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Res OB-148 (2)
OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: AUTHORIZATION TO EXECUTE A PURCHASE AND SALE AGREEMENT (PSA) WITH LEWIS LAND DEVELOPERS, LLC TO SELL THE SUCCESSOR AGENCY OWNED PROPERTY KNOWN AS THE 128-ACRE SITE LOCATED GENERALLY SOUTH OF GERALD FORD DRIVE AND EAST OF PORTOLA AVENUE SUBMITTED BY: Martin Alvarez, Director of Economic Development DATE: August 1, 2016 CONTENTS: Resolution No. OB- 148 Purchase and Sale Agreement (Contract No. SA35570A) Appraisal / Location Map Recommendation By Minute Motion: 1. Approve OB Resolution No. OB-148 authorizing the Executive Director to make non -substantive changes and execute a Purchase and Sale Agreement with Lewis Land Developers, LLC at fair market value for the sale of the Successor Agency owned property known as the 128-acre Property (APN 694-300-001, 002, 005, 014, 015 / 694-310-002, 003, 006) after approval has been received from the State Department of Finance. Executive Summary Approval of staff's recommendation will authorize the Executive Director to execute a purchase and sale agreement with Lewis Land Developers, LLC for properties known as 128-acre site, located south of Gerald Ford Drive and east side of Portola Avenue for fair market value (appraised value) once the approval from the State Department of Finance is received. 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 the 128- acre Site on the approved LRPMP and is located south of Gerald Ford Drive and east of Portola Avenue. The site consists of eight separate parcels totaling 128.95 acres of vacant land. Approximately 104 acres are zoned Planned Residential (5-Units/acre) and 25 acres are zoned 20 units/acre (see location map). The LRPMP requires the site to be sold at fair market value, with the sale proceeds returning to the existing taxing entities. Discussion Staff Report Sell APNs APN 694-300-001,002,005,014,015 / 694-310-002,003,006: LRPMP 128-acre Site July 28, 2016 Page 2 of 3 Discussion To facilitate the property disposition of the 128-acre Site, the Successor Agency staff prepared a Request for Qualifications/Proposals (RFQ/P). The RFQ/P requested proposals from qualified respondents having the ability to master plan, entitle and acquire the entire 128-acre site. The RFQ/P requested that respondents provide the following information: • A detailed list of 5 similar sized projects master planned within the last 15 years • A description of experience processing similar sized undeveloped land through a City's entitlement process • A conceptual land use plan identifying potential property yield, type of uses and residential products, proposed circulation, sustainable design principles, community amenities and the incorporation of a minimum 10 acres (200 units) of affordable housing integrated into the community design. On July 10, 2015, the Successor Agency received responses from seven respondents. The RFQ/P submittals were reviewed by a team of City staff members that included a representative of the Public Works, Planning, and Economic Development Departments as well as a representative from Raimi & Associates (City's General Plan Consultant). The RFQ/P's were reviewed and scored based on a series of criteria identified in the RFQ/P, including but not limited to firm experience, proposed land use concept, circulation, sustainability concepts and affordable housing integration. After evaluation of the proposals, the evaluation team ranked the proposals in the following order: 1. Lewis Operating Corp/Palm Communities 2. Noble & Company 3. Family Development (opted out) 4. G.H.A. 5. Richland Communities/Coachella Valley Housing Coalition 6. Global Investment &Development 7. Somis Investments Following the review and ranking of the proposals, staff scheduled interviews with the top four respondents. Prior to the interview date, Family Development notified staff of their decision to opt out of consideration to acquire the site. On September 1, 2015, staff interviewed the remaining three respondents highlighted above. The interview evaluations were conducted again by representatives from Public Works, Planning, Economic Development, and City Manager Departments as well as a representative from Raimi & Associates (City's General Plan Consultant). The respondents were given the opportunity to present the key elements of their qualifications, land use concept as well as any unique features identified in their proposals. The evaluation team scored the presentations based on firm experience, land use concept, circulation, sustainability concepts and the integration of an affordable housing component. The evaluation results concluded that Lewis Operating Group and Palm Communities (affordable housing developer) were the highest ranking respondents. After selecting Lewis Operating Corp. (Lewis) to move forward with the acquisition of the site, staff met with Lewis to outline the next steps in the acquisition process. During this time, staff engaged Capital Realty Analyst to prepare a fair market appraisal of the site. Upon completion of the appraisal analysis, the appraiser concluded that the 128.95 acre site is valued at $13,085,000 (see attached appraisal). G \Econ Development\Martin Alvarez\SA Property Sales\128-Acres\OB\128 OBSR 8-1-16 doc Staff Report Sell APNs APN 694-300-001,002,005,014,015 / 694-310-002,003,006: LRPMP 128-acre Site July 28, 2016 Page 3 of 3 To proceed with the disposition of the subject property, staff has prepared a Purchase and Sale Agreement (PSA) for your consideration. Below is a summary of the PSA terms: • Purchase price (fair market value)- $13,085,000.00 • Developer shall deposit $125,000.00 into escrow account • Escrow shall open within (3) business days after mutual execution of the PSA • Escrow shall close within 18-months of mutual execution of the PSA Staff recommends that the Oversight Board authorize the Executive Director to execute the PSA with Lewis Land Developers, LLC in the amount of $13,085,000.00, once approval has been received by 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 By: Martin Alvarez Director of Economic Development Reviewed: Moore ctor of Finance Approval: J = i M. McCarthy Interi-n Executive Directo Department Head: Rudy Acosta Assistant City Manager 6iliatiEzzle.._ BY OVERSIGHT BOARD A-iJ r) ON 1 —2-0 VERIFIED BY S Original on file with City Clerk's Office G \Econ Development\Martin Alvarez\SA Property Sales\128-Acres\OB\128 OBSR 8-1-16.doc NOTICE OF 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 Lewis Land Developers, LLC for Property Known as the 128 acre Site Located South of Gerald Ford Drive and East of Portola Avenue known as APNs: 694-300-001, 002, 005, 014 and 015 and 694-310-002, 003 and 006, Property 11(a-h) Pursuant to the Long Range Property Management Plan Date: August 1, 2016 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 August 1, 2016, 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 Lewis Land Developers, LLC for Property Known as the 128 acres Site Located South of Gerald Ford Drive and East of Portola Avenue known as APNs: 694-300-001, 002, 005, 014 and 015 and 694-310-002, 003 and 006, Property 11(a-h) Pursuant to the 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 day j,,,1, , 2016 J Rach le D. Klassen, n Secretary to the Successor Agency to the Palm Desert Redevelopment Agency RESOLUTION NO. OB- 148 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 KNOWN AS THE 128-ACRE SITE LOCATED SOUTH OF GERALD FORD DRIVE AND EAST OF PORTOLA AVENUE (APNs 694-300- 001, 002, 005, 014 AND 015 AND 694-310-002, 003 AND 006) PALM DESERT, CA, PROPERTY 11(a-h) OF THE LONG RANGE PROPERTY MANAGEMENT PLAN WITH LEWIS LAND DEVELOPERS, LLC. 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 Lewis Land Developers, LLC for Property 11(a-h) of the LRPMP (APNs 694-300-001, 002, 005, 014 and 015 and 694-310-002, 003 and 006) totaling approximately 128 acres, in the amount of $13,085,000.00 (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-148 J. The Oversight Board is adopting this Resolution to direct the execution of the Purchase and Sale Agreement (see Exhibit A) with Lewis Land Developers, LLC 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 July 22 , 2016. 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 Lewis Land Developers, LLC 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 , 2016. 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 - 148 EXHIBIT A OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY PURCHASE AND SALE AGREEMENT FOR PROPERTY KNOWN AS THE 128 ACRE SITE LOCATED SOUTH OF GERALD FORD DRIVE AND EAST OF PORTOLA AVENUE, PALM DESERT, CA (APNs 694-300-001, 002, 005, 014 AND 015 AND 694-310-002, 003 AND 006) PROPERTY 11(a-h) OF THE LONG RANGE ROPERTY MANAGEMENT PLAN WITH THE CITY OF PALM DESERT -3- RESOLUTION NO. OB-148 CONTRACT NO. SA35570A REAL ESTATE PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS This Real Estate Purchase and Sale Agreement and Joint Escrow Instructions (this "Agreement"), dated for reference purposes only as of , 2016 is entered into between LEWIS LAND DEVELOPERS, LLC, a Delaware limited liability company ("Buyer"), and the SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY ("Seller"), for the purchase and sale of that certain real property consisting of approximately 128.95 acres located in the City of Palm Desert, County of Riverside ("County"), State of California, known as A.P. Nos. 694-300-001, 694-300-002, 694-300-005, 694-300-014, 694- 300-015, 694-310-002, 694-310-003 and 694-310-006 (the "Property"), as legally described on Exhibit A attached hereto and identified on the map attached hereto as Exhibit A-1. As used herein the term "Property" shall include all of Seller's right, title and interest in and to all entitlements, easements, mineral rights, oil and gas rights, water, water rights, air rights, development rights and privileges appurtenant thereto and all improvements located thereon, excepting any right, title or interest to any public rights of way or public easements. The term "Seller" or "Successor Agency" or "Agency" in all cases herein refers to the Successor Agency to the Palm Desert Redevelopment Agency and the term "City" as used herein means the City of Palm Desert, a municipal corporation. The term "Effective Date" as used in this Agreement shall be the date of State Approval of this Agreement as set forth in Recital G. RECITALS This Agreement is entered into with reference to the following facts: A. Pursuant to AB X1 26 (which became effective at the end of 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 "Redevelopment Agency") was dissolved as of February 1, 2012 and the Agency was constituted to wind down the affairs of the former Redevelopment Agency; and B. AB 1484 (which became effective at the end of June 2012) amended and supplemented AB X1 26 (AB X1 26 and AB 1484, together, being referred to below as the "RDA Dissolution Act"); and C. Pursuant to the RDA Dissolution Act, all assets, properties, contracts, leases, books and records, buildings, and equipment of the former Redevelopment Agency have been transferred to the control of the Agency; and D. Agency owns the fee interest in the Property; and E. Buyer desires to purchase the Property; and F. On August 1, 2016, the Oversight Board adopted its Resolution No. approving this Agreement (the "Oversight Board Approval"); and G. On , 2016, the State of California, Department of Finance ("DOF") approved this Agreement as required by the RDA Dissolution Act (the "State 81097.00000\29090060.1 1 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Approval"). Seller and Buyer agree that such approval by DOF is a condition to the execution and enforceability of this Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. PURCHASE PRICE: The purchase price for the Property shall be Thirteen Million Eighty-five Thousand and no/100 Dollars ($13,085,000.00) (the "Purchase Price") to be paid all cash to Seller at Closing, less the Deposit made by Buyer pursuant to Section 2. 2. DEPOSIT: Buyer has previously deposited a cash sum equal to One Hundred Twenty-five Thousand Dollars ($125,000) (the "Deposit") in escrow (the "Escrow") with Foresite Escrow at41995 Boardwalk, Suite G-2, Palm Desert, CA 92211, Attn: Esther Lopez ("Escrow Holder"). The Deposit shall be held in the Escrow until the Feasibility Deadline (as defined in Section 10 below) with the interest earned thereon inuring to the benefit of Buyer. If on or before the Feasibility Deadline, Buyer delivers to Seller and Escrow Holder written notice approving the feasibility of the Property, the Deposit shall thereafter be non-refundable to Buyer, except as otherwise set forth in this Agreement, and shall remain in Escrow until the Closing or earlier termination of this Agreement, and provided further that until the Closing occurs or until Seller receives the Deposit as liquidated damages pursuant to Section 7.E. hereof, Buyer shall be deemed the owner of the Deposit, and Seller and its successors and assigns shall not be entitled to withdraw from Escrow or to receive from Escrow all or any part of the Deposit. If this Agreement is terminated or deemed terminated on or before the Feasibility Deadline, Seller hereby authorizes Escrow Holder to immediately release the Deposit (and all of the interest earned on the Deposit) to Buyer without any additional documentation required from the parties. Seller releases Escrow Holder from all liability in connection with the release of the Deposit to Buyer in accordance with the preceding sentence, and following such release of the Deposit, neither party shall have any further rights or obligations hereunder (other than those arising from a party's breach of this Agreement). The Deposit shall be credited against the Purchase Price at the Closing. 3. INDEPENDENT CONSIDERATION. Within three (3) business days following the mutual execution and delivery of this Agreement to Escrow, Buyer shall deposit into Escrow the amount of One Hundred Dollars ($100.00) (the "Independent Consideration"). The Independent Consideration shall be non-refundable to Buyer as independent consideration for the rights and options extended to Buyer hereunder, including, without limitation, the right and option to terminate this Agreement as provided herein. The Independent Consideration shall be disbursed to Seller immediately following Buyer's deposit thereof into Escrow. In all instances under this Agreement in which Buyer elects to terminate or is deemed to have terminated this Agreement and the Deposit is returned to Buyer, Seller shall retain the Independent Consideration when the Deposit is returned to Buyer. The Independent Consideration shall not be applicable to the Purchase Price or treated as consideration given by Buyer for any purpose other than as provided herein. The parties agree that it is their intention that the amount of the Independent Consideration is sufficient consideration, as such term is defined in Steiner v. Thexton, 48 Cal. 4th 411 (2010). Buyer and Seller hereby acknowledge and confirm that they have had an opportunity to review this provision with their respective, independent counsel. 81097.00000\29090060.1 2 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A 4. FAIR MARKET VALUE; NO SUBSIDY BY SELLER; NO AGENCY OBLIGATIONS. Buyer and Seller acknowledge and agree that the Purchase Price represents the current fair market value of the Property. Buyer and Seller further acknowledge and agree that neither Seller not City, in their regulatory capacity or otherwise, has provided or agreed to provide any subsidy to the Buyer in connection with Buyer's acquisition, development, use and/or operation of the Property, nor is there any plan to provide any such subsidy to the Buyer. 5. ESCROW: A. Closing. Buyer and Seller shall open escrow with Escrow Holder within three (3) business days after complete execution of this Agreement. Escrow shall close on the date (the "Closing Date" or "Closing") which is eighteen (18) months after the State Approval, provided the Closing Date may be extended by the Executive Director as set forth in Section 9. Buyer may elect to close the Escrow before the Closing Date upon thirty (30) days prior written notice to Seller. B. Escrow Instructions; Costs. The provisions hereof shall constitute joint instructions to Escrow Holder to consummate the purchase in accordance with the terms and provision hereof. The parties shall execute such additional escrow instructions, not inconsistent with the provisions hereof, as may be deemed reasonably necessary to carry out the intentions of the parties as expressed herein; provided, however, if the provisions of any such additional instructions contradict with the provisions of this Agreement, then the provisions of this Agreement shall control. At Closing, (i) real estate taxes shall be prorated between Buyer and Seller as of the closing date, and (ii) all other closing costs and prorations shall be paid by county custom. C. Deposit of Documents. (1) At or before the Closing, Seller shall deposit into escrow the duly executed and acknowledged Deed (defined below) conveying the Property to Buyer; (2) At or before the Closing, Buyer shall deposit into escrow the funds necessary to close this transaction; and (3) Seller and Buyer shall each deposit such other instruments as are reasonably required by the "Title Company" (defined below) or otherwise required to close the escrow and consummate the purchase of the Property in accordance with the terms hereof. D. Prorations. The Current Taxes shall be prorated as of the Closing Date based on the tax assessor's most recent tax bill for the Property except all delinquent taxes and assessments shall be paid by Seller. The parties shall cooperate in good faith following the Closing (and outside of the Escrow) to reconcile any prorations made at the Closing that do not accurately reflect the actual prorated cost or revenue. All prorations of amounts for which Seller is responsible but which Buyer pays or agrees to pay in the future shall be credited against the Purchase Price. 