Appraisal Report — Fontana City Council, September 24, 2024

APPRAISAL REPORT

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 109
(Narra Hills)

City of

Fontana
, San Bernardino

County, California

(Appraisers’ File No. 2024-1299)

Prepared For
City of Fontana
8353 Sierra Avenue
Fontana

, C
alifornia 92335

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

KITTY SIINO & ASSOCIATES, INC.

REAL ESTATE APPRAISERS & CONSULTANTS

August 28, 2024

Jessica Brown, Chief Financial Officer
City of Fontana
8353 Sierra Avenue
Fontana, CA 92335

Reference: Appraisal Report
City of Fontana Community Facilities District No. 109 (Narra Hills) Both sides of Coyote Canyon Rd. between Hawk Ridge Ave. and Lytle Creek Rd.

Fontana, California

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. 109 (Narra Hills) (“Fontana CFD No. 109”) which consists of a gated residential community known as Narra Hills, located in the City of Fontana. Narra Hills includes a total of 484 proposed homes being built-out into five neighborhoods by Landsea Homes. The five neighborhoods include Clementine, Strata, Wildstar, Skyeland and Goldenpeak, all at Narra Hills. Clementine is proposed for 124 duplex and small lot detached homes, Strata is proposed for 127 cluster detached homes, Wildstar is proposed for 78 single-family detached homes on minimum 5,000 square foot lots while Sky eland and Goldenpeak are proposed for 84 and 71 single-family detached homes (respectively) on minimum 10,000 square foot lots. All are being developed by LS-Fontana, LLC, a related entity to Landsea Homes. O ut of the total 484 proposed units within Narra Hills, 169 have closed to individual homeowners to date with an additional 39 in escrow which are due to close upon completion. The remaining property is held by LS -Fontana, LLC (“Landsea”) and Arroyo Cap II-6, LLC (“Arroyo Cap”), a landbank company for Landsea. The builder-owned property ranges from completed model homes to houses under construction to physically finished lots and/or pads to a few partially 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. 109 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. 109. As a result of our investigation, the concluded minimum market value for the subject property is shown below.

Narra Hills:

Landsea (149 lots/pads & 40 houses) $ 75,303,475
Arroyo Cap (126 lots) $ 45,043,999
Individual Owners (169 houses) $ 130,854,505
Total Aggregate Value CFD No. 109 $ 251,201,979

The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of July 26, 2024.

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

August 28, 202

4 Page Two

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 2020/2022

) 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. 109 (Narra Hills) ......................................................... iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................. 2 Definitions ...................................................................................................................... 3 Property Rights Appraised ............................................................................................. 6 Effective Date of Value ................................................................................................... 6 Date of Report ................................................................................................................ 6 Scope of Appraisal ........................................................................................................ 6 Regional Area Map.......................................................................................................... 9 County of San Bernardino Area Description ................................................................. 10 City of Fontana Area Map & Description ....................................................................... 19 Immediate Surroundings ............................................................................................... 24 Community Facilities District No. 109 ........................................................................... 26 Subject Property Description ......................................................................................... 30 Inland Empire Housing Market ...................................................................................... 44 Highest and Best Use Analysis ..................................................................................... 57 Valuation Analysis and Conclusions ............................................................................. 62 Appraisal Report Summary ......................................................................................... 103 Appraiser’s Certification ............................................................................................. 104

ADDENDA
Fontana CFD No. 109 Boundary Map
Tract Map Nos. 20010 and 20069 and 20070 & Site Plans
California Fire Hazard Map
Discounted Cash Flow Analysis
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications

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. 109.

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

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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. P roposed 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 qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document for the Fontana CFD No. 109 special tax bonds

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. 109 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 and summarized in the report are correct. Regarding sales , we have reviewed samples of closed sales against public record when available; however, we have not reviewed escrow documents on each sale. Regarding costs, while we have not received detailed remaining land development costs and fees and are relying on the builder and their representatives as we are not experts in the field of construction estimation. If actual costs differ, it may change the value conclusions.

2. It is assumed that homebuyers and the homeowner’s associations within Fontana CFD No. 109 can obtain fire insurance. The property is within both a recommended High Fire Severity Zone and Very High Fire Severity Zone by CalFire. While fire breaks and fire roads have been incorporated into the development, recently insurance companies have been leaving California high fire zones. It is the appraiser’s understanding fire insurance is currently available on the subject homes.

Due to the current insurance atmosphere in California, it is an extraordinary assumption that fire insurance will continue to be available.

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

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 special tax lien of Fontana CFD No. 109.

THE SUBJECT PROPERTY

The subject property consists of 484 proposed single-family homes being developed into a gated community known as Narra Hills in the City of Fontana (“City”). Narra Hills is located along the west side of I-15 just north of Duncan Canyon Road. The community is being built and sold by Landsea and features five product lines. Clementine includes 124 proposed duplex homes along with one plan, a small lot detached home, sized from 1,372 to 1,661 square feet. Strata includes 127 proposed single- family detached homes on cluster lots with a size range of 2,099 to 2,552 square feet. Wildstar is proposed for 78 single family detached homes on minimum 5,000 square foot conventional lots with sizes ranging from 2,747 to 3,079 square feet. Skyeland is proposed for 84 single-family detached homes on minimum 10,000 square foot lots with home sizes from 2,375 to 3,604 square feet and Goldenpeak is proposed for 71 single family detached homes, also on 10,000 square foot minimum lots with a home size range of 3,160 to 4,248 square feet.

Narra Hills is encompassed by Tract Maps 20010, 20069 and 20070 and su bsequent condominium maps on Tracts 20069 and 20070 which subdivide the property into 484 residences. The lots vary in status from completed models and production homes , to homes under construction to generally finished lots/pads. The description, ownership and condition of the lands are detailed in the chart below.

Description / Name

No.

Units

Owner

Product / Condition /
Status
Clementine (Duplex & Small Lot Detached) Lots 1-8 of Tract 20070 – Units 1-124 Units 1-18 and 25-30 24 Individuals Completed Homes
Units 99-100 2 Landsea Model Homes (0 in escrow)
N/A 0 Landsea Homes over 95% Complete
Units 19-24 and 31-58 34 Landsea Homes Under Construction (5 in escrow)
Units 59-73 and 113-124 27 Landsea Finished Pads/Lots (0 in escrow)
Units 74-98 and 101-112 37 Arroyo Cap Finished Pads/Lots Subtotal Clementine 124

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Strata (Cluster Lots Detached) Lots 1-17 of Tract 20069 – Units 1-127 Units 1-53, 56-57, 59-60 and 67 58 Individuals Completed Homes Units 89-92 4 Landsea Model Homes
Units 54, 55, 58 and 61-66 and 68 10 Landsea Homes over 95% Complete (6 in escrow)
Units 69-76 8 Landsea Homes Under Construction
Units 77-84 and 120-127 16 Landsea Finished Pads/Lots
Units 85-88 and 93-119 31 Arroyo Cap Finished Pads/Lots Subtotal Strata 127
Wildstar (5,000 sf SFD lots) Lots 156-233 of Tract 20010 Lots 156-170, 185-187, 194, 196-
217 and 222-225
45 Individuals Completed Homes
Lots 231-233 3 Landsea Model Homes
Lots 188-190 and 195 4 Landsea Homes over 95% Complete
(3 in escrow)
Lots 171-175, 180-184 and 191-
193
13 Landsea Homes Under Construction
(4 in escrow)
Lots 176-179, 218-221 and 226-
230
13 Landsea Finished Pads/Lots
Subtotal Wildstar 78
Skyeland (10,000 sf SFD lots) Lots 24-56, 95-100, 108-112, 114-122, 125-155 of Tract 20010.

Lots 24, 26-29, 31-35, 37-48, 138
and 154-155
25 Individuals Completed Homes
Lots 49-51 3 Landsea Model Homes
Lots 25, 30, 36, 139-140 and 153 6 Landsea Homes over 95% Complete (4 in escrow)
Lots 121-122 and 125 3 Landsea Homes Under Construction (3 in escrow)
Lots 97-100, 126-131 10 Landsea Finished Lots
Lots 52-56, 95-96, 108-112, 114-
120, 132-137, 141-152
37 Arroyo Cap Lots
Subtotal Skyeland 84
Goldenpeak (10,000 sf SFD lots) Lots 1-23, 57-94, 101-107, 113, 123-124 of Tract 20010 Lots 7-23 17 Individuals Completed Homes
Lots 4-6 3 Landsea Model Homes
Lots 60-62 and 77-78 5 Landsea Homes over 95% Complete
(5 in escrow)
Lots 57-59, 74-76, 79-81, 87-88,
102-106, 123-124
18 Landsea Homes Under Construction
(9 in escrow)
Lots 71-73, 89-91, 101 7 Landsea Finished Lots
Lots 1-3, 63-70, 82-86, 92-94, 107,
113
21 Arroyo Cap Lots
Subtotal Goldenpeak 71
TOTAL CFD No. 109 484

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. 109 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, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the co nsummation 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.”
0F
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 Landsea or Arroyo Cap owned properties, in a bulk sale, is less than one year.

Finished Lot/Pad
The term “Finished Lot/Pad” is defined as:
“A parcel which has legal entitlements created by a recorded subdivision or condominium map, whose physical characteristics are a fine graded level pad per lot /pad with infrastructure contiguous to each individual lot /pad, asphalt paved roads and the necessary utilities. This term assumes the

1 The Appraisal of Real Estate, 13th Edition

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payment of all applicable development fees with the exception of building permit and plan check fees.”

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

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

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

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”
1F
2 In the case at hand, the statistical testing included reviewing all original builder sales and reviewing the Multiple Listing Service (“MLS”) for any resales 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. 109.

2 USPAP 2018-2019 Edition

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

There are two Extraordinary Assumptions within this report . The first is that the sales information and the cost information received from Landsea and/or their representatives are true and accurate. Regarding the sales information, we have reviewed sample closings against public record and the information appears reasonable, however we have not reviewed escrow documents on the sales. Regarding costs, we have received a high summarized cost with no detail to review from the builder. 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 costs differ, it may change the value conclusion.

The second Extraordinary Assumption is that fire insurance will continue to be available for all property within the district. The property is within both a recommended High Fire Severity Zone and Very High Fire Severity Zone by CalFire. While fire breaks and fire roads have been incorporated into the development, recently insurance companies have been leaving California high fire zones. It is the appraiser’s understanding fire insurance is currently available on the subject homes. Due to the current insurance atmosphere in California, it is an extraordinary assumption that fire insurance will continue to be available.

PROPERTY RIGHTS APPRAISED

The property rights being appraised are of a fee simple estate interest , subject to easements of record and the special tax lien of Fontana CFD No. 109. 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.”
2F
3 EFFECTIVE DATE OF VALUE

The subject property is valued as of July 26, 2024.

DATE OF REPORT

The date of this report is August 28, 2024.

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. 109 , which is known as the community of Narra Hills . Landsea is the builder and is actively marketing five neighborhoods of homes . Narra Hills offers one and two-story floorplans ranging in size from 1,372 to 4,248 square feet with product types ranging from duplexes to single- family detached homes on 10,000 square foot minimum lots. T here are a total of 484 proposed homes within Narra Hills . 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. 109
• Subject Property Description
• Inland Empire Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analysis and Conclusions
• Appraisal Report Summary

3 The Appraisal of Real Estate, 13th Edition

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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.” 3F
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:

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 July 1, 2024, and July 26, 2024.

4. Had the site flown by an aerial photographer on July 29, 2024.

5. Interviewed representatives from Landsea and/or their consultants in order to obtain project information.

6. Reviewed a preliminary title report on 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.

4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002

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 brochures and websites for the subject communities.

10. Reviewed developer sales information on each home within each neighborhood in the community along with reviewing public record on sample lots in each community.

11. Reviewed Multiple Listing Service information to determine if there are any resales, pending resales or listings of resale homes.

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

9 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 northwesternmost portion of the City of Fontana, along the west side of Interstsate 15 (“I-15”) north of Duncan Canyon Road.

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 mountains and 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 Bernardin o County has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.

Transportation
The subject property is situated along the west side of I-15, approximately three miles north of its intersection with the 210 Freeway, five miles south of the intersection with I - 215, and about ten miles north of Interstate 10 (“I-10”). The I-15 and I-10 are the nearest interstates providing access to the subject from the employment areas of Orange, Los Angeles and Riverside Counties . From I-15 there is good access from Duncan Canyon Road, west 0.10 mile to Coyote Canyon Road and north 0.25 miles to the subject. I- 15 travels in a northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. I-10 begins from the west in Los Angeles and provides access into Arizona to the east. In the vicinity of the subject, I- 210 provides additional east/west access about two miles north of I -10 beginning in Santa Clarita in Los Angeles County and provides access near the C ity of San Bernardino. The subject

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is located about six 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 eleven miles southwest of the subject property. San Bernardino International Airport is located approximately 1 4 miles southeast of the subject. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways and state freeways.

Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2024 (latest available) County population was 2.182 million. This represents a one-year increase of 0. 4 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. 257 million by 2030, indicating an average annual increase of approximately 0.57 percent over the next six years. The current 0.4 percent growth rate is lower than the previous 20- year annual average of 2.1 percent, likely due to the disruption of the COVID pandemic. The future growth of 0. 57 percent annually was predicted assuming a more stable market than was seen prior to the Great Recession.

Economy
The U.S. economy in the past few years has experienced challenging times due to reactions from the COVID disruption. These economic challenges include significant inflation, increasing interest rates, banks’ instability and reaching an agreement on the debt ceiling. During COVID, the Federal, State, County and City Governments (“Governments”) originally shut down non-essential businesses and areas where social gatherings occur 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

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drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment in the first few months of the pandemic. The Governments attempted to curtail the job losses and hardships with the approval of over 5.6 trillion in COVID relief to our nation. In addition, the Federal Reserve Board (“Board”) reduced interest rates and started quantitative easing by buying bonds. This legislation helped shore up the U.S. economy; however, due to the significant amount of new money introduced into the economy, inflation began occurring at a rate not seen for 40 years. As of June 2024, the national inflation rate was at 3.0 percent; up from a low of 2.97 in July 2023, and down from the peak in June 2022 of 9.1 percent. This compares to a 1.24 annual percent rate for 2020 and an average of 1.74 percent annual rate for the previous ten years. Whether it is a result of world turmoil, supply chain issues due to COVID or from the additional money entering the economy, inflation has been hitting Americans hard.

In an effort to curb inflation, the Federal Reserve Board (“Board”) began raising interest rates. Between March 2022 and August 2023, there were eleven interest rate increases rising the Federal Funds Rate (“FFR”) from 0.25 – 0.50 percent to 5.25 – 5.50 percent.

The Board has not increased rates since July 2023, due to the decrease in inflation coupled with other mostly positive signs in the economy. While the eleven increases appeared to help slow inflation, the quick, significant increases strained bank b alance sheets. Three major banks failed in early 2023 with the government taking unprecedented action to help shore them up. At the most recent Board meeting ( July 2024) they continued to pause the increases for the eighth meeting in a row and continued to suggest there still could be interest rate cuts later this year. The FFR increases over the past couple years increased a typical 30- year fixed mortgage rate from 2.98 percent as of November 10, 2021, to the high of 7.79 percent as of October 2023; however, the rate has dropped to 6.73 percent as of August 1, 2024 (per Federal Reserve Economic Data- St. Louis). The recent decrease in mortgage rates appears to be due to the anticipation of an FFR decrease in the next few months. This steep increase in mortgage rates over the past two years has significantly affected the real estate market.

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The COVID disruption to the economy also caused extreme volatility in the stock market with the Dow Jones Industrial Average (“DJIA”) dropping from 29,398 in February 2020 to 19,174 in March 2020, a drop of 37 percent. The Government interventions resulted in a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing up to a peak of 36,799 in January 2022. In February 2022, Russia began invading Ukraine which caused volatility in world economics followed by U.S. inflation, interest rate increases and instability in the U.S. due to the debt ceiling being reached. In addition, Israel declared war on Hamas on October 7, 2023, which added to the strain. All of these factors caused a drop in the DJIA of over ten percent from January 2022 to the low on October 27, 2023 (32,418); however, the Federal Reserve Board’s notes from June coupled with generally strong economic news, brought the stock market to a new all-time high of 41,198 (July 17, 2024). It appears the Board’s decision not to increase rates further and their suggestion that decreases may occur in the next five months has been well received by investors. Current concerns on the U.S. economy include the upcoming election and the nation’s debt limit which can only be increased through government approvals. The current partisanship in our government caused a stand- off in increasing the debit limit which has been in danger of being reached numerous times with several temporary deals being reached, however, no permanent agreements at this time.

The significant increase in mortgage rates over the past two years is just one part of the puzzle affecting the impact of new housing on the broader economy. Additional risks include homebuilders trying to find balanced inventory levels, supply chain issues, both wage and price increases, and persistent inflation. 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 housing market seeing an improvement beginning in mid- 2012. Contrary to homebuilder’s original thoughts of a slowdown due to the COVID 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 and continued extremely strong throughout 2021. This exceptional

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activity in new home sales was the one bright spot in the COVID disruption and is thought to be due to several factors, including: a tight supply of resale homes; historically low interest rates; millennials finally buying homes; and the work from home fac tor which began during the pandemic and allowed residents to live in more suburban areas without long commutes. As rates began increasing in early 2022, there was a significant slowdown in sales within the Inland Empire. The high mortgage rates have signif icantly slowed existing homeowners from moving. The limited availability of existing homes on the market has resulted in new homes capturing a much larger share of the total home sales.

While most jobs have come back, job losses were significant during the COVID recession as the Nation’s unemployment rate went from 3.5 percent in February 2020 to 14.4 percent in April 2020, with the June 2024 National unemployment rate at 4.3 percent (Employment Development Department, not seasonally adjusted). The unemployment rate for the MSA was estimated at 5. 3 percent (as of June 2024 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 COVID of 14.9 percent. As of June 2024, Riverside County’s unemployment rate was 5. 4 and San Bernardino County had a 5. 2 percent unemployment rate. The current unemployment rate for the MSA of 5. 3 percent is similar to the California rate at 5.3 percent and higher than the June 2024 National rate of 4.3 percent. Below is a table comparing San Bernardino County’s unemployment rate to the unemployment rates of the surrounding counties as of June 2024.

Jurisdiction As of Unemployment
Rate*
Los Angeles County June-2024 5.9%
Riverside County June-2024 5.4%
San Bernardino County June-2024 5.2%
Orange County June-2024 4.0%
San Diego County June-2024 4.5%
Source: State of California E.D.D.; *Not Seasonally Adjusted

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The latest UCLA Anderson Forecast (“Forecast”) was issued June 6 , 2024, and stated that the slowing of the economy does not suggest a national recession; however, they are predicting two more quarters of sub- trend growth for summer and fall of 2024. They state the predicted recession has been silenced due to expansionary fiscal policy, new national industrial policy and robust consumer spending. They believe inflation is slowly finding new equilibrium in the 2.2 to 2.7 percent range (kept higher by resident ial rents, automobile repair and higher health insurance premiums) and they expect the Federal Reserve to take a neutral stance, while economic growth rebounds to trend rates. The risks to their forecast are stated as a possible government shutdown, geopolitical events and a radically different economic policy after the November elections. Due to these uncertainties, the Forecast predicts weaker business investment in the third and fourth quarters of 2024, corresponding to a wait-and-see approach by some firms until after the November elections.

