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ITEM NO. 10 - ITEM DISTRIBUTED AFTER AGENDA DISTRIBUTION
Agenda Item 6 �- AGENDA REPORT Reviewed.- City eviewed.City Manager 4f Finance Director 191. f -7777- MEETING DATE: OCTOBER 2, 2018 TO: JEFFREY C. PARKER, CITY MANAGER FROM: DOUGLAS S. STACK, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER SUBJECT: APPROVE AGREEMENT FOR ACQUISITION OF REAL PROPERTY AND RESIDENTIAL LEASE AGREEMENT FOR PROPERTY AT 11781 OUTLOOK LANE FOR THE SIMON RANCH RESERVOIR, BOOSTER PUMP STATION, AND PIPELINE REPLACEMENT PROJECT (CIP NO. 60114) SUMMARY At the direction of the City Council, staff has successfully negotiated an acquisition agreement for the residential property located at 11781 Outlook Lane, adjacent to the Simon Ranch Reservoir. The acquisition of the property will facilitate construction of the Simon Ranch Reservoir and Booster Pump Station Replacement Project (CIP No. 60114). Staff seeks City Council approval for this purchase and authorization to execute the necessary agreement and associated documents. RECOMMENDATION It is recommended that the City Council: 1. Approve the Agreement for the Acquisition of Real Property between the City of Tustin, a municipal corporation of the State of California, and Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust (Owner) for the property at 11781 Outlook Lane (APN 104-611-33) and authorize the Mayor and City Clerk to execute the agreement and associated documents on behalf of the City; and 2. Approve Residential Lease Agreement between the City of Tustin, a municipal corporation of the State of California ("LANDLORD"), and Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust ("TENANT') for the property at 11781 Outlook Lane (APN 104-611-33) and authorize the Mayor and City Clerk to execute the agreement on behalf of the City. FISCAL IMPACT The total purchase price for acquisition of the property is $1,800,000. Sufficient funds from the 2013 Water Bonds Fund (Fund 306) have been appropriated for the purchase. It was determined that ownership of the property by the City will facilitate construction of the project, resulting in approximately $510,000 in construction cost savings and allow for reservation of a permanent access and maintenance easement valued at $200,000. Upon completion of the project, the property will be sold at fair market value at that time. The Residential Lease Agreement has no fiscal impact. Approve Acquisition of Real Property at 11781 Outlook Lane, CIP 60114 October 2, 2018 Page 2 CORRELATION TO THE STRATEGIC PLAN The proposed project furthers Goal B of the City of Tustin Strategic Plan pertaining to Public Safety and the Protection of Assets, in that the project will improve vital public facilities which enhance Tustin's readiness in responding to fire and drought conditions. BACKGROUND AND DISCUSSION The City of Tustin is proceeding with its plans to demolish the existing Simon Ranch Reservoir and construct a replacement water reservoir and booster pump station at 11811 Outlook Lane. The project site is an incorporated City of Tustin island surrounded by unincorporated County of Orange territory and is bounded by Valhalla Drive to the southwest, Outlook Lane to the southeast, and single family residences to the north, northwest and northeast. The existing reservoir was constructed in 1960 and consists of a rectangular 1.4 million gallon (MG), partially buried structure with trapezoidal bottom and side walls lined with gunite, and a concrete roof. As the surrounding land was subsequently subdivided and developed with single family residences, property lines were established right up to the reservoir walls on the northwest and northeast sides. As a result, demolition of the existing reservoir requires encroachment onto the two adjacent residential properties. On November 15, 2016, the City Council authorized the Director of Public Works to initiate discussions with property owners, make offers, and execute agreements for the acquisition of temporary construction easements. The Public Works Department retained a Right -of -Way Agent in conjunction with the City Attorney's Office, and an independent appraiser to provide appraisal services for the City. During negotiations with Thomas Gaglio, owner of the subject property to the northeast at 11781 Outlook Lane (Assessor Parcel Number 104-611-33), a request was made by Mr. Gaglio for the City to consider acquiring the entire property in fee title, instead of the temporary construction easement. After careful consideration, it was determined that ownership of the property would enable the City to facilitate construction and realize construction cost savings estimated at $480,000 by grading down the slope onto the property, eliminating shoring, and utilizing the property for access to the construction site. Also, the need for a temporary construction easement valued at $30,000 would be eliminated. It is expected that the City will recuperate the purchasing funds with the sale of the property following construction of the project. In addition, the City, as owner of the property, could grant itself at no cost a permanent easement over a portion of the property for future access and maintenance, valued at approximately $200,000. The option to purchase the property was presented to the City Council in Closed Session on January 16, 2018. The City Council authorized the Director of Public Works to proceed with the acquisition process. The property was appraised by Kevin J. Donahue, MAI to determine current fair market value, and the amount of just compensation for the property was determined to be $1,800,000. In accordance with applicable laws, a written offer and pertinent items were delivered to the owners for consideration. The Offer to Acquire Real Property and the Appraisal Report are attached. Also attached is a Residential Lease Agreement, which will allow the property owners to occupy the property until no later than January 31, 2019 without payment of rent. The City's construction schedule will not be impacted. After negotiation of some terms of the agreement, the City's purchase offer was accepted and the attached Agreement forAcquisition of Real Property and Residential Lease Agreement have been signed by the property owners and are now presented to the City Council for approval. The City Attorney has approved the agreements as to form. SACity Council Items\2018 Council Items\10-02-2018\Gaglio Acquisition\Authorization to Purchase - Gaglio.docx Approve Acquisition of Real Property at 11781 Outlook Lane, CIP 60114 October 2, 2018 Page 3 It is recommended that the City Council approve the attached Agreement for Acquisition of Real Property and the Residential Lease Agreement between the City of Tustin and Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust (Owner) and authorize the Mayor and City Clerk to execute the agreements and associated documents on behalf of the City for the property at 11781 Outlook Lane (APN 104-611-33). Dou Ntack, P.E. Dire, t rublic Works/City Engineer chments: 1. Offer to Acquire Real Property and Appraisal Report 2. Agreement for Acquisition of Real Property 3. Residential Lease Agreement SACity Council Items\2018 Council Items\10-02-2018\Gaglio Acquisition\Authorization to Purchase - Gaglio.docx ATTACHMENT 1 OFFER TO ACQUIRE REAL PROPERTY AND APPRAISAL REPORT www.OPCservices.com 1 Jenner, Suite 200 Irvine, CA 92618 949.951.5263 ph 1949.951.6651 fax RECEIPT OF OFFER PACKAGE Simon Ranch Reservoir Replacement Project 11781 Outlook Lane, Santa Ana, CA APN: 104-611-33 1. Property Owner: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust 2. Property Address: 11781 Outlook Lane Santa Ana, CA 92705 This is to acknowledge receipt of the offer package containing the following items: ❑ Written Offer Letter Dated June 27, 2018 ❑ Appraisal Report ❑ Legal Description and Plat Map ❑ Agreement for Acquisition of Real Property ❑ Grant Deed ❑ Acquisition Brochure Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust Thomas J. Gaglio, Trustee Rachel D. Gaglio, Trustee 1319095.1 Date Date www.OPCservices.com 1 Jenner, Suite 200 Irvine, CA 92618 949.951.5263 ph 1949.951.6651 fax June 27, 2018 Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust 11781 Outlook Lane Santa Ana, CA 92705 Re: Offer to Acquire Real Property Simon Ranch Reservoir Replacement Project 11781 Outlook Lane, Santa Ana, CA 92705 Assessor Parcel No. 104-611-33 Dear Mr. & Mrs. Gaglio: The City of Tustin (hereinafter referred to as the "City', is proceeding with its plans to demolish the existing Simon Ranch Reservoir and to construct a new water tank and associated improvements as well as offsite pipeline improvements which is known as the Simon Ranch Reservoir Replacement Project (the "Project'). The City is interested in negotiating the purchase the real property you own located at 11781 Outlook Lane, Santa Ana, CA 92705 and identified by the Orange County Assessor as Assessor Parcel Number 104-611-33 (the "Property"). The Property is described in Exhibit "A" and depicted in Exhibit "B" enclosed with this letter. Overland, Pacific & Cutler, LLC ("OPC") has been contracted by the City to contact the property owners in order to acquire the necessary rights for the Project. A review of public records indicates that you are the owners of record of the Property. The City previously made you an offer to acquire a 2,735 square foot temporary construction easement in the Property. Pursuant to your request that the City consider acquiring the Property instead of the temporary construction easement, the City has appraised the Property. The purpose of this letter is to extend the City's offer to acquire the Property. The City has determined the amount of just compensation for the Property is the sum of $1,800,000. The City's offer is not less than what the City has determined to be the fair market value of the Property. The basis for that determination is explained in the enclosed appraisal report prepared by Kevin Donahue of Overland, Pacific & Cutler, LLC dated May 2, 2018. It is the City's hope that this price is agreeable to you and that the acquisition can begin immediately. This offer is, however, conditioned upon the City's ratification of the offer by execution of a contract of acquisition in a form and substance approved by the City Council of the 1319098.1 Amendment and Restatement of the Gaglio Family Trust 11781 Outlook Lane, Santa Ana, CA 92705 Page 2 City of Tustin. This offer is also based on the assumption that the Property is free of contamination and requires no remediation. If contamination is found, this offer will be subject to amendment. You have the right to obtain your own independent appraisal as part of the acquisition process. Pursuant to California Code of Civil Procedure section 1263.025, you are entitled to receive the reasonable cost, up to five thousand dollars ($5,000), for an independent appraisal you obtain. The appraisal you obtain must be conducted by an appraiser licensed by the California Bureau of Real Estate Appraisers (formerly the California Office of Real Estate Appraisers) and your request for reimbursement must be submitted in writing to the City with a copy of the appraisal and an invoice from the appraiser. Although you have the right to obtain your own appraisal and are entitled to receive up to $5,000 for your appraisal as described above, please note that the City is not obligated to accept your appraiser's value of the Property Interest. The City, however, will review your appraisal and if appropriate, confer with the City's independent appraiser regarding the merits of your appraisal. If you wish to accept this offer, please do so by communication with Mona Montano of Overland, Pacific & Cutler, Inc. at 949-268-5723 as soon as possible. A written agreement concerning the acquisition of the property will then be prepared and forwarded to you for your review and approval. If you have any questions or wish to discuss this matter further, please feel free to call Mona Montano at the number noted above. Sincerely, Over/and, Pacific & Cutler, Inc. Daniela Borbe Sr. Project Manager On behalf of City of Tustin Enclosures: Legal Description and Plat Map Appraisal Report Acquisition Brochure 1319098.1 Appraisal Report Appraisal of: ' Gaglio Family Trust Property APN:104-611-33 I =.µ Located at: 11781 Outlook Ln Santa Ana, CA 92683 Date of Report: May 2, 2018 Prepared For: Date of Value: April 20, 2018 City of Tustin C/O Overland, Pacific & Cutler, LLC Attn: Daniela Borbe, Project Manager 1 Jenner, Suite 200 Irvine, California 92618 Prepared By: Overland, Pacific & Cutler LLC 1 Jenner, Suite 200 Irvine, CA 92618 Ph: 949.951.5263 Fx: 949.951.6651 www.opcservices.com Located at: 11781 Outlook Ln Santa Ana, CA 92683 Date of Report: May 2, 2018 Prepared For: Date of Value: April 20, 2018 City of Tustin C/O Overland, Pacific & Cutler, LLC Attn: Daniela Borbe, Project Manager 1 Jenner, Suite 200 Irvine, California 92618 Prepared By: Overland, Pacific & Cutler LLC 1 Jenner, Suite 200 Irvine, CA 92618 Ph: 949.951.5263 Fx: 949.951.6651 www.opcservices.com May 2, 2018 City of Tustin C/O Overland, Pacific & Cutler, LLC Attn: Daniela Borbe, Project Manager 1 Jenner, Suite 200 Irvine, California 92618 RE: Appraisal of: Gaglio Family Trust Property 11781 Outlook Ln, Santa Ana, CA APN: 104-611-33 Project Code: TUS-013 Dear Ms. Borbe: www.upLse.rvices.com 1 Jenner, Suite 200 Irvine, CA 92618 949.951.5263 ph 1 949.951.6651 fax Per the request of the clients, the City of Tustin and Overland, Pacific & Cutler, LLC (OPC), we have provided the fair market value of the subject property on an "as is" basis. The interest appraised is fee simple interest as to the subject property. Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Any special assumptions and limiting considerations were especially noted in Section 2 of this report. Your attention is directed to the "General Assumptions and Limiting Conditions" which are part of this report. We suggest that you thoroughly read and familiarize yourself with these, since the appraisal is based upon these assumptions. The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Uniform Relocation and Property Acquisition Act and its implementing regulation, 49 CFR 24, the California Code of Civil Procedure. The Appraisal Group of Overland, Pacific & Cutler, LLC does not authorize the out -of -context quoting from or partial reprinting of this appraisal report. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by the use of media for public communication without the prior written consent of the appraisers signing this report. May 2, 2018 Ms. Daniela Borbe Page 2 This appraisal employs the following extraordinaryassumption(s)and hypotheticaicondition(s): • Section 1263.330 of the California Code of Civil Procedure requires the appraiser to not consider any effect on the value of the project, the eminent domain proceeding, or any preliminary actions of the acquiring agency. The appraiser investigated the real estate market for any influence these issues may have had in the market data selected and analyzed and could not find any. Therefore we have prepared the appraisal analysis of the subject property in the "before" condition under the extraordinary assumptionthat these activities have no effect on the value conclusions stated in this appraisal report. Use of the extraordinary assumption may have affected the assignment results. The fair market value as of April 20, 2018 is: $1,800,000 ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS Please refer to the attached appraisal report, plus exhibits, for documentation of these value estimates contained herein. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if Overland, Pacific & Cutler, LLC can be of further service, please contact us. Respectfully submitted, Overland, Pacific & Cutler, LLC Kevin J. Donahue, MAI Senior Manager, Valuation Services Certified General Real Estate Appraiser California AG15579 AaA, Denyse Neville Appraisal Assistant Overland, Pacific & Cutler, LLC SECTION 1 - SUMMARY OF SALIENT FACTS ........................................... 1 SECTION 2 - CERTIFICATION AND LIMITING CONDITIONS ..................... 2 SECTION 3 - PREMISE OF THE APPRAISAL AND SCOPE OF WORK........... 8 SECTION 4 - PRESENTATION OF DATA COLLECTED .............................. 12 SECTION 5 - VALUATION ANALYSIS ..................................................... 28 SECTION 6 - MARKET DATA................................................................ 36 SECTION7 - ADDENDA....................................................................... 42 Property reference: Gaglio Family Trust Property Addresses: 11781 Outlook Ln, Santa Ana, California Location: The subject property is located on the north side of Outlook Lane, east of Valhalla Drive. APN(s) 104-611-33 Property type: Single Family Residence Report Format: Appraisal Report Date of appraisal report: May 2, 2018 Date of value: April 20, 2018 Date of site inspection: April 20, 2018 Real estate interest appraised: Fee simple Function of the appraisal: To provide a fair market value basis for possible public acquisition. Site description: The subject parcel is a ±24,750 sf lot or ±0.57 acres per the Assessor; subject to survey. The parcel is an irregular shaped lot with approximately 181.09 feet of frontage on Outlook Lane. The parcel is zoned E4-20000 (min. lot size) -Small Estates under the Orange County Municipal Code. Improvements Description: The existing improvements consist of a 1975 built detached two-story single family residence, consisting of four (4) bedrooms, and two and three-quarter (2 3/4) bathrooms and 4,131 sf of gross living area. It has an attached three car garage. The average quality improvements are constructed of wood frame and stucco and are in good condition. and Best Use Residential development "Highest As if Vacant": Highest and Best Use "As Existing use Improved": Additional Conditions: This appraisal employs the following extraordinary assumption(s) and hypothetical condition(s); Section 1263.330 of the California Code of Civil Procedure requires the appraiser to not consider any effect on value of the project, the eminent domain proceeding, or any preliminary actions of the acquiring agency. The appraiser investigated the real estate market for any influence that these issues may have had in the market data selected and analyzed and could not find any. Therefore, the appraisal analysis of the subject property in the "before" condition has been prepared under the extraordinary assumption that these activities have no effect on the value conclusions stated in this appraisal report. Use of the extraordinary assumption may have affected the assignment results. Fair Market Value: $1,800,000 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, 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 any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. • I have no bias with respect to the property that is the subject of this report or to 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. • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professiona/Appraisa/ Practice. • 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 other than persons co-signing the appraisal or designated in the transmittal letter. • The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal 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, Kevin J. Donahue, MAI has completed the continuing education program for Designated Members of the Appraisal Institute. May 2, 2018 Kevin J. Donahue, MAI, Senior Manager, Valuation Services Overland, Pacific & Cutler, LLC Certified General Real Estate Appraiser California License #AG015779 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 performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. • I have no bias with respect to the property that is the subject of this report or to 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. • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. • I have made a personal inspection of the property that is the subject of this report. • The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. Oe� Al)_k_May 2, 2018 Denyse Neville Appraisal Assistant Overland, Pacific & Cutler, LLC General Assumptions & Limiting Conditions Information Used: No responsibility is assumed for accuracy of information furnished by others or from others, including the client, its officers and employees, or public records. Neither Overland, Pacific & Cutler, LLC nor Kevin J. Donahue, MAI is liable for such information or for the work of contractors, subcontractors and engineers. To the extent possible, the comparable data relied upon in this appraisal has been confirmed with one or more parties familiar with the transaction unless otherwise noted; all are considered appropriate for inclusion to the best of my factual judgment and knowledge. Research staff working with the appraisers may have gathered certain information, upon which the opinions and values are in part based. Names, professional qualifications and extent of their participation can be furnished to the client upon request. Leaal, Engineering, Financial, Structural or Mechanical Nature, Hidden Components: No responsibility is assumed for legal matters or matters of survey, or of any architectural, structural, mechanical or engineering nature. No opinion is rendered as to the legal nature or condition of the title to the property, which is presumed to be good and marketable. The property is appraised assuming it is free and clear of all mortgages, liens or encumbrances, unless otherwise stated in particular parts of this report. The legal description is presumed to be correct, but we have not confirmed it by survey or otherwise. We assume no responsibility for the survey, any encroachments or overlapping or other discrepancies that might be later revealed. We have inspected, as far as possible by observation, the land and improvements thereon; however, it was not possible to personally observe hidden structures, or other components, or any mechanical components within the improvement; as a result, no representation is made herein as to such matters unless otherwise specifically stated. The estimated market value assumes that no such conditions exist that would cause a loss of value. We do not warrant against the occurrence of problems arising from any of these conditions. It is assumed that there are no hidden or unapparent conditions to the property which would render it more or less valuable. No responsibility is assumed for any such conditions or for any expense or engineering to discover them. All mechanical and HVAC components are assumed to be in operating condition standard for the properties of the subject's type and are considered to be commensurate with the condition of the balance of the improvements, unless otherwise stated. No judgment is made as to the adequacy of insulation, engineering or energy efficiency of the improvements or equipment. Information relating to the location or existence of public utilities has been obtained through verbal inquiry to the appropriate utility authority, or has been ascertained from visual evidence. No warranty has been made regarding the exact location or capacities of public utility systems. Subsurface oil, gas or mineral rights were not considered in this report unless otherwise stated. Legality of Use: The appraisal is based on the premise that there is or will be full compliance with all applicable federal, state and local environmental regulations and laws, unless otherwise stated in the report; and that all appropriate zoning, building and use regulations and restrictions of all types have been or will be complied with and required licenses, consent, permits or other authority, whether local, state, federal and/or private, have been or can be obtained or renewed for the use intended and considered in the value estimate. 4 Component Values: A report related to an estate that is less than the whole fee simple estate applies only to the fractional interest involved. The value of this fractional interest, plus the value of all other fractional interests, may or may not equal the value of the entire fee simple estate considered as a whole. A report relating to the geographic portion of a larger property applies only to such geographic portion and should not be considered as applying with equal validity to other portions of the larger property or tract. The value for such geographic portions, plus the value of all other geographic portions, may or may not equal the value of the entire property or tract considered as a single entity. All valuations in the report are applicable only under the opined highest and best use and are not necessarily appropriate under other uses. Auxiliary/Related Studies: No environmental or impact studies, special market study or analysis, highest and best use analysis study or feasibility study has been requested or made by me unless otherwise specified in this report or in my agreement for services. We reserve the unlimited right to alter, amend, revise or rescind any of these statements, findings, opinions, values, estimates or conclusions upon any subsequent study or analysis or previous study or analysis that subsequently becomes available. Inclusions: Furnishings and equipment or business operations, except as otherwise specifically indicated, have been disregarded, with only the real estate being considered. Value Chanae, Dvnamic Market Influences: The estimated value is subject to change with market changes over time. Value is highly related to interest rates, exposure, time, promotional effort, supply and demand, terms of sale, motivation and conditions surrounding the offering. The value estimate considers the productivity and relative attractiveness of the property both physically and economically in the marketplace. The estimate of value in this report is not based in whole or in part upon race, color or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. In the event this appraisal includes the capitalization of income, the estimate of value is a reflection of such benefits and my interpretation of income and yields and other factors which were derived from general and specific market information. Such estimates are made as of the date of the estimate of value. As a result, they are subject to change, as the market is dynamic and may naturally change over time. The date upon which the value estimate applies is only as of the date of valuation, as stated in the letter of transmittal. The appraisal assumes no responsibility for economic or physical factors occurring at some later date which may affect the opinion stated herein. An appraisal is the product of a professionally trained person, but nevertheless is an opinion only, and not a provable fact. As a personal opinion, a valuation may vary between appraisers based upon the same facts. Thus, the appraisers warrant only that the value conclusions are their best estimate as of the date of valuation. There are no guaranties, either written or implied, that the property would sell for the expressed estimate of value. Sales History: It is assumed that the subject title is marketable, but the title should be reviewed by legal counsel. Any information given by the appraisers as to a sales history is information that the appraisers have researched; to the best of our knowledge, this information is accurate, but not warranted. 5 Property Management: It is assumed that the property which is the subject of this report will be under prudent and competent ownership and management over the entire life of the property. If prudent and competent management and ownership are not provided, this would have an adverse effect upon the value of the property appraised. Confidentiality: We are not entitled to divulge the material (evaluation or valuation) content of this report and analytical findings or conclusions, or give a copy of this report to anyone other than the client or his designee, as specified in writing, except as may be required by the Appraisal Institute, as they may request in confidence for ethic enforcement, or by a court of law with the power of subpoena. All conclusions and opinions concerning the analyses as set forth herein are prepared by the appraisers whose signatures appear. No change of any item in the report shall be made by anyone other than the appraisers, any opinion herein with respect to the existence or absence of fact is qualified by the phrase or phrases "to the best of our knowledge", "it appears" or "indicated", it is intended to indicate that, during the course of our review and investigation of the property, no information has come to our attention which would provide actual knowledge of the existence or absence of such facts. The client shall notify the appraisers of any error, omission or invalid data herein within ten (10) days of receipt and return of the report, along with all copies, to the appraisers for corrections prior to any use whatsoever. Neither our names nor this report may be used in connection with any financing plans which would be classified as a public offering under State or Federal Security Laws. Copies, Publication, Distribution, Use of Report: Possession of this report, or any copy thereof, does not carry with it the right of publication, nor may it be used for other than its intended use. The physical report remains the property of the firm for the use of the client, with the fee being for the analytical services only. This report may not be used for any purpose by any person or corporation other than the client or the party to whom the report is addressed. Additional copies may not be made without the written consent of an officer of the firm, and then only in its entirety. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations effort, news, sales or other media without our prior written consent and approval of the client. Trade Secrets: This appraisal was obtained from Overland, Pacific & Cutler, LLC or related companies and/or its individuals and consists of "trade secrets and commercial or financial information," which is privileged and confidential. Notify the appraisers signing the report or an officer of Overland, Pacific & Cutler, LLC of any request to reproduce this report in whole or in part. Authentic Copies: Any copy that does not have original signatures of the appraisers is unauthorized and may have been altered and, therefore, is considered invalid. Testimony, Consultation, Completion of Contract for Appraisal Services: A contract for appraisal, consultation or analytical services is fulfilled and the total fee payable upon completion of the report. The appraisers or those assisting in the preparation of the report will not be asked or required to give testimony in court or hearing because of having made the appraisal in full or in part, nor will they be asked or required to engage in post -appraisal consultation with the client or third parties except under separate and special arrangement and at an additional fee. Any subsequent copies of this appraisal report will be furnished on a cost plus expenses basis, to be negotiated at the time of request. M Limit of Liability: Liability of the firm and the associates is limited to the fee collected for the preparation of the appraisal. There is no accountability or liability to any third party. Fee: The fee for this appraisal or study is for the service rendered, and not for time spent on the physical report. The acceptance of the report by the client takes with it the agreement and acknowledgement that the client will pay the negotiated fee, whether said agreement was verbal or written. The fee is in no way contingent on the value estimated. Extraordinary Assumption: Section 1263.330 of the California Code of Civil Procedure requires the appraiser to not consider any effect on the value of the project, the eminent domain proceeding, or any preliminary actions of the acquiring agency. The appraiser investigated the real estate market for any influence these issues may have had in the market data selected and analyzed and could not find any; therefore we have prepared the appraisal analysis of the subject property in the "before" condition under the extraordinary assumption that these activities have no effect on the value conclusions stated in this appraisal report. Use of the extraordinary assumption may have affected the assignment results. 7 Section 3 — Premise of the Appraisal and Scope of Work Purpose of Appraisal The purpose of this appraisal is to assist the City of Tustin with purchase negotiations with the private property owner under the reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), as defined by The Appraisal Foundation. Function of Appraisal The function of this report is to provide an estimate of fair market value for the proposed public acquisition. Comoetencv of Appraisers The appraisers' specific qualifications are included within this report. These qualifications serve as evidence of their competence for the completion of this appraisal assignment in compliance with the competency provision contained within the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of The Appraisal Foundation. The appraisers' knowledge and experience, combined with their professional qualifications, are commensurate with the complexity of this assignment based on the following: ❖ professional experience; ❖ educational background and training; and ❖ business, professional, academic affiliations and activities. The appraisers have previously provided consultation and value estimates for residential, industrial and commercial land properties in California. Scope of Assignment This is an 'Appraisal Report" which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation. The scope of this appraisal has been to collect, confirm, and report data. Other general market data and conditions have been considered. Consideration has been given the property's zoning surrounding improvements and neighborhood. The work performed for this assignment included: ❖ An inspection of the property being appraised, as well as the neighborhood in which it is located. The interior and exterior of the subject was inspected. During the inspection, an inventory of the property attributes was collected based on visual observation. (NOTE: The term "inspection" should not be construed to be a professional engineer's report concerning the condition of the building, if any, structural integrity, or condition of any mechanical items. If the client has concerns of this type, a professional engineer's inspection and report are recommended. That type of inspection is beyond the scope of work of this assignment and the professional abilities of a certified appraiser. This inspection is made only for observation of property attributes). ❖ Investigation of public records for the property's zoning, flood hazard area classification and property tax assessor's records, for attributes of the property. ❖ Consideration of the highest and best use. ❖ Collection and analysis of sales, listings and contracts of sale to form a value estimate using the Sales Comparison Approach. • Preparation of a written report: To develop the opinion of value, the appraisers performed an appraisal as defined by the Uniform Standards of Professional Appraisal Practice (USPAP). In this Appraisal, we used the Sales Comparison Approach to value. Other approaches, if any, were not applicable or not necessary to develop a reliable value indication. Furthermore, the value conclusion reflects all information about the subject, market conditions, and available data. This appraisal of the subject has been presented in the form of an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the USPAP. Property Rights Appraised The property ownership rights appraised in this appraisal are those known as Fee Simple and are described as follows: ❖ Fee Simple interest is defined as "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." 1 Intended Use of Appraisal The intended use of the appraisal is to assist the client with purchase negotiations with the private property owner. Intended Users of Appraisal The intended users are the appropriate authorities and/or representatives of Overland, Pacific & Cutler, LLC (OPC) and the City if Tustin. The clients is the City of Tustin. Value Definition: The following definitions and discussions are extracted from the State of California Code of Civil Procedure, Title 7, Eminent Domain Law (New), and Chapter 9. Fair Market Value: Article 4. Measure of Compensation for Property 1263.320 (a) 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 doing so, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (b) The fair market value of the property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable. 1263.330 The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. 1 The Dictionary of Real Estate Appraisal, Sixth Edition, The Appraisal Institute, Chicago, Illinois (U.S., 2015), page 90 101 Value Estimate Date: The value estimated in this appraisal report are applicable as of April 20, 2018. Property Inspection Date: The subject was inspected on April 20, 2018. Mr. Thomas Gaglio and Mrs. Rachael Gaglio, property owners, were present for the inspection. Property Identification: The property that is the subject of this report is identified as: Reference Gaglio Family Trust Property Street Address: 11781 Outlook Ln, Santa Ana CA 92683 Location: The subject property is located on the north side of Outlook Lane, east of Valhalla Drive. County: Orange Legal: Lot 78 of Tract No. 3883 in the County of Orange, State of California, as per map recorded in Book 166, Pages 5 through 11, inclusive of Miscellaneous Maps, in the office of the County Recorder of said county. Current owner of record: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust Assessor Parcel Nos : 104-611-33 History of the Property: The Uniform Standards of Professional Appraisal Practice requires a statement of the sales or listing history of the subject property for the three (3) years prior to the appraisal date. There have been no market transactions for the subject property in the past (3) years, to include sales, listings or offers. Appraisal Analysis/Report Type: The Appraisal Standards Board controls the process of making an appraisal of a parcel of real estate. The Board issues rules and guidelines from which all appraisals and resulting reports are made. The process of administration of those rules and guidelines is addressed to the Real Estate Appraiser Commission of each respective state. The Appraisal Standards Board issues the rules and guidelines in the form of a document update published each year by The Appraisal Foundation. That document is entitled "The Uniform Standards of Professional Appraisal Practice" (USPAP). The analysis process is composed of several distinctive steps that appraisers follow to gain a thorough understanding of the property and factors that affect its value. There are two types of reports: the Appraisal Report and Restricted Appraisal Report; this is an "Appraisal" Report. Exposure Time Exposure time is the estimated length of time the property would have been offered prior to a hypothetical market value sale on the effective date of appraisal. It is a retrospective estimate based on an analysis of recent past events, assuming a competitive and open market. It assumes not only adequate, sufficient, and reasonable time but also adequate, sufficient, and reasonable marketing effort. Exposure time is therefore interrelated with appraisal conclusion of value. 10 An estimate of exposure time is not intended to be a prediction of a date of sale or a simple one -line statement. Instead, it is an integral part of the appraisal analysis and is based on one or more of the following: ❖ statistical information about days on the market; ❖ information gathered through sales verification; and ❖ interviews of market participants. The reasonable exposure period is a function of price, time and use. It is not an isolated estimate of time alone. Exposure time is different for various types of real estate and under various market conditions. In consideration of these factors, we have analyzed the following: ❖ Exposure periods of comparable data revealed during the course of this appraisal ❖ Knowledgeable real estate professionals Based on the foregoing analysis, an exposure time of four to six (4-6) months is reasonable, defensible, and appropriate. This exposure time assumes the subject would have been competitively priced and aggressively promoted within the market area. 11 PTT;11 1 i t County Data — Orange County Orange County is a county in the U.S. State of California. Its county seat is Santa Ana. According to the California Department of Finance, Orange County had a projected January 1, 2017 population of 3,194,024, up 0.7% from the 2016 figure; making it the third most populous county in California, behind Los Angeles and San Diego Counties. The county is famous for its tourism and is home to such attractions as Disneyland and Knott's Berry Farm, as well as several beaches along its more than 40 miles of coastline. The City of Santa Ana serves as the governmental center of the county with Anaheim as its main tourist destination and Irvine as its major business and financial hub. Two Orange County cities have populations exceeding 300,000: Santa Ana and Anaheim. The city of Irvine has a population exceeding 267,000. Thirty-four incorporated cities are located in Orange County; the newest being Aliso Viejo, which was incorporated in 2001. Anaheim was the first city incorporated in Orange County in 1870 when the region was still part of neighboring Los Angeles County. Government Orange County is a chartered county of California; its seat is Santa Ana. Its legislative and executive authority is vested in a five -member Board of Supervisors. Each Supervisor is popularly elected from a regional district, and together the board oversees the activities of the county's agencies and Orange County Population Projections July 2015 3,154,580 July 2020 3,266,107 July 2025 3,349,157 July 2030 3,410,773 July 2035 3,421,228 departments and sets policy on development, public Source: Orange County Center for Demographic Research improvements, and county services. At the beginning of each year the Supervisors select a Chairman and Vice Chairman, but the administration is headed by a professional municipal manager, the County Executive. Seven other public officials are elected at -large: the County Assessor, Auditor -Controller, Clerk -Recorder, District Attorney, Sheriff -Coroner, Treasurer -Tax Collector and Public Administrator. Geography Orange County has a total area of 947.98 square miles of which 789.40 square miles (or 83.27%) is land and 158.57 square miles (or 16.73%) is water. It is the smallest county in Southern California. The average annual temperature is about 68 OF. Orange County is bordered on the southwest by the Pacific Ocean, on the north by Los Angeles County, on the northeast by San Bernardino County and Riverside County, and on the southeast by San Diego County. The northwestern portion of the county lies on the coastal plain of the Los Angeles Basin while the southeastern end rises into the foothills of the Santa Ana Mountains. Most of Orange County's population resides in one of two shallow coastal valleys that lie in the basin, the Santa Ana Valley and the Saddleback Valley. The Santa Ana Mountains lie within the eastern boundaries of the county and of the Cleveland National Forest. The high point is Santiago Peak (5,689 feet) about 20 miles east of Santa Ana. 12 Employmentz The unemployment rate in the Orange County was 2.8 percent in March 2018, down from a revised 3.1 percent in February 2018, and below the year-ago estimate of 3.7 percent. This compares with an unadjusted unemployment rate of 4.2 percent for California and 4.1 percent for the nation during the same period. Between February 2018 and March 2018, total nonfarm employment increased from 1,624,400 to 1,625,900, an increase of 1,500 jobs. ➢ Educational and health services posted the largest employment increase with the addition of 2,600 jobs overall. Nearly 90 percent of the gain was in healthcare and social assistance. ➢ Leisure and hospitality added 2,200 jobs over the month. Eighty percent of the gain was in accommodation and food services led by an increase of 1,600 jobs in food services and drinking places. ➢ Three other sectors reported month -over employment increases. Professional and business services (up 700 jobs), other services (up 500 jobs), and government (up 200 jobs). ➢ Five sectors reported month -over declines: construction (down 1,800 jobs), manufacturing and financial activities (down 1,200 jobs each), trade, transportation and utilities (down 400 jobs), and information (down 100 jobs). Mining and logging remained unchanged. Between March 2017 and March 2018, total nonfarm employment increased by 25,400 jobs, or 1.6 percent. ➢ Educational and health services posted the largest year -over increase with an overall gain of 10,700 jobs. Over 90 percent of the growth was in healthcare and social assistance. ➢ Professional and business services reported a gain of 9,100 jobs with the majority of the employment gain in administrative and support services, which includes temporary help firms. ➢ Four sectors reported year -over declines. The most significant loss was in manufacturing (down 1,700 jobs), with over 90 percent of the loss in durable goods. Information and mining and logging reported no change. z http.//www.calmis.ca.gov/Fle/lfmonth/oran$pds.pdf 13 Unemployment Rate Historical Trend 5.0°k 4.5% 4.0 - 3.5% 3.0% 2.5% 2.0ok P4c 0, 'so -- ---- ______ — _______r_._�T__T ,—_�—__ _�_____ A NA PJo, �QQ qec ��� ��o �^ac PQc q�' deo z http.//www.calmis.ca.gov/Fle/lfmonth/oran$pds.pdf 13 North Tustin3 North Tustin is a census -designated place and unincorporated community in Orange County, California. Within the North Tustin census -designated place are the distinct unincorporated communities of Cowan Heights, East Tustin, Lemon Heights, North Tustin, Panorama Heights, and Red Hill. The Foothill Communities Association (FCA) is a nonprofit corporation begun in the 1960s to preserve the living environment in those communities. FCA works as a representative body for over 10,000 homes within the area. According to the United States Census Bureau, the CDP has a total area of 6.7 square miles (17 km2), all of it land. North Tustin is bordered by the city of Tustin to the west, south, and east, and by the city of Orange to the north. Major nearby freeways include the Santa Ana (5) Freeway, Costa Mesa (55) Freeway, the Garden Grove (22) Freeway, and the Eastern Transportation (261 Toll Road) Corridor. Housing Trends According to the CoreLogic data brief, the median price paid for all Southern California homes sold in March 2018 was a record $519,000. This was up 2.4% month -over -month from $507,000 in February 2018, and up 8.4% year -over -year from $479,000 in March 2017. The average change in the median sale price between February and March since 1988 was an increase of 3.1%. March 2018 marked the 72nd consecutive month in which Southern California experienced a year -over -year increase in the median sale price. While the nominal median sale price peaked in March 2018, when adjusted for inflation, the March 2018 median sale price remained 13.4% below its peak in July 2007. The number of homes that sold for $500,000 or more in March 2018 rose 5.4%, in comparison with March 2017. Sales of $800,000 -plus homes increased 11% year -over -year, and $1 million -plus sales increased 14.2%. Sales below $500,000 fell 16.9% year -over -year, while sales below $300,000 fell 24.4% and sales below $200,000 dropped 32.5%. Homes that sold for $500,000 or more accounted for 52.9% of all sales in March 2018—up from 51.4% in February 2018, and up from 47.1% in March 2017. YEAR -OVER -YEAR CHANGE TOTAL HOMES SOLD/MEDIAN PRICE FOR SELECT SOUTHERN CALIFORNIA COUNTIES (REFLECTS TOTAL HOME SALES) Los Angeles 7,332 6,809 -7.1% $549,000 $S85,000 6.6% ©range 3,437 3,264 -S.0% $667,000 $725,000 8.7% Riverside 4.073 3,745 -8.1% $350,000 $375,000 7.1% San Bernardino 2.731 2.641 -3.3% $345,000 $328,000 7.5% San Diego 3.737 3.529 -5.6% $S1S,000 $550,000 GA% Ventura 950 89S -5.8% $535,000 $565,000 S.6% Southern 22,260 20.883 -6.2% $479,000 $519,000 8.4% California Total Source: CoreLogic 3 https://en.wikipedia.org/wiki/North_Tustin,_California 14 According to Zillow, the median home value in North Tustin is $1,090,709. North Tustin home values have gone up 12% over the past year and Zillow predicts they will rise 5.0% within the next year. The median list price per square foot in North Tustin is $429, which is higher than the Los Angeles -Long Beach -Anaheim Metro average of $420. The median price of homes currently listed in North Tustin is $1,347,000 while the median price of homes that sold is $999,600. In the last 6 months sale prices have appreciated approximately 4%, however from January 2018 to March 2018, sale prices have remained stagnant. Market condition adjustments of 12% per year have been made, applied at the rate of 1% per month through December 2017. Given the stability in prices in recent months, no adjustments are made for sales from January 2018 through the date of value. Mar 2018 — North Tustin $1.09M 2014 2015 2016 2017 2018 Neighborhood Data $1.1M $974K $820K $665K The subject's immediate neighborhood is comprised of single family residences. The Tustin Hills Racquet Club and Tustin Ranch Golf Club are to the southeast and southwest. The Eastern Transportation Corridor SR -261 Toll Road is to the south, providing linkage to the Inland Empire and greater Orange County area. Interstate 5 and The Market Place, an outdoor shopping center, are located to the southwest. 15 Site Description General Site Information Address: 11781 Outlook Ln, Santa Ana, California Location: The subject property is located on the north side of Outlook Lane, east of Valhalla Drive. Current Owners: Thomas 1. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust 5 -Year Sales History: There have been no market transactions for the subject property in the past five (5) years, to include sales, listings or offers. Assessor's Parcel No: 104-611-33 Assessed Land: $371,670 Assessed Improvements: $342,421 Total Value: $714,091 Taxable Value: $714,091 2017-2018 Taxes: $8,866.28 Physical Characteristics of the Site Frontage: ±182.09 feet of frontage along Outlook Lane Total Site Area: The subject property is ±24,750 sf or 0.57 acres according to the Assessor's Parcel map; subject to survey. Shape: Irregular Topography: Level with sloping in the backyard Access: Via Outlook Lane Corner Influence: The subject parcel does not have a corner lot location. Easement(s): A preliminary title report was provided for review. There are no easements encumbering the subject property. A copy of the preliminary title report is contained in the Addenda Section of this report. Encroachments: None noted from site visit; encroachments subject to survey. Utilities to Site: All utilities are connected to the site. Sidewalk, Curbs and There are curbs, gutters and sidewalks along Overlook Lane. Gutters: Flood Designation: The subject property is located on F.E.M.A. Panel # 06059C01683, dated 12/3/2009. According to this map, the subject property is within Flood Zone X. Earthquake/ Fault Zone: The subject property is not within an area delineated by the California Geological Survey as an Alquist-Priolo earthquake fault zone, but is subject to seismic activity. Surface Drainage: Surface drainage appears to be adequate for the development as constructed. No evidence of ponding was noted during the site inspection. Soils: A soil analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soil report, it is a specific assumption that the site has adequate soils to support the highest and best use. Subsurface Conditions: It is assumed that there are no hidden or unapparent conditions to the property, soil, or subsoil, which would render them more or less valuable. Subsurface oil, gas or mineral rights were not considered in this report unless otherwise stated. 16 Economic Factors Affecting the Site Supply of Vacant Land: Below average Demand for Vacant Land: Above average Traffic Pattern/Volume: Outlook Lane is a residential cul-de-sac street with typical local traffic patterns. Neighboring Property The surrounding neighborhood is predominantly single family residential Uses: homes, except for the Tustin Hills Racquet Club located to the south. Zoning: The parcel is zoned E4-20000 (min. lot size) -Small Estates by Orange County. According to the County's Municipal Code, 'the E4 District is established to provide for the development and maintenance of low - medium -density single-family residential neighborhoods in which open spaces and deep setbacks predominate." Development standards in the E-4 zone include: • Building Site Area: 10,000 sf min. except per section 7-9-126.1 • Building Height: 35 ft. maximum except per section 7-9-126.1 • Building Site Coverage: 35% maximum • Building Setbacks: Per sections 7-9-127, 7-9-128, and 7-9-137. • Off -Street Parking: Per section 7-9-145. • Lights: All lights shall be designed and located so that direct light rays shall be confined to the premises. Additional development standards are available on the County's website. As of the date of report, we do not believe there is a reasonable probability of a zone change. Allowable Uses in the Principle permitted uses within the E-4 zone include: community care District: facilities serving six (6) or fewer persons, large family day care homes, parks, playgrounds, athletic fields (non-commercial), single-family dwelling or mobile home per section 7-9-149.5 (one per building site). Major Flaws in Site: None noted Overall Site Analysis: The overall site is legally conforming and adequate for development under the current zoning ordinance. 