Appraisal Report — Fontana City Council, July 12, 2022

APPRAISAL REPORT

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 106
(Mountainview)

City of Fontana, San Bernardino County, California
(Appraisers’ File No. 2022-1260)

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

June 29, 2022

Jessica Brown, Management Services Director
City of Fontana
8353 Sierra Avenue
Fontana, CA 92335

Reference: Appraisal Report
City of Fontana
Community Facilities District No. 106
Mountainview
East side of Lytle Creek Road, North of Summit Avenue, Fontana

Dear Ms. Brown:

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. 106 (“Fontana CFD No. 106”) which consists of a r esidential neighborhood known as Mountainview, in the City of Fontana .

Mountainview includes 156 single family detached homes situated on lots containing a minimum of 5,000 square feet. This report includes the entirety of the Mountainview community. D.R.

Horton (“Horton”) is the builder and is actively marketing the homes. Mountainview offers single- story and two-story floorplans ranging in size from 1,576 to 2,722 square feet.

Out of the 156 proposed units within the subject, 75 have closed to individual homeowners to date with an additional 3 0 in escrow which are due to close upon completion. The builder-owned property ranges from completed model homes to homes under construction to finished lots.

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. 106 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. 106. As a result of our investigation, the concluded minimum market value for the subject property is shown below.

Mountain View:

D.R. Horton Ownership (67 lots & 14 houses) $ 26,062,583 Individual Owners (75 houses) $ 51,571,515
Total Aggregate Value CFD No. 106 $ 77,634,098

115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] Jessica Brown
City of Fontana
June 29, 2022
Page Two

The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of May 1, 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. 106 (Mountainview).................................................... iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................. 1 Definitions ...................................................................................................................... 2 Property Rights Appraised ............................................................................................. 4 Effective Date of Value ................................................................................................... 4 Date of Report ................................................................................................................ 4 Scope of Appraisal ........................................................................................................ 4 Regional Area Map.......................................................................................................... 7 County of San Bernardino Area Description ................................................................... 8 City of Fontana Area Map & Description ....................................................................... 19 Immediate Surroundings ............................................................................................... 24 Community Facilities District No. 106 ........................................................................... 26 Subject Property Descriptions ....................................................................................... 29 Inland Empire Housing Market ...................................................................................... 36 Highest and Best Use Analysis ..................................................................................... 46 Valuation Analyses and Conclusions ............................................................................ 50 Appraisal Report Summary ........................................................................................... 68 Appraiser’s Certification ............................................................................................... 69

ADDENDA
Fontana CFD No. 106 Boundary Map
Tract Map No. 20018
Discounted Cash Flow Analysis
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
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. 106.

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 correct. 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
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otherwise stated in this report. No survey has been made for the purpose of this 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 survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the 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 thwart development of the subject propert ies 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 quali fication 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. 106 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 156 subject residential units. This is the case per D.R. Horton ; 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. 106 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 sales 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. 106 Special Tax Bonds.

THE SUBJECT PROPERTY

The subject property consists of 156 proposed single family detached homes being developed into a community known as Mountainview in the City of Fontana (“City”).

Mountainview is located along the east side of Lytle Creek Road, north of Summit Avenue, and southeast of Interstate 15. Mountainview is being built and sold by D.R. Horton, and features homes sized from 1,576 to 2,722 square feet . The subject community is encompassed by Tract Map 20018, which subdivides the subject lands into 156 single- family detached residential lots with a minimum size of 5,000 square feet. Within Mountainview, 75 of the 156 lots have been completed and closed to individuals. The remaining lots vary in status from completed models, to under homes construction to finished lots. The ownership and condition of the lands are detailed in the chart below.

Description No.

Lots Owner Product / Condition / Status
Mountainview – Tract 20018
Lots 1-31, 51-77, 81-89, 143-150 75 Individuals Completed Homes Lots 154-156 3 D.R. Horton Model Homes (0 in Escrow)
Lots 32-37, 46-50 11 D.R. Horton Over 95% Complete (11 in Escrow) Lots 38-45, 90-142 61 D.R. Horton Under Construction (19 in Escrow) Lots 78-80, 151-153 6 D.R. Horton Finished Lots (0 in Escrow) TOTAL CFD No. 106 156

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. 106 Special Tax Bonds. This report may be included in the Official Statement or similar document to be

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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, knowledg eably 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 wit h the exception of building permit and plan check fees.”

1 The Appraisal of Real Estate, 13th Edition
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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 resales and no current resale listings within the subject property.

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”

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. 106.

Extraordinary Assumptions
The term “Extraordinary Assumption” is defined by USPAP as:

2 USPAP 2018-2019 Edition
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“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 r eport 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 reviewed 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. 106. 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 May 1, 2022.

DATE OF REPORT

The date of this report is June 29, 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 property, Fontana CFD No. 106, which is

3 The Appraisal of Real Estate, 13th Edition
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known as the community of Mountainview. The subject property consists of the entirety of the Mountainview community, and is being built and sold by D.R. Horton. The re are a total of 156 proposed homes within the subject. This appraisal will be presented in the following format:

• County of San Bernardino Description
• City of Fontana Description
• Immediate Surroundings Description
• Brief Description of Fontana CFD No. 106
• Subject Property Description
• Inland Empire Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analysis and Conclusions
• Appraisal Report Summary

In valuing the subject propert y, 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 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 resales and/or resale listings.

The due diligence of this appraisal report included the following:

4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 _________________________________________________________________________________________________________ Appraisal Report
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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, reviewed 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 property between April 1, 2022 and May 15, 2022.

4. Had the site flown by an aerial photographer on May 1, 2022.

5. Interviewed representatives from D.R. Horton and/or their representatives i n order to obtain project information.

6. Reviewed a preliminary title report on portions of the subject property.

7. 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.

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

9. Reviewed the sales brochure and website for the subject community.

10. Reviewed developer sales information on each home within the community.

11. Reviewed Multiple Listing Service information to determine if there are any resales, pending resales or listings of resale 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 less than one- quarter mile southeast of Interstate 15 (“I -15”), and about one- and one- half miles north of Interstate 210 (“I-210”).

San Bernardino County (the “County”) is the largest county in the United 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 expec ted 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 just southeast of I-15, about one- and one-half miles north of I-210, and approximately six and one-half miles north of Interstate 10 (“I-10”). The I-15 is the nearest interstate providing access to the subject via the Beech/Summit Avenue or Duncan Canyon Road on/off ramps . While the subject is near the freeway, there is not currently a direct route to get on the I -15 without traveling to Summit Avenue or Duncan Canyon Road. Currently, there are bollards preventing travel up Lytle Creek just north of the entrance to the subject Mountainview community. 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 _________________________________________________________________________________________________________ Appraisal Report
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near the City of San Bernardino. The subject is located three and one-half 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 10 miles southwest of the subject property. San Bernardino Internati onal Airport is located approximately 13 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 July 1, 2021 (latest available) County population was 2.175 million. This represents a one-year increase of 0.0 percent. This compares to an average annual growth rate over the past 20 years of 2.1 percent. Current projections for San Bernardino County per the California Department of Finance suggest the population is anticipated to reach approximately 2.32 million by 2030, indicating an average annual increase of approximately 0.7 percent over the next nine years. The current zero growth rate is lower than the previous 20- year annual average of 2.1 percent, lik ely due to the disruption of the COVID pandemic. The future growth of 0.7 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 April 27, 2022, the DJIA has shown an increase of 13.28 percent over the previous high in February 2020. It should be noted that the DJIA is down 8.97 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 invading Ukraine which is causing volatility in world economics.

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 in COVID relief to date have helped _________________________________________________________________________________________________________ Appraisal Report
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shore up the U.S. economy; however, due to the significant amount of new money, inflation began.

Inflation is occurring in the United States at a rate not seen for 40 years. As of the end of April 2022, inflation is running at over eight percent from the previous year. Whether it’s from supply chain issues or from the addition of money entering the economy, it is hitting Americans hard. The recent Russian invasion of Ukraine is creating significant volatility in gas prices, which has further increased the rate of inflation. The Federal Reserve Board announced the beginning of several increases in the Federal Reserve Rate coming in 2022. The recent increases at one- quarter and one- half percent have created further volatility in the stock market.

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 March 2022 National unemployment rate at 3.6 percent (latest available per the 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, and then California “reopened” June 15, 2021. In the fall of 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 variants and the winter surge caused the State of California to institute a new indoor mask mandate for January 2022. Most mandates have been rescinded, and the COVID pandemic appears to be transitioning to an endemic. The fall out has been the supply chain disruption along with the prevalent inflation.

The Nation’s gross domestic product (GDP) rate of growth was 5.7 percent in 2021, which is the largest annual increase since 1984. It should be noted the rate is compared to the 2020 year which included the stopped economy due to the introduction of COVID. The International Monetary Fund is projecting GDP growth of 4 percent in 2022, which would outpace the annual average from 2010 to 2019. It should be noted that these estimates _________________________________________________________________________________________________________ Appraisal Report
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were made prior to the Russian invasion of Ukraine. At this time, it is still unknown what effects this may have on the U.S. economy.

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 4.3 percent (as of March 2022 per the Employment Development Department). 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 March 2022, Both San Bernardino and Riverside counties each had an unemployment rate of 4.3 percent. The current unemployment rate for the MSA of 4.3 percent is similar to the California rate at

4.2 percent and significantly higher than the March 2022 National rate of 3. 6 percent.

Below is a table comparing San Bernardino County’s unemployment rate to the unemployment rates of the surrounding counties as of March 2022.

Jurisdiction As of Unemployment Rate*
Los Angeles County 3/22 4.9%
Riverside County 3/22 4.3%
San Bernardino County 3/22 4.3%
Orange County 3/22 3.1%
San Diego County 3/22 3.4%
Source: State of California E.D.D.; *Not Seasonally Adjusted

While unemployment rates have been decreasing, there is an anomaly where, in the overall nation, while unemployment is at 3.6 percent, there are an estimated 2.1 million workers that never came back to work after the pandemic. These jobs were typically lower paying jobs and it is now believed these workers made a choice not to come back, rather _________________________________________________________________________________________________________ Appraisal Report
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than no jobs available. Employers are having trouble filling lower paying jobs throughout the Country causing pay increases in order to entice employees to these jobs.

