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Pursuant to the Exchange Agreement, the Prior Owner and the Army Reserve agreed that the Prior Owner has the right acquire the Army Reserve Property from the Army Reserve in phases, as certain facilities (located outside of the Boulevard Project) are constructed by the Prior Owner and conveyed to the Army Reserve. When purchasing property from the Prior Owner, the Developer assumed all rights and obligations under the Exchange Agreement. The Prior Owner and, following its acquisition of the project, the Developer acquired portions of the Army Reserve Property, as described in the table at “THE BOULEVARD PROJECT – Status of Construction of the Boulevard Project.” As of December 2019, all five phases of the Army Reserve Property was acquired by Developer pursuant to the Exchange Agreement. In addition to the Exchange Agreement, the Prior Owner entered into an agreement dated January 11, 2013 (the “NASA Agreement”) with NASA for the purchase of the NASA Property located adjacent to the Army Reserve Property, which is part of Phase 2 of the Boulevard Project. When purchasing property from the Prior Owner, the Developer assumed all rights and obligations under the NASA Agreement. On August 28, 2015, the Developer acquired the NASA Property. In addition to the Exchange Agreement and the NASA Agreement, the Prior Owner entered into an agreement with the City (the “City Agreement”) for the purchase of the ACSPA Property, which is part of Phase 2 of the Boulevard Project. When purchasing property from the Prior Owner, the Developer assumed all rights and obligations under the City Agreement. On March 23, 2017, the Developer acquired the ACSPA Property. The Army Reserve Property, the NASA Property, and the ACSPA Property, collectively, comprise the property being developed as the Boulevard Project. All such property is subject to the Amended and Restated Development Agreement, dated November 20, 2018, by and between the City and the Developer (as amended from time to time, the “Development Agreement”). The Development Agreement allows for the construction of up to 1,995 residential units, a 30-net acre community park, open space, a school site, and associated infrastructure to serve the project area described in the Dublin Crossing Specific Plan, approved by the City in 2013 pursuant to Resolution No. 187-13. The Development Agreement also allows, but nothing requires, the development of up to 200,000 square feet of commercial use. The Developer does not currently intend to develop any commercial uses. The Development Agreement may be amended from time to time. In 2015, the Developer acquired from the Prior Owner certain property in the Boulevard Project (including all of Phase 1A) as well as the rights to develop the remainder of the property in the Boulevard Project. The Exchange Agreement, NASA Agreement and City Agreement provide for the acquisition of the property in six phases, as follows: Phase 1A: Phase 1A was acquired from the Army Reserve by the Prior Owner and was sold by the Prior Owner to the Developer on August 28, 2015. As consideration for the acquisition from the Army Reserve, the Prior Owner constructed a facility known as the Access Control Point. Phase 1B: Phase 1B was acquired from the Army Reserve by the Developer on October 19, 2016. As consideration for the acquisition from the Army Reserve, the Developer constructed various infrastructure roads and utilities for the Army Reserve. Phase 2: Phase 2 was acquired in three transactions. First, a portion of Phase 2 was acquired from the Army Reserve by the Developer on March 17, 2017. As 383
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consideration for the acquisition from the Army Reserve, the Developer constructed area maintenance support facilities. Second, the NASA Property was acquired by the Developer on August 28, 2015. Third, on March 23, 2017, the Developer acquired the ACSPA Property. Phase 3: Phase 3 was acquired from the Army Reserve by the Developer on May 30, 2018, following the completion of a regional medical training site costing approximately $22,097,000. Phase 4: Phase 4 was acquired from the Army Reserve by the Developer in December 2017, following the completion of, or alternatively posting security for, the completion of an army regional training center estimated to cost $12,926,000. Phase 5: Phase 5 was acquired from the Army Reserve by the Developer in December 2019, following the completion of a logistical warehouse estimated to cost $8,281,000. The Developer has been developing each phase of the Boulevard Project following acquisition of the applicable phase from the Army Reserve, and then developing the property in five phases, described as Phase 1A/1B, 2, 3, 4 and 5. Improvement Area No. 5 comprises the expected 244 units in Phase 5. None of the land in Improvement Area No. 1, Improvement Area No. 2, Improvement Area No. 3, or Improvement Area No. 4 is subject to the Special Tax securing the Bonds. 384
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Of the total estimated amounts required to be expended by the Developer for the Boulevard Project (not including land acquisition, military structure design and construction, and related expenses) in the total of $211,025,000, the Developer has expended approximately $195,911,000, as of October 1, 2023. As of early October 2023, 1,260 homes in the Boulevard Project have been sold and closed, as summarized in the table below. STATUS OF CONSTRUCTION OF THE BOULEVARD PROJECT Phase/Projected Improvement Area Land Development Status Tract Map Status Projected Schedule Phase 1A/1B Improvement Area No. 1 469 units (129 single-family detached units; and 340 single-family attached units) N/A Housing construction commenced mid-2017. As of October 1, 2023, all 469 units have closed escrows with homeowners. Phase 2 Improvement Area No. 2 134 single-family detached units; 358 single-family attached units, a portion of the 30-acre park, and a 15,000 square foot recreation center now owned by the homeowner’s association N/A Housing construction commenced in 2018. As of October 1, 2023, all of the 492 units have closed escrows with homeowners.
Phase 3 Improvement Area No. 3 77 single-family detached units; 210 single-family attached units; a portion of the 30-acre park (now complete); and a school site; as of October 1, 2023, 247 building permits have been issued and there an additional 32 units that have been sold but not closed to homeowners N/A Housing construction commenced mid-2019. As of October 1, 2023, approximately 143 of the 287 units have closed escrows with homeowners.
Phase 4 Improvement Area No. 4 175 single-family detached units; 91 single-family attached units; and approximately 2 acres of open space; as of October 1, 2023, all 266 building permits have been issued and there an additional 51 units that have been sold but not closed to homeowners N/A Housing construction commenced mid-2021. As of October 1, 2023, approximately 153 of the 266 units have closed escrows with homeowners.
Phase 5 Improvement Area No. 5 62 single-family detached units; and 182 single-family attached units Tract Map No. 8372 Recorded Acquisition from Army Reserve in December 2019; See herein for more details. Only the property in Improvement Area No. 5 is subject to the Special Tax that secures payment on the Bonds. The property that is in Improvement Area No. 1, Improvement Area No. 2, Improvement Area No. 3, and Improvement Area No. 4, inclusive, are not subject to the lien of the Special Tax securing the Bonds. 385
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Acquisition Agreement In connection with the issuance of special tax bonds for Improvement Area No. 1, the Developer and the City entered into an Acquisition Agreement, dated as of July 18, 2017 (as amended by the First Amendment to Acquisition Agreement, dated December 4, 2018, and as it may be amended from time-to-time, the “Acquisition Agreement”). Pursuant to the Acquisition Agreement, the City will purchase certain public capital improvements and finance certain development impact fees for the construction of public capital improvements (referred to herein as the “Authorized Improvements”) from the Developer, but solely from the net proceeds of bonds issued for the District, certain investment earnings thereon and special taxes collected within each Improvement Area of the District that are allocated to Authorized Improvements. The Rate and Method provides that the funding of improvement costs can also be made from collections of the Special Tax available as the “pay-as-you-go” component of Special Taxes, also described herein as the Remainder Taxes. The Remainder Taxes will provide for funding of the cost of the Authorized Improvements. By agreement between the City and the Developer, Remainder Taxes are limited to 15 years from each Improvement Area and the Developer expects to utilize it for that time period; the first year of levy for Improvement Area No. 5 is _______. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Tax Methodology” and “ – Special Tax Fund.” Groundwater Testing Required by SFRWQCB In early November 2018, the City was informed by the Developer that it received a letter from the San Francisco Bay Regional Water Quality Control Board (“SFRWQCB”), dated November 5, 2018, regarding results of testing groundwater from a particular area of the Boulevard Project. The letter required that the Developer submit a workplan and schedule to complete site characterization and develop a conceptual site model for volatile organic compounds, including trichloroethylene, in groundwater, soil, and soil vapor generally to the east of the creek at the project site. The Developer then retained experts in human health risk assessment from Ramboll US Consulting, Inc. to work closely with SFRWQCB staff to conduct a systematic, multi-round investigation of groundwater, soil and soil vapor in the area and in 2020 through 2023 the Developer submitted various reports to the SFRWQCB for review in 2020 through 2022 and received SFRWQCB approval of the reports in early February 2023. The Developer received a no further action letter on September 29, 2023. 386
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Market Pricing and Absorption Analysis In connection with the issuance of the Bonds, the City hired RCLCO Real Estate Consulting, Los Angeles, California (the “Pricing Consultant”) to prepare a market pricing and absorption analysis for the homes planned for Improvement Area No. 5, dated October 6, 2023 (the “Pricing Report”). The Pricing Report included market pricing and absorption analysis for the Phase 5 lots anticipated to be constructed in Improvement Area No. 5 (i.e., 244 single-family units, consisting of 62 detached and 182 attached units). The City is not obligated to make, and has not undertaken to make, an independent verification of the information contained in the Pricing Report and assumes no responsibility for the accuracy or completeness of the Pricing Report. A summary table from the report is presented below; the two scenarios reflect the range of potential capture rates that was assumed, as descried in more detail in the report. A copy of the Pricing Report is set forth in its entirety as APPENDIX E – PRICING REPORT. Projected Home Sale Velocity by Price Range Boulevard (Dublin Crossing) Phase 5 DISTRIBUTION PRICE RANGE $1,000,000-$1,400,000 $1,400,000-$1,800,000 $1,800,000-$2,200,000 OVER $2,200,000 TOTAL TOTAL REMAINING UNITS -PHASE 5 138 78 12 0 228 Distribution by Price Range 61% 34% 5% 0% 100% Potential Annual Absorption by Price Range – Scenario 1 64 40 7 0 110 Potential Monthly Absorption by Price Range – Scenario 1 5.4 3.3 0.5 0.0 9.2 Years of Supply by Price Range – Scenario 1 2.1 2.0 1.8 0.0 Potential Annual Absorption by Price Range – Scenario 2 80 45 11 0 136 Potential Monthly Absorption by Price Range – Scenario 2 6.7 3.8 0.9 0.0 11.4 Years of Supply by Price Range – Scenario 2 1.7 1.7 1.1 0.0 Source: RCLCO– Market Pricing and Absorption Analysis, October 6, 2023 387
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IMPROVEMENT AREA NO. 5 Formation of the District On April 21, 2015, the City Council adopted a Resolution of Intention to form a community facilities district under the Act, to levy a special tax and to incur bonded indebtedness for the purpose of financing the Authorized Improvements. After conducting a noticed public hearing, on June 2, 2015, the City Council adopted the Resolution of Formation, which established the District and Improvement Area No. 1 thereof, and designated the Future Annexation Area, which may include all or a portion of four additional improvement areas described as Improvement Area No. 2, Improvement Area No. 3, Improvement Area No. 4, and Improvement Area No. 5. The Resolution of Formation also set forth the Rate and Method within the District and each Improvement Area, and set forth the necessity to incur bonded indebtedness in a total amount not to exceed $150 million for the District. On the same day, an election was held within the District in which the Prior Owner (who was then the only eligible landowner voter in the District) unanimously approved the proposed bonded indebtedness and the levy of the Special Tax. Improvement Area No. 5. On November 2, 2022, each of the owners of the property in Improvement Area No. 5 at the time executed and delivered to the City a separate Unanimous Approval, wherein the owner requested the annexation of their property into Improvement Area No. 5. All of the property that was the subject of the Unanimous Approvals was part of the Future Annexation Area. Pursuant to the Mello-Roos Act, the execution of a Unanimous Approval is all that is required to annex property that is identified as part of the Future Annexation Area into an existing or new improvement area within the District. On November 28, 2022, a Notice of Special Tax Lien was recorded against the property in Improvement Area No. 5 by Instrument No. 2022190139. The Notice of Special Tax Lien establishes the lien of special taxes pursuant to the Rate and Method of Apportionment of Special Tax for Improvement Area No. 5 against all of the property in Improvement Area No. 5. Improvement Area No. 5 is eligible to finance all of the improvements required for the development of the Boulevard Project. As part of the Unanimous Approval, the bonded indebtedness limit for Improvement Area No. 5 was established at $25,515,000. See “IMPROVEMENT AREA NO. 5 – Improvement Area No. 5 Ownership” below. To finance Authorized Improvements that will be owned by the Dublin-San Ramon Services District (previously defined as “DSRSD”), the City, the Developer, and DSRSD entered into a Joint Community Facilities Agreement dated January 10, 2017. To finance Authorized Improvements to be owned by Zone 7 of the Alameda County Flood Control and Water Conservation District (previously defined as “Zone 7”), the Developer entered into a Joint Community Facilities Agreement with the City and Zone 7 dated February 28, 2018. Five Improvement Areas. The District consists of five Improvements Areas, with Improvement Area No. 5 being the last and final improvement area and buildout phase of the Boulevard Project. Bonds for each Improvement Area are secured by special taxes only from such respective Improvement Area. The Bonds are secured only by special taxes levied in Improvement Area No. 5; the special taxes levied in any of Improvement Area Nos. 1, 2, 3, and 4 are not security for the Bonds. 388
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Location and Description of Improvement Area No. 5 and the Immediate Area Improvement Area No. 5 is generally located in the north-western portion of the master plan. Improvement Area No. 5 is contiguous with lots north and west of existing Boulevard phases. It is located north of Dublin Boulevard, between Dougherty and Arnold Roads, south of 6th Street, in the immediate vicinity of the Dublin BART (Bay Area Rapid Transit) station and neighborhood and regional commercial establishments, including Whole Foods, Nordstrom Rack, Best Buy and a variety of smaller retail stores and restaurants. The development is near multiple off-ramps of Interstate 580, a major Bay Area freeway. Other adjacent uses include residential, office and light industrial, and a County jail facility to the north. Zoning. The land in Improvement Area No. 5 is zoned Dublin Crossing Medium-High Density Residential (DC M-HDR) and Dublin Crossing Medium Density Residential (DC MDR). See “THE BOULEVARD PROJECT” above. Seismic Area. According to the Seismic Safety Commission, Improvement Area No. 5 is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the District is located in a Fault-Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. Flood Zone Status. Improvement Area No. 5 is located in Flood Zone X – areas determined to be outside of the 500-year floodplain and determined to be outside of the 1% and 0.2% annual chance floodplains, and flood insurance is not required. Wildfire Hazards. Land in Improvement Area No. 5 is not located in a High or Very High Fire Hazard Severity Zone (FHSZ), as defined by CAL FIRE. Maps. The following pages contain (i) a map showing the parcels that annexed into the District to form Improvement Area No. 5 and (ii) a Site Plan for the overall development, dated as of July 7, 2016 (no representation is made regarding changes which may have been made since such date). Improvement Area No. 5 comprises Parcels 21, 22, and 23 of the Site Plan. 389
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[IA 5 Parcels]
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Site Plan for Dublin Crossing (Boulevard) As of July 7, 2016
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Improvement Area No. 5 Ownership The property in Improvement Area No. 5 is expected to be developed into 62 single-family detached units and 182 single-family attached units (for a total of 244 units), and is owned as shown in the following table as of October 1, 2023. See also “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5” Owner Neighborhood Tract Number of Units Individual Owners NB 21 – Ivy 8372 3 Dublin Crossing, LLC(1) NB 21 – Ivy 8372 28 Dublin Crossing, LLC(2) NB 22 – Vine 8372 92 Dublin Crossing, LLC(3) NB 23 – Avalon 8372 35 Brookfield Merchant Builder: Brookfield Bay Area Holdings LLC NB 21 – Ivy 8372 31 Lennar Merchant Builder: Lennar Homes of California, LLC NB 23 – Avalon 8372 55 Total 244 ____________________ (1) The 28 lots of the Ivy neighborhood are under contract to be sold to Brookfield BAH (defined herein). See “–Dublin Crossing, LLC.” (2) The 92 lots of the Vine neighborhood are expected to be sold to Brookfield BAH (defined herein), but are not yet under contract See “–Dublin Crossing, LLC.” (3) The 35 lots of the Avalon neighborhood are under contract to be sold to Lennar Homes (defined herein). See “–Dublin Crossing, LLC.” Tract Map Status The lots required for the development of the proposed 244 single family units within Improvement Area No. 5 were created by the recordation on November 29, 2021 of Tract Map 8372. All of the 244 lots are final map lots approved by the City. 392
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Dublin Crossing, LLC The Developer owns a portion of the property to be developed as Neighborhood 21 (Ivy), Neighborhood 22 (Vine), and Neighborhood 23 (Avalon). The remaining home sites in these three neighborhoods are under contract , or expected to be under contract, with either Brookfield Bay Area Holdings LLC, a Delaware limited liability company ("Brookfield BAH"), or Lennar Homes of California, LLC, a California limited liability company ("Lennar Homes"), as of October 1, 2023, as shown in the table below: Current Owner Neighborhood Number of Projected Units Merchant Builder Projected Acquisition Date* Dublin Crossing, LLC NB 21 - Ivy 28 Brookfield BAH 14 lots November 2023 14 lots in March 2024 Dublin Crossing, LLC(1) NB 22 - Vine 92 Brookfield BAH 18 lots in December 2023 15 lots in June 2024 13 lots in November 2024 19 lots in March 2025 14 lots in September 2025 13 lots in January 2026 Dublin Crossing, LLC NB 23 – Avalon 35 Lennar Homes 10 lots in February 2024 10 lots in July 2024 15 lots in January 2025 Total 155 ____________________ * For Vine and Avalon, the term “lots” means the property necessary to construct the applicable number of homes. (1) The 92 lots to be developed as Vine are anticipated to be sold by the Developer to Brookfield BAH, but as of October 1, 2023, no purchase contract has been executed. The Developer anticipates that a purchase contract will be entered into in the next 45 days, prior to the anticipated first takedown of lots in Vine in December 2023. The Developer anticipates (i) selling the remaining lots in the Ivy neighborhood to Brookfield BAH, in two takedowns with 14 lots in November 2023 and 14 lots in March 2024, (ii) selling the lots in the Vine neighborhood to Brookfield BAH in six takedowns with 18 lots in December 2023, 15 lots in June 2024, 13 lots in November 2024, 19 lots in March 2025, 14 lots in September 2025, and 13 lots January 2026, and (iii) selling the remaining lots in the Avalon neighborhood to Lennar Homes, an indirect wholly-owned subsidiary of Lennar Corporation, in three takedowns with 10 lots in February 2024, 10 lots in July 2024, and 15 lots in January 2025. Takedowns are subject to change, and there can be no guarantee that the lots will be acquired pursuant to the foregoing schedule. The Merchant Builders The merchant builder owners of the property in Improvement Area No. 5 are affiliated with Brookfield Residential and Lennar Corporation. In particular, the property in Improvement Area No. 5 not owned by the Developer or individual homeowners is owned by the Brookfield Merchant Builder or Lennar Homes, each as described in more detail in the tables under “IMPROVEMENT AREA NO. 5 – The Development Plan.” The Development Plan A more detailed description of each of the neighborhoods owned by the Merchant Builders is set forth below. 393
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Ivy Neighborhood. Brookfield BAH is building and selling homes within the “Ivy” neighborhood within Improvement Area No. 5. Ultimately, the Ivy neighborhood is expected to consist of 62 detached single-family residential units (28 lots are still owned by the Developer as of October 1, 2023). The table below provides information under the assumption that Brookfield BAH will take title to the remaining 28 units and develop all 62 units. The Ivy neighborhood opened for sales in July 2023, and Brookfield BAH anticipates final build-out by December 2024. The following table provides additional information regarding the proposed development of the Ivy project (assuming that the Developer conveys the remaining 28 lots to Brookfield BAH) as of October 1, 2023. Ivy Neighborhood (Tract No. 8372) (as of October 1, 2023) Floor Plan Approx. Square Footage
Total Number of Planned Units
Units Completed, Sold, and Closed
Units Completed Owned by Brookfield BAH (1)(2) Units Under Construction(2)(3) Est. Base Price(4) Plan 1 2,565 31 2 1 14 $1,516,000 Plan 2 2,663 31 1 1 15 $1,541,000 Totals 62 3 2 29 ____________________ (1) Includes 2 completed model homes (one model in each Plan). (2) Brookfield BAH has 18 homes in escrow but have not yet closed. There can be no guarantee that homes in escrow will actually close. (3) As of October 1, 2023, Brookfield BAH has received 34 building permits. (4) Base sale prices are estimated as of October 1, 2023. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered. Source: Brookfield BAH As of October 1, 2023, Brookfield BAH has incurred approximately $24,566,000 on site acquisition, on-site development costs, fees, and costs (other than homebuilding, sales and marketing costs) and anticipates that an additional $32,302,000 will be required to be expended on such costs to complete the neighborhood. As of October 1, 2023, Brookfield BAH has spent $8,046,000 on home construction, sales and marketing, and anticipates spending an additional $20,841,000 to buildout the 62 homes it currently anticipates building (assuming that the Developer conveys the remaining 28 lots to Brookfield BAH). Vine Neighborhood. Prior to the first anticipated takedown in December 2023, the Developer expects to enter into a purchase and sale contract with Brookfield BAH for the sale of the property that will be developed as the 92 Vine units. Assuming that Brookfield BAH and the Developer enter into the purchase and sale agreement, Brookfield BAH is expected to build and sell homes within the “Vine” neighborhood within Improvement Area No. 5. Ultimately, the Vine neighborhood is expected to consist of 92 attached single-family residential units (the property for all 92 units are still owned by the Developer as of October 1, 2023). The table below provides information under the assumption that Brookfield BAH will take title to and develop the property to be developed as 92 units. The Vine neighborhood is anticipated to open for sales in February 2024 have its first closings in September 2024, and Brookfield BAH anticipates final build-out by January 2026. The following table provides additional information regarding the proposed development of the Vine project (assuming that the Developer conveys the property to be developed as the 92 units to Brookfield BAH) as of October 1, 2023. 394
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Vine Neighborhood (Tract No. 8372) (as of October 1, 2023) Floor Plan Approx. Square Footage
Total Number of Planned Units
Units Completed, Sold, and Closed
Units Completed Owned by Brookfield BAH1)(2) Units Under Construction Est. Base Price(3) Plan 1 2,192 34 0 0 0 TBD Plan 2 2,398 34 0 0 0 TBD Plan 3 2,430 24 0 0 0 TBD Totals 92 0 0 0 ____________________ (1) Brookfield BAH anticipates using the model homes in the Abbey Neighborhood of Improvement Area No. 3 to market the Vine, but may decide to construct on-site model homes in the future. (2) As of October 1, 2023, Brookfield BAH has not received any building permits. (3) Base sale prices have not yet been determined. Source: Brookfield BAH As of October 1, 2023, Brookfield BAH has incurred approximately $232,000 on site acquisition, on-site development costs, fees, and costs (other than homebuilding, sales and marketing costs) and anticipates that an additional $52,677,000 will be required to be expended on such costs to complete the neighborhood. As of October 1, 2023, Brookfield BAH has spent $102,000 on home construction, sales and marketing, and anticipates spending an additional $40,271,000 to buildout the 92 homes it currently anticipates building (assuming that the Developer conveys the property to be developed as the remaining 92 units to Brookfield BAH). Note that certain improvements to Scarlett Drive frontage were made a condition of approval for Neighborhoods 21 through 23 of Improvement Area No. 5. The Developer has designed, obtained city plan approval, and provided bonds to assure construction of the Scarlett Drive improvements. While Kinder Morgan was involved in earlier design discussions, subsequent concerns about the construction of a roadway over their existing petroleum pipeline surfaced. The Developer and the City have agreed to interim improvements to address site access while Kinder Morgan concerns are being reviewed. The Developer, the City, and Kinder Morgan are cooperating to review options for an ultimate solution. These discussions have delayed the construction of full final approved frontage improvements as envisioned per the condition of approval. In the meantime, the City has upon request of the Developer allowed the development of Neighborhoods 21 through 23, including the issuance of building permits and occupancy permits. The Developer and City staff are working to modify the condition of approval to address both short term and long term improvement and access solutions, and both the Developer and the City anticipate that the Developer and the builders will continue to be able to construct homes and receive building permits and occupancy permits on the property in Neighborhoods 21 through 23 while the parties determine the long-term solution. Avalon Neighborhood. Lennar Homes is building and selling homes within the “Avalon” neighborhood within Improvement Area No. 5. Ultimately, the Avalon neighborhood is expected to consist of 90 attached single-family residential units (the property for 35 units are still owned by the Developer with the next planned incremental transfer scheduled for February 2024). The table below provides information under the assumption that Lennar Homes will take title to and develop the property to be developed as 90 units. The Avalon neighborhood opened for sales in July 2023, and Lennar Homes anticipates final build-out by summer of 2025. The following table provides additional information regarding the proposed development of the Avalon project (assuming that the Developer conveys the property to be developed as the remaining 35 units to Lennar Homes) as of October 4, 2023. 395
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Avalon Neighborhood (Tract No. 8372) (as of October 4, 2023) Floor Plan Approx. Square Footage
Total Number of Planned Units
Units Completed, Sold, and Closed
Units Completed and Owned by Lennar (1)(2) Units Under Construction(2)(3) Est. Base Price(4) Plan 1 1,493 36 0 0 16 $951,880 Plan 2 2,254 36 0 0 16 $1,099,880 Plan 3 2,456 18 0 0 7 $1,254,880 Totals 90 0 0 39 ____________________ (1) As of October 4, 2023, Lennar Homes has received 70 building permits. (2) Includes three model homes (one in each Plan) and 36 production homes under construction. (3) As of October 4, 2023, nine homes were in escrow. There can be no guarantee that homes in escrow will actually close. (4) Base sale prices are estimated as of October 4, 2023. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered. Source: Lennar Homes As of October 4, 2023, Lennar Homes has incurred approximately $22.9 million on site acquisition, on-site development costs, fees, and costs (other than homebuilding, sales and marketing costs) and anticipates that an additional approximately $12.2 million will be required to be expended on such costs to complete the neighborhood. As of October 4, 2023, Lennar Homes has spent approximately $8.7 million on home construction, sales and marketing, and anticipates spending an additional approximately $21.4 million to buildout the 90 homes it currently anticipates building (assuming that the Developer conveys the property to be developed as the remaining 35 units to Lennar Homes). Notwithstanding the Merchant Builders’ projections regarding home construction and sellout of their planned development in Improvement Area No. 5, no assurance can be given that the Merchant Builders will complete such development as currently anticipated. Financing Plan – Developer To date, the Developer has financed its land acquisition and various site development costs related to its property in the District through internally generated funds and lot sales revenues. The Developer estimates that, as of October 1, 2023, the remaining costs to be incurred by the Developer to complete its planned development within Improvement Area No. 5 will be $1,163,000 (out of the $17,480,000 estimated costs to complete Improvement Area No. 5, which does not include land acquisition, military structure design and construction, and related expenses). The Developer expects to use lot sales revenues, internal funding, and reimbursement from Bond proceeds to complete its development in Improvement Area No. 5 of the District and believes that it will have sufficient funds available to complete such development in accordance with the development schedule described in this Official Statement. Although the Developer expects to have sufficient funds available to complete its development in Improvement Area No. 5 of the District as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available to the Developer from its internally generated funds or from any other source 396
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when needed. Neither the Brookfield Merchant Builder nor any of its related entities, is under any legal obligation of any kind to expend funds for the development of and construction of homes on its property in Improvement Area No. 5 of the District. Any contributions by the Developer or any such entity to fund the costs of such development are entirely voluntary. If and to the extent that internal funding, including but not limited to lot sales revenues, are inadequate to pay the costs to complete the planned development by the Developer within Improvement Area No. 5 of the District and other financing by the Developer is not put into place, there could be a shortfall in the funds required to complete the planned development by the Developer in Improvement Area No. 5 of the District. Financing Plan – Merchant Builders Brookfield Merchant Builder Financing Plan. To date, the Brookfield Merchant Builder has financed its land acquisition, site development, and home construction costs related to its Ivy and Vine neighborhoods in Improvement Area No. 5 through internally generated funds. As of October 1, 2023, Brookfield BAH estimates the costs to acquire the remaining 28 lots in Ivy and the property to be developed as 92 units in Vine from the Developer and the costs to complete the remaining land development of the Ivy and Vine neighborhoods within Improvement Area No. 5, including fees but excluding costs of constructing, selling and marketing of homes, is approximately $84,709,000. Brookfield BAH estimates the remaining vertical home construction, selling and marketing costs as of October 1, 2023 to complete its projects in Improvement Area No. 5 (assuming Brookfield BAH acquires the remaining 28 lots in Ivy and the property to be developed as 92 units in Vine from the Developer) to be approximately $61,112,000. The foregoing costs are exclusive of internal financing repayment and marketing and sales costs Brookfield BAH expects the remaining horizontal and vertical home construction costs will be financed by the Brookfield Merchant Builder from home sales and internally generated funds to complete its development activities in Improvement Area No. 5. Brookfield BAH believes that the Brookfield Merchant Builder will have sufficient funds available to complete its proposed development activities in Improvement Area No. 5, commensurate with the development timing described in this Official Statement. Although Brookfield BAH expects to have sufficient funds available to complete its development activities in Improvement Area No. 5, commensurate with the development timing described in this Official Statement, there can be no assurance, however, that amounts necessary to finance the remaining development and home construction costs will be available from the Brookfield Merchant Builder or any other source when needed. Any contributions by the Brookfield Merchant Builder or any of their respective parent companies to fund the costs of such development and home construction are entirely voluntary. If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by the Brookfield Merchant Builder within Improvement Area No. 5 and other financing by the Brookfield Merchant Builder is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Brookfield Merchant Builder in Improvement Area No. 5 and the remaining portions of the development may not be developed. Lennar Homes Financing Plan. To date, Lennar Homes has financed its land acquisition, site development, and home construction costs related to its Avalon neighborhood in Improvement Area No. 5 through homes sales revenue and internally generated funds. 397
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As of October 4, 2023, Lennar Homes estimates the costs to acquire the property to be developed as the remaining 35 units in Avalon from the Developer and the costs to complete the remaining land development of the Avalon neighborhood within Improvement Area No. 5, including fees but excluding costs of constructing, selling and marketing homes, is approximately $12.2 million. Lennar Homes estimates the remaining vertical home constructing, selling and marketing costs as of October 4, 2023 to complete its Avalon neighborhood in Improvement Area No. 5 (assuming Lennar Homes acquires the property to be developed as the remaining 35 units in Avalon from the Developer) to be approximately $21.4 million. The foregoing costs are exclusive of internal financing repayment and marketing and sales costs. Lennar Homes expects to finance all remaining horizontal and vertical home construction costs related to its Avalon neighborhood in Improvement Area No. 5 through home sales revenue and internally generated funds, including, if necessary, Lennar Corporation’s revolving credit facility. Lennar Corporation’s credit facility is not secured by Lennar Homes' property within Improvement Area No. 5. Additionally, home sales revenue from Lennar Homes' projects in Improvement Area No. 5 will not be segregated and set aside for the payment of costs required to complete their activities in Improvement Area No. 5. Home sales revenue from the project is accumulated and used to pay costs of operations for Lennar Corporation and its subsidiaries, to pay debt service on outstanding debt and for other corporate purposes, and may be diverted to pay costs other than the costs of completing Lennar Homes' activities in Improvement Area No. 5 at the discretion of management. Notwithstanding the foregoing, Lennar Homes believes that it will have sufficient funds available to complete its proposed development activities in Improvement Area No. 5, commensurate with the development timing described in this Official Statement. Although Lennar Homes expects to have sufficient funds available to complete its development activities in Improvement Area No. 5, commensurate with the development timing described in this Official Statement, there can be no assurance, however, that amounts necessary to finance the remaining development and home construction costs will be available from Lennar Homes, Lennar Corporation or any other source when needed. For example, borrowings under Lennar Corporation’s revolving credit facility may not be available, and home sales revenue, which is accumulated daily for use in operations by Lennar Corporation, including to fund costs of other direct and indirect subsidiaries, to pay debt service on outstanding debt and for other corporate purposes, may be diverted to pay costs other than the costs of completing Lennar Homes' activities in Improvement Area No. 5 at the discretion of management. Lennar Homes, Lennar Corporation, its lenders, or any of their related entities are not under any legal obligation of any kind to expend funds for the development of and construction of homes on Lennar Homes' property in Improvement Area No. 5. Any contributions by Lennar Homes or Lennar Corporation to fund the costs of such development and home construction are entirely voluntary. If and to the extent that internal funding, including but not limited to home sales revenues, and borrowings under Lennar Corporation’s revolving credit facility are inadequate to pay the costs to complete the planned development by Lennar Homes within Improvement Area No. 5 and other financing is not put into place, there could be a shortfall in the funds required to complete the proposed development by Lennar Homes in Improvement Area No. 5 and the remaining portions of the development may not be developed. 398
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OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5 Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within the District. There is no assurance that the present property owners or any subsequent owners will have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay the Special Taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the City nor any Bondowner will have the ability at any time to seek payment directly from the owners of property within the District of the Special Tax or the principal or interest on the Bonds, or the ability to control who becomes a subsequent owner of any property within the District. The Developer, BrookCal, Brookfield BAH, and Lennar Homes have provided the information set forth in this section entitled “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5.” No assurance can be given that all information is complete. The City has not independently verified this information and assumes no responsibility for its accuracy or completeness. It is only provided as a convenience to enable investors to more easily commence their own independent investigations if they so choose. In addition, any Internet addresses included below are for reference only, and the information on those Internet sites is not a part of this Official Statement or incorporated by reference into this Official Statement. No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. The Special Taxes are not personal obligations of the developers or of any subsequent landowners; the Bonds are secured only by the Special Taxes and moneys available under the Fiscal Agent Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “SPECIAL RISK FACTORS” herein. The Developer, Brookfield, and Lennar Homes Developer. The master developer of the property within the District is Dublin Crossing, LLC, a Delaware limited liability company (previously defined as “Dublin Crossing” or the “Developer”). Dublin Crossing is a joint venture between BrookCal Dublin LLC, a Delaware limited liability company (previously defined as “BrookCal”), and SPIC Dublin LLC, a Delaware limited liability company (previously defined as “SPIC”), an affiliate of CalAtlantic Group, LLC, a Delaware limited liability company (“CalAtlantic”). CalAtlantic is owned by Lennar Corporation. BrookCal. BrookCal is owned 100% by BrookCal Bay Area Holdings LLC, a Delaware limited liability company (“BrookCal Bay Area”). BrookCal Bay Area is owned 100% by BrookCal, LLC, a Delaware limited liability company (“BrookCal, LLC”). BrookCal, LLC is a joint venture between BHC BrookCal, LLC, a Delaware limited liability company (“BHC BrookCal”), and the California State Teachers Retirement System (“Cal STRS”). BHC BrookCal is an indirect wholly-owned subsidiary of Brookfield Residential Properties Inc. (“Brookfield Residential”), a wholly-owned subsidiary of Brookfield Asset Management Inc., which has been developing land and building homes for over 50 years. Brookfield Residential is a North American land developer and homebuilder with operations in Canada and the United States, which entitles and develops land to create master-planned communities and builds and sells lots to third-party builders, as well as to its own homebuilding divisions. Brookfield Residential also participates in select strategic real estate opportunities, including infill projects, mixed-use developments, infrastructure projects and joint ventures. Brookfield Residential currently focuses on the following operating segments: Canada, California, and Central and Eastern United States. Its Canadian operations are primarily in the Alberta and Ontario markets. Brookfield Residential has homebuilding operations in Austin, Calgary, Denver, Edmonton, Hawaii, Los Angeles, Phoenix, San Diego, San 399