The UCLA Forecast for California mentions the uncommon conditions in the housing market. While typically higher mortgage rates should lower housing prices, the absence of inventory and pent -up demand by households has resulted in an increase in median home prices. With existing home sales at depression levels, builders should be responding with new developments, however they believe the wet winter resulted in no significant growth in building permits. This slow start to new home construction has been factored into the forecast with weaker housing in 2024 and a resurgence in 2025. The Forecast also predicts an increase of goods passing through California ports in the coming year after a downturn due to unsettled labor issues at West Coast ports (now settled). The three-year forecast for California is for the state to grow faster than the U.S., however not by much after 2024. The unemployment rate for the second quarter of the year is anticipated to average 5.2 percent with the averages for 2024, 2025 and 2026 expected to be 5.1%, 4.5% and 4.2% respectively. The Forecast believes that in spite of the higher interest rates, the continued demand for a limited housing stock, coupled with state policies inducing new home building, should result in the beginning of a recovery for the housing market in 2024, followed by solid growth in new home production thereafter.

The expectation is for 110,000 net new units to be permitted in 2024, growing to 152,000

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by the end of 2026. These numbers are down from the March Forecast from 123,000 in 2024, growing to 159,500 by the end of 2026.

One bright spot in the current economy is sales of new homes. While existing homeowners are reluctant to put their houses on the market due to their under -four percent mortgages, new home sales continue. Even with rates in the seven percent range, new homes are still selling. This is partially due to the extremely limited availability of existing homes on the market, coupled with homebuilders offering to buy-down interest rates to help new home buyers. While new homes historically captured 10 – 13 percent of total home sales; over the past year new homes are capturing over 30 percent of total home sales. This rush to new home purchases has put pressure on pricing, even while interest rates have soared. During the Great Recession median housing prices (existing) in San Bernardino County dropped from a high of $350,288 in March 2006 to a low of $120,406 in May 2009. Median prices surpassed the pre- recession high in September 2020 and hit a peak in June 2024 at $522,500. The median home price had been bouncing generally between $475,000 and $500,000 over the past six months (all statistics per the California Association of Realtors). The median home price in San Bernardino County is up 6.9 percent year over year, which 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 and 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 in the Inland Empire linked to supply -chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. Generally, there had 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. The 2022 calendar year saw a decrease of 2.6 percent from the previous year; however, 2023 saw the largest percentage decrease of 12.2 percent year over year (8,018,668 versus 9,133,657 total TEUs). It should be noted that consumer demand

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 17
cooled in mid- 2022 leaving fewer TEUs needed. For the calendar year 2024, thus far TEUs are up over 15 percent.

Government

A Board of Supervisors oversees the County as the governing body of the County, certain County special districts, and the County Housing Authority. The Supervisors enact ordinances and resolutions, adopt the annual budget, approve contracts, and appropriate funds, determine land use zoning for unincorporated areas, and appoint certain County officers and members of various boards and commissions. The Board of Supervisors is elected from five different districts within the County.

Education
The subject area is served by the Fontana Unified School District (“FUSD”). FUSD serves students with five high schools, seven middle schools and 30 elementary schools along with three alternative schools and one adult school. The subject is assigned to Sierra Lakes Elementary School , Ruble Middle School and Summit High School . Community Colleges are available near the subject at Chaffey College in Rancho Cucamonga (seven miles west), at Chaffey College’s Fontana campus, (five miles south), and San Bernardino Valley College (10 miles southeast). Higher education is available approximately seven miles east of the subject at California State University San Bernardino, about 15 miles southeast is University of California at Riverside, 1 5 miles southwest in the private Claremont Colleges (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.

4.0 6.0

8.0 10.0
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 TEU's (millions)
Year
Port of Long Beach TEUs

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Conclusion
Population in the County has increased over the past 2 0 years with predictions for continued population growth. The Nation’s economy has been slowing after the Board increased the FFR over five percent to fight historical inflation which began during COVID.

One bright spot during COVID was housing; the region’s relative affordability and low interest rates, coupled with the rising prices in the coastal market and the demand for housing, set up a new housing boom. This was followed by a significant drop in existing home sales due to existing homeowners being unwilling to give up their low -rate mortgages, which turned out to be a boon for new homes. Current concerns for the Inland Empire economy include stubborn inflation, the high prices of homes, higher interest rates, supply chain issues, possible government shutdowns along with the Russian/Ukraine and Israel/Palestine conflicts, which are all creating volatility in both local and global financial markets. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land, and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles, Riverside and San Diego Counties.

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

19 CITY OF FONTANA DESCRIPTION

General Area
The subject property is located in the north western portion of the City of Fontana (“City”) 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. 109 within the City limits.

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 20
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 originally 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 industr ial employment to the area during the war. To provide for the worker’s health needs, Kaiser constructed the Fontana Kaiser Permanente Medical Facility which now employs more than 5,000 people. In 1994 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 the area of Fontana was home to a drag racing strip which served as a significant venue in the National Hot Rod Association (“NHRA”) circuit. In 1997, Roger Penske built the Fontana Speedway, also 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. It was recently announced the existing raceway will close due to the redevelopment of the lands; however, a smaller short -track will be developed on a portion of the lands keeping car racing in the area of Fontana.

Population
The January 2024 population of Fontana (per the California Department of Finance) was 214,223, which represents an increase of 0. 7 percent over the previous year. The 2000 population of Fontana was 128,928, suggesting the population has increased 66 percent over the past 24 years or an average rate of 2. 1 percent per year. The City population represents 9.8 percent of the County population. The 0.7 percent growth compares to an

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 21
increase of 0.4 percent in the County year -over-year and a growth of 0. 2 percent in the State year-over-year. This is the first year that California has shown positive population growth since 2020. 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 3.75 persons while in overall San Bernardino County the average household size is 3.26 persons. Over 78 percent of the population of the City are high school graduates and over 28 percent of the population of the City are under 18 years old.

Housing
According to the Southern California Association of Governments (“SCAG”), the City of Fontana has an estimated 55,632 housing units as of 2021 (latest data available), with a growth rate of 56 percent since the year 2000. This compares to the County’s housing growth rate of 22.2 percent during this time. This further illustrates Fontana’s growth spurt due to land available for development over the past 20 years. Fontana hosts over eight percent of the total number of households in the County. Below is a graph showing residential units permitted in Fontana between 2002 and 2022 (2023 not yet available).

While the current numbers are not at pre-Great Recession numbers, they are the highest in the past 15 years. Per SCAG, 68 percent of the housing stock is owner occupied and 32 percent are renters. Only 22 percent of the housing stock in the City was built before 1970 and 78 percent was built since that time. There are several residential projects currently under construction including the subject 484-unit community of Narra Hills; 1,908
1,545
1,025
209 306 270 261 419 498 865
1,182 1,029
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2021 2022 Fontana Residential Building Permits

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 22
Ventana at Duncan Canyon a mixed-use neighborhood proposed for 842 residential units along with retail, office and hotel uses; Citrus Heights North (within Shady Trails), Highland Park; the Summit at Rosena Specific Plan which is ongoing and will eventually create 850 new homes, and the Arboretum Specific Plan which is also ongoing and will eventually create 3,500 new homes. In addition, new home proposed communities include Mountain View Homes which is proposed for 156 residential units; Lennar’s Citrus West which is proposed for 86 attached units; Cypress a multi-family housing project and two senior living communities. There are additional planned projects according to the City.

Per the 2023 annual report, there were 709 new single-family residential permits and 42 multi-family residential permits issued (unit number not included in the City’s data) .

According to Redfin Market Trends, the June 2024 median home price in overall Fontana was $667,500 (median of 84 homes) which is 8.5 percent higher than one year prior while the median home price in North Fontana was $715,000 (median of 48 homes) which was

3.5 percent higher than one year prior.

Current new homes communities selling within Fontana include: Narra Hills (the subject property) with five neighborhoods currently being marketed by Landsea Homes, Arboretum by Lennar with six neighborhoods currently selling, Monterado with two neighborhoods by Lennar (nearly sold- out), Aurora Park by Tri Pointe with two neighborhoods ( nearing sell -out), Highland Park by Richmond American with two neighborhoods (nearing sellout).

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

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

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 23
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 I- 15 to Baseline Road, to Cherry Avenue or San Sevaine Road, north to Highland Avenue and east to the subject. Additional access is via I -210 to Citrus, south to Highland and west to the subject.

Economy
Existing commercial property within the City of Fontana is generally along the major thoroughfares including I -10, Route 66/Foothill Boulevard, Sierra Avenue and the 210 Freeway. There are several large shopping centers including Sierra Lakes Marketplace and Falcon Ridge Town Center, both which serve the subject property. There is planned retail across Citrus Avenue from the subject in the Ventana Specific Plan. 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 industrial hub which extends into the City of Fontana with generally industrial use south of I -10. The Fontana Speedway is located along Cherry Avenue north of I -10 and the Metrolink station is located along Sierra Avenue.

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. Between April 2020 and March 2022 residential building permits grew significantly after a lull in the first 10 years since the Great Reces sion. In the past year permits slowed as sales decreased due to increasing rates. The area has excellent access via I-15. The area’s central location, reasonable land prices and the availability of land for development combine to make the location a prime area for future growth.

IMMEDIATE SURROUNDINGS

The subject property is located just north of the quadrant of I-15 and Duncan Canyon Road, in the northern portion of the City of Fontana. The subject has convenient freeway access to the I-15 via Duncan Canyon Road with both on and offramps to I-15.

The subject lands are immediately surrounded by mountainous vacant lands to the north and west along with some existing residential to the west of the southern portion of the site, a new distribution industrial building to the northeast (on the west side of the I -15). the I-15 to the southeast and Coyote Canyon Park (a regional part) to the south.

The subject lands are just north of Hunter’s Ridge, a successful master planned community in Fontana which houses 1,725 residential units on 595 acres built out in the late 1990’s and early 2000s. The distribution building to the northeast is an Amazon distribution center, however access is off Sierra Avenue (one exit north of Duncan Canyon Road) so truck traffic shouldn’t be an issue for the subject site. Just north of the distribution center is some retail which includes two gas stations and a few fast-food chain restaurants which are within one mile of the subject . Neighborhood and more regional shopping is available at Summit Avenue (one exit south from the subject) with two major shopping centers including anchors of Kohl’s, Target, Stater Bros. M arket and many national chains.

Across I-15 from the subject the development of Ventana is underway. Ventana is a mixed-use master plan proposed for residential, retail and hotel land uses. There are 852 planned residential units with Varsari at Ventana, a 257- luxury apartment complex developed and leasing. Beyond Ventana is Monterado, a Lennar community of small lot detached homes which is nearing build-out.

There are several parks within close proximity to the subject. Immediately south of the subject across Duncan Canyon Road is Coyote Canyon Park which includes three baseball fields, barbeque areas, picnic shelters, playground, restrooms and trails. Within one mile is Hunter’s Ridge Park which includes a baseball diamond and a playground

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 25
while within two miles is San Sevaine Park which includes Tennis Courts, Volleyball , Playgrounds and restrooms. Schools that serve Narra Hills include Summit High School (about one mile south), Ruble Middle School (about three miles southeast), and, Sierra Lake Elementary (about 1.5 miles southeast).

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

26 FONTANA CFD NO. 109 (NARRA HILLS)

We have reviewed the City of Fontana CFD Report for Community Facilities District No. 109 (Narra Hills) dated

May 20, 2022

, as prepared by David Taussig & Associates, Inc.

The CFD Report provides a brief description of Fontana CFD No. 109, a brief description of the facilities to be funded

along with an estimate, a description of the boundaries and an estimate of the cost of financing the bonds used to pay for the facilities.

The City
Council of the City of Fontana adopted a resolution of intention

for Fontana CFD No. 109
(Narra Hills) on April 12, 2022.

The exterior boundaries of

Fontana
CFD No. 109 per the Proposed Boundary map are
shown below.

Per the CFD Report, at time of formation,

Fontana
CFD No. 109 encompassed
approximately 137.33 gross acres of which 73.25 are estimated to be taxable. There

were

originally 489 proposed single-family homes at time of report which are now mapped for

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 27
484 units. They are comprised of 129 single-family attached townhome units ranging in size from 1,316 to 1,855 square feet (now mapped for 124 units), 127 single- family detached cluster units ranging in size from 2,100 to 2,555 square feet and 233 single- family detached units ranging in size from 2,387 to 4,249 square feet.

Per the CFD Report, the types of facilities to be eligible for funding are streets, including grading, paving, curbs and gutters, sidewalks, street signalization and signage, streetlights 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 eligible for funding or purchased as completed facilities by CFD No. 109 are streets, including grading, paving, curbs and gutters, sidewalks, street signalization and signage, streetlights and parkway and landscaping related thereto, sewers, storm drains, fire protection facilities, police facilities, public facilities, landscaping, library facilities, park and recreational facilities, flood control facilities consisting of the relocation and construction of the Hawker Crawford flood control channel, water d istribution, treatment and storage facilities and land, rights of way and easements necessary for any such facilities. The types of public services to be financed by CFD No. 109 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 useful life of five or more years that is owned by the City. Incidental expenses also included are the cost of planning and designing public facilities to be financed, including the cost of environmental evaluations of those facilities; the costs associated with the creation of CFD No. 109 , issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise incurred in order to carry out the authorized purposes of CFD No. 109 ; and, any other expenses incidental to the construction, completion, and inspection of the authorized work.

The estimated cost of public facilities at the time the Fontana CFD No. 109 Report was created were estimated as:

PUBLIC FACILITIES AMOUNT
Acquisition Facilities: $25,138,983(1)
Hawker-Crawford Channel Backbone Improvements 11,648,004 Lytle Creek Road Water System Improvements 4,392,549
Sewer Improvements 3,098,823
Storm Drain Improvements 2,854,302
Circulation Improvements 1,559,159
Traffic Signal Improvements 843,125
Street Light Improvements 446,056
Storm drain Improvements 296,965

Other Public Facilities: $12,234,515(2)
Water System Capacity Improvements 6,566,419
Park Facility Improvements 2,398,236
Traffic Circulation Facility Improvements 1,283,620
Storm Drain Improvements 0
Housing Facility Improvements 570,882
Sewer Improvements 0
Police Facility Improvements 281,240
Public Facility Improvements 332,877
Fire Flow Protection Improvements 246,788
Landscape Facility Improvements 251,310
Fire Service Protection Improvements 80,196
Library Facility Improvements 222,947

Additional Capital Facilities Infrastructure Improvements $6,595,323

TOTAL ESTIMATED COSTS $43,968,821
(1) Estimates provided by Project Developer and subject to review and confirmation. (2) Estimated amount of permit fees AFTER the application of anticipated City fee credits.

Per the Rate and Method, the Assigned Facilities Special Tax for Developed Property for Fontana CFD No. 109 (Narra Hills) annual assigned facilities special tax ranges from $3,320 to $8,186 per unit based on the size of the home. The Maximum Services Special Tax is estimated between $1,005 to 1,040 per unit based on the Planning Area while the Assigned Services Special Tax is estimated at $718 to $744 per unit. The Services taxes are expected to finance annual costs to provide 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 propert y or other tangible property with an estimated useful life of five or more years owned by the City.

The maximum bonded indebtedness for CFD No. 109 is $50,000,000.

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 29
Per the latest sources and uses of funds (dated July 24, 2024) for the proposed bond issuance, there will be an estimated $36,170,000 in Bond Par Amount and a Premium of $707,810 for a total bond fund deposit of $ 36,877,810 with $33,891,886 going to the Project Fund, $2,376,750 in Debt Service Reserve Fund and $609,174 in Underwriter’s Discount and C ost of Issuance (all amounts subject to change). A larger copy of the Fontana CFD No. 109 boundary map is located in the Addenda for your review.

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

30 SUBJECT PROPERTY DESCRIPTION

The subject property consists of 484 proposed units be

ing
developed as

Narra Hills within
five communities. The communities include Clementine, a duplex and small lot detached product; Strata, a cluster detached lot project; Wildstar a detached product o

n
5,000
square foot minimum lots and

Skyeland

and Goldenpeak, both

detached products on
10,000 square foot minimum lots. The subject site is shown on the below

aerial
and
described as follows.

Location: West side of I-15 north of Duncan Canyon Road, Fontana, California

Legal Property
Description: Lots 1

-
8 of Tract

20070
– Units 1 -124 (Clementine), Lots 1

-
17 of
Tract 200 69 – Units 1 -127 (Strata), Lots 156

-
233 of Tract 20010
(Wildstar) and lots 1

-
155 of Tract 20010 (Skyeland and Goldenpeak),
all located in

the
City of Fontana, County of San Bernardino,

State of
California

Property Owner: Clementine:

Individual Owners as Units 1- 18 and 25 - 30 of Tract 20070 . LS- Fontana, LLC, a Delaware limited liability company (a related entity to Landsea Homes) as to

U
nits 19

-
24 and 31

-
73 and 99

-
100 and
113

-
124 of Tract 20070. Arroyo Cap

-
6 LLC, a Delaware limited
liability company as to Units 74

-
98 and 101

-
112 of tract 20070.

Strata:

Individual Owners as Units 1-53, 56-57, 59-60 and 67 of Tract 20069.

LS Fontana, LLC as to Units 54-55, 58, 61-66, 68-85, 89-92 and 120- 127 of Tract 20069. Arroyo Cap II -6 LLC as to Units 85- 88 and 93- 119 of Tract 20069.

Wildstar:

Individual Owners as Lots 156-170, 185-187, 194, 196-217 and 222- 225 of Tract 20010. LS Fontana, LLC as to Lots 171- 184, 188-193, 195, 218-221 and 226-233 of Tract 20010.

Skyeland :

Individual Owners as Lots 24, 26-29, 31-35, 37-48, 138 and 154-155 of Tract 20010. LS Fontana, LLC as to Lots 25, 30, 36, 49- 51, 97- 100, 121-122, 145-131, 139-140 and 153 of Tract 20010. Arroyo Cap II-6 LLC as to Lots 52 -56, 95-96, 108-112, 114-120, 132-137 and 141-152 of Tract 20010

Goldenpeak:

Individual Owners as Lots 7-23 of Tract 20010. LS Fontana, LLC as to Lots 4- 6, 57 -62, 71 -81, 87- 91, 101- 106 and 123- 124 of Tract 20010. Arroyo Cap II-6 LLC as to Lots 1-3, 63-70, 82-86, 92-94, 107 and 113 of Tract 20010
Assessors
Parcel Nos.: Clementine: 0226-755-05 thru 16; 0266-755-018 thru 25; 0266-755- 27 thru 34; 0226-755-36 thru 37; 0226-756-04 thru 14; 0226-756-16 thru 20; 0226-756-22 thru 31; 0226-756-33 thru 42; 0226-756-44 thru 53; 0226-763-05 thru 14; 0226-763-16 thru 21; 0226-763-23 thru 31; 0226-763-33 thru 40; 0226-763-42thru 51; 0226-763-53 thru 57.