81097.00000\29090060.1 3 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A E. 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. F. Closing Procedure. Upon receipt of all funds and instruments described in this Section 5, and upon satisfaction or waiver of all contingencies and conditions set forth in this Agreement, Escrow Holder shall: County, California. (1) Record the Grant Deed in the Official Records of Riverside (2) Issue the Title Policy (as defined below) to the Buyer. (3) Deliver the Purchase Price to Seller, less any costs and expenses shown on the closing statements approved by Seller and 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. 6. TITLE: Buyer has procured that current preliminary title report respecting the Property issued by Lawyer's Title/Commonwealth Land Title Company in Riverside, CA (the "Title Company") attached hereto as Exhibit B, along with legible copies of the documentation evidencing all exceptions shown therein (the "Title Report"). Within thirty (30) days following the Effective Date, Buyer shall disapprove in writing any exceptions contained in the Title Report to which Buyer objects (the "Disapproved Exceptions"); all exceptions not so objected to by Buyer in writing shall be referred to as "Approved Exceptions". Seller shall have ten (10) days after Buyer delivers such notice to advise Buyer if Seller will agree to remove any of such Disapproved Exceptions from title. If Seller does not so agree in writing to remove all of the Disapproved Exceptions, then, until the Feasibility Deadline, Buyer may elect to terminate this Agreement and recover the Deposit previously made and any interest actually earned thereon, in which event the parties shall have no further rights or obligations hereunder; or, alternatively, Buyer may elect to waive its objection to those Disapproved Exceptions in which event such Disapproved Exceptions will be deemed to be Approved Exceptions. At the Closing, Seller shall convey its fee interest in and to the Property to Buyer (or to such other Lewis Management Corp. affiliated entity as may be specified in Buyer's escrow instructions and approved by Agency) by deed in a form reasonably mutually acceptable to Buyer and Seller (the "Deed"). Title to the Property shall be subject only to (i) a lien for then current taxes, bonds and assessments not yet delinquent and (ii) the Approved Exceptions (collectively, the "Permitted Exceptions"). Immediately following recordation of the Deed, Escrow Holder shall issue to Buyer an A.L.T.A. Standard Coverage Owner's policy of title insurance, with coverage in the amount of the Purchase Price for the Property, showing fee simple title to the Property vested in Buyer, subject only to the Permitted Exceptions (the "Title Policy"). Buyer may elect to obtain an extended coverage policy at Buyer's cost. 81097.00000\29090060.1 4 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A 7. "AS -IS" PURCHASE; RELEASE OF SELLER; LIQUIDATED DAMAGES A. Buyer's Independent Investigation. Buyer represents and warrants to Seller that Buyer shall, prior to the Feasibility Deadline, perform a diligent and thorough inspection and investigation of each and every aspect of the Property, either independently or through agents of Buyer's choosing, including, without limitation, the following matters (collectively, the "Property Conditions"): (1) All matters relating to title including, without limitation, the existence, quality, nature and adequacy of Seller's interest in the Property and the existence of physically open and legally sufficient access to the Property. (2) The zoning and other legal status of the Property, including, without limitation, the compliance of the Property or its operation with any applicable codes, laws, regulations, statutes, ordinances and private or public covenants, conditions and restrictions, and all governmental and other legal requirements such as taxes, assessments, use permit requirements and building and fire codes. (3) The quality, nature, adequacy, and physical, geological and environmental condition of the Property (including soils and any groundwater), and the presence or absence of any Hazardous Materials in, on, under or about the Property or any other real property in the vicinity of the Property. As used in this Agreement, "Hazardous Material" shall mean any material that, because of its quantity, concentration or physical or chemical characteristics, is now or hereafter deemed by any federal, state or local governmental authority to pose a present or potential hazard to human health or safety or to the environment. (4) The suitability of the Property for Buyer's intended use of the Property. (5) The economics and development potential, if any, of the Property. (6) All other matters of material significance affecting the Property. B. Hazardous Materials Disclosure. California law requires sellers to disclose to buyers the presence or potential presence of certain Hazardous Materials. Accordingly, Buyer is hereby advised that occupation of the Property may lead to exposure to Hazardous Materials such as, but not limited to, gasoline, diesel and other vehicle fluids, vehicle exhaust, office maintenance fluids, tobacco smoke, methane and building materials containing chemicals, such as formaldehyde. By execution of this Agreement, Buyer acknowledges that the notices and warnings set forth above satisfy the requirements of California Health and Safety Code Section 25359.7 and related statutes. C. As -Is Purchase. Buyer specifically acknowledges and agrees that Seller is selling and Buyer is purchasing Seller's interest in the Property on an "as -is with all faults" basis. Buyer is relying solely on its independent investigation and not on any representations or warranties of any kind whatsoever, express or implied, from Seller or its agents as to any matters concerning the Property, its suitability for Buyer's intended uses or any of the Property Conditions. Seller does not guarantee the legal, physical, geological, environmental or other conditions of the Property, nor does it assume any responsibility for the compliance of the 81097.00000\29090060.1 5 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Property or its use with any statute, ordinance or regulation. It is Buyer's sole responsibility to determine all building, planning, zoning and other regulations relating to the Property and the uses to which it may be put. D. Affordable Housing Integration Requirements. Buyer specifically acknowledges and agrees that the Property is subject to the affordable housing integration requirements as described in the Request for Qualifications/Proposals for Successor Agency to the Palm Desert Redevelopment Agency Property Disposition dated May 1, 2015, as amended by Addendum No. 1 dated May 26, 2015 and Addendum No. 2 dated June 15, 2015 (collectively, the "RFQ"), a copy of which is attached hereto as Exhibit C. E. Release/Indemnity. Buyer shall defend, indemnify, and hold harmless Seller, the City and their respective officials, officers, employees, consultants, contractors and agents (collectively, "Indemnitees") from and against any and all actual and alleged claims, losses, damages, fines, costs, penalties, expenses (including reasonable attorneys' fees, costs of experts and other litigation expenses), and liabilities of any type or nature, including those related or due to death or injury to any person and injury to any property, proximately resulting from any negligent acts or omissions by Buyer related to the activities described or contemplated by this Agreement. No officials, officers, employees, consultants, contractors or agents of Seller or City shall be personally liable to Buyer, any voluntary or involuntary successors or assignees, or any lender or other party holding an interest in the Property, in the event of any default or breach by Seller or City, or for any amount which may become due to Buyer or to its successors or assignees, or on any obligations arising under this Agreement. No officials, officers, employees, consultants, contractors or agents of Buyer shall be personally liable to City or Seller in the event of any default or breach by Buyer, or for any amount which may become due to Seller or City, or on any obligations arising under this Agreement. The provisions of this Section 7.E. shall survive the Closing hereunder or the termination of this Agreement and shall not be merged into the Deed. F. LIQUIDATED DAMAGES: BUYER AND SELLER AGREE THAT IF, AFTER THE FEASIBILITY DEADLINE, BUYER DEFAULTS ON ITS OBLIGATION TO PURCHASE THE PROPERTY PURSUANT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE DAMAGES TO SELLER WOULD BE DIFFICULT AND IMPRACTICAL TO DETERMINE. ACCORDINGLY, BUYER AND SELLER HAVE AGREED TO FIX AS LIQUIDATED DAMAGES THE DEPOSIT OF $125,000 SPECIFIED IN SECTION 2, AND SUCH AMOUNT SHALL BE PAYABLE TO SELLER AS LIQUIDATED DAMAGES, AND SHALL CONSTITUTE SELLER'S SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT. BUYER AND SELLER AGREE THAT THIS LIQUIDATED DAMAGES PROVISION IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE, GIVEN THE DIFFICULTY AND IMPRACTICALITY OF DETERMINING SELLER'S DAMAGES, THE COSTS OF NEGOTIATING AND DRAFTING THIS AGREEMENT, PERFORMING SELLER'S OBLIGATIONS HEREUNDER, KEEPING THE PROPERTY OUT OF THE MARKETPLACE, COSTS OF SEEKING ANOTHER BUYER AND OTHER COSTS INCURRED IN CONNECTION HEREWITH. PAYMENT OF SUCH AMOUNT TO SELLER 81097.00000\29090060.1 6 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY UNDER CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT INSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. SELLER AGREES THAT THESE LIQUIDATED DAMAGES SHALL BE IN LIEU OF ANY OTHER MONETARY RELIEF OR OTHER REMEDY, INCLUDING WITHOUT LIMITATION SPECIFIC PERFORMANCE, TO WHICH SELLER OTHERWISE MIGHT BE ENTITLED UNDER THIS AGREEMENT, AT LAW OR IN EQUITY. BUYER AND SELLER SPECIFICALLY ACKNOWLEDGE THEIR AGREEMENT TO THE FOREGOING LIQUIDATED DAMAGES PROVISION BY INITIALING THIS SECTION IN THE APPROPRIATE SPACES PROVIDED BELOW: Buyer's Initials Seller's Initials 8. POSSESSION; MAINTENANCE OF PROPERTY: Seller shall deliver to Buyer possession of the Property immediately on Closing, free of all uses, tenancies and occupancies unless approved by Buyer. Until possession is delivered to Buyer, subject to Buyer's authorization to enter the Property as set forth in Section 10, Seller agrees, at its sole cost and expense, to maintain and keep the Property and all the improvements thereon in not less than the same order and condition as they are on the date this Agreement is executed by Seller. Pending the Closing, Seller shall continue to manage and operate the Property and maintain insurance covering the Property in substantially the same manner as Seller has managed and operated the Property for the last twelve (12) months, and shall not commit waste or otherwise materially and adversely affect the Property. 9. EXECUTIVE DIRECTOR AUTHORITY: The Executive Director of the Agency ("Executive Director") shall have the authority to take all actions and execute all documents required or necessary for the Agency to perform its obligations under this Agreement, to extend each of the Closing Date or Feasibility Deadline for up to 90 days (or for an additional period beyond said 90 days with the approval of the Board of Directors of Seller), and to otherwise complete the Closing and conveyance of the Property to Buyer pursuant to this Agreement. Further, Executive Director may execute any entitlement applications in connection with the Buyer's future use of the Property, where the signature of the Agency is required as the owner of the Property. 10. DUE DILIGENCE/AUTHORIZATION TO ENTER/SELLER DOCUMENTS: Buyer shall have until the date that is ninety (90) days following the Effective Date (the "Feasibility Deadline") to determine the feasibility of the Property for Buyer's intended use in Buyer's sole discretion by its delivery of its written notice of feasibility approval (the "Buyer Feasibility Approval") to Seller and Escrow Holder on or before 5:00 p.m. Pacific Time on or before the Feasibility Deadline. Buyer's failure to deliver to Seller and Escrow Holder the Buyer Feasibility Approval on or before the Feasibility Deadline shall automatically be deemed to constitute Buyer's termination of this Agreement. Upon the Effective Date of this Agreement, Buyer may enter upon the Property until the earlier of the Closing or termination of this Agreement to conduct any investigation, test, study 81097.00000\29090060.1 7 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A or analysis related to the development thereof, including, but not limited to, soils studies, Phase I and/or Phase II toxic studies, engineering studies, tree surveys, archeological studies, biological studies, utilities and constraints study, hydrology studies and any other matters necessary to evaluate the development of the Property. Buyer shall pay all costs with respect to such studies and tests and shall be solely responsible for the disposal of any soil samples (including any Hazardous Materials or other wastes in these samples), which obligation shall survive the termination of this Agreement. Buyer shall exercise due care, follow best commercial practices in connection with such entry and testing, and shall comply with all laws, ordinances, rules, regulations, orders and the like in connection with any entry onto or testing of the Property. Prior to any entry onto the Property, Buyer shall obtain and maintain, and shall require that its agents, consultants, contractors and representatives (collectively, the "Agents") to obtain and maintain in full force during the term of this Agreement, at Buyer's sole cost and expense, a policy of comprehensive liability insurance, including property damage, which will insure Agency, City and their respective officers, members, employees and agents against liability for injury to persons, damage to property, and death of any person arising in connection with Buyer or its Agents entry upon the Property and/or conducting of tests or studies thereon. The policy shall be approved as to form and insurance (including approval of the insurance company) by the Agency, and shall be in an amount not less than One Million Dollars ($1,000,000). Buyer shall provide Agency with a certificate for any insurance policy required hereunder, including an endorsement that states that the policy will not be cancelled except after thirty (30) days' notice in writing to Agency and names the additional insureds as required herein. Buyer shall provide Agency with evidence of such insurance coverage prior to any entry onto the Property by Buyer or its Agents. Following any such tests or studies, Buyer shall leave the Property in substantially similar condition as of the Effective Date of this Agreement, and Buyer shall indemnify, defend and hold harmless Seller, City, and their respective officers, members, employees and agents from and against any liabilities, claims, damages (including injury or damage to person or property), losses, costs, expenses and fees (including reasonable attorneys' and experts' fees and costs) to the extent resulting from the entry, inspections and studies conducted by Buyer and its Agents on, under, or about the Property, except that Buyer shall have no liability under this Section 10 for, and no obligation to remedy, any liabilities, claims, damages, costs, expenses, fees, conditions or defects on or under the Property to the extent (i) not caused by Buyer or its Agents, (ii) resulting from any conditions or defects discovered during Buyer's investigations and inspections, including the discovery of any Hazardous Materials and the results or findings of any tests, or (iii) to the extent resulting from the acts or omissions of Seller, or Seller's agents, engineers, contractors, consultants and representatives. Without limiting the foregoing, Buyer shall have no liability for any diminution in the value of the Property resulting from the activities excluded in (ii) above, provided in the event Buyer or its Agents discover any toxic or Hazardous Materials on or under the Property, Buyer and its Agents shall cease any further investigation in that area of the Property, notify Seller by phone and email within twenty four (24) hours of that discovery, exercise reasonable due care so as not to exacerbate that condition and properly dispose of any soils samples which contain such toxic or Hazardous Materials. Nothing in this Section is intended to limit or modify the indemnity contained in Section 7.E. The foregoing indemnity shall survive beyond the Closing, or, if the sale is not consummated, beyond the termination of this Agreement. To the extent Seller has not previously done so, Seller shall make available to Buyer for Buyer's review and inspection, during the term of this Agreement at the office of Seller and upon 81097.00000\29090060.1 8 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A at least twenty-four (24) hours' prior notice, and in each case to the extent the materials are in the Seller's possession or control, copies of all soil and hydrology reports, environmental or toxic material reports, biological reports, archeological reports, engineering reports, traffic studies, environmental impact studies, or any public records which concern the Property (collectively the "Documents"). Buyer shall have the right, at Buyer's cost, to make copies of the Documents for Buyer's review and approval but if this Agreement is terminated, Buyer shall, upon the written request of Seller, return all such Documents and copies to Seller. Seller makes no representation or warranties whatsoever regarding the existence, availability, completeness or accuracy of the Documents. Buyer shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Property performed by Buyer or its agents, employees or contractors (the "Buyer Work Product"), but shall not deliver copies of any such reports to any other person or entity without Seller's prior written approval. Seller acknowledges and agrees that any and all of the Buyer Work Product is provided by Buyer for informational purposes only and do not constitute representations or warranties of Buyer of any kind, including any representations and warranties concerning the accuracy or completeness of any information in the Buyer Work Product. 