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Francisco, Toronto, and Washington D.C. Brookfield Residential has been active in the Northern California market since 1997. Brookfield BAH. The Developer sold a portion of the Ivy and is under contract to sell the remaining portion of Ivy, and anticipates selling the lots in Vine, in Improvement Area No. 5 to Brookfield Bay Area Holdings LLC, a Delaware limited liability company (previously defined as "Brookfield BAH"). Brookfield BAH is an indirect subsidiary of Brookfield Residential. Information regarding Brookfield Residential’s operations in Northern California is available at www.brookfieldnorcal.com. Copies of Brookfield Residential’s financial statements and other information are currently available from Brookfield Residential’s website at www.brookfieldresidential.com. These internet addresses are included for reference only, and the information on these internet sites is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on these internet sites. Lennar Homes. The Developer sold portions, and is under contract to sell the remaining portions, of the Avalon property in Improvement Area No. 5 to Lennar Homes. Lennar Homes is based in Irvine, California. Lennar Homes is wholly-owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida. Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B.” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home. Lennar Corporation primarily develops residential communities both within the Lennar family of builders and through consolidated and unconsolidated partnerships in which Lennar Corporation maintains an interest. Lennar Corporation is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, set forth, among other things, certain data relative to the consolidated results of operations and financial position of Lennar Corporation and its consolidated subsidiaries, including Lennar Homes, as of such dates. The SEC maintains a website that contains reports, proxy and other information statements and other information regarding registrants that file electronically with the SEC, including Lennar Corporation. The address of such website is www.sec.gov. All documents filed by Lennar Corporation pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Lennar Corporation’s Annual Report and related financial statements, prepared in accordance with generally accepted accounting standards, are available from Lennar Corporation’s website at www.lennar.com. 400
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APPRAISED VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5 The Appraisal General. Integra Realty Resources, San Francisco, California (the “Appraiser”) prepared an appraisal report with a date of value of October 4, 2023 (the “Appraisal”). The Appraisal was prepared at the request of the City. The Appraiser was requested by the City to provide a market value of the appraised properties by ownership, as well as a cumulative, or aggregate, value of the appraised properties within the District (see “– Property Appraised” below), under the assumptions and conditions cited in the attached report. The value estimates assume a transfer would reflect a cash transaction or terms that are considered to be equivalent to cash. The estimates are also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently, knowledgeably, for their own self-interest and assuming neither is under duress. The Appraisal is set forth in its entirety in APPENDIX B hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions and qualifications which are set forth in the Appraisal. Property Appraised. The appraised properties represent the taxable parcels in Improvement Area No. 5, subject to the lien of the Special Taxes of the CFD No. 2015-1, a portion of the Dublin Crossing (now referred to, marketed, as "Boulevard") master planned community. Improvement Area No. 5 consists of 244 residential units/lots (62 detached and 182 attached) being developed by Lennar Homes and Brookfield BAH within three product lines further described herein. Any properties within the boundaries of Improvement Area No. 5 not subject to the Lien of the Special Tax securing the Bonds (e.g., public and quasi-public land use sites) are not a part of this appraisal. Boulevard is generally located at the northwest quadrant of Dublin Boulevard and Arnold Road. Value Estimate. The market value of the appraised properties, by ownership, as well as the cumulative, or aggregate, value, are subject to the hypothetical condition various public improvements to be financed by proposed series of Bonds are in place. The estimates of value also account for the impact of the lien of the Special Tax securing the Bonds. The value estimate for the appraised properties as of the date of value, using the methodologies described in the Appraisal and subject to the hypothetical condition that various public improvements to be financed by the Bonds are in place, and subject to other assumptions and limiting conditions set forth in the Appraisal, and based on the ownership of the property as of that date is $111,070,000, as shown in the table on the following page. Note that the aggregate value noted is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the “total of multiple market value conclusions.” For purposes of the Appraisal, market value is estimated by ownership. 401
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Ownership Value Conclusion Brookfield Bay Area Holdings, LLC $18,910,000 Lennar Homes of California, LLC 20,625,000 Dublin Crossing, LLC) 67,005,000 Individual Homeowners 4,530,000 $111,070,000 Source: The Appraisal. Appraisal Methodology. In the Appraisal, the Appraiser determined the market value of the residential land using the sales comparison approach. Because certain appraised parcels have been sold and transferred to individual homeowners, the Appraiser assigned value to the completed and sold homes using a not-less-than estimate of value based on the smallest homes/floor plan offered. See APPENDIX B for additional details. Hypothetical Condition. The Appraisal estimates the market value of the appraised properties, by ownership, as well as the cumulative, or aggregate, value of Improvement Area No. 5 of the CFD as of the date of value, subject to the hypothetical condition various public improvements to be financed by the Bonds are in place and available for use. Assumptions and Limiting Conditions. In addition to the hypothetical condition described above, the Appraisal is based upon a number of standard and special assumptions and conditions, all of which affect the estimate as to value, some of which include the following. See “APPENDIX B – THE APPRAISAL” for a complete list of such assumptions and conditions. Exposure Time. The Appraisal comments on exposure time for the property appraised as follows: “Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the appraisal. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local land market, it is our opinion that the probable exposure time for the subject at the concluded market values stated previously is 12 months.” The Appraiser concluded that, given the size of the appraised properties, and the condition of the market, it is expected that if appropriately priced, the exposure time for the appraised properties, assuming the properties (by ownership) are not marketed concurrently, would likely be approximately 12 months. No assurance can be given that the estimated exposure time or absorption of sales of property in Improvement Area No. 5 will be achieved or attained over an extended period of time; real estate is cyclical in nature, and it is impossible to accurately forecast and project specific demand over a projected period. See “SPECIAL RISK FACTORS – Property Values and Property Development.” Limitations of Appraisal Valuation. Property values may not be evenly distributed throughout the Improvement Area No. 5; thus, certain parcels may have a greater value than others. This disparity is significant because in the event of nonpayment of the Special Tax, the only remedy is to foreclose against the delinquent parcel. No assurance can be given that the estimate of market value set forth in the Appraisal can or will be maintained during the period of time that the Bonds are outstanding in that the City has no control over the market value of the property within Improvement Area No. 5 or the amount of 402
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additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes. See “– Overlapping Liens and Priority of Lien” below. For a description of certain risks that might affect the assumptions made in the Appraisal, see “SPECIAL RISK FACTORS – Appraised Values” herein. Value by Ownership and Neighborhood The following table sets forth the development status (based on building permits issued as of October 4, 2023) and appraisal value by ownership and neighborhood for property within Improvement Area No. 5, based on the appraised values set forth in the Appraisal. Table 1 City of Dublin Community Facilities District No. 2015-1 (Dublin Crossing) Improvement Area No. 5 Development Status by Neighborhood ___________________ (1) Based on building permits issues as of October 4, 2023. Includes 3 permits for homes owned by individuals. (2) The projected fiscal year 2024-25 special tax levy is subject to change in additional building permits are issued before June 30, 2024. Source: Integra Realty Resources; Goodwin Consulting Group, Inc.
Neighborhood Units with Building Permits(1) Total Planned Units Builder Land Use FY 2024-25 Maximum Special Tax FY 2024-25 Projected Tax Levy Appraised Value Avalon 70 90 Lennar Homes Single Family Attached $420,954 $390,528 $33,750,000 Ivy 34 62 Brookfield BAH Single Family Detached 455,829 382,085 40,520,000 Vine 0 92 Brookfield BAH Single Family Attached 491,370 350,714 36,800,000 Total: 104 244 $1,368,153 $1,123,327 $111,070,000 403
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Value to Special Tax Burden Ratios The following tables set forth the value-to-lien ratios for property within Improvement Area No. 5, based on the appraised values set forth in the Appraisal and based on the projected Special Tax levy for Fiscal Year 2024-25, assuming it was levied on all taxable parcels in the District, and not including any overlapping debt for general obligation bonds. Table 2A City of Dublin Community Facilities District No. 2015-1 (Dublin Crossing) Improvement Area No. 5 Estimated Fiscal Year 2024-25 Special Tax Levy and Value-to-Lien Ratios (Development Status as of October 4, 2023) Development Status Planned Residential Units(1) Appraised Value Maximum FY 2024-25 Special Tax Revenue
Estimated FY 2024-25 Special Tax Levy(2)
Percent of Projected FY 2024-25 Tax Levy Series 2023 Bonds(3)* Value-to- Lien* Developed Property Individual Owners 3 $4,530,000 $17,489 $17,489 1.6% $280,240 16.16 Brookfield BAH 31 18,910,000 180,719 180,719 16.1 2,895,817 6.53 Lennar Homes 55 20,625,000 247,237 247,237 22.0 3,961,684 5.21 Dublin Crossing, LLC 15 5,625,000 67,428 67,428 6.0 1,080,459 5.21 Subtotal 104 $49,690,000 $512,874 $512,874 45.7% $8,218,200 6.05 Undeveloped Property Dublin Crossing, LLC 140 $61,380,000 $855,279 $610,454 54.3% $9,781,800 6.27 Total 244 $111,070,000 $1,368,153 $1,123,327 100.0% $18,000,000 6.17 ___________ * Preliminary, subject to change. (1) Based on Attachment 1 of the Rate and Method of Apportionment. (2) The projected fiscal year 2024-25 special tax levy is subject to change in additional building permits are issued before June 30, 2024. (3) Allocated based on the share of the projected fiscal year 2024-25 special tax levy. Source: Integra Realty Resources; Underwriter; Goodwin Consulting Group, Inc. Table 2B City of Dublin Community Facilities District No. 2015-1 (Dublin Crossing) Improvement Area No. 5 Estimated Fiscal Year 2024-25 Special Tax Levy and Value-to-Lien Ratio by Ranges (Development Status as of October 4, 2023) Value-to-Lien Planned Residential Units (1 Appraised Value FY 2024-25 Maximum Special Tax Revenue
FY 2024-25 Projected Special Tax Levy (2)
Percent of FY 2024-25 Projected Tax Levy
Series 2023 Bonds (3)* Average Value-to- Lien* Greater than 6:1 126 $62,300,000 $705,777 $560,484 49.9% $8,981,105 6.94 4:1 to 6:1 118 48,770,000 662,376 562,843 50.1 9,018,895 5.41 Less than 4:1 0 0 0 0 0.0 0 n/a Total 244 $111,070,000 $1,368,153 $1,123,327 100.0% $18,000,000 6.17 * Preliminary, subject to change. (1) Based on Attachment 1 of the Rate and Method of Apportionment. (2) The projected fiscal year 2024-25 special tax levy is subject to change in additional building permits are issued before June 30, 2024. (3) Allocated based on the share of the projected fiscal year 2024-25 special tax levy. Source: Integra Realty Resources; Underwriter; Goodwin Consulting Group, Inc. In comparing the appraised value of the real property within the Improvement Area No. 5 and the principal amount of the Bonds, it should be noted that only the real property upon which there is a delinquent Special Tax can be foreclosed upon, and the real property within Improvement Area No. 5 cannot be foreclosed upon as a whole to pay delinquent Special Taxes 404
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of the owners of such parcels within Improvement Area No. 5 unless all of the property is subject to a delinquent Special Tax. In any event, individual parcels may be foreclosed upon separately to pay delinquent Special Taxes levied against such parcels. Other public agencies whose boundaries overlap those of Improvement Area No. 5 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area No. 5, impose additional taxes or assessment liens on the land within Improvement Area No. 5. The lien created on the land within Improvement Area No. 5 through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. In addition, construction loans may be obtained by the Merchant Builders or home loans may be obtained by ultimate homeowners. The deeds of trust securing such debt on property within Improvement Area No. 5, however, will be subordinate to the lien of the Special Tax. Overlapping Liens and Priority of Lien The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within Improvement Area No. 5, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 5. Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in Improvement Area No. 5. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area No. 5. 405
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Set forth in the following table is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within Improvement Area No. 5. This table has been prepared by California Municipal Statistics Inc. as of the date indicated, and is included for general information purposes only. The City has not reviewed the data for completeness or accuracy and makes no representations in connection therewith. Table 3 City of Dublin Community Facilities District No. 2015-1 (Dublin Crossing) Improvement Area No. 5 Overlapping Bonded Debt as of October 1, 2023 2023-24 Assessed Valuation: $36,676,491 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 11/1/23 Alameda County General Obligation Bonds 0.009% $ 45,488 Bay Area Rapid Transit District General Obligation Bonds 0.004 88,822 Chabot-Las Positas Community College District G. O. Bonds 0.022 156,525 Dublin Unified School District General Obligation Bonds 0.164 1,237,786 East Bay Regional Park District General Obligation Bonds 0.006 8,303 City of Dublin Community Facilities District No. 2015-1, I.A. No. 5 100. 0 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $1,536,924 OVERLAPPING GENERAL FUND DEBT: Alameda County General Fund Obligations 0.009% $ 64,661 Dublin Unified School District General Fund Obligations 0.164 41,933 City of Dublin General Fund Obligations 0.164 28,502 TOTAL OVERLAPPING GENERAL FUND DEBT $135,096 COMBINED TOTAL DEBT $1,672,020 (2) (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to 2023-24 Assessed Valuation: Direct Debt ($0) ................................................................ 0.00% Total Direct and Overlapping Tax and Assessment Debt . 4.19% Combined Total Debt ........................................................ 4.56% _________________ (1) Excludes Bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. There can be no assurance that the Developer, the Brookfield Merchant Builder, Lennar Homes, their respective affiliates or any subsequent owner will not petition for the formation of other community facilities districts and improvement areas or for a special assessment district or districts and that parity special taxes or special assessments will not be levied by the County or some other public agency to finance additional public facilities, however no other special districts are currently contemplated by the City or the Developer. Private liens, such as deeds of trust securing loans obtained by the Developer, may be placed upon property in Improvement Area No. 5 at any time. Under California law, the Special Taxes have priority over all existing and future private liens imposed on property subject to the lien of the Special Taxes. 406
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Estimated Tax Burden The following table sets forth estimated Fiscal Year 2023-24 sample tax bills for various types of property expected to be built and sold to individual homeowners within Improvement Area No. 5. Table 4 City of Dublin Community Facilities District No. 2015-1 (Dublin Crossing) Improvement Area No. 5 Estimated Fiscal Year 2023-24 Sample Tax Bills Single Family > 2,300 sf Multi-Family > 1,800 sf Assumptions Base Sales Price (1) $1,510,000 $1,217,500 Homeowners Exemption ($7,000) ($7,000) Net Assessed Value $1,503,000 $1,210,500 Ad Valorem Taxes (2) Rate Amount Amount General Tax Levy 1.0000% $15,030 $12,105 County Wide GO Bonds 0.0088 132 107 School Unified 0.1612 2,423 1,951 School Comm Coll 0.0416 625 504 Fld Zn 7 State Wtr 0.0267 401 323 Bay Area Rapid Transit 0.0134 201 162 East Bay Regional Park 0.0057 86 69 Total Ad Valorem Taxes 1.2574% $18,899 $15,221 Direct Charges (3) Amount Amount Mosq MSR K 1982 $2 $2 CSA Paramedic $39 $39 Vec Cntrl Measure A 84 $6 $6 Paramedic Supplement $10 $10 SFBRA Measure AA $12 $12 2019DUSD Measure E $96 $96 Haz Waste Program $7 $7 Vector Cntrl Asmt $6 $6 Mosquito Asmt 2008 $3 $3 East Bay Trail LLD $6 $6 IA 5 CFD No. 2015-1 - Facilities (4) $5,715 $4,007 CFD No. 2017-1 - Services (4) $72 $61 Total Direct Charges $5,974 $4,254 Total Taxes and Direct Charges $24,872 $19,475 Percentage of Base Sales Price 1.65% 1.60% ____________________________________ (1) The smallest single family detached unit included in the appraisal starts at 2,565 square feet and the smallest multi-family unit included in the appraisal starts at 2,254 square feet. (2) Based on the fiscal year 2023-24 ad valorem tax rates for the tax rate area within the CFD. Ad valorem tax rates are subject to change in future years. (3) Based on the fiscal year 2023-24 charges identified on Alameda County-issued property tax bills. Charges subject to change in future years. (4) Represents the maximum special tax rate in fiscal year 2023-24. Sources: Alameda County Tax Collector's Website; Integra Realty Resources; Goodwin Consulting Group, Inc. 407
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SPECIAL RISK FACTORS The purchase of the Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following is a description of certain risk factors affecting Improvement Area No. 5, the property owners in Improvement Area No. 5, the parcels subject to the levy of Special Tax and the payment of and security for the Bonds. The following discussion of risks is not meant to be a complete list of the risks associated with the purchase of the Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the investment quality of the Bonds. There can be no assurance that other risk factors will not become material in the future. Limited Obligation of the City to Pay Debt Service The City has no obligation to pay principal of and interest on the Bonds in the event Special Tax collections are delinquent, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent, nor is the City obligated to advance funds to pay such debt service on the Bonds. The Bonds are not general obligations of the City but are limited obligations of the City and Improvement Area No. 5 payable solely from the proceeds of the Special Tax and certain funds held under the Fiscal Agent Agreement, including amounts deposited in the Reserve Fund and investment income thereon, and the proceeds, if any, from the sale of property subject to the Special Tax in the event of a foreclosure. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” Any tax for the payment of the Bonds will be limited to the Special Taxes to be collected within the jurisdiction of Improvement Area No. 5. Neither the faith and credit nor the taxing power of the City or the State of California or of any of their respective political subdivisions is pledged to the payment of the Bonds. Special Tax Not a Personal Obligation An owner of property in Improvement Area No. 5 is not personally obligated to pay the Special Tax attributable to the property in Improvement Area No. 5. Rather, the Special Tax is an obligation only against the parcel of property, secured by the amount which could be realized in a foreclosure proceeding against the property, and not by any promise of the owner of any property to pay. If the value of the property is not sufficient for the payment of debt service on the Bonds, taking into account other obligations also constituting a lien against the property, the City, Fiscal Agent and owners of the Bonds have no recourse against the owner, such as filing a lawsuit to collect money. Concentration of Ownership Nearly all of the land within Improvement Area No. 5 is currently owned by the Developer and the Merchant Builders. The lack of diversity in ownership of property in Improvement Area No. 5, and the consequent lack of diversity in the obligation to pay the Special Tax levied in Improvement Area No. 5, represents significant risk to the owners of the Bonds in that the ability of the Developer and the Merchant Builders to pay the Special Tax levied on property they own will depend, in part, on the successful sales of lots and homes in Improvement Area No. 5. Failure of the current owners, or any future owners, of significant property subject to the Special Taxes in Improvement Area No. 5 to pay installments of Special Taxes when due could 408
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cause the depletion of the Reserve Fund prior to reimbursement from the resale of foreclosed property or payment of the delinquent Special Tax and, consequently, result in the delinquency rate reaching a level that would cause an insufficiency in collection of the Special Tax to meet obligations on the Bonds. For a description of the Developer and the Merchant Builders, see “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5 – The Developer, Brookfield and Lennar Homes.” In that event, there could be a delay or failure in payments on the Bonds. See “SPECIAL RISK FACTORS – Bankruptcy and Foreclosure Delays” below and “SECURITY FOR THE BONDS – Delinquent Payments; Covenant for Superior Court Foreclosure.” Development of undeveloped property within Improvement Area No. 5 may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of the Developer or landowner to pay the Special Taxes when due. Certain infrastructure improvements remain to be completed in order to complete construction of all of the homes in Improvement Area No. 5. No assurance can be given that the remaining proposed residential development will be partially or fully completed, and for purposes of evaluating the investment quality of the Bonds, prospective purchasers should consider the possibility that such parcels will remain vacant and only partially improved. Levy and Collection of the Special Tax General. The principal source of payment of principal of and interest on the Bonds is the proceeds of the annual levy and collection of the Special Tax against property within Improvement Area No. 5. Limitation on Maximum Annual Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds. In addition to the maximum annual Special Tax rate limitation in the Rate and Method, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds. No Relationship Between Property Value and Special Tax Levy. Because the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels of Taxable Property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of Taxable Property and their proportionate share of debt service on the Bonds, and certainly not a direct relationship. Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:
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Transfers to Governmental Entities. The number of parcels of Taxable Property could be reduced through the acquisition of Taxable Property by a governmental entity and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels. Property Tax Delinquencies. Under provisions of the Act, the Special Tax, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, are being billed to the property within Improvement Area No. 5 on the regular property tax bills sent to owners of the parcels. Such Special Tax installments are due and payable, and bear the same penalties and interest for nonpayment, as do regular property tax installments. Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Special Tax installment payments in the future. Failure of the owners of Taxable Property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Tax revenues. For a summary of recent Special Tax collection and delinquency rates in Improvement Area No. 5, see “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5” herein. Insufficiency of Special Taxes In order to pay debt service on the Bonds, it is necessary that the Special Tax levied against taxable parcels within Improvement Area No. 5 be paid in a timely manner. The City has established the Reserve Fund in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent Special Taxes are not paid on time and other funds are not available. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Reserve Fund” and APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, the City has covenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement; subject, however, to the limitation that the City may not levy the Special Tax in any fiscal year at a rate in excess of the Maximum Special Tax rates permitted under the Rate and Method. In addition, the Act imposes certain limitations on increases in Special Taxes on residential parcels as a consequence of delinquencies in payment of the Special Taxes. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Taxes.” Consequently, if a delinquency occurs, the City may be unable to replenish the Reserve Fund to the Reserve Requirement due to the limitation of the Maximum Special Tax rates. If such defaults were to continue in successive years, the Reserve Fund could be depleted and a default on the Bonds would occur if proceeds of a foreclosure sale did not yield a sufficient amount to pay the delinquent Special Taxes. The City has made certain covenants regarding the institution of foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.” If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest. Appraised Values 410
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The Appraisal estimates the market value of the taxable property within Improvement Area No. 5. This market value is merely the present opinion of the Appraiser, and is subject to the assumptions and limiting conditions stated in the Appraisal. Prospective purchasers of the Bonds should not assume that the land within Improvement Area No. 5 could be sold for the appraised amount described in the Appraisal at a foreclosure sale for delinquent Special Taxes the City has not sought the present opinion of any other appraiser of the value of the taxed parcels. A different present opinion of value might be rendered by a different appraiser. The City makes no representation as to the accuracy of the Appraisal. The opinion of value relates to sale by a willing seller to a willing buyer as of the date of valuation, each having similar information and neither being forced by other circumstances to sell or to buy. Consequently, the opinion is of limited use in predicting the selling price at a foreclosure sale, because the sale is forced and the buyer may not have the benefit of full information. In considering the estimates of value evidenced by the Appraisal, it should be noted that the Appraisal is based upon a number of standard and special assumptions which affect the estimates as to value, as well as the hypothetical condition of the Authorized Improvements having been completed, as set forth in the Appraisal (see APPENDIX B hereto). The improvements to be financed by the Bonds were not in place as of the date of inspection; thus, the value estimate is subject to a hypothetical condition (of such improvements being in place). In addition, the opinion of market value in the Appraisal is a present opinion. It is based upon present facts and circumstances. Differing facts and circumstances may lead to differing opinions of value. The appraised market value is not evidence of future value because future facts and circumstances may differ significantly from the present. No assurance can be given that any of the appraised property in Improvement Area No. 5 could be sold in a foreclosure for the estimated market value contained in the Appraisal. Such sale is the primary remedy available to Bondowners if that property should become delinquent in the payment of Special Taxes. A significant portion of the Special Tax is expected to initially be levied on Undeveloped Property with low value to Bond burden values. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale. The City is not obligated and does not expect to be a bidder at any such foreclosure sale. Value-to-Lien Ratios Value-to-lien ratios have traditionally been used in land-secured bond issues as a measure of the “collateral” supporting the willingness of property owners to pay their special taxes and assessments (and, in effect, their general property taxes as well). The value-to-lien ratio is mathematically a fraction, the numerator of which is the value of the property (usually either the assessed value or a market value as determined by an appraiser) and the denominator of which is the “lien” of the assessments or special taxes as represented by the principal amount of bonds repaid by such assessment or special tax. A value-to-lien ratio should not, however, be viewed as a guarantee of credit-worthiness. Land values are especially sensitive to economic cycles. A downturn of the economy may depress land values and hence the value-to-lien ratios. Further, the value-to-lien ratio typically cited for a bond issue is an average. Individual parcels in a community facilities district may fall above or below the average, sometimes even below a 1:1 411
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ratio (with a ratio below 1:1, the land is worth less than the unpaid principal of the bonded debt allocable to it). Although judicial foreclosure proceedings can be initiated rapidly, the process can take several years to complete, and the bankruptcy courts may impede the foreclosure action. Finally, local agencies may form overlapping community facilities districts or assessment districts. Such local agencies typically do not coordinate their bond issuances. Debt issuance by an entity other than the City for Improvement Area No. 5 can therefore dilute value-to-lien ratios. Exempt Properties Certain properties are exempt from the Special Tax in accordance with the Rate and Method. In addition, the Act provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within Improvement Area No. 5 acquired by a public entity through a negotiated transaction, or by gift or devise, that is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. It is possible that property acquired by a public entity following a tax sale or foreclosure based upon failure to pay taxes could become exempt from the Special Tax. In addition, the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property, for outstanding Bonds only, is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested. In particular, insofar as the Act requires payment of the Special Tax by a federal entity acquiring property within Improvement Area No. 5, it may be unconstitutional. If for any reason property within Improvement Area No. 5 becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable properties within Improvement Area No. 5. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax. Moreover, if a substantial portion of land within Improvement Area No. 5 becomes exempt from the Special Tax because of public ownership, or otherwise, the maximum rate that could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default would occur with respect to the payment of such principal and interest. The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax. Property Values and Property Development The value of taxable property within Improvement Area No. 5 is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of the Special Tax, the City’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. Land values could be adversely affected by economic and other factors beyond the City’s control including, without limitation, a general economic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, wildfires, or other natural disasters, environmental pollution or contamination, inability to obtain necessary permits or agreements with governmental entities, or unfavorable economic conditions. 412
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The Appraisal (which is set forth in APPENDIX B to this Official Statement) is based on certain assumptions made by the Appraiser in estimating the market value of the property within Improvement Area No. 5 as of the date indicated. No assurance can be given that the land values are accurate if these assumptions are incorrect or that the values will not decline in the future if one or more events, such as natural disasters or adverse economic conditions, occur. See “Appraised Values” above. Neither the District nor the City has evaluated development risks related to the development of land in Improvement Area No. 5. Since these are largely business risks of the type that property owners customarily evaluate individually, and inasmuch as changes in land ownership may well mean changes in the evaluation with respect to any particular parcel, Improvement Area No. 5 is issuing the Bonds without regard to any such evaluation. Thus, the creation of Improvement Area No. 5 and the issuance of the Bonds in no way implies that Improvement Area No. 5 or the City has evaluated these risks or the reasonableness of these risks. The following is a discussion of specific risk factors that could affect the timing or scope of property development in Improvement Area No. 5 or the value of property in Improvement Area No. 5. Land Development. Land values are influenced by the level of development in the area in many respects. First, undeveloped or partially developed land is generally less valuable than developed land and provides less security to the Owners of the Bonds should it be necessary for the City to foreclose on undeveloped or partially developed property due to the nonpayment of Special Taxes. Second, failure to complete development on a timely basis could adversely affect the land values of those parcels that have been completed. Lower land values would result in less security for the payment of principal of and interest on the Bonds and lower proceeds from any foreclosure sale necessitated by delinquencies in the payment of the Special Tax. See “APPRAISED VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5 - Value to Special Tax Burden Ratios.” No assurance can be given that the proposed development within Improvement Area No. 5 will be completed, and in assessing the investment quality of the Bonds, prospective purchasers should evaluate the risks of non-completion. Neither the Developer nor any other person provides any assurances that the project currently envisioned for the land in Improvement Area No. 5 will be completed, or that sources of financing that will actually be available to the Developer will be sufficient to complete such projected development. The Developer has no obligation to the City or to owners of the Bonds to complete the project. Risks of Real Estate Investment Generally. Continuing development of land within Improvement Area No. 5 may be adversely affected by changes in general or local economic conditions, fluctuations in the real estate market, increased construction costs, development, financing and marketing capabilities of individual property owners, water or electricity shortages, and other similar factors. Development in Improvement Area No. 5 may also be affected by development in surrounding areas, which may compete with the development. In addition, land development operations are subject to comprehensive federal, state and local regulations, including environmental, land use, zoning and building requirements. There can be no assurance 413
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that proposed land development operations within Improvement Area No. 5 will not be adversely affected by future government policies, including, but not limited to, governmental policies to restrict or control development, or future growth control initiatives. There can be no assurance that land development operations within Improvement Area No. 5 will not be adversely affected by these risks. Legal Requirements. Other events that may affect the value of a parcel include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures. Development in Improvement Area No. 5 may also be adversely affected by the application of laws protecting endangered or threatened species. Hazardous Substances and Groundwater Quality. Any discovery of a hazardous substance detected on property within Improvement Area No. 5 would affect the marketability and the value of some or all of the property in Improvement Area No. 5. In that event, the owners and operators of a parcel within Improvement Area No. 5 may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws. State law with regard to hazardous substances are also applicable to property within Improvement Area No. 5 and are as stringent as the federal laws. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels be contaminated by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. The values set forth in the Appraisal do not take into account the possible reduction in marketability and value of any of the parcels within Improvement Area No. 5 by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substance condition on a parcel. Although the City is not aware that the owner (or operator) of any of the property within Improvement Area No. 5 has a current liability for a hazardous substance with respect to any of the parcels, it is possible that such liabilities do currently exist and that the City is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the parcels within Improvement Area No. 5 resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within Improvement Area No. 5 that is realizable upon a foreclosure sale. The City has not independently verified, but is not aware of, the presence of any hazardous substances within Improvement Area No. 5. As discussed elsewhere in this Official Statement, the SFRWQCB sent the Developer a letter, dated November 5, 2018, regarding results of testing groundwater from a particular area of the Boulevard Project, and requiring the Developer take certain actions in connection therewith. The letter required that the Developer submit a workplan and schedule to complete site 414