Strata: 0226-753-16 thru 23; 0226-753-25 thru 32; 0226-753-34 thru 40; 0226-753-42 thru 45; 0226-753-47 thru 54; 0226-753-56 thru 63; 0226-754-11 thru 18; 0226- 754-20 thru 27; 0226- 754-29 thru 36; 0226-754-38 thru 45; 0226- 754-47 thru 54; 0266- 754-56 thru 63; 0226-754-65 thru 72; 0227- 754-74 thru 77; 0226- 762-07 thru 14; 0226-762-16 thru 23; 0226-762-25 thru 32.

Wildstar: 0226-742-01 thru 31; 0226-743-01 thru 47.

Skyeland & Goldenpeak: 0226-702-01thru 30; 0226-712-01 thru 54; 0226-722-01 thru 60; 0226-732-01 thru 11.

Property Taxes: We have not been able to review property taxes on any of the above assessor parcel numbers. Our review of t he Assessor’s Office does

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 32
not yet show any taxes on the subdivided parcels. It is an assumption of this report that the overall property taxes and special assessments are not over two percent.

Three-Year
Sales History: Per Landsea representatives, Arroyo Cap II -6 LLC (a land bank company) purchased the subject property on September 9, 2021 for $80,000,000. LS Fontana LLC (a related entity to Landsea) began taking down lots in May 2022. They have completed 16 take- downs totaling 358 lots as of July 26, 2024. The next scheduled take- down is anticipated for August 1. There are 126 total lots remaining to be taken down in 10 take-downs with the final take-down estimated for May 2025. . Landsea (or a related entity) began closing homes within the subject property to individual owners in November 2023, and has closed 169 houses between November 2023, and July 26, 2024.

Size and Shape: The subject site is irregular in shape and contains 121.279 gross and

73.444 net acres per Tract Map 20010 which subdivides the site into 233 residential lots and three large lots that were further subdivided into Tract 20069 (Lots 234 and 235 totaling 11.25 of the total net acres) and Tract 20070 (Lot 236 which totals 8.08 net acres).

Zoning: We have reviewed a letter from the Planning Division of Fontana dated March 18, 2019 , which states Resolution No. 2019- 31 was adopted certifying the project EIR, Resolution No. 2019- 32 was approved for General Plan Amendment No. 16- 001 to change the General Plan Land Use Map; Ordinance No. 1798 was approved for Zone Change No. 16- 001 to change the Zoning District Map; a nd Resolution No. 2019-33 was approved for TTM 20010, TTM 20069 and TTM 20070, Planned Unit Development (CUP No. 18- 001) Design Re view No. 16 -025 and Design Review for 16- 026. In addition, Ordinance No. 1799 was approved for Development Agreement No. 16- 001. Th ese actions by the Planning Division of the City of Fontana approved development of Narra Hills for a total of 489 residential units which, once finalized became the subject 484 residential units.

Per the current City of Fontana General Plan, the subject is shown as R-PC (Residential Planned Community with 3 to 6.4 dwelling units per acre allowed), R -M (Medium Density Residential with 5.1 – 12 dwelling units per acre allowed), R-MF (Multi-Family Residential with

12.1 to 24 dwelling units per acre allowed), PR (Recreational Facilities) for the clubhouse area. The current City of Fontana Zoning Map is consistent with the General Plan.

Entitlements: The subject is entitled by t hree Tract Maps. Tract Map No. 20010 recorded April 26, 2023, and subdivided 121.279 gross acres and

73.444 net acres into 236 lots with 233 single family lots (78 lots with a minimum lot size of 5,000 square feet and 155 lots with a minimum lot size of 10,000 square feet) and Lots 234, 235 and 236 being identified for condominium purposes. Tract Map 20069 recorded July 23, 2023, and subdivided Lots 234 and 235 into 17 lots which were subsequently divided into 127 small cluster lots per condominium maps. Tract Map 20070 recorded July 28, 2023, and subdivided Lot 236 into eight lots for condominium purposes which were divided into 124 duplex and small detached lots. A copy of the three maps along with the site plans are located in the Addenda for your review.

Home Owner’s
Association: Per Landsea representatives, Narra Hills has a master Home Owner’s Association which has dues of $192 per month at build-out.

In addition, Strata has an additional $57 per month (due to their cluster format) and Clementine has an additional $41 per month (due to the duplex homes and their shared driveways). The HOA covers maintenance of the community gates, swimming pool, spa, barbeques, clubhouse and restrooms, community park s, as well as all walkways and community landscaping. The pool, spa, clubhouse and park areas looked complete with the pool planned to open the first week in August.

Topography: The subject lands were originally sloping from the freeway up to the foothills of the adjacent San Gabriel Mountains but have been graded into 484 residential lots and pads. The northern portion (north of Coyote Canyon Road) has been graded into the foothills and allows for views from the majority of the lots. The southern portion is near grade of both Lytle Creek Road and I -15 (adjacent to the southeast of the site). Per the Soils Report (referenced below), Debris basins and storm drain inlet areas are within the upper reaches of the northern portion of the site which will intersect with existing drainages from the foothills above the site. The drainage areas will have a debris basin and storm drain inlet or a diversion channel to a basin with maintenance roads to access each. The Hawker -Crawfor Channel originally traversed the site. Th e subject has been fully mass graded and developed into two condominium lots along with 233 single family lots. The condominium lots have been graded into 127 cluster format lots and 112 duplex lots and 12 small, detached lots. The majority of the 233 single family lots have been graded to level pads with sloping streets allowing for some significant views on the northern portion of the site. There are a few lots at the northeast corner of the site which are not finished with grading (utilities have been stubbed to each). It appears they are depositing the excess dirt from construction of the homes within the Narra Hills community on these lots and will finish-grade them at a later date. It appears there is an engineered street drainage system which has been constructed

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 34
on site to alleviate any runoff issues. This is suggested by the City approvals for the construction of the homes.

Fire Hazard Zone: Per the City’s General Plan and Zoning Map, the site is within a fire overlay zone. Per the State of California’s Fire Hazard Map, the site is within a LRA (Local Responsibility Area) with the recommendation for the site to be partially in a high and partially in a very high fire severity zone. A copy of the CalFire Fire Hazard Zone map is located in the Addenda. It is an extraordinary assumption of this report that all Fire Safety Conditions which are required by code have been incorporated into both the construction of the homes and the development of the lands and that the homebuyers are able to obtain fire insurance.

Soils Condition: We have reviewed a “Geotechnical Grading Plan Review ” for the subject site dated May 6, 2016, prepared by LGC Geotechnical Inc. of San Clemente, California. The Report concluded that construction of the proposed residential development is feasible from a geotechnical standpoint provided their conclusions and geotechnical recommendations are incorporated into the design of the project.

It is an assumption of this appraisal that the soils are adequate to support the highest and best use conclusion and that all 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: Within the above referenced Geotechnical Report, a review of a seismic evaluation by Albus -Keefe & Associates (report dated September 8, 2003) was discussed, and it was concluded no active fault exists on the site. Per the above reference Geotechnical Report, the subject site is located within a State of California Earthquake Fault Zone, however, extensive fault trenching as reported by the Albus-Keefe & Associated Report showed no strands of the Cucamonga Fault exist within the proposed development zone and that no fault-related setbacks are required. The appraiser is not an earthquake expert, and it is recommended that any concerns relating to earthquake faults should be addressed to the appropriate experts.

Environmental
Concerns: We have not received an environmental report to review. We have reviewed the Planning Division approvals which adopted and certified the EIR for Narra Hills. It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property and that all proposed mitigation

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City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 35
efforts were completed. 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 in Zone X which states areas determined to be outside of the 0.2 percent annual chance floodplain.

Easements and
Encumbrances: We have reviewed three Preliminary Title Reports prepared by First American Title which cover the three recorded tract maps that encompass the subject property. They are Report Order Number NHSC-6716718, dated June 18, 2024, covering Tract 20070; Report Order Number NHSC -6649385 updated August 8, 2024, covering Tract 20010; and Report Order Number NHSC-6716692 dated June 27, 2024, covering Tract No. 20069. While the exceptions appear typical for subject -type lands, i t 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. 109. The appraisers are not title experts, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.

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

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

Streets/Access: Access to the subject property is convenient via I -15 to Duncan Canyon Road, west one-quarter mile to Coyote Canyon Road and north one- quarter mile to the entrance of Narra Hills. The gated entrances are on both the southeast and northwest side of Coyote Canyon Road which is open to the public.

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

Duncan Canyon Road is an east/west access road with on/off ramps to I-15. To the east Duncan Canyon currently terminates at Sierra Avenue, about 1.5 miles east of I -15, providing access to North Fontana. To the west Duncan Canyon Road is the main entrance into Hunter’s Ridge, a master plan southwest of the subject. As Duncan Canyon Road winds through Hunter’s Ridge and turns south, it changes its name to Cherry Avenue, a main north/south access road through the northern portion of the City of Fontana.

Cherry Avenue terminates at the I-210 Freeway.

Coyote Canyon Road begins at Lytle Creek Road to the north of the subject and provides access through the Narra Hills community and the existing residential neighborhood southwest of Narra Hills where it crosses Duncan Canyon Road. On the south side of Duncan Canyon Road Coyote Canyon Road provides access to Coyote Canyon Park then becomes a frontage road to I -15 for about a mile until it turns west and becomes Bridlepath Drive in the community of Hunter’s Ridge.

Coyote Canyon Road divides Narra Hills into the northwestern portion and the southeastern portion with Skyeland and Goldenpeak in the northwestern portion and Clementine, Strata and Wildstar in the southeastern portion. Internal streets within the northwestern portion include Habitat Drive (gated entrance), Butterfly Drive, Skippers Lane, Papilio Court, Conservatory Drive and Pipevine Lane (gated entrance). Internal Streets in the southeastern portion include Caterpillar Drive, Swallowtail Lane, Morpho Lane, Paulina Lane and Habitat Drive, Milkweed Court, Blue Copper Way and Pipevine Lane along with cluster driveways and alley loaded streets within Clementine and Strata.

Current Condition: The subject is being developed into 124 duplex and small-lot homes (Clementine), 127 single-family detached homes in a cluster format (Strata), 78 single -family detached lots with a minimum lot size of 5,000 square feet (Wildstar) and 155 single-family homes on 10,000 square foot lots (Skyeland and Goldenpeak) . The majority of the grading on the property is complete with a few of the northern most large lots being used as a dump area for fill dirt from the remainder of the community. These lots will need to be re- graded and certified upon completion. All internal streets are in place (with the exception of some duplex alleys and cluster driveways. Upo n our inspection, 209 of the 484 proposed homes were over 95 percent complete including 169 individually owned homes, 15 model homes, 25 production homes ( 18 in escrow) 76 homes under construction ( 21 in escrow) and 199 remaining finished pads/lots, 73 owned by Landsea and 126 owned by Arroyo Cap.

Costs to Complete: The subject property has been developed into 484 generally finished lots/pads with internal streets generally complete and utilities stubbed to each lot. Per Landsea representatives, the remaining hard costs include $620,000 in remaining land development costs (includes final streets and grading on the few lots accepting fill and landscaping/hardscaping). In addition, there is $ 3,170,000 in remaining fees which are not included in the CFD (this appraisal assumes the bonds are in place). Adding the remaining hard costs

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

37 and the remaining fees results in total remaining costs of $3,790,000.

It is our understanding that these costs are the builder’s responsibility and will be spread between

the builder and investor

owned lots as
the individual owners are not responsible. Out of the total

484

lots/pads, 169 are individually owned leaving

315

lots, pads, lots or
homes owned by the builder and/or investor. Dividing the $3,790,000

by the

315
homes/lots/pads results in remaining land development
costs of $12,031.75

p
er lot/pad.

Improvement
Description: Below is a site plan followed by a brief description for each of the neighborhoods.

Clementine:

Clementine is made up of 12

proposed
single-family detached
homes on small lots and 112

proposed
duplex homes. The plans
range in size

from
1,372 to 1,661 square feet with the smallest plan
the detached home

The floorplans all

are
two stories with three to
four bedrooms and two

-
car garages. Features include Home
Automation including Apple Home pod mini, Kwikset Halo Wi -Fi enabled door lock and Honeywell Pro Smart thermostat. Energy Savings include Dual -glazed windows, tankless water heater,

LED
lighting, HALO whole home air purifier and solar system with lease.

Exteriors include Spanish inspired architecture, two hose bibbs and rain gutters at en

t
ry along with Lift Master garage door with openers.

The interiors have nine

-
foot ceilings, two panel interior doors, tile at
select locations and Shaw carpeting. Gourmet Kitchen includes Samsung appliances, qu

a
rtz kitchen counters, kitchen islands, white
thermofoil flat panel cabinets, a double

-
basin sink and USB outlets.

The Primary Suite has subway tile shower fiberglass unit with Bella Marble counters, white thermofoil cabinets, walk-in closets and Moen bathroom accessories. The models are located on Cosmos Way at Caterpillar Drive. There are two models, Plan 2 and 3. Twenty-four of the homes have closed escrow to homebuyers and there

is
no
standing inventory. There are 34 homes under construction with five of tho

e in escrow. The project opened for sale in August 2023 with base pricing $529,990 to $569,990 while current base pricing is $558,990 to $594,990. The homes began closing

March 22, 2024

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

38 with actual closed net sales prices (as reported by the builder) ranging from $535,910 to $641,149. These reported prices include all premiums, options and incentives. Our search of the

MLS
revealed no resales and

no
current resale listing

Our physical
search noted all homes appear to be in excellent condition. It should be noted that the seller is offering varying concessions including some rate buy downs, on a case

-
by-case basis. The total incentives
including closing cost/rate buy down

s
have ranged fro

m
zero to
$22,127. The houses which are over 95 percent complete are

shown
in the table following the descriptions.

Strata

Strata is proposed for 127 single

-
family detached homes on small
lots in a cluster format. The plans range in size

from 2,099
to 2,552

square feet . The floorplans all are two stories with three to four bedrooms and two

-
car garages. Features include Home Automation
including Apple Home pod mini, Kwikset Halo Wi

-
Fi enabled door
lock and Honeywell Pro Smart thermostat. Energy Savings include Dual-glazed windows, tankless water heater, LED lighting, HALO whole home air purifier and solar system with lease. Exteriors include Mid-Century Modern, Modern

Spanish
and California Modern
inspired

architecture, two hose bibbs and rain gutters at en try along with Lift Master garage door with openers. The interiors have nine

-
foot ceilings, two panel interior doors, tile at select locations and Shaw carpeting. Gourmet Kitchen includes Samsung appliances, quartz kitchen counters, kitchen islands, white thermofoil flat panel cabinets, a double

-
basin sink and USB outlets. The Primary Suite
has subway tile shower fiberglass unit with Bella Marble counters, white thermofoil cabinets, walk -in closets , medicine cabinets and Moen bathroom accessories. The models are located on

Habitat
Drive just south of Caterpillar Drive. There are

four
models, one for
each plan. Fifty-eight of the homes have closed escrow to

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

39 homebuyers. There are ten production homes over 95 percent complete (six in escrow) and an additional eight homes under construction. The project opened for sale in March 2023 with base pricing $609,990

to $649,990 while current base pricing is $

675,990

to $739,990. The homes began closing November 16

, 202
3, with
actual closed net sales prices (as reported by the builder) ranging from $ 613,714

to $ 808,477

These reported prices include all
premiums, options and incentives. 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. It should be noted that the seller is offering varying concessions including

some rate buy
downs, on a case

-
by-case basis. The total incentives including
closing cost/rate buy downs have ranged from zero to $

15,333
. The
houses which are over 95 percent complete are shown below in the table

Wildstar

Wildstar is proposed for 78 single-family detached homes on 5,000 square foot minimum lots. The plans range in size

from
2,747 to
3,160

square feet. Plan 2 has an option to change storage/garage space into a

Live
Gen suite which increases the square footage from
2,961 to 3160 square feet. We will name the home with the option Plan 2X in the appraisal. The floorplans all are two stories with

four
to five bedrooms and two to three

-
car garages. Features include
Home Automation including Apple Home pod mini, Kwikset Halo Wi- Fi enabled door lock and Honeywell Pro Smart thermostat. Energy Savings include Dual -glazed windows, tankless water heater, LED lighting, HALO whole home air purifier and solar system with lease.

Exteriors include Mid

-
Century Modern, Modern Spanish and
California Modern inspired architecture, two hose bibbs and rain gutters at entry along with Lift Master garage door with openers. The interiors have nine

-
foot ceilings, two panel interior doors, tile at select

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

40 locations and Shaw carpeting. Gourmet Kitchen includes Samsung appliances with a built -in gas cooktop, quartz kitchen counters, kitchen islands, white Shaker style thermofoil cabinets, a double - basin sink and USB outlets. The Primary Suite has subway tile shower fiberglass unit with Bella Marble counters, white thermofoil cabinets, walk -in closets, medicine cabinets and Moen bathroom accessories. The models are locat ed at the corner of Habitat Drive and Caterpillar Drive, across from the Strata models. There are

three

models, one for each plan. Forty-five of the homes have closed escrow to homebuyers. There are

four
production homes over 95
percent complete ( three

in escrow) and an additional

13 homes
under construction

(four in escrow). The project opened for sale in
March 2023 with base pricing $ 754,990

to $

784,990
while current
base pricing is $

823,990

to $899,990. The homes began closing
October 24

, 2023, with actual closed net sales prices (as reported by the builder) ranging from $

782,389

to $ 992,967. These reported
prices include all premiums, options and incentives. 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.

It should be noted that the seller is offering varying concessions including some rate buy downs, on a case

-
by-case basis. The total
incentives including closing cost/rate buy downs have ranged from zero to $23,474. The houses which are over 95 percent complete are shown below in the table

Skyeland

Skyeland is proposed for 84 single

-
family detached homes on
10,000 square foot minimum lots and are shown as the various colored or grey homes on the site plan above with the tan homes being Goldenpeak. Skyeland has five plans which

range in size from
2,375

to 3,604 square feet. The floorplans include single and

two
stories with

three

to five bedrooms and two to three

-
car garages.

_________________________________________________________________________________________________________ Appraisal Report
City of

Fontana
CFD No. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

41 Features include Home Automation including Apple Home pod mini, Kwikset Halo Wi

-
Fi enabled door lock and Honeywell Pro Smart
thermostat. Energy Savings include Dual -glazed windows, tankless water heater, LED lighting, HALO whole home air purifier and solar system with lease. Exteriors include Mid

-
Century Modern, Modern
Spanish and California Modern inspired architecture, two hose bibbs and rain gutters at entry along with Lift Master garage door with openers. The interiors have

ten
-foot ceilings, two panel

interior
doors, tile at select locations and Shaw carpeting. Gourmet Kitchen includes Samsung appliances with a built -in gas cooktop

and wall
oven

, quartz kitchen counters, kitchen islands, white thermofoil Shaker-style cabinets, a double

-
basin sink and USB outlets. The
Primary Suite has a tiled shower and free

-
standing tub, Bella Marble
counters, white thermofoil

Shaker
-style cabinets, walk-in closets,

36”
medicine cabinets and Moen bathroom accessories. The models are located on the north side of Butterfl y Drive at Habitat Drive . There are three models, a Plan 1, a Plan 2X and a Plan 3

Twenty-five of
the homes have closed escrow to homebuyers. There are

six

production homes over 95 percent complete (four in escrow) and an additional three homes under construction ( all

in escrow). The
project opened for sale in Ma

y
2023 with base pricing $

835,000

to
$905,000 while current base pricing is $

889,990

to $995,990. The
homes began closing December 20, 2023, with actual closed net sales prices (as reported by the

builder) ranging from $

870,920

to
$1,307,063. These reported prices include all premiums, options and incentives. 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. It should be noted that the seller is offering varying concessions including some rate buy downs, on a case-by-case basis. The total incentives including closing cost/rate buy downs have ranged from zero to $58,500

. The houses which are
over 95 percent complete are shown below in the table

Goldenpeak

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 42
Goldenpeak is proposed for 71 single- family detached homes on 10,000 square foot minimum lots and are shown as the various colored or grey homes on the site plan above with the tan homes being Skyeland. Goldenpeak has four plans which range in size from 3,159 to 4,248 square feet . The floorplans include single and two stories with four to six bedrooms with two plans having guest or “livegen” suites with all having three-car garages. Features include Home Automation including Apple Home pod mini, Kwikset Halo Wi- Fi enabled door lock and Honeywell Pro Smart thermostat. Energy Savings include Dual -glazed windows, tankless water heater, LED lighting, HALO whole home air purifier and solar system with lease.

