and legally permissible may be considered tenable. Thus,Highest and Best Use may be defined as the available use and program of future utilization that produces the highest present land value. We have investigated and analyzed the Highest and Best Use of the subject property"as if vacant"in regard to the following four considerations. Legally Permitted I The subject property is zoned R3, Multiple-Family Residential, The General Plan designation for i the subject site is High Density Residential. The allowed uses include a variety of residential uses i plus office use. i The existing use of the site is for the development with 5 condominium units that are almost completed. Based on the zoning and the existing approvals, the density of development allows 5 condominium units, This equates to a density of 13.5 Du's1Ac. Physically Possible The physical characteristics of the subject property, such as its size, frontage, topograph}, accessibility and utilities appear to be adequate for development. Economically Feasible There is supporting evidence in the surrounding residential market for buyer and renter demand. Our market investigations indicated that prices are increasing in the local area. The subject's local market is viewed as being in an under supply condition with demand growing faster than supply. Due to limited additions to the supply of new homes and apartments in the immediate area, the market analysis indicates that enough demand exists to support residential development on the subject site. Since the demand for residential properties also contributes to the demand for residential land, it appears that over the short term, this demand has been increasing due to the growth in population and increasing home prices and rents, Over the long terns, the population growth within the area should continue to add more pressure for increases to the supply of homes and apartments, Our analysis of the economic feasibility for the current development of a five unit condominium project on the subject site is based on a comparison of the land value opinion from the analysis of i land sales and the land value indication from a cursory Developmental Analysis based on the ! construction of a 5 unit condominium project. The value comparisons indicate that development of the subject property, with a good quality 5 unit condominium project appears to be economically feasible. 22 REAL ESTATE CQNSULTAIN-l"S VALUATION METHODOLOGY Basis of Valuation Valuation is based upon general and specific background experience, opinions of qualified informed persons, consideration of all data gathered during the investigative phase of the appraisal, and analysis of all market data available to the appraiser. %`alUdtion Approaches Three basic approaches to value are available to the appraiser: the Cost Approach, the Income Approach, and the Sales Comparison Approach. Cost Approach This approach entails the preparation of a replacement or reproduction cost estimate of the subject property improvements as if they were new and then deducting for losses in value sustained through age, wear and tear, functionally obsolescent features,and external factors affecting the property. The land value is then added to the depreciated cost and entrepreneurial incentive to arrive at a value opinion. Income Approach This approach is based upon the theory that the value of property tends to be set by the expected net income to the owner. It is in effect the capitalization of the expected future income into present worth. This approach requires an estimate of net income,an analysis of all expense items,the selection of a capitalization technique,and the processing of the net income stream into a value indication. Sales Comparison Approach This approach is based upon the principle that the value of a property tends to be set by the price at which comparable properties have recently been sold or for which they can be acquired. This approach requires a detailed comparison of sales of comparable properties with the subject property. One of the main requisites, therefore, is that sufficient transactions of comparable properties be available to provide an accurate indicatorof value and that accurate information regardingprice,terns,property description,and use be obtained through interview and observation. The value opinion of the fee simple interest in the subject property is supported through an application of a Sales Comparison Approach to support the current value of the"assumed to be vacant" land parcel. The Cost Approach is not applicable and was not utilized,since there are no existing building improvements,under the assumption that the site is vacant. No Income Approach was utilized, since buyer's and seller's of vacant land do not typically rely on an opinion of the capitalized land rental in making buy/sell decisions, when land sales are available. 24 REAL FSTATE CONSULTAN-M (COMPARABLE MLILTI-FAMILY RESIDENTIAL LAND SALE DATA SUMMARY Slaw*or Recurd*vl lottong/5hapcs I ood A— t'Llodfllrul I..p.,. Uenstts l3eeelupnwni Sale Pi rcr Grmwa.'3ranree 1(40,:ail ny' thko'r tial![ lcce—Ulil Avast 1S.111 Airr,l Lwidird l_',o d.r' Ione ) ' Awwn. ils T.0,11 Yt nit 114"e FcnmemaVlmfirmattatt .tern hlmpoltm Avenue 6130117 RS-4 97.030 Vacant I1 .Approved Tem Tract Map 35 247,000 5204,880 S5409 Sic Acgmssb ens LLC ,lnanccro Irrelyular -'23 Fsrrly Level lcla'noha t'em ms 53 LLC 071-1u1-1'.&'14 Paved Road Access Conslrucl 25 smLio-family humes All each to-11i r 427?662 AH avadabdc 2 mos Mike Hooter,agent of the seller No 2 SSC-of lWard A..venue&1-igueroa Sven k0.127117 I(2 17,628 Mm ntal improvements demolished 14 S Max None 5425,000 S 185.000 S3247 Grislikewtch Trust Santa Ana Rectangular 040 Fludy Level Based on 5 units Cdsonca Investments Inc 198.10148.49 A 5n Fated Road Access Unknown 321-.CTNL 11458555 All available I alas Adrea Bigler,agent afthc seller Na 1 1 Ural i-10601 Giadcn Gluvc BuulevarJ 113003 AR 29,936 E.xutl ng resad bldg&nes to be dentolishod 15 In Process 52.250,1M10 522-M81 575 04 3ennrc 1)o r'mm&HT Invcsntents LLC harden rintvr Irregular 0 69 Fairly Level Galdcn E=,Ic Enterpnses LLC 05WO92-1x, 25 &20 Paved Road Access Construct 10 cundus plm Io.6430 srul offil s all oexh to-lir su7779 ASI•wadable -'min Brian L ran,age.I al the seller No a IMI l Aluond Avcauc n/211IS NMU IS,841 ]"wiu„hldb Io bw demolished to Had approvals St.100.00t) '5157,143 $6444 Kim L.&Mary Nguyen t.wilen(;rave Rectangular G36 Fairly Lrvel Rowland A%iicadu CLC 113-1441.1) Paved RUaJ Access r'uusuoct 7 apt amts All cult in seller 227U")1 All avarlaute l I ato, Lang Nguven,agent of the*eller No 5 SWC a1S1 x111 Street Isr"F3"sheet MhW;I7 PC 296,417 Industrial park to be demolished *-I .Approved Tent Tract Map S21.230.000 S 15 1.[,,13 571 53 Van Buren Pla"LLC 'I usuu Irrtgulmr 681 Fairly Level Taylor Murtason of('alifunua LLC 401-341.-04 Paved Road Access Construct I40cuttdommituny All cash to sell" 4 122 1 n 1 Ail avaiiahre NrA Angela Mever,teps of the huyet 26 RFAL LSTAIT CONSULTANTS x e 'sr , ua... T LAND DATA N4. l :yrr i�c� REAL B7ATE CONSULTA\'T5 r. v YN.y 'A LAND DATA NO. 3 ' s i yi 30 REAL ESTATE CON5ULTA.N-M � x w �� a� ...�. iii`�.• � � k � ' f y LAND DATA NO. 5 .r kn. y _,. �4f f y _ .az3' ` � a 32 i :�m�ir� ILEAL ESTATE COAISULTANTS LAND DATA ADJUS1VIEN7'ANALYSIS MULT-FAMILY RESIDENTLIIL LAND VALUATION-NEC OF SAN JUAN STREFI s I''I'T DRIVE,1TSTIN,CA 4ublrlxPratrerry S k Solo,Data Na,3 <.lr•D,1a .,_s ;A,-]lata,",1 l SAW lhtr Na,S kddress: NEC of San Juan Street k Ile Drive 470 N KIAH,"ra Avenue SFC ail'Hawud Avenue R Figueroa Strep 10641-10401 Garden Grove Boulevard 0b I I Alwood Avenue SWC of Sixth Street&"B`S[reel Tusrm Anaheim Sam Ana Garden Grove Garden Grove Tustin 10101 Sole Price: NIA S5,247.0W 5475,000 K.25U.01)(1 S I,4110.UUfr S:1.30.000 PricjUnit S204,890 SI85,0mt S2 5110(1 SL57,143 5141,453 Pnce!Sq H 554.08 552 47 575 01 50944 S71 51 Property Rights: Fee Simple Sunrlur Similar Similar Similar Similar Conditions of Sole: Ann's Length Inferior Similar similar Similar Smnlar SlY0,865 50 SD SD Su S15 oh Su 00 SOO() Saw S0 illi Financing: All Cash(m Seller Similar Similar Simlar 41milar Similar Uv11r r,lluor: \'uric Similar Inferior Inform, In fermi W,:r+ur Sly S[,L'100 S2,500 S2.S57 S10.071 50 W Sri SO N1 Sl 26 St Hi u:a n-„I Sale. tu.2448 or3t}117 IU27117 .i0;IS 0r]1!18 SI1"117 S21,000 S 1 1.1 act S?,'in3 S3,12W S12,570 95 58 53 1' S M, $1 41 SS 50 1:Ilse+ir.l i'I I 11„fi,.,i,,, _ nc e; irr' S-3 4,.Ara 5161-100 S'I80,2 lel i,,,1,�I�. �1�1t1 111111.airrl :`:.-Y a'+"+- S"t,:. c72II L'i-91 : 'vc.v RcJ 11,1E }.,: d:rJ O 6• Slighdv Superior Inferior SLmllar Infenw, Sum6a1 Appruvals: ,01.11,1 %1;111. +te,lith}'In1Cr101 Inferior Inferior ;I.Lhrh'InIc—,t Ktivlltk 1111en0f lupographi BShape: FAIIII Ic',c1.l l(,,,canlaular lxmlar Similar Similar Sniiilar Sendai Paved.R d Snnslar Similar S-11. Sun,tar tiundar 1'hpslc;d Condition: Fmeil,C4 Loi similar Similar Similar Similar Sit,iai 4-11ar Y<DellsbW R3,13 5 Du'*�Ac Slightly Luwcr D—rt, Similar higher Overall Density ingher Densm Hcgher Deism Site area(Acres): 1001$ 47,030 t7,428 24,986 15.54€ ',)1,S17 OrmallI ,mlrari,n: Pol:,.iUntAttahysw Suporrr Slightlylnron" SlightlySup(tnar Inferior 111fer-, 1'11:t I rz's.t I I N'La sis Slightly Superior 114flor Slightly Supnrtar Similar Sliglith,Super,•: 34 ly IIIMC REAL ESTATE CONSULTANTS an approved tentative tract map at the time of sale. Land Data No. 2 does not have any approvals for development, which is inferior. Land Data No. 3 was in the process of obtaining approvals at the time of sale,which is inferior. Land Data No. 4 had approvals for construction of an apartment project, which is slightly inferior to having an approved condominium map. I Upward adjustments to all of the comparable land sale data were made due to their inferior or slightly inferior status of approvals. Density The subject property has an approved density ofdevelopment of approximately 14 Du's/Ac, Land Data Nos. l has a lower density of development, which results in the necessity for a downward adjustment to the price per unit indicator. Land Data Nos. 4 and 5 have a higher density of development,which results in the necessity for an upward adjustment to the price per unit indicator. Land Data No. 2 has a fairly simILir density of development compared to the subject property and no adjustment was supported basCd on the comparative analysis. Land Data No. 3 has a fairly similar density of residential development compared to the subject property, but also has an additional 0.69 FAR of office use planned for the site. After considering; the additional office density,the density ofdevelopmentofthis comparable is hi,gherthan the subject property. Since the office density is not reflected in the price per unit indicator, a downward adjustment to the price per unit indicator from Land Data No.3 is supported due to the higher overall density from the office space component. Site Siwe The site size adjustment was based on a comparative analysis of the adjusted indicators for all of the sale data, after making all of the previously discussed adjustments, Land Data Nos. 2 and 4 are similar in size to the subject property and no site size adjustments are warranted. Land Data No. 3 is slightly larger in size,while Land Data Nos. 1 and 5 are larger in site size. Typically, the smaller the size of the site the higher the price per unit. In many cases, this comparison is not true due to the utility of scale in residential development of parcels larger than 0.5 of an acre compared to less than 0.5 acre in size. The comparative analysis did not provide any market support for a size adjustment to Land Data Nos, 3,4, or 5. The price per unit indicators from the comparable land data range from S 151,643 to$225,000, before making any adjustments. After adjustments were considered for property rights transferred, condition of sale, financing, demolition costs, and time of sale or market comlitions, the indicated price range per unit for the subject site from the comparables is from$163,200 to 5292,4!i 5 36 TE CO REAL ESTATE C©NSULTA The lower end of the reasonable value range from the analysis of'the sale data appears to be above the adjusted value indicator from Land Data No. 2 ($1 97,160/unit), or approximately$200,000 per unit. Theupper end of the reasonable valuerange from the analysis of the sale data appears to be below the adjusted value indicator from Land Data No. 3 ($235,463/unit), or approximately$230,000 per unit. Based on the comparative analysis performed,the indicated opinion of the market value range for the subject land parcel is from$200,000 to$230,000 per unit. The calculation of"the value range from the price per unit analysis, based on the potential for the development or 5 units, is set forth as follows: 5 Units X $200,000/Unit = $1,000,000 i . 