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characterization and develop a conceptual site model for volatile organic compounds, including trichloroethylene, in groundwater, soil, and soil vapor at the project site. In response to that directive, the Developer conducted extensive testing of soil, soil vapor, and groundwater. The work was documented in the Site Characterization, Conceptual Site Model and Health Risk Assessment Report submitted to and approved by the SFRWQCB. On September 29, 2023, the SFRWQCB issued a “No Further Action” determination that covers the Improvement Area No. 5 property. See “THE BOULEVARD PROJECT – Groundwater Testing Required by SFRWQCB.” Endangered and Threatened Species. It is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the California Fish & Game Commission under the California Endangered Species Act without a permit. The discovery of an endangered plant or animal could delay development of undeveloped property in Improvement Area No. 5 or reduce the value of such property. Other Possible Claims Upon the Value of Taxable Property While the Special Taxes are secured by the taxable property in Improvement Area No. 5, the security only extends to the value of such property that is not subject to priority and parity liens and similar claims. The table in the section entitled “APPRAISED VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 5 – Overlapping Liens and Priority of Lien” shows the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the parcels of taxable property. The table also states the additional amount of general obligation bonds the tax for which, if and when issued, may become an obligation of one or more of the parcels of taxable property. The table does not specifically identify which of the governmental obligations are secured by liens on one or more of the parcels of taxable property. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area No. 5. Other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels of taxable property and may be secured by a lien on a parity with the lien of the Special Tax securing the Bonds. The City has no control over the ability of other entities to issue indebtedness secured by special taxes or assessments payable from all or a portion of the taxable property within Improvement Area No. 5 subject to the levy of the Special Tax. The imposition of additional indebtedness could reduce the willingness and the ability of the property owners within Improvement Area No. 5 to pay the Special Taxes when due. In general, as long as the Special Tax is collected on the County tax roll, the Special Tax and all other taxes, assessments and charges also collected on the tax roll are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the Bonds, the Special Tax will be subordinate only to existing prior governmental liens, if any. Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on a parity with the other taxes, assessments and charges, and will share the proceeds of such foreclosure proceedings on a pro rata basis. Although the Special Taxes will generally have priority over non-governmental liens on a parcel of Taxable Property, regardless of whether the 415
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non-governmental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy. Bankruptcy and Foreclosure Delays The Fiscal Agent Agreement generally provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County. If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the Reserve Fund is depleted. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.” No assurances can be given that a taxable parcel in Improvement Area No. 5 that would be subject to a judicial foreclosure sale for delinquent Special Taxes will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale and the City has not in any way agreed nor does it expect to be such a bidder. The ability of the City to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest. The FDIC would obtain such an interest by taking over a financial institution that has made a loan that is secured by property within Improvement Area No. 5. The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax may also be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. Although bankruptcy proceedings would not cause the Special Tax to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases. Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay 416
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in enforcement of the foreclosure covenant, a six-month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service. To the extent that property in Improvement Area No. 5 continues to be owned by a limited number of property owners, the chances are increased that the Reserve Fund could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in the Reserve Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis. No Acceleration Provisions The Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreement or in the event interest on the Bonds becomes included in gross income for federal income tax purposes. Under the Fiscal Agent Agreement, a Bondowner is given the right for the equal benefit and protection of all Bondowners similarly situated to pursue certain remedies. So long as the Bonds are in book-entry form, DTC will be the sole Bondowner and will be entitled to exercise all rights and remedies of Bond holders, in accordance with its procedures and rules. Loss of Tax Exemption As discussed under the caption “LEGAL MATTERS – Tax Exemption,” interest on the Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. Neither the Bonds nor the Fiscal Agent Agreement contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to become includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional redemption, mandatory sinking fund redemption or special mandatory redemption upon prepayment of the Special Taxes. In addition, Congress is or may be considering in the future legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The City can provide no assurance that federal tax law will not change while the Bonds are outstanding or that any such changes will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. If the exclusion of interest on the Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Bonds would be adversely impacted. Enforceability of Remedies The remedies available to the Fiscal Agent and the registered owners of the Bonds upon a default under the Fiscal Agent Agreement or any other document described in this Official Statement are in many respects dependent upon regulatory and judicial actions that are often 417
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subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. Any legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Judicial remedies, such as foreclosure and enforcement of covenants, are subject to exercise of judicial discretion. A California court may not strictly apply certain remedies or enforce certain covenants if it concludes that application or enforcement would be unreasonable under the circumstances and it may delay the application of such remedies and enforcement. No Secondary Market No representation is made concerning any secondary market for the Bonds. There can be no assurance that any secondary market will develop for the Bonds. Investors should understand the long-term and economic aspects of an investment in the Bonds and should assume that they will have to bear the economic risks of their investment to maturity. An investment in the Bonds may be unsuitable for any investor not able to hold the Bonds to maturity. Disclosure to Future Purchasers The willingness or ability of an owner of a parcel to pay the Special Tax, even if the value of the property is sufficient to justify payment, may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a Notice of Special Tax Lien to be recorded in the Office of the Recorder for the County against the real property in Improvement Area No. 5. Although title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation when purchasing real property within Improvement Area No. 5 or lending money thereon, as applicable. California Civil Code Section 1102.6b requires that, in the case of transfers, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. IRS Audit of Tax-Exempt Bond Issues The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of such Bonds might be affected as a result of such an audit of such Bonds (or by an audit of similar bonds or securities). 418
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Voter Initiatives From time to time, initiative measures qualify for the State ballot pursuant to the State’s constitutional initiative process and those measures could be adopted by State voters. The adoption of any such initiative might place limitations on the ability of the State, the City, the County or other local districts to increase revenues or to increase appropriations or on the ability of the landowners to complete the development of Improvement Area No. 5. See “Property Values and Property Development” above. Under the State Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010. Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as Improvement Area No. 5. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Special Tax Bonds. Proposition 218–Voter Approval for Local Government Taxes–Limitation on Fees, Assessments, and Charges–Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. On November 2, 2010, State voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act”. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote. The Special Taxes and the Bonds were each authorized by a vote of the property owners in existence at the time that the property was annexed into Improvement Area No. 5, who constituted the qualified electors at the time of such voted authorization. Improvement Area No. 5 believes, therefore, that issuance of the Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26. Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on Improvement Area No. 5 can be determined. Certain provisions of Proposition 218 and Proposition 26 may be examined by the courts for their constitutionality under both State and federal constitutional law, the outcome of which cannot be predicted. 419
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Case Law Related to the Mello-Roos Act On August 1, 2014, the California Court of Appeal, Fourth Appellate District, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a financing district established under San Diego’s city charter (the “Charter”) and was intended to function much like a community facilities district established under the Act. The CCFD was comprised of all of the real property in the entire city. However, the CCFD special tax was to be levied only on properties in the CCFD that were improved with a hotel. At the election to authorize the CCFD special tax, the CCFD proceedings limited the electorate to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel was located. Registered voters in the City of San Diego were not permitted to vote. This definition of the qualified electors of the CCFD was based on Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed community facilities district whose property would be subject to the special tax. The San Diego Court held that the CCFD special tax election did not comply with its Charter and with applicable provisions of the State Constitution -- specifically Article XIIIA, section 4 (“Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district . . ..”) and Article XIIIC, section 2(d) (“No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”) -- because the electors in the CCFD election should have been the registered voters residing within the CCFD (the boundaries of which were coterminous with the boundaries of the City of San Diego). As to Improvement Area No. 5, there were no registered voters within Improvement Area No. 5 at the time of the election to authorize the Special Taxes. Significantly, the San Diego Court expressly stated that it was not addressing the validity of a landowner election to impose special taxes on property pursuant to the Act in situations where there are fewer than 12 registered voters. Therefore, by its terms, the San Diego Court’s holding does not apply to the special tax election in Improvement Area No. 5. Moreover, Sections 53341 and 53359 of the Act establish a limited period of time in which special taxes levied under the Act may be challenged by a third party, which time period has now passed. Natural Disasters The value of the parcels in Improvement Area No. 5 in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in Improvement Area No. 5 and the continued habitability and enjoyment of such private improvements. For example, the areas in and surrounding Improvement Area No. 5, like those in much of the State, may be subject to earthquakes or other unpredictable seismic activity. According to the Seismic Safety Commission, District is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, Improvement Area No. 5 is located in a Fault-Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. 420
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Other natural disasters could include, without limitation, landslides, floods, wildfires, droughts or tornadoes. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the parcels may well depreciate. Wildfires. Many areas of northern California have suffered from major wildfires in recent years, including numerous wildfires in northern California in 2020, 2021 and 2022. In addition to their direct impact on health and safety and property damage in California, the smoke from many of these wildfires has impacted the quality of life throughout the region, and the City and may have short-term and future impacts on commercial activity in the City. The fires have been driven in large measure by drought conditions and low humidity. Experts expect that California will continue to be subject to wildfire conditions year over year as a result in changing weather patterns due to climate change. Droughts. California is subject to droughts from time-to-time. On April 1, 2015, for the first time in California’s history, Governor Edmund G. Brown directed the State Water Resources Control Board to implement mandatory water reductions in cities and towns across California to reduce water usage by 25%. Following a wet winter in 2016-17, most of the mandatory water reductions were lifted, only to return again in 2021-2022 following unusually dry years. Pandemic Diseases In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. Pandemic diseases arising in the future could have significant adverse health and financial impacts throughout the world, leading to loss of jobs and personal financial hardships, and/or actions by federal, State and local governmental authorities to contain or mitigate the effects of an outbreak. Taxpayer assistance measures may include deferral of due dates of property taxes, which was an assistance program during the COVID-19 pandemic, and with or without a deferral some taxpayers may be unable to make their property and Special Tax payments. No assurance can be given that the property tax payment dates will not be deferred in the future, which may cause a delay in the receipt of Special Taxes. In addition, home values may be affected by a reduction in demand stemming from personal finances, or general widespread economic circumstances resulting from pandemic diseases. Cyber Security The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the District, or the administration of the Bonds. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the dissemination agent. No assurance can be given that the City, the District and these 421
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other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners. Potential Early Redemption of Bonds from Prepayments Property owners within the District are permitted to prepay their Special Tax obligation at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in a redemption of the Bonds on the interest payment date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. CONTINUING DISCLOSURE The City The City has covenanted for the benefit of owners of the Bonds to provide certain financial information and operating data relating to Improvement Area No. 5 by not later than January 15th of each year (the “City Annual Report”) commencing with its report for the 2022-23 Fiscal Year (due January 15, 2024) and to provide notices of the occurrence of certain enumerated events. The first City Annual Report may consist solely of this Official Statement. The City Annual Reports and notice of a listed event will be filed with the Municipal Securities Rulemaking Board. The covenants of the City have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). The specific nature of the information to be contained in the annual reports or the notices of listed events by the City is summarized in APPENDIX G-1. The City and its related entity, the Dublin Financing Authority, have previously entered into continuing disclosure undertakings under the Rule. During the past five years, the City and the Dublin Financing Authority, as applicable, have complied with their continuing disclosure obligations with respect to their bond issuances. The City has retained Goodwin Consulting Group Inc., as dissemination agent, in connection with entering into its undertaking under the Rule related to the Bonds. Dublin Crossing The information under this caption has been provided by representatives of Dublin Crossing and has not been independently confirmed or verified by the Underwriter, the City or the District. Dublin Crossing, on behalf of itself and its Affiliates (which specifically excludes the Brookfield BAH, and Lennar Homes) has also agreed for the benefit of owners of the Bonds to provide certain information relating to the property it or its Affiliates owns in Improvement Area No. 5 by not later than December 15th and June 15th of each year (reflecting reported information as of a date no more than 60 days prior) beginning with the report due June 15, 2024 (the “Dublin Crossing Periodic Reports”) and to provide notices of the occurrence of certain enumerated events. The obligation of Dublin Crossing to provide such information will terminate (i) with 422
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respect to a neighborhood, upon the sale of such neighborhood to Lennar Homes or Brookfield BAH (as responsibility to report on such property will automatically be subject to the continuing disclosure agreement of Lennar Homes or Brookfield BAH, as applicable), (ii) with respect to a neighborhood sold to someone other than Lennar Homes or Brookfield BAH, and assuming the property sold is responsible for 20% or more of the Special Taxes within Improvement Area No. 5, upon execution of an assumption agreement by the new owner, and (iii) for the agreement as a whole, once Dublin Crossing no longer owns any taxable property in Improvement Area No. 5 (subject to (i) and (ii) above). Dublin Crossing’s reporting obligation may end in certain other circumstances, as described in APPENDIX G. A default under the agreement with Dublin Crossing will not, in itself, constitute an Event of Default under the Fiscal Agent Agreement, and the sole remedy under the agreement in the event of any failure of Dublin Crossing or the Dissemination agent, to comply with the agreement will be an action to compel performance. To the best of Dublin Crossing's knowledge, it has complied in all material respects with its prior continuing disclosure obligations during the past five years. Brookfield BAH The information under this caption has been provided by representatives of Brookfield BAH and has not been independently confirmed or verified by the Underwriter, the City or the District. Brookfield BAH will execute a Continuing Disclosure Agreement (the “Brookfield BAH Continuing Disclosure Agreement”), pursuant to which Brookfield BAH has agreed, on behalf of itself and its Affiliates (which specifically excludes Dublin Crossing and Lennar Homes) for the benefit of owners of the Bonds, to provide certain information relating to the property it or its Affiliates owns in Improvement Area No. 5 by not later than December 15th and June 15th of each year (reflecting reported information as of a date no more than 60 days prior) beginning with the report due June 15, 2023 (the “Brookfield BAH Periodic Reports”) and to provide notices of the occurrence of certain enumerated events. Any additional property acquired by Brookfield BAH subsequent to the execution of the Brookfield BAH Continuing Disclosure Agreement will automatically be subject to the Brookfield BAH Continuing Disclosure Agreement without requiring any assumption agreement. The obligation of Brookfield BAH to provide such information is in effect only so long as the Brookfield BAH and its Affiliates are collectively responsible for 20% or more of the Special Taxes within Improvement Area No. 5. Brookfield BAH’s reporting obligation may end in certain other circumstances, as described in APPENDIX G-2. A default under the agreement with Brookfield BAH will not, in itself, constitute an Event of Default under the Fiscal Agent Agreement, and the sole remedy under the Brookfield BAH Continuing Disclosure Agreement in the event of any failure of Brookfield BAH or the Dissemination agent, to comply with the Brookfield BAH Continuing Disclosure Agreement will be an action to compel performance. To the best of Brookfield BAH’s knowledge, it has complied in all material respects with its prior continuing disclosure obligations during the past five years. Lennar Homes The information under this caption has been provided by representatives of Lennar Homes and has not been independently confirmed or verified by the Underwriter, the City or the District. 423
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Lennar Homes will execute a Continuing Disclosure Agreement (the “Lennar Homes Continuing Disclosure Agreement”), pursuant to which Lennar Homes has agreed, on behalf of itself and its Affiliates (which specifically excludes Dublin Crossing and Brookfield BAH) for the benefit of owners of the Bonds, to provide certain information relating to the property it or its Affiliates owns in Improvement Area No. 5 by not later than December 15th and June 15th of each year (reflecting reported information as of a date no more than 60 days prior) beginning with the report due June 15, 2024 (the “Lennar Homes Periodic Reports”) and to provide notices of the occurrence of certain enumerated events. Any additional property acquired by Lennar Homes subsequent to the execution of the Lennar Homes Continuing Disclosure Agreement will automatically be subject to the Lennar Homes Continuing Disclosure Agreement without requiring any assumption agreement. The obligation of Lennar Homes to provide such information is in effect only so long as Lennar Homes and its Affiliates are collectively responsible for 20% or more of the Special Taxes within Improvement Area No. 5. Lennar Homes' reporting obligation may end in certain other circumstances, as described in APPENDIX G-3. A default under the agreement with Lennar Homes will not, in itself, constitute an Event of Default under the Fiscal Agent Agreement, and the sole remedy under the Lennar Homes Continuing Disclosure Agreement in the event of any failure of Lennar Homes or the Dissemination agent, to comply with the Lennar Homes Continuing Disclosure Agreement will be an action to compel performance. To the actual knowledge of Lennar Homes, other than as disclosed in this Official Statement, in the last five years, Lennar Homes has not failed to comply in any material respects with its previous continuing disclosure undertakings, specifically regarding its requirement to provide developer periodic reports or to provide notice of occurrence of enumerated events. However, (i) in connection with the $16,780,000 California Municipal Finance Authority Special Tax Revenue Bonds BOLD Program Series 2020B, Lennar Homes inadvertently failed to file the initial semi-annual report by the due date of May 1, 2021, but filed a curative report on May 21, 2021; and (ii) in connection with the $5,795,000 City of Rancho Cordova Grantline 208 Community Facilities District No. 2018-1 Special Tax Bonds, Series 2021B, Lennar Homes inadvertently failed to file the initial annual report by the due date of April 1, 2022, but filed a curative report on September 21, 2022. UNDERWRITING The Bonds were purchased through negotiation by Piper Sandler & Co. (the “Underwriter”). The Underwriter agreed to purchase the Bonds at a price of $_________ (which is equal to the par amount of the Bonds, plus/less a [net] original issue premium/discount of $_________ and less the Underwriter’s discount of $________). The initial public offering prices set forth on the inside cover page hereof may be changed by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers and others at a price lower than the public offering prices set forth on the cover page hereof. 424
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MUNICIPAL ADVISOR The City has retained Fieldman, Rolapp & Associates, Inc., San Francisco, California, as Municipal Advisor (the “Municipal Advisor”) in connection with the planning, structuring and issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The fees of the Municipal Advisor are contingent upon the sale and delivery of the Bonds. LEGAL OPINION The validity of the Bonds and certain other legal matters are subject to the approving opinion of Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX F to this Official Statement, and the final opinion will be made available to registered owners of the Bonds at the time of delivery. The fees of Bond Counsel are contingent upon the sale and delivery of the Bonds. TAX MATTERS Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. For tax years beginning after December 31, 2022, interest on the Bonds may be subject to the corporate alternative minimum tax. The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds. Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium are disregarded. Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon 425
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disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual alternative minimum taxes. Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds. California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds. 426
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NO RATINGS The City has not applied to a rating agency for the assignment of a rating on the Bonds and does not contemplate applying for a rating. NO LITIGATION At the time of delivery of and payment for the Bonds, the City Attorney will deliver his opinion that to the best of its knowledge there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency pending against the City affecting its existence or the titles of its officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Fiscal Agent Agreement or any action of the City contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or its authority with respect to the Bonds or any action of the City contemplated by any of said documents. PROFESSIONAL FEES Fees payable to certain professionals, including Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel and Disclosure Counsel, Fieldman Rolapp & Associates, as Municipal Advisor, the Trustee and the Underwriter are contingent upon the issuance of the Bonds. EXECUTION The execution and delivery of this Official Statement by the City has been duly authorized by the City Council on behalf of the District and Improvement Area No. 5. CITY OF DUBLIN By: Assistant City Manager 427
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APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX 428
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APPENDIX B THE APPRAISAL
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Integra Realty Resources
Sacramento/San Francisco
Appraisal of Real Property
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 244 Single‐Family Units/Lots
Horizon Pky.
Dublin, Alameda County, California 94568
Prepared For:
City of Dublin
Date of the Report:
November 6, 2023
Report Format:
Appraisal Report
IRR ‐ Sacramento/San Francisco
File Number: 193‐2023‐0413
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Subject Photographs
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Horizon Pky.
Dublin, California
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Aerial Photograph
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Integra Realty Resources 590 Menlo Drive T 916.435.3883 Sacramento Suite 1 F 916.435.4774
Rocklin, CA 95765 www.irr.com
November 6, 2023
Mr. Jay Baksa
Assistant Administrative Services Director
City of Dublin
100 Civic Plaza
Dublin, CA 94568
SUBJECT: Market Value Appraisal
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
Horizon Pky.
Dublin, Alameda County, California 94568
IRR ‐ Sacramento/San Francisco
File No. 193‐2023‐0413
Dear Mr. Baksa:
Integra Realty Resources – Sacramento/San Francisco is pleased to submit the accompanying appraisal of the referenced property. The purpose of the Appraisal Report is to develop an opinion of the market value, subject to a hypothetical condition, pertaining to the fee simple interest
in the taxable properties within the boundaries of Improvement Area (IA) No. 5 of the City of Dublin Community Facilities District No. 2015‐1 (Dublin Crossing) (“CFD No. 2015‐1 (IA No. 5)”), under the conditions and assumptions set forth in the attached Appraisal Report. The client for the assignment is City of Dublin and the intended use of the report is for bond underwriting purposes.
The appraised properties represent the taxable parcels in Improvement Area (IA) No. 5, subject to the lien of the Special Taxes of the CFD No. 2015‐1, a portion of the Dublin Crossing (now referred to, marketed, as "Boulevard") master planned community.
Improvement Area No. 5 consists of 244 residential units/lots (62 detached and 182 attached) being developed by Lennar Homes and Brookfield Homes within three product lines further described herein. Any properties within the boundaries of CFD No. 2015‐1 (IA No. 5) not subject to the Lien of the Special Tax securing the Bonds (e.g., public and quasi‐ public land use sites) are not a part of this appraisal. Boulevard is generally located at the 449
Mr. Jay Baksa
City of Dublin
November 6, 2023
northwest quadrant of Dublin Boulevard and Arnold Road. A more detailed discussion of the appraised properties are located in the attached Appraisal Report.
We have been requested to provide a market value of the appraised properties by ownership, as well as a cumulative, or aggregate, value of the properties, as of the date of value, which accounts for the impact of the Lien of the Special Tax securing the City of Dublin Community Facilities District No. 2015‐1 (Improvement Area No. 5), Special Tax Bonds.
Please note the cumulative, or aggregate, value is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the “total of multiple market value conclusions.” For purposes of this Appraisal Report, market value is estimated by owner.
The estimates of market value provided assume a transfer would reflect a cash transaction or terms considered to be equivalent to cash. The estimates are also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller acting prudently, knowledgeably, for their own self‐interest and assuming neither is under duress.
The Appraisal Report is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004). Standards Rule 2‐2 (Content of a Real Property Appraisal Report) contained in the Uniform Standards of Professional Appraisal Practice (USPAP) requires each written real property appraisal report to be prepared as either an Appraisal Report or a Restricted Appraisal Report. This report is prepared as an Appraisal Report as defined by USPAP under Standards Rule 2‐2(a), and incorporates practical explanation of the data, reasoning, and analysis that were used to develop the opinion of value.
Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, the concluded opinions of value, as of October 4, 2023, are as follows:
Value Conclusion
Appraisal Premi s e Interes t Appraised Date of Val ue Val ue Conclusion Market Val ue, Subject to a Hypothetical Condition Fee Simple October 4, 2023 Brookfie ld Bay Area Holdings, LLC $18,910,000
Lennar Homes of California, LLC $20,625,000
Dublin Crossing, LLC* $67,005,000
Vari ous Homeowners $4,530,000
Cumulative, or Aggregate, Val ue of IA No. 5 $111,070,000 * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
450
Mr. Jay Baksa
City of Dublin
November 6, 2023
Extraordinary Assumptions and Hypothetical Conditions
None
1. We have been requested to es ti mate the market value of the appraise d properties, by ownership, as wel l as the cumulative, or a ggrega te, value of IA No. 5 of CFD No. 2015 ‐1 as of the effecti ve date of value (October 4, 2023), subje ct to the hypothetical condit ion proceeds from the Special Tax Bonds are available to reimburse for public i mprovements completed.
The value conclusions are based on the following hypothetical conditions that may affe ct the assignm e nt results. A hypothetical condit ion is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis.
The value conclusions are subje ct to the follow ing e xtraordinary assumptions that may affect the assignm e nt results. An extraordinary assum pt ion is uncertain inform at ion accepted as fact. If the assum pt ion is found to be false as of the effective date of the appraisal, we reserve the right to modi fy our value conclusions.
If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.
Respectfully submitted,
Integra Realty Resources ‐ Sacramento/San Francisco
Eric Segal, MAI
Certified General Real Estate Appraiser
#AG026558
Telephone: 916‐435‐3883, ext. 228
Email: [email protected]
Kevin Ziegenmeyer, MAI
Certified General Real Estate Appraiser
#AG013567
Telephone: 916‐435‐3883, ext. 224
Email: [email protected]
Sara Gilbertson, MAI
Certified General Real Estate Appraiser
#3002204
Telephone: 916.435.3883, ext. 248
Email: [email protected]
451
Table of Contents
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Executive Summary 1
Identification of the Appraisal Problem 2
Subject Description 2
Sale History 3
Appraisal Purpose 3
Value Type Definitions 4
Property Rights Definitions 4
Client and Intended User(s) 4
Intended Use 5
Applicable Requirements 5
Report Format 5
Prior Services 5
Appraiser Competency 5
Scope of Work 6
Economic Analysis 8
Area Analysis – Alameda County 8
Surrounding Area Analysis 14
Residential Market Analysis 19
Property Analysis 27
Land Description and Analysis 27
Real Estate Taxes 45
Highest and Best Use 46
Valuation 49
Valuation Methodology 49
Market Valuation – Smallest Floor Plans 50
Residential Lot Valuation 59
Land Residual Analysis 59
Sales Comparison Approach 74
Market Valuation by Owner 83
Final Opinion of Value 85
Exposure Time 85
Marketing Time 85
Certification 86
Assumptions and Limiting Conditions 88
Addenda
A. Appraiser Qualifications
B. IRR Quality Assurance Survey
C. Definitions
D. Preliminary Title Reports
E. Value by Parcel
F. Comparable Data
452
Executive Summary 1
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Executive Summary
Property Na me
Address
Property Type
Owner of Record
Ta x ID
Zoning Designation
Highest and Best Use
Expos ure Ti me; Marketing Period 12 months ; 12 months Date of the Report November 6, 2023
City of Dublin CFD No. 2015 ‐1 Improve ment Area No. 5 Horizon Pky.
Dublin, Al a meda County, California 94568
Residential Land ‐ Single Family Development La nd
Brookfie ld Bay Area Holdings, LLC (Brookfield); Lennar Homes of California, LLC (Lennar); Dublin Crossing, LLC (master developer) and Individual Homeowners 986‐64‐01 through ‐88; 986‐76‐01 through ‐33; 986‐77‐01 through ‐43; and 986‐ 78‐01 through ‐56
The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than City of Dublin and the associated Finance Tea m may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein.
Dublin Crossing Specific Plan
Single ‐fam ily residential development
Value Conclusion
Appra i s a l Premi s e Interes t Appra i s ed Da te of Va l ue Va l ue Conclusion Market Va l ue, Subject to a Hypothetical Condition Fee Simple October 4, 2023 Brookfield Bay Area Holdings, LLC $18,910,000
Lennar Homes of California, LLC $20,625,000
Dublin Crossing, LLC* $67,005,000
Va ri ous Homeowners $4,530,000
Cumulative, or Aggrega te, Val ue of IA No. 5 $111,070,000 * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
Extraordinary Assumptions and Hypothetical Conditions
None
1. We have been requested to es ti mate the market value of the appraised properties, by ownership, as wel l as the cumulative, or aggregate, value of IA No. 5 of CFD No. 2015 ‐1 as of the effecti ve date of value (October 4, 2023), subje ct to the hypothetical condit ion proceeds from the Special Tax Bonds are available to reimburse for public i mprovements completed.
The value conclusions are based on the follow ing hypothetical conditions that may affect the assignm e nt re sult s. A hypothetical condition is a condit ion contrary to known fact on the effecti ve date of the appraisal but is supposed for the purpose of analysis.
The value conclusions are subje ct to the following e xtraordinary assum pt ions that may affect the assignm e nt re sults. An extraordi na ry assum pt ion is uncertain inform at ion accepted as fact. If the assum pt ion is found to be false as of the effective date of the appraisal, we reserve the right to modi fy our value conclusions.
453
Identification of the Appraisal Problem 2
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Identification of the Appraisal Problem
Subject Description
The appraised properties represent the taxable parcels in Improvement Area (IA) No. 5, subject to the lien of the Special Taxes of the CFD No. 2015‐1, a portion of the Dublin Crossing (now referred to, marketed, as "Boulevard") master planned community. Improvement Area No. 5 consists of 244 residential units/lots (62 detached and 182 attached) being developed by Lennar Homes and Brookfield Homes within three product lines further described herein. Any properties within the boundaries of CFD No. 2015‐1 (IA No. 5) not subject to the Lien of the Special Tax securing the Bonds (e.g., public and quasi‐public land use sites) are not a part of this appraisal. Boulevard is generally located at the northwest quadrant of Dublin Boulevard and Arnold Road. A summary of the appraised properties’ unit counts by builder is provided in the table below.
Improvement Area (IA) 5 Summary by Ownership
Owne r Builde r N e ighborhood Proje ct Name Product Type No. of
Uni ts
Brookfie ld Bay Area Holdings, LLC Brookfi el d Homes 21 Ivy Detached 4‐Pack 31 22 Vine Attached Row Townhomes 0
31 Lenna r Homes of California, LLC Lennar Homes 23 Avalon Attached Carriage Row Townhomes 55 55 Dublin Crossing, LLC* Mas ter Developer 21 Ivy Detached 4‐Pack 28 22 Vine Attached Row Townhomes 92
23 Ava l on Atta ched Carriage Row Townhomes 35
155
Vari ous Homeowners Individual Homeowners 21 Ivy Detached 4‐Pack 3 23 Ava l on Atta ched Carriage Row Townhomes 0
3 * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
^ The subject lots will transfer from the Master Developer to each merchant builders, Brookfield Homes and Lennar Homes, with takedown closing dates scheduled between November 2023 and December 2025.
As of the date of value, three of the Ivy units have sold and transferred to individual homeowners. A summary of lot status is provided in the following table. 454
Identification of the Appraisal Problem 3
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Improvement Area (IA) 5 Lot Status Summary
Project
Name Nei ghborhood Bui l der
Total No.
of Uni ts
Closed to
Homeowner
Sold/
In Contract
Remaining
to be Sold
Under
Cons tructi on*
Ivy 21 Brookfield Homes 62 3 20 39 26
Vine 22 Brookfield Homes 92 0 0 92 0
Ava l on 23 Lenna r Homes 90 0 9 81 70
244 3 29 212 96
*Building Permit issued, includes models
Legal descriptions of the property were provided and are included in the Addenda.
Property Identification
Property Name Ci ty of Dublin CFD No. 2015 ‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Address Horizon Pky.
Dublin, California 94568
Tax ID 986 ‐64‐01 through ‐88; 986‐76‐01 through ‐33; 986‐77‐01 through ‐43; and 986‐78‐01 through ‐56
Owner of Record Brookfield Bay Area Holdings, LLC (Brookfield); Lennar Homes of California, LLC (Lennar); Dublin Crossing, LLC (master developer) and Individual Homeowners
Sale History
The most recent closed sales of the subject are summarized as follows:
Improvement Area (IA) 5 Sale History Summary
Project Name Neighborhood Builder
No. of
Uni ts Sal e Date Sale Price
Price per
Uni t Devel opment Status
Ivy 21 Brookfield Homes 10 Feb ‐23 $5,345,390 $534,539 Finished 12 Apr ‐23 $6,414,468 $534,539 Finished
12 Aug‐23 $7,530,096 $627,508 Finished
34 Avalon 23 Lennar Homes 15 Mar ‐23 $3,736,770 $249,118 Finished 10 Mar ‐23 $2,491,180 $249,118 Finished
10 Jun ‐23 $2,959,260 $295,926 Finished
20 Sep‐23 $7,095,860 $354,793 Finished
55 Based on our analysis herein, it is determined these transactions are consistent with the market. To the best of our knowledge there have been no other sales of the subject property within the last three years and the subject is not currently being marketed for sale.
