Loading...
HomeMy WebLinkAbout SA FULL PACKET_2017-10-17MINUTES OF THE SPECIAL MEETING OF THE SUCCESSOR AGENCY OF THE CITY OF SANTA ANA, CALIFORNIA CALLED TO ORDER MAY 2, 2017 COUNCIL CHAMBER 22 CIVIC CENTER PLAZA SANTA ANA, CA 9:36 P.M. ATTENDANCE AGENCY MEMBERS Present: MICHELE MARTINEZ, Chair Pro Tem P. DAVID BENAVIDES VICENTE SARMIENTO JOSE SOLORIO SAL TINAJERO JUAN VILLEGAS AGENCY MEMBERS Absent: MIGUELA. PULIDO, Chair STAFF Present: ROBERT CORTEZ, Deputy City Manager SONIA R. CARVALHO, Legal Counsel MARIA D. HUIZAR, Recording Secretary PUBLIC COMMENTS - None CONSENT CALENDAR ITEMS MOTION: Approve staff recommendations on Consent Calendar items 1 and 3. MOTION: Tinajero VOTE: AYES: NOES: ABSTAIN ABSENT: SECOND: Sarmiento Benavides, Martinez, Tinajero, Villegas (6) None (0) None (0) Pulido (1) Sarmiento, Solorio, MINUTES FOR CITY OF SANTA ANA 1 MAY 2, 2017 ACTING AS SUCCESSOR AGENCY SA1-1 1. SPECIAL MEETING MINUTES OF FEBRUARY 7, 2017 {STRATEGIC PLAN NO. 5, 11 MOTION: Approve Minutes. 2. EXCUSED ABSENCE MOTION: Excuse the absence of Chair Pulido from said meeting. MOTION: Solorio VOTE: AYES: NOES: ABSTAIN ABSENT: SECOND: Villegas Benavides, Martinez, Tinajero, Villegas (6) None (0) None (0) Pulido (1) Sarmiento, Solorio, 3. QUARTERLY REPORT OF CONTRACTS ENTERED INTO BY THE CITY MANAGER (JANUARY 1, 2017 — MARCH 31, 2017) {STRATEGIC PLAN NO. 4, 11 MOTION: Receive and file. WA01ex.»K.30[ya0rrea1111au.>•a:iiiiii COMMENTS 4. CITY COUNCIL ACTING AS SUCCESSOR AGENCY COMMENTS - None ADJOURNED - 9:37 P.M. Maria D. Huizar, Recording Secretary MINUTES FOR CITY OF SANTA ANA 2 MAY 2, 2017 ACTING AS SUCCESSOR AGENCY SA1-2 REQUEST FOR SUCCESSOR AGENCY • MEETING DATE: OCTOBER 17, 2017 TITLE: QUARTERLY REPORT OF CONTRACTS ENTERED INTO BY THE CITY MANAGER (APRIL 1, 2017 —JUNE 30, 2017) (STRATEGIC PLAN NO. 4, 1) MANAGER RECOMMENDED ACTION Receive and file. DISCUSSION CLERK OF THE COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Implementing Resolution ❑ Other CONTINUED TO FILE NUMBER On November 19, 2012, the City Council of the City of Santa Ana acting as Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana (Successor Agency) established the City Manager's authority to execute agreements in an amount not to exceed $25,000. This authority required the submission of a quarterly report to the Successor Agency at a public meeting on all such agreements, including the names of contractors and the amounts of each contract. There were no agreements that were entered into during the period of April 1, 2017 through June 30, 2017. STRATEGIC PLAN ALIGNMENT Approval of this item assists the City in meeting Goal #4 - Fiscal Sustainability, Objective #1 (Maintain a stable, efficient and transparent financial environment). FISCAL IMPACT There is no fiscal impact associated with this action. Robert M. Zur S h 'ed Interim Executive Zrire6tor Community Development Agency RC/SG SA3-1 SA3-2 �p SAKT� - EQUEST • ti v\ SUCCESSOR AGENCY v ,3 r .i ACTION ;�lR ORS MEETING DATE: OCTOBER 17, 2017 TITLE: PUBLIC HEARING - RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS WITH MARIANNE P. COVINGTON, RIDLEY J. POLITISKI AND MICHAEL P. POLITISKI, AS TRUSTEES OF THE MARITAL TRUST OF THE POLITISKI TRUST DATED DECEMBER 4, 2000 FOR THE SALE OF REAL PROPERTY AT 830 N. PARTON STREET {STRATEGIC PLAN NO. 4, 1} G /ClTf MANAGER RECOMMENDED ACTION CLERK OF THE COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Implementing Resolution ❑ Other CONTINUED TO FILE NUMBER Adopt a resolution approving a Purchase and Sale Agreement and Joint Escrow Instructions between the Successor Agency to the Community Redevelopment Agency of the City of Santa Ana and Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 for the sale of real property at 830 N. Parton Street (APN 005-142-21), and authorize the City Manager of the Successor Agency or his/her designee to execute all required documents as necessary. 2. Authorize the City Manager and Clerk of the Council to execute the Purchase and Sale Agreement and all required documents for the sale of real property, by and between the Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana and Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000, located at 830 N. Parton Street (APN 005-142-21) in the amount of $155,000 plus closing costs and escrow fees, subject to non -substantive changes approved by the City Manager and the City Attorney. Pursuant to Part 1.85 of Division 24 of the California Health & Safety Code ("Dissolution Act"), the City Council on January 9, 2012, elected for the City to act as the "Successor Agency' to the dissolved Community Redevelopment Agency ("Agency'). On February 1, 2012, in accordance SA4-1 Public Hearing — Purchase and Sale Agreement for Property at 830 N. Parton Street October 17, 2017 Page 2 with the Dissolution Act and the California Supreme Court's decision in California Redevelopment Association v. Matosantos, Case No. S194861, the Agency was dissolved and the City began to serve as the "Successor Agency." The City Council serves as the governing body of the Successor Agency under the Dissolution Act as amended by AB 1484, AB 471, and SB 107, to administer the enforceable obligations of the Agency and otherwise unwind the Agency's affairs. All actions of the Successor Agency are subject to the review and approval by the Oversight Board. Health and Safety Code section 34191.5(b) required all successor agencies to prepare a Long Range Property Management Plan (LRPMP) that addresses the disposition and use of all real properties of the former redevelopment agency, and to submit the plan to the California Department of Finance (DOF). The Successor Agency submitted the initial LRPMP on May 26, 2015, and a revised plan was re -submitted on October 4, 2015 with the inclusion of changes as directed by DOF (Exhibit 1). DOF approved the revised LRPMP on December 18, 2015. Among the properties identified in the LRPMP is the property located at 830 N. Parton Street, APN 005-142-21. The property is a remnant parcel approximately 3,929 sq. ft. in size in the Professional (P) zoning district (Exhibit 2). This property has been licensed to the adjacent property owner to the north for use as a parking lot since 2003 and the license is currently on a month-to-month basis. The original owners of the adjacent property were Robert C, Politiski and Noreen S. Politiski. Ownership has since transitioned to the Marital Trust of the Politiski Trust dated December 4, 2000. The LRPMP states that the disposition plan for the parking lot is to sell the property, with the proceeds from the sale submitted to the County of Orange, Auditor -Controller for distribution to recipient taxing entities. The Successor Agency obtained a fee simple appraisal for the property on November 10, 2016 and the market value is $155,000 (Exhibit 3). Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 has agreed to pay the appraised value to acquire the property and the purchase will allow them to consolidate the ownership of the entire parking lot on the block. Staff recommends approval of the sale to be in compliance with the Dissolution Act and move forward with the disposition of real property to wind down the Agency's affairs. If approved, the purchase and sale agreement and joint escrow instructions will be submitted to the Oversight Board for approval on October 25, 2017. ENVIRONMENTAL COMPLIANCE In accordance with the California Environmental Quality Act (CEQA), the sale of surplus government property is categorically exempt from CEQA per Section 15312. Categorical Exemption Environmental Review No. 2017-125 will be filed for this project. SA4-2 Public Hearing — Purchase and Sale Agreement for Property at 830 N. Parton Street October 17, 2017 Page 3 STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #4 - City Financial Stability, Objective #1 (Maintain a stable, efficient and transparent financial environment). FISCAL IMPACT Funds for the Successor Agency's closing and escrow costs as the seller are estimated to be approximately $1,300 and are available in the Redevelopment Obligation Retirement Fund account (no. 67018843-62300) for the current FY 2017-18. Upon approval by the Oversight Board and DOF, if necessary, and the completion of the transaction, $155,000 in proceeds from the sale will be deposited into the Redevelopment Obligation Retirement Funds revenue account (no. 67018002-57071) and payment to the County of Orange, Auditor -Controller will be made from expenditure account (no. 67018850-69142). APPROVED AS TO FUNDS AND ACCOUNTS: Robert M. Zur Sh 'ed Francisco Gutierrez po Interim Executive erector Executive Director Community Development Agency Finance and Management Services Agency RZS/SG Exhibits: 1. Long Range Property Management Plan 2. Location Map 3. Property Appraisal 4. Resolution i. Exhibit A —Purchase and Sale Agreement and Joint Escrow Instructions SA4-3 SA4-4 EXHIBIT 1 Long Range Property Management Plan Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana Revised - September 2015 SA4-5 EXHIBIT 1 INTRODUCTION Pursuant to Assembly Bill 1X 26, the former Community Redevelopment Agency of the City of Santa Ana ("RDA") was dissolved on February 1, 2012 and the City of Santa Ana ("City') elected to serve as the Successor Agency ("Successor Agency") to the former RDA. All non -housing related assets of the former RDA transferred by operation of law to the Successor Agency. On June 26, 2012, the Oversight Board of the Successor Agency adopted Resolution 2012-09 to direct the Successor Agency to take certain actions related to the inventory of property. Those properties identified as having a governmental purpose use were approved to be transferred to the City. Four properties were identified as marketable properties to be disposed, and one property is subject to an enforceable obligation. Certain governmental use properties were approved for transfer pursuant to Oversight Board Resolution 2012-09 as transmitted to the Department of Finance ("DOF"). Housing assets were reaffirmed for transfer to the Housing Authority of the City of Santa Ana, acting as the Successor Housing Agency by Oversight Board Resolution 2012-04 as transmitted to DOF. Assembly Bill 1484 further clarified the RDA dissolution process and requires the Successor Agency to submit for approval to the Oversight Board and to DOT, a Long Range Property Management Plan ("LRPMP") that addresses the disposition and use of the real properties of the former RDA. This LRPMP is due within six months after receiving a Finding of Completion ("FOC') from DOF. The Successor Agency received its FOC from DOF on November 26, 2014. The Oversight Board adopted Resolution 2015-02 approving the LRPMP at a special meeting on May 18, 2015. Upon initial review of the resolution and LRPMP, DOF advised that Property #5, which is subject to an enforceable obligation, cannot be retained by the Successor Agency indefinitely to fulfill its enforceable obligation. The revised LRPMP a change in the disposition of Property #5. This document is the LRPMP for the Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Man a gement Plan SA4-6 SUMMARY The Successor Agency currently owns the following properties: No. Address or Description APN Property Type 1 830 N. Parton Street 005-142-21 Parking Lot 2 921 N. Flower Street 005-142-35 Vacant Lot 3 842 N. Garnsey Street 005-142-47 Vacant Lot 4 915 N. Flower Street 005-142-58 Vacant Lot 5 No Street Address (SW corner of Main Street and 3rd Street) 1 398-601-02 Parking Additional information on each property is provided in the next section. Successor Agency to the former Comm unity Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-7 EXHIBIT 1 Property #1— Parking Lot Address: 830 N. Parton Street Assessor Parcel No: 005-142-21 Acquisition Date: 10/24/1983 Acquisition Price/Purchase Price: $2,000 Successor Agency to the former Comm unity Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-8 Lot Size: Current Zoning: Property Type: Estimated Current Value: Appraisal Completed: Estimated Revenues: Recommended Action: • Purpose of Acquisition EXHIBIT 1 3,929 sq. ft. Professional Public Parking Lot $120,946 (Assessed Value as of 01/01/15) No $7,200 annual rent Sell Property for Benefit of Taxing Agencies This property was donated to the RDA by the City on October 24, 1983, most likely in furtherance of the Ferrante/Walder development project during the 1980's. • Brief History of Previous Development Proposals and Activity There is a non-exclusive license agreement with the adjacent property owner to use this remnant parcel as a parking lot. The agreement can be terminated with 30 days notice. • Description of Contractual Requirements for Disposition of Revenues Generated by Property The rental income is included as part of the "Other" revenues on the Recognized Obligation Payment Schedule (ROPS), Report of Cash Balances form. The Successor Agency requests use of these revenues identified as "Other Funds" on the ROPS, to pay for approved enforceable obligations approved by the Oversight Board and DOF. • History of Environmental Contamination or Remediation Efforts No. • Potential for Transit -Oriented Development No. • Plan for Use/Disposition Upon approval of the LRPMP, the Successor Agency intends to obtain an appraisal and engage a realtor to market and sell this property within one year of DOF's approval of the LRPMP. The most likely buyer would be the adjacent property owner to the north to allow for the continued use of the property as a parking lot. Proceeds from the sale will be submitted to the County for distribution to the taxing entities. • Advancement to the Successor Agency's Planning Objectives No. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana —Long flange Property Management Plan SA4-9 EXHIBIT 1 Property #2 — Vacant Lot Address: 921 N. Flower Street Assessor Parcel No: 005-142-35 Acquisition Date: 02/17/1981 Acquisition Price/Purchase Price: $50,000 Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-10 Lot Size: Current Zoning: Property Type: Estimated Current Value: Appraisal Completed: Estimated Revenues: Recommended Action: • Purpose of Acquisition EXHIBIT 1 4,495 sq. ft. Professional Vacant Lot $127,962 (Assessed Value as of 01/01/15) No None Sell Property for Benefit of Taxing Agencies This property was purchased by the RDAfrom the City on February 17, 1981 at fair market value, most likely to provide opportunities for new office and commercial development in the Central City Redevelopment Project Area. • Brief History of Previous Development Proposals and Activity This property has remained a vacant lot for many years; no previous development plans. • Description of Contractual Requirements for Disposition of Revenues Generated by Property N/A • History of Environmental Contamination or Remediation Efforts No. • Potential for Transit -Oriented Development No. • Plan for Use/Disposition Upon approval of the LRPMP, the Successor Agency intends to obtain an appraisal and engage a realtor to market and sell this property within one year of DOF's approval of the LRPMP. This property may be combined and marketed with the two 842 N. Garnsey Street and 915 N. Flower Street parcels. Proceeds from the sale will be submitted to the County for distribution to the taxing entities. • Advancement to the Successor Agency's Planning Objectives No. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana— Long Range Property Management Plan SA4-11 EXHIBIT 1 Property #3— Vacant Lot Address: 842 N. Garnsey Street Assessor Parcel No: 005-142-47 Acquisition Date: 11/22/1982 Acquisition Price/Purchase Price: $117,720 Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan E SA4-12 Lot Size: Current Zoning: Property Type: Estimated Current Value: Appraisal Completed: Estimated Revenues: Recommended Action: • Purpose of Acquisition EXHIBIT 1 5,946 sq. ft. Professional Vacant Lot $137,900 (Assessed Value as of 01/01/15) No None Sell Property for Benefit of Taxing Agencies This property was acquired to provide opportunities for new office and commercial development in the Central City Redevelopment Project Area. • Brief History of Previous Development Proposals and Activity This property has remained a vacant lot for many years; no previous development plans. • Description of Contractual Requirements for Disposition of Revenues Generated by Property N/A • History of Environmental Contamination or Remediation Efforts M • Potential for Transit -Oriented Development M • Plan for Use/Disposition Upon approval of the LRPMP, the Successor Agency intends to obtain an appraisal and engage a realtor to market and sell this property within one year of DOF's approval of the LRPMP. This property may be combined and marketed with the two 915 & 921 N. Flower Street parcels. Proceeds from the sale will be submitted to the County for distribution to the taxing entities. • Advancement to the Successor Agency's Planning Objectives No. Successor Agency tot he former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-13 EXHIBIT 1 Property #4 — Vacant Lot Address: 915 N. Flower Street Assessor Parcel No: 005-142-58 Acquisition Date: Records are not available. It is believed property was acquired in the 1980s. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-14 EXHIBIT 1 Acquisition Price/Purchase Price: Original records are not available to determine the acquisition or purchase price, therefore, this information is unknown. Lot Size: Current Zoning: Property Type: Estimated Current Value: Appraisal Completed: Estimated Revenues: Recommended Action: • Purpose of Acquisition 1,424 sq. ft. Professional Vacant Lot $39,874 (Assessed Value as of 01/01/15) No None Sell Property for Benefit of Taxing Agencies This property was acquired to provide opportunities for new office and commercial development in the Central City Redevelopment Project Area. • Brief History of Previous Development Proposals and Activity This property has remained a vacant lot for many years; no previous development plans. • Description of Contractual Requirements for Disposition of Revenues Generated by Property N/A • History of Environmental Contamination or Remediation Efforts M • Potential for Transit -Oriented Development No. • Plan for Use/Disposition Upon approval of the LRPMP, the Successor Agency intends to obtain an appraisal and engage a realtor to market and sell this property within one year of DOF's approval of the LRPMP. This property may be combined and marketed with the two 842 N. Garnsey Street and 921 N. Flower Street parcels. Proceeds from the sale will be submitted to the County for distribution to the taxing entities. • Advancement to the Successor Agency's Planning Objectives M Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long flange Property Management Plan SA4-15 EXHIBIT 1 Property #5 - Parking Lot Address: No Street Address (SW corner of Main Street & 3rd Street) Assessor Parcel No: 398-601-02 Acquisition Date: 07/08/1981 Acquisition Price/Purchase Price: $273,135 Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-16 :1 ��+T '9 �++pu.eJrunyxw-ery •aw4�t A #� 17 r lift A• kli61! { } •�4 •� S lt I s21 7 ��.>txnaw �-' - t�' �` r. �-�� ' APN 398-601-02 ■aft t� �. w �i � }��-' l* -r -*z ere �„ i+ �' ' °�R is ., � tr � r•. i = u � •,.` f fi F• � � i �l r'h�,• ���,���,:, •ii � e �, 411 � �Y1 tm 1 Vc a4u t i r Address: No Street Address (SW corner of Main Street & 3rd Street) Assessor Parcel No: 398-601-02 Acquisition Date: 07/08/1981 Acquisition Price/Purchase Price: $273,135 Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-16 Lot Size: Current Zoning: Property Type: Estimated Current Value: Appraisal Completed: Estimated Revenues: Recommended Action: • Purpose of Acquisition EXHIBIT 1 27,830 sq. ft. Specific Development 84 Parking Lot $610,238 (Assessed Value as of 01/01/15) No None Future Development This property was acquired for future development in the Central City Redevelopment Project Area. • Brief History of Previous Development Proposals and Activity A Parking Space Agreement dated May 18, 1993 was entered into between the former RDA and Builders Exchange Associates (`BEA") that assured the future availability of 60 parking spaces on the RDA owned parcel exclusively for the use of BEA and its agents, employees, and invitees. An easement also exists for ingress and egress to provide entry to the parking lot. The former RDA and its successive owners of the property are bound by this agreement to provide the 60 spaces for the benefit of the BEA property and its successive owners. • Description of Contractual Requirements for Disposition of Revenues Generated by Property N/A • History of Environmental Contamination or Remediation Efforts No. • Potential for Transit -Oriented Development IMM • Plan for Use/Disposition The Successor Agency is bound by the original agreement to provide the 60 parking spaces indefinitely for use by the BEA property owner. This obligation is binding on all successive owners of the property per the agreement. The Successor Agency proposes to transfer this property to the City for future development. Per the dissolution laws, compensation agreements with the affected taxing entities will be required as a condition of the transfer of the property to the City. An appraisal will be conducted to determine the appropriate value for inclusion in the compensation agreements. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-17 EXHIBIT 1 • Advancement to the Successor Agency's Planning Objectives No. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana—Long Range Property Management Plan SA4-18 SA4-19 SA4-20 EXHIBIT 2 SITE LOCATION 830 NORTH PARTON STREET M U L I- FA M I LY MULTI -FAMILY MULTI -FAMILY RE IDE CE RESIDENCE RESIDENCE 10TH STREET J h J Q Q Z Z VI Y V1 Q W W Z O z O O W C d Q d N Lu LL W O cc JLu Q > 2 F_ Z Z Q F N N N N W W W W O O SITE Wa Ln z O Ln PROFE SIONAL F- Ln W Z a � Z W > O J LL P OFESSIO AL CIVIC CENTER DRIVE GOVERNMENT j SA4-21 SA4-22 „ Narrative Appraisal Report Public Pay Parking Lot 830 N. Parton Street Santa Ana, Orange County, California 92706 Report Date: November 10, 2016 FOR Paragon Partners Ltd. Ms. Cheryl DeMucci, ROW Supervisor 5762 Bolsa Avenue, Suite 201 Huntington Beach CA 92649 Valbridge File Number: 16 099E -B EXHIBIT 3 \\ Val bridge Suite 255 1370255reaBoulevard \a('rtis� PROPERTY ADVISORS Fuilerlon,CA92835 714-449-0852 phone Penner & Associates, Inc. 714-738-4371 lax Valbrfdge,com November 10, 2016 Ms. Cheryl DeMucci, ROW Supervisor Paragon Partners Ltd. 5762 Bolsa Avenue, Suite 201 Huntington Beach, CA 92649 RE: Appraisal Report Public Pay Parking Lot 830 N. Parton Street Santa Ana, Orange County, California 92706 Dear Ms. DeMucci: In accordance with your request, we have performed an appraisal of the above referenced property. The purpose of the appraisal is to estimate the fee simple "As Is" Market Value of the subject land as a commercial parking lot. This appraisal report sets forth the pertinent data gathered, the techniques employed, and the reasoning leading to our value opinions. This letter of transmittal is not valid if separated from the appraisal report. The subject property, as referenced above, is located on an interior lot fronting a moderate and minor traffic street and is further identified as Assessor's Parcel Number (APN) 005-142-21. The subject is a 0.09 -acre or 3,929 -square -foot site, and is zoned P — Professional. The site is currently improved as a commercial public parking lot. We developed our analyses, opinions, and conclusions and prepared this report in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation; the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, and the requirements of our client as we understand them. The client and intended user in this assignment is the City of Santa Ana and Paragon Partners Ltd. and no others. The value opinions reported herein are subject to the definitions, assumptions and limiting conditions, and certification contained in this report. The findings and conclusions are further contingent upon the following extraordinary assumptions and/or hypothetical conditions which may have impacted the assignment results: Extraordinary Assumptions: • None Hypothetical Conditions: • None SA4-24 EXHIBIT 3 Valbridf�e Ms. CherylDeMucci 1 Paragon Partners Ltd. PROPERTY ADVISORS Page 3 Based on the analysis contained in the following report, our value conclusions are summarized as follows: Market Value of Land As Is Respectfully submitted, John D. Penner, MAI Senior Managing Director California License #AG001720 VALUE CONCLUSIONS Current Fee th. "h "'e Eric Day, Staff Appraiser Certified General AG044661 SA4-25 EXHIBIT 3 VaIbridge Public Pay Parking Lot PROPERTY ADVISORS TABLE OF CONTENTS Table of Contents Cover Page Letter of Transmittal Table of Contents.... Summary of Salient Aerial View ................. LocationMap.............................................................................................................................................................................iv SubjectPhotos............................................................................................................................................................................v Introduction.................................................................................................................................................................................1 Scopeof Work............................................................................................................................................................................3 RegionalArea Analysis............................................................................................................................................................5 Cityand Neighborhood Analysis.....................................................................................................................................11 SiteDescription.......................................................................................................................................................................14 ImprovementsDescription.................................................................................................................................................18 Assessmentand Tax Data...................................................................................................................................................19 MarketAnalysis.......................................................................................................................................................................20 Highestand Best Use............................................................................................................................................................23 AppraisalMethodology.......................................................................................................................................................27 LandValuation.........................................................................................................................................................................28 Glossary................................................................................................................................................................................. 53 Engagement Letter Qualifications © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page i SA4-26 EXHIBIT 3 \ /al4.t-LJ a Public Pay Parking Lot V \`.;. U UC� SUMMARY OF SALIENT FACTS �! PROPERTY ADVISORS Summary of Salient Facts Property Name: Public Pay Parking Lot Address: 830 N. Parton Street Santa Ana, Orange County, California 92706 Assessor's Parcel Number: 005-142-21 Property Rights Appraised: Fee Simple Property Owner: Community Redevelopment Agency/City of Santa Ana Site Size: 0.09 acres (3,929 square feet) Zoning: P - Professional Flood Zone: Zone X (500 -year) Highest and Best Use As Vacant: Hold for Development of Office As Improved: Current Use: Public Parking Lot Date of Report: Effective Date of Value: Estimated Exposure Time: November 10, 2016 October 18, 2016 VALUE INDICATIONS Extraordinary Assumptions: • None Hypothetical Conditions: None 3 to 6 months © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-27 Page ii Val bridge PROPERTY ADVISORS Aerial View EXHIBIT 3 W-�� AERIAL VIEW Public Pay Parking Lot AERIAL AND FRONT VIEWS Wll 9 • �{YA EMAM O k 3. •' k Oiv JJ KEESE'S y� �� - 3, a a� O xTRACT S J sn ...... ... s B _ .9 $ 3 (ED ors ~I a Q ° (sD s es BAKE S O � O -a, E a 188-2 •• PLAT MAP © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page iii SA4-28 EXHIBIT 3 \\ Valbridge Public Pay Parking Lot `' LOCATION MAP PROPERTY ADVISORS Location Ma SVamAdas USA0200S RaRaamanv4 1- i•• �, 'Iu � a o-.,{ n li E.. i r It � i.—i'�. �1 11 1W, zr rP '�r« _ a ��.yf 4fraa 1 Yti N afAOp i'e t,, .(1 )r� L :" 2[ 'i c I - {(Lf I rl �i 1✓s4s� 'r e r i ' j !i � �t ���� �' �'i Ilsxm 1 r u n ��1" } �4iii t { t r z NIS a, R 1 F-:1 F r 1{ l � � ke rarxh{• a*art, we rW. r { [I wia Pak LI �)I 11 —fW Y 1A \ trt'✓1 �J��I �[f1(I` It* �d lSnn'reWa c+ anelm�����` tI t t �l IC, ELS �� S h)'it i� d' t-'s}ffitl ��1 ILP jrit I' {°i$'�4Y,. z r.,i t� 9 lrt, f I G R � i Gordan Grave e 3 ^ 'f. cUL II �,rnG 4 llr t i c �r 'I t'trf y, � I `[ IAEmAN TEg1 E II L 1��t I ST Ri rL 7lt 1 IF. i 1 1f f 91'4 r�ei�j` u jq�l �..' i L i� Y• Ls i1 � 1.1 44 Ij �Z � xr 5 %I� 'f� S � )I�,,. )t.� � �1 Y �L h'I ' f tt rr [ Y 3lII 1. I I I1 A.1 lIO N� flIL i LI !aN't CI i!{Y$ A `�-=-• _t ��]I'+rr'�' l �.'iT' { \ ` 1 �fi,II_L u ., _ r i. <` �Rc � � IL -L1 14 1 a5,, a c 7 j!I' � ,a �`�•y, ur �s }' F R '+ 1 ,r ql Iil�� RFIFI ah t,' 4'�rv1R II '1�yyr Y Pim L n _ ,,n r r ti.' l aa.• , 1 -lf i tt•�IIt 1 ,;: Data uae subiml to kerma ® m i 02007 D.L...... Su}vaAtlas USA92008. 0 ya 1 1% 2 2% vaaadclamlacom - I.M(mo. E) Data Zoom tt-0 Q 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-29 Page iv EXHIBIT 3 Va�bridge Public Pay Parking Lot PROPERTY ADVISORS SUBJECT PHOTOS Subject Photos SUBJECT PROPERTY LOOKING WEST qI � ''sir K- .,�: �.,C. � _ •-ate M. s� _ hells` �^ ° �•, • i RL SUBJECT PROPERTY LOOKING EAST © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-30 Page v EXHIBIT 3 Valbridge Public Pay Parking Lot ON PROPERTY ADVISORS SUBJECT PHOTOS ALLEY LOOKING WEST s� ��f jhl-• � : 2 �Y�- r1•h R•���yy�5 �' 4� h!:rz_. •1 Y.�. _ u ALLEY LOOKING NORTH © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page vi SA4-31 EXHIBIT 3 \/albrldne Public Pay Parking Lot V U tj SUBJECT PHOTOS PROPERTY ADVISORS STREET SCENE - N. PARTON STREET LOOKING NORTH (SUBJECT PROPERTY ON LEFT) STREET SCENE - N. PARTON STREET LOOKING SOUTH (SUBJECT PROPERTY ON RIGHT) © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-32 Page vii EXHIBIT 3 �\ Public Pay Parking Lot Valbridge INTRODUCTION PROPERTY ADVISORS Introduction Client and Intended Users of the Appraisal The client and intended user of this report is the City of Santa Ana and Paragon Partners Ltd. and no others. Intended Use of the Appraisal The intended use of this report is to establish market value for the sale of the real property. Real Estate Identification The subject property is located at 830 N. Parton Street, Santa Ana, Orange County, California 92706. The subject property is further identified by Assessor Parcel Numbers 005-142-21. Legal Description Keese ADD Lot 7 Por of Lot TR 392 Use of Real Estate as of the Effective Date of Value and the Date of this Report As of the effective date of the appraisal, the subject was vacant land. Ownership of the Property According to the public records, title to the subject property is vested in Community Redevelopment Agency/City of Santa Ana. History of the Property Ownership of the subject property has not changed within the past three years. The Community Redevelopment Agency/City of Santa Ana has owned the property for many years. The exact date of acquisition is not known. When appropriate, we have considered and analyzed the known history of the subject in the development of our opinions and conclusions. Listings, Offers, and/or Contracts The subject is not currently listed for sale or under contract for sale. To the best of our knowledge, there have been no offers to purchase the subject property. Type and Definition of Value The appraisal problem (the term 'Purpose of Appraisal" has been retired from appraisal terminology) is to develop an opinion of the market value of the subject property. "Market Value," as used in this appraisal, is defined as "the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus." Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: Buyer and seller are typically motivated. Both parties are well informed or well advised, each acting in what they consider their own best interests; © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and A9 c - es, I�33 Page 1 EXHIBIT 3 Valbridge Public Pay Parking Lot PROPERTY ADVISORS INTRODUCTION • A reasonable time is allowed for exposure in the open market • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents the normal consideration for the property sold unaffected by special or creative financing or safe concessions granted by anyone associated with the sale."i The value conclusions apply to the value of the subject property under the market conditions presumed on the effective date(s) of value. Please refer to the Glossary in the Addenda section for additional definitions of terms used in this report. Valuation Scenarios, Property Rights Appraised, and Effective Dates of Value Per the scope of our assignment we developed opinions of value for the subject property under the following scenarios of value: VALUATION SCENARIOS TABLE Fee Simple As Is Market Value of Land Yes We completed an appraisal inspection of the subject property on October 18, 2016. Date of Report The date of this report is November 10, 2016, which is the same as the date of the letter of transmittal. List of Items Requested but Not Provided • None Assumptions and Conditions of the Appraisal The acceptance of this appraisal assignment and the completion of the appraisal report submitted herewith are subject to the General Assumptions and Limiting Conditions contained in the report. The findings and conclusions are further contingent upon the following extraordinary assumptions and/or hypothetical conditions which may have impacted the assignment results: Extraordinary Assumptions • None Hypothetical Conditions T • None 1 The Dictionary of Real Estate Appraisal, Appraisal Institute 02015 VALBRIDGE PROPERTY ADVISORS I Penner and Assoiates, Inc. _34 Page 2 EXHIBIT 3 \\ / Public Pay Parking Lot Valbridge SCOPE OF WORK PROPERTY ADVISORS Scope of Work The scope of work includes all steps taken in the development of the appraisal. These include: 1) the extent to which the subject property is identified, 2) the extent to which the subject property is inspected, 3) the type and extent of data researched, 4) the type and extent of analysis applied, and the type of appraisal report prepared. These items are discussed as follows: Extent to Which the Property Was Identified Legal Characteristics The subject was legally identified via public records. Economic Characteristics Economic characteristics of the subject property were identified via public records, as well as a comparison to properties with similar locational and physical characteristics. Physical Characteristics The subject was physically identified via a legal description, public record, accessors parcel map, and measurements provided by the City of Santa Ana Public Works Department.. Extent to Which the Property Was Inspected We inspected the subject on October 18, 2016, but did not perform a physical measurement of the site. We are utilizing the measurements provided by the assessor's parcel map for the purposes of this appraisal. Type and Extent of Data Researched We researched and analyzed: 1) market area data, 2) property -specific market data, 3) zoning and land -use data, and 4) current data on comparable listings, sales, and rentals in the competitive market area. Personal Property/FF&E All furniture, fixtures, and equipment (FF&E) or any other personal property are excluded from the analysis. The opinion of market value developed herein is reflective of real estate only. Type and Extent of Analysis Applied We observed surrounding land use trends, the condition of the improvements, demand for the subject property, and relevant legal limitations in concluding a highest and best use. We then valued the subject based on the highest and best use conclusion, relying on the Sales Comparison Approach. The Sales Comparison Approach is most applicable to a Land Value appraisal. Since there are no improvements, the cost approach is considered irrelevant. As discussed later in this report, the highest and best use of the subject is for office development. Any current income generated by the property would be considered an interim use, thus resulting in an Income Approach that inaccurately reflects the value of the property. Appraisal Report Type This is an Appraisal Report as defined by the Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2a. Please see the Scope of Work for a description of the level of research completed. ©2015 VALBRIDGE PROPERTY ADVISORS I Penner and Ac— �Qci es, I�35 Page 3 EXHIBIT 3 Valbridge Public Pay Parking Lot PROPERTY ADVISORS SCOPE OF WORK Appraisal Conformity We developed our analyses, opinions, and conclusions and prepared this report in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation, regulations required by the State of California, the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, and the requirements of our client as we understand them. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 4 SA4-36 EXHIBIT 3 Valbridge REGIONAL AND PAY PARKING LOT D MARKET AREA ANALYSIS 09 PROPERTY ADVISORS ional Area Analysis REGIONAL MAP SiraotAtlac USAV2008 anfel M ' +rlw�nl MW ilk•n: N Y k l tV!n-Mr�r'.l}m�Ll �'�,. I.,IYGNSIIrI.I I.IWnI\\YF.Un r�J 'CI.Ei6�L( I Carv+4�itn aG ) 'k { v °�v ^' -I�Iv1V OuE�Wf h .' 111 u u 1wtl. wa E 1rta° "a j� � F® L.Jjusl�.n� cry.i. -7 al l 1 1 yam., 1 J ,. San Bemardlnoll Y"l.fl— i I( + 1 t �p"i� )-1 �u IylnrnlY f i /-L�-}J VV .: Q� S.. j-- Fyaito qL Ilr if ` �.� yI-✓ M tail 14 L te.rcrti. + be NH R:'.y V 4-^ 1-)I los-A ��'z"'T rr^'�� � - Ur.>_— •_,"-.;'„_ (1 j`s� f � i f j\�. �P 4 S/ d rl a1 ,4111 ry�/ ° '�i'(! (� `�'*, § � I( + U ?. 71'1 I•'a.tAman. nnl.,P.) I m *. R,,lverOlde MuGall aen 9 anla(e ,''\ ^. [f llinrTc - e✓ i' � �elurnxa t+a. ra;yC a�.�•'L f Ou ne/' f��l� �--� 0 �. t ./." ti_ CIs.rd4daaIL,';�Y _.a4,ln�,•., `•h t l + F 1 �1'-{A f-'�Y(' ,�.—_. VDeli e y PI w va a" . -A Q 1 no.a Ceac4 ti � � � tCe torta449 ���)urry—j' I�1 � .jp^ 1Pa on ve�esc alasG I IiP 111 i ehelm l ' �`",t'ltw a ion is io fool Beachr)—'G �.�� i�+Garden �atliarm vl.,avmna :aal0eam't. 4rl Jwaa�SJnta��M� , \n rmn.:3 ' 7 Sin l`eao y-I^��t II Sr �j pF Nunlnlln W'CO-!j l; +tY;4^ A`r /.-'..�.•. i J�- -�-� I� ll�j�.�..��[a tlMne. I ir.4 c+ m �•�-k FIV �._ I 1 � Cull Iww v\I Noll -�,� I tt4an Y✓n f+r �!iPOa:r 0V1 A15r �f�y, \GIA IGn - 1. atulw nrpuxl � • 41 1) V�Srnlwnfdcr4nm �.............1 Dow lbinl� (Cap �mmxln - I 1 moeW,latceme. ®ml 00 2 ®2007 Ovlunnc. Sacci Aaae USAJ 200E 0 3 G 0 12 15 rnwrddarmccom LIR (12.0• E) ❑ata lnnm il-i © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-37 Page 5 0 �/ / EXHIBIT 3 Valbridge PUBLIC PAY PARKING LOT %� PROPERTY ADVISORS REGIONAL AND MARKET AREA ANALYSIS Regional Data The subject property is located in Orange County, California. Orange County is one of six counties that comprise the Southern California Metropolitan Region. The other counties are Los Angeles, Riverside, San Bernardino, San Diego, and Ventura. This region contains one of the most diversified economic environments in the world. Strengths include aerospace, import/export trade, entertainment, defense, tourism, technology, apparel, and education. On the previous page is a map showing the subject in relation to the surrounding region. These counties have been, and continue to be, interdependent for a variety of goods and services. With strong growth during the earlier portions of the century, Los Angeles became the economic base for the region, while the adjoining counties remained predominately rural in nature. As Los Angeles County built up new developments and economies, the surrounding counties began to experience a spill-over effect, first in population, then in industry. Location Orange County is situated directly southeast of Los Angeles County and remained primarily rural in nature until after World War II. The county occupies a total of 798 square miles, stretching along 42 miles of Pacific coastline and extending some 25 miles inland. The eastern mountain region, which includes the Cleveland National Forest, is largely uninhabited. The majority of population is concentrated in the northwest and central portions of the county and stretches south along the coast. Other counties bordering the County of Orange are Riverside to the east, San Diego to the south, and San Bernardino to the northeast. Early development in the county primarily consisted of agricultural activity related to wine, citrus, and ranching. Farmers and ranchers were drawn to the area by the ample water supply and fertile soil. With the advent of the railroads in the late 1800's, shipping to the east coast by rail became a reality and the citrus industry began to blossom, hence the name "Orange" County. The county was split off from Los Angeles and incorporated in 1889. In the early 1900's, small towns began to form in the northwest and central portions of the county. Expansion generally followed the Red Car commuter rail line in the earlier portion of the decade and later the freeway system followed which led to a large influx of new residents from the neighboring County of Los Angeles. Heavy growth continued through the 1950's, 60's, 70's, and 80's, as Orange County began to emerge as a center for high-tech and aerospace -related industries along with strengths in tourism and service. Demographics Although geographically small, Orange County is a major market, both on a statewide and national basis. It ranks third in population among California's 58 counties and fifth nationally, having grown 5.7% from 2010 to 2016. Currently, it represents 8.1% of California's total population. The following table demonstrates the growth of Orange County over the last four decades and growth projections to the year 2020. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 6 SA4-38 EXHIBIT 3 Valbrldge PUBLIC PAY PARKING LOT REGIONAL AN D MARKET AREA ANALYSIS PROPERTY ADVISORS SOUTHERN CALIFORNIA POPULATION TRENDS Source: State Department of Finance The communities of Riverside and San Bernardino have been the biggest beneficiaries of this trend, becoming two of the fastest growing areas in the country over the last ten years. Strong growth into outlying areas is made possible by the extensive freeway system that exists throughout the Southern California basin. This freeway system allows the region's labor force to commute from surrounding counties, and form economic bases in the surrounding counties themselves. During the last ten years, the County of Orange has maintained a strong growth rate despite dwindling land area available for development due to a surging economy. A projection to the year 2020 indicates Orange County is expected to experience moderate growth, with most of this growth occurring in the eastern and southern portions of the county. Employment The Southern California region constitutes one of the most diversified economic environments in the world. This region is the largest center for business services and international trade in the United States. Numerous business firms listed in the Fortune 500 are headquartered here. With a gross revenue of $85 billion, Orange County ranks as the 33rd largest economy in the world. The County enjoys strengths in services, high-tech manufacturing, and tourism. Income levels are among the highest in the nation. Within the Southern California region are a number of areas that are divided into separate Metropolitan Statistical Areas (MSA). The subject is located in the Anaheim/Santa Ana MSA, which comprises the entire County of Orange. The following table shows a breakdown of the various employment sectors within the County: © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 7 SA4-39 9:1 1990 2000 2010 2016 Annual % Change 2020 Projection County Los Angeles Census 7,477,503 Census 8,863,164 Census 9,519,338 Census� 9,818,605 Census 10,241,335 15/16 0.8% 10,500,679 Orange 1,932,709 2,410,556 2,846,289 3,010,232 3,183,011 1.0% 3,220,788 Riverside 663,166 1,170,413 1,545,387 2,189,641 2,347,828 1.3% 2,626,222 San Bernardino 895,016 1,418,380 1,709,434 2,035,210 2,139,570 0.9% 2,283,798 San Diego 1,861,846 2,498,016 2,813,833 3,095,313 3,288,612 0.8% 3,391,010 Ventura 529,174 669,016 753,197 823,318 856,508 0.7% 885,196 Totals: 13,359,414 17,029,545 19,187,478 20,972,319 22,056,864 0.92% 22,907,693 Source: State Department of Finance The communities of Riverside and San Bernardino have been the biggest beneficiaries of this trend, becoming two of the fastest growing areas in the country over the last ten years. Strong growth into outlying areas is made possible by the extensive freeway system that exists throughout the Southern California basin. This freeway system allows the region's labor force to commute from surrounding counties, and form economic bases in the surrounding counties themselves. During the last ten years, the County of Orange has maintained a strong growth rate despite dwindling land area available for development due to a surging economy. A projection to the year 2020 indicates Orange County is expected to experience moderate growth, with most of this growth occurring in the eastern and southern portions of the county. Employment The Southern California region constitutes one of the most diversified economic environments in the world. This region is the largest center for business services and international trade in the United States. Numerous business firms listed in the Fortune 500 are headquartered here. With a gross revenue of $85 billion, Orange County ranks as the 33rd largest economy in the world. The County enjoys strengths in services, high-tech manufacturing, and tourism. Income levels are among the highest in the nation. Within the Southern California region are a number of areas that are divided into separate Metropolitan Statistical Areas (MSA). The subject is located in the Anaheim/Santa Ana MSA, which comprises the entire County of Orange. The following table shows a breakdown of the various employment sectors within the County: © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 7 SA4-39 EXHIBIT 3 \� Valbridge PUBLIC PAY PARKING LOT PROPERTY ADVISORS REGIONAL AND MARKET AREA ANALYSIS ORANGE COUNTY EMPLOYMENT Farm 2,800 0.2% Mining 700 0.0% Construction 82,000 5.5% Manufacturing 158,800 10.6% Utilities 26,600 1.8% Wholesale/Retail Trade 230,400 15.4% Information 24,200 1.6% Financial/Insurance/Real Estate 114,100 7.6% Professional & Business Services 275,800 18.4% Educational & Health Services 190,300 12.7% Leisure & Hospitality 193,500 12.9% Other Services 47,700 3.2% Government 151,900 10.1% Y Total 1,498,800 100.0% I Source: California Employment Development Department - 2014 The table above indicates concentrations in manufacturing, trade, and services. Manufacturing consists of numerous companies related to aerospace, computers, and technology. Major employers in the County include: Boeing, Walt Disney, University of California Irvine, Albertson's, St. Joseph Health System, Tenet Healthcare, Tricon Global Restaurants, Bank of America, Ralphs Grocery, Dayton Hudson, PacifiCare Health Systems, United Parcel Service, Memorial Health Services, Vons Company, California State University Fullerton, Marriott, Kaiser Permanente, Ingram Micro, Del Taco, Knott's Berry Farm, and Conexant Systems. The wholesale/retail trade sector is bolstered by a large population whose residents have among the highest disposable incomes in the country. The driving force behind the service sector is the presence of various tourist attractions including Disneyland, Knott's Berry Farm, and an extensive coastline that features many high-end hotel/resorts. Tourism contributes a total of $7 Billion in spending for Orange County. The following table indicates the trend of tourism in the Orange County area in past years: TOURISM Year Visitors 1990 38,400,000 1995 38,710,000 2000 40,170,000 2005 44,690,000 2010 42,700,000 2015 47,400,000 Source: Anaheim/Orange County Visitor Convention Bureau © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 8 SA4-40 EXHIBIT 3 Valbridge REGIONAL AND PAY PARKING LOT (V, D MARKET AREA ANALYSIS 1." PROPERTY ADVISORS Strengthening the services sector overall are engineering, accounting, and legal sectors. Transportation continues to be a growth area for Orange County, with a number of projects generated by Proposition M. While previous years of strong economic conditions and favorable interest rates created a booming construction and real estate industry in the region, this industry is now in the doldrums resulting from the recent recession. Unemployment has shown recent improvement, while consumer spending and lending seem to have stabilized. Transportation The Orange County transportation system includes an extensive freeway network. The backbone of this freeway system is the Santa Ana (5) Freeway, which extends the entire length of the State. An estimated 56% of the county population resides within three miles of the freeway (along with two- thirds of the county's jobs). Major north -south freeway routes include the Santa Ana (5) and the San Diego (405) Freeways. The major east -west freeway route is the Riverside (91), which connects parts of Los Angeles County with the inland communities of Riverside and San Bernardino. Other freeways include the Orange (57), Garden Grove (22), Newport (55), and the Corona Del Mar (73) Freeways. These freeways, along with connecting freeways thiroughout the region, constitute the most expansive network in the world. However, in recent years, the freeways have become increasingly congested, due to a growing number of motorists and inadequate maintenance/improvements. Much of this congestion has been caused by continued population growth and commuter traffic from the inland communities of Riverside and San Bernardino, as well as, South Orange County. A major public works project is currently underway to provide alternative transportation routes for commuting residents. In 1990, Orange County residents voted in favor of Measure M, which instituted a 1/2 cent sales tax for transportation improvements. Major projects consist of a widening of the Santa Ana (5) Freeway (now nearing completion), new diamond lanes on the Riverside (91), Orange (57), and Costa Mesa (55) Freeways, and the "Smart Street" improvements of Katella Avenue and Imperial Highway. Other projects include the privately -funded toll roads recently completed in the eastern portion of the county and the newly completed San Joaquin corridor in the southern portion. The regional rail system has also recently been expanded to Orange County, with numerous Metro -link stops during peak commuting times between Los Angeles and Irvine. This system provides alternative transportation for commuters and residents to numerous destinations throughout the metropolitan area, including Los Angeles International Airport (LAX). Other transportation features of the county include John Wayne International Airport (SNA), public bus service, Amtrak passenger rail service, and several freight rail lines. Access to shipping is provided by the deep -water ports of Long Beach and Los Angeles, which are located to the north of the County. These mega -ports handle one third of the total U.S. Pacific Coast cargo, with an estimated worth of $124 billion, and are among the four busiest trade areas in the world. Additional airport facilities include the relatively nearby LAX, Ontario, and Long Beach Airports. Quality of Life Orange County enjoys a mild Mediterranean climate. Temperatures generally range from 60 to 75 degrees in the winter and 75 to 85 degrees in the summer. Coastal and desert influences keep rain and moisture to a minimum, providing a year-round outdoor atmosphere. The area's predominately warm, sunny climate helps draw more than 47 million tourists a year to Orange County. Orange County enjoys immediate proximity to numerous beaches and is within an hour's distance of the mountain and desert areas of Southern California. However, smog presents a constant problem to © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 9 SA4-41 n\\Y/� PROPERTY Va I brA EXHIBIT 3 dge DVISORS REGIONAL ANDPUBLIC PAY MARKET AREAPARKING the Southern California environment. Coastal communities, like Orange County, benefit from ocean breezes that blow the smog further inland; however, smog has also grown as a problem in Orange County due to the continued growth in population, hence automobiles. The region has implemented measures, such as, cleaner gas, carpooling, and the metro-link rail system. Education Adding to the strong infrastructure in the region is a complete and diversified educational system. There are more than 150 public and private universities and colleges throughout Southern California. These institutions provide a highly trained and skilled work force for high-tech firms and businesses located in the area. Some of the larger institutions located in Orange County are listed below. There are also several two-year colleges and extension courses offered at various universities within the region. University of California at Irvine Chapman University California State University at Fullerton Western State Law University Hope University Concordia University Vanguard University Soka University Housing Trends Residential housing in Orange County, like most of the nation, experienced the largest drop in prices (30% to 40%) since the great depression of the 1930's during the "Great Recession" of 2008 thru 2011. The highest declines have been seen in areas where recent construction has been prevalent and in areas that are older that had a high concentration of subprime lending. Improvement beginning in 2012, has now exceeded the peak home prices of 2006. The current median price for Orange County is $645,000. This improvement has been highly dependent upon some of the lowest interest rates in history and an improving economy. Presently, apartment rental rates are at exceptionally high rates and there is a high volume of new apartment projects under construction or planned in the County. Summary The availability of a strong transportation system provides for quick access to the many business and industrial centers throughout Southern California. As a result, a diversified economic base provides stability for the region. Historically low interest rates and easy financing fueled rising home prices from 2002 thru 2006. This facilitated rapid consumer spending. However, this false sense of security resulted in plummeting home values and a ripple effect throughout the local, national, and global economy. The subsequent credit crisis on Wall Street led financial institutions and investors to be more cautious with investments. The effects of the Great Recession, have dissipated as unemployment has improved to a current rate of 3.6% for the County and 5.2% for the State and interest rates have remained at historically low rates. Despite the improvement, there is still some uncertainty as it relates to the high levels of government debt, the ups and downs of the stock market, global instability and the uproar of a presidential election year. Nonetheless, Orange County appears to be faring better than most, areas in California and the nation. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 10 SA4-42 EXHIBIT 3 Valbridge Public Pay Parking Lot \ CITY AND NEIGHBORHOOD ANALYSIS \:,`W PROPERTY ADVISORS City and Neighborhood An NEIGHBORHOOD MAP SweetAdas UBAD 2005 D.Lr.ytgeel to Leena. 1R I I ®2007 DcLoa w Shmticlaa USA72008. 0 Tao >0o coo cao 'coo 'mo WWV4dc O.com Idd(20•E) Data Zaon'14 © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-43 Page 11 I"'-- I i i z i+7cT0i >vc !I w'l4j� - Z I, Iy jIE { 'i f I i' 144 �iy. j __]4 .—.._ __ :drt� c>•r rza 1 J r _qPl: J yfjf I r G I 1 a__ I l - 110 anta Ana �8 1 j D.Lr.ytgeel to Leena. 1R I I ®2007 DcLoa w Shmticlaa USA72008. 0 Tao >0o coo cao 'coo 'mo WWV4dc O.com Idd(20•E) Data Zaon'14 © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-43 Page 11 Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS CITY AND NEIGHBORHOOD ANALYSIS City Data The subject property is located within the City of Santa Ana. Santa Ana is situated in the central portion of Orange, 30 miles southeast of downtown Los Angeles and 10 miles inland from the Pacific Ocean. The city covers an approximate area of 27.43 square miles and comprises the most populous city in the county. Neighboring communities include Orange, Anaheim, Tustin, Irvine, Costa Mesa, Fountain Valley and Garden Grove. A map showing the subject property in relation to surrounding influences has been placed on the previous page. The City of Santa Ana is one of the oldest cities in the county. During its early history, the area prospered as an agricultural community, utilizing the nearby Santa Ana River for irrigation of various crops and citrus groves. The city was founded in 1869 and incorporated in 1886. Shortly after incorporation, Orange County was split off from Los Angeles and Santa Ana was made the new county seat. This event set the foundation for the city to remain as a center for economic and demographic activity during the following century. The city has a current population of 342,930 residents. Much of the population growth in the city occurred during the 1950's and 1960's, as the area became a bedroom community to neighboring Los Angeles County. Despite a limited amount of vacant land area, the city continued to register a strong growth (4.4% annually) during the 1980's and 1990's. This growth is primarily attributed to the addition of a number of multi -family dwelling units and a heavy influx of Hispanic residents from Mexico and other Central American countries. These residents generally have a higher density per dwelling unit and comprise the largest Hispanic concentration in the county. Today, the primary focus of the city remains the Civic Center. A large portion of the local employment base is tied to federal, state and local governments. The federal and state courthouses located in the Civic Center support an abundant number of legal firms and government administration services. Historically, Santa Ana was also a financial hub for the county with a number of banks located nearby to the County Recorder, title companies and other financial related entities. Other large employers in the city include Cherry -Textron, ITT Cannon, Microsemi Corporation, The Register, Ricoh Electronics, First American Title, Main Place Mall and Western Medical Center. During the 1970's and 80's, the focus for much of the economic activity in the county shifted southward toward the Orange County Airport; and now, in the new millennium, to South County. Many larger financial and high-tech companies have located in this area. This has led some firms in Santa Ana to relocate or open satellite offices in the airport area, resulting in a decline of local employment. Increases in crime, gang activity and graffiti have also led to a further economic decline in the city. In recent years the city has taken a progressive attitude towards new business and re -development. This effort has led to a revitalization of some parts of the city, predominately in the northern and southeast portions. Examples of these developments include the redevelopment of the Main Place Mall and the construction of Hutton Centre. In addition City Place is a large seven acre mixed use project currently under construction north of the Santa Ana Freeway. Also in the north portion of Santa Ana, the expanding Bowers Museum and the Discovery Center have created the "Museum District". Recent redevelopments include the downtown area with the new Ronald Reagan Federal Building in the civic center, the establishment of the Arts District in the old downtown Main Street and the expansion of Orange County High School for the Performing Arts (OSHA). © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-44 Page 12 EXHIBIT 3 Public Pay Parking Lot Valbridge CITY AND NEIGHBORHOOD ANALYSIS ..... PROPERTY ADVISORS Santa Ana also benefits from a central location with extensive freeway accessibility. The Santa Ana (5) Freeway bisects the northerly portion of the city. The massive 5 Freeway widening project, extending from the 55 Freeway to the 22 Freeway interchange, has recently been completed. The completion has helped to revitalize areas long impacted by construction. The Garden Grove (22) Freeway extends along the north boundary of the city and the Newport (55) Freeway runs north/south along on the easterly boundary. Also located in close proximity is the beginning of the Orange (57) Freeway to the north and the San Diego (405) Freeway to the south. Additional transportation features include an Amtrak/Metro-link train station located in the eastern portion of the city. Immediate Surroundings The subject property is situated in the northeast section of the City of Santa Ana, along N. Parton Street, just north of the Civic Center and south of the Santa Ana (5) Freeway. It is located in an area bracketed by the 5 Freeway and 17th Street to the north, 1"t Street to the south, Bristol Street to the west, and the 5 Freeway to the east. Uses within the neighborhood are primarily office and some residential developments. The majority of the residential tracts were built in the 1950's and 60's, and the majority of the commercial buildings were built in the 1970's and 80's. The majority of commercial buildings are situated along the main thoroughfares of 1" Street, 17th Street, Main Street and Bristol Street. The subject has an office building adjacent to the south, and apartments to the east, parking lot to the north, and a parking lot and office building to the west. The primary catalyst to the area is the Orange County Courthouse, two blocks south of the subject on Civic Center Drive. Additionally, the subject is located approximately 10 miles northeast of the Orange County Airport Area and approximately 15 miles south of Los Angeles County. Summary The subject is located in the City of Santa Ana, which are the county seat and the 2nd most populous city in Orange County. The city has a large Hispanic and high-density population relative to the surrounding communities. It also has a strong economic base centered in the Civic Center. Over the last decade the City has promoted a number redevelopment projects. Given that the City of Santa Ana has a progressive attitude toward business and re -development, this trend is expected to continue. The subject property is located very close to the Civic Center. In addition, it is an attractive location off a moderate traffic street with good access to other cities in Orange County and within close proximity to Los Angeles County. There is little land for new development in the area, and demand for future development appears improving. New projects will likely consist of tearing down old apartments or commercial properties to make way for a better use. Generally, the immediate area surrounding the subject is considered stable with the County Courthouse as the main generator of activity in the area. The centralized location of the City of Santa Ana, its strong economic base and the continued revitalization of portions of the city should add to the continued economic stability of the immediate area. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 13 SA4-45 EXHIBIT 3 \� Valbridge PROPERTYDVISORS Site Description PLAT MAP Public Pay Parking Lot SITE DESCRIPTION The characteristics of the site are summarized as follows: Site Characteristics a TENTH _, 830 N. Parton Street I a Gross Land Area: i • '_PYA LJ EHAM O y � a KEESE SO+ - •• BAKE 5 a Rectangular Average Depth: 145.00 feet Topography: Level Drainage: t'�i z L OL 3 At street grade h 35 n •� xOTRACT x> O' m. direction. The street is improved with lighting, curbs, gutters, and sidewalks. On street parking is allowed. Interior or Corner: Interior, however, the site contains access from one street and has an alleyway on the south and west of the property with no alleyway access. to 1 y 3o H x za ,6a 1 1 icO Al. y i. Al. 1 32 1 lea C/v/C CENTE/> yl rc�wrn sswccn The characteristics of the site are summarized as follows: Site Characteristics Location: 830 N. Parton Street Santa Ana, Orange County, California 92706 Gross Land Area: 0.09 Acres or 3,929 SF Usable Land Area: 0.09 Acres or 3,929 SF Usable Land %: 100.0% Shape: Rectangular Average Depth: 145.00 feet Topography: Level Drainage: No apparent drainage problems were noted Grade: At street grade Utilities: All to Site Off -Site Improvements: N. Parton Street is a minor traffic street with one lane in each direction. The street is improved with lighting, curbs, gutters, and sidewalks. On street parking is allowed. Interior or Corner: Interior, however, the site contains access from one street and has an alleyway on the south and west of the property with no alleyway access. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 14 EXHIBIT 3 � Valbridge PublicSITE DESCRIPTION Lot SITE DESCRIPTION PROPERTY ADVISORS Signalized Intersection: No Street Frontage / Access Street Name: N. Parton Street Street Type: Minor Two -Lane Traffic Street Frontage (Linear Ft.): 18.00 Number of Curb Cuts: One Traffic Count (Cars/Day): Approx. 1000 Additional Access Alley Access: No, there is an alley that runs along the south and west sides of the property, however, there is no access from the alley. Rail Access: No Flood Zone Data Flood Map Panel/Number: 060232-06059CO163J Flood Map Date: 12-03-2009 Flood Zone: Zone X (500 -year) Zone X (500 -year) -An area inundated by 500 -year flooding. This zone is not considered a flood hazard area and thus flood insurance is not required. Other Site Conditions Soil Type: A soil report was not provided for my review. No visual evidence of soil or geological problems in the form of uneven settlement or excessive cracking were observed at the time of inspection. Adequate load bearing capacity is assumed for the present use. Environmental Issues: No environmental site assessment report has been provided for review. Inspection of the property did not reveal any visible or factual evidence of environmental impairment to the site. No hazardous generators, materials, or waste were apparent. Drive by observation of the area surrounding the subject did not reveal any uses or hazards that would be expected to pose a risk to the site or restrict its use. Easements/Encroachments: A title report was not available for our review. It is assumed that various easements for public utilities, storm drains, access as well as a covenant for reimbursement to the City of street landscaping maintenance affects the subject property. These easements and covenant are considered typical for the area and would not be expected to have a negative impact on the marketability of the property. It is recommended that a current Title Report be obtained for further detail of these issues. Earthquake Zone: The subject property is not contained within an Alquist-Priolo © 2015 VALBRIDGE PROPERTY ADVISORS 1 Penner and Associates, Inc. Page 15 SA4-47 EXHIBIT 3 Valbridge Public Pay Parking Lot PROPERTY ADVISORS SITE DESCRIPTION earthquake fault zone. Special Hazards The subject is not located in a known wetlands, California State Coastal Zone, or Agricultural Preserve. Adjacent Land Uses North: Parking Lot South: Office building East: Apartments West: Parking Lot/Office Building Site Ratings Location: Average Access: Average Visibility: Average Exposure: Average Site Improvements: Average Overall Site: Average Zoning Designation ZONING MAP toll _I �� i G!Il,p1){(jW'� {]/j�rR�fii ,P, ♦` 44Y nt V 1✓3i'YilSll2 + °f rnn n IE,�, 'j �aI�E L 14 � r2 _ =rimes ( v I co !6i — .----. __ _ _,_CIVIC CENTER DR_ 1 F cc. n u 4CU SANT A/ rU F cco Zoning Classification: P, Professional General Plan Designation: P (Professional) Permitted Uses (including but Professional business and administrative offices, banks , medical not limited too): and dental offices, pharmacies, child care facilities, and freestanding restaurants Zoning Purpose: To promote professional land uses. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 16 SA4-48 EXHIBIT 3 Valbridge Public Pay Parking Lot SITE DESCRIPTION PROPERTY ADVISORS Development Standards Development Regulations include: 1) Minimum lot size: None 2) Maximum lot coverage: None 3) Maximum building height: 35 feet 4) Minimum setbacks: 5 feet sides, 10 feet rear, and 15 feet front. The requirement for off street parking varies based upon the use of the property. The parking requirements are as follows: office - 3 per 1,000 gross square feet, retail - 5 per 1,000 gross square feet, and medical office - 6 per 1,000 gross square feet. There are no improvements onsite, however, it is the opinion of the appraiser that based on parking requirements the subject property's site could support office, medical office, and retail. Legal, Conforming Status Legally Permitted Use: Yes Conforms to Parking: Yes Conformity Conclusion: Yes Analysis/Comments on Site The site is interior lot with frontage to a minor traffic street. The site is level in topography and is rectangular in shape. Overall, the site is considered average is well suited for a parking lot. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-49 Page 17 Public Pay ValbridgeEXHIBIT 3 Parking Lot PROPERTY IMPROVEMENTS DESCRIPTION Improvements Description Analysis/Comments on Improvements The subject property is currently a part of a larger public parking lot. The subject portion of this parking lot contains 14 parking spaces, which are paid public parking spaces. The site has landscaping along the east, west, and south sides of the property, and curbs, gutters, and sidewalks along the east side. The parking lot is asphalt paved and it shares two entrances with the larger parking lot. The site is very narrow and elongated with direct access off a minor two-lane traffic street. There is an alley on the south and west side of the site, however, there is no access from the alley. The shape of the site restricts the potential development of the site. Parking lots in the P (Professional) zoning per the City of Santa Ana Planning Department are not a legal use according to current zoning standards. Therefore, the site is a legally non -conforming use. Due to setback and parking requirements, the only development potential for the site is if it were used in conjunction with an adjacent site and redeveloped into a permitted use or sold to the owner of the adjacent parking lot site and it remains a parking lot. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 18 SA4-50 EXHIBIT 3 \; Valbridge ASSESSMENT Pay Parking Lot PROPERTY ADVISORS AND TAX DATA Assessment and Tax Data Assessment Methodology Under provisions of Proposition 13, properties are assessed based on their value as of March 1, 1975. This value may increase no more than 2% per year until such time as the property is sold, substantial new construction takes place, or the use of the property is substantially altered. The above property taxes include the general 1% tax, voted indebtedness, and direct assessments. If the property were sold, creating a new assessed value, the direct assessments would not be expected to change. The general tax and the voted indebtedness, however, would be expected to reflect the new basis. Thus, the tax rate specified above relates to the general tax rate and voted indebtedness and the direct assessments are in addition to this rate. Assessed Values and Property Taxes The subject's assessed values are shown below, however, applicable tax rates and total taxes, including direct assessments, are not applicable as the property is owned by the City of Santa Ana: SUMMARY OF ASSESSED VALUES Tax Direct. APN Land Improvements Total Rate Assessments Total 005-142-21 $116,619 $6,743 $123,362 _ Conclusions According to the Orange County Tax Assessors Office the subject's property has no taxes as it is publically owned by the City of Santa Ana. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 19 SA4-51 EXHIBIT 3 Valbridge Public Pay Parking Lot PROPERTY ADVISORS MARKET ANALYSIS Market An MARKET AREA MAP Stmolkl.s USAID20011 ff 4 -ci ir. cj r LET- -z�mixru, r 4d' - 171 lv- F 1 �t , I - —�-R�- � T SR �!Vfij1 ti 4� - �<i 1,14 p , 4-1 4) �j ai 1 �- , A1!4. log T -I S It"s PII--UN- Oil 11Z "tIT Yq r.L-. Ir 1 14:, PT ZT, -Aw 13i11(ffirt, R. I �J-, I ��44�1 )-fY 4 I I r =17 viff U.18 use s iW to bcon,io. 0 2007 DoLucium Stout Alas USAS 2008. IVd 0 4/5 1 1% 2 2% �.del.nmcm mfj (IZO- E) 031. zoo. 11.0 @ 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-52 Page 20 EXHIBIT 3 Public Pay Parking Lot Valbridge MARKET ANALYSIS PROPERTY ADVISORS Regional Office Market The subject property is within Orange County, which is part of the larger Southern California area. The Southern California office market consists of four major market areas. These include the Inland Empire, Los Angeles County, Orange County, and San Diego County. Office information for these areas is provided in the following table and was obtained from 3rd Quarter 2016 Costar Office Market Reports. The Southern California Office Market contains 774.0 million square feet of space. Projects in this market ranged from high-rise office towers to low-rise office buildings. The largest concentration of space was in Los Angeles County, with 433.0 million square feet of inventory, due primarily to the fact that Los Angeles County had a population of approximately 10 million. SOUTHERN CALIFORNIA TOTAL OFFICE MARKET OVERVIEW Source: Costar 3rd Quarter 2016 As shown in the table above, the markets outside of Los Angeles County were significantly smaller, with inventory levels ranging from approximately 73.1 to 154.0 million square feet. Overall, vacancy rates have remained relatively stable to improving since the recession, which started in 2007. Orange County has the lowest vacancy in the region at 8.9%. This is a decrease since the end of the year, 2015, which were 10.3% and 21/2 percentage points below the 11.5% vacancy at the end of 2013. All the markets were substantially impacted by the recession as many small service type businesses and the mortgage industry were significantly hit during this period. These made up a large portion of the office tenancy in the region, which remains slow to recover. All counties had positive absorption in the third quarter, 2016. This follows a year, 2015, which experienced a positive absorption in all four quarters. Although some new construction is occurring, the amount of space developed is limited relative to the base inventory and well off its highs established in 2007. Due to financing constraints, speculative construction has not been occurring. As a result, most new projects involved either owner/user development or multi -tenant projects with significant pre -leasing. With such criteria, some new construction was feasible in select locations, especially with urban and suburban locations in Los Angeles, Orange, and San Diego counties. Local Office Market Recent 3rd quarter 2016 data for Orange County shows an improvement from year end 2015 data. The current Office Market vacancy has declined from 9.4% at the end of 2015 to 8.9% at the end of the 3rd quarter of 2016. Vacancy had been steadily decreasing from 2006 -2010 with the implosion of the sub -prime lending market and its big effect on mortgage office tenants in the county, however, has slowly recovered to slightly less than the vacancy in 2007, which was 10.6%. Orange County had a positive net absorption of 1,342,207 square feet for the end of 3rd quarter 2016. Construction has slowed considerably since 2006, however, in the last two years has increased © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 21 SA4-53 Sub -Market Inland Empire #zId§s. 6,189 Building NRA 73,139,149 Vacancy SF 7,045,149 Vacancy Rate 9.6% SF Net Absorption construction 531,972 51: Under 432,702 Ave. Asking Lease Rate $1.66 Los Angeles County 18,085 432,689,680 45,825,737 10.6% 3,298,216 3,595,692 $2.73 Orange County 6,066 154,039,098 13,785,777 8.9% 1,342,700 2,430,157 $2.31 San Diego County 5,335 114,141,635 12,180,936 10.7% 1,119,464 365,867 $2.54 Southern California Total: 35,675 774,009,562 78,837,599 10.2% 6,292,352 6,824,418 $2.52 Source: Costar 3rd Quarter 2016 As shown in the table above, the markets outside of Los Angeles County were significantly smaller, with inventory levels ranging from approximately 73.1 to 154.0 million square feet. Overall, vacancy rates have remained relatively stable to improving since the recession, which started in 2007. Orange County has the lowest vacancy in the region at 8.9%. This is a decrease since the end of the year, 2015, which were 10.3% and 21/2 percentage points below the 11.5% vacancy at the end of 2013. All the markets were substantially impacted by the recession as many small service type businesses and the mortgage industry were significantly hit during this period. These made up a large portion of the office tenancy in the region, which remains slow to recover. All counties had positive absorption in the third quarter, 2016. This follows a year, 2015, which experienced a positive absorption in all four quarters. Although some new construction is occurring, the amount of space developed is limited relative to the base inventory and well off its highs established in 2007. Due to financing constraints, speculative construction has not been occurring. As a result, most new projects involved either owner/user development or multi -tenant projects with significant pre -leasing. With such criteria, some new construction was feasible in select locations, especially with urban and suburban locations in Los Angeles, Orange, and San Diego counties. Local Office Market Recent 3rd quarter 2016 data for Orange County shows an improvement from year end 2015 data. The current Office Market vacancy has declined from 9.4% at the end of 2015 to 8.9% at the end of the 3rd quarter of 2016. Vacancy had been steadily decreasing from 2006 -2010 with the implosion of the sub -prime lending market and its big effect on mortgage office tenants in the county, however, has slowly recovered to slightly less than the vacancy in 2007, which was 10.6%. Orange County had a positive net absorption of 1,342,207 square feet for the end of 3rd quarter 2016. Construction has slowed considerably since 2006, however, in the last two years has increased © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 21 SA4-53 EXHIBIT 3 Valbridyge Public Pay Parking Lot a`a4 PROPERTY ADVISORS MARKET ANALYSIS dramatically with currently 2,430,157 square feet under construction countywide. Rental rates have steadily increased since the low in 2011 for Orange County and owners in most areas are decreasing concessions and raising rates in response to the higher demand. Rates have increased to $2.31 per square feet for 3rd quarter 2016, which is the highest since 2008. ORANGE COUNTY TOTAL OFFICE MARKET OVERVIEW The subject property is considered part of the Central County sub -market, which comprises the second largest inventory of office space in the county, but has the lowest rental rates. This market contains the 2nd weakest absorption rate for the county so far this year with only 7,891 new space under construction. The Central County area presently has a vacancy of 11.0%, which is above the county overall. Co -Star indicates a present average rental rate of $1.89 per square foot on a full service gross basis for the Central County area. The rental rates are the lowest in the county and the vacancy rate is the highest in the county. This is largely due to the central area being one of the oldest in the county and with some of the lowest economic demographics in county. However, there are pockets of the area that are in redevelopment mode and or are located in niche markets. Market Conditions The improvement in the Orange County office market has continued a positive trend which began near the end of 2010. Vacancy is down significantly from previous highs during the recession. Land values have been rising due to the lack of available land in the area and demand for office property remains strong. This lack of availability also plays a role in the low levels of new construction. Most property owners are not advertising free rent concessions or tenant improvements, but will negotiate some incentives on longer term leases. Terms normally range from three to five years on single tenant buildings and 12 to 36 months for multi -tenant buildings. Conclusion Orange County and Southern California are emerging from a prolonged recession. Vacancy levels are down significantly and new construction remains limited as compared to pre -recession levels. However, the pace of the recovery has been modest and, in particular, there remain concerns relating to the potential of rising interest rates. As a result, public spending patterns are somewhat erratic, however, area office real estate markets have seen rental rates consistently raise each year. The subject property is a part of an office market that has historically experienced average demand and should compare favorably to markets in Orange and Los Angeles Counties. @2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 22 SA4-54 Sub -Market Airport Area Central County North County South County West County # Bldgs. 1,289 1,489 1,152 1,365 771 Building NRA 52,649,958 33,066,606 21,062,174 32,605,815 14,654,545 Vacancy SF 4,839,131 3,648,965 1,791,099 2,442,677 1,063,905 Vacancy Rate 9.2% 11.0% 8.5% 7.5°% 7.3% SF Net Absorption 188,953 63,904 259,086 705,963 124,794 SF Under Construction 613,970 7,891 0 1,763,796 44,500 Ave. Asking Lease Rate $2.69 $1.89 $2.00 $2.50 $2.03 Orange County Total: 6,066 154,039,098 13,785,777 8.9% 1,342,700 2,430,157 $231 Source: Costar 3rd Quarter 2016 The subject property is considered part of the Central County sub -market, which comprises the second largest inventory of office space in the county, but has the lowest rental rates. This market contains the 2nd weakest absorption rate for the county so far this year with only 7,891 new space under construction. The Central County area presently has a vacancy of 11.0%, which is above the county overall. Co -Star indicates a present average rental rate of $1.89 per square foot on a full service gross basis for the Central County area. The rental rates are the lowest in the county and the vacancy rate is the highest in the county. This is largely due to the central area being one of the oldest in the county and with some of the lowest economic demographics in county. However, there are pockets of the area that are in redevelopment mode and or are located in niche markets. Market Conditions The improvement in the Orange County office market has continued a positive trend which began near the end of 2010. Vacancy is down significantly from previous highs during the recession. Land values have been rising due to the lack of available land in the area and demand for office property remains strong. This lack of availability also plays a role in the low levels of new construction. Most property owners are not advertising free rent concessions or tenant improvements, but will negotiate some incentives on longer term leases. Terms normally range from three to five years on single tenant buildings and 12 to 36 months for multi -tenant buildings. Conclusion Orange County and Southern California are emerging from a prolonged recession. Vacancy levels are down significantly and new construction remains limited as compared to pre -recession levels. However, the pace of the recovery has been modest and, in particular, there remain concerns relating to the potential of rising interest rates. As a result, public spending patterns are somewhat erratic, however, area office real estate markets have seen rental rates consistently raise each year. The subject property is a part of an office market that has historically experienced average demand and should compare favorably to markets in Orange and Los Angeles Counties. @2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 22 SA4-54 VaIbridge EXHIBIT 3 Public Pay Parking Lot Shape HIGHEST AND BEST USE PROPERTY ADVISORS All to Site Highest and Best Use The Highest and Best Use of a property is the physically possible, legally permissible, and financially feasible use that results in the highest value. An opinion of the highest and best use results from consideration of the criteria, noted above under market conditions or likely conditions as of the effective date of value. Implied in the definition is that the determination of highest and best use results from the judgment and analytical skills of the appraiser; that is, the use determined from analysis represents an opinion, not necessarily a fact to be found. In appraisal practice, the concept of highest and best use represents the premise upon which value is based. While improved properties may have a highest and best use different than the existing use, the existing use will generally continue until the land value exceeds the property value at its existing use plus demolition costs. It is not always necessary to determine the highest and best use of an improved property both "As If Vacant' and "As Improved." In many cases, the determination of whether the value as improved exceeds the site value is straightforward, not requiring an opinion of market value for the site. In such cases, a determination of highest and best use of the site (aside from excess land, if present) is neither germane nor required. However, if there is a reasonable question as to whether the site value rises to such a level, then a determination of highest and best use as if vacant is mandated. Analysis of Highest and Best Use As If Vacant In determining the highest and best use of the property site, we examine the potential for: 1) near term development, 2) a subdivision of the site, 3) an assemblage of the site with other land, or 4) holding the land as an investment. Physically Possible Multiple factors affect the uses with which land may be developed. These factors discussed earlier in the Site Description are summarized in the following table, followed by a conclusion as to potential limitations imposed by the physical characteristics. PHYSICAL CHARACTERISTICS Land Area 3,929 square feet / 0.09 acres Shape Rectangular Utilities All to Site Visibility Average Flood Plain Shaded X; Flood insurance is not required Soil Conditions No report provided, assumed adequate. Environmental Unknown, No apparent conditions Other None Conclusion: There are no items of a physical nature that would materially limit any reasonable development plan. Legally Permissible Another threshold of highest and best use is what is legally permissible. This analysis considers applicable private restrictions and zoning constraints; and the potential for change of same, historic district controls, urban renewal ordinances, and other possible legal factors that may result in © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 23 SA4-55 ,`p\`� EXHIBIT 3 Valbridge Public Pay Parking Lot `1ti1✓/ PROPERTY ADVISORS HIGHEST AND BEST USE limitations on development. The primary limiting factors are typically associated with the zoning of the site and easements, which reduce development potential. The elements associated with these potential influences are summarized below. LEGAL ISSUES Conclusion: The zoning controls the general nature of permissible uses but is appropriate for the location and physical elements of the subject, providing for a consistency of use with the general neighborhood. The location of the subject is appropriate for the uses allowed and a change in zoning is unlikely. There are no known easements, encroachments, covenants or other use restrictions that would unduly limit or impede development of a probable nature. Financially Feasible After determining uses that are physically possible and legally permissible, an appraiser considers uses that are likely to produce an adequate return on investment. All uses yielding a positive return are financially feasible. Feasibility is initially tested through market observation of supply/demand trends and market values. If necessary, a more exacting analysis involves a cost/benefit analysis. Shown below is a summary of the analyses associated with the primary and probable uses determined to be both physically possible and legally permissible. ISSUES OF FINANCIAL FEASIBILITY . - General Plan P (Professional) Zoning P, Professional Value Trend Professional business and Feasibility administrative offices, banks , Permitted Uses medical and dental offices, pharmacies, child care facilities, and freestanding restaurants Probability of Change Unlikely Easements/Regulations None Conclusion: The zoning controls the general nature of permissible uses but is appropriate for the location and physical elements of the subject, providing for a consistency of use with the general neighborhood. The location of the subject is appropriate for the uses allowed and a change in zoning is unlikely. There are no known easements, encroachments, covenants or other use restrictions that would unduly limit or impede development of a probable nature. Financially Feasible After determining uses that are physically possible and legally permissible, an appraiser considers uses that are likely to produce an adequate return on investment. All uses yielding a positive return are financially feasible. Feasibility is initially tested through market observation of supply/demand trends and market values. If necessary, a more exacting analysis involves a cost/benefit analysis. Shown below is a summary of the analyses associated with the primary and probable uses determined to be both physically possible and legally permissible. ISSUES OF FINANCIAL FEASIBILITY . - Demand Stable Supply Balanced Value Trend Increasing Feasibility Currently Positive Maximally Productive Among the financially feasible uses, the use that results in the highest value (the maximally productive use) is the highest and best use. The subject is located within a pocket of office buildings on a minor traffic street. Most of the existing development in the immediate subject neighborhood consists of office uses, multifamily and single family residences. The primary generator of activity in the immediate area is the Orange County Courthouse. Considering the factors outlined above, the maximally productive uses of the property as though vacant would be office. Presently, demand has improved as indicated by a dropping vacancy rate and rising rental rates. However, construction financing is still difficult to obtain and office land availability is limited resulting in low new construction levels. Thus, it is our conclusion that the most maximally productive use of the subject © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 24 SA4-56 EXHIBIT 3 Pay Parking Lot Valbridge HIGHEISTANDBESTUSE PROPERTY ADVISORS site would be for office, however, development at this time is not as feasible because rental rates have not risen high enough to justify development. Conclusion of Highest and Best Use As If Vacant Based upon the preceding analysis, the conclusion of highest and best use of the subject site as if vacant is as follows: CONCLUSION AS IF VACANT Characteristic Conclusion Use: Hold for Development of Office Analysis of Highest and Best Use as Improved In determining the highest and best use of the property as improved, the focus is on three possibilities for the property: 1) continuation of the existing use, 2) modification of the existing use, or 3) demolition and redevelopment of the land. Continuation of Existing Use Retaining the improvements as existing meets the tests for physical possibility, legal permissibility and financial feasibility. The site is asphalt paved with landscaping, curbs, gutters, and sidewalks on the site. Thus, the continuation of the existing use as part of a public parking lot is a viable use. Conversion/Modification Conversion of the improvements meets the tests for physical possibility and legal permissibility. The property is currently not being utilized to meet the current market expectations for the submarket in which it competes. Modification of the property is financially feasible. Demolition As previously discussed, the new development of an office building appears to be financially feasible as the increasing market rental rates would be high enough to support construction costs. Our final opinion of market value plus demolition costs exceeds the value of the underlying land. Interim Use There are many instances where highest and best use will likely change in the foreseeable future. The use of a property until it can be put to its terminal highest and best use is its interim use. Interim uses are thus current highest and best uses that are anticipated to change in the foreseeable future. Examples of these interim uses include farms, parking lots, and old buildings. The current use represents an interim use. Excess Land Many parcels of land are too large for their principal highest and best uses. Such land parcels may have, in effect, two highest and best uses — the use for the improved portion and another use for the remaining, or excess, land. If excess land exists, it is valued separately within this report. The subject property does not have any excess land. Conclusion of Highest and Best Use As Improved The highest and best use of the subject property, as improved, is its current use as a parking lot. However, per current zoning, P (Professional), which was changed subsequent to the site's current OO 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 25 SA4-57 Q�\ VaIbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS HIGHEST AND BEST USE use as a parking lot, a parking lot is not a permitted use. Therefore, the current use represents a legally non -conforming use. Most Probable Buyer/User As of the date of value, the most probable buyer of the subject property is an Investor and the most probable user would be a local developer. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-58 Page 26 EXHIBIT 3 Public Pay Parking Lotg (INValbrid a APPRAISAL METHODOLOGY , ,,. PROPERTY ADVISORS Appraisal Methodology Three Approaches to Value There are three traditional approaches typically available to develop indications of real property value: the cost, sales comparison, and income capitalization approaches. Cost Approach The cost approach is based upon the principle that a prudent purchaser would pay no more for a property than the cost to purchase a similar site and construct similar improvements without undue delay, producing a property of equal desirability and utility. This approach is particularly applicable when the improvements being appraised are relatively new or proposed, or when the improvements are so specialized that there are two few comparable sales to develop a credible Sales Comparison Approach analysis. Sales Comparison Approach In the sales comparison approach, the appraiser analyzes sales and listings of similar properties, adjusting for differences between the subject property and the comparable properties. This method can be useful for valuing general purpose properties or vacant land. For improved properties, it is particularly applicable when there is an active sales market for the property type being appraised — either by owner -users or investors. Income Capitalization Approach The income capitalization approach is based on the principle that a prudent investor will pay no more for the property than he or she would for another investment of similar risk and cash flow characteristics. The income capitalization approach is widely used and relied upon in appraising income-producing properties, especially those for which there is an active investment sales market. Subject Valuation As stated within the Scope of Work, we have relied upon the Sales Comparison Approach. The Sales Comparison Approach is most applicable to a Land Value appraisal. Since there are no improvements the result of a Cost Approach analysis would be considered irrelevant. As previously discussed, the highest and best use of the subject is for office development. Any current income generated by the property would be considered an interim use, thus resulting in an Income Approach that inaccurately reflects the market value of the property. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-59 Page 27 1,N VaIbridge EXHIBIT 3 Public Pay Parking Lot � PROPERTY ADVISORS LAND VALUATION Land Valuation Methodology Land is most often valued using the Sales Comparison Approach. This approach is based on the premise that a buyer would pay no more for a specific property than the cost of obtaining a property with the same utility. In the sales comparison approach, the opinion of market value is based on closed sales, listings, and pending sales of properties similar to the subject property, using the most relevant units of comparison. The comparative analysis focuses on the difference between the comparable sales and the subject property using all appropriate elements of comparison. A systematic procedure for applying the sales comparison approach includes the following steps: (1) researching and verifying transactional data, (2) selecting relevant units of comparison, (3) analyzing and adjusting the comparable sales for differences in various elements of comparison, and (4) reconciling the adjusted sales into a value indication for the subject site. Unit of Comparison The unit of comparison depends on land use economics and how buyers and sellers use the property. The unit of comparison in this analysis is price per square foot. Elements of Comparison Elements of comparison are the characteristics or attributes of properties and transactions that cause the prices of real estate to vary. The main elements of comparison that are considered in sales comparison analysis are as follows: (1) real property rights conveyed, (2) financing terms, (3) conditions of sale, (4) expenditures made immediately after purchase, (5) market conditions, (6) location, and (7) physical characteristics. Comparable Sales Data A search of data sources and public records, a field survey, interviews with knowledgeable real estate professionals in the area, and a review of our internal database were conducted to obtain and verify comparable sales and listings of vacant land properties. We used five sales in our analysis, which were judged to be the most comparable in developing an indication of the market value of the subject property. The following map displays the location of each comparable in relation to the subject. Following those, are plat maps of the comparable sales and a discussion of relevant adjustments. @2016 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-60 Page 28 EXHIBIT 3 lic Pay ParIdnLot Valbridge PubLAND VALUATION PROPERTY ADVISORS COMPARABLE SALES MAP Stm.lAdas USAN 2008 -u 1-1,1tul �7/ N, NY Z/ R --- ------- ---- ----- T.W .In St. My 1 rw41 Mx ma 'L7 -1� n. 4 7 U'dw �dw 'anu� na x 66 45K Ddd ult =1,1.1 to ka". ml 02001 DL.,mo. SU..Mlus USAS 2008. 0 1 2 3 4 6 v~dclamc-cm LIN (12-0- E) D.I., 7.04M 10-2 @ 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-61 Page 29 Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS LAND VALUATION Comparable Land Sales COMPARABLE LAND COMP #1 520 S. Harbor Blvd., Santa Ana COMPARABLE LAND COMP #2 IV�� 1 x �c «Nana / we, Banca r,na38 /'bt. SC Vf. SC 1/4, SCC. 1. ! S 5, R 9 s �3 W l I L I Ll I 1R cr �I V(J CJ CJ � eu. tp r ,i©,asf;�,, •SIL ` QI / "K � • � Q ase L w TRACT Lv_,V�_ O•� K p U �i '� I Q 1 Ju •L TRACJ • � P. M. -• O 925G• O� I.�]f) v-mm-cri O SIO` � • � r N f 071 (� •f Q r 1 f bO r � w i II t - IO I[J /C IN IC ax.J d A'0. fa// 21 GG AM YTAepp/ T 5 L Lncw f y —L —Amw 1 _TBD IN -60 tae - 25 Iqq- COMPARABLE LAND COMP #2 IV�� 1 x �c «Nana / we, Banca r,na38 /'bt. SC Vf. SC 1/4, SCC. 1. ! S 5, R 9 s �3 W l I L I Ll I 1R cr �I V(J CJ CJ � eu. tp r ,i©,asf;�,, •SIL ` QI / "K � • � Q ase p Lv_,V�_ O•� K p U �i '� I 925G• COMPARABLE LAND COMP #2 IV�� 1 x �c «Nana / we, Banca r,na38 /'bt. SC Vf. SC 1/4, SCC. 1. ! S 5, R 9 s �3 W l I L I Ll I 1R cr �I V(J CJ CJ � eu. tp r ,i©,asf;�,, •SIL ` QI / "K d p.[AiecArs � •- 1 j jOj O O O � -- seSY r a 5[F[r1 v �• i1D Q a>2 0 Q� 151'01 OQ Q Q Q •� .O• $ �'•O. mJL '° FI I � �-IIaL'k� r, f tl au -t5 V,MI/ I]OS S/X/I /MY. Lp. IttL.wISS MK. [11. f: J I nOl[ [ >atJ9�tnrc[ [5 © 2015 VALBRIDGE PROPERTY ADVISORS Penner and Associates, Inc. SA4-62 Page 30 � • � Q ase p Lv_,V�_ O•� K p U �i '� I d p.[AiecArs � •- 1 j jOj O O O � -- seSY r a 5[F[r1 v �• i1D Q a>2 0 Q� 151'01 OQ Q Q Q •� .O• $ �'•O. mJL '° FI I � �-IIaL'k� r, f tl au -t5 V,MI/ I]OS S/X/I /MY. Lp. IttL.wISS MK. [11. f: J I nOl[ [ >atJ9�tnrc[ [5 © 2015 VALBRIDGE PROPERTY ADVISORS Penner and Associates, Inc. SA4-62 Page 30 EXHIBIT 3 Valbridge Public Pay Parking Lot LAND VALUATION A PROPERTY ADVISORS COMPARABLE LAND COMP #3 1dRR7 Imncrinl I-Ivn) I n MirAria (uninrl COMPARABLE LAND COMP #4 Id» -I rlaroor ISIva, L3araen urove - PM. N I/i. SC 1/I. SCC. I. } 5 S. R 10 109-12 A..n..n. 36 363 36 8031 .... ;�t,I� 1 i 2005 ----- I r I (D p i O;' - ° "Ago NI I O F R C E W A r ....., 'O1 �•3c�i;� e O` M. � j 4d r ..m Y•° a°nr 22 O 3 Q 1123 �{ �,� •xdr �` x o & }w x. t I i� xsC••u° U. i 106 !w} FT COMPARABLE LAND COMP #4 Id» -I rlaroor ISIva, L3araen urove - PM. N I/i. SC 1/I. SCC. I. } 5 S. R 10 109-12 A..n..n. 36 363 36 .... ;�t,I� 1 i (D p i O;' - ° "Ago Q O F R C E W A r ....., 'O1 e O` M. � j 4d r ..m Y•° a°nr 22 O 3 Q 1123 �{ 59 \\ 13 u 11951 Y1A[(t IWr i.Y. }3-I ). 119Y9 nol[ SrOrx /x [/xl/i • [IXmr dlxG. BNIIr �°n y 1} @2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 31 SA4-63 EXHIBIT 3 \/ Valbridge Public Pay Parking Lot 'Y`'•`L�� PROPERTY ADVISORS LAND VALUATION COMPARABLE LAND COMP #5 i,+yrc z-pnnguaie )zreei, nunungion Deacn © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-64 Page 32 1, 03 P.av+5swca. �Y^ uwcerooa i f —Y Derv[ °0 "� f 0 © 0 0 (D. a s 0 0° 0 0 0 0 0 0 y •®. fryO aO © 6• L^J � © .O OO O# #YNT-Y/BLI of O Y O ,-- V _-I"- QP— © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-64 Page 32 EXHIBIT 3 \�\, Valbridge Public Pay Parking k ` / V LAND VALUATION ���_/ PROPERTY ADVISORS Land Sales Comparison Analysis All of the sales were analyzed, and adjustments were made for differences in the various elements of comparison, including: real property rights, financing terms, conditions of sale, expenditures made immediately after purchase, market conditions, location, size, and other relevant factors. If the comparable sale was considered superior to the subject for any element of comparison, we applied a negative adjustment to the comparable. Conversely, a positive adjustment to the comparable was applied if it was considered inferior to the subject for any element. A summary of the elements of comparison follows. Transaction Adjustments Transaction adjustments include 1) real property rights conveyed, 2) financing terms, 3) conditions of sale and 4) expenditures made immediately after purchase. These items are applied prior to the market conditions and property adjustments, and are discussed as follows: Real Property Rights Conveyed Real property rights conveyed in land sales, such as easements, right of way, private or public restrictions, the right to develop, and any other land use right the property may transfer upon sale (e.g. the right to farm, mine, or subdivide) influence sale prices and may differ among land sale comparables. Financing Terms The transaction price for one property may differ from that of an identical property due to different financial arrangements. Sales with financing terms not at or near market terms require adjustments for cash equivalency to reflect typical market terms. A cash equivalency procedure discounts atypical mortgage terms to provide an indication of value at cash equivalent terms. Conditions of Sale When the conditions of a sale are atypical, the resulting price may be higher or lower than a normal transaction. Adjustments for conditions of sale usually reflect the motivations of either a buyer or a seller who is under duress to complete the transaction. Another more typical condition of sale scenario involves a downward adjustment applied to a comparable property's for -sale listing price, which usually reflects the upper limit of value. A knowledgeable buyer considers expenditures that must be made upon purchase of a property, decreasing the amount he will agree to pay. Such expenditures may include: (1) costs to demolish and remove any portion of the improvements, (2) costs to petition for a zoning change, and/or (3) costs to remediate environmental contamination. The relevant figure is not the actual cost incurred, but the cost anticipated by both the buyer and seller. Unless the sale involved expenditures anticipated upon the purchase date, no adjustments to the comparable sales are required for this element of comparison. Market Conditions Adjustment Market conditions change over time as a result of inflation, deflation, fluctuation in supply and demand, and other factors. Changing market conditions creates the need for adjustments to sale comparables that represent transactions during periods of dissimilar market conditions. Market conditions reflect changes in supply and demand, economic factors such as a recession, the inflation or deflation of currencies, tax laws, investor perceptions, etc. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-65 Page 33 aEXHIBIT 3 �`� Valbridge Public Pay Parking Lot PROPERTY ADVISORS LAND VALUATION Property Adjustments Property adjustments are usually expressed quantitatively as percentages that reflect the increase or decrease in value attributable to various characteristics of the property. In some instances, qualitative adjustments are used. These adjustments are based on locational and physical characteristics and are applied after transaction and market conditions adjustments. Location Location adjustments may be required when the locational characteristics of a comparable property are different from those of the subject property. These include, but are not limited to, general neighborhood characteristics, freeway accessibility, street exposure, neighboring properties, view amenities, and other factors. AccessNisibility Tracts with major street influence tend to bring higher prices than otherwise comparable secondary street locations. Additionally, tracts featuring corner influence typically command higher prices in the market place than interior locations, because they have greater exposure to traffic and are easier to access. Size The size adjustment identifies variances in the physical size of the comparables and the subject improvements. Typically, the larger a parcel, the lower the sale price per unit. This inverse relationship is due, in part, to the principle of "economies of scale." Shape Parcels of land with odd, non -rectangular, shapes sometimes limit the amount of land within the parcel available for development, resulting in less utility for some portions of the site. Consequently, these parcels are less desirable to buyers and require adjustment. Topography and Soils Sites may differ in value due to physical characteristics such as: grading, contour, drainage, potential for development, and soil content/condition. Adjustments are made to offset additional costs that will incur and any soil changes needed when improving the land. In other cases, topographical and soil conditions, such as steep cliffs, impede development on portions of a site. Zoning The highest and best use of sale comparables should be very similar to the subject property. When comparables with the same zoning as the subject are lacking or scarce, parcels with slightly different zoning, but a highest and best use similar to that of the subject may be used as comparables. These comparables may have to be adjusted for differences in utility if the market supports such adjustment. Other Property Adjustments Other property adjustments are: any other adjustment category relevant to the report. Other adjustments often utilized are utilities to the site, condition, flood zone, building improvements and any other category for site specific characteristics. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-66 Page 34 EXHIBIT 3 Va l br idge Public Pay Parking Lot LAND VALUATION \„ PROPERTY ADVISORS Summary of Adjustments From our analysis, we have summarized adjustments to the sale comparables on the following adjustment grid. Following the grid is a discussion of our adjustments and the land value conclusion. These quantitative adjustments are based on our market research, bestjudgment, and experience in appraising similar properties. © 2015 VALBRIDGE PROPERTY ADVISORS 1 Penner and Associates, Inc. SA4-67 Page 35 ca a O a � L d d c b r .- 7 C m N N V V F- C N O �py � N! V > M VI LL e e e e f e e 0 e e e o O e e e N I N W O1 y0 d 2 a— H O O O O N e M O O V1 O O N ry Q a Q µ m n o 1 Q Mo � o M 3 N C N > 9 VI O AC N_ r0 - E OJ Q ' A 0 oo 0 c m « o r. e e e = e r N j e e a e e m e e e e m V V m Z a ti m m — ? e e m ee- e e e V1 M ✓' O N 1' N V - N V v N QQ Q Q Q Q • N mp 01 d N F T'O- d 6 C Q N 01 d Ol C E W d Z Z Z a 01 OO O 3 3a OONI V W O O J C o m � v E n 0 c R d O 'L a O UO C N O C a VI Z Ja 'v a a v o. u i E 5 1 j Y q a n o - q'� ¢ '^ z n 'c - n N Q Q JO Q y'Cj H N J V V n Z U' C SA4-68 EXHIBIT 3 \\ , Valbridge Public Pay Parking Lot LAND VALUATION ...._ PROPERTY ADVISORS Discussion and Analysis of Land Sales Adjustments for property interests, favorable financing and sales conditions were not warranted. As there is very limited supply, vacancy has been on the decline, rental rates have increased, and property values have been increasing over the past few years. Thus, we have made upward adjustments to the comparable properties at rate of 4% per year from the date the property sold to the date of value for the subject property in order to account for these changes in market conditions (time). Across the board adjustments were necessary to reflect the fact that the subject is located on a minor traffic street, has a zoning that is primarily oriented towards office and has limited development potential due to its smaller size. Land Comp No.1 Land comp no. 1 is located west of the subject, at 520 S. Harbor Blvd., in the city of Santa Ana. The property is located in a small retail area with some sales car lots surrounding the site on an interior lot fronting a major traffic street. The sale price for this property was $5,200,000 which equates to $52.36 per square foot. This property is located in the western area of Santa Ana with similar demographics. The site has visibility to a major traffic street. The site is rectangular in shape, but is narrow in shape with limited street frontage. The front of the site is asphalt paved and was used as a car sales lot. The rear of the site is vacant land. An upward adjustment was needed for the property's larger size. Downward adjustments were made for superior visibility/exposure on a busier street and superior zoning. An additional downward adjustment has been for the subject's small site size and narrow shape, which limits the potential land uses/development of the site. Overall, this comparable was considered superior to the subject. After adjustments, this sale provides an indication of land value for the subject at $36.85 per square foot. Land Comp No.2 Land comp no. 2 is located east of the subject, at NEC 1st St & Grand Ave., in the city of Santa Ana. Bath streets are moderate traffic streets and this comparable is located in a similar area of Santa Ana as the subject. This location is approximately 1/2 mile to the west of the Santa Ana (5) Freeway. The sale price for this property was $1,975,000, which equates to $58.05 per square foot. The property is situated at the immediate corner of a signalized intersection in a somewhat secondary area of older commercial and residential development. This area is similar in demographics to the subject. While it has corner exposure it also wraps around an adjacent property to the east. Thus, the shape of the site is irregular. It sold to a motivated buyer from the immediate area who was attempting to expand church operations. At the time of sale, the property had some old paving and was formerly occupied with a used car business. Considering the buyer motivation, a downward adjustment has been made for "sale conditions." Upward adjustments are necessary for larger size of the site, irregular shape, and site condition (demolition cost). Downward adjustments are warranted for superior access/orientation, superior visibility/exposure on a busier street, and superior zoning. An additional downward adjustment has been for the subject's small site size and narrow shape, which limits the potential land uses/development of the site. Overall, this comparable was considered superior to the subject. After adjustments, this sale provides an indication of land value for the subject at $36.78 per square foot. Land Comp No.3 Land comp no. 3 is located north of the subject, at 14337 Imperial Hwy, in the city of La Mirada (uninc). This property is just east of Valley View Avenue. It has an interior orientation and fronts a well -traveled artery in a secondary commercial area of old retail, single-family residences, and © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 37 SA4-69 EXHIBIT 3 \� Val bridge Public Pay Parking Lot PROPERTY ADVISORS LAND VALUATION apartments. The surrounding area has a lower density of population. The site is approximately 5 feet above grade of the street and requires a sloped driveway for access. At the time of sale, it was improved with a vacant old two-story building that was formerly occupied as a veterinary clinic. The property also has a two-sided billboard. The sale price for this property was $1,550,000 which equates to $48.23 per square foot. Upward adjustments are necessary for larger size of the site, sloped topography, and site condition (demolition cost). Downward adjustments are warranted for superior visibility/exposure on a busier street, superior zoning, and billboard income. An additional downward adjustment has been for the subject's small site size and narrow shape, which limits the potential land uses/development of the site. Overall, this comparable was considered superior to the subject. After adjustments, this sale provides an indication of land value for the subject at $37.12 per square foot. Land Comp No.4 Land comp no. 4 is located west of the subject, at 13551 Harbor Blvd, in the city of Garden Grove. This location is along the south side of the Garden Grove (22) Freeway and has access from Harbor Boulevard. The surrounding area is similar in demographics. The site wraps around the southwest corner of Harbor Boulevard and Trask Avenue. This is a somewhat irregular-shaped site that was improved with an old 1,400 SF building and two billboards. The property was formerly occupied by a fountain and statuary business; however, the buyer intended to develop a self -storage facility. It is in escrow as a clean site with no entitlements. The property is currently in escrow at a price of $4,750,000, which equates to $59.17 per square foot. Escrow is due to close within approximately 9 months upon approval of the planned use. According to the listing broker, there were 9 offers on the property and 4 of these were at the full asking price of $4,500,000. The fact that the escrow price is higher than the asking price is due to a bidding situation. Upward adjustments are necessary for larger size of the site, irregular shape, and site condition (demolition cost). Downward adjustments are warranted for superior visibility/exposure on a busier street, superior zoning, and billboard income from the two billboards onsite. An additional downward adjustment has been for the subject's small site size and narrow shape, which limits the potential land uses/development of the site. Overall, this comparable was considered superior to the subject. After adjustments, the listing provides an indication of land value for the subject at $35.50 per square foot. Land Comp No.5 Land comp no. 5 is a current listing located west of the subject, at 14972 Springdale St, in the city of Huntington Beach. This property is situated at the northeast corner of Springdale Street and Balsa Avenue, a primary signalized intersection in the north portion of the city. This location is approximately 1/z mile to the west of the Westminster Mall and is near the Boeing campus. Demographics in this area are far superior to the subject. Surrounding development consists of mostly mid -age retail and office properties. This is a level site that is adjacent to strip retail buildings to the north and east. The site was formerly used as a service station occupied by Chevron. As such, any soil clean-up costs are the responsibility of Chevron (seller). The property is currently in escrow at a price of $1,610,000, which equates to $71.08 per square foot. According to the seller representative, there were several other offers to purchase at prices ranging from approximately $55.00 to $65.00 PSF. Escrow is due to close in late 2016. The buyer intends to develop a retail property; however, no further details were available. An upward adjustment was needed for the property's larger size. Downward adjustments are warranted for superior demographics, superior access/orientation, superior visibility/exposure on a busier street, and superior zoning. An additional downward adjustment has been for the subject's small site size and narrow shape, which limits the @2016 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-70 Page 38 EXHIBIT 3 \�\ h /ry Public Pay Parking Lot Valbridge LAND VALUATION PROPERTY ADVISORS potential land uses/development of the site. Overall, this comparable was considered superior to the subject. After adjustments, this listing provides an indication of land value for the subject at $33.41 per square foot. Conclusion of Land Value From the market data available, five land sales in competitive market areas which were most comparable to the subject were selected. The unadjusted sale prices for the comparable sales ranged from $48.23 to $71.08 per square foot, with an average of $57.78 a median of $58.05 per square foot. We adjusted the comparable sales based on pertinent elements of comparison as discussed earlier and summarized the adjustments in the preceding adjustment grid. The final adjusted sale prices reflected a range from $33.41 to $37.12 per square foot, with an average of $35.93 and a median of $36.78. Location adjustments were primarily based on desirability for office property in the local area, demographics, exposure to traffic, proximity to a freeway, etc. The subject is located in a desirable area for office property very close to the Civic Center, however, there is limited retail appeal in the area and the site is zoned primarily for office use. Thus, an across the board adjustment was necessary for zoning. Other across the board adjustments were necessary for the subject's frontage on a minor traffic street and exceptionally small size. The subject property is located on an interior lot, which is similar to two of the comparables, however, it is inferior in visibility/exposure, as all of the comparables are off of moderate transportation arteries, which are far busier. One strength of the site is its close proximity to the Orange County Courthouse, which lends itself to use as a public parking pay lot. Size adjustments are typically based on the premise that smaller parcels sell for more on a square foot basis than larger parcels due to the smaller requirements needed for purchase and site improvements. Adjustments for lot size were made to account for this variation. The subject is rectangular in shape like three of the comparables, however, the subject's exceptionally small site size and narrow shape limits the potential land uses/development of the site. Thus, the subject is likely to remain as part of a public parking lot due to its small size and the most likely buyer would be an assemblage by the owner of the larger part of the subject parking lot. Minor adjustments were also required for site condition (demolition cost) for three of the comparables. Land Comps 3 & 4 also required adjustment for the addition of billboards. Overall, the sales provide good support for deriving a value. Comparables 1 & 2 are the most recent sales and are both in the City of Santa Ana. Comparable 3 is a slightly older sale and is an interior lot like the subject. Comparable 4 & 5 are current listings, which are in escrow and provide good support the range in value. The greatest weight is given to sales 1 & 2. Thus, we have concluded at a value of $36.75 per square foot as representative of the subject's fee simple land value. The land valuation is summarized on the following page. In addition to the value of the subject site in a finished condition, we have included a valuation of the site parking lot improvements. The site has an asphalt paved parking with concrete swales, concrete sidewalks, and landscaping on the east, south and west sides of the site, which includes one medium size tree and numerous bushes. According to the Marshall & Swift cost manual, the cost to grade and put landscaping in is approximately $3.00 per square foot. Also according to the Marshall & Swift cost manual, the cost to replace a medium 24" — 36" tree is approximately $1,000 per tree. The replacement cost for asphalt/concrete paving is approximately $5.00 per square foot. Thus, we have ©2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-71 Page 39 EXHIBIT 3 Va1bf idg2 Public Pay Parking Lot Wf�LAND VALUATION PROPERTY ADVISORS estimated the value of the landscaping improvements at $3.00 per square foot, the tree at $1,000, and the asphalt/concrete paving improvements at $5.00 per square foot. The parking lot improvements appear to be in average condition with typical wear and tear. Thus, we have depreciated the parking lot improvements by 50%, resulting in a cost of $2.50 per square foot. Therefore, the value of the site improvements is estimated to be $11,000. SITE IMPROVEMENTS VALUE INDICATION Landscaping 600 SF x $3.00 PSF $1,800 Tree 1 x $1,000/Tree $1,000 Asphalt/Concrete Paving 3,329 SF x $2.50 PSF $8,323 Total Value Rd. $11,000 LAND VALUE INDICATION Land Area (square feet) 3,929 SF Indicated Value PSF $36.75 Indicated Value 4144.391 $1 Final Land Value Determination from Sales Comparison Aooroach f ld.l Q1ss.0001 © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-72 Page 40 EXHIBIT 3 Va I b i d g e Public Pay Parking Lot RECONCILIATION PROPERTY ADVISORS Reconciliation Summary of Value Indications The final step in the appraisal process is the reconciliation of the indications of value as derived in the approaches utilized. This section takes into account the purpose of the report, the type of property appraised, the appropriateness and accuracy of each approach, and the adequacy of the data processed in each of the approaches. Most important, is the consideration of which approach most nearly reflects the actions of buyers and sellers in the market. The indicated values from the approaches used and our concluded market values for the subject property are summarized in the following table. VALUE INDICATIONS Value Type 4; is; Cost Approach Not Applicable Sales Comparison $155,000 Income Approach Not Applicable Market Value of Land $155,000 In order to reach a final opinion of value, the reliability and relevance of each value indication based upon the quality of the data and applicability of the assumptions underlying each approach have been considered. Most importantly is the question "Which approach most nearly reflects the actions of buyers and sellers in the market". Owner -users constitute the majority of purchasers in the market for vacant land. The Sales Comparison Approach is the most commonly used method to value vacant land by owner users and this has been used in this analysis. Therefore, based upon the analysis contained in the foregoing report, the subject property value conclusion is shown as follows: Market Value of Land As Is Current Fee Exposure Time and Marketing Periods A marketing and exposure time estimate of 3 to 6 months is considered reasonable and appropriate for the subject property. This estimate is based on statistical information about days on market, escrow length, marketing times gathered through national investor surveys, sales verification, and interviews of market participants. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-73 Page 41 Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS GENERAL ASSUMPTIONS & LIMITING CONDITIONS General Assum ions and Limitinq Conditions This appraisal is subject to the following limiting conditions: The legal description — if furnished to us — is assumed to be correct. 2. No responsibility is assumed for legal matters, questions of survey or title, soil or subsoil conditions, engineering, availability or capacity of utilities, or other similar technical matters. The appraisal does not constitute a survey of the property appraised. All existing liens and encumbrances have been disregarded and the property is appraised as though free and clear, under responsible ownership and competent management, unless otherwise noted. 3. Unless otherwise noted, the appraisal will value the property as though free of contamination. Valbridge Property Advisors I Penner and Associates, Inc. will conduct no hazardous materials or contamination inspection of any kind. It is recommended that the client hire an expert if the presence of hazardous materials or contamination poses any concern. 4. The stamps and/or consideration placed on deeds used to indicate sales are in correct relationship to the actual dollar amount of the transaction. 5. Unless otherwise noted, it is assumed there are no encroachments, zoning violations, or restrictions existing in the subject property. 6. The appraiser is not required to give testimony or attendance in court by reason of this appraisal, unless previous arrangements have been made. 7. Unless expressly specified in the engagement letter, the fee for this appraisal does not include the attendance or giving of testimony by Appraiser at any court, regulatory, or other proceedings, or any conferences or other work in preparation for such proceeding. If any partner or employee of Valbridge Property Advisors I Penner and Associates, Inc. is asked or required to appear and/or testify at any deposition, trial, or other proceeding about the preparation, conclusions or any other aspect of this assignment, client shall compensate Appraiser for the time spent by the partner or employee in appearing and/or testifying and in preparing to testify according to the Appraiser's then current hourly rate plus reimbursement of expenses. 8. The values for land and/or improvements, as contained in this report, are constituent parts of the total value reported and neither is (or are) to be used in making a summation appraisal of a combination of values created by another appraiser. Either is invalidated if so used. 9. The dates of value for which the opinions expressed in this report apply are set forth in this report. We assume no responsibility for economic or physical factors occurring at some point at a later date, which may affect the opinions stated herein. The forecasts, projections, or operating estimates contained herein are based on current market conditions and © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-74 Page 42 EXHIBIT 3 ®k`% Valbridge Public Pay Parking Lot �\;. / GENERAL ASSUMPTIONS &LIMITING CONDITIONS 9�l PROPERTY ADVISORS anticipated short-term supply and demand factors and are subject to change with future conditions. 10. Maps, plats, and exhibits included in this report are for illustration only and are intended to serve as an aid in visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose. The square footage totals utilized in this report may be based upon the legal description of the property, assessors plat maps, building plans, previous estimates and/or a measurement of the premises by the appraiser(s). The measurements utilized in this report, should not be construed as an exact measurement of the site or improvements. If so desired, a professional survey should be conducted by a trained and qualified consultant. 