5 Units X $230,000/Unit = $1,150,000 Say $'1,000,000 to $1,150,000 Price Per Sq.Ft. Analysis The price per sq.ft, analysis was performed in the same manner as the price per unit analysis. All of the elements of comparison utilized in the price per unit analysis have also been utilized in the price per sq.ft. analysis. Note that the price per sq.ft, adjustment under the density analysis is the opposite asunder the price per unit analysis, Under the price per sq.ft. analysis, typically the higher the density of development, the higher the price per sq.ft. indicator. Therefore an adjustment to reflect a lower level of density compared to a higher level of density would be a downward adjustment to the comparable with the higher density of development. On an overall basis after considering all of the elements of comparison discussed, Land Data No, 1, 3, and 5 are considered to be slightly superior to the subject property, Land Data No. 4 is considered to be similar, while Land Data No. 2 is inferior to the subject property under the price per sq.ft. analysis. A summary of the adjusted price per sq.ft.indicators of value for the subject site from the analysis of the land sale data is included in the following table Sale No. CoinDfIrIng . Ft 5 Slightly su sior 78.90 i 3 Slightly 5u enor 8. .3 E Sli rht u nor 75, l 4 Sim ar 72.11 2 Inferior 55.92 Sub w Proper. 0 to 7 Land Data No. 5 is similar in location, has a higher allowed density of development, a slightly inferior status of approvals,and a larger site size. Under the price per sq.ft. analysis, the higher the density the higher the price per unit. The superior aspect of the higher density of development,outweighs the inferior aspects of the.s1 ightly inferior status of approvals and the larger site size. Overall, this parcel is considered to be slightly superior compared to 38 REAL MATE CONSULTANTS Sales Comparison Approach Reconciliation The price per unit analysis resulted in a land value ram-,c from $1,000,000 to $1,150,000. The prig pCI '�q.It. analysis resulted in a value range from $1,125,000 to$l,170,000. The greatest weight was given to the price per unit analysis since that is the unit of comparison that is most relied upon by developers. The price per sq.ft. analysis was given secondary weight since that unit of comparison is not relied as frequently as the price per unit analysis for residential land. In this appraisal both valuation analyses provide support for each other with overlapping value ranges. Based on the reasons set forth previously, the opinion of the market value for the subject land parcel is$1,150,000. The value opinion of$1,150,000 for the 16,03$ sq.ft. site results in an indication of the value per sq.ft. of$71.70 and a price per unit indicator of$230,000 based the potential for 5 detached condominium units to be constructed. 40 REAL ESTATE CONSULTANTS CERTIFICATION 1 certify that,to the best of my knowledge and belief: The statermertt<s of fact contained in this report are true and correct. The reported analyses,opinions,and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial,and unbiased professional,analyses,opinions,and conclusions. 1 have no present or prospective interest in the property that is the subject of this report,and no personal interest with respect to the parties involved. I have not performed appraisal services involving the subject property for this client withi n the 3 year period preceding the date of this report, have no bias with respect to the property that is the subject of this report or the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. The reported ansly,,es,opinions,and conclusions were developed,and this report has been prepared,in conformity with the requirements of the Code of Professional Ethics& Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Peter B. Finnerty has completed the continuing education program of the Appraisal Institute. have made a personal inspection of the properties that are the subject of this report. No one provided significant real property appraisal assistance to the person signing this certification. I am competent to appraise the property that is the subject of this report based on my previous experience appraising similar types of properties. R,.,hrctfully submitted. Peter B. Finnerty, 1`1:\1 Certified General Real Estate Appraiser Californi(i Certificate No, AG001937 42 I I I I Q A L I FIC ATIONS i Superior Court of San Diego County Federal District Court Federal Bankruptcy Court Arbitration Proceedings LICENSES Licensed California Real Estate Broker Certified General Real Estate Appraiser,State of California ! EJ)UCATIONAL ACTIVITIES a B.S., Real Estate Administration, Indiana University, 1976, Special courses in Real Estate: Principles of Real Estate Real Estate Appraisals r Case Studies in Real Estate Real Estate Law Residential Construction and Design Survey of Real Estate and Land Economics Courses sponsured by American Institute of Real Estate Appraisers: 3 Course 1-A Principles,Methods, and Techniques of Real Estate Appraising Course I-B Capitalization Theory and Techniques Course 11 Urban Properties Course VI Introduction to Investment Analysis SCOPE OF EXPERIENCE i Vacant Land Single-family residential sites, multi-family residential sites, commercial and industrial sites, acreage, planned communities, Residential Single-family residences,duplexes,apartments,condominiums, planned unit developments,mobile homes, I Commercial Shopping centers (regional, neighborhood and com,nurdty), retail stores, general office buildings, medical office buildings,car dealerships, banks. a Industrial Single and n:.:'i -tenant warehouses and manufacturing buildings,truck terminals,business parks,R&D buildings, garages,mini-.k:irehouses. Special Purpose Churches, veterinary Hospitals, hotels and resorts, restaurants, theaters, mobile home parks, submerged tidelands, mixed-use developments,landfill properties,contaminated properties. I e t ATTACHMENT E PACIFIC REAL ESTATE CONSULTANTS APPRAISAL REVIEW, 1212!2418 December 2, 2018 REAL ESTATE CONSULTANTS Our File No. 18-19.2 City of Tustin Parks and Recreation Services 300 Centennial Way Tustin, CA 92780 Attn: Mr. Chad Clanton, Deputy Director Re: Review of the Appraisal 1381-1391 San Juan Street Tustin, California Ladies & Gentlemen: Pursuant to the request and authorization of the client, the City of Tustin - Parks and Recreation Services Department, we have conducted an ttppral,al review of the above-referenced appraisal transmitted in a written report. The intends d use of the appraisal being reviewed is to assist the intended user(City of Tustin) in the response to an appeal regarding the amount of the park in lieu fee for Final Tract Map No. 17665. The purpose of this appraisal review is to provide the client with an opinion as to the quality of the appraisers'work including a review of:(1)the completeness of the appraisal as it relates to the scope of work set forth within the appraisal; (2) the adequacy and relevance of the data and the propriety of any adjustments made to the data;(3)the appropriateness of the appraisal methods and techniques used; and (4) whether the analyses, opinions, and conclusions in the appraisal and report are appropriate and reasonable. The reviewed appraisal and report indicate that the opinion of value for the property appraised is the market value of the fee simple estate, subject to the hypothetical condition that the site is vacant. The appraisal report indicates that the hypothetical condition may have affected the assignment results. The appraisal report indicates that the appraisal is transmitted in a written report format with a date of value of September 25, 2018 and a date of the report of the same date. The appraisal as well as the appraisal report were prepared and signed by John M. Browne, MAI, a California Certified General Real Estate Appraiser. The appraiser did not inspect the property during the course of this assignment. The appraiser relied upon a prior inspection of the property on October 31, 2016 for the appraisal performed with a date i of value of September 25, 2018. 668 N. Coast Highway, Suite 1409, Laguna Beach, California 92651 (949) 752-9323 • E-Mail: pacreconCapacbell.net City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 2 Due to the lack of inspection of the subject property during the course of this appraisal assignment by the appraiser,the location of the appraiser in San Diego,and the lack of photos of thea comparable properties in the appraisal report,the question as to whether the appraiser inspected the comparable properties is raised. The lack of any location adjustments for the Santa Ana properties located adjacent to industrial developments also calls into question whether or not the comparables were inspected. Assumptions and Limiting Conditions The analyses and opinions set forth in this appraisal review are subject to the following assumptions and limiting conditions: No responsibility is assumed by us for matters which are legal in nature. No opinion of title is rendered,and the property that is the subject of the appraisal being rev i cued is assented to be free of all encunibrances and the title is assumed to be marketahle. No survey of the boundaries of the property was undertaken by us. All areas and dimensions furnished to us are presumed to be correct. This appraisal review is predicated on the assumption that the existence of hazardous materials,which may or may not be present on the property,was not observed by the review appraiser,unless otherwise staled in the appraisal review report. The review appraiser has no knowledge of the existence of such materials on or in the property, except as noted in the appraisal reviewed. The review appraiser is not qualified to detect such substances. The presence of substances such as asbestos, lead paint,or other potentially hazardous materials may affect the value of the property. No responsibility is assumed for any such conditions,or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. No engineering survey has been made by us. Except as specifically stated, data relative to size and area were taken from sources considered reliable. No encroachment of real property improvements are considered to exist. We shall not be required,by reason of the appraisal review, to give testimony or to be in attendance in court or any governmental or other hearing with reference to the appraisal reviewed or the property involved without prior arrangements having first been made with us relative to such additional employment. City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-14.2 - Appraisal Review Page 3 The signatory of this appraisal review is a member of the Appraisal Institute. The Bylaws and Regulations of the Institute require each member to control the use and distribution of each appraisal review signed by such member. Therefore, except as hereinafter provided, the party for whom this appraisal review was prepared may distribute copies of this appraisal review, in its entirety,to such third parties as may be selected by the party for whom this appraisal review was prepared; however, selected portions of this appraisal review shall not be given to third parties without the prior written consent of the signatory of this appraisal review. Further, neither all nor part of this appraisal review shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media or other media for public communication without the prior written consent of the signatory of this appraisal review. Scope of the Appraisal Review The scope of the appraisal review for this assignment included the process of reading the appraisal report,reviewing the data,analyses, and conclusions for conformity with the Uniform Standards of Appraisal Practice (USPAP) of the Appraisal Foundation, a verification of the public records sale references, verification of other information regarding the sale data, and adequate market support for the adjustments applied. The property that is the subject of the appraisal under review was inspected previously on October 24, 2018 from the adjacent public right-of-way. That inspection has been relied upon as a part of the appraisal review process. I have not conducted any additional or independent research of the market to ascertain the availability of any additional sales or other indicators of market value that could pertain to the subject property, other than the market data as well as the land sale data uncovered and utilized in the appraisal of the same property and other properties within the City of Tustin over the prior four years. Intended Use and Intended User of the Appraisal Review The City of Tustin-Parks and Recreation Services Department,the client and intended user intends to use the appraisal review to aid in forming the response to an appeal regarding the amount of the park in lieu fee for Final Tract Map No. 17665. Any use of this appraisal review by any other party is not intended. City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 -Appraisal Review Page 4 Date of Appraisal Review The date of the appraisal review is December 2, 2018. The effective date of the appraisal review report is the date set forth on each page of the report. Appraisal Review This review is of an appraisal of a parcel of vacant land that covers 16,117 