17 Improvements Description The following is a description of the subject improvements: General Description General Property Type: Single-family residence Number of Buildings: One Year Built: 1975 Number of Stories: Two Gross Living Area (GLA): 4,131 sf Bedroom/Bathroom Count: 4 bedroom and 2 3/4 bathrooms Additional Rooms: Library, game room, living, family, dining and laundry room Parking: 3 -car attached garage Amenities: N/A Construction Class: Class D; Frame and Stucco construction Construction Quality: Average Exterior Construction Detail Foundation: Concrete slab Framing: Wood Exterior Wall Material: Stucco with wood siding Roof Construction: Composition shingle Windows: Wood frame; casement Heating System: Forced Air; three fireplaces Electrical Service: Standard Physical Condition: Condition: Good Deferred Maintenance: The subject property was in good overall condition, with minimal deferred maintenance observed. Overall Improvements Rating: Average Notable Features: Interior: Kitchen • Marble countertops • 5 -burner gas cooktop • Crown molding Formal Dining Room • Coffered ceiling with mirror and ornamental light fixture Living Room • Fireplace with tiled mantle • Vaulted ceiling with tongue and groove beam Master bedroom • Vaulted ceiling • Walk-in closet • Platform bed E:3 Game Room/ Bar (Second Floor) • Fireplace with granite hearth • Bar has wine cooler, tiled counters and built in glass rack with beveled mirror and hardwood trim Office • Skylights Library • Fireplace with brick and wood accents • Built-in book cases with granite inlaid Family room • Crown molding • Wet bar with wine cooler Bedrooms • Reach in closets • Crown molding Half Bathrooms • Vanity with custom sink • Wood flooring Garage • Built-in cabinetry • Three car garage Additional features • Interior laundry room • 700 sf unfinished space 19 Subject Property Photographs 20 Photograph 1. Front View Taken by: Denyse Neville Photograph date: April 20, 2018 Photograph 2. Game room/ Bar Taken by: Denyse Neville Photograph date: April 20, 2018 Subject Property Photographs 21 Photograph 3. Formal Dining room Taken by: Denyse Neville Photograph date: April 20, 2018 Photograph 4. Library Taken by: Denyse Neville Photograph date: April 20, 2018 Subject Property Photographs 22 Photograph S. Kitchen/ Family room Taken by: Denyse Neville Photograph date: April 20, 2018 Photograph 6. Bedroom Taken by: Denyse Neville Photograph date: April 20, 2018 Subject Property Photographs 23 Photograph 7. Half bathroom Taken by: Denyse Neville Photograph date: April 20, 2018 Photograph 8. Office Taken by: Denyse Neville Photograph date: April 20, 2018 Location Map 'Lemon G HeIgms /1 Cues£a O Ny Peters Canyon irl Regional Park 1f O� SUBJECT X �� lg 1£7810utlook Ln Santa Ana, CA 92705 5 0 xewood Dr- ~ ti Red Hill {{�� a %� Rat's 'V 4, Cedar Park pJ�— 11 4 r b iii S i✓ I � "l:et%gt "SP Tustin t141' � Area Map 24 Limestone Canyon Regional Park Lake Forest 241 Foothill '1r- Ranch n m 3 2 Q 3 9 O n L,. Limestone Canyon Regional Park Lake Forest 241 Foothill '1r- Ranch Aerial of Subject Property 0 OS 2 i MARCH 1463 Assessor's Parcel Map lRAC! NO. 3863 M.M. 166-5 to 1J i— 25 NC'f - A55,F55CR'S &WK d PARCEL NUMOER.5 SHOW 11 CIRC.ES 104-61 MR Highest and Best Use Analysis The principal of highest and best use is defined as: "That reasonably probable use of property that results in the highest value. '4 The criteria the highest and best use must meet are legal permissibility, physical possibility and financial feasibility." ❖ Permissible Use (Legal) - what uses are permitted by zoning and deed restrictions on the site in question? ❖ Possible Use - to what uses is it physically possible to put the site in question? ❖ Feasible Use - which possible and permissible uses will produce any net return to the owner of the site? Highest and best Use - among the feasible uses, which use will produce the highest net return or the highest present worth? The highest and best use may be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the property's total value in its existing use. Implied within these definitions is recognition of the contribution of that specific use to community environment or to community development goals, in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraiser's judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact. Highest and best use represents the premise upon which value is based. In the context of highest selling price (fair market value) another appropriate term to reflect highest and best use would be most probable use. The highest and best use for the unimproved property may be different from the highest and best use of the improved property. This will be true when the improvement is not an appropriate use and yet makes a contribution to total property value in excess of the value of the site. As the scope of work in this appraisal does not include the house, the highest and best use analysis only addresses the subject 'as if vacant'. Highest and Best Use: "As if Vacant": As determined, the highest and best use of the subject property, "as if vacant", based on zoning, applicable land uses, and neighborhood environment, would be to construct a new single family residential development. "As Improved"• The appraisal investigation, inclusive of a review of relevant market data sources, clearly demonstrates that the value of the subject property, as improved, exceeds the value of the site "as if vacant". As such, the analysis focused on the highest and best use "as improved". The present use of the subject property is an owner -occupied single family residence. The existing single family residence is considered to be the highest and best use as of the date of value. The reader is referred to the following criteria as applicable to the subject property. 4 The Appraisal of Real Estate, 14th edition, The Appraisal Institute, Chicago, Illinois, (U.S. 2013), page 333. Legally Permissible: The property is zoned E4-20000 (min. lotsize) -Small Estates by Orange County. The primary purpose of the EA District is to provide for the development and maintenance of low -medium density single-family residential neighborhoods in which open spaces and deep setbacks predominate. Physically Possible: The subject is adequately served by utilities and has an adequate shape and size, sufficient access, etc. The subject site would support a site layout for many of the legally probable uses. Financially Feasible The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally permissible and physically possible land uses versus the cost to create the uses. Given the subject's remaining economic life with current improvements and zoning limitations, its current use as a single family residence is considered to be the most financially feasible. The residence is in good condition throughout and market conditions do not warrant new development at this time. Maximally Productive: Its current use as a single family residence represents the maximum net return to the land. 27 Valuation Process: Valuation process is defined as: "The systematic set of procedures an appraiser follows to provide answers to a client's questions about real property value. '5 Valuation is a term used interchangeably with appraisal. Real estate markets are a function of the location in which they are located. The overall market environment can have a profound effect on the manner in which buyers and sellers perform the act of transferring property rights. Considerations made by the participants are generally based on certain fundamental principles. Those principles and their definitions are as follows: Anticipation: "The perception that value is created by the expectation of benefits to be derived in the future. Value is created by the anticipation of future benefits. Change: The result of the cause and effect relationship among the forces that influence real property value. Supply and Demand: In economic theory, the principle of supply and demand states that the price of a commodity, good, or service varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately with supply. Thus, an increase in the supply of an item or decrease in the demand for an item tends to reduce the equilibrium price; the opposite conditions produce an opposite effect. The relationship between supply and demand may not be directly proportional, but the interaction of these forces is fundamental to economic theory. The interaction of suppliers and demanders, or sellers and buyers, constitutes a market. Competition: Between purchasers or tenants, the interactive efforts of two or more potential buyers or tenants to make a sale or secure a lease; between sellers or landlords, the interactive efforts of two or more potential sellers or landlords to complete a sale or lease; among competitive properties, the level of productivity and amenities or benefits characteristic of each property considering the advantageous or disadvantageous position of the property relative to the competitors. Substitution: The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price attracts the greatest demand and widest distribution. This is the primary principle upon which the cost and sales comparison approaches are based. Balance: The principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium. Contribution: The concept that the value of a particular component is measured in terms of its contribution to the value of the whole property or as the amount that its absence would detract from the value of the whole. Surplus productivity: The net income that remains after the cost of various agents of production has been paid. Conformity: The appraisal principle that real property value is created and sustained when the characteristics of a property conform to the demands of its market. Externalities: The principle that factors outside a property, or externalities, exert both positive and negative influences on the property's value."' s The Appraisal of Real Estate, 14th edition, The Appraisal Institute, Chicago, Illinois (U.S., 2013), page 35 s The Appraisal of Real Estate, 14th edition, The Appraisal Institute, Chicago, Illinois (U.S., 2013), page 33 I: The valuation of the subject property is made on the basis of the real estate. Both the market participants as well as the real estate appraiser take the effects of the fundamental principles listed above into consideration. In arriving at an estimate of value, the appraisal considers the three approaches normally employed in accepted real estate appraisal practice, namely: The Cost Approach, wherein the land is appraised As If Vacant and available for development to its highest and best use. To this result is added the improvements' estimated cost of replacement or reproduction new less depreciation accruing from all causes. The Income Approach, which requires a study of the earnings capacity of the real estate, and the conversion of such net income into value by means of a capitalization process. The Sales Comparison Approach, involving an analysis of the sale of other properties having similar improvements, and a comparison of such data with the property appraised, giving due consideration to the elements of dissimilarity. This approach was used to value the subject property as if vacant. Valuation Methodology The Sales Comparison Approach is typically the preferred method of Single Family Residence valuation when comparable data is available. The appraisal market data investigation generated a sufficient database of comparable sale for use in the valuation by Sales Comparison Approach. The Income and Cost Approaches were not employed as meaningful indicators of the subject's Market Value. The total sale price has been used as the salient unit of comparison, consistent with how market participants buy and sell single family residences. Price per square foot of gross living area has been given secondary consideration. Sales Comparison Approach The application of this approach produces an estimate of value for a property by comparing it with similar properties which have been sold or are currently offered for sale in the same or competing areas. Procedures used to estimate the degree of comparability between two properties involve sound judgment decisions concerning their similarity with respect to any value factors such as transactional factors, location, physical characteristics, zoning and legal encumbrances. Comparable Sales Search A search for comparable data was undertaken in order to gain market insight. Listings, contracts of sale and recorded transactions were all considered. Sources referenced include MLS and RealQuest. The unit of comparison utilized for the analysis is total sales price. The following is a summary of market data items relied on for analysis using the Sales Comparison Approach. The adjustments made to the data are delineated on the adjustment grid following the summary. Residential Land Sales — Santa Ana, CA The map on the next page shows the location of the sales and the subject property. 29 RecordingItem . No. Location Date Zoning (SF) Sale Price PSF R-1 11822 Skyline Drive 2/13/2018 E-4 20,295 $1,650,000 $431.15 Santa Ana R-2 2032 Racquet Hill 9/19/2017 E-4 20,800 $1,960,000 $529.73 Santa Ana R-3 2121 Valhalla Drive 8/30/2017 E-4 26,325 $1,895,000 $449.58 Santa Ana The map on the next page shows the location of the sales and the subject property. 29 Land Sales Market Data Map R.2 X p. 2032 Racquet Hill Santa Ana, CA 92705 g�r9 Qr _ tit 0� S SUBJECT 11781 Outlook Ln Santa Ana, CA 92705 4� !a 'did y O'o O V 6 Rd R3 X _r 2121 Valhalla Dr Santa Ana, CA 92705 �1` m 91 �p 8vruln Aw Land Sale Adiustments v� Qadtas- ay v Tustin Where necessary, each of the residential improved sales have been adjusted for various elements of comparison. These include: property rights conveyed, financing terms, conditions of sale, expenditures immediately after purchase, market conditions (i.e., time). Other physical adjustments include: location and immediate environment, lot area, gross living area (GLA), quality, condition, year built, number of bedrooms and bathrooms, view and a pool amenity. Real Property Rights Conveyed: The selected comparable sales reflect transfers of fee simple interests; no adjustments are warranted. Financing: All of the sales were facilitated with cash or cash equivalent financing; therefore, no adjustments are necessary. Conditions of Sale: All of the comparable sales were arm's length transactions and similar accordingly. No adjustments are warranted. Expenditures Immediately after Purchase: A knowledgeable buyer considers expenditures that must be made following the purchase of a property because these costs may affect the net price that the buyer agrees to pay. Such expenditures may include the costs to demolish and remove any buildings, costs to petition for a zoning change, or costs to remediate 30 R-1 X 11822 Skyline Dr '- Santa Ana, CA 92705 m� m yr Land Sales Market Data Map R.2 X p. 2032 Racquet Hill Santa Ana, CA 92705 g�r9 Qr _ tit 0� S SUBJECT 11781 Outlook Ln Santa Ana, CA 92705 4� !a 'did y O'o O V 6 Rd R3 X _r 2121 Valhalla Dr Santa Ana, CA 92705 �1` m 91 �p 8vruln Aw Land Sale Adiustments v� Qadtas- ay v Tustin Where necessary, each of the residential improved sales have been adjusted for various elements of comparison. These include: property rights conveyed, financing terms, conditions of sale, expenditures immediately after purchase, market conditions (i.e., time). Other physical adjustments include: location and immediate environment, lot area, gross living area (GLA), quality, condition, year built, number of bedrooms and bathrooms, view and a pool amenity. Real Property Rights Conveyed: The selected comparable sales reflect transfers of fee simple interests; no adjustments are warranted. Financing: All of the sales were facilitated with cash or cash equivalent financing; therefore, no adjustments are necessary. Conditions of Sale: All of the comparable sales were arm's length transactions and similar accordingly. No adjustments are warranted. Expenditures Immediately after Purchase: A knowledgeable buyer considers expenditures that must be made following the purchase of a property because these costs may affect the net price that the buyer agrees to pay. Such expenditures may include the costs to demolish and remove any buildings, costs to petition for a zoning change, or costs to remediate 30 environmental contamination. Costs to upgrade a property are typically not cause for adjustment as the benefit of these expenditures will most likely be manifested as potential improved income for the property. Adjustments for expenditures are not warranted. Market Conditions: Comparable sales that occurred under different market conditions than the subject property on the effective date of value, require an adjustment for any differences that affect their value. An adjustment for market conditions is made if, since the time the comparable sales were transacted, general property values have appreciated or depreciated, or investors' perceptions of the market have changed. According to the local listing agents, the subject's neighborhood market is hot. Homes are receiving multiple offers. Market condition adjustments of 12% per year have been made, applied at the rate of 1% per month through December 2017. Given the stability in prices in recent months, no adjustments are made for sales from January 2018 through the date of value. Physical Description Location /Vicinity: The comparable sales are all located within the subject's neighborhood. The subject enjoys a cul-de-sac location, which is slightly superior to a through traffic street. Adjustments for location and immediate environment are made accordingly. Lot Area Within the subject's neighborhood, single family lots average ±20,000 sf, corner and cul-de-sac lots trending towards 24,000+ sf. While the price difference based upon lot size alone does not vary greatly in sales; larger lots are typically improved with homes of larger sizes. A review of the GLA to lot size (ratios listed in the sales Summary Grid) was helpful in determining comparability. The additional lot area allows for the possibility of adding additional living space or customizing the outdoor space to suit the desires of the buyer. Considerations for lot size with regard to GLA/lot size are made accordingly. Gross Living Area (GLA) Within the subject's market area, properties with larger building improvements tend to obtain a longer economic life over smaller homes. Trends indicate that buyers will typically either fully or partially remodel a smaller home and drastically increase the gross living area following the purchase; effectively restarting the life cycle. The overall size (GLA) of the comparable properties is given much greater consideration than the floor plan of each comparable. Adjustments for GLA are made accordingly. Ouality/Condition /Year Built Adjustments must be made for factors such as quality of construction, the condition of a property and its effective age. The comparable properties were built between 1970-1976 and are of similar construction quality. The subject's improvements were constructed in 1975, there have been minor updates during the last 10 years. Overall, the subject's improvements are generally in good condition. The comparable properties used in this analysis vary in terms of updates and renovations; primarily regarding architectural design, layout, and building materials. Adjustments are made accordingly. Number of Bedrooms/ Bathrooms The subject has 4 bedrooms and 2 3/4 bathrooms. Comparable items with additional bedrooms or bathrooms, or a combination thereof were considered superior in comparison and adjusted accordingly. It should be noted that less weight was given to the bedroom count, as it is common in the subject market area to renovate the interior layout to suit the buyers' needs; such as converting bedroom space into a dedicated office. Additionally, it is understood that bathroom renovations or additions typically have higher renovation or addition costs, which were taken into consideration. Adjustments are made accordingly, 31 however it should be noted that more weight was given to the gross living area adjustments, as a higher GLA allows the buyer greater versatility in customizing to suit personal tastes or needs. View Real estate agents and brokers contacted during this analysis have agreed that a buyer would pay more for a view, properties with a panoramic view being at the higher end. The subject property does not have a valuable view. Adjustments for view variances are made accordingly. Other Adiustments Listing agents interviewed in this analysis believe that for the neighborhood's price point, buyers expect a pool. As such, the subject property does not have a swimming pool. The subject has 700 sf of unfinished space, located on the second story behind the master bathroom and office. Permits have been approved for construction, however the space currently functions as an attic. As it was never finalized nor approved, the permitted space is considered an amenity in this valuation; adjustments are made accordingly. 32 Comparable Sales Discussion Item R-1: This is a February 2018 sale of a two story 5 bedroom, 3.5 bath home. The listing agent indicated the home was in good condition, with minor plumbing and electrical repairs made prior to sale. The kitchen features marble countertops, Saltillo tile and European style appliances. The agent also stated the property did not have a view. Adjustments are indicated as follows: Location and Immediate Environment Slightly Inferior — the home is located on a through street Lot Area Slightly Inferior — the home has a smaller lot size Gross Living Area (GLA) Slightly Inferior — the home has a smaller GLA in comparison to the subject Quality/ Condition/ Year Built Slightly Inferior — the property does not have the same level of updating as the subject property Number of Bedrooms/ Bathrooms Superior - the home has one bedroom and a 3/4 bathroom more than the subject Item R-2: This is a September 2017 sale of a single story 5 bedroom, 3 bath home. The listing agent indicated the buyer did some remodeling to taste, however the property was in good condition throughout. The property features transitional indoor -outdoor living; having an in -ground pool and spa, a BBQ island, and outdoor living room equipped with a fireplace. Adjustments are indicated as follows: Location and Immediate Environment Slightly Inferior — the home is located on a through street Market Conditions 7%- the home was sold under inferior market conditions Lot Area Slightly Inferior - the home has a smaller lot size Gross Living Area (GLA) Slightly Inferior — the home has a smaller GLA in comparison to the subject Quality/ Condition/ Year Built Slightly Superior — the home has more desirable attributes than the subject Number of Bedrooms/ Bathrooms Superior - the home has one bedroom more than the subject Amenities Superior — the home has an in -ground pool and spa Item R-3: This is an August 2017 sale of a two story 5 bedroom, 5.5 bath home. The listing agent indicated the seller was a flipper who completely rehabbed the interior and changed the floor plan. The property was in very good condition at the time of sale and received multiple offers. Adjustments are indicated as follows: Location and Immediate Environment Slightly Inferior — the home is located on a through street Market Conditions 8%- the home was sold under inferior market conditions Lot Area Slightly Superior - the home has a larger lot size Quality/ Condition/ Year Built Superior — the home was completely renovated Number of Bedrooms/ Bathrooms Superior - the home has one bedroom and 2 and 3/4 bathrooms more than the subject View Superior - the home has a view of the city/ canyon Amenities Slightly Superior — the home has an in -ground pool and spa 33 Improved Residential Sales Adjustment Grid Residential Sales Subject Item R-1 Item R-2 Item R-3 Location: 11787 Outlook Ln 11822 Skyline Dr. 2032 Racquet Hill 2121 Valhalla Dr. Santa Ana, CA Santa Ana, CA Santa Ana, CA Santa Ana, CA A.P.N. 104-611-33 104-611-04 502-194-03 104-611-38 Sale Price: N/A $1,650,000 $1,960,000 $1,895,000 Sale Date: N/A 2/13/2018 9/19/2017 8/30/2017 Gross Living Area (sf) 4,131 3,827 3,700 4,215 GLA/Lot Size Ratio 0.34 0.19 0.18 0.16 Lot Size 24,750 20,295 20,800 26,325 Year Built 1111 1975 F 1970 1976 OF 1973 BedroornrBathroom Configuration 4 bed/2.75 bath 5 bed/3.5 bath 5 bed/3 bath 5 bed/5.5 bath Garage (# spaces) 3 car attached 3 car attached 3 car attached 3 car attached Sales Adjustment Item R-1 Item R-2 Item R-3 Property Rights Conveyed Fee Simple Fee Simple Fee Simple Financing Terms Conventional Conventional Conventional Conditions of Sale Standard Standard Standard Expenditures Immediately after purchase None None None lvlarket Conditions Current 7% 8% Carried Forward Price/per unit $1,650,000 $2,097,200 $2,046,600 Other Adjustments: Location and Immediate Environment SI. Inferior SI. Inferior SI. Inferior Lot Area SI. Inferior Sl. Inferior Sl. Superior Gross Living Area (GLA) SI. Inferior SI. Inferior Similar Quality/Condition/Year Built Sl. Inferior SI. Superior Superior Number of Bedrooms/Bathrooms Superior Superior Superior View Similar Similar Superior Amenities Similar Superior SI. Superior Overall Comparison SI. Inferior Superior Superior Note: minor disparities in rounding are a result of Microsoft Excel formulas and have no impact on value. 34 Improved Property Value Conclusion: Among numerous items investigated, three (3) items were selected for comparison. Chronologically, the sales dates range from August 2017 to February 2018. Ranking analysis of the adjusted data yields the following result: Item Indicated Sale Price R-2 $2,097,200 R-3 $2,046,600 SUBJECT R-1 $1,650,000 These adjusted sales are bracketed relative to the subject's condition and attributes, as the Sales Comparison analysis indicated. This ranking summarizes the sales by an overall comparison to the subject showing the range of improved value indicators; however, not all value indicators were given equal weight in the overall analysis. As can be seen in the chart above; the subject trends toward the lower range of the values indicated by the adjusted comparable sales and should fall at or near Items R-1 and R-3; indicating a total sale price between $1,650,000 and $2,046,600. Item R-1 is the most comparable to the subject property, being the least adjusted sale with current market conditions. The property does not have a pool amenity, nor a valuable view, similar to the subject. R-1 and R-2 were rated slightly inferior in terms of GLA, however have a superior bedroom/ bathroom count. These items offset each other in comparability. The subject home is situated on a larger lot than items R- 1 and R-2, however the subject's lot tapers towards the intersection of Outlook Lane and Valhalla Drive. The overall lot utility of the comparable properties only differed slightly in comparison to the subject property, and was given less weight in the final opinion. The quality and condition of the property was largely relied upon in this analysis. Item R-3 has a completely renovated interior with desirable finishes, superior in comparison to the subject home. Item R-2 features transitional indoor -outdoor living and has a master suite with a large bathroom. Item R-1 shares similar features as the subject, such as vaulted ceilings and crown molding. Having considered all data contained herein and the analysis thereto, the estimated fair market value as of April 20, 2018 is: $1,800,000 ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS 35 Item R-1 Location/Address: 11822 Skyline Drive, Santa Ana Sale Date/Document No: 02/13/2018 Doc. No.49772 Grantor: Sherry S. Bull Grantee: James Pack and Katherine Pack Deed Type: Grant Deed Assessor's Parcel Number: 104-611-04 Interest Conveyed: Fee Simple Lot Area SF/AC 20,295 / 0.47 Assessor Zoning: E4 Topography Level Utilities All connected Living Area SF / Year Built: 3,827/ 1970 Bedroom/ Bathroom: 5 bedrooms/ 3.5 bathrooms Parking: 3 -Car Garage Attached Sale Price/ sf of GLA: $1,650,000 / $431.15 Verification: MLS, public records, listing agent Kevin Shuler Financing Terms: Conventional Conditions of Sale: Standard Sale View/Amenities: None Comments: This is a February 2018 sale of a two story 5 bedroom, 3.5 bath home. The listing agent indicated the home was in good condition, with minor plumbing and electrical repairs made prior to sale. The kitchen features marble countertops, Saltillo tile and European style appliances. The agent also stated the property did not have a view. 36 Comparable Property Photographs AURCH 1963 Assessor's Parcel Map MCI NO. 3883 N.M. 166-5 10 If i— 37 ,Orr - ASSFSS.^.N'S Nt aCX 6 PARCEL `WWIEaS SNOlN 11 CIRCLES 104-61 Item R-2 Location/Address: 2032 Racquet Hill, Santa Ana Sale Date/Document No: 09/19/2017 Doc. No. 397816 Grantor: Gregory James Ekstorm and Patricia Elena Ekstrom Grantee: Stephen D. Lind and Kathryn M. Lind Deed Type: Grant Deed Assessor's Parcel Number: 502-194-03 Interest Conveyed: Fee Simple Lot Area SF/AC 20,800 / 0.48 Assessor Zoning: E4 Topography Level Utilities All connected Living Area SF / Year Built: 3,700/ 1976 Bedroom/ Bathroom: 5 bedrooms /3 bathrooms Parking: 3 -Car Garage Attached Sale Price/ sf of GLA: $1,960,000 / $529.73 Verification: MLS, public record and listing agent Lesley Citarella Financing Terms: Cash to new loan Conditions of Sale: Standard Sale View/Amenities: None/ pool Comments: This is a September 2017 sale of a single story 5 bedroom, 3 bath home. The listing agent indicated the buyer did some remodeling to taste, however the property was in good condition throughout. The property features transitional indoor -outdoor living; having an in -ground pool and spa, a BBQ island, and outdoor living room equipped with a fireplace. Comparable Property Photographs Assessor's Parcel Map 502- �9 7 20 x a O ,92 2O 21 1 O ,'TgACT „'"' v a s R LIKES y"' c Q O 3 A= ��' p a � i93 • S O •. / �� E• = O .t v ° iO O OO O $HILL BLK /4 -c 194 SU9 ` NO 9640 /9 104-61 104-32 A61RCH 1976 /PME Ste L.A. I-88 -Tr - ASSESSOR -S BLOC,( S ASSESSC✓."S W, TRAGI AV 6/ " 10-$ PARCEL NbWERS BO(iK 502 PAGE 19 TRAGI AV 8540 W)w 359-4R 81w. 51v— 11 CIRCLES C?JNTY OF Q7ANCE 39 Item R-3 Location/Address: 2121 Valhalla Drive, Santa Ana Sale Date/Document No: 08/30/2017 Doc. No. 370340 Grantor: Barbara A. Hess and Susan J. Lodge Grantee: Thomas Bulowski and Tiffany Bulowski Deed Type: Grant Deed Assessor's Parcel Number: 104-611-38 Interest Conveyed: Fee Simple Lot Area SF/AC 26,325 / 0.60 Assessor Zoning: E4 Topography Level Utilities All connected Living Area SF / Year Built: 4,215/1973 Bedroom/ Bathroom: 5 bedrooms/ 5.5 bathrooms Parking: 3 -Car Garage Attached Sale Price/ sf of GLA: $1,895,000 / $449.58 Verification: MLS, public record and listing agent Lesley Citarella Financing Terms: Cash to new loan Conditions of Sale: Standard Sale View/Amenities: Canyon view/ in ground pool ands a Comments: This is an August 2017 sale of a two story 5 bedroom, 5.5 bath home. The listing agent indicated the seller was a flipper who completely rehabbed the interior and changed the floor plan. The property was in very good condition at the time of sale and received multiple offers. 40 Comparable Property Photographs NAHCH 1963 Assessor's Parcel Map rRAC7 H0. 3683 N.M. 166-5 to 11 mc. 41 63 HO'F - A.SSFSSOA'S & XX 6 A5SCSSOH'S -F FARCEC VUVCR.S H(MY 104 PAGE 61 SHO- /H CIRCLES COW, N M-6- 104-61 =J Section 7 - Addenda Education: Bachelor of Arts in Finance, Emphasis in Real Estate Studies, California State University, Fullerton License(s): ■ Certified General Real Estate Appraiser, State of California OREA No. AGO15779 Professiona ■ MAI Designated Member, Appraisal Institute ■ Appraisal Member, Orange County Association of Realtors Affiliations: ■ Past President, International Right of Way Association (IRWA), Chapter 67 Years of Initial Year in Industry: 1986 Experience: Initial Year with OPC: 2010 Overview Mr. Donahue has completed numerous and complex assignments involving commercial, industrial, and residential properties. Besides shopping centers, industrial warehouses, business parks, office buildings, and large apartment complexes, Mr. Donahue has appraised many special purpose properties such as transportation corridors, open space land, mitigation land, affordable housing projects, SRO hotels, and government buildings. Appraisal purposes include eminent domain, inverse condemnation, various easements, ground lease valuation, insurable asset taxation, leasehold/leased fee analysis, I.R.S. disputes, bankruptcy litigation, construction defect litigation, soils movement matters, failure to disclose litigation, and estate planning. Kevin is qualified as an expert witness in Orange, Riverside, Los Angeles and Ventura County Superior Courts. Project Examples Recent Appraisal Project Experience: California High Speed Rail Project, Central California. Supervised and managed appraisal process for over 50 full and partial acquisition appraisals from Madera to Kings County, to include complex subject properties. • Riverside County Transportation Commission (RCTC), SR -91 Corridorlmprovement Project. Full and Partial Acquisitions on various residential and commercial properties. Appraisal review also required. High profile, politically sensitive project to widen approximately 16 miles of active highway through the urbanized area of Corona and the County of Riverside. San Bernardino Associated Governments (SANBAG), I-215 HOV Gap Closure Project. Fifteen (15) partial acquisition appraisals including vacant and improved industrial, utility, and rail properties in the cities of Colton, Santa Ana, and Riverside. Laurel Street Grade Separation Project. This project involved full or partial acquisition of 12 ownerships to include residential, industrial, railroad and special purpose properties needed for the BNSF/Laurel Street Grade Separation Project in the City of Colton. California American Water District (CalAm). Appraisal of a permanent non-exclusive access easement for eminent domain purposes in Camarillo, Ventura County, CA. 42 Kevin Donahue, MAI Senior Manager, Valuation Services Page 2 • CALTRANS, SR6O157 Freeway Interchange Improvement Project, City of Diamond Bar, Los Angeles County. Partial acquisition appraisal of an improved commercial property requiring multiple takings for a new freeway ramp. ■ City of Highland/IVDA/County of San Bernardino, 5*h Street and Del Rosa Avenue Improvement Project, Partial acquisition appraisal of 50+ parcels, to include residential, commercial, industrial, and special purpose utility -owned property. Recent Appraisal Review Experience • California High Speed Rail Project, Centra/California. Provided over 30 appraisal reviews of full and partial acquisition appraisals from Madera to Kings County, to include complex subjects. ■ Sacramento Regional Transit District, South Sacramento Phase II Corridor Project. Completed appraisal reviews for relocation of a SMUD overhead transmission line for the South Sacramento Phase II Corridor Project. ■ Port of Long Beach Authority, Gerald Desmond Bridge Project. Appraisal reviews needed for complex partial acquisitions to include special purpose and waterfront industrial properties. ■ Riverside County Transportation Commission (RCTC), SR -91 Corridor Improvement Project, Appraisal reviews for both Full and Partial Acquisitions on various residential, industrial, and commercial properties, improved and vacant. High profile, politically sensitive project to widen approximately 16 miles of active highway through the urbanized area of Corona and the County of Riverside. Specific Expertise Other Coursework: Appraisal Institute Courses/Seminars: Report Writing and Valuation Analysis Advanced Applications Standards of Professional Practice (bi-annually) Real Estate Principles Basic Valuation Procedures Basic and Advanced Income Capitalization Valuation of Leased Fee Interests Easement Valuation Professional Writing In Appraisal Reports Appraisal Review according to the Federal Land Acquisitions aka "Yellow Book' 43 Education: • Appraisal Trainee Certificate, McKissock ■ B.A., Interdisciplinary Studies, University of California Riverside Years of Initial Year in Industry: 2012 Experience: Initial Year with OPC: 2015 Overview Ms. Neville has experience assisting with the appraisal of residential, industrial, commercial and vacant land properties for public projects. In addition, Denyse investigates and verifies all planning and zoning information and market factors to assist the Valuation Services Team with determination of Highest and Best Use. She researches sale and lease information, verifies data, assists with field measurements and improvement inventories, and also takes site photographs. She is adept at investigating property issues with planning and building departments and providing comparable sales. Denyse is studying to become a licensed real estate appraiser. Project Examples Ms. Neville has provided appraisal assistance on the following projects: ■ Orange County Transportation Authority, I-405 Improvement Project • San Bernardino County Transportation Authority, I-10 Corridor Project 44 OWNER INVITATION LETTER 45 www.OKservices.com 1 Jenner, Suite 200 lrvrne, CA 92616 949,951,5263 ph 1949,951,6651 fax March 27, 2018 Gaglio f=amily Trust Thomas 1. Gaglio and Richard D. Gaglio, Trustees 11781 Outlook Lane Santa Ana, CA. 92705 Re: Owner Invitation to attend inspection 11781 Outlook Lane, Santa Ana, CA 92745 Assessor Parcel Number: 104-611-33 The City of Tustin, (the 'Cit ) is considering the construction of a public project called the Simon Ranch Reservoir Replacement Project. A portion of the above -referenced property may be required for the proposed project. Orrerland, Pacific & Cutler's Appraisal Group has been retained to provide appraisal services on your property. We will commence our appraisal fieldwork shortly. We would like to explain our objectives, to review and inspect your property, to discuss any recent transactions relative to the site, and to explore the history of the property. Should you choose to attend the inspection, you or a representative may accompany the appraiser, if you wish to do so. Any information regarding capital improvement and their subsequent c is requested at the time of inspection. Please provide us with any receipts or other % itben evidence of improvements to your property. If you have any information relative to the real estate market you wish us to have, please pro -Ode it to the appraiser at the time of the property inspection. Information regarding written purchase offers, current leases, contracts of sale or listings is most important. Please call Denyse Neville, Appraisal Assistant at 949-268-5730 so that we may arrange an appointment, This notice does not constitute an ofFer to purchase your property. Upon completion of the appraisal, a representative will contact you for an appointment to discuw the potential acquisition in detail, should it become necessary. If you have arty acquisition questions, you may contact Mona Montano, Project Manager of Overland, Pacific & Cutler, LLC at (951) 951-5263.. Thank you in anticipation of your cooperation; we look forward to meeting and/or talking with you. Sincerely, Overland, Pacific & Cutler, LLC Kevin J. Donahue, MAI Senior 'Manager, Valuation Services 46 NOTICE OF DECISION TO APPRAISE 47 March 23, 2018 Gaglio Family Trust Thomas J. Gaglio and Richard D. Gaglio, Trustees 11781 Outlook Lane Santa Ana, CA 92705 Dear Mr. & Mrs. Gaglio: The City of Tustin, (the "City's is considering the construction of a public project called the Simon Ranch Reservoir Replacement Project (the "Project'. On July 10, 2017, you received a Notice of Decision to Appraise Property explaining that this is a public project which may require the purchase of a portion of your property at 11781 Outlook Lane, Santa Ana, California 92705 also known by Assessor Parcel Number (APN) 104-611-33, located within the Project area. Based on recent meetings and discussions between you and the Project team, you have indicated your desire to sell your entire property by means of a voluntary acquisition by the City. No decision has yet been made by the City to acquire your property. Before that decision can be made, the law provides that your property first be appraised. The purpose of this letter is to advise you of the decision to appraise and shall serve as advance written notice of your opportunity to accompany the appraiser during their inspection of your property, The City has retained the services of Overland, Pacific & Cutler, LLC (OPC), a right-of-way acquisition firm, to discuss this Project with you, explain the proposed transaction and related effects and benefits, and coordinate the acquisition process. Overland, Pacific & Cutler, LLC an independent appraisal firm, has been contracted by the City to appraise your property that is subject to possible acquisition. You will be contacted by the appraiser to arrange an appointment to inspect your property. The enclosed acquisition policies and procedures document contains information pertaining to the process involved in the property acquisition. This is a preliminary notice only and does not constitute the City's determination to acquire any property for the Project nor is this a request or demand that you vacate your property. Additionally, this notice does not establish eligibility for relocation payments or any other relocation assistance by the City. 1294921.1 In the meantime, if,you need additional information or have any questions,. please contact: your OPC acquisition agent: Mona Montano Project Manager Overland, Pacific & Cutler, LLC 1. Jenner, Suite 200, Irvine, CA 92618 Phone (949) 951-5263 Sincerely, Overland, Pacific & Cutler, LLC Daniela Borbe Project Manger Enclosures: Handbook on Acquisition Brochure Legal Description Assessor Parcel Map 1294921.1 Acquiring Agency; CITY OF TUSTIN Proiect Name: Simon Ranch Reservoir Replacement Project Acquiring Agency Representative: Overland, Pacific & Cutler, LLC Benner, suite 200 Irvine, CA 92618 Phone: 949.951.5263 INTRODUCTION This question and answer brochure intends to provide a non-technical, understandable discussion of the Acquiring Agency (listed above) property acquisition procedures and the principal rights and options available to you, the property owner. If the Acquiring Agency decides to acquire your property, it must abide by these procedures to fulfill its obligations under applicable federal and/or state law, The Acquiring Agency has retained the professional firm of Overland, Pacific & Cutler, LLC (OPQ to assist in the acquisition process. Their address and telephone number is listed above. Please contact them if you have any questions about the acquisition procedures or your rights. 125531,5.1 GENERAL PROPERTY ACQUISITION QUESTIONS 1. Who Will Make The Decision To Buy My Property? The decision to acquire property for a public project usually involves many persons and many decisions. The final decision to proceed with the project is made by the Acquiring Agency after a thorough review which often includes public hearings to obtain the views of interested citizens. If you have any questions about the project or the selection of your property for acquisition, you should ask a representative of the Acquiring Agency. 2. How Will The Acquiring Agency Determine How Much To Offer For My Property? Before making you an offer, the Acquiring Agency will obtain an appraisal of your property by a competent real property appraiser who is familiar with local property values. The appraiser will inspect your property and provide a professional opinion of its current fair market value in an appraisal report. After the appraiser has completed the report, a review appraiser may recheck the work to ensure that the estimate is fair and the work conforms with professional appraisal standards. The Acquiring Agency is required to offer you amount cannot be less than the fair market Acquiring Agency on the basis of its appraisal. 3. What Is Fair Market Value? "just compensation" for your property. This value of your property, as determined by the Fair market value is sometimes defined as that amount of money which would probably be paid for a property in a sale between a willing seller, who does not have to sell, and a willing buyer, who does not have to buy. The fair market value of a property is generally considered to be "just compensation". Fair market value does not take into account intangible elements such as sentimental value, goodwill, business profits, or any special value that your property may have for you or for the Acquiring Agency. 4. How Does An Appraiser Determine The Fair Market Value Of My Property? Each parcel of real property is different and therefore no single formula can be devised to appraise all properties. Among the factors an appraiser typically considers in estimating the value of real property are: • How it compares with similar properties in the area that have been sold recently. • How much it would cost to reproduce the buildings and other structures, less any depreciation. • How much rental income it could produce. S. Will I Have A Chance To Talk To The Appraiser? Yes, You must be contacted about the Acquiring Agency`s decision to appraise your property and given the opportunity to accompany the appraiser during the inspection of your property. 1255315.1 You may then inform the appraiser of any special features which you believe may add to the value of your property. It is in your best interest to provide the appraiser with all the useful information you can in order to ensure that nothing of allowable value will be overlooked. If you are unable to meet with the appraiser, you may wish to have a person who is familiar with your property represent you in a meeting with the appraiser. 6. Can I Hire My Own Appraiser And Will I Be Reimbursed For The Cost? Yes. Should you elect to have an independent appraisal conducted in addition to the appraisal conducted by the Acquiring Agency, you are entitled to be reimbursed for the reasonable costs of the appraisal, up to $5,000. In order to receive any reimbursement, the appraiser you chose must be licensed with the Bureau of Real Estate Appraisers (REA) and comply with the Uniform Standards of Professional Appraisal Practice. For information regarding licensed appraisers, please visit the BREA web site at www.brea.ca.gov. Appraisals of property to be acquired for a public project, such as the appraisal being obtained by the Acquiring Agency, are very specialized appraisals. It is imperative that the appraiser you choose be familiar with this particular type of appraisal Once you have chosen an appraiser, it is requested that you submit your reimbursement request in writing to the Acquiring Agency's acquisition representative, ,Overland, Pacific & Cutler, Inc. at the address listed on the front page within ninety (90) days of the earliest of the following dates: (1) the date the selected appraiser requests payment from you for the appraisal, or (2) the date upon which you, or someone on your behalf, remits full payment to the selected appraiser for the appraisal. Copies of the contract (if a contract is made) and invoice for completed work by the appraiser must be provided to the Acquiring Agency concurrent with submission of the appraisal cost reimbursement request. The cost must be reasonable and justifiable. 7. How Soon Will The Acquiring Agency Give Me A Written Purchase Offer? Generally, this will depend on the amount of work required to appraise your property. In the case of a typical single-family house, it is usually possible for the Acquiring Agency to make a written purchase offer within ninety (90) days of the date it first notifies the owner of its intent to appraise the property. Appraisal of commercial and industrial property may take somewhat longer. The Acquiring Agency must give you a written offer to acquire your property for the full amount it determines to be just compensation, and it must do so promptly after it determines that amount. Along with the offer, you will receive a written statement explaining the basis for the Acquiring Agency's determination of just compensation. 8. What Is The Acquiring Agency Basis For Its Statement Of Just Compensation? The Acquiring Agency's statement of the basis for its determination of just compensation must be provided to you with the written purchase offer. Among other things, this statement must include: • The date of valuation, highest and best use, and applicable zoning of property. • The principal transactions, reproduction or replacement cost analysis, or capitalization analysis, supporting the determination of value. 1255315.1 Where appropriate, the just compensation for the real property acquired and for damages to the remaining real property shall be separately stated and shall include the calculations and narrative explanation supporting the compensation, including any offsetting benefits, 9. Must I Accept The Acquiring Agency's Offer? No. You are entitled to present your evidence as to the amount you believe is the value of your property and to make suggestions for changing the terms and conditions of the offer. The Acquiring Agency must make reasonable efforts to consider and respond to your evidence and suggestions. 10. May I Have Someone Represent Me During Negotiations? Yes. If you would like an attorney or anyone else to represent you during negotiations, please so inform the Acquiring Agency in writing. However, state law does not require the Acquiring Agency to pay the costs of any such representation. 11. If I Agree To Accept The Acquiring Agency's Offer, How Soon Will I Be Paid? If you reach a voluntary agreement to sell your property and your ownership (title) is clear, payment will be made at a mutually acceptable time. Generally, this should be possible within 30 to 60 days after you sign a purchase contract, The Acquiring Agency may choose to use an escrow to facilitate payment and the signing and recording of deeds. If the title evidence obtained by the Acquiring Agency indicates that further action is necessary to show your ownership is clear, you may be able to accelerate the payment by helping the Acquiring Agency obtain the necessary proof. (Title evidence is basically a legal record of the ownership of the property. It identifies the owners of record and lists the restrictive deed covenants and recorded mortgages, liens, and other instruments affecting your ownership of the property.) 12. What Happens If I Don't Agree To The Final Offer By The Acquiring Agency? If you are unable to reach a voluntary agreement through negotiations, the Acquiring Agency may request that its governing body adopt a resolution of necessity at a public hearing. You will receive notice of the hearing and given an opportunity to appear at the hearing. If a resolution of necessity is adopted, the Acquiring Agency is authorized to file a suit in court to acquire your property through an eminent domain proceeding. An eminent domain proceeding is often referred to as condemnation. 13. What Happens Atter The Acquiring Agency Condemns My Property? You will be notified of the condemnation suit. In the event the Acquiring Agency requires possession of your property prior to the completion of the condemnation action, the Acquiring Agency will seek a court order for possession prior to completion of the condemnation action and deposit with the California State Treasurer's Office an amount not less than its appraisal of the fair market value of the property. Ordinarily, the owner is then permitted to withdraw this amount, less any amounts necessary to pay off any mortgage or other liens on the property and to resolve any special ownership problems. Your early withdrawal of your share of the money will not affect your right to seek additional compensation for your property, 1255315.1 During the condemnation proceeding, you will be provided an opportunity to introduce your evidence as to the value of your property. Of course, the Acquiring Agency will have the same right. After hearing the evidence of all .parties, a jury will determine the amount of just compensation. If that amount exceeds the amount deposited by the Acquiring Agency, you will be paid the difference, plus any interest that may be provided under state law. To help you in presenting your case, in a condemnation proceeding, you may wish to consider employing an attorney and an appraiser. However, as a general rule, the costs of these professional services and other costs which an owner incurs in presenting his case to the court must be paid by the owner. 14. What Can t Do If I Am Not Satisfied With The Court's Determination? If you are not satisfied with the court judgment, you may file an appeal with the appropriate appellate court for the area in which your property is located. The Acquiring Agency may also file an appeal if it believes the amount of the judgment is too high. 15. Will I Have To Pay Any Settlement Costs? You will be responsible for the payment of the balance on any mortgage on your property. Also, if your ownership is not clear, you may have to pay the cost of clearing it. But the Acquiring Agency will not charge you any sales commission. And the Acquiring Agency is responsible for all reasonable and necessary costs for typical services required to complete the sale, including recording fees, revenue stamps, transfer taxes and any similar expenses which are incidental to transferring ownership to the Acquiring Agency. The Acquiring Agency will identify these items in a settlement cost statement to be given to you at the time of settlement or soon after the court award of compensation, if the property is acquired by condemnation. Ordinarily, if you have paid any of these expenses yourself, you will be repaid at that time. If you later discover other costs for which you should be repaid, you should request repayment from the Acquiring Agency within six (6) months after the acquisition. The Acquiring Agency will assist you in filing a claim for these costs. 16. May I Keep Any Of The Buildings Or Other Improvements On My Property? Very often, many or all of the improvements on a property are not required by the Acquiring Agency. This might include such items as a fireplace mantel, your favorite shrubbery, or even the entire house. If you wish to keep any improvements, please let the Acquiring Agency know as soon as possible. If you do arrange to keep any improvements, the Acquiring Agency will deduct only its salvage value from the price you would otherwise receive. (The salvage value of an item is its probable selling price if offered for sale on the condition that the buyer will remove it at his own expense.) Of course, if you arrange to keep any real property improvement (such as a fireplace mantel or a shrub), you will not be entitled to receive a relocation payment for the cost of moving it to a new location. 