Exteriors include Mid- Century Modern, Modern Spanish and California Modern inspired architecture, two hose bibbs and rain gutters at entry along with Lift Master garage door with openers. The interiors have ten-foot ceilings, two panel interior doors, tile at select locations and Shaw carpeting. Gourmet Kitchen includes Samsung appliances with a built-in gas cooktop and wall oven, quartz kitchen counters, kitchen islands, white thermofoil Shaker -style cabinets, a double-basin sink and USB outlets. The Primary Suite has a tiled shower and free- standing tub, Bella Marble counters, white thermofoil Shaker -style cabinets, walk- in closets, 36” medicine cabinets and Moen bathroom accessories. The models are located on the north side of Butterfly Drive at Habitat Drive. There are three models, a Plan 1, a Plan 2X and a Plan 3. Seventeen of the homes have closed escrow to homebuyers. There are five production homes over 95 percent complete (all in escrow) and an additional 18 homes under construction ( nine in escrow). The project opened for sale in May 2023 with base pricing $ 925,000 to $1,064,990 while current base pricing is $1,059,990 to $1,194,990. The homes began closing December 20, 2023, with actual closed net sales prices (as reported by the builder) ranging from $980,305 to $1,362,618. These reported prices include all premiums, options and incentives. 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. It should be noted that the seller is offering varying concessions including some rate buy downs, on a case- by-case basis. The total incentives including closing cost/rate buy downs have ranged from zero to $25,400 . The houses which are over 95 percent complete are shown below in the table.

*One of each of these plans is a model home. LG stands for LiveGen, representing a floorplan that features a first-floor suite while + represents a loft, bonus room, or office. There are an additional 76 homes under construction, and 199 additional pads/ lots with 73 owned by Landsea and 126 owned by Arroyo Cap (not shown on the above table).

Narra Hills by Landsea

Plan

Bd/Ba
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned
Clementine
1 3 / 2.5 2 / 2 1,372 2 0
2 3 / 2.5 2 / 2 1,450 11 1*
3 4 / 2.5 2 / 2 1,661 11 1*
Subtotal Clementine 24 2
Strata
1 3+ / 2.5 2 / 2 2,099 15 3*
2 4+ / 3 2 / 2 2,136 15 3*
3 4+ / 3 2 / 2 2,311 15 3*
4 4+ / 3 2 / 2 2,552 13 5*
Subtotal Strata 58 14
Wildstar
1 4+ / 3.5 2 / 2 2,747 15 2*
2 4+ / 4 2 / 2 2,961 2 0
2X (LG) 5 / 4.5 2 / 2 3,160 12 3*
3 5+ / 4.5 2 / 3 3,079 16 2*
Subtotal Wildstar 45 7
Skyeland
1 (1(75)) 3+ / 3 1 / 2 2,375 5 1
1X (1(75) 4 / 4 2 / 3 3,010 0 1*
1XX (1(70)) 4+ / 3.5 2 / 3 3,080 4 4
2 (2(70))LG 5+/ 4.5 2 / 3 3,298 8 1
2X (2(75)) 5+ / 4.5 2 / 3 3,339 4 1*
3 (3(75)) 5+ / 4.5 2 / 3 3,604 4 1*
Subtotal Skyeland 25 9
Goldenpeak
1 (1R (100)) 4 / 3.5 1 / 3 3,159 5 2*
1X (1(85))LG 4 /4.5 2 / 3 3,603 0 0
2 (2(85)) 5 / 4.5 2 / 3 3,757 0 0
2X (2R(100)) 4+ / 3.5 2 / 3 3,827 6 3*
3 (100) 6+ / 4.5 2 / 3 4,248 6 3*
Subtotal Goldenpeak 17 8
Total Narra Hills 169 40

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 grew 0.4 percent between January 202 3 and January 2024, and an average of about two percent the previous 20 years. Projections for the County’s growth over the next six years is currently about 0.6 percent per year.

This equates to an increase of approximately 13,000 residents per year suggesting the need for about 3,500 homes per year within the County. New home sales in most cities in the County since 2020 have been higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market.

Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than that of other Southern California regions. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 were 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 equi ty. 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 economy entered what is now known as the COVID disruption. The housing market slowed down significantly early on, but by May 2020, new homes were going under contract and selling at well above average absorption rates from May 2020 through Spring of 2022 in the region. Beginning in mid-2022, the new home market saw a slowdown in absorption rates due to the increasing interest rates, the high prices of homes, and the high rate of inflation which was shaking consumer confidence.

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Median housing prices (all types) in the County increased almost 300 percent from $120,406 at the lowest point in 2009 to the June 2024, price of $522,500 per the California Association of Realtors. This is 6.9 percent higher than one year ago.

Economic growth in the Inland Empire was strong generally between 2015, after the Great Recession, and until the economic shutdown due to COVID. The second half of 2020 and all of 2021 saw economic growth, however the first two quarters of 2022 saw GDP shrinking. The most recent unemployment rate for the County is 5.2 percent (per the June 2024 EDD report). The end of 2022 saw lower unemployment rates than the County’s pre-COVID unemployment rate in February 2020 of 4.0 percent, however 2023 saw unemployment rising from 3.6 to a high of 5.5 percent. This past month unemployment has increased about one percent. While unemployment rates are still near historical lows, the inflation factor has significantly affected the economy.

The housing market played a large role in the past two recessions. In 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 because of the problems in the sub-prime and non-conventional mortgage markets, which played a role in the 2008 upheaval of Wall Street and contributed significantly to the U.S. economic downturn of the Great Recession. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid- 2012 when home prices began a steady climb.

During the COVID disruption, new home sales were 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 onset of the COVID pandemic, both sales and prices increased significantly due to strong demand from May 2020 throughout COVID until spring 2022 when interest rate increases began affecting the home-buying market. The rising interest rates alone did not

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seem to slow sales in Spring 2022. However, a combination of increasing home prices and falling consumer confidence, added to the significant interest rate increases, slowed new home sales significantly beginning in mid- 2022. Due to the significantly higher mortgage interest rates, existing homeowners are not moving which has stifled the existing home market, making the new home market the only option for some. In the Inland Empire there were 44, 087 existing homes closings in the past 12 months (down

17.8 percent from one year ago) and 9,072 new home closings in the past 12 months (down 9.7 percent from the previous year), all information as of May 2024, per Zonda Research, a new home market research company. In January 2022, mortgage rates were

3.22 percent (for a typical 30- year fixed conventional mortgage) while as of August 1, 2024, the rate for the same loan is 6.73 percent which is down from the high of 7.63 percent in October 2023. On a $600,000 mortgage, the current monthly payment for this loan has increased from $2,595 to $3,862 or almost 50 percent which has hit homebuyers hard.

Per the Zonda National Economic and Housing Market Update in March 2024, the rate of growth of new home sales is off from COVID highs but up from 2022 sales numbers, suggesting a healthy market. Per their survey of over 300 new-home builders nationally, the builders are stating sales are continuing but report they had to adjust pricing and incentives to “find the market.” In the January 2023 survey, 50 percent of builders surveyed were lowering their prices and the remaining 50 percent stated their pricing was flat. In March 2024, the survey resulted in 50 percent of the builders stating their pricing was increasing a little, 46 percent of builders stating their pricing was flat and 4 percent dropping prices. This is a very different dynamic than in January 2023 which was partly due to builder’s readjusting concessions (interest rate buy-downs), and partly due to the market accepting the mortgage rate increases. In today’s market over 60 percent of new- home builders in the U.S. are offering either full-term or temporary interest rate buy-downs (John Burns Research and Consulting) which is helping to sustain new home sales. Per Zonda, in March 2024, 80 percent of new home builders in the Inland Empire are offering incentives.

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The larger public homebuilders began offering significant interest rate buy-downs in early 2023 in order to keep absorption rates steady, which reportedly cost between $30,000 and $100,000 in incentives. The builders are attempting to find the “sweet spot” in incentives. In their September 2023, survey of 300 builders nationwide, Zonda asked builders to check all that they were offering and found 70 percent of builders surveyed were offering rate buydowns, 60 percent were offering funds towards closing cost s, 33 percent were offering flex dollars, 22 percent were offering lower home prices and 20 percent were offering funds toward options and upgrades. In the subject communities , per Landsea representatives, the concessions have ranged from zero to $58,500, lower than some projects in the area. The question is, how long can builders continue to offer these significant incentives. As rates go higher, the extent that builders can buy-down the mortgage rates goes down.

Home loan mortgage rates have been and are still playing a huge part in the housing market. The Board held mortgage rates at all -time lows after the Great Recession and again after the COVID Recession in an attempt to assist the housing market’s recovery.

Low rates helped home sales during this time. However, first-time buyers are now having a hard time entering the housing market due to rising prices and rising interest rates.

Mortgage applications had been spiking in late 2020 and 2021 due to the low r ates and the fear rates were going to start ticking up, which began happening in March 2022. The Board increased the rate eleven times between March 2022 and August 2023, which increased the FFR from 0-0.25 percent to 5.25-5.50 percent. At the latest Board meeting in July 2024, they paused the FFR increases for the seventh time and suggested a decrease may come at the next meeting in September 2024. The financial markets had been anticipating a possible March 2024 decrease which caused volatility in the financial markets. The stock market hit an all-time high in late July on the anticipation of a decrease later this year. The FFR increases are supposed to help slow the high inflation rate in the Nation, which appears to be occurring as the latest reports are showing inflation in June 2024 at 3.0 percent, significantly down from a high of 9.1 percent in June 2022.

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While new home builders slowed production as sales slowed in 2022, the spring of 2023 brought optimism to builders once again. Sales were up month over month as buyers adjusted to higher mortgage rates and the existing home inventory is at all -time lows.

Existing homeowners that are locked into a 3 percent mortgage are not moving up due to the current almost seven percent rates. This is creating a supply issue for existing homes.

New home sales are benefiting from this supply issue as in some cases, the only option for homebuyers are new homes. Per Zonda, historically, new homes captured 10 to 13 percent of all home sales; however, due to the limited supply of existing homes currently on the market, new homes are capturing closer to 25 percent of all homes sales in the Inland Empire.

Residential Land Development
While there had been little land development going on in most of the Inland Empire during the Great Recession years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas of the Inland Empire. The increase in housing prices since 2012 combined 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 timeline for 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 various builders, there are few currently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to record (such as Richmond American’s Highland Park and Lennar’s Monterado) or a public builder buying a larger piece of land but develops the land for its own use, such as Narra Hills by Landsea (subject property) and Gardens at the Arboretum by Lennar.

Land sales in the Inland Empire slowly grew from 2012 up to a peak in 2017, with 2018 and 2019 showing lower land transactions. Once home sales exploded in May 2020, land sales followed with a significant number of residential land sales to builders in the Inland Empire during the second half of 2020 and throughout 2021. In late 2021 and early 2022, prior to the F FR increases, builders were paying significantly more for residential land

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that was ready to develop as demand was up and supply was shrinking. The beginning of 2022 continued with residential land sales going under contract until May, when new home sales began to fall sharply. According to Zonda’s survey of builders regarding residential land purchases, as of January 2023 only 2 percent of builders surveyed were “full steam ahead,” and almost 40 percent were pausing transactions or bidding lower on land transactions. As of March 2024, these percentages had changed drastically with 49 percent stating they are going “full steam ahead” and 4 6 percent moving “cautiously forward.” The increase in optimism from new home builders outlook is partially due to the extreme slowdown of existing home inventory which is fueling new home sales. Per Zonda in the first quarter 2024 there were about 11,478 vacant developed lots in the Inland Empire, which is down 23 percent from the previous year.

New Home Sales and Pricing
We have researched new single- family homes within the subject’s 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 July 28, 2024, Ryness Report, the year-to-date average sales rate (4.1 sales per month) is slightly higher than the same time period of the previous year ( 4.0 sales per month). The market comment ary within this Ryness Report on the entire U.S. new housing market states that both new and existing home sales softened in June. They believe the high rates are discouraging would-be buyers and that buyers expectations for lower rates are keeping buyers on the sidelines. New home sales overall in the Country slipped 0.6 percent in June to its lowest point since last November with new homes for sale increasing for the third consecutive month in June amounting to 9.3- month supply at the current sales pace. The Inland Empire has an average number of sales per month decreasing by one percent year over year; however, within the subject’s submarket of Central San Bernardino (included Fontana, Rialto and Bloomington) sales year to date are down about 16 percent from the same time period in 2023 (604 sales year to date in 23 projects in 2024 and 727 sales year to date in 25 projects in 2023). It should be noted however, of the 23 active projects reported by Ryness, five are nearing completion, thus there are closer to 18 active

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projects selling new homes in the Central San Bernardino submarket. Surprisingly, even with the high pricing and mortgage rates, sales of new homes are still occurring, however at a slower rate than last year. This is partially due to the extremely limited supply of existing homes which is creating more demand for new homes. As interest rates rise, purchasing power becomes lower and therefore fewer people purchase new homes.

Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, inspections, interior designers, and landscapers, all contributing to the area economy.

When comparing the July 28, 2024, Inland Empire Ryness Report to one year prior, there are 22 less projects (244 in July 2023 and 222 in July 2024) and sales are one percent higher with the monthly average year to date at 4.1 sales per month per project. Looking back, in 2022 the Inland Empire average sales rate was 4.3 homes per month; in 2021 the average sales rate was 4.9 homes per month, in 2020 the average sales rate in the Inland Empire was 4.1 sales per month, similar to the current absorption rate and in 2019, prior to the COVID disruption, the average sales rate was 3.4 sales per month. Th e similar sales rate to 2020 suggests new home buyers can weather the higher mortgage rates. However, the reader should note existing home listings are over 30 percent lower than in 2020 which increases the amount of new home buyers.

New single -family home pricing (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 Inland Empire median new home price is $625,614 for a detached home and $557,568 for an attached home, nearing the peak which was obtained in 2022. New home sale prices fluctuate based on the land value and competition more than on the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basis typically do not fluctuate as much as land values; however, there have been inflationary increases in construction costs adding to this increase. Construction materials have increased an estimated 40 percent since 2019.

We have reviewed Empire Economics’ Price Point Review Study on Fontana CFD No. 109 (Highland) dated July 26, 2024. Empire Economics did an original Price Point Study on the project in February 2022 in order to determine their price points for the various plans within Narra Hills. The “Review Study” is to ascertain if the prices have increased or decreased since the original Study. The Empire Economics Price Point Review Study concluded that the three plans within Strata (cluster product) had current base price conclusions which were below the original base price conclusions in February 2022 while the remainder of the plans has price points above the conclusions in February 2022. The three plans that showed decreases ranged from 1.1 to 3.5 percent while the remaining 27 plans in the Review Study showed increases ranging from 0.2 to 11.7 percent. Overall, the plans averaged a 4.9 percent increase from the original February 2022 Price Point Study. The Review Study took into account the concessions which are included in their net prices even though some are not included in the reported sales prices. That is, interest rate buy-downs and closing cost incentives are not reported in the sales prices, however, are considered in both the Price Point Review Study and in the appraisal analysis.

Within our search for the most comparable actively selling new home communities, we searched the subject area of North Fontana, which currently features a multitude of actively selling new home communities. Due to the large lot size of Skyeland and Goldenpeak, we expanded our search to include a large lot project in Rialto. W e found 17 communities comparable to the homes at Narra Hills . The comparables have current base prices ranging from $529,900 to $1,194,990. The Narra Hills new homes have a wide range of base prices from $5 58,990 to $1,194,990, which falls within the range of comparable new homes in the area and includes the top of the price range on their large lot homes.

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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 June 2024 ($875,000) is 0.6 percent lower than the month prior median home price ($880,000), however up 5.8 percent year-over-year from $825,000 in June 2023. These overall Southern California numbers compare to San Bernardino County with $522,500 as the median price paid for an existing home in the County in June 2024, up 6.9 percent from the previous month ($488,900), and up 11.2 percent on a year- over-year basis ($ 488,900). Below is a table showing the sales and prices for the Southern California area by County per the CAR.

Southern California Existing Home Sales
County June 2024 May 2024 June 2023
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $889,180 $811,610 $832,310 9.6% 6.8% -15.5% Orange $1,450,000 $1,422,500 $1,260,000 1.9% 15.1% -11.9% Riverside $643,500 $650,000 $628,000 -1.0% 2.5% -13.5%
San Bernardino $522,500 $488,900 $470,000 6.9% 11.2% -12.6% San Diego $1,054,180 $1,025,000 $958,250 2.8% 10.0% -1.9% Ventura $964,500 $925,000 $927,500 4.3% 4.0% -5.7%
Southern Calif. $875,000 $880,000 $815,000 -0.6% 7.4% -11.5% Source: California Association of Realtors

Based on June 2024 median existing homes prices, in comparison to the majority of the surrounding counties, San Bernardino has a definite price advantage. The “San Bernardino County Advantage” (price difference between San Bernardino and surrounding counties) is $1 21,000 as compared to Riverside County, $3 66,680 as compared to Los Angeles County, $4 02,000 as compared to Ventura County, $5 31,680 as compared to San Diego County and $9 27,500 as compared to Orange County. That is, in June 2024, the median priced home in San Bernardino County ($ 522,500) was $927,500 less than the median priced home in Orange County ($1, 450,000). Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. Recently the San Bernardino County “price advantage” has widened for the coastal counties and been reduced within both Riverside and Los Angeles. With the current work-

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from-home concept, the suburban areas have seen more growth which put pressure on home prices in San Bernardino County.

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 both new and existing single family detached homes within market areas surrounding the subject are shown in the table below.

Source: Redfin Housing Market Trends June 2024

The median home price of a detached home in the subject’s vicinity of North Fontana in June 2024 was $725,000, which is near the high end of the range of the detached home prices in the subject area. All of the new homes currently selling in Fontana are in the northern area of the city. The low end of the range relates to the area which includes all of Fontana including the southern portion that includes older homes and the Rialto area which also has older homes. 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 11.2% percent year-over-year from June 2023 to June 2024.

According to the Ryness Report dated July 28 , 2024, there are currently 23 new home projects in the subject’s Central San Bernardino submarkets, with the City of Fontana housing 16 of them (including the subject’s five).