11. CONDITIONS TO BUYER'S PERFORMANCE: Buyer's obligations to purchase the Property under this Agreement are subject to Buyer's written approval of the following conditions precedent ("Buyer's Closing Conditions"), but Buyer shall have the right to waive any such condition(s) in writing within the time period specified in such condition, or if not specified, prior to the Closing. If Buyer waives any of Buyer's Closing Conditions, then Seller shall be relieved of any further obligation or liability, including any representation or warranty, in connection with such condition. In the event Buyer determines that any such condition is objectionable, unacceptable, or cannot be satisfied within the period specified below, or if no time period is specified then prior to Closing, Buyer may, in its sole and absolute discretion, fail to approve said condition. In such event, then (without limiting Buyer's remedies in the event of a breach of this Agreement by Seller which are provided in Section 21 below) the Deposit and all interest earned thereon while in Escrow, shall be returned immediately to Buyer by Escrow Holder, and neither party shall have any further rights or obligations hereunder. If the Closing occurs and Buyer has failed to disapprove of any of the following Buyer's Closing Conditions, then such condition(s) shall be deemed waived. A. Feasibility Study. Buyer's approval of the feasibility of the Property for Buyer's intended use in accordance with Section 10 prior to the Feasibility Deadline. B. Truth and Accuracy of Seller's Representations and Warranties. Seller's representations and warranties as set forth in this Agreement shall be true and correct on the Effective Date of this Agreement and on the Closing Date. C. Title. Escrow Holder is irrevocably and unconditionally committed to issue to Buyer the Title Policy with no exceptions to coverage other than the Permitted Exceptions, and no person or entity has any right to use or occupy the Property, except as shown in any Permitted Exceptions in the Title Policy. D. State Approval. Seller shall have obtained State Approval of this Agreement. 81097.00000\29090060.1 9 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A E. Seller's Other Obligations. Seller shall have performed all of its other covenants and obligations as set forth in this Agreement. 12. CONDITIONS TO SELLER'S PERFORMANCE: The following are conditions precedent to Seller's obligation to sell the Property to Buyer "Seller's Closing Conditions"): A. Seller shall have obtained State Approval of this Agreement. B. Buyer shall have received final approval (beyond any challenge or appeal period with no challenge or appeal then pending) of all necessary land -use approvals, authorizations and entitlements, to develop the Property consistent with the RFQ and Buyer's proposal dated July 10, 2015, a copy of which is attached hereto as Exhibit D. C. Buyer shall have performed all of its obligations hereunder and all of Buyer's representations and warranties shall be true and correct. Each of Seller's conditions precedent are intended solely for the benefit of Seller and is deemed to be material to and of the essence of this Agreement. If any of Seller's conditions precedent are not satisfied as provided above, Seller may, at its option, terminate this Agreement. In such event, then (without limiting Seller's remedies) the Deposit and all interest earned thereon while in Escrow, shall be delivered to Seller by Escrow Holder except in the event that Seller terminates this agreement pursuant to Section 12.A, in which case such amounts shall be returned immediately to Buyer by Escrow Holder, and neither party shall have any further rights or obligations hereunder. If the Closing occurs and Seller has failed to disapprove of any of Seller's Closing Conditions, then such condition(s) shall be deemed waived. 13. SELLER'S REPRESENTATIONS AND WARRANTIES: Seller hereby makes the representations and warranties set forth in this Agreement for the benefit of Buyer and its successors and assigns for a period of six (6) months from and after the Closing Date, after which Seller's representations and warranties will be of no further force or effect. Seller shall notify Buyer in writing within ten (10) business days after Seller's Executive Director receives actual knowledge that any representation or warranty has become untrue or misleading in light of information obtained by Seller after the Effective Date of this Agreement, and if such ten (10) business day period would expire after the Closing, then the Closing shall be extended until the expiration of the ten (10) business day period. As used herein, "Seller's knowledge" shall mean the present actual, not constructive, knowledge of Seller's current Executive Director, without any investigation or inquiry or duty to do so. All representations and warranties contained in the Agreement shall be deemed remade at Closing except as otherwise disclosed to Buyer in writing, shall survive the Closing for the prescribed six month period and shall not merge with the Deed. A. To Seller's knowledge, there is no litigation, arbitration or proceeding pending, or threatened, before any court or administrative agency or any other condition that relates to or affects the Property, Seller's performance hereunder, Buyer's intended use of the Property, or which will result in a lien, charge, encumbrance or judgment against any part of or any interest in the Property, except (i) as disclosed in the Title Report, or (ii) as otherwise disclosed to Buyer in writing. 81097.00000\29090060.1 10 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A B. To Seller's knowledge, the Property is not in violation of any federal, state or local law, statute, regulation, code or ordinance. C. Seller is not a foreign person, foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the Internal Revenue Code Section 1145 and any related regulations and Seller is exempt from the withholding obligations imposed by California Revenue and Taxation Code Sections 18805, 18815, and 26131. D. To Seller's knowledge, no person or entity has the right to use, occupy, possess or reside on the Property except as disclosed in the Title Report and Seller has not, to Seller's knowledge, nor has City, to Seller's knowledge, granted any person or entity any such rights . 14. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. A. Buyer represents and warrants that it is a limited liability company duly organized under the laws of Delaware, in good standing and authorized to conduct business in State of California, has the capacity and full power and authority to enter into and carry out the agreements contained in and the transactions contemplated by this Agreement, and that this Agreement has been duly authorized and executed by Buyer, and upon delivery to and execution by Seller, shall be a valid and binding agreement of Buyer. B. There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending or, to the actual knowledge of Buyer threatened, against Buyer which, if adversely determined, could individually or in the aggregate materially interfere with the consummation by Buyer of the transaction contemplated by this Agreement. The term "actual knowledge" means the present actual, not constructive, knowledge of Robert Martin without any further investigation or inquiry or duty to do so. C. In compliance with Executive Order 13224 and the USA Patriot Act of 2001, Buyer and Seller each affirmatively represents and warrants to the other that (a) neither it, nor any of its officers, directors, or principals, has committed or supported terrorist acts; or (b) neither it, nor any of its officers, directors, or principals is identified on the list of Specially Designated Nations and Blocked Persons generated by the Office of Foreign Assets Control. 15. COMMISSIONS: Seller will pay to Edward J. Schiller of Innovative Land Concepts, Inc. ("Schiller") a finder's fee equal to one percent (1%) of the Purchase Price, subject to (i) approval by the Oversight Board and the California Department of Finance and (ii) the Close of Escrow for the Property by Buyer. Buyer through a separate agreement has agreed to pay Schiller, at its own expense, an additional finder's fee. Buyer and/or business entities affiliated with Buyer, and certain of their employees is/are a BRE licensee(s) but Buyer is acting solely as a principal in this transaction. Buyer was represented primarily by Robert Martin (Broker License No.00963777) who is an employee of Lewis Management Corp., an affiliate of Seller, and such licensee is not receiving any commission or fee as a licensee in this transaction and is representing Buyer only. Other than disclosed above, each party represents to the other that it has not dealt with any broker, agent, or finder for which a commission or fee is payable with respect to the Property or this Agreement, and each party shall indemnify, defend and hold 81097.00000\29090060.1 11 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A harmless the other from any claims, demands, liabilities, or judgments for commissions or fees arising from such party's breach of this Section. The foregoing indemnification, defense and hold harmless obligations of the parties shall survive Closing and any termination of this Agreement. 16. FOREIGN INVESTOR DISCLOSURE: Seller understands that if Seller is unable to certify that it is U.S. citizen or a resident of the State of California at the time of the Closing, Buyer shall be entitled to withhold from the purchase price such amounts as are necessary to satisfy Buyer's withholding obligations under the Foreign Investment in Real Property Tax Act and under California Revenue and Taxation Code Sections 18805, 18815 and 26131. 17. FUTURE LEASES, COMMITMENTS AND ENCUMBRANCES: From and after the Effective Date of this Agreement, except to the extent required by law or otherwise, Seller shall not (a) execute, modify and/or approve any leases, contracts or commitments affecting the Property that would extend beyond the Closing Date without Buyer's written approval; which approval may be given or withheld in Buyer's sole discretion; or (b) voluntarily encumber the Property with any liens, encumbrances or other instruments creating a cloud on title or securing a monetary obligation with the Property. 18. CONDEMNATION/CASUALTY: If after the Effective Date of this Agreement and prior to the Closing all or any part of the Property is taken or threatened to be taken by eminent domain or condemnation or is destroyed by fire, earthquake or other casualty, Buyer may elect either (a) to terminate this Agreement as to the entire Property, in which event all the Deposit and interest earned thereon while in Escrow, shall be returned to Buyer, and this Agreement shall be null and void and of no further force or effect, or (b) to consummate purchase of the Property as herein provided, in which event Seller shall pay or assign to Buyer all condemnation awards or payments in respect of the Property and/or all insurance proceeds paid or payable to Seller as a consequence of such casualty. If this Agreement is terminated in full pursuant to this Section 18, neither party shall have any further rights, duties, obligations or liabilities, at law or in equity, arising out of or relating to this Agreement except for those that specifically survive termination of this Agreement pursuant to other provisions hereof. 19. NO RECORDING: Neither this Agreement nor any memorandum or short form thereof may be recorded by Buyer. 20. AMENDMENTS: This Agreement expresses the agreement of the parties. There are no other understandings, oral or written, which in any manner alter or enlarge its terms. This Agreement supersedes any and all prior agreements between the parties hereto regarding the Property. Seller and Buyer agree to execute such additional documents as may be reasonable and necessary to carry out the provisions of this Agreement. This Agreement may be amended, but only in writing and only if such writing is executed by both parties. 21. BUYER'S REMEDIES; NO MONEY DAMAGES: If Seller defaults on its obligation to deliver title to the Property to Buyer in the manner required hereby or otherwise breaches this Agreement, Buyer shall have the right to seek specific performance of this Agreement or Buyer may terminate this Agreement, in which case Buyer shall be entitled to an 81097.00000\29090060.1 12 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A immediate return of the Deposit and any interest earned thereon while in the Escrow and Buyer shall have no further right to seek damages. The failure of Buyer to receive approval of any applicable development permits, maps, or other entitlements for the Property shall not constitute a default or breach of Seller's obligations contained in this Agreement. Buyer acknowledges that Seller would not have entered into this Agreement if doing so would subject it to the risk of incurring liability in money damages, either for breach of this Agreement, anticipatory breach, repudiation of the Agreement, or for any actions with respect to its negotiation, preparation, implementation or application. The parties further acknowledge that money damages and remedies at law generally are inadequate, and specific performance is the most appropriate remedy for the enforcement of this Agreement and should be available to Buyer. Therefore, the parties hereby acknowledge and agree that it is a material part of Buyer's consideration to Seller that Seller shall not be at any risk whatsoever of liability for money damages relating to or arising from this Agreement, and except for the express indemnity obligations hereunder and non -damages remedies, including the remedy of specific performance, Buyer, for itself, its successors and assignees, hereby release Agency, the City and their respective officers, members, employees and agents from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, including, but not limited to, any claim or liability, based or asserted, pursuant to Article I, Section 19 of the California Constitution, the Fifth and Fourteenth Amendments of the United States Constitution, or any other law or ordinance which seeks to impose any money damages, whatsoever, upon the parties because the parties entered into this Agreement, because of the terms of this Agreement, or because of the manner of implementation or performance of this Agreement. 22. ATTORNEYS' FEES: If this Agreement or the transaction contemplated herein gives rise to a lawsuit or other legal proceeding between the parties hereto, the prevailing party shall be entitled to recover its costs and reasonable attorneys' fees and costs of litigation in addition to any other judgment of the court. 23. ASSIGNMENT: Without Seller's consent, Buyer's rights and obligations hereunder may be assigned to a partnership, corporation, limited liability company or other entity that is controlled directly or indirectly by any one or more of Richard Lewis, Robert Lewis, Roger Lewis, Randall Lewis or John Goodman (the "Lewis Principals"), including without limitation, any entity in which the Lewis Principals (or any one or more of them) own at least 51% or more of the voting or financial interest of such entity and in which Buyer or the Lewis Principals (or any one or more of them) is the manager thereof), provided that Buyer notifies Seller in writing within ten (10) business days of such assignment, and provided that said assignee assumes all of the obligations of Buyer under this Agreement and agrees to perform all the obligations of Buyer hereunder as if such assignee were the original Buyer hereunder. Any such assignee shall have all the benefits, including rights to specific performance, damages, and enforcement of Seller's representations and warranties that Buyer has under this Agreement. No such assignment, however, shall relieve Buyer of any of its obligations hereunder. "Financial Interest" means any interest in the profits and/or losses of, and/or equity in, such entity. 