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HomeMy WebLinkAboutRes OB-105 (2)OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY ECONOMIC DEVELOPMENT DEPARTMENT STAFF REPORT REQUEST: AUTHORIZATION TO EXECUTE A PURCHASE AND SALE AGREEMENT FOR THE PROPERTY KNOWN AS DESERT WILLOW LOT PAD F / APN 620-400-028 LOCATED ON THE EAST SIDE OF PORTOLA AVENUE, SOUTH OF FRANK SINATRA DRIVE, PROPERTY 12(f) OF THE LONG RANGE PROPERTY MANAGEMENT PLAN SUBMITTED BY: Martin Alvarez, Director of Economic Development PROPERTY Family Development BUYER: 73081 Fred Waring Palm Desert, CA 92260 DATE: December 1, 2014 CONTENT: Resolution No. OB-105 Purchase and Sale Agreement (CONTRACT NO. SA34040) Appraisal / Location Map Recommendation Waive further reading and adopt Resolution No. OB-105: 1. Authorize the Executive Director to execute a Purchase and Sale Agreement with Family Development to sell the Successor Agency owned property known as APN 620-400-028 located on the east side of Portola Avenue, south of Frank Sinatra Drive. 2. Authorize the Executive Director to execute said agreement after approval is received from the Oversight Board and State Department of Finance. Executive Summary Approval of staff's recommendation will authorize the Executive Director to execute a Purchase and Sale Agreement (PSA) with Family Development for the sale of a Successor Agency owned parcel located on the east side of Portola Avenue, south of Frank Sinatra Drive, known as Desert Willow Lot Pad F (see location map). This parcel is identified to be sold in the approved Long Range Property Management Plan. The PSA is in the amount of the appraised value ($2,020,000.00) and will require approval by the Oversight Board and the State Department of Finance, prior to execution. Background On June 2, 2014 the Successor Agency's Long Range Property Management Plan (LRPMP) was approved by the State Department of Finance. The subject parcel is identified as Parcel 12(f) on \\srv-fi12k3\groups\Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\Oversight Board DW Lot Pad F PSA 12-1-14 doc Staff Report — Oversight Board Sale of Property- Desert Willow Lot Pad F (12f) December 1, 2014 Page 2 of 2 the LRPMP and requires disposition at or above fair market value. The site is currently vacant, totals 15.52 acres and is located adjacent to the 4.3 acre parcel currently being used as a retention basin. The retention basin was approved to be transferred to the City of Palm Desert as Government Use as part of the LRPMP (see location map). The subject site is zoned Planned Residential 5-units/acre. Discussion On August 28, 2014, the Successor Agency authorized the execution of a 12-month Exclusive Negotiating Agreement (ENA) with Family Development for the sale of the subject 15.52 acre site known as Desert Willow Lot Pad F. During the ENA period and in anticipation of the sale of the property, the Successor Agency contracted with Lidgard & Associates, Inc. to conduct a fair market appraisal. Lidgard's appraisal complies with the reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a). Lidgard's appraised value for the site is $2,020,000.00 (see attached appraisal). Staff has prepared the attached PSA, selling the site for the appraised value to Family Development (developer). The PSA requires that the developer secure the development entitlements with the City prior to the close of escrow. In addition, the PSA requires the developer to deposit $125,000.00 into escrow upon execution of the agreement. The developer proposes to develop the site with approximately 112 residential units and common area amenities. The developer is required to close escrow within 30-days of receiving final approval of entitlements, which is anticipated to be accomplished by the middle of next year. Staff recommends that the Oversight Board authorize the Executive Director to execute the Purchase and Sale Agreement with Family Development for the appraised value of $2,020,000.00, pending approval from the State Department of Finance. Fiscal Analysis The property is listed on the LRPMP to be sold for fair market value. The LRPMP requires that all proceeds of the sale be distributed as property taxes to the affected taxing entities, in accordance with the terms of the California Health and Safety Code, Section 34191.5 (c)(2)(B). Each taxing entity including the City will receive a portion of the proceeds based on their respective tax rate. Submitted Byi ' / , Department Head: Mtin Alvarez Director of Reviewed 1 Paul $/ c ibson, Director of Finance evelopment Appr / 00 ../`tYWG/fle/777/ John M. Wohlmuth, Executive Director Rudy Accta, Assistant City Manager (+{ . ILarson , i (IJO; Jon BY OVERSIGHT BOARD - ON IQ,— (-)t - , 4 VERIFIED B. Original on file with City Clerk's Office \\srv-fi12k3\groups\Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\Oversight Board DW Lot Pad F PSA 12-1-14.doc NOTICE OF ADJOURNED REGULAR MEETING OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY Proposed Adoption of: A Resolution Directing the Execution of a Purchase and Sale Agreement with Family Development for Property Located on the East Side of Portola Avenue, South of Frank Sinatra Drive known as APN: 620-400-028, Property 12(f) Pursuant to the Long Range Property Management Plan Date: December 1, 2014 Time: 1:30 P.M. or as soon thereafter as the matter may be heard Place: Administrative Conference Room, located at Palm Desert City Hall, 73-510 Fred Waring Drive, Palm Desert, California NOTICE IS HEREBY GIVEN that at the meeting of the Oversight Board (the "Oversight Board") of the Successor Agency to the Palm Desert Redevelopment Agency (the "Successor Agency") to be held on December 1, 2014, at 1:30 P.M., or as soon thereafter as possible, the Oversight Board will consider the adoption of a resolution directing the execution of a Purchase and Sale Agreement with Family Development for Property located on the East Side of Portola Avenue, South of Frank Sinatra Drive known as APN: 620-400-028, Property 12(f) pursuant to the Successor Agency's Long Range Property Management Plan. Such Long Range Property Management Plan has been approved previously by the Oversight Board and the California State Department of Finance. Interested persons are invited to attend this meeting and be heard regarding this matter. An individual who challenges any decision regarding the proposed action in court may be limited to raising only those issues such individual or someone else raised at the meeting described in this notice or in written correspondence delivered to the Oversight Board at, or prior to, the meeting. Due to the time constraints and the number of persons wishing to give oral testimony, time restrictions may be placed on oral testimony at the meeting regarding the proposal. Any interested person may wish to make comments in writing to assure that the relevant views are expressed adequately. Written comments may be submitted to the Oversight Board prior to the time set for the meeting, to the attention of the Secretary of the Oversight Board at 73-510 Fred Waring Drive, Palm Desert. Further information may be obtained by contacting Martin Alvarez, Dir. of Economic Development, at 73-510 Fred Waring Drive, Palm Desert, or by telephone at (760) 346-0611, Ext 467 or by email at malvarez@cityofpalmdesert.org. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in an Oversight Board meeting, please contact the Office of the City Clerk of the City of Palm desert at (760) 346-0611. Notification at least 48 hours prior to the meeting or time when services are needed will assist the Oversight Board staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting or service. Assisted hearing devices will be available at this hearing without prior notification Dated this 'lr'day o0 , 2014 Ra helle D. Klassen, Secretary to the Successor Agency to the PT1m Desert Redevelopment Agency RESOLUTION NO. OB- 105 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION OF A PURCHASE AND SALE AGREEMENT FOR PROPERTY LOCATED ON THE EAST SIDE OF PORTOLA AVENUE, SOUTH OF FRANK SINATRA DRIVE, PALM DESERT, CA (APN 620-400-028) PROPERTY 12(f) OF THE LONG RANGE PROPERTY MANAGEMENT PLAN WITH FAMILY DEVELOPMENT RECITALS: A. Pursuant to AB X1 26 (enacted in June 2011), as modified by the California Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., 53 Cal. 4th 231 (2011), the Palm Desert Redevelopment Agency (the "Former Agency") was dissolved as of February 1, 2012 and the Successor Agency was established, and the Oversight Board to the Successor Agency (the "Oversight Board") was constituted. B. AB 1484 (enacted June 2012) amended and supplemented AB X1 26 (AB X1 26 and AB 1484, together, being referred to below as the "Dissolution Act"). C. Pursuant to the Dissolution Act, the Successor Agency is tasked with winding down the affairs of the Former Agency. D. Pursuant to Section 34175(b) of the California Health and Safety Code ("HSC"), all real properties of the Former Agency transferred to the control of the Successor Agency by operation of law. E. On May 5, 2014, the Oversight Board adopted Resolution No. OB-073, approving a Long -Range Property Management Plan (the "LRPMP") which addresses the disposition of the real properties owned by the Successor Agency. F. As indicated in the DOF's letter dated June 2, 2014, the DOF has approved the LRPMP. G. Pursuant to HSC Section 34191.3, the DOF-approved LRPMP shall govern, and supersede all other provisions of the Dissolution Act relating to, the disposition and use of the real property assets of the Former Agency. H. Pursuant to the approved LRPMP, the Oversight Board authorizes the execution of a Purchase and Sale Agreement (see Exhibit A) with Family Development for Property 12(f) of the LRPMP (APN 620-400-028) in the amount of $2,020,000.00 (fair market value). In accordance with the terms of California Health and Safety Code Section 34191.5(c)(2)(B), the proceeds of this property sale will distributed as property taxes to the affected taxing entities. -1- RESOLUTION NO. OB-105 J. The Oversight Board is adopting this Resolution to direct the execution of the Purchase and Sale Agreement (see Exhibit A) with Family Development for fair market value as directed by the approved LRPMP. K. Notice of the proposed action presented in this Resolution was posted on the Successor Agency's website (being a page on the City's website) and at three public places: beginning on November 20 , 2014. NOW, THEREFORE, THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct. Section 2. The Oversight Board hereby authorizes and directs the Successor Agency to complete the execution of the Purchase and Sale Agreement (see Exhibit A) with Family Development for fair market value as directed by the approved LRPMP. The Executive Director of the Successor Agency is hereby authorized to execute the Purchase and Sale Agreement to complete the disposition of the property. Section 3. The members of the Oversight Board and officers and staff of the Successor Agency are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable to effectuate this Resolution. Section 4. This Resolution shall become effective in accordance with HSC Section 34181(f). APPROVED and ADOPTED this day of , 2014. AYES: NOES: ABSENT: ABSTAIN: ROBERT A. SPIEGEL, CHAIR ATTEST: RACHELLE D. KLASSEN, SECRETARY OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY RESOLUTION NO. OB -105 EXHIBIT A OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY PURCHASE AND SALE AGREEMENT FOR PROPERTY LOCATED ON THE EAST SIDE OF PORTOLA AVENUE, SOUTH OF FRANK SINATRA DRIVE, PALM DESERT, CA (APN 620-400-028) PROPERTY 12(f) OF THE LONG RANGE ROPERTY MANAGEMENT PLAN WITH THE CITY OF PALM DESERT -3- RESOLUTION NO. OB-105 CONTRACT NO. SA34040 AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS The Escrow Connection ("Escrow") 1111 E. Taquitz Canyon Way, Ste. 101 Palm Springs, CA 92262 (760) 327-8566 Attention: Kathy Kleindienst ("Escrow Holder") Escrow No: THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS ("Agreement") is dated for reference purposes as of this day of , 2014, by and between the SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY, a public entity ("Seller"), and FAMILY DEVELOPMENT GROUP, INC., a Delaware corporation ("Buyer"). This Agreement is made with reference to the following facts, which are intended to be part of the substance of the agreement between the parties: RECITALS A. Seller is the owner of certain real property located in the City of Palm Desert ("City"), Riverside County, California, commonly known as a portion of APN 620-400-028, consisting of approximately 15.5 acres of unimproved land, and more particularly described in Exhibit A attached hereto ("Property"). Reference herein to the Property includes all of Seller's right, title and interest in and to any and all improvements, fixtures, rights -of -way, utility rights, easements and other appurtenant interests, entitlements, claims or other privileges or benefits in any way connected with the Property, excepting any right, title or interest other than as a member of the public, and other than the rights of an adjoining owner upon abandonment, in and to any public rights of way or public easements. B. Buyer is interested in developing the Property as a residential development project, including the construction of residences and related improvements thereon (the "Project"), subject to the necessary land use approvals, authorizations and entitlements, including, without limitation, a development agreement between Buyer and the City (the "DA") to be submitted and processed by Buyer for approval by the City (all such approvals, authorizations and entitlements of a discretionary nature, including the DA, that are in form and substance acceptable to Buyer in its sole and absolute discretion being referred to herein as the "Project Entitlements"). The DA shall address, among other things, affordable (inclusionary) housing fees or in lieu payments arising from the Project, an agreement relating to the membership in, use of and access to the Desert Willow Golf Course/Academy by the owners of homes and units within the Project, and the Project's use of the retention basin on property currently owed by Seller or the City adjacent to the Property. RESOLUTION NO. OB-105 CONTRACT NO. SA34040 C. On September 17, 2014, Seller entered into an Exclusive Right to Negotiate Agreement (the "ENA") for the purchase of the Property and development of the Project by the Buyer. D. Pursuant to the ENA, Buyer desires to acquire the Property and develop, construct and operate thereon the Project, and Seller desires to sell the Property to Buyer pursuant to the terms and conditions set forth in this Agreement. THE PARTIES AGREE AS FOLLOWS: 1. Effective Date. The "Effective Date" of this Agreement shall be the date the Seller delivers an executed copy of this Agreement to Buyer. 2. Purchase and Sale of Property. Upon the terms and conditions described below, Buyer agrees to purchase and Seller agrees to sell and convey the Property to Buyer. 3. Purchase Price. 3.1 Purchase Price. The purchase price for the Property will be an amount equal to Two Million Twenty Thousand Dollars ($2,020,000.00) ("Purchase Price"), provided that such Purchase Price shall be subject to adjustment as provided in Section 3.2. The purchase price shall be paid in cash, and this Agreement is not subject to any financing contingency. 3.2 Adjustment to Purchase Price. Notwithstanding the foregoing, either party shall have the right to commission an Updated Appraisal (as hereafter defined) at their sole cost and expense, with the Purchase Price for the Property being adjusted to the Fair Market Value of the Property determined by such Updated Appraisal, if the close of escrow on the Property has not occurred by the Purchase Price Adjustment Date (as hereafter defined). In the event that an Updated Appraisal would increase the purchase price of the Property by more than 5%, Buyer shall have the right to terminate this Agreement and receive back the Deposit (as hereafter defined). As used herein the term "Updated Appraisal" means a revision of the appraisal prepared by Capital Realty Analysts (the "Appraiser") dated October 2, 2014 (the "Appraisal") to determine the current Fair Market Value of the Property, to be performed by the Appraiser, based upon the same general parameters that applied to the Appraisal (i.e., assuming raw and unentitled land). As used herein the term "Purchase Price Adjustment Date" means April 1, 2016; provided, however, that such date shall be automatically extended for up to ninety (90) days, but in no event more than thirty (30) days following receipt of Final Approval (as hereafter defined) of the Project Entitlements, in the event that the Closing Date (as hereafter defined) is extended pursuant to Section 8.3 beyond April 1, 2016 as a result of delays in securing the Project Entitlements that were beyond the reasonable control of Buyer, including, without limitation, a City delay in processing and evaluating the Project Entitlements or a third party challenge to the Project Entitlements. G:\Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 2 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 4. Payment of Purchase Price. Buyer will pay the Purchase Price to Selier through Escrow as follows: 4.1 Deposit. Within five (5) business days following the Effective Date of this Agreement, Buyer will deposit with Escrow Holder the sum of One Hundred Twenty Five Thousand Dollars ($125,000.00) ("Deposit") in immediately available funds; provided that Twenty Five Thousand Dollars ($25,000.00) of such deposit shall consist of a transfer of the deposit previously made pursuant to the terms of the ENA. Escrow Holder will place the Deposit in an interest bearing account, with interest to accrue for the benefit of Buyer. All references herein to the "Deposit" will include interest accrued thereon. In the event the Buyer fails to deliver the Deposit to the Escrow Holder within the time period specified herein, this Agreement will be null and void. 4.2 Balance of Purchase Price. Not later than one (1) business day prior to Closing, Buyer shall deposit with Escrow Holder in immediately available funds the balance of the Purchase Price, together with such other amounts as may be required in order to pay Buyer's share of closing costs and prorations. 