Appraisal Purpose
The purpose of the Appraisal Report is to develop an opinion of the market value, subject to a hypothetical condition, pertaining to the fee simple interest in the taxable properties within the 455
Identification of the Appraisal Problem 4
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 boundaries of Improvement Area (IA) No. 5 of the City of Dublin Community Facilities District No. 2015‐1 (Dublin Crossing) (“CFD No. 2015‐1 (IA No. 5)”), under the conditions and assumptions set forth in the attached Appraisal Report as of the effective date of the appraisal, October 4, 2023. The market value of the appraised properties by owner, as well as a cumulative, or aggregate, value of the properties, as of the date of value, accounts for the impact of the Lien of the Special Tax securing CFD 2015‐1 (IA No. 5), Special Tax Bonds. The date of the report is November 6, 2023. The appraisal is valid only as of the stated effective date or dates.
Value Type Definitions
The definitions of the value types applicable to this assignment are summarized below.
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:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in what they consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 Property Rights Definitions
The property rights appraised which are applicable to this assignment are defined as follows.
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.2 Client and Intended User(s)
The client is City of Dublin. The intended users are City of Dublin and the associated Finance Team. No party or parties beyond the clients associated finance team may use or rely on the information, opinions, and conclusions contained in this report; however, this appraisal report may be included in the offering document provided in connection with the issuance and sale of the Bonds.
1 Code of Federal Regulations, Title 12, Chapter I, Part 34.42[h]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472 2 Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)
456
Identification of the Appraisal Problem 5
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Intended Use
The intended use of the appraisal is for bond underwriting purposes. The appraisal is not intended for any other use.
Applicable Requirements
This appraisal report conforms to the following requirements and regulations:
Uniform Standards of Professional Appraisal Practice (USPAP); Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute; Applicable state appraisal regulations;
Interagency Appraisal and Evaluation Guidelines issued December 10, 2010; Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (CDIAC) (2004).
Report Format
Standards Rule 2‐2 (Content of a Real Property Appraisal Report) contained in the Uniform Standards of Professional Appraisal Practice (USPAP) requires each written real property appraisal report to be prepared as either an Appraisal Report or a Restricted Appraisal Report. This report is prepared as an Appraisal Report as defined by USPAP under Standards Rule 2‐2(a), and incorporates practical explanation of the data, reasoning, and analysis used to develop the opinion of value.
Prior Services
USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three‐year period immediately preceding acceptance of this assignment.
Appraiser Competency
No steps were necessary to meet the competency provisions established under USPAP. The assignment participants have appraised several properties similar to the subject in physical, locational, and economic characteristics, and are familiar with market conditions and trends; therefore, appraiser competency provisions are satisfied for this assignment. Appraiser qualifications and state credentials are included in the addenda of this report.
457
Scope of Work 6
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Scope of Work
Introduction
The appraisal development and reporting processes require gathering and analyzing information about the assignment elements necessary to properly identify the appraisal problem. The scope of work decision includes the research and analyses necessary to develop credible assignment results, given the intended use of the appraisal. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed.
To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below.
Research and Analysis
The type and extent of the research and analysis conducted are detailed in individual sections of the report. Although effort has been made to confirm the arms‐length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable.
Subject Property Data Sources
The legal and physical features of the subject property, including size of the site, flood plain data, seismic zone designation, property zoning, existing easements and encumbrances, access and exposure, and condition of the improvements (as applicable) were confirmed and analyzed.
Inspection
Eric Segal, MAI, and Sara Gilbertson, MAI, completed an on‐site inspection of the subject property on September 25, 2023. Kevin Ziegenmeyer, MAI, has also inspected the subject property.
Valuation Methodology
Three approaches to value are typically considered when developing a market value opinion for real property. These are the cost approach, the sales comparison approach, and the income capitalization approach. Use of the approaches in this assignment is summarized as follows:
Approaches to Value
A pproach A pplicabilit y to Subject Use in As s i gnment Cost Approa ch Not A pplicable N ot U t ilize d
Sales Comparison A pproach A pplicable U t ilize d
Income Capit alizat ion Approach Not A pplicable N ot U t ilize d
In the analysis that follows, we first estimate the not‐less‐than market value of the smallest floor plan within the Ivy and Avalon product lines via the sales comparison approach to value. The (not‐less‐ 458
Scope of Work 7
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 than) estimate of market value will be assigned to each of the completed single‐family residential units sold/transferred to individual homeowners. The objective of the analysis is to estimate the base price, net of incentives, upgrades and lot, or unit location, premiums. Incentives can take the form of direct price reductions or non‐price incentives such as upgrades or non‐recurring closing costs. The proper application of this approach required obtaining recent sales data for comparison with the appraised homes.
We will employ the sales comparison approach and land residual analysis to estimate the value of the subject’s residential land components. In the land residual analysis (a variation of the cost approach and income capitalization approaches combined), all direct and indirect costs are deducted from an estimate of the anticipated gross sales price of the improved product; the resultant net sales proceeds are then discounted to present value at an anticipated rate over the development and absorption period to indicate the residual value of the lots. In the direct sales comparison approach, we adjust the prices of comparable transactions in the region based on differences between the comparable sales and the appraised properties. The values indicated by each approach will then be reconciled into an opinion of market value for the subject’s various lot size categories.
A typical cost approach is not included in the valuation; however, development costs are analyzed as part of the land residual analysis. In addition, the income approach is not utilized as the income potential, if any, of the subdivision would not yield a credible indicator of its value.
459
Area Analysis – Alameda County 8
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Economic Analysis
Area Analysis – Alameda County
Introduction
One of the nine Bay Area counties, Alameda County is located on the eastern shores of the San Francisco Bay and is bordered on the north by Contra Costa County, on the south by Santa Clara County and on the east by San Joaquin County. It encompasses 821 square miles, featuring a variety of topography and geography. A coastal plain stretches some five miles from the Bay to the base of the Berkeley Hills. The county also reaches to the top of the Berkeley Hills on their southwest side. At the south end of the hills, a gap leads to Livermore Valley, which covers most of the eastern part of the county. The coastal plain is covered with urban areas, and the cities extend high into the Berkeley Hills. Livermore Valley is less densely populated and includes areas of farmland. Alameda County enjoys a mild coastal climate with little extremes of temperature and moderate amounts of rainfall.
Forests cover large areas of the Berkeley Hills, separated by grassy areas. Oakland is the county seat and most populous city in the county.
Population
The population of Alameda County is over 1.63 million and has declined at an average rate of 0.2% per year over the past five years. The city of Dublin has had the greatest growth in the County, with an average annual growth rate of 3.3% over the last five years. With a population of nearly 420,000, Oakland represents the largest city in the County, followed by Fremont, Hayward and Berkeley. The following table illustrates population trends for Alameda County.
Population Trends
City 2018 2019 2020 2021 2022 2023 %/Yr
Alameda 81,195 81,457 78,815 78,250 77,437 77,287 ‐1.0% Albany 18,818 18,932 22,420 20,500 21,524 21,401 2.7% Berkeley 121,763 122,297 126,841 120,418 123,188 123,562 0.3% Dublin 61,488 63,890 74,211 73,009 72,374 71,750 3.3% Emeryville 12,142 12,177 12,689 12,655 12,478 12,610 0.8% Fremont 232,107 232,601 229,923 229,563 229,122 229,467 ‐0.2% Hayward 158,896 159,272 163,965 161,808 160,081 159,800 0.1% Livermore 90,392 90,769 87,694 87,476 85,870 84,793 ‐1.2% Newark 46,765 48,079 47,414 47,290 47,150 47,459 0.3% Oakland 428,750 429,932 433,144 430,901 421,806 419,556 ‐0.4% Piedmont 11,311 11,325 11,259 11,127 10,913 10,793 ‐0.9% Pleasanton 78,244 78,840 79,741 79,174 77,524 76,459 ‐0.5% San Leandro 88,389 88,328 90,852 89,976 88,075 87,497 ‐0.2% Union City 72,889 73,375 70,037 69,177 67,702 66,754 ‐1.7% Unincorporated 148,611 148,334 153,348 152,047 149,004 147,006 ‐0.2% Total 1,651,760 1,659,608 1,682,353 1,663,371 1,644,248 1,636,194 ‐0.2% Source: California Department of Finance
460
Area Analysis – Alameda County 9
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Transportation
The availability of a broad transportation network has been one of the major factors in the region’s growth. The county is served by a number of Interstate routes and freeways, including Interstates 80, 580 and 880. Interstate 80 connects the western portion of the area to San Francisco to the west and the Sacramento region to the east. Interstate 580 connects the eastern portion of the county to San Joaquin County in the Central Valley to the east. Three bridges connect Alameda County across the Bay, including the Bay, Dumbarton and San Mateo Bridges. Bay Area Rapid Transit (BART) serves a large part of the region. The city of Oakland is the terminus of vital interstates and railways and has long been a major West Coast transportation hub for travelers and cargo. The port of Oakland is one of the nation’s major container ports, providing an important connection to global markets. The city of Emeryville is a passenger stop for Amtrak trains. Oakland International Airport is the main airport serving the region. San Francisco International Airport is also easily accessible.
Employment & Economy
The California Employment Development Department (EDD) has reported the following employment data for Alameda County over the past five years.
Alameda County had declining unemployment rates during 2004 through 2006, increases from 2007 to 2010, and declines between 2011 and 2019. A significant increase followed in 2020 as a result of the pandemic, with improvement in 2021 and 2022.
The California EDD reported an unemployment rate of 4.1% for Alameda County in July 2023, above the rate of 3.2% a year prior and compared to 4.8% for California and 3.8% for the nation.
The Oakland‐Hayward‐Berkeley Metropolitan Division
(Alameda and Contra Costa Counties) had significant
job losses after the onset of the pandemic, with
169,400 jobs lost. A year later, this number decreased
to 97,800 jobs lost year‐over‐year and conditions
continued to improve. As of July 2023, jobs have
grown year‐over‐year by 26,400; all but the
Professional/Business Services and Information
sectors had growth, as illustrated in the chart to the
right. The greatest gain was in the Private
Education/Health Services sector with 10,600 jobs
gained, followed by the Leisure/Hospitality sector
with a gain of 5,900 jobs.
Employment Trends
2017 2018 2019 2020 2021 2022
Labor Force 838,200 841,600 843,000 819,700 813,000 825,600 Employment 807,100 815,800 818,000 746,500 763,500 798,400 Annual Employment Change 11,100 8,700 2,200 (71,500) 17,000 34,900 Unemployment Rate 3.7% 3.1% 3.0% 8.9% 6.1% 3.3%
Source: California Employment Development Department
461
Area Analysis – Alameda County 10
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 The metro has a diverse economy, as illustrated in the following chart indicating the percentage of total employment for each sector within the county as of July 2023.
The area’s largest employment sectors are Private Education and Health Services, accounting for
17.8% of the total employment; Trade/Transportation/Utilities, which includes retail and wholesale trade (17.0%); Professional and Business Services (15.9%) and Government (13.0%). The largest employers in the region are summarized as follows.
Historically, Alameda County businesses, particularly in Oakland and its urban neighbors, were mostly manufacturing (including World War II shipbuilding), warehousing and distribution, food processing, and printing and publishing. Though many of these businesses survive today, manufacturing has become a much smaller portion of the economy. Oakland’s relative affordability of land and less traffic congestion compared to other Bay Area locations, coupled with a state‐of‐the‐art fiber‐optic network, 462
Area Analysis – Alameda County 11
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 have attracted many high‐tech employers to the area. The closure of the many military installations in the county has also led to new commercial and residential uses. The Alameda Naval Air Station, now Alameda Point, offers deep‐water piers, an airport, laboratories and industrial buildings, housing and recreational facilities.
The Port of Oakland, the nation’s seventh busiest containerized cargo port, remains a powerful economic engine for the county, providing jobs at the seaport and the Oakland International Airport.
The port handles 99% of Northern California’s containerized cargo, and the airport is among the top 20 airports in the nation with regard to air cargo volume.
Scientific research is another Alameda County hallmark. The Lawrence Berkeley National Laboratory and Lawrence Livermore National Laboratory are part of the U.S. Department of Energy and are managed by the University of California. Another facility, Sandia National Laboratories, is operated and managed by Sandia Corporation, a wholly owned subsidiary of Lockheed Martin Corporation, as a contractor for the U.S. Department of Energy. All of these facilities are world‐class research leaders, creating thousands of jobs over the years. Many private technology firms have located nearby to partner with the labs on scientific projects.
The University of California at Berkeley, one of the nation’s top‐ranked research universities, is another major employer. The university provides an academic culture and educated workforce that enhance the entire region and attract new businesses to the area. Further south, California State University Hayward also provides higher education and thousands of jobs.
Household Income
Median household income represents a broad statistical measure of well‐being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. According to Claritas Spotlight data reporting service, the median household income estimated for Alameda County in 2023 is $119,304, which is higher than the state of California’s median income of $89,113.
Recreation & Culture
Alameda County offers a variety of recreational and cultural opportunities. A number of parks preserve large tracts of land in the Berkeley Hills, including the Redwood Regional Park, Joaquin Miller Park and the Anthony Chabot Regional Park. Excursions to San Francisco are within a short drive and include the Golden Gate Bridge, Alameda Mammal Center, Muir Woods, Alcatraz and Angel Islands, to name a few. Public golf courses, neighborhood parks, community and recreation centers, museums, galleries, restaurants and wineries are located throughout the county. The county is home to the Oakland Athletics (Major League Baseball) professional sports franchise.
Conclusion
Alameda County has experienced moderate population growth, averaging 0.3% per year over the past five years. Most of this growth has been due to in‐migration of businesses and residents from more expensive Bay Area counties. Some of the county’s locational advantages include its proximity to San 463
Area Analysis – Alameda County 12
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Francisco, employment opportunities, University presence, good transportation linkages, temperate climate and relative affordability compared to other Bay Area locations.
Market and economic conditions were very strong in the years preceding the pandemic, with unemployment rates falling to historical lows. Employment conditions declined sharply after the onset of the pandemic but both market and economic conditions have since improved. In the current market, macroeconomic factors, notably high inflation and rising interest rates, have re‐introduced uncertainty in the market. However, the long term outlook for the region is good in light of its advantages and historical stability.
464
Area Analysis – Alameda County 13
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Area Map
465
Surrounding Area Analysis 14
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Surrounding Area Analysis
Boundaries
The boundaries of a neighborhood identify the physical area that influences the value of the subject property. These boundaries may coincide with observable changes in prevailing land use or occupant characteristics. Physical features such as the type of development, street patterns, terrain, vegetation and parcel size tend to identify neighborhoods. Roadways, waterways and changing elevations can also create neighborhood boundaries. The subject property is located in the city of Dublin, in the eastern part of Alameda County. The neighborhood is generally defined by the city limits of Dublin.
A map identifying the location of the property follows this section.
Access and Linkages
The subject property is located north of Dublin Boulevard, between Dougherty and Arnold Roads, south of 6th Street. Dublin Boulevard is a six‐lane thoroughfare and serves as a major linkage throughout Dublin. Less than one‐half mile south of the subject property, running parallel to Dublin Boulevard, is Interstate 580, which provides access to the cities of San Leandro, Oakland, and Berkeley to the west, before joining Highway 101 in San Rafael. To the east, I‐580 connects the city of Dublin with the city of Livermore before terminating south of the city of Tracy at Interstate 5. Approximately two miles west of the subject property, Interstate 680 is accessible via Interstate 580 or Dublin Boulevard. Interstate 680 spans the length of the East Bay Area and provides access to the cities of Danville, Walnut Creek, Concord and Martinez to the north before terminating at Interstate 80. To the south, the cities of Pleasanton, Fremont, and Milpitas can be reached via I‐680 before terminating in San Jose. Dublin’s steady population growth over the past decade is largely attributable to San Francisco and Silicon Valley commuters seeking more affordable housing, who likely favor Dublin over other communities of the East Bay Area for the proximity and access to both the I‐580 and I‐680 highways.
Public transportation is available via the heavy‐rail public transit and subway system identified as BART (Bay Area Rapid Transit), which connects the cities of the East Bay Area with the San Francisco peninsula. The West Dublin/Pleasanton BART station is located less than one mile south of the subject property and the East Dublin/Pleasanton BART station is approximately two miles southeast of the subject property. Additionally, bus service is provided by the Livermore Amador Valley Transit Authority (LAVTA), which has stops just south of the subject property along Amador Valley Boulevard.
Demographic Factors
A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table.
466
Surrounding Area Analysis 15
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
As shown above, the current population within a 5‐mile radius of the subject is 216,249, and the average household size is 2.9. Population in the area has grown since the 2020 census, and this trend is projected to continue over the next five years. Compared to Alameda County overall, the population within a 5‐mile radius is projected to grow at a faster rate.
Median household income is $178,120, which is higher than the household income for Alameda County. Residents within a 5‐mile radius have a considerably higher level of educational attainment than those of Alameda County, while median owner occupied home values are considerably higher.
Land Use
The city of Dublin contains mostly residential development, with a good balance of supporting commercial and community uses. Predominate land uses in Dublin are presented in the map on the following page.
467
Surrounding Area Analysis 16
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
There is significant residential development within the subject’s neighborhood. Most of the nearby single‐family residential developments represent relatively newer construction, having been built within the last 10‐15 years. Wallis Ranch is a recently completed master planned community, located at the northern end of the city limits, northeast of Dublin Crossing (identified by the yellow star). In October 2014, a partnership between Trumark and Castlelake, LP acquired Wallis Ranch, an entitled 806‐unit master planned community, for $200 million. Trumark subsequently subdivided Wallis Ranch into multiple parcels, or eight neighborhoods. Various homebuilders developed in Wallis Ranch, and included: KB Home, Taylor Morrison, Pulte Homes, D.R. Horton, Trumark Homes and Meritage Homes.
Projects include both attached and detached products with home sizes ranging from 1,853 to 3,676 square feet. According to realtor.com, there are currently six homes for sale in Wallis Ranch (resales) ranging from $945,000 to $2.5 million.
Jordan Ranch, located at the eastern end of the city, was a Tri Pointe Homes community that sold out in the third quarter of 2020. Tri Pointe offered three product lines, two attached and one detached, with average home sizes ranging from 2,043 to 2,346 square feet. Starting price points ranged from $960,000 to $1,220,000.
Finally, northeast of Wallis Ranch is the Tessajara Hills community, currently being built by Toll Brothers, first opening in mid‐2017. This community is exclusively detached, with lot sizes from 5,800 to 7,300 square feet. The community features two product lines: The Bluffs and The Knolls. The Knolls is currently being actively marketed, with price points starting at $2,100,000 and home ranging from 3,658 to 4,266 square feet.
Just southeast of Dublin Crossing is the Persimmon Place shopping center (anchored by Whole Foods Market and Nordstrom Rack) located along the south side of Dublin Boulevard, between Arnold Road and Hacienda Drive. Just east of this shopping center is the Hacienda Crossings center, anchored by Best Buy, Barnes & Noble, T.J. Maxx, and a Stadium 20 and IMAX movie theater. Further east along Dublin Boulevard, between Dublin Boulevard and I‐580, are several other anchored shopping centers that include Lowe’s Home Improvement and Target.
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Surrounding Area Analysis 17
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Although just outside the Dublin city limits, south of I‐580 and west of I‐680 is the Stoneridge Shopping Center, a regional mall that is proximate to the subject property and draws retail consumers to the area. Anchor tenants in the Stoneridge Shopping Center include JCPenney and Macy’s.
The Dublin Crossing specific plan is located on a portion of the U.S. Army Parks Reserve Forces Training Area (PRFTA), commonly known as Camp Parks. It is currently a semi‐active mobilization and training center for U.S. Army Reserve personnel to be used in case of war or natural disaster.
Camp Parks has a primary mission of exercising the functions of command, training, security, administration, servicing and supply to all troop units, military activities and other governmental agencies assigned or attached. New and state‐of‐the‐art training facilities have been built and more are planned. In the garrison area are administrative and classroom buildings, upgraded housing, a remodeled dining facility, a modern lodging facility, an informative history center, and other support and training facilities.
Camp Parks RFTA is the only local training facility for more than 11,000 Army Reserve Soldiers in the San Francisco Bay Area where a wide variety of training facilities are available. Reserve Units permanently stationed at Parks RFTA conduct weekend inactive duty training throughout the year, and Reserve Component units travel to the base for their two‐week annual training.
The base also hosts the Federal Correctional Institute, Dublin (FCI Dublin), and is adjacent to Alameda County/Santa Rita Jail. The FCI Dublin is a low‐security United States federal prison for female inmates, just west of the Alameda County/Santa Rita Jail. The Alameda County/Santa Rita Jail is located just east of FCI Dublin at the northeast corner of Arnold Road and Broder Boulevard. Santa Rita houses the majority of persons arrested in Alameda County, which occupies most of the East San Francisco Bay Area and includes the cities of Oakland, Berkeley, San Leandro and Alameda.
Outlook and Conclusions
In conclusion, the city of Dublin has experienced strong population growth in recent periods, which has fueled the need for additional supporting commercial services. The subject property benefits from its location in Dublin’s primary retail corridor. Additionally, the subject has good access to major neighborhood linkages and regional highways. Overall, considering the preceding factors, as well as the subject’s location in an area with a high average household income and steady population growth, the subject’s neighborhood is expected to remain a viable location for a residential development over the long‐run.
469
Surrounding Area Analysis 18
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Surrounding Area Map
470
Residential Market Analysis 19
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Residential Market Analysis
Given prevailing land use patterns and the subject’s zoning, a likely use of the property is for residential development. In the following paragraphs, we examine supply and demand indicators for residential development in the subject’s area.
The residential housing market has been changing due to rising interest rates. After a period of expansion leading up to, and sustained during, the COVID‐19 pandemic with low mortgage interest rates, the increased cost of borrowing, which began in 2022, put downward pressure on housing affordability and, consequently, housing prices. A survey of several active homebuilders was conducted to gain insight relative to current market conditions. While new home sales trended downward over the course of 2022, for many submarkets the compression was most pronounced in late 2022. The duration of the downward trend appears to have been short‐lived in some submarkets and lingering in others. However, the overall consensus among active market participants is the downward trend has stabilized or increased, based on submarket, with limited evidence of ongoing downward pressure.
In many new home submarkets sales began rising in the Spring of 2023. This is partially due to low resale inventory, as existing homeowners with low interest rate mortgages have reconsidered a move, with a corresponding higher interest rate mortgage. The result is a more constrained resale market inventory, leading many first‐time buyers to find that increased opportunities in the new home market despite slightly higher prices than resale homes. With the market volatility in the second half of 2022, buyers were concerned with settling for a higher interest rate, but were also waiting to see if home prices would decline. Some buyers accepted the higher interest rates but wanted assurance they weren’t overpaying for a home that would soon drop in price. Reportedly, many new homebuyers have now adjusted their budgets to current interest rates, which have stabilized, and seem more confident in their expectations of interest rate activity in the near term.
Homebuilders are still offering concessions in the market to buy down the interest rates for prospective buyers, which decreases the net sale price to the homebuilders, but allows more buyers to afford the new home product; this trend is expected to continue in the near term, as the higher interest rate environment has led to tighter lending standards. It’s also worth noting the unemployment rate has risen slightly following the recent trend in company layoffs impacting many of the technology sectors throughout the San Francisco Bay Area and Southern California, which may impact the homebuyer market in some submarkets.
Submarket Overview
The subject is located in the City of Dublin. The subject is adjacent to newer home construction and planned future development and is considered to have good transportation linkages. The neighborhood is characterized as a suburban area that appeals to both local workers and commuters.
Based on existing surrounding homes and new projects under development, the subject characteristics best support a project designed for a combination of entry‐level and/or first‐time move‐up home buyers.
It is important to note, price points are highest for those areas located closest to the Bay Area. This also holds true for Alameda County as a whole as well; price points are significantly higher the more 471
Residential Market Analysis 20
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 proximate to San Francisco/Oakland (the Bay Area) in comparison to those east of the I‐680 Corridor (i.e., Dublin and Livermore, etc.). Thus, while this market overview begins with the analysis of Alameda County as a whole (macro overview), the market overview for the subject’s location within the East Bay Area is best described when we hone in on this specific market area of Alameda County later in this section.
Single‐Family Building Permits
Single‐family building permits for the city of Dublin, as well as Alameda County totals, are shown in the following table.
Single‐Family Building Permits
Year Ci ty of Dublin % Change County of Al a meda % Change 2013 665 ‐‐ 1,391 ‐‐
2014 816 22.71% 1,613 15.96%
2015 529 ‐35.17% 1,905 18.10%
2016 606 14.56% 2,398 25.88%
2017 966 59.41% 2,595 8.22%
2018 615 ‐36.34% 1,965 ‐24.28%
2019 145 ‐76.42% 1,972 0.36%
2020 146 0.69% 1,342 ‐31.95%
2021 101 ‐30.82% 1,368 1.94%
2022 127 25.74% 1,222 ‐10.67%
Source: SOCDS Building Permits Monthly Request
Preliminary 2023 permit data is shown in the following table from January through August.
Single‐Family Building Permits: 2023 Preliminary Data
Month City of Dublin Count y of Al a meda
January 16 56
February 16 70
March 16 121
Apri l 28 67
May 24 94
June 19 106
Jul y 1 49
August 12 94
132 657
Source: SOCDS Building Permits Monthly Request
New Home Pricing and Sales
A market pricing and absorption analysis, prepared by RCLCO, was prepared for the City of Dublin for the subject property. In addition to the analysis and findings presented therein, market data available 472
Residential Market Analysis 21
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 from the Gregory Group, a firm that publishes new home prices and absorption statistics for areas in California and Nevada, was also analyzes and considered. There are presently four active new home subdivisions in Dublin, with a total of 29 throughout Alameda County (including Alameda, Dublin, Fremont, Hayward, Newark, Oakland, and San Leandro). As previously mentioned, price points are highest for those areas located closest to the San Francisco Bay; therefore, we will analyze the communities of Dublin. Historically Livermore and Pleasanton have had competitive active new home projects; however, currently there are none to consider in this analysis. Below we present a table depicting average sale prices for active single‐family residential projects in the market area (Dublin, Livermore and Pleasanton) for the past three years.
New Home Sales History
Quarter Average Price
% Change
Avera ge Price
Avera ge Home
Size (SF)
Avg. Price /
Avg. SF
% Change
Price / SF
Quarter
Sold
Number of
Projects
Sold per Project
per Month
3Q 2020 $1,106,243 ‐‐ 2,411 $458.83 ‐ ‐ 170 19 2.98
4Q 2020 $1,054,337 ‐4.69% 2,269 $464.67 1.27% 158 15 3.51 1Q 2021 $1,086,177 3.02% 2,264 $479.76 3.25% 155 12 4.31 2Q 2021 $1,189,531 9.52% 2,351 $505.97 5.46% 72 9 2.67 3Q 2021 $1,065,950 ‐10.39% 2,108 $505.67 ‐ 0.06% 54 7 2.57 4Q 2021 $1,069,053 0.29% 2,108 $507.14 0.29% 59 7 2.81 1Q 2022 $1,073,324 0.40% 2,034 $527.69 4.05% 24 4 2.00 2Q 2022 $1,257,646 17.17% 2,226 $564.98 7.07% 68 8 2.83 3Q 2022 $1,215,200 ‐3.38% 2,252 $539.61 ‐ 4.49% 48 7 2.29 4Q 2022 $1,264,868 4.09% 2,281 $554.52 2.76% 62 5 4.13 1Q 2023 $1,341,830 6.08% 2,399 $559.33 0.87% 67 5 4.47 2Q 2023 $1,413,478 5.34% 2,510 $563.14 0.68% 64 4 5.33 Source: The Gregory Group
New home pricing in the subject’s market area have trended upward over this period along with the average price per square foot, with the most recent decline in the Third Quarter 2022. Absorption rates (homes sold per project per month) have fluctuated, but have generally stayed within the range of 2.00 to 5.33 sales per project per month. There were 5.33 sales per project per month in the Second Quarter 2023, the highest absorption rate in the period analyzed. Over the last 12 months, the average was 4.05 sales per project per month. Over the last three years, the number of home sales has averaged 3.32 per project per month.
Active New Home Projects Pricing and Absorption
As previously mentioned, there are four active projects in Dublin, of which two are attached projects and two are detached projects. It is noted, all the active projects in Dublin are within the subject’s Boulevard master planned community. These projects are summarized in the following table, based on data from the Second Quarter 2023.
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Residential Market Analysis 22
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Active Projects (as of 2Q 2023)
Project
Na me Ma s ter Pl a n Communi ty Devel oper Avera ge Price Avg. Home
Size (SF)
Avera ge
Price/SF
Product
Type
Uni ts
Planned
Uni ts
Offered
Uni ts
Sold
Uni ts
Uns ol d
Lombard Boulevard Dublin Lennar Homes $1,514,630 2,580 $587.07 D e t a c h e d 1 0 0 6 05 19 Venice Boulevard Dublin Lennar Homes $1,316,213 2,393 $550.03 Attached 91 71 69 2 Me lrose Boule vard Dublin Brookfie ld Residential $1,606,657 2,702 $594.62 Detached 75 59 59 0 A bbe y Boule vard Dublin Brookfie ld Residential $1,182,695 2,340 $505.43 Attached 60 32 29 3 Minimum $1,182,695 2,340 $505.43
Maximum $1,606,657 2,702 $594.62
Average $1,405,049 2,504 $559.28
Source: The Gregory Group
Absorption
Project
Na me Mas ter Plan Community Developer
Avg. Home Price
(2Q 2023 Only)
Avg. Home Size
(2Q 2023 Only)
Product
Type 2Q 2023 1Q 2023 4Q 2022 3Q 2022
12‐Month
Total
Avera ge per
Quarter
Avera ge per
Month
L om bard Boule vard Dublin L e nnar Homes $1,514,630 2,580 Detached 18 9 7 7 41 10.3 3.4 Venice Boulevard Dublin Lennar Homes $1,316,213 2,393 Attached 19 20 7 12 58 14.5 4.8 Me lrose Boule vard Dublin Brookfie ld Residential $1,606,657 2,702 Detached 11 11 7 17 46 11.5 3.8 A bbe y Boule vard Dublin Brookfie ld Residential $1,182,695 2,340 Attached 16 13 ‐‐ ‐‐ 29 14.5 4.8 64 53 21 36
4433
16.0 13.3 7.0 12.0
5.3 4.4 2.3 4.0
4.0 Average Monthly Pro‐Rata
Monthly Pro‐Rata
Source: The Gregory Group
Tota l
No. of Acti ve Projects
Quarterly Pro‐Rata
Based on this information, over the last four quarters the monthly absorption rate per project has ranged from 2.3 to 5.3 sales per project per month, with an average rate of 4.0 sales per project per month. Of the active projects, two were attached and two detached. Over the last four quarters the average monthly absorption rate per attached project was 4.8 sales per month. For the detached projects, the average monthly absorption rate per project ranged from 3.4 to 3.8 sales per month.
Resale Pricing
The following table shows historical resale data for more recently built homes (2018 and newer) in the city of Dublin since May 1, 2023.