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 2009 then remained essentially flat for two to three years with the majority of the Inland Empire’s 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 t he 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 act ivity 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 beginning of November 2021, the Board decided that the quantitative easing will begin to taper in mid-November and in March 2022 increased the Federal Reserve Rate 0.25 percent for the first time since 2018 and in May increased it an additional 0.5 percent.

During the Great Recession, the Federal Government attempted to correct the struggling economy by implementing several economic stimulus packages. The Federal Reserve _________________________________________________________________________________________________________ Appraisal Report
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Board (“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 the 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 100 basis points to the historically low level of 0 - 0.25 percent.

Along with dropping the interest rate at the beginning of the pandemic, the Board began quantitative easing by buying 80 billion in Treasury Bonds and 40 billion in mortgage- backed securities each month which also helped shore up the national economy. In March 2022 the Board increased the rate 0.25 percent followed by an 0.50 percent increase in May. The Board also stated they anticipa te several additional increases this year. Most homebuyers currently in escrow are locked in to their mortgage rates. It is too early to tell if this increase has affected homebuying at this time. 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 along with the early 2021 low of 0.25 percent. The recent historically low rates had spurred home sales within the Inland E mpire, which was identified as one of the tightest housing markets in the nation in October 2020.

The latest UCLA Anderson Forecast (“Forecast”) was issued March 9, 2022 and is cautious due to the unknown’s associated with Russia’s invasion of Ukraine. T he Forecast comes with considerable uncertainty as it depends on the future course of the pandemic and on how long the war in Ukraine will last and if it will spread to other countries. The National Forecast states that Inflation is a main concern with higher oil and energy prices considered key factors. They expect oil prices to remain high at least through the second quarter of 2022. The Forecast anticipates that following the average GDP growth of 5.7 percent in 2021, a 4.3 percent growth in 2022, 2.8 percent growth in 2023 and a 2.3 percent growth in 2024. These GDP numbers are dependent on the Federal Reserve Board coordinating a “soft landing” for the economy which means reining in inflation by increasing the interest rates without sacrificing employment and output. _________________________________________________________________________________________________________ Appraisal Report
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The Forecast for California says while some sectors in the State are showing new growth with the technology sector leading the way, there are still some weaknesses. Sectors that require a high level of human contact in the sale of their services have the greatest disparity between the number of jobs before the pandemic and their current employment levels. The Forecast cites four sectors where job growth was strong in the latter part of 2021 with technology, logistics and construction expect ing to be strong drivers of the California economy in both the short and the long term. However, they anticipate the leisure and hospitality sector to remain a drag on economic growth. The risks to California per the Forecast are a possible new virulent w ave of the pandemic and an acceleration of residents leaving the state while upside risk include increased international immigration and accelerated onshoring of technical manufacturing. At time of the Forecast, the State unemployment rate is estimated at 5.5 percent for 2022; 4.5 percent for 2023 and 4.3 percent for 2024. Per the latest California E.D.D. numbers, the March 2022 unemployment rate for the State was at 4.2 percent.

The Forecast for Southern California is for the recovery to continue with the Inland Empire’s economy forecast to grow at a higher rate because of a continued influx of residents drawn by the lower cost of living and the resilient logistics sector. Coastal Southern California is expected to grow at a slower rate. This increase is s hown in the zero percent population increase for San Bernardino County between July 2020 and July 2021 as compared to the State of California which lost 0.44 percent of its population during this time period.

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 _________________________________________________________________________________________________________ Appraisal Report
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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 allocated for COVID by the government to buy goods, which increased demand. This has 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 stati stics 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 Forecast, 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 Ports of Los Angeles and Long Beach. Generally, there has been increases since 2009 with the exception of a slight dip in 2016 and again in 2019 which ended with a 5.6 percent downturn. In December 2021, year to date TEU’s were running over 15 percent above _________________________________________________________________________________________________________ Appraisal Report
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the previous year. As of February 2022, the ports were running 3.2 percent above the previous year. The ports are a big part of the recovery with both the Port of Long Beach and the Port of Los Angeles backed up significantly due to the economic disruption of COVID which has created supply-chain issues. While it has been improving, there is still ample evidence of supply chain challenges.

Education
The subject area is served by the Fontana Unified School District (“FUSD”). The subject is assigned to Sierra Lakes Elementary School (K-5), 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 Chaffey College in Rancho Cucamonga (six miles southwest), at Chaffey College’s Fontana campus ( five miles south of the subject in Fontana), and San Bernardino Community College (13 miles southeast). Higher education is available approximately eight miles to the northwest at California State University San Bernardino, about 15 miles southeast is University of California at Riverside, 14 miles west in the private Claremont Colleges area which include Claremont McKenna College, Pitzer College, Harvey Mudd College, Pomona 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

4.0 5.0

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'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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saw a resurgence beginning the second half of 2012 with sales and prices rising since then. While the economy was slowing slightly in late 2019, the COVID pandemic brought the economy to a halt in March 2020. The one bright spot over the past two years has been the new home market, which has been extremely 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 occur ring in part due to residents leaving urban areas for more suburban areas due to COVID factors, coupled with historically low interest rates. Current concerns in the Inland Empire housing market include possible variants of the pandemic, the high prices of homes, rising interest rates, inflation, supply chain issues, and most recently the Russian invasion of Ukraine which are all creating volatility in financial markets. In conclusion, the County is expected to continue to grow in population due to its Sout hern California location, the availability of land and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles and San Diego 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. 106 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 employme nt 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 11064 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, latest information available) 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 size is 3.3 persons. Over 75 percent of the population of _________________________________________________________________________________________________________ Appraisal Report
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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 2021.

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 Ci ty’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 that were 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 of $200,000 in 2009 with the March 2022 median price estimated at $644 ,000 per Redfin 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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market trends. According to Redfin, this represents a 26.3 percent increase from March of 2021.

Current new homes communities selling within Fontana include: Mountainview by D.R.

Horton (subject), Gabion Ranch by Lennar with two neighborhoods; The Arboretum by Lennar (currently sold out but future phases coming); The Retreat by Lennar; Shady Trails by Tri Pointe Homes, Richmond American and Taylor Morrison; Highland Park by Richmond American (coming soon); and Aurora Park by Tri Pointe Homes . Per Realtor.com there are currently 430 existing homes for sale within the City with the median listing price of $620,000 and the median sold home price of $640,000. Within the subject’s zip code of 92336, the median listing home price is currently $674,900 and the median sold home price is $720,000. 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 Boulev ard, Baseline Avenue, the 210 Freeway, Mountainview 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, Duncan Canyon Road, and Lytle Creek Road.

Economy
Existing commercial property within the City of Fontana is generally along the major thoroughfares including I -10, Route 66/Foothill Boulevard, Mountainview 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 _________________________________________________________________________________________________________ Appraisal Report
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property. The City is home to an Amazon Distribution Center, a Target Distribution Center and a FedEx transfer station. The intersection of the I -10 and I -15 is a major indus trial 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 (f rom 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
U S F Reddaway 320
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 first 10 years since the Great Recession. The area has excellent acc ess 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.

IMMEDIATE SURROUNDINGS

The subject property is located along the east side of Lytle Creek Road, just southeast of I-15, in the City of Fontana. The subject has convenient freeway access to the I -15 via the Beech/Summit Avenue or Duncan Canyon Road on/off ramps.

The subject lands are surrounded by vacant lands to the north, west, and east. The vacant lands to the north and immediately to the east are Southern California Edison corridors with power lines. The land to the west of the subject is a small vacant parcel that separates the subject from I -15, which is only 500 or so feet from the Rainer Lane entrance to the Mountainview community. To the south and east (past the utility easement corridor) is existing residential lands. Southeast of the subject is Wisteria at Shady Trails, an actively selling new home community being developed by Richmond American Homes, and one of the subject’s closet comparable communities (discussed later in the Valuation Analysis section of this report).

The neighborhood adjacent to t he south of the subject is part of the Shady Trails community, but was built in 2007/2008. These homes are large, featuring 3,000 to 5,000 square feet with three car garages and are situated on larger lots. Several of them have sold in the last few months for the mid-$800,000s to low $1 million price point. Southeast of the subject, the Shady Trails community continues, but with smaller homes situated on smaller lots. The newest communities of Shady Trails are much denser than the subject, and some of them are attached homes. The Shady Trail master plan features a large recreation center with a clubhouse, large pool, sports courts, and parks located off of Summit Avenue.

Just one-half mile south of the subject, at the corner of Summit Avenue and Lytle Creek Road, is a large public park facility that Mountainview residents have convenient access to. This park facility includes Fontana Park and Aquatic Center, along with a large dog park, and skate park. Immediate south of Fontana Park, at the southeast corner of Summit Avenue and Lytle Creek Road, is Summit High School. Summit High School will serve the subject property. Southwest of the subject just one- quarter mile is Falcon Ridge _________________________________________________________________________________________________________ Appraisal Report
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Elementary School. While this is the closest elementary school to the subject , it belongs to the Etiwanda School District and will not serve the residents of Mountainview.

Mountainview is served by Sierra Lakes Elementary School, which is located one mile southeast of the subject at the southeast corner of Summit Avenue and Citrus Avenue.

Wayne Ruble is the middle school serving the subject property, and is located south of SR-210, southwest of Highland Avenue and Juniper Avenue, approximately 2.3 miles southeast of the subject.

The closest shopping to the subject is approximately one-half mile southeast, at Falcon Ridge Town Center. Falcon Ridge Town Center is located at the corner of Beech Avenue and Summit Avenue on the east side of I-15, and is anchored by a Stater Brothers market, Target, Michael’s craft store, Ross Dress for Less, CVS and 24-Hour Fitness. The center also offers a multitude of dining options. Across from Falcon Ridge Town Center on the south west corner of Beech Avenue and Summit Avenue is an additional shopping center, featuring a Kohl’s, PetSmart, Aldi grocer y store, a Planet Fitness, and several smaller retail stores and restaurants. Additional shopping is available approximately one and one- half miles southeast along the 210 Freeway at the Citrus Avenue and Sierra Avenue on/off ramps. This stretch of retail includes a Home Depot, Ralphs Grocery Store, Walgreens, Costco, Lowest Home Improvement and more.