sq.ft. and is located at 1381-1391 San Juan Street, Tustin, CA. The property that is the subject of the appraisal being reviewed is appraised under the hypothetical condition that the site is vacant land. The site is currently being improved with a 5 home detached condominium project. The appraisal of the property is reported on page 11 to be the market value of the fee simple estate. According to USPAP, the definition of market value and the source must be reported in a written appraisal report. The body of the appraisal report contains no reference to the definition of market value or the source. There is a definition of market value with a soffce located in the Glossary. While not a USPAP violation,the lack of reference to the definition of value and source within the body of the report is not typical of appraisal reporting. The Scope of the Appraisal,on page 13, indicates that the land sale data is analyzed using the price per sq.ft.and the price per unit comparisons. On page 36,the price per unit is indicated to have been considered but not utilized. The lack of the inclusion of a price per unit analysis is inconsistent with the Scope of the Appraisal set forth previously. The Region and Area Analysis presents general data with no analysis and no conclusions reached. The Life Stage and Trends set forth on page 24 indicates that the long-term growth outlook for the area is one of continued stability and growth due to the location proximate to Lake Mission Viejo. Lake Mission Viejo is located appro\iniately 13 miles to the southeast in Southern Orange County. The City of Tustin is located in Central Orange County with different influences. This comment appears to be an error. The Residential Market Overview includes information about the National Land Development Market, which may or may not be applicable to the local market. No market information regarding the local residential market and trends to aid in supporting the market conditions adjustment used in the Sales Comparison Approach was presented or analyzed. The size of the land parcel indicated in the appraisal is 16,117 sq.ft. and is indicated to be from the Orange County Assessor's records. Research of the grange County Assessor's records during City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 5 October 2018 indicated that no size characteristic are associated with the recently revised Orange County Assessor's records for the subject parcel (APN 500-081-30). Note that the information for the prior Assessor's Parcel Numbers for the subject property (APN's 500-081-01 and 02) were no longer In the. Assessor's records as of October 2018. Even without being able to verify that Assessor's records source for the parcel size, the Orange County Assessor's maps dimensions indicate an area of 16,060 sq.ft. and the dimensions on Tract Map No. 17665 indicate an area of 16,038 sq.ft. Therefore, the site size figure in the appraisal reviewed of 16,117 sq.ft. appears to be larger than the correct size. On pages 34 and 35, the Appraisal Process concludes with the use of only the Sales Comparison Approach. There is no explanation for the exclusion of the Cost and Income Approaches,which are also discussed in this section as potential valuation approaches. Not including an explanation as to why these approaches were not appropriate for this valuation assignment in the appraisal report is a violation of USPAP Standards Rule 2-2(a)(viii). The appraisal being reviewed was transmitted in a written report format. The opinion of the market value of the fee simple estate in the"assumed to be vacant"land parcel is based on the application of a Sales Comparison Approach. The appraisal date of value was September 25, 2018, and the date of the report reviewed was also September 25, 2018. The conclusion of the highest anEl best use "as if vacant" for the land that is the subject of this appraisal review is for multi-family development, consistent with the proposed detached home project. The appraisal transmitted in an appraisal report that was reviewed indicates that the valuation process followed in reaching the opinion of the market value for the fee simple estate in the vacant parcel of land was not adequately completed in compliance with the scope of work set forth in the Appraisal Report. The data utilized to arrive at the opinion of value for the subject property appears to represent the low end of the value range for this appraisal assignment. The presentation was inadequate and the analysis of the data was not acceptable. In the application of the Sales Comparison Approach,quantitative adjustments were made. On page 39, in the Sales Comparison Approach, it is stated that the ". . . adjustments are based on the i City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 6 appraiser's subjective judgement,. . .". The adjustment should be based on the appraiser's judgment. from market analysis and not from subjectivity. On page 39, all of the sales were indicated to be arm's length transactions with no adjustments required. Land Sale No. 3 included the seller joining the buyer's development joint venture,which resulted in a reduction of the price paid for the land to the joint venture. The upward adjustment, according to the verification source, is 26% to the price reported in order to reflect market value. The lack of the necessary adjustment for Conditions of Sale to Land Sale No. 3 results in this sale comparable not being a reliable indication of value and the indicator from this analysis is substantially tower than it should be. On page 36, it is indicated that home prices have been increasing. The concluded adjustment is upward by 3%C per year. There is no support in the appraisal report for this rate of increase in the local area. Research performed by the Real Estate Research Council of Southern California, which includes appraisals of the same residential properties on a semi-annual basis,supports a home price increase in the City of Tustin at a rate of 6.2% during 2016 and 6.9% during 2017. Based on the actual market data supporting home price changes, the rate of change used in the market conditions adjustment of the appraisal appears to be lower than reasonable. On page 36, it is indicated that all of the land sale data are located within 5 miles of the subject property and therefore there is no support for any location adjustments. This is reflective of a conclusion based on lack of local knowledge. Within 5 miles of the subject property there are a variety of land uses and environmental influences. Land Sale Nos.2,4,and 5 are located in the City of Santa Ana adjacent to industrial development, which is substantially inferior to the subject property. Based on home price variations between the Santa Ana properties and the subject property, upward location adjustments from 30% to 43% were supported for the inferior Santa Ana locations, based on median price data and price data from the Real Estate Research Council of Southern California. The same comparison provided market support for an upward adjustment to the property located in the City of Orange as well. By not making appropriate adjustments for locational variances, the reliability of the appraisal decreases substantially. The information set forth regarding Land Sale No. 1 through 5 in the appraisal report reviewed,was consistent with the public records sale history,except for minor difference, regarding the land sizes for Land Sale Nos. 2 and 3. City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 7 The reported Grantor and Grantee in the appraisal report for Land Sale Nos. 2, and 3, as well as the Grantee for Land Sale No. 5 are not consistent with the public records information. The zoning for Lana Sale No. 1 is reported in the appraisal to be Rl & MFR. That is not correct. Both parcels are Toned MFR. The MFR zoning allows a maximum density of development of approximately 24 dwelling units per acre (Du's/Ac). Land Sale No. 1 was previously verified by Pacific Real Estate Consultants in the course of performing appraisals of other residential land parcels within the City of Tustin. Compared to other land sales in the City of Tustin,that occurred prior to and subsequent to this sale,the price per sq.ft. for this sale is much lower than the indicators from the other land sales. In addition, this property was previously purchased in April 2013 for a price of 5670,000. The indicated change in value of only$5,000 over 4 years did not appear to be consi,tent with other value change indicators in the area. For these reasons,this sale was not considered to be representative of the local market and it was never used in appraisals completed by Pacific Real Estate Consultants. The zoning for Land Sale No. 3 is reported to be R2. That is not correct. The zoning is C1, with a Conditional Use Permit allowing the senior's apartment development. The density of development for this property is 2.7 Du's/Ac. The marketing time for Land Sale No. 3 is indicated to be not reported in the appraisal report. The actual exposure time for this property was 24 months due to the need to obtain the CUP, based on the verification source, Land Sale No. 5,which occurred in January 2016,was later sold in May 2016 for a 21%higher price of$273,000. This later transaction was not used in the appraisal, which is suspicious. The lack of use of the more recent transaction results in the appearance that the appraiser may be trying to use low priced sale data for this assignment. On page 39,the status of approvals adjustment is based on adding$80,000,or approximately$5.00 per sq.ft. (per page 40),to the value indicators from the sales based on none of the sales having any approvals for development. Only one of the sales had approvals for development at the time of sale, Land Sale No. 3. On page 40, the adjustment to Sale No. 3 for the benefit of hay ing approvals for development is downward by 20%, which equates to a $10.40 per sq.ft. downward adjustment. Then to reflect this property having approvals for development,a$5.00 per sq.ft. upward adjustment is made in the conclusion. This is poor analysis, at best, and misleading with an indication that the direction of the appraisal is being taken lower than reasonable, at worst. City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 8 On page 39, it is stated that all of the sales are single-family or multi-family zoned sites. The density of the sale comparables are considered to be similar. While all of the land sales are zoned for single- family or multi-family use,the densities of development are not similar to the subject property. Land Data Nos. 1 through 5 have deve.Iopment densities of 24 Du's/Ac, 7 Du's/Ac, 27 Du's/Ac, 11 Du's/Ac, and 10 Du's/Ac, respecti%cly. The subject has an approved density of development of approximately 14 Du's/Ac. The �ariance in density between the subject property and the comparables is :significant and needs adjustments. The lack of adjustment for density differences is poor analysis and results in little confidence in the conclusion set forth. The conclusion, or reconciliation, appears to be influenced the most by averaging the adjusted indicators from adjustment analysis. This is improper appraisal methodology. Averaging is never acceptable. A proper reconciliation should consider the strengths and weaknesses of each comparable in relation to the subject property and set forth the reasoning for giving the greatest weight to the most comparable of the sales. The conclusion of the appraisal with a value of$560,000 is not reasonable and hard to accept. The acquisition costs ($220,000 in 2008, $420,000 in 2013, and $8,600 cost of demolition) totals $648,600. The September 25, 2018 value opinion of$560,000 reflects a decrease in land value of 13.7% compared to the historical acquisition costs. With strong recovery in the marketplace since 2013, a decrease in land value below the acquisition costs is not reasonable. For a reasonableness check, if the acquisition costs ($648,600) are added to the costs of obtaining approvals for development ($80,000) and a 3% annu�il increase rate (as set forth in the appraisal reviewed)was used to cover the increasing value of the land si nce acquisition,the current land value indication is approximately$893,000. If a market supported increase rate of approximately 6%per year is used, as supported with data set forth in the appraisal review,the value indication would be $1,056,000. Based on the comments made as a part of the appraisal review report, it is recommended that the appraisal of the property and report dated September 25, 2018 not be accepted for use by the intended user. The rejection is due to violations of USPAP SRI-l(b) & (c) plus SRI-4(a). SRI-1 states that "In developing a real property appraisal, an appraiser must: (b) not commit a substantial error of omission or commission that significantly affects the appraisal;and(c)not render appraisal services in a careless or negligent manner, such that by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results." SRI-4 states that "In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible results; (a) Wbcrn a sales comparison approach is City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 9 necessary for credible results,an appraiser must analyze such comparable sales data as are available to indicate a value conclusion." Based on the land sale data reviewed in the course of appraising other N etca nt land parcels within the City of Tustin over the prior 4 years,the land sale data set forth in the appraisal report reviewed and Utilized in this appraisal appear to reflect prices at the low end of the range for land sale data. The definition of market value upon which the appraisal being reviewed is based includes the assumption that the market value opinion is reflective of the most probable price and not the lowest price. Certification I certify that, to the best of my knowledge and belief: - The facts and data reported by the reviewer and used in the review process are true and correct. - The analyses,opinions,and conclusions in this review report are limited only try the as�41111ptions and limiting conditions stated in this review report,and are my pci-som il, impartial, and unbiased professional, analyses, opinions, and conclusions. - I have no present or prospective interest in the property that the subject of this appraisal review report, and I have no personal interest or bias with respect to the parties involved. - I have performed services, as an appraiser,regarding the property that is the subject of the work under review within the three-year period immediately preceding acceptance of this assignment for this client. - I have no bias with respect to the property that is the subject of the work under review or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in this review or from its use. The reported analyses, opinions, and conclusions were developed, and this review report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal City of Tustin - Parks and Recreation Services December 2, 2018 Our File No. 18-19.2 - Appraisal Review Page 10 Institute,which include the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. - The use of this review report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - As of the date of this report,Peter B. Finnerty has completed the requirements of the continuing education program of the Appraisal Institute. - I have made a personal inspection of the subject property of the work under review for this appraisal review. - No one provided significant appraisal, appraisal review, or appraisal consulting assistance to the person signing this certification. - I am competent to review or appraise the property that is the subject of this report based on my previous experience appraising and/or reviewing appraisals of similar types of properties. - My state certification has not been revoked, suspended, canceled, or restricted. Respectfully submitt(A, Peter B. Finnerty, MAI Certified General Real Estate Appraiser California Certificate No. AG001937 ADDENDA QUALIFICATIONS QUALIFICATIONS OF PETER B.FINNERTY, MAI PROFESSIONAL. BACKGROUND Actively engaged in the real estate profession since 1977. President and Principal of Pacific Real Estate Consultants,Inc., with offices at: 668 N. Coast Highway,Suite 1409 Laguna Beach, California 92651 Before starting Pacific Real Estate Consultants, was employed as Vice-President at Real Fstate Analysts of Newport,Inc.(REAM),in Costa Mesa,California. Prior to that,was a Senior Appraiser, Bank of America, in Anaheim,California. PROFESSIONAL ORGANIZATIONS Member of Appraisal Institute,with the MAI designation LEED AP,Green Building Certification Institute Member of National Association of Realtors Member of California Association of Realtors Member of Orange Coast Association of Realtors Associate Member of Urban Land Institute INSTRUCTOR AIREA Basic Valuation Procedures Course AIREA Capitalization Theory & Techniques,Part A AIREA Capitalization Theory & Techniques,Part B How to Value your Corporate Real Estate Assets, Seminar for International Association of Corporate Real Estate Executives, Inc. Real Estate Appraisal 342,Coastline Community College Finance 448,Income Property Appraisals,California State University at Long Beach Appraisal Institute Appraisal Procedures Course Appraisal Institute Capitalization Theory & Techniques,Part B Appraisal Institute Advanced Applications Course Appraisal Institute Non-Residential Demonstration Appraisal Report Writing Seminar Appraisal Institute Small Hotel/Motel Valuation EXPERT WITNESS I Superior Court of Orange County j Superior Court of Los Angeles County Superior Court of Riverside County I Superior Court of San Diego County Federal District Court Federal Bankruptcy Court Arbitration Proceedings LICENSES Licensed California Real Estate Broker Certified General Real Estate Appraiser,State of California EDUCATIONAL ACTIVITIES B.S., Real Estate Administration, Indiana University, 1976. Special courses in Real Estate: Principles of Real Estate Real Estate Appraisals Case Studies in Real Estate Real Estate Law Residential Construction and Design Survey of Real Estate and Land Economics Courses sponsored by American Institute of Real Estate Appraisers: Course I-A Principles, Methods,and Techniques of Real Estate Appraising Course I-B Capitalization Theory and Techniques Course II Urban. Properties Course VI Introduction to investment Analysis SCOPE OF EXPERIENCE Vacant Land Single-family residential sites, multi-family residential sites, commercial and industrial sites, acreage, planned communities. Residential Single-family residences,duplexes,apartments,condominiums,planned unit developments,mobile homes. Commercial Shopping centers lrcoinnal, neighborhood and community), retail stores, general office buildings, medical office buildings,car dealerships. banks. Industrial Single-and multi-tenant warclw< ,�,, :w(] r .:iiufacturing buildings,truck terminals,business parks, R& D buildings, garages,mini-warehouses. Special Purpose Churches, veterinary hospitals, hotels and resorts, restaurants, theaters, mobile home parks, submerged tidelands, mixed-use developments, landfill properties,contaminated properties. PARTIAL LIST OF CLIENTS Lending Institutions American Savings&Loan Assn. Great Western S&L Assn. Bank of America Home Federal S&L of San Diego Bank of British Columbia Imperial S&L Assn. Beverly Hills S&L Merit Savings Bank Butterfield Savings Mitsui Manufacturers Bank California Canadian Bank Morgan Guarantee Trust Co. California Federal S&L Assn. Mortgage Guaranty Ins.Corp. Canadian Commercial Bank Pacific Mutual Life Insurance Chemical Ranh Rainier Mortgage Citil),nth San Diego Federal S & L Assn. C olumhia 1<rvingti&Loan Security Pacific Nat'l.Bank Co.lst 5a%ink.w �� Lean Valencia Bank Ciihralta 5:n ine Western Empire Savings&Loan Glendale Federal S&L Assn. Wells Fargo Bank Goldman Sash, I'uhlic :1��encies Burbank t nified School Dist. )r.ui,e County Dept.of Real Property Services Calif.Deft-ot Real Estate Services Oian,_c C Cunt% Counsel's Office City of Ira ine I.nil<d ytntr, PoNtal Service Federal DLlposit Insurance Corp. t mw(l Stints .Aran Corps of Engineers Resolution Trust Corporation I nitrd .`Mates Ju ii,c Department Garden Grove Unified School King Comity, Washrnclon Developers and Landovsncrs Birtcher-Pacific N I II IJT1 1 1'I c rties Butler Housing Corporation N i I-%%,,1 1)e v c!t,1,n i;nt Company Cadillac Fairview Homes West 1'irt-1 i11,•1 11 e11,1i, Education and Pension Carlton-Browne and Co.,Inc. R ,,i, Iioni,e:s Carma Developers(Canada) ti.ru i \rTm DevelnLmcnt Company Carma-Sandling Group D,i nl D. elopment Save-Most Development,Inc. Gc1isl'u T&S Development Company fhe In ine Conipairy Trammel-Crow Company 11tc K I I Company Valencia Corporation I in,-)In Piijperty Warmington Group Nl:i,tci Cmiipany Robert P.Warmington Company \l-tI:: I k°,t•I(Jpment Company William Lyon Company \1,c CI_til Land&Farming Company Law Firms Davis&Digrazia McDermott,Will.&Emery Gibson, Dunn&Crutcher Morrison&Faerster Latham&Watkins Patil. lla.slingv.Janof,kt, (\ Walker Lewis,D'Amato,Brisbois,&Bisgaard Rki,-tic, k, India McCutchen,Black,Verlager and Shey Rt"cTl Icld hL�yer& Stlifll.nt Rutan&Tucker L rl.cnd. ?J(trello,Dunn& Mavr,ard Corporations and Institutions AMT Voit,Incorporated W. R.Grace Company ATO Corporation E.F.Hutton Development, Inc. Baldwin United Corporation Kenneth Leventhal&Assoc. University of California at L.A. Ottawa Silicon Corporation Campeau Corporation Fluor Corporation ATTACHMENT PACIFIC REAL ESTATE CONSULTANTS ADDENDUM TO APPRAISAL REPORT, 1212/18 s REAL ESTATE CONSULTANTS December 1, 2018 Our File No. 18-19.1 City of Tustin Parks and Recreation Services 300 Centennial Way Tustin, CA 92780 Attn: Mr. Chad Clanton, Deputy Director Re: Addenda to the Appraisal of a 16,038 Sq.Ft. Multi-Family Zoned Lot NEC of San Juan Street & Utt Drive Tustin, California Ladies & Gentlemen: According to the client's request,this letter is considered to be an Addenda to our prior appraisal of the same property performed for the intended use of aiding in the calculations for determining the park in-lieu fee for this project. The intended user is the City of Tustin. The prior appraisal(Our File No. 18-19),of which this letter is a part,had a date of value of October 24, 2018. and a date of the report of October 26, 2018. All descriptions, definitions, ownership references, scope of the appraisal, intended use, assumptions and limiting conditions, opinions of Highest and Best Use, valuation methodology, and analyses set forth in that appraisal report are hereby included by reference. Note that the Scope of the Appraisal for this Addenda includes providing an opinion of the market value of the subject property as of the retrospective date of value of January 26,2017,the date of the approval of Tract No. 17665, the condominium map. Since this letter is an Addenda to our prior appraisal,this update appraisal cannot be fully understood without concurrent access to our prior appraisal (Our File No. 18-19). Appraisal Reporting Option In compliance with Standards Rule 2-2 of the Uniform Standards of Professional Appraisal Practice, this appraisal addenda is being transmitted under the written Appraisal Report Option. Since our prior appraisal (Our File No. 18-19)was transmitted in a written appraisal report format, this letter is also considered to be a part of the written appraisal report. Date of Valuation The date of value is January 26, 2017. I 668 N. Coast Highway, Suite 1.409, Laguna Beach, California 92651 (949) 752-9323 • E-Mail: pacrecon@pacbell.net City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 2 The date of this report is the same date as set forth on the top of each page. Scope of the Appraisal Addenda The scope of this appraisal addenda includes all of the items mentioned in the Scope of the Appraisal set forth in the original report with an emphasis on changes that occurred in the social, political, physical, and economic environments prior to the date of the retrospective appraisal (1/26/17) and prior to the date of valuation of our previous appraisal (10/24/18). This retrospective valuation is also based on the hypothetical assumption that the site is vacant, according to the instructions of the client. There is currently a 5-unit detached condominium project being constructed on the site. This appraisal does not include any value contribution from the improvements. The hypothetical assumption may have affected the results of this assignment. The subject property description is unchanged from the prior appraisal report. The highest and best use conclusion "as if vacant" is unchanged between the date of the prior appraisal report and the date of value of the retrospective appraisal. The valuation methodology utilized for this appraisal addenda is the same as the valuation methodology utilized in the prior appraisal report. Land Valuation - Retrospective Date of 1/26/17 A search was undertaken to uncover sales of comparable sized residential zoned land parcels in the City of Tustin and throughout the County of Orange between the beginning of 2014 and the end of June 2017. Our search uncovered five sales of land parcels located within the Cities of Tustin, Orange, and Anaheim that occurred between July 2014 and August 2017, which have been utilized in the valuation analyses. On the following page is a summary of the sale data that are used in the valuation analysis. On the page after the sales summary is a map indicating the location of the sale data in relation to the subject property. A photograph and plat map of each of the sale data are included in the Addenda to this report for reference. City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 3 COMPARABLE MULTI-FAMILY RESIDENTIAL LAND SALE DATA SUMMARY Status of ©ata,No.0 Location Recorded Zoning/Shape/ Land Area Condition/Topo./ Density Development Sale Price GramorlGrantee APN/Dme.No. Dace of Sale Access/Utit.Avail. (Sg.Fr/Acres) Intended Use/Exp..Time Du Ae A two als Total $/Unit $ISS.Ft. Financing/Confirmation No,1 420 N.Magnolia Avenue 1,130/17 RS-4 97.030 Vacant 11 Approved Tem.Tract Map 55,2470ai S209,9R0 S54.09 Sic Acquisitions LLC Anaheim lrregular 2.23 Fairly Level Magnolia Cerritos 53 LLC 071-491-32&34 Paved Road Access Construct 25 single-family homes All cash to seller #272662 All available 2 mos. Mike Hunter,agent of the seller No.2 1972 San Juan Street 12/30114 R4 98,115 8 older homes to be demolished 12 Approved Tent.Tract Map 57,000,000 $269,231 571.34 Watt Communities at San Juan LLC Tustin Rectangular 2.25 Fairly Level DR Holten Ven Inc. 5W-074-12 Paved Road Access Construct 26 detached condominiurru All cash to seller #564633 All available N/A Greg Paley,repr.of the buyer No.3 1051 Bonita Street 7107/14 R3 8,549 Older home to he demolished 20 None $(,I L50(1 $152,975 571.53 Ann Mane Maxon Tustin Rectangular 0,20 Fairly Level Goliath Financial&Management LLC 500-152-29 Paved Road Access Construct 4 cundomimums All cash to.seller #267968 All available 4 mos. Abbas Mahmood,owners representative No.4 SWC of Sixth Street&'B"Street 9104117 PC 296.917 Industrial park to be demolished 21 Approved Tent,Tract Map 521,230010 $151.643 $71.53 '.i::R---., r'...f..i.i-C Tustin Irregular 6.81 Fairly Level q 101 tlnmsor,--7 C alifornia LLC 401-341-04 Paved Road Access Construct 140 condominiums All c:L,: to seller #322163 .All available N/A AnFe:;,�,Seyer,rep.of the buyer No.5 130 S.Hewes Street 11/09/16 Cl with CUP 19,689 Vacant 27 Had approvals $950,0m $79,167 $49.25 I r: twLLC Orange Rectangular 0.45 Fairly Level Lica­,-I]--LLC 392-181-21 Paved Road Access Construct 12 seniors apartments All cash to seller #434671 All available 24 mos. Roger Niez.buyer's&seller's agent City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 4 COMPARABLE MULTI-FAMILY ZONED LAND SAIF. DATA MAP .