4.3 Application of Deposit. The Deposit is nonrefundable except as otherwise expressly provided in this Agreement. Upon Close of Escrow (defined below), the Deposit will be credited against the Purchase Price. Notwithstanding anything in this Agreement to the contrary, the first $100.00 of the Deposit shall be nonrefundable to Buyer under any and all circumstances and shall constitute independent consideration payable to Seller for Seller's agreement to sell the Property to Buyer pursuant to the terms of this Agreement. 5. Title. 5.1 Preliminary Title Report. Upon execution of this Agreement by both parties, Buyer is deemed to have approved all exceptions to title as set forth in the preliminary title report for the Property dated August 28, 2014 (the "Permitted Exceptions"), prepared by Lawyers Title Company (through its Riverside, California office — "Title Company") (the "Title Report"). In the event that any additional exceptions to title not caused or created by Buyer and not reflected in the Title Report are reported by the Title Company prior to the Close of Escrow (each an "Additional Exception"), Seller shall use commercially reasonable efforts to remove any such Additional Exception so it no longer affects title to the Property or to otherwise address and cure such Additional Exception in a manner reasonably acceptable to Buyer ("Cure"), but in no event or circumstance shall Buyer be obligated to accept the Property at the Close of Escrow subject to any such Additional Exceptions that have not been removed from the title records or otherwise Cured in accordance herewith. Any Additional Exceptions that are Cured in accordance herewith shall thereafter be deemed Permitted Exceptions. 5.2 Title Policy. At Close of Escrow, Seller will convey good and marketable title to the Property to Buyer, subject only to the Permitted Exceptions, as G'\Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14.doc 3 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 evidenced by a CLTA Standard Form Owners Policy of Title Insurance, or at Buyer's election and additional expense, an ALTA Extended Owner's Policy of Title Insurance, issued by the Title Company in an amount equal to the Purchase Price, and containing such endorsements (the "Endorsements") as Buyer may, at Buyer's expense, reasonably require ("Title Policy"). 6. Due Diligence Inspections/Entry upon the Property. Prior to Buyer's execution of this Agreement, Buyer has been given an opportunity to inspect the Property. Notwithstanding the foregoing, Buyer shall have the right to access the Property to conduct surveys and feasibility studies through the Close of Escrow with reasonable prior notice to Seller. Buyer shall be responsible for any personal injury or property damage resulting from its negligence, gross negligence, or willful misconduct in connection with its entry onto the Property, provided that in no event shall Buyer have responsibility or liability under this Agreement for legally required disclosure or any pre- existing conditions affecting the Property (including the discovery or existence of hazardous substances in, on or about the Property and associated groundwater). In the event that the Close of Escrow does not occur for any reason other than a default by Seller hereunder, Buyer shall restore any damage caused to the Property in connection with any Buyer inspections. 6.1 Marketing and Signage. From the date of this Agreement through the date of the Close of Escrow, Buyer shall have the right to (a) promote, market and advertise the Project, (b) advertise, market and offer for sale the homes and units to be included within the Project, and (c) place or install, in a reasonable manner and in compliance with any applicable laws, rules and regulation, sales and marketing and other promotional signage upon the Property. Notwithstanding the foregoing, no signage shall be placed upon the Property by Buyer (i) without the prior approval of the City Manager of the City of Palm Desert, and (ii) until the Project Entitlements (or a material component thereof) have been submitted to the City's Planning Department for review and comment. 7. As Is Acceptance of Property. Buyer acknowledges that prior to Close of Escrow, it will have had the opportunity to conduct such tests and evaluations as it deems reasonably necessary in order to investigate the condition of the Property, including its environmental status. Buyer acknowledges that it is acquiring the Property in its "as is" condition with no warranty or representation from Seller regarding the physical condition of the Property, its environmental condition or its suitability for Buyer's intended purposes except as may be contained in this Agreement. Buyer acknowledges that it is acquiring the Property based solely in reliance on its own inspections and examination and its own evaluation of the Property, except that Buyer shall have the right to rely upon the truth and accuracy of any Seller representations or warranties contained in this Agreement. Buyer agrees that no representations, statements or warranties have at any time been made by Seller or its agents regarding the physical condition of the Property except as may be contained in this Agreement. Buyer acknowledges that there may be conditions affecting the Property unknown to Buyer that may adversely affect its value or use for Buyer's intended purposes. Buyer nevertheless waives any rights or recourse it may have with respect to such unknown G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 4 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 conditions and any damage, loss, costs or expense related thereto, including rights accruing under California Civil Code § 1542, which provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Buyer acknowledges that it has either consulted with or had an opportunity to consult with legal counsel regarding the above waiver. The provisions of this Section 7 will survive Close of Escrow. Buyer Initials 8. Escrow. 8.1 Escrow Instructions. This Agreement shall constitute instructions of Buyer and Seller to Escrow Holder. The parties agree to execute such additional pro forma instructions as Escrow Holder may reasonably require, however, in the event of a conflict, the terms and provisions of this Agreement shall govern. 8.2 Opening of Escrow. Upon execution of this Agreement, Buyer and Seller shall cause an escrow to be opened with Escrow Holder by depositing with Escrow Holder a fully executed copy of this Agreement. Escrow shall be deemed opened as of the date this fully executed Agreement is deposited with Escrow Holder ("Escrow Opening"). 8.3 Close of Escrow: Closing Date. "Close of Escrow" shall mean the date on which the Grant Deed conveying title from Seller to Buyer is recorded in the Official Records of the County Recorder of Riverside County, California. The form of the Grant Deed will be as set forth in Exhibit B attached hereto. Provided that this Agreement is not earlier terminated pursuant to the terms and provisions hereof, and provided that all of the conditions precedent to the Close of Escrow set forth in this Agreement have been approved or waived as herein provided, Escrow shall close on or before the thirtieth (30th) day after Final Approval of the Project Entitlements ("Final Approval" means, with respect to the Project Entitlements, that they have been obtained beyond any challenge or appeal period with no challenge or appeal then pending and with all City requirements regarding the issuance of such Project Entitlements fully satisfied), but in no event after April 1, 2016 ("Closing Date"). Notwithstanding the foregoing, Buyer shall have the right to extend the closing date up to three (3) times, each for a thirty (30) day period, by providing Seller with reasonable prior notice of each such extension and delivering to Escrow Holder a $25,000 applicable extension payment for each such extension. Seller may terminate this Agreement pursuant to Section 9.2 hereof if Seller has performed its obligations hereunder, and failure to close Escrow results from a material default by Buyer, in which G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 5 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 case the Deposit shall be delivered to Seller as liquidated damages. Buyer may terminate this Agreement pursuant to Section 9.1 hereof if Buyer has performed its obligations hereunder, and failure to close Escrow results from a material default by Seller, in which case the Deposit shall be returned to Buyer. By causing the Close of Escrow to occur, Escrow Holder shall be deemed to have irrevocably committed to cause the Title Company to issue the Title Policy to Buyer (or to have confirmed that Title Company is irrevocably committed to issue the Title Policy to Buyer) upon payment of the applicable premium. If the County Recorder of Riverside County, California is closed on the last day for closing Escrow, then the parties agree that Escrow Holder shall have until the next day the Recorder is open to record the Grant Deed and close Escrow. 8.4 Documents and Funds from Buyer. Not later than one (1) business day prior to the Closing Date, Buyer will deliver or will assure that the following documents and funds have been delivered to Escrow Holder: (a) Purchase Price. The Purchase Price, as described in Section 3 above. (b) Preliminary Change of Ownership Statement. A Preliminary Change of Ownership Statement or in lieu thereof, the appropriate fee, to be provided to the Recorder's office at Close of Escrow. (c) Other Sums and Documents. All other sums and documents required by Escrow Holder according to this Agreement to carry out and close the Escrow. 8.5 Documents and Funds from Seller. Not later than one (1) business day prior to the Closing Date, Seller will deliver or will assure that the following documents and funds have been delivered to Escrow Holder: (a) Grant Deed. A fully executed and acknowledged Grant Deed conveying the Property to Buyer, or Buyer's nominees or assigns, in fee simple subject only to the Permitted Exceptions. (b) FIRPTA Affidavit. An original affidavit, using Escrow Holder's standard forms, certifying that Seller and this transaction are not subject to the withholding requirements of the Foreign Investment in Real Property Tax Act and equivalent California legislation. (c) General Assignment. A General Assignment in the form of Exhibit C attached hereto transferring Seller's rights and interests in and to the Project Entitlements and any other intangible Property relating to the Property to Buyer. (d) Other Sums and Documents. All other documents and sums required by Escrow Holder according to this Agreement to carry out the Escrow and to issue the Title Policy to Buyer in the form required by Buyer. G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 6 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 8.6 Conditions to the Close of Escrow. Close of Escrow shall not take place unless and until: (a) Seller's Obligation. Seller's obligation to sell the Property to Buyer is contingent on the following: (i) Buyer shall have delivered the Purchase Price, less any credits described in this Agreement, for the Property. (ii) The Seller's Oversight Board has approved this Agreement and/or the sale of the Property, and the California Department of Finance has approved this Agreement and/or the sale of the Property. (iii) The City and Buyer shall have entered into the DA on terms and conditions satisfactory to both the City and Buyer or, in the event the DA will be executed following the Close of Escrow, Final Approval of the DA shall have been obtained. (iv) On and as of the Close of Escrow, all of the representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects. (v) Buyer shall have timely performed all other obligations of Buyer under this Agreement. In the event that any of the foregoing conditions have not occurred or been satisfied or waived by the Closing Date, Seller shall be entitled to terminate this Agreement and, subject to the provisions of Section 8.9 below, any funds deposited, including the Deposit by Buyer and any interest thereon will be returned to Buyer. (b) Buyer's Obligation. Buyer's obligation to purchase the Property is contingent on the following: (i) The Property shall be in substantially the same physical condition that existed as of the date of this Agreement. (ii) The Seller's Oversight Board has approved this Agreement and/or the sale of the Property, and the California Department of Finance has approved this Agreement and/or the sale of the Property. G \Econ Development\Martin Alvarez SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 7 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 (iii) The Buyer shall have received Final Approval of the Project Entitlements, and there shall be no moratorium or similar development related restriction that would preclude or materially restrict or delay Buyer's intended development and construction of the Project. (iv) The City and Buyer shall have entered into the DA on terms and conditions satisfactory to both the City and Buyer or, in the event the DA will be executed following the Close of Escrow, Final Approval of the DA shall have been obtained. (v) Title Company shall be irrevocably committed to issue the Title Policy to Buyer at the Close of Escrow in accordance with the terms of Section 5.2 hereof, subject only to the payment of any applicable premiums. (vi) On and as of the Close of Escrow, all of the representations and warranties of Seller set forth in this Agreement shall be true and correct in all material respects. (vii) Seller shall have performed all of its other obligations under this Agreement. In the event that any of the foregoing conditions have not occurred or been satisfied or waived by the date(s) specified, Buyer shall be entitled to terminate this Agreement and, subject to the provisions of Section 8.9 below, any funds deposited by Buyer, including the Deposit, and any interest thereon will be returned to Buyer. (c) Delivery of Sums and Documents. Both parties have deposited with Escrow Holder all sums and documents required by this Agreement. 8.7 Closina Procedure. Upon receipt of all funds and instruments described in this Section 8, and upon satisfaction or waiver of all contingencies and conditions set forth in this Agreement, Escrow Holder shall: (a) Record the Grant Deed. Record the Grant Deed in the Official Records of Riverside County, California. (b) Title Policy. Cause the Title Policy to be issued. (c) Purchase Price. Deliver the Purchase Price to Seller, less any costs and expenses shown on the closing statements approved by Seller and G \Econ Development\Martin Alvarez SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 8 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 Buyer, which costs and expenses shall be disbursed as instructed by Seller and Buyer in escrow instructions delivered to Escrow Holder prior to the Closing Date. 8.8 Electronic/Counterpart Documents. In the event Buyer or Seller utilizes "facsimile" or other electronically transmitted signed documents, then except as otherwise set forth below with respect to recorded documents, the parties hereby agree to accept and instruct Escrow Holder to rely upon such documents as if they bore original signatures. Buyer and Seller hereby agree, if requested by Escrow Holder, to provide to Escrow Holder within seventy-two (72) hours after transmission, such documents bearing the original signatures. Buyer and Seller further acknowledge and agree that electronically transmitted documents bearing non -original signatures will not be accepted for recording and that the parties will timely provide originally executed documents to Escrow Holder for such purpose. Escrow Holder is authorized to utilize documents which have been signed by Buyer and Seller in counterparts. 8.9 Costs of Escrow. Buyer will pay one-half of Escrow Holder's fee, and any additional costs and charges customarily charged to buyers in accordance with common escrow practices in Riverside County. Seller shall pay one-half of Escrow Holder's fee, the costs and expenses associated with the Title Policy as described in Section 4, and any additional costs and charges customarily charged to sellers in accordance with common escrow practices in Riverside County. 8.10 Property Taxes and Assessments. Under Seller's ownership, the Property has not been subject to real property taxes or assessments. At the Close of Escrow, Buyer will become liable for all real property taxes and assessments (including any supplemental assessments) allocable to the Property for the period commencing after the Close of Escrow. 