24. NOTICES: All notices or tender required or permitted herein shall be in writing and shall be sent to the address set forth below (or such other address as a party may hereafter designate for itself by written notice to the other parties as required hereby) of the party for whom such notice or communication is intended: 81097.00000\29090060.1 13 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A If to Seller: Successor Agency to the Palm Desert Redevelopment Agency Attention: Executive Director City of Palm Desert 739510 Fred Waring Drive Palm Desert, CA 92260 Fax: 760-341-6372 With copy to: Best Best & Krieger LLP Attn: Robert Hargreaves 74-760 Highway 111, Suite 200 Indian Wells, CA 92210 FAX: 760-340-6698 If to Buyer: Attn: John M. Goodman Lewis Land Developers, LLC c/o Lewis Management Corp. 1156 North Mountain Avenue Upland, CA 91786 P. O. Box 670 91785-0670 Telephone: (909) 985-0971 Fax: (909) 949-6700 With copy to: Attn: General Counsel Lewis Management Corp. 1156 North Mountain Avenue Upland, CA 91786 P. O. Box 670 91785-0670 Telephone: (909) 985-0971 Fax: (909) 949-6725 Any such notice or communication shall be sufficient if sent by registered or certified mail, return receipt requested, postage prepaid; by hand delivery; by overnight courier service; or by fax is receipt is confirmed by the recipient. Any such notice or communication shall be effective 81097.00000\29090060.1 14 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A on the business day delivered to the office of the addressee or upon refusal of such delivery, or three business days after deposit by first class mail. Notice transmitted after 5:00 p.m. or on Saturday or Sunday shall be deemed to have been given on the next business day. Should any act or notice required hereunder fall due on a weekend or holiday, the time for performance shall be extended to the next business day. 25. MISCELLANEOUS: A. Section headings contained herein are included solely for convenience of reference and shall in no way affect the construction of this Agreement. B. Time is of the essence of this Agreement. C. This Agreement shall be governed by the laws of the State of California. D. Each party shall execute, acknowledge, and deliver, after the Effective Date of this Agreement, including at or after closing, such further assurances, instruments and documents as the other may reasonably request in order to fulfill the intent of this Agreement and the transactions contemplated hereby. E. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and shall in no way be impaired or invalidated, and the parties agree to substitute for the invalid or unenforceable provision a valid and enforceable provision that most closely approximates the intent and economic effect of the invalid or unenforceable provision. F. This Agreement may be executed in counterparts, and transmitted by facsimile by and to each of the parties, and each such counterpart shall be deemed an original, and all of them together shall constitute a single instrument. G. If a party hereto believes the other party is in breach or default under this Agreement, the non -breaching party shall deliver written notice of the alleged breach or default to the other party, and the other party shall have ten (10) business days after receipt of such written notice in which to cure the breach or default, and if the breach or default is actually cured within such ten (10) business day period, the breaching party shall not be in breach or default under this Agreement by reason of the matter(s) alleged in the non -breaching party' s notice that have been so cured. H. Except as expressly set forth herein, this Agreement is not intended nor shall it be construed to create any third party beneficiary rights in any person who is not expressly made a party and signatory hereto. I. If Buyer executes this Agreement before Seller, such execution and delivery of the Agreement shall be deemed an offer to buy the above described Property for the price and upon the terms and conditions herein stated. INTENTIONALLY LEFT BLANK; SIGNATURES FOLLOW IMMEDIATELY ON NEXT PAGE 81097.00000\29090060.1 15 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A SELLER BUYER Successor Agency Lewis Land Developers, LLC, a Delaware limited to the Palm Desert Redevelopment Agency liability company By: Name: Title: Date: Approved as to Form: By: Name: Title: Special Legal Counsel Date: Attest: By: Name: Title: City Clerk Date: By: Lewis Management Corp., a Delaware corporation, Its Manager By: Name: Title: Date: List of Exhibits A Description of Property A-1 Map of Property B Title Report C. Request for Qualifications/Proposals for Seller D. Buyer's Response to Request for Qualifications/Proposals 81097.00000\29090060.1 16 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A The undersigned representative of Escrow Holder hereby accepts the foregoing instructions and agrees to comply with them in connection with the purchase and sale of the Property. Escrow Holder: Foresite Escrow Effective Date By: Authorized Representative 81097.00000\29090060.1 17 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Exhibit A Description of the Property [to be inserted] 81097.00000\29090060.1 18 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Exhibit A-1 Map of Property [to be inserted] 81097.00000\29090060.1 19 APN: 694310003 P.R.-5 GERALD-FORD-DR z uJco z 00 Q� �z W 1- w P.R.-20 APN: 694300005 APN: 694310005 P.R.-5 APN: 694310002 SCHOLAR LN -10 WINDFLOWER'CT PR 5 I APN: 6943000017 APN: 69430000 P!RF,5 APN: 694300007 APN: 694300006 l h1 JERILN • PORTOLA POINTE LN ��CE11� �IIIIIMPERIAL CT W i 1 PI��Yi 11111111 wooDwARD RTINEMPrallipli PETUNIA -PLACE W CHINOOK CIR P.R. JULIE LN COLLEGE DR 4 O' PETUNIA PLACE E I 1 lilL CHINOOK CIR E 1111111! Future 132 Acre Request For Proposals to be Released Summer 2015 For info Contact: City of Palm Desert - Economic Development Department (760) 346-0611 VICINITY MAP RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Exhibit B Title Report [to be inserted] 81097.00000\29090060.1 20 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Exhibit C Request for Qualifications/Proposals for Seller 81097.00000\29090060.1 21 RESOLUTION NO. OB-148 CONTRACT NO. SA35570A Exhibit D Buyer's Response to Request for Qualifications/Proposals 81097.00000\29090060.1 22 128.95-Acres of Vacant Land South Side of Gerald Ford Drive, West of Portola Avenue, City of Palm Desert, Riverside County, CA. Appraisal Report Market Value Fee Simple Estate, As -Is Prepared For: The City of Palm Desert Attn: Mr. Martin Alvarez 73-510 Fred Waring Drive Palm Desert, CA92260 Effective Date of Appraisal: April 1, 2016 CRA File No. 15-4162 C R A CAPI1AL REALTY ANALYSTS CRA `AFIA; FE Ali-NA:YST) June 29, 2016 The City of Palm Desert Attn: Mr. Martin Alvarez 73-510 Fred Waring Drive Palm Desert, CA 92260 RE: The Market Value of the Fee Simple Estate in 128.95-Acres of Vacant Land, Located Along the South Side of Gerald Ford Drive, West of Portola Avenue, City of Palm Desert, Riverside County, CA; Otherwise Known as APNs: 694-300-001, 2, 5, 14, 15; 694-310- 002, 3, and 6; 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 April 1, 2016. Per your request, the following market value estimates are provided: Ilk Market Value "As Is" The intended use of the report is for internal use. The intended user is the Client. No other use or users are intended. My report identifies the subject property and its market area, and presents the market data and analysis leading to the final estimate of value. This report is subject to the requirements of the Code of Professional Ethics and Standards of Professional Apprai sal 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 1898 ("FIRREA"), and the Uniform Standards of 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 the 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 April 1, 2016 is as follows: $13,085,000 Thirteen Million Eighty -Five Thousand Dollars The market value estimate in this appraisal report is based upon the following Extraordinary Assumptions and Hypothetical Conditions: Extraordinary Assumptions: Nir None Hypothetical Conditions: 114- None The use of the above captioned Extraordinary Assumptions and Hypothetical Conditions might have affected the assignment results. 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 my services is in any way contingent upon the the opinions reported herein. I hope you find the details of the appraisal report relevant to your decisions. Thank you for the opportunity to be of service. Respectfully Submitted Capital Realty Analysts Michael A. Scarcella, MAI 78015 Main Street, Suite 207 La Quinta, CA92253 (760) 564-6222 mike@realtyadvisor.com State Certification No. AG019463 Expiration Date: October 24, 2017 Part I — Introduction, Summary of Important Facts and Conclusions Table of Contents Table of Contents 4 Certification 5 Summary of Important Facts and Conclusions 6 Identification of Client and Intended Users 11 Statement of Intended Use 11 Identification of the Subject Real Estate 11 Property Rights Appraised 11 Definition of Market Value 11 Effective Date of Value Opinion 12 Extraordinary Assumptions 12 Hypothetical Conditions 12 General Assumptions and Limiting Conditions 12 Scope of Work 14 Personal Property or Other Items that are Not Real Property 15 History, Including Prior Sales and Current Offers or Listings 15 Market Area, City, Neighborhood, and Location Data 15 Regional Analysis 15 City Data 19 Land Description 23 Improvement Description 32 Taxes and Assessment Data 32 Market Analysis 33 Highest and Best Use 36 Sales Comparison Approach 39 Estimate of Exposure Time 47 Addendum ©Capital Realty Analysts, 2016 Page 4 Pa rt I — Introduction, Summary of Important Facts a nd Conclusions Certification I certify to the best of my knowledge and belief: */5- The statements of fact contained in this report are true and correct. 4- The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. Ilk I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. Ilk I have performed no services as an appraiser or in any other capacity regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. +# My engagement in this assignment was not contingent upon developing or reporting predetermined results. ▪ My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 4- My analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. 14 I have made a personal inspection of the property that is the subject of this report. • No one provided significant real property appraisal assistance to the person signing the certification. 411- The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professiona I Appraisal Practice of the Appraisal Institute. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by it's duly authorized representatives. 141. As of this report, I Michael A. Scarcella, MAI have completed the continuing education program of the appraisal institute. 4- I have not previously appraised the property that is the subject of this report. Michael A. Scarcella, MAI 78015 Main Street, Suite 207 La Quinta, CA 92253 (760) 564-6222 mike@realtyadvisor.com State Certification No. AG019463 Expiration Date: October 24, 2017 II III 1111 IIIIIIIII II II 11111111111111 1111111 I tt ©Capital Realty Analysts, 2016 Page 5 Pa rt I — Introduction, Summary of Important Facts a nd Conclusions Summary of Important Facts and Conclusions Client: Intended Users: The City of Palm Desert Attn: Mr. Martin Alvarez 73-510 Fred Waring Drive Palm Desert, CA92260 The City of Palm Desert Attn: Mr. Martin Alvarez 73-510 Fred Waring Drive Palm Desert, CA92260 Intended Use: The intended use of the report is for internal use Property Type: Vacant Land Location: South side of Gerald Ford Drive, west of Portola Avenue, Palm Desert, CA. Identification: APN: 694-300-001, 2, 5, 14, 15; 694-310-002, 3, and 6: Riverside County, CA Zoning: General Plan: According to the Zoning Map of the City of Palm Desert, the subject parcels are zoned P.R.-5, P.R.-20, and P.R.-22; Planned Residential. A zoning map is included in the Site Data section of this report. According to the General Plan Map of the City of Palm Desert, the subject parcels have a general plan designation of C-R/H, Resort Hotel, and R-L, Low Density Residential. A general plan map is included in the Site Data section of this report. Site Description: According to the Riverside County Assessor's data, the site size of the subject property is 128.95-acres. A breakdown of the site by parcel is included in the Site Data section of this analysis. Improvement Description: Highest and Best Use As Vacant: None Hold for investment until such time as speculative development becomes financially feasible. ©Capital Realty Analysts, 2016 Page 6 Part I — Introduction, Summary of Important Facts and Conclusions Highest and Best Use As Improved: N/A, the subject parcels are vacant Property Rights Fee Simple Estate Appraised: Final Value Estimate: $13,085,000 Introduction The subject property consists of 8 legal parcels of vacant land, totaling 128.95-acres. The parcels are owned by the Redevelopment Agency of the City of Palm Desert. An approximately 10-acre portion of the site is designated for 200 low income housing units. All of the parcels were acquired over 3-years prior to the date of value. As a consequence of the dissolution of Redevelopment Agency's in California, the City put out an RFQ/P in May of 2015, requesting proposals to acquire the subject property. The successful respondent was Lewis Homes; who is currently in the process of negotiating a development agreement with the city to acquire and develop the property. Lewis Homes is planning to deed the 10-acre low income housing site to Palm Communities, and develop the remainder with master infrastructure to support detached single-family home development, and/or planning area sales to other builders. An interesting feature of the subject property is the requirement that 200 affordable apartment style housing units be developed on an approximately 10-acre portion of the subject property. The city has identified a portion of the site along the westerly line for the affordable housing site. In addition, the city has indicated that zone changes and general plan amendments will be provided to accommodate the approved plan for this site. The city has imposed the following condition on the property: Ilk Developer will be required to set aside 10-acres of the 128.95-acres for affordable housing. This requirement includes having to provide a development ready 10-acre affordable housing project pad with utilities to the site. Currently, the city is exploring the possibility of selling the parcels, which generated the requirement for this analysis. All photos were taken by the appraiser, unless otherwise noted. The report format generally follows the report format suggested by The Appraisal of Real Estate, 14t" Edition (figure 31.2, p. 658). ©Capital Realty Analysts, 2016 Page 7 Part I — Introduction, Summary of Important Facts and Conclusions 1 WIe4 W..-LI J.11Jll.11 LI, h., Subject Property viewing SE from near the NWC of the site Subject property viewing northwest from Portola Avenue ©Capital Realty Analysts, 2016 Page 8 Pa rt I — Introduction, Summary of Important Facts a nd Conclusions Street scene viewing E along Gerald Ford Drive, subject at right Street scene viewing W along Gerald Ford Drive, subject at left ©Capital Realty Analysts, 2016 Page 9 Part I — Introduction, Summary of Important Facts and Conclusions Street scene viewing N along Portola Avenue, subject at left Street scene viewing S along Portola Avenue, subject at right ©Capital Realty Analysts, 2016 Page 10 Part II — Identification of the Appraisal Problem and the Scope of Work Identification of Client and Intended Users The Client and intended Users of this report are as follows: The City of Palm Desert Attn: Mr. Martin Alvarez 73-510 Fred Waring Drive Palm Desert, CA 92260 Statement of Intended Use The intended use of the report is for internal use. Identification of the Subject Real Estate The following table shows the Riverside County description for the subject parcels: APN She (c) 694.300.001 694.300.002 694.300.005 694.300.014 694.300.015 694.310.002 694.310.003 694.310.006 Total Assessor's Parcel Number, Lovoi toescription 5.00 5.00 Acres In POR NE 1/4 of SEC 32 T4S R6E 4.69 4.69 Acres In POR NE 1/4 of SEC 32 T45 R6E 4.83 4.83 Acres In POR NE 1/4 of SEC 32 T4S R6E 4.91 4.91 Acres In POR NE 1/4 of SEC 32 T4S R6E 3.86 3.86 Acres In POR NE 1/4 of SEC 32 T4S R6E 40.47 40.47 Acres M/L In POR NE 1/4 of SEC 32 T4S R6E 40.46 40.46 Acres M/L In POR SE 1/4 of SEC 32 T4S R6E 24.73 24.73 Acres M/L In POR NE 1/4 of SEC 32 T4S R6E 128.95 and short legal Property Rights Appraised The property rights appraised for this analysis are those of the Fee Simple Estate. The definition of Fee Simple Estate (Interest) for this appraisal is as follows: "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat."1 Definition of Market Value The definition of market value for this appraisal is as follows: 1 Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015) ©Capital Realty Analysts, 2016 Page 11 Part II — Identification of the Appraisal Problem and the Scope of Work "The most probable price that 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; Irk Buyer and seller are typically motivated; imir Both parties are well informed or well advised, and acting in what they consider their best interests; 14 A reasonable time is allowed for exposure in the open market; sir Payment is made in terms of cash in US dollars or in terms of financial arrangements comparable thereto; and viiii The price represents the normal consideration for the property soul unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." 