We have reviewed the City of Fontana CFD Report for Community Facilities District No. 106 (Mountainview) dated June 29, 2021 as prepared by David Taussig & Associates, Inc. The C FD Report provides a brief description of Fontana CFD No. 106 , 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 f acilities. Resolution No. 2021-040 was adopted June 8, 20 21 and approved the intention to establish Fontana CFD No. 106.

The exterior boundaries of Fontana CFD No. 106 per the Proposed Boundaries map dated June 8, 2021 are shown below. Per the Proposed Boundaries map, the subject contains approximately 36.3 gross acres of land.

Per the CFD Report, Fontana CFD No. 106 is anticipated to build 20.8 net acres out of a total 36.3 gross acres into 156 single family detached homes ranging in size from 1,576

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to 2,722 square feet. Per the CFD Report, the types of facilities to be eligible for funding are streets, including grading, paving, curbs and gutters, s idewalks, 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 facilities proposed to be purchased as completed facilities by CFD No. 106 are streets, including grading, paving, curbs and gutters, sidewalks, street signali zation and signage, street lights and parkway and landscaping related thereto, sewers, storm drains, landscaping 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. 106 are fire protection and suppression services, 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 us eful life of five or more years that is owned by the City. Incidental expenses are also included.

Per the Rate and Method, the Assigned Facilities Special Tax for Developed Property for Fontana CFD No. 106 (Mountainview) is as follows:

Land Use
Class
Description Sq. Ft. Special Tax
1 Residential Property 2,700 or greater $3,618 per unit 2 Residential Property 2,550 to less than 2,700 $3,547 per unit 3 Residential Property 2,400 to less than 2,550 $3,501 per unit 4 Residential Property 2,250 to less than 2,400 $3,434 per unit 5 Residential Property 2,100 to less than 2,250 $3,367 per unit 6 Residential Property 1,950 to less than 2,100 $3,276 per unit 7 Residential Property 1,800 to less than 1,950 $3,185 per unit 8 Residential Property 1,650 to less than 1,800 $3,099 per unit 9 Residential Property 1,500 to less than 1,650 $3,013 per unit 10 Residential Property Less than 1,500 $2,984 per unit 11 Non-Residential Property N/A $25,180 per acre

The estimated cost of public facilities at time of the Fontana CFD No. 106 Report were estimated as:
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PUBLIC FACILITIES AMOUNT
Acquisition Facilities $2,038,2325
Storm Drain Improvements $683,923
Circulation and Traffic Improvements $673,097
Landscaping Improvements $478,050
Sewer Improvements $106,862
Construction Management $96,300
Other Public Facilities $2,995,2886 $2,393,7607
Park Facility Improvements $1,034,748 $1,034,748
Traffic circulation Facility Improvements $894,504 $830,149 Storm Drain Improvements $419,993 $0
Sewer Improvements $136,751 $19,571
Local Transportation Facility Improvements $123,552 $123,552 Police Facility Improvements $73,632 $73,632
Public Facility Improvements $69,420 $69,420
Local Arterial Facility Improvements $69,108 $69,108
Fire Service Protection Improvements $57,564 $57,564
Landscape Facility Improvements $43,524 $43,524
MSHCP Mitigation Improvements $35,676 $35,676
Traffic Signal Facility Improvements $21,372 $21,372
Library Facility Improvements $15,444 $15,444

Developer’s CFD Application Fees $60,000

Development Agreement Fee (Storm Drain Infrastructure $434,000

Additional Capital Facilities Infrastructure Improvements $1,231,498 TOTAL ESTIMATED COSTS $6,157,490

The maximum bonded indebtedness for CFD No. 106 is $ 8,500,000. Per the latest sources and uses of funds (dated May 11, 2022) for the proposed bond issuance, there will be an estimated $ 6,785,000 in Bond Par Amount and a Premium of $87,018 for a total bond fund deposit of $ 6,872,018 with $ 6,083,568 going to the project fund, $441,750 in a debt service reserve fund and $346,700 in underwriter’s discount, cost of issuance and administrative expense fund (all amounts subject to change). A larger copy of the Fontana CFD No. 106 boundary map is located in the Addenda for your review.

5 Estimates provided by Project Developer and subject to review and confirmation. Inclusive of a 10% contingency for civil design and plan check, 7% contingency for permit, plan check and inspection fees, and 20% construction costs contingency.
6 Estimated amount of permit fees prior to anticipated City fee credits (rounded) 7 Estimated amount of permit fees after anticipated City fee credits. _________________________________________________________________________________________________________ Appraisal Report
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SUBJECT PROPERTY DESCRIPTIONS

The subject property consists of 156 proposed lots begin developed as Mountainview by D.R. Horton. The subject site is described below.

Location: East side of Lytle Creek Road, southeast of Interstate 15, and north of Summit Avenue, Fontana, California
Legal Property
Description: Lots 1-156 of Tract No. 20018 in the City of Fontana, County of San Bernardino, State of California.

Property Owner: Individual Owners as to Lots 1-31, 51, 53-77, 81-89, 143-150 of Tract 20018. D.R. Horton as to Lots 32-50, 52, 78-80, 90-142 and 151-156 of Tract 20018.

Assessors
Parcel Nos.: The subject covers the following APNs: 1107 -511-01 through - 86 and 1107-521-01 through -70.

Property Taxes: We have reviewed the property tax invoice for sample parcel 1107- 511-85-0000. The parcel has an assessed value of $172,162 as the land value only. The property taxes include $904.84 for the general levy and $66.22 in miscellaneous charges. The tax invoice (as of May 19, 2022 per the County of San Bernardino Tax Col lector) was fully paid. It should be noted this parcel is now improved. The subject Fontana CFD No. 106 is not shown on this tax invoice. It should be noted the current tax invoice is based on unimproved property and does not include the subject CFD.

Three-Year
Sales History: Per the seller , D.R. Horton Los Angeles Holding Company Inc. purchased the subject lands from Fontana 37, LLC in 2021 for $27,000,000 over two take downs. The first takedown was in March 2021 and the second take down in October 2021. D.R. Horton began

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closing homes within the subject to individual owners in August 2021, and has closed 75 homes between August 27, 2021 and May 1 , 2022.

Size and Shape: Tract Map 20018 is rectangular in shape and contains 37.19 gross acres per the recorded map which subdivides the subject into 156 residential lots and a small park site along with open space.

Zoning: Per the current City of Fontana General Plan Land Use Map and the current Zoning Map, the site is designated as R -M (or Medium Density Residential). The subject lands do not fall within a Specific Plan.

Entitlements: The subject is entitled by Tract Map No. 20018 which was recorded on December 10, 2020. A copy of Tract Map No. 20018 is located in the Addenda for your review. Per Tract Map 20018, the subject lots have a minimum size of 5,000 square feet.

Home Owner’s
Association: The Mountainview HOA fee is estimated at $67 per month at build- out and covers maintenance of the community gate, as well as all walkways and community landscaping , and the small community park.

Topography: The subject lands are generally flat and at grade with surrounding streets. The subject has been fully graded and is generally level with the surrounding residential tracts.

Soils Condition: We have reviewed a “Geotechnical Investigation for Frome Property East of Lytle Creek Road North of Portenza Drive” dated July 15, 2015, as well as a “Geotechnical Report Update” dated January 24, 2020, both prepared by RMA Group Geotechnical Consultants out of Rancho Cucamonga and both covering the subject property. The Report presents a summary of the observation and testing services provided by RMA as well as their findings and suggestions for developing the soils into Tract 20018. The Report concludes that the proposed development is geologically and geotechnically feasible, provided that the recommendations contained in the report are implemented. The Update to the report was completed in regards to Seismic Design Parameters which were mapped in accordance with Section 1613 of the 2019 California Building Code. This was not required when RMA completed their first Geotechnical Report, but came into effect in 2019 and therefore required the update to the report.

It is an assumption of this appraisal that the soils are adequate to support the highest and best use conclusion and that all _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 31
recommendations made within any and all reports were adhered to during construction. The appraiser is not a soils expert and it is recommended that any concerns relating to soils should be addressed to the appropriate experts.

Seismic
Information: Per San Bernardino County’s Geological Hazard Overlay map, the subject property is not loc ated within a County Designated Fault Zone or a Earthquake Fault Zone Boundary.

Environmental
Concerns: We have reviewed two Environmental reports for the subject. The first was an Environmental Checklist Form – Initial Study prepared by the City of Fontana for the subject lands , dated March 19, 2020.

The Report’s Summary Analysis concludes that the proposed residential development would have a less than significant impact on the environment.

We also reviewed a Phase I Environmental Site Assessment (“ESA”) dated June 14, 2004, prepared by LOR Geotechnical Group, Inc. of Riverside. The Phase I ESA concluded that the subject propert y exhibited no evidence of environmental conditions that would prohibit residential use. The appraiser refers the reader to the Environmental Checklist Form - Initial Study and the Phase I ESA for additional information.

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. 06071C7915H dated August 28, 2008 the property is shown as being located in Zone X, designated as an area of minimal flood hazard.

Easements and
Encumbrances: We have reviewed a Preliminary Title Report prepared by Fidelity National Title Builder Services dated November 23, 2021 (and amended on December 2, 2021) issued on Lots 1- 156 (subject property) of Tract Map No. 20018.