8.11 Brokers' Commissions. Neither party has had any contact or dealings regarding the Property, or any communication in connection with the subject matter of this transaction, through any real estate broker or other person who can claim a right to a commission or finder's fee in connection with the sale contemplated herein. If any other broker or finder perfects a claim for a commission or finder's fee based upon any such contact, dealings or communication, then the party through whom such person makes its claim shall indemnify, hold harmless and defend the other party (the "Indemnified Party") from any and all costs, damages, claims, liabilities, losses, or expenses, (including without limitation, reasonable attorneys' fees and disbursements) incurred by the Indemnified Party in defending against the claim. The provisions of this Section shall survive termination of this Agreement and the Close of Escrow. 8.12 Possession. Exclusive possession of the Property shall be surrendered to Buyer at the Close of Escrow, vacant and subject only to the Permitted Exceptions. 8.13 Report to IRS. After Close of Escrow and prior to the last date on which such report is required to be filed with Internal Revenue Service ("IRS"), and if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 9 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 Escrow Holder shall report the gross proceeds of the purchase and sale of the Property to the IRS on Form 1099-B, W-9 or such other form(s) as may be specified by the IRS pursuant to said Section 6045(e). Concurrently with such filing, Escrow Holder shall deliver a copy thereof to Buyer and Seller. 9. Remedies for Default. 9.1 Seller Default. If Seller defaults under this Agreement prior to the Close of Escrow, Buyer may, at its option, terminate this Agreement (in which case the Deposit will be returned by Escrow Holder to Buyer) or initiate an action for specific performance of this Agreement. 9.2 Buyer Default. IF BUYER DEFAULTS IN ITS OBLIGATION TO CLOSE THE PURCHASE OF THE PROPERTY, SELLER MAY TERMINATE THIS AGREEMENT, IN WHICH EVENT SELLER SHALL RETAIN THE DEPOSIT AS FULL, AGREED AND LIQUIDATED DAMAGES, AND SELLER'S RETENTION OF THE DEPOSIT IS SELLER'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO SUCH BUYER DEFAULT. THE PARTIES HERETO EXPRESSLY AGREE AND ACKNOWLEDGE THAT IN THE EVENT OF A DEFAULT BY BUYER IN ITS OBLIGATION TO CLOSE THE PURCHASE OF THE PROPERTY, SELLER'S ACTUAL DAMAGES WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN, THAT THE AMOUNT OF THE DEPOSIT REPRESENTS THE PARTIES' REASONABLE ESTIMATE OF SUCH DAMAGES, AND THAT SUCH AMOUNT IS NOT UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS AGREEMENT WAS MADE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING: (1) SELLER WILL INCUR ADMINISTRATIVE COSTS IN THE NEGOTIATION AND REVIEW OF THIS AGREEMENT AND OTHER DOCUMENTS RELATING TO THIS TRANSACTION, AND WILL INCUR DAMAGES BY WITHDRAWING THE PROPERTY FROM THE OPEN MARKET; (2) CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT SUBSTANTIALLY IN EXCESS OF THE DEPOSIT MAY BE INCURRED BY SELLER IF THE SALE OF THE PROPERTY CONTEMPLATED HEREBY IS NOT COMPLETED; AND (3) SELLER IS ENTERING INTO THIS AGREEMENT WITH BUYER IN RELIANCE UPON BUYER'S COMMITMENT TO PURCHASE THE PROPERTY FROM SELLER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION 9.2, THIS LIQUIDATED DAMAGES PROVISION IS NOT INTENDED AND SHALL NOT BE DEEMED OR CONSTRUED TO LIMIT IN ANY WAY BUYER'S INDEMNITY, RESTORATION OR CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT. SELLER'S INITIALS: BUYER'S INITIALS: GA\Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 1 I-17-14.doc 10 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 9.3 Post -Closing Default. In the event of a default of this Agreement by either party following the Close of Escrow, the other party shall have all rights and remedies available at law or in equity. 10. Notices. Any and all notices required or permitted to be given hereunder shall be in writing and shall be (i) personally delivered, or (ii) sent by recognized overnight delivery service, mailed by certified or registered mail, return receipt requested, postage prepaid. Any such notice or communication shall be effective when received by the addressee or upon refusal of such delivery to the parties at the addresses indicated below: To Seller: With copy to: To Buyer: With copy to: Successor Agency to the Palm Desert Redevelopment Agency 73-510 Fred Waring Drive Palm Desert, CA 92260 Attn: Executive Director Facsimile: 760-341-6372 Best Best & Krieger LLP 74-760 Highway 111, Suite 200 Indian Wells, CA 92210 Facsimile: 760-340-6698 Attn: Robert Hargreaves Rudy C. Herrera, President Family Development Group, Inc. 73081 Fred Waring Drive Palm Desert, CA 92260 Facsimile: 760-776-4422 Law Offices of Gregory L. Wasserman 700 Larkspur Landing Circle, Ste. 199 Larkspur, CA 94939 Facsimile: 415-373-4507 Any party may change its address by a notice given to the other party in the manner set forth above. 11. Representations and Warranties. 11.1 Seller Representations. As of the date of this Agreement and through and including the date that the Close of Escrow occurs, and for the duration of the Survival Period (as hereafter defined), Seller hereby represents, warrants and covenants to Buyer as follows: G \Eton Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 11 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 (a) Seller is the fee simple owner of the Property and has the right, power and authority to enter into this Agreement, to fulfill its obligations hereunder and to sell the Property in accordance with the terms hereof, having previously obtained any and all consents and approvals required in connection therewith, and Seller entering into this Agreement, fulfilling its obligations hereunder and selling the Property in accordance with the terms hereof will not violate any existing permit, approval, contract, agreement, law, obligation, restriction, requirement, writ, injunction or judicial order to which Seller is bound. (b) There are no attachments, assignments for the benefit of creditors, actions, suits, litigation, eminent domain, condemnation or other judicial or administrative proceedings in any court, tribunal or dispute resolution forum pending or, to Seller's knowledge, threatened, affecting the right, power or authority of Seller to enter into this Agreement, to fulfill its obligations hereunder and to sell the Property in accordance with the terms hereof, or which question the validity or enforceability of this Agreement or of any action taken by Seller in accordance with this Agreement. (c) The individual(s) executing this Agreement and the documents contemplated herein on behalf of Seller have the legal right, power and authority to bind Seller to the terms and conditions hereof or thereof, and this Agreement and the documents contemplated to be executed and delivered herein are or will be upon full execution and delivery valid, legal and binding obligations of Seller, enforceable against Seller in accordance with their terms. (d) Seller has no actual knowledge of any liens or encumbrances or claims of liens or encumbrances affecting the Property or any portion thereof, except those matters that are disclosed to Buyer in the Title Report. (e) There are no oral or written leases affecting the Property. No person, firm or other legal entity has any option, right of first refusal, right of first offer or other right to acquire, possess, use or occupy the Property or any portion or portions thereof or any interest or interests therein. There are no contracts, agreements or commitments affecting or relating to the Property which will survive or otherwise be enforceable against Buyer following the Close of Escrow. 11.2 Buyer Representations. As of the date of this Agreement and through and including the date that the Close of Escrow occurs, and for the duration of the Survival Period, Buyer hereby represents, warrants and covenants to Seller as follows: (a) Buyer has the right, power and authority to enter into this Agreement, to fulfill its obligations hereunder and to acquire the Property in accordance with the terms hereof, having previously obtained any and all consents and approvals required in connection therewith, and Buyer entering into this Agreement, fulfilling its obligations hereunder and acquiring the Property in accordance with the terms hereof will not violate any existing permit, approval, contract, agreement, law, obligation, restriction, requirement, writ, injunction or judicial order to which Buyer is bound. G \Eton Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 12 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 (b) There are no actions, suits, litigation or judicial proceedings in any court, tribunal or dispute resolution forum pending or, to Buyer's knowledge, threatened, affecting the right, power or authority of Buyer to enter into this Agreement, to fulfill its obligations hereunder and to acquire the Property in accordance with the terms hereof, or which question the validity or enforceability of this Agreement or of any action taken by Buyer in accordance with this Agreement. (c) The individual(s) executing this Agreement and the documents contemplated herein on behalf of Buyer have the legal right, power and authority to bind Buyer to the terms and conditions hereof or thereof, and this Agreement and the documents contemplated to be executed and delivered herein are or will be upon full execution and delivery valid, legal and binding obligations of Buyer, enforceable against Buyer in accordance with their terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, or other similar laws affecting the rights of creditors generally. (d) Buyer is not a, and is not acting directly or indirectly for or on behalf of any, person, group, entity or nation named by any Executive Order of the United States Treasury Department as a terrorist, "Specifically Designated National and Blocked Persons," or other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule or regulation that is enforced or administered by the Office of Foreign Assets Control and Buyer is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of any such person, group, entity, or nation. 11.3 Survival Period. The representations and warranties of Seller and Buyer set forth in this Section 11 shall survive the Close of Escrow for a period of one year (the "Survival Period"). 11.4 Breach of Representation or Warranty. The breach of a representation or warranty of a party hereunder shall be addressed and resolved pursuant to the terms of Section 8.6 or Article 9, as applicable. 12. Covenants of the Parties. From and after the date of this Agreement and through and including the date that the Close of Escrow occurs: 12.1 Seller shall reasonably cooperate with Buyer, at no cost, expense or liability to Seller, in connection with Buyer's efforts to obtain, at any time and from time to time, any entitlements, permits, approvals or authorizations from any governmental agencies or authorities, utility companies, the California Bureau of Real Estate or any similar bodies or entities, which are reasonably necessary or required in connection with the Project, including, without limitation, the Project Entitlements. 12.2 Except as may be requested by Buyer in connection with Buyer processing and obtaining the Project Entitlements, Seller shall not amend, submit or revise or seek to amend, submit or revise the current zoning for the Property or any existing land use related entitlements, permits, approvals or authorizations applicable to or that G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 13 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 would be applicable to the Property without Buyer's prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. 12.3 Except as may be requested by Buyer in connection with Buyer processing and obtaining the Project Entitlements, Seller shall not sell, convey, grant, lease, assign, mortgage, hypothecate, lien, encumber or otherwise transfer the Property or any portion thereof or interest therein or permit any third party to lien or otherwise encumber the Property. 12.4 Seller shall not alter or cooperate in or otherwise approve or consent to the alteration of the physical condition of the Property and Seller shall maintain the Property as it is currently being maintained and in any case in substantial conformance with any applicable laws, rules and regulations. 12.5 Seller shall not enter into, amend, terminate or extend any existing contracts or agreements applicable to the Property without Buyer's prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. 12.6 Seller shall, promptly upon receipt, provide Buyer with a copy of any written notice or material correspondence from any utility company, any governmental authority or any other third party that concerns or relates to the Property or Buyer's intended development thereof. 12.7 Neither Seller nor Buyer shall introduce or release or cause or consent to the introduction or release of any Hazardous Materials in, from, under or upon the Property in violation of any applicable Environmental Laws. The term "Hazardous Materials" means any hazardous wastes, hazardous and toxic substances or related materials, asbestos or any material containing asbestos (including, without limitation, vinyl asbestos tile), petroleum and other hydro -carbons or any other substance or material, defined as a "hazardous substance" pursuant to and in actionable quantities or levels contemplated by any Environmental Law, and the term "Environmental Law" means any federal, state or local law, rule, ordinance or regulation relating to industrial hygiene or to environmental conditions or health and human safety, including, without limitation, the federal Comprehensive Environmental Reclamation and Liability Act, the federal Hazardous Materials Transportation Act, the Federal Resource Conservation and Recovery Act, each as amended, and the regulations promulgated pursuant to each of the foregoing. 13. Miscellaneous. 13.1 Integration. This Agreement supersedes all prior agreements and understandings between the parties relating to the subject matter hereof. Neither of the parties has relied upon any oral or written representation or oral or written information given to it by any representative of the other party. 13.2 Binding Effect. This Agreement shall bind and inure to the benefit of the parties, their respective heirs, successors and assigns. G \Eton Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 dot 14 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 13.3 Amendment/Modification. No change or modification of the terms or provisions of this Agreement shall be deemed valid unless in writing and signed by both parties. 13.4 Governina Law/Venue. This Agreement shall be construed, interpreted and applied in accordance with the laws of the State of California. Any litigation or arbitration regarding the Property or this Agreement will be brought in Riverside County Superior Court or conducted in Riverside County. 13.5 Business Days. Reference herein to "business days" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of California or in the City of Palm Desert. 13.6 Waiver. No waiver of any breach or default shall be construed as a continuing waiver of any provision or as a waiver of any other or subsequent breach of any provision contained in this Agreement. 13.7 Attorneys' Fees. In the event of any action or proceeding to enforce or construe any of the provisions of this Agreement, the prevailing party in any such action or proceeding shall be entitled to reasonable attorneys' fees and costs. 13.8 Assianabilitv. Any assignment of Buyer's rights under this Agreement shall require the prior written consent of Seller, which Seller may grant or withhold in its sole discretion. Notwithstanding the previous sentence, Buyer may transfer its rights under this Agreement to an entity controlled by the Buyer or a majority of the principals of Buyer without approval of the Seller. Except as expressly provided herein, any purported transfer of this Agreement, voluntarily or by operation of law, shall be null and void and shall confer no rights whatsoever upon any purported assignee or transferee, unless otherwise approved in writing by Seller pursuant to this Section 11.8. 13.9 Time of the Essence. Time is of the essence of this Agreement. 13.10 Escrow Holder. Escrow Holder shall conduct the Close of Escrow in accordance with the terms and provisions of the escrow instructions to be given to Escrow Holder by the parties in a form consistent with this Agreement. To the extent of any conflict or inconsistency between the terms and provisions of this Agreement and the escrow instructions, the terms of this Agreement shall control. 13.11 Exhibits. All Exhibits which are referred to herein and which are attached hereto or bound separately and initialed by the parties are expressly made and constitute a part of this Agreement. 13.12 Counterparts. This Agreement may be executed in counterparts and when so executed by the parties, shall become binding upon them and each such counterpart will be an original document. 