17. Can The Acquiring Agency Take Only A Part Of My Property? Yes. If the Acquiring Agency acquires a portion of your property leaving you with an uneconomic remnant (a portion of land not capable of an economic development or use), the 125531.5,1 Acquiring Agency will offer to acquire the uneconomic remnant if you so desire. Whether an uneconomic remnant remains after the Acquiring Agency's acquisition will be determined by the Acquiring Agency's appraiser and attorney as well as by negotiations with the properly owner. 18. Will I Have To Pay Rent To The Agency After My Property Is Acquired? If arrangements are made to rent acquired property to an owner or his tenant for a short term or for a period subject to termination by the Acquiring Agency on short notice, the rental will not exceed the lesser of the fair rental of the property to the short term occupier, or the prorated portion of the fair market value for a typical rental period. If the owner or tenant is an occupant of a dwelling, the rental for the dwelling shall be within his financial means in accordance with state or federal law, as applicable. 19. How Boon Must I Move? You will likely not be required to relocate from your property. However, in the event that you are required to relocate from your property, every reasonable effort will be made to give you ample time to relocate after the acquisition of your property. In most cases, a mutually satisfactory arrangement can be worked out. Also, except in an unusual instance where there is an urgent need for your property, you. cannot be required to move from your residence or to move your business or farm operation without at least a ninety (90) day advance written notice of the date by which your move is required. If you reach a voluntary agreement to sell your property, you cannot be required to move before you receive the agreed purchase price. In the case of a condemnation, you cannot be required to move before the estimated fair market value of the property has been deposited with the California State Treasurer's Office so that you can withdraw your share. If you are being displaced from your residence, decent, safe and sanitary replacement housing must be available before you can be required to move. 20. Will I Be Compensated For The Loss 4f Goodwill For My Business? If the owner of real property is also the owner of a business conducted on the real property to be acquired, the owner may have a right to compensation for loss of goodwill. Pertinent provisions of the California Code of Civil Procedure addressing compensation for "loss of goodwill" are provided below. CODE OF CIVIL PROCEDURE - ARTICLE 6 (SECTIONS 1253.5.10 -1263.530) COMPENSATION FOR LOSS OF GOODWILL In the event you are the owner of a business conducted on the property being acquired by the Acquiring Agency, you may be entitled to compensation for loss of goodwill, if any, if you are able to make a showing of such loss pursuant to the requirements of California Code of Civil Procedure Section 1263.510 as follows. a. The owner of a business conducted on the property taken, or on the remainder if such property is part of a larger parcel, shall be compensated for loss of goodwill if the owner proves all of the following: 1) The loss is caused by the taking of the property or the injury to the remainder. 2) The loss cannot reasonably be prevented by relocation of the business or by taking steps and adopting procedures that a reasonably prudent person would take and adopt in preserving the goodwill. 3) Compensation for the loss will not be included in payments under Section 7262 of the Government Code. 4) Compensation for the loss will not be duplicated in the compensation otherwise awarded to the owner. 1255315.1 ^� b. Within the meaning of this article, 'goodwill" consists of the benefits that accrue to a business as a result of Its location, reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisition of new patronage. " 21. My Property Is Worth More Now Than When I Bought It. Do I Pay Capital Gains Tax On The Increase? Internal Revenue Service (IRS) Publication 544, "Sales and Other Dispositions of Assets" is available from the IRS. It explains how the federal income tax would apply to a gain or loss resulting from a condemnation for public purposes. In most cases, the owner of property acquired for public purposes may postpone the gain and associated taxes if certain conditions are met within a defined period, If you have any questions about the IRS rules, you should discuss your particular circumstances with your personal tax advisor or your local IRS office. 22. Will My Property Taxes Increase Substantially When I Move Because Of The Proposition 13 Reassessment Formula? No. Not as long as the replacement property's purchase price does not exceed 120 percent of the sales price for the acquired property. Section 2(d) of Article XIIIA of the California Constitution and the Revenue and Taxation Code Section 68 generally provides that property tax relief shall be granted to any real property owner who acquires comparable replacement property after having been displaced by governmental acquisition or eminent domain proceedings. If the full cash value of the comparable replacement property does not exceed 120 percent of the award or purchase price of the property taken or acquired, then the adjusted base year value of the property taken or acquired shall be transferred to the comparable replacement property. For example: Purchase Price 120% Allowable Transfer Basis Replacement Properly Price Subject Property Tax Basis Replacement Tax Basis $100,000 $120,000 $130,000 $50,000 $60,000 Calculated as follows: *$50,000 + ($130,000 .. $120,000) _ $60,000 In the event that the replacement property price is greater than the replacement tax basis, the difference will be added to the subject property tax basis to represent the replacement tax basis. 23. Is It Possible To Donate Property To The Acquiring Agency? Yes. However, prior to accepting any donation of real property, the Acquiring Agency must inform the owner in writing of the amount it believes to be just compensation for the property. The property owner must indicate in writing that, although he understands that he cannot be required to sell his property for less than just compensation, he voluntarily agrees to do so. 24. What Are The Advantages Of Selling My Property To The Acquiring Agency? • Acquiring Agency pays full cash value for property as determined by an independent appraiser. Seller does not have to provide financing to sell the property. 1255315.1 • Seller does not have to pay real estate sales commission. Sales commissions typically equal six percent (6%) of the sales price in a private transaction. • Acquiring Agency pays virtually all closing costs (i.e., escrow fees, recording fees, mortgage prepayment penalties). • Seller may receive favorable capital gains tax treatment and can transfer his existing property tax basis to the replacement property. • If you are required to relocate, the Acquiring Agency provides relocation benefits including referral assistance and cash payments. • If you are required to relocate, the Acquiring Agency pays for moving expenses. 25. Additional Information If you have further questions after reading this brochure, please contact the Acquiring Agency's representative at Overland, Pacific & Cotler, LLC at the address and phone number listed on the front page. 1255315.1 LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOT 78 OF TRACT NO, 3883 IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 166, PAGE{S} 5 THROUGH 11, INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. Assessor's Parcel Nimiber: 104-611-33 ASSESSOR PARCEL MAP LI _ tia taay:p a ss ic; fuc�iahed as � ai4 Laa�cf rhe aaiu , awribid Uzd in ra :i0a to x3jafeus atnets, aanua encs as is a ' ta. a s�xtap a a 4ept ttd. fztaptr0 ratlVeDt a �sshty oftirle tC9MWI It efigCM¢ 'MbdI a4 ep @14OMR ati, Uacp.'S4 C"apZs4041 "T tc m dimm i s. 4lsta6.41, wit lom offlumwl, aeraaet ar othax tcattass thom chum, w 22 \ 0 9 j ED . � § .. § \ f a a « rti \ ON m / R ( / J / ®Dq � _n EMMONS .Noun== � �" 1 •S r ' LU �QU a m t CL TRO¢ I). M U- C9 YIl o i QJ U E 4 41s- °o u41 t1] Ln v a 10 ON al Cf7 °' O 7 D Chi ii 0 � < O as 00 PRELIMINARY TITLE REPORT 48 Comm®I IYYeami LAND TITLE COMPANY Overland, Pacific & Cutler, Inc. 2280 Market St #200 Riverside, CA 92501 Attn: Elena Cannon Your Reference No: PTR -002 TUS-013 Property Address: 11781 OUTLOOK LN, Santa Ana Area, California PRELIMINARY REPORT Dated as of December 30, 2016 at 7:30 a.m. Commonwealth Land Title Company 4100 Newport Place Dr. Newport Beach, CA 92660 Phone: (949) 724-3140 In response to the application for a policy of title insurance referenced herein, Commonwealth Land Title Company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a policy or policies of title insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an exception herein or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations or Conditions of said policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Attachment One. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitation on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Attachment One. Copies of the policy forms should be read. They are available from the office which issued this report. The policy(s) of title insurance to be issued hereunder will be policy(s) of Commonwealth Land Title Insurance Company. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Attachment One of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. Order No: 09202724-920-CMM-CM8 SCHEDULE A The form of policy of title insurance contemplated by this report is: ALTA Homeowner's Policy of Title Insurance (12-2-13) ALTA Extended Loan Policy of Title Insurance (6-17-06) The estate or interest in the land hereinafter described or referred to covered by this report is: A FEE Title to said estate or interest at the date hereof is vested in: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust The land referred to herein is situated in the County of ORANGE, State of California, and is described as follows: SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF Order No: 09202724-920-CMM-CM8 EXHIBIT "A" THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOT 78 OF TRACT NO. 3883 IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 166, PAGE(S) 5 THROUGH 11, INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. Assessor's Parcel Number: 104-611-33 Order No: 09202724-920-CMM-CM8 SCHEDULE B — Section A The following exceptions will appear in policies when providing standard coverage as outlined below: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof, (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor of material not shown by the Public Records. Order No: 09202724-920-CMM-CM8 SCHEDULE B — Section B At the date hereof Exceptions to coverage in addition to the printed exceptions and exclusions in said policy form would be as follows: A. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes to be levied for the fiscal year 2017-2018. B. Property taxes, including any personal property taxes and any assessments collected with taxes, are as follows: Tax Identification No.: 104-611-33 Fiscal Year: 2016-2017 1 st Installment: $3,947.05 Paid 2nd installment: $3,947.05 Open (Delinquent after April 10) Penalty and Cost: $417.70 Homeowners Exemption: $7,000.00 Code Area: 89-027 Prior to close of escrow, please contact the Tax Collector's Office to confirm all amounts owing, including current fiscal year taxes, supplemental taxes, escaped assessments and any delinquencies. C. The lien of supplemental or escaped assessments of property taxes, if any, made pursuant to the provisions of Chapter 3.5 (commencing with Section 75) or Part 2, Chapter 3, Articles 3 and 4, respectively, of the Revenue and Taxation Code of the State of California as a result of the transfer of title to the vestee named in Schedule A or as a result of changes in ownership or new construction occurring prior to Date of Policy. D. Any liens or other assessments, bonds, or special district liens including without limitation, Community Facility Districts, that arise by reason of any local, City, Municipal or County Project or Special District. 1. Water rights, claims or title to water, whether or not disclosed by the Public Records. 2. Any easements not disclosed by the public records as to matters affecting title to real property, whether or not said easements are visible or apparent. 3. Covenants, conditions and restrictions but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, citizenship, immigration status, primary language, ancestry, source of income, gender, gender identity, gender expression, medical condition or genetic information, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth in the document Recording Date: August 22, 1962 Recording No: Book 6222, Page 500, of Official Records Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of any mortgage or deed of trust made in good faith and for value. Modification(s) of said covenants, conditions and restrictions Recording Date: November 23, 1964 Recording No: Book 7312, Page 197, of Official Records Modification(s) of said covenants, conditions and restrictions Recording Date: May 10, 1965 Recording No: Book 7513, Page 945, of Official Records Order No: 09202724-920-CMM-CM8 1 An instrument entitled Covenant Running with the Land Recording Date: September 12, 1974 Recording No: Book 11241, Page 816, of Official Records Reference is hereby made to said document for full particulars. A deed of trust to secure an indebtedness in the amount shown below, Amount: $650,000.00 Dated: April 23, 2004 Trustor/Grantor: Thomas J. Gaglio, a married man as his sole and separate property Trustee: Fidelity National Title Company Beneficiary: Mortgage Electronic Registration Systems, Inc. (MFRS), solely as nominee for Bondcorp Realty Services, Inc., a California Corporation Loan No.: M57520409 Recording Date: May 3, 2004 Recording No.: 2004000381960, of Official Records This Company will require that the original note, the original deed of trust and a properly executed request for full reconveyance together with appropriate documentation (i.e., copy of trust, partnership agreement or corporate resolution) be in this office prior to the close of this transaction if the above-mentioned item is to be paid through this transaction or deleted from a policy of title insurance. Any demands submitted to us for payoff must be signed by all beneficiaries as shown on said deed of trust, and/or any assignments thereto. In the event said demand is submitted by an agent of the beneficiary(s), we will require the written approval of the demand by the beneficiary(s). Servicing agreements do not constitute approval for the purposes of this requirement. If no amounts remain due under the obligation a zero balance demand will be required along with the reconveyance documents. In addition, we require the written approval of said demand by the trustor(s) on said deed of trust or the current owners if applicable. A notice of Trustee's Sale under said deed of trust Executed By: ReconTrust Company, N. A. Time and Place of Sale: At the North front entrance to the County Courthouse, 700 Civic Center Drive Test, Santa Ma, CA 92701, 5/21/2012 at 12:0013M Recording Date: April 27, 2012 Recording No.: 2012000240580, of Official Records By various assignments, the beneficial interest thereunder is now held of record in: Assignee: Nationstar Mortgage LLC Recording Date: September 20, 2013 Recording No.: 2013000545087, of Official Records A substitution of trustee under said deed of trust which names, as the substituted trustee, the following Trustee: Clear Recon Corp. Recording Date: December 10, 2015 Recording No.: 2015000625682, of Official Records Order No: 09202724-920-CMM-CM8 6. A deed of trust to secure an indebtedness in the amount shown below, Amount: $150,000.00 Dated: July 23, 2004 Trustor/Grantor: Thomas J. Gaglio, a married man as his sole and separate property Trustee: CTC Real Estate Services Beneficiary: Mortgage Electronic Registration Systems, Inc. (MERS), solely as nominee for Loan No.: Countrywide Bank, a Division of Treasury Bank, N.A. Loan No.: not set out Recording Date: August 3, 2004 Recording No.: 2004000703294, of Official Records Assignment of the beneficial interest under said deed of trust which names: Assignee: The Bank of New York Mellon fka the Bank of New York, as Successor Trustee to JPMorgan Chase Bank, N. A., as Trustee on Behalf of the Certificateholders of the CWHEQ Inc., CWHEQ Revolving Home Equity Loan Trust, Series 2005-G Recording Date: April 11, 2012 Recording No.: 2012000204823, of Official Records A deed of trust to secure an indebtedness in the amount shown below, Amount: $250,000.00 Dated: November 8, 2013 Trustor/Grantor: Thomas J. Gaglio, a married man as his sole and separate property Trustee: Lawyers Title Company Beneficiary: Touchdown Mortgage Fund, L.P. Loan No.: 1697-13 Recording Date: November 26, 2013 Recording No: 2013000646770, of Official Records This Company will require that the original note, the original deed of trust and a properly executed request for full reconveyance together with appropriate documentation (i.e., copy of trust, partnership agreement or corporate resolution) be in this office prior to the close of this transaction if the above-mentioned item is to be paid through this transaction or deleted from a policy of title insurance. Any demands submitted to us for payoff must be signed by all beneficiaries as shown on said deed of trust, and/or any assignments thereto. In the event said demand is submitted by an agent of the beneficiary(s), we will require the written approval of the demand by the beneficiary(s). Servicing agreements do not constitute approval for the purposes of this requirement. If no amounts remain due under the obligation a zero balance demand will be required along with the reconveyance documents. In addition, we require the written approval of said demand by the trustor(s) on said deed of trust or the current owners if applicable. Order No: 09202724-920-CMM-CM8 8. A deed of trust to secure an indebtedness in the amount shown below, Amount: $100,000.00 Dated: December 14, 2015 Trustor/Grantor: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust Trustee: Old Republic Title Co. Beneficiary: Hall Mortgage Fund, LP, a California Limited Partnership Loan No.: 1795-15 Recording Date: December 29, 2015 Recording No: 2015000652082, of Official Records This Company will require that the original note, the original deed of trust and a properly executed request for full reconveyance together with appropriate documentation (i.e., copy of trust, partnership agreement or corporate resolution) be in this office prior to the close of this transaction if the above-mentioned item is to be paid through this transaction or deleted from a policy of title insurance. Any demands submitted to us for payoff must be signed by all beneficiaries as shown on said deed of trust, and/or any assignments thereto. In the event said demand is submitted by an agent of the beneficiary(s), we will require the written approval of the demand by the beneficiary(s). Servicing agreements do not constitute approval for the purposes of this requirement. If no amounts remain due under the obligation a zero balance demand will be required along with the reconveyance documents. In addition, we require the written approval of said demand by the trustor(s) on said deed of trust or the current owners if applicable. 9. A deed of trust to secure an indebtedness in the amount shown below, Amount: $200,000.00 Dated: August 10, 2016 Trustor/Grantor: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust Trustee: Old Republic Title Company Beneficiary: Hall Mortgage Fund, LP Loan No.: 1795-15 Recording Date: August 30, 2016 Recording No: 2016000414497, of Official Records This Company will require that the original note, the original deed of trust and a properly executed request for full reconveyance together with appropriate documentation (i.e., copy of trust, partnership agreement or corporate resolution) be in this office prior to the close of this transaction if the above-mentioned item is to be paid through this transaction or deleted from a policy of title insurance. Any demands submitted to us for payoff must be signed by all beneficiaries as shown on said deed of trust, and/or any assignments thereto. In the event said demand is submitted by an agent of the beneficiary(s), we will require the written approval of the demand by the beneficiary(s). Servicing agreements do not constitute approval for the purposes of this requirement. If no amounts remain due under the obligation a zero balance demand will be required along with the reconveyance documents. In addition, we require the written approval of said demand by the trustor(s) on said deed of trust or the current owners if applicable. Order No: 09202724-920-CMM-CM8 0. Any invalidity or defect in the title of the vestees in the event that the trust referred to herein is invalid or fails to grant sufficient powers to the trustee(s) or in the event there is a lack of compliance with the terms and provisions of the trust instrument. If title is to be insured in the trustee(s) of a trust, (or if their act is to be insured), this Company will require a Trust Certification pursuant to California Probate Code Section 18100.5. The Company reserves the right to add additional items or make further requirements after review of the requested documentation. END OF SCHEDULE B EXCEPTIONS PLEASE REFER TO THE "NOTES AND REQUIREMENTS SECTION" WHICH FOLLOWS FOR INFORMATION NECESSARY TO COMPLETE THIS TRANSACTION Order No: 09202724-920-CMM-CM8 REQUIREMENTS SECTION: In order to complete this report, the Company requires a Statement of Information to be completed by the following party(s), Party(s): All Parties The Company reserves the right to add additional items or make further requirements after review of the requested Statement of Information. NOTE: The Statement of Information is necessary to complete the search and examination of title under this order. Any title search includes matters that are indexed by name only, and having a completed Statement of Information assists the Company in the elimination of certain matters which appear to involve the parties but in fact affect another party with the same or similar name. Be assured that the Statement of Information is essential and will be kept strictly confidential to this file. 2. The Company will require either (a) a complete copy of the trust agreement and any amendments thereto certified by the trustee(s) to be a true and complete copy with respect to the hereinafter named trust, or (b) a Certification, pursuant to California Probate Code Section 18100.5, executed by all of the current trustee(s) of the hereinafter named trust, a form of which is attached. Name of Trust: The Gaglio Family Trust Order No: 09202724-920-CMM-CM8 INFORMATIONAL NOTES SECTION 1. The information on the attached plat is provided for your convenience as a guide to the general location of the subject property. The accuracy of this plat is not guaranteed, nor is it a part of any policy, report or guarantee to which it may be attached. 2. For wiring Instructions please contact your Title Officer or Title Company Escrow officer. 3. None of the items shown in this report will cause the Company to decline to attach CLTA Endorsement Form 100 to an ALTA Loan Policy, when issued. 4. The following information will be included in the CLTA Form 116 or ALTA Form 22-06 Endorsement to be issued pursuant to this order: There is located on said Land: Single Family Residence Known as: 11781 Outlook Lane, Area of Santa Ana, California 5. Note: There are NO conveyances affecting said Land recorded within 24 months of the date of this report. 6. The Company requires current beneficiary demands prior to closing. If the demand is expired and a current demand cannot be obtained, our requirements will be as follows: (a) If the Company accepts a verbal update on the demand, we may hold an amount equal to one monthly mortgage payment. This hold will be in addition to the verbal hold the lender may have stipulated (b) If the Company cannot obtain a verbal update on the demand, we will either pay off the expired demand or wait for the amended demand, at our discretion. (c) All payoff figures are verified at closing. If the customer's last payment was made within 15 days of closing, our Payoff Department may hold one month's payment to insure the check has cleared the bank (unless a copy of the cancelled check is provided, in which case there will be no hold). Typist: ad Date Typed: January 19, 2017 Order No: 09202724-920-CMM-CM8 ATTACHMENT ONE CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY —1990 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building or zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien, or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable doing business laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate of interest insured by this policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. EXCEPTIONS FROM COVERAGE - SCHEDULE B, PART I This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof, (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE (12-02-13) ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE EXCLUSIONS In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning: a. building; b. zoning; C. land use; d. improvements on the Land; e. land division; and f. environmental protection. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15. 3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17. 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date;. C. that result in no loss to You; or d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28. 5. Failure to pay value for Your Title. 6. Lack of a right: a. to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and Attachment One (6-5-14) CA & NV Order No: 09202724-920-CMM-CM8 b. in streets, alleys, or waterways that touch the Land. This Exclusion does not limit the coverage described in Covered Risk 11 or 21. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence. Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances. LIMITATIONS ON COVERED RISKS Your insurance for the following Covered Risks is limited on the Owner's Coverage Statement as follows: • For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. The deductible amounts and maximum dollar limits shown on Schedule A are as follows: Our Maximum Dollar Your Deductible Amount Limit of Liability 1.00% % of Policy Amount Shown in Schedule A or Covered Risk 16: $2,500.00 (whichever is less) $ 10,000.00 1.00% % of Policy Amount Shown in Schedule A or Covered Risk 18: $5,000.00 (whichever is less) $ 25,000.00 1.00% of Policy Amount Shown in Schedule A or Covered Risk 19: $5,000.00 (whichever is less) $ 25,000.00 1.00% of Policy Amount Shown in Schedule A or Covered Risk 21: $2,500.00 (whichever is less) $ 5,000.00 2006 ALTA LOAN POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of; 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13 or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing -business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk I I (b). The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE (Except as provided in Schedule B - Part II,( t(or T)his policy does not insure against loss or damage, and the Company will not pay costs, attorneys' fees or expenses, that arise by reason of: (PART I (The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. Attachment One (6-5-14) CA & NV Order No: 09202724-920-CMM-CM8 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the Public Records. PART II In addition to the matters set forth in Part I of this Schedule, the Title is subject to the following matters, and the Company insures against loss or damage sustained in the event that they are not subordinate to the lien of the Insured Mortgage:) 2006 ALTA OWNER'S POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: I. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage, and the Company will not pay costs, attorneys' fees or expenses, that arise by reason of: (The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown in the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and that are not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof, (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the Public Records. 7. (Variable exceptions such as taxes, easements, CC&R's, etc. shown here.) ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (12-02-13) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. Attachment One (6-5-14) CA & NV Order No: 09202724-920-CMM-CM8 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing -business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, or any consumer credit protection or truth -in -lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6. 9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy. 10. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence. 11. Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances. Attachment One (6-5-14) CA & NV Order No; 09202724-920-CMM-CM8 Notice of Available Discounts Pursuant to Section 2355.3 in Title 10 of the California Code of Regulations Fidelity National Financial, Inc. and its subsidiaries ("FNF") must deliver a notice of each discount available under our current rate filing along with the delivery of escrow instructions, a preliminary report or commitment. Please be aware that the provision of this notice does not constitute a waiver of the consumer's right to be charged the filed rate. As such, your transaction may not qualify for the below discounts. You are encouraged to discuss the applicability of one or more of the below discounts with a Company representative. These discounts are generally described below; consult the rate manual for a full description of the terms, conditions and requirements for such discount. These discounts only apply to transactions involving services rendered by the FNF Family of Companies. This notice only applies to transactions involving property improved with a one -to -four family residential dwelling. FNF Underwritten Title Company FNF Underwriter LTC — Lawyers Title Company CLTIC — Commonwealth Land Title Insurance Co. Available Discounts DISASTER LOANS (CLTIC) The charge for a Lender's Policy (Standard or Extended coverage) covering the financing or refinancing by an owner of record, within 24 months of the date of a declaration of a disaster area by the government of the United States or the State of California on any land located in said area, which was partially or totally destroyed in the disaster, will be 50% of the appropriate title insurance rate. EMPLOYEE RATE (LTC and CLTIC) No charge shall be made to employees (including employees on approved retirement) of the Company or its underwritten, subsidiary or affiliated title companies for policies or escrow services in connection with financing, refinancing, sale or purchase of the employees' bona fide home property. Waiver of such charges is authorized only in connection with those costs which the employee would be obligated to pay, by established custom, as a party to the transaction. Notice of Available Discounts Page 16 Mod. 10/21/2011 FIDELITY NATIONAL FINANCIAL PRIVACY NOTICE At Fidelity National Financial, Inc. and its majority-owned subsidiary companies (collectively, "FNF", "our" or "we"), we value the privacy of our customers. This Privacy Notice explains how we collect, use, and protect your information and explains the choices you have regarding that information. A summary of our privacy practices is below. We also encourage you to read the complete Privacy Notice following the summary. Types of Information Collected. You may provide us with How Information is Collected. We may collect personal certain personal information, like your contact information, information directly from you from applications, forms, or social security number (SSN), driver's license, other communications we receive from you, or from other government ID numbers, and/or financial information. We sources on your behalf, in connection with our provision of may also receive information from your Internet browser, products or services to you. We may also collect browsing computer and/or mobile device. information from your Internet browser, computer, mobile device or similar equipment. This browsing information is generic and reveals nothing personal about the user. Use of Your Information. We may use your information Security Of Your Information. We utilize a combination to provide products and services to you (or someone on of security technologies, procedures and safeguards to help your behalf), to improve our products and services, and to protect your information from unauthorized access, use communicate with you about our products and services. We and/or disclosure. We communicate to our employees about do not give or sell your personal information to parties the need to protect personal information. outside of FNF for their use to market their products or services to you. Choices With Your Information. Your decision to submit When We Share Information. We may disclose your personal information is entirely up to you. You can opt -out information to third parties providing you products and of certain disclosures or use of your information or choose services on our behalf, law enforcement agencies or to not provide any personal information to us. governmental authorities, as required by law, and to parties with whom you authorize us to share your information. Information From Children. We do not knowingly collect Privacy Outside the Website. We are not responsible for information from children under the age of 13, and our the privacy practices of third parties, even if our website websites are not intended to attract children. links to those parties' websites. Access and Correction. If you desire to see the Do Not Track Disclosures. We do not recognize "do not information collected about you and/or correct any track" requests from Internet browsers and similar devices. inaccuracies, please contact us in the manner specified in this Privacy Notice. The California Online Privacy Protection Act. Certain International Use. By providing us with your information, FNF websites collect information on behalf of mortgage you consent to the transfer, processing and storage of such loan servicers. The mortgage loan servicer is responsible information outside your country of residence, as well as for taking action or making changes to any consumer the fact that we • will handle such information consistent information submitted through those websites. with this Privacy Notice. Your Consent To This Privacy Notice. By submitting Contact FNF. If you have questions or wish to contact us information to us and using our websites, you are accepting regarding this Privacy Notice, please use the contact and agreeing to the terms of this Privacy Notice. information provided at the end of this Privacy Notice. FNF Privacy Notice Effective: April 1, 2016 FIDELITY NATIONAL FINANCIAL, INC. PRIVACY NOTICE FNF respects and is committed to protecting your privacy. We pledge to take reasonable steps to protect your Personal Information (as defined herein) and to ensure your information is used in compliance with this Privacy Notice. This Privacy Notice is only in effect for information collected and/or owned by or on behalf of FNF, including collection through any FNF website or online services offered by FNF (collectively, the "Website"), as well as any information collected offline (e.g., paper documents). The provision of this Privacy Notice to you does not create any express or implied relationship, nor create any express or implied duty or other obligation, between FNF and you. Types of Information Collected We may collect two types of information: Personal Information and Browsing Information. Personal Information. The types of personal information FNF collects may include, but are not limited to: contact information (e.g., name, address, phone number, email address); social security number (SSN), driver's license, and other government ID numbers; and financial account or loan information. Browsing Information. The types of browsing information FNF collects may include, but are not limited to: • Internet Protocol (or IP) address or device ID/UDID, protocol and sequence information; • browser language; • browser type; • domain name system requests; • browsing history; • number of clicks; • hypertext transfer protocol headers; and • application client and server banners. How Information is Collected In the course of our business, we may collect Personal Information about you from the following sources: • applications or other forms we receive from you or your authorized representative, whether electronic or paper; • communications to us from you or others; • information about your transactions with, or services performed by, us, our affiliates or others; and • information from consumer or other reporting agencies and public records that we either obtain directly from those entities, or from our affiliates or others. We may collect Browsing Information from you as follows: • Browser Log Files. Our servers automatically log, collect and record certain Browsing Information about each visitor to the Website. The Browsing Information includes only generic information and reveals nothing personal about the user. • Cookies. From time to time, FNF may send a "cookie" to your computer when you visit the Website. A cookie is a FNF Privacy Notice Effective: April 1, 2016 small piece of data that is sent to your Internet browser from a web server and stored on your computer's hard drive. When you visit the Website again, the cookie allows the Website to recognize your computer, with the goal of providing an optimized user experience. Cookies may store user preferences and other information. You can choose not to accept cookies by changing the settings of your Internet browser. If you choose not to accept cookies, then some functions of the Website may not work as intended. Use of Collected Information Information collected by FNF is used for three main purposes: To provide products and services to you, or to one or more third party service providers who are performing services on your behalf or in connection with a transaction involving you; • To improve our products and services; and • To communicate with you and to inform you about FNF's products and services. When We Share Information We may share your Personal Information (excluding information we receive from consumer or other credit reporting agencies) and Browsing Information with certain individuals and companies, as permitted by law, without first obtaining your authorization. Such disclosures may include, without limitation, the following: • to agents, representatives, or others to provide you with services or products you have requested, and to enable us to detect or prevent criminal activity, fraud, or material misrepresentation or nondisclosure; • to third -party contractors or service providers who provide services or perform other functions on our behalf; • to law enforcement or other governmental authority in connection with an investigation, or civil or criminal subpoenas or court orders; and/or • to other parties authorized to receive the information in connection with services provided to you or a transaction involving you. We may disclose Personal Information and/or Browsing Information when required by law or in the good -faith belief that such disclosure is necessary to: • comply with a legal process or applicable laws; • enforce this Privacy Notice; • investigate or respond to claims that any information provided by you violates the rights of a third party; or • protect the rights, property or personal safety of FNF, its users or the public. We make efforts to ensure third party contractors and service providers who provide services or perform functions on our behalf protect your information. We limit use of your information to the purposes for which the information was provided. We do not give or sell your information to third parties for their own direct marketing use. We reserve the right to transfer your Personal Information, Browsing Information, as well as any other information, in connection with the sale or other disposition of all or part of the FNF business and/or assets, or in the event of our bankruptcy, reorganization, insolvency, receivership or an assignment for the benefit of creditors. You expressly agree and consent to the use and/or transfer of this information in connection with any of the above-described proceedings. We cannot and will not be responsible for any breach of security by any third party or for any actions of any third party that receives any of the information that is disclosed to us. Choices With Your Information Whether you submit your information to FNF is entirely up to you. If you decide not to submit your information, FNF may not be able to provide certain products or services to you. You may choose to prevent FNF from using your information under certain circumstances ("opt out"). You may opt out of receiving communications from us about our products and/or services. Security And Retention Of Information FNF is committed to protecting the information you share with us and utilizes a combination of security technologies, procedures and safeguards to help protect it from unauthorized access, use and/or disclosure. FNF trains its employees on privacy practices and on FNF's privacy and information security policies. FNF works hard to retain information related to you only as long as reasonably necessary for business and/or legal purposes. Information From Children The Website is meant for adults. The Website is not intended or designed to attract children under the age of thirteen (13). We do not collect Personal Information from any person that we know to be under the age of thirteen (13) without permission from a parent or guardian. Privacy Outside the Website The Website may contain links to other websites, including links to websites of third party service providers. FNF is not and cannot be responsible for the privacy practices or the content of any of those other websites. International Users Because FNF's headquarters is located in the United States, we may transfer your Personal Information and/or Browsing Information to the United States. By using our website and providing us with your Personal Information and/or Browsing Information, you understand and consent to the transfer; processing and storage of such information outside your country of residence, as well as the fact that we will handle such information consistent with this Privacy Notice. Do Not Track Disclosures Currently, our policy is that we do not recognize "do not track" requests from Internet browsers and similar devices. The California Online Privacy Protection Act For some websites which FNF or one of its companies owns, such as the Customer CareNet ("CCN"), FNF is acting as a third party service provider to a mortgage loan servicer. In those FNF Privacy Notice Effective: April 1, 2016 instances, we may collect certain information on behalf of that mortgage loan servicer, including: • first and last name; • property address; • user name and password; • loan number; • social security number - masked upon entry; • email address; security questions and answers; and IP address. The information you submit is then transferred to your mortgage loan servicer by way of CCN. The mortgage loan servicer is responsible for taking action or making changes to any consumer information submitted through this website. For example, if you believe that your payment or user information is incorrect, you must contact your mortgage loan servicer. CCN does not share consumer information with third parties, other than those with which the mortgage loan servicer has contracted to interface with the CCN application. All sections of this Privacy Notice apply to your interaction with CCN, except for the sections titled Choices with Your Information, and Access and Correction. If you have questions regarding the choices you have with regard to your personal information or how to access or correct your personal information, contact your mortgage loan servicer. Access and Correction To access your Personal Information in the possession of FNF and correct any inaccuracies, please contact us by email at privacy@fnf.com or by mail at: Fidelity National Financial, Inc. 601 Riverside Avenue Jacksonville, Florida 32204 Attn: Chief Privacy Officer Your Consent To This Privacy Notice By submitting Personal Information and/or Browsing Information to FNF, you consent to the collection and use of information by FNF in compliance with this Privacy Notice. We reserve the right to make changes to this Privacy Notice. If we change this Privacy Notice, we will post the revised version on the Website. Contact FNF Please send questions and/or comments related to this Privacy Notice by email at privacy@fnf.com or by mail at: Fidelity National Financial, Inc. 601 Riverside Avenue Jacksonville, Florida 32204 Attn: Chief Privacy Officer Copyright © 2016. Fidelity National Financial, Inc. All Rights Reserved. EFFECTIVE AS OF APRIL 1, 2016 I I This mapiplat ii being furnished as an aid in locating the her*in described Land in relation to adjoining streets, natural bounduies and other bud, and k not a survey ofthe, land depicted. Except to the extent a pDlicy oftitle insurance is expressly modified by endorsement, if any, the Company does not insure dimension, distances, location of easements. acreage or other matters shourt thereon. STATEMENT OF INFORMATION CONFIDENTIAL INFORMATION STATEMENT TO BE USED IN CONNECTION WITH ORDER NO: 09202724-920-CM8 COMPLETION OF THIS FORM WILL EXPEDITE YOUR ORDER AND WILL HELP PROTECT YOU. THE STREET ADDRESS of the property in this transaction is: IF NONE LEAVE BLANK ADDRESS: CITY: IMPROVEMENTS: o SINGLE RESIDENCE o MULTIPLE RESIDENCE o COMMERCIAL OCCUPIED BY: o OWNER o LESSEE o TENANTS ANY PORTION OF NEW LOAN FUNDS TO BE USED FOR CONSTRUCTION: o YES o NO NAME SPOUSES NAME FIRST MIDDLE LAST FIRST MIDDLE LAST BIRTHPLACE BIRTH DATE BIRTHPLACE BIRTH DATE I HAVE LIVED IN CALIFORNIA SINCE SOCIAL SECURITY NUMBER I HAVE LIVED IN CALIFORNIA SINCE SOCIAL SECURITY NUMBER DRIVER'S LICENSE NO. DRIVER'S LICENSE NO. WIFE'S MAIDEN NAME: WE WERE MARRIED ON AT RESIDENCE(S) FOR LAST 10 YEARS NUMBER AND STREET CITY FROM TO NUMBER AND STREET CITY FROM TO NUMBER AND STREET CITY FROM TO NUMBER AND STREET CITY FROM TO OCCUPATION(S) FOR LAST 10 YEARS HUSBAND PRESENT OCCUPATION FIRM NAME ADDRESS NO. OF YEARS PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS WIFE PRESENT OCCUPATION FIRM NAME ADDRESS NO. OF YEARS PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS FORMER MARRIAGES: IF NO FORMER MARRIAGES, WRITE "NONE": NAME OF FORMER SPOUSE IF DECEASED: DATE WHERE CURRENT LOAN ON PROPERTY PAYMENTS ARE BEING MADE TO: 2. 1. 3. HOMEOWNERS ASSOCIATION NUMBER: DATE SIGNATURE HOMEPHONE MISCO008 (Rev. 09/15/2011) BUSINESS PHONE RECORDING REQUESTED BY Commonwealth Land Title Company WHEN RECORDED MAIL TO: ORDER NO.: 09202724-920-CM8 SPACE ABOVE THIS LINE FOR RECORDER'S USE CERTIFICATION OF TRUST California Probate Code Section 18100.5 The undersigned declare(s) under penalty of perjury under the laws of the State of California that the following is true and correct: 1. The Trust known as executed on , is a valid and existing trust. 2. The name(s) of the settlor(s) of the Trust is (are): 3. The name(s) of the currently acting trustee(s) is (are): 4. The trustee(s) of the Trust have the following powers (initial applicable line(s)): Power to acquire additional property. Power to sell and execute deeds. Power to encumber, and execute deeds of trust. Other: 5. The Trust is (check one): Revocable Irrevocable B The name of the person who may revoke the Trust is: The number of trustees who must sign documents in order to exercise the powers of the Trust is (are): whose name(s) is (are): 7. Title to Trust assets is to be taken as follows: 8. The Trust has not been revoked, modified or amended in any manner which would cause the representations contained herein to be incorrect. 9. I (we) am (are) all of the currently acting trustees. 10. I (we) understand that I (we) may be required to provide copies of excerpts from the original Trust documents which designate the trustees and confer the power to act in the pending transaction. Dated (Acknowledgement must be attached) TRST0003 (DSI Rev. 11/05/14) CERTIFICATE OF ACKNOWLEDGEMENT OF NOTARY PUBLIC A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF } SS: On before me, a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by his/her/their signature(s)on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature CERTIFICATE OF ACKNOWLEDGEMENT OF NOTARY PUBLIC A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF } SS: On before me, a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by his/her/their signature(s)on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: IAT 78 OF TRACT N0.3883 IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 166, PAGE(S) 5 THROUGH 11, INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. Assessor's Parcel Nimber: 104-611-33 ASSESSOR PARCEL MAP il:tx rRapkt Ik 9tt�� %nG1lARG ax �. AHI t.4 iOrAnn�, thR Rtrillt Cit{rS911% 4dM W rfSdWp 10 �'3'O{6iA�' xllbtfi. @A 34YJd PISYGRa{{65 �a �1"+!Y La'cn, #4+u 1x. c4V3 a sw ce) at W! iSiai F daptctldwgttarate+act3pagofnrktcaurar�assng vsc , ma=d byadae;otam.ltAny, thtC agjnv4*4;totZmadtM 04MI,mtstInt er. aaamaieaxaeerss, Is atare or ar�ez ttuxters shown chubon. Project: Simon Ranch Reservoir Replacement Project Parcel No: 104-611-33 Escrow #: Title Company: Commonwealth Land Title Company Date of Preliminary Title Report: 12/30/2016 Grantors: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust Grantee: CITY OF TUSTIN, a municipal corporation of the State of California AGREEMENT FOR ACQUISITION OF REAL PROPERTY WHEREAS, the above-named Grantors own that certain real property located in the City of Santa Ana, County of Orange, State of California legally described in the Legal Description identified as Exhibit "A" and depicted on the Plat Map identified as Exhibit "B", attached hereto and made a part hereof ("Property"); and WHEREAS, Grantors intend to convey to City of Tustin ("City") and City intends to acquire from Grantors the Property, as described and depicted in the Grant Deed identified as Exhibit "C" for the purpose of constructing the Simon Ranch Reservoir Replacement Project ("Project") pursuant to the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the payment and other obligations set forth below, Grantors and City mutually agree as follows: 1. Full and Complete Agreement The parties have herein set forth the whole of their agreement ("Agreement"). The performance of this Agreement constitutes the entire consideration for the Property and shall relieve the City of all further obligations or claims on this account, or on account of the location, grade or construction of the proposed public improvement. The City requires the Property for the Project, a public use for which the City has the authority to exercise the power of eminent domain. Grantors are conveying the Property under threat of eminent domain. 2. Payment A. Purchase Price. The parties agree that the amount of One Million Eight Hundred Thousand and No/100 Dollars ($1,$00,000.00) ("Purchase Price") is the full amount of compensation due and owing to Grantors for conveyance of the Property to City. 3. Execution and Delivery to Escrow City shall open an escrow with the title company identified above ("Escrow Holder") by delivery of a fully executed copy of this Agreement. Upon full execution of this Agreement by the parties ("Effective Date"), Grantors shall execute and notarize the Grant Deed, in the form of Exhibit "C", attached hereto and made a part hereof. City shall tender the Purchase Price to the Escrow Holder, which shall be paid.when title to the Property vests in the City. 1319123.1 A. Close of Escrow Unless extended by the mutual agreement of the parties, the escrow shall close within ninety (90) days after the Effective Date of this Agreement and shall be the date the Grant Deed is recorded in the Recorder's Office for Orange County ("Close of Escrow"). B. City's Right to Cancel Escrow The City reserves the right to cancel escrow and terminate this Agreement if at any time the City determines that the Property is no longer needed for the Project. C. Escrow Holder's Right to Discharge Liens The Escrow Holder may expend any or all monies payable under this Agreement and deposited into escrow to discharge any obligations which are liens upon the Property, including, but not limited to, those arising from judgments, assessments, delinquent taxes for other than the fiscal year in which the escrow closes, or debts secured by deeds of trust or mortgages, and/or to defray any other incidental costs other than those specified in Section 2 hereof to be borne by the City. The Escrow Holder shall release payment to Grantors, return any credited amounts to City, and record the Grant Deed in the Recorder's Office for Orange County upon the Close of Escrow. D. Escrow Instructions This Agreement may serve in whole or in part as escrow instructions. The issuance of any further escrow instructions shall be the sole responsibility of City. The Grantors agree to execute such additional documents as may be reasonably necessary to consummate the purchase and sale herein contemplated. E. Fees The City shall pay all Grantors' and City's usual escrow, recording, and title insurance fees incurred in this transaction. F. Taxes Taxes for the fiscal year in which the escrow closes shall be cleared and paid for in the manner required by Section 5086 of the Revenue and Taxation Code. As a deduction from the amount shown in Section 2A, above, City shall be authorized to pay any delinquent taxes due in any fiscal year, except the fiscal year in which this escrow closes, together with penalties and interest thereon. G. No Removal of Easements or Rights of Way Grantors shall not be required to remove: (i) easements or rights-of-way for public roads or public utilities, if any; and (ii) items specifically identified on "Title Exceptions" identified as Exhibit "D", attached hereto, if any. H. Assessments The City is not assuming responsibility for payment or subsequent cancellation of unpaid assessments on the Property acquired under this transaction. The assessments remain the obligation of Grantors. Payment for the Property acquired under this transaction is made upon the basis that the Grantors retain their obligation to the levying body respecting said assessments. 