2 Effective Date of Value Opinion April 1, 2016 Extraordinary Assumptions This appraisal report has been prepared based upon the following extraordinary assumptions: Imik None Hypothetical Conditions This appraisal report has been prepared based upon the following hypothetical conditions: None General Assumptions and Limiting Conditions This appraisal has been made with the following general assumptions; ilk No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumedto be good and marketable unless otherwise stated. 1111- The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. Responsible ownership and competent property management are assumed. 2 (12 C.F.R. Part 34.42(g); 55 Federal Register 29499, June 7, 1994) ©Capital Realty Analysts, 2016 Page 12 Part II — Identification of the Appraisal Problem and the Scope of Work • Information furnished by others is believed to be reliable but no warranty is given for its accuracy. Ilk All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the property. • It is assumed that there're 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. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance stated in the appraisal report. • It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a nonconformity has been described in the appraisal report. Ilk It is assumed that all required licenses, certificates of occupancy, consents, other legislative or administrative authority from any local, state, or national government or private entity or organization have or can be obtained or renewed for any use on which the opinion of value contained in this report is based. • It is assumed that the use of the land and improvements is confined within the boundaries for property lines of the property described that there is no encroachment or trespass unless noted in the report. 44 Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the 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. 146 The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions. This appraisal has been made with the following general limiting conditions; Ilk Any allocation of the total value is estimated in this appraisal report between the land and improvements applies only under the stated program of utilization. The separate ©Capital Realty Analysts, 2016 Page 13 Part I1— Identification of the Appraisal Problem and the Scope of Work values allocated to the land and buildings must not be used in conjunction with any other appraisal andjor invalid if they are. Scope of Work The scope of work for this appraisal assignment required three steps. These are as follows; 1. Identify the problem to be solved; 2. Determine and perform the scope of work necessary to develop credible assignment results; and 3. Disclose the scope of work in the report. For this analysis each of the required steps is described separately as follows: Appraisal Problem In this case, the subject property consists of 128.95-acres of vacant land. The property is comparatively large, and in a strong location in the northern part of Palm Desert. The property has a 10-acre, 200-unit affordable housing component. Consequently, the primary appraisal problems I encountered during the performance of this assignment, was acquiring a sufficient amount of comparable sales data, and quantifying the impact of the affordable housing component. Otherwise, I encountered no other atypical problems or difficulty in the valuation of the subject property. Scope of Work Necessary to Develop Credible Assignment Results In order to perform this appraisal, I performed the following steps; Ilk I collected a factual data from the client; Ilk I inspected the subject property on April 1, 2016; Ilk I searched for comparable sales data from both public and private data sources; Ilk I interviewed the key brokers who work in the subject market area; Ilk I analyzed the data collected; yak I performed the relevant approaches to value; Ilk I prepared a written appraisal report detailing factual information about the subject property, the comparable data applied, the analysis of the data and the reconciled final value estimates for the subject property; I transmitted the appraisal report to the client ©Capital Realty Analysts, 2016 Page 14 Part III — Presentation of Data Personal Property or Other Items that are Not Real Property None History, Including Prior Sales and Current Offers or Listings The current owner acquired the property over 3-years prior to the date of value for an unknown sale price. The property was offered for sale via an RFQ/P, dated May 1, 2015. Market Area, City, Neighborhood, and Location Data Regional Analysis The subject property is located in the Coachella Valley regional area. The following is a map of the regional area: The Coachella Valley region is located in southern California. The regional area extends for approximately 45 miles in Riverside County, southeast from the San Bernardino Mountains to the northern shore of the Salton Sea. The Coachella Valley 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 miles wide along most of its length. The region is bounded on the west by the San Jacinto and Santa Rosa Mountains, and in the north and east by the Little San Bernardino Mountains. The San Andreas Fault crosses the valley from the Chocolate Mountains in the ©Capital Realty Analysts, 2016 Page 15 Part III — Presentation of Data southeast corner of the region. The fault is easily visible along its northern leg as a strip of greenery against an otherwise barren mountain. The Coachella Valley connects with the greater Los Angeles area to the west via San Gorgonio Pass, a major transportation corridor that includes Interstate 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. The following table shows the growth trends of the regional area (source: California Department of Finance/US Census Bureau): 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 awl 0', a- N1 am1 awl aten) l m a^1 awl m 0 0 0 0 0 `0 0 0 0 O� ai al al al al al 01 a1 al 01 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 ,-1 a -I ,-I r-I rl e-I .-i 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 spring 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 the highest growth rates over the past several years. The following table shows the growth rate of the cities in the region, from west to east: ©Capital Realty Analysts, 2016 Page 16 Part III - Presentation of Data 9'Yr Avg.)Yr City 2005 2006 2007 2008 2009 2010 2011 2012 2013 Gain/Loss %)Change Indio-66,539 +72,142 +77,146 -60,962 -62,325 +75,122 +77,165 +78,065 +78,298 +++41,759 1.96% Cathedral -City -60,957 -61,435 -62,115 -61,972 -62,508 -61,037 -61,603 -61,952 -62,108 +++++4,151 0.25% Palm -Desert +49,595 +49,879 -49,752 -60,686 -61,570 48,132-49,111 449,471 49,619 +n+++t+H++24 0.01% Palm-6prings 46,000 +46,754 +46,858-47,019 -47,653 444,385 +45,002 -45,279 +45,414 +++++++1f586) E0.14% Coachella-80,964-65,449 -88,486 -40,317 +41,043 -40,464 -41,502 +41,904-42,030 +++41,066 3.97% La-Quinta -86,377 +38,604 441,092 +42,743 443,830-67,307 +37,836 438,075 -68,190 ++++++1,813 0.55% Desert+lot-6prings -49,507 422,163 -23,544 425,939 -26,584 -25,852 -27,383 -27,638 -27,721 ++++++8,214 4.68% Rancho -Mirage 46,520 46,783 46,944 46,975 -46,938 47,168 47,463 47,504 47,556 ++++++1,036 0.70% Indian+Wells 4+4,810 1+4,899 4.4,942 ++5,000 ++6,099 ++4,941 1+6,010 ++6,035 ++6,050 ++++s++++240 0.55% Desert Hot Springs and Coachella has 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 several years. Tourism, retail, healthcare, construction and agriculture are the main industries in the Coachella Valley. The following table shows the employment distribution by sector: SOURCE: CA EAItRmMEAT OEY(LOPMEN' D(MR7M(4' tus+ess Services (3.5% - 4,449) Fool nsittE (3.7%-4,676) Construction (4,5% - 5,707) R Distrtb,tron(5.0%-6,247) Ranee (24,4%-30,771) ! >5 Education(7.0%-t,774) ",fi,. HOteVAmuse(15.9%-19,971) Health (10.0%-12 629) ■ Sm4 Sects (7.t%-9,774) Other Services (9.0%-11,294) . Aaicukure (9.3%-11.677) As shown, retail hotel with their related services historically have been the driving force in the local economy. Close driving proximity to 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 tended to underperform the Inland Empire's economy in bad ©Capital Realty Analysts, 2016 Page 17 Part III - Presentation of Data times; and outperform it in good times. Thus, the areas job growth was negative in the early 1990s recession, but grew faster than the region in the late 1990's recovery. It was slower in the 2001 recession but was faster to recover in the mid-2000's. In 2007 the pattern reversed due to the severe recession. This is largely due to the increased prominence of the local construction sector. The Valley grew slower than the Inland region in 2005 -2006 boom years, and matched it during the 2007 -2009 recession. It fell much more than the Inland region in 2010 (-3.3% versus -1.5%). Since 2011 both continue a slow upward growth trend. In terms of new -home absorption, the following table shows the regional trend: Atbched Units IYear 1996 1807 1001 12: 2001 2402 2M2 2004 2006 2080 2007 2MB 2009 2010 2011 2012 2013 2014 2016 42 17 - 5 21 8 17 29 85 135 50 1 24 4 3 41h 41f 98 7 • ► Oubr Tatal 222 2M 81 143• • r r r ♦ r M ► ► ► ► r r ♦ ► r 78 19 TS 97 212 873 I267 87 PO 36 41 23 4S 67 30 Detached Units I Y. 1096 1987 1990 1010 21100 2001 2062 2843 2004 2006 2004 2007 20411 2010 2010 2011 2012 2013 2014 2015 04t00. 290 425 551 860 1,19D 797 831 897 2,031 994 941 804 583 257 168 141 141 163 1113 160 2.6101 317 207 604 750 742 572 900 1,802 1,761 1,444 916 474 326 278 108 143 179 181 167 191 3rd 111 171 361 565 593 626 492 751 933 1,197 1,283 688 209 304 173 68 100 185 145 109 177 4th a 287 252 415 484 891 652 1,681 2,239 650 774 496 233 908 137 77 132 109 142 242 148 ► r ♦ ♦ ► • r ► r r • ♦ r r EuaTolal r 1,M6 r • ► r r 1,345 2,155 2,707 3,249 2,643 4,163 6,871 6,p8 I,M6 3,041 1,TM 1,621 846 422 516 594 031 T21 671 Tad units IYew 1006 1097 1068 1999 2090 2041 2802 2883 2804 2806 2001 2087 2000 2089 2010 2011 2012 2811 2014 2016 j 1st QL 994 510 585 922 1,238 808 835 926 2,052 1,331 1,046 896 625 259 191 176 149 164 192 161 Ind OL 412 318 613 761 709 571 940 1,630 1,799 1,580 1,087 537 326 287 107 145 188 209 189 197 3rdgt 180 412 594 615 831 493 763 937 1,265 1,498 829 308 325 184 80 106 172 152 117 161 409OL 331 311 494 532 699 660 1.098 2,268 795 909 548 234 312 141 80 131 106 149 20) 155 Totals 1,287 1,851 2,226 2,550 3,327 2,632 4,236 6,768 0,851 5,318 3,510 1,977 1,608 071 184 887 617 674 778 714 As shown in table above, regional new -home absorption declined sharply in 2007 through 2010. Small up -ticks in 2011 and 2012 were followed by comparatively strong showings in 2014/2015. Conclusion, Regional Analysis The Coachella Valley 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 boomer 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, planned housing developments ranging from upper middle to high end products geared to the segment. 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 midterm growth as the current economic cycle continues to mature. ©Capital Realty Analysts, 2016 Page 18 Part III — Presentation of Data City Data The subject property is located in the City of Palm Desert. The following map shows the subject City; Introduction Palm Desert California is located in the central portion of the Coachella Valley region. The city is bounded by Indian Wells to the east, Rancho Mirage to the west, the Santa Rosa Mountains to the south and Interstate 10 to the north. Access to Palm Desert is considered good via Monterey Ave., Cook Street and Washington Street: direct routes to the Interstate 10freeway. State Highway 111, the major commercial corridor in the region roughly bisects the city of Palm Desert, running from west to east. Palm Springs International Airport is the nearest regional airport, located approximately 18 miles west of the city in the city of Palm Springs. Bermuda Dunes Airport, a general aviation facility is located immediately east of the city in an unincorporated area known as Bermuda Dunes. Although Southern Pacific operates rail facilities parallel to the Interstate 10 freeway along the northern border of the city, rail spur access is not available within the city limits. The city was incorporated in 1973, and includes a total land area ©Capital Realty Analysts, 2016 Page 19 Part III — Presentation of Data of 26.96 mi.'. Historically, Palm Desert has had a reputation and one is as one of the best run cities in the subject region. Several good -quality master -planned communities have been developed in Palm Desert. Some of these include Bighorn, Ironwood, Desert Falls, Palm Valley and Indian Ridge. In addition, Palm Desert has attracted high quality retail development. El Paseo is the region's premier pedestrian retail corridor, generally attracting the highest retail rents in the region. Tenants on El Paseo include Sak's, Tiffany's, Coach, Tommy Bahamas and designers such as Louis Vuitton, Gucci, and Ralph Lauren. Westfield Shoppingtown (formerly known as the Palm Desert Town Center), a regional mall located in Palm Desert sold in 1999. This facility is the largest in both size and sales volume among the four regional malls in the Coachella Valley region. The facility completed a major renovation in the mid-2000's and again in 2014, which brought in new retailers and food court tenants. Population As shown in the tables in the Regional Analysis, the population of Palm Desert has grown approximately 90% in the past decade, to over 50,000 permanent residents. Current estimates put the seasonal population of the city at over 70,000. The city's growth has been enhanced with quality developments, including the city's Desert Willow project Marriott's Desert Springs resort and a number of excellent quality retail projects. The northern part of the city includes hundreds of acres available for new residential and commercial development. Business and Economy The fact the Palm Desert has a substantial retail and service -based economy makes for a comparatively high percentage of year-round population. As shown in the chart on the following page the absorption rate for homes sales remains relatively weak; although the median price has been trending up. ©Capital Realty Analysts, 2016 Page 20 Part III — Presentation of Data Home Sales In Palm Desert, CA fan Ems 1,200 $300,000 1,000 600 0 r Q1xQ203cuilau 2Q3Q4l01 Q2Q3+44Q1 Q2Q3Q4Q1Q2Q3Q4Q102Q3 3250,000 3200,000 Costal 3150, S100,000 2009 2010 2011 2012 2013 2014 misme Median Pace Overall unemployment has been comparatively low in Palm Desert, and is trending down as of the date of value. The following chart shows a 13-year trend through 2014: 10 0 Unemployment by year (%) 000 2002 2004 2006 008 201+ 201 01; 2001 2003 2005 2007 2009 2011 20 ©Capital Realty Analysts, 2016 Page 21 Part III — Presentation of Data Like the other Coachella Valley cities, Palm Desert's economic base is the tourism, construction, and retail industries. Palm Desert has the largest destination resort in the Coachella Valley. The Marriott's Desert Springs resort represents almost 50% of the cities over 1800 hotel rooms. A 400% increase in hotel room sales has occurred since 1986 to over approximately $80 million. The recession and subsequent housing downturn impacted the construction industry in Palm Desert. The following table shows the permit trend in the city: 100 0 Number of permits per 10.00D residents 1 tItIIhit IIIIIILe...1.1.1. 