�.a 72 Ott rbel. '� +Yyhlntlor Hawland Hel9Mes N-­d Bar I ♦ �l• l �' •L, 56fnno' e�Habra Heaghts 3" Raw ---�..- •+,� �La Habra p Chino HI1N 0. ♦ � 4 ... _..---._.._-__.♦La alh�ehr I_.-,.-.---..-®-T---....+Brea✓ � �` J � 8n Yarba Liuda � '' � Futenan tkrr ♦Fullenan ♦Placewtla - -�t�,,��� Bne®Park'i.� *Atwaud �CF� SI Q _P�y _a* tai ai LAFJD DATA NO.1 ♦Cypress �. �1 Villa Palk tarOnn �A'a aitn LAND DATA NO,5 Lee PJxiae IJev.4 Swam' Los alrraos AAF " ♦Orang -+'� Panora a Hal hts Cow •IQhts Smmo� zz ,. ✓Garden Gr LAND DATA NO.3 rdrawxdr ` s Wsetinirrster LAND DATA NO.4 • SUBJECT PROPERTY I ._-. ♦MidwayCiry �Salyd ♦T x 261 Fountain Valley t LAND DATA NO.2 ., ♦Huntingtnir B adr # ., A D i .3 O.�orri ad tlrwi+re .ucartt* Irvine �i Taoracas 8 `} e4gaka P,n7 Heights 4 rrrr.. eed�, ♦faslamesa �° o �•� ♦Newport Beachc. Tan ♦El Toro Alis.Vleio♦ ♦ ♦L ma HH1a +naua del Mlar HewpraH 1-aas1 Lagrma Waarts Misslm yJo 4 Pacific" ♦Crystal Cove to Oceanx Data use subject to kense. (0 2905 DeLonne Street Alias USAO 2006 0 1 2 3 4 S wwwdElorme cam MIN 01-8'E) Data.2Dom 10-0 City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 5 Analysis of the Sale Data Five comparable closed land sales were utilized in the analysis to reach an opinion of the market value of the subject parcel of land with an approved density of development of approximately 14 Du's/Ac as of the retrospective date of January 26, 2017. Based on discussions with buyers and sellers of similar properties as well as active real estate agents in the residential land market,the unit of comparison used in the local market for residential zoned land is the price per unit and the price per sq.ft. of site area. Adjustments to all of the comparables were considered for property rights transferred, condition of sale, financing terms, demolition costs, date of sale or market conditions, status of development approvals, location, physical condition of the land,density of development,access, size of the site, and zoning differences. Adjustments to the land sale data were based on interviews with buyers, sellers, and agents active in the local market, general economic trends, analysis of the land sale data to extract matched-pair adjustments, where possible, and from our appraisal experience from analyzing similar data sets to extract similar adjustments. It is virtually impossible to quantify every necessary adjustment to equate the compar.ihlcs to the subject property. Our analysis of the land sale data utilizes quantifiable adjustments wh cre they can be extracted and qualitative adjustments when quantitative adjustments cannot be extracted. Price Per Unit Analysis Individual qualitative comparisons of the sale data to the subject property are set forth in a summary grid which is included on the following page. The adjustment grid summarizes the adjustments considered for each of the comparable land data to equate them to the subject property. Property Rights: The property rights appraised are the fez simple estate. All of the land sale data are transfers of the fee simple estate and no adjustments are warranted for property rights. City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 6 LAND DATA ADJUSTMENT ANALYSIS MULT-FAMILY RESIDENTIAL LAND VALUATION- NEC OF SAN JUAN STREET&UTT DRIVE,TUSTIN,CA SuhivO Primerly Sale Data No.I Sale Data No.2 Sale Data No.3 Sale Data No.4 Sale Data No.5 Address: NEC of San Juan Strct t& I it Drive 420 N.Magnolia Avenue 1872 San Juan Street 1051 Bonita Street S WC of Sixth Street&"B"Streel 130 S.Hewes Street Tustin Anaheim Tustin Tustin Tustin Orange Total Sale Price: N/A $5,247,000 $7,000,000 $611,5W $21,230,000 $950,000 Pric/Unit: $209,880 $269,231 $152,875 $151,643 $79,167 Price/Sq.Ft.: $54.08 $71.34 $71.53 $71.53 $48.25 Property Rights: Fee Simple Similar Similar Similar Similar Similar Conditions of Sale: Arm's Length Inferior Similar Similar Similar Inferior $/Unit Adjustment $60,865 $0 $0 $0 $20,583 $/Sq.Ft.Adjustment $15.68 $0.00 $0.00 $0,00 $12.55 Financing: All Cash to Seller Similar Similar Simlar Similar Similar Demolition: None Similar Inferior Inferior Inferior Similar $/Unit Adjustment $0 $23,700 $7,000 $3,954 $0 $/Sq.Ft.Adjustment $0.00 $6.28 $3.28 $1.87 $0.00 Date of Sale: 1/26/17 6/30/17 12/30/14 7/07/14 8/04/17 9/09/16 $/Unit Adjustment ($6,769) $36,616 $24,781 ($4,668) $2,494 $/Sq.Ft.Adjustment ($1.74) $9.70 $11.59 ($2.20) $1.52 Adjusted$/Unit Indicator: $263,976 $329,547 $184,656 $150,929 $102,244 Adjusted$/Sq.Ft.Indicator: $68.02 $87.32 $66.40 $71.20 $62.32 Location: Near Red Hill Ave.&N/O I-5 Slightly Superior Similar Similar Similar Inferior Approvals: Approved Condo.Map Slightly Inferior Slightly Inferior Inferior Slightly htfenor Slightly Inferior Topography&Shape: Fairly level&Rectangular Similar Similar Similar Similar Similar Access: Paved Road Similar Similar Similar Similar Similar Physical Condition: Finished Lot Similar Similar Similar Similar Similar Zoning&Density: R3/13.5 Du's/Au Lower Similar Higher Higher Higher Site Area(Acres): 16,038 97,030 98.115 8,549 296,817 19,688 Overall Comparison: Price per Unit Analysis: Superior Superior Similar Inferior Inferior Price per Sq.F1.Analysis: Similar Superior Superior Slightly Superior Inferior City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 7 Conditions of Sale All of the sale data were arm's length tr tw<rctions at market prices,except for Land Data Nos. 1 and 5. Therefore, no adjListmctit,, erre necessary for the conditions of sale to Land Data Nos. 2 through 4. Land Data No. 1 was originally marketed as a sale of the property owned by the seller. The seller eventually joined a joint venture with the buyer for the develop- ment of the land. According to the listing agent,the decrease in the price for the land contributed to the joint venture was approximately 29% below other offers that would have been for an outright purchase. Therefore,an upward adjustment of 29% was applied to this comparable to reflect the inferior conditions of sale that did not include an outright sale, but the owner participating in a joint venture for the development of the land. Land Data No. 5 was originally marketed as a sale of the property owned by the seller. The seller eventually joined a joint venture with the buyer for the develop- ment of the land. According to the listing agent,the decrease in the price for the land contributed to the joint venture was approximately 26% below other offers that would have been for an outright purchase. Therefore,an upward adjustment of 26% was applied to this comparable to reflect the inferior conditions of sale that did not include an outright sale, but the owner participating in a joint venture for the development of the land. Financing All of the transfers were all cash to the seller transactions and no adjustments are warranted for financing. Demolition Costs Land Data Nos. 1 and 5 were vacant sites at the time of sale and no demolition costs adjustment are necessary. Land Data Nos. 2 through 4 had existing improvements that do not reflect the highest and best use of the land. The demolition costs represent an upward adjustment necessary to have a vacant site. The costs of demolition, based on cost data from the verification sources, for Land Data Nos. 2 through 4 were indicated to be $616,200, $28,000, and $553,625, respectively. The demolition costs for Land Data No. 2 included unexpected soils remediation costs. City of Tustin -Parks and Recreation Services December 1, 2018 Re: Our File No, 18-19.1 Page 8 Market Conditions Based on our investigations and analysis,upward adjustments for market conditions were supported at a rate of 6% per year(0.5%per month)during 2014 through 2017 based on home price trends and land price trends, Location The location adjustment includes consideration of differences in location,being an interior site versus a corner site, visibility, and access. Land Data No. 1 is in a slightly superior location adjacent to a golf course, while Land Data No. 5 is in an in inferior location in the City of Orange. Adjustments for these differences have been considered in the comparative analysis. Land Data Nos. 2, 3, and 4 are in locations considered to be similar to the subject property's location and no adjustments are supported. Physical Condition The adjustment for pliN sical characteristics includes comparisons of shape, availability of utilities, existing street improvements, and street access. All of the land sale data are in similar pli)-sical condition compared to the subject property and no adjustments for physical condition are warranted. Topography The subject property is a fairly level parcel in topography. All of the land data have similar topography and no adjustments are warranted. Zoning The comparable land sale data have a variety of zoning designations. The allowed uses under the zoning liave been modified during the process of receiving approvals for development to allow residential development. Comparatively,after considering the approvals for development, all of the land sale data allow residential land uses with the only difference being the allowed density of development. Imo__ City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our Nile No. 18-19.1 Page 9 Adjustments for zoning differences are implicitly included with the status of approvals and density adjustments and no additional zoning adjustments are warranted. Status of Approvals The subject property has a final condominium map allowing subdivision of the site for 5 detached condominium units. Land Data Nos. 1, 2, and 4 are slightly inferior to the subject property with only an approved tentative tract map at the time of stile. Land Data No. 3 does not have any approvals for development, which is inferior. Land Data No. 5 had approvals for construction of an apartment project, which is slightly inferior to having an approved condominium map._ Upward adjustments to all of the comparable land sale data were made due to their inferior or slightly inferior status of approvals. Density The subject property has an approved density of development of approximately 14 Du's/Ac. Land Data No. 1 has a slightly lower density of development,which result in the necessity for a downward adjustment to the price per unit indicator. Land Data Nos. 3,4, and 5 have a higher density of development,which res Lilts in the neccs its for an upward adjustment to the price per unit indicator. Land Data No. 2 has a fairly similar density of development compared to the subject property and no adjustment was supported based on the comparative analysis. Site Size The site size adjustment was based on a comparative analysis of the adjusted indicators for all of the sale data, after making all of the previously discussed adjustments. Land Data No. 5 is similar in size compared to the subject property and no site size adjustment is warranted. Land Data No. 3 is smaller in size, while Land Data Nos. 1, 2, and 4 are larger in site size. The price per unit indicators from the comparable land data range from$79,167 to$269,231,before making any adjustments. After adjustments were considered for property rights transferred, City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our Pile No. 18-19.1 Page 10 condition of sale, financing, demolition costs, and time of sale or market conditions,the indicated