13.13 Severabilitv. If one or more of the provisions of this Agreement, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in G\Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 15 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remainder of this Agreement shall not be in any way impaired or affected thereby, it being intended by the parties that all other rights, privileges and obligations under this Agreement shall be valid and enforceable to the fullest extent permitted by law. Notwithstanding the foregoing, this provision shall not apply in the event that a court of competent jurisdiction determines that the application hereof would materially and adversely affect a party hereto or the rights and interests of such party under this Agreement and would not be consistent with the perceived intent of the parties as otherwise reflected in this Agreement. 13.14 Limited Liability. Seller hereby acknowledges and agrees that in no event or circumstance shall any of Buyer's principals, shareholders, members, managers, partners, officers, directors, representatives or employees, or any principals, shareholders, members, managers, partners, directors, officers, representatives or employees of the shareholders, partners, members or managers of Buyer, have any personal liability under this Agreement. Buyer hereby acknowledge and agrees that in no event or circumstance shall any of Seller's officers, directors, representatives or employees have any personal liability under this Agreement. 13.15 Further Assurances. Upon the Close of Escrow, and from time to time thereafter, and as an obligation surviving the Close of Escrow, Seller and Buyer agree that they shall, at the request of the other make, execute and deliver or obtain and deliver all such affidavits, deeds, certificates, and other instruments and documents, and shall do or cause to be done all such acts or things, which either party may reasonably require in order to complete the consummation of the transactions contemplated by this Agreement, provided that the party to whom any such request is made is not subjected to any additional cost, expense or liability, or any increase in duties or obligations or any reduction or impairment of rights and interests in any material way in connection therewith. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOLLOWS G\Econ DevelopmentVvlartin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad FWD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doe 16 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 SELLER: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Name: JOHN M. WOHLMUTH Its: Executive Director BUYER: FAMILY DEVELOPMENT GROUP, INC., a Delaware corporation By: Name: Its: G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 17 RESOLUTION NO. OB-105 CONTRACT NO. SA34040 CONSENT AND ACKNOWLEDGMENT OF ESCROW HOLDER Escrow Holder hereby agrees to (i) accept the foregoing Agreement, (ii) act as the Escrow Holder under said Agreement and (iii) be bound by said Agreement in the performance of its duties as Escrow Holder. Escrow Holder acknowledges receipt on the date hereof of originals or counterparts of the foregoing Agreement fully executed by Seller and Buyer. Dated: Escrow Holder advises the parties that the date of the Opening of Escrow is , 2014. , 2014 THE ESCROW CONNECTION By: Its: Escrow Officer G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - Purchase and Sale Agreement (Family Development) 11-17-14 doc 18 RESOLUTION NO. OB-105 CONTRACT NO. SA3404O EXHIBIT A LEGAL DESCRIPTION OF PROPERTY Lot 3 of Tract No. 28450, in the City of Palm Desert, County of Riverside, State of California, as per map filed in Book 264, Pages 4 through 15 inclusive, of Maps in the office of the County Recorder of said County; EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Quitclaim Deed to the City of Palm Desert, a municipal corporation, recorded July 21, 2014, as Document No. 2014-0268856, Official Records of said County of Riverside; ALSO EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Grant Deed to the City of Palm Desert, a municipal corporation, recorded December 23, 2009, as Document No. 2009-0659533, Official Records of said County of Riverside. Containing 15.52 acres, more or less. SUBJECT TO all covenants, rights, rights of ways, and easements of record, if any. R. Page Garner, L.S. City Surveyor City of Palm Desert Date RESOLUTION NO. OB-105 CONTRACT NO. SA34040 EXHIBIT B GRANT DEED [See Attached] RESOLUTION NO. OB-105 CONTRACT NO. SA34040 Exhibit "B" RECORDING REQUESTED BY: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY c/o CITY OF PALM DESERT 73-510 Fred Waring Drive Palm Desert, California 92260 Attn: Executive Director WHEN RECORDED RETURN TO: CITY OF PALM DESERT 73-510 Fred Waring Drive Palm Desert, California 92260 Attn: City Clerk Exempt from Recording Fees Pursuant to G.C. 6103 APN: 620-400-028 Above Space for Recorder's Use Documentary transfer tax is $ GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY, a public entity ("Grantor"), hereby grants to FAMILY DEVELOPMENT GROUP, INC., a California corporation ("Grantee"), the following described real property (the "Property") situated in the City of Palm Desert, County of Riverside, State of California: See Exhibit A attached hereto. AND excepting any right, title or interest other than as a member of the public, and other than the rights of an adjoining owner upon abandonment, in and to any public rights of way or public easements. IN WITNESS WHEREOF, Grantor has caused its name to be affixed hereto and this instrument to be executed by its duly authorized officer. DATED: , 2014 GRANTOR: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Name: John M. Wohlmuth Its: Executive Director RESOLUTION NO. OB-105 CONTRACT NO. SA34040 STATE OF CALIFORNIA COUNTY OF Exhibit "B" ACKNOWLEDGEMENT ) 1 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 (Seal) RESOLUTION NO. OB-105 Exhibit "B" EXHIBIT A LEGAL DESCRIPTION OF PROPERTY CONTRACT NO. SA34040 THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: Lot 3 of Tract No. 28450, in the City of Palm Desert, County of Riverside, State of California, as per map filed in Book 264, Pages 4 through 15 inclusive, of Maps in the office of the County Recorder of said County; EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Quitclaim Deed to the City of Palm Desert, a municipal corporation, recorded July 21, 2014, as Document No. 2014-0268856, Official Records of said County of Riverside: ALSO EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Grant Deed to the City of Palm Desert, a municipal corporation, recorded December 23, 2009, as Document No. 2009-0659533, Official Records of said County of Riverside. Containing 15.52 acres, more or less. SUBJECT TO all covenants, rights, rights of ways, and easements of record, if any. -7 R. Page Garner, L.S. City Surveyor City of Palm Desert "/, Date RESOLUTION NO. OB-105 CONTRACT NO. SA34040 EXHIBIT C FORM OF GENERAL ASSIGNMENT [See Attached] RESOLUTION NO. OB-105 CONTRACT NO. SA34040 EXHIBIT "C" GENERAL ASSIGNMENT THIS GENERAL ASSIGNMENT (this "Assignment") is executed as of the day of , 2014, by the SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY, a public entity ("Assignor"), to and for the benefit of FAMILY DEVELOPMENT GROUP, INC., a Delaware corporation ("Assignee"). WHEREAS, contemporaneously herewith, Assignee is acquiring from Assignor certain real property described in Exhibit "A" attached hereto (the "Land"), together with all of Assignor's right, title and interest in and to any and all improvements, fixtures, rights -of -way, utility rights, easements and other appurtenant interests, entitlements, claims or other privileges or benefits in any way connected with the Land, excepting any right, title or interest other than as a member of the public, and other than the rights of an adjoining owner upon abandonment, in and to any public rights of way or public easements (collectively, the "Real Property"); WHEREAS, in connection with the foregoing acquisition, Assignor desires to transfer and assign to Assignee all of Assignor's right, title, and interest in and to certain items and rights applicable or relating thereto, all as hereinafter provided. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor hereby grants, sells, transfers, and assigns unto Assignee all of Assignor's right, title, and interest in and to that certain intangible property owned by Assignor or used by Assignor in connection with all or any portion of the Real Property, including, without limitation, all of Assignor's right, title, and interest, if any, in and to: (a) all plats, improvement plans, drawings and specifications, and development rights and credits relating to the Real Property, (b) all books, records, reports, test results, environmental assessments, if any, as -built plans, specifications, and other similar documents and materials relating to the use, operation, maintenance, repair, construction, or fabrication of all or any portion of the Real Property; and (c) all transferable architectural, site, landscaping or other permits, applications, approvals, authorizations, and other entitlements affecting any portion of the Real Property. This Assignment is binding upon the successors and assigns of Assignor and will inure to the benefit of the successors and assigns of Assignee. Assignor hereby covenants that it will, at any time and from time to time upon written request therefor, execute and deliver to Assignee, and its successors and assigns, any new or confirmatory instruments and take such further acts as Assignee may reasonably request to evidence the assignment contained herein. G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - General Assignment (Family Development) docx RESOLUTION NO. OB-105 CONTRACT NO. SA34040 This Assignment shall be governed by and interpreted under the laws of the State of California, without regards to its principles of conflict of laws. ASSIGNOR: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Name: JOHN M. WOHLMUTH Its: Executive Director G \Econ Development\Martin Alvarez\SA Property Sales\Desert Willow Lot Pads\Lot Pad F\PD - SARDA - General Assignment (Family Development).docx RESOLUTION NO. OB-105 CONTRACT NO. SA34040 EXHIBIT "A" TO GENERAL ASSIGNMENT LEGAL DESCRIPTION Lot 3 of Tract No, 28450, in the City of Palm Desert, County of Riverside, State of California, as per map filed in Book 264, Pages 4 through 15 inclusive. of Maps in the office of the County Recorder of said County: EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Quitclaim Deed to the City of Palm Desert, a municipal corporation, recorded July 21, 2014, as Document No, 2014-0268856. Official Records of said County of Riverside; ALSO EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Grant Deed to the City of Palm Desert, a municipal corporation. recorded December 23. 2009, as Document No. 2009-0659533. Official Records of said County of Riverside. Containing 15.52 acres. more or less. SUBJECT TO all covenants. rights. rights of ways, and easements of record, if any. /-/ R. Page Garner. L.S. Date City Surveyor City of Palm Desert G \Econ Development \Martin Alvarez \SA Property Sales \Desert Willow Lot Pads \Lot Pad F\PD - SARDA - General Assignment (Family Development) docx October 2, 2014 The City of Palm Desert Attn: Mr. Martin Alvarez 73510 Fred Waring Drive Palm Desert, CA 92260-2524 CAPITAL REALTY ANALYSTS Real Estate Appraisers ♦ Analysts ♦ Advisors 78-015 Main Street, Suite 207 La Quinta, CA 92253-8962 rNth radi, Jr coins RE: A 15.52-Acre Vacant Land Parcel, Located Along the East Side of Portola Avenue, South of Frank Sinatra Drive, Palm Desert, CA.; Otherwise Known As A Portion of APN: 620-400-028; Riverside County, CA. Dear Mr. Alvarez: At your request and authorization, I have prepared this appraisal report, setting forth my opinion of the market value of the fee simple estate in the subject property, as of September 25, 2014. Per your request, the following market value estimates are provided: 4- Market Value "As Is" My report identifies the subject property and its market area and presents the market data and analysis leading to the final estimates of value. This report is subject to the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. The appraisal report is intended to comply with the appraisal guidelines of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), the Uniform Standards of Professional Appraisal Practice ("USPAP"), adopted by the Appraisal Standards Board of the Appraisal Foundation. I have personally inspected the subject property. I have located and reviewed current sales and listings of comparable properties in the subject neighborhood and competing areas, and have analyzed this data in order to arrive at my estimate of market value. Based upon the available data, I conclude that the market value of the fee simple estate in the subject property as of September 25, 2014 is as follows: $2,020,000 (Two Million Twenty Thousand Dollars) PHONE: (760) 564-6222 FAx: (888) 985-9994 EMAIL: MIKE@REALTYADVISOR.COM October 2, 2014 Capital Realty Analysts / Mr. Martin Alvarez The undersigned have no personal interest either present or contemplated in the subject property and certify that no fee, received or to be received for the employment of our services is in any way contingent on the opinion reported herein. I hope you find the details of this appraisal report relevant to your decisions. Thank you for the opportunity to be of service. Respectfully submitted CAPITAL REALTY ANALYSTS, Michael A. Scarcella, MAI State Certification No.: AG019463 Expiration Date: October 24, 2015 Table of Contents Summary of Important Facts and Conclusions 5 Introduction / History of the Subject 11 Definition of Fee Simple Estate 12 Definition of Market Value 12 Definition of "As Is" Market Value 12 Scope of the Appraisal 12 Appraisal Problem 12 Appraisal Problem 13 Scope of Work 13 Legal Description 14 Assessment & Taxation 14 Regional Analysis - Coachella Valley 16 Market Analysis 20 Site Analysis 26 Plat Map 620-40; Riverside County, CA 26 Zoning Map (Source: City of Palm Desert) 31 General Plan Map (Source: City of Palm Desert) 32 FEMA Flood Zone Map 39 Highest and Best Use Analysis 40 Appraisal Process 43 Sales Comparison Approach 45 Certification 55 Assumptions and Limiting Conditions 58 Cad © 2014 CAPITAL REALTY ANALYSTS Page 4 Summary of Important Facts and Conclusions Owner of Record: Site: Improvements: Zoning: General Plan: Highest And Best Use, "As Vacant": Highest And Best Use, "As Improved": Property Rights Appraised: Extraordinary Assumptions: Hypothetical Conditions: A Preliminary Title Report was not submitted or examined. According to public records, title to the subject property is vested with Palm Desert Redevelopment Agency. According to data supplied by the Client, the subject parcel size is 15.52-acres. None According to the City of Palm Desert Planning Department, the subject property is zoned PR-5, Planned Residential. A zoning map is located in the Site Analysis section of this report. According to the General Plan Map of the City of Palm Desert, the subject has a general plan designation of C-R/H, Resort Hotel/Commercial. A general plan map is located in the Site Analysis section of this report. Hold for Investment N/A, the subject is vacant Fee Simple Estate The land is assumed to be free of any soil contamination and/or other toxic substances. None Final Value Estimate: $2,020,000 Cad© 2014 CAPITAL REALTY ANALYSTS Page 7 Summary of Important Facts and Conclusions Personal Property: $0 Marketing Period: "As Is" - 12 Months Exposure Period: "As Is" - 12 Months CVA1 © 2014 CAPITAL REALTY ANALYSTS Page 8 Definition of Fee Simple Estate "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Definition of Market Value The definition of Market Value for this Appraisal is as follows: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated. 2. Both parties are well informed or well advised, and acting in what they consider their best interests; 3. A reasonable time is allowed for exposure on the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Definition of "As Is" Market Value The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. (Proposed Interagency Appraisal and Evaluation Guidelines, OCC-4810-33-P 20%) Scope of the Appraisal Appraisal Problem The subject property is consists of a vacant land parcel located in Palm Desert, CA. The purpose of the appraisal is to estimate the market value of the fee simple estate in the subject property under the following conditions: 4- Market Value "As Is" (The Dictionary of Real Estate Appraisal, 5th Edition, Appraisal Institute, Chicago, Illinois) Cad© 2014 CAPITAL REALTY ANALYSTS Page 12 Appraisal Problem The Sales Comparison is applied in this appraisal assignment to estimate market value. Lacking improvements with an associated cost or income earning ability, the Cost Approach and the Income Approaches are not considered relevant to this analysis. There are a few somewhat atypical issues involved with the valuation of the subject property. Mainly, the property is zoned for residential uses, but is in the general plan as a resort hotel commercial site. Clearly, the property is better suited to residential development. I found sufficient market data to overcome any issues and provide credible assignment results. Scope of Work This appraisal report is intended to be an appraisal assignment as defined in the Uniform Standards of Appraisal Practice (USPAP). It is my intent that the appraisal service be performed in such a manner that the results of the analysis, opinions, and conclusions