1319123.1 I. Mortgages or Deeds of Trust Any monies payable under this Agreement up to and including the total amount of unpaid principal and interest on note(s) secured by mortgage(s) or deed(s) of trust, if any, and all other amounts due and payable in accordance with the terms and conditions of said deed(s) of trust or mortgage(s), shall upon demand(s) be made payable to the mortgagee(s) or beneficiary(ies) entitled thereunder; said mortgagee(s) or beneficiary(ies) are to furnish Grantors with good and sufficient receipt showing said monies credited against the indebtedness secured by said mortgage(s) or deed(s) of trust. 4. Just Compensation; Waiver and Release A. Grantors agree that performance of this Agreement by City, including the payment recited in Section 2A, above, shall constitute full and fair compensation and consideration for any and all claims that Grantors, and their successors and assigns, may have against City by reason of the acquisition, improvement, possession, use and/or occupancy of the Property, and Grantors, on behalf of themselves and their successors and assigns, hereby knowingly and voluntarily waive, and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to, any and all such claims, including claims for severance or taking compensation or damages to the remainder not taken on account of the acquisition of the Property or the location, establishment, construction and/or operation of the above-named Project. This waiver and release shall survive the Close of Escrow. B. The foregoing waiver and release shall include the waiver and release of any and all rights or claims that Grantors have, may have had or may in the future have under Article 1, Section 19 of the California Constitution, the Eminent Domain Law, or any other law or regulation; except as provided herein. Grantors, on behalf of themselves and their successors and assigns, further knowingly and voluntarily waive and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to any claims for the following: precondemnation damages, inverse condemnation, lost business goodwill, lost profits, lost rents, severance damages, mitigation damages, compensation for the construction and use of the Project in the manner proposed, damage to or loss of improvements pertaining to the realty, machinery, fixtures, inventory, equipment and/or personal property, interest, any right to repurchase, leaseback from City, or receive any financial gain from, City's sale of any portion of the Property, any right to challenge City's adoption of a resolution of necessity, pursuant to Code of Civil Procedure sections 1245.245, any right to receive any notices pursuant to Code of Civil Procedure section 1245.245, any right to enforce any other obligation placed upon City pursuant to Code of Civil Procedure sections 1245.245 and 1263.615, any other rights conferred upon Grantors pursuant to Code of Civil Procedure sections 1245.245 and 1263.615 and 1263.025, and claims for litigation expenses, attorney's fees and/or costs. This waiver and release shall survive the Close of Escrow. Grantors are aware of and understand all potential benefits to which they are otherwise entitled and have had the opportunity to discuss potential benefits with representatives of the City and with legal counsel of their choice. 5. Waiver under Section 1542 The parties intend that this Agreement will result in a full, complete, and final resolution and settlement of any and all claims, causes of action or disputes which exist, or may exist, between them as to the acquisition, possession and/or use of the Property by the City, except as expressly provided herein. It is therefore understood that the waiver, under this Agreement, of any rights, damages, compensation or benefits to which a party is, or may be, entitled is intended to be full and complete. Accordingly, 1319123.1 A. Grantors hereby waive any and all rights or benefits arising from and/or related to the City's acquisition, possession and/or use of the Property that it may have under section 1542 of the Civil Code of the State of California which provides: "a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." B. The Grantors represent and warrant that they understand the effect of this waiver of section 1542 and have had the opportunity to discuss the effect of this waiver with counsel of their choice. 6. Title Insurance City may obtain a CLTA extended coverage Grantors' policy of title insurance in the amount of the Purchase Price insuring that clear title to the Property is vested in City upon recording of the Grant Deed. 7. Possession and Use of the Property Pending Close of Escrow It is agreed and confirmed by the parties hereto that notwithstanding other provisions in the Agreement, the right of possession and use of the Property by City, including the right to remove and dispose of improvements, shall commence on the date the amount of funds as specified in Clause 2A of the Agreement are deposited into the escrow controlling this transaction. The amount shown in Clause 2A of the Agreement includes, but is not limited to, full payment for such possession and use, including damages, if any, from said date. It is further agreed that, notwithstanding the City's right of possession and use of the Property set forth in this paragraph, the single-family residence will be protected in place until the Close of Escrow. However, City makes no representation that the Project shall be constructed, and no liability or obligation whatsoever shall be incurred by City by reason of any failure to construct the Project for any reason. If, after City takes possession, the Property subsequently is not acquired by City for any reason, City shall restore the Property to the condition existing prior to the City's possession or use hereunder, unless otherwise agreed by the parties. 8. Eminent Domain A. It is mutually understood that the acquisition of the Property by City is for a public purpose, and therefore, the Property is otherwise subject to taking by the power of eminent domain.' The acquisition by and through this Agreement is in lieu of City's exercise of the power of eminent domain. B. If any eminent domain action that includes the Property, or any portion thereof, has been filed by City and after said filing the Grantors subsequently agree and consent to the dismissal of said action, then the Grantors hereby waive any and all claims to any money that may have been deposited in any Court or with the State Treasurer in any such action and waive any and all claims for damages, costs, or litigation expenses, including attorney's fees, arising by virtue of the abandonment of the action pursuant to Section 1268.510 of the California Code of Civil Procedure. 9. Amendment This agreement may be modified, changed, or rescinded only by an instrument in writing executed by the parties hereto. 1319123.1 MIJ IFF 1319123.1 No Leases A. Grantors warrant that there are no leases, except as disclosed on Exhibit `B" attached hereto, on all or any portion of the Property exceeding a period of one month, and the Grantors further agree to defend and indemnify and hold the City harmless and reimburse the City for any and all of its losses and expenses occasioned by reason of any tenant, lease or occupant of all or a portion of the Property for a period exceeding one month other than what is disclosed on Exhibit "E." A general release or quitclaim deed will be required from any lessee that has a lease term exceeding one month. Said general releases or quitclaim deeds are to be provided to Escrow Holder or the City prior to the Close of Escrow. Grantors agree not to assign, transfer or sell to any third party any right, title or interest Grantors have in the Property. Grantors' Representations A. Grantors make the following representations and warranties: i. Grantors certify that they own full legal title to the Property, and have full power and authority to convey all property rights described herein to City. ii. This Agreement constitutes a legal, valid,. and binding obligation of Grantors enforceable in accordance with its terms. iii. To the best of Grantors' knowledge there is no suit, action, arbitration, legal, administrative or other proceeding or inquiry pending or threatened against the Property, or any portion thereof, or pending or threatened against Grantors which could (i.) affect Grantors' title to the Property, or any portion thereof, (ii.) affect the value of the Property, or any portion thereof, or (iii.) subject Grantors to liability. iv. To the best of Grantors' knowledge, there are no uncured notices, which have been served upon Grantors from any .governmental agency notifying Grantors of any violations of law, ordinance, rule, or regulation, which would affect the Property, or any portion thereof. v. There are no Hazardous Substances (as defined in Paragraph 14 below), or storage tanks containing Hazardous Substances, in, on, under, or about the Property. vi. To the best of Grantors' knowledge, there has been no production, storage, disposal, presence, observance, or release of any Hazardous Substances in, on, under, or about the Property. vii. The Grantors and the Property are not in violation of any federal, state, or local law, ordinance, regulation, order, decree, or judgment relating to Hazardous Substances and/or environmental conditions in, on, under, or about the Property. viii.To the best of Grantors' knowledge, there are no notices or other information giving Grantors reason to believe that any conditions existing on the Property or in the vicinity of the Property subject or could subject any Grantors of the Property to potential liabilities under any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety and/or the environment, including, but not limited .to, the ambient air, soil, soil vapor, groundwater, surface water or land use. ix. To the best of Grantors' knowledge, there are no violations of any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety or the environment, including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use, nor of any legal, administrative or other action or proceeding, pending or threatened, affecting the Property and relating to Hazardous Substances and/or environmental compliance. x. To the best of Grantors' knowledge, there is no license, permit, option, right of first refusal, or other agreement, written or oral, which affects the Property or any portion thereof Grantors will defend and indemnify the City, its successor and/or assigns against any and all claims, demands, causes of action filed against the City, its successors/or assigns by someone claiming a legal interest in or right to the Property, or any portion thereof. xi. To the best of Grantors' knowledge conveyance of the property rights described herein will not constitute a breach or default under any agreement to which Grantors are bound and/or to which the Property is subject. B. Each of the above warranties and representations is material and is relied upon by City separately and collectively. Each of the above representations shall be deemed to have been made as of the date that the Grant Deed is recorded. If, before the recording of the Grant Deed, Grantors discover any information or facts that would materially change any of these warranties and representations, Grantors shall immediately give notice in writing to City of such facts and information. If any of the foregoing warranties and representations cease to be true before the recording of the Grant Deed, the City may, at its unfettered discretion, either cancel and terminate this Agreement or give the Grantors the option to remedy the problem before the recording of the Grant Deed or deduct from the payments required by Section 2, above, as a credit to City, in an amount as determined by the City reasonably required to remedy the problem. 12. Hazardous Substances A. Liability for Hazardous Substance The parties acknowledge, understand, and agree that any liability associated with the presence of any Hazardous Substances, as definedbelow, on or adjacent to any portion of the Property shall be governed by the provisions of Section 15 below, regardless of whether any inspection, examination, sampling, testing, assessment, or other investigation is conducted by City. "Hazardous Substance(s)" includes, but is not limited to, any hazardous or toxic substance, material or waste, or any solid waste, pollutant, or contaminant that is: (i) Regulated by any local governmental agency, the State of California or the United States Government; (ii) defined as such in any federal, State, or local statute, ordinance, rule, or regulation applicable to the property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code sections 9601-9675), the Resource Conservation and Recovery Act (Title 42 United States Code sections 6901-6992k), the Carpenter -Presley -Tanner Hazardous Substance Account Act (California Health and Safety Code sections 25330- 25395), and the Hazardous Waste Control Law (California Health and Safety Code sections 25100-25250.25); (iii) listed in the United States Department of Transportation Table (49 CFR § 172.101) or by the Environmental Protection Agency, or listed as hazardous substances by any equivalent State of California or local governmental agency, or any 1319123.1 successor agency (40 CFR Part 302); (iv) asbestos or asbestos containing material; (v) radon gas; (vi.) petroleum or petroleum fractions; (vii) any explosive substances (viii) polychlorinated biphenyl; (ix) a radioactive material, and (x) per chlorate. 13. Indemnification A. Each party (hereafter the "Indemnifying Parry") agrees and covenants to indemnify, defend (with counsel acceptable to the other party) each other party (hereinafter "Indemnified Party"), which consent shall not be unreasonably withheld), and hold the Indemnified Party, and its officers, employees and agents, harmless from and against any and all liabilities, penalties, losses, damages, costs, expenses (including reasonable attorneys' fees, whether for outside counsel or the City Attorney), causes of action, claims, or judgments that arise by reason of any death, bodily injury, personal injury, property or economic damage, or violation of any law or regulation, or damage to the environment, including ambient air, soil, soil vapor, groundwater, or surface water, and resulting from or in any way connected with: L any acts or omissions related to the performance of this Agreement;(ii) any breach of this Agreement, or; (iii.) the occupancy or use of the Property (including, but not limited to, the use, storage, treatment, transportation, release, or disposal of Hazardous Substances on or about any portion of the Property), by the Indemnifying Party, its officers, employees, agents, engineers, contractors or subcontractors, or any other person or entity employed by or acting on their behalf. B. The parties further agree and understand as follows: a party does not, and shall not be deemed to, waive any rights against the other party which it may have by reason of the aforesaid indemnity and hold harmless agreement because of any insurance coverage available; the scope of the aforesaid indemnity and hold harmless agreements are to be construed broadly and liberally to provide the maximum coverage in accordance with their terms; no specific term or word contained in this Section shall be construed as a limitation on the scope of the indemnification and defense rights and obligations of the parties unless specifically so provided. The provisions of this Section shall survive the recording of any deeds hereunder. 14. Attorney Fees Either party may bring a suit or proceeding to enforce or require performance of the terms of this Agreement, and the prevailing party in such suit or proceeding shall be entitled to recover from the other party reasonable costs and expenses, including attorney's fees. 15. Notices Any notice that either party may or is required to give the other shall be in writing, and shall be either personally delivered or sent by registered or certified mail, return receipt requested. If by mail, service shall be deemed to have been received by such party at the time the notice is delivered, to the following address: To City: City of Tustin 300 Centennial Way Tustin, CA 92780 Attention: Public Works Director 1319123.1 To Grantors: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust 11781 Outlook Lane Santa Ana, CA 92705 With a copy to: Woodruff, Spradlin & Smart Craig Farrington/Alyson Suh 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 16. Recording Either party may record this Agreement in the Recorder's Office for the County of Orange. The fully executed Grant Deed will be recorded in the Recorder's Office for the County of Orange. 17. Binding on Successors This Agreement shall be binding on and shall inure to the benefit of the City and Grantors, and their respective heirs, personal representatives, successors, assigns, and transferees, and their past, present and future officers, employees and agents. The City may freely assign any or all of its interests or rights under this Agreement. 18. Brokers Grantors and City each warrant to the other that no person or entity can properly claim a right to a commission, finder's fee, or other compensation with respect to the transaction contemplated by this Agreement. If any broker or finder makes any claim for a commission or finder's fee, the party through which the broker or finder makes such claim shall indemnify, defend and hold the other party harmless from all liabilities, expenses, losses, damages or claims (including the indemnified party's reasonable attorneys' fees) arising out of such broker's or finder's claims. 19. Time of Essence Time is of the essence for each condition, term, and provision in this Agreement. 20. Waivers No waiver of any breach of any covenant or provision in this Agreement shall be deemed a waiver of any other covenant or provision in this Agreement and no waiver shall be valid unless in writing and executed by the waiving party. 21. Severability If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to either party. Upon such determination that any term or provision is illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the greatest extent possible. 22. Construction Section headings are solely for the convenience of the parties and are not a part of and shall not be used to interpret this Agreement. The singular form shall include the plural and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if 1319123.1 both parties have prepared it. Unless otherwise indicated, all references to Sections are to this Agreement. 23. Governing Law This Agreement shall be construed in accordance with and governed by the laws of the State of California. Any legal action arising under or related to this Agreement shall be brought and prosecuted in the Orange County Superior Court. 24. Entire Agreement The parties have herein set forth the whole of their Agreement. All prior oral discussions, representations, and/or agreements, if any, are specifically superseded by this Agreement, which is intended by the parties to contain all of the terms and conditions agreed to by them with regards to acquisition of the Property by City. 25. Signatures on Behalf of an Entity Each individual executing this Agreement on behalf of an entity represents and warrants that he or she has been authorized to do so by the entity on whose behalf he or she executes this Agreement and that said entity will thereby be obligated to perform the terms of this Agreement. 26. Counterparts This Agreement may be executed in counterparts, including by facsimile or e-mail, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original, and all such counterparts together shall constitute one and the same instrument. 27. City Council Approval This Agreement may be subject to approval by the City's governing City Council. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOLLOWS 1319123.1 IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below. GRANTORS: GRANTEE: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of CITY OF TUSTIN, a municipal the Amendment and Restatement of The Gaglio corporation of the State of California Family Trust Date: Thomas J. Gaglio, Trustee Rachel D. Gaglio , Trustee Date: By: _ Name: Its: APPROVED AS TO FORM: Date: By: _ General Counsel ATTEST: Date: By: 9 Name Title *Note: If Granton is a corporation, the following two signatures are required: (I) the first signature by either the Chairman of the Board, the President, or any Vice President of the corporation; and (2) the second signature by either the Secretary, any Assistant Secretary, the Chief Financial Officer or any Assistant Treasurer of the corporation. - 1319123.1 EXHIBIT "A" Legal Description of Property THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOT 78 OF TRACT NO. 3883 IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, A5 PER IVIAP RECORDED IN BOOK 166, PAGE(S) 5 THROUGH 11, INCLUSIVE OF IVIISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY_ 1319123.1 I 0 1319123.1 EXHIBIT "B" Plat Map A* --WE Ilk I EXHIBIT "C" Grant Deed 1319123.1 EXHIBIT "D" Title exceptions that will not be removed, if any, as noted in preliminary title report dated December 30, 2016: 1, 3 and 4 1319123.1 EXHIBIT "E" Leases and Other Possessory Rights 1319123.1 RECORDING REQUESTED BY AND FOR THE BENEFIT OF AND WHEN RECORDED MAIL TO: City of Tustin 300 Centennial Way Tustin, CA 92780 Attn: City Clerk APN: 104-611-33 No recording fee required: SPACE ABOVE THIS LINE FOR RECORDER'S USE Exempt pursuant to Code 27383 GRANT DEED Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust (hereinafter, individually and collectively, "Grantor"), is the owner of that certain real property located County of Orange, State of California, designated as Assessor's Parcel Number 104-611-33 ("Grantor's Property"). FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Grantor hereby grants to the CITY OF TUSTIN, a municipal corporation, ("Grantee"), all that real property more particularly described in Exhibit "A" and depicted in Exhibit "B" attached hereto, which are incorporated herein by this reference. Date: 1319126.1 Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust Thomas J. Gaglio, Trustee Rachel D. Gaglio, Trustee ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF COUNTY OF On before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State Of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature 1319126.1 CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY, That the City of Tustin, a municipal corporation, hereby accepts for public purposes the real property described in the within deed and consents to the recordation thereof. DATED: A **NAME** **TITLE** 1319126.1 EXHIBIT "A" LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA- AND IS DESCRIBED AS FOLLOWS: LOT 78 OF TRACT NO. 3883 IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 166, PAGE(S) 5 THROUGH 11, INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXHIBIT "B" 1319126.1 1319126.1 PLAT MAP ATTACHMENT 2 AGREEMENT FOR ACQUISITION OF REAL PROPERTY Project: Simon Ranch Reservoir Replacement Project Parcel No: 104-611-33 Escrow #: Title Company: Commonwealth Land Title Company Date of Preliminary Title Report: 12/30/2016 Grantors: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust Grantee: CITY OF TUS"TIN, a municipal corporation of the State of California AGREEMENT FOR ACQUISITION OF REAL PROPERTY WHEREAS, the above-named Grantors own that certain real property located at 11781 Outlook Lane in the County of Orange, State of California legally described in the Legal Description identified as Exhibit "A" and depicted on the Plat Map identified as Exhibit "B", attached hereto and made a part hereof ("Property"); and WHEREAS, Grantors intend to convey to City of Tustin ("City") and City intends to acquire from Grantors the Property, as described and depicted in the Grant Deed identified as Exhibit "C" for the purpose of constructing the Simon Ranch Reservoir Replacement Project ("Project") pursuant to the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the payment and other obligations set forth below, Grantors and City mutually agree as follows: 1. Full and Complete Agreement The parties have herein set forth the whole of their agreement ("Agreement"). The performance of this Agreement constitutes the entire consideration for the Property and shall relieve the City of all further obligations or claims on this account, or on account of the location, grade or construction of the proposed public improvement. The City requires the Property for the Project, a public use for which the .City has the authority to exercise the power of eminent domain. Grantors are conveying the Property under the threat of eminent domain. 2. Payment A. Purchase Price. The parties- agree that the amount of One Million Eight Hundred Thousand and No/100 Dollars ($1,800,000.00) ("Purchase Price") is the full amount of compensation due and owing to Grantors for conveyance of the Property to City. 3. Execution and Delivery to Escrow City shall open an escrow with the title company identified above ("Escrow Holder") by delivery of a fully executed copy of this Agreement. Upon full execution of this Agreement by the .parties ("Effective Date"), Grantors shall execute and notarize the Grant Deed, in the form of Exhibit "C", attached hereto and made a part hereof. City shall tender the Purchase Price to the Escrow Holder, which shall be paid when title to the Property vests in the City free and clear of all liens, deeds of trust, encumbrances, assessments, easements and leases (recorded and/or unrecorded). Page 1 of 12 1346811.1 A. Close of Escrow Unless extended by the mutual agreement of the parties, the escrow shall close within sixty (60) days after the Effective Date of this Agreement and shall be the date the Grant Deed is recorded in the Recorder's Office for Orange County ("Close of Escrow"). B. Escrow Holder's Right to Discharge Liens The Escrow Holder may expend any or all monies payable under this Agreement and deposited into escrow to discharge any obligations which are liens upon the Property, including, but not limited to, those arising from judgments, assessments, delinquent taxes for other than the fiscal year in which the escrow closes, or debts secured by deeds of trust or mortgages, and/or to defray any other incidental costs other than those specified in Section 2 hereof to be borne by the City. The Escrow Holder shall release payment to Grantors, return any credited amounts to City, and record the Grant Deed in the Recorder's Office for Orange County upon the Close of Escrow. C. Escrow Instructions This Agreement may serve in whole or in part as escrow instructions. The issuance of any further escrow instructions shall be the sole responsibility of City, The Grantors agree to execute such additional documents as may be reasonably necessary to consummate the purchase and sale herein. contemplated. D. Fees The City shall pay all Grantors' and City's usual escrow, recording, and title insurance fees incurred in this transaction. E. Taxes Taxes for the fiscal year in which the escrow closes shall be cleared and paid for in the manner required by .Section 5086 of the Revenue and Taxation Code. As a deduction from the amount shown in Section 2A, above, City shall be authorized to pay any delinquent taxes due in any fiscal year, except the fiscal year in which this escrow closes, together with penalties and interest thereon. F. Assessments The City is not assuming responsibility for payment or subsequent cancellation of unpaid assessments on the Property acquired under this transaction. The assessments remain the obligation of Grantors. Payment for the Property acquired under this transaction is made upon the basis that the Grantors retain their obligation to the levying body respecting said assessments. G. Mortgages or Deeds of Trust Any monies payable under this Agreement up to and including the total amount of unpaid principal and interest on note(s) secured by mortgage(s) or deed(s) of trust, if any, and all other amounts due and payable in accordance with the terms and conditions of said deed(s) of trust or mortgage(s), shall upon demand(s) be made payable to the mortgagee(s) or beneficiary(ies) entitled thereunder; said mortgagee(s) or beneficiary(ies) are to furnish Page 2 of 12 1346811.1 Grantors with good and sufficient receipt showing said monies credited against the indebtedness secured by said mortgage(s) or deed(s) of trust. 4. Just Compensation; Waiver and Release A. Grantors agree that performance of this Agreement by City, including the payment recited in Section 2A, above, shall constitute full and fair compensation and consideration for any and all claims that Grantors, and their successors and assigns, may have against City by reason of the acquisition, improvement, possession, use and/or occupancy of the Property, and Grantors, on behalf of themselves and their successors and assigns, hereby knowingly and voluntarily waive, and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to, any and all such claims, including claims for severance or taking compensation or damages to the remainder not taken on account of the acquisition of the Property or the location, establishment, construction and/or operation of the above-named Project. This waiver and release shall survive the Close of Escrow. B. The foregoing waiver and release shall include the waiver and release of any and all rights or claims that Grantors have, may have had or may in the future have under Article 1, Section 19 of the California Constitution, the Eminent Domain Law, or any other law or regulation; except as provided herein. Grantors, on behalf of themselves and their successors and assigns, further knowingly and voluntarily waive and expressly release and .discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to any claims for the following: precondemnation damages, inverse condemnation, lost business goodwill, lost profits, lost rents, severance damages, mitigation damages, compensation for the construction and use of the Project in the manner proposed, damage to or loss of improvements pertaining to the realty, machinery, fixtures, inventory, equipment and/or personal property, interest, any right to repurchase, leaseback from City, or receive any financial gain from, City's sale of any portion of the Property, any right to challenge City's adoption of a resolution of necessity, pursuant to Code of Civil Procedure sections 1245.245, any right to receive any notices pursuant to Code of Civil Procedure section 1245.245, any right to enforce any other obligation placed upon City pursuant to Code of Civil Procedure sections 1245.245 and 1263.615, any other rights conferred upon Grantors pursuant to Code of Civil Procedure sections 1245.245 and 1263.615 and 1263.025, and claims for litigation expenses, attorney's fees and/or costs. This waiver and release shall survive the Close of Escrow. Grantors are aware of and understand all potential benefits to which they are otherwise entitled and havehad the opportunity to discuss potential benefits with representatives of the City and with legal counsel of their choice. 5. Waiver under Section 1542 The parties intend that this Agreement will result in a full, complete, and final resolution and settlement of any and all claims, causes of action or disputes which exist, or may exist, between them as to the acquisition, possession and/or use of the Property by the City, except as expressly provided herein. It is therefore understood that the waiver, under this Agreement, of any rights, damages, compensation or benefits to which a party is, or may be, entitled is intended to be full and complete. Accordingly, A. Grantors hereby waive any and all rights or benefits arising from and/or related to the City's acquisition, possession and/or use of the Property that it may have under section 1542 of the Civil Code of the State of California which provides: Page 3 of 12 1346811.1 "a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." B. The Grantors represent and warrant that they understand the effect of this waiver of section 1542 and have had the opportunity to discuss the effect of this waiver with counsel of their choice. 6. Title Insurance City may obtain a CLTA extended coverage policy of title insurance in the amount of the Purchase Price insuring that clear title to the Property is vested in City upon recording of the Grant Deed. 7. Possession and Use of the Property Pending Close of Escrow It is agreed and confirmed by the parties hereto that notwithstanding other provisions in the Agreement, the right of possession and use of the Property by City, including the right to remove and dispose of improvements, shall commence on the date the amount of funds as specified in Clause 2A of the Agreement are deposited into the escrow controlling this transaction. The amount shown in Clause 2A of the Agreement includes, but is not limited to, full payment for such possession and use, including damages, if any, from said date. It is further agreed that, notwithstanding the City's right of possession and use of the Property set forth in this paragraph, the single-family residence will be protected in place until the Close of Escrow. However, City makes no representation that the Project shall be constructed, and no liability or obligation whatsoever shall be incurred by City by reason of any failure to construct the Project for any reason. If, after City takes possession, the Property subsequently is not acquired by City for any reason, City shall restore the Property to the condition existing prior to the City's possession or use hereunder, unless otherwise agreed by the parties. 8. Eminent Domain A. It is mutually understood that the acquisition of the Property by City is for a public purpose, and therefore, the Property is otherwise subject to taking by the power of eminent domain. The acquisition by and through this Agreement is in lieu of City's exercise of the power of eminent domain. B. If any eminent domain action that includes the Property, or any portion thereof, has been filed by City and after said filing the Grantors subsequently agree and consent to the dismissal of said action, then the Grantors hereby waive any and all claims to any money that may have been deposited in any Court or with the State Treasurer in any such action and waive any and all claims for damages, costs, or litigation expenses, including attorney's fees, arising by virtue of the abandonment of the action pursuant to Section 1268.510 of the California Code of Civil Procedure. 9. Amendment This agreement may be modified, changed, or rescinded only by an instrument in writing executed by the parties hereto. 10. No Leases A. Grantors warrant that there are no leases on all or any portion of the Property exceeding a period of one month, and the Grantors further agree to defend and indemnify and hold the City harmless and reimburse the City for any and all of its losses and expenses occasioned. by Page 4 of 12 1346811.1 reason of any tenant, lease or occupant of all or a portion of the Property for a period exceeding one month. A general release or quitclaim deed will be required from any lessee that has a lease term exceeding one month. Said general releases or quitclaim deeds are to be provided to Escrow Holder or the City prior to the Close of Escrow. Grantors agree not to assign, transfer or sell to any third party any right, title or interest Grantors have in the Property. 11. Grantors' Representations A. Grantors make the following representations and warranties: L Grantors certify that they own full legal title to the Property, and have full power and authority to convey all property rights described herein to City. ii. This Agreement constitutes a legal, valid, and binding obligation of Grantors enforceable in accordance with its terms. iii. To the best of Grantors' knowledge there is no suit, action, arbitration, legal, administrative or other proceeding or inquiry pending or threatened against the Property, or any portion thereof, or pending or threatened against Grantors which could (i.) affect Grantors' title to the Property, or any portion thereof, (ii.) affect the value of the Property, or any portion thereof, or (iii.) subject Grantors to liability. iv. To the best of Grantors' knowledge, there are no uncured notices, which have been served upon Grantors from any governmental agency notifying Grantors of any violations of law, ordinance, rule, or regulation, which would affect the Property, or any portion thereof. v. There are no Hazardous Substances (as defined in Paragraph 14 below), or storage tanks containing Hazardous Substances, in, on, under, or about the Property. A. To the best of Grantors' knowledge, there has been no production, storage, disposal, presence, observance, or release of any Hazardous Substances in, on, under, or about the Property. vii. The Grantors and the Property are not in violation of any federal, state, or local law, ordinance, regulation, order, decree, or judgment relating to Hazardous Substances and/or environmental conditions in, on, under, or about the Property. viii.To the best of Grantors' knowledge, there are no notices or other information giving Grantors reason to believe that any conditions existing on the Property or in the vicinity of the Property subject or could subject any Grantors of the Property to potential liabilities under any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety and/or the environment, including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use. ix. To the best of Grantors' knowledge, there are no violations of any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety or the environment, including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use, nor of any Page 5 of 12 1346811.1 legal, administrative or other action or proceeding, pending or threatened, affecting the Property and relating to Hazardous Substances and/or environmental compliance. x. To the best of Grantors' knowledge, there is no license, permit, option, right of first refusal, or other agreement, written or oral, which affects the Property or any portion thereof. Grantors will defend and indemnify the City, its successor and/or assigns against any and all claims, demands, causes of action filed against the City, its successors/or assigns by someone claiming a legal interest in or right to the Property, or any portion thereof. xi. To the best of Grantors' knowledge conveyance of the property rights described herein will not constitute a breach or default under any agreement to which Grantors are bound and/or to which the Property is subject. B. Each of the above warranties andrepresentations is material and is relied upon by City separately and collectively. Each of the above representations shall be deemed to have been made as of the date that the Grant Deed is recorded. If, before the recording of the Grant Deed, Grantors discover any information or facts that would materially change any of these warranties and representations, Grantors shall immediately give notice in writing to City of such facts and information. If any of the foregoing warranties and representations cease to be true before the recording of the Grant Deed, the City may, at its unfettered discretion, either cancel and terminate this Agreement or give the Grantors the option to remedy the problem before the recording of the Grant Treed or deduct from the payments required by Section 2, above, as a credit to City, in an amount as determined by the City reasonably required to remedy the problem. 12. Hazardous Substances A. Liability for Hazardous Substance The parties acknowledge, understand, and agree that any liability associated with the presence of any Hazardous Substances, as defined below, on or adjacent to any portion of the Property shall be governed by the provisions of Section 15 below, regardless of whether any inspection, examination, sampling, testing, assessment, or other investigation is conducted by City. "Hazardous Substance(s)" includes, but is not limited to, any hazardous or toxic substance, material or waste, or any solid waste, pollutant, or contaminant that is: (i) Regulated by any local governmental agency, the State of California or the United States Government; (ii) defined as such in any federal, State, or local statute, ordinance, rule, or regulation applicable to the property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code sections 9601-9675), the Resource Conservation and Recovery Act (Title 42 United States Code sections 6901-6992k), the Carpenter -Presley -Tanner Hazardous Substance Account Act (California Health and Safety Code sections 25330- 25395), and the Hazardous Waste Control Law (California Health and Safety Code sections 25100-25250.25); (iii) listed in the United States Department of Transportation Table (49 CFR § 172.101) or by the Environmental Protection Agency, or listed as hazardous substances by any equivalent State of California or local governmental agency, or any successor agency (40 CFR Part 302); (iv) asbestos or asbestos containing material; (v) radon gas; (vi.) petroleum or petroleum fractions; (vii) any explosive substances (viii) polychlorinated biphenyl; (ix) a radioactive material, and (x) per chlorate. Page 6 of 12 1346811.1 13. Indemnification A. Grantors agree and covenant to indemnify, defend (with counsel acceptable to the City) and hold the City and its officers, employees and agents,. harmless from and against any and all liabilities, penalties, losses, damages, costs, expenses (including reasonable attorneys' fees, whether for outside counsel or the City Attorney), causes of action, claims, or judgments that arise by reason of any death, bodily injury, personal injury, property or economic damage, or violation of any law or regulation, or damage to the environment, including ambient air, soil, soil vapor, groundwater, or surface water, and resulting from or in any way connected with: i. any acts or omissions related to the performance of this Agreement;(ii) any breach of this Agreement, or; (iii.) the occupancy or use of the Property (including, but not limited to, the use, storage, treatment, transportation, release, or disposal of Hazardous Substances on or about any portion of the Property), by the Grantors, their officers, employees, agents, engineers, contractors or subcontractors, or any other person or entity employed by or acting on their behalf. B. The parties further agree and understand as follows: a party does not, and shall not be deemed to, waive any rights against the other party which it may have by reason of the aforesaid indemnity and hold harmless agreement because of any insurance coverage available; the scope of the aforesaid indemnity and hold harmless agreements are to be construed broadly and liberally to provide the maximum coverage in accordance with their terms; no specific term or word contained in this Section shall be construed as a limitation on the scope of the indemnification and defense rights and obligations of the parties unless specifically so provided. The provisions of this Section shall survive the recording of any deeds hereunder. 14. Notices Any notice that either party may or is required to give the other shall be in writing, and shall be either personally delivered or sent by registered or certified mail, return receipt requested. If by mail, service shall be deemed to have been received by such party at the time the notice is delivered, to the following address: To City: To Grantors: City of Tustin Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the 300 Centennial Way Amendment and Restatement of the Gaglio Family Trust Tustin, CA 92780 11781 Outlook Lane Attention: Public Works Director Santa Ana, CA 92705 With a copy to: Woodruff, Spradlin & Smart 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 Attention: David Kendig, City Attorney 15. Recording The fully executed Grant Deed will be recorded in the Recorder's Office for the County of Orange. Page 7 of 12 1346811.1 16. Binding on Successors This Agreement shall be binding on and shall inure to the benefit of the City and Grantors, and their respective heirs, personal representatives, successors, assigns, and transferees, and their past, present and future officers, employees and agents. The City may freely assign any or all of its interests or rights under this Agreement. 17. Brokers Grantors and City each warrant to the other that no person or entity can properly claim a right to a commission, finder's fee, or other compensation with respect to the transaction contemplated by this Agreement. If any broker or finder makes any claim for a commission or finder's fee, the party through which the broker or finder makes such claim shall indemnify, defend and hold the other party harmless from all liabilities, expenses, losses, damages or claims (including the indemnified party's reasonable attorneys' fees) arising out of such broker's or finder's claims. 18. Time of Essence Time is of the essence for each condition, term, and provision in this Agreement. 19. Waivers No waiver of any breach of any covenant or provision in this Agreement shall be deemed a waiver of any other covenant or provision in this Agreement and no waiver shall be valid unless in writing and executed by the waiving party. 20. Severability If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to either party. Upon such determination that any term or provision is illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the greatest extent possible. 21. Construction Section headings are solely for the convenience of the parties and are not a part of and shall not be used to interpret this Agreement. The singular form shall include the plural and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties have prepared it. Unless otherwise indicated, all references to Sections are to this Agreement. 22. Governing Law This Agreement shall be construed in accordance with and governed by the laws of the State of California. Any legal action arising under or related to this Agreement shall be brought and prosecuted in the Orange County Superior Court, 23. Entire Agreement The parties have herein set forth the whole of their Agreement. All prior oral discussions, representations, and/or agreements, if any, are specifically superseded by this Agreement, which is Page 8 of 12 1346811.1 intended by the parties to contain all of the terms and conditions agreed to by them with regards to acquisition of the Property by City. 24. Signatures on Behalf of an Entity Each individual executing this Agreement on behalf of an entity represents and warrants that he or she has been authorized to do so by the entity on whose behalf he or she executes this Agreement and that said entity willthereby be obligated to perform the terms of this Agreement, 25, Counterparts This Agreement may be executed in counterparts, including by facsirnile or e-mail each of which so executed shall, irrespective, of the'date of its execution and delivery, be deemed :an original, and all such, counterparts together shall constitute one and the same instrument. 26., City Council Approval This Agreement may be subject to approval by the City's governing City Council. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below, GRANTORS: GRANTEE: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of CITY OF TUST11N,.a municipal the Amendment and Restatement of The Gaglio' corporation of the State of California Fainfly Trust 6 Rachel D, Gaglio, Trustee L, EXHIBIT "A" Legal Description of Property THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALFORNIA4 AND IS DESCRIBED AS FOLLOWS LOT "iS CSF TRACT INTO, 3883 IN THE CD= OF ORANGE, STATE OF CALIFOM, ASPERIVLAPRtCORDED IN BOOK 166, PAGE(S) 5 THROUGH 11, INC'I.,ITME OF IiII CELLANEOUS MAPS, IN THE OFFICE OF TIDE COUNTY RECORDER OF SAID COUNTY EXHIBIT "B" Plat Map Page 11 of 12 1346811.1 EXHIBIT "C" Grant Deed Page 12 of 12 1346811,1 RECORDING REQUESTED BY AND FOR THE,BENEFIT OF AND WHEN RECORDED MAIL TO: Glity of Tustin 300 Centennial Way Tustin, CA 92780 Atta: City Clerk 104-611-33 raing tee requires: pursuant to Code 27383 Thomas J. Gaglio. and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gagilo Family Trust (hereinafter, individually and collectively, -"Grantor"), isthe owner of that certain real property located in the County of Orange, State of California, designated as Assessor's Parcel Number 104-611-33 ("Grantor's Property"). FOR VALUABLE CONSIDERATION ., receipt of which is hereby acknowledged, Grantor hereby grants to the CITY OF TUSTIN,, a municipal corporation, ("Grantee"), all that real property more particularly described in Exhibit "A" and depicted in Exhibit "B' attached hereto, which are incorporated herein by this, reference. Date,: 13461343 ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document, 04 STATE OF COUNTY OF On � / 1. 7 /f1 before me, appeared -X —Mmi -;�W ' V - Wile> me on the basis of satisfactotj evldence' to be I instrument and acknowledged to me that V/so(e/the that by 1�4/Pbrltfteir signature(s) on the instrument acted, executed the instrument, We Notary Public, person. ally 'Wet Z ,--------yho proved to e person(s) whbge ffahle(§) ' are subscribed to the within executed the same in n h�el,ohfl heir authorized capacity(les) and , " /f/ ie person(s), or the entity upon behalf of which the perqo 1 certify under PENALTY OF PERJURY under the laws of the State Of California that the, foregoing paragraph js,true . and correct. WITNESS my hand and official seal, (Seal) SId6-ature 13461343 CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY, that the City of Tustin, a municipal corporation, hereby accepts for public purposes the real property described in the within deed and consents to the recordation thereof. DATED: By: Name: Its: 1346134.1 EXHIBIT "B" PLAT MAP 1346134.1 1346134.1 m f ATTACHMENT 3 RESIDENTIAL LEASE AGREEMENT RESIDENTIAL LEASE AGREEMENT In consideration of the covenants herein, the City of Tustin, a municipal corporation of the State of California ("LANDLORD") hereby leases to Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of The Gaglio Family Trust (collectively referred to hereinafter as "TENANT") the property located at 11781 Outlook Lane, Santa Ana, California 92705 (the "PROPERTY"). LANDLORD and TENANT now covenant and agree that the following terms and conditions shall govern this Lease. 1. TERM &RENT.. The term begins on close of escrow between the parties, and shall continue until TENANT vacates the PROPERTY but no later than January 31, 2019. TENANT shall be permitted to occupy the PROPERTY without the payment of rent on the condition that TENANT complies with the terms and conditions set forth in this Residential Lease Agreement ("AGREEMENT"). 2. UTILITIES. TENANT shall pay for all water, gas, heat, light, power, telephone, trash disposal, and other utilities and services provided to the PROPERTY during the term of the Lease until TENANT vacates the PROPERTY. TENANT will terminate any and all accounts for said services when TENANT vacates the PROPERTY. 3. USE OF THE PROPERTY. LANDLORD recognizes that TENANT has been in possession of the PROPERTY as the prior owner. TENANT shall continue its use of the PROPERTY as a residential property. TENANT shall not permit any use of the PROPERTY which will adversely affect or make voidable any insurance on the PROPERTY, or ori the contents of said PROPERTY, • or which shall be contrary to any law, regulation or recommendation made by the Insurance Services Office (or successor organization), state fire prevention agency, local fire department, LANDLORD's insurer or any similar entity. TENANT shall on demand reimburse LANDLORD for all extra insurance premiums caused by any change in TENANT's use of the PROPERTY from its present use. 4, COMPLIANCE WITH LAWS. LANDLORD and TENANT contemplate and agree that TENANT will continue to use the PROPERTY in the same manner as it has been used by TENANT prior to the execution of this Lease for the duration of this Lease. TENANT shall continue to be responsible for the PROPERTY. 5. ASSIGNMENT OR SUBLEASE. In no case may TENANT assign this Lease or sublet the PROPERTY to any other persons or entities without first obtaining written permission from LANDLORD. 6. MAINTENANCE OF PROPERTY. TENANT shall continue to maintain the PROPERTY including electrical, plumbing and water systems, if any, and keep glass, windows, and doors in an operable and safe condition. TENANT shall keep the PROPERTY free of trash and debris and shall comply with all applicable laws and regulations concerning the use of the PROPERTY. If TENANT fails to maintain the PROPERTY, LANDLORD may contract for or perform such maintenance, and charge TENANT for the cost. 7. ALTERATIONS. TENANT shall not make structural alterations, additions or improvements of any kind to the PROPERTY, but may make nonstructural alterations, additions or improvements with LANDLORD'S prior written consent. All such allowed alterations, additions and improvements shall be at TENANT's expense and shall conform with LANDLORD's building standards and construction Page 1 of 5 1346132.1 specifications. If LANDLORD or its agent provides any services or maintenance for TENANT in connection with such alterations, additions and improvements or otherwise under this Lease, TENANT will promptly pay any just invoice. Any alterations, additions and improvements added hereafter shall become part of the PROPERTY of LANDLORD. 