price range per unit for the subject site from the comparables is from $102,244 to $329,547. Qualitative adjustments were considered for the elements of comparison including location,status of development approvals, density of development, zoning, access, physical condition of the land, topography,and site size. On an overall basis after considering all of the elements of comparison discussed,Land Data Nos. 2 and 1 are considered to be superior to the subject property, Land Data No. 3 is considered to be similar, while Land Data Nos. 4 and 5 are inferior to the subject property. A summary of the adjusted price per unit indicators of value for the subject site from the analysis of the land sale data is included in the following table. Sale Data No. Comparison d,diusted VUnit 2 Superior $329,547 1 Superior $263,476 Similar $184,656 4 Inferior $150.9211 5 Inferior $102?4a Subject Property I 1 $180,0011 u7$21 0.0W Land Data No. 2 is slightly inferior in status of approvals and larger in site size, which is also inferior, The other elements of comparison are similar to the subject property. Even with these inferior aspects, the adjusted value indication from this sale is the highest price per unit indicator. Since the price per unit was calculated incl iding the costs of the unexpected soils remediation,the price per unit is higher than typical. Due to the higher than typical value indicator from this sale,this comparable is considered to be superior overall and given little weight in the reconciliation of the land sale data. Land Data No. 1 is a larger parcel in size located in a slightly superior location in the City of Anaheim adjacent to a golf course. This parcel sold with a tentative tract map approvals for the development of 25 single-family homes, which is slightly inferior. This parcel has a lower density of development compared to the subject property. Under the price per unit analysis, the lower the density the higher the price per unit. Due to the slightly superior location and the slightly lower density of development of this comparable,the value indication for the subject property should be lower than the adjusted price per unit indicator from Land Data No. 1. Land Data No. 3 is in a location that is considered to be similar and the density of development is higher. The status of approvals is inferior and the site size is much smaller. The superior aspect of the smaller site size is offset by the upward adjustment to the price per unit indicator for the higher I City of Tustin- Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 11 density of development and the inferior status of approvals. Overall, the value indication for the subject property should be similar to the adjusted indicator from this comparable. Land Data No. 4 is similar in location, has a higher allowed density of development, a slightly inferior status of approvals,and a larger site size. The upward adjustments for the higher density of development, slightly inferior status of approvals, as well as the larger site size result in this parcel being inferior overall compared to the subject site. Therefore, the value indication for the subject property should be above the adjusted indicator from this comparable. Land Data No. 5 is inferior in location, has a higher approved density of development, a slightly inferior status of approvals, while. the Site size is similar. This comparable is considered to be inferior overall due to the inferior location, the higher density of development, and the slightly inferior status of approvals. The value indication for the subject property should be above the adjusted indicator from this comparable. The lower end of the reasonable value range from the analysis of the sale data appears to be above the adjusted value indicator from Land Data No.4($150,929/unit)and just below the adjusted value indicator from Land Data No. 3 ($184,656/unit), or approximately$180,000 per unit. The upper end of the reasonable value range from the analysis of the sale data appears to be substantially below the adjusted value indicator from Land Data No. 1 ($263,976/unit), or approximately$210,000 per unit. Based on the comparative analysis performed, the indicated opinion of the market value range for the subject land parcel is from $180,000 to $210,000 per unit. The calculation of the value range from the price per unit analysis,based on the potential for the development of 5 units, is set forth as follows: 5 Units X $180,000/Unit = $ 900,000 5 Units X $210,000/Unit = $1,050,000 Say $900,000 to$1,050,000 Price Per Sq.Ft. Analysis The price per sq.h. analysis was performed in the same manner as the price per unit analysis. All of the elements cit cornparison utilized in the price per unit analysis have also been utilized in the price per sq.ft. analysis. I City of Tustin - Parks and Recreation Services December 1, 2018 Re. Our File No. 18-19.1 Page 12 Note that the price per sq.ft. adjustment under the density analysis is the opposite as under the price per unit analysis. Under the price per sq.ft.analysis,typically the higher the density of development, the higher the price per sq.ft. indicator. Therefore an adjustment to reflect a lower level of density compared to a higher level of density would be a downward adjustment to the comparable with the higher density of development. On an overall basis after considering all of the elements of comparison discussed,Land Data No. 1, 3,and 5 are considered to be slightly superior to the subject property,Land Data No.4 is considered to be similar, while Land Data No. 2 is inferior to the subject property under the price per sq.ft. analysis. A summary of the adjusted price per sq.ft, indicators of value for the subject site from the analysis of the land sale data is included in the following table. Saic-DaU-No, Com rjwn Adausted / SFt. $86.4 $71.20 $ 82 $6232 to$6 2 Superior 3 Superior 4 Slightly Su nor t Similar 5 Inferior Subject Property i 1 $ Land Data No. 2 is slightly inferior in status of approvals and larger in site size, which is also inferior. The other elements of comparison are similar to the subject property. Even with these inferior aspects, the adjusted value indication from this $Elle is the highest price per sq.ft. indicator. Since the price per sq.ft. was calculated including the costs of the unexpected soils remediation, the price per sq.ft. is higher than typical. Due to the higher than typical value indicator from this sale, this comparable is considered to be superior overall and given little weight in the reconciliation of the land sale data. Land Data No. 3 is in a location that is considered to be similar and the density of development is higher. The status of approvals is inferior and the site size is much smaller. The superior aspects including the smaller site size and the higher density of development more than offset the inferior status of approvals. Overall, the value indication for the subject property should be below the adjusted indicator from this comparable. Land Data No. 4 is similar in location, has a higher allowed density of development, a slightly inferior status of approvals, and a 1,1r1 er site size. Under the price per sq.ft. analysis,the higher the density the higher the price per unit. The superior aspect of the higher density of development, outweighs the inferior aspects of the slightly inferior status of approvals and the larger site size. Overall,this parcel is considered to be slightly superior compared to the subject site. Therefore,the City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 13 value indication for the subject property should be slightly below the adjusted indicator from this comparable. Land Data No. 1 is a larger parcel in size located in a slightly superior location in the City of Anaheim adjacent to a golf course. This parcel sold with a tentative tract map approvals for the development of 25 single-family homes, which is slightly inferior. This parcel has a lower density of development compared to the subject property, which is slightly inferior. The superior aspect of the location appears to offset the inferior aspects of slightly lower density, larger site size, and slightly inferior approvals. Overall, this comparable is considered to be similar and the value indication for the subject property should be similar to the adjusted price per sq.ft. indicator from Land Data No. 1. Land Data No. 5 is inferior in location, has a higher approved density of development, which is superior, plus a slightly inferior status of approvals, while the site size is similar. This comparable is considered to be inferior overall with the inferior location and slightly inferior status of approvals outweighing the superior aspect of the higher density ot'development. The value indication for the subject property should be higher than the adjusted indicator from this comparable. The lower end of the reasonable value range from the analysis of the sale data appears to be slightly below the adjusted value indicator from Land Data No. 1 ($68.02/sq.ft.), or approximately$66 per sq.ft. The upper end of the reasonable value range from the analysis of the sale data appears to be just below the adjusted value indicator from Land Data No. 4($71.20/sq.ft.), or approximately$70 per sq.ft. Based on the comparative analysis performed, the indicated opinion of the market value range for the subject land parcel is from$66 to$70 per sq.ft. The calculation of the value range from the price per sq.ft. analysis is set forth as follows:. 16,038 Sq.Ft. X $66/Sq.Ft. = $1,058,508 16,038 Sq.Ft. X $70/Sq.Ft. = $1,122,660 Say $1,060,000,000 to$1,120,000 Sales Comparison Approach Reconciliation The price per unit analysis resulted in a land value range from $900,000 to 81,050,000. The price per sq.ft, analysis resulted in a value range from $1,060,000 to $1,120,000. City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 14 The greatest weight was given to the price per unit analysis since that is the unit of comparison that is most relied upon by developers. The price per sq.ft. analysis was given secondary weight since that unit of comparison is not relied as frequently as the price per unit analysis for residential land. Based on the reasons set forth previously,the opinion of the market value for the subject land parcel is $1,000,000. The value opinion of$1,000,000 for the 16,038 sq.ft. site results in an indication of the value per sq.ft. of $62.35 and a price per unit indicator of $200,000 based the potential for 5 detached condominium units to be constructed. Valuation Based on the investigations and analyses undertaken and upon our experience as real estate analysts and appraiser,. o have formed the opinion that the market value of the fee simple estate in the subject propci t , as of the retrospective date of January 26, 2017, and subject to the Assumptions and Limiting Conditions set forth in this report, is as follows: ONE MILLION DOLLARS $1,040,000 Certification I certify that, to the best of my knowledge and belief: - The statements of fact contained in this report are true and correct. - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional, analyses, opinions, and conclusions. - I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. - I have performed appraisal services involving the subject property for this client/- intended user within the 3 year period preceding the date of this report. - I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. City of Tustin - Parks and Recreation Services December 1, 2018 Re: Our File No. 18-19.1 Page 15 My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client,the amount of the value opinion,the attainment of a stipulated result,or the occurrence of a subsequent event directly related to the intended use of this appraisal. The reported analyses,opinions,and conclusions were developed,and this report has been prepared, in confonnity with the requirements of the Code of Professional Ethics and the Standards of Professional A ppr r i s 4t l Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. - The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - As of the date of this report,Peter B.Finnerty has completed the requirements of the continuing education program of the Appraisal Institute. - I have made a personal inspection of the property that is the subject of this report. - No one provided significant real property appraisal assistance to the person signing this certification. I am competent to appraise the property that is the subject of this report based on my previous experience appraising similar types of properties. Respectfully submitted, 61d''-f Peter B. Finnerty, MAI Certified General Real Estate Appraiser California Certificate No. AGOO1937 ADDENDA COMPARABLE LAND DATA PHOTOGRAPHS & PLAT MAPS �r m m LAN1) 1) VI I s 4 k s'wrA ell 'O I}Y ! a O U O OY On O CD C1 ,tr t 4 C7: =0 ® O v t JAV�NNL Ik-E ry 7 [ I q � 4. SA.A— SYREcr t p� wlrr s � A" . i .t L►'int y �� ��,„, ',+� ��' �c "S '~' I—lac J"Js !AUNT'^z 2•d (} Q �,�'i .