be that of a disinterested 3rd party. It is my intent that all appropriate data deemed pertinent to the solution of the appraisal problem be collected, confirmed and reported in conformance with USPAP and the Code of Professional Ethics of the Appraisal Institute. The scope of the analysis is intended to be appropriate in relation to the significance of the appraisal problem. In preparing this appraisal report, I performed the following steps, and applied the following special assumptions and limiting conditions: Inspection I have physically inspected the subject property as of the date of value. Additionally, I have physically inspected the comparable data items included within this report. Information I searched for comparable data from a variety of sources. These include published data services, the Desert Area MLS, the County Tax Roll, and personal interviews with local brokers, lenders and developers. Confirmation Unless otherwise noted, all comparable data applied in this report has been confirmed with at least 1 party to the transaction. A party to the transaction may include 1 or more of the following; buyer, seller, broker, lender, attorney, accountant, title officer, escrow officer. © 2014 CAPITAL REALTY ANALYSTS Page 13 Scope of Work (cont'd) Analysis I have analyzed the data and applied the appropriate techniques available to arrive at my opinion of market value for the subject property. Legal Description A Preliminary Title Report for the subject property was not submitted or examined. According to data supplied by the Client, the legal description for the subject is as follows: Lot 3 of Tract No. 28450, in the City of Palm Desert, County of Riverside, State of California, as per map filed in Book 264, Pages 4 through 15 inclusive. of Maps in the office of the County Recorder of said County; EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Quitclaim Deed to the City of Palm Desert, a municipal corporation, recorded July 21, 2014, as Document No. 2014-0268856, Official Records of said County of Riverside; ALSO EXCEPTING THEREFROM that portion of said Lot 3 described in that certain Grant Deed to the City of Palm Desert, a municipal corporation. recorded December 23, 2009, as Document No. 2009-0659533, Official Records of said County of Riverside. Containing 15.52 acres,. more or less. SUBJECT TO all covenants, rights, rights of ways, and easements of record, if any. Assessment & Taxation Real property taxation in the State of California is governed by Proposition 13, which was passed by the voters in June 1978. The basic elements of Proposition 13 are as follows: 1. The tax rate was limited to 1 % of the assessed value plus an additional 1 /4% to cover the payment of debts previously approved by voters. 2. The assessed value of a property purchased prior to March 1, 1975 was fixed at that property's market value as of March 1, 1975. For a property purchased after March 1, 1975, the law requires the assessment to be based on the market value at the time of sale. © 2014 CAPITAL REALTY ANALYSTS Page 14 Assessment & Taxation (cont'd) 3. All assessed values can increase no more than 2% per year for inflation. The subject property is currently held by a tax-exempt entity. Consequently, I have no basis for estimating the reasonableness of the assessed value or effective tax rate for the property. Assessed value is not considered as an indication of current market value. Easements and Encumbrances A Preliminary Title Report for the subject was not submitted or examined. Consequently, the subject is being appraised as though there are no atypical easements and/or encumbrances that may have a negative impact on the market value or marketability of the subject property. Any user of this analysis is advised to make an independent assessment of the condition of title, prior to utilizing this analysis. C? ' © 2014 CAPITAL REALTY ANALYSTS Page 15 Market Analysis Introduction The subject property includes a 15.52-acre vacant land parcel. Interestingly, the property is zoned Planned Residential, 5-units to the acre; while the general plan designation is for resort hotel and commercial uses. In the highest and best use section of this analysis, the data suggests that the most maximally productive use of the land would be for medium density residential development. The City has indicated a willingness to affect a zone change and general plan amendment. However, because of the resort location of the property, the land is not considered suitable for lower priced housing. The City is currently in the process of conducting a Nexus study to estimate the impact fee that will be charged on projects such as that considered suitable for the subject, to mitigate the fact that no low-income housing will be developed on the site. Comparable known fees for other Cities with a similar low-income housing impact fee are in the range of approximately $15,000 to $30,000 per unit. Assuming a density of 7 units per acre, the subject would support approximately 105 units, and generate a impact fee of approximately $1,575,000 to approximately $3,150,000. Clearly, this feature will impact value. Positive features of the site include its strong location in a resort setting, with up -trending market conditions. Macro -Economic Environment The US economy has yet to fully recover from the economic downturn, which followed the financial crisis of 2007-2008. Output is still below potential according to the CBO, and unemployment is still above historic trends. As of August 2014, the unemployment rate was 7.3% (11.3 million people), while the government's broader U-6 unemployment rate, which includes the part-time underemployed, was 13.9%. With a record proportion of long term unemployed, continued decreasing household income, and new federal budget cuts, the US economy remained in a jobless recovery. Uncertainty over such issues as entitlement spending and financial segment regulation have created some amount of uncertainty in the real property markets; with money on the sidelines waiting for clear signs of improvement. Alternatively, atypically high gains over the summer in alternative investments such as the stock markets have drawn capital away from real estate in the short term. This trend seems unlikely to persist on a national level, as the overall real property markets appear to have passed through the bottom of the current cycle. MAI © 2014 CAPITAL REALTY ANALYSTS Page 21 Market Analysis Regional Residential Market Conditions The Coachella Valley region grew significantly through 2006. A prominent market segment for the region is the baby boomer segment. As a popular 2nd home and retirement area, the Coachella Valley benefited from the significant increase in population growth in this demographic. Both residential land values and developed residential property values increased sharply through 2005 due to the increase in demand. Many of the public homebuilders, who traditionally shunned the Coachella Valley market due to the historical seasonality of demand, rushed to enter the market with significant land acquisitions starting in approximately 2002. Subsequently, land values were bid up significantly, causing a sharp increase in housing costs on a per square foot basis. Generally, market conditions began to soften in the 2nd 1/2 of 2005 as inventory began to increase, along with interest rates. Sub -market areas such as North Indio and Coachella with a high concentration of competing projects and Desert Hot Springs with low average retail prices have been the hardest hit. In early 2007, the sub -prime mortgage crisis and other economic factors resulted in a significant decline in absorption rates from which the regional market has yet to fully recover from. In terms of total new home sales, the Coachella Valley market peaked in 2004 with 5,851 sales. New home sales subsequently declined each year through 2010; when the market bottomed out with 458 new home sales. The market increased slightly in 2011 with 557 new home sales and again in 2012 with 617 new home sales. The uptrend continued in 2013 with 674 sales. The 1st 2 quarters of 2014 showed a slight decrease from 2013. The table on the following page shows the historical trend: ail © 2014 CAPITAL REALTY ANALYSTS Page 22 Market Analysis Regional Residential Market Conditions (Cont'd) In terms of pricing, the new detached segment has seen a sharp increase since 2011. However, the overall regional average price decreased from $550,673 in the 1st quarter of 2014 to $494,081 in the 2nd quarter of 2014. The local brokers attribute the sharp increase in total average price to the decline in lower priced REO and short sale inventory; combined with a low inventory of both new and resale homes. Additionally, some higher end projects such as Toscana Country Club have had strong performance in the past 2 quarters. This feature has generally increased marketability, if not value, for higher quality residential land in the regional area. In terms of land sales, the top of the last cycle was in the 2005/2006 season. Through 2010, land sales volume declined sharply. Lacking feasibility for speculative development, large numbers of subdivisions in various stages of development were lost in foreclosure. Land inventory peaked in the 2008/2009 season, where marketability for many parcels was virtually nil. Starting in the 2009/2010 season, trading activity increased. Many of the public builders and larger speculators were acquiring finished lots while prices were down. Raw parcels remained unattractive as finished lots were trading for significantly less than cost. Currently, finished lot and partially improved inventory is declining rapidly, generally increasing the marketability of well -located raw land, such as the subject. The Subject Property Although land sales activity is trending up, the vast majority of sales are for entitled land parcels. The subject presents a well above average risk profile for a number of reasons. First, the property requires both a zone change and general plan amendment in order for the property to be legally available for development to its highest and best use. Next, the low-income impact fees are as yet unknown. However, what is known is that these fees will likely be between $15k and $30k per unit; which is significant. Furthermore, the subject property will have plenty of competition. The approximately 80-acre former Santa Rosa Country Club property located immediately west of the subject is currently in escrow for a future residential project. There are over 800-mapped lots located in the University Park area, just north of the subject. The master developer indicated that he will continue to hold for price appreciation, but has been getting more interest in the property as of the date of value. Additional competition is located along Frank Sinatra Drive northeast of the subject, and along both Portola Avenue and Gerald Ford Drive, north and northeast of the subject. CadCD 2014 CAPITAL REALTY ANALYSTS Page 24 Market Analysis Conclusion The subject property has a strong location in Palm Desert, CA. The resort location suggests a medium density (apx. 7 du/ac) residential project with mid -level pricing. Increasing retail home pricing is a positive element working in favor of the subject property. However, absorption remains relatively weak and the lack of entitlements and the new low- income impact fees will weigh on the market value of this property in the as is condition. Additional details are included in the Sales Comparison Approach section of the report. C3�J © 2014 CAPITAL REALTY ANALYSTS Page 25 Site Analysis Location: East side of Portola Avenue, south of Frank Sinatra Drive, Palm Desert, CA. Identification: A portion of APN: 620-400-028; City of Palm Desert; Riverside County, CA. Site Size: According to data supplied by the Client, the subject parcel size is 15.52-acres. Shape: Irregular Dimensions: See Plat Map Frontage: E side of Portola Avenue, Palm Desert, CA. Topography: Generally level at curb grade except the retention area, which is approximately 15' below grade. Flood Zone: Access: Visibility: According to the Flood Insurance Rate Map, Community Panel Number 06065C 1615G, revised August 28, 2008, the subject property is located in Flood Zone X. Zone X is defined as areas of 500-year flood; areas of 100-year flood with average depths of less than 1 foot or with drainage areas less than 1 square mile, and areas protected by levees from 100-year flood. The subject has average access along the east side of Portola Avenue. Average+ Cad© 2014 CAPITAL REALTY ANALYSTS Page 27 Site Analysis Soils: The Appraiser was not provided with a soil report for the subject property. A physical inspection of the subject property did not reveal obvious evidence of toxic waste or hazardous materials on the subject property. This Report assumes that no toxic or hazardous materials are present on the subject property. The Appraiser is not qualified to make a determination as to the existence or non- existence of hazardous materials on the subject property, and recommend a qualified engineer be consulted, if required. Utilities: Utilities available to the subject site are as follows: Electricity: Southern California Edison Gas: The Gas Company Telephone: Verizon Water: Coachella Valley Water District Sewer: Coachella Valley Water District Hazards: A physical inspection of the subject did not reveal any atypical hazards. I am not qualified to evaluate the site for toxic waste or hazardous substances. This Report assumes that there are no hidden or unapparent conditions to, or on the soil or subsoil that would render the property more or less valuable. Improvements: None Zoning: According to the City of Palm Desert Planning Department, the subject property is zoned PR-5, Planned Residential. A zoning map is located in the Site Analysis section of this report. C4 © 2014 CAPITAL REALTY ANALYSTS Page 28 Site Analysis General Plan: According to the General Plan Map of the City of Palm Desert, the subject has a general plan designation of C-R/H, Resort Hotel/Commercial. A general plan map is located in the Site Analysis section of this report. Earthquake According to the Riverside County Geographic Hazard: Information System, the subject property is not located in an Alquist-Priolo Special Studies Zone. The subject is located in an area determined to be in a moderate liquefaction hazard area. Special The course of normal data gathering and analysis Resources: and a visual inspection of the subject did not reveal any evidence of natural, cultural, recreational or scientific resources present upon the subject site. Easements and A Preliminary Title Report for the subject was not Encumbrances: submitted or examined. Consequently, the subject is being appraised as though there are no atypical easements and/or encumbrances that may have a negative impact on the market value or marketability of the subject property. Any user of this analysis is advised to make an independent assessment of the condition of title, prior to utilizing this analysis. Functional The size and other physical properties of the Adequacy of the subject are considered typical of other parcels that Site: have been developed with no atypical functional problems. Consequently, the functional utility of the subject property is considered typical. Relationship to North: Golf course Adjoining South: Retention area / golf course maintenance Properties: facility East: Golf Course West: Vacant Cad © 2014 CAPITAL REALTY ANALYSTS Page 29 Site Analysis Units of In the subject marketplace, land parcels of the Comparison: subject's size and type are typically purchased based upon a price per acre. Based upon the market preference, the price per acre will be applied as the unit of comparison to value the site in this Appraisal Report. C4 © 2014 CAPITAL REALTY ANALYSTS Page 30 Highest and Best Use Analysis Highest and Best Use is defined as follows: "The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property -specific with respect to the user ands timing of the use -that is adequately supported and results in the highest present value.", Implied in this definition, and the definitions of Highest and Best Use As Vacant, and Highest and Best Use As Improved to follow, is that the determination of highest and best use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. Hence, in certain situations, the highest and best use of land may be for parks, greenbelts, preservation, conservation, wildlife habitats, and the like. The four stages of analysis are further described as follows: 1. Legally Permissible: What uses are permitted by zoning and deed restriction for the subject site? 2. Physically Possible: What are the physically possible uses for the subject site? 3. Financially Feasible: What physically possible and legally permissible uses will produce a net return to the owner of the site? 4. Maximally Productive: Among the financially feasible uses, which use will produce the highest net return or the highest present worth? These four tests are applied to the subject property in the "As Vacant" condition, as well as the "As Improved" condition (if applicable). The following pages describe the analysis: 2 The Dictionary of Real Estate Appraisal, Fifth Edition: Appraisal Institute, 2010, Page 93 CJ © 2014 CAPITAL REALTY ANALYSTS Page 40 Highest and Best Use Analysis "As If Vacant" The definition of Highest and Best Use As Vacant is as follows: "Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital and coordination. The use of a property based upon the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements.", Legally Permissible The legal restrictions that apply to the subject are the public restrictions of the City of Palm Desert's PR-5, Planned residential zoning ordinance and non -conforming C-R?H Resort Hotel / Commercial general plan designation. In light of the fact that new resort hotel uses are being planned for Parcels C, D & E in the Desert Willow project area, and as Parcels A & B (over 30-acres combined), remain vacant and available for future resort development, it is clear that resort hotel development on the subject property would not represent the highest and best use of the property. Alternatively, the City has indicated a willingness to consider medium density residential development for the site. However, it will take time to affect a zone change and general plan amendment; which impact the current market value of the property. Physically Possible The subject property is typical in size and shape as compared with other parcels in the subject neighborhood. The location, access and visibility of the subject are considered average+ compared to other parcels located in the immediate area. The topography of the site is level, and typical of other sites that have been successfully developed in the subject region. Utilities are available to the subject property, which is located adjacent to other serviced parcels. The shape of the subject lot provides a typical level of functional utility in comparison with similar parcels in the neighborhood. In my opinion, the physical aspects of the subject property, et of the retention basin, which limits the usable area of the property, would not impair the potential for it to be developed to its highest and best use if it were vacant on the date of value. 