11. The information, estimates, and opinions, which were obtained from sources outside of this office, are considered reliable. However, no liability for them is assumed by the appraiser. 12. Possession of this report, or a copy thereof, does not carry with it the right of publication. Neither all, nor any part of the content of the report, or copy thereof (including conclusions as to property value, the identity of the appraisers, professional designations, reference to any professional appraisal organization or the firm with which the appraisers are connected), shall be disseminated to the public through advertising, public relations, news, sales, or other media without prior written consent and approval. 13. No claim is intended to be expressed for matters of expertise that would require specialized investigation or knowledge beyond that ordinarily employed by real estate appraisers. We claim no expertise in areas such as, but not limited to, legal, survey, structural, environmental, pest control, mechanical, etc. 14. This appraisal was prepared for the sole and exclusive use of the client for the function outlined herein. Any party who is not the client or intended user identified in the appraisal or engagement letter is not entitled to rely upon the contents of the appraisal without express written consent of Valbridge Property Advisors I Penner and Associates, Inc. and Client. The Client shall not include partners, affiliates, or relatives of the party addressed herein. The appraiser assumes no obligation, liability, or accountability to any third party. 15. Distribution of this report is at the sole discretion of the client, but third -parties not listed as an intended user on the face of the appraisal or the engagement letter may not rely upon the contents of the appraisal. In no event shall client give a third -party a partial copy of the appraisal report. We will make no distribution of the report without the specific direction of the client. 16. This appraisal shall be used only for the function outlined herein, unless expressly authorized by Valbridge Property Advisors I Penner and Associates, Inc.. 17. This appraisal shall be considered in its entirety. No part thereof shall be used separately or out of context. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-75 Page 43 / Valbrid/�J�e EXHIBIT PROPERTY ADVISORS Public Pay Parking Lot _,)GENERAL ASSUMPTIONS &LIMITING CONDITIONS 18. Unless otherwise noted in the body of this report, this appraisal assumes that the subject property does not fall within the areas where mandatory flood insurance is effective. Unless otherwise noted, we have not completed nor have we contracted to have completed an investigation to identify and/or quantify the presence of non -tidal wetland conditions on the subject property. Because the appraiser is not a surveyor, he or she makes no guarantees, express or implied, regarding this determination. 19. The flood maps are not site specific. We are not qualified to confirm the location of the subject property in relation to flood hazard areas based on the FEMA Flood Insurance Rate Maps or other surveying techniques. It is recommended that the client obtain a confirmation of the subject's flood zone classification from a licensed surveyor. 20. If the appraisal is for mortgage loan purposes 1) we assume satisfactory completion of improvements if construction is not complete, 2) no consideration has been given for rent loss during rent -up unless noted in the body of this report, and 3) occupancy at levels consistent with our "Income and Expense Projection" are anticipated. 21. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering required to discover them. 22. Our inspection included an observation of the land and improvements thereon only. It was not possible to observe conditions beneath the soil or hidden structural components within the improvements. We inspected the buildings involved, and reported damage (if any) by termites, dry rot, wet rot, or other infestations as a matter of information, and no guarantee of the amount or degree of damage (if any) is implied. Condition of heating, cooling, ventilation, electrical and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements unless otherwise stated. Should the client have concerns in these areas, it is the client's responsibility to order the appropriate inspections. The appraiser does not have the skill or expertise to make such inspections and assumes no responsibility for these items. 23. This appraisal does not guarantee compliance with building code and life safety code requirements of the local jurisdiction. It is assumed that all required licenses, consents, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value conclusion contained in this report is based unless specifically stated to the contrary. 24. When possible, we have relied upon building measurements provided by the client, owner, or associated agents of these parties. In the absence of a detailed rent roll, reliable public records, or "as -built" plans provided to us, we have relied upon our own measurements of the subject improvements. We follow typical appraisal industry methods; however, we recognize that some factors may limit our ability to obtain accurate measurements including, but not limited to, property access on the day of inspection, basements, fenced/gated areas, grade elevations, greenery/shrubbery, uneven surfaces, multiple story structures, obtuse or acute wall angles, immobile obstructions, etc. Professional building area measurements of © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 44 SA4-76 EXHIBIT 3 �� Valbridge Public Pay Parking LOS \,,,., GENERAL ASSUMPTIONS &LIMITING CONDITIONS PROPERTY ADVISORS the quality, level of detail, or accuracy of professional measurement services are beyond the scope of this appraisal assignment. 25. We have attempted to reconcile sources of data discovered or provided during the appraisal process, including assessment department data. Ultimately, the measurements that are deemed by us to be the most accurate and/or reliable are used within this report. While the measurements and any accompanying sketches are considered to be reasonably accurate and reliable, we cannot guarantee their accuracy. Should the client desire a greater level of measuring detail, they are urged to retain the measurement services of a qualified professional (space planner, architect, or building engineer). We reserve the right to use an alternative source of building size and amend the analysis, narrative and concluded values (at additional cost) should this alternative measurement source reflect or reveal substantial differences with the measurements used within the report. 26. In the absence of being provided with a detailed land survey, we have used assessment department data to ascertain the physical dimensions and acreage of the property. Should a survey prove this information to be inaccurate, we reserve the right to amend this appraisal (at additional cost) if substantial differences are discovered. 27. If only preliminary plans and specifications were available for use in the preparation of this appraisal, then this appraisal is subject to a review of the final plans and specifications when available (at additional cost) and we reserve the right to amend this appraisal if substantial differences are discovered. 28. Unless otherwise stated in this report, the value conclusion is predicated on the assumption that the property is free of contamination, environmental impairment, or hazardous materials. Unless otherwise stated, the existence of hazardous material was not observed by the appraiser and 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, or other potentially hazardous materials may affect the value of the property. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required for discovery. The client is urged to retain an expert in this field, if desired. 29. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey of the property to determine if it is in conformity with the various requirements of the ADA. It is possible that a compliance survey of the property, together with an analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this could have a negative effect on the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible noncompliance with the requirements of ADA in developing an opinion of value. 30. This appraisal applies to the land and building improvements only. The value of trade fixtures, furnishings, and other equipment, or subsurface rights (minerals, gas, and oil) were not considered in this appraisal unless specifically stated to the contrary. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 45 SA4-77 p Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS GENERAL ASSUMPTIONS & LIMITING CONDITIONS 31. No changes in any federal, state, or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated, unless specifically stated to the contrary. 32. Projections of income and expenses made in this appraisal are not predictions of the future and are made as of the date of the appraisal. These estimates represent the appraiser's best estimate of current market related thinking on future income and expenses. The appraiser makes no warranty that these projections will materialize. The real estate market is constantly fluctuating and changing. It is not the task of the appraiser(s) to predict or in any way warrant the conditions of a future real estate market, rather the appraiser(s) can only reflect what the investment community, as of a specific date, envisions for the future in terms of rental rates, expenses, supply and demand. 33. Any estimate of insurable value, if included within the scope of work and presented herein, is based upon figures developed consistent with industry practices. However, actual local and regional construction costs may vary significantly from our estimate and individual insurance policies and underwriters have varied specifications, exclusions, and non -insurable items. Therefore, we strongly recommend that the Client obtain estimates from professionals experienced in establishing insurance coverage. This analysis should not be relied upon to determine insurance coverage and we make no warranties regarding the accuracy of this estimate. 34. The data gathered in the course of this assignment (except data furnished by the Client) shall remain the property of the Appraiser. The appraiser will not violate the confidential nature of the appraiser -client relationship by improperly disclosing any confidential information furnished to the appraiser. Notwithstanding the foregoing, the Appraiser is authorized by the client to disclose all or any portion of the appraisal and related appraisal data to appropriate representatives of the Appraisal Institute if such disclosure is required to enable the appraiser to comply with the Bylaws and Regulations of such Institute now or hereafter in effect. 35. You and Valbridge Property Advisors I Penner and Associates, Inc. both agree that any dispute over matters in excess of $5,000 will be submitted for resolution by arbitration. This includes fee disputes and any claim of malpractice. The arbitrator shall be mutually selected. If Valbridge Property Advisors I Penner and Associates, Inc. and the client cannot agree on the arbitrator, the presiding head of the Local County Mediation & Arbitration panel shall select the arbitrator. Such arbitration shall be binding and final. In agreeing to arbitration, we both acknowledge that, by agreeing to binding arbitration, each of us is giving up the right to have the dispute decided in a court of law before a judge or jury. In the event that the client, or any other party, makes a claim against Penner and Associates, Inc. or any of its employees in connections with or in any way relating to this assignment, the maximum damages recoverable by such claimant shall be the amount actually received by Valbridge Property Advisors I Penner and Associates, Inc. for this assignment, and under no circumstances shall any claim for consequential damages be made. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 46 SA4-78 Valbridge PROPERTY ADVISORS EXHIBIT 3 Public Pay Parking Lot GENERAL ASSUMPTIONS & LIMITING CONDITIONS 36. Valbridge Property Advisors I Penner and Associates, Inc. shall have no obligation, liability, or accountability to any third party. Any party who is not the "client' or intended user identified on the face of the appraisal or in the engagement letter is not entitled to rely upon the contents of the appraisal without the express written consent of Valbridge Property Advisors Penner and Associates, Inc.. "Client' shall not include partners, affiliates, or relatives of the party named in the engagement letter. Client shall hold Valbridge Property Advisors I Penner and Associates, Inc. and its employees harmless in the event of any lawsuit brought by any third party, lender, partner, or part-owner in any form of ownership or any other party as a result of this assignment. The client also agrees that in case of lawsuit arising from or in any way involving these appraisal services, client will hold Valbridge Property Advisors I Penner and Associates, Inc. harmless from and against any liability, loss, cost, or expense incurred or suffered by Valbridge Property Advisors I Penner and Associates, Inc. in such action, regardless of its outcome. 37. The Valbridge Property Advisors office responsible for the preparation of this report is independently owned and operated by Penner and Associates, Inc.. Neither Valbridge Property Advisors, Inc., nor any of its affiliates has been engaged to provide this report. Valbridge Property Advisors, Inc. does not provide valuation services, and has taken no part in the preparation of this report. 38. If any claim is filed against any of Valbridge Property Advisors, Inc., a Florida Corporation, its affiliates, officers or employees, or the firm providing this report, in connection with, or in any way arising out of, or relating to, this report, or the engagement of the firm providing this report, then (1) under no circumstances shall such claimant be entitled to consequential, special or other damages, except only for direct compensatory damages, and (2) the maximum amount of such compensatory damages recoverable by such claimant shall be the amount actually received by the firm engaged to provide this report. 39. This report and any associated work files may be subject to evaluation by Valbridge Property Advisors, Inc., or its affiliates, for quality control purposes. 40. Acceptance and/or use of this appraisal report constitutes acceptance of the foregoing general assumptions and limiting conditions. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-79 Page 47 IT Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS CERTIFICATION Certification I certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We 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. 4. We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of the appraisal within the three-year period immediately preceding acceptance of this assignment. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. This appraisal has been completed without regard to race, color, religion, national origin, sex, marital status or any other prohibited basis, and does not contain references which could be regarded as discriminatory. 9. Our analyses, opinions and conclusions were developed, and this report has been prepared in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 10. We have made a personal inspection of the property that is the subject of this report. 11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 12. As of the date of this report, I, John D. Penner, have completed the continuing education program for Designated Members of the Appraisal Institute. John D. Penner, MAI Eric Day Senior Managing Director Staff Appraiser Certified General AGO01720 Certified General AG044661 © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-80 Page 48 EXHIBIT 3 Valbridge Public Pay Parking Lot ADDENDA PROPERTY ADVISORS Addenda Exhibit A: Engagement Letter Glossary Qualifications Information on Valbridge Property Advisors Office Locations © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-81 Page 49 EXHIBIT 3 Valbrid a Public Pay Parking Lot (SJR PROPERTY ADVISORS ADDENDA Exhibit A — ent Letter © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-82 Page 50 EXHIBIT 3 Public Pay Parking Lot \\ VaIbridge ADDENDA �"+' PROPERTY ADVISORS 1%10albridge PROPERTY ADVISORS Penner & Associates, Inc- September na September 16.2016 TO: Ms. Cheryl DeMucci, ROW Supervisor Paragon Partners Ltd. 5762 Bolsa Avenue, Suite 201 Huntington Beach, CA 92649 Re: Contract for Appraisal Services: 91 S Flower Street & 830 N Parton Street Santa Ana, CA 92703 Santa Ana, CA 92701 APN:005-142-58 APN: 005-142-21 921 Flower Street Santa Ana, CA 92703 APN: 005-142-35 842 N Garnsey Street Santa Ana, CA 92701 APN: 005-142-47 1370 N. ar,a BaulrvaM SS5ta 251 Fuilnlm, cA 97A55 714.449-D852 plana 714 733 4371 lax siDOgo Cain Dear Ms. DeMucci, We are pleased to submit our contract for an appraisal of the above referenced properties. The purpose of this assignment will be to estimate the "as is' Market Values of the fee simple interest in the subject properties. These appraisals are to be in conformance with the guidelines of the Appraisal Institute and regulations required by the State of California. The intended use of this report is to establish market value for the sale of the real properties. It is our understanding that the subject property consists of a four separate land parcels identified above. It is noted that Parcels 005-142-58, 35 & 47 currently consist of three contiguous vacant lots that share the same zoning and would be sold together to maximize the development potential of the sites. Thus, we will consider these parcels together as one parcel for the purpose of this assignment. Parcel 005-142-21 consists of a land parcel occupied by a parking lot that is part of a larger parking lot and is not contiguous to the other parcels. Therefore, we will complete two appraisal reports. These reports are to be issued as a narrative Appraisal Report and will conform with the Codes of Professional Ethics and Standards of the Appraisal Institute. The scope of the report will include the background, objectives and conclusions reached as well as the valuation methodology employed in arriving at the final conclusion of value. Also included, are all relevant and appropriate exhibits and supporting appendices. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-83 Page 51 �\m / ry EXHIBIT 3 / Valbridye Public Pay Parking Lot %/ PROPERTY ADVISORS ADDENDA Valbeidge PWI.1 V x=Wus Our reports are to be used only for the purpose stated herein anis none should rely on this report for any other purpose You may show our reports in their entirety to those third parties who need to review the Information contained therein. However, you agree to hold the appraiser harmless from any liability, including attorney's fees, damages or costs which may result from any improper use of or reliance on the report. by you or third parties. Our professional fee is based an the probable number of hours required to inspect the subject property, investigate market data, inspect and analyze data, reach a conclusion of value and write the report. our fee for this assignment will be $4,000. Based on our current workload, we could complete the report in 4 v:eeks. In order to proceed with this assignment, it is necessary that we receive a retainer made out to Valbridge Property Advisors for 52,000. Presented on the next few pages, are standard terms of the appraisal contract. This proposal is submitted based upon our current schedule of commitments. Thus, delays in receiving the requested information could result in an extension of the delivery date for this appraisal. We appreciate the confidence implied by your request for this proposal and look forward to the opportunity of wmking with you on this appraisal assignment. Respectively submitted, �- � () John D. Penner, MAI Senior Managing Director General Certified, AGO01720 If this contract is satisfactory to you, please sign a copy and return it to us along with the other requested items. Authorized to proceed as indicated. By Title Date © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-84 Page 52 EXHIBIT 3 '({\ Parking Lot Valbridge Public Pay ADDENDA PROPERTY ADVISORS Glossary Definitions are taken from the Dictionary of Real Estate Appraisal, 5`h Edition (Dictionary), the Uniform Standards of Professional Appraisal Practice (USPAP) and Building Owners and Managers Association International (BOMA). Absolute Net Lease A lease in which the tenant pays all expenses including structural, maintenance, building reserves, and management; often a long-term lease to a credit tenant. (Dictionary) Additional Rent Any amounts due under a lease that is in addition to base rent. Most common form is operating expense increases. (Dictionary) Amortization The process of retiring a debt or recovering a capital investment, typically though scheduled, systematic repayment of the principal; a program of periodic contributions to a sinking fund or debt retirement fund. (Dictionary) As Is Market Value The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. (Dictionary) Base (Shell) Building The existing shell condition of a building prior to the installation of tenant improvements. This condition varies from building to building, landlord to landlord, and generally involves the level of finish above the ceiling grid. (Dictionary) Base Rent The minimum rent stipulated in a lease. (Dictionary) Base Year The year on which escalation clauses in a lease are based. (Dictionary) Building Common Area The areas of the building that provide services to building tenants but which are not included in the rentable area of any specific tenant. These areas may include, but shall not be limited to, main and auxiliary lobbies, atrium spaces at the level of the finished floor, concierge areas or security desks, conference rooms, lounges or vending areas food service facilities, health or fitness centers, daycare facilities, locker or shower facilities, mail rooms, fire control rooms, fully enclosed courtyards outside the exterior walls, and building core and service areas such as fully enclosed mechanical or equipment rooms. Specifically excluded from building common areas are; floor common areas, parking spaces, portions of loading docks outside the building line, and major vertical penetrations. (BOMA) Building Rentable Area The sum of all floor rentable areas. Floor rentable area is the result of subtracting from the gross measured area of a floor the major vertical penetrations on that same floor. It is generally fixed for the life of the building and is rarely affected by changes in corridor size or configuration. (BOMA) Certificate of Occupancy (COO) A statement issued by a local government verifying that a newly constructed building is in compliance with all codes and may be occupied. Common Area (Public) Factor In a lease, the common area (public) factor is the multiplier to a tenant's useable space that accounts for the tenant's proportionate share of the common area (restrooms, elevator lobby, mechanical rooms, etc.). The public factor is usually expressed as a percentage and ranges from a low of 5 percent for a full tenant to as high as 15 percent or more for a multi -tenant floor. Subtracting one (1) from the quotient of the rentable area divided by the useable area yields the load (public) factor. At times confused with the "loss factor" which is the total rentable area of the full floor less the useable area divided by the rentable area. (BOMA) © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Common Area Maintenance (CAM) The expense of operating and maintaining common areas; may or may not include management charges and usually does not include capital expenditures on tenant improvements or other improvements to the property. CAM can be a line -item expense for a group of items that can include maintenance of the parking lot and landscaped areas and sometimes the exterior walls of the buildings. CAM can refer to all operating expenses. CAM can refer to the reimbursement by the tenant to the landlord for all expenses reimbursable under the lease. Sometimes reimbursements have what is called an administrative load. An example would be a 15 percent addition to total operating expenses, which are then prorated among tenants. The administrative load, also called an administrative and marketing fee, can be a substitute for or an addition to a management fee. (Dictionary) SA4-85 Page 53 ��. Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS ADDENDA Condominium A form of ownership in which each owner possesses the exclusive right to use and occupy an allotted unit plus an undivided interest in common areas. A multiunit structure, or a unit within such a structure, with a condominium form of ownership. (Dictionary) Conservation Easement An interest in real property restricting future land use to preservation, conservation, wildlife habitat, or some combination of those uses. A conservation easement may permit farming, timber harvesting, or other uses of a rural nature to continue, subject to the easement. In some locations, a conservation easement may be referred to as a conservation restriction. (Dictionary) Contributory Value The change in the value of a property as a whole, whether positive or negative, resulting from the addition or deletion of a property component. Also called deprival value in some countries. (Dictionary) Debt Coverage Ratio (DCR) The ratio of net operating income to annual debt service (DCR = NOI/lm), which measures the relative ability to a property to meet its debt service out of net operating income. Also called Debt Service Coverage Ratio (DSCR). A larger DCR indicates a greater ability for a property to withstand a downturn in revenue, providing an improved safety margin for a lender. (Dictionary) Deed Restriction A provision written into a deed that limits the use of land. Deed restrictions usually remain in effect when title passes to subsequent owners. (Dictionary) Depreciation 1) In appraising, the loss in a property value from any cause; the difference between the cost of an improvement on the effective date of the appraisal and the market value of the improvement on the same date. 2) In accounting, an allowance made against the loss in value of an asset for a defined purpose and computed using a specified method. (Dictionary) Disposition Value The most probable price that a specified interest in real property is likely to bring under the following conditions: Consummation of a sale within a exposure time specified by the client; The property is subjected to market conditions prevailing as of the date of valuation; © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Both the buyer and seller are acting prudently and knowledgeably, The seller is under compulsion to sell; The buyer is typically motivated; Both parties are acting in what they consider to be their best interests; An adequate marketing effort will be made during the exposure time specified by the client; Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (Dictionary) Easement The right to use another's land for a stated purpose. (Dictionary) EIFS Exterior Insulation Finishing System. This is a type of exterior wall cladding system. Sometimes referred to as dry -vit. Effective Date The date at which the analyses, opinions, and advice in an appraisal, review, or consulting service apply. 2) In a lease document, the date upon which the lease goes into effect. (Dictionary) Effective Gross Income (EGI) The anticipated income from all operations of the real property after an allowance is made for vacancy and collection losses and an addition is made for any other income. (Dictionary) Effective Rent The rental rate net of financial concessions such as periods of no rent during the lease term and above- or below-market tenant improvements (Tis). (Dictionary) EPDM Ethylene Diene Monomer Rubber. A type of synthetic rubber typically used for roof coverings. (Dictionary) Escalation Clause A clause in an agreement that provides for the adjustment of a price or rent based on some event or index. e.g., a provision to increase rent if operating expenses increase; also called an expense recovery clause or stop clause. (Dictionary) Estoppel Certificate A statement of material factors or conditions of which another person can rely because it cannot be denied at a later date. In real estate, a buyer of rental property SA4-86 Page 54 Parking Lot `/ EXHIBIT 3 Valbr,idge Public Pay ADDENDA PROPERTY ADVISORS typically requests estoppel certificates from existing tenants. Sometimes referred to as an estoppel letter. (Dictionary) Excess Land Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately. (Dictionary) Expense Stop A clause in a lease that limits the landlord's expense obligation, which results in the lessee paying any operating expenses above a stated level or amount. (Dictionary) Exposure Time 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. (Dictionary) Extraordinary Assumption An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. (Dictionary) Fee Simple Estate Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. (Dictionary) Floor Common Area Areas on a floor such as washrooms, janitorial closets, electrical rooms, telephone rooms, mechanical rooms, elevator lobbies, and public corridors which are available primarily for the use of tenants on that floor. (BOMA) Full Service (Gross) Lease A lease in which the landlord receives stipulated rent and is obligated to pay all of the property's operating and fixed expenses; also called a full service lease. (Dictionary) Going Concern Value • The market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. • The value of an operating business enterprise. Goodwill may be separately measured but is an integral component of going -concern value when it exists and is recognizable. (Dictionary) Gross Building Area The total constructed area of a building. It is generally not used for leasing purposes (BOMA) Gross Measured Area The total area of a building enclosed by the dominant portion (the portion of the inside finished surface of the permanent outer building wall which is 50 percent or more of the vertical floor -to -ceiling dimension, at the given point being measured as one moves horizontally along the wall), excluding parking areas and loading docks (or portions of the same) outside the building line. It is generally not used for leasing purposes and is calculated on a floor by floor basis. (BOMA) © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Gross Up Method A method of calculating variable operating expense in income-producing properties when less than 100 percent occupancy is assumed. The gross up method approximates the actual expense of providing services to the rentable area of a building given a specified rate of occupancy. (Dictionary) Gross Retail Sellout The sum of the appraised values of the individual units in a subdivision, as if all of the units were completed and available for retail sale, as of the date of the appraisal. The sum of the retail sales includes an allowance for lot premiums, if applicable, but excludes all allowances for carrying costs. (Dictionary) Ground Lease A lease that grants the right to use and occupy land. Improvements made by the ground lessee typically revert to the ground lessor at the end of the lease term. (Dictionary) Ground Rent The rent paid for the right to use and occupy land according to the terms of a ground lease; the portion of the total rent allocated to the underlying land. (Dictionary) SA4-87 Page 55 EXHIBIT 3 VaIbridge Public Pay Parking Lot PROPERTY ADVISORS ADDENDA HVAC Heating, ventilation, air conditioning. A general term encompassing any system designed to heat and cool a building in its entirety. Highest and Best Use The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are 1) legal permissibility, 2) physical possibility, 3) financial feasibility, and 4) maximally profitability. Alternatively, the probable use of land or improved —specific with respect to the user and timing of the use—that is adequately supported and results in the highest present value. (Dictionary) Hypothetical Condition That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. (Dictionary) Industrial Gross Lease A lease of industrial property in which the landlord and tenant share expenses. The landlord receives stipulated rent and is obligated to pay certain operating expenses, often structural maintenance, insurance and real estate taxes as specified in the lease. There are significant regional and local differences in the use of this term. (Dictionary) Insurable Value A type of value for insurance purposes. (Dictionary) (Typically this includes replacement cost less basement excavation, foundation, underground piping and architect's fees). Investment Value The value of a property interest to a particular investor or class of investors based on the investor's specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market. (Dictionary) Just Compensation In condemnation, the amount of loss for which a property owner is compensated when his or her property is taken. Just compensation should put the owner in as good a position as he or she would be if the property had not been taken. (Dictionary) © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Leased Fee Interest A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord -tenant relationship (i.e., a lease). (Dictionary) Leasehold Interest The tenant's possessory interest created by a lease. (Dictionary) Lessee (Tenant) One who has the right to occupancy and use of the property of another for a period of time according to a lease agreement. (Dictionary) Lessor (Landlord) One who conveys the rights of occupancy and use to others under a lease agreement. (Dictionary) Liquidation Value The most probable price that a specified interest in real property should bring under the following conditions: Consummation of a sale within a short period. The property is subjected to market conditions prevailing as of the date of valuation. Both the buyer and seller are acting prudently and knowledgeably. The seller is under extreme compulsion to sell. The buyer is typically motivated. Both parties are acting in what they consider to be their best interests. A normal marketing effort is not possible due to the brief exposure time. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (Dictionary) Loan to Value Ratio (LN) The amount of money borrowed in relation to the total market value of a property. Expressed as a percentage of the loan amount divided by the property value. (Dictionary) Major Vertical Penetrations Stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the like, and their enclosing walls. Atria, lightwells and similar penetrations above the finished floor are included in this definition. Not included, however, are vertical penetrations built for the private use of a tenant occupying office areas on more than one floor. Structural columns, openings for vertical electric cable or telephone distribution, and openings for plumbing lines i . . Page 56 EXHIBIT 3 Parking Lot A9, Valbridge PublicPaY ADDENDA A9',v''''' PROPERTY ADVISORS are not considered to be major vertical penetrations. (BOMA) Market Rent The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement including permitted uses, use restrictions, expense obligations; term, concessions, renewal and purchase options and tenant improvements (Tis). (Dictionary) Market Value The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: a. Buyer and seller are typically motivated; b. Both parties are well informed or well advised, and acting in what they consider their own best interests; c. A reasonable time is allowed for exposure in the open market; d. Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and e. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Market Value As If Complete Market value as if complete means the market value of the property with all proposed construction, conversion or rehabilitation hypothetically completed or under other specified hypothetical conditions as of the date of the appraisal. With regard to properties wherein anticipated market conditions indicate that stabilized occupancy is not likely as of the date of completion, this estimate of value shall reflect the market value of the property as if complete and prepared for occupancy by tenants. Market Value As If Stabilized Market value as if stabilized means the market value of the property at a current point and time when all improvements have been physically constructed and the property has been leased to its optimum level of long term occupancy. Marketing Time An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of the appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the Standards Board of the Appraisal Foundation and Statement on Appraisal Standards No. 6, "Reasonable Exposure Time in Real Property and Personal Property Market Value Opinions' address the determination of reasonable exposure and marketing time). (Dictionary) Master Lease A lease in which the fee owner leases a part or the entire property to a single entity (the master lease) in return for a stipulated rent. The master lessee then leases the property to multiple tenants. (Dictionary) Modified Gross Lease A lease in which the landlord receives stipulated rent and is obligated to pay some, but not all, of the property's operating and fixed expenses. Since assignment of expenses varies among modified gross leases, expense responsibility must always be specified. In some markets, a modified gross lease may be called a double net lease, net net lease, partial net lease, or semi -gross lease. (Dictionary) ©2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Operating Expense Ratio The ratio of total operating expenses to effective gross income (FOE/EGI); the complement of the net income ratio, i.e., CER = 1 — NIR (Dictionary) Option A legal contract, typically purchased for a stated consideration, that permits but does not require the holder of the option (known as the optionee) to buy, sell, or lease real property for a stipulated period of time in accordance with specified terms; a unilateral right to exercise a privilege. (Dictionary) Partial Interest Divided or undivided rights in real estate that represent less than the whole (a fractional interest). (Dictionary) Pass Through A tenant's portion of operating expenses that may be composed of common area maintenance (CAM), real estate taxes, property insurance, and any other expenses determined in the lease agreement to be paid by the tenant. (Dictionary) Potential Gross Income (PGI) The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted. (Dictionary) SA4-89 Page 57 p .�. Valbridge EXHIBIT 3 Public Pay Parking Lot PROPERTY ADVISORS ADDENDA Prospective Future Value Upon Completion Market value "upon completion" is a prospective future value estimate of a property at a point in time when all of its improvements are fully completed. It assumes all proposed construction, conversion, or rehabilitation is hypothetically complete as of a future date when such effort is projected to occur. The projected completion date and the value estimate must reflect the market value of the property in its projected condition, i.e., completely vacant or partially occupied. The cash flow must reflect lease -up costs, required tenant improvements and leasing commissions on all areas not leased and occupied. Prospective Future Value Upon Stabilization Market value "upon stabilization" is a prospective future value estimate of a property at a point in time when stabilized occupancy has been achieved. The projected stabilization date and the value estimate must reflect the absorption period required to achieve stabilization. In addition, the cash flows must reflect lease -up costs, required tenant improvements and leasing commissions on all unleased areas. Replacement Cost The estimated cost to construct, at current prices as of the effective appraisal date, a substitute for the building being appraised, using modern materials and current standards, design, and layout. (Dictionary) Reproduction Cost The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all of the deficiencies, super -adequacies, and obsolescence of the subject building. (Dictionary) Retrospective Value Opinion A value opinion effective as of a specified historical date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific prior date. Value as of a historical date is frequently sought in connection with property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., "retrospective market value opinion." (Dictionary) Sandwich Leasehold Estate The interest held by the original lessee when the property is subleased to another party; a type of leasehold estate. (Dictionary) © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Sublease An agreement in which the lessee (i.e., the tenant) leases part or all of the property to another party and thereby becomes a lessor. (Dictionary) Subordination A contractual arrangement in which a party with a claim to certain assets agrees to make his or her claim junior, or subordinate, to the claims of another party. (Dictionary) Substantial Completion Generally used in reference to the construction of tenant improvements (Tls). The tenant's premises are typically deemed to be substantially completed when all of the Tis for the premises have been completed in accordance with the plans and specifications previously approved by the tenant. Sometimes used to define the commencement date of a lease. Surplus Land Land that is not currently needed to support the existing improvement but cannot be separated from the property and sold off. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved parcel. (Dictionary) Triple Net (Net Net Net) Lease A lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management. Also called NNN, triple net lease, or fully net lease. (Dictionary) (The market definition of a triple net lease varies; in some cases tenants pay for items such as roof repairs, parking lot repairs, and other similar items.) Usable Area The measured area of an office area, store area or building common area on a floor. The total of all the usable areas or a floor shall equal floor usable area of that same floor. The amount of floor usable area can vary over the life of a building as corridors expand and contract and as floors are remodeled. (BOMA) Value -in -Use The value of a property assuming a specific use, which may or may not be the property's highest and best use on the effective date of the appraisal. Value in use may or may not be equal to market value but is different conceptually. (Dictionary) SA4-90 Page 58 EXHIBIT 3 ValbridgegPROPERTY Qualifications of John D. Penner, MAI Senior Managing Director Independent Valuations for a Variable World State Certifications Membership/Affiliations: Certified General Appraiser Member: Appraisal Institute - MAI Designation & Certification in State of California (AG001720) Litigation Chair: Appraisal Institute - Southern California Chapter - Southern Branch & Advisor/Candidate Program (2012) Member: Urban Land Institute -Certificate in RE Development Founding Board of Directors Member- Valbridge Property Advisors Education Experience: B.S. - Business Administration SENIOR MANAGING DIRECTOR/OWNER,1991-Present Finance & Investments This firm performs valuation and advising for commercial real estate with a San Diego State University specialty in medical office, and industrial properties. Mr. Penner has over 30 years of experience in the Southern California region and has completed assignments in many areas of the United States. Publications - Author SENIOR APPRAISER: T.LYATES&ASSOCIATE, 1990-1991. Penner Expense Guides: Work included narrative appraisals of proposed, existing and problem Low Rise & Medical Office properties located in the markets of Southern California and Arizona. Business Parks & Single Tenant Industrial SENIOR APPRAISER/ANALYST: HOMESAVINGS oFAMERICA, 1983-1990. Strip Retail Centers Work included valuation of residential and commercial properties located throughout Southern California, parts of Northern California, Arizona, Texas, Florida and New York. Specific responsibilities included the appraisal of Qualified problem properties, market studies, feasibility, and portfolio analysis. Expert Witness: Bankruptcy & Superior Court Scope of Work: Cash Flow Forecast: ARGUS Work includes the appraisal and/or consultation of reports for acquisition, sale, refinance, estate, development, condemnation, fractional interest and court testimony purposes. Typical clients served are financial institutions, Contact Details investors, developers, legal firms, and governmental. Types of properties 714-449-0852 (office) appraised include: Valbridge Property Advisors High and Low Rise Office Medical & Dental Offices 1370 N. Brea Blvd., Suite 255 Corporate Headquarters Office Condominiums Fullerton, CA 92835 Regional Shopping Malls Neighborhood Centers jpenner@valbridge.com Strip Retail Centers Restaurants www.valbridge.com Mixed Use Bank Branches Vacant Land Market Studies Valbridge Property Advisors is Manufacturing Facilities Warehouses R&D Buildings Business Parks the 3rd Appraisal Company in Mini -Warehouse Multi -Tenant Industrial the United States with 65 Master Planned Communities Subdivisions offices nationwide. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. Page 59 SA4-91 EXHIBIT 3 0111 Valbr dlge RS Qualifications of Eric Day MBA Staff Appraiser Independent Valuations for a Variable World i State Certifications Membership/Affiliations: Certified General Appraiser Member: National Association of Realtors State of California (AG044661) Appraisal Courses: Appraisal Principles, Appraisal Procedures, National Uniform Real Estate Broker's License Standards of Appraisal Practice (USPAP), Report Writing and Case State of California (01474163) Studies, Market Analysis and Highest and Best Use, Sales Comparison Approach, Income Approach, Site Valuation and Cost Approach Education Statistics, Modeling and Finance, Real Estate Practice, Real Estate M.B.A. Business Finance, Real Estate Law, Real Estate Principles Administration Experience: University of Southern VALBRIDGE PROPERTYAD VISORS, 2011—Present. California This firm performs valuation and advising for commercial & B.A. — Business & Finance residential real estate with specialties in investment property, Cal tate University Fullerton medical, development, condemnation, legal testimony and fractional interests. REAL ESTATE BROKER: T.L. C&P RE41. ESTATE AND INVEsTMEmTs, 2004 - Contact Details 2011• 714-308-6969 (p) Owned & operated brokerage firm specializing in commercial, residential, industrial and investment real estate, including Real Estate Valbridge Property Advisors Appraisals, Property Management, Commercial & Residential Property Penner & Associates, Inc. Evaluations, Land, and Vacant Land Acquisitions. 1370 N. Brea Blvd., Suite 255 CORPORATE BUSINESS OWNER: ECDENTERPRIsEs, 1997-2004. Fullerton, CA 92835 Owned & operated service -related corporation that covered the eday@valbridge.com Orange County market. www.valbridgecom FINANCIAL PLANNING MANAGER: BOEING COMPANY, 1982-1997. Developed the accounting and financial plans for program and division commitments for awards, sales, profit and assets. Scope of Work: Types of properties appraised include: High and Low Rise Office, Medical & Dental Offices, Neighborhood Centers, Strip Retail Centers, Restaurants, Mixed Use, Vacant Land, Market Studies, Manufacturing Facilities, Warehouses, R&D Buildings, Business Parks, Mini -Warehouse, Multi -Tenant Industrial, Apartment Projects, Single Family, Self -Storage Facilities, Condemnation, Fractional Interests, and Skilled Nursing Facilities. @ 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-92 Page 60 EXHIBIT 3 Company Information on Valbridge Property Advisors a Valbridge Is one of the Top 3 national commercial real estate valuation and advisory services firms based on: - Total number of MAIs (188 on staff) - Total number of office locations (68 across the U.S.) - Total number of staff (650+ strong) a Valbridge covers the U.S. from coast to coast. O Valbridge services all property types, Including special-purpose properties. a Valbridge provides independent valuation services. We are not owned by a brokerage firm or Investment company. a Every Valbridge office Is led by a senior managing director who holds the MAI designation of the Appraisal Institute. a Valbridge is owned by our local office leaders. a Valbridge welcomes single -property assignments as well as portfolio, multi -market and other bulk -property engagements. © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-93 Page 61 EXHIBIT 3 Comprehensive Valuation and Advisory Services Valbridge specializes in appraising all types of property and land: ® Office buildings and properties ® Industrial buildings and properties • Retail buildings and properties JIF Apartments, multifamily, senior living buildings and properties * Hotel, lodging, hospitality, recreational buildings and properties * Other special-purpose buildings and properties SPECIALTY SERVICES © Portfolio valuation 9 Real estate market and feasibility analysis, including rent and demand studies and site analysis and selection ® Property and lease comparables, including lease revievi 9 Due diligence * Property tax assessment analysis and property tax appeals [J Valuations and analysis of property for right-of-way, eminent domain, easements m REO and foreclosure evaluation © Valuations of property for financial reporting, including goodwill impairment, impairment or disposal of long-lived assets, fairvalue and leasehold valuations 17 Valuation of property for insurance, estate planning and trusteeship, including fractional interest valuation for gifting and IRS purposes • Litigation support, including expert vntness testimony O Business and partnership valuation and advisory services, including partial interests © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-94 Page 62 EXHIBIT 3 ALABAMA 4732 NW amen f routevard 334-2-507713fif08 311-27]-597] ARIZONA 6061 E. Gran) Raad Suit. 121 Tucsvn,A265T12 52061-0000 CALIFORNIA 4915C.BOway Dnve state 101' Bale 87-10 0 93312 661-`v81-1010 1370 N. Brea Boulevard SuX.255 FuBedon. CA U835 714-449-0652 2813 Coffee Road Suite E-2 200 !W U0450 5355 309569-0450 W S. lake Avenue Slee 21 Pesedena,CA91101 626744-0426 10301 Planer lane Suit. 100 Sanam.ntn, CA 95027 910.361-2509 55 Soum MMam Sn.1 Suite 1210 San Jose. CA 95113 403-2]9-1520 3160 Craw Canyon Race Sat.245 San Ramon. CA 94583 925322-1660 :41F7[e1:Tili: 5345Ar8pa5oe AvarNe Saw 7, Issue, CO M303 303x43.0600 552 Highway 133 CoNondale,C081623 970,340-1016 CONNECTICUT 6 Central Row Wal Floor Hanford, CT 0610 2 7 01 660.2464606 17 H9h Shelf Surae 214 Nom-aN, CT 06051 2012886520 FLORIDA 2240 Venetian Capt Naples. FL 34109 239.5144646 FLORIDA IcOnl'd J 603 11,11(d st Street Orlando, FL 32003 497-839-3626 11 Do IM 1 Street N St. Palawan,, FL -33705 727.894-1800 2711 Poinsettias A.. At,, Palm Boad1. FL 17407 561-0315331 GEORGIA 2675 Paces Fnry Road Suite 146 Atlanta. GA30339 678644-1853 IDAHO 1450Tvre9Lane Sales , get.'ID BTJo6 208336 X109] 1117524. Lakewood Drt e Suite 100 - Cae.1d'Mono. 1) 83S14. 206292.2065 INDIANA 820 Fon Wayne Av nuo Indlanapoks. IN 46204 317607-2747 KANSAS 109900uvira Road Suite 100 Ovedar4Park,K36521D 913151.1451 KENTUCKY 214 South 8th Slleet Suit. 200 LatimGO. KY 40202 on MIS -3651 LOUISIANA 512 North Causeway Bou''.1d hNsaire, LA 70001 504 8338234 760TFern Avenue Suite 1N Slbevepod, IA 71105 31&797,0543 MARYLAND 6240044 Dobbin lana SM.140 Columb'm.101321045 4104232300 MASSACHUSETTS 21 eW74ey Street Sal.2 Le[mgton, IJA 02421 791-652-0700 MICHIGAN 1442 Brush Street Depoit. IN 48226 3119863313 2127 University Parkpiva Suite 390 Massa, 1.1148864 517-3300001 MINNESOTA 120 South 601 Spee) Suite I= Mmneapobs. IAN 55402 612353-0650 -' - NEVADA 3034 S. Corona Suile 100 - Us Vegas. NV 89117 ]02342.9369 NEW JERSEY . 2740 Raule 10'AN51. SURD 204 Monis Plain; NJ 079W 971970.9333 2052 Rco 35. Bute IN Wall Township, W 07719 732.6074113 NEW YORK 424 A0s133rd Steel Suit.630 New Yak, NY 10001 212 -2681113 - NORTH CAROLINA 412 E. Chatham Sbeel Cary, NC27511 9148593666 4530 Park Road. State 100 Charlotte, NC 28209 7043765400 OHIO 1655 W. Worst Street Suite 130 Au. OH44313 3305999900 1422 ENbd Avenue S.01070 Cleveland. OH 44115 218367.9690 9277 Conrad Papel Orivo Sullo350 fltsl Chester. ON 45069 511785,0020 OKLAHOMA 025 N. Merida, A... Suite 309 Oklahama City.OK 73116 4055011553 CS665.uth sheMan Road suiio IN Tried, OK 74133 918.7129992 © 2015 VALBRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-95 OREGON 8220 SW Warm Stange Sbetl Suite 100 Tualatin. OR 97062 503-0200981 PENNSYLVANIA 150S.Make Road Saii King of Pmsela. PA 19408 2185461900 4201 Baptist Road S.A. 304 Paburgh. PA 15227 412-861-WBD SOUTH CAROLINA 610 N. Man Moral - Greenvilte, SC 29601 8643335277 800 Main Street Suit. 220, Hiban Head Island. SC 29028 843.3422302 � - 1250Fatmmnt Averaa, AML Plea4enl.'SC 29464 ' 811804421-8 TENNESSEE 112 WMpvvod Plae Suite 300 BrenNmvd. TN 37027 818389-0670 701 Broad Spool Suite 209 Challanooga.TN37402 423.2858435 213 Fav Road Knomlle, TN 37922 868522-2424 67SOPoplav Avenue Suilo706 Memphis.TN39136 901453867] TEXAS Two Energy Square 48400feemiw Avenue Sale 1495 Dallas. 08 7X]52 214440.1811 974 Campbell Road Suile 204 Housai 7X77024 7114675856 273181st Street Lubbock. TX 79423 806744-It08 III Soledad 5.140600 San Antonio.TK78205 21032]5229 UTAH 260 S.M12500 West Suite 301 Pleasant Gmve, UT Moog! W1492.9328 1100 Eas166006dNh Suite 201 Sall Lake City. UT 84121 801.2623388 20 Norah Main Su11. 304 St Geal,.. UT 84770 4357]35300 VIRGINIA 6561depeod.nce Parklad, su to 220 Chesapeake,VA23320 757410-1222 7400 Beau W tl Slinger Grivc S1iro 300 - RkAmurval 23225 ON 672-4473.- 5107Centel Street Unit 28 4 WOamebur9.VA23188 757.3480010 WASHINGTON 18728 Bothell A' y, NE Sudo B BotM0, NA98311 425-450-0010 2927 Colby Avenue Sate 100 Everett, WA 98201 426258.2611 419Belkeloy Avenue Sate A Fuaest. WACU66 2512]4-0039 8378 W. GrandMige Boulevard Sole 11" KenndivickWAM336 509221.1540 506Second Avenue Suite toot Swiss. 97,008104 206-209-3010 324 N.Mutan flood Spokane Veeey,WA992D5 509-747-0999 WISCONSIN 12560 W. North Avenue P.r.okfmld. Al 53005 262782.7990 Exp Vahod9a anew Is fralopentlOnity mvred and operaled. Page 63 EXHIBIT 3 • 7-Eieiam Ina • General Electrc Peal Estate • Advanced Micro Dwicas • General Gmsth Preperies. • Aetna Insurance Inc • AEW Capital Management . General Mcmrs • Allstate Investmeru LLC • GMAC • A%lRESCO Capital • Goldman Sachs • Amoral: . Gocgle. Inc • Apple Computar,Inc . Grnt Thomlon • Aro • Hearst Ccrporadcn • AT&T Home Cap= • Bankof America . HSBC • SEW • Hyatt Hotels Bell Atlantic Properties • Ietl • Bethlehem Steel • Intel Corporation • BFI Indus:Vies 1P. Alorgan Chase • Black &Decker . )Cpenney • Slaekeork Realty • )ohm Hopkins • Blue Cwsrluo Shield . Jones Lang LaSalle • SP Norh America . JCS. A. Bank • California Sank&True . Kalser Aluminum • CRIPER5 • Kaiser Permanente • Canada We Assurance Co. • K3Home • Catholic Charities . Key Bank Coop=_ ,the Services . Klmm Real Estate • Chemical Bank Imestment Trust • Chevron U.SA. Into • LaSalle lr:escrmnt Mgmt • Cnryslar Realty CPrp. • Lend Lease Real Estate • Citibank Imestmerts,lre • Constellation Energy • Lockheed Martin • Corporate Office Corpomdcn Propertles Trust . Macys • Conco M ulasale . Marine Midland Bank Corporation . Marriott CorPc von • Clan Suisse/First Boston . Massachusetts lnsdtute of • CCC Realty Technology • Deutsche Bank M.cng.ge • McDonalcis Corporation Capital LLC • Madill Lynch • Equayoffice • Metropolitan Life • E*mr. Mcbll Insurance Cc, • Federal Depcsit:murance . Midas Corp. • Money Store • Federal Home Loan Bank • Morgan Cuaramy Tram Board Company • Federal RealtyInvesiment . NewYcrk Life lrnmrtment Trust Management lnc • Fish Third Bank . Nenel • Fireman's Fund!murame • PEPCO Co. . PG&E • Food Ucn • PNC Bank • Ford Motor • Prudential lrvrmo • Forest City Entelpdses Corn pany 0 America • GECapitsl . Reglom Bank • GEICO . Safecolnsumnte @2015 VAL BRIDGE PROPERTY ADVISORS I Penner and Associates, Inc. SA4-96 .. Va,br e • Safmry7nc • SEC Global • Sears Roebuck&Co. • Sun Life of Canada • SunTrust • T. Rona Price • TeachersImurence& Annu:rj Aswc7stion of America • The David Kcmblatt Company • The Nature Ccrrervency • Time Group • Times hr, rrcr • Tog Emth.a. Ina • Toyota • Trust for Public Land • US Army Corps of Engiresrs • U.S Dept of Housing and Urban Development • US Dept C. Justice • US DePL of the Navj • U.S- General Services AdminuVation • US.Imemal Relem e Senice • U.S. P tai cewice • UN:ed Bank • Valem Energy Corpertion • VerLen • Volunteers of Avredca • Weech-Aa Eanc • Walker & Dunlop • Wei -Mart • V131. hlanagemm • Wage Fsrgo Page 64 EXHIBIT 4 SUCCESSOR AGENCY RESOLUTION NO. 2017-001 A RESOLUTION OF THE SUCCESSOR AGENCY TO THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA APPROVING A PURCHASE AND SALE AGREEMENT BY AND BETWEEN THE SUCCESSOR AGENCY AND MARIANNE P.. COVINGTON, RIDLEY J. POLITISKI AND MICHAEL P. POLITISKI, AS TRUSTEES OF THE MARITAL TRUST OF THE POLITISKI TRUST DATED DECEMBER 4, 2000 WHEREAS, the Community Redevelopment Agency of the City of Santa Ana (the "Redevelopment Agency") operated pursuant to Part 1 of Division 24 of the California Health and Safety Code as a redevelopment agency and, in connection with its activities, acquired certain property consisting of approximately 3,929 square feet designated as APN 005-142-21 at 830 N. Parton Street (the "Successor Agency Property"); and WHEREAS, by ABx1 26 enacted by the California Legislature during 2011 (the "2011 Dissolution Act ), the California Legislative eliminated every redevelopment agency within the State of California, including without limitation the Redevelopment Agency. Provisions relating to the dissolution of redevelopment agencies were elaborated upon by AB 1484, Chapter 26, Statutes of 2012 ("AB 1484" and, together with the 2011 Dissolution Act, the "Dissolution Provisions"); and WHEREAS, the Dissolution Provisions provide that a successor agency shall be designated for each redevelopment agency to implement the dissolution of each such redevelopment agency; the City of Santa Ana acting as the Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana has been designated as the successor agency to the Redevelopment Agency (in such capacity, the "Successor Agency"); and WHEREAS, pursuant to the 2011 Dissolution Act, an oversight board ("Oversight Board") has been established to oversee the wind-up of the activities of the Redevelopment Agency; and WHEREAS, in implementation of the Dissolution Provisions, and particularly in connection with managing the disposition of properties formerly held by the Redevelopment Agency that were not acquired with moneys from the Redevelopment Agency's low- and moderate -income housing fund ("Non -Housing Properties"), the Successor Agency prepared and submitted to the Oversight Board a long range property management plan: such long range property management plan was approved by the Oversight Board and the California Department of Finance (the "LRPMP"). The LRPMP identifies the Successor Agency Property as property to be sold, with the net proceeds of sale to be applied as provided in the LRPMP; and Resolution 2017-001 Page 1 of 5 SA4-97 EXHIBIT 4 WHEREAS, a private entity, Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 ('Buyer") has proposed to purchase the Successor Agency Property from the Successor Agency on those terms and conditions as set forth in that certain Purchase and Sale Agreement and Joint Escrow Instructions as submitted herewith (the 'Purchase and Sale Agreement'); and WHEREAS, the Successor Agency has reviewed the terms of the Purchase and Sale Agreement, the staff report, testimony given in connection with this item, and a report prepared by a land economist, and has determined that the Purchase and Sale Agreement provides a reasonable price for the Successor Agency Property; and WHEREAS, notice of the proceedings at which the Purchase and Sale Agreement is to be considered were published in a newspaper of general circulation; and WHEREAS, the proposed Purchase and Sale Agreement, and a staff report describing various aspects of the proposed Purchase and Sale Agreement (the'Report"), were available for public inspection prior to the joint public hearing; and WHEREAS, on October 17, 2017, the governing board of the Successor Agency held a public hearing on the proposed Agreement, at which time the Successor Agency reviewed and evaluated all of the information, testimony, and evidence presented during the joint public hearing; and WHEREAS, all actions required by all applicable law with respect to the proposed Purchase and Sale Agreement have been taken in an appropriate and timely manner; and WHEREAS, the Successor Agency has reviewed the Report and has evaluated other information provided to it pertaining to the findings proposed to be made hereunder. NOW THEREFORE, BE IT RESOLVED BY THE SUCCESSOR AGENCY TO THE FORMER COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA: Section 1. The foregoing recitals are true and correct and are a substantive part of this Resolution. Section 2. The Successor Agency hereby approves the Purchase and Sale Agreement in substantially the form presented to the Successor Agency, subject to such revisions as may be made by the City Manager or his/her designee. The City Manager is hereby authorized to execute the Purchase and Sale Agreement (including without limitation a grant deed and all attachments thereto) on behalf of the Successor Agency. A copy of the Purchase and Sale Agreement when executed by the Successor Agency shall be placed on file in the office of the Secretary of the Successor Agency. The Secretary of the Successor Agency shall transmit or cause to be transmitted to the Oversight Board a copy of the Purchase and Sale Agreement together with a copy of this Resolution. Resolution 2017-001 Page 2 of 5 SA4-98 EXHIBIT 4 Section 3. The City Manager or his/her designee is hereby authorized, on behalf of the Successor Agency, to make revisions to the Purchase and Sale Agreement which do not increase the Successor Agency's obligations or materially or substantially reduce the consideration payable to the Successor Agency, to sign a grant deed and any other documents the execution of which is necessary or convenient to effect the sale of the Successor Agency Property, to make all approvals and take all actions necessary or appropriate to carry out and implement the Purchase and Sale Agreement and to administer the Successor Agency's obligations, responsibilities and duties to be performed under the Purchase and Sale Agreement and related documents. Section 4. In accordance with the California Environmental Quality Act (CEQA), the sale of surplus government property is categorically exempt per §15312 of the CEQA Guidelines. Class 12 consists of sales of surplus government property. Section 5. This Resolution shall take effect upon its adoption and execution in the manner as required by the applicable provisions of the California Health & Safety Code shall govern the effectiveness of the Purchase and Sale Agreement. Section 6. The City Manager is hereby authorized and directed to submit the Purchase Agreement to the Oversight Board for approval in accordance with Health and Safety Code Section 34181(a). Section 7. This Resolution shall take effect immediately upon its adoption by the Successor Agency, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. [Signatures on subsequent page] Resolution 2017-001 Page 3 of 5 SA4-99 EXHIBIT 4 ADOPTED this 171h day of October, 2017. Miguel A. Pulido Mayor APPROVED AS TO FORM: Sonia R. Carvalho City Attgrnpy , Attorney AYES: Councilmembers: NOES: Councilmembers: ABSTAIN: Councilmembers: NOT PRESENT: Councilmembers: CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2017-001 to be the original resolution adopted by the Successor Agency on October 17, 2017. Date: Clerk of the Council City of Santa Ana SA4-100 Resolution 2017-001 Page 4 of 5 EXHIBIT 4 EXHIBIT "A" PURCHASE AND SALE AGREEMENT BETWEEN THE SUCCESSOR AGENCY TO THE FORMER COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA AND MARIANNE P. COVINGTON, RIDLEY J. POLITISKI AND MICHAEL P. POLITISKI, AS TRUSTEES OF THE MARITAL TRUST OF THE POLITISKI TRUST DATED DECEMBER 4, 2000 PROPERTY: 830 N. PARTON STREET (APN 005-142-21) (See Attachment) Resolution 2017-001 Page 5 of 5 SA4-101 EXHIBIT A TO EXHIBIT 4 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS SELLER: Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana BUYER: Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 DATED: October 17, 2017 (830 N. Parton Street, APN 005-142-21) SA4-102 EXHIBIT A TO EXHIBIT 4 BASIC TERMS Buyer: Marianne P. Covington, Ridley J. Politiski and MichaelP, Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 Buyer's Address: Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 Attention: Ridley J. Politiski, Trustee 320 S. Santa Maria Street Orange, CA 92869 E-mail address: Tel.: (714) 552-1174 Fax: (_ City: The City of Santa Ana Closing: The recording of the Deed Closing Contingency Date: November 30, 2017 Closing Date Estimated to occur by December 15, 2017, but not later than the Outside Date Deed: A grant deed in the form of Exhibit B hereto Deposit: Twenty Thousand Dollars ($20,000.00) Effective Date: October 17, 2017 Escrow Holder: Commonwealth Land Title Insurance Company 4100 Newport Place, Suite 120 Newport Beach, CA 92660 Tel: (949) 724-3142 Fax: (949)= _ Attention: Kelly Ralph, Escrow Officer (direct: (949) 724-3142; email: kelly.ralph@cltic.com (or another escrow holder mutually acceptable to Buyer and Seller) Independent Consideration Amount: Two Hundred Dollars ($200.00) Outside Date: December 31, 2017; provided that such date may be extended by mutual writing agreement by Seller and Buyer Oversight Board: The Oversight Board to the Successor Agency to the former SA4-103 EXHIBIT A TO EXHIBIT 4 Community Redevelopment Agency of the City of Santa Ana Owner of Adjacent Property Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 Purchase Price: One Hundred Fifty Five Thousand Dollars ($155,000.00) Real Property: That property described in Exhibit A hereto; the subject property is sometimes referred to as APN 005-142-21 Rental Agreement: See Recital A Seller: Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana Seller's Address: 20 Civic Center Plaza, M-25 Santa Ana, California 92701 Attention Executive Director Tel. (714) 647-5360 Fax: (714) 647-6549 Email: sgorosne(c)santa-ana.org Soil and Title Contingency Date: November 25, 2017 Title Company: Commonwealth Land Title Insurance Company 4100 Newport Place, Suite 120 Newport Beach, CA 92660 Tel: (949)_ Attention: Title Officer (direct: (949)= _; email:_ (or another title insurer mutually acceptable to Buyer and Seller) SA4-104 EXHIBIT A TO EXHIBIT 4 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS This PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of October 17, 2017 (the "Effective Date") by and between Seller and Buyer. RECITALS A. Seller is the fee owner of the Real Property. The Real Property is unoccupied and is improved as part of a parking lot. The Real Property is subject to a rental agreement with the Owner of the Adjacent Property (the "Rental Agreement"). The Owner of the Adjacent Property is related to the Buyer. Buyer agrees to cause the Owner of the Adjacent Property to cancel the Rental Agreement concurrent with the conveyance of the Real Property to Buyer under this Agreement. By executing this Agreement, each of Seller and Buyer consent to the termination of the Rental Agreement automatically as of the Closing. B. Seller has offered to sell to Buyer the Real Property described herein for the price and subject to the terms set forth below. Buyer has considered the offer by Seller and agrees to buy from Seller the Real Property, as more specifically described below. C. In addition to the Purchase Price, a material consideration to Seller in agreeing to sell the Real Property to Buyer pursuant to this Agreement and but for which Seller would not have agreed to enter into this Agreement or sell the Real Property to Buyer, Buyer has: (i) Agreed to pay to Seller or to deposit with the Escrow Holder for delivery to Seller the Independent Consideration Amount; and (ii) Agreed to deposit with the Escrow Holder for delivery to Seller the Deposit; (iii) Agreed to the provisions set forth in Sections 14 and 15 hereof. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows: 1. Purchase and Sale. Seller hereby agrees to sell the Real Property to Buyer, and Buyer hereby agrees to purchase the Real Property from Seller, on the terms and conditions set forth in this Agreement. The term Real Property is defined as the fee interest in the Real Property to be conveyed by a grant deed in the form of the Deed. 2. Payment of Consideration. As consideration for the sale of the Real Property from Seller to Buyer, Buyer shall, at the Closing (as defined below), pay to Seller the Purchase Price for the Real Property. Upon payment of the Purchase Price, the use of sales proceeds by Seller is a matter with which Buyer is not concerned. SA4-105 EXHIBIT A TO EXHIBIT 4 3. Escrow and Tndenendent Consideration. (a) Opening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened ("Opening of Escrow") on the date that Escrow Holder receives a copy of this Agreement fully executed by Buyer and Seller. Buyer and Seller shall use their best efforts to cause the Opening of Escrow to occur on or before five (5) business days after the Effective Date. Escrow Holder shall promptly notify Buyer and Seller in writing of the date of the Opening of Escrow. This Agreement will constitute escrow instructions to the Escrow Holder. Buyer and Seller agree to execute, deliver and be bound by any reasonable or customary supplemental escrow instructions or other instruments reasonably required by Escrow Holder to consummate the transaction contemplated by this Agreement; provided, however, that no such instruments shall be inconsistent or in conflict with, amend or supersede any portion of this Agreement. If there is any conflict or inconsistency between the terms of such instruments and the terms of this Agreement, then the terms of this Agreement shall control. Without limiting the generality of the foregoing, no such instruments shall extinguish any obligations imposed by this Agreement or any other agreement between Seller and Buyer. (b) Independent Consideration. Within two (2) days after the Effective Date, Buyer A shall pay to Seller the Independent Consideration mount to be retained by Seller as non- refundable independent consideration. The Independent Consideration Amount has been bargained for and agreed to as consideration for Seller's execution and delivery of this Agreement and Seller holding the Real Property off the market for a period commencing as of the Effective Date and continuing until the Outside Date and for the rights and privileges granted to Buyer herein, including any and all rights granted to Buyer to terminate this Agreement tinder the circumstances provided for herein. Notwithstanding anything to the contrary contained in this Agreement, the Independent Consideration Amount shall be non-refundable in all events, except for (i) Seller's default hereunder, (ii) the failure of the Oversight Board to approve the sale of the Real Property as provided under this Agreement, and (iii) actions by the California Department of Finance ("DOF") which prevent the disposition of the Real Property to Buyer as provided under this Agreement. If the Closing occurs, a credit shall be applied to the Purchase Price based upon payment of the Independent Consideration Amount. (c) Deposit. Within seven (7) days after the Effective Date, Buyer shall submit to Escrow Holder the Deposit. The Deposit shall be released to Seller upon either; (i) the Closing (as part of the Purchase Price) or (ii) the failure to close by reason of Buyer's default under this Agreement. (d) Treatment of Deposit LIQUIDATED DAMAGES; DISPOSITION OF DEPOSIT. IF THE CLOSING DOES NOT OCCUR SOLELY BY REASON OF BUYER'S DEFAULT UNDER THIS AGREEMENT, IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, THE PARTIES HAVE AGREED THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN SUCH EVENT IS AND SHALL BE THE RIGHT TO RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES, AS SELLER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT. SUCH LIQUIDATED DAMAGES ARE NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF APPLICABLE LAWS. IF THE CLOSING DOES NOT OCCUR FOR ANY REASON OTHER THAN BUYER'S DEFAULT UNDER THIS AGREEMENT, THEN THE DEPOSIT SHALL BE RETURNED IMMEDIATELY TO BUYER (WITHOUT LIMITATION ON AND IN ADDITION TO ANY OTHER RIGHTS OR REMEDIES OF BUYER). SA4-106 EXHIBIT A TO EXHIBIT 4 BUYER'S INITIALS SELLER'S INITIALS (e) Closing. For purposes of this Agreement, the "Closing" or "Closing Date" shall be the date the Deed (as defined below) is recorded pursuant to applicable law in the county in which the Real Property is located. Unless changed in writing by Buyer and Seller, the Closing shall occur on the Closing Date, or as soon thereafter as the conditions precedent to closing are satisfied pursuant to Sections 6 and 7 of this Agreement. if the Closing has not, for any reason, occurred by the Closing Date, then either Buyer or Seller may terminate this Agreement by delivering written notice to the other at any time after the outside Closing Date (i.e. the Outside Date); provided, however, that if either Patty is in default under this Agreement at the time of such termination, then such termination shall not affect the rights and remedies of the non -defaulting party against the defaulting party. 4. Sellers Delivery of Real Property and Formation Documents. Within ten (10) days after the Effective Date, Seller shall deliver to Buyer the following items (collectively, the Property Documents"): (a) Such reasonable proof of SeIler's authority and authorization to enter into this Agreement and to consummate this transaction consistent with the terms of this Agreement, including without limitation approval of the Oversight Board of the sale ofthe Real Property by Seller to Buyer. (b) To the extent in the possession of Seller, all materials related to pending or threatened litigation involving the Real Property, including correspondence, complaints, court orders, settlements, andjudgments to the extent such matters are within the actual knowledge of the Executive Director of the Successor Agency, no investigation with respect thereto having been undertaken. In addition, Seller shall cause Escrow Holder to obtain and deliver to Buyer a Natural Hazard Report as provided for under Sections 1102 and 1103 of the California Civil Code (the "Natural Hazard Report") within twenty (20) calendar days after the Opening of Escrow, but in no event later than the thirtieth (30th) day after the Effective Date. Buyer has previously received and reviewed the Rental Agreement; Seller need not provide Buyer with a copy of the Rental Agreement. 5. Brier's Right of Entry. From and after the Opening of Escrow through the earlier to occur of the termination of this Agreement or the Soil and Title Contingency Date, or as otherwise agreed in writing by Seller prior to entry is effected, Buyer and Buyer's employees, agents, consultants and contractors shall have the right to enter upon the Real Property during normal business hours, provided reasonable prior notice has been given to Seller. (a) Investigation of the Real Property. In addition to the foregoing, the Buyer shall have the right, at its sole cost and expense, prior to the Soil and Title Contingency Date, to make such evaluations, inspections, tests or investigations as Buyer deems necessary or appropriate, including any "Phase 1" or "Phase 2" investigations of the Real Property. If, based upon such evaluations, inspections, tests or investigations, Buyer determines that it, in its sole discretion, does not wish to proceed with purchase of the Real Property based upon the condition of the Real Property, Buyer may cancel this Agreement by giving written notice of termination to Seller on or before the Soil and Title Contingency Date, Furthermore, if Buyer does not approve in writing this Agreement by the time allowed under this Section 5, Buyer shall be deemed to have disapproved the evaluations, inspections and tests as provided herein and to have elected not to proceed with this transaction on the terms and SA4-107 EXHIBIT A TO EXHIBIT 4 conditions of this Agreement and this Agreement shall be deemed cancelled. Seller shall be provided a copy of all reports and test results provided by Buyer's environmental consultant promptly after receipt by the Buyer of any such reports and test results without any representation or warranty as to their accuracy or completeness; provided however, Buyer will not be required to deliver any such reports or test results if the written contract which Buyer entered into with the environmental consultant who prepared such report or test results specifically forbids the dissemination of the report or test results to others. Buyer shall bear all costs, if any, associated with restoring the Real Property to substantially the same condition prior to its testing by or on behalf of Buyer if requested to so do by Seller but excluding any latent defects or Hazardous Materials (as defined below) discovered by Buyer during its investigation of the Real Property. Buyer agrees to indemnify, protect, defend (with counsel satisfactory to Seller) and hold Seller and the Real Property free and harmless from and against all costs, claims, losses, liabilities, damages, judgments, actions, demands, attorneys' fees or mechanics' liens arising out of or resulting from any entry or activities on the Real Property by Buyer, Buyer's agents, contractors or subcontractors and the contractors and subcontractors of such agents, but in no event shall the indemnity of this Section 5 include the discovery of pre-existing conditions by Buyer or any such liabilities, costs, etc, arising from the negligence or willful misconduct of Seller and/or its consultants. The indemnity obligations of Buyer set forth in this Section 5(a) shall survive any termination of this Agreement or the Close of Escrow. "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §6901 et seq. (b) No Warranties as To the Real Prooertv. The physical condition and possession of the Real Property, is and shall be delivered from Seller to Buyer in an "as is" condition, with no warranty expressed or implied by Seller, including without limitation, the presence of Hazardous Materials or the condition of the soil, its geology, flee presence of known or unknown seismic faults, or the suitability of the Real Property for development proposes. In addition, Seller makes no representations, warranties or assurances concerning the Real Property, its suitability for any particular use or with regard to the approval process for entitlements as to the Real Property. SA4-108 EXHIBIT A TO EXHIBIT 4 (c) Buyer Precautions after Closing. Upon and after the Closing, Buyer shall comply with all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the State, the County, the City, or any other political subdivision in which the Real Property is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over the Real Property ("Governmental Requirements") with respect to Hazardous Materials. 6. Bover's Conditions Precedent and TerminationRieht. (a) Conditions Precedent, The Closing and Buyer's obligation to consummate the purchase of the Real Property under this Agreement are subject to the timely satisfaction, approval, or written waiver of the following conditions precedent (collectively, "Buyer's Contingencies"), which are for Buyer's benefit only. (i) Title Review. Within twenty (20) calendar days after the Opening of Escrow, but in no event later than the thirtieth (300') day after the Effective Date, Seller shall cause the Title Company to deliver to Buyer a preliminary title report (the "Report') describing the title to the Real Property, together with copies of the plotted easements and the exceptions (the "Exceptions") set forth in the Report; provided that the cost of the Report shall be borne by Seller. Seller acknowledges that the Buyer's Title Policy shall include an endorsement against the effect of any mechanics' liens; Seller will provide such indemnity or other assurances as necessary to induce the Title Company to provide such endorsement. On or before the Soil and Title Contingency Date, Buyer shall have approved in writing, in Buyer's sole discretion, any matters of title disclosed by the following (collectively, the "Title Documents"): (i) the Report; (ii) the Exceptions; (iii) the legal description of the Real Property and (iv) any survey Buyer desires to obtain at Buyer's sole cost and expense. Buyer's failure to approve in writing the Title Documents prior to the Soil and the Title Contingency Date shall be deemed to be a disapproval of the Title Documents. Buyer shall have the same rights to approve or disapprove any exceptions to title that are not created by Buyer and that come into existence after issuance of the Report but prior to Closing. Seller shall, on or before the Closing, remove all deeds of trust, mortgages, and delinquent taxes (but not the lien for any real property taxes or assessments not yet delinquent). (ii) Buyer's Title Policy. On or before the Closing, the Title Company shall, upon payment (by Seller in accordance with Section 10(a)) of the Title Company's premium, have agreed to issue to Buyer, a standard ALTA owner's policy of title insurance insuring only as to matters of record title ("Standard Buyer's Title Policy") in the amount of the Purchase Price showing fee title to the Real Property vested solely in Buyer and subject only to (i) the standard, preprinted exceptions to Buyer's Title Policy; (ii) liens to secure payment of real estate taxes or assessments not yet delinquent; (iii) matters affecting the Real Property created by or with the written consent of Buyer; and (iv) those matters specifically approved in writing by Buyer. Buyer shall have the right, at its sole cost and expense, to obtain coverage beyond that offered by a standard ALTA policy (such as an owner's extended coverage ALTA policy); provided, however, that Buyer's ability to obtain such extended coverage shall not be a Buyer's Contingency and Buyer's obligations hereunder shall in no way be conditioned or contingent upon obtaining such extended coverage. Buyer shall have sole responsibility for obtaining, and bearing the cost of, any endorsements and for any survey or other matters required by the Title Company for such extended coverage. In the event Buyer enters into a loan agreement to generate moneys to purchase SA4-109 EXHIBIT A TO EXHIBIT 4 the Real Property from Seller under this Agreement, Buyer and not Seller shall be responsible. for the title insurance, closing costs and any other costs, fees or expenses in relation to Buyer obtaining such loaned moneys. The sale shall be all cash to Seller. (iii) Inspections and Studies. On or before the Soil and Title Contingency Date, Buyer shall have approved in writing, in Buyer's sole and absolute discretion, the results of any physical and legal inspections, investigations, tests and studies Buyer elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; soils, seismic and geologic reports; environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations as Buyer may elect to make or obtain. For the avoidance of doubt, if Buyer fails to give such written notice on or before the Soil and Title Contingency Date, Buyer will be deemed to have elected to terminate this Agreement. (iv) Natural Hazard Report. Within twenty (20) calendar days after the Opening of Escrow, but in no event later than the thirtieth (30th) day after the Effective Date, Seller shall cause the Escrow Holder to provide to Buyer prior to the Soil and Title Contingency Date the Natural Hazard Report described at Section 8(a)(iii) of this Agreement. (v) Property and Formation Documents. On or before the Soil and Title Contingency Date, Buyer shall have approved in writing, in Buyer's sole discretion, the terms, conditions and status of all of the Property Documents. in Section 8, below. (vi) Delivery of Documents. Seller's delivery of all documents described (vii) Representations and Warranties. All representations and warranties of Seller contained in this Agreement shall be true and correct as of the date made and materially true and correct as of the Closing. (viii) Title Company Confirmation. The Title Company shall have confirmed that it is prepared to issue the Buyer's Title Policy consistent with the provisions of this Agreement. (ix) Oversight Board and DOF Approval. The Oversight Board and, if required as a condition of the issuance of title insurance or by either party hereto, approval by DOF, shall have been given as to the disposition of the Real Property by Seller to Buyer under this Agreement. (x) Consents. All necessary agreements and consents of all parties to consummate the transaction contemplated by this Agreement will have been obtained and furnished by Seller to Buyer. (xi) No Default. As of the Closing, Seller shall not be in default in the performance of any material covenant or agreement to be performed by Seller under this Agreement. (b) Termination Right. Each of paragraphs (b) (i) and (ii) below shall operate independently and each shall entitle the respective party to terminate this Agreement, as follows: SA4-110 EXHIBIT A TO EXHIBIT 4 (i) If the Independent Consideration Amount is not paid by Buyer to Seller by the time set forth therefor in Section 3(b) of this Agreement, then Seller may terminate this Agreement by giving notice thereof toBuyer. (ii) If any of Buyer's Contingencies are not to be met by the Closing Contingency Date, Buyer may, by written notice to Seller, terminate this Agreement. If this Agreement is terminated, then (except to the extent expressly allocated to one party hereto by this Agreement) any escrow, title or other cancellation fees shall be paid by Buyer, unless Seller is in default hereunder, in which case Seller shall pay all such fees. If the Agreement has not been terminated pursuant to (i) or (ii) of this Section 6(b) and Buyer has neither terminated this Agreement in writing ("Termination Notice") on or before 5:00 p.m. on the Monday preceding the scheduled Closing ("Termination Notice Deadline"), and/or Buyer has approved in writing all of Buyer's Contingencies, then all such Buyer's Contingencies shall be deemed to have been satisfied and this Agreement shall continue pursuant to its terms. If Buyer has approved in writing the items set forth in Sections 6(a)(i)-(xi) inclusive, prior to the TerminationNotice Deadline, such Buyer's Contingencies shall be deemed to have been satisfied. (c) Seller's Cure Right. Buyer shall notify Seller, in Buyer's Termination Notice, of Buyer's disapproval or conditional approval of any Title Documents. Seller shall then have the right, but not the obligation, to (i) remove from title any disapproved or conditionally approved Exception(s) (or cure such other title matters that are the basis of Buyer's disapproval or conditional approval of the Title Documents) within five (5) business days after Seller's receipt of Buyer's Termination Notice, or (ii) provide assurances reasonably satisfactory to Buyer that such Exception(s) will be removed (or other matters cured) on or before the Closing. With respect to any such Exception, it shall be sufficient for purposes hereof for Seller to commit in writing, within the applicable period, to remove such Exception at or before the Closing. Seller's failure to remove such Exception after committing to do so shall be a default hereunder. An Exception shall be deemed removed or cured if Seller furnishes Buyer with evidence that the Title Company will issue the Buyer's Title Policy, as defined herein, at the Closing deleting such Exception or providing an endorsement (at Seller's expense) reasonably satisfactory to Buyer concerning such Exception. If Seller cannot or does not remove or agree to remove any of the disapproved Exception(s) (or cure other matters) within such five (5) business day period, Buyer shall have three (3) business days after the expiration of such fivc_(5) business day period to give Seller written notice that Buyer elects to proceed with the purchase of the Real Properly subject to the disapproved Title Document(s), it being understood that Buyer shall have no further recourse against Seller for such disapproved Title Exception(s). For the avoidance of doubt, if Buyer fails to give such notice within such three (3) business day period, Buyer will be deemed to have elected to terminate this Agreement. 7. Seller's Conditions Precedent and Termination Right. The Closing and Seller's obligations with respect to the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following condition precedent ("Seller's Contingencies"), which are for Seller's benefitonly: (a) Completion of Title Review. Seller shall have received written confirmation from Buyer on or before the Soil and Title Contingency Date that Buyer has completed its review of title and that the condition of title is satisfactory and Buyer has approved a pro forma title policy. SA4-111 EXHIBIT A TO EXHIBIT 4 (b) Confirmation Concerning Site. Seller shall have received written confirmation from Buyer on or before the Soil and Title Contingency Date that Buyer has reviewed the condition of the Real Property, including without limitation concerning Hazardous Materials, zoning and suitability, and approves the condition of the Real Property. (c) Liens. Seller shall have obtained the consent of any lien holder to the release of such liens prior to or concurrent with Closing. (d) Oversight Board and if applicable DOF Approval. The approval by the Oversight Board shall have been given as to the disposition of the Real Property by Seller to Buyer under this Agreement, and, if required as a matter of law or as a condition by the Title Company as a condition of the Title Company issuing its policy of title insurance, DOF approval. 9(a), below. (e) Delivery of Documents. Buyer's delivery of all documents described in Section Should any of Seller's Contingencies not be met by the respective times set forth for the satisfaction for such contingency, Seller may, by written notice to Buyer, terminate this Agreement; such termination rights shall be in addition to those termination rights of Seller as set forth in Section 6(b)(i). If this Agreement is so terminated, then (except to the extent expressly allocated to one party hereto by this Agreement) any escrow, title or other cancellation fees shall be paid by Buyer. 8. Seller's Deliveries to Escrow Holder. (a) Seller's Delivered Documents. At least one (1) business day prior to the Closing Date, Seller shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged ("Seller's Delivered Items"): (i) Deed. The Deed. (ii) FIRPTA/Tax Exemption Forms. The Transferor's Certificate of Non - Foreign Status in the form attached hereto as Exhibit C (the "FIRPTA Certificate"), together with any necessary tax withholding forms, and a duly executed California Form 593-C, as applicable (the "California Exemption Certificate"). (iii) Hazard Disclosure Report. Consistent with the terms of this Agreement, Seller shall cause Escrow Holder to obtain and deliver to Buyer, at Seller's cost, a Natural Hazard Report as provided for under Sections 1102 and 1103 of the California Civil Code (the "Natural Hazard Report") before the Closing. (iv) Possession of Real Property. Possession of the Real Properly free of any tenancies or occupancy. (v) Authority. Such evidence of Seller's authority and authorization to enter into this Agreement and to consummate this transaction. (vi) Final Escrow Instructions. Seller's final written escrow instructions to close escrow in accordance with the terms of this Agreement. 10 SA4-112 EXHIBIT A TO EXHIBIT 4 (vii) Further Documents or Items. Any other documents or items reasonably required to close the transaction contemplated by this Agreement as determined by the Title Company which are consistent with the terms of thisAgreement. (b) Failure to Deliver. Should any of Seller's Delivered Items not be timely delivered to Escrow, Buyer shall, by written notice to Seller, provide Seller with five (5) business days to deliver all of Seller's Delivered Items. If Buyer's notice provides Seller such five (5) business days to deliver Seller's Delivered Items, and if Seller's Delivered Items are not delivered within such period, then this Agreement shall automatically terminate without further action or notice. In the event of any such termination, any cash deposited by Buyer shall immediately be returned to Buyer. Under no circumstances shall Buyer have any responsibility to or duty to pay consultants or real estate brokers retained by Seller, Seller being solely responsible in connection with any such contractual arrangements of Seller. 9, Buyer's Deliveries to Escrow. (a) Buyer's Delivered Documents. At least one (1) business day prior to the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged ("Buyer's Delivered Items"): (i) Purchase Price. The Purchase Price, less amounts which Seller confirms in writing to Escrow Holder were theretofore paid to Seller as the Independent Consideration Amount and the Deposit, together with additional funds as are necessary to pay Buyer's closing costs set forth in Section 10(b) herein. In the event Seller does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code, as evidenced by the delivery at Closing of the California Exemption Certificate duly executed by Seller, Title Company shall withhold three and one-third percent (3-1/3%) ofthe Purchase Price on behalf ofBuyer for payment to the California Franchise Tax Board in accordance with Section I l(b) hereof. In the event Seller is not exempt from such withholding or does not otherwise deliver the California Exemption Certificate at Closing, Seller shall execute and deliver three (3) originals of California Form 593 to Title Company at or immediately afterClosing. (ii) Change of Ownership Report. One (1) original Preliminary Change of Ownership Report (iii) Final Escrow Instructions. Buyer's final written escrow instructions to close escrow in accordance with the terms of this Agreement. (iv) Authority. Such proof of Buyer's authority and authorization to enter into this Agreement and to consummate the transaction contemplated Hereby as may be reasonably requested by Seller or the Title Company. (v) Further Documents or Items. Any other documents or items reasonably required to close the transaction contemplated by this Agreement as determined by the Title Company. (b) Failure to Deliver. Should any of Buyer's Delivered Items not be timely delivered to Escrow, Seller shall, by written notice to Buyer, provide Buyer with five (5) business days 11 SA4-113 EXHIBIT A TO EXHIBIT 4 to deliver all of Buyer's Delivered Items. If Seller's notice provides Buyer such five (5) business days to deliver Buyer's Delivered Items, and if Buyer's Delivered Items are not delivered within such period, then this Agreement shall automatically terminate without further action or notice. In the event of any such termination, any cash deposited by Seller shall immediately be returned to Seller; the Independent Consideration, if not earlier released by Escrow Holder to Seller, shall be released to Seller. Under no circumstances shall Seller have any responsibility to or duty to pay consultants or real estate brokers retained by Buyer, Buyer being solely responsible in connection with any such contractual arrangements of Buyer. 