- R � h d0 � 0O° 0' • J 0 0' �4 f I L rJ ffi o (p—iif � t a - � a LAND DATA NO. 4 i J sixvw sngFFr f FAWr _.__ �O R S7.�sUVD•s;0�/d.677v , « I o 1 s�siv � Ate` i -- B' � j= AN 4 d , LAND DATA NO. 5 .o B QUALIFICATIONS QUALIFICATIONS OF PETER B.FINNERTY, MAI PROFESSIONAL BACKGROUND Actively engaged in thereal estate profession since 1977. President and Principal of Pacific Real Estate Consultants, Inc., with offices at: 668 N.Coast Highway,Suite 1409 Laguna Beach,California 92651 Before starting Pacific Real Estate Consultants,was employed as Vice-President at Real Estate Analysts of Newport, Inc. (BEAN), in Costa Mesa,California. Prior to that,was a Senior Appraiser,Bank of America,in Anaheim,California. PROFESSIONAL ORGANIZATIONS Member of Appraisal Institute,with the MAI designation. LEER-AP, Green Building Certification Institute Member of National Association of Realtors Member of California Association of Realtors Member of Orange Coast Association of Realtors Associate Member of Urban Land Institute INSTRUCTOR AIREA Basic Valuation Procedures Course AIREA Capitalization Theory & Techniques,Part A AIREA Capitalization Theory & Techniques,Part B How to Value your Corporate Real Estate Assets,Seminar for International Association of Corporate Real Estate Executives, Inc. Real Estate Appraisal 342, Coastline Community College Finance 448, Income Property Appraisals, California State University at Long Beach Appraisal Institute Appraisal Procedures Course Appraisal Institute Capitalization Theory & Techniques,Part B Appraisal Institute Advanced Applications Course Appraisal Institute Non-Residential Demonstration Appraisal Report Writing Seminar Appraisal Institute Small Hotel/Motel Valuation EXPERT WITNESS Superior Court of Orange County Superior Court of Los Angeles County Superior Court of Riverside County Superior Court of San Diego County Federal District Court Federal Bankruptcy Court Arbitration Proceedings LICENSES Licensed California Real Estate Broker Certified General Real Estate Appraiser, State of California EDUCATIONAL ACTIVITIES B.S., Real Estate Administration,Indiana University, 1976. Special courses in Real Estate: Principles of Real Estate. Real Estate Appraisals Case Studies in Real Estate Real Estate Law Residential Construction and Design Survey of Real Estate and Land Economics Courses sponsored by American Institute of Real Estate Appraisers: Course I-A Principles, Methods,and Techniques of Real Estate Appraising Course I-B Capitalization Theory and Techniques Course II Urban Properties Course VI Introduction to Investment Analysis SCOPE OF EXPERIENCE Vacant Land Single-family residential sites, multi-family residential sites, commercial and industrial sites, acreage, planned communities. Residential Single-family residences,duplexes,apartments,condominiums,planned unit developments,mobile homes. Commercial Shopping centers (regional, neighborhood and community), retail stores, general office buildings, medical office buildings,car dealerships,banks. Industrial Single-and multi-t,:n_uU �vJ1 JIOUIr, anal nrla-J W 1112 hL11[aui��,. I111,k LCIMiIMIS, hu.inr,5 piks, R& Dbuildings, garages,mini-warehouses. Special Purpose Churches, veterinary hospitals, hotels and r: e rt>. restaur nr, ilwaic,,, unobile home parks, submerged tidelands, mixed-use developments,landfill properu�, .�.�iu,unutrt ��� � n�l��ities. PARTIAL LIST OF CLIENTS Lending Institutions American Savings&Loan Assn. Great %%estcm S&L Assn. Bank of America I I�,n,,, Ic,l,, al S&L of San Diego Bank of British Columbia [Trperial S � L Assn, Beverly Hills S&L N'1 rit Savings Bank Butterfield Savings N1: ,ri Manufa,lurers Bank California Canadian Bank i•1, r .ir C:.c,, coo, Trust Co. CaliforniaFederal S&L Assn, Lis_Corp Canadian Commercial Bank Lt.surancc Chemical Bank R,rin,.:o Vi, igage Citibank Scut D r I .:dcral S &L Assn. Columbia Savings&Loan Secunt\ I'a iiic \,i 'I Bank Coast Savings&Loan V,rl,:ncia Bank Gibraltar Savings W,',tem Frnnire S,n ings&Loan Glendale Federal S&L Assn. W1 IL.,l-cu_o R.wk Goldman Sachs Public Agencies Burbank Unified Sdiool Dist. Orange Conutt% Dept.of Real Property Services Calif.Dept.of Real Estate Services Orange County Couii �I' Office C'il. of hr ine I Tiled States Postal Service Federal Deposit 11�Llrance Corp. United State, Arnty Corps of Engineers Resolution Trust Corporation United State>Justi�c Department Garden Grove Citified School King %kashington Developers and Landowners Birtcher-Pacific Norland Properties Butler Housing Corporation Nu-West Development Company Cadillac Fairview Homes West Pipefitters Welfare Education and Pension Carlton-Browne and Co.,Inc, Regis Homes Carina Developers(Canada) Santa Anita Development Company Carma-SandlingGruap Daon Dei<lopmcnt Development,Inc. C's,rt.irtr `1 & S Developntcni Company The hA ine Company Tramrnel-Crow Crntpany The Koll Company Valencia Corporation Lincoln Property Warmington Group ]Meister Company Robert P.Warmington Company Mt-la Development Company William Lyon C,�nipany Nen lull Land&Farming Company Lair Firms Davis&Digraii.t McDorntntt_Will& Fmery Gibson,Dunn&Crutcher Morrison & 1 oerster Latham&Watkins Paul,Hastings,Januisky& Walker Lewis,D'Amato,Brisbois,&Bisgaard Rhodes&Bidna McCutchen,Black,Verlager and Shey Rosenfeld,Meyer&Susman Rutan&Tucker Urland,Morello,Dunn&Maynard Corporations and Institutions AMF Voit,Incorporated W.R.Grace Company ATO Corporation E.F. Hutton Development,Inc. Baldwin United Corporation Kenneth Leventhal&Assoc. University of California at L.A. Ottawa Silicon Corporation Campeau Corporation Fluor Corporation I ATTACHMENT G PACIFIC REAL ESTATE CONSULTANTS SECOND ADDENDUM TO APPRAISAL REPORT, 12/6/2018 5, 2018 REAL ESTATE CONSULTANTS December 1 Our File No. 18-19.319.3 City of Tustin Parks and Recreation Services 300 Centennial Way Tustin, CA 92780 Attn: Mr. Chad Clanton, Deputy Director Re: Addenda No. 2 to the Appraisal of a 16,038 Sq.Ft. Multi-Family Zoned Lot NEC of San Juan Street & Utt Drive Tustin, California Ladies & Gentlemen: According to the client's request,this letter is considered to be Addenda No. 2 to our prior appraisal of the same property and our prior Addenda performed for the intended use of aiding in the calculations for determining the park in-lieu fee for this project. The intended user is the City of Tustin. The prior appraisal(Our File No. 18-19),of which this letter is a part,had a date of value of October 24, 2018 and a date of the report of October 26, 2018. All descriptions, definitions, ownership references, scope of the appraisal, intended use, assumptions and limiting conditions, opinions of Highest and Best Use, valuation methodology, and analyses set forth in that appraisal report are hereby included by reference. The Addenda(Our File No. 18-19.1),of which this letter is also a part,had a date of value of January 26, 2017 and a date of the report of December 1, 2018. All descriptions, definitions, ownership references, scope of the appraisal, intended use, assumptions and limiting conditions, opinions of Highest and Best Use,valuation methodology, and analyses set forth in that appraisal Addenda are hereby included by reference. Note that the Scope of the Appraisal for Addenda No. 2 includes providing an opinion of the fair market value of the subject property as of the retrospective date of value of January 26, 2017,the date of the approval of Tract No. 17665, the condominium map, and as of the date of value of the original appraisal October 24, 2018. Since this letter is Addenda No. 2 to our prior appraisal, this update appraisal cannot be fully understood without concurrent access to our prior appraisal (Our File No. 18-19) and the prior Addenda (Our File No. 18-19.1). 668 N. Coast Highway, Suite 1409, Laguna Beach, California 92651 (949) 752-9323 • E-Mail: pacrecon@pacbell.net City of Tustin - Parks and Recreation Services December 5, 2018 Re: Our File No. 18-19.3 Page 2 Appraisal Reporting Option In compliance with Standards Rule 2-2 of the Uniform Standards of Professional Appraisal Practice, appraisal Addenda No. 2 is being transmitted under the written Appraisal Report Option. Since our prior appraisal (Our File No. 18-19) and prior Addenda (Our File No. 18-19.1) were transmitted in a written appraisal report format, this letter is also considered to be a part of the written appraisal report. Date of Valuation The dates of value in Addenda No. 2 include the date of value of the original appraisal,or October 24, 2018, as well as the retrospective date of the approval of Tract No. 17665, the condominium map, or January 26, 2017. The date of this report is the same date as set forth on clic top of each page. Fair Market Value Defined The term "fair market value"' is defined as follows: The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell, but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonable adaptable and available.. The fair market value of a property taken for which there in no relevant,comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable. According to the Code of Civil Procedures Section 1263.321 and Evidence Code Section 824, related to determination of value of non-profit, special use property, where there is no evident,comparable market,the method of determining value is the "cost of purchasing the land and the reasonable cost of making it suitable for the conduct of the same non-profit, special use, together with the cost of constructing similar improvements. The cost of reproducing the improvements are to be taken 1 Eminent Domain Law, Code of Civil Procedures Section 1263.324 City of Tustin -Parks and Recreation Services December 5, 2018 Re: Our File No. 18-19.3 Page 3 into account without taking into consideration any depreciation or obsolescence of the improvements. Pursuant to California Civil Procedures Code Section 1263.330 and California Government Code Section 7267.2,in determining fair market value,any increase or decrease in the fair market value of the property to be acquired prior to the date of valuation caused by the public improvements for which the property is acquired,or by the likelihood that the property would be acquired for the improvements should not be considered,other than that due to physical deterioration within the reasonable control of the owner or occupant. This appraisal is predicated on an all cash to the seller transaction at a price equal to the value conclusion reached in this appraisal along with a reasonable exposure time in the open market ranging from 2 months to 6 months prior to the date of value. Scope of the Appraisal Addenda The scope of appraisal Addenda No.2 is to provide an opinion of the fair market value of the subject property under two separate dates of value, 1/26/17 and 10/24/18. The fair market value opinions are also based on the hypothetical assumption that the site is vacant, according to the instructions of the client. There is currently a 5-unit detached condominium project being constructed on the site. This appraisal does not include any value contribution from the improvements. The hypothetical assumption may have affected the results of this assignment. Note that the fair market value definition includes a reference to the value opinion being reflective of the highest price for the property,while the market value definition is predicated on the opinion of value being the most probable price that would be paid for a property. The subject property description is unchanged broom the prior appraisal report. The highest and best use conclusion "as if vacant" is unchanged between the date of the prior appraisal report and the date of value of the retrospective appraisal. The valuation methodology ut i 4 i wd for appraisal Addenda No. 2 is the same as the valuation methodology utilized in the prim �ypraisal report. City of Tustin - Parks and Recreation Services December 5, 2018 Re: Our File No. 18-19.3 Page 4 Fair Market Value Opinion - Date of 10/24/18 From the market valuation reconciliation set forth in our prior appraisal with a date of value of 10/24/18,the price per unit analysis resulted in a land value range from$1,000,000 to $1,150,000. The price per NLl.h. analysis resulted in a value range from $1,125,000 to $1,170,000. The greatest weight was given to the price per unit analysis since that is the unit of comparison that is most relied upon by developers. The price per sq.ft. analysis was given secondary weight since that unit of comparison is not relied as frequently as the price per unit analysis for residential land. In this appraisal both valuation analyses provide support for each other with overlapping value ranges. Based on the reasons set forth previously, the opinion of the fair market value for the subject land parcel is $1,170,000. The fair market value opinion of$1,170,000 for the 16,038 sq.ft. site results in an indication of the value per sq.ft, of $72.95 and a price per unit indicator of $234,000 based the potential for 5 detached condominium units to be constructed. Fair Market Value Opinion - Retrospective Date of 1/26/17 From the market valuation reconciliation set forth in our prior