3 The Dictionary of Real Estate Appraisal, Fifth Edition: Appraisal Institute, 2010, Page 93 CM© 2014 CAPITAL REALTY ANALYSTS Page 41 Highest and Best Use Analysis "As If Vacant" Financially Feasible Clearly, there is no potential for feasible resort hotel or speculative commercial development on the subject property as of the date of value. Furthermore, it seems that it will be many years before any kind of financially feasible commercial development would be feasible on this land. Alternatively, the residential market is heating up, and the property presents a reasonable medium density residential development opportunity as of the date of value. However, the lack of entitlements and impact fees present a comparatively high risk that will weigh on the market value of the property in the as is condition. Maximally Productive The physically possible and legally permissible uses for the subject property are present in the subject region. Other properties in the subject region have been successfully developed. Based on the available data, it is my opinion that the market perception is that the most maximally productive use of the subject property "As Is" is to begin processing a zone change and general plan amendment to facilitate future residential development. "As Improved" The definition of Highest and Best Use As Improved is as follows: "The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one."4 The subject is vacant. Consequently, there is no highest and best use as improved analysis. 4 The Dictionary of Real Estate Appraisal, Fifth Edition: Appraisal Institute, 2010, Page 94 C?4 © 2014 CAPITAL REALTY ANALYSTS Page 42 Appraisal Process The first step in the appraisal process is to identify the appraisal problem. Every real property is different and there are many types of values that can be estimated for any real property. For this appraisal assignment, the appraisers are estimating the market value of the leased fee estate in the subject property, under the following conditions; 4- Market Value "As Is" The definition of market value has been defined in the Purpose of the Appraisal section of this report. The subject property and the type of value desired have been identified. Through the appraisal process, it is our intent to present a properly supported value estimate for the subject property. The market data, analysis and conclusions presented in the appraisal report should cause a reasonable person to reach similar conclusions. There are three traditional approaches to estimating market value. These are the Cost Approach, the Sales Comparison Approach and the Income Approach. The approaches to value are defined as follows; Cost Approach "A set of procedures through which a value indication is derived for the fee simple interest in a property by estimating the current cost to construct a reproduction of, or replacement for, the existing structure; deducting accrued depreciation from the reproduction or replacement cost; and adding the estimated land value plus an entrepreneurial profit. Adjustments may then be made to the indicated fee simple value of the subject property to reflect the value of the property interest being appraised." Sales Comparison Approach "The Sales Comparison Approach is the process in which a market value estimate is derived by analyzing the market for similar properties and comparing these properties to the subject property. Estimates of market rent, cost, depreciation, and other value parameters may be derived in the other approaches to value using comparative techniques. Often, these elements are also analyzed in the sales comparison approach to determine (estimate) the adjustments to be made to the sale prices of the comparable properties. The comparative techniques of analysis applied in the sales comparison approach are fundamental to the valuation process." Cad© 2014 CAPITAL REALTY ANALYSTS Page 43 Appraisal Process Income Approach "A set of procedures through which an appraiser derives a value indication for an income -producing property by converting its anticipated benefits (cash flows and reversion) into property value. This conversion can be accomplished in 2 ways. One year's income expectancy can be capitalized at a market -derived capitalization rate or at a capitalization rate that reflects a specified income pattern, return on investment and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate." The following is a description of the valuation process for each of the components of the subject; Market Value "As Is" The Sales Comparison Approach to value is applied exclusively in the "As Is" condition. Lacking improvements with an associated cost or income earning ability, the Cost Approach and the Income Approaches are not considered relevant for this analysis. Complete descriptions of the Approaches are included in the introductory section of each approach. A reconciliation completes the analysis leading to final value estimates. © 2014 CAPITAL REALTY ANALYSTS Page 44 Sales Comparison Approach In the Sales Comparison Approach, the subject property is compared to similar properties, which have been sold recently or for which listing prices or offering figures are known. Data for generally comparable properties are used and comparisons are made to demonstrate a probable price at which the subject property would be sold if offered on the market. The Dictionary of Real Estate Appraisal defines the Sales Comparison Approach as follows; "A set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, applying appropriate units of comparison, and making adjustments to the sale prices of the comparables based on the elements of comparison. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant; it is the most common and preferred method of land valuation when comparable sales data are available."S In this appraisal report, the Sales Comparison Approach is applied to estimate the market value of the subject land "As Is". A search of public records and a field investigation were made in order to obtain data on recent, comparable sale transactions. The primary selection criteria for the comparable sales are based on obtaining sales with similar highest 86 best uses. Several sales and listings have been reviewed and analyzed. The most relevant sales were selected for comparison. The Sales Comparison Approach is organized as follows; 4- Land Sales Map 4- Land Sales Grid 4- Land Sales Analysis 4- Land Sales Adjustments 4- Land Sales Adjustment Matrix 4- Conclusion, Market Value "As Is" 5 The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute, 1993, page 318 Cad © 2014 CAPITAL REALTY ANALYSTS Page 45 Sales Comparison Approach Land Sales Analysis and Conclusions Comparable Sale Number 1 Comparable sale number 1 is the July 2014 sale of a 23.85-acres, 196-unit residential project site located at the SEC of College Drive and University Park Drive, Palm Desert, CA. The sale price of $6,600,000 equates to an otherwise unadjusted sale price of $276,730 per acre, or $33,673 per developable unit. This transaction was selected for comparison, as it is the most recent sale of a residential development site located in close proximity to the subject that I could locate and verify. This data point demonstrates the top of the market for entitled residential land in the area of the subject. The property was mapped, and all offsite improvements have been completed. Overall comparability is considered fair, as significant downward adjustment will be required of this parcel to compare to the subject. Comparable Sale Number 2 Comparable sale number 2 is the April 2012 sale of a 3.64-acre, 16- nearly finished lot development site, located along the east side of Shepherd Lane, north & south of University Pointe Court, Palm Desert, CA. The sale price of $425,000 equates to an otherwise unadjusted sale price of $116,758 per acre, or $26,563 per lot. This data point was selected for comparison, as the property is located in very close proximity to the subject. However, this transaction was an REO sale of partially finished detached SFR lots. Clearly, market conditions have increased since the date of this sale. However, the data does suggest comparatively low per lot values in the immediate area of the subject. Again, overall comparability is considered fair due to the number and amount of adjustments required. Comparable Sale Number 3 Comparable sale number 3 is the June 2013 sale of a 22.02-acre residential development site, located at the SWC of La Quinta Drive and Auto Centre Drive, La Quinta, CA. The sale price of $3,750,000 equates to an unadjusted sale price of $170,300 per acre. This transaction was selected for comparison because much like the subject, this property requires a zone change and general plan amendment to develop the property to its highest and best use. The buyer is planning a condominium project for the site, known as The Grand - La Quinta. Overall comparability is considered average-. add © 2014 CAPITAL REALTY ANALYSTS Page 47 Sales Comparison Approach Comparable Sale Number 4 Comparable sale number 4 is the August 2012 sale of a 36.70-acre vacant land parcel, located within the Desert Princess Country Club art the NWC of N. Laguna Drive and W. Natoma Drive, Cathedral City, CA. The sale price of $2,250,000 equates to an otherwise unadjusted sale price of $61,308 per acre. This data item was selected for comparison to demonstrate a land parcel that is vastly inferior to the subject in terms of retail price point potential. Interestingly, the existing HOA is requiring a $5,000 per unit payment to have this land be incorporated in the HOA. The locational quality of the property is vastly inferior to the subject and overall comparability is considered fair. Other Market Data In addition to the data described above, I acquired some additional data that while not directly comparable for various reasons, may prove instructive. The 96.75-acres located immediately west of the subject is currently in play. The project site is known as Catavina. The broker reports over 10 offers on the property ranging from $25M to $33M ($258,398 to $341,085 per acre). The property is not mapped, but all of the offers were reported to be contingent upon entitlement approval; demonstrating the value of entitlements; which the subject does not have. The seller owns the 16.75-acres along Portola and is attempting to double -escrow the 80-acres currently improved with the Santa Rosa Golf Club, which makes up the balance of the property. Without a closing, there is no real data from this property from which to derive value estimates. In November 2013, Beazer Homes acquired the Watermark Villas site, located in La Quinta, CA. The property consists of 82 partially improved lots, located at the NWC of Jefferson Street 86 50th Avenue, La Quinta, CA. The sale price of $10,400,000 equates to an unadjusted sale price of $499,040 per acre or $126,829 per lot. The improvements included a partially completed four-plex condo building and 10 subterranean parking garages with foundations and other site improvements. Clearly, the improvement level prevents this property from being considered for direct comparison. © 2014 CAPITAL REALTY ANALYSTS Page 48 Sales Comparison Approach Other Market Data (cont'd) In January 2104, California West Communities acquired the 41.95- acre, 232-unit resort core parcel located within PGA West, La Quinta, CA. The sale price of $22,500,000 equates to an otherwise unadjusted sale price of $536,362 per acre or $96,983 per lot. The property is fully entitled, and has a vastly superior locational quality as compared to the subject. Interestingly, the previous owner acquired the property in 2011 for $9,000,000 and perfected the entitlements on this property, which was originally zoned for development of another resort hotel (hence the resort core reference). While the property is not directly comparable to the subject, it does demonstrate that perfecting entitlements can significantly enhance value. Adjustments Adjustments to each of the sales are required for significant differences that affect value. The appraiser adheres to a sequence of adjustments in all sales comparison analysis. Using the sequence, the appraiser obtains intermediate price figures and applies succeeding adjustments to each previously adjusted price. The adjustments applied to the price of a comparable property reflect the comparables' superiority or inferiority in regard to the real property rights conveyed, financing, conditions of sale, market conditions and locational and physical characteristics. A common method of extracting adjustments among the comparable sales is a technique called "Matched Pairs Analysis". The goal of Matched Pairs Analysis is to obtain market -based adjustments. The basic premise of Matched Pairs is to isolate a particular adjustment feature among 2 or more sales, where the difference in adjusted prices would yield the market's value perception for that feature. Generally, the appraiser follows a sequence of adjustments, attempting to isolate market -based adjustments from intermediate adjusted sale prices. In many cases, adjustment features cannot be isolated. Limited comparable data, unique property traits or other factors may cause this. When adjustment features cannot be isolated, Matched Pairs Analysis is supplemented with other techniques to adjust the comparable data. These other techniques typically include cost based adjustments, adjustments based upon a market survey, adjustments based upon published data and subjective adjustments. The following is a description of the required adjsutments: C4 © 2014 CAPITAL REALTY ANALYSTS Page 49 Sales Comparison Approach Property Rights Conveyed All of the comparable sales reflect the transfer of fee simple estates. No adjustment for this feature is required among this group of comparable sales. Financing Terms Sales 2-4 were sold for cash to the seller. No adjustments are required for financing terms among these sales. Sale 1 had seller financing of 50% down, 5% interest only for 3-years. The cash equivalency calculation is shown in the following table: Interest To Principal To Date Seller Seller Balance Outstanding Gross Cash Flow PV Factor Cash Equivalent Year 0 $ Year 1 $ 165,000 Year 2 $ 165,000 Year 3 $ 165,000 Total $ 495,000 $ 3,300,000 $ $ 3,300,000 $ 6,600,000 $ 3,300,000 $ 3,300,000 $ 3,300,000 $ $ 3,300,000 $ 165,000 $ 165,000 $ 3,465,000 $ 7,095,000 1.000000 $ 3,300,000 0.869565 $ 143,478 0.756144 $ 124,764 0.657516 $ 2,278,294 $ 5,846,536 As the metric is a per acre basis, the difference between the sale price of $6,600,000, and cash equivalent sale price of $5,846,536, is divided by 23.855-acres to yield a per acre adjustment of ($31,592). Conditions of Sale Sales 2, 3 and 4 are all REO sales. Sales 3 and 4 were known to have had significant market exposure and do not require adjustment. Sale 2 was reportedly sold by an atypically motivated seller, and upward adjustment is applied. Market Conditions Adjustments for market conditions reflect a change in prices paid for real property due to changes in market over time. The Hoffman Co. Coachella Valley 04, 2013 analysis shows finished lot values increasing by over 60% over the past 24-months. Now that finished lot inventory has been nearly fully absorbed, raw land values are now beginning to trend up. The sales are adjusted accordingly. Location The subject is located in the North Sphere area of Palm Desert, adjacent o the Desert Willow project site. While the Palm Desert location is superior to most, there is a very significant number of mapped lots and vacant land in the North Sphere area, guaranteeing significant competition in the future. 