8. MECHANICS LIENS. TENANT shall keep property free from any liens arising out of any work performed, material furnished, or obligations incurred by TENANT. TENANT shall obtain a lien waiver from any contractor it employs prior to commencement of any work. TENANT shall not permit any mechanics' liens, or similar liens, to remain upon the PROPERTY in connection with any work performed or claimed to have been performed at the direction of TENANT and shall cause any such lien to be released or removed forthwith without cost to LANDLORD. TENANT shall indemnify, defend with counsel selected by LANDLORD, protect and hold LANDLORD, its officers, directors, employees, agents, successors and, assigns, and any successor or successors to LANDLORD'S interest harmless from and against all claims, actual damages (including, but not limited to, special and consequential damages), punitive damages, injuries, costs, response, costs, losses, demands, debts, liens, liabilities, causes of action, suits, legal or administrative procedings, interest, fines, charges, penalties, and expenses (including, but not limited to, attorneys' and expert witness fees and costs incurred in connection with defending against any of the' foregoing or in enforcing this indemnity) of any kind whatsoever paid, incurred or suffered by, or asserted against, the PROPERTY, or any indemnified party directly or indirectly arising from or attributable to any work performed, material furnished, or obligations incurred by TENANT. 9. FIRE PREVENTION. TENANT agrees to use every reasonable precaution against fire, to provide. and maintain approved, labeled fire extinguishers as required or recommended by the local fire department, LANDLORD' S insurer or any similar entity. 10. INSURANCE. TENANT shall obtain and keep in force a Residential General Liability policy of insurance protecting TENANT and naming LANDLORD as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the PROPERTY, and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000, an "Additional Insured -Managers or Lessors of Premises Endorsement" and contain the "Amendment of the Pollution Endorsement" for damage caused by heat, smoke, or fumes from a hostile fire. The policy shall not contain any intra - insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of TENANT's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of. TENANT nor relieve TENANT of any obligation hereunder. All insurance carried by TENANT shall be primary and not contributory with a similar insurance carried by LANDLORD, whose insurance shall be considered excess insurance only. TENANT shall provide LANDLORD with a certificate of insurance evidencing such insurance. 11. SECURITY MEASURES. TENANT hereby acknowledges that LANDLORD is not responsible to provide any security measures during the term of this Lease and that LANDLORD shall have no obligation whatsoever to provide same. TENANT assumes all responsibility for the protection of the PROPERTY, TENANT, its agents and invitees to the PROPERTY from the acts of third parties. 12. HAZARDOUS MATERIALS. Hazardous materials are those substances listed in California Code of Regulations, Title 22, or those which meet the toxicity, reactivity, corrosivity or flammability Page 2 of 5 1346132.1 criteria of Title 22 of the above Code, as well as any other substance which poses a hazard to health or environment. Except as otherwise permitted in this Agreement, TENANT shall not use, create, store or allow any such substances .on the premises. Fuel stored in a motor vehicle for the exclusive use in such vehicle is excepted. In no case shall TENANT cause or allow the deposit or disposal of any such substance on the property described in the Preamble. However, household products necessary for routine cleaning and maintenance of the property may be kept in quantities reasonable for current needs. LANDLORD, or its agents or contractors shall at all times have the right to go upon and inspect the property and the operations conducted thereon to assure compliance with the requirements herein stated. This inspection may include taking samples of substances and materials present for testing, and/or testing soils or underground tanks on the premises. 13. INDEMNIFICATION OF LANDLORD. Except for LANDLORD'S gross negligence or willful misconduct,. TENANT shall indemnify, defend, and hold harmless, the PROPERTY, LANDLORD,, its officers, directors, employees, agents, successors and assigns, from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorney's fees and consultants' fees arising out of, involving, or in connection with the use and/or occupancy of the PROPERTY by TENANT. If any action or proceeding is brought against LANDLORD by reason of any of the foregoing matters, TENANT shall upon notice defend the same at TENANT's expense by counsel reasonably satisfactory to LANDLORD. LANDLORD need not have first paid any such claim in order to be defended or indemnified. 14. EXEMPTION OF LANDLORD FROM LIABILITY. LANDLORD shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of TENANT, TENANT's employees, contractors, invitees, customers or any other person in or about the PROPERTY, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the PROPERTY or from other sources or places. This exemption does not apply to LANDLORD'S active negligence or willful misconduct. 15. ASSUMPTION OF RISK AND INDEMNITY. TENANT assumes all risk of loss to itself, which in any manner may arise out of the use of the PROPERTY under this Lease. Further, TENANT, its successors and assigns, shall indemnify and defend LANDLORD and its officers, directors, employees, agents, successors and assigns against any liability and expenses, including the reasonable expense of legal representation whether by special counsel or by LANDLORD's City Attorney's Office, resulting from injury to or death of TENANT, its successor and assigns, and invitees, and any person who otherwise is lawfully ,on the PROPERTY; or damage to any property, including property of LANDLORD, or damage to any other interest of LANDLORD, including but not limited to suit alleging noncompliance with any statute or regulation which in any manner may arise out of the issuing of this Lease; or use by TENANT of the PROPERTY. This assumption is not intended to apply. to. LANDLORD'S gross negligence or willful misconduct. 16. } WAIVER. The waiver by LANDLORD of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition, or of any subsequent breach of the same or any other term, covenant, or condition herein contained. Page 3 of 5 1346132.1 17. LANDLORD'S RIGHT OF ENTRY. LANDLORD may enter and inspect the PROPERTY upon reasonable advance notice of at least 24 hours to TENANT. 18. BROKERAGE. TENANT warrants and represents to LANDLORD that TENANT has dealt with no broker or third person with respect to this Lease, and TENANT agrees to indemnify LANDLORD against any brokerage claims arising out of this Lease. LANDLORD warrants and represents to TENANT that LANDLORD has employed no exclusive broker or agent in connection with this Lease. If either party introduces a broker or third person on its behalf for any extension, renewal or expansion of this Lease, any fees or commissions shall be the sole responsibility of the party engaging such broker or third person. 19. NOTICE. Any notice that either party may or is required to give the other shall be in writing, and shall be either personally delivered or sent by regular U.S. Mail, to the following addresses: To TENANT: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amendment and Restatement of the Gaglio Family Trust 11781 Outlook Lane Santa Ana, CA 92705 To LANDLORD: City of Tustin 300 Centennial Way Tustin, CA 92780 With a copy to: David Kendig City Attorney Woodruff, Spradlin & Smart 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 In the event either address changes, notice shall be given to the other party. 20: SURRENDER. On or before the termination , of this Lease, TENANT shall remove all of TENANT's goods and effects from the leased premises, and shall deliver to LANDLORD actual and exclusive possession of the PROPERTY and all keys and locks thereto. Any of TENANT's property that remains on the PROPERTY upon termination of the Lease shall be deemed abandoned and shall be. disposed of as LANDLORD sees fit, with no liability to TENANT for loss or damage thereto, and at the sole risk of TENANT. LANDLORD may remove and store any such property at TENANT's expense; retain same under LANDLORD's control; sell same at public or private sale (without notice) and apply the net proceeds of such sale to the payment of any sum due hereunder; or destroy same. 21. VALIDITY/SEVERABILITY. If any provision of this Lease is held to be invalid, such invalidity shall not affect the validity or enforceability of any other provision of this Lease. ,22. ATTORNEYS' FEES. In the event action is brought by any party to enforce the terms of this Lease or to recover possession of the PROPERTY, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees and costs associated therewith. Page 4 of 5 1346132.1 23. AMENDMENT: The terms of this Lease may not be modified or amended except by an instrument in writing executed by each of the parties hereto. 24. TIME OF ESSENCE. Time is of the essence of each and every term, condition, obligation, and provision hereof. 25. ENTIRE AGREEMENT. This Lease and the Agreement for Acquisition of Real Property entered into between the parties constitute the entire agreement between the parties with respect to the terms of the Lease and the purchase and sale of the PROPERTY and supersede any oral or written representations or agreements that may have been made by either party. IN WITNESS WHEREOF, the parties have executed this Agreement the dates set forth below. TENANT: Thomas J. Gaglio and Rachel D. Gaglio, Trustees of the Amend Me Restatement of The Gaglio Fami u t Th as ,.. ate' ,—Trus fee - Date: �—" 1 r Z Rachel agllio, Trustee Date: ? " / -�' " ' � Page 5 of 5 1346132.1 LANDLORD: CITY OF TUSTIN, a municipal corporation of the State of California By: _ Name: Its: Date: APPROVED AS TO FORM: By: City Attorney Date: ATTEST: By: Name: Title: Date: nda AGENDA REPORT Reee eldm City Manager Finance Director MEETING DATE: OCTOBER 2, 2018 TO: JEFFREY C. PARKER, CITY MANAGER FROM: DOUGLAS S. STACK, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER SUBJECT: APPROVE AGREEMENT FOR ACQUISITION OF REAL PROPERTY AND RESIDENTIAL LEASE AGREEMENT FOR PROPERTY AT 2061 VALHALLA DRIVE FOR THE SIMON RANCH RESERVOIR, BOOSTER PUMP STATION, AND PIPELINE REPLACEMENT PROJECT (CIP NO. 60114) SUMMARY At the direction of the City Council, staff has successfully negotiated an acquisition agreement for the residential property located at 2061 Valhalla Drive, adjacent to the Simon Ranch Reservoir. The acquisition of the property will facilitate construction of the Simon Ranch Reservoir and Booster Pump Station Replacement Project (CIP No. 60114). Staff seeks City Council approval for this purchase and authorization to execute the necessary agreement and associated documents. RECOMMENDATION It is recommended that the City Council: 1. Approve the Agreement for the Acquisition of Real Property between the City of Tustin, a municipal corporation of the State of California, and Chong Sang Kim and Cho Hea Kim, Trustees of the Kim Trust dated October 3, 1990 (Owner) for the property at 2061 Valhalla Drive (APN 104-611-30) and authorize the Mayor and City Clerk to execute the agreement and associated documents on behalf of the City; and 2. Approve Residential Lease Agreement between the City of Tustin, a municipal corporation of the State of California ("LANDLORD"), and Chong Sang Kim and Cho Hea Kim, Trustees of the Kim Trust dated October 3, 1990 ("TENANT") for the property at 2061 Valhalla Drive (APN 104-611-30) and authorize the Mayor and City Clerk to execute the agreement on behalf of the City. FISCAL IMPACT The total purchase price for acquisition of the property is $1,950,000. Sufficient funds from the 2013 Water Bonds Fund (Fund 306) have been appropriated for the purchase. It was determined that ownership of the property by the City will facilitate construction of the project, resulting in approximately $306,000 in construction cost savings and allow for reservation of a permanent access and maintenance easement valued at $100,000. Upon completion of the project, the property will be sold at fair market value at that time. The Residential Lease Agreement has no fiscal impact. 1349879.1 Approve Acquisition of Real Property at 2061 Valhalla Drive, CIP 60114 October 2, 2018 Page 2 CORRELATION TO THE STRATEGIC PLAN The proposed project furthers Goal B of the City of Tustin Strategic Plan pertaining to Public Safety and the Protection of Assets, in that the project will improve vital public facilities which enhance Tustin's readiness in responding to fire and drought conditions. BACKGROUND AND DISCUSSION The City of Tustin is proceeding with its plans to demolish the existing Simon Ranch Reservoir and construct a replacement water reservoir and booster pump station at 11811 Outlook Lane. The project site is an incorporated City of Tustin island surrounded by unincorporated County of Orange territory and is bounded by Valhalla Drive to the southwest, Outlook Lane to the southeast, and single family residences to the north, northwest and northeast. The existing reservoir was constructed in 1960 and consists of a rectangular 1.4 million gallon (MG), partially buried structure with trapezoidal bottom and side walls lined with gunite, and a concrete roof. As the surrounding land was subsequently subdivided and developed with single family residences, property lines were established right up to the reservoir walls on the northwest and northeast sides. As a result, demolition of the existing reservoir requires encroachment onto the two adjacent residential properties. On November 15, 2016, the City Council authorized the Director of Public Works to initiate discussions with property owners, make offers, and execute agreements for the acquisition of temporary construction easements. The Public Works Department retained a Right -of -Way Agent in conjunction with the City Attorney's Office, and an independent appraiser to provide appraisal services for the City. During negotiations with Dr. Chong Sang Kim, owner of the subject property located at 2061 Valhalla Drive (Assessor Parcel Number 104-611-30) and to the northwest of the proposed replacement water reservoir and booster pump station, a request was made by Dr. Kim for the City to consider acquiring the entire property in fee title, instead of the temporary construction easement. It was determined that ownership of the property would enable the City to realize savings in mobilization, limited shoring, improved slope stabilization, and sound wall construction estimated at $278,000. The building corner of the subject property lies only 15 feet from the property line adjacent to the reservoir. Also, the need for a temporary construction easement valued at $28,000 would be eliminated. It is expected that the City will recuperate the purchasing funds with the sale of the property following construction of the project, with potential property value appreciation. In addition, the City, as owner of the property, could grant itself at no cost a permanent easement over a portion of the property for future access and maintenance, valued at approximately $100,000. The option to purchase the property was presented to the City Council in Closed Session on January 16, 2018. The City Council authorized the Director of Public Works to proceed with the acquisition process. The property was appraised by Kevin J. Donahue, MAI to determine current fair market value, and the amount of just compensation for the property was determined to be $1,950,000. In accordance with applicable laws, a written offer and pertinent items were delivered to the owners for consideration. The Offer to Acquire Real Property and the Appraisal Report are attached. Also attached is a Residential Lease Agreement, which will allow the property owners to occupy the property until no later than January 31, 2019 without payment of rent. The City's construction schedule will not be impacted. The City's purchase offer was accepted and the attached Agreement for Acquisition of Real Property and Residential Lease Agreement have been signed by the property owners and are now presented to the City Council for approval. The City Attorney has approved the agreements as to form. 1349879.1 Approve Acquisition of Real Property at 2061 Valhalla Drive, CIP 60114 October 2, 2018 Page 3 It is recommended that the City Council approve the attached Agreement for Acquisition of Real Property and the Residential Lease Agreement between the City of Tustin and Chong Sang Kim and Cho Hea Kim, Trustees of the Kim Trust dated October 3, 1990 (Owner) and authorize the Mayor and City Clerk to execute the agreements and associated documents on behalf of the City for the property at 2061 Valhalla Drive (APN 104-611-30). r Do glas . Stack, P.E. re of Public Works/City Engineer Attachments: 1. Offer to Acquire Real Property and Appraisal Report 2. Agreement for Acquisition of Real Property 3. Residential Lease Agreement 1349879.1 ATTACHMENT 1 OFFER TO ACQUIRE REAL PROPERTY AND APPRAISAL REPORT I Jenner, Suite 200 Irvine,CA 92619 949,951.5263 ph 1949.951.65651 fax RECEIPT OF OFFER PACKAGE Simon Ranch Reservoir Replacement Project 2061 Valhalla Drive, Santa Ana, CA APN: 104-611-30 Property Owner: Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 2. Property Address: 2061 Valhalla Drive Santa Ana, CA 92705 This is to acknowledge receipt of the offer package containing the following items: ❑ Written Offer Letter Dated June 27, 2017 ❑ Appraisal Report ❑ Legal Description and Plat Map ❑ Agreement for Acquisition of Real Property ❑ Grant Deed ❑ Acquisition Brochure Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 Chong Sang Kim, Trustee Cho Hea Kim, Trustee 1307450.1 Date Date June 27, 2018 Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 2061 Valhalla Drive Santa Ana, CA 92705 Re: Offer to Acquire Real Property Simon Ranch Reservoir Replacement Project 2061 Valhalla Drive, Santa Ana, CA 92705 Assessor Parcel No. 104-611-30 Dear Mr. & Mrs. Kim: 1 Jenner, Suite 200 Irvine, CA 92618 949.951.5263 ph, 1949.951,6651 fax The City of Tustin (hereinafter referred to as the "City', is proceeding with its plans to demolish the existing Simon Ranch Reservoir and to construct a new water tank and associated improvements as well as offsite pipeline improvements which is known as the Simon Ranch Reservoir Replacement Project (the "Project'). The City is interested in negotiating the purchase the real property you own located at 2061 Valhalla Drive, Santa Ana, CA 92705 and identified by the Orange County Assessor as Assessor Parcel Number 104-611-30 (the "Property"). The Property is described in Exhibit "A" and depicted in Exhibit "B" enclosed with this letter. Overland, Pacific & Cutler, Inc. ("OPC") has been contracted by the City to contact the property owners in order to acquire the necessary rights for the Project. A review of public records indicates that you are the owners of record of the Property. The City previously made you an offer to acquire a 2,247 square foot temporary construction easement in the Property. Pursuant to your request that the City consider acquiring the Property instead of the temporary construction easement, the City has appraised the Property. The purpose of this letter is to extend the City's offer to acquire the Property. The City has determined the amount of just compensation for the Property is the sum of $1,950,000. The City's offer is not less than what the City has determined to be the fair market value of the Property. The basis for that determination is explained in the enclosed appraisal report prepared by Scott Lidgard of Lidgard and Associates, Inc. dated March 13, 2018. It is the City's hope that this price is agreeable to you and that the acquisition can begin immediately. This offer is, however, conditioned upon the City's ratification of the offer by execution of a contract of acquisition in a form and substance approved by the City Council of the 1307457.1 The Kim Trust, Dated October 3, 1990 2061 Valhalla Drive, Santa Ana, CA 92705 Page 2 City of Tustin. This offer is also based on the assumption that the Property is free of contamination and requires no remediation. If contamination is found, this offer will be subject to amendment. You have the right to obtain your own independent appraisal as part of the acquisition process. Pursuant to California Code of Civil Procedure section 1263.025, you are entitled to receive the reasonable cost, up to five thousand dollars ($5,000), for an independent appraisal you obtain. The appraisal you obtain must be conducted by an appraiser licensed by the California Bureau of Real Estate Appraisers (formerly the California Office of Real Estate Appraisers) and your request for reimbursement must be submitted in writing to the City with a copy of the appraisal and an invoice from the appraiser. Although you have the right to obtain your own appraisal and are entitled to receive up to $5,000 for your appraisal as described above, please note that the City is not obligated to accept your appraiser's value of the Property. The City, however, will review your appraisal and if appropriate, confer with the City's independent appraiser regarding the merits of your appraisal. If you wish to accept this offer, please do so by communication with Mona Montano of Overland, Pacific & Cutler, Inc. at 949-268-5723 as soon as possible. A written agreement concerning the acquisition of the Property will then be prepared and forwarded to you for your review and approval. If you have any questions or wish to discuss this matter further, please feel free to call Mona Montano at the number noted above. Sincerely, Over/and, Pacific & Cutler, Inc. Daniela Borbe Project Manager On behalf of City of Tustin Enclosures: Legal Description and Plat Map Appraisal Report Acquisition Brochure 1307457.1 Prepared for CITY OF TUSTIN c/o Overland, Pacific & Cutler, Inc. 1 Jenner, Suite 200 Irvine, California 92618 Date of Report March 13, 2018 MARKET VALUE STUDY KIM OWNERSHIP SINGLE FAMILY RESIDENCE 2061 VALHALLA DRIVE SANTA ANA, CALIFORNIA Effective Date of Appraisal March 6, 2018 Prepared by Scott A. Lidgard, MAI, CCIM LIDGARD AND ASSOCIATES, INC. 2592 North Santiago Boulevard Orange, California 92867-1862 Report Reference No. 8119 LIDGAi AND ASSOCIATES Ar'PRAISERS-CONSULTANTS March 13, 2018 City of Tustin c/o Overland, Pacific & Cutler, Inc. 1 Jenner, Suite 200 Irvine, California 92618 Attention: Mona Montano Project Manager Subject: Market Value Study Kim Ownership 2061 Valhalla Drive Santa Ana, California 2592 North Santiago Boulevard Orange, California 92867-1862 (714) 633-8441 or (562) 988-2926 scott@lidgardine.com In accordance with your request and authorization, I have completed an appraisal study of the above -referenced property on behalf of the client indicated above. The entire subject property is sought to be acquired by the City of Tustin in connection with the Simon Ranch Reservoir Replacement Project The valuation study consisted of (1) notification of the property owner regarding the necessity of the appraisal study, (2) an complete on-site inspection of the subject property, (3) a review of public records, (4) the research and collection of comparable market data in the immediate and general subject market area, (5) a valuation employing applicable methodology based on an analysis of the comparable market data, and (6) preparation of this formal narrative appraisal report in summation of the activities outlined above. The subject property is located on the northeasterly side of Valhalla Drive, beginning 165± feet northwesterly of Outlook Lane, within unincorporated Orange County territory. The site has an interior (versus corner) location, effectively rectangular land configuration, level topography, and contains 23,200± square feet of land area. The property has a partial city light view of Southern Orange County. The highest and best use of the subject property is residential development. The subject property is presently improved with a one-story single family residence of wood frame and stucco construction. The dwelling contains 4 bedrooms, 31/2 bathrooms, 3,567 square feet of living area, was originally constructed in 1973 and renovated throughout the years. on-site improvements located within the boundaries of the subject property include a three -car detached garage, wood frame patio covers, barbecue island, swimming LIDGARD AND ASSOCIATES Real Estate Appraisal and Consultation INCORPORATED City of Tustin c/o Overland, Pacific & Cutler, Inc. Attention: Mona Montano Project Manager March 13, 2018 Page 2 pool/spa, concrete paving, brick paving, perimeter fencing/walls including numerous retaining walls, inground irrigation system, and ornamental landscaping. Overall condition is rated good, considering the age. Reference the accompanying appraisal report for a complete description of the subject property. The purpose of this appraisal study is to estimate the fair market value of the unencumbered fee simple interest in the subject property, in as -is condition, as well as to provide an estimate of the fair market rental value thereof. Market value is defined in The California Code of Civil Procedure, §1263.320, as: "(A) 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 reasonably adaptable and available. (B) The fair market value of property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is Just and equitable. " The intended use of this report is to assist the City of Tustin in complying with eminent domain requirements for their purchase negotiations with the private property owner. Intended users are City officials, along with consultants thereof, for the explicit purpose and intent indicated above. This report is not intended to be delivered to, or relied upon by, third parties, except as provided for in the eminent domain law. After considering the various factors which influence value, the market values of the subject property, in as -is condition, as of March 6, 2018 are as follows: Unencumbered fee simple market value: $1,950,000. Fair market rental value: $5,000 per month. This appraisal complies with the reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a). This report contains a moderate level of detail with respect to the market data, appraisal methodology, and reasoning supporting the analysis, opinions, and conclusions. It contains sufficient information for the purpose, intent, and users for which it is written. LIDGARD AND ASSOCIATES INCORPORATED Real Estate Appraisal and Consultation City of Tustin c/o Overland, Pacific & Cutler, Inc. Attention: Mona Montano Project Manager March 13, 2018 Page 3 This appraisal report is submitted in triplicate; I have retained a file copy. If you require any additional information from our file, please do not hesitate to contact the undersigned. Very truly yours, LIDGARD AND ASSOCIATES, INC. Scott A. Lidgard, MAI, CCIM Certified General Real Estate Appraiser California Certification No. AG 004014 Renewal Date: March 13, 2020 SAL:sp LIDGARD AND ASSOCIATES INCORPORATED Real Estate Appraisal and Consultation TABLE OF CONTENTS Title Page Letter of Transmittal Table of Contents PREFACE Executive Summary Location Map Date of Value Purpose of the Appraisal Intent and Users of the Appraisal Property Rights Appraised Appraiser's Certification Scope of the Appraisal Assumptions and Limiting Conditions Terms and Definitions SUBJECT PROPERTY DESCRIPTION Vestee Property Address Legal Description Plat Map Site Description Building Improvements Plot Plan Drawing Other Improvements Assessment Data Ownership History Owner Notification Neighborhood Environment VALUATION ANALYSIS Highest and Best Use Analysis Valuation Methods Sales Comparison Approach Fair Market Rental Value Final Estimate of Value Exposure Time LUDGA W AIS"D ASSOCLkTES APPRATSERS-CONSULTANTa —I I, ov�t�t� I � EXECUTIVE SUMMARY PURPOSE OF APPRAISAL: Estimation of the fair market value of the subject property in as -is condition, as well as to provide an estimate of the fair market rental value thereof. The entire subject property is sought to be acquired by the City of Tustin in connection with the Simon Ranch Reservoir Replacement Project. CLIENT IDENTIFICATION: City of Tustin c/o Overland, Pacific, & Cutler, Inc. DATE OF VALUE: March 6, 2018 DATE OF REPORT: March 13, 2018 PROPERTY ADDRESS: 2061 Valhalla Drive Santa Ana, California VESTEE: Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 SITE: Land area: 23,200± square feet, per Assessor's records. Map coordinates: Thomas Bros. Map Page 830, Grid E-2. Census tract: Property located in Government Census Tract 756.06. Land shape: Effectively rectangular land configuration. Zoning: E-4 (small estates). Soil contamination: None known or observed by appraiser, however, a comprehensive soil study was not provided for review. The subject property has been appraised herein as though free of soil contaminants, if any. Present use: Highest and best use: Assessor's No. IMPROVEMENTS: Use: Dwelling area: Single family residential use. Residential development. 104-611-30 Single family residential use. 3,567 square feet. LI CARD ANTSSSOCU APPRAISE RS-CONSULTANTS, 1 EXECUTIVE SUMMARY (Continued) IMPROVEMENTS: (Continued) Construction quality: Average quality, Class D construction. Condition: Overall condition is rated good, considering the age. Floor plan: Floor plan includes a foyer, living room with sunken conversation area, formal dining room, kitchen, eating area, family room, 4 bedroms, 3 1/2 bathrooms, and service porch. Year built: Originally constructed in1973 and renovated in 1985 and 2009. HIGHEST AND BEST USE VALUE INDICATIONS: Sales Comparison Approach: Cost -Summation Approach: Income Capitalization Approach: Existing single family residence. $1,950,000. Not applicable. Not applicable. RECONCILIATION: Sales Comparison Approach is the only approach considered applicable in the subject case. The Cost -Summation Approach and Income Capitalization Approach are not considered applicable in the subject case for reasons discussed in the Valuation Analysis Section. VALUE CONCLUSIONS: Unencumbered fee simple market value: $1,950,000. Fair market rental value: $5,000 per month. L L A D AND ASSOCIATES ES APPPA1SERS-CO NSU LTA NTS 0 2 Subject Property rim -- jA ws * myon Comilla t .8ti O mi 0. 9 t5 LJJD xAI D AND ASSOCIATES APP 1' AI$VRS-CONSVLTANTS DATE OF VALUE The date of value employed in this appraisal report, and all opinions and computations expressed herein, are based on March 6, 2018, said date being generally concurrent with the inspection of the subject property and valuation analysis process. PURPOSE OF THE APPRAISAL The purpose of this appraisal report is to express an estimate of the market value of the subject property, in fee simple, absent any liens, leases, or other encumbrances, as of the date of value set forth above. The definition of market value is set forth in the following portion of this section following the heading "Definition of Market Value" Further, it is the purpose of this appraisal report to describe the subject property, and to render an opinion of the highest and best use based on (1) the character of existing and potential development of the property appraised, (2) the requirements of local governmental authorities affecting the subject property, (3) the reasonable demand in the open market for properties similar to the subject property, and (4) the location of the subject property considered with respect to other existing and competitive residential districts within the immediate subject market area. Further, it is the purpose of this appraisal report to provide an outline of certain factual and inferential information which was compiled and analyzed in the process of completing this appraisal study. INTENT AND USERS OF THE APPRAISAL The intended use of this report is to assist the City of Tustin in complying with eminent domain requirements for their purchase negotiations with the private property owner. Intended users are City officials, along with consultants thereof, for the explicit purpose and intent indicated above. This report is not intended to be delivered to, or relied upon by, third parties, except as provided for in the eminent domain law. PROPERTY RIGHTS APPRAISED The property rights appraised herein are those of the unencumbered fee simple interest. Fee simple is defined in the 12th Edition of The Appraisal of Real Estate, as, 'Absolute ownership by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. " APPRAISERS -CONSULTANT,', 3 CERTIFICATION The undersigned does hereby certify, except as otherwise noted in this appraisal report, that: I have personally inspected the subject parent property; I have no present or contemplated future interest in the real estate which is the subject of this appraisal report. Also, I have no personal interest or bias with respect to the subject matter of this appraisal report, or the parties involved in this assignment. My engagement in this assignment, and the amount of compensation, are not contingent upon the reporting or development of pre -determined values or direction in value that favors (1) the cause of the client, (2) the amount of the value opinion, (3) the attainment of predetermined/stipulated results, or (4) the occurrence of a subsequent event directly related to the intended use of this appraisal. To the best of my knowledge and belief, the statements of fact contained in this appraisal report, upon which the analyses, opinions, and conclusions expressed herein are based, are true and correct. This appraisal report sets forth all of the assumptions and limiting conditions (imposed by the terms of this assignment or by the undersigned), affecting my personal, impartial, and unbiased professional analyses, opinions, and conclusions. The reported analyses, opinions, and conclusions, were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, and the Code of Professional Ethics. As of the date of this report, I have completed the requirements of the continuing education program of the State of California as well as the Appraisal Institute. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I have previously appraised the subject property as of August 11, 2017. Jason P. Boyer provided real property appraisal assistance to the person signing this report with respect to data collection, inspection of the property, and report preparation. No one other than the undersigned assisted in the preparation of the analyses, conclusions, and opinions of the real estate appraisal study. Scott A. Lidgard, MAI, CCIM Certified General Real Estate Appraiser California Certification No. AG 004014 Renewal Date: March 13, 2020 Date: March 13, 2018 LUD Al AN -D A.S O IATA APPRAISER S-CONSU L`I'ANTS S! SCOPE OF THE APPRAISAL The appraiser, in connection with the following appraisal study, has: 1. Been retained, and has accepted the assignment, to make an objective analysis/valuation study of the subject property, and to report, without bias, an estimate of fair market value. 2. Toured the general area by automobile to acquaint himself with the extent, condition, and quality of nearby developments, sales and offerings in the area, density and type of development, topographical features, economic conditions, trends toward change, etc. 3. Viewed the subject property and completed an exterior inspection from the adjacent rights-of-way in order to acquaint himself with the current particular attributes, or shortcomings, of the subject site. 4. General descriptive information relating to the subject property, such as land area, building size, construction type, building age/condition, etc., was obtained from a review of public records, observed from adjacent rights-of-way, or assumed based on the nature and quality of the development. 5. Made a visual observation concerning public streets, access, drainage, and topography of the subject property. 6. Obtained information regarding public utilities and sanitary sewer available at the subject site. 7. Made, or obtained from other qualified sources, calculations on the area of land contained within the subject property. 8. Taken photographs of the subject property, together with photographs of the immediate environs. 9. Made, or caused to be made, a search of public records for factual information regarding the recent sales of the subject property, and for recent sales of comparable properties. LIDGGARD AND ASSOCIATES. APP RMSERS-CON SULTAN S 9 SCOPE OF THE APPRAISAL (Continued) 10. Reviewed current maps, zoning ordinances, and other material for additional background information pertaining to the subject property, and sale property. 11. Attempted to visualize the subject property as it would be viewed by a willing and informed buyer, as well as a willing and informed seller, absent the proposed public acquisition project. 12. Formed an opinion of the highest and best use applicable to the subject property appraised herein. 13. Formed an estimate of market value, as of the date of value expressed herein, for the subject property. The valuation methodology primarily relied upon is the Sales Comparison Approach based on comparable market data located within the immediate and general subject market area. 14. Prepared and delivered this appraisal report in summation of all the activities outlined above. LIDGARD AND ASSOCIATES A,PMAISERS-CONSULTANTS 101 ASSUMPTIONS AND LIMITING CONDITIONS This appraisal is made with the following understanding as set forth in items No. 1 through 18, inclusive: 1. That liability of Lidgard and Associates, Inc., along with the specific appraiser responsible for this report, is limited to the client only and to the fee actually received by the firm. There is no accountability, obligation or liability to any third party reader/user of this report. In the event this appraisal report is delivered to anyone other than the client for whom this report was prepared, it is the client's responsibility to make such party and/or parties aware of all limiting conditions and assumptions of this assignment and related discussions. 2. That in the event the client or any third party brings legal action against Lidgard and Associates, Inc., or the preparer of this report, and the appraiser prevails, the party initiating such legal action shall reimburse Lidgard and Associates, Inc. and/or the appraiser for any and all costs of any nature, including attorney's fees, incurred in their defense. 3. This appraisal report is intended to comply with reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a). It contains a moderate level of detail with respect to the market data, appraisal methodology, and reasoning supporting the analysis, opinions, and conclusions. This report contains sufficient information for the intended use and users for which it was written. 4. That title to the subject property is assumed to be good and merchantable. Liens and encumbrances, if any, have not been deducted from the final estimate of value. The vesting was obtained from County Records, or other sources, and has been relied upon as being accurate. The subject property has been appraised as though under responsible ownership. The legal descriptions are assumed accurate. 5. That the appraiser assumes there are no hidden or unapparent conditions of the subject property, subsoil, structures, or other improvements, if any, which would render them more or less valuable. Further, the appraiser LIDGARD AND ASSOCIATES APPi ATSERS-CONSULTrINTS 7 ASSUMPTIONS AND LIMITING CONDITIONS (Continued) assumes no responsibility for such conditions or for the engineering which might be required to discover such conditions. That mechanical and electrical systems and equipment, if any, except as otherwise may be noted in this report, are assumed to be in good working order. The property appraised is assumed to meet all governmental codes, requirements, and restrictions, unless otherwise stated. 6. That no soils report, topographical mapping, or survey of the subject property was provided to the appraiser; therefore information, if any, provided by other qualified sources pertaining to these matters is believed accurate, but no liability is assumed for such matters. Further, information, estimates and opinions furnished by others and contained in this report pertaining to the subject property and market data were obtained from sources considered reliable and are believed to be true and correct. No responsibility, however, for the accuracy of such items can be assumed by the appraiser. 7. That unless otherwise stated herein, it is assumed there are no encroachments, easements, soil toxics/contaminants, or other physical conditions adversely affecting the value of the subject property. 8. That no opinion is expressed regarding matters which are legal in nature or other matters which would require specialized investigation or knowledge ordinarily not employed by real estate appraisers, even though such matters may be mentioned in the report. 9. That no oil rights have been included in the opinion of value expressed herein. Further, that oil rights, if existing, are assumed to be at least 500 feet below the surface of the land, without the right of surface entry. 10. That the distribution of the total valuation in this report between land and improvements, if any, applies only under the existing program of utilization. The separate valuations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. LD ARD AND ASSOCIATES APPRAISV RS-CONSU LTANTS ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 11. That the valuation of the property appraised is based upon economic and financing conditions prevailing as of the date of value set forth herein. Further, the valuation assumes good, competent, and aggressive management of the subject property. 12. That the appraiser has conducted a visual inspection of the subject property and the market data properties. Should subsequent information be provided relative to changes or differences in (1) the quality of title, (2) physical condition or characteristics of the properties, and/or (3) governmental restrictions and regulations, which would increase or decrease the value of the subject property, the appraiser reserves the right to amend the final estimate of value. 13. That the appraiser, by reason of this appraisal, is not required to give testimony in court or at any governmental or quasi -governmental hearing with reference to the property appraised, unless contractual arrangements have been previously made therefor. 14. That drawings, plats, maps, and other exhibits contained in this report are for illustration purposes only and are not necessarily prepared to standard engineering or architectural scale. 15. That this report is effective only when considered in its entire form, as delivered to the client. No portion of this report will be considered binding if taken out of context. 16. That possession of this report, or a copy thereof, does not carry with it the right of publication, nor shall the contents of this report be copied or conveyed to the public through advertising, public relations, sales, news, or other media, without the written consent and approval of the appraiser, particularly with regard to the valuation of the property appraised and the identity of the appraiser, or the firm with which he is connected, or any reference to the Appraisal Institute, or designations conferred by said organizations. LIDGART ANDS O I�,.'TE APP RATS ERS -Co NSULTr+ NT"5 X ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 17. That the form, format, and phraseology utilized in this report, except the Certification, and Terms and Definitions, shall not be provided to, copied, or used by, any other real estate appraiser, real estate economist, real estate broker, real estate salesman, property manager, valuation consultant, investment counselor, or others, without the written consent and approval of Scott A. Lidgard. 18. That this appraisal study is considered completely confidential and will not be disclosed or discussed, in whole or in part, with anyone other than the client, or persons designated by the client. LID+ -A.I D AND ASSOCLkMS APP RAISERS -CON SU LTANTS 10 TERMS AND DEFINITIONS Certain technical terms have been used in the following report which are defined, herein, for the benefit of those who may not be fully familiar with said terms. FAIR MARKET VALUE: The highest price, estimated in terms of money, which would be paid by a willing buyer to a willing seller, allowing sufficient reasonable time to find a buyer, both buyer and seller acting without duress and both being fully advised as to the purposes to which the property can be best used. Fair Market Value is estimated as of the date of valuation set forth in the appraisal. The California Code of Civil Procedure, S1263.320, states: "(A) 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 reasonably adaptable and available. (B) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable." SALES COMPARISON APPROACH: One of the three accepted methods of estimating Fair Market Value. This approach consists of the investigation of recent sales of similar properties to determine the price at which said properties sold. The information so gathered is judged and considered by the appraiser as to its comparability to the subject property. Recent comparable sales are the basis for the Sales Comparison Approach. COST -SUMMATION APPROACH: Another accepted method of estimating Fair Market Value. This approach consists of estimating the new construction cost of the building and yard improvements and making allowances for appropriate amount of depreciation. The depreciated reconstruction value of the improvements is then added to the land value estimate gained from the Sales Comparison Approach. The sum of these two figures is the value indicated by the Cost - Summation Approach. LJDGARD AND ASSOCIATES APPRAISERS -CONS LTANTS 11 TERMS AND DEFINITIONS (Continued) INCOME CAPITALIZATION APPROACH: The Income Capitalization Approach consists of capitalizing the net income of the property under study. The capitalization method studies the income stream, allows for (1) vacancy and credit loss, (2) fixed expenses, (3) operating expenses, and (4) reserves for replacement, and estimates the amount of money which would be paid by a prudent investor to obtain the net income. The capitalization rate is usually commensurate with the risk, and is adjusted for future depreciation or appreciation in value. DEPRECIATION: Used in this appraisal to indicate a lessening in value from any one or more of several causes. Depreciation is not based on age alone, but can result from a combination of age, condition or repair, functional utility, neighborhood influences, or any of several outside economic causes. Depreciation applies only to improvements. The amount of depreciation is a matter for the judgment of the appraiser. HIGHEST AND BEST USE: Used in this appraisal to describe that private use which will (1) yield the greatest net return on the investment, (2) be permitted or have the reasonable probability of being permitted under applicable laws and ordinances, and (3) be appropriate and feasible under a reasonable planning, zoning, and land use concept. LIDGARD AND ASSOCLATES APPRAISERS -CONSULTANTS 12 �Vvlm^k�r-mll-�Iuill�%J" I nt, La SUBJECT PROPERTY Aerial view of subject property located on the northeasterly side of Valhalla Drive, beginning 165± feet northwesterly of Outlook Lane, within unincorporated Orange County territory. See additional photographs of the subject property in the Addenda Section. VESTEE: Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990. Mailing Address: 2061 Valhalla Drive Santa Ana, California 92705 Telephone: (714) 665-3321 PROPERTY ADDRESS: 2061 Valhalla Drive Santa Ana, California LEGAL DESCRIPTION: Lot 80 of Tract No. 3883 in the County of Orange, State of California, as per map recorded in Book 166, Pages 5 through 11, inclusive of Miscellaneous Maps, in the office of the County Recorder of said county. L ID ARD AND ASSOCIATES APPRAISERS -CO NSU LTANTS 1 LIDGARD AND A aOCfATT APPRAI SERS-CONSUL'CrkNTS SITE DESCRIPTION LOCATION: Northeasterly side of Valhalla Drive, beginning 165± feet northwesterly of Outlook Lane, within unincorporated Orange County territory. Property has a partial city light view of Southern Orange County. MAP COORDINATES: Thomas Bros. Map Page 830, Grid E-2. CENSUS TRACT: Property located in Government Census Tract No. 756.06. LAND SHAPE: Effectively rectangular land configuration; see highlighted portion of plat map on the opposite page. DIMENSIONS: Various dimensions; reference plat map. LAND AREA: 23,200± square feet, per Assessor's records. TOPOGRAPHY: Effectively level topography. DRAINAGE: Appears to be adequate; no depressions or low areas were noted within the boundaries of the subject property which would cause a water ponding condition during the rainy season. SOIL STABILITY: Appears to be adequate based upon the existing development at the subject site, as well as surrounding developments; it should be noted that a soils report was not provided for review. SOIL CONTAMINATION: None known or observed, however, a soils study has not been provided for review. The subject property has been appraised as though free of soil contaminants. ACCESS: The subject property has 143.85 lineal feet of frontage along Valhalla Drive. RIGHT-OF-WAY WIDTH: Valhalla Drive: 40 feet. STREET SURFACING: Asphalt paved traffic lanes. 4 SITE DESCRIPTION (Continued) CURB AND GUTTER: Concrete curb and gutter (each side of street). SIDEWALK: Concrete sidewalk along portion of subject frontage. STREET LIGHTS: Mounted on ornamental standards. PUBLIC UTILITIES: Water, gas, electric power, and telephone are available at the site. SANITARY SEWER: Available to site. ENCROACHMENTS: None known, or observed during the field inspection, however, a survey of the subject property was not provided for review. EASEMENTS: Based on a preliminary title report prepared by Commonwealth Land Title Company, dated December 30, 2016, there are no easements encumbering the subject property. It is assumed there are no "cross - lot" or "blanket" easements. ILLEGAL USES: None apparent. EARTHQUAKE FAULT: The subject property is not located within an earthquake fault study zone. The greater Southern California area, however, is generally prone to earthquakes and other seismic disturbances. No seismic or geo- logical studies have been provided for review. No responsibility is assumed for the possible impact on the subject property of seismic activity and/or earthquakes. FLOOD HAZARD AREA: The subject property is located within Zone X, per data issued by the Federal Emergency Management Agency. Property is depicted on Flood Map Panel 06059C0168J, dated December 3, 2009. PRESENT USE: Single family residential use. LIDGAR D AND A.SSOCL TE' 3 SITE DESCRIPTION (Continued) ZONING: The subject property is located within the E-4 (small estates) zone district of the County of Orange. The purpose and intent of the E-4 zone classification is to provide for the development and maintenance of low - medium density single family residential neighborhoods in which open spaces and deep setbacks predominate. Current development standards include a (1) minimum lot size of 20,000 square feet, (2) maximum site coverage of 35%, (3) maximum building height of three stories or 35 feet, whichever is most restrictive. The on-site automobile parking requirement for single family residential use is two enclosed spaces per dwelling unit. Based on an inspection of the subject property, as well as a review of current zone standards, the existing subject development generally represents a conforming land use. HIGHEST AND BEST USE: The reader is referred to the first portion of the Valuation Analysis Section for a detailed discussion regarding the highest and best use of the subject property. BUILDING IMPROVEMENTS MAIN DWELLING TYPE OF STRUCTURE: Single family residence. NO. OF STORIES: One story. DWELLING SIZE: 3,567 square feet per Orange County Assessor's records. YEAR BUILT: Originally constructed in 1973 and renovated in 1985 and 2009. LID ARD AND ASSOCIATES APPRAMERS- eaNsULTANTs 0 Landscaping Landscaping (Sloped) (sloped) slope ) Concrete Pool Pool L.-- F Concrete Garage Concrete MainDwelling P Brick aConcrete Valhalla Landscaping (Sloped) -IJE)GARL> ANE> ASSOCIATES APPRATSE RS-CONSULTA' NTS Drive BUILDING IMPROVEMENTS (Continued) MAIN DWELLING (Continued) CONSTRUCTION QUALITY: Average -good quality, Class D (wood frame) construction. FOUNDATION: Reinforced poured concrete column and wall footings. EXTERIOR WALLS: Stucco over wood framing exterior walls with wood fascia. ROOF SURFACING: Plywood roof deck supported by wood frame truss structure with lightweight concrete tile roof surfacing. Roof surfacing replaced in approximately 1993. FLOORS: Concrete slab flooring with carpet and ceramic tile floor coverings. INTERIOR WALLS: Painted drywall over wood stud interior walls. CEILINGS: Painted drywall wood stud ceilings. DOORS: Wood frame with glass panel front entry door and wood frame/panel interior doors. WINDOWS: Plate glass windows set in wood frames and dual pane vinyl frame sliding windows. Windows replaced throughout the dwelling in approximately 2009. ELECTRICAL: Conventional electrical wiring system. PLUMBING: Conventional plumbing system. Dwelling has 31/2 bathrooms, kitchen sink, and a 80± gallon water heater. HEATING AND COOLING: Dual central forced air central heating and cooling system. CONDITION: Overall condition is rated good, considering the age. APPRAISERS-CONSU LTANTS. 