appraisal Addenda with a date of value of 1/26/17, the price per unit analysis resulted in a land value range from $900,000 to $1,050,000. The price per sq.ft. analysis resulted in a value range from $1,060,000 to $1,120,000. The greatest weight was given to the price per unit analysis since that is the unit of comparison that is most relied upon by developers. The price per sq.ft, analysis was given secondary weight since that unit of comparison is not relied as frequently as the price per unit analysis for residential land. Based on the reasons set forth previously, the opinion of the fair market value for the subject land parcel is $1,075,000. The fair market value opinion of S 1 ,075,000 for the 16,038 sq.ft. site results in an indication of the value per sq.ft. of $67.03 and a pm:e per unit indicator of $215,000 based the potential for 5 detached condominium units to be constructed. City of Tustin - Parks and Recreation Services December 5, 2018 Re: Our File No. 18-19.3 Page 5 Valuation Based on the investigations and analyses undertaken and upon our experience as real estate analysts and appraisers, we have formed the opinion that the fair market value of the fee simple estate in the subject property, under two separate dates of value, and subject to the Assumptions and Limiting Conditions set forth in this report and the reports to which this Addenda No. 2 is a part, are as follow: Fair Market Value Opinion as of 10/24/18 ONE MILLION ONE HUNDRED SEVENTY THOUSAND DOLLARS $1,170,000 Fair Market Value Opinion as of the Retrospective Date of 1/26/17 ONE MILLION ONE HUNDRED SEVENTY THOUSAND DOLLARS $1,075,000 Certification I certify that, to the best of my knowledge and belief: - The statements of fact contained in this report are true and correct. - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional, analyses, opinions, and conclusions. - I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. - I have performed appraisal services involving the subject property for this client/- intended user within the 3 year period preceding the date of this report. - I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. City of Tustin - Parks and Recreation Services December 5, 2018 Re: Our File No. 18-19.3 Page 6 - My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client,the amount of the value opinion,the attainment of a stipulated result,or the occurrence of a subsequent event directly reiatcil io the intended use of this appraisal. - The reported analyses,opinions,and conclus icm� Nk cre developed,and this reporthas been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. - The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - As of the date of this report,Peter B.Finnerty has completed the requirements of the continuing education program of the Appraisal Institute. I have made a personal inspection of the property that is the subject of this report. No one provided significant real property appraisal assistance to the person signing this certification. I am competent to appraise the property that is the subject of this report based on my previous experience appraising similar types of properties. Respectfully submitted, Peter B. Finnerty, MAI Certified General Real Estate Appraiser California Certificate No. AG001937 ADDENDA QUALIFICATIONS QUALIFICATIONS OF PETER B. FINNERTY,MAI PROFESSIONAL BACKGROUND Actively engaged in the real estate profession since 1977. President and Principal of Pacific Real Estate Consultants,Inc.,with offices at: 668 N. Coast Highway,Suite 1409 Laguna Beach, California 92651 Before starting Pacific Real. Estate Consultants, was employed as Vice-President at Real Estate Analysts of Newport,Inc. (REAN),in Costa Mesa,California. Prior to that,was a Senior Appraiser, Bank of America, in Anaheim,California. PROFESSIONAL ORGANIZATIONS Member of Appraisal Institute,with the MAI designation LEED-AP, Green Building Certification Institute Member of National Association of Realtors Member of California Association of Realtors Member of Orange Coast Association of Realtors Associate Member of Urban Land Institute INSTRUCTOR AIREA Basic Valuation Procedures Course AIREA Capitalization Theory & Techniques,Part A AIREA Capitalization Theory & Techniques,Part B How to Value your Corporate Real Estate Assets,Seminar for International Association of Corporate Real Estate Executives, Inc. Real Estate Appraisal 342,Coastline Community College Finance 448, Income Property Appraisals,California State University at Long Beach Appraisal Institute Appraisal Procedures Course Appraisal Institute Capitalization Theory & Techniques, Part B Appraisal Institute Advanced Applications Course Appraisal Institute Non-Residential Demonstration Appraisal Report Writing Seminar Appraisal Institute Small Hotel/Motel Valuation EXPERT WITNESS Superior Court of Orange County Superior Court of Los Angeles County Superior Court of Riverside County Superior Court of San Diego County Federal District Court Federal Bankruptcy Court Arbitration Proceedings LICENSES Licensed California Real Estate Broker Certified General Real Estate Appraiser,State of California EDUCATIONAL ACTIVITIES B.S., Real Estate Administration,Indiana University, 1976. Special courses in Real Estate: Principles of Real Estate Real Estate Appraisals Case Studies in Real Estate Real Estate Law Residential Construction and Design Survey of Real Estate and Land Economics Courses sponsored by American Institute of Real Estate Appraisers: Course I-A Principles,Methods,and Techniques of Real Estate Appraising Course I-B Capitalization Theory and Techniques Course II Urban Properties Course VI Introduction to Investment Analysis SCOPE OF EXPERIENCE Vacant Land Single-family residential sites, multi-family residential sites, commercial and industrial sites, acreage, planned communities. Residential Single-family residences,duplexes,apartments,condominiums,planned unit developments,mobile homes. Commercial Shopping centers (regional, neighborhood and community), retail stores, general office buildings, medical office buildings,car dealerships,banks. Industrial Single- and multi-t4IMW altJ huildiiigs. truck temimak, husinr s parks, R & D buildings, garages, mini-warehouses. Special Purpose C liurchcs, veterinary hospitals, hotels and resorts, rt:staurants, theaters, 1110hilc 1101310 parks. suhn1cr1_'C.d Ud lands, mixed use developments,landfill propertic:,,contarniiiated properties. PARTIAL LIST OF CLIENTS Lending Institutions American Savings&Loan Assn. Great Western S&L Assn. Bank of America Home Federal S&L of San Diego Bank of British Columbia Imperial S&L Assn, Beverl` Hills S&L \1 ,rit Savings Bank Butterfield Savings Mt i-ui Manufacturers Bank California Canadian Bank vL,r ..,n Guarantee Trust Co. California Fcderal S&L Assn. \i,�i Guaranty Ins.Corp. Can;,dii,n Commercial Bank f':i,iIi, Mutual Life Insurance Chemical Bank I', inier Mortgage Citibank ti:.:, Diesto Federal S&L Assn. Columbia Savings&Loan S., : ; I'acific Nat'l.Bank Coast Savings&Loan Gibraltar Savings c>tcrn I wpii, 5,,\1n�,s&Loan Glendale Federal S&L Assn. 1 I I. t ,uuo 13.ii,1, Goldman Sachs Public Agencies Burbank Unified School Dist. C)range County IIepr oT Property Services Calif.Dept.of Real Estate Services t)r.M,.e C'srunty Counsel's Office City of Irvine L nttc•d States Postal Service Federal Deposit Insurance Corp. t nitcd SI.,1Ca Army Corps of Engineers Resolution Trust Corporation t ni ted State,Justice Department Garden Grove Unified School Kill,-,C'ouuly, Washington Developers and Landowners Birtcher-Pacific lrland Properties Butler Housing Corporation Development Company Cadillac Fairviuw Homes West I'tpeliriers Wellare Education and Pension Carlton-Browne and Co.. Inc. R fLi, Homes Carma Developer,tCanadnt Santa Anita Development Company Carma-Sendltn_Group Dagen Development S:,vc-r1,,tit Deeelopnernt. Inc. Cknstar T& S Dee CIopL„en1 Company The Irvine Company Tranunel-Crme Company The Koll Company Valencia Corlroration Lincoln Property Warmington Group Meister Company Robert P.Warmington Company Mola Development Company William Lyon Company Newhall Land&Farming Company Law Firms Davis&Digrazia McDermott,Will&Emery Gibson,Dunn&Crutcher Morrison&Foerster Latham&Watkins Paul,Hastings,Tanofsky&Walker Lewis,D'Amato, Brisbois,&Bisgaard Rhodes&Bidna McCutchen,Black,Verlager and Shey Rosenfeld,Meyer&Susman Rutan&Tucker Urland,Morello,Dunn&Maynard Corporations and Institutions ANIF Voit.Incorporated W. R.Grace Company ATO Corporation E. F. Hutton Development,Inc. Balder in United Corporation Kenneth Leventhal&Assoc. University of California at L.A. Ottawa Silicon Corporation Campeau Corporation Fluor Corporation ATTACHMENT H PLANNING COMMISSION RESOLUTION NO. 4375 RESOLUTION NO. 4375 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF TUSTIN, DENYING THE APPEAL OF PARK IN LIEU FEES FOR THE RESIDENTIAL SUBDIVISION DEVELOPMENT AT 1381-1391 SAN JUAN STREET AND ESTABLISHING A FEE BASED ON THE SECOND ADDENDUM TO THE APPRAISAL CONDUCTED BY PACIFIC REAL ESTATE CONSULTANTS. The Planning Commission of the City of Tustin does hereby resolve as follows: I. The Planning Commission hereby finds and determines as follows: A. That NexGen Management is the developer of a 5-unit single-family detached residential condominium development project at 1381-1391 San Juan Street that was approved by the Planning Commission on September 22, 2015. B. That California Government. Code Section 66477 (Quimby Act, 1975) requires residential subdivision developers to help mitigate the impacts of property improvements through parkland dedication and/or in lieu fees. C. That Tustin City Code Section 9331d details the provisions and methods of how the Quimby Act requirements are applied. D. That on September 25, 2018, BBG Inc. submitted an appraisal for the property at 1381-1391 San Juan Street to be used for the calculation of park in lieu fees. E. That on October 2, 2018, the City of Tustin notified NexGen Management that the appraisal submitted by BBG Inc. was not accepted. F. That on October 26, 2018 a second appraisal was received, from Pacific Real Estate Consultants, for the property at 1381-1391 San Juan Street, G. That on October 29, 2018, NexGen Management was informed of their park in lieu fee assessment based on the appraisal from Pacific Real Estate Consultants. H. That on November 6, 2018, NexGen Management submitted an appeal of their park in lieu fee assessment. I. That on December 3, 2018, Pacific Real Estate Consultants submitted a review of the BBG Inc. appraisal and an addendum to their own appraisal to the City. i Resolution No. 4375 Page 2 J. That Pacific Real Estate Consultants' review of the BBG Inc. appraisal recommends that the appraisal from BBG Inc. not be accepted due to problems with the report's methodology, selection and value adjustments of comparable properties and overall valuation conclusion, as exemplified by the following: a. The market condition adjustments of a 3% increase per year for the comparable properties in the BBG Inc. appraisal is lower than reasonable and is not supported. Independent real estate research indicates home price increases in Tustin at 6.2% in 2016 and 6.9% in 2017. b. Value adjustments for location variances were not made for three (3) of the five (5) comparable properties even though they were located in Santa Ana, CA adjacent to industrial development. c. The valuation of $560,000 is not reasonable considering the property acquisition costs ($648,600) the costs of obtaining approvals for development ($80,000) and a 3% annual increase rate (as set forth in the appraisal). K. That on December 6, 2018, Pacific Real Estate Consultants submitted a second addendum to their own appraisal, which considered fair market value instead of market value. L. That the Director of Parks & Recreation Services has determined that the park in lieu fee shall be based on the fair market value of the property at 1381-1391 San Juan Street as appraised by Pacific Real Estate Consultants. II. The Planning Commission does hereby denies the appeal of park in lieu fees determination and establishes a fee based on the second addendum to the appraisal conducted by Pacific Real Estate Consultants for the residential subdivision development in the amount of $24,989 per unit for a total of $124,945 for the property at 1381-1391 San Juan Street. PASSED AND ADOPTED by the Planning Commission of the City of Tustin, on the 11th day of December, 2018. STEVE KOZAK Chairperson Pro Tem ELIZABETH A. BINSACK Planning Commission Secretary Resolution No. 4375 Page 3 STATE OF CALIFORNIA COUNTY OF ORANGE ) CITY OF TUSTIN ) I, ELIZABETH A. BINSACK, the undersigned, hereby certify that I am the Secretary of the Planning Commission of the City of Tustin, California; that Resolution No. xxxx was duly passed and adopted at a regular meeting of the Tustin Planning Commission, held on the 11th day of December, 2018. PLANNING COMMISSIONER AYES: PLANNING COMMISSIONER NOES: PLANNING COMMISSIONER ABSTAINED: PLANNING COMMISSIONER ABSENT: ELIZABETH A. BINSACK Planning Commission Secretary