Item Nos. A, B and C refer to property taxes and special assessments. Item No. 1 refers to water rights. Item Nos. 2 thru 8, 11 and 13 thru 15 were intentionally omitted. Item No. 9 states the property is within the Fontana Redevelopment Agency. Item Nos. 10, 18, 19, 20, 21, 22, 27, 28 and 29 refer to public utility easements on the property. Item No. 16 refers to a deed of trust recorded in July _________________________________________________________________________________________________________ Appraisal Report
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15, 2020 followed by a partial reconveyance (Lot Nos. 1- 28, 54-89 and 142- 156). We have additionally reviewed a full reconveyance (Dated October 5, 2021) on the aforementioned trust deed which was provided by D.R. Horton. Item No. 17 pertains to a d evelopment agreement recorded on the site. Item No. 23 refers to CC & Rs recorded on the property while Item No. 24 is in regards to the Declaration of Development CC & Rs recorded on the property. Item No. 25 pertains to a Deed of Trust to secure performance of an agreement for profit participation recorded March 29, 2021. It is the appraiser’s understanding that as homes are sold, they are released from this trust deed. Item No. 26 states there are no known matters which were deleted from the report. Item No. 29 pertains to the Master Dispute Resolution Declaration for Mountainview which affects lots 1-28, 54-89 and 142-156 and Lot G which was recorded July 1, 2021. Item No. 29 is in regards to a supplementary master dispute resolution declaration for Mountainview which affects Lots 29-53 and 90- 141 recorded November 19, 2021. Item No. 30 pertains to a deed of trust recorded October 5, 2021 on the property.

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. 106, and the easements noted above. The appraiser is not a title expert 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

Streets/Access: Access to the subject property is convenient via I -15 to Exit 116 Beech Avenue/Summit Avenue, east one -half mile to Lytle Creek Road, and north one- half mile to the Rainer Lane entrance to the subject. Access is also convenient via the I -15’s Duncan Canyon Road exit, east one-half mile to Citrus Avenue, south on Citrus for one-half mile to Knox Avenue, and west on Knox Avenue to enter the subject via Walsh Lane

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

I-210 (one and one- half miles south of the subject) is an east/west freeway. It begins in Santa Clarita in Los Angeles County and ends _________________________________________________________________________________________________________ Appraisal Report
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near downtown San Bernardino. I -210 provides additional access parallel to I-10 which gets congested at commuting times.

I-10 (six and one-half 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 ro ute 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 northeast of the subject.

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.

Duncan Canyon Road has on/off ramps at I-15 and provides access into Fontana. West of I- 15 Duncan Canyon provides access into Hunter’s Ridge, a developed master plan while east of I-15, current access terminates near Sierra Avenue, one of the main north/south arterials in the City.

Lytle Creek Road is an access road which travels in a north/south direction which currently terminates just north of the subject to the north and at the I-210 to the south. North of the subject Lytle Creek is a dirt road which essentially follows the offramp up to Duncan Canyon Road, however vehicle access is not currently available to this section of Lytle Creek Road.

Internal streets within the subject include: Rainer Lane, Darwin Lane, Parry Peak Drive, Walsh Lane, Kings Peak Drive, Elbert Place, Denali Court, Antero Court and Hayes Court.

Current Condition: The subject has been developed into 156 single- family detached lots. Upon our inspection, 89 of the homes were over 95 percent complete including 7 5 individually owned homes, three model homes, and 11 additional production homes owned by the builder (all in escrow). In addition, there were 61 homes under construction (less than 95 percent complete and all in escrow) and 6 additional finished lots.

Costs to Complete: The subject property has been developed into 156 finished lots with internal streets complete and utilities stubbed to each lot. Out of the 156 lots, 75 are completed and individually owned. Per the builder there are remaining land development costs are shown below. _________________________________________________________________________________________________________ Appraisal Report
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Professional Services $ 215,833
Permits/Fees 412,416
Grading 174,642
Sewer 15,402
Water 13,858
Street Improvements 83,892
Fencing & Walls 441,091
Bond Exoneration 80,000
Amenities 13,300
Landscape 73,897
Total $ 1,524,331

It is the appraiser’s understanding that the above amounts do not include any facilities or fees to be financed by Fontana CFD 106.

These costs are associated with the builder-owned property only and are not obligations of the individually owned homes. Dividing the total amount of $1,524,331 by the 81 builder -owned lots equates to $18,818.90 in remaining costs per lot. The above remaining costs will be taken into consideration in the valuation section later within this report. Please note that it is an Extraordinary Assumption of this report that the costs as reported above are true and correct. While the amounts appear reasonable, we do not have expertise in cost estimating.

Improvement
Description: Mountainview is a gated community and includes six detached one and two-story floorplans ranging in size from 1,576 to 2,722 square feet. The model homes are located at the west entrance of the community off of Rainer Lane on Darwin Lane . Mountainview features three to five- bedroom floorplans featuring attach ed two to three car garages. Home exteriors feature dual glazed low -E windows, roll-up sectional garage doors, Therma-Tru fiberglass entry doors, and three distinct architectural elevations. The Mountainview homes offer Mohawk vinyl and carpet floor coverings , bullnose drywall corners, two- panel interior doors and prewiring for light fixtures or ceiling fans in bedrooms and dining room. Kitchens include quartz countertops, Whirlpool stainless steel appliances, and eat in islands. D.R. Horton advertises their Multi-Gen suite options for select floorplans, which feature a kitchenette, living and bedroom with bathroom. Mountainview is a solar mandatory community, and offer Vivint solar panel power purchase or system purchase, which is not included in the advertised prices. The homes also include tankless water heaters, CAT5 wiring and a conduit for an EV charger in garage. Sevent y-four of the proposed 126 homes in the subject property have closed to individuals with closing dates betwee n August 27, 2021 and April 21, 2022 . Actual sales prices (including premium, upgrades, options and incentives) within the subject have _________________________________________________________________________________________________________ Appraisal Report
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ranged from $599,315 to $815,543. Current base pricing ranges from $648,990 to $780,990. Our search of the MLS revealed no resales and no current resale listings. Our physical search noted all homes appear to be in excellent condition. The houses which are over 95 percent complete are detailed below.

*Each asterisk designates one model home per that plan. In addition to the above, there are 61 homes under construction and an additional 6 finished lots.

Mountainview by D.R. Horton

Plan

Bed/Bath
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

THE INLAND EMPIRE HOUSING MARKET

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

Population
The San Bernardino County population showed no growth between July 2020 and July 2021, and an average of 2.1 percent the previous 20 years. The stagnant growth during this time is thought to be due to the disruption during COVID. Prior to the COVID pandemic, predictions were for the County to grow at an average annual rate of 0. 7 percent over the next nine 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 large scale COVID-19 influence is still unknown on the County’s population growth.

New home sales in the County are recently higher than the coastal communities due to affordability, the work from home factor and millennials finally entering the housing market which may increase County population growth.

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 signific antly 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. After 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 once again going under contract with new homes selling at above average absorption rates from May 2020 into April 2022 in the region.

Economic growth in t he 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 _________________________________________________________________________________________________________ Appraisal Report
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general increases since that time until the economic shutdown due to COVID which created a new recession. The unemployment rate for the County was 4.3 percent (per the March 2022 Employment Development Department “EDD” report), lower than the high of

15.1 percent in July 2010. The March 2022 County rate was essential the same as the California unemployment rate (4.2 percent), but was higher than the March 2022 National rate of 3.6 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 COVID 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 closed, hotels are currently at less than normal 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 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 _________________________________________________________________________________________________________ Appraisal Report
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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 significantly 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 and as of the end of March 2022 was 24 percent below one year-ago levels.

This has put pressure on prices to rise. As of mid- March 2022, over 97 percent of new home builders in the Nation were stating pricing has increased from January 2022 to February 2022. 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 for buyers; (4) labor shortages; and (5) delay on government services.

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 4.7 percent compared to a

1.2 percent average in 2020. Thus far, 2022 has experienced high rates of inflation with March showing an 8.5 percent annual rate. 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 tapered off their purchase of bonds and has begun to raise the Federal Reserve Rate.

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 _________________________________________________________________________________________________________ Appraisal Report
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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 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 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 April 28, 2022 was 5.01 percent, which is higher than the February and March 2022 averages, and significantly higher than the most recent low of 2.65 percent on January 7, 2021. Mortgage applications had been spiking due to these low rates, and the fear that they were going to start to slowly tick ing up, which we are seeing occur in real time . In March 2022 the Federal Reserve Board increased the rate 0.25 percent followed by a 0.50 percent increase in May. The Board has stated they anticipate several additional increases this year. The Federal Reserve Rate increases are supposed to help slow the high inflation rate in our country.

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 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 development 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 _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 40
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 (such as the subject property) or a public builder buying a larger piece of land but develops the land for its own use. 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. With mortgage rates rising, there may be a cooling off in the currently hot housing market.

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 May 8, 2022 Ryness Report, the average year to date sales are two percent above the previous year .

Moreover, when taking into account two calendar years and reviewing December 2019 to December 2021 (prior to pandemic and since the pandemic), sales prices increased 37 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. However, the flip side is as rates rise, purchasing power becomes lower. In late 2021 there was a slight slowdown in sales which suggested that a peak in pricing may have been reached. However, sales numbers jumped back up for a strong end of 2021 and a very strong start to 2022, possibly from predictions of rates rising which appears to be occurring. It is still too early to tell if the rising rates will significantly affect the new home sales market. Along with home sales comes a demand for appliances, furniture, _________________________________________________________________________________________________________ Appraisal Report
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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, new home projects have decreased since that time to 188 new home projects per the May 8, 2022 Ryness 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 2021 were 1,228 (for the quarter) while new home 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 equate to 4,912 new home sales for the year, which relate to the aforementioned needed homes based on estimated 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 $535,419 per John Husing’s Third Quarter 2021 (latest available) information. This reflects an increase of over 99 percent from the bottom of the cycle and an increase of

22.5 percent over its previous peak. New home sale prices 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 fluctuate as much as land values. However, there have been inflationary increases in construction costs adding to the increased cost of building a home.

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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 Jurupa Valley, Rialto, and San Bernardino. Our search for comparable new home projects as compared to the subject communities within the competitive market area resulted in thirteen new home projects (including the subject) with base pricing ranging from $5 60,100 to $1,003,655, but the majority of the communities pricing ranging from $595 ,000 to $790,000. The subject’s current base pricing ranges from $648,990 to $780,990.

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 March 2022 ($802,500) reflects an increase of 5.6 percent from the previous month and up 13.8 percent year -over-year from $705,000 in March 2021.