Narra Hills - Sales and Pricing
Narra Hills is comprised of 484 proposed single-family homes with marketed sizes from 1,372 to 4,249 square feet with products ranging from attached duplex homes to single- family detached homes on minimum 10,000 square foot lots . Narra Hills began sales in Community
Name
Location
To Subject
No. of
Sales
June ‘24
June ‘24
Median
Sale Price
Price %
Change
Y-O-Y
North Fontana Larger Subject Vicinity 49 $725,000 8.6%
All of Fontana Subject and South 84 $684,000 7.9%
Rialto East 48 $590,000 7.3%
Rancho Cucamonga West 93 $866,250 3.4%
Jurupa Valley South 47 $677,245 1.0%

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both Wildstar and Strata in March 2023, in Goldenpeak and Skyeland in May 2023 and in Clementine in August 2023. They have sold a total of 208 homes suggesting an average sales rate of 12.2 homes per month since March 2023. Base pricing has increased zero to 18.4 percent depending on the home type and plan with no price reductions.

Clementine
Within Clementine they have sold 29 homes resulting in an average absorption rate of

2.4 homes per month with pricing increasing from 4.4 to 5.5 percent depending on the plan. Original base pricing was from $534,990 to $569,990 while current base pricing is from $563,990 to $594,990. Actual sales prices on closed homes range from $550,662 to $641,149 (these prices include all premiums, options and a deduction of all incentives).

Strata
Within Strata they have sold 64 homes resulting in an average absorption rate of 3. 7 homes per month with pricing increasing from 10.8 to 15.1 percent depending on the plan.

Original base pricing was $609,990 to $649,990 while current base pricing is $675,990 to $739,990. Actual sales prices on closed homes within Strata range from $613,714 to $808,477 (again including all premiums, options and a deduction for all incentives).

Wildstar
Within Wildstar they have sold 52 homes resulting in an average absorption rate of 3. 1 homes per month with pricing increasing from 9.1 to 14.6 percent depending on the plan.

Original base pricing was $754,990 to $784,990 while current base pricing is $823,990 to $899,990. Actual sales prices on closed homes within Wildstar range from $613 ,714 to $808,477 (again including all premiums, options and a deduction for all incentives).

Skyeland
Within Skyeland they have sold 32 homes resulting in an average absorption rate of 2.1 homes per month with pricing increasing from 3.3 to 10.1 percent depending on the plan.

Original base pricing was $835,000 to $905,000 while current base pricing is $889,990 to

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$995,000. Actual sales prices on closed homes within Skyeland range from $870,920 to $1,307,063 (again including all premiums, options and a deduction for all incentives).

Goldenpeak
Within Goldenpeak they have sold 31 homes resulting in an average absorption rate of

2.1 homes per month with pricing increasing from zero to 18.4 percent depending on the plan. Original base pricing was $925,000 to $1,064,990 while current base pricing i s $1,059,990 to $1,194,990. Actual sales prices on closed homes within Goldenpeak range from $980,305 to $1,362,618 (again including all premiums, options and a deduction for all incentives).

The sales rates for the five communities range from 2.1 to 3.7 sales per month, which is below the average of the various projects in both the Inland Empire and in the subject submarket. Per the Ryness Report, a new home tracking service, as of July 28 , 2024, year-to-date average sales per project per month in the Inland Empire is 4.1 homes while within the subject’s submarket of Central San Bernardino the year-to-date average sales per project per month is 3.6. While the subject neighborhood generally have a lower sales rate than the averages in the area, homes are still selling, and they have increased base pricing.

Summary

The Inland Empire had seen substantial increases in pricing since 2012 with most areas, including the subject, showing astronomical increases from mid-2020 through early 2022.

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. The latest statistics indicate a possible slowdown in sales as interest rates have risen substantially; however, buyers appear to be resilient to the increases. The Fontana new -home submarket is performing slightly below the Inland Empire market as a whole with the subject’s five communities all experiencing a slower absorption rate than the average; however, prices have still increased. Builders’ optimism appears to have returned with builders generally

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believing prices will increase slightly in 2024 or remain flat. Despite uncertainty hitting the market due to interest rates and inflation, most observers agree that the Inland Empire housing market is healthy and population growth is still estimated to occur in the area. It is believed that as the population continues to increase, housing growth will also continue, despite a possible economic slowdown.

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”
4F
5 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 irregular in shape, consisting of 121.279 gross acres per recorded Tract Map No. 20010. The site is in the northwestern portion of the City of Fontana, along the northwest side of I-15 northeast of Duncan Canyon Road. The lands were originally sloping with the northern boundary at the foothills of the San Gabriel Mountains and the southern border generally at the elevation of I -15 and Lytle Creek Road. The site is bounded by mountainous undeveloped lands (San Gabriel Mountains) to the northwest, existing homes and Duncan Canyon Road beyond which is Coyote Canyon Park to the

5 The Appraisal of Real Estate, 11th Edition

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southwest beyond which is Hunter’s Ridge, a large master planned community built -out in the early 2000s, and I -15 along the entire southeastern border. Northeast is vacant land and a recently completed distribution building which is leased to Amazon.

The subject site has been graded for 484 single-family homes: 155 detached lots with a minimum lot size of 10,000 square feet; 78 detached lots with a minimum lot size of 5,000 square feet and two condominium lots, one graded for 127 cluster detached homes and the other for 124 duplex and single-family detached small lots. We have reviewed a Soils Report on the subject site which concluded that the development of the site into single- family residential use is feasible; however, all mitigation measures recommended within the report should be adhered to during construct ion. We have not received an environmental report to review. It is an assumption of this report that the soil is adequate to support the highest and best use, and that there are no soils or 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 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 excellent access via I-15, exit Duncan Canyon Road. There are two neighborhood shopping centers within two miles of the subject at I- 15 and Beech Avenue/Summit Avenue exit, one anchored by Target and Stater Bros. and one by Kohls.

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.

We have reviewed a letter from the Planning Division of Fontana which allowed for Tract Map 20010 for 233 single-family detached lots and two condominium lots along with Tract

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20069 and 20070 which subdivided the two condominium lots into 251 units for a total of 484 residential units. Ordinance No. 1798 approved a zone change, Resolution No. 2019- 31, 32 and 33 adopted and approved the project EIR, the General Plan Amendment and the mapping.

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

Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Inland Empire Housing Market section earlier within this report, the market had shown strong increases in both sales and pricing since COVID until late 2022 when high home prices and increasing interest rates began to slow sales. Overall home sales have slowed down significantly, partially due to existing homeowners not moving due to the higher interest rates, which is stifling the existing home market, at times leaving new homes the only option for homebuyers. Within Narra Hills there have been 208 sales to date with the first sale occurring in March 2023, suggesting an overall sales rate between the five communities of 12.2 sales per month with actual per project absorption rates between

2.1 and 3.2 homes per month which is below the average year to date sales per month in the Inland Empire (4.1) and below the average sales per month in the subject’s submarket (3.6). While the absorption rates are below the average of surrounding projects, all structures appear to be in excellent condition with no physical depreciation apparent.

Within the new home market in Fontana and Rialto, we found 17 projects (including the five subject neighborhoods) to be most comparable to the subject property. The subject area in Fontana is priced higher than the homes in the older area of Fontana and Rialto (adjacent to the south and east). While the market softened in the second half of 2022, the Inland Empire is still seeing demand and new homes are still selling. Our search for land sales found 13 land sales within the past year that we consider to be comparable.

Population growth is still occurring in the area and will continue to create the need for

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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.

Highest and Best Use – “As Improved”
The subject property consists of five neighborhoods within the community of Narra Hills with a total of 484 proposed homes which are currently being marketed by Landsea. Narra Hills began selling in March 2023 and has sold 208 homes to date, reflecting a sales rate of 12.2 sales per month spread across the five product lines. Independently, Clementine has a sales rate of 2.4 homes per month, Strata has an average sales rate of 3.7 homes per month, Wildstar has an average sales rate of 3.1 homes per month and Skyeland and Goldenpeak each have an average sales rate of 2.1 homes per month. The Skyeland and Goldenpeak communities are the high- end of the project with homes on 10,000 minimum square foot lots. Base prices at Narra Hills have generally increased since grand-opening on all communities with base price increases ranging from zero to 18.4 percent depending on the plan and no price decreases. While the absorption rates at the subject communities is generally slower than the average absorption rate per project in the overall Inland Empire and in the submarket, the homes are still selling, and prices have been increasing. Builders are offering concessions to increase absorption rates in the area. In marketing Narra Hills, the builder is offering concessions, including rate buy- downs and help with closing costs, on a case -by-case basis. These concessions have ranged from $0 to $58,500 with an average of $11,655 per closed sale and an average

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of $18,346 on the 39 homes currently in escrow. Some builders in the area are offering higher concessions in order to maintain higher absorption rates . While the incentive increases are suggesting a softening market, per Empire Economics’ Price Point Review Study, the plan pricing (including incentives being offered) has decreased on three plans however increased on the remaining plans with an average increase of 4.9 percent between proposed pricing in 2022 and current pricing. The sales absorption rate within Narra Hills is considered to be below the average in the market area. All of the homes are of good design and appear to be of good quality workmanship. While the homes at Narra Hills are selling slower than the average in the subject market, it appears the pr oduct is being well received and the neighborhood is selling at or near the correct price points for the area. Based on the above information, it is concluded that the highest and best use for the subject property, is for the continued use, as improved.

VALUATION ANALYSIS AND CONCLUSIONS

The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the subject lands, a unit of comparison needs to be addressed.

For single family detached lots, cluster residential lands and duplex and small lot lands , all are typically sold on the basis of a finished pad/lot per unit. That is, the sales price is determined by a finished pad or lot value and then the remaining costs to develop the property to a true 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/pads will be considered. Our search revealed several transactions similar to the subject in that they include either single-family detached lots or some detached cluster lots along with some attached product . At tim es, the cluster and attached transactions are typically looked at on a blended price per unit , taking into consideration the overall density of the neighborhood. Thus, we will value each of the lot-types separately.

In the case of the completed home valuations , a single new home is the unit of comparison. Our search will include all new home projects within the subject’s immediate and surrounding market area to find comparable new homes for sale. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home . The minimum market value also includes all concessions given by the builder including mortgage closing costs and buy-downs (which are not included in the reported sales prices), if applicable.

For 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

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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 /pad rather than attribute value to a partially complete improvement. In the case of the individually owned homes, the concluded minimum market value will be used for each plan and a mass appraisal technique will be addressed.

In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. All of the value conclusions will take into consideration improvements and/or benefits to be funded by the Fontana CFD No. 109 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 Narra Hills there are 484 lots/pads in a generally physically finished condition. The lands include 155 single- family detached lots with a minimum lot size of 10,000 square feet, some with good to excellent views; 78 single- family detached lots with a minimum lot size of 5,000 square feet; and two condominium maps, one with 127 cluster lots and the other with 124 duplex lots. For the 10,000 square foot minimum lots (includes both Skyeland and Goldenpeak), there are 58 owned by Arroyo Cap. , 17 owned by Landsea, and 21 homes under construction owned by Landsea. A home under construction (under 95 percent complete) wil l be valued as a finished lot rather than attribute value to a partially complete improvement, thus we will value 38 lots with a minimum lot size of 10,000 square feet under Landsea ownership. For the 5,000 square foot minimum lots (Wildstar) there are 13 lots owned by Landsea and 13 homes under construction (under 95 percent complete), also owned by Landsea, thus we will value 26 lots with a minimum size of 5,000 square feet. For the cluster lots (Strata) there are 31 pads owned by Arroyo Cap, 16 pads owned by Landsea and eight units under construction (under 95 percent complete) owned by Landsea. As we are valuing the homes under construction as finished lots, we will value 24 cluster pads under the Landsea ownership. Finally, there are 37 duplex pads owned by Arroyo Capital, 27 pads owned by Landsea and 34 units

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which are under construction (under 95 percent complete). As we are valuing a unit under construction as a finished lot, we will value 61 pads under Landsea ownership.

We have searched the area and found the 13 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,” these 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 pertains to the most recent closed transaction in our search. The site is located at the southwest corner of Eucalyptus Avenue and Haven Avenue in Ontario Ranch about 15 miles southwest of the subject site. KB Home purchased 351 units from Richland Communities in June 2024 for $85,000,000 or $242,165 per unit based on a reported blended finished lot price of $380,000. The 351 proposed units are located on about 46 acres, however there is a high- wire Edison ea sement bisecting the site. The overall density of the site equates to about eight dwelling units per acre. There are three proposed products on the site which include 4,500 square foot convention al lots, detached cluster units and attached townhomes. Per brokers familiar with the transaction, the townhomes estimated finished unit price is $280,000, the cluster product finished pad price is $410,000 while the 4,500 square foot lots are estimated at a finished lot of $560,000. This is higher than previous sales in the area. Ontario Ranch is considered to be superior due to being located closer to Orange, Los Angeles and Riverside County employment centers for commuters. In addition, these lands do not have any freeway noise which is considered superior, however the high wire easement is considered to be inferior to the subject.

Land Sale No. 2 is located in Jurupa Valley along the north side of the 60 Freeway at Pacific Avenue about eleven miles south of the subject property. Richmond American

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Homes purchased the site in April 2024 for $9,351,000 or $194,813 per lot based on an estimated finished lot price of $308,000. The lands were purchased in a rough graded condition with approved mapping in place. The site is known as Sequanota Heights and is proposed for 48 homes on 6,300 square foot minimum sized lots. In comparison to the subject property this site is considered to be inferior to the subject detached lots as these do not have the amenities associated with Narra Hills.

Land Sale No. 3 refers to the most recent closing our search located within the City of Fontana. KB Home purchased the site proposed for 255 units in April 2024. KB Home purchased the property from New Bridge Homes for $31,100,000 or $121,961 per unit based on a blended finished lot price of $252,000. This site is located about nine miles south of the subject at Cherry and Live Oak Avenues. The lands were sold in an unimproved condition with an approved tentative tract map. The proposed product is for detached 8-pack cluster homes and detached alley -load small lots. The overall density for this site is estimated at eight dwelling units per acre. In comparison to the subject property, this transaction is considered inferior due to the density when compared to the single-family detached lots and similar to the duplex and cluster product. This site is considered inferior when compared to the significant amenities located in Narra Hills, however superior due to no freeway frontage.

Land Sale No. 4 refers to the January 2024 purchase of a site located in Rancho Cucamonga about four miles southwest of the subject. This site is located at the southeast corner of Etiwanda and Highland Avenues. Manning Homes purchased the in- fill site in January 2024 for $4,063,000. The site was unimproved and had a final map in process for 22 lots, with a 12,500 square foot minimum lot size. The site is located adjacent to a water tank and an approximate five-acre parcel owned by the Cucamonga Valley Water District. The purchase price equates to $184,682 per lot with an estimated finished lot price of $550,000. This is the only other large single-family detached lot sale our search located. This property is superior to the subject 5,000 and 10,000 square foot lots due to size, and it is located in Rancho Cucamonga, a slightly superior location. This site will not have the significant amenities that Narra Hills residents will enjoy.

Land Sale No. 5 refers to the January 2024 closing of a site located in North Fontana, about 2.5 miles northeast of the subject along both sides of Garden Street along the east side of Cypress Avenue. The site had tentative mapping and grading plans approved for 174 units on 18.66 acres. Richmond American Homes purchased the site in January 2024 from Lewis for $28,789,500 or $165,457 per lot based on a reported finished lot estimate of $279,465. The product will be 4-pack and 6-pack alley loaded detached condominiums.

The overall density of this project equates to 9.32 units per acre. There are two small parks in the site plan to serve the community. In comparison to the subject property this transaction is considered to be similar in location, however superior as it does not have freeway frontage and has a slightly lower density than the subject’s Duplex (15 du/ac) and cluster (11 du/ac) products.

Land Sale No. 6 is located about 15 miles southwest of the subject, in Ontario Ranch, near Land Sale No. 1. Lennar purchased the land proposed for 236 units from Lewis Companies in December 2023 for $35,177,500 or $149,057 based on an estimated finished lot blended price of $250,000. The property had been mass graded at time of sale and the final map was in process. The products are both two- and three-story cluster products with an overall density of 16 dwelling units per acre. The reported finished lot price is a blended price for the two products. In comparison to the subject this location is considered to be slightly superior (closer into employment for commuters) and due to no freeway frontage, however inferior to the larger lots and the cluster product in density.

Land Sale No. 7 pertains to the purchase of an infill site located along Route 66 in Rancho Cucamonga about eleven miles southwest of the subject site. Lennar purchased the property in December 2023 for $8,700,000 or for $49,714 per unit. The site closed in an unimproved condition with approved mapping for 175 townhomes with an overall density of 12 dwelling units per acre. Per brokers familiar with the transaction, the finished pad was estimated at $250,000. This property is adjacent to the south of the Red Hill Country Club and golf course and surrounds the historic Sycamore Inn, a famous restaurant along Route 66 that dates back to the 1800s. In comparison to the subject site, this property is

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considered to be slightly superior due to the Rancho Cucamonga address and no freeway frontage and similar in density to the subject cluster product and superior to the subject duplex product.

Land Sale No. 8 is in regard to the Pulte Homes’ purchase of 333 proposed units along the west side of Hamner, north of Eucalyptus Avenue within the Esperanza Specific Plan about ten miles southwest of the subject in the master planned community of Ontario Ranch. The overall density on the site is 11 dwelling units per acre. Pulte purchased the site in December 2023 for $72,527,499 or $217,800 per unit. Per the approved site plan there are 156 attached townhomes, 82 small , detached cluster lots and 95 large, detached cluster lots. Per brokers familiar with the transaction, the r eported blended finished lot/unit price is $315,000 which is broken down as $258,000 for the attached townhomes, $315,000 for the small cluster lots and $401,000 for the large cluster lots.

The site is also known as Planning Area 3 and 4 of the Esperanza Specific Plan. In comparison to the subject property this transaction is considered similar in overall density, however inferior of number of lots (333 would be considered a bulk sale) and superior in location with Ontario Ranch closer in to the employment centers of Los Angeles, Orange and Riverside. In addition, this site is superior due to it having no freeway frontage.

Land Sale No. 9 refers to the Woodside Homes purchase of 41 lots in Eastvale, about 16 miles southwest of the subject site. Eastvale is essentially built-out with this being one of the last in-fill parcels within the city. The site was unimproved at time of sale however surrounding infrastructure was in place and the site was generally at street grade of the surrounding streets. Woodside Homes processed the entitlements and mapping on the site during escrow. The site is located along the south side of Schleisman Road just west of Scholar Way, adjacent to Eastvale Elementary School , River Heights Intermediate School and Eleanor Roosevelt High School. Woodside purchased the site for $7,500,000 or $182,927 per lot based on a finished lot cost of $360,000. The site is mapped for 41 lots with a 5,000 square foot minimum lot size. The sale closed in November 2023, however, was negotiated over one year prior. The site is known as Magnolia Ranch. In comparison to the subject site this location is considered to be superior due to it being

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closer in for commuters, however it is inferior in amenities when compared to Narra Hills pool and clubhouse and gathering areas. The lot size is similar to the subject 5,000 square foot lots.