10. -Costs and Expenses. (a) Seller's Costs. If the transaction contemplated by this Agreement is consummated, then Seller shall be debited for and bear the following costs: (i) costs and charges associated with the removal of encumbrances; (ii) Seller's share of prorations; (iii) the premium for a Standard Buyer's Title Policy with coverage in the amount of the Purchase Price; (iv) documentary recording fees, if any; (v) documentary transfer tax, if any; (vi) one half of the escrow charges; and (vii) costs, if any, allocable to Seller under this Agreement and costs for such services as Seller may additionally request that Escrow perform on its behalf (which foregoing items collectively constitute "Seller's Costs and Debited Amounts"). (b) Buyer's Costs. If the transaction contemplated by this Agreement is consummated, then Buyer shall bear the following costs and expenses: (i) Buyer's share of prorations, (ii) the premium for title insurance other than or in excess of a Standard Buyer's Title Policy based on the Purchase Price, and, if applicable, the cost for any survey required in connection with the delivery of an ALTA owner's extended coverage policy of title insurance; (iii) one half of escrow charges; (iv) recording and other costs of closing; (v) costs, if any, for such services as Buyer may additionally request that Escrow perform on its behalf; and (vi) any costs associated with Buyer borrowing money in order to pay to Seller the Purchase Price (collectively, "Buyer's Costs and Debited Amounts"). (c) Generally. Each party shall bear the costs of its own attorneys, consultants, and real estate brokers in connection with the negotiation and preparation of this Agreement and the consummation of the transaction contemplated hereby. Buyer represents to Seller that Buyer and not Seller shall be solely responsible for payment in connection with the services of any consultants, finders or real estate brokers engaged by Buyer in connection with the purchase of the Real Property from the Seller. Seller has not engaged the services of any consultants, finders or real estate brokers in connection with the sale of the Real Property to the Buyer. Seller shall not be responsible for any real estate commissions in connection with the sale of the Real Property under this Agreement and no amount of the Purchase Price shall be applied for any such commissions. 11. Prorations: Withholding. (a) All revenues (if any) and expenses relating to the Real Property (including, but not limited to, property taxes, utility costs and expenses, water charges and sewer rents and refuse collection charges) shall be prorated as of the Closing Date; provided that all delinquent taxes shall be satisfied at the expense of Seller. Not less than five (5) business days prior to the Closing, Seller shall deliver to Buyer a tentative schedule of proration for Buyer's approval (the "Proration and Expense Schedule"). If any prorations made under this Section shall require final adjustment after the Closing, then the parties shall make the appropriate adjustments promptly when accurate information becomes 12 SA4-114 EXHIBIT A TO EXHIBIT 4 available and either party hereto shall be entitled to an adjustment to correct the same. Any corrected or adjustment proration shall be paid promptly in cash to the party entitled thereto. (b) In the event Seller does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code (the "Tax Code") as evidenced by the delivery to Escrow Holder for release to Buyer at Closing of the California Exemption Certificate duly executed by Seller, (i) Title Company shall withhold three and one-third percent (3-1/3%) of the Purchase Price on behalf of Buyer at Closing for payment to the California Franchise Tax Board in accordance with the Tax Code, (ii) Seller shall deliver three (3) duly executed copies of California Form 593 to Title Company at or immediately after Closing, (iii) two (2) copies of California Form 593 shall be delivered by Title Company to Buyer, and (iv) on or before the 20th day of the month following the month title to the Real Property is transferred to Buyer (as evidenced by the recording of the Grant Deed), Title Company shall remit such funds withheld from the Purchase Price, together with one (1) copy of California Form 593 to the California Franchise Tax Board on behalf of Buyer. Buyer and Seller hereby appoint Title Company as a reporting entity under the Tax Code, authorized to withhold and remit the withholding tax contemplated under the Tax Code, together with such other documents required by the Tax Code (including, without limitation, California Form 593), to the California Franchise Tax Board. 12. Closing Procedure. When the Title Company is unconditionally prepared (subject to payment of the premium therefor) to issue the Buyer's Title Policy and all required documents and funds have been deposited with Escrow Holder, Escrow Holder shall immediately close Escrow in the manner and order provided below. (a) Recording. Escrow Holder shall cause the Deed to be recorded pursuant to applicable law in the county in which the Real Property is located and obtain conformed copies thereof for distribution to Buyer and Seller. (b) Disburse Funds. Escrow Holder shall debit or credit (as provided herein) all Buyer's Costs and Debited Amounts, Seller's Costs and Debited Amounts and General Expenses, prorate matters and withhold funds as provided herein. The Purchase Price, less any applicable debits or credits (including any liens as to which such liens and the amount to satisfy such liens shall have been confirmed in writing by Seller to Escrow Holder) shall be distributed by check payable to Seller unless Escrow Holder is instructed otherwise in writing signed by Seller (and, in such event, in accordance with such instructions). Seller authorizes Escrow Holder to request demands for payment and to make such payments from the Purchase Price (or such other funds, if any, as are advanced by Seller) to defray the cost of removing deeds of trust, liens and other encumbrances (but not for obligations of Buyer). Escrow Holder shall disburse on behalf of Buyer such moneys as are deposited by Buyer (in addition to the Purchase Price and Buyer's share of closing costs) as the commission for Buyer's real estate broker, if any (unless Buyer's real estate broker shall deliver a written statement to Escrow Holder which indicates that Buyer has arranged to pay Buyer's Real Estate Broker outside escrow and that payment of such remuneration is a matter with respect to which Escrow Holder and Seller need not be concerned). (c) Documents to Seller. Escrow Holder shall deliver to Seller a conformed copy of the Deed, and documents, if any, recorded on behalf of any lender, as duly recorded among the official land records of the County of Orange, and a copy of each other document (or copies thereof) deposited into Escrow by Buyer pursuambereto. 13 SA4-115 EXHIBIT A TO EXHIBIT 4 (d) Documents to Buyer. Escrow Holder shall deliver to Buyer the original FIRPTA Certificate, the original California Exemption Certificate (as applicable), and a conformed copy of each of the Deed as duly recorded among the official land records of the County of Orange, the Natural Hazard Report, and each other document (or copies thereof) deposited into Escrow by Seller pursuant hereto, including, without limitation, those documents referenced in Section 8. (e) Title Company. Escrow Holder shall cause the Title Company to issue the Buyer's Title Policy to Buyer. (f) Closing Statement. Escrow Holder shall forward to both Buyer and Seller a separate accounting of all funds received and disbursed for each party. (g) Informational Reports. Escrow Holder shall file any information reports required by Internal Revenue Code Section 6045(e), as amended. (h) Possession. Possession of the Real Property shall be delivered to Buyer at the Closing. 13. Representations and Warrantie . (a) Seller's Representations and Warranties. In consideration of Buyer entering into this Agreement and as an inducement to Buyer to purchase the Real Property, Seller makes the following representations and warranties as of the Effective Date and as of the Closing, each of which is material and is being relied upon by Buyer (and the truth and accuracy of which shall constitute a condition precedent to Buyer's obligations hereunder), and all of which are material inducements to Buyer to enter into this Agreement (and but for which Buyer would not have entered into this Agreement) and shall survive Closing: (i) Seller has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated subject to the approval of the Oversight Board and, as may be applicable,DOF. (ii) Subject to the approval of the Oversight Board and, as may be applicable, DOF, all requisite action (corporate, trust, partnership or otherwise) has been taken by Seller in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. (iii) Subject to the approval of the Oversight Board and, as may be applicable, DOF, the individual executing this Agreement and the instruments referenced herein on behalf of Seller has the legal power, right and actual authority to bind Seller to the terms and conditions hereof and thereof. (iv) Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or instruments referenced herein or therein conflict with or result in the material breach of any terms, 14 SA4-116 EXHIBIT A TO EXHIBIT 4 conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, lease or other agreement or instrument to which Seller is a party or that affect the Real Property, including, but not limited to, any of the Title Documents or the Property Documents. (v) There is no pending litigation nor, to the best knowledge of the Executive Director of the Successor Agency, threatened litigation, which does or will adversely affect the right of Seller to convey the Real Property. There are no claims which have been received by Seller that have not been disclosed toBuyer. (vi) Seller has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the Real Property, or any part hereof, or any interest therein, which will survive the Closing. (vii) There are no leases or rental agreements in effect as to the Real Property, other than the Rental Agreement. (viii) To the best knowledge of the Executive Director of the Successor Agency, Seller is not in default of its obligations under any contract, agreement or instrument to which Seller is a party pertaining to the RealProperty. (ix) To the best knowledge of the Executive Director of the Successor Agency, there are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the Real Property for work performed or commenced for Seller or on Seller's behalf prior to the date of this Agreement. (x) To the best knowledge of the Executive Director of the Successor Agency, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or management of the Real Property that will be binding upon Buyer or the Real Property after the Closing. To the best knowledge of the Executive Director of the Successor Agency, there are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the Real Property. (xi) There are not as of the Effective Date, nor will there be as of the Closing, any written or oral leases or contractual right or option to lease, purchase, or otherwise enjoy possession, rights or interest of any nature in and to the Real Property or any part thereof, other than the Rental Agreement, and no person other than Buyer shall have any right of possession to the Real Property or any part thereof as of the Closing, except for any recorded easements to the City of Santa Ana for public purposes. (xii) No person, excepting Seller, has possession or any rights to possession of the Real Property or portion thereof, other than the Rental Agreement. (b) Subsequent Changes to Seller's Representations and Warranties. If, prior to the Closing, Buyer or Seller should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Seller set forth herein incorrect or untrue in any respect (collectively, the "Seller's Representation Matter"), then the party who has learned, 15 SA4-117 EXHIBIT A TO EXHIBIT 4 discovered or become aware of such Seller's Representation Matter shall promptly give written notice thereof to the other party and Seller's representations and warranties shall be automatically limited to account for the Seller's Representation Matter. Buyer shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Seller if Buyer reasonably disapproves any such change. If Buyer does not elect to terminate this Agreement, Seller's representation shall be qualified by such Seller's Representation Matter and Seller shall have no obligation to Buyer for such Seller's Representation Matter. (c) Buyer's Representations and Warranties. In consideration of Seller entering into this Agreement and as an inducement to Seller to sell the Real Property, Buyer makes the following representations and warranties as of the date hereof and at and as of the Closing, each of which is material and is being relied upon by Seller (and the truth and accuracy of which shall constitute a condition precedent to Seller's obligations hereunder), and all of which shall survive Closing: (i) Buyer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby. (ii) All requisite action has been taken by Buyer in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. (iii) The individuals executing this Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof. (iv) Neither the execution and delivery of this Agreement and the documents and instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement and the documents and instruments referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreement or instrument to which Buyer is a party or by which any of Buyer's properties are bound. (v) Buyer is required to maintain the property, including trash and weed abatement, as necessary, after the transfer of title to the property to the Buyer is completed. (d) Subsequent Changes to Buyer's Representations and Warranties. If, prior to the Closing, Seller or Buyer should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Buyer set forth herein incorrect or untrue in any respect (collectively, the "Buyer's Representation Matter"), then the party who has learned, discovered or become aware of such Buyer's Representation Matter shall promptly give written notice thereof to the other party and Buyer's representations and warranties shall be automatically limited to account for the Buyer's Representation Matter. Seller shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Buyer if Seller reasonably disapproves SA4-118 EXHIBIT A TO EXHIBIT 4 any such change. If Seller does not elect to terminate this Agreement, Buyer's representation shall be qualified by such Buyer's Representation Matter and Buyer shall have no obligation to Seller for such Buyer's Representation Matter. 14. Fail Value Price. The Purchase Price is equal to the amount determined by an independent appraiser retained by Seller to represent the fair market value of the Real Property. Each of Buyer and Seller believes that the Purchase Price represents a fair value price for the Real Property. This Agreement does not require that Buyer undertake any improvements to the Real Property. At such time, if any, as Buyer makes improvements to the Real Property, the costs for planning, designing, and constructing such improvements shall be borne exclusively by the Buyer and the Buyer shall construct or cause to be constructed such improvements in conformity with all applicable laws, including without limitation labor standard and wage rate requirements to the extent such labor and wage requirements are applicable. Buyer, including but not limited to its contractors and subcontractors, shall be responsible to comply with Labor Code Section 1720, et seq., if applicable, and its implementing regulations, regarding the payment of prevailing wages (the "State Prevailing • Wage Law"), if applicable, and, if applicable, federal prevailing wage law ("Federal Prevailing Wage Law" and, together with State Prevailing Wage Law, "Prevailing Wage Laws") with regard to the construction of improvements to the Real Property, but only if and to the extent such sections are applicable to the development of the Real Property. Insofar as the parties understand that Buyer is paying a fair market price for the Real Property, the parties believe that the payment of prevailing wages will not be required. In any event, Buyer shall be solely responsible for determining and effectuating compliance with the Prevailing Wage Laws, neither the Seller nor the City makes any final representation as to the applicability or non -applicability of the Prevailing Wage Laws to improvements to the Real Property, or any part thereof. Buyer hereby releases from liability, and agrees to indemnify, defend, assume all responsibility for and hold each of the Seller and the City, and their respective officers, employees, agents and representatives, harmless from any and all claims, demands, actions, suits, proceedings, fines, penalties, damages, expenses resulting from, arising out of, or based upon Buyer's acts or omissions pertaining to the compliance with the Prevailing Wage Laws as to the Real Property. This Section 14 shall survive Closing. 15. General Provisions. (a) Indemnification. In addition to the Purchase Price, a material consideration to Seller in agreeing to sell the Real Property to Buyer pursuant to this Agreement and but for which Seller would not have agreed to enter into this Agreement or sell the Real Property to Buyer, Buyer: (i) has agreed to assume all responsibility for terminating, with the consent of Seller, the rights of the Owner of the Adjacent Property to rent the Real Property, and (ii) has agreed to the remaining provisions of this Section 15. Buyer agrees to and shall indemnify and hold the Seller, its elected officials, employees, agents or representatives, free and harmless from all claims, actions, damages and liabilities of any kind and nature arising from any claims made by the Owner of the Adjacent Property with respect compliance with following: i) Title 49 Code of Federal Regulations Part 24, (the "Uniform Relocation Assistance and Real Property Acquisition Policies for Federal and Federally -Assisted Programs"); ii) California Government Code § 7260-7277 (the "California Relocation Assistance Law"); iii) Title 25, California Code of Regulations, Chapter 6, Subchapter 1 (the "California Relocation Assistance and Real Property Acquisition Guidelines"); and/or iv) any other applicable law (collectively, the "Relocation Assistance Laws"). As part of the foregoing indemnity, Buyer agrees to protect and defend at its own expense, including attorney's fees, the Seller, its elected officials, employees, agents or representatives from any and all legal actions based 17 SA4-119 EXHIBIT A TO EXHIBIT q upon such actual or alleged acts or omissions with respect to the Relocation Assistance Laws. Buyer hereby waives any and all rights to any types of express or implied indemnity against the Seller, its elected officials, employees, agents or representatives, with respect to claims against the Buyer from the Owner of the Adjacent Property relating to or in any way connected with the Relocation Assistance Laws. This Section 15 shall survive Closing. (b) Condemnation. If any material portion of the Real Property shall be taken or appropriated by a public or quasi -public authority exercising the power of eminent domain, Buyer shall have the right, at its option, to (i) terminate this Agreement or (ii) proceed with the purchase of the Real Property and receive all of the award or payment made in connection with such taking. (c) Notices. All notices, demands, requests or other communications required or permitted hereunder (collectively, "Notices") shall be in writing, shall be addressed to the receiving party as provided in the Basic Terms section above, and shall be personally delivered, sent by overnight mail (Federal Express or another carrier that provides receipts for all deliveries), sent by certified mail, postage prepaid, return receipt requested, or sent by facsimile transmission (provided that a successful transmission report is received). All Notices shall be effective upon receipt at the appropriate address. Notice of change of address shall be given by written notice in the manner detailed in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no Notice in accordance with this Section was given shall be deemed to constitute receipt of such Notice. The providing of copies of Notices to the patties' respective counsels is for information only, is not required for valid Notice and does not alone constitute Notice hereunder. (d) Brokers. Buyer assumes sole responsibility for any consultants or brokers, including without limitation Rick Gill of Daum Commercial Real Estate Services ("Daum", and together with any other consultants, finders or brokers, "Buyer's Agents") it may have retained in connection with the purchase of the Real Property (and Seller shall have no responsibility in connection with such matters). Buyer represents to Seller that: (i) Buyer shall be solely responsible for compensation, if any, payable to Daum, and (1i) except for Daum, Buyer has engaged no Buyer's Agents in connection with the sale of the Real Property to the Buyer, and there are no brokerage commission, finder's fee or other compensation of any kind is due or owing to any person or entity in connection with this Agreement other than Buyer's costs with respect to Buyer's real estate broker, if any. Buyer agrees to and does hereby indemnify and hold the Seller free and harmless from and against any and all costs, liabilities or causes of action or proceedings which may be instituted by any broker, agent or finder, licensed or otherwise, claiming through, under or by reason of the conduct of the Buyer in connection with this Agreement. (e) Waiver. Consent and Remedies. Each provision of this Agreement to be performed by Buyer and Seller shall be deemed both a covenant and a condition and shall be a material consideration for Seller's and Buyer's performance hereunder, as appropriate, and any breach thereof by Buyer or Seller shall be deemed a material default hereunder. Either party may specifically and expressly waive in writing any portion of this Agreement or any breach thereof, but no such waiver shall constitute a further or continuing waiver of a preceding or succeeding breach of the same or any other provision. A waiving party may at any time thereafter require further compliance by the other party with any breach or provision so waived. The consent by one party to any act by the other for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or any similar acts in the future. No waiver or consent shall be implied from silence or any failure of a party to act, except as otherwise specified in this Agreement. All rights, remedies, undertakings, obligations, options, covenants, conditions and agreements 18 SA4-120 EXHIBIT A TO EXHIBIT 4 contained in this Agreement shall be cumulative and no one of them shall be exclusive of any other. Except as otherwise specified herein, either party hereto may pursue any one or more of its rights, options or remedies hereunder or may seek damages or specific performance in the event of the other party's breach hereunder, or may pursue any other remedy at law or equity, whether or not stated in this Agreement. (f) Cooperation. Buyer and Seller agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the purchase and sale herein contemplated and shall use all reasonable efforts to accomplish the Closing in accordance with the provisions hereof and, following Closing. It is not contemplated by Buyer or Seller that DOF will determine that DOF requires time to review this Agreement, however, in the event DOF determines that it requires time to review the Agreement, Buyer and Seller will not unreasonably withhold their consent to the extension of dates set forth in this Agreement to accommodate such review by DOF. (g) Remedies. Without limitation as to the availability of other remedies, this Agreement may be enforced by an action for specific enforcement. (h) Time. Time is of the essence of every provision herein contained. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from which said period of time runs shall be excluded, and the last day of such period shall be included, unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until 5:00 p.m, of the next day that is not a Saturday, Sunday, or legal holiday. Except as otherwise expressly provided herein, all time periods expiring on a specified date or period herein shall be deemed to expire at 5:00 p.m. on such specified date or period. "Day" means a calendar day unless otherwise expressly setforth. (i) Counterparts: Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. A signature by facsimile or as an attachment to electronic mail in "Portable Document Format" (PDF), or "Tagged Image File Format" (TIFF) shall be deemed an original signature. (j) Cautions. Any captions to, or headings of, the sections or subsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. (k) Obligations to Third Parties. City shall be deemed to be a third party beneficiary of this Agreement. Excepting only for the City, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the partieshereto. (1) Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. (m) Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. 19 SA4-121 EXHIBIT A TO EXHIBIT 4 (n) Applicable Law. This Agreement shall be governed by and construed in accordance with the local law of the State ofCalifornia. (o) Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated herein by this reference for allpurposes. (p) Entire Agreement. This Agreement supersedes any prior agreements, negotiations and communications, oral or written, and contains the entire agreement between, and the final expression of, Buyer and Seller with respect to the subject matter hereof. The parties hereto expressly agree and confirm that this Agreement is executed without reliance on any oral or written statements, representations or promises of any kind which are not expressly contained in this Agreement. No subsequent agreement, representation or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. (q) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. (r) Assignment. Buyer may not assign its rights under this Agreement without the prior written consent of Seller; provided, however, that Buyer may assign its rights under this Agreement to a trust, partnership, or other entity in which the trustor of Buyer, or a named beneficiary of Buyer, owns no less than fifty percent (50%) of the equity ("Permitted Assignee") without the prior written consent of Seller so long as the Permitted Assignee agrees in writing enforceable by Seller that Permitted Assignee will be deemed Buyer under this Agreement (including without limitation the attachments hereto) for all purposes and will succeed to all rights and obligations of Buyer remaining as of the date Seller receives written notice of such assignment together with evidence demonstrating agreement of the Permitted Assignee to be bound to Seller hereunder. In the event of an assignment to a Permitted Assignee which complies with the foregoing portion of this paragraph (r) of Section 15, Buyer shall be required to notify Seller of such assignment. (Signatures on followingpage) 20 SA4-122 EXHIBIT A TO EXHIBIT 4 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. ATTEST: By: Maria D. Huizar Clerk of the Council APPROVED AS TO FORM: Sonia R. Carvalho Cit; La RECOMMENDED FOR APPROVAL: M Robert M. Zur Schmiede Interim Executive Director "SELLER" SUCCESSOR AGENCY TO THE FORMER COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA, a public entity, corporate and politic By: Cynthia J. Kurtz Interim City Manager "BUYER" MARIANNE P. COVINGTON, RIDLEY J. POLITSKI AND MICHAEL P. POLITISKI, AS TRUSTEES OF THE MARITAL TRUST OF THE POLITISKI TRUST DATED DECEMBER 4, 2000 By: Name: Marianne P. Covington Its: Trustee By: Name: Ridley J. Politiski Its: Trustee Name: Michael P. Politiski Its: Trustee 21 SA4-123 EXHIBIT A TO EXHIBIT 4 Acceptance by Escrow Holder: Commonwealth Land Title Insurance Company hereby acknowledges that it has received a fully executed copy of the foregoing Purchase and Sale Agreement and Joint Escrow Instructions by and between the Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana, a public entity, corporate and politic ("Seller"), and Marianne P. Covington, Ridley J. Politiski and Michael P. Politisld, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 ("Buyer") and agrees to act as Escrow Holder thereunder and to be bound by and strictly perform the terms thereof as such terms apply to Escrow Holder. Dated: 12017 COMMONWEALTH LAND TITLE INSURANCE COMPANY Z 22 SA4-124 EXHIBIT A TO EXHIBIT 4 11W.40I. YII\ LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Orange, described as follows: [to come] APN: 005-142-21 A-1 SA4-125 EXHIBIT A TO EXHIBIT 4 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 320 S. Santa Maria Street Orange, CA 92869 Attn: Ridley J. Politiski, Trustee 14L-21 EXHIBIT B DEED [Space above for recorder.] DOCUMENTARY TRANSFER TAX _ computed on the consideration or value of property conveyed; OR computed on the consideration or value less liens or encumbrances remaining at time of sale. Signature of Declarant or Agent determining tax - Firm Name GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana, a public entity, corporate and politic ("Grantor"), hereby grants to Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees ofthe Marital Trust of the Politiski Trust dated December 4, 2000 ("Grantee"), that certain real property located in the County of Orange, State of California, more particularly described on Attachment No. 1 attached hereto and incorporated herein by this reference (the "Property"), subject to existing easements, restrictions and covenants of record.- B-2 ecord: !12 SA4-126 EXHIBIT A TO EXHIBIT 4 IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of 2017. SUCCESSOR AGENCY TO THE FORMER COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA am Name: Cynthia J. Kurtz Its: Interim City Manager iw SA4-127 EXHIBIT A TO EXHIBIT 4 ATTACHMENT NO. 1 TO GRANT DEED LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of orange, described as follows: [to come] APN: 005-142-21 ATTACHMENT NO. 1 TO GRANT DEED TO EXHIBIT B SA4-128 EXHIBIT A TO EXHIBIT 4 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, Notary Public, (Print Name of Notary Public) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public I1) J 61Q\%\ 0 Though the data below is not required bylaw, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey-Ia-Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Persons) Or Emity(ies) DESCRIPTION OF ATTACHED DOCUMENT SA4-129 Title Or Type Of Document Number Of Pages Date Of Documents Signer(s) Other Than Named Above EXHIBIT A TO EXHIBIT 4 taK1111HY1[y FIRPTA CERTIFICATE TRANSFEROR'S CERTIFICATE OF NON -FOREIGN STATUS To inform Marianne P. Covington, Ridley J. Politiski and Michael P. Politiski, as Trustees of the Marital Trust of the Politiski Trust dated December 4, 2000 ("Transferee"), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended ("Code") will not be required upon the transfer of certain real property to the Transferee by the Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana (the, "Transferor"), the undersigned hereby certifies the following: 1. The Transferor is not a foreign person or citizen, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. The Transferor's social security number or U.S, employer identification number is as follows: 95-6000785. The Transferor's home or office address is: 20 Civic Center Plaza, M-25 City of Santa Ana, CA 92701 The Transferor understands that this certification may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment or both. Under penalty of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document. Successor Agency to the former Community Redevelopment Agency of the City of Santa Ana C-1 SA4-130