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Residential Market Analysis 23
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Resales ‐ Detached
Address Sale Date
Li vi ng Area
(SF) Sale Price
La s t Li s t
Price
Sales
Price /SF Sale /L ist Y e ar Built
Days on
Market
Lot Size
(SF)
5991 Peridot Place 5/28/2023 2,376 $1,392,570 $1,522,380 $586 91.47% 2022 7 2,245 7396 Kenwood Road 5/15/2023 3,359 $1,925,000 $1,849,888 $573 104.06% 2019 1 3,498 4500 Al exa nder Val l ey Way 5/30/2023 3,680 $2,300,000 $2,388,000 $625 96.31% 2018 14 4,750 2797 Mount Dana Drive 6/5/2023 3,415 $2,800,000 $2,599,000 $820 107.73% 2019 6 6,106 4232 Healdsburg Way 5/30/2023 1,841 $1,490,101 $1,449,888 $809 102.77% 2018 6 2,567 2918 Tulare Hills Drive 5/9/2023 4,415 $3,250,000 $2,999,000 $736 108.37% 2019 0 7,525 7085 Kylemore Circle 6/28/2023 2,834 $2,260,000 $2,149,888 $797 105.12% 2018 7 3,742 2738 Mount Dana Drive 7/30/2023 3,415 $2,675,000 $2,599,888 $783 102.89% 2019 5 5,850 7291 Lembert Hills Drive 8/9/2023 3,662 $2,800,000 $2,699,888 $765 103.71% 2020 6 6,279 2906 Delamar Drive 8/25/2023 4,415 $3,225,000 $2,999,888 $730 107.50% 2021 6 6,359 7152 Aubrey Way 8/22/2023 4,063 $2,880,000 $2,899,000 $709 99.34% 2019 4 6,439 2616 Briceburg Way 9/6/2023 2,095 $1,367,500 $1,389,000 $653 98.45% 2018 21 2,414 6924 Atl a s Peak Drive 8/30/2023 3,288 $2,420,000 $2,420,000 $736 100.00% 2018 0 5,272 7420 Diamond Mountain Road 9/26/2023 3,445 $2,510,000 $2,450,000 $729 102.45% 2018 9 7,517 Total Sales 14 3,307 $2,378,227 $2,315,408 $718 102.16% 2019 7 5,040 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) Source: Local Multiple Listing Service (MLS)
Ability to Pay
In this section, we will examine the ability to pay among prospective buyers for a representative price points of the smallest detached and attached floor plans being constructed by the merchant builders of $1,510,000 (detached) and $1,180,000 (attached), based on the indicators from the competing Resales ‐ Attached
Addres s Sa l e Date
Li vi ng Area
(SF) Sale Price
Las t Li s t
Price
Sales
Price /SF Sale /L ist Y e ar Built
Days on
Market
5560 Barrel Ct, Dublin, CA 5/8/2023 1,563 $1,070,000 $1,049,000 $685 102.00% 2021 33 5728 Kemper Place #401 5/12/2023 1,961 $1,330,000 $1,398,000 $678 95.14% 2021 21 4042 Scot t fie ld Street 5/11/2023 1,949 $1,185,000 $1,099,000 $608 107.83% 2018 13 3925 Gue rne ville Way 5/17/2023 1,514 $1,001,500 $959,000 $661 104.43% 2019 6 3926 Scottfield 5/25/2023 2,208 $1,310,000 $1,188,888 $593 110.19% 2018 5 5630 El Dorado Lane 6/9/2023 1,348 $965,000 $949,000 $716 101.69% 2018 19 6918 Ge yse rville Street 6/9/2023 2,160 $1,275,000 $1,249,888 $590 102.01% 2018 1 5568 Barrel Court 6/27/2023 1,563 $1,100,000 $1,049,000 $704 104.86% 2021 14 3922 Gue rne ville Way 7/18/2023 1,514 $967,000 $979,000 $639 98.77% 2019 32 5638 Iron Horse Parkway 6/21/2023 1,933 $1,215,000 $1,225,000 $629 99.18% 2018 14 3987 Summit Road 7/28/2023 1,879 $1,254,000 $1,150,000 $667 109.04% 2018 8 3934 Scot t fie ld Street 8/2/2023 1,949 $1,240,000 $1,098,000 $636 112.93% 2018 7 5561 Dublin Boulevard 8/8/2023 1,563 $1,097,000 $1,099,000 $702 99.82% 2022 13 5597 El Dorado Lane 8/17/2023 2,128 $1,250,000 $1,249,888 $587 100.01% 2018 6 5856 Cadence Avenue 8/21/2023 1,748 $1,110,000 $1,099,000 $635 101.00% 2018 12 5538 Stout Street 9/18/2023 1,706 $1,132,500 $1,079,000 $664 104.96% 2021 5 5539 Stout Street 8/28/2023 2,178 $1,180,000 $1,085,000 $542 108.76% 2021 7 5870 El Dorado Lane 8/29/2023 1,740 $1,048,888 $999,888 $603 104.90% 2019 6 5533 Stout Street 9/15/2023 2,178 $1,180,000 $1,148,890 $542 102.71% 2021 1 5717 St e rling Street 9/14/2023 2,128 $1,250,000 $1,248,000 $587 100.16% 2019 24 Total Sales 20 1,846 $1,158,044 $1,120,122 $633 103.52 % 2019 12 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.)
Source: Local Multiple Listing Service (MLS)
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Residential Market Analysis 24
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 projects. First, we will estimate the required annual household income based on typical mortgage parameters in the subject’s market area. Specifically, we will employ a loan‐to‐value ratio of 80% (down payment of 20%), mortgage interest rate of 7.00%, 360 monthly payments, and a 40% ratio for the housing costs as a percent of monthly income (inclusive of principal, interest, all taxes and insurance). Property tax payments are accounted for in the analysis, which includes estimated special tax payments associated with the CFD bonds. The following table shows the estimate of the annual household income that would be required to afford homes priced at the representative price point.
Income Required
Detached Attached
Home Price $1,510,000 $1,180,000
Loa n % of Price (Loan to Value) 80% 80%
Loa n Amount $1,208,000 $944,000
Interest Rate 7.00% 7.00%
Mortgage Payment $8,037 $6,280
Property Taxes $1,596 $1,247 Based on 1.268400% and direct charges of $0 City of Dublin CFD No. 2015 ‐1 $476 $320
Homeowner's A ssociation Fee $158 $158
Property Insurance $315 $246
Total Monthly Obligation $10,582 $8,251
Mortgage Payment % of Income 40% 40%
Monthly Income $26,454 $20,628
Annual Income $317,453 $247,534
Generally, interest rates have an inverse relationship to the affordability of a home. In short, all else being equal, higher interest rates lower the price point for buyers based on income. Over the past several years, interest rates have remained historically low, often at or below 3.0%. Current mortgage interest rates more closely resemble historic rates and for the most part the home buyer pool appears to recognize that the 3% mortgage rate environment was the anomaly and rates around the 7% level are most likely into the foreseeable future.
Conversations with sales agents in multiple new home projects noted there was a slowing in demand for new residential homes in the second half of 2022 and early 2023. The combination of historically high new home prices and rising interest rates priced some buyers out of entry‐level (lower‐priced) homes. While some projects were affected more than others, coastal locations and limited supply submarkets fared better than emerging submarkets with a concentration of competing projects, predominately due to inventory levels. Continued high inflation forced prospective homeowners to account for other costs (like groceries, gas, etc.) over buying a new home at a higher interest rate.
Homebuilders reported turmoil from pending buyers dropping out of contract because of rising interest rates. Most homebuilders reported the pace of sales slowed from the historic highs. Further, homebuilders began offering concessions in the form of buying down interest rates and discounted options, instead of decreasing their base prices. In some markets, there was enough downward pressure on the market for homebuilders to offer concessions as well as drop their base prices.
Prior to mid‐2022, homebuilders were able to sell homes faster than they were able to construct them, but with the rising interest rates this has since moderated pace of sales to a level more in line 476
Residential Market Analysis 25
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 with builders’ ability to deliver. The recent increases in interest rates impacted the pace of sales as well as pricing in most markets. However, there are signs the residential market is beginning to stabilize. Markets in Spring 2023 have generally been stronger than expected. Homebuyers that previously were waiting on the sidelines either in anticipation of decreasing home prices, or due to interest rate volatility, are beginning to adjust their budgets to the new higher interest rates as home pricing stabilizes. In addition, low inventory and a tight resale market make new construction more attractive. According to market participants in the spring, absorption rates have remained steady or increased slightly with some homebuilders having small increases in base prices from the First Quarter 2023.
We have obtained income data from Environics Analytics, for a 10‐mile radius surrounding the subject property, which is considered representative of typical buyers for the subject property.
In the
following table we show the income brackets within the noted area, along with estimates of the percentage of households able to afford a home priced at the representative price point within each income bracket.
Household Ability @ $1,510,000
Household Income Households
Percent of
Households
Percent Abl e to
Pay Households
Households
Abl e to Pay
< $15,000 6,645 3.8% 0.0% 0 0.0%
$15,000 ‐ $24,999 4,212 2.4% 0.0% 0 0.0%
$25,000 ‐ $34,999 4,689 2.7% 0.0% 0 0.0%
$35,000 ‐ $49,999 7,406 4.3% 0.0% 0 0.0%
$50,000 ‐ $74,999 13,904 8.0% 0.0% 0 0.0%
$75,000 ‐ $99,999 14,554 8.4% 0.0% 0 0.0%
$100,000 ‐ $124,999 15,729 9.1% 0.0% 0 0.0%
$125,000 ‐ $149,999 15,032 8.7% 0.0% 0 0.0%
$150,000 ‐ $199,999 24,221 14.0% 0.0% 0 0.0%
$200,000 ‐ $249,999 15,874 9.2% 0.0% 0 0.0%
$250,000 ‐ $499,999 25,184 14.5% 73.0% 18,389 10.6%
$500,000+ 25,855 14.9% 100.0% 25,855 14.9%
173,305 100.0% 44,244 25.5%
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Residential Market Analysis 26
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Conclusions
Demand for homes in the subject’s market area is considered to be strong at the current time as indicated by the overall trend of new home sales prices and activity in recent quarters, as well as the absorption rate within new home projects in the subject’s area.
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Land Description and Analysis 27
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Property Analysis
Land Description and Analysis
Location
Dublin Crossing is generally located at the northwest quadrant of Dublin Boulevard and Arnold Road.
Land Area
A summary of the appraised properties’ unit counts by builder is provided in the table below.
Improvement Area (IA) 5 Summary by Ownership
Owne r Builde r N e ighborhood Proje ct Name Product Type No. of
Uni ts
Brookfie ld Bay Area Holdings, LLC Brookfi el d Homes 21 Ivy Detached 4‐Pack 31 22 Vine Attached Row Townhomes 0
31 Lenna r Homes of California, LLC Lennar Homes 23 Avalon Attached Carriage Row Townhomes 55 55 Dublin Crossing, LLC* Mas ter Developer 21 Ivy Detached 4‐Pack 28 22 Vine Attached Row Townhomes 92
23 Ava l on Atta ched Carriage Row Townhomes 35
155
Vari ous Homeowners Individual Homeowners 21 Ivy Detached 4‐Pack 3 23 Ava l on Atta ched Carriage Row Townhomes 0
3 * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
^ The subject lots will transfer from the Master Developer to each merchant builders, Brookfield Homes and Lennar Homes, with takedown closing dates scheduled between November 2023 and December 2025.
Final subdivision maps for each Neighborhood have been recorded.
Shape and Dimensions
The subject land areas are irregular in shape, yet functional for development under their respective land use and zoning designations.
Topography
The site is generally level and at street grade. The topography does not result in any particular development limitations.
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Land Description and Analysis 28
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Off‐site Improvements
Off‐site improvements, which include primary access roads and curbs, gutters, sidewalks and streetlights, are complete.
On‐site Improvements
On‐site and in‐tract development is completed for all neighborhoods within Improvement Area No. 5.
Drainage
There are two seasonal drainage channels traversing the Dublin Crossing site, one north to south generally through the middle of the project site, and another along the eastern border, parallel to Arnold Street.
No particular drainage problems were observed or disclosed at the time of field inspection. This appraisal assumes that surface water collection, both on‐site and in public streets adjacent to the subject, is adequate.
Flood Hazard Status
The following table provides flood hazard information.
Flood Hazard Status
Community Panel Number 06001C0308G & 06001C0309G
Date August 3, 2009
Zone X
Description Outside of 500‐year floodplain
Insurance Required? No
Environmental Hazards
Presented below is an excerpt from the Preliminary Office Statement as it pertains to environmental hazards impacting the Dublin Crossing Project:
Groundwater Testing Required by SFRWQCB
In early November 2018, the City was informed by the Developer that it received a letter from the San Francisco Bay Regional Water Quality
Control Board (“SFRWQCB”), dated November 5, 2018,
regarding results of testing groundwater from a particular area of the Boulevard Project. The letter required that the Developer submit a workplan and schedule to complete site characterization and develop a conceptual site model for volatile organic compounds, including trichloroethylene, in groundwater, soil, and soil vapor generally to the east of the creek at the project site. The Developer then retained experts in human health risk assessment from Ramboll US Consulting, Inc. to work closely with SFRWQCB staff to conduct a systematic, multi‐round investigation of groundwater, soil and soil vapor in the area and in 2020 through 2023 the Developer submitted various reports to the 480
Land Description and Analysis 29
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 SFRWQCB for review in 2020 through 2022 and received SFRWQCB approval of the reports in early February 2023. The Developer anticipates receiving a no further action by the end of 2023.
Seismic Hazards
According to the Seismic Safety Commission, the subject site is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is located in a Fault‐Rupture Hazard Zone (formerly referred to as an Alquist‐Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. In general, a number of faults are located in the Southern California and throughout California; thus, the area is subject to severe ground shaking during earthquakes. Competitive sites face similar seismic risk.
Fire Hazards
Fire protection services are provided under contract with the Alameda County Fire Department (ACFD). In all, the department serves approximately 508 square miles and a daytime population of 517,000 people. In addition to fire suppression, the Alameda County Fire Department provides, under contract, first‐responder/paramedic services on all engine companies and all necessary fire and emergency medical support services.
According to the CAL FIRE Fire and Resource Assessment Program, the subject is not located within or near a state responsibility area or lands classified as a Very High Fire Hazard Severity Zone (VHFHSZ), see the map below.
481
Land Description and Analysis 30
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
Ground Stability
A soils report was not provided for our review. Based on our inspection of the subject and observation of development on nearby sites, there are no apparent ground stability problems. However, we are not experts in soils analysis. We assume that the subject’s soil bearing capacity is sufficient to support the existing improvements.
Streets, Access and Frontage
The subject has frontage, access and visibility from Dublin Boulevard and Arnold Road. The master plan has three project entrances from Dublin Boulevard (Columbus Street, Sterling Street and Iron Horse Parkway). An additional entrance is provided via Scarlet Drive on the west end of the development and two entrances via Arnold Road on the east end. An interior street system serves all of the various components of the development. Overall functional utility is considered to be typical for similar development projects in the East Bay Area. The accessibility and visibility of the property are good.
Utilities
The availability of utilities to the subject is summarized in the following table. 482
Land Description and Analysis 31
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Utilities
Service Provider
Water City of Dublin
Sewer City of Dublin
E le ct ricit y Pacific Gas & El ectri c (PG&E)
Natural Gas Pacific Gas & El ectri c (PG&E)
Local Phone Various providers
Zoning
The subject is within the Dublin Crossing Specific Plan, comprising approximately 189 acres in the City of Dublin. The project site is located north of Interstate 580 and Dublin Boulevard, on a portion of the 2,485‐acre U.S. Army Camp Park Reserve Forces Training Area (Camp Parks), which currently sits in the middle of the City of Dublin, leaving geographically large portions of the City to the east and to the west of the project site.
The Specific Plan addresses the development of Dublin Crossing which is comprised of residential units, parks and open space, and an elementary school. Specifically, at build‐out the project could include a maximum of up to 1,995 residential units/lots, a trail system that connects to the Iron Horse Trail and a 30 net‐acre Community Park, five net‐acres of Neighborhood Park, and a school site.
Development of the Specific Plan area includes five development phases, with anticipated build‐out occurring over a period of approximately 10 years in response to market demands, the acquisition of the property from the U.S. Army, and according to an orderly extension of roadways, infrastructure, public services, and utilities. Over the course of the five phases, park sites, private recreational facilities, the school site, and other amenities will be provided commensurate with the residential development pursuant to terms in the Project Development Agreement.
The portion of the Dublin Crossing project considered the subject of this appraisal assignment herein encompass IA No. 5, which include the following land uses:
Land Use Density Purpose & Permitted Uses
Dublin Crossing
Medium‐High Density
Residential (DC M‐HDR)
14.1 – 25.0 units/acre
DC Medium‐High Density Residential (DC M‐
HDR) allows for a mix of attached and
detached single‐family and multi‐family
housing lot configurations at a density of 14.1
to 25 units/net acre.
Medium‐High Density Residential
development provides a transition from the
higher density apartments and condominiums
along the project periphery to the DC Medium
Density Residential land use district in the core
of the Specific Plan area.
483
Land Description and Analysis 32
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Residential product types may include a
variety of attached and detached housing
types, including:
Single‐Family Conventional Home
(Detached)
Alley Loaded Home (Detached)
Duet Home (Attached)
Rowhouse (Attached)
Green Court Home (Detached)
Motorcourt Home (Detached or
Attached)
Townhome (Attached)
Multi‐Family (Attached)
Dublin Crossing
Medium Density
Residential
(DC MDR)
6 ‐ 14 units/acre
The DC Medium Density Residential (DC MDR)
land use district allows a mix of residential lot
configurations from conventional single‐family
small‐lots including “two‐pack” or “zipper”
lots, to attached multi‐family lots at a density
of 6‐14 units per net acre.
Secondary dwelling units, accessory
structures, and home occupations are
permitted in the DC MDR land use district in
accordance with the Zoning Ordinance.
Residential product types may include a
variety of attached and detached housing
types, including:
Single‐Family Conventional Home
(Detached)
Alley Loaded Home (Detached)
Duet Home (Attached)
Rowhouse (Attached)
Green Court Home (Detached)
Motorcourt Home (Detached or
Attached)
Townhome (Attached)
We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance is required. 484
Land Description and Analysis 33
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Other Land Use Regulations
We are not aware of any other land use regulations that would affect the property.
Easements, Encroachments and Restrictions
We have reviewed preliminary title reports provided by the ownership groups. The reports identify exceptions to title, which include various utility and access easements that are typical for a property of this type. Such exceptions would not appear to have an adverse effect on value. Our valuation assumes no adverse impacts from easements, encroachments or restrictions and further assumes that the subject has clear and marketable title.
Permits and Fees
Permits and fees due at building permit by neighborhood are summarized in the following table.
Improvement Area (IA) 5 Permits and Fees by Neighborhood Ivy Vine A valon Total Fees
62 Lots 92 Lots 90 Lots 244 Lots
Land Permits & Fees ‐ Builder Detached Attached Atta ched Water Connecti on/Meter/Drai n/Was te Fee @ BP* 2,110,976$ 2,715,748$ 2,570,400$ 7,397,124$ Traffi c Impact @ BP 841,898 $ 987,006$ 946,998$ 2,775,902$ Frwy/Trans @ BP 16,012 $ 23,760$ 23,243$ 63,015$ Publin Arts in‐Li eu @ BP ‐$ ‐ $ ‐ $ ‐ $ Fire Impact @ BP 21,018 $ 19,044$ 18,630$ 58,692$ Other Land Fees @ BP 2,562 $ 2,822$ 2,639$ 8,022$ Building Permit @ BP 644,364 $ 751,985$ 811,860$ 2,208,209$ Zone 7 Water Fee @ BP 2,091,260 $ 3,103,160$ 3,035,700$ 8,230,120$ Public Facilities Fees @ BP 1,848,964 $ 1,740,732$ 1,573,830$ 5,163,526$ Total Fee Credits @ BP (1,378,942) $ (1,248,900)$ (1,285,740)$ (3,913,582)$ Total Land Permits & Fees ‐ Builder (w/o School Fees) 6,198,111$ 8,095,357$ 7,697,561$ 21,991,029$ Avera ge School Fees ‐ Es t ($9.10/SF) 1,650,849 $ 1,950,858$ 1,629,810$ 5,231,517$ Total Permits & Fees ‐ w/ School Fees 7,848,961 $ 10,046,215$ 9,327,371$ 27,222,546$ Permits & Fees (w/ School Fees) per lot $ 126,596 $ 109,198 $ 103,637 $ 111,568 *Payable to Dublin San Ramon Services District
Site Development Costs
According to information provided by representatives of the Master Developer (Dublin Crossing, LLC), all required infrastructure improvements servicing Improvement Area No. 5 have been substantially complete (reportedly only $501,593 remain).
485
Land Description and Analysis 34
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Improvement Area (IA) 5 Land Development Costs
Budget Spent to Dat e Re m aining Costs
CFD E ligible
Costs
De m olit ion $ 1,475,552
Grading $ 1,823,764
Eros i on Control $ ‐
Storm Drain $ 709,302 x
Sanitary Sewer $ ‐ x
Water $ 70,930 x
Joint Trench $ 384,552
Concrete $ 43,345 x
Street $ 279,465 x
Walls $ 1,161,304 x
Landscape $ 54,084 x
Subtotal $ 6,002,299
Contingency $ ‐
TOTAL $ 6,002,299 $ 5,500,706 $ 501,593
Conclusion of Site Analysis
Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. Uses permitted by zoning include medium and medium‐high density residential. We are not aware of any other particular restrictions on development.
486
Land Description and Analysis 35
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Site Plan
487
Land Description and Analysis 36
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Parcel Maps
488
Land Description and Analysis 37
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 489
Land Description and Analysis 38
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 490
Land Description and Analysis 39
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
491
Land Description and Analysis 40
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
492
Land Description and Analysis 41
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
493
Land Description and Analysis 42
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
494
Land Description and Analysis 43
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
495
Land Description and Analysis 44
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
496
Real Estate Taxes 45
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Real Estate Taxes
The property tax system in California was amended in 1978 by Article XIII to the State Constitution, commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year.
The base year was set at 1975‐76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be re‐ appraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges.
Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two‐thirds vote of the district in which the property is located, can be added to the 1% tax rate.
According to the Alameda County Tax Collector’s Office, the subject property has a tax rate of
1.2684%. The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted as the infrastructure and property improvements are completed and the property is sold off to individual homeowners.
Additionally, the subject is within the boundaries of Improvement Area (IA) No. 5 of the City of Dublin Community Facilities District No. 2015‐1 (Dublin Crossing). According to the Rate and Method of Apportionment, the annual special taxes applicable to the subject’s facilities are as presented in the table below:
Special Tax Table (Fiscal Year 2023‐2024)
Land Us e Category Square Footage Category
Single ‐Fam ily Detached Property Less than 2,100 SF $4,891 per unit Single ‐Fam ily Detached Property 2,100 ‐ 2,300 SF $5,305 per unit Single ‐Fam ily Detached Property Greater than 2,300 SF $5,715 per unit Mult ifam ily Property Less than 1,600 SF $3,835 per unit Mult ifam ily Property 1,600 ‐ 1,800 SF $4,318 per unit Mult ifam ily Property Greater than 1,800 SF $4,789 per unit Undeveloped Property N/A $139,310 per acre
Taxabl e Non‐Residential Property N/A $139,310 per acre Taxabl e Homeowners As s oci ati on Property N/A $139,310 per acre Taxabl e Public Property N/A $139,310 per acre
Source: Goodwin Consulting Group, Inc.
A ssigne d Special Tax
497
Highest and Best Use 46
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Highest and Best Use
Process
Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as if vacant, and as improved or proposed. By definition, the highest and best use must be:
Legally permissible under the zoning regulations and other restrictions that apply to the site. Physically possible.
Financially feasible.
Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses.
Highest and Best Use As If Vacant
Legally Permissible
The legal factors influencing the highest and best use of the subject property are primarily government regulations such as zoning and building codes. The subject property is entitled for 244 residential units/lots (62 detached and 182 attached) within the Dublin Crossing (now referred to, marketed, as “Boulevard”) master planned community. The subject property, as proposed and partially improved, represents a portion of a specific plan that has undergone extensive planning and review. Based on the difficulties in obtaining the subject’s existing approvals, it is doubtful any significant project changes would be allowed. Given prevailing land use patterns in the area, only single‐family residential development (both attached and detached) is given further consideration in determining highest and best use of the site, as though vacant.
Physically Possible
The physical and locational characteristics of the properties have been previously described in this report. In summary, the physical characteristics of the site, terrain and soils are suitable for the proposed uses.
Location considerations include the compatibility of the subject’s proposed use(s) and location with respect to surrounding uses. As indicated previously, the subject represents a portion of a specific plan, which has undergone extensive planning and review. The proposed development has been carefully designed to include an appropriate mix of land uses that are compatible with adjacent uses and uses throughout the planned community.
It should be noted at the time of inspection the appraiser did not observe the existence of hazardous material, which may or may not be present on the properties. The appraiser has no knowledge of the existence of such materials on the properties. However, the appraiser is not qualified to detect such substances. The presence of potentially hazardous materials could affect the value of the properties.
The value estimates herein are predicated on the assumption there is no material on or in the properties that would cause a loss of value. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in the field if desired.
498
Highest and Best Use 47
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Financially Feasible
Financial feasibility depends on supply and demand influences. With respect to financial feasibility of single‐family residential development, consideration to the current state of the residential housing market and its impact on the residential land market is necessary. As previously discussed in the Residential Market Analysis section, the significant rise in mortgage interest rates had an inverse relationship on the affordability of a home. Prior to the second half of 2022, interest rates remained historically low, often at or below 3.0%. Conversations with sales agents in multiple new home projects noted there was a slowing in demand for new residential homes in the second half of 2022, with some buyers priced out of entry‐level (lower‐priced) homes. Current mortgage interest rates more closely resemble historic rates and for the most part the home buyer pool appears to recognize that the 3% mortgage rate environment was the anomaly and rates around the 7% level are most likely into the foreseeable future.
Prior to mid‐2022, homebuilders were able to sell homes faster than they were able to construct the homes, but with moderating demand due to rising interest rates and inflation factors, construction delivery is no longer a project challenge. The downward shifts in home prices in the second half of 2022 had a significant impact on underlying land/lot values, and land brokers indicated an abrupt drop in builder demand for developable lots and challenges in selling lots presently available during that time period. Recent market conditions for new homes, constraints on new home inventory, appears to have reversed this trend and early indications are builders are once again looking to increase buildable lot inventories. Reports from active market participants indicate that while only a few bulk lot purchases have closed to builders lately, there is increased interest, and several pending sales are in the due diligence period for acquisition. Lot pricing remains lower than recent peaks achieved, but the return of builder interest in bulk lot acquisitions appears to be signaling a return to steady‐to‐ increasing demand for new homes across many submarkets.
Current market conditions once again appear to support development of partially improved and unimproved residential lots. With new, lower lot prices, land development to residential lots is again financially feasible (if the vacant land is acquired at prices commensurate with current new home pricing). This return to feasibility is driven by new home buyers (as of Spring 2023) beginning to adjust their budgets to the new interest rates and making purchases. Due to depleting existing lot inventories for many builders, additional land and lot acquisitions may be the maximally productive use of vacant land (discussed below).
Maximally Productive
Legal, physical, and market conditions have been analyzed to evaluate the highest and best use of the appraised properties as vacant. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the property. Based on the factors previously discussed, the maximally productive use of the appraised properties, and their highest and best use as vacant, is single‐family residential development. The probable buyer of vacant land in the residential space is a merchant builder. For the most part these likely buyers have existing inventories, which under current new home pricing and pace of sales may supply their needs into the foreseeable future. 499
Highest and Best Use 48
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 As Improved (Proposed)
Highest and best use of the property as improved pertains to the use that should be made in light of its current improvements.
In the case of land under development with some construction completed, consideration must be given to whether it makes sense to demolish existing improvements (either on‐site or off‐site improvements) for replacement with another use. The time and expense to demolish existing improvements, re‐grade, reroute utilities or re‐map, must be weighed against alternative uses. If the existing or proposed improvements are not performing well, then it may produce a higher return to demolish existing improvements, if any, and re‐grade the site for development of an alternative use.
Based on the current condition, the improvements completed contribute to the overall property value. The value of the subject as improved exceeds its value as vacant less demolition costs. The highest and best use of the subject as improved is for continuation of single‐family development. The probable buyer of the residential lots in an as‐improved condition would be a production homebuilder.
500
Valuation Methodology 49
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Valuation
Valuation Methodology
Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach.
The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties.
The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner‐user properties.
The income capitalization approach reflects the market’s perception of a relationship between a property’s potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income‐producing properties.
Additional analyses often undertaken in the valuation of subdivisions include extraction, land residual analysis, and the subdivision development method.
Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type.
The methodology employed in this assignment is summarized as follows:
Approaches to Value
A pproach A pplicabilit y to Subject Use in As s i gnment Cost Approa ch Not A pplicable N ot U t ilize d
Sales Comparison A pproach A pplicable U t ilize d
Income Capit alizat ion Approach Not A pplicable N ot U t ilize d 501
Market Valuation – Smallest Floor Plans 50
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Market Valuation – Smallest Floor Plans
A summary of the appraised properties’ unit counts by builder is provided in the table below.
Improvement Area (IA) 5 Summary by Ownership
Owne r Builde r N e ighborhood Proje ct Name Product Type No. of
Uni ts
Brookfie ld Bay Area Holdings, LLC Brookfi el d Homes 21 Ivy Detached 4‐Pack 31 22 Vine Attached Row Townhomes 0
31 Lenna r Homes of California, LLC Lennar Homes 23 Avalon Attached Carriage Row Townhomes 55 55 Dublin Crossing, LLC* Mas ter Developer 21 Ivy Detached 4‐Pack 28 22 Vine Attached Row Townhomes 92
23 Ava l on Atta ched Carriage Row Townhomes 35
155
Vari ous Homeowners Individual Homeowners 21 Ivy Detached 4‐Pack 3 23 Ava l on Atta ched Carriage Row Townhomes 0
3 * The subject lots will transfer from the Master Developer to each merchant builders, Brookfield Homes and Lennar Homes, with takedown closing dates scheduled between November 2023 and December 2025.
As of the date of value, three of the Ivy units have sold and transferred to individual homeowners. A summary of lot status is provided in the following table.
Improvement Area (IA) 5 Lot Status Summary
Project
Name Nei ghborhood Bui l der
Total No.
of Uni ts
Closed to
Homeowner
Sold/
In Contract
Remaining
to be Sold
Under
Cons tructi on*
Ivy 21 Brookfield Homes 62 3 20 39 26
Vine 22 Brookfield Homes 92 0 0 92 0
Ava l on 23 Lenna r Homes 90 0 9 81 70
244 3 29 212 96
*Building Permit issued, includes models
Therefore, for the purposes of assigning value to the completed and sold homes within the Lombard and Venice projects, a not‐less‐than estimate of value will be determined for the smallest homes/floor plan offered, which are summarized in the following table.
Smallest Floor Plan Summary
Project
Name Merchant Builder
Li vi ng
Area (SF) Bedroom Bathroom Stories Garage Product Type Typi cal Lot
Size (SF)
Developer's
Base Price
Ivy Brookfi el d 2,565 4 3.5 Two+ Two ‐Car Detached 4‐Pack 2,750 $1,499,990 Avalon Lennar 1,493 3 2.5 Three Two ‐Car Attached Carriage Row Townhomes 850 $951,880
The market values of the subject’s smallest floor plans are estimated in this section. The objective of the analyses is to estimate the base price per floor plan, net of incentives, upgrades and lot premiums. 502
Market Valuation – Smallest Floor Plans 51
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Incentives can take the form of direct price reductions or non‐price incentives such as upgrades or non‐recurring closing costs. The sales comparison approach to value is employed in order to establish the market values for each floor plan.
This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 15th Edition (Chicago: Appraisal Institute, 2020), “The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time.” The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market.
The proper application of this approach requires obtaining recent sales data for comparison with the appraised properties. In order to assemble the comparable sales, we searched public records and other data sources for leads, then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers).
The comparable sales are summarized in the following table.
Comparable Home Sale Summary
No. Address
Contract
Date Sale Price
Close of
Escrow
Li vi ng Area
(SF) Bedroom Bathroom Garage Year Built
Lot Size
(SF)
Ivy Comparable Sales
1L o t 19 9/1/2023 $1,539,990 Pending 2,663 5 4 Two ‐Car 2023 3,222 2L o t 17 8/31/2023 $1,524,990 Pending 2,565 4 3.5 Two ‐Car 2023 2,245 3L o t 13 8/14/2023 $1,499,990 Pending 2,565 4 3.5 Two ‐Car 2023 3,548 4L o t 67 7/21/2023 $1,613,880 8/30/2023 2,384 4 3.0 Two ‐Car 2023 3,222 Avalon Comparable Sales
5L o t 1705 8/28/2023 $1,254,880 Pending 2,456 4 3.5 Two ‐Car 2023 2,035 6L o t 1801 8/6/2023 $951,880 Pending 1,493 3 2.5 Two ‐Car 2023 850 7L o t 1805 7/31/2023 $1,229,880 Pending 2,456 4 3.5 Two ‐Car 2023 2,035 8L o t 1802 7/30/2023 $951,880 Pending 1,493 3 2.5 Two ‐Car 2023 850
503
Market Valuation – Smallest Floor Plans 52
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Discussion of Adjustments
In order to estimate the market values for the subject floor plans, the comparable transactions were adjusted to reflect the subject with regard to categories that affect market value. If a comparable has an attribute considered superior to that of the subject, it is adjusted downward to negate the effect the item has on the price of the comparable. The opposite is true of categories that are considered inferior to the subject and are adjusted upward. In order to isolate and quantify the adjustments on the comparable sales data, percentage or dollar adjustments are considered appropriate. At a minimum, the appraiser considers whether adjustments are necessary pertaining to these items:
Property rights conveyed
Financing terms
Conditions of sale (motivation)
Market conditions
Location
Physical features
A paired sales analysis is performed in a meaningful way when the quantity and quality of data are available. Even so, many of the adjustments require the appraiser’s experience and knowledge of the market and information obtained from those knowledgeable and active in the marketplace. A detailed analysis involving each of these factors and the value conclusion for each unit follows.