Land Sale No. 10 refers to the Lennar purchase of 23 acres along the west side of Archibald Avenue, south of Riverside Drive within the Countryside Specific Plan in Ontario Ranch, about 14 miles southwest of the subject property. The site is mapped for 265 units which creates an overall density of about 12 dwelling units per acre. The proposed product includes townhomes, cluster product and small detached lots. Lennar purchased the site in October 2023 for $49,559,000 or $187,01 5 per unit based on an estim ated blended finished lot price of $297,000. Per brokers familiar with the transaction the finished lot values at time of purchase were estimated at $260,000 for the townhomes, $315,000 for the cluster detached lots and $365,000 for the detached small conventional lots. In comparison to the subject site this transaction is considered to be slightly superior in location and due to no freeway frontage.

Land Sale No. 11 pertains to the sale of a residential site located in Fontana at Lytle Creek Road and Sierra Lakes Parkway, about two miles south of the subject site, fronting the northern side of the I-210 Freeway. D.R. Horton purchased the property in September 2023 for $9,850,000 or for $68,881 per unit based on an estimated finished lot blended price of $220,000. The site is mapped for 143 units which includes 96 attached units and 47 detached cluster units. Final engineering was underway at time of sale. This property rears to I-210 and has an overall density of 13.9 dwelling units per acre. When compared to the subject property, this site is considered to be inferior in density when compared to the single-family detached lots and similar due to the proximity of the I-210 Freeway. This site is also inferior in amenities.

Land Sale No. 12 refers to another D.R. Horton land purchase in Fontana about 2.5 miles south of the subject property . This site is located along the east side of Citrus Avenue, south of Highland Avenue, and is mapped for 68 attached townhome units. The overall density of the site allows for 15.7 dwelling units per acre which is higher than the subject’s

10.63 dwelling units per acre density. D.R. Horton purchased the property from 6997 Citrus LLC in August 2023 for $6,300,000 or $92,647 per unit based on an estimated finished pad price of $21 9,000. The site was sold in an unimproved condition with tentative mapping in place. In comparison to the subject property this site is considered to be inferior in density (these are attached) and amenities while it is considered superior due to no freeway frontage.

Land Sale No. 13 is in regard to the purchase of another residential site by D. R. Horton.

This property is located at the northwest corner of Citrus and Summit Avenues, about 1.2 miles south of the subject property. The site has approved mapping for 85 detached cluster units and sold for $9,850,000 or $115,882 per unit based on an estimated finished lot value of $2 72,000. The overall density of this property is 9.4 dwelling units per acre.

D.R. Horton purchased the site in July 2023 from AKY LLC. In comparison to the subject property, this sale is considered to be inferior in amenities and superior due to no freeway frontage.

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

Data
No. Location Date of
Sale
Lot Size /
Density
Finished
Lot Price Comparison to Subject
1 Ontario Ranch 6 / 24 8 du/ac
$380,000
($560,000/
$410,000/
$280,000)
Superior – Location, No freeway
Inferior – Highwire Easement

2 Jurupa Valley 4 / 24 6,300 sf $308,000 Inferior – Amenities 3 North Fontana 4 / 24 8 du/ac $252,000 Superior – No Freeway Frontage Inferior – Amenities
4 Rancho
Cucamonga 1 / 24

12,000 sf

$550,000 Superior – Location
Inferior – Amenities
5 North Fontana 1 / 24 10 du/ac $279,465 Superior – No freeway frontage Inferior – Amenities

6 Ontario Ranch 12 / 23 16 du/ac $250,000 Superior – Location & no freeway Inferior – Density

7 Rancho
Cucamonga 12 / 23 12 du/ac $250,000 Superior – Location and no freeway Inferior – Amenities

8 Ontario Ranch 12 / 23 11 du/ac
$315,000
(401,000/
$315,000
$258,000)
Superior – Location, no freeway
Inferior – Amenities

9 Eastvale 11 / 23 5,000 sf $360,000
Superior – Location and no freeway
Inferior – Amenities & Date of
Transaction

10 Ontario Ranch 10 / 23 12 du/ac
$297,000
($365,000/
$315,000/
$260,000)
Superior – Location and no freeway
Inferior – Amenities

11 North Fontana 10 / 23 14 du/ac $220,000 Inferior – Location

12 North Fontana 8 / 23 16 du/ac $219,000 Superior – No freeway Inferior – Amenities

13 North Fontana 7 / 23 9 du/ac $272,000 Superior – No freeway Inferior- Amenities

All 13 of the market data have closed within the past year and it is considered to be good and plentiful. The above reported finished lot values depict a wide range of lot/pad price from $219,000 to $550,000 with the majority of the differences being due to lot size and/or density on each site and location. We will review the most relevant sales for each product type below.

Clementine encompasses 112 duplex pads and 12 single family detached small lots.

Tract Map 20070 contains 8.08 acres and is mapped for 124 units which equates to an overall density of 15.34 dwelling units per acre. For this site the best comparables are Data No. (for attached product), Data Nos. 3, 5, 6, 7, 8 (the townhomes), 10, 11, 12 and

13. These Data have a finished lot range from $219,000 to $280,000 per finished pad with generally the lower prices (Data Nos. 11 and 12) for the higher densities. The subject is along Interstate 15, however is within a gated community with significant amenities including a pool, pickle ball courts and social club. The most recent North Fontana sales (Data Nos. 3 and 5) each have lower overall densities and sold for $252,000 and $279,465 per unit. We have concluded that the Clementine pads have a finished pad value of $240,000.

Strata includes 127 cluster pads on 11.25 acres (per Tract Map 20069) which equates to an overall density of 11.28 dwelling units per acre. The best comparable are Data Nos. 3, 5, 8 (for cluster), 10 (for cluster) and 13 which have a range from $252,000 to $315,000 per finished pad. The majority of the cluster lots within Strata are set back from I -15,

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however still have the freeway noise. We have concluded that the Strata pads has a finished pad value of $280,000.

Wildstar includes 78 single family detached lots with a minimum lot size of 5,000 square feet. While there is a buffer zone, the lots are affected by the noise from I -15. There are few conventional single family detached lot sales as most are higher density in the Ontario Ranch/North Fontana markets. The best comparables are Data No. 1 (single- family detached lots), Data Nos. 2, 4 and 9 with finished lot sales prices ranging from $308,000 to $560,000. Data No. 1 at $560,000 refers to 4,500 square foot minimum lots within Ontario Ranch, a superior location. Data No. 2 at $308,000 refers to slightly larger lots, 6,300 square feet, however the site is located in Jurupa Valley with frontage on the 60 Freeway and does not have the amenities associated with Narra Hills. Data No. 4 at $550,000 refers to larger lots (12,000 square foot minimum) and is located in Rancho Cucamonga, considered a superior address. Data No. 9 at $ 360,000 refers to 5,000 square foot lots located in Eastvale which is considered a superior location, however the buyer process entitlements on the site which was under option for more than a year. We have concluded that the subject 5,000 square foot minimum lots within Wild star have a finished lot value of $420,000.

Skyeland and Goldenpeak includes 155 single family detached lots with a minimum lot size of 10,000 square feet, many which have good to excellent views, the majority of which are in a true, physically finished lot condition. The market data is the same as for Wildrose, however Data No. 4 would be the most comparable with 12,000 square foot minimum lots. We have concluded that the 10,000 square foot lots have a finished lot value of $500,000.

The lots are not yet in a true finished lot condition. As discussed under Pro perty Description section, there are remaining costs to get to a true finished lot which equate to $12,031.75 per lot. The costs were not available for each community; thus, we have averaged the costs over all of the builder -owned property . The land values per neighborhood are calculated as follows.

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Clementine
The concluded value for the Clementine pads in a finished condition is $240,000. There are 37 lots owned by Arroyo Cap and 61 lots owned by Landsea (34 under construction).

The value is calculated as follows:

Landsea Ownership
61 pads x $240,000 $14,640,000
Less: $12,031.75 x 61 ( 733,937)
As is Value 61 Clementine Pads $13,906,063

Arroyo Cap Ownership
37 pads x $240,000 $ 8,880,000
Less: $12,031.75 x 37 ( 445,175)
As is Value 37 Clementine Pads $ 8,434,825

Strata
The concluded value for the Strata pads in a finished condition is $280,000. There are 31 lots owned by Arroyo Cap and 24 lots owned by Landsea (eight under construction). The value is calculated as follows:

Landsea Ownership
24 Pads x $280,000 $ 6,720,000
Less: $12,031.75 x 24 ( 288,762)
As is Value 24 Strata Pads $ 6,431,238

Arroyo Cap Ownership
31 Pads x $280,000 $ 8,680,000
Less: $12,031.75 x 31 ( 372,984)
As is Value 31 Strata Pads $ 8,307,016

Wildstar
The concluded value for the Wildstar lots in a finished condition is $42 0,000. There are no lots owned by Arroyo Cap and 26 lots owned by Landsea (12 under construction). The value is calculated as follows:

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Landsea Ownership
26 Lots x $420,000 $ 10,920,000
Less: $12,031.75 x 26 ( 312,825)
As is Value 26 Wildstar Lots $ 10,607,175

Skyeland and Goldenpeak
The concluded value for the Skyeland and Goldenpeak lots in a finished condition is $500,000. There are 58 lots owned by Arroyo Cap and 38 lots owned by Landsea (21 under construction). The value is calculated as follows:

Landsea Ownership
38 Lots x $500,000 $ 19,000,000
Less: $12,031.75 x 38 ( 457,207)
As is Value 38 - 10,000 sf Lots $ 18,542,793

Arroyo Cap Ownership
58 Lots x $500,000 $ 29,000,000
Less: $12,031.75 x 58 ( 697,842)
As is Value 58 – 10,000 sf Lots $ 28,302,158

Land Valuation Conclusions
There are currently 76 homes under construction owned by Landsea and 199 remaining lots/pad with 73 lots/pads owned by Landsea and 126 lots/pads owned by Arroyo Cap.

The homes under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement. T he final land values are calculated as follows.

Landsea Ownership:

Clementine (61 pads) $ 13,906,063
Strata (24 pads) 6,431,238
Wildstar (26 lots) 10,607,175
Skyeland & Goldenpeak (38 lots) 18,542,793
Landsea Land Value (149 lots/pads) $ 49,487,269

Clementine (37 pads) $ 8,434,825
Strata (31 pads) 8,307,016
Wildstar (0 lots) 0
Skyeland & Goldenpeak (58 lots) 28,302,158
Arroyo Cap Land Value (126 lots/pads) $ 45,043,999

Retail House Valuation – Narra Hills
Within Narra Hills there are five neighborhoods with 169 individually owned homes , 40 homes over 95 percent complete owned by Landsea. The builder-owned homes over 95 percent complete include 25 production homes (18 in escrow) and 15 model homes.

Due to the single ownership of multiple houses (40 houses) 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. This will be further discussed below.

Below is a summary of the floor plans within each neighborhood followed by a valuation for each plan. A listing of the improved residential comparable properties is located in the Addenda of this report. All new home comparables are located within the City of Fontana, which currently houses a multitude of actively selling new home communities or the neighboring city of Rialto. Our search of the subject property and the local Multiple Listing Service (MLS) has resulted in no resales and no current resale listings within Narra Hills.

Clementine

*One of each of these plans is a model home. There are an additional 34 homes under construction, and 64 additional pads with 27 owned by Landsea and 37 owned by Arroyo Cap (not shown on the above table).

Narra Hills by Landsea

Plan

Bd/Ba
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned
Clementine
1 3 / 2.5 2 / 2 1,372 2 0
2 3 / 2.5 2 / 2 1,450 11 1*
3 4 / 2.5 2 / 2 1,661 11 1*
Subtotal Clementine 24 2

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2.5 2 / 2 1,372 --
1 2 3 / 2.5 2 / 2 1,450 $385.51
1 3 4 / 2.5 2 / 2 1,661 $358.21
8 1 3 / 2.5 2 / 2 1,651 $365.62
12 1 4 / 3 2 / 2 1,563 $339.03
12 2 3 / 2 2 / 2 1,582 $310.94
16 1 3 / 2.5 2 / 2 1,410 $414.60
16 2 3 / 2.5 2 / 2 1,650 $366.26

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Plan 1 within Clementine is a detached home, surrounded by duplex homes.

There is no other duplex product selling, thus we included zero lot line, cluster and alley- load homes which are considered similar. Adjustments were considered (when applicable) for location, school districts, 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 range from $310.94 to $414.60 per square foot, with generally the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Clementine Plan 1 is the smallest sized home in the area and has a current base asking price of $411.07 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been two closings of Clementine Plan 1 with sales prices ranging from $401.36 to $417.45 per square foot. There are no current escrows of Clementine Plan 1. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Clementine Plan 1 has a base current market value of $400.00 per square foot. This calculates as follows:

1,372 sf x $400.00 = $548,800

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 3 / 2.5 2 / 2 1,450 --
1 1 3 / 2.5 2 / 2 1,372 $411.07
1 3 4 / 2.5 2 / 2 1,661 $358.21
8 1 3 / 2.5 2 / 2 1,651 $365.62
12 1 4 / 3 2 / 2 1,563 $339.03
12 2 3 / 2 2 / 2 1,582 $310.94
16 1 3 / 2.5 2 / 2 1,410 $414.60
16 2 3 / 2.5 2 / 2 1,650 $366.26

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, com mon area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $310.94 to $414.60 per square foot, with generally the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Clementine Plan 2 has a current base asking price of $385.51 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been 11 closings of Clementine Plan 2 with sales prices ranging from $369.59 to $399.55 per square foot. There are three current escrows of Clementine Plan 2 with a sales price range from $395.36 to $399.46 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Clementine Plan 2 has a base current mark et value of $ 375.00 per square foot. This calculates as follows:
1,450 sf x $375.00 = $543,750

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 77
Subj. 3 4 / 2.5 2 / 2 1,661 --
1 2 3 / 2.5 2 / 2 1,450 $385.51
1 3 4 / 2.5 2 / 2 1,661 $358.21
2 1 3 / 2.5 2 / 2 2,099 $322.05
6 1 3 / 2.5 2 / 2 1,822 $345.15
8 1 3 / 2.5 2 / 2 1,651 $365.62
8 2 3 / 2.5 2 / 2 1,761 $345.99
12 3 4 / 3 2 / 2 1,669 $339.07
16 2 3 / 2.5 2 / 2 1,650 $366.26
16 3 3 / 2.5 2 / 2 1,710 $344.09

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. There is no other duplex product selling, thus we included zero lot line, cluster and alley-load homes which are considered similar. Adjustments were considered (when applicable) for location, school districts, 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 com parables have a base price range from $322.05 to $385.51 per square foot, with generally the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Clementine Plan 3 has a current base asking price of $358.21 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy -downs or closing cost assistance). There have been 11 closings of Clementine Plan 3 with sales prices ranging from $348.26 to $386.00 per square foot. There are two current escrows of Clementine Plan 3 with a sales price range from $369.20 to $373.08 per square foot. It should be noted that the reported sales prices include upgrades, premiums , and options along with a ll concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home . It has been concluded that Clementine Plan 3 has a base current market value of $350.00 per square foot. This calculates as follows:
1,661 sf x $350.00 = $581,350

Strata

Plan

Bd/Ba
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned

*One of each of these plans is a model home. There are an additional eight homes under construction, and 47 additional pads with 16 owned by Landsea and 31 owned by Arroyo Cap (not shown on the above table).

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2.5 2 / 2 2,099 --
1 3 4 / 2.5 2 / 2 1,661 $358.21
2 2 4 / 3 2 / 2 2,136 $331.46
6 2 3 / 2.5 2 / 2 1,932 $332.11
6 3 3 / 2.5 2 / 2 2,207 $306.75
8 4 4 / 3 2 / 2 1,970 $325.88
14 1 3 / 2.5 2 / 2 2,006 $350.88
15 3 4 / 3 2 / 3 2,065 $316.22

There is one current escrow of Strata Plan 1 with a reported sales price of $353.79 per square foot.. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of Strata
1 3+ / 2.5 2 / 2 2,099 15 3*
2 4+ / 3 2 / 2 2,136 15 3*
3 4+ / 3 2 / 2 2,311 15 3*
4 4+ / 3 2 / 2 2,552 13 5*
Subtotal Strata 58 14

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 79
selling the home. It has been concluded that Strata Plan 1 has a base current market value of $310.00 per square foot. This calculates as follows:
2,099 sf x $310.00 = $650,690

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 4 / 3 2 / 2 2,136 --
2 1 3 / 2.5 2 / 2 2,099 $322.05
2 3 4 / 3 2 / 2 2,311 $314.58
6 2 3 / 2.5 2 / 2 1,932 $332.11
6 3 3 / 2.5 2 / 2 2,207 $306.75
7 1 3 / 2.5 2 / 2 2,213 $292.84
15 3 4 / 3 2 / 3 2,065 $316.22
16 4 4 / 3 2 / 2 1,950 $329.39

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, com mon area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $292.84 to $332.11 per square foot, with generally the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Strata Plan 2 has a current base asking price of $331.46 per square foot, which is at the high end of the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been 15 closings of Strata Plan 2 with sales prices ranging from $298.84 to $365.40 per square foot. There are no current escrows of Strata Plan 2. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Strata Plan 2 has a base current market value of $310.00 per square foot. This calculates as follows:
2,136 sf x $310.00 = $662,160

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3 2 / 2 2,311 --
2 2 4 / 3 2 / 2 2,136 $331.46
2 4 4 / 3 2 / 2 2,552 $289.96
6 3 3 / 2.5 2 / 2 2,207 $306.75
7 1 3 / 2.5 2 / 2 2,213 $292.84
7 2 3 / 2.5 2 / 2 2,358 $289.25
14 2 4 / 3 2 / 2 2,303 $315.73
15 3 4 / 3 2 / 3 2,065 $316.22

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, com mon area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $289.25 to $331.46 per square foot, with generally the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Strata Plan 3 has a current base asking price of $314.58 per square foot which is within the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been 15 closings of Strata Plan 3 with sales prices ranging from $286.17 to $342.22 per square foot. There are two current escrows of Strata Plan 3 with a sales price range of $329.51 to $330.16 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Strata Plan 3 has a base current market value of $305.00 per square foot. This calculates as follows:
2,311 sf x $305.00 = $704,855

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 4 / 3 2 / 2 2,552 --

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 81
2 4 4 / 3 2 / 2 2,552 $289.96
3 1 4 / 3.5 2 / 2 2,747 $299.96
6 3 3 / 2.5 2 / 2 2,207 $306.75
7 3 4 / 2.5 2 / 2 2,472 $283.69
9 1 4 / 3 2 / 2 2,449 $303.79
14 2 4 / 3 2 / 2 2,303 $315.73
14 3 5 / 4 2 / 3 2,777 $294.04

It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy -downs or closing cost assistance). There have been 13 closings of Strata Plan 4 with sales prices ranging from $254.50 to $316.80 per square foot.

There are three current escrows of Strata Plan 4 with a sales price range of $293.50 to $313.37 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Strata Plan 4 has a base current market value of $285.00 per square foot. This calculates as follows:

2,552 sf x $285.00 = $727,320

*One of each of these plans is a model home. There are an additional 13 homes under construction, and 13 additional lots owned by Landsea (not shown on the above table).