5 BUILDING IMPROVEMENTS (Continued) MAIN DWELLING (Continued) FLOOR PLAN: Floor plan includes a foyer, living room with sunken conversation area, formal dining room, kitchen, eating area, family room, 4 bedrooms, 31/2 bathrooms, and service porch. Dwelling has two wood burning fireplaces with gas log lighters. Family room has an extensive stone wall and hearth surrounding fireplace. KITCHEN FEATURES: Kitchen features include stain grade cabinets, quartz stone drainboard and backsplash, double bowl stainless steel sink, garbage disposal, built-in oven (Kitchenaid), countertop range (Thermador, four electric burners), hood and vent fan, built-in refrigerator (Kitchenaid), and dishwasher (Kitchenaid). All appliances have stainless steel finish. OTHER IMPROVEMENTS COMMENT: Other on-site improvements located within the boundaries of the subject property include a three -car detached garage, wood frame patio covers, barbecue island, swimming pool/spa, concrete paving, brick paving, perimeter fencing/walls including numerous retaining walls, inground irrigation system, and ornamental landscaping. ASSESSMENT DATA ASSESSOR'S PARCEL NO.: 104-611-30 ASSESSED VALUATIONS: Land: $ 73,458. Improvements: $185,831. TAX CODE AREA: 89-027. TAX YEAR: 2017-2018 L IDGARD AND ASSOCIATES APPRA[SCR,S-00NSU LTA*,4`i'S C ASSESSMENT DATA (Continued) REAL ESTATE TAXES: $2,705.15* SPECIAL ASSESSMENTS: $457.72 per annum. * In the event the subject property is sold -transferred to a private party, the real estate taxes will be adjusted to approximately 1.07223% of the sale - transfer price, per Proposition 13. In the absence of a sale -transfer, the maximum allowable annual increase in the assessed valuations is 2%. OWNERSHIP HISTORY COMMENT: The subject property was acquired by the present owner on June 15, 1994 as Document No. 401764. A non -market related grant deed transferring ownership between two related parties recorded October 22, 2014 as Document No. 428842. Due to the date of acquisition, the purchase price is not considered relevant to the current market value. The property has not been marketed for sale through the local Multiple Listing Service in recent years. OWNER NOTIFICATION COMMENT: The property owner was notified of the appraisal study by letter from Overland, Pacific & Cutler, LLC, acquisition consultants for the City of Tustin, dated February 9, 2018, and Lidgard and Associates, Inc., dated February 12, 2018. Reference copies of the notification letters set forth in the Addenda Section. The property owner was advised of the entitlement to accompany the appraiser at the time of the appraisal inspection. The letter also invited the owner to complete an LS A AND ASSOCLATES APPRAISE RS -CON SUL'TANTS 7 OWNER NOTIFICATION (Continued) COMMENT: (Continued) enclosed Property Data Form with information such as recent property upgrades and tenant information. The owner responded to the letters of notification by making telephone contact with the appraiser. An inspection of the subject property was conducted on March 1, 2018 in the presence of the property owner. NEIGHBORHOOD ENVIRONMENT COMMUNITY: The subject property is located in unincorporated Orange County territory within a community commonly known as North Tustin. The community of North Tustin is situated in central Orange County. Neighboring and adjoining communities include Orange, Tustin, Santa Ana, Orange Park Acres, EI Modena, and Villa Park. Major nearby freeways include the Santa Ana (5) Freeway, Costa Mesa (55) Freeway, the Garden Grove (22) Freeway, and the Eastern Transportation (261 Toll Road) Corridor. North Tustin encompasses 6.7 square miles; the elevation is 256 feet above sea level. The total population, as of 2010, is 24,917 persons. The average household size is approximately 2.88 persons. The median household income is $119,207. There are a total of 8,866 housing units including attached and detached dwellings. There is a variety of cultural, recreational, educational, and entertainment options in the greater central Orange County area. Tourism and entertainment facilities include the Anaheim Convention Center, Honda Center, Angel Stadium, Disneyland Resort, LMOARD ANID ASSOCIATES APPRATSV RS -CONSULTANTS N. " s [ i z of t it t. - wt r. �;,- ;.-Fr ,,��• t- " " roper #y. < .t r . a - #$ , ` IV f .. r, , a q M , R e` a it a . y m 41 NEIGHBORHOOD ENVIRONMENT (Continued) COMMUNITY: (Continued) Anaheim Resort, The Rinks Anaheim Ice, Orange County Fairgrounds, Irvine Lake, and Irvine Regional Park. LAND USES: The predominant land use within the immediate area along secondary streets is single family residential dwellings situated on large land parcels. Commercial retail and office developments are located along Red Hill Avenue and Newport Avenue. Existing developments, for the most part, consist of one and two story structures of either reinforced concrete or wood frame construction. Predominant land uses within the general vicinity include the Trader Joes, Tustin Ranch Golf Club, Peters Canyon Regional Park, EI Modena Open Space, Orange Hill Restaurant, The Market Place, In -N -Out Burger, Target, BJ's Restaurant & Brewhouse, Orchard Hills Apartments, Walgreens, Tustin Plaza Apartments, Pioneer Middle School and Ladera Elementary School. Existing land uses within the area are generally compatible when considered in the context of the longevity of respective uses. There are no substantial adverse conditions which would have a measurable impact on the value or marketability of the subject property. BUILT-UP: The immediate neighborhood is effectively 85% built-up. Residential: 70±% owners. 30±% tenants. Commercial: 40±% owners. 60±% tenants. L DGARD AND ASSOCIATES 91 NEIGHBORHOOD ENVIRONMENT (Continued) AGE RANGE: Existing developments in the area range from 5 years to exceeding 50 years. PRIDE OF OWNERSHIP: Overall pride of ownership, evidenced by an ongoing maintenance program, is rated average. OTHER: The availability and adequacy of public facilities, transportation, and retail/office commercial facilities are rated average. The County of Orange provides police and fire protection to the subject district See Valuation Analysis in the following section. I., D ARD AND ASSOCIATE PPRATSERS-CONSULTANTS 10 Art* K A 1,111-'K' b-UUN6UL L A NIZI VALUATION ANALYSIS The purpose of this valuation study is the estimation of fair market value of the unencumbered fee simple interest in the subject property, in as -is condition, as well as to provide an estimate of the fair market rental value thereof. The entire subject property is sought to be acquired by the City of Tustin in connection with the Simon Rancho Reservoir Replacement Project. The date of value employed in this study is March 6, 2018. Prior to the application of the appraisal process, which in this case employs the Sales Comparison Approach and Direct Rental Comparison Approach, it is necessary to consider and analyze the highest and best use of the subject property. H/GHESTAND BEST USEANALYS/S; Highest and best use is defined in The Appraisal of Real Estate, by the Appraisal Institute, 14th Edition, Page 332, as: "The reasonably probable use of property that results in the highest value. " In the process of forming an opinion of highest and best use, consideration must be given to various environmental and political factors such as zoning restrictions, probability of zone change, private deed restrictions, location, land size and configuration, topography, and the character/quality of land uses in the immediate and general subject market area. There are three basic criteria utilized in the highest and best use analysis of a property as if vacant, as well as presently improved. The three criteria are summarized as follows: 1. Physically possible. 2. Legally permissible. 3. Financially feasible. The foregoing are typically considered sequentially; for example, a specific use may prove to be maximally productive, however, if it is not legally permissible, or physically possible, its productivity is irrelevant. Physically Possible: The physical possibility of developing a specific property is governed, in part, by the size, shape, area, and terrain of the property in question. The availability of public utilities is also an important consideration in the analysis of a property's overall development potential. LI CARD AND ASSOCIATES APPRAIStKS-CONSU LTANTS 1 VALUATION ANALYSIS (Continued) H/GHESTAND BEST USEANAL MS. (Continued) Physically Possible: (Continued) Additional physical considerations are warranted when analyzing the highest and best use of the subject property, as presently improved. The size, architectural design, and condition of the existing building improvements are important elements, and may have a substantial impact on the highest and best use of a property, as presently improved. Legally Permissible: Legally permissible uses are determined, in part, by a community's general plan, zoning requirements, local building codes, and private deed restrictions. The general plan of a community is established to assure continuity of development within the community and the surrounding area. There is usually a consistency between the general plan of a community and the various zone classifications. The zone classification sets forth the various types of development allowed within a specific zone district. Zoning requirements typically constitute the available choices of development for a property. Local building codes are generally addressed as part of the zone classification, and include items such as maximum building densities, building height restrictions, setback and parking requirements, etc. Private deed restrictions relate to mutual agreements under which a property was acquired. Said restrictions may prohibit certain types of development. Financially Feasible: Those uses which meet the first two criteria, i.e. physically possible and legally permissible, are further analyzed in order to determine which uses produce an adequate return on the investment. The specified use is considered financially feasible if the net income capable of being generated is enough to satisfy the required rate of return and provide a return on the land. Among those uses which are considered financially feasible, that use which produces the highest price, or value, consistent with the required rate of return, is considered the highest and best use of the property. Conclusion (as if vacant). The subject property has an interior (versus corner) location along a secondary residential street. The site has an effectively rectangular land configuration, level topography, and contains 23,200 square feet of land area. Vehicular access, as well as pedestrian access, are rated average. Property has a partial city light view of Southern Orange County. APPRAISE RS -CONSULTANTS 0 VALUATION ANALYSIS (Continued) H/GHESTAND BEST USEANALYS/Se (Continued) Conclusion (as if vacant); (Continued) All public utilities such as water, gas, electric power, telephone, as well as sanitary sewer are available to the site. The physical characteristics of the subject parcel are considered adequate to accommodate a variety of legally permissible uses. As stated, the subject property is located within the E-4 (small estates) zone of the County of Orange. The primary legally permitted use within the E-4 zone classification is single family residential development with a minimum lot size of 20,000 square feet. The optimal utility of the subject site is as zoned. Based on the demand, the physical characteristics of the site, as well as the legally permissible uses, it is the appraiser's opinion that the maximally productive use, and therefore, the highest and best use of the subject land, as if vacant, is a single family residential development. Conclusion (as improved): The subject property, as presently improved, is obviously physically possible, and generally conforms to current development standards. Overall condition of the subject dwelling and on-site improvements is rated good, considering the age. The overall functional utility of the subject property is competitive with the preponderance of improved single family residential properties in the immediate market area. The subject property, as improved, is considered financially feasible, and represents the maximally productive use at the present time. Based on an inspection of the subject property, as well as the valuation analysis which considered property values, historical occupancy rates, as well as expressed tenant and owner/user demand, the existing development represents the highest and best use of the subject property. The value of the subject property as presently improved exceeds that of the underlying land parcel. VAL UA T/ON METHODS: There are three conventional methods (approaches) which can be used to estimate value. They are the Sales Comparison Approach, Cost -Summation Approach, and Income Capitalization Approach. Following is a brief description of each approach to value. IJGARD AND ASSOCIATES AV PR AB ERS -CON SULTANTS 3 VALUATION ANALYSIS (Continued) VALUATION METHODS: (Continued) Sales Comparison Approach, This approach consists of the investigation of recent sales of similar properties to determine the price at which said properties sold. The information so gathered is judged and considered by the appraiser as to its comparability to the subject property. Recent comparable sales, either vacant land or improved properties, are the basis for the application of the Sales Comparison Approach. Cost -Summation Approach: The Cost -Summation Approach consists of estimating the construction cost new of the building and yard improvements and making allowances for the appropriate amount of accrued depreciation. The depreciated reconstruction value of the improvements is then added to the land value estimate. The sum of these two figures is the value indicated by the Cost - Summation Approach. Income Capitalization Approach; The Income Capitalization Approach consists of the capitalizing of net income of the property under appraisement. The capitalization methodology studies the income stream, allows for (1) vacancy and credit loss, (2) fixed expenses, and (3) oper- ating expenses. The value indicated by the Income Capitalization Approach represents the money which would be paid by a prudent investor to obtain the net income capable of being generated by the property. The capitalization rate is usually commensurate with the inherent risk. The appraisal process is concluded by reconciliation of the indications of value obtained from the applicable valuation methods. Consideration is given to the type and reliability of data used, as well as the applicability of each approach. It should be understood that the reconciliation is not an averaging process, but an analysis of data upon which the various approaches were developed. The Sales Comparison Approach is the only approach considered applicable as a reliable indicator of value when estimating the unencumbered fee simple market value of the subject property. The Direct Rental Comparison Approach, which is an adaptation of the Sales Comparison Approach, has been employed in order to estimate the fair market rental value thereof. The Cost -Summation Approach is without LIDG RD AND ASSOCIATES A]PPRAiSCRS-CONSLTLT .Nrs 11 VALUATION ANALYSIS (Continued) VALUATION METHODS: (Continued) meaningful application due to the age and nonconforming status of the existing development and resultant difficulty in accurately estimating accrued depreciation. The Income Capitalization Approach has not been applied inasmuch as the subject property would not typically be acquired for investment -type purposes. SALES COMPARISONAPPROACH; The Sales Comparison Approach takes into account properties which have sold in the open market. This approach, whether applied to vacant or improved property, is based on the Principle of Substitution which states, "The maximum value of a property tends to be set by the cost of acquiring an equally desirable substitute property, assuming no costly delay is encountered in making the substitution." Thus, the Sales Comparison Approach attempts to equate the subject property with sale properties by analyzing and weighing the various elements of comparability. The Sales Comparison Approach has been applied to the subject property after an investigation and analysis was conducted of single family residential properties having recently sold within the immediate market area. Comprehensive information pertaining to each of the sale properties employed herein is contained in the appraiser's file and data base. Reference the Market Data Map, on the following page, for an illustration of the location of the various sale properties. The knowledge and understanding of present and historical value patterns and trends affecting the local real estate market are based on the observation of market conditions and the appraisal of other residential properties, as well as information obtained from various sources which include the following: • Owners: Interviews were conducted with owners of residential properties in the general research area to determine various market trends, and value patterns. • Tenants: Interviews were conducted with various tenants of residential properties located within the immediate subject market area. • Real estate brokers and salespersons: A number of active brokers and salespersons within the greater subject market area were interviewed regarding existing and historical lease and sales data, as well as value patterns and trends. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANT 5 LIDGA D AND ASSOCIATES APPRAIS ER.S-CONSULTANT, VALUATION ANALYSIS (Continued) SALES COMPARISONAPPROACH; (Continued) • Public officials: Various public officials were interviewed regarding (1) existing or proposed projects which have an impact on real property values, (2) economic trends, (3) level of public services, (4) zone classifications and building standards, and (5) property tax structure and assessment districts. • Published data: Information was gathered and studied regarding population, unemployment levels, employment centers, residential sales data as well as rental data, and other demographic and economic factors. Following is a summary of those sales considered helpful when estimating the value of the subject property as presently improved. All of the properties surveyed are located within the immediate and general subject market area. The properties contain dwellings ranging in size from 3,395 to 3,901 square feet of living area, and were originally constructed between 1970 and 1999. The floor plans range from 5 bedrooms/3 bathrooms to 5 bedrooms/51/2 bathrooms. The parcels range in size from 7,638 to 26,325 square feet of land area. After viewing each of the sale properties, and verifying details of the various transactions, the primary unit of analysis employed herein is the overall purchase price. Two other factors developed from the residential sale LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS C Dwelling On-site Land/Bldg. $/SF Land Data Date Lot Size Size Br/Ba Built Parking Ratio Sale Price $/SF Dwel. 1. 6-17 20,400 sf 3,536 sf 5 br/31/2 ba 1976 3 -gar. 5.77:1 $1,653,000. $ 81.03 2071 Racquet Hill, Santa Ana $467.48 2. 8-17 13,148 sf 3,549 sf 5 br/3 be 1998 2 -gar. 3.70:1 $1,711,000. $130.13 12165 Zielian Court, Tustin $482.11 3. 8-17 26,325 sf 3,395 sf 5 br/51/2 ba 1973 3 -gar. 7.75:1 $1,895,000. $ 71.98 2121 Valhalla Drive, Santa Ana $558.17 4. 9-17 20,800 sf 3,513 sf 5 br/3 ba 1976 3 -gar. 5.92:1 $1,960,000. $ 94.23 2032 Racquet Hill, Santa Ana $557.93 5. 12-17 7,638 sf 3,901 sf 5 br/4 be 1999 3 -gar. 1.96:1 $1,700,000. $222.57 2348 Pieper Lane, Tustin $435.79 6. 2-18 20,295 sf 3,827 sf 5 br/31/2 ba 1970 3 -gar. 5.30:1 $1,650,000. $ 81.30 11822 Skyline Drive, Santa Ana $431.15 All of the properties surveyed are located within the immediate and general subject market area. The properties contain dwellings ranging in size from 3,395 to 3,901 square feet of living area, and were originally constructed between 1970 and 1999. The floor plans range from 5 bedrooms/3 bathrooms to 5 bedrooms/51/2 bathrooms. The parcels range in size from 7,638 to 26,325 square feet of land area. After viewing each of the sale properties, and verifying details of the various transactions, the primary unit of analysis employed herein is the overall purchase price. Two other factors developed from the residential sale LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS C VALUATION ANALYSIS (Continued) SALES COMPAR/SONAPPROACH,• (Continued) Elements of Comparability -(Continued) properties were utilized as secondary units of analysis; they are the (1) overall purchase price per square foot of land area, and (2) overall purchase price per square foot of building area. The overall purchase prices range from $1,650,000 to $1,960,000. The purchase prices produce a range of value of $71.98 to $222.57 per square foot of land area, and $431.15 to $558.17 per square foot of dwelling area. The land/building area ratio was also considered in the analysis of the improved residential sale properties when compared to the subject property. The subject property has a ratio of 6.50:1. As can be noted, the land/building area ratios of the sale properties range from 1.96:1 to 7.75:1. All of the sales employed herein conveyed title to the fee simple interest, and represent arm's-length transactions. Financing terms of each sale were typical of the subject market area. Adjustments for property rights conveyed, conditions of sale, and financing are therefore not warranted. Market Conditions.- Certain onditions: Certain of the sale properties considered extended over a time period back to the second quarter of 2017. The time frame permitted the development of a rather comprehensive real estate market profile. The improved sale properties employed in this study are set forth in chronological order, and took place between June, 2017 and February, 2018. Based on discussions with residential brokers and salespersons, as well as extensive media coverage, a substantial upward trend in value and market activity commenced in 2012 after relatively stagnant market conditions. The escalating value trend continues, albeit at a slower pace. It is apparent that the supply of residential properties is generally in equilibrium with the demand. This condition is anticipated to continue throughout the remaining portion of this year. Differing market conditions impacting the sale properties were considered in the valuation analysis employed herein. Elements of Comparability.- After omparability: After viewing all of the single family residential sale properties, an analysis was made of the various elements of comparability. Some of those elements include, but are not limited to, the following: LIDGA D AND ASSOCLATES APPRAISERS-CONSULTA''TS 7 VALUATION ANALYSIS (Continued) SALES COMPAR/SONAPPROACH; (Continued) Elements of Comparability.- (Continued) General location. Immediate environmental influences. Zoning. Land size and configuration. Dwelling age and condition. Type/capacity of on-site parking. Vehicular and pedestrian access. Topography, view amenity. Dwelling size. No. of bedrooms/bathrooms. Construction quality. Extent of on-site improvements. A Relative Comparison Analysis (RCA) has been conducted between the individual comparable properties and the subject property. The RCA is a qualitative technique for analyzing comparable sales, and is a valuable tool employed to illustrate whether the characteristics of a comparable property are inferior, superior, or similar to those of the property under appraisement. The Relative Comparison Analysis is similar to paired data analysis without the use of arbitrary or unsupportable quantitative adjustments. This technique acknowledges the imperfect nature of the subject real estate market. The primary objective is to bracket the subject property between the comparable sales with respect to the similarity, superiority, and inferiority thereof. Superior elements of comparability of an individual sale property would reflect a downward adjustment to the value indication thereof. Conversely, inferior elements suggest an upward adjustment. Additionally, it is important to note that the above elements of comparability were not assigned equal weight in making the analysis of each property. The immediate environmental influences, land area, effective dwelling age/condition, overall construction quality, dwelling size, number of bedrooms/bathrooms, parking capacity/type, and extent of other on-site improvements were considered the most important factors in the subject case. Overall marketability of each sale property was also considered. Marketability is the practical aspect of selling a property in view of all the elements constituting value, and certain economic and financing conditions prevailing as of the date of sale. Allowance was made for these factors when considered applicable. Sales Comparison Analysis: Reference the following pages for a description of each sale property employed herein. LIDGARD AND ASSOCIATES APPRAISE RS-C€iNSU LTANTS X u MARKET DATA NO. I mLL M., 2071 Racquet Hill, Santa Ana The sale property consists of a single story dwelling of wood frame and stucco construction, built in 1976. The floor plan includes 5 bedrooms, 31/2 bathrooms, two fireplaces, and 3,536 square feet of living area. Marketing features include a guard gated location, office, bonus room, newer hardwood flooring, and stainless steel appliances. Overall condition is rated average -good, considering the age. The underlying land parcel contains 8,150 square feet of land area. Additional features include a swimming pool/spa, and four -car attached garage. Landscaping improvements/ - maintenance are rated average. The property was originally offered for sale at $1,695,000. The purchase price was $1,653,000, which included $330,900 cash down to a concurrent first trust deed note of $1,322,100 with MUFG Union Bank. The cash down payment represents 20% of the total purchase price. The deed recorded June 29, 2017 as Document No. 269946. Further details regarding the transaction are summarized as follows: Grantor: Kathryn Latta Trust Grantee: Johansson Living Trust Assessor's Parcel No.: 502-191-02 APPRAISERS -CONSULTANTS A MARKET DATA NO. 2 12165 Zielian Court, Tustin The sale property consists of a single story dwelling of wood frame and stucco construction, built in 1998. The floor plan includes five bedrooms, three bathrooms, two fireplaces, and 3,549 square feet of living area. Marketing features include a guard gated location, a gourmet kitchen, walk- in pantry, custom entertainment center, custom bathrooms, French doors, travertine and hardwood flooring, and ornate chandeliers. Overall condition is rated average -good, considering the age. The underlying land parcel contains 13,148 square feet of land area. Additional features include a swimming pool/spa, and two -car attached garage. Landscaping improvements/maintenance are rated average. The property was originally offered for sale at $1,775,000 and was on the market 120 days. The purchase price was $1,711,000, which included $961,000 cash down to a concurrent first trust deed note of $750,000 with Community America Credit Union. The cash down payment represents 56% of the total purchase price. The deed recorded August 11, 2017 as Document No. 340659. Further details regarding the transaction are summarized as follows: Grantor: Shrikhande 2002 Family Trust Grantee: Viren P. & Shritin J. Patel, & Prakash C. & Sushila Patel Assessor's Parcel No.: 501-271-12 UIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 10 MARKET DATA NO. 3 2121 Valhalla Drive, Santa Ana The sale property consists of a two-story dwelling of wood frame and stucco construction, built in 1973. Overall condition is rated average -good, considering the age. The underlying land parcel contains 26,325 square feet of land area. Additional features include a swimming pool/spa and three -car attached garage. Landscaping improvements/maintenance are rated average. The property was originally offered for sale at $1,895,000 and was on the market 47 days. The purchase price was $1,895,000, which included $405,000 cash down to a concurrent first trust deed note of $1,490,000 with MUFG Union Bank. The cash down payment represents 20% of the total purchase price. The deed recorded August 30, 2017 as Document No. 370340. Further details regarding the transaction are summarized as follows: Grantor: Barbara A. Hess Grantee: Thomas & Tiffany Bulowski Assessor's Parcel No.: 104-611-38 LIDGA)F D AND ASSOCIATES APPRAISERS -CONSULTANTS 11 MARKET DATA NO. 4 2032 Racquet Hill, Santa Ana The sale property consists of a single story dwelling of wood frame and stucco construction, built in 1976. The floor plan includes five bedrooms, three bathrooms, three fireplaces, and 3,513 square feet of living area. Marketing features include exposed beam ceilings, office with custom built- ins, gourmet kitchen, and entertainer's bar. Overall condition is rated average -good, considering the age. The underlying land parcel contains 20,800 square feet of land area. Additional features include a swimming pool/spa and three -car attached garage. Landscaping improvements/ - maintenance are rated average. The property was originally offered for sale at $1,950,000 and was on the market 10 days. The purchase price was $1,960,000, which included $392,000 cash down to a concurrent first trust deed note of $1,568,000 with MUFG Union Bank. The cash down payment represents 20% of the total purchase price. The deed recorded September 19, 2017 as Document No. 397816. Further details regarding the transaction are summarized as follows: Grantor: G. J. & P. E. Ekstrom Trust Grantee: Stephen D. & Kathryn M. Lind Assessor's Parcel No.: 502-192-03 UD+Irl RE) A -D ASSOCIATES APPRAiSGRS-C ON SULTAtdTS 12 MARKET DATA NO. 5 2348 Pieper Lane, Tustin The sale property consists of a two-story dwelling of wood frame and stucco construction, built in 1999. The floor plan includes five bedrooms, four bathrooms, two fireplaces, and 3,901 square feet of living area. Marketing features include a guard gated location and close proximity to Tustin Ranch Golf Course. Overall condition is rated average -good, considering the age. The underlying land parcel contains 7,638 square feet of land area. Additional features include a swimming pool/spa and three -car attached garage. Landscaping improvements/maintenance are rated average. The property was originally offered for sale at $1,775,000 and was on the market 98 days. The purchase price was $1,700,000, which included $340,000 cash down to a concurrent first trust deed note of $1,700,000 with a conventional lender. The cash down payment represents 20% of the total purchase price. The deed recorded December 19, 2017 as Document No. 546570. Further details regarding the transaction are summarized as follows: Grantor: Mazin & Sophia J. Habbas Grantee: Sunki & Miehee Rhee Assessor's Parcel No.: 501-271-52 APPRAISERS -CONSULTANTS 13 MARKET DATA NO. 6 11822 Skyline Drive, Santa Ana The sale property consists of a two-story dwelling of wood frame and stucco construction, built in 1970. The floor plan includes 5 bedrooms, 31/2 bathrooms, one fireplace, and 3,827 square feet of living area. Marketing features include textured hardwood flooring, exposed beam ceilings, gourmet kitchen, plantation shutters, and den with built-in bookcases. Overall condition is rated average -good, considering the age. The underlying land parcel contains 20,295 square feet of land area. Additional features include a three -car attached garage. Landscaping improvements/ - maintenance are rated average. The property was originally offered for sale at $1,699,000 and was on the market 191 days. The purchase price was $1,650,000, which included $247,500 cash down to a concurrent first trust deed note of $1,402,500 with Wells Fargo Bank. The cash down payment represents 15% of the total purchase price. The deed recorded February 13, 2018 as Document No. 49772. Further details regarding the transaction are summarized as follows: Grantor: Sherry S. Bull Trust Grantee: James & Kathrine Pack Assessor's Parcel No.: 104-611-04 LIDGARD AND ASSOCIATES APPRAISERS-CONSULTA59Ta 14 p O aNi -2O N C6 C6 O � O N N CV cO ,- m O c6 O (� O Lo E o ro a) N E O D° E E ;O °J LO r E E E ❑ CO N '� r .� U : .N .� O ON 'N. = C� Ch a O .N O co 'N C 'U r N co. O N _ _ O _ _ N U O O L\ O N c0 t` O O N c O O .,�., 0O (� O E C\J O a) Po N O E 00 co 0) N O. r- C2 N r (6 c6 (6 ' o .N CO a) rn a o CO E rn E O w LO � f ❑ r c c c _ 3 .N '� c r N c "' 'N 'N _ c r N N O N CL\ p N O C)o m N a O o ro m o o a co o (O m C\l o cO o E E rn E E Lo m w .� Q c))O > C: FD N o N Cn Cn co N N 0) U O Cn r N O O Ga � >, i O p a) coo 0- OC\j O C 0 0 6 (6 O C\j� 6 (tl N - d r 0 N CO 6 (O Lo rn .N cO m o a o a o .E 0M) "� LO T a— E E E ! Q 0 m a c �_ (n .� N N .� M fn ) r .N '�j 'F .N ■ r N CO O CO cnr {{} O 7 00 O O N O r ro g 0 o o 0 0, o m `m `o_ � ro `o_ � Q ro r Cn CO a) r a) O w N E E O rn (O E a) m E E E E N ❑ r a) c 'N '� c U) c cl '� O r 'm 'm 'm r- a) m O W - Q - - C'6 - Ga n U o U) Ch O N U O E .L N (6 O p CrO c6 O co N O. Sg r N O N O (o C'7 Lo .� @ o N a) d' N CO O OO_ E E gyp' E U LO r �A E_ �_ O ❑ (D ma) N N O N N � Cl) ('� _ O (n C O O O O_ L. T LOU A 1 'O 0 -0 r- N ni I I i I i I i I i I i I i I I I IOO 0 O O Na7OOL O V O OTOWOO ) Or I 1 DIIIIIIII O U) ro N U) O) C,) ; O) N In O . O U I U) CO CY Q Q 1 C O C6 5;1 N N (n O C O OL Q ? j UC0 NON CD -0 U (OtS O D _Q C O OQ U + cn + CO O U N N N N vO O > _ O O , N O O NLcucdOcOO UCOO0cNdoQO U O- U) czNOUO N 0) c� O O C 0 M 0 N_ �Y O� N a U LL ❑ cLi cn a- 0E > �>- 0❑❑ z z LL U- -1 0- °Q)0 al O 0 VALUATION ANALYSIS (Continued) SALES COMPARISONAPPROACH: (Continued) Sales Comparison Analysis: (Continued) Reference the Market Analysis Comparison Grid set forth on the following facing page. A Relative Comparison Analysis has been conducted between the individual sale properties and the subject property with consideration assigned to property rights conveyed, conditions of sale, sale terms (financing), as well as the significant elements of comparability. By way of review and comparison, the subject parcel has an interior (versus corner) location, an effectively rectangular land configuration, level topography, partial city light view, and contains 23,200 square feet of land area. The main dwelling is of wood frame and stucco construction, has 4 bedrooms, 31/2 bathrooms, contains 3,567 square feet of living area, was originally constructed in 1973 and renovated throughout the years. Overall condition of the building and on-site improvements is rated good, considering the age. In addition to the consummated sale transactions discussed herein, research was expanded to include three reasonably comparable single family residential properties presently in escrow within the general subject market area, as follows: As can be noted, the properties contain dwellings ranging in size from 3,390 to 3,467 square feet of living area, and were built between 1992 and 1998. The floor plans range from 5 bedrooms/3 bathrooms to 5 bedrooms/31/2 bathrooms and are situated on parcels ranging in size from 6,081 to 9,375 square feet of land area. The overall asking prices range from $1,300,000 to $1,600,000. The properties have been on the market between 15 and 110 days. APPRAI FRS -CONSULT NTS 15 Dwelling On-site Land/Bldg. Days on Data Lot Size Size Br/Ba Built Parking Ratio Asking Price Market 1. 9,375 sf 3,433 sf 5 br/31h ba 1995 3 -gar. 2.73:1 $1,600,000. 110 2605 Cypress, Tustin 2. 6,642 sf 3,467 sf 5 br/31/2 ba 1992 2 -gar. 1.92:1 $1,300,000. 15 12585 Prescott Avenue, Tustin 3. 6,081 sf 3,390 sf 5 br/3 ba 1998 2 -gar. 1.79:1 $1,350,000. 51 11617 McDougall, Tustin As can be noted, the properties contain dwellings ranging in size from 3,390 to 3,467 square feet of living area, and were built between 1992 and 1998. The floor plans range from 5 bedrooms/3 bathrooms to 5 bedrooms/31/2 bathrooms and are situated on parcels ranging in size from 6,081 to 9,375 square feet of land area. The overall asking prices range from $1,300,000 to $1,600,000. The properties have been on the market between 15 and 110 days. APPRAI FRS -CONSULT NTS 15 VALUATION ANALYSIS (Continued) SALES COMPAR/SONAPPROACH.• (Continued) Sales Comparison Analysis; (Continued) All of the sale transactions employed herein were considered helpful in the valuation analysis of the subject property as presently improved with the single family residence. Following is a summary relating the overall comparability of the individual sale properties to the subject property: Based on the foregoing, the value of the subject property, as indicated by the Sales Comparison Approach, is estimated at $1,950,000, which reflects $84.05 per square foot of land area, and $546.68 per square foot of dwelling area. FA/R MARKET RENTAL VALUE. - In addition to estimating the unencumbered fee simple interest in the subject property, it is the purpose of this study to estimate the fair market rental value applicable thereto. The Direct Rental Comparison Approach was applied to the subject property for the purpose of estimating rental value. The Direct Rental Comparison Approach takes into account properties which have rented/leased in the open market. This approach, whether applied to vacant or improved property, is based on the Principle of Substitution, which states, "The maximum (rental) value of a property tends to be set by the cost of acquiring (renting) an equally desirable substitute property, assuming no costly delay is encountered in making the substitution. " While the principle of substitution generally relates to fee simple market value, it is also applicable to rental value. Thus, the Direct Comparison method attempts to equate the subject property with other reasonably similar rental properties by analyzing and weighing the various elements of comparability. LIDGA. AND ASSOC RTES APPRMSRR.S-CONSVLTA TS 16 Overall Data Comparability Sale Price 6 inferior $1,650,000. 1 inferior $1,653,000. 5 inferior $1,700,000. 2 inferior $1,711,000. 3 inferior $1,895,000. Subject - - - - $1,950,000. 4 superior $1,960,000. Based on the foregoing, the value of the subject property, as indicated by the Sales Comparison Approach, is estimated at $1,950,000, which reflects $84.05 per square foot of land area, and $546.68 per square foot of dwelling area. FA/R MARKET RENTAL VALUE. - In addition to estimating the unencumbered fee simple interest in the subject property, it is the purpose of this study to estimate the fair market rental value applicable thereto. The Direct Rental Comparison Approach was applied to the subject property for the purpose of estimating rental value. The Direct Rental Comparison Approach takes into account properties which have rented/leased in the open market. This approach, whether applied to vacant or improved property, is based on the Principle of Substitution, which states, "The maximum (rental) value of a property tends to be set by the cost of acquiring (renting) an equally desirable substitute property, assuming no costly delay is encountered in making the substitution. " While the principle of substitution generally relates to fee simple market value, it is also applicable to rental value. Thus, the Direct Comparison method attempts to equate the subject property with other reasonably similar rental properties by analyzing and weighing the various elements of comparability. LIDGA. AND ASSOC RTES APPRMSRR.S-CONSVLTA TS 16 VALUATION ANALYSIS (Continued) FAIR MARKET RENTAL VALUE.- (Continued) Direct Rental Comparison Approach.- The pproach; The Direct Rental Comparison Approach was utilized to estimate the rental value of the subject property after an investigation and analysis was conducted of reasonably comparable single family residential properties located within the immediate and general subject market area. Following is a summary of those properties considered helpful in the analysis of the subject property. Reference the Market Data Map on the following page for an illustration of the location of the various rental properties surveyed. As can be noted, the properties surveyed pertain to three, four and five bedroom dwellings ranging in size from 3,291 to 3,816 square feet of living area. The properties were originally developed between 1957 and 1976. The leases commenced between March, 2016 and July, 2017. The monthly rental rates range from $4,500 to $5,300, which reflects $1.26 to $1.83 per square foot of living area. The predominant range is between $4,800 and $5,300. After viewing each of the comparable rental properties, and obtaining certain information pertinent to rental value, an analysis was conducted of the various elements of comparability which, among others, include the following: LIDGARD AND ASSOCIATES APPRAISE RS -CONSULTANTS 17 Dwelling On-site Land/Bldg. Monthly $/SF Data Date Lot Size Size Br/Ba Built Parking Ratio Rent Dwellina. R1. 5-16 20,038 sf 3,291 sf 5 br/21/2 ba 1965 2 -gar. 6.09:1 $4,600 $1.40 1351 Faren Drive, Orange County R2. 9-16 23,958 sf 3,300 sf 5 br/41/2 ba 1976 2 -gar. 7.26:1 $5,300 $1.61 2212 Racquet Hill, Orange County R3. 9-16 12,880 sf 3,633 sf 4 br/4 ba 1965 3 -gar. 3.55:1 $5,000 $1.38 10506 Grove Oak Drive, Orange County R4. 7-17 11,614 sf 3,816 sf 4 br/3 ba 1973 3 -gar. 3.04:1 $4,800 $1.26 10761 Quadrille Place, Orange County R5. 1-18 9,147 sf 3,552 sf 6 br/4 ba 1995 3 -gar. 2.58:1 $5,000 $1.41 2321 Coffman Drive, Tustin R6. 2-18 13,971 sf 3,439 sf 4 br/31/2 ba 2000 2 -gar. 4.06:1 $6,300 $1.83 11823 Willard Avenue, Tustin As can be noted, the properties surveyed pertain to three, four and five bedroom dwellings ranging in size from 3,291 to 3,816 square feet of living area. The properties were originally developed between 1957 and 1976. The leases commenced between March, 2016 and July, 2017. The monthly rental rates range from $4,500 to $5,300, which reflects $1.26 to $1.83 per square foot of living area. The predominant range is between $4,800 and $5,300. After viewing each of the comparable rental properties, and obtaining certain information pertinent to rental value, an analysis was conducted of the various elements of comparability which, among others, include the following: LIDGARD AND ASSOCIATES APPRAISE RS -CONSULTANTS 17 h,R4 ' i 1`fili $4800 ' , 33 it ie=1�;- [ :m -3i " @ u:,_ °SII , i� ``a , ryon ( [ R t zg4onal Rork'° 4,600 1} $ 3 `241 lit,�p E I'sf �1t11f�€ Citi +f ! _ ;) h, I i 8 3 i t: IH I13A t1 (f a iec &f t r rt { t tfltiyl " two V77,Ui3° C it s fit +F A 5 5„ � t + p 4'Ei`t%nrltry ' R 3 a t i iIL t $5,000 NW .' I ;f Tin pts er, t rr Rare Ail co R 2 ` $5,300/ R6Hb touttw),bd Pa* , $5,000'fir r Ess n NK lolov 'fderkrrd .1 ober; M: oras Asr�Yt# . S n i cstin 0 mi 0.5 1 1.5 APPRATSER.S- ONSUCrANTS VALUATION ANALYSIS (Continued) FA/RMARKETRENTAL VALUE: (Continued) Direct Rental Comparison Approach; (Continued) General location. Immediate environmental influences. Zoning. Land size and configuration. Dwelling age and condition. Type/capacity of on-site parking. Vehicular and pedestrian access. Topography, view amenity. Dwelling size. No. of bedrooms/bathrooms. Construction quality. Extent of on-site improvements. As in the previous Sales Comparison Approach, a Relative Comparison Analysis (RCA) has been conducted between the individual comparable properties and the subject property. The RCA is a qualitative technique for analyzing comparable sales, and is a valuable tool employed to illustrate whether the characteristics of a comparable property are inferior, superior, or similar to those of the property under appraisement. The Relative Comparison Analysis is similar to paired data analysis without the use of arbitrary or unsupportable quantitative adjustments. This technique acknowledges the imperfect nature of the subject real estate market. The primary objective is to bracket the subject property between the comparable sales with respect to the similarity, superiority, and inferiority thereof. Superior elements of comparability of an individual sale property would reflect a downward adjustment to the value indication thereof. Conversely, inferior elements suggest an upward adjustment. Additionally, it is important to note that the above elements of comparability were not assigned equal weight in making the analysis of each property. The immediate environmental influences, land area, effective dwelling age/condition, overall construction quality, dwelling size, number of bedrooms/bathrooms, parking capacity/type, and extent of other on-site improvements were considered the most important factors in the subject case. The commencement date of the various leases, as well as the overall marketability of each rental property were also considered. Marketability is the practical aspect of renting a property in view of all the elements constituting value, and certain economic and financing conditions prevailing as of the date of the lease agreement. An allowance was made for these factors when considered applicable. Reference the following pages for a description of each rental property employed herein. L.DGARD AND ALSSOCtATES AP RAISERS-CONSU LTA*,4T$ im RENTAL DATA NO. 1 1351 Faren Drive, Orange County The property consists of a single story dwelling of wood frame and stucco construction, built in 1965. The floor plan includes 5 bedrooms, 21/2 bathrooms, one fireplace, and 3,291 square feet of living area. Marketing features include remodeled kitchen and bathrooms, recessed lighting, formal dining room, wet bar, and master bedroom walk-in closet. Overall condition is rated average -good, considering the age. The underlying land parcel contains 20,038 square feet of land area. Additional features include a swimming pool/spa and two -car attached garage. Landscaping improvements/maintenance are rated average. The property was leased in May, 2016 at monthly rental rate of $4,600, reflecting $1.40 per square foot of dwelling area. Further details regarding the transaction are summarized as follows: Lessor: Sheri Lynn Gail Lessee: Not disclosed Assessor's Parcel No.: 502-282-01 LIDGARD AND ASSOCIATES 19 RENTAL DATA NO. 2 22122 Racquet Hill, Orange County The property consists of a single story dwelling of wood frame and stucco construction, built in 1976. The floor plan includes 5 bedrooms, 41/2 bathrooms, one fireplace, and 3,300 square feet of living area. Marketing features include a remodeled kitchen, French doors, and hardwood flooring. Overall condition is rated average -good, considering the age. The underlying land parcel contains 23,958 square feet of land area. Additional features include a swimming pool, built-in barbecue, and two -car attached garage. Landscaping improvements/maintenance are rated average. The property was leased in September, 2016 at monthly rental rate of $5,300, reflecting $1.61 per square foot of dwelling area. Further details regarding the transaction are summarized as follows: Lessor: Christopher T. McCormack Lessee: Not disclosed Assessor's Parcel No.: 502-194-18 APPRAIS ERS -CON "LTA.NTS 20 RENTAL DATA NO. 3 10506 Grove Oak Drive, Orange County The property consists of a two-story dwelling of wood frame and stucco construction, built in 1965. The floor plan includes four bedrooms, four bathrooms, three fireplaces, and 3,633 square feet of living area. Marketing features include unobstructed views, gourmet kitchen with island, and built- in shelves. Overall condition is rated average -good, considering the age. The underlying land parcel contains 12,880 square feet of land area. Additional features include a swimming pool/spa and three -car attached garage. Landscaping improvements/maintenance are rated average. The property was leased in September, 2016 at monthly rental rate of $5,000, reflecting $1.38 per square foot of dwelling area. Further details regarding the transaction are summarized as follows: Lessor: Kourosh Boutorabi Lessee: Not disclosed Assessor's Parcel No.: 503-143-08 LMOARD AND ASSO LATES APPRAISERS -CONSULTANTS 21 RENTAL DATA NO. 4 10761 Quadrille Place, Orange County The property consists of a two-story dwelling of wood frame and stucco construction, built in 1973. The floor plan includes four bedrooms, three bathrooms, two fireplaces, and 3,816 square feet of living area. Marketing features include city lights and hills views, recessed lighting, crown molding, and bonus room. Overall condition is rated average -good, considering the age. The underlying land parcel contains 11,614 square feet of land area. Additional features include a swimming pool/spa and three -car attached garage. Landscaping improvements/maintenance are rated average. The property was leased in July, 2017 at monthly rental rate of $4,800, reflecting $1.26 per square foot of dwelling area. Further details regarding the transaction are summarized as follows: Lessor: Tuan M. Nguyen & Chau N. M. Dao Lessee: Not disclosed Assessor's Parcel No.: 503-221-05 L IDGARD AND ASSOC AT° APPRAISERS-CONSTJ LTANTS 22 RENTAL DATA NO. 5 2321 Coffman Drive, Tustin The property consists of a two-story dwelling of wood frame and stucco construction, built in 1995. The floor plan includes six bedrooms, four bathrooms, one fireplace, and 3,552 square feet of living area. Marketing features include a complete guest suite with private kitchen and bathroom, guard gated community, marble and hardwood flooring, gourmet kitchen, bonus room with wet bar, upgraded bathrooms, and second floor loft with custom cabinetry. Overall condition is rated average -good, considering the age. The underlying land parcel contains 9,147 square feet of land area. Additional features include a fire pit, barbecue island, and three -car attached garage. Landscaping improvements/maintenance are rated average. The property was leased in January, 2018 at monthly rental rate of $5,000, reflecting $1.41 per square foot of dwelling area. Further details regarding the transaction are summarized as follows: Lessor: Alan Ali Katoozi Lessee: Not disclosed Assessor's Parcel No.: 501-241-69 LID ARIA AND ASSOCIATES A.P'RALSER.s-CoNsvLTANTS 23 RENTAL DATA NO. 6 11823 Willard Avenue, Tustin The property consists of a single story dwelling of wood frame and stucco construction, built in 2000. The floor plan includes 4 bedrooms, 31/2 bathrooms, one fireplace, and 3,439 square feet of living area. Marketing features include a gated community, travertine flooring, courtyard with fountain, gourmet kitchen, family room with sound system, and French doors. Overall condition is rated average -good, considering the age. The underlying land parcel contains 13,971 square feet of land area. Additional features include a swimming pool/spa and two -car attached garage. Landscaping improvements/maintenance are rated average. The property was leased in February, 2018 at monthly rental rate of $6,300, reflecting $1.83 per square foot of dwelling area. Further details regarding the transaction are summarized as follows: Lessor: Samireh Z. Said Lessee: Not disclosed Assessor's Parcel No.: 502-511-22 IJDGARD AND A ASO IATES APPRAISERS -CONSULTANTS 24 t5 m co O O C'7 00 T Q N N L O 'L mL 0 co 0 N l0 — E WWWO L t00 — E L — E T r, C) O O Q L U E L E O N L 0 — E L z — E T co(D L O L L m — E L c0 — L c0 — Cl Cl) go p LO Ir Q O O "��"' T— q \ r L .a '� (z ( ro° Q (ll ate-+ N L E (D L g E U) L E U r O rn L c0 E L E Ln m d- L ro EE (A L lA T oo LC) N L c0 E F L _o L c0 E L c0 E r 0 LO ._ Q co U) U) T CCS N ro U CO mo &) Un T O MMZM U UA (o U/) co ® co co ❑ O O q LO � C\j.O �, O L � (� (� L t O E L (0 E Un L W E Un L (0 E U) Q 00 °C N LO m T L (0 E U L � E U � C0 Cl) `� L (0 E (n L (i E fn Lp Lp L (0 E U L E (n L E (n L E N NGG N m co O "! Q N .O .� ro p p F 0 p O E m c0 E .N c0 E .U) CO °; N CO L c0 E n L c0 E to O C7 LO N L c0 E L N E r co (` L ,O L (0 ——— E L c0 E L c0 E O N N ro O O O — 0 O g (0 .� CO co N .N co Q N LO T (0 'E .� c0 'E in T N c7 LO N r N c0 E .� (0 E co T �, T O — (0 -- (0 c0 E A co 4 t � m 4' Q Cn i i I i i i i i i i i i i i i I t 1 1 O O O O O) U 00 N N co O 0 � Z O p O) r O (� N � T C7 0 O p O) N T O Lo ( L (0 U - cy) CD p O Q O O O) i Q. > Q r U Q 0 U L a } U N E5 0 N to (0CO C D C 0 N C O :5 C 0 O L o Q u) O X O (� U O L L C o> .� O N N ?) � v C +j Q� CD 6 r O U CON 0 U O C O U o N N N o O O � N Q z N E O c0 Q Z ro Q E O U U Q i� O Q- >, U Q U a C Y L cd Q O a° N O L Q E L U O .. co co O U M L 0 VALUATION ANALYSIS (Continued) FAIRMARKETRENTAL VLAUE--(Continued) Direct Renta/ Comparison Approach: (Continued) Reference the Market Analysis Comparison Grid set forth on the opposite page. The comparable rental properties have been compared to the subject property with consideration assigned to the various elements of comparability. All of the rental transactions employed herein were considered helpful in the valuation analysis of the subject property as presently improved with the single family residence. Following is a summary relating the overall comparability of the individual sale properties to the subject property: Based on the foregoing, the value of the subject property, as indicated by the Direct Rental Comparison Approach, is estimated at $5,000, which reflects $1.40 per square foot of dwelling area. FINAL EST/MATES OF VALUE Based on (1) an analysis of the various sale and rental properties employed herein, (2) the overall condition, quality, and features of the subject property, and (3) current real estate market conditions in the general market area, the respective market values of the subject property in as -is condition, as of the date of value set forth herein, are as follows: Unencumbered fee simple market value: $1,950,000. Fair market rental value: $5,000 per month. EXPOSURE TIME -- Exposure time is defined in the 2014-2015 Edition of the Uniform Standards of Professional Appraisal Practice as the "estimated length of time that the property interest being appraised would have been offered on the market LED ARTS AND ASSOCIATES APPRAISERS-CONSQ LTANTS 25 Overall Data Comparability Sale Price 1 similar $4,600 4 similar $4,800 3 similar $5,000 Subject - - - - $5,000. 5 similar $5,000 2 similar $5,300 6 similar $6,300 Based on the foregoing, the value of the subject property, as indicated by the Direct Rental Comparison Approach, is estimated at $5,000, which reflects $1.40 per square foot of dwelling area. FINAL EST/MATES OF VALUE Based on (1) an analysis of the various sale and rental properties employed herein, (2) the overall condition, quality, and features of the subject property, and (3) current real estate market conditions in the general market area, the respective market values of the subject property in as -is condition, as of the date of value set forth herein, are as follows: Unencumbered fee simple market value: $1,950,000. Fair market rental value: $5,000 per month. EXPOSURE TIME -- Exposure time is defined in the 2014-2015 Edition of the Uniform Standards of Professional Appraisal Practice as the "estimated length of time that the property interest being appraised would have been offered on the market LED ARTS AND ASSOCIATES APPRAISERS-CONSQ LTANTS 25 VALUATION ANALYSIS (Continued) EXPOSURE TIME: (Continued) prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. ' Exposure time is a retrospective opinion based on an analysis of past events assuming a competitive and open market. The reasonable exposure time is a function of price, time, and use, not an isolated opinion of time alone. The exposure time of a particular property is a direct function of supply and demand within a particular market segment. Generally, a higher demand results in a shorter marketing period. During the course of extensive market research, interviews were conducted of parties involved in the transactions regarding the sale properties employed in the Sales Comparison Approach. Based on said interviews, as well as interviews with a number of real estate brokers and other market participants, the exposure time estimated for the subject property, assuming an aggressive and comprehensive marketing program, is estimated at approximately three months. LIUG ARD AND ASSO L TFT 26 11.i -1-1.g I. V. t5, -11,."