1007 1000 2001 2001 200.1 1007 2000 2011 1000 2000 7007 1004 2001 7000 2010 2012 a rim, calm cxr r g000011 »orate Average cast pn $1000s) 0 7i0 100 230 �/ i 11 � � II II II Iji111I t; t3 iii' � { 1M00 7 10N 2001 2001 25 1007 7000 20 ; 1000 2000 1002 2004 2000 20000 2010 201: • jWe Dean as #r aura^»» aerate As shown, permit activity is near a historical low. However, the average permit value is comparatively high, and trending up. Conclusion Palm Desert has been one of the top economic performers in the regional area. Well -managed growth and a realistic municipal approach, combined with relatively wide economic diversity have created a comparatively stable community. The city administration has done a good job of anticipating and adjusting to changes occurring through its own growth and the growth of the surrounding communities. These trends are projected to continue through at least the midterm. ©Capital Realty Analysts, 2016 Page 22 Part III — Presentation of Data Land Description Plat Map 694-30 P R NE • f(. SEC 32, 74$ RfE u+, s irawwM�r ©Capital Realty Analysts, 2016 Page 23 Part III — Presentation of Data Location: South side of Gerald Ford Drive, west of Portola Avenue, Palm Desert, CA. Identification: APN: 694-300-001, 2, 5, 14, 15; 694-310-002, 3, and 6: Riverside County, CA Site Size: According to the Riverside County Assessor's data, the site size of the subject property is 128.95-acres. The following table shows the breakdown of the site by parcel: APN Size (AC) 694-300-001 5.00 694-300-002 4.69 694-300-005 4.83 694-300-014 4.91 694-300-015 3.86 694-310-002 40.47 694-310-003 40.46 694-310-006 24.73 Total 128.95 Shape: Irregular, See Plat Maps Dimensions: See Plat Maps Frontage: South side of Gerald Ford Drive, west side of Portola Avenue Topography: Very gently sloping downward from northwest to southeast Flood Zone: According to the Flood Insurance Rate Map, Community Panel No. 06065C 1595G, dated 8/28/08, the subject is located in Flood Zone X. Flood Zone X is defined as follows: "Areas of 0.2% annual chance flood; areas of 1% annual chance flood with average depths of less than 1 foot or with drainage areas less than one square mile; and areas protected by levees from 1% annual chance flood." Fault Zone: The subject property is not located within % mile of an known fault Liquefaction Moderate Potential: Subsidence: Susceptible ©Capital Realty Analysts, 2016 Page 24 Part III — Presentation of Data Access: The subject property has average access along the south side of Gerald Ford Drive, and along the west side of Portola Avenue Visibility: Average Soils: I was not provided with the soils report for the subject property. My physical inspection of the subject property did not reveal any obvious evidence of toxic waste or atypical hazardous materials on the subject property. This report assumes that no toxic or hazardous materials are present upon the subject property. The appraiser is not qualified to make a determination as to the existence or nonexistence but hasn't materials on the subject property, recommend a qualified engineer be consulted, if required. Utilities: Electricity: Southern California Edison Gas: The Gas Company Water: Coachella Valley Water District Sewer: Coachella Valley Water District Hazards: Zoning: General Plan: My physical inspection of the subject property 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 apparent conditions to, or on the soil or subsoil that render the property more or less valuable. According to the Zoning Map of the City of Palm Desert, the subject parcels are zoned P.R.-5, P.R.-20, and P.R.-22; Planned Residential. A zoning map is included in the Site Data section of this report. According to the General Plan Map of the City of Palm Desert, the subject parcels have a general plan designation of C-R/H, Resort Hotel, and R-L, Low Density Residential. Ageneral plan map is included in the Site Data section of this report. Special The course of normal data gathering and analysis and a visual inspection of the Resources: subject did not reveal any evidence of natural, cultural, recreational or scientific resources present on the subject site. Easements A preliminary title report for the subject property was not submitted or Encumbrances examined. Consequently, other than those items specifically noted, the subject property is being appraised based upon the assumption that there are no atypical easements or encumbrances that may have a negative impact on the marketability or market value of the subject property. ©Capital Realty Analysts, 2016 Page 25 Part III — Presentation of Data Functional Typical Adequacy of the Site: Relationship Homogeneous Adjoining Properties: Units of The market typically applies a price per acre as the metric to value land such as Comparison: the subject property. The price per acre will be applied as the unit of comparison to value the site for this analysis. ©Capital Realty Analysts, 2016 Page 26 Part III — Presentation of Data Site Plan With Zoning 1 1 J 1111 OIRALD-FORD•DIR RR-20 APN 694310005 P.R.-5 APN 6943 0002 APN. 694310003 P.R.-5 • P.R.-5 I 1 N 694300 P.R.-5 N 69430000 PRI:5 s_PN. 6943 N. 69430000t OPOCITA YU* A$A$TACIA PITOlA POI 114 PR ..COLLEOM 1 CT,IN K PIETAS OM CT W 1A41." KOK KINOSTON:CT. MA PtACt le CKINOOK C Future 132 Acre Request For Proposals to be Released Summer 2015 For into Contact: City of Palm Desert - Economic Development Department (760) 346-0611 1 " P F1/41:1t Watts, P Piarnwa R.b1 P C , ©Capital Realty Analysts, 2016 Page 27 Part III — Presentation of Data Site Plan With Potential Low Income Area Delineated (B) t �111111li ►ri.:;lC111:7111 4111111 g 1111111t `1lll ;�+1iirf•1l11 ii ;1 ri,Wl l t1 116.11111 WI Ili 1iti4N1 J/1i$111 irn %I iti: 41421111 Pii1:11 1it.i.li = ►1t1111,i 1 "Ifni tPilli 1l1.f.11i «l►'l10 11 1#Ilili, lrs.4 111 #It.t�1it 1 ►!1111111' iu11IN :Pi trine, lb.i • 40«!l'11 •r1ttert e .M€t•tr�ita:� ©Capital Realty Analysts, 2016 Page 28 Part III — Presentation of Data Zoning Map ©Capital Realty Analysts, 2016 Page 29 Part III — Presentation of Data ©Capital Realty Analysts, 2016 Page 30 Part III — Presentation of Data Flood Zone Map me. .«.,....:..............1..., . ...+.a0dwwwra.a+•e. , w.. ae..a *.., rt.w s ..+a...+w..w w rw .m...tw...sm u.. do. ...a .w*OW tow mo s..n.....maw Now. hr...rss. .4..**v.. s... w M....r w....•......... ..ww ©Capital Realty Analysts, 2016 Page 31 Part III — Presentation of Data Improvement Description None, the subject parcels are vacant Taxes and Assessment Data 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 %% to cover the payment of debts previously approved by voters. 2. The assessed value of the property purchased prior to March 1, 1975 was fixed at that property's market value as of March 1, 1975. For a property purchase after March 1, 1975, the law requires the assessment to be based on the market value at the time of sale. 3. All assessed values can increase no more than 2% per year for inflation. All of the subject parcels are owned by the City of Palm Desert Redevelopment Agency, a tax- exempt entity. Consequently, I have no basis for estimating the reasonableness of the assessed value or effective tax rates for the subject parcels. ©Capital Realty Analysts, 2016 Page 32 Part IV — Analysis of Data and Conclusions Market Analysis The Market Analysis is intended to describe the supply and demand characteristics of the subject market area. The subject property includes 8 contiguous parcels of vacant land. The property is zoned for residential development, and includes an approximately 10-acre portion, designated for low income housing. The property is located in the North Sphere sub -market area of the City of Palm Desert. The following map of the sub -market area shows the subject in relation to some competing land parcels in the immediate area: The North Sphere area of Palm Desert has been among the last to develop in the city, as the freeway corridor is a wind belt; making it less desirable as a residential location. However, as development has moved north through the city, the North Sphere area has become active with some new developments and several prominent parcels are in -play. The PSUSD site is an 80-acre parcel with an approved tract map for SFR development. The PSUSD has acquired a buyer for the property, but is finalizing approvals prior to closing. This property is located immediately east of the new high school, and development on this site will compete with SFR development on the subject site. Pulte (Del Webb) has reportedly agreed to acquire an approximately 115-acre site located at the SWC of Ramon Road & Bob Hope Drive for a new SFR project. The property is owned by Native Americans, who are currently going through the ©Capital Realty Analysts, 2016 Page 33 Part IV — Analysis of Data and Conclusions approval process required to sell the property. The property will likely develop with a more resort oriented product type, that may not be directly competitive with future development on the subject property, which is not planned to be resort -oriented as of the date of value. The Eagle property is the last full section currently undeveloped on the valley floor, in the core developed area of the region. This country club site has historically had fractured ownership that has been unable to bring a project to the market. The property is likely to develop in the future with a very high end country club, not likely competitive with the subject. D.R. Horton acquired the remaining subdivision land located immediately north of the subject from Ponderosa Homes. This project is most competitive with the subject, and with a large number of lots remaining for development, the project is likely to be a direct competitor for units developed on the subject land. Millennium is a recently approved master planned lifestyle community, which includes a significant residential portion. The site plan for the project is shown at right. The project recently broke ground, and will likely be a primary SFR competitor for the subject COMOINVIT property in the future. � ...n. r..ees,rr. University Park has over 600 mapped SFR lots currently available. However, the land was developed with a large CFD, and the property has historically been priced well above the current market. With the CFD obligation in place, and a non -motivated seller, this property is likely to remain vacant for the foreseeable future. Catavina is the former Santa Rosa Country Club property, which is reportedly in escrow for over $20M. It is unclear as to when a product may be brought to the market on this site. o.. PORTOLA OVERPASS MANN CO MIX tir.••. YN bt yH i MININSIONIKaballeall .0110S11 OOP INAMILLENNIUM PALM DESERT MINK /00111111111K mums ammo • ...8... MUMS MINIMITRACIt .lb=- :__ 44.44, If In terms of current new home absorption, the following table shows the long-term trend in the regional area: ©Capital Realty Analysts, 2016 Page 34 Part IV - Analysis of Data and Conclusions Attactbsd Units II Year 15011 1017 108 1100 2006 2001 2012 2403 2004 2006 2906 2087 2008 2018 T 2011 2612 2013 2014 2018 1st Qt. 74 85 34 42 4B 11 4 31 27 367 105 94 42 23 35 8 1 9 21 2nd CS 95 31 9 31 17 111 40 11 30 138 171 03 9tl 2 9 22 211 5 7 7 8 4 4th 13L 44 59 19 45 8 17 24 85 135 50 1 24 4 111 111 7 38 7 6ub.Tota1 • 222 r 201 r 41 • 143 r 78 • If r 73 r 07 r 212 r 173 r 460 r 267 • 07 r 26 r 36 r 41 r 23 r 43 r 67 r 36 Osta4Md Units Year 15M 1107 1001 1104 2000 2081 2082 2143 200/ 2085 2001 2047 2008 2006 2010 2011 2012 2013 2014 2016 1st CO_ 290 425 551 800 1,190 707 831 897 2,031 964 941 004 583 257 100 141 141 183 103 180 Ind Cis 317 257 654 750 742 572 900 1,602 1,761 1,444 916 474 316 278 106 143 179 181 167 191 3.101 171 381 565 593 826 402 751 933 1,197 1,263 886 209 304 173 89 100 185 145 100 177 4th 00. 287 252 415 484 691 852 1.881 2,239 650 774 498 233 308 137 77 132 109 142 242 1413 • ♦ r Sub.Total 1,MF. W r • r r r 6 1,316 2,136 2,707 S,t2,513 1.183 5,071 5,6]f 4,M► r r r ► r r 5 3,011 1,720 1,52/ i46 122 580 504 831 721 070 Total Units IY. 1506 1567 1804 101 2060 2001 2002 2003 2404 2145 2006 2047 2008 2000 2010 2011 2012 2613 2014 2016 1st Qt. 364 510 565 922 1,238 008 835 928 2,052 1,331 1,048 866 825 259 191 176 149 144 192 101 2n4OIL 412 316 613 781 759 571 940 1,835 1,795 1,580 1,067 517 326 287 107 145 186 269 169 197 3rd Olt 160 412 594 815 831 493 783 937 1,205 1,498 629 308 325 184 80 106 172 152 117 181 401.Of. 331 311 434 532 099 880 1,698 2,268 735 909 548 234 332 141 80 131 108 149 280 155 Totals 1,247 1,651 2,226 2,150 3,327 2,532 4,220 5,706 6,151 1,311 3,510 1,077 1,806 171 460 557 417 474 774 714 As shown, regional new home absorption rates remain very significantly below the historical average. This feature has weighed on residential land values for parcels such as the subject. Conclusion The subject land is a prominent parcel in the North Sphere area of Palm Desert. The property is surrounded by existing development and the Iocational quality of the property is considered good. However, there are a significant number of Tots remaining for development in the immediate area, and consequently, absorption may be a challenge. The requirement to set aside a low income housing site on an approximately 10-acre portion of the land is a significant negative feature that will impact the current per acre value of the property. The main strength of the subject is its comparatively strong Iocational quality in the emerging sub -market area of North Palm Desert. Alternatively, current absorption rates are well below average on a historical basis. There is a large amount of existing lot inventory in the immediate area of the subject, and supply clearly exceeds existing demand as of the date of value. In addition, the larger size of the property will likely see a prospective developer go through at least 1 real estate cycle. These factors will weigh on the per acre value of the subject. I I III I IIIIIIIIII IIIIIIIIIIII IIII I I I I I I l ©Capital Realty Analysts, 2016 Page 35 Part IV —Analysis of Data and Conclusions Highest and Best Use Highest and best use is defined as follows: 1. The reasonably probable use of the property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an assets existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (IVS) 3. The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions)3 Implied in this definition, and the definitions of highest and best use as vacant, and highest and best use as improved, is that the determination of the 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, green belts, preservation, conservation, wildlife habitats, and the like. The four stages of analysis are further described as follows: Legally Permissible: what uses are permitted by zoning and deed restriction for the subject site? Physically Possible: what are you physically possible uses for the subject site? ilk Financially Feasible: what physically possible and legally permissible uses will produce a net return to the owner of the site? Ilk Maximally Productive: I'm on the highest net return or the highest present worth? These four tests are applying the subject property in the asked vacant condition, as well as the house improved condition. The following describe the analysis: Highest and Best Use of Land or Site as Though Vacant The highest and best use of land or a site as though vacant is defined as follows: 3 Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015) ©Capital Realty Analysts, 2016 Page 36 Part IV — Analysis of Data and Conclusions "Among all reasonable, alternative uses, that use that yields the highest present value, after payments are made for labor, capital, and coordination."4 Legally Permissible — As Vacant The legal restrictions that apply to the subject are the public restrictions of the city of Palm Desert's P.R. zoning ordinance and CR/H and R-L general plan designations. The commercial, resort hotel general plan component is a result of the Marriot project located immediately west of the subject land. Clearly, there is very limited or no current potential for viable resort development on the subject property, and the city has expressed in the RFQ/P a willingness to make zone changes and general plan amendments to facilitate detached SFDR development and 10-acres of low income housing on the subject site. Other similar parcels have been developed on similarly zone parcels, with no apparent legal constraints. However, the requirement to develop low income housing on a portion of the site, along with associated impact fees on (a portion of) the remainder will weigh on the current market value of the property. Consequently, I conclude that the subject's legal constraints will impair development of the parcels to their highest and best use, if they were vacant on the date of value. Physically Possible — As Vacant The subject site is comparatively large. All utilities are available to the site; which has average+ access and visibility. The topographical conditions are generally level to very gently sloping, providing a typical level of physical viability for the legally permissible uses for the property. In my opinion, the physical aspects of the subject property would not impair the potential for the parcels to be developed to their highest and best use, if they were vacant on the date value. Financially Feasible —As Vacant The legally permissible and physically possible qualities of the subject parcels lend them to residential subdivision development. While SFR development on the property would be homogeneous and could be financially feasible as of the date of value, the low income housing portion of the property is clearly not independently financially feasible as of the date of value. The reason that no market rate apartment development has occurred in the region over the past several years is that rents are too low to support financially feasible development. The low income requirement reduces the prospect of financial feasibility even lower. For this reason, cities in the region have historically made subsidies 4 Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010) ©Capital Realty Analysts, 2016 Page 37 Pa rt IV — Analysis of Data a nd Conclusions to attract low income housing development. Additional comments in the regard are included in the sales comparison approach section of the report. Based upon the available data, I conclude that development of the subject parcels with SFR's, similar to houses being developed in competing projects in the immediate area could potentially prove to be financially feasible in small phases. Development of low income housing on the site would not be financially feasible. Maximally Productive —As Vacant The physically possible and legally permissible uses for the subject property are present in the subject region. Other similar parcels have been successfully developed in immediate area of the subject property. However, lacking current financial feasibility for speculative development, it is my opinion that the market perception is that the most maximally productive use of the subject parcels as vacant, is to hold for investment purposes until such time as speculative development of the site is financially feasible. Highest and Best Use of the Property As Improved The highest and best use of the property as improved is defined as follows: "The use that should be made of the 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 the new improvement would more than offset the cost of demolishing the existing building and constructing a new one." The subject parcels are vacant. Consequently, there is no highest and best use as improved analysis. Land or Site Value As the subject parcels lack improvements with an associated cost or income earning ability, the Cost and Income Approaches are not considered relevant. Land value will be estimated via direct comparison to other parcels that have sold in the market; which calls for a Sales Comparison Approach. However, as a 10-acre low income housing site and a housing mitigation fee is associated with this property, the methodology will be to value the property as is, net of the mitigation fee, and then deduct for this element as a lump sum. The 10-acre low income site is considered to hold no contributory value and thus, the as is value will be estimated net of the 10-acres. ©Capital Realty Analysts, 2016 Page 38 Part IV —Analysis of Data and Conclusions Sales Comparison Approach The sales comparison approach is defined as follows: "The process of deriving a value indication for the subject property by comparing sales of similar properties to the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market — derived elements of comparison. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant when an adequate supply of comparable sales is available."5 A field investigation was made in order to obtain data on recent, comparable sales transactions. The primary selection criteria for the comparable sales applied in this analysis are as follows; current sales, similar Iocational quality, similar physical qualities, etc. The typical unit of comparison for vacant land parcels of the subject's size and type is the price per acre. In this report, the price per acre will be applied as the unit of comparison. The sales comparison approach is organized as follows: Land Sales/Listings Map Land Sales/Listings Grid Land Sales Analysis Land Sales Adjustment Matrix Reconciliation and Conclusion 5 Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015) ©Capital Realty Analysts, 2016 Page 39 Part IV — Analysis of Data and Conclusions Land Sales Map Land Sales Grid No. Location Date Price 0,0 ParAcre Lots 1 SEC of College Drive & 7/31/14 $ 6,600,000 23.850 $ 276,730 210 $ 31,429 University Park Drive Palm Desert, CA 2 S Side of Avenue 44, 7/7/14 $ 8,900,000 79.150 $ 112,445 300 $ 29,667 W of Harrison Street, Indio, CA 3 East side of Rattler Road, Contract $ 16,280,000 80.000 $ 203,500 200 $ 81,400 North of Ramon Road Riverside County, CA 4 NWC of Gerald Ford Drive 4/23/13 $ 4,399,000 17.520 $ 251,084 53 $ 83,000 & Portola Avenue 4/16/13 $ 12,500,000 23.550 $ 530,786 212 $ 58,962 Palm Desert, CA 7/28/11 $ 2,465,500 14.460 $ 170,505 49 $ 50,316 Data No. 6Total $ 19,364,500 55.530 '$ 348,721 314 $ 61,670 5 E Side of Portola Avenue, Contract $ 2,020,000 15.520 $ 130,155 112 $ 18,036 S of Frank Sinatra Drive Palm Desert, CA 6 NEC of 38th Avenue & Listing $ 9,200,000 53.420 $ 172,220 460 $ 20,000 Varner Road Riverside County, CA Subj. S Side of Gerald Ford Dr., W of Portola Avenue Palm Desert, CA 128.950 ©Capital Realty Analysts, 2016 Page 40 Part IV — Analysis of Data and Conclusions Comparable Sale No.1 Comparable sale number one is the July 31, 2014 sale of the 23.85-acre land parcel located at the southeast corner of College Drive and University Park Dr., Palm Desert California. The sale price of $6,600,000 equates to an unadjusted sale price of $276,730 per acre. This sale was selected for comparison as this property is located very close proximity to the subject, and is one of very few recent sales of residential land, located in the immediate area of the subject. The property had tentative map approval for 210-unit although the value of this property is impacted by a community facilities district bond, the locational quality is considered good. Overall comparability is considered fair to average Comparable Sale No. 2 Comparable sale number two is the July 7, 2014 sale of a 79.15-acre land parcel located along the south side of Avenue 44, west of Harrison St., Indio, CA. The sale price of $8,900,000 equates to an unadjusted sale price of $112,445. The sale was selected for comparison, to demonstrate the lower end of the range of larger residential land sales and the subject region. The property included 300 partially completed detached single-family residential lots. The retail value potential of homes in this area is slightly below that of the area of the subject property. Overall comparability is considered average. Comparable Sale No. 3 Comparable sale number three is the current escrow of an 80-acre land parcel located along the eastside of Rattler Road, north of Ramon Rd., Riverside County California. The contract sale price of $16,280,000 equates to an unadjusted sale price of $203,500 per acre. This property has a tentative tract map for 200 detached single-family residential Tots. However, the prospective buyer is currently in the process of remapping the property for additional units. The locational quality of this property is considered superior to that of the subject property as this land is located immediately east of a new DSUSD middle/high school complex. Overall comparability is considered average. Comparable Sale No. 4 Comparable sale number four includes the three takedowns for the D. R. Horton project located immediately north of the subject property. The overall sale price of $19,364,500 equates to an unadjusted sale price of $348,721 per acre. The property included 314 partially improved lots. Although significant downward adjustment will be required for improvements, this property is considered to be locationally equivalent to the subject, and overall comparability is considered average. Comparable Sale No. 5 Comparable sale number five is the current escrow of a 15.52-acre land parcel located along the eastside of Portola Ave., South the Frank Sinatra Drive, Palm Desert California. The contract price of $2,020,000 equates to an unadjusted sale price of $130,155 per acre. This property was ©Capital Realty Analysts, 2016 Page 41 Part IV — Analysis of Data and Conclusions selected for comparison, as the land is located in very close proximity to the subject, it is a very current data item. The buyer intends to develop the property with 112 units. Overall comparability is considered average. Comparable Sale No. 6 Comparable sale number six is the current listing of a 53.42-acre land parcel located at the northeast corner of 38th Ave. and Varner Rd., Riverside County, California. The current listing price of $9,200,000 equates to an unadjusted listing price of $172,220 per acre. This data item was included for comparison to demonstrate a current listing located in reasonably close proximity to the subject. Although this property has an inferior location north of Interstate 10, the property is approved for 460 detached residential units. Overall comparability is considered poor to fair, as property has not attracted offers at this price. 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 sale price. The adjustments applied to the price of a comparable property reflect the comparable sales superiority or inferiority in regard to the real property rights conveyed, financing, conditions of sale, market conditions, 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 two or more sales, where the difference in adjusted prices would yield the markets value perception for that feature. Generally, the appraiser follows the 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 discussion of the relevant adjustment features: Property Rights Conveyed Among this data set, all of the sales were fee simple estates. Consequently, no adjustments for property rights conveyed will be applied to this dataset. ©Capital Realty Analysts, 2016 Page 42 Pa rt IV — Analysis of Data a nd Conclusions Financing Terms All of the sales except sale one, were reported to be cash equivalent sales with no indication of any non -market or beneficial financing that would warrant a cash equivalency adjustment. Comparable sale number one was acquired with the $3,300,000 down payment, and a $3,300,000 note from the seller. The note had a three-year term, at 5%, interest only. The following table shows the calculation of the cash equivalent sale price for comparable sale number one: Inlirwt To Data Wier Year 0 $ • Year 1 $ 165,000 Year 2 $ 165,000 Year 3 $ 165,000 Total $ 495,000 Prlwtlpal To Sailer 3,300,000 3,300,000 6,600,000 Outstanding $ 3,300,000 $ 3,300,000 $ 3,300,000 $ • arm PV Cosh Cash Row Fatter EquheMnt $ 3,300,000 1.000000 $ 3,300,000 $ 165,000 0.869565 $ 143,478 $ 165,000 0.756144 $ 124,764 $ 3,465,000 0.657516 $ 2,278,294 $ 7,095,000 $ 5,846,536 Subtracting the cash equivalent sale price of $5,846,536 from the total price of $6,600,000 yields a difference of $753,464. Dividing this amount by 23.85 acres yields a per acre adjustment of - $31,592. Conditions of Sale All of the closed comparable sales were reported to be arm's-length sales with no indication of any atypical conditions that would warrant an adjustment for conditions of sale. The listing has not sold, and requires downward adjustment. Market Conditions Adjustments for market conditions reflect a change in the prices paid for real property due to changes in markets over time. The lack of land sales makes for a somewhat challenging analysis of changes in market conditions. As described in the Market Analysis, absorption rates were down slightly in 2015, which would be an indication of declining market conditions for residential land. Alternatively, retail pricing is up, offsetting to some extent, the negative absorption indication. My broker survey revealed a slightly negative outlook since 2014. Lacking direct sales evidence of changes in market conditions over the time period covered by the sales, no adjustment is applied. However, I will consider the potential for market conditions to be flat to slightly declining in where to place the final value estimate among the indicated range. Location The locational quality of residential land is a function of the available retail price point, and prospective absorption rate. In terms of available retail price point, the subject area is generally a mid -range location, with retail homes values predominantly in the $400k to $550k range. However, prospective absorption is currently weak. A compounding problem is the large number of lots currently in play in the North Sphere area. Comparable Sale Number 1 is located in the ©Capital Realty Analysts, 2016 Page 43 Pa rt IV — Analysis of Data a nd Conclusions same sub -market area as the subject. This property has a slightly superior locational quality, as the property is located immediately adjacent to University Village. Downward adjustment is applied to Sale 1 for this condition. Sale 2 is considered inferior in location as compared to the subject. The available retail price point is located in the North Indio sub -market location of this property, and there are a significant number of competitors in the market. Upward adjustment is applied to Sale 2 for location. Sale 3 is considered superior to the subject in location. This property is a candidate for annexation into Rancho Mirage, and the property is located immediately east of the new school. Mission Hills, located immediately south of this property attracts comparatively high retail price points; although the residential subdivisions located west of DaVall Drive are located in the City of Cathedral City and attract a lower price point. Lacking other new home competitors in the immediate area, absorption is likely to be stronger in this location as compared to the location of the subject. Downward adjustment for location is applied to Sale 3. Sale 4 is located immediately north of the subject property. This land has a virtually identical locational quality and no adjustment for location is required of Sale 4 for this analysis. Although Sale 5 is located in close proximity to the subject, Sale 5 abuts the Desert Willow project. Consequently, the property lends itself to resort style housing, which is generally a positive attribute in this sub -market area. For this reason, the locational quality of Sale 5 is considered superior to that of the subject and downward adjustment is applied to Sale 5 for location. Listing 6 is located north of 1-10. This is a significant negative locational attribute, as the majority of existing development and public services, shopping, etc., are located south of 1-10. In addition, the wind is stronger north of 1-10; which is part of the reason that development has been slow to move into this area. Upward adjustment is applied to Listing 6 for location. Size Size adjustments are typically 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 Generally, the concept of marginal utility is valid for this property type, in the Palm Desert sub - market. At 128.95-acres, the subject is larger than all of the sales. This is not unexpected, as the sub -market area is becoming built -out, and the subject is among the last of the larger parcels remaining for development, and available on the open market. 6 Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015) ©Capital Realty Analysts, 2016 Page 44 Pa rt IV — Analysis of Data a nd Conclusions Because adjustments for improvements remain, size adjustments cannot be isolated and consequently, matched pairs analysis is not available as an adjustment technique. In order to estimate the amount of size adjustment (if any) applicable to this analysis, I interviewed the local brokers and developers who work this market. The consensus of opinion was that size does impact value. However, the degree to which size impacts per acre (or lot) value varied considerably. Some felt that the larger parcels provided an economy of scale that reduced the per lot development cost, making size less of an issue. Others felt that as absorption is currently slow, the larger parcels would require a larger adjustment to account for the increased holding costs. Lacking the ability to apply a quantitative adjustment, small qualitative adjustments are applied. Other Physical Attributes In terms of other physical attributes, the significant difference between the subject and the comparables is the fact that the subject is not mapped, or otherwise improved. Because a large number of projects were in process when the recession stopped new development; most residential land trading activity over the past several years has been in partially developed parcels; where the improvements could be acquired at a discount from cost new. Comparable sale number 1 was mapped and all offsite improvements have been completed. A small downward adjustment is required of this sale. Sale 2 included some nearly finished lots, along with some final mapped lots that were partially improved. The seller acquired the property from the lender and consequently, a cost to complete; or a cost spent to date was not available. Most likely, the existing improvements had a higher cost than the total sale price of this property. For this analysis, a comparatively high percentage downward adjustment is applied. Sale 3 had a tentative map, but is otherwise unimproved. The map had no value to the prospective buyer, as they are in the process of trying to remap the property. Consequently, no adjustment for improvements is required. Data No. 4 included a mix of improvement levels among the lots acquired. Much like Sale 2, the exact cost data is not available. However, a majority of these lots were finished, or partially finished and a comparatively large downward adjustment is required. Data No. 5 is not mapped or otherwise improved and no adjustment is required in this adjustment category. Data No. 6 has a tract map. However, this land is going to require considerable offsite improvement that would not exist for the subject. These factors are offsetting and no adjustment is applied to Data No. 6 in this adjustment category. Conclusion, Market Value As Is The table on the following page, shows the adjustment matrix applied to the comparable sales, to yield per acre value indications for the subject property (note that the 10-acre low income housing site garners no value, as incentives, including the land, will be required to attract development to this portion of the property): ©Capital Realty Analysts, 2016 Page 45 Part IV - Analysis of Data and Conclusions Element Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale S Sale 6 Sale Price $ 6,600,000 $ 8,900,000 $16,280,000 $ 19,364,500 52,020,000 $9,200,000 Site (Acres) 128.95 23.85 79.15 80.00 55.53 15.52 53.42 Unit of Comparison $/acre $/Acre $/Acre $/Acre $/Acre $/Akre $/Acre Sale Price /Acre $ 276,730 $ 112,445 $ 203,500 $ 348,721 $ 130,155 $ 172,220 Property Rights Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment $ - $ • $ - $ - $ - $ Terms Seller Cash Cash Cash Cash Cash Cash Equivalency •$ 31,592 $ • $ • $ - $ - $ • Conditions of Sale Arm's-Length Arms -Length Arm's-Length Arms -Length Arms -Length Listing Adjustment $ $ • $ $ - $ - -$ 34,444 Date of Sale 12/1/15 7/31/14 7/7/14 Contract Various Contract Listing Adjustment $ $ - $ - $ - 5 - $ Subtotal $ 245,138 $ 112,445 $ 203,500 $ 348,721 $ 130,155 $ 137,776 Location Average SI. Superior Inferior Superior Similar SI. Superior Inferior Adjustment -$ 24,514 $ 33,733 -$ 40,700 $ -5 13,015 •5 27,555 Size 128.95 23.85 79.15 80.00 55.53 15.52 53.42 Adjustment •$ 49,028 •5 11,244 -$ 20,350 •$ 69,744 -$ 26,031 -$ 27,555 Other Physical Raw Land Map/lmpvs Map/Impvs Similar Map/Impvs Similar Similar Adjustment -$ 49,028 -$ 33,733 $ - •$ 174,361 $ - $ - Vatue indlcations/Ac $ 122,569 $ 101,200 $ 142,450 $ 104,616 $ 91,108 $ 82,666 The adjusted value range is from $82,666 per acre to $142,450 per acre. Listing 6, the low value indicator is least similar to the subject and as a listing, no emphasis is placed on this data point. Data No. 3, the high value indicator has not closed, but is under contract. This data point is most similar to the subject in size, and consequently, some weight is ascribed to this data point. The remaining data points yield a range of $91,108 per acre to $122,569 per acre. These sales each garner some weight for this analysis. Note again that the 10-acre low income site has no value. Based upon the available data I conclude that the market value of the fee simple estate in the subject property as of April 1, 2016 by the sales comparison approach is as follows: $110,000 Per Acre x 118.95-Acres = $13,084,500 $13,085,000 (Rounded) Thirteen Million Eighty -Five Thousand Dollars ©Capital Realty Analysts, 2016 Page 46 Pa rt IV — Analysis of Data a nd Conclusions Estimate of Exposure Time Exposure time is defined as follows: 1. "The time a property remains on the market. 