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3.5 2 / 2 2,747 --
2 4 4 / 3 2 / 2 2,552 $289.96
3 2 4 / 4 2 / 2 2,961 $287.06
7 3 4 / 2.5 2 / 2 2,472 $283.69
9 2 4 / 3 2 / 2 2,666 $293.40
9 3 4 / 3 2 / 2 2,877 $282.87
10 2 5 / 3 2 / 2 2,985 $280.90
14 2 4 / 3 2 / 2 2,303 $315.73
14 3 5 / 4 2 / 3 2,777 $294.04

It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy -downs or closing cost assistance). There have been 15 closings of Wildstar Plan 1 with sales prices ranging from $284.82 to $329.88 per square foot. There are three current escrows of Wildstar Plan 1 with a sales price range of $319.73 to $ 328.95 per square foot . The escrow prices versus the closed prices shows the appreciation which has occurred within Wildstar. It should be noted that the reported sales

Plan

Bd/Ba
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned
Wildstar
1 4+ / 3.5 2 / 2 2,747 15 2*
2 4+ / 4 2 / 2 2,961 2 0
2X (LG) 5 / 4.5 2 / 2 3,160 12 3*
3 5+ / 4.5 2 / 3 3,079 16 2*
Subtotal Wildstar 45 7

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 83
prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Wildstar Plan 1 has a base current market value of $290.00 per square foot. This calculates as follows:
2,747 sf x $290.00 = $796,630

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 4 / 4 2 / 2 2,961 --
2 4 4 / 3 2 / 2 2,552 $289.96
3 1 4 / 3.5 2 / 2 2,747 $299.96
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 1XX 4 / 3.5 2 / 3 3,080 $296.43
9 3 4 / 3 2 / 2 2,877 $282.87
10 2 5 / 3 2 / 2 2,985 $280.90
11 2 5 / 4 2 / 2 3,251 $257.91
14 3 5 / 4 2 / 3 2,777 $294.04

Wildstar Plan 2 has a current base asking price of $287.06 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance).

There have been 2 closings of Wildstar Plan 2 with sales prices ranging from $267.38 to $291.57 per square foot. There are no current escrows of Wildstar Plan 2. It should be noted that the reported sales prices include upgrades, premiums , and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It is concluded Wildstar Plan 2 has a base current market value of $280.00 per square foot. This calculates as follows:

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2X 5 / 4.5 2 / 2 3,160 --
2 4 4 / 3 2 / 2 2,552 $289.96
3 2 4 / 4 2 / 2 2,961 $287.06
4 1XX 4 / 3.5 2 / 3 3,080 $296.43
9 3 4 / 3 2 / 2 2,877 $282.87
10 2 5 / 3 2 / 2 2,985 $280.90
11 2 5 / 4 2 / 2 3,251 $257.91
14 3 5 / 4 2 / 3 2,777 $294.04

Wildstar Plan 2X has a current base asking price of $275.52 per square foot (Plan 2 base price plus the option amount for the LiveGen Suite) , which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been 12 closings of Wildstar Plan 2X with sales prices ranging from $ 277.46 to $335.35 per square foot. There are two current escrows of Wildstar Plan 2X with a sales price range of $308.08 to $320.50. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It is concluded Wildstar Plan 2X has a base current market value of $275.00 per square foot. This calculates as follows:

3,160 sf x $275.00 = $869,000

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 5 / 4.5 2 / 3 3,079 --
2 4 4 / 3 2 / 2 2,552 $289.96
3 2 4 / 4 2 / 2 2,961 $287.06
4 1XX 4 / 3.5 2 / 3 3,080 $296.43
9 3 4 / 3 2 / 2 2,877 $282.87
10 2 5 / 3 2 / 2 2,985 $280.90
11 2 5 / 4 2 / 2 3,251 $257.91
14 3 5 / 4 2 / 3 2,777 $294.04

Wildstar Plan 3 has a current base asking price of $292.30 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance).

There have been 16 closings of Wildstar Plan 3 with sales prices ranging from $273.45 to $322.09 per square foot. There are two current escrows of Wildstar Plan 3 with a sales price range of $299.21 to $326.49 per square foot. The escrow prices versus the closed prices shows the appreciation which has occurred within Wildstar. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Wildstar Plan 3 has a base current market value of $280.00 per square foot. This calculates as follows:
3,079 sf x $280.00 = $862,120

*One of each of these plans is a model home. There are an additional three homes under construction, and 10 additional lots owned by Landsea and 37 lots owned by Arroyo Cap (not shown on the above table).

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 3 1 / 2 2,375 --
3 1 4 / 3.5 2 / 2 2,747 $299.96
4 1XX 4 / 3.5 2 / 3 3,080 $296.43
5 1 3 / 3.5 1 / 3 3,159 $338.71
10 1 3 / 2 1 / 2 1,905 $383.97
11 1 4 / 2 1 / 2 2,215 $334.94
17 1 3 / 2 1 / 2 2,140 $312.14

Plan

Bd/Ba
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned
Skyeland
1 (1(75)) 3+ / 3 1 / 2 2,375 5 1
1X (1(70)) 4 / 4 2 / 3 3,010 0 1*
1XX (1(70)) 4+ / 3.5 2 / 3 3,080 4 4
2 (2(70))LG 5+/ 4.5 2 / 3 3,298 8 1
2X (2(75)) 5+ / 4.5 2 / 3 3,339 4 1*
3 (3(75)) 5+ / 4.5 2 / 3 3,604 4 1*
Subtotal Skyeland 25 9

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 87
prices versus the closed prices is partially due to homesite premiums on the two escrows with premiums of over $150,000 on one and over $250,000 on the other. It should be noted that the reported sales prices include upgrades, premiums , and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home . It has been concluded that Skyeland Plan 1 has a base current market value of $360.00 per square foot.

This calculates as follows:
2,375 sf x $360.00 = $855,000

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1X 4 / 4 2 / 3 3,010 --
3 1 4 / 3.5 2 / 2 2,747 $299.96
4 1 3 / 3 1 / 2 2,375 $374.73
4 2 5 / 4.5 2 / 3 3,298 $289.26
5 1 3 / 3.5 1 / 3 3,159 $338.71
5 1X 4 / 4.5 2 / 3 3,603 $294.20
9 3 4 / 3 2 / 2 2,877 $282.87
10 2 5 / 3 2 / 2 2,985 $280.90
10 3 4 / 3 2 / 2 3,105 $263.87
17 2 4 / 2.5 2 / 3 2,809 $268.78

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 88
no escrows. The model is the only plan 1X at this time, thus we have reviewed Plan 1XX sales information. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Skyeland Plan 1X has a base current market value of $292.00 per square foot. This calculates as follows:
3,010 sf x $292.00 = $878,920

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1XX 4 / 3.5 2 / 3 3,080 --
3 1 4 / 3.5 2 / 2 2,747 $299.96
4 1 3 / 3 1 / 2 2,375 $374.73
4 2 5 / 4.5 2 / 3 3,298 $289.26
5 1 3 / 3.5 1 / 3 3,159 $338.71
5 1X 4 / 4.5 2 / 3 3,603 $294.20
9 3 4 / 3 2 / 2 2,877 $282.87
10 2 5 / 3 2 / 2 2,985 $280.90
10 3 4 / 3 2 / 2 3,105 $263.87
17 2 4 / 2.5 2 / 3 2,809 $268.78

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 89
Skyeland Plan 1XX with a sales price range of $317.99 to $318.35 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home . It has been concluded that Skyeland Plan 1XX has a base current market value of $292.00 per square foot. This calculates as follows:
3,080 sf x $292.00 = $899,360

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 5 / 4.5 2 / 3 3,298 --
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 1XX 4 / 3.5 2 / 3 3,080 $296.43
4 2X 5 / 4.5 2 / 3 3,339 $290.50
5 1 3 / 3.5 1 / 3 3,159 $338.71
5 1X 4 / 4.5 2 / 3 3,603 $294.20
10 2 5 / 3 2 / 2 2,985 $280.90
10 3 4 / 3 2 / 2 3,105 $263.87
11 2 5 / 4 2 / 2 3,251 $257.91
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 2 4 / 2.5 2 / 3 2,809 $268.78

Skyeland Plan 2 has a current base asking price of $289.26 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance).

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 90
There have been eight closings of Skyeland Plan 2 with sales prices ranging from $288.91 to $334.40 per square foot. The wide range relates to the homesite premiums which range from $30,000 to $64,000. There is one current escrow of Skyeland Plan 2 with a sales price of $303.67 per square foot . It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including clos ing cost concessions.

Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Skyeland Plan 2 has a base current market value of $280.00 per square foot. This calculates as follows:
3,298 sf x $280.00 = $923,440

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2X 5 / 4.5 2 / 3 3,339 --
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 2 5 / 3.5 2 / 3 3,298 $289.26
4 3 5 / 4.5 2 / 3 3,604 $276.36
5 1X 4 / 4.5 2 / 3 3,603 $294.20
5 2 5 / 4.5 2 / 3 3,757 $287.46
10 3 4 / 3 2 / 2 3,105 $263.87
11 2 5 / 4 2 / 2 3,251 $257.91
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 3 5 / 3.5 2 / 2 3,325 $251.67

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 91
however the one that closed at $360.70 had over $150,000 in homesite premium with the next highest closing at $289.44 per square foot. There is one current escrow of Skyeland Plan 2X with a sales price of $ 361.62 per square foot, however this site has a $250,000 homesite premium. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Skyeland Plan 2X has a base current market value of $278.00 per square foot. This calculates as follows:

3,339 sf x $278.00 = $928,242

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 5 / 4.5 2 / 3 3,604 --
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 2 5 / 3.5 2 / 3 3,298 $289.26
4 2X 5 / 4.5 2 / 3 3,339 $290.50
5 1X 4 / 4.5 2 / 3 3,603 $294.20
5 2 5 / 4.5 2 / 3 3,757 $287.46
10 3 4 / 3 2 / 2 3,105 $263.87
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 3 5 / 3.5 2 / 2 3,325 $251.67
17 4 5 / 3.5 2 / 3 4,122 $229.67

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 92
take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been four closings of Skyeland Plan 3 with sales prices ranging from $256.43 to $362.67 however the one that closed at $362.67 had almost $150,000 in homesite premium with the next highest closing at $276.71 per square foot. There is one current escrow of Skyeland Plan 3 with a sales price of $375.92 per square foot, however this site has a $250,000 homesite premium. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Skyeland Plan 3 has a base current market value of $262.00 per square foot. This calculates as follows:
3,604 sf x $262.00 = $944,248

Goldenpeak

*One of each of these plans is a model home. There are an additional 18 homes under construction, and seven additional lots owned by Landsea and 21 lots owned by Arroyo Cap (not shown on the above table).

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

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3.5 1 / 3 3,159 $338.71
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 1 3 / 3 1 / 2 2,375 $374.73
4 1XX 4 / 3.5 2 / 3 3,080 $296.43
5 1 3 / 3.5 1 / 3 3,159 $338.71
10 1 3 / 2 1 / 2 1,905 $383.97
11 1 4 / 2 1 / 2 2,215 $334.94
17 1 3 / 2 1 / 2 2,140 $312.14

Plan

Bd/Ba
Floors/
Parking

Sq. Ft.

Ind.

Owned
Bldr.

Owned
Goldenpeak
1 (1R (100)) 4 / 3.5 1 / 3 3,159 5 2*
1X (1(85))LG 4 /4.5 2 / 3 3,603 0 0
2 (2(85)) 5 / 4.5 2 / 3 3,757 0 0
2X (2R(100)) 4+ / 3.5 2 / 3 3,827 6 3*
3 (100) 6+ / 4.5 2 / 3 4,248 6 3*
Subtotal Goldenpeak 17 8

The comparable communities are all located in Fontana or Rialto. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, 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 range from $292.30 to $383.97 per square foot with the highest priced per square foot home being the smallest. This is due to economies of scale obtained during construction. It should be noted that Skyeland and Goldenpeak homes are on 10,000 square foot minimum lots which are the largest single family detached lots of all the comparables. Goldenpeak Plan 1 has a current base asking price of $338.71 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been five closings of Goldenpeak Plan 1 with sales prices ranging from $310.32 to $382.84 per square foot with the highest priced home having a $98,000 homesite premium. There are three current escrows of Goldenpeak Plan 1 with a sales price range of $417.43 to $498.29 per square foot. The escrow prices versus the closed prices is partially due to homesite premiums on the three escrows with premiums of up to $300,000 . It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Goldenpeak Plan 1 has a base current market value of $300.00 per square foot. This calculates as follows:

3,159 sf x $300.00 = $947,700

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

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 94
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1X 4 / 4.5 2 / 3 3,603 $294.20
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 2X 5 / 4.5 2 / 3 3,339 $290.50
4 3 5 / 4.5 2 / 3 3,604 $276.36
5 1 3 / 3.5 1 / 3 3,159 $338.71
5 2 5 / 4.5 2 / 3 3,757 $287.46
10 3 4 / 3 2 / 2 3,105 $263.87
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 3 5 / 3.5 2 / 2 3,325 $251.67
17 4 5 / 3.5 2 / 3 4,122 $229.67

It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Goldenpeak Plan 1X has a base current market value of $262.00 per square foot. This calculates as follows:

3,603 sf x $262.00 = $943,968

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

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 95
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 5 / 4.5 2 / 3 3,757 --
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 2X 5 / 4.5 2 / 3 3,339 $290.50
4 3 5 / 4.5 2 / 3 3,604 $276.36
5 1 3 / 3.5 1 / 3 3,159 $338.71
5 2X 4 / 3.5 2 / 3 3,827 $301.80
10 3 4 / 3 2 / 2 3,105 $263.87
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 3 5 / 3.5 2 / 2 3,325 $251.67
17 4 5 / 3.5 2 / 3 4,122 $229.67

The comparable communities are all located in Fontana or Rialto. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, 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 range from $229.67 to $338.71 with the largest home being at the low-end of the scale. This is due to the economies of scale typically obtained during construction. It should be noted that Skyeland and Goldenpeak homes are on 10,000 square foot minimum lots which are the largest single family detached lots of all the comparables. Goldenpeak Plan 2 has a current base asking price of $287.46 per square foot, which is within the range of the comparables. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been no closings of Goldenpeak Plan 2. There is one current escrow of Goldenpeak Plan 2 with a sales price of $336.55 however it includes a homesite premium of $150,000. It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Goldenpeak Plan 2 has a base current market value of $260.00 per square foot. This calculates as follows:

3,757 sf x $260.00 = $976,820

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 96
The most appropriate new home comparable data for Goldenpeak Plan 2X are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2X 4 / 3.5 2 / 3 3,827 --
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 2X 5 / 4.5 2 / 3 3,339 $290.50
4 3 5 / 4.5 2 / 3 3,604 $276.36
5 2 5 / 4.5 2 / 3 3,757 $287.46
5 3 5 / 4.5 2 / 3 4,248 $281.31
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 3 5 / 3.5 2 / 2 3,325 $251.67
17 4 5 / 3.5 2 / 3 4,122 $229.67

There are six current escrows of Goldenpeak Plan 2X with prices ranging from $326.40 to $416.80 however these all include site premiums which range from $85,000 up to $243,000.

It should be noted that the reported sales prices include upgrades, premiums, and options along with all concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Goldenpeak Plan 2X has a base current market value of $260.00 per square foot. This calculates as follows:
3,827 sf x $260.00 = $995,020

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 97
The most appropriate new home comparable data for Goldenpeak Plan 3 are shown below.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 6 / 4.5 2 / 3 4,248 --
3 3 5 / 4.5 2 / 3 3,079 $292.30
4 2X 5 / 4.5 2 / 3 3,339 $290.50
4 3 5 / 4.5 2 / 3 3,604 $276.36
5 2 5 / 4.5 2 / 3 3,757 $287.46
5 2X 4 / 3.5 2 / 3 3,827 $301.80
11 3 4 / 3.5 2 / 2 3,339 $266.45
17 3 5 / 3.5 2 / 2 3,325 $251.67
17 4 5 / 3.5 2 / 3 4,122 $229.67

There have been six closings of Goldenpeak Plan 3 with prices ranging from $261.72 to $320.77 with the highest sale having a site premium of $170,000. There are four current escrows of Goldenpeak Plan 3 with prices ranging from $324.29 to $359.83 however these all include site premiums which range from $103,000 up to $268,000. It should be noted that the reported sales prices include upgrades, premiums , and options along with a ll concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home . It has been concluded that Goldenpeak Plan 3 has a base current market value of $250.00 per square foot. This calculates as follows:
4,248 sf x $250.00 = $1,062,000

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 98
Discounted Cash Flow Analysis
Due to the single ownership of multiple houses (40 houses) 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 Narra Hills 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 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.

Builder Owned Retail Value – Narra Hills

Within the subject property, there are 40 builder-owned houses over 95 percent complete, 15 of which are decorated 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 concluded above, the retail base value conclusions for the builder -owned homes within Narra Hills are calculated on the following page:

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 99
Clementine Plan 1 (0 x $548,800) $ 0
Clementine Plan 2 (1 x $543,750) 5 43,750
Clementine Plan 3 (1 x $581,350) 581,350
Strata Plan 1 (3 x $650,690) 1,952,070
Strata Plan 2 (3 x $662,160) 1,986,480
Strata Plan 3 (3 x $704,855) 2, 114,565
Strata Plan 4 (5 x $727,320) 3,636,600
Wildstar Plan 1 (2 x $796,630) 1,593,260
Wildstar Plan 2 (0 x $829,080) 0
Wildstar Plan 2X (3 x $869,000) 2,607,000
Wildstar Plan 3 (2 x $862,120) 1,724,240
Skyeland Plan 1 (1 x $855,000) 855,000
Skyeland Plan 1X (1 x 878,920) 878,920
Skyeland Plan 1XX (4 x $899,360) 3,597,440
Skyeland Plan 2 (1 x $923,440) 923,440
Skyeland Plan 2X (1 x $928,242) 928,242
Skyeland Plan 3 (1 x $944,248) 944,248
Goldenpeak Plan 1 (2 x $947,700) 1,895,400
Goldenpeak Plan 1X (0 x $943,968) 0
Goldenpeak Plan 2 (0 x $976,820) 0
Goldenpeak Plan 2X (3 x $995,020) 2,985,060
Goldenpeak Plan 3 (3 x $1,062,000) 3,186,000
Model Upgrades (15 x $50,000) 750,000
Total Retail Value $ 33, 683,065

Absorption Period
In order to arrive at an absorption period for the 40 builder-owned homes, the absorption rate for the subject neighborhoods along with the surrounding developments has been reviewed. Narra Hills began sales in March 2023 and consists of 484 proposed homes.

There have been 208 sales suggesting an average absorption of 12.23 homes per month across the five product lines, which is considered to be below average for the subject area.

When looking at each product line individually, Clementine has averaged a sales pace of

2.4 sales per month, Strata has averaged 3.7 sales per month, Wildstar has averaged 3.1 sales per month, Skyeland has averaged 2.1 sales per month and Goldenpeak has averaged 2.1 sales per month. The market comparables have a range of 2.1 to 4.9 sales per month. Taking into consideration the product, concluded sales prices and current escrows, along with the current interest rates, it has been concluded that the 40 builder- owned homes will be absorbed within a five-month time period at the concluded values.