Existing home sales in Southern California overall were down 7.5 percent year-over-year as of March 2022. The decrease in sales combined with the increase in median price reflects the low inventory effecting the entire Southern California market. The overall Southern California numbers compare to San Bernardino County with $ 475,000 as the median price paid for an existing home in the County in March 2022, up 5.6 percent from the previous month and up 15.3 percent year over year ($412,000). Sales of existing homes in the County were down 5.7 percent year-over-year. The decrease in sales is mainly due to a lack of supply of new homes as builders can’t keep up with demand and due to 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 Mar. 2022 Feb. 2022 Mar. 2021
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $781,050 $773,440 $689,440 1.0% 13.3% -5.8% Orange $1,305,000 $1,264,000 $1,025,000 3.6% 27.3% -19.4% Riverside $620,000 $605,000 $535,000 2.5% 15.9% -9.5%
San Bernardino $475,000 $450,000 $412,000 5.6% 15.3% -5.7% San Diego $950,000 $888,000 $800,000 7.0% 18.8% -2.2%
Ventura $914,000 $887,500 $770,700 3.0% 18.6% 6.2%
Southern Calif. $802,000 $760,000 $705,000 5.6% 13.8% -7.5% Source: California Association of Realtors

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Based on March 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 45,000 as compared to Riverside County, $ 306,050 as compared to Los Angeles County, $439,000 as compared to Ventura County , $475,000 as compared to San Diego County and $830,000 as compared to Orange County. That is, in March 2022, the median priced home in San Bernardino County was $830,000 less than the median priced home in Orange County ($1, 305,000). Typically, as the price advantage widens, homebuyers are more open to commuting 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 surrounding the subject are shown in the table below.

Community
Name
Location
To
Subject

No. of
Sales
April 2022
Price
Median

Price %
Change
from Apr.
2022
North Fontana Subject 69 $689,000 17.2%
Coyote Canyon West 10 $872,000 32.6%
Lytle Creek Northwest 3 $600,000 42.9%
Citrus Heights South South 9 $805,000 26.8%
Rialto Southeast 64 $550,000 20.9%
Summit Heights Southwest 12 $784,000 22.4%
Sierra Lakes Southeast 14 $697,000 18.9%
Source: Redfin Housing Market Trends April 2022

The median home price of a detached resale home in North Fontana in April 2022 was $689,000, 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 Coyote C anyon, which is a small neighborhood on the west side of I -15. 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 15.3 percent year over year from March 2021 to March 2022. _________________________________________________________________________________________________________ Appraisal Report
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According to the Ryness Report dated May 8, 2022, there are currently 17 new home projects in the subject’s Central-East San Bernardino submarket with the City of Fontana housing 11 of them (including the subject).

Mountainview - Sales and Pricing
Mountainview is comprised of 156 single family detached homes sized from 1,576 to 2,722 square feet situated on 5,000 square foot minimum lots. Mountainview had a grand opening on June 12, 2021, however began pre- selling on May 17, 2021 with opening base pricing ranging from $589,990 to $704,990. Current base pricing at Mountainview ranges from $648,990 to $780,990 which is 10 to 12 percent higher than opening base prices. Actual closed prices, including options, upgrades and premiums, have ranged from $ 599,315 to $815,543. Within the subject, D.R. Horton has sold and closed 75 homes to individuals, with an additional 30 homes which are in escrow and due to close at completion. The total of 1 05 sales equates to an absorption rate of 8.75 sales per month. This is considered to be a very strong absorption rate for the subject marketplace.

Per the Ryness Report, a new home tracking service, as of May 8, 2022 the year-to-date average sales per project per month in the Inland Empire is 5.4 homes.

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 astronomical increases over the past two years. While existing home sales were originally down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all -time lows. In the past two years, the I nland Empire market has seen new home sales rates much stronger than the previous several years. The subject community is performing above the Inland Empire average, resulting in strong sales rates. This is due to limited new homes offered in the subject area along with the subject’s pricing and average absorptions being in-line with the actively selling projects and the comparable communities.
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The year 2020 began poised for huge growth, but the COVID pandemic temporarily shook the existing home market. T he COVID pandemic actually had a positive impact on the new home market, which became a preferred option with new home sales growing over the past two years. Sales rates in the immediate vicinity of the subject are generally above the overall average in the subject market area. Prices of new homes in the area have had significant increases of well over ten percent per year in some communities. Despite uncertainty hitting the market at the beginning of the COVID outbreak, most observers agree that the Inland Empire housing market is positive and healthy population growth is occurring in the County. It is believed that as the population continues to increase, housing growth will also continue.

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 is rectangular in shape, consists of 37.19 gross acres per recorded Tract Map No. 20018 and is located in the northern portion of the City of Fontana, on the east side of Lytle Creek Road, north of Summit Avenue and immediately east of I-15. The lands are generally at street grade of surrounding streets, with vacant lands to the north, a Southern California Edison eas ement to the east, existing homes to the south, and vacant lands up to the I-15 to the west.

8 The Appraisal of Real Estate, 11th Edition
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The subject site has been graded into 156 single-family lots with a minimum of 5,000 square feet. We have reviewed the final Environmental Impact Report along with a Soils Report on the subject site. All reports reviewed concluded that the development of the site into single -family residential us e 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. It is an assumption of this report that the soils are adequate to support 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 tract. All standard utilities are available to serve the subject property.

The site has good access via I -15, exit Beech/Summit Avenue to L ytle Creek Road or Duncan Canyon Road to Citrus Avenue to Knox Avenue. There is a regional shopping within one mile of the subject at Summit Avenue.

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.

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 M -R, or Medium Density Residential. There is no Specific Plan on the subject lands. In addition to the General Plan zoning, the subject is covered by recorded Tract Map 20018 which subdivides the subject property into 156 single-family detached lots along with open space, setback areas and internal streets.

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 th e findings of the physically possible uses.
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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. As discussed under the Inland Empire Housing Market section earlier within this report, the market h as shown strong increases in both sales and pricing in the past year, even with the COVID pandemic ongoing. Within Fontana CFD No. 106, out of 156 proposed houses, there have been 105 home sales to date including 7 5 home closings. All structures appear to be in excellent condition with no physical depreciation apparent. Within the new home market in the greater Fontana area, we found thirteen projects to be comparable to the subject Mountainview community. Homebuilding has not been able to keep up with the demand in the past two years due to several factors including historically low interest rates, millennials joining the home buying market and the work from home factor all adding to the demand. The San Bernardino County housing market has seen exceptional absorption over the past two years. Our search for land sales found ten land sales in the market area that we consider to be comparable. Population growth is still occurring in the area and will continue to create the need for housing.

Based on the above analysis, the highest and best use for the subject property appears to be for single-family detached residential development at the right price points.

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.

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Highest and Best Use – “As Improved”
The subject property consists of Mountainview with 156 proposed homes which is currently being marketed by D.R. Horton . Mountainview began selling in May 2021 and has sold 105 homes, reflecting a sales rate of approximately 8.75 sales per month. Base prices at Mountainview have increased since grand opening from 10 to 12 percent per floorplan, with current base pricing ranging from $648,990 to $780,990 . The sales absorption rate within Mountainview is considered to be very good to excellent. As discussed under the Inland Empire Housing Market section, within the Inland Empire, the year-to-date average sales per project is 5.4 homes per month. All of the homes are of good design and appear to be of good quality workmanship. It appears that Mountainview is being well received and the neighborhood is 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. _________________________________________________________________________________________________________ Appraisal Report
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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.

In the case of the completed (over 95 percent complete) builder -owned models and production houses, the homes will be valued using the Sales Comparison Approach to conclude on a retail value for each plan, followed by a Discounted Cash Flow (“DCF”) Analysis due to the single ownership. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining development costs (if any), the marketing and carrying costs 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. A home under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement. In the case 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 _________________________________________________________________________________________________________ Appraisal Report
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testing. All of the value conclusions will take into consideration improvements and/or benefits to be funded by the Fontana CFD No. 106 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.

Market Data Discussion – Residential Lots

Within Mountainview, there are 156 lots in a generally physically finished condi tion, with 75 completed homes individually owned, 14 builder-owned homes that are complete or nearly complete (including three model homes), 61 builder-owned homes that are under construction, and 6 additional finished lots owned by the builder . As we are valuing a home under construction (under 95 percent complete) on the basis of a finished lot, we will be valuing 67 lots in our analysis.

We have searched the area and found the eight transactions summarized in the Addenda to be most comparable to the subject property. 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 one-half mile northeast, from Lewis Group of Companies (North Fontana Investment Company) in December 2021 for $91,935,500 per public record. The purchase included 69 triplex units, 99 cluster lots with a minimum size of 2,200, 109 cluster lots wit h 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, 100 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 product however brokers familiar with the transaction reported the blended finished lot price is estimated at $274,000. In comparison to the subject property, this transaction is considered to be inferior in lot size as it includes a _________________________________________________________________________________________________________ Appraisal Report
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blended price for triplex units along with a majority of smaller lots than the subject’s 5,000 square foot lots. 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 th is transaction considered 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 about 1.5 miles south of the subject property . Richmond American 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 adjacent to the 210 Freeway. The overall density of this transaction is 10 dwelling units per acre while the subject’s area of Mountainview about

4.2 dwelling units per gross acre. The subject refers to 5,000 square foot minimum lots while this transaction has all detached small lots which is considered to be inferior in density and lot size to the subject. In addition, the freeway location is considered to be inferior.

Land Sale No. 3 refers to the purc hase by Landsea Homes of 489 units located just northwest of the subject northwest 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 $87,394 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 tr ansaction is considered to be inferior due to the townhomes (attached) units and the motorcourt cluster units when compared to the subject’s minimum 5,000 square foot lots. In addition, this transaction is considered to be 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 _________________________________________________________________________________________________________ Appraisal Report
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is risk associated with the development (both time of development and grading risk) while the subject lots are all graded and 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 significantly inferior due to it being adjacent to the 210 Freeway, the higher density and date of sale. 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 appreciation occurred in the marketplace suggesting significant appreciation. However, S ale 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 No. 5 pertains to the sale of 81 lots located in Rialto, about 7.5 miles southeast of the subject. This area of Rialto is considered to be an inferior location when compared to the subject area’s location in Fontana. The infill parcel closed in February 2021 for $3,564,000 or $44,000 per lot based on a f inished lot estimate of $140,000. Richmond American Homes purchased the site and is now selling their Seasons at Acacia on the site with home sizes from 2,080 to 2,640 square feet and pricing from $593,000 to $649,490. When reviewing Redfin Market Trends, Rialto has a median home price of $550,000 while the subject zip code has a median home price of $688,000 or 25 percent higher. In comparison to the subject property, this transaction is considered inferior due to lot size (3,600 versus the subject’s 5,000 square foot minimum), inferior due to the date of sale (over one year ago), and significantly inferior in location.

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Land Sale Nos. 6, 7 & 8 refer to three land sales which closed in 2021 within Fontana in a community known as Shady Trails, about one- half mile southwest of the subject property. These three sales are for higher density product; however, we have included them due to their proximity to the subject property. Land Sale No. 6 refers to the purchase by PLC Communities for 91 detached triplex units. PLC is selling their community known as Juniper on the site with home sizes from 1,218 to 1,828 square feet and base pricing from $517,900 to $634,900. The property has 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. 7 refers to TRI Pointe Homes purchasing the lands for 139 two-story townhomes at Shady Trails from the Lewis Group of Companies in February 2021. The density is approximately 15 dwelling units per acre for this project. The land is located south of the subject property near the Summit Avenue and Citrus Avenue intersection. The land was purchased in a finished condition 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 sel ler when factoring in the anticipated profit participation. This community is now selling a s Birch Bend with base pricing from $487,000 to $595,000. Land Sale No. 8 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-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, all three transactions have significantly inferior lot sizes/density; however, Shady Trails has superior amenities due to the master plan. Finally, while these transactions closed in 2021, the escrows opened in 2019, prior to a significant amount of appreciation in the subject marketpl ace. _________________________________________________________________________________________________________ Appraisal Report
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While home prices have increased from 35-50 percent during this time, the land residual typically increases at a higher rate. When pairing Data Nos. 2 and 7 with similar densities, the significant appreciation is apparent (i.e., $132,000 versus $285,000 per finished lot).

Land Sale No. 9 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 miles southwest of the subject property near the Interstate 15 and Victoria Street intersection in the City of Fontana. The land was purchased in an unimproved condition with final engi neering 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 no w known as Aurora Park with two products known as Goldenrod and Sienna currently selling. Home sizes range from 1,829 to 2,743 square feet with base pricing from $662,420 to $796,565. In comparison to the subject property, the site is significantly inferior due to lot size, along with being inferior due to the date of sale, over one year ago, prior to a significant amount of appreciation in the subject marketplace.

Land Sale No. 10 is located in Rialto, similar in location to Land Sale No. 5; however, in a slightly superior location within the City. Lennar purchased 776 lots known as River Ranch in December 2020 from Lytle Development. The lots range from small detached lots up to 6,000 square foot detached lots. Lennar purchased the site for $90,000,000 in December, 2020 or for $115,979 per lot based on a blended finished lot price of $190,000.

The lands were in an unimproved condition at time of sale. Lennar is planning on opening four communities; Stonecreek, Ridgewater, Summerbrooke and Blueridge beginning in late May 2022. Pricing has not yet been announced. In comparison to the subject property, this transaction is considered to be inferior in location, date of sale, lot size, condition and due to the number of lots in the transaction which is considered to be a bulk sale.

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

Data
No. Location Date of
Sale Lot Size Finished
Lot Price Comparison to Subject

1 Arboretum,
Fontana 12 / 21
4 du/ac
Triplex –
6,000 sf
$274,000 Inferior – Lot Size/Density,
Number of Lots

2 Fontana 12 / 21
10 du/ac
Sm. Det
Lots
$285,000 Inferior – Amenities, Fwy
Location and Lot Size

3 Fontana 9 / 21
4 du/ac
Att to
10,000 sf
$285,000 Inferior – Lot Size/Density,
Condition & Number of Lots

4 Fontana 5 / 21
14 du/ac
Att & Sm
Det Lots
$155,000 Inferior – Lot Size/Density, Fwy
Location and Date of Sale

5 Rialto 2 / 21 3,600 sf $140,000 Inferior – Location, Lot size, Date of Sale
6 Shady Trails
Fontana 2 / 21 14 du/ac
Triplex $133,000
Superior – Amenities
Inferior – Date of Sale, Lot
Size/Density
7 Shady Trails
Fontana 2 / 21 15 du/ac
Attached $114,000
Superior – Amenities
Inferior – Lot Size/Density, Date
of Sale
8 Shady Trails
Fontana 1 / 21 12 du/ac
Sm. Det. $132,000 Superior – Amenities
Inferior – Lot Size, Date of Sale
9 Fontana 12 / 20 11 du/ac
Sm. Det. $215,000 Inferior – Lot Size, Date of Sale
10 Rialto 12/20 Sm. Lot –
6,000 sf $190,000 Inferior – Location, Lot size,
Condition, No. of Lots

The market data depicts a wide range of overall finished lot price range from $114,000 to $285,000. Land Sale No. 1, 3 and 10 refer to the most similar in comparison to the subject in lot size/density, however these three transactions all refer to a blended price which includes some smaller or attached lots and all are considered to be “bulk sales” as they refer to 526, 489 and 776 lots/units respectively. Typically, a builder purchases a single tract or receives a discount due to the “bulk” purchase. While Land Sale No. 10 closed on the basis of a blended finished lot at $190,000, this transaction was completed in December 2020, prior to a significant amount of appreciation in the marketplace. Land Sale No. 2 refers to all detached lots, however they are smaller in size when compared to the subject property. Sale Nos. 6 , 7 and 8 are all located within Shady Trails with superior amenities, however all were negotiated well over two years ago, prior to a significant amount of appreciation in the subject marketplace. Most of the market data _________________________________________________________________________________________________________ Appraisal Report
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relates to blended prices of either attached and small cluster lots, or small to medium sized conventional lots.

In addition to the above comparables, we have knowledge of a current negotiation on a property in near proximity to the subject. The details of this transaction have been retained in our files for confidentiality purposes. The property consists of lands for a duplex product which is in negotiation based on a $264,000 finished lot/pad. This is not an escrow at this time but does show activity in the subject marketplace.

Based on the market data, we have concluded that the subject Mountainview lots, with a minimum lot size of 5,000 square feet, have a finished lot value of $290,000. Based on the above and considering the remaining costs as discussed in the Property Description section, the land value is calculated as follows:

67 Lots x $290,000 $19,430,000
Less: Remaining Costs ($18,818.90 x 67) ( 1,260,866)
Current Value of 67 Lots $18,169,134

Retail House Valuation – Mountainview
Within Mountainview, there are 7 5 individually owned homes and 14 homes over 95 percent complete owned by the builder. The builder -owned homes over 95 percent complete include 11 production homes and three model homes.

Due to the single ownership of multiple houses ( 14 homes) by the builder within the subject property, a Discounted Cash Flow (“DCF”) analysis is needed in order to arrive at a bulk value for the homes within each neighborhood. F irst, a retail value for each plan within Rancho Palma will be concluded followed by a DCF for the builder owned homes which will take into account the absorption time to sell off the homes, the costs associated with selling off the homes and any remaining costs owed by the builder, if any. The resulting revenue will be discounted using an appropriate rate to determine the builder - owned bulk value for the builder -owned homes. The DCF builder -owned final value will be followed by a reporting of the concluded values for the individually owned homes within _________________________________________________________________________________________________________ Appraisal Report
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each neighborhood using the concluded base retail value for each plan with a separate check of the analysis utilizing a mass appraisal technique based on actual sales prices of the homes.

Below is a summary of the floor plans within Mountainview. A listing of the improved residential comparable properties is located in the Addenda of this report. All new home comparables are located within Fontana and the neighboring areas of Jurupa Valley, Rialto, and San Bernardino. Our search of the subject property and the local Multiple Listing Service (MLS) has resulted in no re-sales or current resale listings within Mountainview. are detailed below.

*Each asterisk designates one model home per that plan. In addition to the above, there are 61 homes under construction and an additional 6 finished lots.

The most appropriate new home comparable data for Mountainview Plan 1 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2 1 / 2 1,576 --
1 2 4 / 3 1 / 2 1,898 $366.17
2 1 3 / 2.5 2 / 2 1,642 $385.64
7 1 3 / 2.5 1 / 2 2,280 $321.93
8 1 4 / 3 1 / 2 2,140 $344.13
9 1 3 / 2 1 / 2 1,547 $391.67
10 1 3 / 2 1 / 2 1,792 $358.55

The majority of the comparable communities are located in Fontana; however, our search Mountainview by D.R. Horton

Plan

Bed/Bath
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned
1 3 / 2 1 / 2 1,576 14 0
2 4 / 3 1 / 2 1,898 15 2*
3 4 / 3 2 / 2 2,239 14 2
4 4 / 3 2 / 2 2,537 13 2*
5 4 / 3.5 2 / 2 2,617 13 5*
6 5 / 3 2 / 3 2,722 6 3
Total 75 14
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was expanded to the surrounding cities of Jurupa Valley, Rialto and San Bernardino in order to include comparables with lots sized similar to the subject. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price less concessions range from $321.93 to $391.67. Mountainview Plan 1 has a current base asking price of $411.80 per square foot. There have been 14 closings of Plan 1 with sales prices ranging from $380.28 to $428.21 per square foot. There are two current escrows of Plan 1 with a sales price range of $ 435.99 to $454.99 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted that the reported sales prices include upgrades, premiums and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan . It has been concluded that Plan 1 has a base current market value of $390.00 per square foot. This calculates as follows:

1,576 sf x $390.00 = $614,640

The most appropriate new home comparable data for Mountainview Plan 2 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 4 / 3 1 / 2 1,898 --
1 1 3 / 2 1 / 2 1,526 $411.80
2 2 4 / 2.5 2 / 2 1,872 $360.21
3 2 3 / 2.5 2 / 2 1,961 $322.31
7 1 3 / 2.5 1 / 2 2,280 $321.93
8 1 4 / 3 1 / 2 2,140 $344.13
9 1 3 / 2 1 / 2 1,547 $391.67
10 1 3 / 2 1 / 2 1,792 $358.55

The majority of the comparable communities are located in Fontana; however, our search was expanded to the surrounding cities of Jurupa Valley, Rialto and San Bernardino in order to include comparables with lots sized similar to the subject. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square _________________________________________________________________________________________________________ Appraisal Report
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footage, room count, garage space and other amenities. The new home comparables have a base price less concessions range from $ 321.93 to $411.80, with generally the larger homes having the lower per square foot price. This is typical due to the economies of scale obtained during construction. Mountainview Plan 2 has a current base asking price of $366.17 per square foot. There have been 15 closings of Plan 2 with sales prices ranging from $336.14 to $375.16 per square foot. There are four current escrows of Plan 2 with a sales price range of $381.82 to $404.34 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted that the reported sales prices include upgrades, premiums and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan. It has been concluded that Plan 2 has a base current market value of $360.00 per square foot. This calculates as follows:

1,898 sf x $360.00 = $683,280

The most appropriate new home comparable data for Mountainview Plan 3 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3 2 / 2 2,239 --
1 4 4 / 3 2 / 2 2,537 $292.66
4 Lambert 3 / 2.5 2 / 2 2,210 $308.59
5 2 4 / 3 2 / 2 2,292 $323.50
6 3 4 / 3 2 / 3 2,264 $336.74
10 2 4 / 3 2 / 2 2,203 $310.15
11 Lapis 3 / 2.5 2 / 2 2,180 $272.47
13 N2 4 / 2.5 2 / 2 2,274 $253.30

The majority of the comparable communities are located in Fontana; however, our search was expanded to the surrounding cities of Jurupa Valley, Rialto and San Bernardino in order to include comparables with lots sized similar to the subject. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price less concessions range from $253.30 to $336.74 with the low-end of the range _________________________________________________________________________________________________________ Appraisal Report
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in an inferior location. Mountainview Plan 3 has a current base asking price of $321.79 per square foot. There have been 14 closings of Plan 3 with sales prices ranging from $300.13 to $348.43 per square foot. There are four current escrows of Plan 3 with a sales price range of $328.04 to $343.76 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted that the reported sales prices include upgrades, premiums and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan. It has been concluded that Plan 3 has a base current market value of $ 310.00 per square foot.

This calculates as follows:

2,239 sf x $310.00 = $694,090

The most appropriate new home comparable data for Mountainview Plan 4 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 4 / 3 2 / 2 2,537 --
1 3 4 / 3 2 / 2 2,239 $366.17
1 5 4 / 3.5 2 / 2 2,617 $298.43
4 Livingston 3 / 2.5 2 / 2 2,440 $293.64
5 2 4 / 3 2 / 2 2,292 $323.50
10 3 4 / 3 2 / 2 2,590 $282.29
11 Moonstone 4 / 2.5 2 / 2 2,640 $246.02

The majority of the comparable communities are located in Fontana; however, our search was expanded to the surrounding cities of Jurupa Valley, Rialto and San Bernardino in order to include comparables with lots sized similar to the subject. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price less concessions range from $ 246.02 to $366.17 with generally the larger homes at the low end of the range and smaller homes at the high end of the range. This is due to the economies of scale typically obtained during construction. Mountainview Plan 4 has a current base asking price of $292.66 per square foot. There have been 13 closings of Plan 4 with sales prices ranging from $267.61 to $302.04 per square foot. There are five _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 62
current escrows of Plan 4 with a sales price range of $304.04 to $324.74 per square foot.

The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted that the reported sales pri ces include upgrades, premiums and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan . It has been concluded that Plan 4 has a base current market value of $280.00 per square foot. This calculates as follows:

2,537 sf x $280.00 = $710,360

The most appropriate new home comparable data for Mountainview Plan 5 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 5 4 / 3.5 2 / 2 2,617 --
1 4 4 / 3 2 / 2 2,537 $292.66
1 6 5 / 3 2 / 3 2,722 $282.88
4 Livingston 3 / 2.5 2 / 2 2,440 $293.64
5 3 5 / 4 2 / 3 2,743 $290.40
8 2 4 / 2.5 2 / 3 2,809 $278.03
10 3 4 / 3 2 / 2 2,590 $282.29
11 Moonstone 4 / 2.5 2 / 2 2,640 $246.02

The majority of the comparable communities are located in Fontana; however, our search was expanded to the surrounding cities of Jurupa Valley, Rialto and San Bernardino in order to include comparables with lots sized similar to the subject. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price less concessions range from $246.02 to $293.64. Mountainview Plan 5 has a current base asking price of $298.43 per square foot. There have been 13 closings of Plan 5 with sales prices ranging from $275.25 to $311.63 per square foot. There are 9 current escrows of Plan 5 with a sales price range of $ 303.14 to $328.99 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted that the reported sales prices include upgrades, premiums and options along with any concessions given by the builder, while the concluded _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 63
value relates to a base price for the plan . It has been concluded that Plan 5 has a base current market value of $275.00 per square foot. This calculates as follows:

2,617 sf x $275.00 = $719,675

The most appropriate new home comparable data for Mountainview Plan 6 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 6 5 / 3 2 / 3 2,722 --
1 5 4 / 3.5 2 / 2 2,617 $298.43
4 Livingston 3 / 2.5 2 / 2 2,440 $293.64
5 3 5 / 4 2 / 3 2,743 $290.40
8 2 4 / 2.5 2 / 3 2,809 $278.03
10 3 4 / 3 2 / 2 2,590 $282.29

The majority of the comparable communities are located in Fontana; however, our search was expanded to the surrounding cities of Jurupa Valley, Rialto and San Bernardino in order to include comparables with lots sized similar to the subject. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price less concessions range from $ 278.03 to $298.43, with generally the larger homes having the lower per square foot price. This is typical due to the economies of scale obtained during construction. Mountainview Plan 6 has a current base asking price of $282.88 per square foot. There have been five closings of Plan 6 with sales prices ranging from $262.50 to $282.64 per square foot. There are six current escrows of Plan 6 with a sales price range of $287.67 to $300.71 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted that the reported sales prices include upgrades, premiums and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan. It has been concluded that Plan 6 has a base current market value of $270.00 per square foot. This calculates as follows:

2,722 sf x $270.00 = $734,940
_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 64

Builder Owned Retail Value – Mountainview

Within the subject property, there are 14 builder-owned houses over 95 percent complete, three of which are models. Per interviews with builders, upgrades and landscape/hardscape of up to $100,000 are installed in the model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar -for-dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $50,000 premium has been included with each of the model homes. As con cluded above, the retail base value conclusions for the builder -owned homes within Mountainview are calculated as follows:

Plan 1 (0 x $614,640) $ 0
Plan 2 (2 x $683,280) 1,366,560
Plan 3 (2 x $694,090) 1,388,180
Plan 4 (2 x $710,360) 1,420,720
Plan 5 (5 x $719,675) 3,598,375
Plan 6 (3 x $734,940) 2,204,820
Model Upgrades (3 x $50,000) 150,000
Total Retail Value $10,128,655

Absorption Period
In order to arrive at an absorption period for the 14 builder-owned homes, the absorption rate for the subject neighborhood along with the surrounding developments has been reviewed. Mountainview grand opened in June 2021 (but started presales in May 2021) and consists of 156 homes. There have been 105 sales since May 2021 suggesting an average absorption of 8.75 homes per month which is considered to be very good for the subject area with the subject’s price points. Taking into consideration the product, concluded sales prices and current escrows, along with the current unstable interest rates , it has been concluded that the 14 builder-owned homes will be absorbed within a four-month period at the concluded values.

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 65
Remaining Costs
As discussed under the remaining costs section earlier within this report, there are $18,818.90 per lot in no remaining land development costs associated with the builder - owned homes which equates to a total of $263,465 for the subject 14 homes. It is an assumption of this analysis that the remaining costs will be spread evenly over the four - month absorption time period.

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.

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 early 1990s 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. This appears to be occurring once again as prices have been increasing. 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 San Bernardino 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

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 66
The homes within Mountainview began selling in May 2021 with the product being well received in the marketplace with a 8.75 sales per month average. Based on the sales rate within the subject project, the competition, the product and location, and current market conditions, a 10 percent discount rate is considered appropriate for this analysis.

Discounted Cash Flow Summary
The discounted revenue (see DCF Analyses in addenda) for the builder -owned homes within Mountainview is $7,893,449.

Mountainview – Builder Ownership

67 Lots owned by Builder $18,169,134
14 Houses (including 3 models) builder-owned 7,893,449 Total Builder Ownership $26,062,583

Individual Owners Value Conclusion – Mountainview
There are 74 individually owned homes within the subject property. Based on the concluded value for each plan, the individually owned homes within the subject property have a minimum market value of:

Plan 1 (14 x $614,640) $ 8,604,960
Plan 2 (15 x $683,280) 10,249,200
Plan 3 (14 x $694,090) 9,717,260
Plan 4 (13 x $710,360) 9,234,680
Plan 5 (13 x $719,675) 9,355,775
Plan 6 (6 x $734,940) 4,409,640
Total Individual Owned $51,571,515

In an additional review, we have reviewed the original builder sales prices for the homes within the subject property. Closings for the 75 homes occurred between August 27, 2021 and April 27, 2022. The reported closing prices by the builder for the 75 individually owned homes total $52, 994,749 which is 2.7 percent higher than the concluded value. The builder’s reported prices include premiums, upgrades and purchased options as well as took into consideration the concessions given by the builder which would typically be substantially more than the base pricing . When reviewing actual options, premiums and upgrades on the closed sales, the homebuyer paid an average of $28,600 for these items. _________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 67
However; this amount has been offset by the significant appreciation in the subject marketplace. Opening base prices ranged from $ 648,990 to $780,990, and base prices have increased $59,000 to $76,500 (representing 10 to 12 percent) across all plans from opening to the current base prices. The above valuation is for the minimum market value as it takes into consideration the base plan price only and does not take into account any options, premiums or upgrades which were purchased by the buyers It is our conclusion that the original builder sales 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. 106 which consists of 156 proposed residential lots. The 156 lots are known as Mountainview, being marketed and sold by D.R. Horton , and are located in the northern portion of the City of Fontana. As of May 1, 2022, individuals have purchased and closed on 7 5 of the total 156 proposed houses with an additional 30 homes in escrow which are due to close upon completion. The community has enjoyed good to excellent sales rates. 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 resales.

The subject properties were valued utilizing the Sales Comparison Approach to value, a Discounted Cash Flow Analysis, and a Mass 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. 106 bond proceeds along with the Fontana CFD No. 106 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:

Mountain View:

D.R. Horton Ownership (67 lots & 14 houses) $ 26,062,583 Individual Owners (75 houses) $ 51,571,515
Total Aggregate Value CFD No. 106 $ 77,634,098

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. 106 (Mountainview by D.R. Horton) Kitty Siino & Associates, Inc. Page 69
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 predetermined 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 reques ted 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 ass istance to the persons 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 Pro fessional 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. 106 BOUNDARY MAP

TRACT MAP No. 20018

DISCOUNTED CASH FLOW ANALYSIS

Mountainview Builder-Owned Houses Disc. Cash Flow Analysis

MONTH Months MONTH 1 MONTH 2 MONTH 3 MONTH 4 TOTAL
4 INCOME:

Retail Sales 10,128,655 $2,532,164 $2,532,164 $2,532,164 $2,532,164 $10,128,655

TOTAL INCOME $2,532,164 $2,532,164 $2,532,164 $2,532,164 $10,128,655

EXPENSES:

Remaining Costs ($65,866) ($65,866) ($65,866) ($65,867) ($263,465) Marketing & Carrying Expenses 8% ($202,573) ($202,573) ($202,573) ($202,573) ($810,292) Profit 10% ($253,216) ($253,216) ($253,216) ($253,216) ($1,012,866)

TOTAL EXPENSES ($521,655) ($521,655) ($521,655) ($521,656) ($2,086,623)

NET CASH FLOW $2,010,508 $2,010,508 $2,010,508 $2,010,507 $8,042,032 Discount Factor 10% 0.9917 0.9835 0.9754 0.9754

DISCOUNTED CASH FLOW $1,993,893 $1,977,414 $1,961,072 $1,961,071 $7,893,449

CUMULATIVE DISCOUNTED $1,993,893 $3,971,307 $5,932,378 $7,893,449 $7,893,449

CASH FLOW

FINISHED LOT LAND SALES MAP
& SUMMARY CHART

FINISHED LOT LAND SALES SUMMARY CHART

Data
No.

Location / APN / Buyer / Seller

Sales
Date

# Units

Density /
Lot Size

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)
Triplex up
to 6,000 sf

$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 (4,1060 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)
Small
Detached

$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)
Attach. up
to 10,000 sf

$42,736,000 /
$87,394

$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)
Attached
and Small
Detached

$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 Seasons at Acacia, SE of East
Merrill Avenue & South Sycamore
Avenue, Rialto / 0131-111-05 /
Richmond American Homes / Asian
Pacific Inc

02 / 21

81 3,600 sf

$3,564,000 /
$44,000

$140,000
Closed in unimproved condition with an
approved tentative tract map.

Data
No.

Location / APN / Buyer / Seller

Sales
Date

# Units

Density /
Lot Size

Sales Price /
Price per Lot

Est. Finished
Lot Price

Comments

6 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
Triplex

$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.

7 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
Attached

$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.

8 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
Small
Detached

$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.

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

12 / 20

193

11 du/ac
(blended)
Small
Detached

$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.
10 River Ranch (El Rancho Verde), NE
of Foothill Freeway (I/SR-210) &
North Riverside Avenue, Rialto /
0264-421-12 / Lennar / Lytle
Development

12 / 20

776

Varies
Small
Detached
up to
6,000 sf

$90,000,000 /
$115,979

$190,000
(blended)
Closed in unimproved condition with
final engineering in process. River
Ranch six (6) product lines:
• PA 1, 130 lots, 3,800 sf
• PA 2, 146 lots, 5,000 sf
• PA 3, 87 lots, 6,000 sf
• PA 4, 77 lots, 5,000 sf
• PA 5, 205 lots, 8 du/ac
PA 6, 131 lots, 3,800 sf

IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART

IMPROVED RESIDENTIAL SALES SUMMARY CHART

Data
No. Project Name Room Floors/ Lot Size or
Density / Base
Location/Developer Plan Count Parking Size (SF) Absorption Sales Price Price/SF

Mountainview, Lytle Creek Road and I-
215, Fontana / D.R. Horton
1 3 / 2 1 / 2 1,576 $648,990 $411.80
1 2 4 / 3 1 / 2 1,898 $694,990 $366.17
Subj. 3 4 / 3 2 / 2 2,239 5,000 / 10.4 $720,490 $321.79 4 4 / 3 2 / 2 2,537 Detached $742,490 $292.66
5 4 / 3.5 2 / 2 2,617 $780,990 $298.43
6 5 / 3 2 / 3 2,722 $769,990 $282.88
2 Encore, Citrus Avenue and Baseline
Avenue, Fontana / D.R. Horton
1 3 / 2.5 2 / 2 1,642
2,600 / 7.1
Sm Lot Det
$633,229 $385.64
2 4 / 2.5 2 / 2 1,872 $674,305 $360.21
3 4 / 3 2 / 2 2,043 $711,708 $348.36
3 Chateau at The Retreat, South
Highland Avenue and Beech Avenue,
Fontana / Lennar
1 3 / 3 2 / 2 1,724 $592,740 $343.82
2 3 / 2.5 2 / 2 1,961 10 du/ac / 5.0 $632,050 $322.31 3 3 / 2.5 2 / 2 1,987 Sm Lot Det $628,005 $316.06
4 3 / 3.5 2 / 2 2,046 $634,320 $310.03
4 Wisteria at Shady Trails, Citrus
Avenue and Knox Avenue, Fontana /
Richmond American Homes
Lambert 3 / 2.5 2 / 2 2,210
2,800 / 5.3
Sm. Lot Det
$681,990 $308.59
Lewis 3 / 2.5 2 / 2 2,350 $690,990 $294.04
Livingston 3 / 2.5 2 / 2 2,440 $716,490 $293.64
5 Goldenrod at Aurora Park, Victoria
Street and Kestral Drive, Fontana / TRI
Pointe Homes
1 3 / 3 2 / 2 2,006 12 du/ac / 5.3 $710,730 $354.30
2 4 / 3 2 / 2 2,292 Cluster $741,470 $323.50
3 5 / 4 2 / 3 2,743 $796,565 $290.40
6 Sienna at Aurora Park, Victoria Street
and Kestral Drive, Fontana / TRI
Pointe Homes
1 3 / 2.5 2 / 2 1,879
10 du/ac / 2.8
Sm Lot Det.
$662,240 $352.44
2 3 / 2.5 2 / 3 1,997 $683,265 $342.15
3 4 / 3 2 / 3 2,264 $762,380 $336.74
7 Bridle Path @ Paradise Knolls,
Limonite and Beach Street, Jurupa
Valley / Richmond American
1 3 / 2.5 1 / 2 2,280
5,000 / 7.6
$733,990 $321.93
2 4 / 2.5 1 / 2 2,490 $759,990 $305.22
3 4 / 3 1 / 3 2,610 $771,990 $295.78

8 Exploration at Shadow Rock, Kings
Canyon Drive, Jurupa Valley / Lennar
1 4 / 3 1 / 2 2,140
6,000 / 5.4
$736,435 $344.13
2 4 / 2.5 2 / 3 2,809 $780,990 $278.03
3 5 / 3.5 2 / 3 3,325 $900,410 $270.80
4 6 / 4.5 2 / 3 4,122 $1,003,655 $243.49
9 Discovery at Shadow Rock, Kings
Canyon Drive, Jurupa Valley / Lennar
1 3 / 2 1 / 2 1,547

4.700 / 5.0
$605,910 $391.67
2 3 / 2.5 2 / 2 1,705 $627,280 $367.91
3 3 / 2.5 2 / 2 1,843 $641,190 $347.91
4 4 / 3 2 / 2 2,064 $651,960 $315.87
10 Adventure at Shadow Rock, Kings
Canyon Drive, Jurupa Valley / Lennar
1 3 / 2 1 / 2 1,792
5,000 / 5.0
$642,520 $358.55
2 4 / 3 2 / 2 2,203 $683,270 $310.15
3 4 / 3 2 / 2 2,590 $731,120 $282.29

Seasons at Acacia, SE of East Merrill
Avenue and South Sycamore Avenue,
Rialto / Richmond American Homes
Agate 3 / 2 1 / 2 2,080 $599,990 $288.46
11 Lapis 3 / 2.5 2 / 2 2,180 3,650 / 7.0 $593,990 $272.47 Pearl 3 / 2.5 2 / 2 2,380 $604,490 $253.99
Moonstone 4 / 2.5 2 / 2 2,640 $649,490 $246.02

Verdemont Ranch / NWC of West
Meyers Street and North Little League
Drive, San Bernardino / GFR Homes
1 3 / 2.5 1 / 2 2,224 $680,900 $306.16
12 2 4 / 2.5 1 / 2 2,595 10,800 / 19.0 $695,900 $268.17 3 4 / 2.5 1 / 2 2,679 (Just opened) $711,900 $265.73
4 4 / 3 2 / 2 3,063 $744,900 $243.19

Navarra and Rioja at Rancho Palma /
NW of Palm Avenue and Interstate
215, San Bernardino / Trumark Homes
N1 3 / 2 1 / 2 2,000 $560,100 $280.05
N2 4 / 2.5 2 / 2 2,274 $576,000 $253.30
13 N3 4 / 2.5 2 / 3 2,506 5,000
(Navarra), $596,100 $237.87
R4 4 / 3 1 / 3 2,522 7,000 (Rioja) / $615,155 $243.92
R5 4 / 3 2 / 3 2,824 7.5 $623,155 $220.66
R6 5 / 4 2 / 3 3,179 $667,355 $209.93

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 clas ses 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, 2019 and 2022

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

Fontana City CouncilJuly 12, 2022

Fontana City Council
July 12, 2022