4 © 2014 CAPITAL REALTY ANALYSTS Page 50 Sales Comparison Approach Location (coned) The subject's proximity to golf may be a slight advantage, but the opinions expressed by the brokers that work this market varied on this topic. Sale 1 is located northeast of the subject in the University Park area. The locational quality is considered very slightly superior as the site has better proximity to services. A very small downward adjustment is applied to Sale 1 for this feature. Sale 2 is located just northwest of the subject property. The locational quality is considered similar and no adjustment for location is required of Sale 2. Sale 3 is located in a core commercial area of La Quinta. While the available price point is lower in this location, the location will probably acquire higher density and faster absorption. Downward adjustment is applied. Sale 4 is located within the Desert Princess. This location is vastly inferior to the subject in both retail price potential and absorption. Upward adjustment is applied. Size The size of a property affects the uses it will support, and the buyers it will attract. Size adjustments are generally based upon the concept of "marginal utility". Marginal utility is defined as follows; "The increment of total utility added by the last unit of a good at any given point of consumption. In general, the greater the number of items, the lower the marginal utility, i.e., a greater supply of an item or product lowers the value of each item."6 The concept of marginal utility can work opposite the concept of marginal utility for residential subdivisions as the economy of scale for larger sites can reduce the per lot development cost. Consequently, cases exist where larger parcels sell for more on a per acre or per unit basis as compared to smaller parcels. In this case, the available sales evidence is insufficient to derive a meaningful comparison. While no adjustment is applied directly, I will consider the potential impact of size of per acre price in where to place the final value estimate among the indicated range. 6 The Dictionary of Real Estate Appraisal. 3rd Edition, Appraisal Institute, Chicago, IL., 1993, p.219 Cad © 2014 CAPITAL REALTY ANALYSTS Page 51 Sales Comparison Approach Other Physical Conditions The major issue with the subject property is the fact that the land will require a zone change and general plan amendment in order for the property to be developed to its highest and best use. As the City has indicated a willingness to do the zone change and general plan amendment, the risk is comparatively low. However, it will take time to affect this change. Assuming a 10% rate of return on invested capital, the loss of the year it will take to get the zoning correct yields an approximately 9% value implication, which is rounded to 10% for this analysis. Noting that Sale 3 also has this feature, Sale 3 will not be adjusted downward for the zoning issue. The next issue involves entitlements. As described in the Other Market Data section, entitlements do add value to a property as of the date of value. There are a number of reasons for this. The main ones are the fact that tentative maps come with conditions of approval. Understanding the cost to develop the land eliminates significant risk of unexpected offsite requirements, etc. In addition, residential developers typically buy land based upon residual lot values. Not knowing the number of lots also significantly increases the risk of an acquisition. This is the reason that most buyers acquire raw land contingent upon the approval of entitlements (e.g. the Catavina site located immediately west of the subject). Among those interviewed for this analysis, the consensus of opinion is that this additional risk should have a 10% to 20% impact upon the value of the property in the raw condition. Finally, there is the issue of the low-income housing fee. While it is unclear as to what this fee may finally be, at a range of $15k to $30k per unit, the fee is significant. For example, a builder of $500k retail value homes will seek to have a finished lot cost of approximately 25%-30%, or $125k to $150k. At a finishing cost of $75k (conservatively low in most cases for detached SFRs), the raw lot value residuals out to $50k to $75k. A $25k per lot mitigation fee would therefore reduce the amount a developer could pay for raw land by approximately 33% to 50%; which is significant. Sale 1 shares this feature. Overall, the general plan, entitlement and low-income fee issues weigh on the value of the subject property. Clearly, the subject carries a higher risk profile than the comparables, with the possible exception of Sale 3. The sales are adjusted accordingly. © 2014 CAPITAL REALTY ANALYSTS Page 52 Sales Comparison Approach Conclusion (cont'd) As a test of reasonableness, I considered the fact that the property will likely support 5 to 7 units per acre (77 to 108 units total), yielding a per lot value raw of $18,681 per lot to $26,203 per lot. These indications fall well within a reasonable range considering the addition of the low-income fee; suggesting a reasonable degree of reliability for the final value estimate. U © 2014 CAPITAL REALTY ANALYSTS Page 54 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 is my personal, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this Report, and I have no personal interest or bias with respect to the parties involved. 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 analysis, opinions and conclusions were developed, and this Report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation, except that the Departure Provision of the USPAP shall not apply to federally related transactions. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. I certify that 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, I have completed the requirements of the continuing education program of the Appraisal Institute. I have made a personal inspection of the property that is the subject of this Report. No other person provided significant professional assistance to the person(s) signing this Report. CM© 2014 CAPITAL REALTY ANALYSTS Page 55 Certification (cont'dj This Appraisal assignment was not based on a requested minimum valuation, a specific valuation or the approval of a loan. I certify that, to the best of my knowledge and belief, the reported analyses, opinions and conclusions were developed, and this Report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. I have not previously appraised the property that is the subject of this report. Michael A. Scarcella, MAI State Certification No.: AGO19463 Expiration Date: October 24, 2015 © 2014 CAPITAL REALTY ANALYSTS Page 56 Addendum Mil © 2014 CAPITAL REALTY ANALYSTS Page 57 Assumptions and Limiting Conditions This appraisal report has been made with the following general assumptions and limiting conditions: 1. No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. The appraiser reserves the right to make adjustments to the analyses, opinions and conclusions in this report, as may be required by consideration of additional or revised data that may become available. 5. All engineering is assumed to be correct. The plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them. 7. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. 8. It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report. 9. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. MI © 2014 CAPITAL REALTY ANALYSTS Page 58 Assumptions and Limiting Conditions 10. It is assumed that the utilization of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 11. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the subject property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea -formaldehyde foam insulation and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The intended user is urged to retain an expert in this field, if desired. 12. Any allocation of the total value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate allocations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. 13. Except for use in the Official Statement as required for bond issuance, possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event only with properly written qualification and only it its entirety. 14. The appraiser herein by reason of this appraisal is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made. 15. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser. CI?Al © 2014 CAPITAL REALTY ANALYSTS Page 59 Assumptions and Limiting Conditions 16. Improved Properties - The Americans with Disabilities Act ("ADA") became effective January 26, 1992. I (we) have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since I (we) have no direct evidence relating to this issue, I (we) did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. 17. Improvements, Proposed Improvements - The value estimates in this report are subject to the improvements being completed in the manner represented to the Appraiser(s), and described in the Improvement Description section of this report. 18. The legal descriptions, site sizes, dimensions and/or other surveys provided to the appraiser, including County Tax Plats, are assumed to be accurate. Should a survey prove these characteristics inaccurate, it may be necessary for the appraisal to be adjusted. 19. The forecasts, projections, or operation estimates contained herein are based upon current market conditions, anticipated short-term supply and demand factors, and a continued state economy. These forecasts are therefore, subject to change in the future. 20. The appraiser undertaking this assignment warrants that he is competent in properly identifying the appraisal problem and has the necessary knowledge and experience to complete the assignment. 21. Provision of an insurable value by the appraiser does not change the intended user or intended purpose of the appraisal. The appraiser assumes no liability for, and does not guarantee that any estimate or opinion will result in the subject property being fully insured for any possible loss that may be sustained. The appraiser recommends that an insurance professional be consulted. tad© 2014 CAPITAL REALTY ANALYSTS Page 60 Assumptions and Limiting Conditions 22. Copyright of this material belongs exclusively to Michael A. Scarcella, Inc., and/or Capital Realty Analysts, Inc. This copy is intended for private use as defined in the body of the report for the designated client only. No person or entity is permitted to reproduce this material, in whole or in part, for distribution either free of charge or for 'commercial purposes', unless that person or entity has a signed license agreement with Michael A. Scarcella, Inc. and/or Capital Realty Analysts, Inc. Reproduction for commercial purposes is reproduction for the purposes of sale, rent, trade or distribution, or posting it on the Internet or on electronic bulletin boards. C3© 2014 CAPITAL REALTY ANALYSTS Page 61 MICHAEL A. SCARCELLA, MAI Education 1982 B.S., Business, University of Nevada, Las Vegas All required Appraisal Institute sponsored courses required to attain the MAI designation, along with Appraisal Institute sponsored courses, seminars and on-line forums required for continuing education. Professional Organizations/ Licensing Member of the Appraisal Institute - MAI Member Number 11072 Licensed by the State of California as a "Certified General Real Estate Appraiser". Office of Real Estate Appraisers, Appraiser Identification Number AG 019463. Appraisal Institute - So. Cal. Chapter, 1997, 1998, 2001 Experience Review Committee; 1999, 2000, 2005 So. Cal. Chapter Ethics Committee General Experience 1997 to Current Capital Realty Analysts - President 1991 to 1996 - MacKenzie and Associates - Staff Appraiser 1982 to 1991 - Hotel, Construction / Development Controller Qualified as an expert real estate witness, United States Bankruptcy Court Qualified as an expert real estate witness, Riverside County Superior Court Representative List of Clients Public Sector United States Of America RTC/FDIC Bureau of Indian Affairs BLM State of California State of Arizona Riverside County City of Palm Springs City of Coachella City of Desert Hot Springs City of Cathedral City City of Rancho Mirage City of Palm Desert City of Indian Wells City of Indio City of La Quinta Palm Springs Unified SD Desert Sands Unified SD Coachella Valley Unified SD Southern California Edison Coachella Valley Water Dist. Mojave Water Agency Eisenhower Memorial Hsp. Desert Hospital Private Sector Price Waterhouse Merrill Lynch CB Commercial Textron Bechtel Corporation KSL Recreation Corp. United States Filter Sunrise Company Trust for Public Land Mojave Desert Land Trust Canyon Development Lennar Homes Temple Construction Santa Fe Pacific Takenaka Corporation Betty Ford Center Heart Inst. of the Desert Basic Capital Management Estate of Walter Annenberg Estate of Frank Sinatra Wessman Development Attorneys Developers Accountants Institutional Lenders Bank of America Rabobank N.A. Wells Fargo Bank Pacific Western Bank Washington Mutual Bank Bank Midwest Pacific National Bank Pacific Premier Bank Desert Commercial Bank Pacific Mercantile Bank Banc One Fidelity Federal Bank Bankers Trust Company Sunrise Community Bank Union Bank Commerce Federal Svgs Great American Bank Mitsubishi Bank Indymac Bank Foothill Independent Bank El Paseo Bank Palm Desert National Bank Bank Six First Bank 1 MI© 2014 CAPITAL REALTY ANALYSTS Page 62 C?4 +:.�1 0 { •d .ram .+� ✓rwl d' Prepared For: The City of Palm Desert Attn: Mr. Martin Alvarez 73510 Fred Waring Drive Palm Desert, CA 92260-2524 An Appraisal Report Of A 15.52-Acre Vacant Land Parcel Location: East Side of Portola Avenue, South of Frank Sinatra Drive, Palm Desert, CA.: Otherwise Known As APN: 620-400-028: Riverside County, CA. Date of Report: October 2, 2014 Date of Value: September 25, 2014 Capital Realty Analysts File No.: 14-4033 CAPITAL REALTY ANALYSTS MICHAEL A. SCARCELLA, MAI 78015 MAIN STREET, SUITE 207 LA QUINTA, CA 92253 PHONE: (760) 564-6222 FAX: (888) 985-9994 EMAIL: MIKE@REALTYADVISOR.COM Summary of Important Facts and Conclusions Client: Intended Users: Intended Use: Property Type: Location: The City of Palm Desert Attn: Mr. Martin Alvarez 73510 Fred Waring Drive Palm Desert, CA 92260-2524 The Client This report is intended for use by the Client for prospective disposition purposes. The subject of this appraisal report is a vacant land parcel. East side of Portola Avenue, south of Frank Sinatra Drive, Palm Desert, CA. An Assessor's Plat Map is located in the Site Analysis section of this Report. Identification: A 15.52-acre portion of APN: 620-400-028; City of Palm Desert; Riverside County, CA. Thomas Brothers Page 818 Grids G 1-G2 Guide Reference: ail © 2014 CAPITAL REALTY ANALYSTS Page 5 Summary of Important Facts and Conclusions Census Tract Number: Tract 0449.19 Report Format: Appraisal Report Purpose of the The purpose of this appraisal is to estimate the Appraisal: market value of the fee simple estate in the subject property under the following conditions: 4- Market Value "As Is" in accordance with the definition of market value described in the body of this Report. Date of Valuation: September 25, 2014 Date of Appraisal: October 2, 2014 Cqd© 2014 CAPITAL REALTY ANALYSTS Page 6 Photographs Relating to the Subject Property The subject property viewing SW Subject property viewing N from across the retention area near the S line of the site Minor amounts of dumping was An old slab and fencing were observed on the site observed on the property Street scene viewing N along Portola Street scene viewing S along Portola Avenue. Subject at right. Avenue. Subject at left. Cad © 2014 CAPITAL REALTY ANALYSTS Page 9 Aerial Photo of the Subject The retention area is not a part of the subject property APN 620-400-028 Desert Willow Lot Pad F 0 © 2014 CAPITAL REALTY ANALYSTS Page 10 Introduction / History of the Subject • i The subject consists of a 15.52-acre vacant land parcel. The property was acquired by the City of Palm Desert and/or its affiliated former Redevelopment Agency along with other neighboring parcels over 3-years ago. The purpose of the acquisition was to develop Desert Willow, a City - owned golf resort facility. To date, the City has completed 2 golf courses and a clubhouse & ancillary golf related site improvements. In addition to the golf facilities, The City owned property includes 7 vacant land parcels (Parcels A-G), with Parcel F comprising the subject property. Quicksilver is planning to develop Parcels C Ss D and a portion of Parcel E with resort & retail facilities. The subject Parcel F is a perimeter parcel. While the property does abut the golf course facilities, berms prevent the land from having direct golf course views. Alternatively, the land does have good south and west mountain views. As a consequence of the dissolution of Redevelopment Agency's, the Client is developing a disposition analysis for the subject property, which generated the requirement for this appraisal report. CCfi © 2014 CAPITAL REALTY ANALYSTS Page 11 Regional Analysis - Coachella Valley West Patin Springs Palm speogs ossartiwat Mks c.IAadral City Rancho Mirage Sky Valley 1,11011.11ed Paints Paton Dimon Indian Wells Coachella Valley Map California Subject Sue city aurnluda Daiwa la Quiets Korot Valley Indio Joshua Tr.+ National Perk The Coachella Valley is a valley in Southern California, which extends for approximately 45 mi (72 km) in Riverside County southeast from the San Bernardino Mountains to the northern shore of the Salton Sea. It is the northernmost extent of the vast trough; which includes the Salton Sea, the Imperial Valley and the Gulf of California. It is approximately 15 mi (24 km) wide along most of its length, bounded on the west by the San Jacinto Mountains and the Santa Rosa Mountains and on the north and east by the Little San Bernardino Mountains. The San Andreas Fault crosses the valley from the Chocolate Mountains in the southeast corner and along the centerline of the Little San Bernardinos. The fault is easily visible along its northern length as a strip of greenery against an otherwise bare mountain. The Coachella Valley connects with the Greater Los Angeles area to the west via the San Gorgonio Pass, a major transportation corridor that includes I-10 and the Union Pacific Railroad. Populated by nearly 600,000 people, the Coachella Valley is part of the 13th-largest metropolitan area in the United States, the Inland Empire. C3 ' © 2014 CAPITAL REALTY ANALYSTS Page 16 Regional Analysis - Coachella Valley The following table shows the growth trend of the regional area (source: CA Department of Finance / U.S. Census Bureau): 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 N m Vl l0 r` 00 Ol 0 m Ul 1.0 N 00 al 0 r-I N m Ol 01 Ol of Ol of 01 Ql of Ol O o O O o o O O o o c-I .--I c-I c-I of 01 01 01 01 Ol Ol Ol al 01 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ,- rq c-I c-I , i e-I c-I i- I ri N N N N N N N N N N N N N N The regional area generally attracts a high percentage of retirees due to the favorable climate in the fall, winter and springs seasons. Summers are hot, resulting in a seasonal population base. Development has generally been moving from west to east through the region. Consequently, the eastern cities in the region have had the highest growth rates over the past several years. The following table shows the growth rates of the cities in the region, from west to east: City 9-Yr City 2005 2006 2007 2008 2009 2010 2011 2012 2013 Gain/Loss Indio Cathedral City Palm Desert Palm Springs Coachella La Quinta Desert Hot Springs Rancho Mirage 66,539 50,957 49,595 46,000 30,964 36,377 19,507 16,520 72,142 51,435 49,879 46,754 35,449 38,604 22,163 16,783 77,146 52,115 49,752 46,858 38,486 41,092 23,544 16,944 80,962 51,972 50,686 47,019 40,317 42,743 25,939 16,975 82,325 52,508 51,570 47,653 41,043 43,830 26,584 16,938 75,122 51,037 48,132 44,385 40,464 37,307 25,852 17,168 77,165 51,603 49,111 45,002 41,502 37,836 27,383 17,463 78,065 51,952 49,471 45,279 41,904 38,075 27,638 17,504 78,298 52,108 49,619 45,414 42,030 38,190 27,721 17,556 11,759 1,151 24 (586) 11,066 1,813 8,214 1,036 Desert Hot Springs and Coachella had the highest overall growth rates and the lowest median housing prices, reflecting the generally poor economic conditions that have prevailed in the region over the past approximately 7-years. Cad © 2014 CAPITAL REALTY ANALYSTS Page 17 Regional Analysis - Coachella Valley Economy Tourism, retail, healthcare, construction and agriculture are the main industries in the Coachella Valley. The following table shows the employment distribution by sector: Pus rrss S.r:,Mt r 7..Yha-< 449: (.Ont!rt.t;i C*( *-]C7) btl ton(,"-6741) loutas.?n (40% • 8 / !4 i . S-4Seuat(7.E%-9'74: rr'441'11'0 4'44 —' aPkg. .,neut*(9.1S.1'6775 R 4.11, 4A%-3J /1). .1-,r: Amvte ("›.916 • 19.9l1) . As shown, retail and hotel with their related services historically has been the driving force in the local economy. Close driving proximity to the Los Angeles, Orange County and San Diego metro areas yields over 3.5 million tourists per year. The area attracts a significant retiree base; yielding a high percentage of healthcare employment. Historically, the Coachella Valley has tended to underperform the Inland Empire's economy in bad times and out -perform it in good times. Thus, the area's job growth was negative in the early 1990s recession but grew faster than the region in the late 1990s recovery. It was slower in the 2001 recession but was faster in the upturn, until 2005. Since then, that pattern reversed. This is largely due to the increased prominence of the local construction sector. Thus, the valley grew slower than the inland region in the 2005-2006 boom years and matched it during the 2007- 2009 recession. It fell much more than the inland region in 2010 (-3.3% v.-1.5%). In 2011 both grew slightly, 0.5% in the Coachella Valley v 0.4% for the Inland Empire. The Valley's growth was 2.8% in 2012 v. 2.0% for the IE. C3A1 © 2014 CAPITAL REALTY ANALYSTS Page 18 Regional Analysis - Coachella Valley Economy (cont'd) In terms of new home absorption, the table at right shows the regional trend. The absorption pattern shown at right followed closely along the same pattern as the home price trend through 2009. From 2010 through 2013, the average home price increased from $248,444 to $334,044; or 34%. The fact that the lower priced foreclosure absorption percentage is decreasing sharply is a factor in the sharp average retail price increase. Several of the public homebuilders (Toll, Lennar, D.R. Horton, etc.) are now constructing new homes in the region; which suggests a moderation of the retail price percentage growth rate, and an uptick in new home absorption counts. Other economic indicators include the following: 4- 2012 Taxable Retail Sales - $5.3B 4- 2012 Bank Deposits - $6.48B 4- 2013 Assessed Value - $56.6B 4- Crime Rate Per 1,000 Residents - 45.0 4- 2012 Average Job Pay - $35,689 Conclusion The Coachella Valley's economy has historically been seasonal, tied to the winter/spring influx of tourists and seasonal residents. Additionally, the Coachella Valley has historically attracted the baby boomers and relatively affluent retiree segments. The region is projected to continue to grow rapidly in relation to neighboring regions over the next few decades as the large baby boomer demographic is now entering retirement age. The region continues to enhance its appeal with this demographic by configuring shopping, entertainment venues and planned housing developments ranging from upper middle to high -end products geared to the segment. With additional growth in the permanent population, the economy is likely to become less vulnerable to seasonality. The regional economy is now trending up after several years of difficult economic conditions. This trend is likely to continue through the short term; with some potential for stronger mid-term growth as the current economic cycle continues to mature. MI© 2014 CAPITAL REALTY ANALYSTS Page 19 Market Analysis The purpose of the Market Analysis section in this appraisal report is to identify the supply and demand characteristics of the subject property. The Market Analysis section is organized as follows: Market Analysis 4- Introduction 4- Marco Economic Environment 4- Regional Residential Market Conditions The Subject Property Conclusion Cid © 2014 CAPITAL REALTY ANALYSTS Page 20 Market Analysis Regional Residential Market Conditions (Cont'd) Attached Units I Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 1st Qt. 74 85 34 42 48 11 4 31 21 367 105 94 42 2 23 35 8 1 9 2nd Qt. 95 31 9 31 17 (1) 40 33 38 136 171 63 9 (1) 2 9 28 2 3rd Qt. 9 31 29 22 5 1 12 4 68 235 143 99 21 11 11 5 7 7 4th Qt. 44 59 19 48 8 8 17 29 85 135 50 1 24 4 3 (1) (1) 7 Sub -Total 222 206 91 143 78 19 73 97 212 873 469 257 87 26 36 41 23 43 11 Detached Units I Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 I 1st at. 290 425 551 880 1,190 797 831 897 2,031 964 941 804 583 257 168 141 141 163 183 2nd Qt. 317 287 604 750 742 572 900 1,602 1,761 1,444 916 474 326 278 108 143 179 181 187 3rd Qt. 171 381 565 593 626 492 751 933 1,197 1,263 686 209 304 173 69 100 165 145 - 4th 00. 287 252 415 484 691 652 1,681 2,239 650 774 498 233 308 137 77 132 109 142 - Sub -Total 1,065 1,345 2,135 2,707 3,249 2,513 4,163 5,671 5,639 4,445 3,041 1,720 1,521 845 422 516 594 631 370 Total Units Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 j 1st Qt. 364 510 585 922 1,238 808 835 928 2,052 1,331 1,046 898 625 259 191 176 149 164 192 2nd Qt. 412 318 613 781 759 571 940 1,635 1,799 1,580 1,087 537 326 287 107 145 188 209 189 3rd Qt. 180 412 594 615 631 493 763 937 1,265 1,498 829 308 325 184 80 105 172 152 4th Qt. 331 311 434 532 699 660 1,698 2,268 735 909 548 234 332 141 80 131 108 149 Totals 1,287 1,551 2,226 2,850 3,327 2,532 4,236 5,768 5,851 5,318 3,510 1,977 1,608 871 458 557 617 674 381 The following shows the data graphically with a linear trend line: 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Sales ID N 00 Ot 0 c-I N m to l0 N 00 Ol o r1 N m 01 01 01 Q1 0 0 0 0 0 0 0 0 0 0 rA .-I O1 Ot O1 O1 0 0 0 0 0 0 0 0 Cr 0 0 0 0 0 ,-I ,-I .--I .-4 N N N N N N N N N CA N N N N Linear (Sales) Cad© 2014 CAPITAL REALTY ANALYSTS Page 23 Site Analysis Plat Map 620-40; Riverside County, CA • SEC 4. ' SS . R SE >+tu DE8E41' i1'. ., 70 w64° / .a are tag DE II ,.�' , . /i. r?. •�wr�owCr. �: ,,..—:,1•s4 N. 620-40 1 pp <r .4114.4 41.44.-4444. W. >y.v..stS..a.url , � ! 1 X .w metric .p"— -- +ref. n.0 •YAIW OIL LW 1 L. •wrr . .e ....,z II J% i Cad © 2014 CAPITAL REALTY ANALYSTS Page 2 6 Site Analysis Zoning Map (Source: City of Palm Desert) .14e_a Subject Property Note that the zone was changed to PR-5 in 2012. MAN AILLOI CAWS ate_ raetn C 1J © 2014 CAPITAL REALTY ANALYSTS Page 31 Site Analysis General Plan Map (Source: City of Palm Desert) DESERT 01110n GOLF R.ESORT Cad © 2014 CAPITAL REALTY ANALYSTS Page 32 Site Analysis Fault Zone Map (Source - Riverside County GIS) RIVERSIDE COUNTY GIS :rust w I. 'MOW. e. .r Riverside County TLMAGIS sh,i,-,���.,Y_ SELECTED PARCEL CITY INTERSTATES Selected parcel(s): 620-400-028 FAULT ZONES HI C' I-NV'AY S PARCELS "IMPORTANT' Maps and data are to be used for reference purposes only. Map features are approximate, and are not necessarily accurate to surveying or engineering standards. The Cairty of Riverside makes no warranty or guarantee as to the content (the source is often third party), accuracy, timeliness, or completeness of any of the data provided, and assumes no legal responsibiity for the information contained on this map. Any use of this product wth respect to accuracy and precision shall be the sole responsibiity of the user. Cad © 2014 CAPITAL REALTY ANALYSTS Page 33 Site Analysis Flood Map (Source - Riverside County GIS) RIVERSIDE COUNTY GIS Riverside County TLMA GIS ElSELECTED PARCEL 7-1 PARCELS INTERSTATES FLOOD ZONES Selected parcel(s): 620-400-022 FL00D ZONES Hi ,1 VAYS cir IMPORTANT* Maps and data are to be used for reference purposes only. Map features are approximate, and are not necessarily accurate to surveying or engineering aiandards. The Courtly of Rroerside makes no warranty or guarantee as to the content (the source is often third party), accuracy, timeliness, or completeness of any of the data provided, and assumes no legal responsibility for the information contained on this map. Ary use of this product wth respect to accuracy and precision shall be the sole responsibility of the user. add © 2014 CAPITAL REALTY ANALYSTS Page 34 Site Analysis Liquefaction Hazard Map (Source - Riverside County GIS) RIVERSIDE COUNTY GIS FRANK S NATRA DR City of Palm Desert 0 Riverside County TLMA GIS FRANK SINATRA DR • re4 ElSELECTED PARCEL l._ 7 PARCELS I NTTERSTATE S Moderate Selected parcel(s) 620-400-028 LIQUEFACTION HIGFWAYS LJ CIT( *IMPORTANT' Maps and data are to be used for reference purposes only Map features are approximate, and are not necessarily accurate to surveying or engineering dandards. The Courtly of Riverside makes no warranty or guarantee asto the content (the source is often third party), accuracy, timeliness, or completeness of any of the data provided, and assumes no legal responsibility for the information contained On this map. Any u9e of this product wdh respect to accuracy and precision shall be the sole responsibility of the user C�4 c0 2014 CAPITAL REALTY ANALYSTS Page 35 Site Analysis MSHCP Map (Source - Riverside County GIS) RIVERSIDE COUNTY GIS Riverside County TLMA GIS SELECTED PARCEL ElPARCELS FRANK S1NXTRA?DR Selected parcel(s): COACHELLA VLY MSHCP CONS. AREA I NTE RSTATE S mallow I IMPORTANT' Maps and data are to be used for reference purposes only. Map features are approximate, and are not necessarily accurate to surveying or engineering standards. The Courry of Riverside makes no warranty or guarantee asto the content (the source is often third party), accuracy, timeliness, or completeness of any of the data provided, and assumes no legal responsibility for the information contained on this map. Any use of this product with respect to accuracy and precision shad be the sole responsibility of the user C3J © 2014 CAPITAL REALTY ANALYSTS Page 36 Site Analysis Subsidence Map (Source - Riverside County GIS) RIVERSIDE COUNTY GIS ElSELECTED PARCEL PARCELS INTERSTATES SUSCEPTIBLE Selected palrcel(s): 620-400-028 SUBSIDENCE HIhH'wA,'S i CITY *IMPORTANT* Maps and data are to be used for reference purposes only R4 ap features are approximate, and are not necessarily accurate to surveying or engineering 9andards. The County of Rberside makes no warranty or guarantee as to the content (the source is often thud party), accuracy, timeliness, or completeness of ark of the data provided, and assures no legal responsibility for the information contained on this map. Ark use of this product with respect to accuracy and precision shall be the sole responsibility of the user © 2014 CAPITAL REALTY ANALYSTS Page 3 7 Site Analysis Topographical Map (Source - Riverside County GIS) RIVERSIDE COUNTY GIS Ll SELECTED PARCEL 7 PARCELS Selected parcel(s): ELEVATION -CONTOUR rr_r.rF: UNEE: INTERSTATES HICiHNAYS IMPORTANT Maps and data are to be used for reference purposes only. Map features are approximate, and are not necessarfy accurate to surveying or engineering standards. The County of Riverside makes no warranty or guarantee as to the content the source is often third parry), accuracy, timeliness, or completeness of any of the data provided, and assumes no legal responsibility for the information contained on this map Any use of this product with respect to accuracy and precision shall be the sole responsibility of the user. © 2014 CAPITAL REALTY ANALYSTS Page 38 Site Analysis FEMA Flood Zone Map SLAP SCALE r- • raw fist x.>a wltti r*_I ...w FIRM I t000 nslAli111G( SATE OAP KI11 RNI9 I lit \IN. 4 %I Itf)R\I\ .wrv.rnr.1/a.n ... Mli'l IttS OF MOS MAP Well* OIpr,C .411G (FIaTIVI Dan' AUGUST ZS, MS wow. .n...r..go. rink.. Cgdigi © 2014 CAPITAL REALTY ANALYSTS Page 39 Sales Comparison Approach Land Sales Map Land Sales Grid Sale No. Location Sale Sale Size Sale Price Date Price (Ac.) Per Acre 1 SEC of College Drive & University Park Drive Palm Desert, CA 7/31/14 $ 6,600,000 23.850 $276,730 2 E Side of Shepherd Lane, 4/9/12 $ 425,000 3.640 $116,758 N & S of University Pt. Ct. Palm Desert, CA 3 SWC of La Quinta Drive 6/ 19/ 13 $ 3,750,000 22.020 $170,300 & Auto Centre Drive La Quinta, CA 4 NWC of N. Laguna Drive 8/20/12 $ 2,250,000 36.700 $ 61,308 & W. Natoma Drive Cathedral City, CA Subj. E side of Portola Avenue, S of Frank Sinatra Drive Palm Desert, CA 15.520 C 4 © 2014 CAPITAL REALTY ANALYSTS Page 46 Sales Comparison Approach Conclusion The following table shows the Land Sales Adjustment Matrix; Element Subject Sale Price Size (Acres) Unit of Comparison Sale Price Per Acre Property Rights Adjustment Terms Cash Equivalency Conditions of Sale Adjustment Date of Sale Adjustment Subtotal Location Location Adjustment Size Size Adjustment 15.52 $ Per Lot Fee Simple 9/25/14 Average 15.52 Sale 1 $6,600,000 23.85 $ Per Lot $276,730 Fee Simple $0 Cash ($31,592) Arms -Len. $0 7/31/14 $0 Sale 2 Sale 3 Sale 4 $425,000 $3,750,000 $2,250,000 3.64 22.02 36.70 $ Per Lot $ Per Lot $ Per Lot $116,758 $170,300 $61,308 Fee Simple $0 Cash $0 Atypical $23,352 4/9/12 $43,137 $245,138 $183,246 Si. Superior ($12,257) 23.85 Similar $0 Fee Simple Fee Simple $0 $0 Cash $0 REO $0 Cash $0 REO $0 6/19/13 8/20/12 $10,801 $19,299 $181,101 $80,607 Superior Inferior ($18,110) $40,304 3.64 22.02 $0 $0 $0 Other Physical Elements Raw/Not Zoned Entitled & Impvd Other Physical Adjustment ($98,055) Adjusted Sale Price Per Acre $134,826 36.70 $0 Final Map/Impvs Raw/Not Zoned Raw ($54,974) $0 ($4,030) $128,273 $162,991 $116,881 As shown, the adjusted value range is from $116,881 per acre to $162,991 per acre. Sale 3, the high value indicator is somewhat of a statistical outlier, as the other 3 sales fell with a more narrow range, below the indication from Sale 3. The subject is somewhat unique in that it lacks an appropriate general plan designation and entitlements. However, the land is well located and would clearly draw offers if the land were available on the open market. However, the risk involved in the zoning and entitlement process will be a slight drag on value, as other parcels are available that do not carry the same risk, or time associated with preparing the land for development. In light of the features of the subject property, a lower, mid -range market value estimate best reflects the market perception of value of this land as of the date of value. Based upon the available data, I conclude that the market value of the fee simple estate in the subject property as of the date of value is as follows: $130,000 Per Acre x 15.52-Acres = $2,017,600 $2,020,000 (Two Million Twenty Thousand Dollars) © 2014 CAPITAL REALTY ANALYSTS Page 53 joy. skis t ugl." APN: 620-400-028 Desert Willow Lot Pad F Date: 8/2014 • • •• • - . • • • VICINITY MAP •