Special Taxes
In an effort to account for the impact of bond indebtedness on the sales price, we establish a present value amount for the bond encumbrance based on the annual special tax assessment (escalators are not taken into account), and the remaining term from the date of sale. A majority of the comparables are encumbered by bonds; thus, the present value of the bonds is considered in this analysis to determine its impact on each sale. The adjustment relates to the bond encumbrance of each sale relative to the subject property over a typical (seven year) holding period. As all the comparables are encumbered by the same special tax lien, no adjustments are necessary.
Upgrades and Incentives
The objective of the analysis is to estimate the base value per floor plan, net of incentives. Incentives can take the form of direct price reductions or non‐price incentives such as upgrades or non‐recurring closing costs. Incentives and upgrades included in the sales have been considered and adjusted for in this analysis.
Property Rights Conveyed
In transactions of real property, the rights being conveyed vary widely and have a significant impact on the sales price. As previously noted, the opinion of value in this report is based on a fee simple estate, 504
Market Valuation – Smallest Floor Plans 53
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat, as well as non‐detrimental easements, community facility districts and conditions, covenants and restrictions (CC&Rs). All of the comparables represent fee simple estate transactions. Therefore, adjustments for this factor are not necessary.
Financing Terms
In analyzing the comparables, it is necessary to adjust for financing terms that differ from market terms. If the seller provides incentives in the form of paying for closing costs or an interest rate buy down, a discount has been obtained by the buyer for financing terms. This discount price must then be adjusted to a cash equivalent basis. Also, any incentives applicable toward closing costs would have been reflected in the incentives adjustments previously considered. No adjustments were required for this factor.
Conditions of Sale
Adverse conditions of sale can account for a significant discrepancy from the sales price actually paid compared to that of the market. This discrepancy in price is generally attributed to the motivations of the buyer and the seller. Certain conditions of sale are considered to be non‐market and may include the following:
a seller acting under duress,
a lack of exposure to the open market,
an inter‐family or inter‐business transaction for the sake of family or business interest, an unusual tax consideration,
a premium paid for site assemblage,
a sale at legal auction, or
an eminent domain proceeding
The comparables did not involve any non‐market or atypical conditions of sale. Adjustments for this factor do not apply.
Market Conditions (Date of Sale, Phase Adjustment)
The market conditions vary over time, but the date of this appraisal is for a specific point in time. In a dynamic economy – one that is undergoing changes in the value of the dollar, interest rates and economic growth or decline – extra attention needs to be paid to assess changing market conditions.
Significant monthly changes in price levels can occur in several areas of a neighborhood, while prices in other areas remain relatively stable. Although the adjustment for market conditions is often referred to as a time adjustment, time is not the cause of the adjustment. 505
Market Valuation – Smallest Floor Plans 54
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 The comparable sales went into contract between July and September 2023; thus, based on current market conditions, an adjusted for market conditions is not considered necessary.
Location
Location is a very important factor to consider when making comparisons. The comparables need not be in the same neighborhood but should be in neighborhoods that offer the same advantage and have, in general, the same overall desirability to the most probable buyer or user. The comparables are located within the city of Dublin, more specifically within the subject’s Boulevard master planned community, and no adjustments are warranted for this category.
Community Appeal
In addition to market location adjustments, we consider community appeal adjustments. Even within a specific market location, often specific community characteristics influence sale prices. Often, prices on one street may be significantly higher or lower than the next, despite similar home characteristics.
Community characteristics that may influence sale prices include a gated amenity or the condition of surrounding development.
All of the comparables are within the subject’s Boulevard master planned community, no adjustment for community appeal is necessary.
Lot Size
The lot size adjustment pertains to the differences between the subject’s typical lot size and comparables with either larger or smaller lots. It does not include any lot premium adjustments, which are adjusted for separately. The amount of the adjustment used in the comparison of the base lot sizes comes from a survey of premiums paid for larger lots. Considering the average lot size adjustments factors indicated by the comparable sales utilized in this analysis, a lot size adjustment factor of $10.00/SF is considered reasonable for the subject’s residential detached lots, and $15.00/SF for the attached lots. This figure is supported by our observations of sales in the subject’s market area.
It is noted adjustments within the same subject community are not necessary when lot premiums are identified.
Lot Premiums
Properties sometimes achieve premiums for corner or cul‐de‐sac positioning, or proximity to open space or views. Adjustments for lot position premiums would be in addition to lot size adjustments previously considered. The comparable sales have similar lot configurations as the smallest base floor plan and no other adjustments are warranted.
Design and Appeal/Quality of Construction
Design and appeal of a floor plan is consumer specific. One exterior may appeal to one buyer, while another appeals to a different buyer. These types of features for new homes with similar functional utility are not typically noted in the base sales prices. The comparables are similar to the subject in regard to design and appeal.
506
Market Valuation – Smallest Floor Plans 55
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Construction quality can differ from slightly to substantially between projects and is noted in the exterior and interior materials and design features of a standard unit. In terms of quality of construction, the subject represents good construction quality. All of the comparable sales feature similar construction quality and do not require adjustments.
Age/Condition
All of the sales represent new construction with a similar effective age as the subject and do not require adjustments.
Functional Utility
The appraised properties and comparables represent traditional detached single‐family residential construction on similar lot size categories as the subject. Adjustments for this factor do not apply.
Room Count
For similar size units the differences between room count is a buyer preference. One buyer might prefer two bedrooms and a den versus a three‐bedroom unit. Extra rooms typically result in additional building area and are accounted for in the size adjustment. Therefore, no adjustments are made for number of total rooms or bedrooms. Because bathrooms are a functional item for each floor plan and add substantial cost due to the number of plumbing fixtures, an adjustment is made for the difference in the number of fixtures between the subject and the comparable sales. The adjustment is based on an amount of $5,000 per fixture (or half‐bath) and is supported by cost estimates for a good quality home in the Residential Cost Handbook, published by the Marshall and Swift Corporation. Considering the fact that plumbing upgrades for existing bathrooms generally range from $5,000 to over $25,000 for the various fixtures, the $7,500 per fixture, or half‐bath, is supported. Consequently, a factor of $15,000 per full bath is also applied in our analysis.
Unit Size/Living Area
Units similar (in the same development), except for size, were compared to derive the applicable adjustment for unit size. Those used for comparison purposes, are units within similar projects. Units within the same project were used since they have a high degree of similarity in quality, workmanship, design and appeal. Other items such as a single level or two‐story designs, number of bathrooms and number of garage spaces were generally similar in these comparisons, in order to avoid other influences in price per square foot. Where differences exist, they are minor and do not impact the overall range or average concluded.
The typical range indicated by the paired units in this analysis generally demonstrated a value range from approximately $75 to upwards of $150 per square foot. Considering the information cited above, a factor of $100 per square foot is concluded to be appropriate and reasonable for the difference in living area between the subject and the comparables, given the quality of the product.
Number of Stories
For similar size units, the differences between the number of stories is a buyer preference. One buyer might prefer a single‐story versus a two‐story unit. Typically, more stories result in additional building area and are accounted for in the size adjustment. Adjustments for this factor are not warranted. 507
Market Valuation – Smallest Floor Plans 56
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Parking/Garage
The subject’s floor plans and all of the comparables offer a standard two‐car garage. No adjustments are warranted.
Adjustment Grids
The following pages include grids reflecting the aforementioned adjustments.
Ivy
Project Information Subject Property
Project Name Boulevard Ivy Ivy Ivy Lomard
Plan Ivy Plan 2P l a n 1P l a n 1P l a n 1
Address/Lot Number Lot 19 Lot 17 Lot 13 Lot 67
City/Area Dublin Dublin Dublin Dublin Dublin
Price N/Ap $1,539,990 $1,524,990 $1,499,990 $1,613,880
Price Per SF N/Ap $578.29 $594.54 $584.79 $676.96
Special Ta xes (7‐year hold) $33,677 $33,677 $33,677 $33,677 $32,371 Adjustment $0 $0 $0 ‐$1,306
Adjusted Price (Including Bonds) $1,539,990 $1,524,990 $1,499,990 $1,612,574 Total Conside rat ion per SF $578.29 $594.54 $584.79 $676.42 Data Source Project sale s report Project sale s report Project sale s report Project sale s report Incenti ves N/Ap No $0 No $0 No $0 No $0
Upgrades Ba s e No $0 No $0 No $0 No $0
Effective Base Sales Price $1,539,990 $1,524,990 $1,499,990 $1,612,574 Adjustments: Factor Description +/( ‐)D e s c r i p t i o n + / ( ‐)D e s c r i p t i o n+ / ( ‐)D e s c r i p t i o n + / ( ‐) Property Rights Fee Sim ple Sim ilar Sim ilar Sim ilar Sim ilar Financing Terms Ca s h E quivale nt Sim ilar Sim ilar Sim ilar Sim ilar Conditions of Sale Market Market Market Market Market
Market Conditions
Contract Date MV 10/4/2023 9/1/2023 8/31/2023 8/14/2023 7/21/2023 Project Location Dublin Dublin Dublin Dublin Dublin
Communi ty A ppe al Good Sim ilar Sim ilar Sim ilar Sim ilar Lot Size $10.00 2,750 3,222 ($4,720) 2,245 $5,050 3,548 ($7,980) 3,222 ($4,720) Lot Pre m ium N /A p Sim ilar Sim ilar Sim ilar Sim ilar Design and A ppe al A ve rag e Sim ilar Sim ilar Sim ilar Sim ilar Quality of Const ruction Good Sim ilar Sim ilar Sim ilar Sim ilar Age (T ot al/Effe ct ive ) N e w Sim ilar Sim ilar Sim ilar Sim ilar Condition Good/N e w Sim ilar Sim ilar Sim ilar Sim ilar Functional U tility Good Sim ilar Sim ilar Sim ilar Sim ilar Room Count
Bedrooms 4 5 4 4 4
Baths $15,000 3.5 4.0 ($7,500) 3.5 $0 3.5 $0 3.0 $7,500 Li vi ng Area (SF) $100.00 2,565 2,663 ($9,800) 2,565 $0 2,565 $0 2,384 $18,100 Number of Stories Two+ Two+ Two+ Two+ Three
He at ing /Cooling Ce nt ral/Force d Sim ilar Sim ilar Sim ilar Sim ilar Garage Two ‐Car Two ‐Car Two ‐Car Two ‐Car Two ‐Car
L andscaping Front Sim ilar Sim ilar Sim ilar Sim ilar
Pool/Spa N one Sim ilar Sim ilar Sim ilar Sim ilar
Pat ios/De cks Pat io Sim ilar Sim ilar Sim ilar Sim ilar Fe ncing Re ar Sim ilar Sim ilar Sim ilar Sim ilar
Fi repl a ce(s ) None None None None None
Kitchen E quipm e nt G ood Sim ilar Sim ilar Sim ilar Sim ilar Other N one Sim ilar Sim ilar Sim ilar Sim ilar
Gross Adjustments $22,020 $5,050 $7,980 $30,320
Net Adjustments ($22,020) $5,050 ($7,980) $20,880
Adjusted Retail Value $1,517,970 $1,530,040 $1,492,010 $1,633,454 Concluded Retail Value $1,510,000
Indicated Value Per SF $588.69
Comparable 1C o m p a r a b l e 2C o m p a r a b l e 3 Comparable 4
508
Market Valuation – Smallest Floor Plans 57
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Avalon
Project Information Subject Property
Project N am e Boule vard A valon A valon A valon A valon Plan A valon Plan 3P l a n 1P l a n 3P l a n 1
Address/Lot Number Lot 1705 Lot 1801 Lot 1805 Lot 1802 City/Area Dublin Dublin Dublin Dublin Dublin
Price N/Ap $1,254,880 $951,880 $1,229,880 $951,880
Price Per SF N/Ap $510.94 $637.56 $500.77 $637.56
Special Taxes (7‐year hold) $22,599 $28,220 $22,599 $28,220 $22,599 Adjustment $5,622 $0 $5,622 $0
Adjusted Price (Including Bonds) $1,260,502 $951,880 $1,235,502 $951,880 Total Conside rat ion per SF $513.23 $637.56 $503.05 $637.56 Data Source Project sale s report Project sale s report Project sale s report Project sale s report Incenti ves N/Ap No $0 No $0 No $0 No $0
Upgrades Bas e No $0 No $0 No $0 No $0
Effective Base Sales Price $1,260,502 $951,880 $1,235,502 $951,880 Adjustments: Factor Description +/( ‐)D e s c r i p t i o n + / ( ‐)D e s c r i p t i o n + / ( ‐)D e s c r i p t i o n + / ( ‐) Property Rights Fee Sim ple Sim ilar Sim ilar Sim ilar Sim ilar Financing Terms Cas h E quivale nt Sim ilar Sim ilar Sim ilar Sim ilar Conditions of Sale Market Market Market Market Market
Market Condit ions
Contract Date MV 10/4/2023 8/28/2023 8/6/2023 7/31/2023 7/30/2023 Project L ocat ion Dublin Dublin Dublin Dublin Dublin
Community A ppe al Good Sim ilar Sim ilar Sim ilar Sim ilar Lot Size $15.00 850 2,035 ($17,775) 850 $0 2,035 ($17,775) 850 $0 Lot Pre m ium N /A p Sim ilar Sim ilar Sim ilar Sim ilar Design and A ppe al A ve rage Sim ilar Sim ilar Sim ilar Sim ilar Qualit y of Const ruct ion Good Sim ilar Sim ilar Sim ilar Sim ilar Age (T ot al/E ffe ct ive ) N e w Sim ilar Sim ilar Sim ilar Sim ilar Condit ion Good/N e w Sim ilar Sim ilar Sim ilar Sim ilar Functional
U t ilit y Good Sim ilar Sim ilar Sim ilar Sim ilar
Room Count
Bedrooms 3 4 3 4 3
Baths $15,000 2.5 3.5 ($15,000) 2.5 $0 3.5 ($15,000) 2.5 $0 Li vi ng Area (SF) $100.00 1,493 2,456 ($96,300) 1,493 $0 2,456 ($96,300) 1,493 $0 Number of Stories Three Three Three Three Three
He at ing/Cooling Ce nt ral/Force d Sim ilar Sim ilar Sim ilar Sim ilar Garage Two ‐Car Two ‐Car Two ‐Car Two ‐Car Two ‐Car
L andscaping Front Sim ilar Sim ilar Sim ilar Sim ilar
Pool/Spa N one Sim ilar Sim ilar Sim ilar Sim ilar
Pat ios/De cks Pat io Sim ilar Sim ilar Sim ilar Sim ilar Fe ncing Re ar Sim ilar Sim ilar Sim ilar Sim ilar
Fireplace(s) None None None None None
Kitchen E quipm e nt Good Sim ilar Sim ilar Sim ilar Sim ilar Other N one Sim ilar Sim ilar Sim ilar Sim ilar
Gross Adjustments $129,075 $0 $129,075 $0
Net Adjustments ($129,075) $0 ($129,075) $0
Adjusted Retail Value $1,131,427 $951,880 $1,106,427 $951,880 Concluded Retail Value $955,000
Indicated Value Per SF $639.65
Comparable 5 Comparable 6 Comparable 7 Comparable 8
509
Market Valuation – Smallest Floor Plans 58
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Conclusion of Home Values
Adjustments were necessary to account for differences between these homes and the smallest floor plan in the Ivy and Avalon projects. Adjustments were primarily warranted for lot size, bathroom, and living area. Based on the analysis herein, the market value conclusions for the smallest floor plans are as follows:
Floor Plan Value Conclusions
Floor Plan
Li vi ng
Area (SF) Bedroom Bathroom Stories Garage
Typi cal Lot
Size (SF)
Concluded Base
Retail Value
Ivy 2,565 4 3.5 Two+ Two ‐Car 2,750 $1,510,000
Avalon 1,493 3 2.5 Three Two ‐Car 850 $955,000
As previously described, as of the date of value, three of the Ivy units had sold and transferred to individual homeowners within the CFD No. 2015‐1 (IA No. 5) without and the estimate of not‐less‐than market value will be assigned to each of these units.
510
Residential Lot Valuation 59
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Residential Lot Valuation
Land Residual Analysis
The land residual analysis is used in estimating land value when subdivision and development are the highest and best use of the land being appraised. All direct and indirect costs are deducted from an estimate of the anticipated gross sales price of the improved product; the resultant net sales proceeds are then discounted to present value at an anticipated rate over the development and absorption period to indicate the value of the land. The land residual analysis is conducted on a quarterly basis. As a discounted cash flow analysis, the land residual analysis consists of four primary components summarized as follows:
Revenue – the gross income is based on the sale of completed homes.
Absorption Analysis – the time frame required for sell off. Of primary importance in this analysis is the allocation of the revenue over the absorption period – including the estimation of an appreciation factor (if any).
Expenses – the expenses associated with the sell‐off are calculated in this section – including infrastructure costs (if any), direct and indirect construction costs, administration, marketing and commission costs, as well as taxes and special taxes (if any).
Discount Rate – an appropriate discount rate is derived employing a variety of data.
Discussions of these four concepts follows below, with the discounted cash flow analysis offered at the end of this section.
Revenue
The projected sales price for the average unit within each project will vary, as the ultimate sales price is affected by unit size, location within the project, site influences, horizontal and vertical construction costs, anticipated premiums achievable at the point of retail sale, as well as external influences such as adjacent land uses. The preceding analysis estimated the market value (not‐less‐than) for the smallest floor plan; whereas, this analysis will consider a typical, or average, sale price for a home within an attached and detached product line.
Information in this analysis will be based on the conclusions provided via the market study, prepared by Robert Charles Lesser & Co. Real Estate Advisors, commissioned for this land‐secured financing. A typical home size of the proposed product lines for each neighborhood will be utilized. Based on analysis of prices and floor plans in the Residential Market Analysis section, as well as Market Pricing and Absorption Analysis, dated October 6, 2023, the respective homes sizes could achieve prices ranging from $1,180,000 to $1,510,000.
Considering the discussion in the Residential Market section of this report and current asking prices, we estimate representative homes and corresponding base prices on the subject’s neighborhoods as follows:
511
Residential Lot Valuation 60
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Land Residual Revenue Basis
Neighborhood/
Project Name
Typi cal Home
Size (SF) Base Price
Detached
Ivy 2,565 $1,510,000
Attached
Vine 2,398 $1,255,000
Avalon 2,254 $1,180,000
These estimates will be utilized in the following analyses.
Based on the layout of the lots and parcels indicated by the maps provided, and considering the subject lots are generally similar in size to one another, lot premium allocations are not warranted.
The subject does not feature any lots meriting a lot premium, and all lots are generally similar in size.
The subject does not feature any atypical premiums such as view or open space frontage.
As will be discussed in the expense section that follows, given the typical product line size at the Boulevard, it is anticipated a builder will construct two to four model homes per product line/neighborhood. Upgrade amenity costs are projected at $150,000 per detached model home and $125,000 per attached model home. Typically, builders capture approximately 50% of the cost through the sale of the model and the furniture. Although furnishings are a real cost of the model improvements, they are personal property, not real estate. Thus, furnishings are not included in the opinion of value for the model home premiums. Given this consideration, the recapture cost for model homes are typically reduced to 25% to 40% of model improvement costs. Considering the anticipated foot traffic for the subject property, a recapture amount of 35% is considered reasonable.
Using this percentage, a recapture of $52,500 per detached model (35% x $150,000) and $43,750 per attached model (35% x $125,000) are concluded, which will be considered in the estimate of aggregate retail value.
Closing Projections
For the attached product, the typical time required for the construction of units is estimated at approximately nine to 18 months from start to closing. For the detached product, construction of the homes is estimated at approximately two to nine months. It is assumed that closings will occur within nine months of the date of sale. These assumptions are reflected in the projected construction schedules shown in the land residual model’s project activity table in the section titled direct construction and phasing. Since the land residual analysis is conducted on a quarterly basis, closings are reflected in the second period following the sale.
Changes in Market Conditions (Price Increases or Decreases) The subject’s market area has experienced rapid market appreciation in home prices for the past few years; however, since early 2022 the Federal Reserve Bank began raising the benchmark federal‐funds rate (from near zero in March 2022) in an effort to manage rising inflation. The fed‐funds rate is greater than 5%, which has resulted in a substantial rise in mortgage interest rates, which now exceed 512
Residential Lot Valuation 61
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
7.00%. Market expectations are for additional rate increases. The rise in mortgage interest rates is anticipated to impact the affordability of homes for a certain segment of the homebuyer market, which may impact pricing in the near term. Consequently, under current market conditions, forecasting home appreciation during the absorption period is speculative, and several homebuilders surveyed indicate they typically do not trend/forecast home appreciation during the sell‐off period.
Therefore, for purposes of this analysis, the home price revenue will be held constant during the sell‐ off period.
Absorption
According to the Market Pricing and Absorption Analysis for the Dublin Crossing (Boulevard) Improvement Area No. 5 development, prepared by Robert Charles Lesser & Co., total annual absorption within the range of 110 and 142 units/lots is projected for the subject, equivalent to approximately 9.2 to 11.8 units/lots per month.
Considering our discussion in the Residential Market Analysis section, and for purposes of this analysis, it is estimated the subject attached projects can achieve an absorption rate of 4.0 sales per month (12.0 sales per quarter), with the detached product selling at a rate beginning at 3.5 sales per month (or roughly 11.0 sales per quarter). These conclusions suggest a total absorption of approximately 11 units/lots per month between the three neighborhoods in Improvement Area No. 5, which is generally consistent with that projected in the Market Pricing and Absorption Analysis prepared by Robert Charles Lesser & Co.
With sales beginning in Period 1, the subject’s lots sell out in six to eight periods, depending on neighborhood, and require one to two additional periods to complete construction and close escrow.
Expense Projections
As part of an ongoing effort to assemble market information, the table below reflects survey responses and developer budget information for numerous single‐family residential subdivisions throughout the Northern California region.
513
Residential Lot Valuation 62
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
Information from the survey above will contribute to the estimate of development expenses classified as follows.
General and Administrative
These expenses consist of management fees, liability and fire insurance, inspection fees, appraisal fees, legal and accounting fees and copying or publication costs. This expense category typically ranges from 2.5% to 4.0%, depending on length of project and if all of the categories are included in a builder’s budget. We have used 2.0% for general and administrative expenses.
Marketing and Sale
These expenses typically consist of advertising and promotion, closing costs, sales operations, and sales commissions. The expenses are expressed as a percentage of the gross sales revenue. The range of marketing and sales expenses typically found in projects within the subject’s market area is 5.0% to Attached Residential Budgets
Developer
Classification
Budget
Date
No. of
Unit Quality
Avg. Unit
Size (SF)
G & A % of
Revenue
Mkt & Sales %
of Revenue
Direct
Costs/SF
Indirect %
of Direct
Costs
Site
Costs/Unit
Permits &
Fees/Unit
Profit % of
Revenue IRR
Projected
Sales/Mo.
Local 2021 84 Average 1,500 N/Av N/Av $109.96 1% $56,681 $13,280 N/Av N/Av N/Av Regional 2021 101 Good 1,586 3.45% 1.20% $171.32 12% $107,339 $42,985 8.9% 12.5% 4.8 Local 2021 58 Good 1,540 1.00% 4.90% $294.96 13% N/Av $37,600 9.6% N/Av N/Av Local 2021 18 Good 1,841 N/Av N/Av $225.47 21% $33,860 $31,393 N/Av N/Av 1.5 Regional 2021 15 Good 1,678 4.80% 1.34% $223.00 17% $108,667 $40,000 10.9% N/Av 4.0 Regional 2020 102 Average 1,560 2.80% 6.00% $136.00 18% $105,207 $44,282 24.5% N/Av 3.0 Regional 2020 42 Average 1,699 4.00% 2.40% $81.73 13% $134,306 $15,477 12.5% 28.0% 3.8 Regional 2020 237 Average 1,818 2.49% 0.54% $135.00 6% $78,137 $27,818 12.5% 22.2% 5.3 Regional 2020 134 Good 1,707 N/Av N/Av $180.00 16% $187,280 $27,365 N/Av N/Av 4.0 Regional 2020 68 Good 2,007 N/Av N/Av $205.00 16% $187,280 $31,645 N/Av N/Av 4.0 Regional 2020 64 Good 2,111 N/Av N/Av $205.00 10% $80,058 $31,370 N/Av N/Av N/Av Regional 2020 60 Good 2,019 N/Av N/Av $188.00 10% $80,058 $30,150 N/Av N/Av N/Av Regional 2019 52 Average 1,621 1.80% 1.57% $150.63 8% $68,123 $60,000 N/Av N/Av N/Av Regional 2019 46 Average 1,525 4.88% 4.90% $99.86 18% $52,598 $34,939 N/Av N/Av N/Av Local 2019 21 Average/Good 1,593 N/Av N/Av $135.00 9% $47,033 $24,811 N/Av N/Av N/Av Local 2019 7 Average/Good 1,639 N/Av N/Av $130.00 9% $66,982 $24,235 N/Av N/Av N/Av Regional 2019 28 Good 2,400 N/Av N/Av $105.00 N/Av $75,472 $47,162 N/Av N/Av N/Av Regional 2019 22 Average 1,939 3.00% 6.00% $120.00 16% $80,099 $103,149 N/Av N/Av 4.0 Regional 2019 74 Average 1,519 N/Av 5.8% $143.56 8% $115,000 $37,270 N/Av N/Av 3.0 Local 2019 37 Good 2,037 N/Av N/Av $152.29 19% $88,387 $16,701 N/Av N/Av N/Av Minimum 7 Average 1,500 1.00% 0.54% $81.73 1% $33,860 $13,280 8.9% 12.5% 1.5 Maximum 237 Good 2,400 4.88% 6.00% $294.96 21% $187,280 $103,149 24.5% 28.0% 5.3 Average 64 Average/Good 1,767 3.14% 3.47% $159.59 13% $92,240 $36,082 13.2% 20.9% 3.7 Detached Subdivision Budgets
Developer
Classification
Budget
Date
No. of
Units Quality
Avg. Home
Size (SF)
Typical
Lot Size
G & A % of
Revenue
Mkt & Sales %
of Revenue
Direct
Costs/SF
Indirect %
of Direct
Costs
Site
Costs/Lot
Permits &
Fees/Unit
Profit % of
Revenue IRR
Projected
Sales/Mo.
National 2022 919 Good 1,877 4,782 3.0% 3.0% $143.0 0 N/Av N/Av $78,522 N/Av 25.0% 4 Local 2021 36 Good 2,533 3,450 5.5% 6.6% $112.26 4.9% N/Av $55,497 15.0% N/Av N/Av Local 2021 12 Good 1,909 3,450 N/Av 1.4% $189.48 16.7% $96,162 $36,27 0 20.0% N/Av 4. 0
Regional 2021 147 Average 2,20 0 3,825 N/Av N/Av $76.0 0 7.0% $43,972 $48,197 N/Av N/Av 6.6 Regional 2021 72 Good 2,551 3,800 N/Av 7.4% $88.0 0 N/Av $112,128 $63,61 0 9.5% N/Av N/Av Local 202 0 22 Good 1,692 2,200 N/Av N/Av $170.0 0 20% $101,441 $25,85 0 N/Av N/Av N/Av National 202 0 14 Average 2,165 3,500 N/Av 3.2% $95.00 12% N/Av $68,214 N/Av N/Av 4 Regional 202 0 20 Good 2,67 0 1,824 N/Av N/Av $160.00 18% $187,280 $40,872 N/Av N/Av 3 National 202 0 130 Average 1,988 3,580 N/Av N/Av N/Av N/Av $83,408 $57,00 0 N/Av N/Av N/Av National 202 0 100 Average 1,466 3,680 N/Av N/Av N/Av N/Av $41,319 $43,30 0 N/Av N/Av N/Av National 202 0 144 Average 1,800 2,000 N/Av N/Av $134.0 0 N/Av $25,569 $37,70 0 N/Av N/Av N/Av Minimum 12 Average 1,466 1,824 3.0% 1.4% $76.0 0 4.9% $25,569 $25,85 0 9.50% 25.0% 3 Maximum 919 Good 2,67 0 4,782 5.5% 7.4% $189.48 20.0% $187,280 $78,522 20.00% 25.0% 4 Average 147 Average/Good 2,077 3,281 4.3% 4.3% $129.75 13.0% $86,410 $50,457 14.84% 25.0% 3.75 514
Residential Lot Valuation 63
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
6.5%. A figure of 5.0%, or 2.0% for marketing and 3.0% for sales, is estimated in the marketing and sales expense category.
Property Taxes (Ad Valorem and Special Taxes)
The subject is located within an area with an effective tax rate of 1.2684%. This amount is applied to the estimated market values and divided by the total number of units to yield an estimate of ad valorem taxes/unit/year. The tax amounts are applied to unclosed inventory over the sell‐off period.
Property taxes are increased by 2% per year.
As referenced, the subject is within the boundaries of Improvement Area (IA) No. 5 of the City of Dublin Community Facilities District No. 2015‐1 (Dublin Crossing). According to the Rate and Method of Apportionment, the annual special taxes applicable to the subject’s facilities are as presented in the table below:
Special Tax Table (Fiscal Year 2023‐2024)
Land Us e Category Square Footage Category
Single ‐Fam ily Detached Property Less than 2,100 SF $4,891 per unit Single ‐Fam ily Detached Property 2,100 ‐ 2,300 SF $5,305 per unit Single ‐Fam ily Detached Property Greater than 2,300 SF $5,715 per unit Mult ifam ily Property Less than 1,600 SF $3,835 per unit Mult ifam ily Property 1,600 ‐ 1,800 SF $4,318 per unit Mult ifam ily Property Greater than 1,800 SF $4,789 per unit Undeveloped Property N/A $139,310 per acre
Taxabl e Non‐Residential Property N/A $139,310 per acre Taxabl e Homeowners As s oci ati on Property N/A $139,310 per acre Taxabl e Public Property N/A $139,310 per acre
Source: Goodwin Consulting Group, Inc.
A ssigne d Special Tax
The total tax expense is gradually reduced over the absorption period, as the land components are sold off.
HOA
The subject property is part of a homeowners association. The HOA fees for the three appraised projects are $158 per unit per month.
Permits and Fees
Permits and fees due at building permit by neighborhood are summarized in the following table. 515
Residential Lot Valuation 64
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Improvement Area (IA) 5 Permits and Fees by Neighborhood Ivy Vine A valon Total Fees
62 Lots 92 Lots 90 Lots 244 Lots
Land Permits & Fees ‐ Builder Detached Attached Atta ched Water Connecti on/Meter/Drai n/Was te Fee @ BP* 2,110,976$ 2,715,748$ 2,570,400$ 7,397,124$ Traffi c Impact @ BP 841,898 $ 987,006$ 946,998$ 2,775,902$ Frwy/Trans @ BP 16,012 $ 23,760$ 23,243$ 63,015$ Publin Arts in‐Li eu @ BP ‐$ ‐ $ ‐ $ ‐ $ Fire Impact @ BP 21,018 $ 19,044$ 18,630$ 58,692$ Other Land Fees @ BP 2,562 $ 2,822$ 2,639$ 8,022$ Building Permit @ BP 644,364 $ 751,985$ 811,860$ 2,208,209$ Zone 7 Water Fee @ BP 2,091,260 $ 3,103,160$ 3,035,700$ 8,230,120$ Public Facilities Fees @ BP 1,848,964 $ 1,740,732$ 1,573,830$ 5,163,526$ Total Fee Credits @ BP (1,378,942) $ (1,248,900)$ (1,285,740)$ (3,913,582)$ Total Land Permits & Fees ‐ Builder (w/o School Fees) 6,198,111$ 8,095,357$ 7,697,561$ 21,991,029$ Avera ge School Fees ‐ Es t ($9.10/SF) 1,650,849 $ 1,950,858$ 1,629,810$ 5,231,517$ Total Permits & Fees ‐ w/ School Fees 7,848,961 $ 10,046,215$ 9,327,371$ 27,222,546$ Permits & Fees (w/ School Fees) per lot $ 126,596 $ 109,198 $ 103,637 $ 111,568
Direct and Indirect Construction Costs
Construction costs are generally classified into direct and indirect costs. Direct costs reflect the cost of labor and materials to build the project. Direct costs generally are lower per square foot for larger floor plans, all else being equal, due to economies of scale. Indirect items are the carrying costs and fees incurred in developing the project and during the construction cycle. Construction quality and market‐segment are significant factors that affect direct construction costs. In addition, national/public builders, which are able to achieve lower costs due to the larger scale in which orders are placed, routinely achieve lower direct costs.