-c R.', 4.r§:—a,7 See Photo No. 1 on first page of Subject Property Section. PHOTO NO. 2: View looking northeasterly at the subject property from Valhalla Drive. PHOTO NO. 3: View looking southwesterly across the rear portion of the subject property. LIDGARD AND ASSOCIATES AY PR ATS ERS -CONS V L`CA N TS PHOTO NO. 4: View looking southerly at the rear portion of the main dwelling. PHOTO NO. 5: View looking westerly across the rear portion of the subject property. L.IO ARIA AND ASSOCIATES PHOTO NO. 6: View looking southwesterly across the rear portion of the subject property. PHOTO NO. 7: Interior view of foyer. LIDGARD AND ASSOC" A'TES APPRAiSF RS -CONSULTANTS PHOTO NO. 8: Interior view of living room. PHOTO NO. 9: Interior view of kitchen and dining area. LI GARD AND ASSOCIATES ATE PHOTO NO. 10: Interior view of typical bedroom. PHOTO NO. 11: Interior view of typical bathroom. LIDGARD ANID ASSOCIATES PHOTO NO. 12: Interior view of service porch. L DGARD AND ASSOCIATES APPRAIS r.RS-CO NSU LTA NTS STREET SCENE 1: View looking northwesterly along Valhalla Drive from the subject frontage. STREET SCENE 2: View looking southeasterly along Valhalla Drive from the subject frontage. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS AFVKAINI',(Kb-(O N S U 1A AN'[,S cmmnwi LANA TITLE 00WANY Commonwealth Land Title Company 4100 Newport Place Dr. Newport Beach, CA 92660 Phone: (949) 724-3140 Overland, Pacific & Cutler, Inc. Our File No: 09202723 2280 Market St #200 Title Officer: Chris Maziar Riverside, CA 92501 e-mail: unitl0@cltic.com Phone: (949) 724-3170 Attn: Elena Cannon Fax: (949) 258-5740 Your Reference No: PTR -001 TUS-013 Property Address: 2061 VALHALLA DR, Santa Ana Area, California PRELIMINARY REPORT Dated as of December 30, 2016 at 7:30 a.m. In response to the application for a policy of title insurance referenced herein, Commonwealth Land Title Company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a policy or policies of title insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an exception herein or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations or Conditions of said policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Attachment One. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitation on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Attachment One. Copies of the policy forms should be read. They are available from the office which issued this report. The policy(s) of title insurance to be issued hereunder will be policy(s) of Commonwealth Land Title Insurance Company. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Attachment One of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. Order No: 09202723-920-CMM-CM8 SCHEDULE A The form of policy of title insurance contemplated by this report is: ALTA Homeowner's Policy of Title Insurance (12-2-13) ALTA Extended Loan Policy of Title Insurance (6-17-06) The estate or interest in the land hereinafter described or referred to covered by this report is: A FEE Title to said estate or interest at the date hereof is vested in: Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, Dated October 3,1990 The land referred to herein is situated in the County of ORANGE, State of California, and is described as follows: SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF Order No: 09202723-920-CMM-CM8 EXHIBIT "A" THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: LOT 80 OF TRACT NO. 3883, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 166 PAGES 5 TO 11, INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. Assessor's Parcel Number: 104-611-30 Order No: 09202723-920-CMM-CM8 SCHEDULE B — Section A The following exceptions will appear in policies when providing standard coverage as outlined below: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof, (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor of material not shown by the Public Records. Order No: 09202723-920-CMM-CM8 SCHEDULE B — Section B At the date hereof Exceptions to coverage in addition to the printed exceptions and exclusions in said policy form would be as follows: A. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes to be levied for the fiscal year 2017-2018. B. Property taxes, including any personal property taxes and any assessments collected with taxes, are as follows: Tax Identification No.: 104-611-30 Fiscal Year: 2016-2017 1st Installment: $1,553.74 Paid 2nd installment: $1,553.74 Open (Delinquent after April 10) Penalty and Cost: $178.37 Homeowners Exemption: $7,000.00 Code Area: 89-027 Prior to close of escrow, please contact the Tax Collector's Office to confirm all amounts owing, including current fiscal year taxes, supplemental taxes, escaped assessments and any delinquencies. C. The lien of supplemental or escaped assessments of property taxes, if any, made pursuant to the provisions of Chapter 3.5 (commencing with Section 75) or Part 2, Chapter 3, Articles 3 and 4, respectively, of the Revenue and Taxation Code of the State of California as a result of the transfer of title to the vestee named in Schedule A or as a result of changes in ownership or new construction occurring prior to Date of Policy. D. Any liens or other assessments, bonds, or special district liens including without limitation, Community Facility Districts, that arise by reason of any local, City, Municipal or County Project or Special District. Water rights, claims or title to water, whether or not disclosed by the Public Records. 2. Any easements not disclosed by the public records as to matters affecting title to real property, whether or not said easements are visible and apparent, Covenants, conditions and restrictions but omitting any covenants or restrictions, if any, including but not limited to those based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, citizenship, immigration status, primary language, ancestry, source of income, gender, gender identity, gender expression, medical condition or genetic information, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law, as set forth in the document Recording Date: August 22, 1962 Recording No: Book 6222, Page 500, of Official Records Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of any mortgage or deed of trust made in good faith and for value. Modification(s) of said covenants, conditions and restrictions Recording Date: May 10, 1965 Recording No: Book 7513, Page 945, of Official Records Modification(s) of said covenants, conditions and restrictions Recording Date: November 23, 1964 Recording No: Book 7312, Paae 197, of Official Records Order No: 09202723-920-CMM-CM8 Memorandum of Agreement Executed by: Red Hill Ridge Estates, a Limited Partnership and The Pacific Telephone and Telegraph Company, a corporation Recording Date: July 12, 1963 Recording No.: Book 6629, Page 7, of Official Records 5. The search did not disclose any open mortgages or deeds of trust of record, therefore the Company reserves the right to require further evidence to confirm that the property is unencumbered, and further reserves the right to make additional requirements or add additional items or exceptions upon receipt of the requested evidence. 6. Any invalidity or defect in the title of the vestees in the event that the trust referred to herein is invalid or fails to grant sufficient powers to the trustee(s) or in the event there is a lack of compliance with the terms and provisions of the trust instrument. If title is to be insured in the trustee(s) of a trust, (or if their act is to be insured), this Company will require a Trust Certification pursuant to California Probate Code Section 18100.5. The Company reserves the right to add additional items or make further requirements after review of the requested documentation. END OF SCHEDULE B EXCEPTIONS PLEASE REFER TO THE "NOTES AND REQUIREMENTS SECTION" WHICH FOLLOWS FOR INFORMATION NECESSARY TO COMPLETE THIS TRANSACTION ArrK A I N1 KZS-KVNZ�UL I AN L* February 9, 2018 Kim Trust Chong Sang Kim and Cho Flea Kim, Trustees 2061 Valhalla Drive Santa Ana, CA 92705 Dear Mr. & Mrs. Kim: The City of Tustin, (the "City's is considering the construction of a public project called the Simon Ranch Reservoir Replacement Project (the 'Project). On July 10, 2017, you received a Notice of Decision to Appraise Property explaining that this is .a public project which may require the purchase of a portion of your property at 2061 Valhalla Drive, Santa Ana, California 92705 also known by Assessor Parcel Number (APN) 104-611-30, located within the Project area. Based on recent meetings and discussions between you and the Project team, you have indicated your desire to sell your entire property by means of a voluntary acquisition by the City. No decision has yet been made by the City to acquire your property. Before that decision can be made, the law provides that your property first be appraised. The purpose of this letter is to advise you of the decision to appraise and shall serve as advance written notice of your opportunity to accompany the appraiser during their inspection of your property. The City has retained the services of Overland, Pacific & Cutler, Inc. (OPC), a right-of-way acquisition firm, to discuss this Project with you, explain the proposed transaction and related. effects and benefits, and coordinate the acquisition process. Lidgard and Associates, Inc., an independent appraisal firm, has been contracted by the City to appraise your property that is subject to possible acquisition. You will be contacted by the appraiser to arrange an appointment to inspect your property. The enclosed acquisition policies and procedures document contains information pertaining to the process involved in the property acquisition. This is a preliminary notice only and does not constitute the City's determination to acquire any property for the Project nor is this a request or demand that you vacate your property. Additionally, this notice does not establish eligibility for relocation payments or any other relocation assistance by the City. 1294421.1 February 12, 2018 Chong Sang Kim and Cho Hea Kim Trustees of the Kim Trust 2061 Valhalla Drive . Santa Ana, California 92705 Subject: Real Estate Appraisal Study 2061 Valhalla Drive APN: 104-611-30 Santa Ana, California Dear Property Owners; 2592 North Santiago Bou$o Orange, California 92867- (714) 633-8441 or (562) 986 scott@lidgardinc.com. Our firm has been retained by the City of Tustin to prepare an appraisal study pertaining to the proposed acquisition of the above referenced property in connection with the Simon Ranch Reservoir Replacement Project. If you or your representative wish to accompany the appraiser at the time of the inspection, it would be appreciated if you would contact the undersigned by telephone to arrange an appointment convenient to your schedule. I can be reached at (714) 633--8441. As part of our real estate valuation study, we would like to consider and analyze certain information requested on the enclosed "Property Data" form. Please provide any additional information that you feel is relevant to the value of your property. A return envelope is provided for your convenience. In the event you have any questions regarding the purpose of the appraisal, or the authority of our assignment, please contact Mona Montana of Overland, Pacific, & Cutler, Inc., the City's acquisition consultants, at (949) 951-5263. Thank you in advance for your cooperation. Very truly yours, LIDGARD A OCIATES, INC. cott A. Iridgard, MAI, cCIM Certified General Real Estate Appraiser California Certification No. AG 004014 SAI_.:sp LIDGARD .AND ASSOCIATES INCORPORATED Real Estate Appraisal and Consultation In the meantime, if you need additional information or have any questions, please contact your OPC acquisition agent: Mona Montano Project Manager Overland, Pacific &. Cutler, Inc, Penner, Suite 200, Irvine, CA 92618 Phone (949) 951.5263 Sincerely, Overland, Pacific & Cutler, Inc. Daniela Borbe Project Manger Enclosures: Handbook on Acquisition Brochure Legal Description Assessor Parcel Map 1294921.1 AFrktAlti N:S U L�t ANJ Z$ BACKGROUND AND QUALIFICATIONS Scott A. Lidgard, MAI, CCIM President of LIDGARD AND ASSOCIATES INCORPORATED Full service appraisal firm encompassing all types of real property including commercial, industrial, complex residential, and special use properties. Scott A. Lidgard has over 30 years' experience in the appraisal of real property for various clients including public agencies, corporations, law firms in connection with litigation support, accountants, and private clients. OFFICE ORGANIZATIONAL STRUCTURE: Principal Appraiser: Market Research Analyst: Market Research Analyst: Market Research Analyst: Market Research Assistant Office Administrator: Office Assistant: Scott A. Lidgard Jason T. Clayton Jason P. Boyer Andrew S. Lidgard Mayra Villegas-Garcia Sarah A. Petty Kelly M. Lidgard PROFESSIONAL ORGANIZATION AFFILIATIONS: MAI Designated Member of the Appraisal Institute (Member No. 11715). CCIM (Certified Commercial Investment Member) designated member of the CCIM Institute (Member No. 11262). STATE CERTIFICATION: Certified General Real Estate Appraiser by the Office of Real Estate Appraisers, State of California. Certificate No. AG004014. BROKER'S LICENSE: Licensed California Real Estate Broker (License No. 00825141). EXPERT WITNESS: Qualified as an expert on Real Property Valuation in the Los Angeles, Orange, San Bernardino, and Riverside County Superior Courts, as well as Federal Bankruptcy Court. LI DGARD ANIS ASSOCIATES APPRAi3ERS CQ'..NSULTANTS BACKGROUND AND QUALIFICATIONS (Continued) ACADEMIC BACKGROUND California State University, Fullerton B.A., Business Administration, emphasis in real estate finance. Successfully completed various educational courses and seminars sponsored by the Appraisal Institute, as well as other real estate and business organizations. BUSINESS AFFILIATIONS: Appraisal Experience: President, Lidgard and Associates, Inc., Orange, California, established October 1, 1997. Vice President, R. P. Laurain & Associates, Inc., Long Beach, California, between 1984 and 1997. Real Estate Sales Associate, Merrill Lynch Realty, Placentia, California, between 1982 and 1984. BOARD OF DIRECTORSHIPS: Sergeant at Arms, Long Beach Rotary President, Belmont Estates HOA, Orange Vice President, Canyon Rim Villas HOA, Anaheim Hills Treasurer, Orchard Owner's Association, Orange Board of Directors, Villa Heights HOA, Villa Park APPRAISAL SERVICES RENDERED: Real estate appraisal services performed on projects for the following public agencies and private corporations, since 1984: Cities: City of Anaheim City of Azusa City of Baldwin Park City of Bell City of Bellflower City of Bell Gardens City of Brea City of Carson City of Cathedral City City of Costa Mesa City of Diamond Bar City of Downey City of Fullerton City of Garden Grove City of Glendora City of Hawaiian Gardens City of Highland City of Huntington Park City of Indio City of Irvine City of La Mirada City of La Habra City of La Quinta City of Laguna Hills City of Long Beach City of Lynwood 1JDCTAKD A T> AS +I CAT E APPRAISERS -.CONS ULTANT$ City of Mission Viejo City of Montclair City of Monterey Park City of Murrieta City of Ontario City of Palm Desert City of Palm Springs City of Pasadena City of Pico Rivera City of Placentia City of Pomona City of Rancho Mirage City of Redondo Beach BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL SERVICES RENDERED (Continued) Cities: (Continued) City of Rialto City of Santa Ana City of Upland City of Riverside City of Santa Clarita City of Whittier City of San Clemente City of Signal Hill City of West Covina City of San Bernardino City of Stanton City of Yorba Linda City of San Juan Capistrano City of Tustin City of Victorville Redevelopment Agencies: Baldwin Park Redevelopment Agency Bell Redevelopment Agency Bell Gardens Redevelopment Agency Buena Park Redevelopment Agency Carson Redevelopment Agency Cathedral City Redevelopment Agency EI Monte Redevelopment Agency Garden Grove Redevelopment Agency Glendale Redevelopment Agency Huntington Beach Redevelopment Agency Huntington Park Redevelopment Agency Inglewood Redevelopment Agency La Puente Redevelopment Agency Long Beach Redevelopment Agency Los Angeles Community Redevelopment Agency Norwalk Redevelopment Agency Ontario Redevelopment Agency Palm Desert Redevelopment Agency Rialto Redevelopment Agency Riverside Redevelopment Agency San Bernardino Redevelopment Agency Signal Hill Redevelopment Agency West Covina Community Development Commission Whittier Redevelopment Agency Yorba Linda Redevelopment Agency Other Government Agencies: Calleguas Municipal Water District County of Los Angeles, Internal Services Division County of Riverside Inland Empire Utilities Agency Long Beach Unified School District Los Angeles County Sanitation District Los Angeles Unified School District Orange County Transportation Authority Palm Springs Unified School District LIDGAFJ:) ANI> A SS04CIATTE APPRAISERS-CONSULTAN 'S BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL SERVICES RENDERED (Continued) Other Government Agencies: (Continued) Placentia Unified School District Port of Long Beach Port of Los Angeles Resolution Trust Corporation Riverside County Transportation Commission State of California U. S. Department of Navy U. S. Marshal Service Victor Valley Wastewater Reclamation Authority Financial Institutions: American First Federal Credit Union Farmers and Merchants Bank First Federal Bank First Federal Credit Union Fiscal Federal Credit Union Harbor Bank Long Beach Bank Mineral King National Bank Northern Trust Bank Queen City Bank Sumitomo Bank, Ltd. Union Bank Asset Management Companies: Amresco, Inc. American Residential Mortgage Corporation BEI Management, Inc. Emerson International Equitable Real Estate Investment Management EQ Services Icon Associates Independence One Pacific Southwest Partners Private Companies/Corporations: Allstate Insurance Company Best, Best & Krieger, LLP Bonnie, Hopkins & Bastardi, LLP Bridgestone/Firestone, Inc. Black & Vetch Corporation Buchalter Nemer, A Professional Corporation Burke, Williams & Sorenson, LLP California Eminent Domain Law Group APPRAISE S -CONSULTANTS BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL SERVICES RENDERED (Continued) Private Companies/Corporations: (Continued) Carl Karcher Enterprises Chapman University Century Law Group Daley & Heft, LLP Eastman Kodak Company Ferro Corporation Flagstar Companies Guild Financial Hahn & Hahn, LLP Harbor Chevrolet Inland Partners Corporation Kaufman and Broad Latham & Watkins, Attorneys at Law Long Beach Memorial Medical Center Madden, Jones, Cole & Johnson, Attorneys at Law Oliver, Vose, Sandifer, Murphy & Lee Pan Pacific Development Rutan & Tucker, LLP Scotsdale Insurance Snell & Wilmer, Attorneys at Law T.R.W. The Trust for Public Land Westport Packers Windes and McClaughry, Accountancy Corporation Wise, Wiezorek, Timmons & Wise, Attorneys at Law APPRAISERS -CONSULTANTS EXHIBIT "A" LEGAL DESCRIPTION THE LAND REFERRED TO 1=%EIN IS SITUATED IN COUNTY OF ORAN-GE, STATE OF CALIFORNIA- AND IS DESCRIBED AS FOLLOWS: I-wm-uf--f IT rim L; i - u u ucu GF, —31 WEE -of Pli BOOK 166 PAGES 5 TO 11, INCLUSR"E OF IYUSCELLANTEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COU -Nn' 1307460.1 1307460.1 EXHIBIT "B" PLAT MAP vt I I Project: Simon Ranch Reservoir Replacement Project Parcel No: 104-611-30 Escrow #: Title Company: Commonwealth Land Title Company Date of Preliminary Title Report: 12/30/2016 Grantors: Cho Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, Dated October 3, 1990 Grantee: CITY OF TUSTIN, a municipal corporation of the State of California AGREEMENT FOR ACQUISITION OF REAL PROPERTY WHEREAS, the above-named Grantors own that certain real property located in the City of Santa Ana, County of Orange, State of California legally described in the Legal Description identified as Exhibit "A" and depicted on the Plat Map identified as Exhibit `B", attached hereto and made a part hereof ("Property"); and WHEREAS, Grantors intend to convey to City of Tustin ("City") and City intends to acquire from Grantors the Property, as described and depicted in the Grant Deed identified as Exhibit "C" for the purpose of constructing the Simon Ranch Reservoir Replacement Project ("Project") pursuant to the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the payment and other obligations set forth below, Grantors and City mutually agree as follows: 1. Full and Complete Agreement The parties have herein set forth the whole of their agreement ("Agreement"). The performance of this Agreement constitutes the entire consideration for the Property and shall relieve the City of all further obligations or claims on this account, or on account of the location, grade or construction of the proposed public improvement. The City requires the Property for the Project, a public use for which the City has the authority to exercise the power of eminent domain. Grantors are conveying the Property under threat of eminent domain. 2. Payment A. Purchase Price. The parties agree that the amount of One Million Nine Hundred Fifty Thousand and No/ 100 Dollars ($1,950,000.00) ("Purchase Price") is the full amount of compensation due and owing to Grantors for conveyance of the Property to City. 3. Execution and Delivery to Escrow City shall open an escrow with the title company identified above ("Escrow Holder") by delivery of a fully executed copy of this Agreement. Upon full execution of this Agreement by the parties ("Effective Date"), Grantors shall execute and notarize the Grant Deed, in the form of Exhibit "C", attached hereto and made a part hereof. City shall tender the Purchase Price to the Escrow Holder, which shall be paid when title to the Property vests in the City. 1307510.1 A. Close of Escrow Unless extended by the mutual agreement of the parties, the escrow shall close within ninety (90) days after the Effective Date of this Agreement and shall be the date the Grant Deed is recorded in the Recorder's Office for Orange County ("Close of Escrow"). B. City's Right to Cancel Escrow The City reserves the right to cancel escrow and terminate this Agreement if at any time the City determines that the Property is no longer needed for the Project. C. Escrow Holder's Right to Discharge Liens The Escrow Holder may expend any or all monies payable under this Agreement and deposited into escrow to discharge any obligations which are liens upon the Property, including, but not limited to, those arising from judgments, assessments, delinquent taxes for other than the fiscal year in which the escrow closes, or debts secured by deeds of trust or mortgages, and/or to defray any other incidental costs other than those specified in Section 2 hereof to be borne by the City. The Escrow Holder shall release payment to Grantors, return any credited amounts to City, and record the Grant Deed in the Recorder's Office for Orange County upon the Close of Escrow. D. Escrow Instructions This Agreement may serve in whole or in part as escrow instructions. The issuance of any further escrow instructions shall be the sole responsibility of City. The Grantors agree to execute such additional documents as may be reasonably necessary to consummate the purchase and sale herein contemplated. E. Fees The City shall pay all Grantors' and City's usual escrow, recording, and title insurance fees incurred in this transaction. F. Taxes Taxes for the fiscal year in which the escrow closes shall be cleared and paid for in the manner required by Section 5086 of the Revenue and Taxation Code. As a deduction from the amount shown in Section 2A, above, City shall be authorized to pay any delinquent taxes due in any fiscal year, except the fiscal year in which this escrow closes, together with penalties and interest thereon. G. No Removal of Easements or Rights of Way Grantors shall not be required to remove: (i) easements or rights-of-way for public roads or public utilities, if any; and (ii) items specifically identified on "Title Exceptions" identified as Exhibit "D", attached hereto, if any. H. Assessments The City is not assuming responsibility for payment or subsequent cancellation of unpaid assessments on the Property acquired under this transaction. The assessments remain the obligation of Grantors. Payment for the Property acquired under this transaction is made upon the basis that the Grantors retain their obligation to the levying body respecting said assessments. 1307510.1 I. Mortgages or Deeds of Trust Any monies payable under this Agreement up to and including the total amount of unpaid principal and interest on note(s) secured by mortgage(s) or deed(s) of trust, if any, and all other amounts due and payable in accordance with the terms and conditions of said deed(s) of trust or mortgage(s), shall upon demand(s) be made payable to the mortgagee(s) or beneficiary(ies) entitled thereunder; said mortgagee(s) or beneficiary(ies) are to famish Grantors with good and sufficient receipt showing said monies credited against the indebtedness secured by said mortgage(s) or deed(s) of trust. 4. Just Compensation; Waiver and Release A. Grantors agree that performance of this Agreement by City, including the payment recited in Section 2A, above, shall constitute full and fair compensation and consideration for any and all claims that Grantors, and their successors and assigns, may have against City by reason of the acquisition, improvement, possession, use and/or occupancy of the Property, and Grantors, on behalf of themselves and their successors and assigns, hereby knowingly and voluntarily waive, and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to, any and all such claims, including claims for severance or taking compensation or damages to the remainder not taken on account of the acquisition of the Property or the location, establishment, construction and/or operation of the above-named Project. This waiver and release shall survive the Close of Escrow. B. The foregoing waiver and release shall include the waiver and release of any and all rights or claims that Grantors have, may have had or may in the future have under Article 1, Section 19 of the California Constitution, the Eminent Domain Law, or any other law or regulation; except as provided herein. Grantors, on behalf of themselves and their successors and assigns, further knowingly and voluntarily waive and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to any claims for the following: precondemnation damages, inverse condemnation, lost business goodwill, lost profits, lost rents, severance damages, mitigation damages, compensation for the construction and use of the Project in the manner proposed, damage to or loss of improvements pertaining to the realty, machinery, fixtures, inventory, equipment and/or personal property, interest, any right to repurchase, leaseback from City, or receive any financial gain from, City's sale of any portion of the Property, any right to challenge City's adoption of a resolution of necessity, pursuant to Code of Civil Procedure sections 1245.245, any right to receive any notices pursuant to Code of Civil Procedure section 1245.245, any right to enforce any other obligation placed upon City pursuant to Code of Civil Procedure sections 1245.245 and 1263.615, any other rights conferred upon Grantors pursuant to Code of Civil Procedure sections 1245.245 and 1263.615 and 1263.025, and claims for litigation expenses, attorney's fees and/or costs. This waiver and release shall survive the Close of Escrow. Grantors are aware of and understand all potential benefits to which they are otherwise entitled and have had the opportunity to discuss potential benefits with representatives of the City and with legal counsel of their choice. 5. Waiver under Section 1542 The parties intend that this Agreement will result in a full, complete, and final resolution and settlement of any and all claims, causes of action or disputes which exist, or may exist, between them as to the acquisition, possession and/or use of the Property by the City, except as expressly provided herein. It is therefore understood that the waiver, under this Agreement, of any rights, damages, compensation or benefits to which a party is, or may be, entitled is intended to be full and complete. Accordingly, 1307510.1 A. Grantors hereby waive any and all rights or benefits arising from and/or related to the City's acquisition, possession and/or use of the Property that it may have under section 1542 of the Civil Code of the State of California which provides: "a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." B. The Grantors represent and warrant that they understand the effect of this waiver of section 1542 and have had the opportunity to discuss the effect of this waiver with counsel of their choice. 6. Title Insurance City may obtain a CLTA extended coverage Grantors' policy of title insurance in the amount of the Purchase Price insuring that clear title to the Property is vested in City upon recording of the Grant Deed. 7. Possession and Use of the Property Pending Close of Escrow It is agreed and confirmed by the parties hereto that notwithstanding other provisions in the Agreement, the right of possession and use of the Property by City, including the right to remove and dispose of improvements, shall commence on the date the amount of funds as specified in Clause 2A of the Agreement are deposited into the escrow controlling this transaction. The amount shown in Clause 2A of the Agreement includes, but is not limited to, full payment for such possession and use, including damages, if any, from said date. It is further agreed that, notwithstanding the City's right of possession and use of the Property set forth in this paragraph, the single-family residence will be protected in place until the Close of Escrow. However, City makes no representation that the Project shall be constructed, and no liability or obligation whatsoever shall be incurred by City by reason of any failure„to construct the Project for any reason. If, after City takes possession, the Property subsequently is not acquired by City for any reason, City shall restore the Property to the condition existing prior to the City's possession or use hereunder, unless otherwise agreed by the parties. 8. Eminent Domain A. It is mutually understood that the acquisition of the Property by City is for a public purpose, and therefore, the Property is otherwise subject to taking by the power of eminent domain. The acquisition by and through this Agreement is in lieu of City's exercise of the power of eminent domain. B. If any eminent domain action that includes the Property, or any portion thereof, has been filed by City and after said filing the Grantors subsequently agree and consent to the dismissal of said action, then the Grantors hereby waive any and all claims to any money that may have been deposited in any Court or with the State Treasurer in any such action and waive any and all claims for damages, costs, or litigation expenses, including attorney's fees, arising by virtue of the abandonment of the action pursuant to Section 1268.510 of the California Code of Civil Procedure. 9. Amendment This agreement may be modified, changed, or rescinded only by an instrument in writing executed by the parties hereto. 1307510.1 10. No Leases A. Grantors warrant that there are no leases, except as disclosed on Exhibit "E" attached hereto, on all or any portion of the Property exceeding a period of one month, and the Grantors further agree to defend and indemnify and hold the City harmless and reimburse the City for any and all of its losses and expenses occasioned by reason of any tenant, lease or occupant of all or a portion of the Property for a period exceeding one month other than what is disclosed on Exhibit "E." A general release or quitclaim deed will be required from any lessee that has a lease term exceeding one month. Said general releases or quitclaim deeds are to be provided to Escrow Holder or the City prior to the Close of Escrow. Grantors agree not to assign, transfer or sell to any third party any right, title or interest Grantors have in the Property. 11. Grantors' Representations A. Grantors make the following representations and warranties: i. Grantors certify that they own full legal title to the Property, and have full power and authority to convey all property rights described herein to City. ii. This Agreement constitutes a legal, valid, and binding obligation of Grantors enforceable in accordance with its terms. iii. To the best of Grantors' knowledge there is no suit, action, arbitration, legal, administrative or other proceeding or inquiry pending or threatened against the Property, or any portion thereof, or pending or threatened against Grantors which could (i.) affect Grantors' title to the Property, or any portion thereof, (ii.) affect the value of the Property, or any portion thereof, or (iii.) subject Grantors to liability. iv. To the best of Grantors' knowledge, there are no uncured notices, which have been served upon Grantors from any governmental agency notifying Grantors of any violations of law, ordinance, rule, or regulation, which would affect the Property, or any portion thereof. v. There are no Hazardous Substances (as defined in Paragraph 14 below), or storage tanks containing Hazardous Substances, in, on, under, or about the Property. A. To the best of Grantors' knowledge, there has been no production, storage, disposal, presence, observance, or release of any Hazardous Substances in, on, under, or about the Property. vii. The Grantors and the Property are not in violation of any federal, state, or local law, ordinance, regulation, order, decree, or judgment relating to Hazardous Substances and/or environmental conditions in, on, under, or about the Property. viii.To the best of Grantors' knowledge, there are no notices or other information giving Grantors reason to believe that any conditions existing on the Property or in the vicinity of the Property subject or could subject any Grantors of the Property to potential liabilities under any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety and/or the environment, 1307510.1 including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use. ix. To the best of Grantors' knowledge, there are no violations of any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety or the environment, including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use, nor of any legal, administrative or other action or proceeding, pending or threatened, affecting the Property and relating to Hazardous Substances and/or environmental compliance. x. To the best of Grantors' knowledge, there is no license, permit, option, right of first refusal, or other agreement, written or oral, which affects the Property or any portion thereof. Grantors will defend and indemnify the City, its successor and/or assigns against any and all claims, demands, causes of action filed against the City, its successors/or assigns by someone claiming a legal interest in or right to the Property, or any portion thereof. xi. To the best of Grantors' knowledge conveyance of the property rights described herein will not constitute a breach or default under any agreement to which Grantors are bound and/or to which the Property is subject. B. Each of the above warranties and representations is material and is relied upon by City separately and collectively. Each of the above representations shall be deemed to have been made as of the date that the Grant Deed is recorded. If, before the recording of the Grant Deed, Grantors discover any information or facts that would materially change any of these warranties and representations, Grantors shall immediately give notice in writing to City of such facts and information. If any of the foregoing warranties and representations cease to be true before the recording of the Grant Deed, the City may, at its unfettered discretion, either cancel and terminate this Agreement or give the Grantors the option to remedy the problem before the recording of the Grant Deed or deduct from the payments required by Section 2, above, as a credit to City, in an amount as determined by the City reasonably required to remedy the problem. 12. Hazardous Substances A. Liability for Hazardous Substance The parties acknowledge, understand, and agree that any liability associated with the presence of any Hazardous Substances, as defined below, on or adjacent to any portion of the Property shall be governed by the provisions of Section 15 below, regardless of whether any inspection, examination, sampling, testing, assessment, or other investigation is conducted by City. "Hazardous Substance(s)" includes, but is not limited to, any hazardous or toxic substance, material or waste, or any solid waste, pollutant, or contaminant that is: (i) Regulated by any local governmental agency, the State of California or the United States Government; (ii) defined as such in any federal, State, or local statute, ordinance, rule, or regulation applicable to the property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code sections 9601-9675), the Resource Conservation and Recovery Act (Title 42 United States Code sections 6901-6992k), the Carpenter -Presley -Tanner Hazardous Substance Account Act (California Health and Safety Code sections 25330- 25395), and the Hazardous Waste Control Law (California Health and Safety Code sections 1307510.1 25100-25250.25); (iii) listed in the United States Department of Transportation Table (49 CFR § 172.101) or by the Environmental Protection Agency, or listed as hazardous substances by any equivalent State of California or local governmental agency, or any successor agency (40 CFR Part 302); (iv) asbestos or asbestos containing material; (v) radon gas; (vi.) petroleum or petroleum fractions; (vii) any explosive substances (viii) polychlorinated biphenyl; (ix) a radioactive material, and (x) per chlorate. 13. Indemnification A. Each party (hereafter the "Indemnifying Party") agrees and covenants to indemnify, defend (with counsel acceptable to the other party) each other party (hereinafter "Indemnified Party"), which consent shall not be unreasonably withheld), and hold the Indemnified Party, and its officers, employees and agents, harmless from and against any and all liabilities, penalties, losses, damages, costs, expenses (including reasonable attorneys' fees, whether for outside counsel or the City Attorney), causes of action, claims, or judgments that arise by reason of any death, bodily injury, personal injury, property or economic damage, or violation of any law or regulation, or damage to the environment, including ambient air, soil, soil vapor, groundwater, or surface water, and resulting from or in any way connected with: i. any acts or omissions related to the performance of this Agreement;(ii) any breach of this Agreement, or; (iii.) the occupancy or use of the Property (including, but not limited to, the use, storage, treatment, transportation, release, or disposal of Hazardous Substances on or about any portion of the Property), by the Indemnifying Party, its officers, employees, agents, engineers, contractors or subcontractors, or any other person or entity employed by or acting on their behalf. B. The parties further agree and understand as follows: a party does not, and shall not be deemed to, waive any rights against the other party which it may have by reason of the aforesaid indemnity and hold harmless agreement because of any insurance coverage available; the scope of the aforesaid indemnity and hold harmless agreements are to be construed broadly and liberally to provide the maximum coverage in accordance with their terms; no specific term or word contained in this Section shall be construed as a limitation on the scope of the indemnification and defense rights and obligations of the parties unless specifically so provided. The provisions of this Section shall survive the recording of any deeds hereunder. 14. Attorney Fees Either party may bring a suit or proceeding to enforce or require performance of the terms of this Agreement, and the prevailing party in such suit or proceeding shall be entitled to recover from the other party reasonable costs and expenses, including attorney's fees. 15. Notices Any notice that either party may or is required to give the other shall be in writing, and shall be either personally delivered or sent by registered or certified mail, return receipt requested. If by mail, service shall be deemed to have been received by such party at the time the notice is delivered, to the following address: To City: City of Tustin 300 Centennial Way Tustin, CA 92780 Attention: Public Works Director 1307510.1 To Grantors: Cho Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, Dated October 3, 1990 2061 Valhalla Drive Satna Ana, CA 92705 With a copy to: Woodruff, Spradlin & Smart Craig Farrington/Alyson Suh 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 16. Recording Either party may record this Agreement in the Recorder's Office for the County of Orange. The fully executed Grant Deed will be recorded in the Recorder's Office for the County of Orange. 17. Binding on Successors This Agreement shall be binding on and shall inure to the benefit of the City and Grantors, and their respective heirs, personal representatives, successors, assigns, and transferees, and their past, present and future officers, employees and agents. The City may freely assign any or all of its interests or rights under this Agreement. 18. Brokers Grantors and City each warrant to the other that no person or entity can properly claim a right to a commission, finder's fee, or other compensation with respect to the transaction contemplated by this Agreement. If any broker or finder makes any claim for a commission or finder's fee, the party through which the broker or finder makes such claim shall indemnify, defend and hold the other party harmless from all liabilities, expenses, losses, damages or claims (including the indemnified party's reasonable attorneys' fees) arising out of such broker's or fmder's claims. 19. Time of Essence Time is of the essence for each condition, term, and provision in this Agreement. 20. Waivers No waiver of any breach of any covenant or provision in this Agreement shall be deemed a waiver of any other covenant or provision in this Agreement and no waiver shall be valid unless in writing and executed by the waiving party. 21. Severability If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to either party. Upon such determination that any term or provision is illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the greatest extent possible. 22. Construction Section headings are solely for the convenience of the parties and are not a part of and shall not be used to interpret this Agreement. The singular form shall include the plural and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if 1307510.1 both parties have prepared it. Unless otherwise indicated, all references to Sections are to this Agreement. 23. Governing Law This Agreement shall be construed in accordance with and governed by the laws of the State of California. Any legal action arising under or related to this Agreement shall be brought and prosecuted in the Orange County Superior Court. 24. Entire Agreement The parties have herein set forth the whole of their Agreement. All prior oral discussions, representations, and/or agreements, if any, are specifically superseded by this Agreement, which is intended by the parties to contain all of the terms and conditions agreed to by them with regards to acquisition of the Property by City. 25. Signatures on Behalf of an Entity Each individual executing this Agreement on behalf of an entity represents and warrants that he or she has been authorized to do so by the entity on whose behalf he or she executes this Agreement and that said entity will thereby be obligated to perform the terms of this Agreement. 26. Counterparts This Agreement may be executed in counterparts, including by facsimile or e-mail, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original, and all such counterparts together shall constitute one and the same instrument. 27 City Council Approval This Agreement may be subject to approval by the City's governing City Council. REMAINDER OF PA GEINTENTIONALLYLEFT BLANK SIGNATURE PAGE FOLLOWS 1307510.1 IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below. GRANTORS: Cho Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, Dated October 3, 1990 Date: Chong Sang Kim, Trustee Cho Hea Kim, Trustee GRANTEE: CITY OF TUSTIN, a municipal corporation of the State of California Date: By: _ Name: Its: APPROVED AS TO FORM: Date: By: General Counsel ATTEST: Date: By: 9 Name Title *Note: If Grantor is a corporation, the following two signatures are required: (1) the first signature by either the Chairman of the Board, the President, or any Vice President of the corporation and (2) the second signature by either the Secretary, any Assistant Secretary, the Chief Financial Officer or any Assistant Treasurer of the corporation. 1307510.1 EXHIBIT "A" Legal Description of Property DESCRIBED AS FOLLOWS - LOT 80 OF TRACT NO,3893, IN TIS COUNTY OF ORANGE, STATE OF CALIFORMA, AS PER MAP RECORDED IN BOOK 166 PAGES 5 TO 11, INCLUSIVE OF MSCELLA-NEOITS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY 1307510.1 e 1307510,1 EXHIBIT `B" Plat Map 11, m EXHIBIT "C" Grant Deed 1307510.1 EXHIBIT "D" Title exceptions that will not be removed, if any, as noted in preliminary title report dated December 30,2016: 1, 3 and 4 1307510.1 EXHIBIT "E" Leases and Other Possessory Rights 1307510.1 RECORDING REQUESTED BY AND FOR THE BENEFIT OF AND WHEN RECORDED MAIL TO: City of Tustin 300 Centennial Way Tustin, CA 92780 Attn: City Clerk APN: 104-611-30 1 No recording fee required: SPACE ABOVE THIS LINE FOR RECORDER'S USE Exempt pursuant to Code 27383 C —A IL t a-= 4 C CHONG SANG KIM and CHO HEA KIM, TRUSTEES OF THE KIM TRUST, DATED OCTOBER 3, 1990 (hereinafter "Grantors"), are the owners of that certain real property located in the County of Orange, State of California, designated as Assessor's Parcel Number 104-611-30 ("Grantors' Property"). FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Grantors hereby grant to the CITY OF TUSTIN, a municipal corporation, ("Grantee"), all that real property more particularly described in Exhibit "A" and depicted in Exhibit "B" attached hereto, which are incorporated herein by this reference. Date: 1307460.1 The Kim Trust, Dated October 3, 1990 Chong Sang Kim, Trustee Cho Hea Kim, Trustee ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF COUNTY OF On before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State Of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Seal) Signature 1307460.1 CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY, That the City of Tustin, a municipal corporation, hereby accepts for public purposes the real property described in the within deed and consents to the recordation thereof. DATED: By: **NAME** **TITLE** 1307460.1 EXHIBIT "A" LEGAL DESCRIPTION TBE LAND REFERRED TO BEREEW IS SITUATED IN COUNTY OF OF-kN(:rE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS- IL75 usloi il tdowto =loap a Koll) 3 Wl V�l t4i 96%1111 IMSIM I 1307460.1 1 1307460.1 EXHIBIT "B" PLAT MAP Acquiring Agency: CITY OF TUSTIN Project Name: Simon Ranch Reservoir Replacement Project Acquiring Agency Representative: Overland, Pacific & Cutler, Inc. 1 Jenner, Suite 200 Irvine, CA 92618 Phone: 949.951.5263 This question and answer brochure intends to provide a non-technical, understandable discussion of the Acquiring Agency (listed above) property acquisition procedures and the principal rights and options available to you, the property owner. If the Acquiring Agency decides to acquire your property, it must abide by these procedures to fulfill its obligations under applicable federal and/or state law. The Acquiring Agency has retained the professional firm of Overland, Pacific & Cutler, Inc. (OPG) to assist in the acquisition process. Their address and telephone number is listed above. Please contact them if you have any questions about the acquisition procedures or your rights. 1255315.1 GENERAL PROPERTY ACQUISITION QUESTIONS 1. Who Will Make The Decision To Buy My Property? The decision to acquire property for a public project usually involves many persons and many decisions. The final decision to proceed with the project is made by the Acquiring Agency after a thorough review which often includes public hearings to obtain the views of interested citizens. If you have any questions about the project or the selection of your property for acquisition, you should ask a representative of the Acquiring Agency. 2. How Will The Acquiring Agency Determine How Much To Offer For My Property? Before making you an offer, the Acquiring Agency will obtain an appraisal of your property by a competent real property appraiser who is familiar with local property values. The appraiser will inspect your property and provide a professional opinion of its current fair market value in an appraisal report. After the appraiser has completed the report, a review appraiser may recheck the work to ensure that the estimate is fair and the work conforms with professional appraisal standards. The Acquiring Agency is required to offer you amount cannot be less than the fair market Acquiring Agency on the basis of its appraisal. 3. What Is Fair Market Value? "just compensation" for your property. This value of your property, as determined by the Fair market value is sometimes defined as that amount of money which would probably be paid for a property in a sale between a willing seller, who does not have to sell, and a willing buyer, who does not have to buy. The fair market value of a property is generally considered to be "just compensation". Fair market value does not take into account intangible elements such as sentimental value, goodwill, business profits, or any special value that your property may have for you or for the Acquiring Agency. 4. How Does An Appraiser Determine The Fair Market Value Of My Property? Each parcel of real property is different and therefore no single formula can be devised to appraise all properties. Among the factors an appraiser typically considers in estimating the value of real property are: • How it compares with similar properties in the area that have been sold recently. • How much it would cost to reproduce the buildings and other structures, less any depreciation. • How much rental income it could produce. S. Will I Have A Chance To Talk To The Appraiser? Yes. You must be contacted about the Acquiring Agency's decision to appraise your property and given the opportunity to accompany the appraiser during the inspection of your property. 1255315.1 You may then inform the appraiser of any special features which you believe may add to the value of your property. It is in your best interest to provide the appraiser with all the useful information you can in order to ensure that nothing of allowable value will be overlooked. If you are unable to meet with the appraiser, you may wish to have a person who is familiar with your property represent you in a meeting with the appraiser. 6. Can I Hire My Own Appraiser And Will I Be Reimbursed For The Cost? Yes. Should you elect to have an independent appraisal conducted in addition to the appraisal conducted by the Acquiring Agency, you are entitled to be reimbursed for the reasonable costs of the appraisal, up to $5,000. In order to receive any reimbursement, the appraiser you chose must be licensed with the Bureau of Real Estate Appraisers (BREA) and comply with the Uniform Standards of Professional Appraisal Practice. For information regarding licensed appraisers, please visit the BREA web site at www.brea.ca.gov. Appraisals of property to be acquired for a public project, such as the appraisal being obtained by the Acquiring Agency, are very specialized appraisals. It is imperative that the appraiser you choose be familiar with this particular type of appraisal. Once you have chosen an appraiser, it is requested that you submit your reimbursement request in writing to the Acquiring Agency's acquisition representative, Overland, Pacific & Cutler, Inc. at the address listed on the front page within ninety (90) days of the earliest of the following dates: (1) the date the selected appraiser requests payment from you for the appraisal; or (2) the date upon which you, or someone on your behalf, remits full payment to the selected appraiser for the appraisal. Copies of the contract (if a contract is made) and invoice for completed work by the appraiser must be provided to the Acquiring Agency concurrent with submission of the appraisal cost reimbursement request. The cost must be reasonable and justifiable. i. How Soon Will The Acquiring Agency Give Me A Written Purchase Offer? Generally, this will depend on the amount of work required to appraise your property. In the case of a typical single-family house, it is usually possible for the Acquiring Agency to make a written purchase offer within ninety (90) days of the date it first notifies the owner of its intent to appraise the property. Appraisal of commercial and industrial property may take somewhat longer. The Acquiring Agency must give you a written offer to acquire your property for the full amount it determines to be just compensation, and it must do so promptly after it determines that amount. Along with the offer, you will receive a written statement explaining the basis for the Acquiring Agency's determination of just compensation. S. What Is The Acquiring Agency Basis For Its Statement Of Just Compensation? The Acquiring Agency's statement of the basis for its determination of just compensation must be provided to you with the written purchase offer. Among other things, this statement must include: • The date of valuation, highest and best use, and applicable zoning of property. • The principal transactions, reproduction or replacement cost analysis, or capitalization analysis, supporting the determination of value. 