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 100
Remaining Costs
As discussed under the remaining costs section earlier within this report, there is $12,031.75 per home/lot/pad in remaining land development costs associated with the builder-owned homes, which equates to a total of $481,270 for the subject 40 homes. It is an assumption of this analysis that the remaining costs will be spread evenly over the five-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. Due to the volatile market, we are considering e ight percent for marketing expenses and two percent for general and administrative costs for a total of ten 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 great recession, this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. 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

The homes within Narra Hills began selling in March 2023 with the product being nominally well received in the marketplace with a 12.2 sales per month average across the five product

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 101
lines with the averages per community ranging from 2.1 and 3.7 sales per month. This compares to the overall Inland Empire average sales rate per community of 4.1 sales per month (year to date as of July 28, 2024). The subject is performing below the average of the overall market. The slower absorption rate is thought to be due to the freeway frontage coupled with the minimal mortgage rate/closing cost buydowns. Based on the sales rate within the five communities in the subject project, the competition, the product and location, and current market conditions, a ten 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 Narra Hills is $25,816,206
.

Narra Hills – Landsea Ownership

149 Lots/Pads owned by Landsea $ 49,487,269
40 Houses (including 15 models) Builder-owned 25,816,206 Total Landsea Ownership $ 75,303,475

Narra Hills – Arroyo Cap Ownership

126 Lots/Pads owned by Arroyo Cap $ 45,043,999

Individual Owners Value Conclusion – Narra Hills
There are 169 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:

Clementine Plan 1 (2 x $548,800) $ 1,097,600
Clementine Plan 2 (11 x $543,750) 5,981,250
Clementine Plan 3 (11 x $581,350) 6,394,850
Strata Plan 1 (15 x $650,690) 9, 760,350
Strata Plan 2 (15 x $662,160) 9,932,400
Strata Plan 3 (15 x $704,855) 10,572,825
Strata Plan 4 (13 x $727,320) 9, 455,160
Wildstar Plan 1 (15 x $796,630) 1 1,949,450

_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 109 (Narra Hills) - by Landsea Homes Kitty Siino & Associates, Inc. Page 102
Wildstar Plan 2 (2 x $829,080) 1,658,160
Wildstar Plan 2X (12 x $869,000) 10,428,000
Wildstar Plan 3 (16 x $862,120) 13, 793,920
Skyeland Plan 1 (5 x $855,000) 4, 275,000
Skyeland Plan 1X (0 x 878,920) 0
Skyeland Plan 1XX (4 x $899,360) 3,597,440
Skyeland Plan 2 (8 x $923,440) 7, 387,520
Skyeland Plan 2X (4 x $928,242) 3, 712,968
Skyeland Plan 3 (4 x $944,248) 3,776,992
Goldenpeak Plan 1 (5 x $947,700) 4, 738,500
Goldenpeak Plan 1X (0 x $943,968) 0
Goldenpeak Plan 2 (0 x $976,820) 0
Goldenpeak Plan 2X (6 x $995,020) 5, 970,120
Goldenpeak Plan 3 (6 x $1,062,000) 6, 372,000
Total Individual Owned Value $ 130,854,505

In an additional review, we have reviewed the original builder sales prices for the homes within the subject property. Closings for the 169 homes occurred between November 9, 2023, and July 26, 2024. The reported closing prices by the builder for the 169 individually owned homes total $139,018,750, which is 6.2 percent higher than the concluded value.

The builder’s reported prices include premiums, upgrades and purchased options as well as took into consideration all concessions given by the builder , including closing costs and mortgage buydowns. Base pricing has increased since the project opened; however, builders have also increased concessions with rate buy -downs occurring which have totaled within Narra Hills up to $56,100. Opening base prices in March 2023 for the homes within Narra Hills ranged from $529,990 to $1,064,990 with current base pricing ranging from $558,990 to $1,194,990 resulting in increases from zero to 18.4 percent depending on the plan. This suggests prices have increased, however the concessions, at times, offset the increases in order to meet the market. The current market and the current incentives have been taken into account in our analysis . 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; however, it does take all concessions into consideration. 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. 109 which consists of 484 proposed residential units. The 484 units are known as Narra Hlls, being marketed, and sold by Landsea, and are located in the northern portion of the City of Fontana. The subject includes five product lines: Clementine, 124 duplex and small lot detached product; Strata, 127 detached cluster condominiums; Wildstar, 78 single-family detached homes on 5,000 square foot minimum lots and Skyeland and Goldenpeak, 155 single-family detached homes on 10,000 square foot minimum lots. As of July 26, 2024, individuals have purchased and closed 169 of the total 484 proposed houses, with an additional 39 homes in escrow which are due to close upon completion. The community has sold at a below average sales pace. 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 and found none.

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. 109 bond proceeds along with the Fontana CFD No. 109 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:

Narra Hills:

Landsea (149 lots/pads & 40 houses) $ 75,303,475
Arroyo Cap (126 lots/pads) $ 45,043,999
Individual Owners (169 houses) $ 130,854,505
Total Aggregate Value CFD No. 109 $ 251,201,979

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. 109

(
Narra Hills) - by Landsea Homes
Kitty Siino & Associates, Inc.

Page

104
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 requested minimum valuation, a specific valuation or the approval of a loan.

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

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

8. Kitty Siino has

not
performed any appraisal services on the subject property in the past three years.

9. No other appraisers have provided significant professional assistance to the 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 Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.

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

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

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

ADDENDA

FONTANA CFD NO. 109

BOUNDARY MAP

TRACT MAP Nos. 20010, 20069 and 20070
And SITE PLANS

Planning Area 1 & 2 – Skyeland and Goldenpeak

Planning Area 2 - Wildstar

Planning Area 3 - Strata

Planning Area 4 - Clementine

California Fire Hazard Map

California Fire Hazard Map – Approximate Location of Narra Hills Outlined in Blue

DISCOUNTED CASH FLOW ANALYSIS

Narra Hills Builder-Owned Houses Discounted Cash Flow Analysis

MONTH Months MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 TOTAL 5 INCOME:

Retail Sales 33,683,065 $6,736,613 $6,736,613 $6,736,613 $6,736,613 $6,736,613 $33,683,065

TOTAL INCOME $6,736,613 $6,736,613 $6,736,613 $6,736,613 $6,736,613 $33,683,065

EXPENSES:

Remaining Costs ($96,254) ($96,254) ($96,254) ($96,254) ($96,254) ($481,270) Marketing & Carrying
Expenses 10% ($673,661) ($673,661) ($673,661) ($673,661) ($673,661) ($3,368,307) Profit 10% ($673,661) ($673,661) ($673,661) ($673,661) ($673,661) ($3,368,307)

TOTAL EXPENSES ($1,443,577) ($1,443,577) ($1,443,577) ($1,443,577) ($1,443,577) ($7,217,883)

NET CASH FLOW $5,293,036 $5,293,036 $5,293,036 $5,293,036 $5,293,036 $26,465,182 Discount Factor 10% 0.9917 0.9835 0.9754 0.9673 0.9594

DISCOUNTED CASH FLOW $5,249,292 $5,205,910 $5,162,886 $5,120,217 $5,077,901 $25,816,206

CUMULATIVE DISCOUNTED $5,249,292 $10,455,202 $15,618,088 $20,738,305 $25,816,206 $25,816,206

CASH FLOW

FINISHED LOT LAND SALES MAP
& SUMMARY CHART

FINISHED LOT LAND SALES MAP

FINISHED LOT LAND SALES SUMMARY CHART

Data
No. Location / APN / Buyer / Seller Sales
Date
#
Lots
Lot
Size
Sales Price /
Price per Lot
Est.

Finished Lot
Price
Comments
1 Ontario 351, SWC Eucalyptus Ave
and Haven Ave, Ontario / 1073-171-
02 / KB Home / Richland
Communities
June 2024 351 8
du/acre
$85,000,000 /
$380,000
Closed in unimproved condition
with approved TTM. Blended FLV
- KB Home paid approximately
$560,000 FLV for 4,500 sf lots,
$410,000 FLV for cluster product,
and $280,000 FLV for
townhomes.
$242,165
2 Sequanota Heights, 60 Freeway and
Pacific Avenue, Jurupa Valley / 177-
130-007 / Richmond American
Homes / JPMB Investments
April 2024 48 6,300
sf
$9,351,000 / $308,000
Closed in a rough graded
condition with approved final
map.
$194,813
3 The Heights at Southridge, SE Live
Oak Ave and Cherry Ave, Fontana /
0237-411-13 / KB Home / New Bridge
Homes
April 2024 255 8
du/acre
$31,100,000 / $252,000
Closed in unimproved condition
with approved TTM. Blended FLV
- consists of two product types,
including a detached 8-pack
cluster and detached alley-load.
$121,961
4 Etiwanda Classics at Highland, SEC
Highland Avenue and Etiwanda
Avenue, Rancho Cucamonga / 0227-
051-03 / Manning Homes / Li Hailin
January
2024 22 12,000
sf lots
$4,063,000 / $550,000
Closed in an unimproved
condition with final map in
process.
$184,682
5 Gardens at Arboretum, SEC Duncan
Canyon Road and Cypress Ave,
Fontana / 1118-421-01 / Richmond
American Homes / Lewis Group of
Companies
January
2024 174 10
du/acre
$28,789,500 / $279,465
Closed in an unimproved
condition with final map in
process.
$165,457
6 Parkside II, NWC Eucalyptus and
Archibald, Ontario / 0218-053-05 /
Lennar / Lewis Group of Companies
December
2023 236
16 du/acre
$35,177,500 / $250,000
Closed in an unimproved
condition with a final map in
process. Blended finished lot
value number- Product will be
three two- and three-story cluster
products.
$149,057

7 Sycamore Heights, North of Rte 66,
East of Red Hill Country Club Dr,
Rancho Cucamonga / 0207-101-13 /
Lennar / RY Properties
December
2023 175 12
du/acre
$8,700,000 / $250,000 Closed in an unimproved
condition with approved TTM.
$49,714
8 Pietersma PA 3 & 4 (W/S Hamner
north of Eucalyptus Avenue),
Esperanza Specific Plan, Ontario
Ranch / 0218-312-06 / Pulte Homes /
Richland
December
2023 333 11
du/ac
$72,527,499 /
$315,000
Blended price, estimated F/L
values are $258,000 for 156
townhomes; $315,000 for 82
small detached cluster lots and
$401,000 for 95 large detached
cluster lots. PA 3 & 4 of
Esperanza SP
$217,800
9 Magnolia Ranch, South of
Schleisman Rd and west of Scholar
Way, Eastvale / 152-040-003 /
Woodside Homes / Kirschner Family
Trust
November
2023 41 4 du/ac
$7,500,000 / $360,000 Closed in an unimproved
condition with an approved TTM. $182,927
10 Barth Farms (West side Archibald),
S/O Riverside Drive N/O Chino,
Countryside Spec. Plan, Ontario
Ranch / 0218-111-60 / Lennar /
Landmark Co.

October
2023 265 12
du/ac
$49,559,000 / $297,000
Blended price, estimated F/L
values are $260,000 for
townhomes; $315,000 for Cluster
and $355,000 for detached lots.

Within Countryside SP
$187,015
11 Lytle Creek, SEC Sierra Lakes
Parkway and Lytle Creek Road,
Fontana /1108-052-05 / DR Horton /
The Sobrato Family Foundation
September
2023 143 14
du/ac
$9,850,000 / $220,000
Closed in an unimproved
condition with final map in
process. Blended FLV - consists
of attached motorcourt units and
detached motorcourt units
$68,881
12 Citrus Lane, SE of Citrus Avenue and
South Highland Avenue, Fontana /
0240-011-17 / DR Horton / 6997
Citrus LLC
August
2023 68 16
du/acre
$6,300,000 / $219,000 Closed in an unimproved
condition with an approved TTM.
$92,647
13 Citrus West, NWC Citrus Avenue and
Summit Avenue, Fontana / 1107-262-
37 / DR Horton / Lynn Chao
July 2023 84 9 du/ac
$9,850,000 $272,000
Closed in an unimproved
condition with final map in
process.
$117,262

IMPROVED RESIDENTIAL

SALES MAP & SUMMARY CHART

IMPROVED RESIDENTIAL SALES SUMMARY CHART

Data
No.

Project Name
Location/Developer Plan Room
Count
Floors/
Parking
Size
(SF)
Lot Size /
Absorption
Base Sales
Price Price/SF
1 Clementine at Narra Hills, Lytle Creek
Road and Duncan Canyon Road,
Fontana / Landsea
1 3 / 2.5 2 / 2 1,372 Paired Homes $563,990 $411.07
2 3 / 2.5 2 / 2 1,450 2.4 sales/mo $558,990 $385.51
3 4 / 2.5 2 / 2 1,661 $594,990 $358.21
2 Strata at Narra Hills, Lytle Creek Road
and Duncan Canyon Road, Fontana /
Landsea
1 3 / 2.5 2 / 2 2,099 2,700 sf lots $675,990 $322.05
2 4 / 3 2 / 2 2,136 (Det. Cluster) $707,990 $331.46
3 4 / 3 2 / 2 2,311 3.7 sales/mo $726,990 $314.58
4 4 / 3 2 / 2 2,552 $739,990 $289.96
3 Wildstar at Narra Hills, Lytle Creek Road
and Duncan Canyon Road, Fontana /
Landsea
1 4 / 3.5 2 / 2 2,747 5,000 sf lots $823,990 $299.96
2 4 / 4 2 / 2 2,961 3.1 sales/mo $849,990 $287.06
3 5 / 4.5 2 / 3 3,079 $899,990 $292.30
4 Skyeland at Narra Hills, Lytle Creek
Road and Duncan Canyon Road,
Fontana / Landsea
1 3 / 3 1 / 2 2,375 $889,990 $374.73
1X 4 / 3.5 2 / 3 3,080 10,000 sf lots $912,990 $296.43
2 5 / 4.5 2 / 3 3,298 2.1 sales/mo $953,990 $289.26
2X 5 / 4.5 2 / 3 3,339 $969,990 $290.50
3 5 / 4.5 2 / 3 3,604 $995,990 $276.36
5 Goldenpeak at Narra Hills, Lytle Creek
Road and Duncan Canyon Road,
Fontana / Landsea
1 3 / 3.5 1 / 3 3,159 $1,069,990 $338.71
1X 4 / 4.5 2 / 3 3,603 10,000 sf lots $1,059,990 $294.20 2 5 / 4.5 2 / 3 3,757 2.1 sales/mo $1,079,990 $287.46
2X 4 / 3.5 2 / 3 3,827 $1,154,990 $301.80
3 5 / 4.5 2 / 3 4,248 $1,194,990 $281.31
6 Salerno at Monterado, Citrus Avenue
and Duncan Canyon Road, Fontana /
Lennar
1 3 / 2.5 2 / 2 1,822 3,000 sf lots $628,860 $345.15
2 3 / 2.5 2 / 2 1,932 (Det. Cluster) $641,635 $332.11 3 3 / 2.5 2 / 2 2,207 4.1 sales/mo $676,990 $306.75

7 Acacia at Arboretum, Sierra Avenue and
Casa Grande Avenue, Fontana / Lennar
1 3 / 2.5 2 / 2 2,213 2,500 sf lots $648,060 $292.84
2 3 / 2.5 2 / 2 2,358 4.3 sales/mo $682,060 $289.25
3 4 / 2.5 2 / 2 2,472 $701,290 $283.69
8 Blue Sage at Arboretum, Sierra Avenue
and Casa Grande Avenue, Fontana /
Lennar
1 3 / 2.5 2 / 2 1,651 2,000 sf lots $603,646 $365.62
2 3 / 2.5 2 / 2 1,761 (Zero Lot Line) $609,290 $345.99
3 4 / 2.5 2 / 2 1,969 4.3 sales/mo $622,590 $316.20
4 4 / 3 2 / 2 1,970 $641,990 $325.88
9 Silverberry at Arboretum, Sierra Avenue
and Casa Grande Avenue, Fontana /
Lennar
1 4 / 3 2 / 2 2,449 4,000 sf lots $743,980 $303.79
2 4 / 3 2 / 2 2,666 4.9 sales/mo $782,210 $293.40
3 4 / 3 2 / 2 2,877 $813,830 $282.87
10 Wildrose at Arboretum, Sierra Avenue
and Casa Grande Avenue, Fontana /
Lennar
1 3 / 2 1 / 2 1,905 6,000 sf lots $731,462 $383.97
2 5 / 3 2 / 2 2,985 4.3 sales/mo $838,490 $280.90
3 4 / 3 2 / 2 3,105 $819,325 $263.87
11 Azalea at Arboretum, Sierra Avenue and
Casa Grande Avenue, Fontana / Lennar
1 4 / 2 1 / 2 2,215 5,500 sf lots $741,900 $334.94
2 5 / 4 2 / 2 3,251 3.5 sales/mo $838,465 $257.91
3 4 / 3.5 2 / 2 3,339 $889,670 $266.45
12 Dayflower at Arboretum, Sierra Avenue
and Casa Grande Avenue, Fontana /
Lennar
1 4 / 3 2 / 2 1,563 Det. Cluster $529,900 $339.03
2 3 / 2 2 / 2 1,582 4.0 sales/mo $491,900 $310.94
3 4 / 3 2 / 2 1,669 $565,900 $339.07
13 Sienna at Aurora Park, Victoria Street
and Kestral Drive, Fontana / TRI Pointe
Homes
1 3 / 2.5 2 / 2 1,879 2,000 sf lots $775,000 $412.45
2 3 / 2.5 2 / 3 1,997 (Alley-load) $849,000 $425.14
3 4 / 3 2 / 3 2,264 2.6 sales/mo $879,000 $388.25
14 Goldenrod at Aurora Park, Victoria
Street and Kestral Drive, Fontana / TRI
Pointe Homes
1 3 / 2.5 2 / 2 2,006 2,000 sf lots $703,871 $350.88
2 4 / 3 2 / 2 2,303 (Det. Cluster) $727,126 $315.73
3 5 / 4 2 / 3 2,777 2.7 sales/mo $816,547 $294.04
15 Cascade at Highland Park, South
Highland Avenue and San Servaine
Road, Fontana / Richmond American
1 3 / 2.5 2 / 2 1,860 5,000 sf lot $638,883 $343.49
2 3 / 2.5 2 / 3 1,930 2.2 sales/mo $676,487 $350.51
3 4 / 3 2 / 3 2,065 $652,990 $316.22

16 Talise at Highland Park, South Highland
Avenue and San Servaine Road,
Fontana / Richmond American
1 3 / 2.5 2 / 2 1,410 $584,584 $414.60
2 3 / 2.5 2 / 2 1,650 5,000 sf lots $604,325 $366.26
3 3 / 2.5 2 / 2 1,710 3.1 sales/mo $588,392 $344.09
4 4 / 3 2 / 2 1,950 $642,315 $329.39
17 Stonecreek at River Ranch, NE of River
Ranch Parkway and Havasu Way, Rialto
/ Lennar
1 3 / 2 1 / 2 2,140 $667,990 $312.14
2 4 / 2.5 2 / 3 2,809 9,000 sf lots $754,990 $268.78
3 5 / 3.5 2 / 2 3,325 3.0 sales/mo $836,800 $251.67
4 5 / 3.5 2 / 3 4,122 $946,680 $229.67

APPRAISER’S QUALIFICATIONS

QUALIFICATIONS OF KITTY S. SIINO, MAI

Education

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

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

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

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

Employment

1988 - Present:

Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of Sa n 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 functions. 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 CouncilSeptember 24, 2024

Fontana City Council
September 24, 2024