Anticipated construction costs applicable to the subject were not provided. Recent conversations with homebuilders confirm construction costs have increased over the last 12 months. Based on cost information provided by the homebuilders, considering the quality of the product line for each neighborhood analyzed, direct cost estimates of $155 per square foot is applied to the various concluded typical home sizes.
Regarding indirect costs, the following list itemizes some of the typical components that generally comprise indirect costs:
• Architectural and engineering fees for plans, plan checks, surveys and environmental studies • Appraisal, consulting, accounting and legal fees
• The cost of carrying the investment in land and contract payments during construction. If the property is financed, the points, fees or service charges and interest on construction loans are considered
• All‐risk insurance
516
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City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 • The cost of carrying the investment in the property after construction is complete, but before sell‐out is achieved
• Developer fee earned by the project coordinator
• Interest reserve
Conversations with homebuilders indicate the indirect costs generally range anywhere from 10% to 20% of the direct costs (excluding marketing, sales, general and administrative expenses, taxes, which are accounted for separately). An estimate of 18% is considered reasonable for the subject.
Model Complex
It is anticipated the merchant builders will construct three model homes for each product line. Model upgrade expenses can vary widely depending upon construction quality, targeted market and anticipated length of time on the market. These upgrades, exterior and interior, including furniture, can range from $20,000 per model to over $250,000 per model for executive homes.
Based on the quality of the subject’s proposed improvements and the targeted buyer segment, a model upgrade cost of $150,000 per detached model home and $125,000 per attached model home are considered reasonable for the subject’s lots. Of this amount approximately 35% will be recaptured with the sale of the models reflecting a model recapture of $52,500 per detached model (35% x $150,000) and $43,750 per attached model (35% x $125,000). Model costs will be applied over the initial two periods.
Summary
The following chart summarizes the revenue and expenses discussed on the preceding pages. 517
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City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Revenue & Expense Summary (Ivy, Neighborhood 21)
REVENUE SUMMARY
No. of Uni t Bas e Retail
Floor Plan Units Size (SF) $/SF Value Per U nit E xt e nsion Avera ge Unit 62 2,565 $589 $1,510,000 $93,620,000
Lot Premiums $0 $0
Model Recapture (@ 35% of cost) $105,000
62 2,565
(weighted avg.)
Total Revenue Before Appreciation: 93,725,000$
$1,511,694 /unit
Total Revenue After Appreciation: 93,725,000$
$1,511,694 /unit
EXPENSES SUMMARY
Total Over Sell ‐Off Period
General and Admi ni s trati ve 2.0% of tota l revenue 1,874,500 $ Marketing and Sales 5.0% of tota l revenue 4,686,250 $ Ad Va l orem Taxes $7,770 /unit/year 405,289 $ (from cash flow) Direct Charges $0 /unit/year ‐$ (from cash flow) Special T axe s/A sse ssm e nt s $5,715 /unit /ye ar 298,084 $ (from cash flow) Homeowner's A ssociat ion Fees $158 /unit/month 98,118 $ (from cash flow) Model Costs 2 models 300,000 $ $150,000 (per model ) Permits and Fees 7,848,961$ $126,596 (per unit) Subtotal: 15,511,201$
Direct Cons tructi on Costs (Before Appreci ati on) SF Uni ts Cost/SF Extens i on Average/Typi cal Floor Plan 2,565 62 $155.00 24,649,650 $ $397,575 /unit Indirect Construction Costs 18% of Direct Costs 4,436,937 $ $71,564 /unit Subtotal: 29,086,587$
Total Expenses Before Appreciation: 44,597,788$
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City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Revenue & Expense Summary (Vine, Neighborhood 22)
REVENUE SUMMARY
No. of Uni t Bas e Retail
Floor Plan U nit s Size (SF) $/SF Value Per Uni t Extens i on Avera ge Unit 92 2,398 $523 $1,255,000 $115,460,000
Lot Premiums $0 $0
Model Recapture (@ 35% of cost) $131,250
92 2,398
(weighted avg.)
Total Revenue Before Appreciation: 115,591,250$
$1,256,427 /unit
Total Revenue After Appreciation: 115,591,250$
$1,256,427 /unit
EXPENSES SUMMARY
Total Over Sell ‐Off Period
General and Administrative 2.0% of total revenue 2,311,825 $ Marketing and Sales 5.0% of total revenue 5,779,563 $ Ad Val orem Taxes $5,108 /unit/year 516,583 $ (from cash flow) Direct Charges $0 /unit/year ‐$ (from cash flow) Special T axe s/A sse ssm e nt s $4,789 /unit /ye ar 484,302 $ (from cash flow) Homeowner's A ssociat ion Fees $158 /unit/month 189,600 $ (from cash flow) Model Costs 3 models 375,000 $ $125,000 (per model ) Permits and Fees 10,046,215$ $109,198 (per unit) Subtotal: 19,703,088$
Direct Construction Costs (Before Appreci a ti on) SF Uni ts Cost/SF Extens i on Avera ge/Typi ca l Floor Plan 2,398 92 $155.00 34,195,480 $ $371,690 /unit Indirect Constructi on Costs 18% of Direct Costs 6,155,186 $ $66,904 /unit Subtotal: 40,350,666$
Total Expenses Before Appreciation: 60,053,754$
519
Residential Lot Valuation 68
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Revenue & Expense Summary (Avalon, Neighborhood 23)
REVENUE SUMMARY
No. of Uni t Bas e Retail
Floor Plan U nit s Size (SF) $/SF Value Per Uni t Extens i on Avera ge Unit 90 2,254 $524 $1,180,000 $106,200,000
Lot Premiums $0 $0
Model Recapture (@ 35% of cost) $131,250
90 2,254
(weighted avg.)
Total Revenue Before Appreciation: 106,331,250$
$1,181,458 /unit
Total Revenue After Appreciation: 106,331,250$
$1,181,458 /unit
EXPENSES SUMMARY
Total Over Sell ‐Off Period
General and Administrative 2.0% of total revenue 2,126,625 $ Marketing and Sales 5.0% of total revenue 5,316,563 $ Ad Val orem Taxes $4,810 /unit/year 466,838 $ (from cash flow) Direct Charges $0 /unit/year ‐$ (from cash flow) Special T axe s/A sse ssm e nt s $4,789 /unit /ye ar 464,808 $ (from cash flow) Homeowner's A ssociat ion Fees $158 /unit/month 182,016 $ (from cash flow) Model Costs 3 models 375,000 $ $125,000 (per model ) Permits and Fees 9,327,371$ $103,637 (per unit) Subtotal: 18,259,219$
Direct Construction Costs (Before Appreci a ti on) SF Uni ts Cost/SF Extens i on Avera ge/Typi ca l Floor Plan 2,254 90 $155.00 31,443,300 $ $349,370 /unit Indirect Constructi on Costs 18% of Direct Costs 5,659,794 $ $62,887 /unit Subtotal: 37,103,094$
Total Expenses Before Appreciation: 55,362,313$
Developer’s Incentive and Discount Rate
The project yield rate is the rate of return on the total un‐leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the “base” equity position when a portion of the development is financed. The “base” equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts.
According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey[1], discount rates for land development projects ranged from 12.00% to 30.00%, with an average of 19.2% during the Second Quarter 2023, which is 50 basis points higher than the average reported in the Fourth Quarter 2022, 100 basis points higher than a year ago, and assumes entitlements are in place. Without entitlements in place, certain investors will increase the discount
[1] PwC Real Estate Investor Survey, PricewaterhouseCoopers, 2nd Quarter 2023. 520
Residential Lot Valuation 69
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 rate an average of 125 basis points.
According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the participants reflect a preference in including the developer’s profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer’s profit projection.
The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large‐scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place.
Excerpts from recent PwC surveys are copied below.
“Development land
investors continue to search for opportunities, especially in the apartment and industrial sectors of the industry. They note, however, that holding costs are dramatically higher due to the rise in interest rates over the past year, which could change their strategies for the near term and keep their acquisitions to a minimum. ‘Deals are requiring further due diligence to meet projected returns,’ states an investor. Unfortunately, the current stress in the financial sector is adding additional challenges. ‘We are looking closely at our banking relationships,’ says another.
Growth rates for development expenses, such as amenities, real estate taxes, advertising, and administration, range from 0.00% to 10.00% and average 4.71%. For lot pricing, investors indicate a range from 2.00% to 5.00%; the average growth rate is 3.13%.” (Second Quarter 2023)
“Confronted with inflation, rising interest rates, economic uncertainty, and a slowdown in tenant demand, it is not surprising that most surveyed investors expect property values to decline over the next 12 months…When looking at macro development prospects for the five major commercial real estate sectors included in Emerging Trends, only the hotel sector shows an improvement in its rating from last year... Although the industrial/distribution and multi‐family sectors boast the highest ratings for 2023, they both slip this year among respondents… From a micro standpoint, the top‐five property types for development prospects in 2023 are datacenters, fulfillment, moderate‐income/workforce apartments, life‐science facilities, and single‐family rental housing.” Labor costs and availability as well as material costs are among the top three reported development issues for 2023. (Fourth Quarter 2022)
“Based on our Survey results, the industrial and multifamily sectors of the U.S. commercial real estate industry offer the best development land investment opportunities due to strong tenant demand. Investors also see opportunities in the single‐family residential sector…However, many are mindful that rising interest rates could dampen demand even though U.S. homebuilding unexpectedly rose in March 2022. Still, record low housing supply should continue to support homebuilding this year…Over the next 12 months, surveyed investors are mostly optimistic regarding value trends for the national development land market. Their expectations range from a decline of 5.0% to growth of 25.0% with an average expected value change of +7.0%. This average 521
Residential Lot Valuation 70
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 is better than where it is was both six months ago, as well as a year ago (+5.8% for both time periods).” (Second Quarter 2022)
“Compared to five years ago, both the apartment and industrial sectors show strong gains in their ratings, while the other three sectors [retail, office, hotel] see their ratings decline…From a micro standpoint, the top five property types for development prospects in 2022 are fulfillment, life science facilities, warehouse, single‐family rental housing, and moderate‐income/workforce apartments.” Among the top five development issues as reported among Emerging Trends Respondents are construction material costs, construction labor costs, construction labor availability, land costs and state & local regulations. (Fourth Quarter 2021)
“2020 revealed that where people work and where people live can be very far apart,” says a development land participant. This philosophy is a driving force behind a resurgence of new‐home construction in the United States. In the nonresidential sector, each segment reported year‐over‐ year declines in spending as of March 2021. Over the next 12 months, surveyed investors are most optimistic regarding value trends for the national development land market. Their expectations range from a decline of 5.0% to growth of 25.0% with an average expected value change of +5.8%.
This average is better than where it was six months ago (+4.9%), as well as a year ago (‐6.9%). (Second Quarter 2021)
For 2021, most Emerging Trends respondents (53.0%) believe that debt capital for development and redevelopment will be undersupplied. This percentage is more than twice the figure from last
year’s report and is likely due to the uncertainty tied to the pandemic. Interestingly, the percentage of respondents that feel debt capital for such projects will be “in balance” drops this year to 35.0% – down from 57.0% in 2020. (Fourth Quarter 2020)
Amid the COVID‐19 crisis, participants in the national development land market are looking to reduce leverage, lessen their holding costs, and preserve cash flow. “These are highly uncertain times, and we are moving in a direction no one thought we’d be headed a few months ago,” shares a participant. Although some investors are looking to acquire distressed properties, it is difficult to ascertain pricing amid such uncertainty. For now, most investors are content to wait on the sidelines for a clearer path to emerge before they formulate new strategies for the rest of 2020 and beyond. (Second Quarter 2020)
522
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City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
According to industry sources, project yield rates historically have ranged anywhere from 5% to 25%, with a predominate range of 5% to 25%. A yield rate is based on the perceived risk associated with the development.
Positive attributes of the subject property include steady demand in the market area and stabilizing home prices. There are some “negative” attributes associated with the subject such as rising interest rates, in addition to the potential for deterioration in market conditions in the residential sector that would result from a change in macroeconomic factors (i.e., continued high inflation, unemployment rates, interest rates, etc.). Based on the characteristics of the subject an internal rate of return (IRR) of 22% is used in our analyses.
Conclusion
The land residual analysis is presented as follows:
Project Yield Rate Survey
Data Source Yield / IRR Expectations (Inclusive of Profit) PwC Real Estate Investor Survey ‐
Second Quarter 2023 (updated semi‐annually)
Range of 12.0% to 30.0%, with an average of 19.20%, on an unleveraged basis, for land development (national average)
National Builder 20% to 25% for entitled lots
Regional Builder 18% to 25%. Longer term, higher risk projects on higher side of the range, shorter term, lower risk projects on the lower side of the range. Long term speculation properties (10 to 20 years out) often closer to 30%.
National Builder 18% minimum, 20% target
Developer Minimum IRR of 20‐25%; for an 8 to 10 year cash flow, mid to upper 20% range
Developer 25% IRR for land development is typical (no entitlements); slightly higher for properties with significant infrastructure costs
Land Management Company 20% to 30% IRR for land development deals on an unleveraged basis Land Developer 35% for large land deals from raw unentitled to tentative map stage, unleveraged or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, unleveraged
Land Developer 18% to 22% for land with some entitlements, unleveraged. 30% for raw unentitled land
Real Estate Consulting Firm Low 20% range yield rate required to attract capital to longer‐term land holdings
Land Developer Merchant builder yield requirements in the 20% range for traditionally financed tract developments. Larger land holdings would require 25% to 30%. Environmentally challenged or politically risky development could well run in excess of 35%.
Regional Builder 10% discount rate excluding profit for single ‐family subdivisions National Builder 10% to 40% for single ‐family residential subdivisions with 1‐2 year development timelines
Regional Builder 15% to 20% IRR
Regional Builder No less than 20% IRR for land development, either entitled or unentitled Land Developer 20% to 30% for an unentitled property; the lower end of the range would reflect those properties close to tentative maps
Regional Builder No less than 30% when typical entitlement risk exists 523
Residential Lot Valuation 72
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Land Residual Analysis (Ivy, Neighborhood 21)
Q u a r t e r :01234567 T o t a l
ABSORPTION
S a l e s 1 11 11 11 11 1 7 0 6 2
Close of Es crow (COE) 0 11 11 11 11 11 7 62
Uns ol d Inventory 62 5 1 4 0 2 9 1 8700
Sales Revenue (Before Appreci a ti on) $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 10,581,855 $ ‐ Annual Appreciation Factor 0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Sales Revenue (After Appreciation) $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 10,581,855 $ ‐ $ 93,725,000 Total Sales Revenue (at Close of Escrow) $ ‐ $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 16,628,629 $ 10,581,855 $ 93,725,000 EXPENSES AND CASH FLOWS
General and Administrative 2.0% $ (267,786) $ (267,786) $ (267,786) $ (267,786) $ (267,786) $ (267,786) $ (267,786) $ (1,874,500) Marketing and Sales 5.0% $ ‐ $ (831,431) $ (831,431) $ (831,431) $ (831,431) $ (831,431) $ (529,093) $ (4,686,250) Ad Val orem Taxes ($/unit/yr) $7,770 $ (120,441) $ (99,568) $ (78,483) $ (57,185) $ (35,671) $ (13,942) $ ‐ $ (405,289) Direct Charges ($/unit/yr) $0 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Special T axe s/A sse ssm e nt s ($/unit/yr) $5,715 $ (88,583) $ (73,231) $ (57,723) $ (42,058) $ (26,236) $ (10,254) $ ‐ $ (298,084) Homeowner's A ssociat ion Fees ($/unit/mo) $158 $ (29,388) $ (24,174) $ (18,960) $ (13,746) $ (8,532) $ (3,318) $ ‐ $ (98,118) Model Costs $ (150,000) $ (150,000) $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ (300,000) Permits and Fees $ (1,392,558) $ (1,392,558) $ (1,392,558) $ (1,392,558) $ (1,392,558) $ (886,173) $ ‐ $ (7,848,961) Subtotal: $ (2,048,755) $ (2,838,747) $ (2,646,940) $ (2,604,764) $ (2,562,214) $ (2,012,903) $ (796,878) $(15,511,201) Direct Construction Costs $ (2,186,663) $ (4,373,325) $ (4,373,325) $ (4,373,325) $ (4,373,325) $ (3,578,175) $ (1,391,513) Annual Appreciation Factor 0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Direct Construction Costs (Appreciated) $ (2,186,663) $ (4,373,325) $ (4,373,325) $ (4,373,325) $ (4,373,325) $ (3,578,175) $ (1,391,513) $(24,649,650) Indirect Construction Costs 18% $ (393,599) $ (787,199) $ (787,199) $ (787,199) $ (787,199) $ (644,072) $ (250,472) $ (4,436,937) Subtotal: $ (2,580,262) $ (5,160,524) $ (5,160,524) $ (5,160,524) $ (5,160,524) $ (4,222,247) $ (1,641,985) $(29,086,587) Total Expenses $ (4,629,016) $ (7,999,271) $ (7,807,464) $ (7,765,287) $ (7,722,737) $ (6,235,150) $ (2,438,863) $(44,597,788) NET INCOME BEFORE DEVELOPER'S INCENTIVE $ (4,629,016) $ 8,629,359 $ 8,821,165 $ 8,863,342 $ 8,905,892 $ 10,393,479 $ 8,142,992 $ 49,127,212 Present Value Factors
Internal Rate of Return (IRR) 22.00% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 Discounted Cash Flow $ (4,387,693) $ 7,753,068 $ 7,512,225 $ 7,154,638 $ 6,814,204 $ 7,537,827 $ 5,597,792 $ 37,982,061 Net Present Value (Rounded) $ 37,982,000
per unit: $612,613
Land Residual Analysis (Vine, Neighborhood 22)
Q u a r t e r :0123456789 1 0 T o t a l
ABSORPTION
S a l e s 1 21 21 21 21 21 21 2 8 0 0 9 2
Close of Es crow ( C O E ) 0 01 21 21 21 21 21 21 2 8 9 2 Uns ol d Inve nt ory 92 80 68 56 44 32 20 8 0 0 0
Sales Revenue (Before Appreci a ti on) $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 10,051,413 $ ‐ $ ‐ Annual Appreci a ti on Factor 0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Sales Revenue (After Appreciation) $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 10,051,413 $ ‐ $ ‐ $ 115,591,250 Total Sales Revenue (at Close of Escrow) $ ‐ $ ‐ $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 15,077,120 $ 10,051,413 $ 115,591,250 EXPENSES AND CASH FLOWS
General and Administrative 2.0% $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (231,183) $ (2,311,825) Marketing and Sales 5.0% $ ‐ $ ‐ $ (753,856) $ (753,856) $ (753,856) $ (753,856) $ (753,856) $ (753,856) $ (753,856) $ (502,571) $ (5,779,563) Ad Val orem Taxes ($/unit/yr) $5,108 $ (117,489) $ (102,675) $ (87,710) $ (72,593) $ (57,323) $ (41,898) $ (26,317) $ (10,579) $ ‐ $ ‐ $ (516,583) Direct Charges ($/unit/yr) $0 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Special Taxes/Assessments ($/unit/yr) $4,789 $ (110,147) $ (96,259) $ (82,229) $ (68,057) $ (53,741) $ (39,279) $ (24,672) $ (9,918) $ ‐ $ ‐ $ (484,302) Homeowner's A ssociation Fees ($/unit/mo) $158 $ (43,608) $ (37,920) $ (32,232) $ (26,544) $ (20,856) $ (15,168) $ (9,480) $ (3,792) $ ‐ $ ‐ $ (189,600) Model Costs $ (187,500) $ (187,500) $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ (375,000) Permits and Fees $ (1,310,376) $ (1,310,376) $ (1,310,376) $ (1,310,376) $ (1,310,376) $ (1,310,376) $ (1,310,376) $ (873,584) $ ‐ $ ‐ $ (10,046,215) Subtotal: $ (2,000,302) $ (1,965,912) $ (2,497,586) $ (2,462,608) $ (2,427,333) $ (2,391,759) $ (2,355,884) $ (1,882,912) $ (985,038) $ (733,753) $ (19,703,088) Direct Construction Costs $ (2,230,140) $ (2,230,140) $ (4,460,280) $ (4,460,280) $ (4,460,280) $ (4,460,280) $ (4,460,280) $ (3,716,900) $ (2,230,140) $ (1,486,760) Annua l Appreciation Factor 0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Direct Construction Costs (Appreciated) $ (2,230,140) $ (2,230,140) $ (4,460,280) $ (4,460,280) $ (4,460,280) $ (4,460,280) $ (4,460,280) $ (3,716,900) $ (2,230,140) $ (1,486,760) $ (34,195,480) Indirect Construction Costs 18% $ (401,425) $ (401,425) $ (802,850) $ (802,850) $ (802,850) $ (802,850) $ (802,850) $ (669,042) $ (401,425) $ (267,617) $ (6,155,186) Subtotal: $ (2,631,565) $ (2,631,565) $ (5,263,130) $ (5,263,130) $ (5,263,130) $ (5,263,130) $ (5,263,130) $ (4,385,942) $ (2,631,565) $ (1,754,377) $ (40,350,666) Total Expenses $ (4,631,867) $ (4,597,477) $ (7,760,716) $ (7,725,738) $ (7,690,464) $ (7,654,890) $ (7,619,014) $ (6,268,854) $ (3,616,604) $ (2,488,130) $ (60,053,754) NET INCOME BEFORE DEVELOPER'S INCENTIVE $ (4,631,867) $ (4,597,477) $ 7,316,404 $ 7,351,381 $ 7,386,656 $ 7,422,230 $ 7,458,106 $ 8,808,265 $ 11,460,516 $ 7,563,283 $ 55,537,496 Present Value Factors
Internal Rate of Return (IRR) 22.00% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 0.61763 0.58543 Discounted Cash Flow $ (4,390,396) $ (4,130,615) $ 6,230,749 $ 5,934,158 $ 5,651,784 $ 5,382,941 $ 5,126,976 $ 5,739,456 $ 7,078,350 $ 4,427,777 $ 37,051,182 Net Present Value (Rounded) $ 37,051,000
per unit: $402,728
524
Residential Lot Valuation 73
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Land Residual Analysis (Avalon, Neighborhood 23)
Q u a r t e r :0123456789 1 0 T o t a l
ABSORPTION
S a l e s 1 21 21 21 21 21 21 2 6 0 0 9 0
Close of Es crow ( C O E ) 0 01 21 21 21 21 21 21 2 6 9 0 Uns ol d Inve nt ory 90 78 66 54 42 30 18 6 0 0 0
Sales Revenue (Before Appreci a ti on) $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 7,088,750 $ ‐ $ ‐ Annual Appreci a ti on Factor 0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Sales Revenue (After Appreciation) $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 7,088,750 $ ‐ $ ‐ $ 106,331,250 Total Sales Revenue (at Close of Escrow) $ ‐ $ ‐ $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 14,177,500 $ 7,088,750 $ 106,331,250 EXPENSES AND CASH FLOWS
General and Administrative 2.0% $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (212,663) $ (2,126,625) Marketing and Sales 5.0% $ ‐ $ ‐ $ (708,875) $ (708,875) $ (708,875) $ (708,875) $ (708,875) $ (708,875) $ (708,875) $ (354,438) $ (5,316,563) Ad Val orem Taxes ($/unit/yr) $4,810 $ (108,223) $ (94,262) $ (80,159) $ (65,913) $ (51,522) $ (36,985) $ (22,302) $ (7,471) $ ‐ $ ‐ $ (466,838) Direct Charges ($/unit/yr) $0 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Special Taxes/Assessments ($/unit/yr) $4,789 $ (107,753) $ (93,852) $ (79,811) $ (65,626) $ (51,298) $ (36,824) $ (22,205) $ (7,439) $ ‐ $ ‐ $ (464,808) Homeowner's A ssociation Fees ($/unit/mo) $158 $ (42,660) $ (36,972) $ (31,284) $ (25,596) $ (19,908) $ (14,220) $ (8,532) $ (2,844) $ ‐ $ ‐ $ (182,016) Model Costs $ (187,500) $ (187,500) $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ (375,000) Permits and Fees $ (1,243,649) $ (1,243,649) $ (1,243,649) $ (1,243,649) $ (1,243,649) $ (1,243,649) $ (1,243,649) $ (621,825) $ ‐ $ ‐ $ (9,327,371) Subtotal: $ (1,902,447) $ (1,868,899) $ (2,356,441) $ (2,322,322) $ (2,287,914) $ (2,253,217) $ (2,218,226) $ (1,561,116) $ (921,538) $ (567,100) $ (18,259,219) Direct Construction Costs $ (2,096,220) $ (2,096,220) $ (4,192,440) $ (4,192,440) $ (4,192,440) $ (4,192,440) $ (4,192,440) $ (3,144,330) $ (2,096,220) $ (1,048,110) Annua l Appreciation Factor 0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Direct Construction Costs (Appreciated) $ (2,096,220) $ (2,096,220) $ (4,192,440) $ (4,192,440) $ (4,192,440) $ (4,192,440) $ (4,192,440) $ (3,144,330) $ (2,096,220) $ (1,048,110) $ (31,443,300) Indirect Construction Costs 18% $ (377,320) $ (377,320) $ (754,639) $ (754,639) $ (754,639) $ (754,639) $ (754,639) $ (565,979) $ (377,320) $ (188,660) $ (5,659,794) Subtotal: $ (2,473,540) $ (2,473,540) $ (4,947,079) $ (4,947,079) $ (4,947,079) $ (4,947,079) $ (4,947,079) $ (3,710,309) $ (2,473,540) $ (1,236,770) $ (37,103,094) Total Expenses $ (4,375,987) $ (4,342,438) $ (7,303,520) $ (7,269,401) $ (7,234,994) $ (7,200,296) $ (7,165,305) $ (5,271,426) $ (3,395,077) $ (1,803,870) $ (55,362,313) NET INCOME BEFORE DEVELOPER'S INCENTIVE $ (4,375,987) $ (4,342,438) $ 6,873,980 $ 6,908,099 $ 6,942,506 $ 6,977,204 $ 7,012,195 $ 8,906,074 $ 10,782,423 $ 5,284,880 $ 50,968,937 Present Value Factors
Internal Rate of Return (IRR) 22.00% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 0.61763 0.58543 Discounted Cash Flow $ (4,147,855) $ (3,901,474) $ 5,853,975 $ 5,576,333 $ 5,311,950 $ 5,060,188 $ 4,820,441 $ 5,803,188 $ 6,659,540 $ 3,093,930 $ 34,130,217 Net Present Value (Rounded) $ 34,129,000
per unit: $379,211
525
Residential Lot Valuation 74
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Sales Comparison Approach
In this section of the report, we will utilize the sales comparison approach to estimate the market value of the subject lots. This value estimate assumes the subject property would sell on a bulk, or wholesale, basis. That is, it would transfer in one transaction to a single buyer. This approach develops an indication of value by researching, verifying, and analyzing sales of similar properties. Our sales research focused on transactions within the following parameters:
Location: East Bay communities
Number of Units/Lots: 50 to 250 units/lots
Transaction Date: within the last 24 to 36 months
Our initial search for bulk lot sales focused on Alameda County. However, given the lack of data, we were required to expand our search to include other similar submarkets in the larger Bay Area region, including Santa Clara and Solano Counties.
The sale are analyzed on a loaded lot basis. Loaded lot is the equivalent of underlying land, any remaining site development costs and all fees paid through the building permit for home construction.
The most relevant sales are summarized in the following table:
526
Residential Lot Valuation 75
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Summary of Comparable Land Sales
No. Name/Address
Sale
Date;
Status
Sale Price;
PV of Spec.
Tax/Lot
Typical Lot
Size (SF) Number of Lots $/Lot
Site Dev. Costs/L ot ;
Permits & Fees/Lot
1V e n i c e (91 Lots ) Jun ‐23 $36,329,941 4,828 91 $399,230 $119,169 Dublin Blvd. Closed $7,772 $95,031
Dublin
Grantor: Dublin Crossing, LLC
Gra ntee: Lennar
2L o m b a r d (84 Lots ) Jun ‐23 $47,039,570 6,000 84 $559,995 $111,685 Dublin Blvd. Closed $9,549 $108,815
Dublin
Grantor: Dublin Crossing, LLC
Gra ntee: Lennar
3M e l r o s e (75 Lots ) Ma r ‐23 $39,818,126 75 $530,908 $94,112 Dublin Blvd. Closed $9,549 $100,228
Dublin
Grantor: Dublin Crossing, LLC
Gra ntee: Brookfield
4I r i s at The Vi l l ages Jul ‐22 $26,560,000 5,000 100 $265,600 $0 Balance Cir. Closed $1,743 $55,000
Fairfield
Grantor: Lewi s Operating Corp
Gra ntee: Hearthstone, In
5O n e Lake (Neighborhood 6A) May ‐22 $7,338,600 4,775 60 $122,310 $0 Shore Vi s . In‐Contract $1,910 $51,000
Fairfield
Grantor: One Lake Holdings LLC
Gra ntee: Brookfield Residential
Comments: This property consists of 91partially improved lots (blue top), that transferred in five takedowns between October 2021 and June 2023. This product
is attached duet lots, with in a portion of Improvement Area No. 4 of the Dublin Crossing Specific Plan area. Special taxes are $4,150 per lot per year, permits and fees are reportedly $95,031/lot. This project has a typical lot of about 1,600 SF.
Comments: This property consists of 84 partially improved lots (blue top), that transferred in seven takedowns between October 2021 and June 2023. This product is detached motor court lots, with in a portion of Improvement Area No. 4 of the Dublin Crossing Specific Plan area. Special taxes are $5,099 per lot per year, permits and fees are reportedly $108,815/lot. This project has a typical lot of about 2,640 SF.
Comments: This property consists of 75partially improved lots (blue top), that transferred in three takedowns between July 2021 and March 2023. This product is detached 4‐pack lots, with in a portion of Improvement Area No. 4 of the Dublin Crossing Specific Plan area. Special taxes are $5,099 per lot per year, permits and fees are reportedly $100,228/lot.
Comments: Buyer is acting as a land bank for D.R. Horton, which is developing Iris at the Villages. Home plans range from 1,353 to 2,311 square feet with proposed pricing from $628,000 to $710,000. The typical lot size is approximately 4,790 square feet. Based on other projects in the area, permits and fees are estimated at $55,000 per lot. Special taxes are approximately $931 per lot.
Comments: This is a pending sale of 60 stack flats/duet lots sold as finished (fully improved lots). The typical lot size is 2,300 SF. Permits and fees are $51,000; special taxes are approximately $1,020 per lot per year.
527
Residential Lot Valuation 76
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Summary of Comparable Land Sales
No. Name/Address
Sale
Date;
Status
Sale Price;
PV of Spec.