1255315.1 • Where appropriate, the just compensation for the real property acquired and for damages to the remaining real property shall be separately stated and shall include the calculations and narrative explanation supporting the compensation, including any offsetting benefits. 9. Must I Accept The Acquiring Agency's Offer? No. You are entitled to present your evidence as to the amount you believe is the value of your property and to make suggestions for changing the terms and conditions of the offer. The Acquiring Agency must make reasonable efforts to consider and respond to your evidence and suggestions. 10. May I Have Someone Represent Me During Negotiations? Yes. If you would like an attorney or anyone else to represent you during negotiations, please so inform the Acquiring Agency in writing. However, state law does not require the Acquiring Agency to pay the costs of any such representation. 11. If I Agree To Accept The Acquiring Agency's Offer, How Soon Will I Be Paid? If you reach a voluntary agreement to sell your property and your ownership (title) is clear, payment will be made at a mutually acceptable time. Generally, this should be possible within 30 to 60 days after you sign a purchase contract. The Acquiring Agency may choose to use an escrow to facilitate payment and the signing and recording of deeds. If the title evidence obtained by the Acquiring Agency indicates that further action is necessary to show your ownership is clear, you may be able to accelerate the payment by helping the Acquiring Agency obtain the necessary proof. (Title evidence is basically a legal. record of the ownership of the property. It identifies the owners of record and lists the restrictive deed covenants and recorded mortgages, liens, and other instruments affecting your ownership of the property.) 12. What Happens If I Don't Agree To The Final Offer By The Acquiring Agency? If you are unable to reach a voluntary agreement through negotiations, the Acquiring Agency may request that its governing body adopt a resolution of necessity at a public hearing. You will receive notice of the hearing and given an opportunity to appear at the hearing. If a resolution of necessity is adopted, the Acquiring Agency is authorized to file a suit in court to acquire your property through an eminent domain proceeding. An eminent domain proceeding is often referred to as condemnation. 13. What Happens After The Acquiring Agency Condemns My Property? You will be notified of the condemnation suit. In the event the Acquiring Agency requires possession of your property prior to the completion of the condemnation action, the Acquiring Agency will seek a court order for possession prior to completion of the condemnation action and deposit with the California State Treasurer's Office an amount not less than its appraisal of the fair market value of the property. Ordinarily, the owner is then permitted to withdraw this amount, less any amounts necessary to pay off any mortgage or other liens on the property and to resolve any special ownership problems. Your early withdrawal of your share of the money will not affect your right to seek additional compensation for your property. 1255315.1 During the condemnation proceeding, you will be provided an opportunity to introduce your evidence as to the value of your property. Of course, the Acquiring Agency will have the same right. After hearing the evidence of all parties, a jury will determine the amount of just compensation. If that amount exceeds the amount deposited by the Acquiring Agency, you will be paid the difference, plus any interest that may be provided under state law. To help you in presenting your case, in a condemnation proceeding, you may wish to consider employing an attorney and an appraiser. However, as a general rule, the costs of these professional services and other costs which an owner incurs in presenting his case to the court must be paid by the owner. 14. What Can I Do If I Am Not Satisfied With The Court's Determination? If you are not satisfied with the court judgment, you may file an appeal with the appropriate appellate court for the area in which your property is located. The Acquiring Agency may also file an appeal if it believes the amount of the judgment is too high. 15. Will I Have To Pay Any Settlement Costs? You will be responsible for the payment of the balance on any mortgage on your property. Also, if your ownership is not clear, you may have to pay the cost of clearing it. But the Acquiring Agency will not charge you any sales commission. And the Acquiring Agency is responsible for all reasonable and necessary costs for typical services required to complete the sale, including recording fees, revenue stamps, transfer taxes and any similar expenses which are incidental to transferring ownership to the Acquiring Agency. The Acquiring Agency will identify these items in a settlement cost statement to be given to you at the time of settlement or soon after the court award of compensation, if the property is acquired by condemnation. Ordinarily, if you have paid any of these expenses yourself, you will be repaid at that time. If you later discover other costs for which you should be repaid, you should request repayment from the Acquiring Agency within six (6) months after the acquisition. The Acquiring Agency will assist you in filing a claim for these costs. 16. May I Keep Any Of The Buildings Or Other Improvements On My Property? Very often, many or all of the improvements on a property are not required by the Acquiring Agency. This might include such items as a fireplace mantel, your favorite shrubbery, or even the entire house. If you wish to keep any improvements, please let the Acquiring Agency know as soon as possible. If you do arrange to keep any improvements, the Acquiring Agency will deduct only its salvage value from the price you would otherwise receive. (The salvage value of an item is its probable selling price if offered for sale on the condition that the buyer will remove it at his own expense.) Of course, if you arrange to keep any real property improvement (such as a fireplace mantel or a shrub), you will not be entitled to receive a relocation payment for the cost of moving it to a new location. 17. Can The Acquiring Agency Take Only A Part Of My Property? Yes. If the Acquiring Agency acquires a portion of your property leaving you with an uneconomic remnant (a portion of land not capable of an economic development or use), the 1255315.1 Acquiring Agency will offer to acquire the uneconomic remnant if you so desire. Whether an uneconomic remnant remains after the Acquiring Agency's acquisition will be determined by the Acquiring Agency's appraiser and attorney as well as by negotiations with the property owner. 18. Will I Have To Pay Rent To The Agency After My Property Is Acquired? If arrangements are made to rent acquired property to an owner or his tenant for a short term or for a period subject to termination by the Acquiring Agency on short notice, the rental will not exceed the lesser of the fair rental of the property to the short term occupier, or the pro -rated portion of the fair market value for a typical rental period. If the owner or tenant is an occupant of a dwelling, the rental for the dwelling shall be within his financial means in accordance with state or federal law, as applicable. 19. How Soon Must I Move? You will likely not be required to relocate from your property. However, in the event that you are required to relocate from your property, every reasonable effort will be made to give you ample time to relocate after the acquisition of your property. In most cases, a mutually satisfactory arrangement can be worked out. Also, except in an unusual instance where there is an urgent need for your property, you cannot be required to move from your residence or to move your business or farm operation without at least a ninety (90) day advance written notice of the date by which your move is required. If you reach a voluntary agreement to sell your property, you cannot be required to move before you receive the agreed purchase price. In the case of a condemnation, you cannot be required to move before the estimated fair market value of the property has been deposited with the California State Treasurer's Office so that you can withdraw your share. If you are being displaced from your residence, decent, safe and sanitary replacement housing must be available before you can be required to move. 20. Will I Be Compensated For The Loss Of Goodwill For My Business? If the owner of real property is also the owner of a business conducted on the real property to be acquired, the owner may have a right to compensation for loss of goodwill. Pertinent provisions of the California Code of Civil Procedure addressing compensation for "loss of goodwill" are provided below. CODE OF CIVIL PROCEDURE - ARTICLE 6 (SECTIONS 1263.510 -1263.530) COMPENSATION FOR LOSS OF GOODWILL In the event you are the owner of a business conducted on the property being acquired by the Acquiring Agency, you may be entitled to compensation for loss of goodwill, if any, if you are able to make a showing of such loss pursuant to the requirements of California Code of Civil Procedure Section 1263.510 as follows: a. The owner of a business conducted on the property taken, or on the remainder if such property is part of a larger parcel, shall be compensated for loss of goodwill if the owner proves all of the following: 1) The loss is caused by the taking of the property or the injury to the remainder. 2) The loss cannot reasonably be prevented by relocation of the business or by taking steps and adopting procedures that a reasonably prudent person would take and adopt in preserving the goodwill. 3) Compensation for the loss will not be included in payments under Section 7262 of the Government Code. 4) Compensation for the loss will not be duplicated in the compensation otherwise awarded to the owner. 1255315.1 b. Within the meaning of this article, 'yoodwi0" consists of the benefits that accrue to a business as a result of its location, reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisition of new patronage. " 21. My Property Is Worth More Now Than When I Bought It. Do I Pay Capital Gains Tax On The Increase? Internal Revenue Service (IRS) Publication 544, "Sales and Other Dispositions of Assets" is available from the IRS. It explains how the federal income tax would apply to a gain or loss resulting from a condemnation for public purposes. In most cases, the owner of property acquired for public purposes may postpone the gain and associated taxes if certain conditions are met within a defined period. If you have any questions about the IRS rules, you should discuss your particular circumstances with your personal tax advisor or your local IRS office. 22. Will My Property Taxes Increase Substantially When I Move Because Of The Proposition 13 Reassessment Formula? No. Not as long as the replacement property's purchase price does not exceed 120 percent of the sales price for the acquired property. Section 2(d) of Article XIIIA of the California Constitution and the Revenue and Taxation Code Section 68 generally provides that property tax relief shall be granted to any real property owner who acquires comparable replacement property after having been displaced by governmental acquisition or eminent domain proceedings. If the full cash value of the comparable replacement property does not exceed 120 percent of the award or purchase price of the property taken or acquired, then the adjusted base year value of the property taken or acquired shall be transferred to the comparable replacement property. For example: Purchase Price 120% Allowable Transfer Basis Replacement Property Price Subject Property Tax Basis Replacement Tax Basis $100,000 $120,000 $130,000 $50,000 $60,000 Calculated as follows: *$50,000 + ($130,000 - $120,000) = $60,000 In the event that the replacement property price is greater than the replacement tax basis, the difference will be added to the subject property tax basis to represent the replacement tax basis. 23. Is It Possible To Donate Property To The Acquiring Agency? Yes. However, prior to accepting any donation of real property, the Acquiring Agency must inform the owner in writing of the amount it believes to be just compensation for the property. The property owner must indicate in writing that, although he understands that he cannot be required to sell his property for less than just compensation, he voluntarily agrees to do so. 24. What Are The Advantages Of Selling My Property To The Acquiring Agency? • Acquiring Agency pays full cash value for property as determined by an independent appraiser. Seller does not have to provide financing to sell the property. 1255315.1 • Seller does not have to pay real estate sales commission. Sales commissions typically equal six percent (6%) of the sales price in a private transaction. • Acquiring Agency pays virtually all closing costs (i.e., escrow fees, recording fees, mortgage prepayment penalties). • Seller may receive favorable capital gains tax treatment and can transfer his existing property tax basis to the replacement property. • If you are required to relocate, the Acquiring Agency provides relocation benefits including referral assistance and cash payments. • If you are required to relocate, the Acquiring Agency pays for moving expenses. 25. Additional Information If you have further questions after reading this brochure, please contact the Acquiring Agency's representative at Overland, Pacific & Cutler, Inc. at the address and phone number listed on the front page. 1255315.1 ATTACHMENT 2 AGREEMENT FOR ACQUISITION OF REAL PROPERTY Project: Simon Ranch Reservoir Replacement Project Parcel No: 104611-30 Escrow #: Title Company: Commonwealth Land Title Company Date of Preliminary Title Report: 12/30/2016 Grantors: Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 Grantee: CITY OF TUSTIN, a municipal corporation of the State of California AGREEMENT FOR ACQUISITION OF REAL PROPERTY WHEREAS, the above-named Grantors own that certain real property located at 2061 Valhalla Drive in the County of Orange, State of California legally described in the Legal Description identified as Exhibit "A" and depicted on the Plat Map identified as Exhibit "B", attached hereto and made a part hereof ("Property"); and WHEREAS, Grantors intend to convey to City of Tustin ("City") and City intends to acquire from Grantors the Property, as described and depicted in the Grant Deed identified as Exhibit "C" for the purpose of constructing the Simon Ranch Reservoir Replacement Project ("Project") pursuant to the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the payment and other obligations set forth below; Grantors and City mutually agree as follows: 1. Full and Complete Agreement The parties have herein set forth the whole of their agreement ("Agreement"). The performance of this Agreement constitutes the entire consideration for the Property and shall relieve the City of all further obligations or claims on this account, or on account of the location, grade or construction of the proposed public improvement. The City requires the Property for the Project, a public use for which the City has the authority to exercise the power of eminent domain. Grantors are conveying the Property under the threat of eminent domain. 2. Payment A. Purchase Price. The parties agree that the amount of One Million Nine Hundred Fifty Thousand and No/100 Dollars ($1,950,000.00) ("Purchase Price") is the full amount of compensation due and owing to Grantors for conveyance of the Property to City. 3. Execution and Delivery to Escrow City shall open an escrow with the title company identified above ("Escrow Holder") by delivery of a fully executed copy of this Agreement. Upon full execution of this Agreement by the parties ("Effective Date"), Grantors shall execute and notarize the Grant Deed, in the form of Exhibit "C", attached hereto and made a part hereof. City shall tender the Purchase Price to the Escrow Holder, which shall be paid when title to the Property vests in the City free and clear of all liens, deeds of trust, encumbrances, assessments, easements and leases (recorded and/or unrecorded). Page 1 of 12 1346811,1 A. Close of Escrow Unless extended by the mutual agreement of the parties, the escrow shall close within sixty (60) days after the Effective Date of this Agreement and shall be the date the Grant Deed is recorded in the Recorder's Office for Orange County ("Close of Escrow"). B. Escrow Holder's Right to Discharge Liens The Escrow Holder may expend any or all monies payable under this Agreement and deposited into escrow to discharge any obligations which are liens upon the Property, including, but not limited to, those arising from judgments, assessments, delinquent taxes for other than the fiscal year in which the escrow closes, or debts secured by deeds of trust or mortgages, and/or to defray any other incidental costs other than those specified in Section 2 hereof to be borne by the City. The Escrow Holder shall release payment to Grantors, return any credited amounts to City, and record the Grant Deed in the Recorder's Office for Orange County upon the Close of Escrow. C. Escrow Instructions This Agreement may serve in whole or in part as escrow instructions. The issuance of any further escrow instructions shall be the sole responsibility of City. The Grantors agree to execute such additional documents as may be reasonably necessary to consummate the purchase and sale herein contemplated. D. Fees The City shall pay all Grantors' and City's usual escrow, recording, and title insurance fees incurred in this transaction. E. Taxes Taxes for the fiscal year in which the escrow closes shall be cleared and paid for in the manner required by Section 5086 of the Revenue and Taxation Code. As a deduction from the amount shown in Section 2A, above, City shall be authorized to pay any delinquent taxes due in any fiscal year, except the fiscal year in which this escrow closes, together with penalties and interest thereon. F. Assessments The City is not assuming responsibility for payment or subsequent cancellation of unpaid assessments on the Property acquired under this transaction. The assessments remain the obligation of Grantors. Payment for the Property acquired under this transaction is made upon the basis that the Grantors retain their obligation to the levying body respecting said assessments. G. Mortgages or Deeds of Trust Any monies payable under this Agreement up to and including the total amount of unpaid principal and interest on note(s) secured by mortgage(s) or deed(s) of trust, if any, and all other amounts due and payable in accordance with the terms and conditions of said deed(s) of trust or mortgage(s), shall upon demand(s) be made payable to the mortgagee(s) or beneficiary(ies) entitled thereunder; said mortgagee(s) or beneficiary(ies) are to furnish Page 2 of 12 1346811.1 Grantors with good and sufficient receipt showing said monies credited against the indebtedness secured by said mortgage(s) or deed(s) of trust. 4. Just Compensation; Waiver and Release A. Grantors agree that performance of this Agreement by City, including the payment recited in Section 2A, above, shall constitute full and fair compensation and consideration for any and all claims that Grantors, and their successors and assigns, may have against City by reason of the acquisition, improvement, possession, use and/or occupancy of the Property, and Grantors, on behalf of themselves and their successors and assigns, hereby knowingly and voluntarily waive, and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to, any and all such claims, including claims for severance or taking compensation or damages to the remainder not taken on account of the acquisition of the Property or the location, establishment, construction and/or operation of the above-named Project. This waiver and release shall survive the Close of Escrow. B. The foregoing waiver and release shall include the waiver and release of any and all rights or claims that Grantors have, may have had or may in the future have under Article 1, Section 19 of the California Constitution, the Eminent Domain Law, or any other law or regulation; except as provided herein. Grantors, on behalf of themselves and their successors and assigns, further knowingly and voluntarily waive and expressly release and discharge City, and any and all of City's employees, agents, officers, servants, representatives, contractors, attorneys and assigns, from liability in regard to any claims for the following: precondemnation damages, inverse condemnation, lost business goodwill, lost profits, lost rents, severance damages, mitigation damages, compensation for the construction and use of the Project in the manner proposed, damage to or loss of improvements pertaining to the realty, machinery, fixtures, inventory, equipment and/or personal property, interest, any right to repurchase, leaseback from City, or receive any financial gain from, City's sale of any portion of the Property, any right to challenge City's adoption of a resolution of necessity, pursuant to Code of Civil Procedure sections 1245.245, any right to receive any notices pursuant to Code of Civil Procedure section 1245.245, any right to enforce any other obligation placed upon City pursuant to Code of Civil Procedure sections 1245.245 and 1263.615, any other rights conferred upon Grantors pursuant to Code of Civil Procedure sections 1245.245 and 1263.615 and 1263.025, and claims for litigation expenses, attorney's fees and/or costs. This waiver and release shall survive the Close of Escrow. Grantors are aware of and understand all potential benefits to which they are otherwise entitled and have had the opportunity to discuss potential benefits with representatives of the City and with legal counsel of their choice. 5. Waiver under Section 1542 The parties intend that this Agreement will result in a full, complete, and final resolution and settlement of any and all claims, causes of action or disputes which exist, or may exist, between them as to the acquisition, possession and/or use of the Property by the City, except as expressly provided herein. It is therefore understood that the waiver, under this Agreement, of any rights, damages, compensation or benefits to which a party is, or may be, entitled is intended to be full and complete. Accordingly, A. Grantors hereby waive any and all rights or benefits arising from and/or related to the City's acquisition, possession and/or use of the Property that it may have under section 1542 of the Civil Code of the State of California which provides: Page 3 of 12 1346811,1 "a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." B. The Grantors represent and warrant that they understand the effect of this waiver of section 1542 and have had the opportunity to discuss the effect of this waiver with counsel of their choice. 6. Title Insurance City may obtain a CLIA extended coverage policy of title insurance in the amount of the Purchase Price insuring that clear title to the Property is vested in City upon recording of the Grant Deed. 7. Possession and Use of the Property Pending Close of Escrow It is agreed and confirmed by the parties hereto that notwithstanding other provisions in the Agreement, the right of possession and use of the Property by City, including the right to remove and dispose of improvements, shall commence on the date the amount of funds as specified in Clause 2A of the Agreement are deposited into the escrow controlling this transaction. The amount shown in Clause 2A of the Agreement includes, but is not limited to, full payment for such possession and use, including damages, if any, from said date. It is further agreed that, notwithstanding the City's right of possession and use of the Property set forth in this paragraph, the single-family residence will be protected in place until the Close of Escrow. However, City makes no representation that the Project shall be constructed, and no liability or obligation whatsoever shall be incurred by City by reason of any failure to construct the Project for any reason. If, after City takes possession, the Property subsequently is not acquired by City for any reason, City shall restore the Property to the condition existing prior to the City's possession or use hereunder, unless otherwise agreed by the parties. 8. Eminent Domain A. It is mutually understood that the acquisition of the Property by City is for a public purpose, and therefore, the Property is otherwise subject to taking by the power of eminent domain. The acquisition by and through this Agreement is in lieu of City's exercise of the power of eminent domain. B. If any eminent domain action that includes the Property, or any portion thereof, has been filed by City and after said filing the Grantors subsequently agree and consent to the dismissal of said action, then the Grantors hereby waive any and all claims to any money that may have been deposited in any Court or with the State Treasurer in any such action and waive any and all claims for damages, costs, or litigation expenses, including attorney's fees, arising by virtue of the abandonment of the action pursuant to Section 1268.510 of the California Code of Civil Procedure. 9. Amendment This agreement may be modified, changed, or rescinded only by an instrument in writing executed by the parties hereto. 10. No Leases A. Grantors warrant that there are no leases on all or any portion of the Property exceeding a period of one month, and the Grantors further agree to defend and indemnify and hold the City harmless and reimburse the City for any and all of its losses and expenses occasioned by Page 4 of 12 1346811,1 reason of any tenant, lease or occupant of all or a portion of the Property for a period exceeding one month. A general release or quitclaim deed will be required from any lessee that has a lease term, exceeding one month. Said general releases or quitclaim deeds are to be provided to Escrow Holder or the City prior to the Close of Escrow. Grantors agree not to assign, transfer or sell to any third party any right, title or interest Grantors have in the Property. 11. Grantors' Representations A. Grantors make the following representations and warranties: L Grantors certify that they own full legal title to the Property, and have full power and authority to convey all property rights described herein to City. ii. This Agreement constitutes a legal, valid, and binding obligation of Grantors enforceable in accordance with its terms. iii. To the best of Grantors' knowledge there is no suit, action, arbitration, legal, administrative or other proceeding or inquiry pending or threatened against the Property, or any portion thereof, or pending or threatened against Grantors which could (i.) affect Grantors' title to the Property, or any portion thereof., (ii.) affect the value of the Property, or any portion thereof, or (iii.) subject Grantors to liability. iv. To the best of Grantors' knowledge, there are no uncured notices, which have been served upon Grantors from any governmental agency notifying Grantors of any violations of law, ordinance, rule, or regulation, which would affect the Property, or any portion thereof. v. There are no Hazardous Substances (as defined in Paragraph 14 below), or storage tanks containing Hazardous Substances, in, on, under, or about the Properly. vi. To the best of Grantors' knowledge, there has been no production, storage, disposal, presence, observance, or release of any Hazardous Substances in, on, under, or about the Property. vii. The Grantors and the Property are not in violation of any federal, state, or local law, ordinance, regulation, order, decree, or judgment relating to Hazardous Substances and/or environmental conditions in, on, under, or about the Property. viii.To the best of Grantors' knowledge, there are no notices or other information giving Grantors reason to believe that any conditions existing on the Property or in the vicinity of the Property subject or could subject any Grantors of the Property to potential liabilities under any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety and/or the environment, including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use. ix. To the best of Grantors' knowledge, there are no violations of any federal, state or local law, statute, ordinance, regulation, rule, order, decree, or other governmental requirement that pertains to the regulation of Hazardous Substances and/or the protection of public health and safety or the environment, including, but not limited to, the ambient air, soil, soil vapor, groundwater, surface water or land use, not of any Page 5 of 12 1346811.1 legal, administrative or other action or proceeding, pending or threatened, affecting the Property and relating to Hazardous Substances and/or environmental compliance. x. To the best of Grantors' knowledge, there is no license, permit, option, right of first refusal, or other agreement, written or oral, which affects the Property or any portion thereof. Grantors will defend and indemnify the City, its successor and/or assigns against any and all claims, demands, causes of action filed against the City, its successors/or assigns by someone claiming a legal interest in or right to the Property, or any portion thereof. xi. To the best of Grantors' knowledge conveyance of the property rights described herein will not constitute a breach or default under any agreement to which Grantors are bound and/or to which the Property is subject. B. Each of the above warranties and representations is material and is relied upon by City separately and collectively. Each of the above representations shall be deemed to have been made as of the date that the Grant Deed is recorded. If, before the recording of the Grant Deed, Grantors discover any information or facts that would materially change any of these warranties and representations, Grantors shall immediately give notice in writing to City of such facts and information. If any of the foregoing warranties and representations cease to be true before the recording of the Grant Deed, the City may, at its unfettered discretion, either cancel and terminate this Agreement or give the Grantors the option to remedy the problem before the recording of the Grant Deed or deduct from the payments required by Section 2, above, as a credit to City, in an amount as determined by the City reasonably required to remedy the problem. 12. Hazardous Substances A. Liability for Hazardous Substance The parties acknowledge, understand, and agree that any liability associated with the presence of any Hazardous Substances, as -defined-below, on- or--adjacent-to any portion of the Property shall be governed by the provisions of Section 15 below, regardless of whether any inspection, examination, sampling, testing, assessment, or other investigation is conducted by City. "Hazardous Substance(s)" includes, but is not limited to, any hazardous or toxic substance, material or waste, or any solid waste, pollutant, or contaminant that is: (i) Regulated by any local governmental agency, the State of California or the United States Government; (ii) defined as such in any federal, State, or local statute, ordinance, rule, or regulation applicable to the property, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code sections 9601-9675), the Resource Conservation and Recovery Act (Title 42 United States Code sections 6901-6992k), the Carpenter -Presley -Tanner Hazardous Substance Account .Act (California Health and Safety Code sections 25330- 25395), and the Hazardous Waste Control Law (California Health and Safety Code sections 25100-25250.25); (iii) listed in the United States Department of Transportation Table (49 CFR § 172.101) or by the Environmental Protection Agency, or listed as hazardous substances by any equivalent State of California or local governmental agency, or any successor agency (40 CFR Part 302); (iv) asbestos or asbestos containing material; (v) radon gas; (vi.) petroleum or petroleum fractions; (vii) any explosive substances (viii) polychlorinated biphenyl; (ix) a radioactive material, and (x) per chlorate. Page 6 of 12 t34681 1.1 13. Indemnification A. Grantors agree and covenant to indemnify, defend (with counsel acceptable to the City) and hold the City and its officers, employees and agents, harmless from and against any and all liabilities, penalties, losses, damages, costs, expenses (including reasonable attorneys' fees, whether for outside counsel or the City Attorney), causes of action, claims, or judgments that arise by reason of any death, bodily injury, personal injury, property or economic damage, or violation of any law or regulation, or damage to the environment, including ambient air, soil, soil vapor, groundwater, or surface water, and resulting from or in any way connected with: i. any acts or omissions related to the performance of this Agreement;(ii) any breach of this Agreement, or; (iii.) the occupancy or use of the Property (including, but not limited to, the use, storage, treatment, transportation, release, or disposal of Hazardous Substances on or about any portion of the Property), by the Grantors, their officers, employees, agents, engineers, contractors or subcontractors, or any other person or entity employed by or acting on their behalf. B. The parties further agree and understand as follows: a party does not, and shall not be deemed to, waive any rights against the other party which it may have by reason of the aforesaid indemnity and hold harmless agreement because of any insurance coverage available; the scope of the aforesaid indemnity and hold harmless agreements are to be construed broadly and liberally to provide the maximum coverage in accordance with their terms; no specific term or word contained in this Section shall be construed as a limitation on the scope of the indemnification and defense rights and obligations of the parties unless specifically so provided. The provisions of this Section shall survive the recording of any deeds hereunder. 14. Notices Any notice that either party may or is required to give the other shall be in writing, and shall be either personally .delivered or sent by registered or certified mail, return receipt requested. If by mail, service shall be deemed to have been received by such party at the time the notice is delivered, to the following address: To City: City of Tustin 300 Centennial Way Tustin, CA 92780 Attention: Public Works Director With a copy to: Woodruff, Spradlin & Smart 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 Attention: David Kendig, City Attorney 15. Recording 1346811,1 To Grantors: Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 2061 Valhalla Drive Santa Ana, CA 92705 The fully executed Grant Deed will be recorded in the Recorder's Office for the County of Orange. Page 7 of 12 16. Binding on Successors This Agreement shall be binding on and shall inure to the benefit of the City and Grantors, and their respective heirs, personal representatives, successors, assigns, and transferees, and their past, present and future officers, employees and agents. The City may freely assign any or all of its interests or rights under this Agreement. 17. Brokers Grantors and City each warrant to the other that no person or entity can properly claim a right to a commission, finder's fee, or other compensation with respect to the transaction contemplated by this Agreement, If any broker or finder makes any claim for a commission or finder's fee, the party through which the broker or finder makes such claim shall indemnify, defend and hold the other party harmless from all liabilities, expenses, losses, damages or claims (including the indemnified party's reasonable attorneys' fees) arising out of such broker's or finder's claims. 18. Time of Essence Time is of the essence for each condition, term, and provision in this Agreement. 19. Waivers No waiver of any breach of any covenant or provision in this Agreement shall be deemed a waiver of any other covenant or provision in this Agreement and no waiver shall be valid unless in writing and executed by the waiving party. 20. Severability If any term or provision of this Agreement shall, to any.extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to either party. Upon such determination that any term or provision is illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the greatest extent possible, 21. Construction Section headings are solely for the convenience of the parties and are not a part of and shall not be used to interpret this Agreement. The singular form shall include the plural and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties have prepared it. Unless otherwise indicated, all references to Sections are to this Agreement. 22. Governing Law This Agreement shall be construed in accordance with and governed by the laws of the State of California. Any legal action arising under or related to this Agreement shall be brought and prosecuted in the Orange County Superior Court. 23. Enure Agreement The parties have herein set forth the whole of their Agreement. All prior oral discussions, representations, and/or agreements, if any, are specifically superseded by this Agreement, which is Page 8 of 12 1346811.1 intended by the parties to contain all of the terms and conditions agreed to by thein with regards to acquisition of the Property by City, 24. Signatures on Behalf of an Entity Each individual executing this Agreement on behalf of an entity represents and warrants, that he or she has been authorized to do so by the entity on whose behalf he or she executes this. Agreement, and that said entity will thereby be obligated to perform the terins of this Agreement. 25, Counterparts This Agreement i -nay be executed in counterparts, including by facsimile or Q-1na,il, each. of which so executed shall, irrespective of the date of its execution, and delivery, be deemed an original, and all such counterparts together sliall, constitute one and, the same insft-ioncrit. 26., City Council Approval This Agreement may be subject to approval by the City's governing City Council. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below. GRANTORS: Chong Sang Kim and Cho Ilea 10m, Trustees of The If Trust, dated October 3, 1990 GRANTEE: CITY OF TUSTIN,a municipal corporation of the State of California Date: M Mine: Its: APPROVED AS TO FORM: By: 'City Attorney Date: ATTEST:, By: Name, Title:' Date, Page 9 of 12 1�46811,1 Page 10 of 12 1346811.1 EXHIBIT "B" Plat Map In Page 11 of 12 1346811.1 EXHIBIT "C" Grant Deed Page 12 of 12 1346811.1 RECORDING REQUESTED BY 'AND FOR THE BENEFIT OF AND WHEN RECORDED MAIL TO, City of Tustin 300 Centennial Way Tustin, CA 92780, Attn: City Clerk APN: 104-611-30 No, recording fee required: Exempt pursuant to Code 27383 Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 (hereinafter, individually and collectively, "Grantor"), Is the owner of that certain real property located in the County of Orange, State of California, designated as Assessor's Parcel Number 104- 611-30 ("Grantor's Property"), FOR VALUABLE CONSIDERATION, receipt, of Which Is,. hereby acknowledged, Grantor hereby grants to the CITY OF I TUSTIN, a municipal corporation, ("Grantee"), all that real, property more particularly described in Exhibit "A' and depicted in Exhibit "B"' attached hereto, which are incorporated herein by this reference. 5r, 2- 9>/,A- 4 1346134.1 Chong Sang Kim and Cho Hea Kim, Trustees of The KimTrust, dated October 3, 1990 414�elo-44, Uhong011ng On, Trustee (Lo, 4C4 Cho Hea 'Kim, `Trustee ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF COUNTYOF X gn yr on A before mi 0- Notary Public, personally AX appeared r' o proved to me on the basis Wsitisfaetry evidence to be the person(s.) whose name(s) /are subscribed to the within instrument and acknowledged to me that h6fsVe/they.executed the same in hid/h,grltheir authorized capacity(les) , an, I d that by Vs/h,6r/their signature(s) on the instrument the person(s), or the entity upon behalf of which the',person(s) acted,, executed the instrument, I certify. under PENALTY OF PERJURY under the laws of the State Of California that the foregoing paragraph 'is true and correct. WITNESS, my hand and official sea]. (Seal) " Signa ure 1346134it CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY, that the City of Tustin, a municipal corporation, hereby accepts for public purposes the real property described in the within deed and consents to the recordation thereof. DATED: By: Name: Its: 1346134.1 EXHIBIT "A" LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS, FOLLOW& LOT 80 OF TRACT NO. 398, ISI THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN 1300K 166 PAGES 5 TO 11, INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 134613441 1346134.1 EXHIBIT "B" PLAT MAP I ATTACHMENT 3 RESIDENTIAL LEASE AGREEMENT RESIDENTIAL LEASE AGREEMENT In consideration of the covenants herein, the City of Tustin, a municipal corporation of the State of California ("LANDLORD") hereby leases to Chong Sang Kim and Cho Hea Kim, Trustees of The Kim Trust, dated October 3, 1990 (collectively referred to hereinafter as "TENANT") the property located at 2061 Valhalla Drive, Santa Ana, California 92705 (the "PROPERTY"). LANDLORD and TENANT now covenant and agree that the following terms and conditions shall govern this Lease. L TERM & RENT. The, term begins on close of escrow between the parties, and shall continue until TENANT vacates the PROPERTY but no later than January 31, 2019. TENANT shall be permitted to occupy the PROPERTY without the payment of rent on the condition that TENANT complies with the terms and conditions set forth in this Residential Lease. Agreement ("AGREEMENT"). 2. UTILITIES. TENANT shall pay for all water, gas, heat, light, power, telephone, trash disposal, and other utilities and services provided to the PROPERTY during the term of the Lease until TENANT vacates the PROPERTY. TENANT will terminate any and all accounts for said services when TENANT vacates the PROPERTY. 3. USE OF THE PROPERTY. LANDLORD recognizes that TENANT has been in possession of the PROPERTY as the prior owner. TENANT shall continue its use of the PROPERTY as a residential property. TENANT shall not permit any use of the PROPERTY which will adversely affect or make voidable any insurance on the PROPERTY, or on the contents of said PROPERTY, or which shall be contrary to any law, regulation or recommendation made by the Insurance Services Office (or successor organization), state fire prevention agency, local fire department, LANDLORD's insurer or any similar entity, TENANT shall on demand reimburse LANDLORD for all extra insurance premiums caused by any change in TENANT's use of the PROPERTY from its present use. 4. COMPLIANCE WITH LAWS. LANDLORD and, TENANT contemplate and agree that TENANT will continue to use the PROPERTY in the same manner as it has been used by TENANT prior to the execution of this Lease for the duration of this Lease. TENANT shall continue to be responsible for the PROPERTY. 5. ASSIGNMENT OR SUBLEASE. In no case may TENANT assign this Lease or sublet the PROPERTY to any other persons or entities without first obtaining written permission from LANDLORD. 6. MAINTENANCE OF PROPERTY. TENANT shall continue to maintain the PROPERTY including electrical, plumbing and water systems, if any, and keep glass, windows, and doors in an operable and safe condition. TENANT shall keep the PROPERTY free of trash and debris and shall comply with all applicable laws and regulations concerning the use of the PROPERTY. If TENANT fails to maintain the PROPERTY, LANDLORD may contract for or perform such maintenance, and charge TENANT for the cost. 7. ALTERATIONS. TENANT shall not make structural alterations, additions or improvements of any kind to the PROPERTY, but may make nonstructural alterations, additions or improvements with LANDLORD'S prior written consent. All such allowed alterations, additions and improvements shall be at TENANT's expense and shall conform with LANDLORD's building standards and construction specifications. If LANDLORD or its agent provides any services or maintenance for TENANT in Page 1 of 5 1346132.1 connection with such alterations, additions and improvements or otherwise under this Lease, TENANT will promptly pay any just invoice. Any alterations, additions and improvements added hereafter shall become part of the PROPERTY of LANDLORD. 8. MECHANICS LIENS. TENANT shall keep property free from any liens arising out of any work performed, material furnished, or obligations incurred by TENANT. TENANT shall obtain a lien waiver from any contractor it employs prior to commencement of any work. TENANT shall not permit any mechanics' liens, or similar liens, to remain upon the PROPERTY in connection with any work performed or claimed to have been performed at the direction of TENANT and shall cause any such lien to be released or removed forthwith without cost to LANDLORD. TENANT shall indemnify, defend with counsel selected by LANDLORD, protect and hold LANDLORD, its officers, directors, employees, agents, successors and assigns, and any successor or successors to LANDLORD'S interest harmless from and against all claims, actual damages (including, but not limited to, special and consequential damages), punitive damages, injuries, costs, response costs, losses, demands, debts, liens, liabilities, causes of action, suits, legal or administrative proceedings, interest, fines,. charges, penalties, and expenses (including, but not limited to, attorneys' and expert witness fees and costs incurred in connection with defending against any of the foregoing or in enforcing this indemnity) of any kind whatsoever paid, incurred or suffered by, or asserted against, the PROPERTY, or any indemnified party directly or indirectly arising from or attributable to any work performed, material furnished, or obligations incurred by TENANT. 9. FIRE PREVENTION. TENANT agrees to use every reasonable precaution against fire, to provide and maintain approved, labeled fire extinguishers as required or recommended by the local fire department, LANDLORD'S insurer or any similar entity. 10, INSURANCE. TENANT shall obtain .and keep in force a Residential General Liability policy of insurance protecting TENANT and naming LANDLORD as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the PROPERTY, and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000, an "Additional Insured -Managers or Lessors of Premises Endorsement" and contain the "Amendment of the Pollution Endorsement" for damage caused by heat, smoke, or fumes from a hostile fire. The policy shall not contain any intra - insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of TENANT's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of TENANT nor relieve TENANT of any obligation hereunder. All insurance carried by TENANT shall be primary and not contributory with a similar insurance carried by LANDLORD, whose insurance shall be considered excess insurance only. TENANT shall provide LANDLORD with a certificate of insurance evidencing such insurance. 11. SECURITY MEASURES. TENANT hereby acknowledges that LANDLORD is not responsible to provide any security measures during the term of this Lease and that LANDLORD shall have no obligation whatsoever to provide same. TENANT assumes all responsibility for the protection of the PROPERTY, TENANT, its agents and invitees to the PROPERTY from the acts of third parties. 12. HAZARDOUS MATERIALS. Hazardous materials are those substances listed in California Code of Regulations, Title 22, or those which meet the toxicity, reactivity, corrosivity or flammability Page 2 of 5 1346132,1 criteria of Title 22 of the above Code, as well as any other substance which poses a hazard to health or environment. Except as otherwise permitted in this Agreement, TENANT shall not use, create, store or allow any such substances on the premises. Fuel stored in a motor vehicle for the exclusive use in such vehicle is excepted. In no case shall TENANT cause or allow the deposit or disposal of any such substance on the property described in the Preamble. However, household products necessary for routine cleaning and maintenance of the property may be kept in quantities reasonable for current needs. LANDLORD, or its agents or contractors shall at all times have the right to go upon and inspect the property and the operations conducted thereon to assure compliance with the requirements herein stated. This inspection may include taking samples of substances and materials present for testing, and/or testing soils or underground tanks on the premises. 13. INDEMNIFICATION OF LANDLORD. Except for LANDLORD'S. gross negligence or willful misconduct, TENANT shall indemnify, defend, and hold harmless, the PROPERTY, LANDLORD, its officers, directors, employees, agents, successors and assigns, from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorney's fees and consultants' fees arising out of, involving, or in connection with the use and/or occupancy of the PROPERTY by TENANT. If any action or proceeding is brought against LANDLORD by reason of any of the foregoing matters, TENANT shall upon notice defend the same at TENANT's expense by counsel reasonably satisfactory to LANDLORD. LANDLORD need not have first paid any such claim in order to be defended or indemnified. 14. EXEMPTION OF LANDLORD FROM LIABILITY. LANDLORD shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of TENANT, TENANT's employees, contractors, invitees, customers or any other person in or about the PROPERTY, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the PROPERTY or from other sources or places. This exemption does not apply to LANDLORD'S active negligence. or willful misconduct. 15. ASSUMPTION OF RISK AND INDEMNITY. TENANT assumes all risk of loss to itself, which in any manner may arise out of the use of the PROPERTY under this Lease. Further, TENANT, its successors and assigns, shall indemnify and defend LANDLORD and its officers, directors, employees, agents, successors and assigns against any liability and expenses, including the reasonable expense of legal representation whether by special counsel or by LANDLORD's City Attorney's Office, resulting from injury to or death of TENANT, its successor and assigns, and invitees, and any person who otherwise is lawfully on the PROPERTY; or damage to any property, including property of LANDLORD, or damage to any other interest of LANDLORD, including but not limited to suit alleging noncompliance with any statute or regulation which in any manner may arise out of the issuing of this Lease; or use by TENANT of the PROPERTY. This assumption is not intended to apply to LANDLORD'S gross negligence or willful misconduct. 16. WAIVER. The waiver by LANDLORD of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition, or of any subsequent breach of the same or any other term, covenant, or condition herein contained. Page 3 of 5 1346132,1 17. LANDLORD'S RIGHT OF ENTRY. LANDLORD may enter and inspect the PROPERTY upon reasonable advance notice of at least 24 hours to TENANT. 18, BROKERAGE. TENANT warrants and represents to LANDLORD that TENANT has dealt with no broker or third person with respect to this Lease, and TENANT agrees to indemnify LANDLORD against any brokerage claims arising out of this Lease. LANDLORD warrants and represents to TENANT that LANDLORD has employed no exclusive broker or agent in connection with this Lease. If either party introduces a broker or third person on its behalf for any extension, renewal or expansion of this Lease, any fees or commissions shall be the sole responsibility of the party engaging such broker or third person. 19. NOTICE. Any notice that either party may or is required to give the other shall be in writing, and shall be either personally delivered or sent by regular U.S. Mail, to the following addresses: To TENANT: Chomg Sang Kim and Cho He Kim, Trustees of The Kim Trust, dated October 3, 1990 2061 Valhalla Drive Santa Ana, CA 92705 To LANDLORD: City of Tustin 300 Centennial Way Tustin, CA 92780 With a copy to: David Kendig City Attorney Woodruff, Spradlin & Smart 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 In the event either address changes, notice shall be given to the other party. 20. SURRENDER. On or before the termination of this Lease, TENANT shall remove all of TENANT's goods and effects from the leased premises, and shall deliver to LANDLORD actual and exclusive possession of the PROPERTY and all keys and locks thereto. Any of TENANT's property that remains on the PROPERTY upon termination of the Lease shall be deemed abandoned and shall be disposed of as LANDLORD sees fit, with no liability to TENANT for loss or damage thereto, and at the sole risk of TENANT. LANDLORD may remove and store any such property at TENANT's expense; retain same under LANDLORD's control; sell same at public or private sale (without notice) and apply the net proceeds of such sale to the payment of any sum due hereunder; or destroy same. 21. VALIDITY/SEVERABILITY. If any provision of this Lease is held to be invalid, such invalidity shall not affect the validity or enforceability of any other provision of this Lease. 22, ATTORNEYS' FEES. In the event action is brought by any party to enforce the terms of this Leaseor to recover possession of the PROPERTY, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees and costs associated therewith. Page 4 of 5 1346132.1 23, AMENDMENT. The terms of this Lease may not be modified or amended except by an instrument in writing executed by each of the parties hereto. 24. TIME OF ESSENCE. Time is of the essence of each and every term, condition, obligation, and provision hereof. 25, ENTIRE AGREEMENT. This Lease and the Agreement n ent for Acquisition of Real Property entered into between the parties constitute the entire agreement between the patties with respect to the terms of the Lease and'the purchase and, sale of the PROPERTY and supersede any oral or written representations or agreements that may have been made by either patty. IN WITNESS WHEREOF, the parties, have executed this Agreement the dates" set forth below. TENANT: Chong Sang Kim and Cho Rea Mm, Trustees of The Kim Trust, dated October 3,1990 Date,-, Page 5 of 5 1346132A LANDLORD: CITY OF TUSTIN, a municipal, corporation of the State of California By: Name: Its: Date: APPROVED AS TO FORM: By: City Attorney Date: ATTEST: M Name; Title: Date: