Appraisal Report — Fontana City Council, April 26, 2022

APPRAISAL REPORT

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 95
(Summit at Rosena Phase Two)

City of Fontana, San Bernardino County, California
(Appraisers’ File No. 2022-1257)

Prepared For
City of Fontana
8353 Sierra Avenue
Fontana, CA 92335

Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780

KITTY SIINO & ASSOCIATES, INC.

REAL ESTATE APPRAISERS & CONSULTANTS

April 7, 2022

George Pirsko, Accounting Manager
City of Fontana
8353 Sierra Avenue
Fontana, CA 92335

Reference: Appraisal Report
City of Fontana
Community Facilities District No. 95
Summit at Gabion Ranch by Lennar
East side of Cypress Avenue at Casa Grande Avenue, Fontana

Dear Mr. Pirsko:

At the request and authorization of the City of Fontana, we have completed an Appraisal Report for The City of Fontana Community Facilities District No. 95 (“Fontana CFD No. 95”) which consists of five residential neighborhoods within Phase Two of the master planned community formerly known as the Summit at Rosena Ranch and now known as Gabion Ranch, in the City of Fontana. Gabion Ranch includes eight neighborhoods proposed for 886 total residential units divided into two phases with Phase One encompassing 606 proposed units which are within Fontana CFD No. 90 (not a part of this report) and Phase Two encompassing 280 proposed units within Fontana CFD No. 95 (subject property). Lennar Homes of California, Inc. (“Lennar”) is the builder for the five communities within Phase Two. These include portions of the communities of Stonegate, Iron Walk, Mountainside, Ridgeview and Woodridge. Three of the five communities (Stonegate, Iron Walk and Mountainside) have built, sold and closed out with two projects still marketing, Ridgeview and Woodridge, however Ridgeview is sold out but not yet closed out. This appraisal is for the 280 proposed units within Fontana CFD No. 95 which are located within Phase Two of Gabion Ranch.

Out of the 280 proposed units within Phase Two, 181 have closed to individual homeowners to date with an additional 47 in escrow and due to close upon completion. The builder-owned property ranges from completed homes to homes under construction to generally finished pads for attached product.

The valuation method s used in this report are the Sales Comparison Approach, a Discounted Cash Flow Analysis and a Mass Appraisal Technique as defined within this report. The fee simple estate of the subject property has been valued subject to the Fontana CFD No. 95 special tax lien. This report is written with the hypothetical condition that the subject propert y is enhanced by the improvements and/or fee credits to be funded by the special tax bonds of Fontana CFD No. 95. As a result of our investigation, the concluded minimum market value for the subject property is shown on the following page.

115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] George Pirsko
City of Fontana
April 7, 2022
Page Two
Lennar Individually
Owned Owned
Stonegate
Individual Owners (33 Houses) $ 28,258,800
Iron Walk
Individual Owners (38 Houses) $ 27,916,500
Mountainside
Individual Owners (35 Houses) $ 27,151,350
Ridgeview
Lennar (12 Houses) $ 5,048,124
Individual Owners (42 Houses) $ 23,945,075
Woodridge
Lennar (15 Houses) $ 4,954,790
Lennar (72 Lots) $ 9,371,290
Subtotal Lennar $14,326,080
Individual Owners (33 Houses) $ 15,470,445

Total Individual Owned (181 Houses) $122,742,170
Total Builder Owned $ 19,374,204

Aggregate Total for CFD No. 95 $142,116,374

The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of February 15, 2022.

Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser ’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2020) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report.

This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.

Respectfully submitted,

KITTY SIINO & ASSOCIATES, INC.

Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)

TABLE OF CONTENTS

Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Fontana CFD No. 95 ............................................................................... iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................ 2 Definitions ...................................................................................................................... 3 Property Rights Appraised ............................................................................................. 5 Effective Date of Value ................................................................................................... 5 Date of Report ................................................................................................................ 6 Scope of Appraisal ........................................................................................................ 6 Regional Area Map.......................................................................................................... 8 County of San Bernardino Area Description ................................................................... 9 City of Fontana Area Map & Description ....................................................................... 20 The Summit at Rosena Specific Plan & Immediate Surroundings ................................. 25 Community Facilities District No. 95 ............................................................................. 28 Subject Property Descriptions ....................................................................................... 31 Inland Empire Housing Market ...................................................................................... 46 Highest and Best Use Analysis ..................................................................................... 57 Valuation Analyses and Conclusions ............................................................................ 62 Appraisal Report Summary ........................................................................................... 97 Appraiser’s Certification ............................................................................................... 98

ADDENDA
Fontana CFD No. 95 Boundary Map
Tract Map Nos. 20214-2, 20214-3, 20214-5 and 20214
Discounted Cash Flow Analyses
Finished Lot Land Sales Maps and Summary Charts
Improved Residential Sales Maps and Summary Charts
Appraiser’s Qualifications
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ASSUMPTIONS AND LIMITING CONDITIONS

1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.

3. It is assumed that the subject property is subject to the special tax lien of Fontana CFD No. 95.

4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.

5. The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy.

6. All engineering is assumed to be c orrect. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.

7. It is assumed that there are no hidden or unapparent conditions of either property, subsoil or structures that would render them more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report.

9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.

10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

11. Any sketch or photograph included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps , photographs and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page ii
otherwise stated in this report. No survey has been made for the purpose of t his report.

12. It is assumed that the utilization of the land and improvements (if any) are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.

13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea- formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.

14. Proposed improvements , if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.

15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings , if any, must not be used in conjunction with any other appraisal and are invalid if so used.

16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992 and have been updated several times since then. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance surv ey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.

17. It is assumed there are no environmental concerns that would slow or thwar t development of the subject properties and that the soils are adequate to support the highest and best use conclusions.

18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document for the Fontana CFD No. 95 special tax bonds

19. It is assumed that there are no conditions of approval or hindrances which could slow or thwart the obtaining of occupancy permits on the 280 subject residential units. This is the case per Lennar; however, we were unable to verify via the various conditions of approval.

HYPOTHETICAL CONDITION

1. It is assumed that all improvements and benefits to the subject properties, which are to be funded by the City of Fontana CFD No. 95 Special Tax Bond Proceeds are completed and in place.

EXTRAORDINARY ASSUMPTION

1. It is assumed that the sales information and remaining development costs as reported by the builder a nd summarized in the report are correct. We have not reviewed escrow documents on the home sales however, per our review the sal es as reported by the builder appear to be reasonable. While we have reviewed the costs and they appear reasonable, we are not experts in the field of construction cost estimation and are relying on the costs received in the valuation analysis. If the actual land development costs differ, the final values may change

PURPOSE OF THE APPRAISAL

The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the lien of the Fontana CFD No. 95 Special Tax Bonds.

THE SUBJECT PROPERTY

The subject property consists of 280 proposed single-family homes being developed into Phase Two of the master planned community known as Gabion Ranch in the City of Fontana (“City”). Phase Two of Gabion Ranch is located along the north side of Summit Avenue between Sierra and Cypress Avenues in the City of Fontana and is being developed into portions of five communities known as Stonegate, Iron Walk, Mountainside, Ridgeview and Woodridge. All five communities are being built and sold by Lennar. The products range from single-family detached homes on various sized lots, to cluster detached homes on small lots, to row townhomes. The subject includes homes sized from 849 square feet to 4,122 square feet. The five communities are encompassed by four tract maps. Tract Map No. 20214-2 has been subdivided into 33 lots composing Phase Two of Stonegate. Tract Map No. 20214- 3 has been subdivided into 73 lots composing Phase Two of the communities of Iron Walk and Mountainside. Tract Map No. 20214-5 has been subdivided into 54 small clust er lots encompassing Phase Two of Ridgeview. Tract Map No. 20214 (no dash o n the final tract) has been subdivided into four lots which have been further subdivided by Condominium Maps to create 120 motorcourt townhome units composing Phase Two of the Woodridge townhomes. These four tract maps encompass the subject property which is known as Phase Two of Gabion Ranch (“Phase Two”). Each of the above communities is an extension of five of the total of eight communities which were built and marketed by Lennar within Phase One which totaled 606 homes, not included in this appraisal report. The ownership and condition of the lands are detailed in the chart on the following page.

Description
No.

Lots

Ownership

Condition/Status
Stonegate (SFD)
Lots 1-33 of Tract 20214-2 33 Individuals Completed Houses / Closed Subtotal Stonegate 33
Iron Walk (SFD)
Lots 1-22 and 43-58 of Tract 20214-3 38 Individuals Completed Houses / Closed Total Iron Walk 38
Mountainside (SFD)
Lots 23-42 and 59-73 of Tract 20214-
3 35 Individuals Completed Houses / Closed
Total Mountainside 35
Ridgeview (Small Cluster Lots)
Lots 5-46 of Tract 20214-5 42 Individuals Completed Houses / Closed Lots 1-4 and 47-54 of Tract 20214-5 12 Lennar 95%+ complete (all in escrow) Total Ridgeview 54
Woodridge (Attached Motorcourts)
Units 401-407, 410-411 (p) Lot 2 of
Tract 20214; Units 501 – 512 (p) Lot
2 of Tract 20214; Units 1101 - 1112
(p) Lot 3 of Tract 20214.
33 Individuals Completed Houses / Closed
Units 408-409 and 412 (p) of Lot 2 of
Tract 20214; Units 901 - 912 (p) Lot 3
of Tract 20214,
15 Lennar 95%+ complete (14 in escrow)
Units 301-312 (p) Lot 2 of Tract
20214 and Units 801 – 812 (p) Lot 3
of Tract 20214
24 Lennar Homes under const (21 In escrow)
Units 101-112 and 201-212 (p) Lot 1
Tract 20214; Units 601 - 612 (p) Lot 4
of Tract 20214 and Units 701 - 712
(p) Lot 4 of Tract 20214
48 Lennar Finished Pads (none in escrow)
Total Woodbridge 120
Fontana CFD No. 95 Total 280

INTENDED USE OF THE REPORT

It is the appraiser’s understanding that the client, the City of Fontana, will utilize this report in disclosure documents related to the sale of the Fontana CFD No. 95 Special Tax Bonds. This report may be included in the Official Statement or similar document to be distributed in connection with the marketing and offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report.

DEFINITIONS

Market Value
The term “Market Value” as used in this report is defined as:

"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, 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 each acting in what he or she considers his or her own best interest;

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 Inherent in the Market Value definition is exposure time or the time the subject property would have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions , the exposure time for each individually owned property or the entire developer owned property in a bulk sale, is less than one year.

Finished Lot
The term “Finished Lot” is defined as:
“A parcel which has legal entitlements created by a recorded subdivision map, whose physical characteristics are a fine graded level pad per lot with infrastructure contiguous to each individual lot, asphalt paved roads and the necessary utilities. This term assumes the payment of all applicable development fees with the exception of building permit and plan check fees.”

Finished Pad
The term “Finished Pad” is defined as:

1 The Appraisal of Real Estate, 13th Edition
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“A parcel which has legal entitlements created by a condominium map, whose physical characteristics are a fine graded level pad per unit with infrastructure contiguous to each proposed unit, asphalt paved roads and the necessary utilities. This term assumes the payment of all applicable development fees with the exception of building permit and plan check fees.”

Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:

“The base market value of a new home. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home.

The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options or premiums.”

Mass Appraisal Technique
The term “Mass Appraisal” as used in this report is defined as:
“The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”
2 In the case at hand, the statistical testing included reviewing all original builder sales and reviewing the Multiple Listing Service (“MLS”) for any re -sales and/or current listings of each plan type. In addition, we have determined the actual range of sales prices for each plan type which will be utilized in the valuation process . The search of the MLS resulted in no re-sales and no current re-sale listings within the subject property. However, we did find four resales within Phase One in the past six months in the same communities which will be discussed under the valuation sections.

Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis”

2 USPAP 2018-2019 Edition
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The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by Fontana CFD No. 95.

Extraordinary Assumptions
The term “Extraordinary Assumption” is defined by USPAP as:
“An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions”

There is one Extraordinary Assumption within this report which is that the sales information and the cost information as received from Lennar are true and accurate. We have not reviewed actual escrow documents on the sales of the new homes. However, we have revi ewed each sale as reported by the builder and the sales prices appear reasonable. In addition, w e have reviewed the remaining land development costs and they appear reasonable; however, we are not experts in the field of cost estimating. It should be noted that these costs were relied upon for the value conclusion and, if the remaining land development costs differ, it may change the value conclusions.

PROPERTY RIGHTS APPRAISED

The property rights being appraised are of a fee simple estate interest, subject to easements of record and subject to Fontana CFD No. 95. The definition of “fee simple estate” is defined as:
“absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”
3 EFFECTIVE DATE OF VALUE

The subject property is valued as of February 15, 2022.

3 The Appraisal of Real Estate, 13th Edition
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DATE OF REPORT

The date of this report is March 7, 2022.

SCOPE OF APPRAISAL

As previously stated, the purpose of this appraisal is to report the appraiser ’s best estimate of the market value for the subject propert y, Fontana CFD No. 95, which is known as Phase Two of the master planned community of Gabion Ranch. The subject property consists of portions of the communities of Stonegate, Iron Walk, Mountainside, Ridgeview and Woodridge; all being built and sold by Lennar. Each of the communities began selling in Phase One of Gabion Ranch (not a part of this appraisal) which houses the model homes. The subject five communities are extensio ns of these existing communities. There are a total of 280 proposed homes within the subject. This appraisal will be presented in the following format:

• County of San Bernardino Description
• City of Fontana Description
• Specific Plan/Immediate Surroundings Description
• Brief Description of Fontana CFD No. 95
• Subject Property Descriptions
• Inland Empire Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analysis and Conclusion
• Appraisal Report Summary

In valuing the subject property, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sales prices of the comparables based on the elements of comparison. The Sales Comparison Approach may be used to value improved properties, vacant land or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparables is available.” 4 4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 _________________________________________________________________________________________________________ Appraisal Report
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In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject that have recently been sold, are listed for sale or are under contract.

Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. In addition, we have utilized a mass appraisal technique which included reviewing all builder sales and searching the MLS for any re-sales and/or listings.

The due diligence of this appraisal report included the following:

1. Compiled demographic information and related that data to the subject propert y to perform a feasibility/demand analysis.

2. Gathered and analyzed information on the subject marketplace, revi ewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro- and macro- economic outlook within San Bernardino County and the Fontana area.

3. Inspected the subject properties between February 1, 2022 and March 1, 2022.

4. Had the site flown by an aerial photographer on February 27, 2022.

5. Interviewed representatives from Lennar in order to obtain project information.

6. Reviewed the Summit at Rosena (previous name of Gabion Ranch) Specific Plan.

7. Reviewed preliminary title reports on portions of the subject property.

8. Searched the area for relevant comparable residential land sales , inspected and verified each sale with a buyer or seller or broker familiar with the transaction.

9. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable project.

10. Reviewed the sales brochures and websites for the subject neighborhoods.

11. Reviewed developer sales information on each home within each neighborhood.

12. Reviewed Multiple Listing Service information to determine if there are any re-sales, pending re-sales or listings of re-sale homes.

REGIONAL AREA MAP

COUNTY OF SAN BERNARDINO AREA DESCRIPTION

Location
The subject property is located in the southwestern portion of San Bernardino County, in the northern portion of the City of Fontana. More specifically, Gabion Ranch is located about one- and one-half miles north of Interstate 210 (“I-210”), and one- and one-half miles east of Interstate 15 (“I-15”).

San Bernardino County (the “County”) is the largest county in the Uni ted States by area containing over 20,100 square miles, and includes large expanses of undeveloped deserts, valleys, canyons and mountains with deserts comprising about 90 percent of the acreage. The County is a major beneficiary of outward urban pressure from Los Angeles, Orange and Riverside Counties. Although located at the periphery of most urban activity in Southern California, the southwestern portion of San Bernardino County has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties , and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.

Transportation
The subject property is situated about one- and one-half miles north of I-210, between I- 15 (one- and one- half miles west of the subject) and Interstate 215 (“I -215”) (approximately six miles east of the subject) , and approximately six miles north of Interstate 10 (“I-10”). The I-15 is the nearest interstate providing access to the subject via the Summit Avenue, Sierra Avenue or Duncan Canyon Road on/off ramps. I-15 travels in a northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. I -10 begins from the west in Los Angeles and provides access into Arizona to the east. In the vicinity of the subject, I -210 provides additional east/west access about two miles north of I-10 beginning in Santa Clarita in Los Angeles County and provides access near the city of San Bernardino. The subject is located three _________________________________________________________________________________________________________ Appraisal Report
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miles north of the historical Route 66, the original Los Angeles to Chicago cross country route.

The County is served by Amtrak and Metrolink as well as several rail -freight lines. The Ontario International Airport provides regional international air service and is located approximately 11 miles southwest of the subject property. San Bernardino International Airport is located approximately 11 miles southeast of the subject. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways and state freeways.

Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 202 1 (latest available per State) County population was 2.176 million. This represents a one- year increase of 485 persons or .02 percent. This compares to an average annual growth rate over the past 20 years of 2.1 percent. Current State of California projections for San Bernardino County suggest the population is anticipated to reach approximately 2.395 million by 2030, indicating an average annual increase of approximately 0.95 percent over the next ten years. The current growth of 0. 02 percent is lower than the previous 20- year annual average of 2.1 percent, likely due to the disruption of the COVID pandemic . The future growth of 0.95 percent annually was predicted assuming a more stable market than was seen prior to the Great Recession, however doesn’t take into effect the COVID pandemic.

Economy
Beginning February 20, 2020, the U.S. began experiencing an unprecedented economic disruption due to the COVID-19 pandemic. Original predictions were for deaths due to the virus overwhelming hospitals and staff. While the U.S. has lost over 900,000 lives due to COVID-19, except for a few exceptions, hospitals have, thus far, had the capacity to treat the patients. January 2021 was the deadliest month in the U.S.; however, cases then declined rapidly as vaccination rates rose. The summer of 2021 b egan new variants of _________________________________________________________________________________________________________ Appraisal Report
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the disease which increased rates once again; however, thus far not to the extent of last winter with hospitalizations of vaccinated people significantly lower. The Federal, State, County and City Governments (“Governments”) originally shut down non -essential businesses and areas where social gatherings occur in March 2020 in order to slow the spread of the virus. This created a strain on small and large businesses alike. Restaurants and hotels were hit hard and travel reduced drastically as citiz ens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment the first few months of the pandemic. This disruption originally caused extreme volatility in the stock market with an overall drop of 37 percent in March 2020 (based on the Dow Jones Industrial Average “DJIA”); however, as of February 18, 2022, the DJIA has shown a n increase of 15.9 percent over the previous high in February 2020. It should be noted that the DJIA is down 6.6 percent thus far in 2022 with the volatility thought to be due to the Federal Reserve Board tapering off their bond buying and the anticipation of a rise in interest rates. On February 24, 2022 Russia began inv ading Ukraine which is causing some uncertainty in world economics. As of March 4, 2022 the DJIA had dropped 1.3 percent from the February 18, 2022 closing.

The Federal Government attempted to curtail the job losses and hardships with the approval of the Coronavirus Aid, Relief and Economic Security (CARES) Act which was signed into law on March 27, 2020. The CARES Act appropriated over two-trillion dollars to people and businesses that were financially stunted by the COVID -19 pandemic. On April 9, 2020 the Federal Reserve took additional action to provide up to $2.3 trillion in loans to support the economy . Additionally, on April 23, 2020, Congress passed an additional $484 billion in relief for small businesses and hospitals. Over the summer of 2020 some business openings occurred. However, in the fall and winter of 2020 the pandemic surged and businesses shut down once again. In December 2020, the Federal Government passed an additional $900 billion in stimulus that included jobless benefits and additional dollars for vaccine distribution. In March 2021 the new National Administration approved the American Rescue Plan Act which appropriated an additional $1.9 trillion in help to our nation for vaccine distribution and more economic relief for the pandemic. It appears these stimuli totaling $5.6 trillion to date have helped shore up the _________________________________________________________________________________________________________ Appraisal Report
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economy; however, due to the significant amount of new money may be causing inflation.

Inflation is occurring in the United States at a rate not seen for over 40 years.

As of the end of February, inflation is running at 7.5 percent over the previous year. It is thought that issues contributing to inflation include the re- opening of the economy after COVID, the current supply chain issues and the addition of money entering the economy during COVID. The recent invasion of Ukraine by Russia is creating significant volatility in gas prices which will only increase the rate of inflation in the U.S. The Federal Reserve Board has announced an increase in the Federal Reserve Rate wil l be forthcoming in mid-March. It is unknown at this time whether it will be a one-quarter percent increase or higher. A higher increase will create further volatility in the stock market as investors closely watch the increases.

While some jobs have come back, job losses were huge with the Nation’s unemployment rate going from 3.5 percent in February 2020 to 14.4 percent in April 2020 with the January 2022 National unemployment rate at 3.8 percent (bureau of Labor Statistics). At the beginning of 2021, California was a hot spot with COVID cases surging and Southern California was put under another stay -at-home order. The vaccine roll -out was quicker than anticipated and cases had declined substantially. California “ reopened” June 15, 2021. Beginning in lat e summer 2021, variants caused concern with hospital cases increasing for unvaccinated people and mandates once again occurring. While the news in mid-2021 had been positive with the vaccination roll -out, the new variant s and the winter surge caused the St ate of California to institute a new indoor mask mandate for January 2022. Currently mandates are being rescinded and it appears the pandemic may be transitioning to an endemic. The fallout has been the supply chain disruption along with the inflation which is now occurring.

The Nation’s Gross Domestic Product (GDP) rate of growth was 5.7 percent in 2021 which is the largest annual increase since 1984. However, this rate is compared to the prior year (2020) which included the stopped economy due to COVID . The International Monetary Fund is projecting National GDP growth of 4.0 percent in 2022 which would outpace the _________________________________________________________________________________________________________ Appraisal Report
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annual average GDP growth from 2010 to 2019. It should be noted that these estimates were prior to the Russian invasion of Ukraine which may change forecasts.

Prior to the COVID-19 pandemic, the nation was experiencing a strong economy. As with the rest of the nation, the Inland Empire experienced a strong multi -year recession, now referred to as the Great Recession, between 2006 and 2012. The MSA, which had strong employment over the ten previous years saw unemployment rates increase significantly between December 2006 and early 2010, at which time a leveling off occurred followed by continued employment growth (generally since July 2011) until the pandemic hit.

The unemployment rate for the MSA was estimated at 5.1 percent (as of December 2021 per the Employment Development Department – latest available ). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during the COVID pandemic of 14.9 percent; however, this represents an increase from February 2020’s 4.0 percent, prior to the pandemic outbreak.

As of December 2021, Riverside had an unemployment rate of 5.1 percent and San Bernardino County had a 5.2 percent unemployment rate. The current unemployment rate for the MSA of 5.1 percent is similar to the California rate at 5.0 percent and significantly higher than the December 2021 National rate of 3.7 percent. Below is a table comparing Rivers ide County’s unemployment rate to the unemployment rates of the surrounding counties as of December 2021.

Jurisdiction As of Unemployment Rate*
Los Angeles County 12/21 8.4%
Riverside County 12/21 5.1%
San Bernardino County 12/21 5.2%
Orange County 12/21 3.7%
San Diego County 12/21 4.2%
Source: State of California E.D.D.; *Not Seasonally Adjusted

Over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking prices back to 2002 levels. Home values appeared to hit bottom in _________________________________________________________________________________________________________ Appraisal Report
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2009 then remained essentially flat for two to three years with the majority of the Riverside County housing market seeing an improvement beginning in mid- 2012. While coastal Southern California housing enjoyed significant increases between 2012 and 2015, the Inland Empire bounced back slower with overall San Bernardino County finally passing the previous median home price peak in early 2020 (prior to the pandemic). Contrary to homebuilder’s original thoughts of a slowdown due to the pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year. In addition, since May 2020 there has been a significant increase in residential builder land purchases in the Inland Empire. While land purchases essentially stopped in February, March and April, beginning in May 2020 builders began looking for land and entering escrow on land purchases with residential land currently moving at a brisk pace. The exceptional activity in new home sales is thought to be due to several factors, including a tight resale supply of homes; historically low interest rates; millennials finally buying homes; and, the work from home factor during the pandemic which is allowing residents to live in more suburban areas without long commutes. Along with dropping the interest rate to 0 - 0.25 percent at the beginning of the pandemic, the Federal Reserve Board (“Board”) began quantitative easing by buying 80 billion in Treasury Bonds and 40 billion in Mortgage- backed Securities each month. .

This has also helped shore up the national economy. At the November Board meeting, the Board decided that the quantitative easing will begin to slowly taper beginning in mid- November. In December the Chairman of the Board stated due to the high rate of inflation, the tapering may be quicker than originally planned.

During the Great Recession, the Federal Government attempted to correct the struggling economy by implementing several economic stimulus packages. The Board kept interest rates below historical averages, dropping rates to near zero in December 2008 until December 2015, when the Board began raising interest rates until December 2018 when the ninth increase appeared to affect t he economy with home sales slowing and stock market volatility. Since then, interest rates dropped three times until the COVID pandemic when the Board dropped the rate 50 basis points due to the stock market reaction to the COVID pandemic and then again on March 16, 2020 when they dropped the rate another _________________________________________________________________________________________________________ Appraisal Report
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100 basis points to the historical ly low level of 0 - 0.25 percent. Since the March decreases, the Board has left rates unchanged. The Board had previously mentioned that rates could stay low until 2023, h owever, once inflation began, it is thought that interest rates would begin to increase in 2022 . The Federal Interest Rate (“Rate”) in the US averaged 5.69 percent from 1971 to 2019 reaching an all-time high of 20 percent in March 1980 and the previous low of .25 percent in December 2008. The current historically low rates have spurred home sales with the Inland Empire, which was identified as one of the tightest housing markets in the nation in October 2020. At the November meeting of the Federal Reserve B oard, they elected to keep the rate at the 0- 0.25 percent level. On December 15, 2021 the Federal Reserve chairman met with the Senate Banking Committee and due, to the inflation that is occurring, an accelerated timetable for Rate hikes is anticipated to occur with three Rate hikes now projected in 2022. The Board is meeting in mid -March and at minimum a one -quarter percent hike is expected with the possibility of a higher hike due to the high rate of inflation.

The latest UCLA Anderson Forecast (“Forecast”) was issued September 29, 2021 and is less optimistic than the last two quarterly reports which projected robust growth. However, the Forecast acknowledges the historical reality that economic recoveries are never smooth. The September Forecast states the belief that previously projected blockbuster growth for both the U.S. and California has been tempered by the new COVID variants, slowing vaccination rates, consumer caution and supply constraints. The National Forecast states that the recovery heading into the final quarter of the year should be good and solid rather than the previous blockbuster and spectacular growth predictions. Since June, vaccination rates have plateaued and the new variants spread quickly in both the U.S. and around the world. As a result, global supply chains continue to battle disruptions.

Per the Forecast, the U.S. economy is down 5.3 million payroll jobs from its pre- COVID peak. The current forecast is less optimistic with a 5.6 percent growth in 2021 (down from predicted 7.1 growth rate in June), followed by GDP growth of 4.1 percent in 2022 and

3.1 in 2023. This represents a shifting of growth into the future rather than in the next year or two.

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The Forecast for California is still under the shadow of the COVID -19 pandemic. While the Forecast assumes COVID-19 variants will create less serious economic impact, the various variants are spooking consumers creating a slower return of consumption behavior that previously predicted. In California the COVID recession and recovery has hit lower income Californians disproportionately exacerbating inequality in the State. The California Forecast still predicts the state recovery to eventually outpace the U.S. recovery; however, due to the stricter public health interventions, the State’s recovery has been delayed. The Forecast predicts the transition to new ways of work and new ways of social interaction will disproportionately benefit California through its technology sectors.

The leisure and hospitality sector (generally lower income w orkers) will be the last to recover due to the depth of its decline. The Forecast predicts the recovery will occur considerably faster in high-income technical services and faster in residential construction due to the State’s shortage of housing relative to demand.

Per the California Forecast, California’s unemployment rate for the third quarter of this year is expected to be 7.2 percent (currently 6.4 percent), with the anticipated average for 2021, 2022 and 2023 being 7.6 percent, 5.6 percent and 4.4 percent, respectively. In spite of the pandemic, the continued demand for a limited housing stock, coupled with low interest rates , has led to a relatively rapid return of home building. They are forecasting 123,000 new housing units in California in 2021, growing to 139,000 new units in 2023.

According to John Husing’s most recent Inland Empire Economic Report dated October 2021, the Inland Empire, along with the State and the Nation, is going through a most unusual year. The pandemic downturn was severe and second only to the Great Depression. However, Husing states that the combination of Federal and state legislation efforts combined with the impact of vaccinations has created the opportunity for most of what was lost to be regained. Within the Inland Empire at the end of 2020, Husing notes that the economy was down an average of 65,600 jobs, but his 2021 forecast sees the Inland Empire recovering the majority of these jobs. Affecting the growth is the unexpected occurrence of the disruption of the supply chain as families used the funds _________________________________________________________________________________________________________ Appraisal Report
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allocated for COVID by the government to buy goods, which increased demand. This has even impacted the Inland Empire due to its concentration of trucking firms, e- commerce operations, warehouses, distribution and wholesale trade firms in the area. One benefit of this disruption is the logistics employment statistics which have soared in the Inland Empire, adding 21,100 jobs in 2020 and an estimated additional 25,300 jobs in 2021.

As mentioned in the UCLA California Forec ast, one bright spot in the COVID economy has been sales of new homes. While existing homeowners were reluctant to put their houses on the market during COVID, new home sales in the Inland Empire soared.

Among other factors, historically low interest rates appear to have finally brought the millennial generation to the new home market. In addition, the new work-from-home factor has made non- homeowners realize they can afford a house further outside of the economic areas while they work and buying a home in a more affordable, suburban area makes sense if they don’t have to drive to the office each day. The need for home offices combined with the overall stress on social distancing has incentivized city dwellers to move out of denser urban areas into more suburban neighborhoods with more space.

The minimal existing home inventory, coupled with these factors has put pressure on pricing with new homes prices in the Inland Empire increasing well over 10 percent year- over-year. This will be discussed further in the Inland Empire Housing Market section later within this report.

As a final indicator of overall economic activity for the region we have reviewed the rise or fall of TEUs (Twenty -foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the inland communities as it represents much of the growth in development of West Coast distribution centers and warehouses linked to supply-chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. Generally, there has been increases since 2009 with the exception of a slight dip in 2016 and again in 2019. As of January 2022 , fiscal year to date TEU’s (October – September) were running 2.5 percent below the previous year however January 2022 was 4.8 percent above January 2021. The ports are a big part of the recovery with both the Port of Long Beach and the Port of Los Angeles backed up _________________________________________________________________________________________________________ Appraisal Report
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significantly due to the economic disruption of COVID which has created supply -chain issues.
.

Education
The subject area is served by the Fontana Unified School District (“FUSD”). The subject is assigned to Sierra Lakes Elementary School, Wayne Ruble Middle School, and Summit High School. The district operates 45 schools serving students from preschool through adult education. Community Colleges are available near the subject at Ch affey College in Rancho Cucamonga (eight miles southwest ), at Chaffey College’s Fontana campus (four miles south of the subject in Fontana), and San Bernardino Community College (12 miles southeast). Higher education is available approximately seven miles to the northwest at California State at San Bernardino, about 14 miles southeast is University of California at Riverside , 15 miles west in the private Claremont Colleges area which include Claremont McKenna College, Pitzer College, Harvey Mudd College, P omona College and Scripps College, and 22 miles to the southwest at Cal Poly Pomona,

Conclusion
Population in the County has increased over the past 30 years with predictions for continued population growth. The nation’s economy stalled during the Great Recession due to the housing downturn, unemployment and the credit crisis. The housing market saw a resurgence beginning the second half of 2012 with sales and prices rising until March 2020 when the COVID-19 pandemic brought the economy to a halt. The one bright spot over the past 22 months has been the new home market which has been extremely

4.0 5.0

6.0 7.0

8.0 9.0

10.0 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 TEU's (millions)
Year
Port of Long Beach TEUs
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strong in the Inland Empire. The region’s affordability coupled with the rising prices in the coastal market and the need for new housing set up a potential boom in the Inland Empire.

This appears to be occurring in part due to residents leaving urban areas for more suburban areas due to COVID factors coupled with low interest rates. Current concerns in the Inland Empire housing market include possible additional variants of the pandemic, the high prices of homes, rising interest rates, inflation , supply chain issues and most recently, the Russian invasion of Ukraine and how it may affect the economy . In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles and Riverside Counties.

CITY OF FONTANA DESCRIPTION

General Area
The subject property is located in the northeastern portion of the City of Fontana (“City”) and in southwestern San Bernardino County. The City is situated at the base of the San Gabriel Foothills, east of the cities of Rancho Cucamonga and Ontario, north of Jurupa Valley, west of the City of Rialto and the community of Bloomington, and south of the San Bernardino Mountains. The City encompasses an estimated 43 square miles with generally the northern border the San Gabriel Mountains and the southern border the Jurupa Mountains. The black star on the below map shows the approximate location of Fontana CFD No. 95 within the City limits.

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History
Fontana was founded in 1913 and is the second largest city in San Bernardino County and the 20th largest city in the State of California. The area was a rural farming community with citrus orchards, vineyards and chicken ranches that ran along U.S. Route 66 which is now known as Foothill Boulevard. The historic Route 66, which was built in 1926 to connect Los Angeles to Chicago, is a commercial corridor that runs east/west through the City. During World War II Henry J. Kaiser opened the Kaiser Steel Mill near Fontana, the only steel mill west of the Mississippi River, which brought industrial employment to the area during the war. To provide for the worker’s health needs, Kaiser constructed the Fontana Kaiser Permanente Medical Facility which now employs more than 5,000 people.

In 1954 the San Bernardino Freeway, which later became Interstate 10, was completed connecting Los Angeles to San Bernardino and making accessibility to Fontana relatively easy. This led to substantial growth as Fontana became an industrial hub for the County.

In the 1950s and 1960s Fontana was home to a drag racing strip which was a significant venue in the National Hot Rod Association (“NHRA”) circuit. In 1997, Roger Penske built the Fontana Speedway, now known as the Auto Club Speedway which became a major NASCAR sanctioned tract. In 2006 , the Auto Club Speedway opened a new NHRA sanctioned drag strip on site to resurrect Fontana’s drag racing heritage. The Auto Club Speedway was purchased by NASCAR in 2019 and hosts at least one major NASCAR race each year.

Population
The January 2021 population of Fontana ( per the California Department of Finance) is 213,944, which represents an increase of 1.1 percent over the previous year. The 2000 population was 128,928, suggesting the population has increased 66 percent over the past 22 years. The City population represents 9.7 percent of the County population. The City has several new home communities currently under construction, especially in the northern portion of the City. Per the U.S. Census Bureau, the average household size in Fontana is 3.85 persons while in overall San Bernardino County the average household _________________________________________________________________________________________________________ Appraisal Report
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size is 3.3 persons. Over 75 percent of the population of the City are high school graduates and over 28 percent of the population of the City are under 18 years old.

Housing
Per the Southern California Association of Governments (“SCAG”) 2019 Local Profiles (latest available), the City of Fontana has an estimated 52,251 housing units with a growth rate of 53.6 percent since the year 2000. This compares to the County’s housing growth rate of 21.9 percent during this time. This further illustrates Fontana’s growth spurt due to land available for development over the past 20 years. Fontana hosts 8.1 percent of the total number of households in the County. Below is a graph showing residential units permitted in Fontana between 2000 and 2020.

While the current numbers are not at pre-Great Recession numbers, they are the highest in the past 13 years. Per SCAG , 82.2 percent of the homes are single-family and 15 percent are multi-family units. Only 22 percent of the housing stock in the City was built before 1970 and 78 percent was built since that time. Per the City’s 2021 annual report, there are three residential projects in the planning stages: a 489-unit community known as Monarch Hills; a 257-unit project at Duncan Canyon and I-15 and a 189 unit project at Duncan Canyon and Citrus. This is in addition to 777 new single-family residential permits and 405 multi-family residential permits being issued in 2020. Per SCAG, the median home price in the City went from $129,000 in 2000 to a peak of $450,000 in 2006, a low 1,427
1,908
1,545
1,025
209 306 270 261 419 498 865
1,182
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2021 Fontana Residential Building Permits
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of $200,000 in 2009 with the January 2022 median price estimated at $618,000 per Redfin market trends.

Current new homes communities selling within Fontana include Gabion Ranch by Lennar with three neighborhoods (portion of the subject property), The Arboretum by Lennar (currently sold out but future phases coming) , The Retreat by Lennar , Shady Trails by Richmond American and Aurora Park by TRI Pointe Homes . Per Realtor.com there are currently 348 existing homes for sale within the City with the median listing price of $585,500 and the median sold home price of $620,000. Within the subject’s zip code of 92336, the median listing home price is currently $ 642,400 and the median sold home price is $645,500. This is in-line with current resale trends across Southern California of homes selling for higher than their list price.

Access
Fontana has good access with I -15 generally forming the northwest border of the City.

The 210 Freeway provides east -west access through the upper third of the City; Route 66 (also known as Foothill Boulevard) provides east -west access through the approximate middle of the City and the I-10 provides east-west access through the bottom third of the City. Major on/off ramps to the City from I- 15 include Foothill Boulevard, Baseline Avenue, the 210 Freeway, Summit Avenue, Duncan Canyon Road and Sierra Avenue. On/off ramps from the 210 Freeway within the City include Cherry Avenue, Citrus Avenue and Sierra Avenue. Route 66/ Foothill Boulevard has stop lights at major intersections while the major on/off ramps from I-10 in the City include Etiwanda Avenue, Cherry Avenue, Citrus Avenue and Sierra Avenue. Access to the subject is via Summit Avenue, Citrus Avenue and Sierra Avenue.

Economy
Existing commercial property within the City of Fontana is generally along the major thoroughfares including I -10, Route 66/Foothill Boulevard, Summit Boulevard, Sierra Avenue and the 210 Freeway. There are several large shopping centers including Sierra Lakes Marketplace and Falcon Ridge Town Center, both which serve the subject property. The City is home to an Amazon Distribution Center, a Target Distribution Center _________________________________________________________________________________________________________ Appraisal Report
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and a FedEx transfer station. The intersection of the I -10 and I -15 is a major industrial hub which extends into the City of Fontana with generally industrial use south of I-10. The Auto Club Speedway is located along Cherry Avenue north of I -10 and the Metrolink station is located along Sierra Avenue. The top- ten employers in the City (from 2018 – latest available per City’s website) include the following:

Employer No. of Employees
Kaiser Hospital 5,430
Fontana Unified School District 5,000
City of Fontana 1,030
Target Distribution Center 621
Costco Wholesale 333
Estes West 317
Sierra Aluminum Company 312
Crown Technical systems 297
Walmart Store (Foothill Blvd) 290

Summary
Fontana is located at the base of the San Gabriel Mountains and was incorporated over 100 years ago as a rural farming community. Kaiser Steel brought jobs to the area during World War II and the opening of the I-10 Freeway in the 1950s made it an easy commute to Los Angeles and Orange Counties. Almost 80 percent of the housing stock within the City was built since 1970. There are currently several new home master planned communities selling homes. The last three years have seen residential building permits growing significantly after a lull in the 10 years since the Great Recession. The area has excellent access via three major freeways and the historic Route 66. The area’s central location, reasonable land prices and the availability of land for development combine to make the area a prime area for future growth.

THE SUMMIT AT ROSENA SPECIFIC PLAN / IMMEDIATE SURROUNDINGS

The Summit at Rosena Specific Plan (previous name of Gabion Ranch – “Specific Plan”) was originally approved March 22, 2006 . Per the Specific Plan, Gabion Ranch encompasses 179.8 acres and was approved for up to 898 residential homes and condominiums and up to 20,000 square feet of new commercial -retail space. The entire Gabion Ranch project is shown on the below land- use map with a yellow dashed line identifying the subject property.

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The subject property, also known as Phase Two of Gabion Ranch, includes Planning Areas 12, 15, and 17-19. Planning Area 16 is within the boundaries of Fontana CFD No. 95, however are open space and recreation areas which are not taxable and therefore not valued within this appraisal. Phase One includes the remainder of the Specific Plan and consists of Planning Areas 1-4, 10 and 13. While Planning Area 15 was originally an elementary school, it was not needed by Fontana Unified School District and was approved for 3 9 additional homesites per the Specific Plan. It should be noted that Planning Area 15 was actually developed into 33 homesites (subject Stonegate property).

Per the Specific Plan, the Planning Area details are as follows:

Land Use. Acres Units
Residential 138.65*
Townhouse 347
Garden & Courts 190
SFR 4,000 sf 97
SFR 5,000 98
SFR 6,000 75
SFR 10,000 88*
Commercial 1.0
Open Space
Edison Trails Park (SCE ROW) 20.00
Pocket Park 1.75
Dog Park 2.0
Tot Lots 0.5
Greenways/Trails 4.5
Other Community Purpose
Dedications of Roadway 10.4
Sub-Total 179.8
Less: SEC ROW and Dedications (30.4)
Total 149.4 895
*Assumes Elementary School Site developed to 39 lots with minimum 10,000 sf The purpose and intent of the Specific Plan is to create an amenity -rich, mixed use, residential community in North Fontana. The amenities include creating a 20- acre park with a quarter -mile running track ; demonstration gardens ; a trail system w ith workout stations; a community recreation center for use by residents with a pool, lap pool, spa, weight room, cabana and barbeque; a neighborhood pocket park with two half -court basketball courts, picnic/BBQ areas and restrooms; two tot lots, one with restrooms; an extensive system of greenways with off-street trails and a dog park.

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with a density of up to 10 dwelling units per acre and attached townhomes with a density of up to 16 dwelling units per acre. While there are 895 total proposed residential units in the Specific Plan, this appraisal refers to only Phase Two which consists of 280 proposed residential units.

Gabion Ranch is located at the northwest corner of Summit and Sierra Avenues, two of the main arterials in North Fontana. Both Summit and Sierra have on/off ramps from I-15 creating good access to the master planned community. The community is generally bordered by Casa Grande Avenue to the north, Sierra Avenue to the east, Summit Avenue to the south and Cypress Avenue to the west. The site is bisected by a 3 30-foot Southern California Edison (SCE) easement which includes high- power lines. North of the subject is generally undeveloped lands (currently being graded for Arboretum Gardens, a residential community) while to the east is existing industrial use (Target Distribution Center, LGE Electronics Distribution Center and FedEx Distribution Center ).

South of Summit Avenue is the existing Sierra Lakes Golf Course and master planned community. To the west is existing housing and Summit Place, a new home community recently closed out by Taylor Morrison. To both the north and northeast of the subject is the Arboretum, a new home master planned community also being developed by Lennar.

Shopping is available at Summit Avenue and I -15 1.5 miles west at Falcon Ridge Town Center and at Sierra Avenue and the 210 Freeway, 0.8 miles south at the Sierra Lakes Marketplace with a substantial amount of commercial fronting the 210 Freeway between Sierra Avenue and Citrus Avenue. While the original Specific Plan had some commercial land use at the southeast corner of the overall Gabion Ranch site within Phase Two (Planning Area 19), this has been changed to residential.

Gabion Ranch has good access to the local schools of the Fontana Unified School District with Summit High School located about one mile west on Summit, Sierra Lakes Elementary School located one -half miles west on Summit and Wayne Ruble Middle School located about one mile south of the subject.

FONTANA CFD NO. 95 (SUMMIT AT ROSENDA PHASE TWO)

We have reviewed the City of Fontana CFD Report for Community Facilities District No. 95 (Summit at Rosena Phase Two) dated April 17, 2019 as prepared by David Taussig & Associates, Inc. The Summit at Rosena is being marketed (and referred to in this report) as Gabion Ranch. The CFD Report provides a brief description of Fontana CFD No. 95, a brief description of the Facilities to be funded, a brief description of the boundaries and an estimate of the cost of financing the bonds used to pay for the Facilities. Resolution No. 2019-036 was adopted March 12, 2019 and approved the intention to establish Fontana CFD No. 95.

The exterior boundaries of Fontana CFD No. 95 are generally the southern portion of the Specific Plan as shown on the map below.

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Per the CFD Report, Fontana CFD No. 95 encompasses approximately 44.4 gross acres of land with approximately 27.6 of the acres expected to be developed into uses subject to Fontana CFD No. 95. At time of the report, they were anticipating the subject proposed 280 residential units. Per the CFD Report, the types of facilities to be funded are streets, including grading, paving, curbs and gutters, sidewalks, street signalization and signage, street lights and parkway and landscaping related thereto, sewers, storm drains, fire protection facilities, police facilities, public facilities, landscaping, library facilities, park and recreational facilities and land, rights -of-way and easements necessary for any of such facilities. The types of public services to be financed by Fontana CFD No. 95 are fire protection and suppression s ervices, maintenance and lighting of parks, parkways, streets, roads and open space, flood and storm protection services and maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City. Incidental expenses are also included.

The estimated cost of public facilities at time of the CFD Report for both CFD No. 90 and CFD No. 95 were estimated as:

PUBLIC FACILITIES AMOUNT5
Acquisition Facilities $20,124,498
Street Improvements $6,992,825
Sewer Improvements $1,670,432
Storm Drain Improvements $8,371,657
Park and Recreational Facilities $3,089,584
Other Public Facilities $16,261,0646 $2,876,0457
Circulation Facility Improvements $4,344,878 $0
Landscape Facility Improvements $433,551 $0
Public Facility Improvements $558,737 $558,737
Police Facility Improvements $533,417 $533,417
Library Facility Improvements $374,219 $374,219
Fire Service Protection Improvements $146,288 $0
Inclusionary Housing Improvements $964,767 $964,767
Sewer Facility Improvements $781,936 $0
Storm Drain Facility Improvements $2,059,698 $0
Flood Control Facility Improvements $444,905 $444,905
Park Facility Improvements $5,618,668 $0
Additional Capital Facilities Infrastructure Improvements $4,765,367 TOTAL ESTIMATED COSTS $27,765,910

5 Estimates provided by project developer
6 Estimated amount of permit fees prior to anticipated City fee credits 7 Estimated amount of permit fees after anticipated City fee credits. _________________________________________________________________________________________________________ Appraisal Report
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The maximum bonded indebtedness for CFD No. 95 is $ 11,000,000. Per the latest sources and uses of funds ( dated April 7, 2022) for the proposed bond issuance, there will be an estimated $9,205,000 in Bond Par Amount and a Premium of $ 301,587 for a total bond fund deposit of $ 9,506,587 with $ 8,601,403 going to the project fund, $573,062 in a debt service reserve fund and $332,122 in underwriter’s discount and cost of issuance (all amounts subject to change). A larger copy of the Fontana CFD No. 95 boundary map is located in the Addenda for your review.

SUBJECT PROPERTY DESCRIPTIONS

The subject property consists of portions of the communities known as Stonegate, Iron Walk, Mountainside, Ridgeview, and Woodridge within the master planned community known as Gabion Ranch, being built out by Lennar. Immediately below is information that is applicable to the entire subject property (Phase Two of Gabion Ranch), while specific information about each community is broken out in sub-categories on the following pages.

Location: North side of Summit Avenue, generally bound by Sierra Avenue to the east and Cypress Avenue to the west, Fontana, California Three-Year
Sales History: Lennar purchased the entire Gabion Ranch (including all subject lands and additional property ) for $44,000,000 on November 22, 2017 from J.W. Mitchell Land Company. The site was in an unimproved condition. The site had an approved specific plan for 895 units at the time of sale; post close, as final maps were recorded, lot numbers were slightly adjusted. Individual homebuyers have closed on 181 lots since October 26, 2020.

Size and Shape: The subject property is irregular shaped, and contains an estimated

44.428 gross acres per the dimensions on Tract Map No s. 20214, 20214-2, 20214-3 and 20214-5.

Zoning: Per the current City of Fontana General Plan Land Use Map and the current Zoning Map, the site is designated as R-PC (or Residential Planned Community) and then has a Specific Plan overlay (see above section on Summit at Rosena Specific Plan).

Topography: The topography is generally flat, and currently the subject property is at street level of the surrounding streets. The lands have been developed into single -family detached lots and pads for attached townhomes. Drainage appears to be within an engineered street drainage system.

Soils Condition: We have reviewed three Geotechnical Reports of Rough Grading for Gabion Ranch all prepared by Petra Geosciences of Temecula, California. They are for:

• Updated Geotechnical Recommendations for Planning Areas 1-6 and 10-19 (for both Phase 1 and Phase 2) dated July 9, 2018;
• Tracts 20214- 1, 20214- 2, 30314- 3, 20214- 4, 20214- 5 and 20214-F, Planning Areas 10 through 15 and 17 through 19 _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 32
(Ridgeview and Stonebrook and additional lands outside of the subject property) dated June 24, 2019.
• Addendum Geotechnical Repor t for Mass Grading of Park Site within Planning Area 15, portion of Tract 2014- f (or no dash) which is located within Fontana CFD 95 however will not be taxable property, thus is not included in this appraisal, dated April 9, 2020.

All reports conclude that the earthwork was performed in general accordance with the recommendations presented in
recommendations provided in Petra’s Geotechnical
Recommendations report dated 2018.

It is an assumption of this report that the soils are adequate to support the highest and best use conclusion. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California and there are no known active faults crossing the site.

Environmental
Concerns: We have reviewed the Draft Environmental Impact Report (“EIR”) for the entire Summit at Rosena Specific Plan (both Phase One and Phase Two) prepared by Willdan and dated July 2005. We did not receive a Phase 1 Environmental Assessment to review. The EIR describes all environmental impacts the subject proposed specific plan could have. The report concludes that the only significant and unavoidable impacts are short and long- term construction induced air pollutants. The only project alternative that would not have these impacts is to not build on the site. Within the EIR, the issues raised by Agencies and the Public include: Fontana Unified School District expressing school impact concerns. The EIR includes an analysis of the environmental impacts associated with the elementary school; the Metropolitan Water District (MWD) in regards to the Rialto Pipeline/Foothill Feeder which extends through the site which is discussed in the EIR, the South Coast Air Quality Management District (SCAQMD) expressed general air quality impact concerns (addressed in EIR); the Native American Heritage Commission (NAHC) expressed concerns for archaeological resources
(addressed in EIR); and finally, the Santa Ana Regional Water Quality Control Board provided comments which the EIR responded to. The appraiser refers the reader to the EIR for additional information.

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City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 33
It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Flood Information: Per FEMA Map No. 060 71C7915H dated August 28, 2008 the property is shown as being located in Zone X, outside of the annual

0.2 percent change of flood.

Easements and
Encumbrances: We have reviewed two Preliminary Title Reports prepared by Lennar Title, which cover portions of Woodridge and Ridgeview within the subject property. They are:

Report 192002-1636656 dated January 31, 2022 covering portions of Woodridge;

Report 192002-1636666 dated January 31, 2022 covering portions of Ridgeview.

The exceptions within all reports include easements, CC & Rs and property taxes, special assessments, water rights, abutters rights to certain streets, that the property lies within the North Fontana Redevelopment Project area, a notice of builder’s election of handling of construction claims, matters shown as disclosed on said maps, matters in document entitled Declaration of Solar Energy Covenants, Conditions and Restrictions for Gabion Ranch, dedications for open space purposes, any facts, rights, interests or claims not shown by public records but which could be ascertained by an inspection, condominium plan documents and for the Gabion Ranch Master Association, and that no known matters otherwise appropriate were deleted from the report.

While the exceptions appear typical for subject-type lands, it is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 95. The appraisers are not title experts and it is recommended that any concerns relating to title should be addressed to the appropriate experts.

Utilities: All normal utilities are available to serve the subject site by the following companies:

Electrical: Southern California Edison Company
Natural Gas: SoCal Gas
Sewer/Water: City of Fontana
Schools: Fontana Unified School District

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City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 34
Streets/Access: Access to the subject property is convenient via I -15 to Duncan Canyon Road, east three quarters of a mile to Cypress Avenue, and south on Cypress Avenue for almost one mile to Veneto Drive.

Access via I -210 is convenient using exit Citrus Avenue north one mile to Summit Avenue, or one- and one-half miles to Casa Grande Avenue. From Summit Avenue, travel east one-half mile to Cypress Avenue, and head north on Cypress Avenue. The subject is accessible from Casa Grande Avenue via Napa Valley Road, from Cypress Avenue or Sierra Avenue via Veneto Drive, or from Summit Avenue via Napa Valley Road or Montelena Road.

I-15 is a major north/south freeway, which provides access to both international borders with Mexico and Canada.

I-210 is also an east/west freeway. It begins in Santa Clarita in Los Angeles County and ends near downtown San Bernardino. I -210 provides additional access parallel to I-10 (about three miles north at the subject) which gets congested at commuting times.

I-10 (six miles south of the subject) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.

I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida

Citrus Avenue has on/off ramps at I -10 and I -210 and provides access into central and south Fontana. Citrus Avenue’s northern terminus is at Duncan Canyon Road, just north of the subject.

Sierra Avenue in Fontana makes up the eastern border of the subject and provides north/south access into downtown Fontana and into Sunnyslope. It provides access and has on/off ramps for: I-15, I-210, and I-10.

Summit Avenue is a smaller local arterial that provides east/west access to the subject and to Falcon Ridge Town Center at the Beech Avenue/I-15 intersection.

Cost to Complete: Residential lands in the area are typically sold on a “finished lot” or “finished pad” basis. That is, builders pay a finished lot or finished pad price less the remaining development costs that will need to be expended to arrive at a “finished lot” or “finished pad”. Per Lennar and/or their representatives, the remaining land development cost s and fees for the subject portion of Gabion Ranch are estimated at $4,439,477. The homeowners are not responsible for any of the remaining costs; thus, they fall to the builder -owned property only.

There are a total of 280 proposed residential units within the subject _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 35
property and 181 have closed to individuals leaving 99 pads/units under builder ownership. Dividing the remaining costs of $4,439,477 by the 99 units/pads equates to $ 44,843.20 in remaining land development costs per pad/unit. These costs will be taken into account in the valuation section, later within this report.

Homeowner’s
Association: Per Lennar Representatives, the master Gabion Ranch homeowner’s association assessment is estimated at $80 per unit at build-out.

Stonegate:

Legal Property
Description: Lots 1-33 of Tract Map No. 20214- 2. Stonegate includes additional lots to the southwest within Phase Two of Gabion Ranch which are not included in the Fontana CFD No. 95 boundaries, thus, are not addressed in this report.

Property Owner: Individual Owners as to Lots 1-33 of Tract 20214-2.

Assessors
Parcel Nos.: 0239-973-01 thru 033

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 36
Property Taxes: The San Bernardino County website does not have property taxes shown for these parcels at this time. It is an assumption of this report that the overall taxes and assessments are under two percent.

Size & Shape: Tract Map 20214- 2 is roughly rectangular in shape and encompasses 11.278 gross acres and 7.765 net acres. Based on the 33 lots within the 11.278 gross acres, the site equates to a density of

2.93 dwelling units per acre.

Entitlements: The subject portion of Stonegate is covered by Tract Map No. 20214- 2, recorded December 19, 2019. The map divides the property into 33 single-family detached lots with a minimum lot size of 10,000 square feet.

Internal Streets: Internal streets within Stonegate include: Oakville Street, Turley Way and Trivento Place. The models for Stonegate are located in Phase 1 of Gabion Ranch and are not included in the subject property.

Current Condition: The subject property has been graded and developed into 33 single- family detached lots. The lots are in a physically finished condition with streets complete and utilities stubbed to each lot. All 33 lots include completed homes, with all 33 individually owned.

Improvement
Description: Stonegate at Gabion Ranch i s proposed for 67 houses, 3 3 located within the subject property. Stonegate offers four floorplans (although only three are included within the subject lots) with four architecture styles: American Farmhouse, California Ranch, Craftsman and Monterey. The homes feature one - and two- story plans with attached three car garages, and a NextGen floorplan option. Home exteriors include Boral cool roof tiles, sectional roll -up garage doors with fully drywalled interior garages, block wall fencing with tubular steel gates, and exterior lighting. Plans include second floor laundry rooms (per plan), walk in closets, tankless water heaters, raised panel doors, LED downlights, bullnose corners and rocker light switches. Gourmet kitchens with islands featuring granite slab countertops and backsplashes, GE stainless steel appliances and a choice of white Thermofoil or maple cabinetry. Lennar also advertises their connectivity features with Wi -Fi certification, smart thermostats, deadbolts and Ring doorbells.

We have rev iewed Stonegate’s sales information from the builder which includes 33 homes closing between October 28, 2020 and September 24, 2021. Closed sale prices range from $655,790 to $839,590. There are currently no escrows at Stonegate included within the subject boundaries as all homes have closed . Per public record, there have been no resales and per our inspection there were _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 37
no homes listed for resale. The base pricing at time of sell -out was from $691,323 to $829,240. The houses are detailed below.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
1 4 / 3 1 / 3 2,470 N/A
2 4 / 3.5 1 / 3 2,820 12
3 5 / 3 2 / 3 3,523 7
4 6 / 4.5 2 / 3 4,122 14
Total 33
Iron Walk:

Legal Property
Description: Lots 1-22 and 43-58 of Tract 20214-3. Iron Walk includes additional lots to the northwest within Phase One of Gabion Ranch which are

Property Owner: Individual Owners as to Lots 1-21 and 43-58 of Tract 20214-3.

Assessors
Parcel Nos.: 0239-266-01; 0239-974-01 thru 037

Property Taxes: The San Bernardino County website does not have property taxes shown for these parcels at this time. It is an assumption of this report that the overall taxes and assessments are under two percent.

Size & Shape: Tract Map 202 14-3 which houses Iron Walk’s 38 lots, plus 35 lots within Mountainside, is irregular in shape and encompasses 14.915 gross acres and 10.371 net acres, the difference being public right of ways for roads and landscape areas. Based on the 73 lots within the 14.915 gross acres equates to a density of 4. 896 dwelling units per acre.

Entitlements: Iron Walk is covered by Tract Map No. 20214 -3, recorded April 15, 2020. The map divides the property into 73 single-family detached lots (38 of which fall within Iron Walk) with a minimum lot size of 5,000 square feet.

Internal Streets: Internal streets within Iron Walk include Oakville Street, Pegasus Bay Place, Rubicon Way, and Shafer Court. The models for Iron Walk are located in Phase One of Gabion Ranch and are not included in the subject CFD No. 95.

Current Condition: The subject property has been graded and developed into 38 single- family detached lots. The lots are in a physically finished condition with streets complete and utilities stubbed to each lot. All 38 lots include completed homes that have closed to individuals.

Improvement
Description: Iron Walk at Gabion Ranch Phase Two includes 38 homes being built out by Lennar. Iron Walk offers three floorplans with four architecture styles: American Farmhouse, California Ranch, Craftsman and Monterey. The homes feature one- and two-story plans with attached two car garages, and a NextGen floorplan option. The NextGen (“NG”) floor plans have a separate entrance and living area allowing for a multi-generation household. Home exteriors include Boral cool roof tiles, sectional roll -up garage doors with fully drywalled interior garages, block wall fencing with tubular steel gates , and exterior lighting. Plans include second floor laundry rooms (per plan), walk in closets, tankless water heaters, raised panel doors, LED downlights, bullnose corners and rocker light switches. Gourmet kitchens with islands feature granite slab countertops and back splashes, GE _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 39
stainless steel appliances and a choice of white Thermofoil or maple cabinetry. Lennar also advertises their connectivity features with Wi- Fi certification, smart thermostats, deadbolts and Ring doorbells.

We have reviewed Iron Walk’s sales information from the builder which includes 38 homes closing between January 21, 2021 and October 1, 2021. Closed sale prices range from $557,490 to $744,585. There are currently no escrows at Iron Walk included within the subject boundaries as all 38 homes are closed. Per public record, there have been no resales and per our inspection there were no homes listed for resale. The base pricing at time of sell -out was from $591,490 to $692,490. The houses which are over 95 percent complete are detailed below.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
1 3 / 2 1 / 2 1,950 14
2 4 / 3 2 / 2 2,723 12
3 4 / 3.5 2 / 2 3,180 12
Total 38

Mountainside:

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 40
Legal Property
Description: Lots 23- 42 and 59- 73 of Tract 20214- 3. Mountainside includes additional lots to the northwest located within Phase One of Gabion Ranch which are not included in Fontana CFD No. 95, thus are not addressed in this report.

Property Owner: Individual Owners as to Lots 23-42 and 59-73 of Tract 20214-3.

Assessors
Parcel Nos.: 0239-266-02 thru 036

Size & Shape: Tract Map 20214-3 which houses Mountainside’s 35 lots, plus 38 lots within Iron Walk, is irregular in shape and encompasses 14.915 gross acres and 10.371 net acres, the difference being public right of ways for roads and landscape areas. Based on the 73 lots within the 14.915 gross acres equates to a density of 4.896 dwelling units per acre.

Entitlements: The subj ect portion of Mountainside is covered by Tract Map No. 20214-3, recorded April 15, 2020. The map divides the property into 73 single-family detached lots (35 of which fall within Mountainside) with a minimum lot size of 6,000 square feet.

Internal Streets: Internal streets within Mountainside include Oakville Street, Pegasus Bay Place, Rubicon Way, and Shafer Court. The models for Mountainside are located in Phase One of Gabion Ranch and are not included in the subject CFD No. 95.

Current Condition: The subject property has been graded and developed into 35 single- family detached homes. The lots are in a physically finished condition with streets complete and utilities stubbed to each lot and completed homes on some lots. All 35 lots include completed homes that have closed to individuals.

Improvement
Description: Mountainside at Gabion Ranch is proposed for 71 proposed homes, 35 which are within the subject property, being built out by Lennar.

Mountainside offers three floorplans with four architecture styles:

American Farmhouse, California Ranch, Craftsman and Monterey.

The homes fe ature one- and two-story plans with attached two car garages. Home exteriors include Boral cool roof tiles, sectional roll - up garage doors with fully drywalled interior garages, block wall fencing with tubular steel gates , and exterior lighting. Plans incl ude second floor laundry rooms (per plan), walk in closets, tankless water _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 41
heaters, raised panel doors, LED downlights, bullnose corners and rocker light switches. Gourmet kitchens with islands feature granite slab countertops and backsplashes, GE stainles s steel appliances and a choice of white Thermofoil or maple cabinetry. Lennar also advertises their connectivity features with Wi -Fi certification, smart thermostats, deadbolts and Ring doorbells.

We have reviewed Mountainside’s sales information from the builder which includes 35 homes closing between October 26, 2020 and April 22, 2021. Closed sale prices range from $520,500 to $728,100.

Per public record, there have been no resales and per our inspection there were no homes listed for resale within the subject portion of Mountainside. Within Phase One, we found two re- sales which will be discussed under the valuation section later within this report. The base pricing at time of sell-out was from $610,400 to $728,900. The houses are detailed below.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
1 3 / 2 1 / 2 2,140 12
2 5 / 4 2 / 2 3,251 10
3 5 / 3.5 2 / 2 3,325 13
Total 35

Ridgeview:

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 42
Legal Property
Description: Lots 1-54 of Tract 20214-5. Ridgeview includes additional lots to the northwest in Gabion Ranch Phase One which are not included in Fontana CFD No. 95, thus are not addressed in this report.

Property Owner: Lennar Homes of California, Inc. as Lots 1 -4 and 47- 54 of Tract 20214-5. Individual Owners as to Lots 5-46 of Tract 20214-5.

Assessors
Parcel Nos.: 0239-277-01 thru 54

Size & Shape: Tract Map 20214- 5 which houses the subject 54 cluster lots, is roughly rectangular in shape and encompasses 6.396 gross acres and 5.35 net acres, the difference being public right of ways for roads and landscape areas. Based on the 54 cluster lots within the 6.396 gross acres equates to a density of 8.44 dwelling units per acre.

Entitlements: The subject portion of Ridgeview is covered by Tract Map No. 20214- 5, recorded June 23, 2020. The map divides the property into 5 4 single-family detached lots with a minimum lot size of 3 ,000 square feet (8.4 du/acre).

Internal Streets: Internal streets within Ridgeview include: Villa Maria Way and Wyndham Lane. The models for Ridgeview are located in Phase One of Gabion Ranch and are not included in the subject CFD No. 95.

Current Condition: The subject property has been graded and developed into 54 single- family detached lots with access off shared court streets . The lots are in a physically finished condition with streets complete and utilities stubbed to each lot and completed homes on some lots. All 54 lots have homes over 95 percent complete including 42 individually owned homes, and 12 production homes over 95 percent complete (all in escrow).

Homeowner’s
Association: In addition to the Gabion Ranch Master Association dues of $80 per month per unit, Ridgeview has an assessment of $75 per month for their common areas.

Improvement
Description: Ridgeview at Gabion Ranch is proposed for a total of 108 homes, 54 within the subject property that are detached homes arranged in a motor court/courtyard style being built out by Lennar. Ridgeview offers four floorplans with four architecture styles: American Farmhouse, California Ranch, Craftsman and Monterey. The homes feature two- story plans with attached two car garages. Home _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 43
exteriors include Boral cool roof tiles, sectional roll -up garage doors with fully drywalled interior garages, block wall fencing with tubular steel gates, and exterior lighting. Plans include second floor laundry rooms, walk in closets, tankless water heaters, raised panel doors, LED downlights, bullnose corners and rocker light switches. Gourmet kitchens with islands featuring granite slab countertops and backsplashes, GE stainless steel appliances and a choice of white Thermofoil or maple cabinetry. Lennar also advertises their connectivity features with Wi -Fi certification, smart thermostats, deadbolts and Ring doorbells.

We have reviewed Ridgeview’s sales information from the builder which includes 42 homes closing between August 13, 2021 and January 18, 2022 . Closed sale prices range from $472,900 to $590,200, while estimated final sale prices on current escrows range from $555,900 to $595,200. Per public record, there have been no resales and per our inspection there were no homes listed for resale within the subject portion of Ridgeview. Within Phase One our search revealed one sale which will be discussed under the valuation section later within this report. Current base pricing per Lennar is from $556,900 to $587,833. The houses which are over 95 percent complete are detailed below.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
Bldr.

Owned
1 3 / 2.5 2 / 2 1,578 14 2
2 3 / 2.5 2 / 2 1,715 14 5
3 4 / 3 2 / 2 1,790 7 4
4 4 / 3.5 2 / 2 1,801 7 1
Total 42 12

Woodridge:

Property Owner: Lennar Homes of California, Inc. as to Units 101-112; 201-212, 301- 312, 408-409 and 412, Units 601- 612, 701-712, 801-812 and 901- 912 all located within portions of Lots 1-4 of Tract 20214.

Individual Owners as to Units 401-407, 410-411, Units 501-512 and Units 1101-1112 on portions of Lots 2 and 3 of Tract 20214.

Assessors
Parcel Nos.: 239-278-11 fhru 82 and 0239-914-13 thru 60.

Size & Shape: Tract Map No. 2021 4 (also known as Tract 20214- F) houses the subject’s 120 units/pads. The map is generally rectangular in shape and totals 11.839 gross and 5.168 net acres with the difference being setback and landscape areas, streets and roads along with a community park and water quality basin which is shown as Lot N on the map and contains 3.892 acres. Lots 1-4 of Tract Map 20214 houses the subject 120 attached units/pads. Based on the 7.947 gross acres (total acreage minus the park/water basin) and the 120 total units, the overall density for the project is 15.10 dwelling units per acre.

Entitlements: Woodridge is covered by Tract Map No. 20214 , recorded August 4, 2020, as well as further condominium maps which divides the subject portion of Woodridge into 120 attached townhomes with a density of 15 du/acre.

Internal Streets: Internal streets within Woodridge include Wyndham Lane.

Current Condition: The subject property has been graded and developed into 120 single-family attached row townhome pads arranged in a motor court style. The pads are in a physically finished condition with streets complete and utilities stubbed to each unit and completed homes on some lots. There are 48 units with homes over 95 percent complete including 33 individual owned homes and 15 production homes (14 in escrow). There are 24 additional homes under construction (under 95 percent complete with 21 in escrow) and 48 remaining finished pad status units (not yet released).

Homeowner’s
Association: In addition to the Gabion Ranch Master Association dues of $80 per month per unit, Woodridge has an assessment between $71 and $110 per month (depending on the unit) for their common areas. _________________________________________________________________________________________________________ Appraisal Report
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Kitty Siino & Associates, Inc. Page 45

Improvement
Description: Woodridge at Gabion Ranch includes 228 proposed townhome style condominiums arranged in a motor court/courtyard style being built out by Lennar. The subject portion of Woodridge includes 120 proposed townhomes. Woodridge offers five floorplans with Craftsman and California Ranch-influenced architecture. The homes feature two-story plans with attached one to two- car garages. Home exteriors include Boral cool roof tiles, sectional roll -up garage doors with fully drywalled interior garages, tubular steel fencing with tubular steel gates, and exterior lighting. Plans include second floor laundry rooms, walk in closets, tankless water heaters, raised panel doors, LED downlights, bullnose corners and rocker light switches. Gourmet kitchens with islands featuring granite slab countertops and backsplashes, GE stainless steel appliances and a choice of white Thermofoil or maple cabinetry. Lennar also advertises their connectivity features with Wi -Fi certification, smart ther mostats, deadbolts and Ring doorbells.

We have reviewed Woodridge’s sales information from the builder which includes 33 homes closing between September 22, 2021 and February 11, 2022. Closed sale prices range from $332,000 to $532,500, while estimated final sale prices on current escrows range from $386,150 to $543,500. Per public record, there have been no resales and per our inspection there were no homes listed for resale.

Current base pricing per Lennar is from $399,000 to $548,500. The houses which are over 95 percent complete are detailed below.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
Bldr.

Owned
1 1 / 1.5 2 / 1 849 5 3
2 2 / 2.5 2 / 2 1,391 11 5
3 3 / 3 2 / 2 1,324 6 2
4 3 / 2.5 2 / 2 1,652 6 2
5 3 / 2.5 2 / 2 1,826 5 3
Total 33 15
In addition to the above shown houses, there are 24 homes under construction and finished pads for an additional 48 townhomes.

THE INLAND EMPIRE HOUSING MARKET

In analyzing the area’s housing market, population growth and economic conditions need to first be considered.

Population
The County population grew at a 0.02 percent increase between January 2020 and January 2021 and an average of 2.1 percent the previous 20 years. The slowdown in population growth during this time was primarily due to the sluggish national economy and the disruption during COVID. It is interesting to note that while the County did not show growth during this time period, the City of Fontana grew at 1.1 percent. Prior to the COVID pandemic predictions were for the County to grow at an average annual rate of

0.95 percent over the next ten years. This equates to an increase of approximately 20,000 residents per year suggesting the need for about 7,000 homes per year within the County.

The COVID-19 influence is still unknown on the County’s population growth. New home sales in some cities in the County in 2020 were higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market. These factors may increase County population growth in 2021 and 2022.

Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than in other areas of Southern California. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 was considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equity. A fter essentially remaining flat for a few years, housing prices began to increase in late 2012 through January 2020. Once the COVID pandemic hit in March 2020, the housing market seemed to slow down significantly in March but by May 2020 new homes were onc e again going _________________________________________________________________________________________________________ Appraisal Report
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Kitty Siino & Associates, Inc. Page 47
under contract with new homes selling at above average absorption rates from May 2020 into February 2022 in the region.

Economic growth in the Inland Empire was strong between 2002 and 2007. Job losses occurred between 2007 and 2009, with a leveling out in 2010, a slight upturn in 2011, and general increases since that time until the economic shutdown due to COVID which created a new recession. The unemployment rate for the County was 5.1 percent (per the December 2021 Employment Development Department “EDD” report), lower than the high of 15.1 percent in July 2010. The December 2021 County rate was essential the same as the California unemployment rate (5.0 percent), but was higher than the December 2021 National rate of 3.7 percent. The pre- COVID unemployment rate in February 2020 for the County was 4.1 percent. According to CNN Business, as of January 2022 the U.S. economy is operating at 91 percent of where it was in early March 2020, prior to the pandemic. While it was thought once the CO VID pandemic ends, the Nation will get back to the previous highs, it is now looking like there may be some changes in the post-COVID economy. These changes include many companies switching to work - from-home for their employees whenever possible, on-line shopping will be a larger factor in retail, people moving out of urban areas to suburban areas, on- line academia rising and many now believing that the travel and leisure industry may never get back to the old “normal” as restaurants have closed, hotels are currently at less than 75 percent capacity and airline revenues are down significantly. The closing of businesses appears to have had a ripple effect on trade as materials and consumer goods are hard to obtain which is creating long lead times for many orders.

The housing market has played a large role in the past two recessions. The housing market was a significant factor in strengthening the impact of the Great Recession. Due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives such as sub-prime and non-conventional mortgages to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up due to the problems in the sub- prime and non-conventional mortgage markets. In March 2007, the Federal Government _________________________________________________________________________________________________________ Appraisal Report
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initiated efforts to stop or limit sub- prime mortgages. Unfortunately, the damage had already been done with sub-prime mortgages playing a role in the 2008 shake out of Wall Street and contributing significantly to the U.S. economic downturn. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid-2012 when home prices began a steady climb.

Thus far into the COVID recession, new home sales have been one of the brightest spots in both the local and National economies. While new home sales slowed in March and April 2020 due to the COVID pandemic, prices did not appear to change in the County.

Some builders increased concessions in March 2020, but by May concessions were back to where they were prior to COVID, and prices have increased significantl y since. The Inland Empire was documented as the tightest housing market in the Nation (OC Register October 2020) based on the supply. The supply of homes in the Inland Empire is still constrained which has put pressure on prices to rise. As of mid-January, over 93 percent of new home builders in the Nation were stating pricing has increased over the past month. However, there are signs that we may be approaching a price ceiling. Per Metrostudy’s survey of homebuilders, their largest concerns relate to (1) availability of materials; (2) cost of materials and land increasing; (3) increasing interest rates leading to affordability issues for buyers; (4) labor shortages; and (5) delay on government services.

Home loan mortgage rates have been and are still playing a large part in the robust housing market. The Board held mortgage rates at all -time lows after the Great Recession in an attempt to assist the housing market. Low rates appeared to help for quite a while. However, first-time buyers are now having a hard time entering the housing market due to rising prices, despite historically low mortgage rates. The Board had kept interest rates below historical averages, dropping rates to zero in December 2008.

Subsequently, there had been eight subsequent one- quarter point increases with the December 2018 increase bringing the Federal Rate to 2.25- 2.5 percent which appeared to have a negative impact on home sales. In 2019 the Board reduced the rate one-quarter _________________________________________________________________________________________________________ Appraisal Report
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percent three times in an effort to spur the economy. This appeared to help as housing sales began to increase in early 2020, prior to COVID. On March 3, 2020, due to the COVID pandemic economic disruption, the Board reduced the Federal Rate one- half percent. Then on March 16, 2020 they reduced the rate an additional one percent to the current Federal Rate of 0.00 – 0.25 percent, the lowest rate in history. The quoted average U.S. rate for a 30-year fixed mortgage per FRED (Federal Reserve Economic Data) as of February 17, 2022 was 3. 92 percent, w hich is slightly higher than the January 2022 average, and much higher than the most recent low of 2.65 percent on January 7, 2021.

Mortgage applications have been spiking due to these low rates, and the fear that they are starting to slowly tick up. The Federal Reserve Board is expected to increase rates at a minimum of one-quarter percent at the upcoming March meeting which has been felt in the increase of mortgage rates. There are predictions for up to four rate increases this year which will increase mortgage rates back to more “normal” levels.

The fall out of the shut-downs from the COVID pandemic are still affecting the economy.

As previously discussed, the Federal Government approved $5.6 trillion in COVID relief in order to keep the economy stable. This amount of money entering the system appears to be fueling inflation with the 2021 National inflation rate at 7 percent compared to a 1.2 percent average in 2020. High inflation is one of the factors that the Federal Reserve Board watches in order to determine both bond purchases and fluctuations in the interest rate. Due to the recent inflation, the Board has begun tapering off their purchase of bonds.

Since June 2020, in order to help stabilize the economy, the Board has purchased $80 billion in Trea sury Bonds and $40 billion in Mortgage Securities each month. At the November Board meeting, the decision was to begin reducing the bond purchases of both Treasury Bonds Mortgage S ecurities. The monthly purchase of $40 billion in mortgage-backed securities between June 2020 and November 2021 fueled the already active home buying and refinancing markets.

Residential Land Development
While there had been little land development going on in most of the Inland Empire during the years 2008- 2011, the second half of 2012 saw a resurgence in the more coveted _________________________________________________________________________________________________________ Appraisal Report
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areas such Ontario, Rancho Cucamonga, Fontana, Chino and Chino Hills in Southwest San Bernardino County. The increase in housing prices since 2012 coupled with the limited availability of supply made land dev elopment feasible once again for homebuilders. It is thought that the increase in regulations, which has significantly increased the time of processing entitlements, has limited the master developers’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to builders, there are few currently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to record or a public builder buying a larger piece of land but develops the land for its own use (such as the subject property).

Land sales slowly grew from 2012 up to a peak in 2017 with 2018 and 2019 showing lower land transactions. Since then, residential land sales have eclipsed the 2017 peak as builders are trying to keep up with the demand for new homes. With new housing appearing to be one of the strongest sectors in the COVID economy, there appears to be a rebound in new -home starts. It’s possible that the rush to build by the new -home builders in the Inland Empire may create a slower 2022/2023 in residential land sales.

That is, residential land sold exceptionally well in 2021 and is continuing to sell well in early 2022, but that may be pulling future demand forward creating a softening in the land market in the future.

New Home Sales and Pricing
We have researched new single- family homes within the subject real estate market in order to reflect residential trends . It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. In reviewing new home sales in the Inland Empire market area, per the January 30, 2022 Ryness Report, the average year to date sales are eight percent above the previous year however, when reviewing January 2020 to January 2022 (prior to pandemic and since the pandemic), sales increased 31 percent. This increase is partially slowed due to the limited available supply which was not meeting demand, thus put pressure on pricing along with historically low interest rates. As rates go down, purchasing power becomes larger, which gives new-home buying a boost. At the beginning of the fall season, it appeared sales _________________________________________________________________________________________________________ Appraisal Report
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were seeing a slight slow- down with some builders dropping pricing in order to keep absorption up. While there was a slight slowdown in September 2021 which suggested that a peak in pricing may have been reached, sales numbers jumped back up for a strong end of 2021 and a very strong start to 2022, possibly from predictions of rates rising in later in the year. Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, inspections, interior designers and landscapers, all contributing to the area economy.

The years 2018, 2019 and early 2020, saw a significant increase in new homes projects in the Inland Empire. Due to the high number of land sales in 2017, new homes projects increased 84 percent in the Inland Empire from 131 new home projects in January 2018 to 242 new home projects in February 2020; however, decreased since that time to 184 new home projects per the January 30, 2022 Ryness Company Report. While this is a significant increase in number of new home projects since 2018, the number of new home sales is still running over 50 percent below the average of 2002 through 2006. New home sales in overall San Bernardino County for the 3rd quarter of 202 1 were 1,228 (for the quarter) while new ho me sales for the 3rd quarter of 2020 were 1,051, representing an increase of 16.8 percent (latest data per Husing). The 1, 228 new home sales for the quarter would equ ate to 4,912 new home sales for the year, which relate to the aforementioned needed homes based on population growth of about 7,000 per year. This suggests new home supply is not keeping up with the demand due to population growth.

New single -family home prices (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current new home median price is a record high of $ 529,250 for Riverside County and $ 545,250 for San Bernardino County (for a combined average of $535,419) per John Husing’s October 2021 report. This reflects an increase of over 99 percent from the bottom o f the cycle and an increase of 21 percent over its previous peak. It is important to note that building trends changed to building smaller, more economical homes since pre- Great Recession, so this increase likely _________________________________________________________________________________________________________ Appraisal Report
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demonstrates an even higher increase when looking at a price per square foot basis. New home sale prices typically fluctuate based on the land value more than the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basis do not typically fluctuate as much as land values. However, recently there have been inflationary increases in construction costs adding to the increased cost of building a new home.

Within our search for the most comparable actively selling new home communities, we searched the subject’s city of Fontana along with the neighboring cities of Rancho Cucamonga, Rialto and Jurupa Valley. Our search for comparable new home projects as compared to the subject communities within the competitive market area resulted in fifteen new home projects with base pricing ranging from $395,150 to $ 978,000. The subject’s either current or final base pricing (if sold out) range s from $ 395,150 to $826,990.

Existing Homes Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in the Inland Empire. According to the California Association of Realtors’ most recent data, within overall Southern California, the median price paid for an existing single-family home in January 2022 ($740,000) is down 1.3 percent from the previous month, however up 13.8 percent year-over-year from $650,000 in January 2021. Existing home sales in Southern California overall were down 10. 1 percent year-over-year as of January 2022. While this is an annual decrease, sales are substantially up from 2019 sales. Low interest rates have been allowing existing home owners to move up. The overall Southern California numbers compare to San Bernardino County with $450,000 as the median price paid for an existing home in the County in January 2022, down 2.2 percent from the previous month however up 15.4 percent year over year ($390,000).

Sales of existing homes in the County were down 7.7 percent year -over-year. The decrease in sales is mainly due to a lack of supply: less inventory of existing homes.

Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.

Southern California Existing Home Sales
County Jan. 2022 Dec. 2021
Jan.
2021
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $800,960 $826,500 $704,850 -3.1% 13.6% -12.4% Orange $1,195,000 $1,182,500 $971,000 1.1% 23.1% -18.4% Riverside $590,000 $590,000 $495,500 0.7% 19.1% -4.5%
San Bernardino $450,000 $460,000 $390,000 -2.2% 15.4% -7.7% San Diego $875,000 $836,700 $730,000 4.6% 19.9% -6.7%
Ventura $850,000 $850,000 $776,000 0.0% 9.5% -11.7%
Southern Calif. $740,000 $749,900 $650,000 -1.3% 13.8% -10.1% Source: California Association of Realtors

Based on January 2022 median existing homes prices, in comparison to the majority of the surrounding counties, San Bernardino County has a definite price advantage. The “San Bernardino County Advantage” (price difference between San Bernardino and surrounding counties) is $1 40,000 as compared to Riverside County, $ 350,960 as compared to Los Angeles County, $400,000 as compared to Ventura County , $425,000 as compared to San Diego County and $745,000 as compared to Orange County. That is, in January 2022 , the median priced home in San Bernardino County was $ 745,000 less than the median priced home in Orange County ($1,195,000). Typically, as the price advantage widens, homebuyers are more open to comm uting to further out areas. With the current work-from-home concept, the suburban areas are seeing more growth which is putting pressure on home prices in the Inland Empire.

In a separate attempt to capture the amount of increase in home prices, the resale activity of existing homes in the subject’s immediate area (per Redfin.com) has been reviewed.

The number of sales and sale prices of existing homes within market areas of the subject are shown in the table below.

Community
Name
Location
To
Subject

No. of
Sales
Jan 2022
Price
Median

Price %
Change
from Jan.
2021
Fontana Subject 129 $620,000 31.9%
Lytle Creek North 3 $600,000 42.9%
Rancho Cucamonga West 109 $675,000 8.9%
Rialto East 57 $520,000 20.9%
Jurupa Valley South 61 $600,000 24.2%
Source: Redfin Housing Market Trends January 2022
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The median home price of a detached resale home in Fontana in January 2022 was $620,000, which is within the range of the resale detached home prices in the subject area. The low-end of the range relates to the Rialto which has older homes while the high- end of the range relates to Rancho Cucamonga. The above price fluctuations from year- to-year relate to the California Department of Real Estate’s overall San Bernardino County detached home resale price increase of 15.4 percent year over year from January 2021 to January 2022.

According to the Ryness Report dated January 30, 2022, there are currently 16 new home projects in the subject’s Central San Bernardino submarket with the City of Fontana housing 14 of them (including four within Gabion Ranch (two outside of Fontana No. 95).

Gabion Ranch - Sales and Pricing

The subject consists of portions of five new home communities within Phase Two of the Gabion Ranch master plan which is proposed for 280 new residences . Phase One included an additional 606 new residences within eight communities. Five of the eight communities (Iron Walk , Mountainside, Ridgevie w, S tonegate and Woodridge) have proposed homes within both phases. Within Phase Two, Stonegate began selling homes in May 2020 and generally sold out by March 2021 which suggests an absorption rate of

3.3 homes per month; however, in actuality they were s elling homes within Phase One so the absorption rate was higher. Iron Walk began selling homes in September 2020 with the final home sold in August 2021 resulting in a sales rate of 3.16 homes per month within Phase Two. Again, Iron Walk was selling homes in Phase One so actual absorption was higher within overall Stonegate. Mountainside began selling homes in Phase Two in April 2020 with the last one sold in March 2021 resulting in an average sales rate of 3.18 homes per month. Ridgeview began selling in January 2021 and had their last sale in December 2021 resulting in a sales rate of 4.5 homes per month within Phase Two. Again, they were selling within Phase One a portion of this time resulting in a higher actual sales rate. Woodridge began selling homes within Phase Two in April 2021 and has sold 68 _________________________________________________________________________________________________________ Appraisal Report
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homes resulting in an average sales rate of 6.8 homes per month with additional homes selling during some of this time in Phase One. The higher sales rates for the smaller product is typical as price points are important in the subject market. Looking overall at Phase Two, there have been 228 sales since May of 2020 suggesting an average sales rate within Phase Two of Gabion Ranch of 11.4 sales per month. It should be noted that communities sold out and several had temporary sell-outs due to construction not being able to keep up with demand. This delayed sales along with some communities not beginning sales until 2021, both factors which would result in a higher average absorption for overall Phase Two. While the COVID-19 pandemic has caused a significant disruption to the U.S. economy and the existing home market, it does not seem to have affected the new home housing market in the same way. Furthermore, according to the Inland Empire sales rates, the subject has been performing near or above the averages for the region.

We have also reviewed Empire Economics, Inc. Price Point Review Study for Fontana CFD No. 95 dated February 23, 2022. The study concluded that in comparison to the 2018 Price Point Study Review, all plans had price increases with the current market value of the plans increased by some 20 percent on average over this time period.

Within Gabion Ra nch Phase Two, actual sales prices have seen substantial increases since May 2020. We have reviewed the actual sales prices for each plan within each community. Prices increased at a minimum of ten percent (between April 2021 and November 2021 within Plan 4 of Woodridge) to a maximum of 21 percent (between September 2020 and August 2021 for Plan 3 of Iron Walk). In numbers the overall increases in the actual sales prices for each community have ranged from $ 49,150 to $131,990. These are considered to be significant increases in pricing.

Summary

The Inland Empire as a whole as well as San Bernardino County specifically have seen a substantial increase in pricing since 2012 with most areas, including the subject, in the past year showing double-digit increases. When the COVID pandemic shook the nation in early 2020, the new home market became the better option with new home sales very strong for the past two years. The subject’s pricing and historical average absorption is in _________________________________________________________________________________________________________ Appraisal Report
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line with the comparable communities. Sales rates in the immediate vicinity of the subject are generally at or above the overall average in the Inland Empire market area. Prices of new homes in the area have had significant increases with some showing over 10 percent year-over-year. The Inland Empire housing market is positive and healthy population growth is occurring in San Bernardino County. It is believed that as population continues to increase, housing growth will also continue.
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HIGHEST AND BEST USE ANALYSIS

The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:

"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”8

Proper application of this analysis requires the subject properties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered or demolished preparatory to redevelopment of the site with a more productive or ideal use.

“As If Vacant”
In the following analysis, we have considered the sites probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.

Physically Possible Uses
The subject property consists of 44.428 gross acres per the recorded Tract Maps that are irregular in shape and located in the northern portion of the City of Fontana on the east side of Cypress Avenue at Summit Avenue. According to the Summit at Rosena Specific Plan (prior name of Gabion Ranch), the entire Gabion Ranch site was undeveloped lands with a 330 -foot-wide SCE right of way bisecting the site from east to west. There is an additional 100-foot MWD right of way that runs east to west in the northern portion of the property along Casa Grande Avenue but does not appear to affect the subject property’s

8 The Appraisal of Real Estate, 11th Edition
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development potential. At time of the Specific Plan origination in 2006, there were some dirt roads, mostly associated wi th the two right -of-way easements across the property along with some trash and dirt dumped on the site. The subject site is surrounded by Cypress Avenue on the west, Casa Grande and vacant lands to the north, Sierra Avenue to the east and Summit Avenue to the south.

The subject site was graded for development into 280 single-family units with 106 single- family conventional detached lots, 54 single-family detached cluster lots and 120 pads for attached units. We have reviewed soils reports on the subject site. All reports we reviewed concluded that the grading of the site was done according to appropriate standards and that development of the site is feasible; however, all mitigation measures recommended within the reports should be adhered to during construction. The site is being developed with conventional single-family detached homes, small-lot single-family detached homes in a cluster format and attached townhomes. It is an assumption of this report that the soils are adequate to suppor t the highest and best use, and that there are no environmental issues which would slow or thwart development of the property . This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction.

An engineered drainage system appears to have been designed into a street drainage system for the entire master planned community . All standard utilities are available to serve the subject property. The site has good access via I-15 via either Summit Avenue, Duncan Canyon Road or Sierra Avenue. There is neighborhood shopping within one mile and regional shopping within 2.5 miles.

Based on the physical analysis, the size and access make the subject property physically suited for numerous types of development; however, the grading that has occurred on the site suggests residential development.

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Legality of Use
The subject property is located within the City of Fontana in the County of San Bernardino.

Per the City’s General Plan, the subject site is shown as R -PC for Residential Planned Community. In addition, on both the General Plan Land Use Map and the City Zoning Map, the site is shown as Specific Plan 22, which is the Summit at Rosena Specific Plan (previous name for Gabion Ranch). Per the Specific Plan, the subject and adjoining lands to the south were approved for up to a maximum of 895 dwelling units on the entire approximate 180 gross acres. The subject property is shown as Planning Areas 12 and 15-19 within the Specific Plan and has approvals for 280 residential units. A SCE high power line easement bisects the entire Specific Plan. In addition to the Specific Plan entitlements, the subject is covered by recorded Tract Maps 20214-2, 20214- 3 and 20214-5 which subdivide the majority of the subject property into 106 single-family detached lots and 54 single-family detached cluster lots. Tract Map 2021 4 was also recorded along with condominium maps dividing this map into 120 attached units.

Based on the legality of use analysis, the type of development for which the subject properties can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses.

Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. The subject site would possibly be residential per the above analyses. As discussed under the Inland Empire Housing Market section earlier within this report, the market has been on an upswing for almost a decade with strong increases in sales and pricing, a slowdown in late 2018 and increases since mid-2019. The subject property is located in North Fontana with several new home communities now selling with good to excellent sales rates , suggesting that residential lands in the immediate area are feasible to develop. The COVID-19 pandemic does not appear to have negatively affected new home sales in the Inland Empire, but rather appears to have increased absorption and pricing of new homes in the area.

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Based on the above analysis, the highest and best use for the subject property appears to be for single-family residential development with homes at the right price points. This coincides with the previous conclusions.

Based on the above analysis, in our opinion, the highest and best use for the subject property appears to be for residential land use.

Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands.

Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as if vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property is for residential land use.

Highest and Best Use – “As Improved”
The subject property consists of five communities within the Gabion Ranch master plan (Stonegate, Iron Walk, Mountainside, Ridgeview, and Woodridge) consisting of 280proposed homes . The 280 proposed homes are being developed by Lennar with homes ranging in size from 849 to 4,122 square feet with most recent base pricing ranging from $399,000 to $829,240. Included in the 280 proposed homes are 33 within Stonegate, 38 within Iron Walk and 35 within Mountainside which are all sold and closed out.

Ridgeview which includes small cluster lots proposed for 54 units, all sold with 42 closed at this time. The fina l community which includes 120 proposed attached motorcourt homes in Woodridge has 48 units over 95 percent complete (33 closed and remaining in escrow), an additional 24 under construction (21 in escrow) and 48 remaining pads which have not yet been released for sale. New home sales have been strong to very strong in the Inland Empire area with the subject projects selling at very good rates. Prices have increased at substantial rates ranging from 49,150 to $131,990 or between 10 and 20 percent. All of the homes are of good design and appear to be of good quality _________________________________________________________________________________________________________ Appraisal Report
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workmanship. It appears that the subject properties within Gabion Ranch have been well received and the neighborhoods are selling at the correct price points for the area. Based on the above information, it is concluded that the highest and best use for the subject property, is for the continued use, as improved.

VALUATION ANALYSIS AND CONCLUSIONS

The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For attached residential lands, they are typically sold on the basis of a finished pad for a townhome unit. That is, the sales price is determined by a finished pad value and then the remaining costs to develop the property to a finished condition are taken into account in the sales price. Therefore, in determining a current market value for the lands, the current condition of the lots will be considered. In the case of the existing home valuations, a single new-home sale is the unit of comparison. O ur search will include all new home projects within the subject’s immediate and surrounding market area to find comparable new homes for sale. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home.

The valuation will be presented as follows. First, a discussion of the small and attached land sales will be given. Each of the compa rable market data (on a finished pad basis) will be detailed along with a comparison discussion of their relationship to the subject high-density product on a finished pad basis. The remaining construction costs, if any , will be taken into consideration followed by a finished lot/unit value conclusion for the lands. Houses which are under construction (under 95 percent complete) will be valued on the basis of a finished pad rather than attribut ing value to a partially com plete improvement.

In the case of the completed (over 95 percent complete) builder-owned units, the homes will be valued using the Sales Comparison Approach to value to conclude on a retail value for each plan. This will be followed by a Discounted Cash Flow (“DCF”) Analysis due to the single ownership of multiple homes. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining _________________________________________________________________________________________________________ Appraisal Report
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development costs (if any), the marketing and carrying c osts associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. In the ca se of the individually owned homes, the concluded base value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. All of the value conclusions will take into consideration improvements funded by the Fontana CFD No. 95 special tax bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.

GABION RANCH LAND VALUATION ANALYSES

Within Phase Two of Gabion Ranch, there are a total of 280 proposed residential units, 181 units which are individually owned, 27 homes over 95 percent complete ( none of which are models – models are located in Phase One, not a part of this report), 24 homes under construction (under 95 percent complete) and 48 finished pads. The homes which are under construction (under 95 percent complete) will be valued on the basis of a finished pad rather than attribute value to a partially complete improvement.

Market Data Discussion

All of the remaining lands are attached townhome pads within Woodridge. As mentioned above, in this appraisal, we will consider a house under construction (under 95 percent complete) as a finished pad rather than attribute value to a partially complete improvement; therefore, we will value the homes under construction (under 95 percent complete) and the remaining lands as finished pads. Within Woodridge there are 24 units under construction and 48 remaining townhome pads, thus 72 townhome pads will be valued. We will conclude on a finished pad value, taking into consideration the remaining costs to develop the pads to a true, finished pad condition.

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We have searched the area and found the eight transactions summarized in the Addenda to be most comparable to the subject Woodridge pads. The sales are reported both on a purchase price basis and on a finished lot basis. The actual purchase price is typically less, depending on the condition of the land (lots or pads) at the time the property was acquired. Although some sales refer to “finished lots/pads,” they are typically physically finished lots/pads with some fees remaining to be paid to be considered true finished lots/pads. Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject property.

Land Sale No. 1 refers to the sale of 526 lots which are to be known as the Gardens at Arboretum. Lennar purchased the acreage which is located just north of Gabion Ranch, from Lewis Group of Companies (North Fontana Investment Company) in December 2021 for $91,935,500 per public record. The Arboretum has similar amenities which compared to the subject Gabion Ranch. The purchase included 69 triplex units, 99 cluster lots with a minimum size of 2,200, 109 cluster lots with a minimum size of 2,600, 97 lots with a minimum lot size of 4,000 square feet, 88 lots with a minimum lot size of 4,950 square feet and 64 lots with a minimum lot size of 6,000 square feet. We were unable to obtain finished lot /pad estimates on each p roduct however brokers familiar with the transaction reported the blended finished lot price estimated at $274,000. In comparison to the subject attached product, this transaction is considered to be significantly superior in lot size as the majority of the lots are detached and up to 6,000 square feet compared to the subject attached pads. It should be noted that this transaction is considered a bulk sale due to the number of lots/pads which would have commanded a discount, making this transaction consider ed to be inferior to the subject when looking at number of pads/lots.

Land Sale No. 2 pertains to the purchase of 107 lots located at the northeast corner of San Savaine Road and South Highland Avenue in Fontana, just south of the 210 Freeway. Richmond Am erican purchased the lands which had approvals for 46 alley loaded lots and 61 motorcourt cluster lots from the Stratham Group in December 2021 for $18,691,821 based on a reported blended finished lot price of $285,000. The site is _________________________________________________________________________________________________________ Appraisal Report
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adjacent to the 210 Freeway. The overall density of this transaction is 10 dwelling units per acre while the subject’s area of Woodridge is about 15 dwelling units per acre. The subject refers to attached product while this transaction has all detached small lots which command a premium making this sale superior in density and lot size to the subject. The location, adjacent to the 210 Freeway is considered to be inferior to the subject’s location within Gabion Ranch. In addition, the amenities associated with Gabion Ranch are considered to be superior to this transaction which will have a pool/clubhouse, however not to the extent of Gabion Ranch.

Land Sale No. 3 refers to the purchase by Landsea Homes of 489 units located just northwest of the subject nor thwest of Duncan Canyon Road and Interstate 15. Landsea purchased the site in September 2021 from Richland Communities who had entitled and processed engineering on the site. The site is raw land with mapping for 129 townhomes, 127 motorcourt cluster lots, 79 lots with a minimum size of 5,000 square feet and 154 lots with a minimum lot size of 10,000 square feet. The property was reportedly purchased for $42,736,000 or a blended per unit price of $87,395 based on a blended finished lot/pad price of $285,000. The significant cost to develop the lots/pads (almost $200,000 per unit) is due to the hillside condition of a portion of the site. In comparison to the subject property, this transaction is considered to be significantly superior in the majority of the lot sizes; however, inferior due to the number of lots (considered a bulk purchase) and due to the amount of grading needed on the property. While the actual costs of land development are taken into consideration, there is risk associated with the developm ent while the subject lots are all graded and nearly finished.

Land Sale No. 4 pertains to the purchase of a community known as The Retreat, located adjacent to the east to Data No. 2, at the northeast corner of Beech Avenue and South Highland Avenue in Fontana, just south of the 210 Freeway. Lennar purchased the lands from the Stratham Group in May 2021 for $16,500,000 or for $85,052 per unit. The site is entitled for 100 attached units and 92 detached cluster units with an overall density of 14 dwelling units per acre, which is similar to the subject’s density. In comparison to the subject, this transaction is considered to be inferior due to it being adjacent to the 210 _________________________________________________________________________________________________________ Appraisal Report
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Freeway, the amenities and date of sale. While the Retreat will have some amenities , they will not be as plentiful as the Gabion Ranch amenities. The date of sale of May, 2021 is considered to be inferior due to the appreciation which has occurred in the marketplace since that time. When pairing Sale No. 2 and this transaction which are adjacent to each other, Sale No. 2 occurred in September 2021which is after additional appreciation in the subject marketplace making Sale No. 2 superior to Sale No. 4 in Date of Sale. In addition, Sale No. 2 had all detached units with an overall density of 10 dwelling units per acre while this transaction has a density of 14 dwelling units per acre and included over one- half attached units.

Land Sale Nos. 5, 6 & 7 refer to three land sales which closed in 2021 within Fontana in a community known as Shady Trails, about one- half mile west of the subject property.

Land Sale No. 5 refers to the purchase by PLC Communities for 91 detached triplex units.

PLC is selling their community known as Juniper on the site. The property had a density of 14 dwelling units per acre and sold for $7,977,000 based on a reported finished lot price of $133,000. Land Sale No. 6 refers to TRI Pointe Homes purchasing the lands for 139 two- story townhomes at Shady Trails from the Lewis Gr oup of Companies in February 2021. The density is approximately 15 dwelling units per acre for this project.

The land is located west of the subject property near the Summit Avenue and Citrus Avenue intersection. The land was purchased in a finished condit ion with an approved final map for $9,277,000 or $66,741 per unit. This was based upon a reported finished lot price of $100,000 by the buyer and a reported finished lot price of $114,000 by the seller when factoring in the anticipated profit participation. This community is now selling at Birch Bend with base pricing from $480,000 to $570,000. Land Sale No. 7 refers to Taylor Morrison purchasing 60 lots from the Lewis Group of Companies in January 2021. This community consists of two -story detached courtyard cluster units; the lot sizes will vary due to the cluster layout, but the overall density is approximately 12 dwelling units per acre. The land was purchased in a finished condition with an approved final map for $5,022,000 or $83,700 per lot, and based on a reported estimated finished lot price of $132,000. The transaction included a seller carryback loan for $2,510,940. This community which marketed as Aspen Court has sold out. Shady Trails includes a 15,000- _________________________________________________________________________________________________________ Appraisal Report
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square-foot recreation center, including a fitness center, theater, library, business center, game rooms, and “cybercafé.” It also includes a second recreational club with a pool, spa, fitness center, half -basketball court, tot lot and barbecue area. There are a number of other amenities placed throughout the master-planned community. In comparison to the subject property, Both Shady Trails and the subject property have master -planned amenities and are located within one- half mile of each other. While these transactions closed in 2021, the escrows opened in 2019 and there has been a significant amount of appreciation in the subject marketplace since that time. In comparison to the subject lands, the subject’s attached pads are higher in density than Land Sale No. 7. The other main difference is that these land transactions were negotiated in 2019 which is considered to be significantly inferior due to today’s market value and the appreciation in the marketplace.

Land Sale No. 8 refers to TRI Pointe Homes purchasing 193 detached small lot homesites from The Stratham Group in December 2020. The 193 lots include 82 detached alley-load units and 111 detached cluster units with an overall density of 11 dwelling units per acre. The land is located about three and one- half miles southwest of the subject property near the Interstate 15 and Victoria Street intersection in the City o f Fontana. The land was purchased in an unimproved condition with final engineering in process for $25,315,500 or $131,168 per lot, based on a reported blended finished lot price of $215,000. This community is now known as Aurora Park with two products known as Goldenrod and Sienna currently selling. Aurora Pak has some amenities, but they are fewer and smaller amenities compared to the subject property. In comparison to the subject property, the site is slightly superior due to the density, however inferior due to its location along I-15, its lack of master -planned amenities and the date of sale, over one year ago, prior to a significant amount of appreciation in the subject marketplace.

The chart below summarizes the considerations used in adjusting the market data to the subject property.

1 Arboretum,
Fontana 12 / 21 4 du/ac $274,000 Sig. Superior – Density Inferior – Number of Lots

2 Fontana 12 / 21 10 du/ac $285,000
Superior – Density
Inferior – Amenities, Fwy
Location

3 Fontana 9 / 21 4 du/ac $285,000
Sig. Superior – Density
Inferior – Condition & Number of
Lots

4 Fontana 5 / 21 14 du/ac $155,000 Inferior – Amenities, Fwy Location and Date of Sale
5 Shady Trails
Fontana 2 / 21 14 du/ac $133,000 Inferior – Date of Sale 6 Shady Trails
Fontana 2 / 21 15 du/ac $114,000 Inferior – Date of Sale 7 Shady Trails
Fontana 1 / 21 12 du/ac $132,000 Slightly Superior – Density Inferior – Date of Sale
8 Fontana 12 / 20 11 du/ac $215,000
Slightly Superior – Density
Inferior – Date of Sale, Fwy,
Amenities

The market data depicts a wide range of overall finished lot price range from $114,000 to $285,000. Land Sale No. 1 and 3 both refer to much lower density land sales which both include conventional lots which are significantly superior to the subject’s attached pads with a density of 15 dwelling units per acre. home density. Land Sale Nos. 5, 6 and 7 are all located within Shady Trails with similar amenities to Gabion Ranch, however all were negotiated two years ago, prior to a significant amount of appreciation in the subject marketplace. Homes have increased 15 percent just over the past year. While this represents the increase in housing prices which has been upwards of $60,000 on average (California Association of Realtors San Bernardino statistics for January 2022) , a good portion of appreciation does fall to the land. Data No. 2 appears to be a high sale due to the freeway influence as Data No. 4 is adjacent to Data No. 2. Most of the market data relates to blended prices of either attached and small cluster lots, or small to medium sized conventional lots. The only other strictly attached land sale refers to Data No. 6, which sold over a year ago based on a finished lot price of $114,000 which includes an estimate for profit participation). Data No. 4 is similar in density, however is adjacent to the freeway and will not have the amenities that Gabion Ranch does. Based on the market data, we have concluded that the subject Woodridge pads have a fini shed pad value of _________________________________________________________________________________________________________ Appraisal Report
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$175,000. The valuation for Woodridge’s pads will be within its community’s valuation section below.

GABION RANCH – HOUSE VALUATION ANALYSES
Within Phase 2 of Gabion Ranch, there are 181 individually owned homes and 27 production homes over 95 percent complete owned by the builder. The builder -owned homes over 95 percent complete are all production homes with no models (the models for each community were included in Phase One of Gabion Ranch, and are outside the Fontana CFD No. 95 boundary lines). The 27 builder owned homes include 12 homes within Ridgeview and 15 homes within Woodridge. We have searched the local Multiple Listing Service and inspected the property . Our search resulted in no resales within the subject property and four re- sales of the subject plans within the past six months within Phase One of Gabion Ranch. Below is a valuation section for each neighborhood which includes a summary of the various floor plans , a valuation analysis on each plan using comparable data, a discounted cash flow for the bulk -ownership of the builder -owned homes, and the concluded land valuation followed by a minimum market valuation for the individual owned homes based on the concluded value for each plan. A listing of the improved residential comparable properties for both attached, cluster and conventional single-family detached improved properties are located in the Addenda of this report.

Gabion Ranch Valuation – Stonegate
Stonegate consists of 67 proposed single- family detached homes on minimum 10,000 square foot lots with 33 homes located within Phase Two (Fontana CFD 95, subject property). All 33 of the subject’s 33 houses are complete and closed to individuals. Below is a table showing the break-out of the plans and ownership followed by the valuation for the various plans within Stonegate. Please note, there are no Plan 1 homes located within Phase 2.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
1 4 / 3 1 / 3 2,470 N/A
2 4 / 3.5 1 / 3 2,820 12
3 5 / 3 2 / 3 3,523 7
4 6 / 4.5 2 / 3 4,122 14
Total 33
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The most appropriate new home comparable data for Stonegate Plan 2 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 2 4 / 3.5 1 / 3 2,820 --
9 3 5 / 3 2 / 3 2,743 $282.33
12 3 3 / 2.5 2 / 2 2,440 $279.91
13 5 4 / 3.5 2 / 2 2,617 $299.58
14 2 5 / 2.5 1 / 2 2,490 $307.63
14 3 4 / 2.5 1 / 2 2,610 $288.89
15 1 3 / 2 1 / 2 2,140 $305.12

The subject market includes comparable product located within Fontana and the neighboring city of Jurupa Valley. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. There are minimal new, single-story homes for sale in Fontana on large conventional lots, thus we expanded our search to include two- story homes on smaller lots. The comparable new home sales have base prices ranging from $279.91 to $307.63 per square foot. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire.

The final base asking price for Stonegate Plan 2 was $243.38 per square foot. There have been 12 closings of Stonegate Plan 2 within Phase Two with actual sales prices from $232.55 to $260.37 per square foot with the last sale occurring in August 2021; however, this appears to be an outlier as the previous most recent sale was in March 2021. There are no current escrows of Stonegate homes within Phase Two as they are sold out. Our search of the local MLS resulted in no resales within Stonegate Phase One or Phase Two within the past six months.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 2 would have a base current market value of $285.00 per square foot. This calculates as follows:
2,820 sf x $285.00 = $803,700

The most appropriate new home comparable data for Stonegate Plan 3 are:

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Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 3 5 / 3 2 / 3 3,523 --
9 3 5 / 4 2 / 3 2,743 $282.33
13 6 5 / 3 2 / 3 2,722 $287.66
15 3 5 / 3.5 2 / 3 3,325 $249.76
15 4 6 / 4 2 / 3 4,122 $237.26

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 would have a base current market value of $240.00 per square foot. This calculates as follows:
3,523 sf x $240.00 = $845,520

The most appropriate new home comparable data for Stonegate Plan 4 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 4 NG 6 / 4.5 2 / 3 4,122 --
9 3 5 / 4 2 / 3 2,743 $282.33
13 6 5 / 3 2 / 3 2,722 $287.66
15 3 5 / 3.5 2 / 3 3,325 $249.76
15 4 6 / 4 2 / 3 4,122 $237.26

The subject market includes comparable product all located within Fontana or the neighboring city of Jurupa Valley. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, _________________________________________________________________________________________________________ Appraisal Report
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view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The Stonegate Plan 4 is a “NextGen” home which allows for a separate entrance and living area for multi-generations. The comparable new home sales have base prices ranging from $ 237.26 to $282.33 per square foot. It should be noted that the subject is the largest home in the area. As square footage grows, the price per square foot decreases due to economies of scale during construction. There has been significant appreciation in the subject market in the past few months due to the demand for new homes in the Inland Empire. The final base asking price for Stonegate Plan 4 was $201.17 per square foot. There have been 14 closings of Stonegate Plan 4 with actual sales prices from $176.13 to $203.69 per square foot with the last sale occurring of a Plan 4 within Phase Two in March 2021.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 4 would have a base current market value of $ 220.00 per square foot. This calculates as follows:
4,122 sf x $220.00 = $906,840

Individual Owners Value Conclusion – Stonegate
In determining the value for the individually owned homes, we have considered the concluded base price value for the homes, which is considered a minimum market value.

This is due to homebuyers typically purchasing some addition upgrades, options or pay some premiums for the lot. The concluded values are shown below:

Stonegate:

Plan 2 (12 x $803,700) $ 9,644,400
Plan 3 (7 x $845,520) 5,918,640
Plan 4 (14 x $906,840) 12,695,760
Individual Owned Minimum Market Value $28,258,800

In an additional review, we have reviewed the builder sales prices for the 33 homes within Stonegate in Phase Two. Sales occurred between May 2020 and August 2021 however, the August sale appears to be an outlier as the previous sale occurred in March 2021.

The builder’s reported closing prices for the individually owned homes total $24,105,432. _________________________________________________________________________________________________________ Appraisal Report
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The concluded minimum market value of $28,258,800 equates to 17 percent higher than the actual sales prices. The subject market has had significant price appreciation over the last few months. Within Stonegate, the price increases have run between 12 and 16 percent over the sales time period. These increases offset the options and upgrades which were purchased. Based on the above information and analysis along with our familiarity with the market, it is our conclusion that the original builder sales prices further substantiate the concluded minimum market value for the individually owned homes.

Gabion Ranch Valuation – Iron Walk
Iron Walk consists of 92 proposed single-family detached homes on minimum 5,000 square foot lots with 38 homes located within Phase Two (Fontana CFD No. 95, subject property). All 38 of the subject’s houses are completed and closed to individuals. Below is a table showing the break-out of the plans and ownership followed by the valuation for the various plans within Iron Walk.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
1 3 / 2 1 / 2 1,950 14
2 4 / 3 2 / 2 2,723 12
3 4 / 3.5 2 / 2 3,180 12
Total 38

The most appropriate new home comparable data for Iron Walk Plan 1 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 1 3 / 2 1 / 2 1,950 --
9 3 5 / 3 2 / 3 2,743 $282.33
12 3 3 / 2.5 2 / 2 2,440 $279.91
13 2 4 / 3 1 / 2 1,898 $376.71
14 1 4 / 2.5 1 / 2 2,280 $319.29
14 2 5 / 2.5 1 / 2 2,490 $307.63
15 1 3 / 2 1 / 2 2,140 $305.12

The subject market includes comparable product all located within Fontana or the neighboring city of Jurupa Valley. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, _________________________________________________________________________________________________________ Appraisal Report
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room count, garage space and other amenities. There are minimal new, single-story homes for sale in Fontana, thus we expanded our search to include Jurupa Valley along with two- story homes in Fontana. The comparable new home sales have base prices ranging from $279.91 to $376.71 per square foot with the lower per square foot prices generally being for the larger homes and the higher per square foot prices being for the smaller homes. This is due to the economies of scale which occurs during construction. In addition, a single-story home commands a premium in the subject market. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for an Iron Walk Plan 1 was $303.33 per square foot.

There have been 14 closings of Iron Walk Plan 1 with actual sales prices from $285.89 to $334.61 per square foot with the last sale occurring in August of 2021. There no current escrows of Iron Walk homes as they are closed out.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 1 has a base current market value of $330.00 per square foot.

This calculates as follows:
1,950 sf x $330.00 = $643,500

The most appropriate new home comparable data for Iron Walk Plan 2 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 2 4 / 3 2 / 2 2,723 --
9 3 5 / 4 2 / 3 2,743 $282.33
11 3 4 / 3 2 / 3 2,264 $341.09
12 3 3 / 2.5 2 / 2 2,440 $279.91
13 5 4 / 3.5 2 / 2 2,617 $299.58
13 6 5 / 3 2 / 3 2,722 $287.66
15 2 4 / 2.5 2 / 3 2,809 $255.93

The subject market includes comparable product all located within Fontana and the adjacent city of Jurupa Valley . All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The comparable new home sales have base prices ranging from $255.93 to $341.09 per square foot with generally the smaller homes at _________________________________________________________________________________________________________ Appraisal Report
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the high end of the range and the larger homes at the low end of the range. This is due to the economies of scale obtained during construction. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for Iron Walk Plan 2 wa s $234.11 per square foot. There have been 12 closings of Iron Walk Plan 2 with actual sales prices from $223.65 to $272.12 per square foot with the last sale occurring in August 2021.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 2 has a base current market value of $275.00 per square foot.

This calculates as follows:
2,723 sf x $275.00 = $748,825

The most appropriate new home comparable data for Iron Walk Plan 3 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 3 NG 4 / 3.5 2 / 2 3,180 --
9 3 5 / 4 2 / 3 2,743 $282.33
12 3 3 / 2.5 2 / 2 2,440 $279.91
13 6 5 / 3 2 / 3 2,722 $287.66
15 2 4 / 2.5 2 / 3 2,809 $255.93
15 3 5 / 3.5 2 / 3 3,325 $249.76
15 4 6 / 4.5 2 / 3 4,122 $237.26

The subject market includes comparable product all located within Fontana and the adjacent city of Jurupa Valley . All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The Iron Walk Plan 3 is a “NextGen” (“NG”) home, which allows for a separate entrance and living area for multi-generations. The comparable new home sales have base prices ranging from $237.26 to $287.66 per square foot with generally the smaller homes at the high end of the range and the larger homes at the lower end of the range. This is due to the economies of scale obtained during construction. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for Iron Walk Plan 3 was $217.76 per square foot. There have been 19 closings of Iron Walk Plan 3 with actual _________________________________________________________________________________________________________ Appraisal Report
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sales prices from $203.30 to $234.15 per square foot with the last sale occurring in August 2021.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 has a base current market value of $260.00 per square foot.

This calculates as follows:
3,180 sf x $260.00 = $826,800

Individual Owners Value Conclusion – Iron Walk
In determining the value for the individually owned homes, we have considered the concluded base price value for the homes, which is considered a minimum market value.

This is due to homebuyers typically purchasing some addition upgrades, options or pay some premiums for the lot. The concluded values are shown below:

Iron Walk:

Plan 1 (14 x $643,500) $ 9,009,000
Plan 2 (12 x $748,825) 8,985,900
Plan 3 (12 x $826,800) 9,921,600
Individual Owned Minimum Market Value $ 27,916,500

In an additional review, we have reviewed the builder sales prices for the 38 homes within Iron Walk in Phase Two. Sales occurred between May 2020 and August 2021. The builder’s reported closing prices for the individually owned homes total $24,578,075. The concluded minimum market value of $27,916,500 equates to 13.6 percent higher than the actual sales prices. T he subject market has had significant price appreciation over the last few months. Within Iron Walk , the price increases have run between 15 and 20 percent over the sales time period. These i ncreases offset the options and upgrades which were purchased. Based on the above information and analysis along with our familiarity with the market, it is our conclusion that the original builder sales prices further substantiate the concluded minimum market value for the individually owned homes.

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Gabion Ranch Valuation – Mountainside
Mountainside consists of 71 proposed single-family detached homes on minimum 5,000 square foot lots with 35 located within Phase Two (Fontana CFD 95, subject property).

All 35 of the subject ’s proposed houses are completed and closed to individuals. Below is a table showing the break-out of the plans and ownership followed by the valuation for the various plans within Mountainside.

Plan

Bd/Ba
Floors/
Parking
Sq. Ft. Ind.

Owned
1 3 / 2 1 / 2 2,140 12
2 5 / 4 2 / 2 3,251 10
3 5 / 3.5 2 / 2 3,325 13
Total 35

The most appropriate new home comparable data for Mountainside Plan 1 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 1 3 / 2 1 / 2 2,140 --
9 2 4 / 3 2 / 3 2,292 $313.45
11 3 4 / 3 2 / 3 2,264 $341.09
12 1 3 / 2.5 2 / 2 2,210 $297.28
13 1 3 / 2 1 / 2 1,576 $415.92
13 2 4 / 3 1 / 2 1,898 $376.71
14 1 4 / 2.5 1 / 2 2,280 $319.29
14 2 5 / 2.5 1 / 2 2,490 $307.63
15 1 3 / 2 1 / 2 2,140 $305.12

The subject market includes comparable product all located within Fontana or the adjacent city of Jurupa Valley . All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. There are minimal new, single-story homes for sale in Fontana, thus we expanded our search to include two-story homes. The comparable new home sales have base prices ranging from $297.28 to $415.92 per square foot with generally the lower per square foot price being for the large r homes and the higher per square foot price being for the smaller homes. This is due to the economies of scale which occurs during construction. There has been significant appreciation in the subject market in _________________________________________________________________________________________________________ Appraisal Report
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the past two years due to the demand for new homes in the Inland Empire. The final base asking price for a Mountainside Plan 1 was $285.23 per square foot. There have been 12 closings of Mountainside Plan 1 within the subject property with actual sales prices from $243.22 to $285.23 per square foot with the last sale occurring in March 2021, prior to a substantial amount of appreciation in the subject marketplace. Our search of the local MLS resulted in one resale of Mountainside Plan 1 within Phase One of Gabion Ranch (not subject portion). The home originally sold in May 2020 for $479,000 and resold in November 2021 for $677,000.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 1 has a base current market value of $320.00 per square foot.

This calculates as follows:
2,140 sf x $320.00 = $684,800

The most appropriate new home comparable data for Mountainside Plan 2 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 2 5 / 4 2 / 2 3,251 --
9 3 5 / 4 2 / 3 2,743 $282.33
12 3 3 / 2.5 2 / 2 2,440 $279.91
13 6 5 / 3 2 / 3 2,722 $287.66
15 2 4 / 2.5 2 / 3 2,809 $255.93
15 3 5 / 3.5 2 / 3 3,325 $249.76

The subject market includes comparable product all located within Fontana and the adjacent city of Jurupa Valley . All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The comparable new home sales have base prices ranging from $249.76 to $2 82.33 per square foot. There has been significant appreciation in the subject market in the past few months due to the demand for new homes in the Inland Empire. The final base asking price for Mountainside Plan 2 was $215.13 per square foot. There have been 10 closings of Mountainside Plan 2 with actual sales prices from $182.77 to $205.23 per square foot with the last sale occurring in March 2021, prior to a substantial amount of appreciation in the subject marketplace. Our search of the local MLS _________________________________________________________________________________________________________ Appraisal Report
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Kitty Siino & Associates, Inc. Page 79
resulted in one resale of a Mountainside Plan 2 within Phase One of Gabion Ranch (not subject portion). The home originally sold in May 2020 for $566,000 and resold in December 2021 for $810,000.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 2 has a base current market value of $250.00 per square foot.

This calculates as follows:
3,251 sf x $250.00 = $812,750

The most appropriate new home comparable data for Mountainside Plan 3 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 3 5 / 3.5 2 / 2 3,325 --
9 3 5 / 4 2 / 3 2,743 $282.33
13 6 5 / 3 2 / 3 2,722 $287.66
15 2 4 / 2.5 2 / 3 2,809 $255.93
15 3 5 / 3.5 2 / 3 3,325 $249.76
15 4 6 / 4.5 2 / 3 4,122 $237.26

The subject market includes comparable product all located within Fontana and the adjacent city of Jurupa Valley . All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The comparable new home sales have base prices ranging from $237.26 to $287.66 per square foot with generally the smaller homes at the higher end of the price per square foot range and the larger homes at the low end of the range. This is due to the economies of scale typically obtained during construction. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for Mountainside Plan 3 was $219.22 per square foot. There have been 13 closings of Mountainside Plan 3 with actual sales prices from $181.20 to $218.98 per square foot with the last sale occurring in March 2021, prior to a substantial amount of appreciation in the subject marketplace.

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 80
All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 has a base current market value of $250.00 per square foot.

This calculates as follows:
3,325 sf x $250.00 = $831,250

Individual Owners Value Conclusion - Mountainside
In determining the value for the individually owned homes, we have considered the concluded base price value for the homes, which is considered a minimum market value.

This is due to homebuyers typically purchasing some addition upgrades or options or pay some premiums for the lot. The concluded values are shown below:

Mountainside:

Plan 1 (12 x $684,800) $ 8,217,600
Plan 2 (10 x $812,750) 8,127,500
Plan 3 (13 x $831,250) 10,806,250
Individual Owned Minimum Market Value $ 27,151,350

In an additional review, we have reviewed the builder sales prices for the 35 closed homes within Mountainside in Phase One. Sales occurred between April 2020 and March 2021.

The builder’s reported closing prices for the individually owned homes total $21,309,500.

The concluded minimum market value of $27, 151,350 equates to 27.4 percent higher than the actual sales prices. The subject market has had significant price appreciation over the last few months. Within Mountainside, the price increases have run between 12 and 20 percent over the sales time period which was May 2020 through March 2021. This sales period was earlier t han the Iron Walk sales suggesting the appreciation would be higher. The above information and analysis along with our familiarity with the market, it is our conclusion that the original builder sales prices further substantiate the concluded minimum market value for the individually owned homes.

Gabion Ranch Valuation – Ridgeview
Ridgeview consists of 108 proposed single- family detached homes in a cluster format with 54 proposed homes located within Phase Two (Fontana CFD 95, subject property).

Forty-two of the subject 54 proposed houses are completed and closed to individuals. _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 81
Lennar owns 12 production houses over 95 percent complete (all in escrow). Below is a table showing the break-out of the plans and ownership followed by the valuation for the various plans within Ridgeview.

Plan

Room
Count

Floors/
Parking

Sq.

Ft.

Completed
Ind.

Owned
95% Complete
Bldr.

Owned
Ridgeview
1 3 / 2.5 2 / 2 1,578 14 2
2 3 / 3.5 2 / 2 1,715 14 5
3 4 / 3 2 / 2 1,790 7 4
4 4 / 3.5 2 / 2 1,801 7 1
Ridgeview Subtotal 42 12

House Valuation Analysis – Ridgeview

The most appropriate new home comparable data for Ridgeview Plan 1 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 1 3 / 2.5 2 / 2 1,578 --
1 4 3 / 2.5 2 / 2 1,652 $328.09
6 1 3 / 3 2 / 2 1,724 $342.11
7 1 3 / 2 2 / 2 1,477 $343.87
7 2 4 / 3 2 / 2 1,592 $342.27
8 1 3 / 2.5 2 / 2 1,665 $357.83
10 1 3 / 2.5 2 / 2 1,642 $370.55

All of the comparable communities are located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space , and other amenities. The comparable new home sales have base prices ranging from $328.09 to $370.55 per square foot. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for a Ridgeview Plan 1 was $352.92 per square foot. There have been 14 closings of Ridgeview Plan 1 with actual sales prices from $299.68 to $355.45 per square foot. There are two current escrows of Ridgeview Plan 1 with a sales price range of $352.28 to $353.64 per square foot. It should be noted that the final sale occurred within Ridgeview for a Plan 1 in _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 82
November 2021

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 1 has a base current market value of $350.00 per square foot.

This calculates as follows:
1,578 sf x $350.00 = $552,300

The most appropriate new home comparable data for Ridgeview Plan 2 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 2 3 / 2.5 2 / 2 1,715 --
1 4 3 / 2.5 2 / 2 1,652 $328.09
6 1 3 / 3 2 / 2 1,724 $342.11
7 3 4 / 3 2 / 2 1,611 $341.34
8 2 3 / 2.5 2 / 2 1,759 $355.80
10 1 3 / 2.5 2 / 2 1,642 $370.55
10 2 4 / 2.5 2 / 2 1,872 $345.52

All of the comparable communities are located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $328.09 to $370.55 per square foot. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for a Ridgeview Plan 2 was $342.97 per square foot. There have been 14 closings of Ridgeview Plan 2 with actual sales prices from $2 85.07 to $339.94 per square foot. There are five current escrows of Ridgeview Plan 2 with a sales price range of $335.98 to $341.90 per square foot. The final sale occurred in Ridgeview in December 2021. Our search of the local MLS resulted in one resale of a Ridgeview Plan 2 that was located within Phase One (not subject portion). The home originally sold for $415,000 and resold for $535,000.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 2 has a base current market value of $335.00 per square foot.

This calculates as follows:
_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 83
1,715 sf x $335.00 = $574,525

The most appropriate new home comparable data for Ridgeview Plan 3 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 3 4 / 3 2 / 2 1,790 --
1 4 3 / 2.5 2 / 2 1,652 $328.09
6 1 3 / 3 2 / 2 1,724 $342.11
7 3 4 / 3 2 / 2 1,611 $341.34
8 2 3 / 2.5 2 / 2 1,759 $355.80
10 1 3 / 2.5 2 / 2 1,642 $370.55
10 2 4 / 2.5 2 / 2 1,872 $345.52

All of the comparable communities are located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $320.31 to $370.55 per square foot. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for a Ridgeview Plan 3 was $327.69 per square foot. There have been seven closings of Ridgeview Plan 3 with actual sales prices from $281.59 to $329.72 per square foot. There are four current escrows of Ridgeview Plan 3 with a sales price range of $327.49 to $332.51 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. The final sale occurred in December 2021.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 has a base current market value of $325.00 per square foot.

This calculates as follows:
1,790 sf x $325.00 = $581,750

The most appropriate new home comparable data for Ridgeview Plan 4 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 4 4 / 3.5 2 / 2 1,801 --
6 1 3 / 3 2 / 2 1,724 $342.11
6 2 3 / 2.5 2 / 2 1,961 $315.86
8 2 3 / 2.5 2 / 2 1,759 $355.80
8 3 4 / 2.5 2 / 2 1,891 $351.83
10 1 3 / 2.5 2 / 2 1,642 $370.55
10 2 4 / 2.5 2 / 2 1,872 $345.52

All of the comparable communities are located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $320.31 to $370.55 per square foot. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The final base asking price for a Ridgeview Plan 4 was $328.60 per square foot. There have been seven closings of Ridgeview Plan 4 with actual sales prices from $280.68 to $326.37 per square foot. There is one current escrow of Ridgeview Plan 4 with a sales price of $329.15 per square foot with the sale occurring in October 2021. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 4 has a base current market value of $325.00 per square foot.

This calculates as follows:
1,801 sf x $325.00 = $585,325

Builder Owned Retail Value – Ridgeview

Within the subject property, there are 12 builder-owned houses over 95 percent complete.

The model homes are located within Gabion Ranch Phase One and are not included in this appraisal report. The retail base value conclusions for the builder -owned homes are calculated as follows:

Plan 1 (2 x $552,300) $ 1,104,600
Plan 2 (5 x $574,525) 2,872,625
Plan 3 (4 x $581,750) 2,327,000
Plan 4 (1 x $585,325) 585,325
Retail Value Builder-Owned $ 6,889,550

Absorption Period
In order to arrive at an absorption period for Ridgeview, the absorption rate within Ridgeview has been considered along with the absorption rates of the comparable communities used in the valuation. As discussed under the Highest and Best Use section earl ier within this report, Ridgeview had an average sales rate within Phase Two of 4.5 units per month. The comparable communities have average sales rates ranging from 3.7 to 12.7 sales per month. These sales rates vary due to some projects having temporary sell-outs as the construction couldn’t keep up with the demand. Ridgeview has 12 homes, all which are in escrow and due to close upon completion. We have concluded that the subject 12 houses will be absorbed over a two-month period.

Remaining Costs
As discussed under the remaining costs section earlier within this report , there are $44,843.20 in remaining land development costs associated with each lot. For the 12 builder-owned homes, this equates to $538,118 in remaining costs. We are assuming that the costs will be spread evenly over the two-month absorption period in our analysis.

Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Six percent has been estimated for marketing expenses and two percent for general and administrative costs for a total of eight percent in expenses for this analysis.

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 86
Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.

Discount Rate
In selecting a discount rate, the following was completed:

1. Interviews with merchant builders in the Fontana area

2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)

3. The quality, construction, historical sales and product on the subject property

The homes within the subject property appear to be well constructed and have been selling at excellent absorption rates. Even with the COVID pandemic, new home sales are continuing at strong rates . Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.

Discounted Cash Flow Summary – Lennar Ownership Ridgeview

The discounted revenue for Ridgeview (see DCF Analysis in Addenda) for the builder - owned homes is $5,048,124.

Individual Owners Value Conclusion - Ridgeview
In determining the value for the individually owned homes, we have considered the concluded base price value for the homes, which is considered a minimum market value.

This is due to homebuyers typically purchasing some addition upgrades or options or pay some premiums for the lot. The concluded values are shown below:

Plan 1 (14 x $552,300) $ 7,732,200
Plan 2 (14 x $574,525) 8,043,350
Plan 3 (7 x $581,750) 4,072,250
Plan 4 (7 x $585,325) 4,097,275
Individual Owned Minimum Market Value $23,945,075

In an additional review, we have reviewed the builder sales prices for the 42 closed homes within Ridgeview in Phase Two. Sales occurred between January 2021 and January 2022. The builder’s reported closing prices for the individually owned homes total $22,414,447. The concluded minimum market value of $23, 945,075 equates to 6.8 percent higher than the actual sales prices. The builder’s reported prices include premiums, upgrades , and purchased options as well as took into consideration the concessions given by the builder which typically would result in a higher price than the concluded base value of the homes. However, the subject market has had significant price appreciation over the last few months. Within Ridgeview, the price increases have averaged 16 to 19 percent since the first sale in January 2021. These increases offset the options and upgrades which were purchased. Based on the above information and analysis along with our familiarity with the market, it is our conclusion that the original builder sales prices further substantiate the concluded minimum market value for the individually owned homes.

Gabion Ranch Valuation – Woodridge
Woodridge consists of 228 proposed attached townhomes in a motor court format with 120 proposed townhomes located within Phase Two of Gabion Ranch (Fontana CFD No. 95, subject property). Thirty-three of the townhomes are complete and closed to individuals. Lennar owns 15 houses over 95 percent complete of which 14 are in escrow.

There are an additional 24 townhomes under construction (under 95 percent complete) , 21 of which are in escrow, plus finished pads for 48 townhomes within Phase Two. We will value a home under construction (under 95 percent complete) as a finished lot rather than attribute value to a partially complete improvement. Therefore, we will value 72 pads.

Below is a table showing the break -out of the plans and ownership followed by the valuation for the various plans within Woodridge.
_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 88

Plan

Room
Count

Floors/
Parking

Sq.

Ft.

Completed
Ind.

Owned
95% Complete
Bldr.

Owned
Woodridge
1 1 / 1.5 2 / 1 849 5 3
2 2 / 2.5 2 / 2 1,391 11 5
3 3 / 3 2 / 2 1,324 6 2
4 3 / 2.5 2 / 2 1,652 6 2
5 3 / 2.5 2 / 2 1,826 5 3
Woodridge Subtotal 33 15

House Valuation Analysis – Woodridge

The most appropriate new home comparable data for Woodridge Plan 1 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 1 1 / 1.5 2 / 1 849 --
1 2 2 / 2.5 2 / 2 1,391 $377.27
1 3 3 / 3 2 / 2 1,324 $344.00
2 1 2 / 2 3 / 2 995 $520.60
2 2 2 / 2.5 3 / 2 1,164 $492.27
3 1 2 / 2.5 2 / 2 1,160 $354.30
4 1 2 / 2 2 / 2 1,165 $393.99
5 1 2 / 2 2 / 2 1,309 $366.41

The subject is the smallest and only one bedroom home available within the market area.

All of the comparable communities are located in Fontana or the adjoining cities of Rancho Cucamonga or Rialto. All are of similar quality, design, and appeal. Adjustme nts were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The subject Plan 1 is the smallest sized home in the market area. The comparable new home sales have base prices ranging from $344.00 to $520.60 per square foot with the highest price per square foot for a tri -level home in Rancho Cucamonga. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The current base asking price for a Woodridge Plan 1 is $469.96 per square foot. There have been five closings of Woodridge Plan 1 with actual sales prices from $391.05 to $458.36 per square foot. There are seven current escrows of Woodridge Plan 1 with a sales price range of $454.83 to $465.42. The escrow sales prices versus the closed sales prices shows the _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 89
recent appreciation in the subject marketplace.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 1 has a base current market value of $440.00 per square foot.

This calculates as follows:

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 1 has a base current market value of $440.00 per square foot.

This calculates as follows:
849 sf x $440.00 = $373,560

The most appropriate new home comparable data for Woodridge Plan 2 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 2 2 / 2.5 2 / 2 1,391 --
1 1 1 / 2.5 2 / 2 849 $469.96
1 3 3 / 3 2 / 2 1,324 $344.00
2 2 2 / 2.5 3 / 2 1,164 $492.27
2 3 2 / 3 3 / 2 1,263 $459.94
3 2 3 / 2.5 2 / 2 1,375 $327.99
4 2 2 / 2 2 / 2 1,243 $389.62
5 1 2 / 2 2 / 2 1,309 $366.41
5 2 2 / 2.5 2 / 2 1,556 $331.38

There have been 11 closings of Woodridge Plan 2 with actual sales prices from $295.11 to $336.81 per square foot. There are 11 current escrows of Woodridge Plan 2 with a sales price range of $330.70 to $345.43. The escrow sales prices versus the closed sales prices _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 90
shows the recent appreciation in the subject marketplace. Our search of the local MLS resulted in one resale of a Woodridge Plan 2 within Phase One of Gabion Ranch (not subject portion) within the past six months. The property originally sold for $368,000 and resold for $500,000.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 2 has a base current market value of $325.00 per square foot.

This calculates as follows:
1,391 sf x $325.00 = $452,075

The most appropriate new home comparable data for Woodridge Plan 3 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 3 3 / 3 2 / 2 1,324 --
1 1 1 / 2.5 2 / 2 849 $469.96
1 2 2 / 2.5 2 / 2 1,391 $377.27
2 2 2 / 2.5 3 / 2 1,164 $492.27
2 3 2 / 3 3 / 2 1,263 $459.94
3 2 3 / 2.5 2 / 2 1,375 $327.99
4 2 2 / 2 2 / 2 1,243 $389.62
5 1 2 / 2 2 / 2 1,309 $366.41
5 2 2 / 2.5 2 / 2 1,556 $331.38

There have been six closings of Woodridge Plan 3 with actual sales prices from $324.40 to $365.18 per square foot. There are six current escrows of Woodridge Plan 3 with a sales price range of $365.18 to $373.49. The escrow sales prices versus the closed sales prices _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 91
shows the recent appreciation in the subject marketplace.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 has a base current market value of $360.00 per square foot.

This calculates as follows:
1,324 sf x $360.00 = $476,640

The most appropriate new home comparable data for Woodridge Plan 4 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 4 3 / 2.5 2 / 2 1,652 --
1 2 2 / 2.5 2 / 2 1,391 $344.00
1 3 3 / 3 2 / 2 1,324 $377.27
1 5 3 / 2.5 2 / 2 1,826 $300.38
3 4 3 / 2.5 2 / 2 1,575 $304.12
4 3 3 / 3 2 / 2 1,687 $327.39
5 3 3 / 2.5 2 / 2 1,604 $330.81
6 1 3 / 3 2 / 2 1,724 $342.11

All of the comparable communities are located in Fontana or the adjoining cities of Rancho Cucamonga or Rialto. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $300.38 to $ 377.27 per square foo t. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The current base asking price for a Woodridge Plan 4 is $328.09 per square foot. There have been six closings of Woodridge Plan 4 with actual sales prices from $289.95 to $319.70 per square foot. There are five current escrows of Woodridge Plan 4 with a sales price range of $320.31 to $325.76 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 has a base current market value of $315.00 per square foot. _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 92
This calculates as follows:
1,652 sf x $315.00 = $520,380

The most appropriate new home comparable data for Woodridge Plan 5 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 5 3 / 2.5 2 / 2 1,826 --
1 4 3 / 2.5 2 / 2 1,652 $328.09
3 4 3 / 2.5 2 / 2 1,575 $304.12
4 4 3 / 2.5 2 / 2 1,771 $298.70
4 5 3 / 2.5 2 / 2 1,895 $297.63
5 3 3 / 2.5 2 / 2 1,604 $330.81
5 4 3 / 3 2 / 2 1,900 $294.01
6 1 3 / 3 2 / 2 1,724 $342.11
6 2 3 / 2.5 2 / 2 1,961 $315.86

All of the comparable communities are located in Fontana or the adjoining cities of Rancho Cucamonga or Rialto. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size, attached versus detached, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $294.01 to $ 342.11 per square foot. There has been significant appreciation in the subject market in the past two years due to the demand for new homes in the Inland Empire. The current base asking price for a Woodridge Plan 5 is $300.38 per square foot. There have been five closings of Woodridge Plan 5 with actual sales prices from $262.05 to $291.62 per square foot. There are six current escrows of Woodridge Plan 5 with a sales price range of $292.72 to $297.65 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 5 has a base current market value of $290.00 per square foot.

This calculates as follows:
1,826 sf x $290.00 = $529,540

Within the subject property, there are 15 houses over 95 percent complete. The models are located within Phase One of Gabion Ranch and not included in this appraisal. The retail base value conclusions for the builder-owned homes are calculated as follows:

Woodridge:

Plan 1 (3 x $373,560) $ 1,120,680
Plan 2 (5 x $452,075) 2,260,375
Plan 3 (2 x $476,640) 953,280
Plan 4 (2 x $520,380) 1,040,760
Plan 5 (3 x $529,540) 1,588,620
Retail Value Builder-Owned $ 6,963,715
Absorption Period
In order to arrive at an absorption period for Woodridge , the absorption rate within the community has been considered along with the absorption rates of the comparable communities used in the valuation. As discussed under the Highest and Best Use section earlier within this report, Woodridge has an average sales rate within Phase Two of 6.8 units per month. The comparable communities have average sales rates ranging from 3.7 to 12.7 sales per month. These sales rates vary due to some projects having temporary sell-outs as the construction couldn’t keep up with the demand. Woodridge 15 homes, 14 which are in escrow and due to close upon completion. We have concluded that the subject 15 units will be absorbed over a three-month period.

Remaining Costs
As discussed under the remaining costs section earlier within this report, there are $44,843.20 in remai ning land development costs associated with each lot. For the 15 builder-owned homes, this equates to $672 ,648 in remaining costs. We are assuming that the costs will be spread evenly over the t hree-month absorption period in our analysis.

Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 94
varying factors such as absorption period, intensity of marketing, etc. Six percent has been estimated for marketing expenses and two percent for general and administrative costs for a total of eight percent in expenses for this analysis.

Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession, this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.

Discount Rate
In selecting a discount rate, the following was completed:

1. Interviews with merchant builders in the Fontana area

2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)

3. The quality, construction, historical sales and product on the subject property

The homes within the subject property appear to be well constructed and have been selling at excellent absorption rates. Even with the COVID pandemic, new home sales are continuing at a very good rate. Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.

Discounted Cash Flow Summary

The discounted revenue for Woodridge (see DCF Analysis in Addenda) for the builder - owned homes is $4,954,790.

Lennar Ownership Valuation Total – Woodridge

Within Phase Two, Lennar owns 48 townhome pads, and 24 pads with homes under construction (under 95 percent complete) located within the subject property. For _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 95
purposes of this appraisal, we are valuing a home under construction on the basis of a finished lot rather than attribute value to a partially complete impr ovement. As earlier concluded the lots have a finished lot value of $1 75,000, however there are remaining costs associated with the builder -owned property. As discussed above, the remaining costs equate to $44 ,843.20 per pad/unit. The final value conclusi on for the 72, builder- owned pads is calculated as follows:
72 Pads x $175,000 $12,600,000
Less: Remaining Costs ($44,843.20 x 72) (3,228,710) Woodridge Land Value $ 9,371,290
Builder-Owned Houses Value $ 4,954,790
Total Lennar Ownership Value $14,326,080

Individual Owners Value Conclusion - Woodridge
In determining the value for the individually owned homes, we have considered the concluded base price value for the homes, which is considered a minimum market value.

This is due to homebuyers typically purchasing some addition upgrades or options or pay some premiums for the lot. The concluded values are shown below:

Woodridge:

Plan 1 (5 x $373,560) $ 1,867,800
Plan 2 (11 x $452,075) 4,972,825
Plan 3 (6 x $476,640) 2,859,840
Plan 4 (6 x $520,380) 3,122,280
Plan 5 (5 x $529,540) 2,647,700
Individual Owned Minimum Market Value $15,470,445

In an additional review, we have reviewed the builder sales prices for the 33 closed homes within Woodridge in Phase Two. Sales occurred between April 2021 and February 2022.

The builder’s reported closing prices for the individually owned homes total $15,006,550.

The concluded minimum market value of $15,470,445 equates to 3.1 percent higher than the actual sales prices. The builder’s reported prices include premiums, upgrades, and purchased options as well as took into consideration the concessions given by the builder which typically would result in a higher price than the concluded base value of the homes.

However, the subject market has had significant price appreciation over the last few months. Within Woodridge the price increases have averaged 10 to 17 percent since the _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 96
first sale in April 2021. These increases offset the options and upgrades which were purchased. Based on the above information and analysis along with our familiarity with the market, it is our conclusion that the original builder sal es prices further substantiate the concluded minimum market value for the individually owned homes.

APPRAISAL REPORT SUMMARY

The appraisal assignment was to value the subject property within Fontana CFD No. 95 which includes portions of five communities within Phase Two of Gabion Ranch in Fontana. The five communities include Stonegate, Iron Walk, Mountainside, Ridgeview, and Woodridge. As of February 15, 2022, individuals have purchased and closed on 181 of the total 280 proposed houses with an additional 47 in escrow which are due to close upon completion. The communities have enjoyed good to excellent sales rates ranging.

All structures appear to be in excellent condition with no visible depreciation. We have reviewed builder sales and reviewed the local MLS for current listings or re-sales.

The subject properties were valued utilizing the Sales Comparison Approach to value, a Discounted Cash Flow Analysis , and a M ass Appraisal Technique for the individually owned homes. A minimum value was determined by concluding at a base value for the individually owned homes. The valuation took into account the improvements/benefits to be funded by the special tax Fontana CFD No. 95 bond proceeds along with the Fontana CFD No. 95 special tax lien. The concluded aggregate value for the subject propert ies, subject to their respective special tax lien, is:

Stonegate
Individual Owners (33 Houses) $ 28,258,800
Iron Walk
Individual Owners (38 Houses) $ 27,916,500
Mountainside
Individual Owners (35 Houses) $ 27,151,350
Ridgeview
Lennar (12 Houses) $ 5,048,124
Individual Owners (42 Houses) $ 23,945,075
Woodridge
Lennar (15 Houses) $ 4,954,790
Lennar (72 Lots) $ 9,371,290
Subtotal Lennar $14,326,080
Individual Owners (33 Houses) $ 15,470,445

Total Individual Owned (181 Houses) $122,742,170
Total Builder Owned $ 19,374,204

Aggregate Total for CFD No. 95 $142,116,374

The above values are stated as of said date of value and subject to the attached Assumptions and Limiting Conditions and Appraiser’s Certification. _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 95 (Phase Two of Gabion Ranch)
Kitty Siino & Associates, Inc. Page 98
APPRAISER’S CERTIFICATION

The appraiser certifies that to the best of his 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 my personal, unbiased, professional analyses, opinions and conclusions.

3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.

4. The appraiser’s compensation is not contingent upon the reporting of a predeter mined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.

5. This appraisal was not based on a requested minimum valuation, a specific valuation or the approval of a loan.

6. The analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

7. Kitty Siino has made a personal inspection of the property that is the subject of this report.

8. Kitty Siino has not performed any appraisal services on the subject property in the past three years.

9. No other appraisers have provided significant professional assistance to the pers ons signing this report.

10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.

11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.

Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)

ADDENDA

FONTANA CFD NO. 95 BOUNDARY MAP

TRACT MAP Nos. 20214, 20214-2, 20214-3
and 20214-5

DISCOUNTED CASH FLOW ANALYSES

Ridgeview Builder Ownership Discounted Cash Flow Analysis

MONTH Months MONTH 1 MONTH 2 TOTAL
2 INCOME:

Retail Sales 6,889,550 $3,444,775 $3,444,775 $6,889,550

TOTAL INCOME $3,444,775 $3,444,775 $6,889,550

EXPENSES:

Remaining Costs ($269,059) ($269,059) ($538,118)
Marketing & Carrying Expenses 8% ($275,582) ($275,582) ($551,164) Profit 10% ($344,478) ($344,478) ($688,955)

TOTAL EXPENSES ($889,119) ($889,119) ($1,778,237)

NET CASH FLOW $2,555,657 $2,555,657 $5,111,313
Discount Factor 10% 0.9917 0.9835

DISCOUNTED CASH FLOW $2,534,535 $2,513,589 $5,048,124

CUMULATIVE DISCOUNTED $2,534,535 $5,048,124 $5,048,124

CASH FLOW

Woodridge Builder Ownership Discounted Cash Flow Analysis

MONTH Months MONTH 1 MONTH 2 MONTH 3 TOTAL
3 INCOME:

Retail Sales 6,963,715 $2,321,238 $2,321,238 $2,321,238 $6,963,715

TOTAL INCOME $2,321,238 $2,321,238 $2,321,238 $6,963,715

EXPENSES:

Remaining Costs ($224,216) ($224,216) ($224,216) ($672,648) Marketing & Carrying Expenses 8% ($185,699) ($185,699) ($185,699) ($557,097) Profit 10% ($232,124) ($232,124) ($232,124) ($696,372)

TOTAL EXPENSES ($642,039) ($642,039) ($642,039) ($1,926,117)

NET CASH FLOW $1,679,199 $1,679,199 $1,679,199 $5,037,598 Discount Factor 10% 0.9917 0.9835 0.9754

DISCOUNTED CASH FLOW $1,665,322 $1,651,559 $1,637,910 $4,954,790

CUMULATIVE DISCOUNTED $1,665,322 $3,316,881 $4,954,790 $4,954,790

CASH FLOW

FINISHED LOT LAND SALES MAP
& SUMMARY CHART

FINISHED LOT LAND SALES SUMMARY CHART – CLUSTER AND ATTACHED PRODUCT

Data
No.

Location / APN / Buyer / Seller

Sales
Date

# Units

Density

Sales Price /
Price per Lot

Est. Finished
Lot Price

Comments

1 Gardens at Arboretum, NWC of
Sierra Avenue & Casa Grande
Avenue, Fontana / 0239-131-45 /
Lennar / Lewis Group of Companies

12 / 21

526

4 du/ac
(blended)

$91,935,447 /
$174,782

$274,000
(blended)
Gardens at Arboretum was closed in
unimproved condition with an approved
tentative tract map. It consists of six (6)
product lines:
• Triplex, 69 Units
• SFD (2,200 sf), 99 Lots
• SFD (2,600 sf), 109 Lots
• SFD (4,000 sf), 97 Lots
• SFD (4,950 sf), 88 Lots
• SFD (6,000 sf), 64 Lots

2 Highland, NW of Beech Avenue &
South Highland Avenue, Fontana /
0228-021-09 / Richmond American
Homes / Stratham Group

12 / 21

107

10 du/ac
(blended)

$18,691,821 /
$174,690

$285,000
(blended)
Highland was closed in unimproved
condition with final engineering in
process. It consists of two (2) product
lines:
• Alley-Load, 46 Lots
• Motorcourt Cluster, 61 Lots

3 Monarch Hills, NW of Duncan
Canyon Road & Interstate 15,
Fontana / 0226-075-18 / Landsea
Homes / Richland Communities

09 / 21

489

4 du/ac
(blended)

$42,736,000 /
$87,395

$285,000
(blended)
Monarch Hills was closed in
unimproved condition with final
engineering in process. It consists of
four (4) product lines:
• Townhomes, 129 Units
• Motorcourt Cluster, 127 Lots
• SFD (5,000 sf), 79 Lots
• SFD (10,000 sf), 154 Lots

4 The Retreat, NWC of Beech Avenue
& South Highland Avenue, Fontana
/ 0228-254-49 / Lennar / Stratham
Group

05 / 21

194

14 du/ac
(blended)

$16,500,000 /
$85,052

$155,000
(blended)
The Retreat was closed in unimproved
condition with final engineering in
process. It consists of two (2) product
lines:
• Villas, Att. Cluster, 100 Units
• Chateau, Det. Cluster, 94 Units

5 Juniper at Shady Trails, NW of
Summit Avenue & Citrus Avenue,
Fontana / 1107-501-03 / PLC
Communities / Lewis Group of
Companies

02 / 21

91 14 du/ac

$7,977,000 /
$87,659

$133,000
Juniper was closed in finished condition
with an approved final map. It consists
of detached triplexes. The transaction
includes a profit participation.

Data
No.

Location / APN / Buyer / Seller

Sales
Date

# Units

Density

Sales Price /
Price per Lot

Est. Finished
Lot Price

Comments

6 Birch Bend of Shady Trails, NW of
Summit Avenue & Citrus Avenue,
Fontana / 1107-262-50 / TRI Pointe
Homes / Lewis Group of Companies

02 / 21

139

15 du/ac

$9,277,000 /
$66,741

$100,000
Birch Bend was closed in finished
condition with an approved final map. It
consists of attached townhomes. The
transaction includes a profit
participation. Per the seller, the
estimated finished lot value is closer to
$114,000 –– after factoring in the
anticipated profit participation.

7 Aspen Court of Shady Trails, NW of
Summit Avenue & Citrus Avenue,
Fontana / 1107-501-02 / Taylor
Morrison / Lewis Group of
Companies

01 / 21

60 12 du/ac

$5,022,000 /
$83,700

$132,000
Aspen Court was closed in finished
condition with an approved final map. It
consists of two-story detached cluster
units. The transaction included a seller
carryback loan for $2,510,940.

8 Aurora, SEC of Interstate 15 &
Victoria Street, Fontana / 0228-
091-41 / TRI Pointe Homes /
The Stratham Group

12 / 20

193

11 du/ac
(blended)

$25,315,500 /
$131,168

$215,000
(blended)
Closed in unimproved condition
with final engineering in process.

Aurora consists of two product
lines: 82 detached alley-load units
and 111 detached cluster units with
an overall density of 11 dwelling
units per acre.

IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART

IMPROVED RESIDENTIAL SALES SUMMARY CHART

Data
No.

Project Name
Location/Developer

Plan

Room
Count

Size (SF)

Floors/
Parking

Lot Size or
Density /
Absorption

Base
Sales Price

Price/SF

1 Subj.

Woodridge at Gabion Ranch,
Cypress Avenue and Casa Grande
Avenue, Fontana / Lennar
1 2
3 4
5 1 / 1.5
2 / 2.5
3 / 3
3 / 2.5
3 / 2.5
849
1,391
1,324
1,652
1,826
2 / 1
2 / 2
2 / 2
2 / 2
2 / 2
14 du/ac /

6.5 Attached
$399,000
$478,500
$499,500
$542,000
$548,500
$469.96
$344.00
$377,27
$328.09
$300.38

2 Nova at The Resort, 4th Street and
The Resort Parkway, Rancho
Cucamonga / The New Home
Company
1A
2A
3A

2 / 2
2 / 2.5
2 / 3

995
1,164
1,263

2 / 2
3 / 2
3 / 2

20 du/ac /

4.7 Attached
$518,000
$573,000
$580,900

$520.60
$492.27
$459.94

3 Foothill Grove Towns, West Foothill
Boulevard and North Spruce
Avenue, Rialto / Century
Communities
1 2
3 4
2 / 2.5
3 / 2.5
3 / 2.5
3 / 2.5
1,160
1,375
1,481
1,575
2 / 2
2 / 2
2 / 2
2 / 2
16 du/ac /

12.7 Attached
$410,990
$450,990
$472,990
$478,990
$354.30
$327.99
$319.37
$304.12
4 Villas at The Retreat, South
Highland Avenue and Beech
Avenue, Fontana / Lennar
1 2
3 4
5 2 / 2
2 / 2
3 / 3
3 / 2.5
3 / 2.5
1,165
1,243
1,687
1,771
1,895
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
16 du/ac /

7.4 Attached
$459,000
$484,300
$552,300
$529,000
$564,000
$393.99
$389.62
$327.39
$298.70
$297.63
5 Birch Bend at Shady Trails, Summit
Avenue and Citrus Avenue,
Fontana / TRI Pointe Homes
1 2
3 4
5 2 / 2
2 / 2.5
3 / 2.5
3 / 3
4 / 3
1,309
1,556
1,604
1,900
1,922
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
15 du/ac /

6.9 Attached
$479,625
$515,625
$530,625
$558,625
$571,625
$366.41
$331.38
$330.81
$294.01
$297.41
6 Chateau at The Retreat, South
Highland Avenue and Beech
Avenue, Fontana / Lennar
1 2
3 4
3 / 3
3 / 2.5
3 / 2.5
3 / 3.5
1,724
1,961
1,987
2,046
2 / 2
2 / 2
2 / 2
2 / 2
10 du/ac /

4.5 Attached
$589,800
$619,410
$606,245
$609,155
$342.11
$315.86
$305.11
$297.73
7 Juniper at Shady Trails, Summit
Avenue and Citrus Avenue,
Fontana / PLC Communities
1 2
3 3 / 2
4 / 3
4 / 3
1,477
1,592
1,611
2 / 2
2 / 2
2 / 2
14 du/ac /

5.5 Carriage
$507,900
$544,900
$549,900
$343.87
$342.27
$341.34
8 Aspen Court at Shady Trails,
Summit & Citrus, Fontana / Taylor
Morrison
1 2
3 4
3 / 2.5
3 / 2.5
4 / 2.5
4 / 3
1,665
1,759
1,891
1,989
2 / 2
2 / 2
2 / 2
2 / 2
12 du/ac /

5.6 Cluster
$595,785
$625,845
$665,305
$653,680
$357.83
$355.80
$351.83
$328.65
9 Goldenrod at Aurora Park, Victoria
Street and Kestral Drive, Fontana /
TRI Pointe Homes
1 2
3 3 / 3
4 / 3
5 / 4
2,006
2,292
2,743
2 / 2
2 / 3
2 / 3
12 du/ac /

3.7 Cluster
$703,410
$718,430
$774,430
$350.65
$313.45
$282.33

10 Encore, Baseline Avenue and
Citrus Avenue, Fontana / D.R.

Horton
1642
1872
2043
3 / 2.5
4 / 2.5
4 / 3
1,642
1,872
2,043
2 / 2
2 / 2
2 / 2
2,600 / 7.2

$608,437
$646,805
$661,390
$370.55
$345.52
$323.73
11 Sienna at Aurora Park, Victoria
Street and Kestral Drive, Fontana /
TRI Pointe Homes
1 2
3 3 / 2.5
3 / 2.5
4 / 3
1,879
1,997
2,264
2 / 3
2 / 3
2 / 3
10 du/ac /

4.1 $663,410
$692,495
$696,850
$353.07
$346.77
$341.09
12 Wisteria at Shady Trails, Citrus
Avenue and Knox Avenue, Fontana
/ Richmond American Homes
Lambert
Lewis
Livingston
3 / 2.5
3 / 2.5
3 / 2.5
2,210
2,350
2,440
2 / 2
2 / 2
2 / 2
2,800 / 5.6 $656,990
$676,990
$682,990
$297.28
$288.08
$279.91
13 Mountainview, Lytle Creek Road
and 3 Mile Road, Fontana / D.R.

Horton
1576
1898
2239
2537
2617
2722
3 / 2
4 / 3
4 / 3
4 / 3
4 / 3.5
5 / 3
1,576
1,898
2,239
2,537
2,617
2,722
1 / 2
1 / 2
2 / 2
2 / 2
2 / 2
2 / 3
5,000 / 7.2 $655,490
$715,000
$742,000
$777,000
$784,000
$783,000
$415.92
$376.71
$331.40
$306.27
$299.58
$287.66
14 Bridle Path @ Paradise Knolls,
Limonite and Beach Street, Jurupa
Valley / Richmond American
1 2
3 4 / 2.5
5 / 2.5
4 / 2.5
2,280
2,490
2,610
1 / 2
1 / 2
1 / 2
5,000 / 8.4 $727,990
$765,990
$753,990
$319.29
$307.63
$288.89
15 Exploration at Shadow Rock, Kings
Canyon Drive, Jurupa Valley /
Lennar
1 2
3 4
4 / 3
4 / 2.5
5 / 3.5
6 / 4.5
2,140
2,809
3,325
4,122
1 / 2
2 / 3
2 / 3
2 / 3
6,000 / 5.4 $652,960
$718,900
$831,440
$978,000
$305.12
$255.93
$249.76
$237.26

APPRAISER’S QUALIFICATIONS

QUALIFICATIONS OF KITTY S. SIINO, MAI

Education

Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)

Post-Graduate Study, Real Estate Development, University of California, Irvine, California

Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.

Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.

Employment

1988 - Present:

Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos and City of Moreno Valley.

1986-1988:

Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.

1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management func tions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements.

Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders.

1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments.

Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793)

Organizations
MAI #11145 - The Appraisal Institute

Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018 and 2019

Speaker, Mello- Roos & Special Assessment Financing, UCLA Extension Publi c Policy Program, February 2009 and March 2011

Fontana City CouncilApril 26, 2022

Fontana City Council
April 26, 2022