Tax/Lot
Typical Lot
Size (SF) Number of Lots $/Lot
Site Dev. Costs/L ot ;
Permits & Fees/Lot
6C i t y of Al a meda CFD No. 2013 ‐01 (Alameda Landing) Apr ‐22 $22,065,000 5,775 106 $208,160 $104,811 Mosley Ave. In‐Contract $4,397 $15,015
Al a meda
Grantor: The Successor Agency to the former Community Improvement Com m ission of the City of Al ameda Gra ntee: Pulte Home Company, LLC
7M o r g a n Hill 7J u n ‐21 $25,100,000 102 $246,078 $107,339 Monterey Rd. Closed $0 $42,985
Morgan Hill
Grantor: Quail Capital Inve stm e nt s, LLC
Gra ntee: TH Monterey Gateway, LLC
8C i t y of Al a meda CFD No. 2013 ‐01 (Alameda Landing) Jun ‐21 $24,075,000 3,096 95 $253,421 $109,895 Mosley Ave. Closed $4,397 $15,590
Al a meda
Tax ID: 74‐1380 ‐ Lots 1 ‐ 18, 74‐1379 ‐ Lots 1 ‐ 18, 74‐1373 ‐10 and 74‐1373 ‐13 Grantor: The Successor Agency to the former Community Improvement Com m ission of the City of Al ameda Gra ntee: Pulte Home Company, LLC
Comments: Trumark acquired the entitled land for $25,100,000 in June 2021. In addition, Trumark paid the seller $2,300,000 for fees paid and site improvements completed prior to the close of escrow. The property has an approved final map for 101 townhomes (for‐sale) and 1 commercial unit. The commercial unit may be demised into up to three suites. The project will include 15 BMR units and 4 live/work units which will offer ground floor in‐home office space. Site development costs are estimated at $107,339 per unit; permits and fees are estimated at $42,985 per unit. There are no special taxes.
Comments: This transaction reflects Phase 2 of Alameda Landing, which includes 95 lots. Permits and fees are estimated at $15,590 per unit. The master developer is responsible for the grading of the parcels, with the homebuilder responsible for infrastructure and in‐tracts. Remaining site development costs at the time of sale are estimated at $109,895 per lot. The proposed homes will include 78 attached homes (mix of townhomes and flats) and 17 detached homes on small lots. Seven of the homes will be below market rate. The average home size for Phase 2 is 1,404 square feet.
This is the second of three takedowns to Pulte; all three takedowns were negotiated together and included in one purchase agreement. The first takedown closed in August 2020 and the third takedown is scheduled for April 2022.
Comments: This transaction reflects Phase 3 of Alameda Landing, which includes 106 lots. Permits and fees are estimated at $15,590 per unit. The master developer is responsible for the grading of the parcels, with the homebuilder responsible for infrastructure and in‐tracts. Remaining site development costs are estimated at $104,811 per lot. The proposed homes will include a mix of condominiums and townhomes. Eight of the homes will be below market rate. The average home size for Phase 3 is 1,406 square feet.
This is the last of three takedowns to Pulte; all three takedowns were negotiated together in 2020 and included in one purchase agreement. The first and second takedowns closed in August 2020 and June 2021, respectively. 528
Residential Lot Valuation 77
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Comparable Land Sales Map
529
Residential Lot Valuation 78
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 For certain adjustments such as site development cost, permits and fees and Special Taxes, adjustments are made using actual or estimated (present value) dollar amounts. Other adjustments may be categories as either superior or inferior, with qualitative adjustments applied accordingly. If a comparable has an attribute considered superior to that of the subject, it is adjusted downward to negate the effect the item has on the price of the comparable. The opposite is true of categories considered inferior to the subject. The adjustments are made in consideration of paired sales, the appraiser’s experience and knowledge and interviews with market participants.
Loaded Lot Analysis
Prior to the application of adjustments, the following items are added to the per lot sale price.
Loaded Lot Analysis
Remaining Site Dev. Cost We apply adjustments for remaining site development costs (if any).
Permits and Fees Permits and fees due upon building permit are included on a dollar‐for‐ dollar basis.
Bond Encumbrance PV All of the comparables transferred with the assumption of bonds; consequently, in order to reflect an estimate of the total consideration of each sale, the present value of the special taxes or the assessment lien are considered. Bond encumbrances are estimated utilizing a 4.5% interest (yield) rate for a two‐year anticipated hold.
Loaded Lot Adjustments
Comparable 1 Comparable 2 Comparable 3 Comparable 4 Comparable 5 Comparable 6 Comparable 7 Comparable 8 Lot Price $399,230 $559,995 $530,908 $265,600 $122,310 $208,160 $246,078 $253,421 Re m aining Site Development Costs $119,169 $111,685 $94,112 $0 $0 $104,811 $107,339 $109,895 Permits & Fees $95,031 $108,815 $100,228 $55,000 $51,000 $15,015 $42,985 $15,590 Loa ded Lot Price Before Bonds $613,430 $780,495 $725,248 $320,600 $173,310 $327,986 $396,402 $378,906 Special T axe s/A sse ssm e nt Lien $4,150 $5,099 $5,099 $931 $1,020 $2,348 $0 $2,348 Holding P e r i o d 22222202
Pres ent Value $7,772 $9,549 $9,549 $1,743 $1,910 $4,397 $0 $4,397 Loa ded Lot Price After Bonds $621,202 $790,044 $734,797 $322,343 $175,220 $332,383 $396,402 $383,303 Loa ded Lot Adj us tment $221,972 $230,049 $203,889 $56,743 $52,910 $124,223 $150,324 $129,882
Adjustment Factors
The sales are compared to the subject and adjusted to account for material differences that affect value. The adjustment process is typically applied through either quantitative or qualitative analysis, or a combination of the two. Quantitative adjustments are often developed as dollar or percentage amounts and are most credible when there is sufficient data to perform a paired sales analysis.
This analysis relies on qualitative adjustments, with adjustments being characterized as being slightly superior/inferior, superior/inferior, or significantly superior/inferior, where approximate percent adjustments would be assigned as follows:
530
Residential Lot Valuation 79
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
While we present percentage adjustments in the above table for comparison purposes, they are based on qualitative judgment rather than empirical research as there is not sufficient data to develop a sound quantitative estimate.
As a result of the limited data present in the market, many of the adjustments require the appraiser’s experience and knowledge of the market and information obtained from those knowledgeable and active in the marketplace. Additionally, many of the adjustments are subjective and reflect the premiums and discounts a typical buyer would most likely assign for differing attributes between the comparables and the subject property.
Our rating
of each comparable sale in relation to the subject is the basis for the adjustments. If the comparable is superior to the subject, its sale price is adjusted downward to reflect the subject’s relative attributes; if the comparable is inferior, its price is adjusted upward.
Adjustment Factor Accounts For Comments
Real Property Rights Fee simple, leased fee, leasehold, partial interest, etc.
All the comparables represent fee
simple estate transactions.
Therefore, adjustments for property
rights are not necessary.
Financing Terms Seller financing, or assumption of
existing financing, at non‐market
terms.
The comparable sales were cash to
the seller transactions and do not
require adjustments.
Conditions of Sale Extraordinary motivation of buyer
or seller, assemblage, forced sale.
No adjustments are warranted for
this element of comparison.
Market Conditions Changes in the economic
environment over time that affect
the appreciation and depreciation
of real estate.
Home values increased significantly
in 2021; though, some price
appreciation was offset by rising
construction costs (materials) and
labor shortages during the
pandemic. The construction costs
have since moderated; although,
rising interest rates have impacted
Qualitative Adjustment Summary
Adjustment Identification
Sig. Inferior +++ 11% to 20+%
Inferior ++ 6% to 10%
Sl. Inferior + 1% to 5%
Similar 0%
Sl. Superior ‐‐ 1% to ‐5%
Superior ‐‐ ‐ 6% to ‐10%
Sig. Superior ‐‐‐ ‐ 11% to ‐20+%
General Percent of
Adjustment Ranges
531
Residential Lot Valuation 80
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Adjustment Factor Accounts For Comments
pricing and absorption in the last six
months. Since all the comparables
transferred between June 2021 and
June 2023, we apply a slight market
conditions adjustments those
comparables that transferred in
mid‐2021.
Location/Community
Appeal
Market or submarket area
influences on sale price;
surrounding land use influences.
Comparables 4, 5 and 7 warrant
upward adjustments for their
inferior locations. No other
adjustments for
location/community appeal are
warranted.
Number of Lots Generally, there is an inverse
relationship between the number of
lots and price per lot such that
larger projects (with a greater
number of lots) achieve a lower
price per lot.
Typically, variances in per lot prices,
all else being equal, are not
observed in transactions between
50 and 200 lots. Most of the
comparables represent fairly similar
sized transactions and do not
require adjustment.
Topography/Site
Utility
Primary physical factors that affect
desirability of lots.
The subject property is considered
to have average utility. Each of the
comparables are considered to offer
similar site utility as the subject.
Lot Premiums/
Discounts
Cul‐de‐sac, single or double‐loaded
streets, open space, elevated views,
etc.
No adjustments for this factor are
warranted.
Land Value Conclusion
The market data set consists of various sales that are considered reasonable indicators of market value for the fee simple interest in the appraised neighborhoods. After accounting for remaining site development costs, permits and fees and special taxes, the data set reflects an unadjusted (loaded lot price) range of $189,925 to $863,552 per unit/lot.
The most recent closed sales of the subject are summarized as follows:
532
Residential Lot Valuation 81
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Subject Lot Sale
Project Na me
No. of
Uni ts Sal e Date Sale Price
Price per
Lot
Loa ded Lot
Adj us tment $/Loa ded Lot
Ivy 10 Feb ‐23 $5,345,390 $534,539 $213,009 $747,548 12 Apr ‐23 $6,414,468 $534,539 $213,009 $747,548
12 Aug ‐23 $7,530,096 $627,508 $213,009 $840,517
Weighted Average $780,360
Les s : Permits and Fees $126,596
Finished Lot $653,764
Aval on 15 Ma r ‐23 $3,736,770 $249,118 $173,972 $423,090 10 Mar ‐23 $2,491,180 $249,118 $173,972 $423,090
10 Jun ‐23 $2,959,260 $295,926 $173,972 $469,898
20 Sep ‐23 $7,095,860 $354,793 $173,972 $528,765
Weighted Average $470,028
Les s : Permits and Fees $103,637
Finished Lot $366,391
Overall the recent closed transactions of the subject lots/units are supported by market transactions.
Based upon the analysis presented herein, a ranking of the subject and the comparable sales is provided in the following table.
Bulk Lot Comparable Ranking
Sale Date
$/Loaded Lot
(Unadjusted) Comparison
Esti mated Loaded
Lot/Uni t Val ue
Les s : Permits and
Fees
Conclusion of Value
per Lot/Unit
Comparable 2J u n ‐23 $790,044 Similar
Comparable 3M a r ‐23 $734,797 Similar
Comparable 1J u n ‐23 $621,202 Similar
Subject: Ivy $780,000 $126,596 $653,404
Subject: Vine $500,000 $109,198 $390,802
Subject: Avalon $470,000 $103,637 $366,363
Comparable 8J u n ‐21 $383,303 Inferior
Comparable 7J u n ‐21 $396,402 Inferior
Comparable 6A p r ‐22 $332,383 Inferior
Comparable 4J u l ‐22 $322,343 Sig. Infe rior
Comparable 5M a y ‐22 $175,220 Sig. Infe rior
533
Residential Lot Valuation 82
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Reconciliation of Lot Value
The improved (finished) lot value conclusions indicated by the land residual analysis and sales comparison approach to value are presented below.
Reconciliation of Finished Lot Value
Lot Size Categories
Sales Comparison Approach $653,000 per finished lot $391,000 per finished lot $366,000 per finished lot Land Residual Analysis $612,613 per finished lot $402,728 per finished lot $379,211 per finished lot % Difference 6.59% ‐2.91% ‐3.48%
Average $632,806 $396,864 $372,606
Concluded Finished Lot Value $610,000 per finished lot $400,000 per finished lot $375,000 per finished lot Ivy, Neighborhood 21 Vi ne, Neighborhood 22 Ava l on, Neighborhood 23
When ample sales are available, the direct sales comparison approach is generally concluded to be the most reliable indication of land value. However, the scarcity of sales that reflect current market conditions for the subject’s location result in a required downward adjustment for contracting market conditions, which can be difficult to quantify. Given the information cited above, the direct sales comparison approach as an indicator of value is considered a supporting indicator to the land residential analysis, which considers the current prices achieved for new home sales. 534
Market Valuation by Owner 83
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Market Valuation by Owner
The appraised properties represent the taxable parcels in Improvement Area No. 5, a portion of the Dublin Crossing master planned community, within the boundaries of CFD No. 2015‐1 (Dublin Crossing) Improvement Area 5. More specifically, the appraised properties consist of 244 residential units/lots (62 detached and 182 attached) held by two separate merchant builders, the Master Developer and individual homeowners.
In this section, the previously concluded finished lot values will be allocated to each ownership group comprising the appraised properties in order to provide a market value of the appraised properties by owner. A summary of the various ownership group holdings is restated in the following table.
Improvement Area (IA) 5 Summary by Ownership
Owne r Builde r N e ighborhood Proje ct Name Product Type No. of
Uni ts
Brookfie ld Bay Area Holdings, LLC Brookfi el d Homes 21 Ivy Detached 4‐Pack 31 22 Vine Attached Row Townhomes 0
31 Lenna r Homes of California, LLC Lennar Homes 23 Avalon Attached Carriage Row Townhomes 55 55 Dublin Crossing, LLC* Mas ter Developer 21 Ivy Detached 4‐Pack 28 22 Vine Attached Row Townhomes 92
23 Ava l on Atta ched Carriage Row Townhomes 35
155
Vari ous Homeowners Individual Homeowners 21 Ivy Detached 4‐Pack 3 23 Ava l on Atta ched Carriage Row Townhomes 0
3 * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
^ The subject lots will transfer from the Master Developer to each merchant builders, Brookfield Homes and Lennar Homes, with takedown closing dates scheduled between November 2023 and December 2025.
The previous analysis derived estimates of market value for the various residential land components comprising Improvement Area No. 5 of the City of Dublin CFD No. 2015‐1. As previously discussed, the estimates of market value provided herein are subject to the hypothetical condition various public improvements to be financed by the Bonds are in place. According to information provided by representatives of the Master Developer (Dublin Crossing, LLC), all required infrastructure improvements servicing Improvement Area No. 5 have been substantially complete (reportedly only $501,593 remain). Therefore, for purposes of this analysis, it is presumed available construction fund proceeds from the sale of the Bonds will provide for the completion of remaining infrastructure improvements associated with Improvement Area No. 5.
In light of the fact the property owners have a number of lot(s) that could sell in bulk to one buyer within 12 months, which is supported by the recent acquisition of the subject land, no discounting is necessary. Based on the previous analysis, the estimates of market value (in bulk), by builder, as well as the cumulative, or aggregate, value of Improvement Area No. 5 of the CFD, subject to the impact of 535
Market Valuation by Owner 84
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 the Lien of the Special Tax securing the Bonds, as of the date of value, October 4, 2023, are estimated in the table on the following page.
Value Conclusions
Ow ne r Builde r N e ighborhood
Project
Name Product Type
No. of
Uni ts
Construction
Status
Concluded Uni t
Va l ue
Concluded
Va l ue
Brookfie ld Bay Area Holdings, LLC Brookfi el d Homes 21 I vy Deta ched 4‐Pack 31 Finished Lots $610,000 $ 18,910,000 22 Vine Attached Row Townhomes 0 Finished Lots $400,000 $ ‐ 31 $ 18,910,000
Lenna r Homes of California, LLC Lennar Homes 23 Avalon Attached Carriage Row Townhomes 55 Finished Lots $375,000 $ 20,625,000 55 $ 20,625,000
Dublin Crossing, LLC* Mas ter Developer 21 Ivy Detached 4‐Pack 28 Finished Lots $610,000 $ 17,080,000 22 Vine Attached Row Townhomes 92 Finished Lots $400,000 $ 36,800,000 23 Avalon Attached Carriage Row Townhomes 35 Finished Lots $375,000 $ 13,125,000 155 $ 67,005,000
Vari ous Homeowners Individual Homeowners 21 Ivy Detached 4‐Pack 3 Sold Homes $1,510,000 $ 4,530,000 23 Avalon Attached Carriage Row Townhomes 0 Sold Homes $955,000 $ ‐ 3 $ 4,530,000
Cumulative, or Aggregate, Value of IA No. 5 111,070,000$ * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
536
Final Opinion of Value 85
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Final Opinion of Value
Based on the preceding valuation analysis and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value, as of October 4, 2023, are as follows Value Conclusion
Appra i s a l Premi s e Interes t Appra i s ed Da te of Va l ue Va l ue Conclusion Market Va l ue, Subject to a Hypothetical Condition Fee Simple October 4, 2023 Brookfield Bay Area Holdings, LLC $18,910,000
Lennar Homes of California, LLC $20,625,000
Dublin Crossing, LLC* $67,005,000
Va ri ous Homeowners $4,530,000
Cumulative, or Aggrega te, Val ue of IA No. 5 $111,070,000 * Dublin Crossing, LLC is the master horizontal developer, which is a joint venture between the two merchant builders above.
Extraordinary Assumptions and Hypothetical Conditions
None
1. We have been requested to es ti ma te the market value of the appraised properti es , by ownership, as wel l as the cumulative, or a ggrega te, value of IA No. 5 of CFD No. 2015 ‐1 as of the effecti ve date of value (October 4, 2023), subject to the hypothetical condition proceeds from the Special Tax Bonds are available to reimburse for public i mprovements completed.
The value conclusions are based on the follow ing hypothetical conditions that may affect the assignm e nt re sult s. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis.
The value conclusions are subject to the following e xtraordinary assumptions that may affe ct the assignme nt re sult s. An e xtraordinary assum pt ion is uncertain inform at ion accepted as fact. If the assum ption is found to be false as of the effecti ve date of the appraisal, we reserve the right to modi fy our value conclusions.
Exposure Time
Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the appraisal. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local residential land market, it is our opinion that the probable exposure time for the subject at the concluded market values stated previously is 12 months.
Marketing Time
Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. As we foresee no significant changes in market conditions in the near term, it is our opinion that a reasonable marketing period for the subject in bulk is likely to be the same as the exposure time. Accordingly, we estimate the subject’s marketing period at 12 months.
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Certification 86
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Certification
We 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 not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three‐year period immediately preceding acceptance of this assignment.
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. Our 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 the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice as well as applicable state appraisal regulations.
9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
11. Eric Segal, MAI, Kevin Ziegenmeyer, MAI, and Sara Gilbertson, MAI, have made a personal inspection of the property that is the subject of this report.
12. No one provided significant real property appraisal assistance to the person(s) signing this certification.
13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP.
14. As of the date of this report, Eric Segal, MAI, Kevin Ziegenmeyer, MAI, and Sara Gilbertson, MAI, have completed the continuing education program for Designated Members of the Appraisal Institute.
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Certification 87
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
Eric Segal, MAI
Certified General Real Estate Appraiser
California Certificate # AG026558
Kevin Ziegenmeyer, MAI
Certified General Real Estate Appraiser
California Certificate # AG013567
Sara Gilbertson, MAI
Certified General Real Estate Appraiser
California Certificate # 3002204
539
Assumptions and Limiting Conditions 88
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Assumptions and Limiting Conditions
This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report:
1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use.
2. There are no existing judgments or pending or threatened litigation that could affect the value of the property.
3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property.
4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction.
5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes.
6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.
This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report:
1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised.
2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events.
3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated.
4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies.
5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment.
6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal
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Assumptions and Limiting Conditions 89
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct.
7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal.
8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes.
9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context.
10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report.
11. Information, estimates and opinions contained in the report and obtained from third‐party sources are assumed to be reliable and have not been independently verified.
12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results.
13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate.
14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered.
15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur.
16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions.
17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic 541
Assumptions and Limiting Conditions 90
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material.
18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations.
Inasmuch as compliance matches each owner’s financial ability with the cost to cure the non‐ conforming physical characteristics of a property, a specific study of both the owner’s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance.
19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk.
20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources – Sacramento/San Francisco, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the “Integra Parties”), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property.
21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non‐ existent or minimal.
22. Integra Realty Resources – Sacramento/San Francisco is not a building or environmental inspector. Integra Sacramento/San Francisco does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended.
23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner.
24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the 542
Assumptions and Limiting Conditions 91
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct.
25. Integra Realty Resources – Sacramento/San Francisco, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client’s use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable).
26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer‐seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property.
27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.
28. The appraisal is also subject to the following:
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Assumptions and Limiting Conditions 92
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Extraordinary Assumptions and Hypothetical Conditions
None
1. We have been requested to es ti ma te the market value of the appraised properti es , by ownership, as wel l as the cumulative, or a ggrega te, value of IA No. 5 of CFD No. 2015 ‐1 as of the effecti ve date of value (October 4, 2023), subject to the hypothetical condition proceeds from the Special Tax Bonds are available to reimburse for public i mprovements completed.
The value conclusions are based on the follow ing hypothetical conditions that may affect the assignm e nt re sult s. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis.
The value conclusions are subject to the following e xtraordinary assumptions that may affe ct the assignme nt re sult s. An e xtraordinary assum pt ion is uncertain inform at ion accepted as fact. If the assum ption is found to be false as of the effecti ve date of the appraisal, we reserve the right to modi fy our value conclusions.
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Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Addendum A
Appraiser Qualifications
545
Integra Realty
Resources ‐ Sacramento
irr .com
T 916.435.3883
F 916.435.4774
590 Menlo Drive
Suite 1
Rocklin, CA 95765
Kevin Ziegenmeyer, MAI
Experience
Mr . Ziegenmeyer is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1989, Mr . Ziegenmeyer began his career in real estate as a controller for a commercial and residential real estate development corporation. In 1991 he began appraising and continued to be involved in appraisal assignments covering a wide variety of properties, including office, retail, industrial, residential income and subdivisions throughout the state of California, and Northern Nevada. Mr . Ziegenmeyer handles many of the firm’s master‐planned property appraisals and over the past two decades has developed expertise in the valuation of Community Facilities Districts and Assessment Districts.In fact, Mr . Ziegenmeyer was one of five appraisers to collaborate with other professionals in developing the appraisal guidelines for the California Debt and Investment Advisory Commission (Recommended Practices in the Appraisal of Real Estate for Land‐Secured Financing ‐ 2004). He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities and counties of San Francisco, Dublin, Monterey, Newport Beach, Alameda, Napa and San Mateo. In early 2015, Mr .
Ziegenmeyer obtained the Appraisal Institute's MAI designation.
Licenses
California, California Certified General Real Estate Appraiser, AG013567, Expires June 2025 Education
Academic:
Bachelor of Science in Accounting, Azusa Pacific University, California
Appraisal and Real Estate Courses:
Standards of Professional Practice, Parts A, B & C
Basic Valuation Procedures
Real Estate Appraisal Principles
Capitalization Theory and Techniques, Part A
Advanced Income Capitalization
Report Writing and Valuation Analysis
Advanced Applications
IRS Valuation Summit I
& II
2008, 2009, 2010 & 2011 Economic Forecast
Business Practices and Ethics
Contemporary Appraisal Issues with Small Business Administration Financing General Demonstration Appraisal Report Writing Seminar
7‐Hour National USPAP Update Course
Valuation of Easements and Other Partial Interests
2009 Summer Conference
Uniform Appraisal Standards for Federal Land Acquisitions (Yellowbook) 2008 Economic Update
Valuation of Conservation Easements
Subdivision Valuation
2005 Annual Fall Conference
General Comprehensive Exam Module I, II, III & IV
[email protected] ‐ 916.435.3883 x224
546
Integra Realty
Resources ‐ Sacramento
irr .com
T 916.435.3883
F 916.435.4774
590 Menlo Drive
Suite 1
Rocklin, CA 95765
Kevin Ziegenmeyer, MAI
Education (Cont'd)
Advanced Income Capitalization
Advanced Sales Comparison & Cost Approaches
2004 Central CA Market Update
Computer‐Enhanced Cash Flow Modeling
Forecast 2000, 2001, 2002, 2003 & 2004
Land Valuation Assignments
Land Valuation Adjustment Procedures
Highest & Best Use and Market Analysis
Entitlements, Land Subdivision & Valuation
Real Estate Value Cycles
El Dorado Hills Housing Symposium
Federal Land Exchanges
M & S Computer Cost‐Estimating, Nonresidential
[email protected] ‐ 916.435.3883 x224
547
548
Integra Realty
Resources ‐ Sacramento
irr .com
T 916.435.3883
F 916.435.4774
590 Menlo Drive
Suite 1
Rocklin, CA 95765
Eric Segal, MAI
Experience
Mr . Segal is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1998, Mr . Segal began his career in real estate as a research analyst/appraiser trainee for Richard Seevers and Associates. By 1999, he began writing narrative appraisal reports covering a variety of commercial properties, with an emphasis on residential master planned communities and subdivisions. Today, Mr . Segal is a partner in the firm and is involved in appraisal assignments covering a wide variety of properties including office, retail, industrial, multifamily housing, master planned communities, and specializes in the appraisal of Mello‐Roos Community Facilities Districts and Assessment Districts for land‐secured municipal financings, as well as multifamily developments under the U.S. Department of Housing and Urban Development’s Multifamily Accelerated Processing (MAP) Guide. He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities of San Francisco, Monterey, Alameda and San Mateo. He has developed the experience and background necessary to deal with complex assignments covering an array of property types. Eric is currently Managing Director of the Integra‐San Francisco office as well as Integra‐Sacramento office.
Professional Activities & Affiliations
Appraisal Institute, Member (MAI) Appraisal Institute, January 2016 Licenses
California, Certified General Real Estate Appraiser, AG026558, Expires February 2025 Nevada, Certified General, A.0207666‐CG, Expires January 2025 Arizona, Certified General, CGA ‐ 1006422, Expires January 2024 Washington, Certified General, 20100611, Expires June 2025 Education
Academic:
Bachelor of Science in Business Administration (Concentrations in Finance and Real Estate & Land Use Affairs), California State University, Sacramento
Appraisal and Real Estate Courses:
Uniform Standards of Professional Appraisal Practice
Appraisal Principles
Basic Income Capitalization
Highest & Best Use and Market Analysis
Advanced Income Capitalization
Report Writing and Valuation
Analysis
Self‐Storage Economics and Appraisal Seminar
Appraisal Litigation Practice and Courtroom Management
Hotel Valuations: New Techniques for today’s Uncertain Times Computer Enhanced Cash Flow Modeling
Advanced Sales Comparison & Cost Approaches
Advanced Applications
Supervisor‐Trainee Course for California
[email protected] ‐ 916.435.3883 x228
549
550
Integra Realty
Resources ‐ Sacramento
irr .com
T 916.435.3883
F 916.435.4774
590 Menlo Drive
Suite 1
Rocklin, CA 95765
Sara Gilbertson, MAI
Experience
Ms. Gilbertson is a licensed appraiser with Integra Realty Resources, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. After completing her bachelor’s degree at California State University, Sacramento, Ms. Gilbertson began her career in real estate as a research analyst/appraiser trainee for Seevers Jordan Ziegenmeyer in 2011. She has experience in writing narrative appraisal reports covering a variety of commercial properties, as well as special use properties including self‐storage facilities, hotels and mobile home parks. She also specialized in the appraisal of residential master planned communities and subdivision, as well as Mello Roos and Assessment Districts for land secured municipal financings. Ms. Gilbertson has developed the experience and background necessary to deal with complex assignments covering an array of property types.
Licenses
California, California Certified General Real Estate Appraiser, 3002204, Expires May 2024 Education
Academic:
Bachelor of Science in Business Administration (Concentration in Real Estate and Land Development), California State University, Sacramento
Appraisal Institute Courses:
Basic Appraisal Principles
Basic Appraisal Procedures
Uniform Standards of Professional Appraisal Practice
Real Estate Finance and Statistics and Valuation Modeling Sales Comparison Approach
Report Writing and Case Studies
Market Analysis
and Highest and Best Use
Site Valuation and Cost Approach
Basic Income Capitalization
Federal and California Statutory and Regulator Laws
Quantitative Analysis
Business Practices and Ethics
Advanced Market Analysis and Highest and Best Use
Advanced Income Capitalization
Advanced Concepts and Case Studies
[email protected] ‐ 916.435.3883 x248
551
About IRR
Integra Realty Resources, Inc. (IRR) provides world‐class commercial real estate valuation, counseling, and advisory services. Routinely ranked among leading property valuation and consulting firms, we are now the largest independent firm in our industry in the United States, with local offices coast to coast and in the Caribbean.
IRR offices are led by MAI‐designated Senior Managing Directors, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets. This experience, coupled with our understanding of how national trends affect the local markets, empowers our clients with the unique knowledge, access, and historical perspective they need to make the most informed decisions.
Many of the nation's top financial institutions, developers, corporations, law firms, and government agencies rely on our professional real estate opinions to best understand the value, use, and feasibility of real estate in their market.
Local Expertise...Nationally!
irr.com
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553
Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Addendum B
IRR Quality Assurance Survey
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Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 IRR Quality Assurance Survey
We welcome your feedback!
At IRR, providing a quality work product and delivering on time is what we strive to accomplish. Our local offices are determined to meet your expectations. Please reach out to your local office contact so they can resolve any issues.
Integra Quality Control Team
Integra does have a Quality Control Team that responds to escalated concerns related to a specific assignment as well as general concerns that are unrelated to any specific assignment. We also enjoy hearing from you when we exceed expectations! You can communicate with this team by clicking on the link below. If you would like a follow up call, please provide your contact information and a member of this Quality Control Team will call contact you.
Link to the IRR Quality Assurance Survey: quality.irr.com
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Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Addendum C
Definitions
556
Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Definitions
The source of the following definitions is the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), unless otherwise noted.
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.
Disposition Value
The most probable price that a specified interest in property should bring under the following conditions:
1. Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both the buyer and seller are acting prudently and knowledgeably.
4. The seller is under compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interests.
7. An adequate marketing effort will be made during the exposure time.
8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto.
9. 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.
This definition can also be modified to provide for valuation with specified financing terms.
Effective Date
1. The date on which the appraisal or review opinion applies.
2. In a lease document, the date upon which the lease goes into effect.
Entitlement
In the context of ownership, use, or development of real estate, governmental approval for annexation, zoning, utility extensions, number of lots, total floor area, construction permits, and occupancy or use permits.
Entrepreneurial Incentive
The amount an entrepreneur expects to receive for his or her contribution to a project.
Entrepreneurial incentive may be distinguished from entrepreneurial profit (often called developer’s
557
Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 profit) in that it is the expectation of future profit as opposed to the profit actually earned on a development or improvement. The amount of entrepreneurial incentive required for a project represents the economic reward sufficient to motivate an entrepreneur to accept the risk of the project and to invest the time and money necessary in seeing the project through to completion.
Entrepreneurial Profit
1. A market‐derived figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk; the difference between the total cost of a property (cost of development) and its market value (property value after completion), which represents the entrepreneur’s compensation for the risk and expertise associated with development. An entrepreneur is motivated by the prospect of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who successfully creates value through new development, expansion, renovation, or an innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may also fail and suffer losses.
2. In economics, the actual return on successful management practices, often identified with coordination, the fourth factor of production following land, labor, and capital; also called entrepreneurial return or entrepreneurial reward.
Exposure Time
1. The time a property remains on the market.
2. The estimated length of time that 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 opinion based on an analysis of past events assuming a competitive and open market.
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.
Floor Area Ratio (FAR)
The relationship between the above‐ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area.
Highest and Best Use
1. The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.
2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (ISV)
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Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023
3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions)
Investment Value
1. The value of a property 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.
2. The value of an asset to the owner or a prospective owner for individual investment or operational objectives.
Lease
A contract in which rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent.
Leased Fee Interest
The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.
Leasehold Interest
The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease.
Liquidation Value
The most probable price that a specified interest in real property should bring under the following conditions:
1. Consummation of a sale within a short time period.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both the buyer and seller are acting prudently and knowledgeably.
4. The seller is under extreme compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interests.
7. A normal marketing effort is not possible due to the brief exposure time.
8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto.
9. 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.
This definition can also be modified to provide for valuation with specified financing terms.
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Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 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 an appraisal.
Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.
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:
buyer and seller are typically motivated;
both parties are well informed or well advised, and acting in what they consider their own best interests;
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 sales concessions granted by anyone associated with the sale. (Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[h]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Prospective Opinion of Value
A value opinion effective as of a specified future date. The term does not define a type of value.
Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long‐term occupancy.
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Addenda
City of Dublin CFD No. 2015‐1 Improvement Area No. 5 Special Tax Bonds, Series 2023 Addendum D
Preliminary Title Reports
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CLTA Preliminary Report Form Order Number: 3409-6846227 (Rev. 11/06) Page Number: 1
First American Title