Source: David Taussig and Associates, Inc. dba DTA.
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TABLE 6B
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 112 (THE GARDENS PHASE ONE)
ESTIMATED MINIMUM MARKET VALUE-TO-LIEN STRATIFICATION
BASED ON BONDS ONLY
(PROJECTED FISCAL YEAR 2025-2026 SPECIAL TAX LEVY
ASSUMING FULL DEVELOPMENT)
Estimated Minimum
Market Value-to-Lien
Ratio Category
Number of
Parcels
Subject to
Facilities
Special Tax
Projected
Fiscal Year
2025-2026
Facilities
Special Tax(1)
Percent of
Projected
Fiscal Year
2025-2026
Facilities
Special Tax
Pro Rata Share
of Bonds(2)*
Minimum
Market Value(3)
Estimated
Minimum
Market Value-
to-Lien
Ratios(4)*
11.00:1 and above 135 $ 408,679 20.08% $ 6,176,471 $ 73,651,310 11.92
9.00:1 to 10.99:1 236 1,029,048 50.56 15,552,255 165,755,142 10.66
7.00:1 to 8.99:1 50 214,551 10.54 3,242,560 25,934,167 8.00
5.00:1 to 6.99:1 7 22,186 1.09 335,311 1,866,299 5.57
3.00:1 to 4.99:1 98 360,836 17.73 5,453,403 24,698,181 4.53 Less than 3.00:1 0 0 0.00 0 0 NA
TOTAL 526 $ 2,035,300 100.00% $30,760,000 $291,905,099 9.49
* Preliminary, subject to change.
(1) Based on the levy to fund Administrative Expenses and debt service on the Bonds, assum ing the remaining 17 unpermitted properties as of August 1, 2024 are constructed at the home sites identified in the development plan submitted by Lennar Homes. (2) There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District with outstanding debt (excluding debt secured by any tax or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof). The Bonds are allocated based on a proportionate share of the Projected Fiscal Year 2025-2026 Facilities Special Tax.
(3) Based on the Appraisal with a date of value as of August 25, 2024. (4) Calculated by dividing the Minimum Market Value column by the Pro Rata Share of Bonds column.
Source: David Taussig and Associates, Inc. dba DTA.
Delinquency History
Fiscal Year 2023-24 was the first year in which Facilities Special Taxes were levied in the District. For Fiscal Year 2023-24, Facilities Special Taxes totaling $591,845 were levied on 140 dwelling units classified as Developed Property with respect to the Facilities Special Tax based on building permits obtained as of May 1, 2023. As of October 1, 2024, the entire $591,845 in Facilities Special Taxes had been paid. As of October 1, 2024, the entire Fiscal Year 2023-24 Services Special Tax levy in the amount of $79,314 had also been paid.
PROPERTY OWNERSHIP AND THE DEVELOPMENT
Representatives of Lennar Homes have provided the information in this section regarding Lennar Homes and its development in the District. Neither the Underwriter nor the City has independently confirmed or verified the information in this section of the Official Statement nor does any such party make any representation as to accuracy or adequacy of this information. Further, there may be material adverse changes in this information after the date of this Official Statement.
The information in this section of the Official Statement regarding ownership of certain taxable property in the District has been included because it is considered relevant to an informed evaluation of the Bonds. The inclusion in this Official Statement of information related to Lennar Homes should not be construed to suggest that the Bonds, or the Special Tax that will be used to pay the Bonds, are recourse obligations of Lennar Homes, or any other property owner in the District. A property owner may sell or otherwise dispose of land within the District or a development or any interest therein at any time.
No assurance can be given that the prop osed development within the District will occur as described below. As the proposed land development progresses and parcels are sold, it is expected that the ownership of 433
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the land within the District will become more diversified. No assurance can be give n that development of the land within the District will occur in a timely manner or in the configuration or intensity described herein, or that any landowner described herein will obtain or retain ownership of any of the land within the District.