2. The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based on an analysis of past events assuming a competitive and open market. (USPAP, 2016-2017 ed. )"7 In Tight of the exposure times of the comparables, the exposure time for the subject is correlated at 12-months. 7 Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015) ©Capital Realty Analysts, 2016 Page 47 Part IV — Analysis of Data and Conclusions Qualifications of the Appraiser Michael A. Scarcella, MAI Education Bachelor of Science, Business, University of Nevada, Las Vegas —1982 All required appraisal Institute sponsored courses required to attain the MAI designation, along with appraisal Institute sponsored courses, seminars and online forums required for continuing education. Professional Organizations/Licensing Member of the Appraisal Institute, MAI member number 11072 State of California certified general real estate appraiser, AG 019463 General Experience 1997 - Current — Capital Realty Analysts, President 1991— 1996 - Mackenzie and Associates, staff appraiser 1982 — 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 ofAmerica BLM BIA FDIC Dept. of Justice State of California State of Arizona Riverside County City of Palm Springs City of Coachella City of Desert H ot Springs City ofCathedralcity City of Rancho Mirage City of Palm Desert City of Indian Wells City of Indio City of La Qu i n to Pa I m Springs USD DesertSands Unified SD Coa chella Valley Unified SO Various Public Utilities CVAG Eisenhower Memorial Hsp. Desert Hospital Private Sector TrustforPublicLand Annenberg Foundation CB Commercial Te xtro n Bechtel Corporation KSL Recreation Corp. United State Filter Corp. Sunrise Company Price Waterhouse Mojave Desert Land Trust Ha bitat for Humanity LennarHomes Temple Construction Takenaka Corporation Betty Ford Center Heart Institute of the Desert Ba s is Ca pital Ma nagement Estate of Frank Sinatra Merrill Lynch Wessman Development Attorneys Developers Accountants Institutional Bank of America Wells Fargo Bank Pacific Western Bank Washington Mutual Bank Home Savings Bank Bank Midwest Pacific National Bank Pa cific Premier Bank Sterling Bank Pacific Mercantile Bank Ba nc One Fidelity Federal Bank Bankers Trust Company Northern Trust Bank First Bank Commerce Federal Savings Great American Bank Mitsubishi Bank First Citizens Bank El PaseoBank CommunityValleyBank Bank Six Alliance Bank ©Capital Realty Analysts, 2016 Page 48 Part IV — Analysis of Data and Conclusions Addendum Property Profiles ©Capital Realty Analysts, 2016 Page 49 = METROS CAN PROPERTY P R O F I L E= Riverside (CA) **************************************************************************************** * * * * * * * * * * * * * * * * * * * * * Parcel Number Ref Parcel Nbr Owner Name CoOwner Site Address Mail Address « < OWNERSHIP INFORMATION » > :694 300 001 :000 000 000 :Redevelopment Bldg # of S:32 T:04S R:06E Q:NE Pos Interest: Agency City of Palm Desert :*no Site Address* «< SALES AND LOAN INFORMATION » > Transferred :01/01/2007 Document # :173119 Sale Price . Deed Type :Misc % Owned :100 Land Structure Other Total % Improved Map Grid Census Land Use Legal Sub/Plat Book TractNum : Lot Block Ag Prsry . Loan Amount Lender Loan Type Interest Rate Vesting Type «< ASSESSMENT AND TAX INFORMATION »> Exempt Type Exempt Amount Tax Rate Area 14-15 Taxes «< PROPERTY DESCRIPTION »> :Tract:449.22 Block:1 :Ys Vacant,With Misc Struct :5.00 ACRES IN POR NE 1/4 OF SEC 32 :T4S R6E FOR TOTAL DESCRIPTION SEE :ASSESSORS MAPS Page: «< PROPERTY CHARACTERISTICS »> Bedrooms : Lot Acres:5.00 BathFull : Lot SqFt :217,800 Bath3Qtr : Elect Svc: BathHalf : Gas Svc . BathTotal: WaterSrce: Cntrl Ht :No SewerType: Cntrl A/C:No StreetTyp: Fireplace:No View Misclmprl:None MiscImpr2:None **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. :18-081 Zoning:W2 * * * Pool :No RoofType: YearBlt : Stories : Units . Bldg SF : Grg Type: Grg SF . ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : AddtlPkgSgFt: Pool :No RoofType: YearBlt : Stories : Units . Bldg SF : Grg Type: Grg SF . = M E T R O S CAN PROPERTY P R O F I L E= Riverside (CA) **************************************************************************************** * * * * * «< OWNERSHIP INFORMATION »> * * * Parcel Number :694 300 002 Bldg # of * Ref Parcel Nbr :000 000 000 S:32 T:04S R:06E Q:NE * Pos Interest: * Owner Name :Redevelopment Agency City of Palm Desert * CoOwner * Site Address :*no Site Address* * Mail Address :73510 Fred Waring Dr Palm Desert Ca 92260 * * * * * «< SALES AND LOAN INFORMATION » > * * * * * Transferred : Loan Amount * Document # Lender * Sale Price Loan Type * Deed Type Interest Rate * % Owned :100 Vesting Type * * * * * « < ASSESSMENT AND TAX INFORMATION »> * * * * * Land Exempt Type * Structure Exempt Amount * Other Tax Rate Area :18-081 * Total •14-15 Taxes * % Improved * * * * * «< PROPERTY DESCRIPTION »> * * * * * * * Zoning: * * * * * * * * * * * « < PROPERTY CHARACTERISTICS »> * * Map Grid : Census :Tract:449.22 Block:1 Land Use :Yy Vacant,Other Legal :4.69 ACRES M/L IN POR NE 1/4 OF SEC :32 T4S R6E FOR TOTAL DESCRIPTION :SEE ASSESSORS MAPS Sub/Plat : Book Page: TractNum : Lot Block Ag Prsry : * Bedrooms . * BathFull : * Bath3Qtr : * BathHalf : * BathTotal: Cntrl Ht :No Cntrl A/C:No Fireplace:No * StreetTyp:Unpaved Lot Acres:4.69 Lot SqFt :204,296 Elect Svc:None Gas Svc :None WaterSrce:None SewerType:None View • * Misclmprl:None * Misclmpr2:None **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : AddtlPkgSgFt: = M E T R O S CAN PROPERTY PROFILE Riverside (CA) **************************************************************************************** * * * * * * « < OWNERSHIP INFORMATION » > Parcel Number :694 300 005 Ref Parcel Nbr :000 000 000 Owner Name CoOwner Site Address Mail Address Transferred Document # Sale Price Deed Type % Owned Land Structure Other Total % Improved Map Grid Census Land Use Legal Sub/Plat Book TractNum Lot Block Ag Prsry Bedrooms . BathFull : Bath3Qtr : BathHalf : BathTotal: Cntrl Ht :No Cntrl A/C:No Fireplace:No :Redevelopment Bldg # of S:32 T:04S Pos Interest: Agency City of Palm :*no Site Address* R:06E Q:NE Desert «< SALES AND LOAN INFORMATION » > :01/01/2007 :173119 :Misc :100 :$1 :$1 Loan Amount Lender Loan Type Interest Rate . Vesting Type «< ASSESSMENT AND TAX INFORMATION »> Exempt Type Exempt Amount Tax Rate Area 14-15 Taxes «< PROPERTY DESCRIPTION »> :Tract:449.22 Block:1 :Yy Vacant,Other :4.83 ACRES M/L IN POR NE 1/4 OF SEC :32 T4S R6E FOR TOTAL DESCRIPTION :SEE ASSESSORS MAPS Page: «< PROPERTY CHARACTERISTICS »> Lot Acres:4.83 Lot SqFt :210,395 Elect Svc:None Gas Svc :None WaterSrce:None SewerType:None StreetTyp:Unpaved View Misclmprl:None MiscImpr2:None **************************************************************************************** • :18-081 Zoning: * Pool :No RoofType: YearBlt : Stories : Units . Bldg SF : Grg Type: Grg SF . ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : AddtlPkgSgFt: Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. = M E T R O S CAN PROPER T Y P R O F I L E= Riverside (CA) **************************************************************************************** Parcel Number Ref Parcel Nbr Owner Name CoOwner Site Address Mail Address Transferred : Document # . Sale Price . Deed Type Owned Land Structure Other Total• Improved . « < OWNERSHIP INFORMATION »> :694 300 014 Bldg # of :000 000 000 S:32 T:04S R:06E Q:NE Pos Interest: :Redevelopment Agency City of Palm Desert :*no Site Address* :73510 Fred Waring Dr Palm Desert Ca 92260 « < SALES AND LOAN INFORMATION » > Loan Amount Lender Loan Type Interest Rate Vesting Type «< ASSESSMENT AND TAX INFORMATION »> Exempt Type Exempt Amount . Tax Rate Area :18-081 14-15 Taxes «< PROPERTY DESCRIPTION »> Map Grid : Census :Tract:449.22 Block:1 Land Use :Ys Vacant,With Misc Struct Legal Sub/Plat : Book TractNum : Lot Block Ag Prsry : Bedrooms BathFull Bath3Qtr BathHalf : BathTotal: Cntrl Ht :No Cntrl A/C:No Fireplace:No Page: «< PROPERTY CHARACTERISTICS » > Lot Acres:4.91 Lot SqFt :213,880 Elect Svc: Gas Svc . WaterSrce: SewerType: StreetTyp: View Misclmprl:None MiscImpr2:None **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. Zoning: Pool :No RoofType: YearBlt : Stories . Units . Bldg SF : Grg Type: Grg SF . ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : AddtlPkgSgFt: =METROSCAN PROPERTY PROFILE Riverside (CA) **************************************************************************************** Parcel Number Ref Parcel Nbr Owner Name CoOwner Site Address Mail Address Transferred : Document # . Sale Price . Deed Type Owned Land Structure Other Total Improved « < OWNERSHIP INFORMATION »> :694 300 015 :000 000 000 Bldg # of S:32 T:04S R:06E Q:NE Pos Interest: :Redevelopment Agency :*no Site Address* :73510 Fred Waring Dr City of Palm Desert Palm Desert Ca 92260 «< SALES AND LOAN INFORMATION »> Loan Amount Lender Loan Type Interest Rate Vesting Type «< ASSESSMENT AND TAX INFORMATION » > Exempt Type Exempt Amount Tax Rate Area 14-15 Taxes «< PROPERTY DESCRIPTION »> Map Grid : Census :Tract:449.22 Block:1 Land Use :Ys Vacant,With Misc Struct Legal Sub/Plat Book TractNum Lot Block Ag Prsry Bedrooms : BathFull : Bath3Qtr : BathHalf : BathTotal: Cntrl Ht :No Cntrl A/C:No Fireplace:No Page: «< PROPERTY CHARACTERISTICS »> Pool :No RoofType: YearBlt : Stories : Units . Bldg SF : Grg Type: Grg SF . Lot Acres:3.86 Lot SqFt :168,142 Elect Svc: Gas Svc . WaterSrce: SewerType: StreetTyp: View Misclmprl:None MiscImpr2:None • • :18-081 Zoning: ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : AddtlPkgSgFt: **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. = M E T R O S CAN PROPERTY P R O F I L E= Riverside (CA) **************************************************************************************** * * * * * « < OWNERSHIP INFORMATION » > * * * Parcel Number :694 310 002 Bldg # of * Ref Parcel Nbr :000 000 000 S:32 T:04S R:06E Q:NE * Pos Interest: * Owner Name :Redevelopment Agency City of Palm Desert * CoOwner * * Site Address :*no Site Address* * Mail Address :73510 Fred Waring Dr Palm Desert Ca 92260 * * * * * «< SALES AND LOAN INFORMATION » > * * * * * Transferred : Loan Amount * Document # Lender * Sale Price Loan Type * Deed Type Interest Rate * % Owned :100 Vesting Type * * * * * «< ASSESSMENT AND TAX INFORMATION »> * * * * * Land Exempt Type * Structure Exempt Amount * Other Tax Rate Area :18-081 * Total 14-15 Taxes * % Improved * * * * * * «< PROPERTY DESCRIPTION »> * * * * * Map Grid : * * Census :Tract:449.22 Block:1 * Land Use :Yr Vacant,Residential Land Zoning: * Legal :40.47 ACRES M/L IN POR NE 1/4 OF * :SEC 32 T4S R6E FOR TOTAL * :DESCRIPTION SEE ASSESSORS MAPS * Sub/Plat : * * Book Page: * TractNum : * Lot * Block * * Ag Prsry : * * * * « < PROPERTY CHARACTERISTICS »> * * * * * Bedrooms : Pool :No Lot Acres:40.47 ADDITIONALS * * BathFull : RoofType: Lot SqFt :1,762,873 RmAdditions :No * * Bath3Qtr : YearBlt : Elect Svc: AddtlSgFt * * BathHalf : Stories : Gas Svc AddtlGrgTyp : * * BathTotal: Units WaterSrce: AddtlPkgSgFt: * * Cntrl Ht :No Bldg SF : SewerType: * * Cntrl A/C:No Grg Type: StreetTyp: * * Fireplace:No Grg SF View * * Misclmprl:None * * MiscImpr2:None * **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. = M E T R O S CAN PROPERTY PROFILE Riverside (CA) **************************************************************************************** Parcel Number Ref Parcel Nbr Owner Name CoOwner Site Address Mail Address Transferred : Document # . Sale Price . Deed Type % Owned Land Structure Other Total % Improved Map Grid Census Land Use Legal Sub/Plat Book TractNum Lot Block Ag Prsry Bedrooms . BathFull : Bath3Qtr : BathHalf : BathTotal: Cntrl Ht :No Cntrl A/C:No Fireplace:No «< OWNERSHIP INFORMATION »> :694 310 003 :000 000 000 :Redevelopment Bldg # of S:32 T:04S Pos Interest: Agency City of Palm Desert :*no Site Address* :73510 Fred Waring Dr Palm Desert Ca 92260 :100 «< SALES AND LOAN INFORMATION »> Loan Amount Lender Loan Type Interest Rate Vesting Type «< ASSESSMENT AND TAX INFORMATION »> Exempt Type Exempt Amount Tax Rate Area 14-15 Taxes «< PROPERTY DESCRIPTION »> :Tract:449.22 Block:1 :Yr Vacant,Residential Land :40.46 ACRES M/L IN POR SE 1/4 OF :SEC 32 T4S R6E FOR TOTAL :DESCRIPTION SEE ASSESSORS MAPS Page: «< PROPERTY CHARACTERISTICS »> R:06E Q:SE :18-081 Lot Acres:40.46 Lot SqFt :1,762,438 Elect Svc: Gas Svc . WaterSrce: SewerType: StreetTyp: View Misclmprl:None MiscImpr2:None **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. Zoning: * * * * * * * * * * * * * * * * * * Pool :No RoofType: YearBlt : Stories : Units . Bldg SF : Grg Type: Grg SF . ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : Addt1PkgSqFt: = M E T R O S CAN PROPERTY P R O F I L E= Riverside (CA) **************************************************************************************** * * * * * «< OWNERSHIP INFORMATION »> Parcel Number :694 310 006 Ref Parcel Nbr :000 000 000 Owner Name CoOwner Site Address Mail Address Transferred : Document # . Sale Price . Deed Type Owned Land :$1 Structure Other Total :$1 Improved . Bldg # of S:32 T:04S R:06E Pos Interest: :Redevelopment Agency City of Palm Desert :*no Site Address* :73510 Fred Waring Dr Palm Desert Ca 92260 «< SALES AND LOAN INFORMATION »> Loan Amount Lender Loan Type Interest Rate Vesting Type «< ASSESSMENT AND TAX INFORMATION »> Exempt Type Exempt Amount . Tax Rate Area :18-081 14-15 Taxes «< PROPERTY DESCRIPTION » > Map Grid : Census :Tract:449.22 Block:1 Land Use :Cy Com,Commercial Land Legal • Sub/Plat : Book TractNum : Lot Block Ag Prsry : Bedrooms . BathFull : Bath3Qtr : BathHalf : BathTotal: Cntrl Ht :No Cntrl A/C:No Fireplace:No Page: «< PROPERTY CHARACTERISTICS »> Lot Acres:24.73 Lot SqFt :1,077,239 Elect Svc: Gas Svc . WaterSrce: SewerType: StreetTyp: View Misclmprl:None MiscImpr2:None **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report. Q:NE Zoning: * * * * * Pool :No RoofType: YearBlt : Stories : Units . Bldg SF : Grg Type: Grg SF . ADDITIONALS RmAdditions :No AddtlSgFt . AddtlGrgTyp : AddtlPkgSgFt: = M E T R O S CAN PROPERTY P R O F I L E= Riverside (CA) **************************************************************************************** «< OWNERSHIP INFORMATION »> Parcel Number :694 310 007 Bldg # of Ref Parcel Nbr :000 000 000 S:32 T:04S R:06E Q:NE Pos Interest: Owner Name :City of Palm Desert CoOwner Site Address :*no Site Address* Mail Address :73510 Fred Waring Dr Palm Desert Ca 92260 «< SALES AND LOAN INFORMATION » > * * * Transferred : Loan Amount * Document # Lender * Sale Price Loan Type * Deed Type Interest Rate * % Owned Vesting Type * * * «< ASSESSMENT AND TAX INFORMATION »> * * * Land :$1 Exempt Type • * Structure Exempt Amount . * Other Tax Rate Area :18-081 * Total :$1 14-15 Taxes * % Improved * * * «< PROPERTY DESCRIPTION »> * * * Map Grid : * Census :Tract:449.22 Block:1 * Land Use :Cy Com,Commercial Land Zoning: * Legal * * * Sub/Plat : * Book Page: * TractNum : * Lot * Block * Ag Prsry : * * «< PROPERTY CHARACTERISTICS »> * * * Bedrooms : Pool :No Lot Acres:3.00 ADDITIONALS * BathFull : RoofType: Lot SqFt :130,680 RmAdditions :No * Bath3Qtr : YearBlt : Elect Svc: AddtlSgFt . * BathHalf : Stories : Gas Svc AddtlGrgTyp : * BathTotal: Units WaterSrce: AddtlPkgSgFt: * Cntrl Ht :No Bldg SF : SewerType: * Cntrl A/C:No Grg Type: StreetTyp: * Fireplace:No Grg SF View . * * Misclmprl:None * Misclmpr2:None **************************************************************************************** Information compiled from various sources. CoreLogic makes no representations or warranties as to the accuracy or completeness of information contained in this report.