The Bonds and the Special Tax are not personal obligations of Lennar Homes or any other current or subsequent property owners and, in the event that Lennar Homes or any other current or subsequent property owner defaults in the payment of the Special Tax, the City may proceed with judicial foreclosure but has no direct recourse to the assets of Lennar Homes or any other current or subsequent property owner. As a result, other than as provided in the Official Statement, no financial statements or information is, or will be, provided about Lennar Homes or any other current or subsequent property owner. The Bonds are secured solely by the Net Special Tax Revenues and other amounts pledged under the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “SPECIAL RISK FACTORS.”
Lennar Homes
Lennar Homes of California, LLC, a California limited liability company (previously defined as “Lennar Homes” or the “Developer”), is based in Irvine, California, and has been in the business of developing residential real estate communities in California since 1996. Lennar Homes is wholly -owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida (“Lennar Corporation”). Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B,” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home. Lennar Corporation primarily develops residential communities both within the Lennar Corporation family of builders and through consolidated and unconsolidated partnerships in which Lennar Corporation maintains an interest.
Lennar Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the Securities and Exchange Commission (the “SEC”). Such filings, particularly Lennar Corporation’s annual report on Form 10 -K and its most recent quarterly report on Form 10-Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such filings can also be accessed over the internet at the SEC’s website at www.sec.gov. This internet address is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site.
Copies of Lennar Corporation’s annual report and related financial statements are available from Lennar Corporation’s website at www.Lennar.com. This internet address is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement.
Development Plan
General. The District includes approximately 69.9 gross acres and is located in the northwestern portion of the City, approximately one mile east of Interstate 15 and along both sides of Cassava Drive, south of Duncan Canyon Road and north of Casa Grande Avenue. The property within the District is being developed into phase one of a residential community known as The Gardens, which is within the master -planned residential community known as The Arboretum, by Lennar Homes. Phase one of The Gardens is expected to consist of 526 residential units across six neighborhoods known as “Dayflower,” “Blue Sage,” “Acacia,” “Silverberry,” “Wildrose,” and “Azalea.” The Gardens Phase One is encompassed by a portion of Tract Map 20362 and Tract 434
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Maps 20363 and 20364 along with subsequent condominium maps on Lot 5 and 6 of Tract 20362, all of which subdivide the property into 526 separate parcels (each of which is a separate Assessor’s Parcel subject to the levy of the Special Tax pursuant to the Rate and Method).
Lennar Homes has acquired 496 of the 526 lots of the property within the District in phased takedowns from AG EHC II (LEN) CA 2, L.P., a Delaware limited partnership (the “Land Bank”) pursuant to the Option Agreement (as defined under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT —Option Agreement”), and has an option (but not an obligation) to acquire the remaining 30 lots from the Land Bank pursuant to the Option Agreement. The purchase price for the property within the District was $91,935,447 and the Land Bank took title to the property in December 2021. As of August 25, 2024, Lennar Homes had acquired 496 lots from the Land Bank within the District, with an additional 22 lots scheduled to be acquired October 14, 2024 and the final eight lots scheduled to be acquired December 14, 2024. There is no guarantee that Lennar Homes will acquire the remaining lots as planned. During the term of the Option Agreement, Lennar Homes is contractually obligated to pay the Special Tax levied on the property subject to such agreement. However, in the event the Option Agreement is terminated prior to Lennar Homes having acquired all of the lots thereunder, the Special Tax would continue to be levied on the property in the District owned by the Land Bank and Lennar Homes’ contractual obligation to pay the Special Taxes would terminate.
As of August 25, 2024, 366 residential units had been completed and conveyed to individual homeowners, Lennar Homes owned 14 completed model units (none of which were in escrow), 41 homes over 95% complete (39 of which were in escrow), 69 residential units under construction and less than 95% complete (42 of which were in escrow), and six finished lots (none of which were in escrow), and the Land Bank owned 13 homes under construction (none of which were in escrow) and 17 finished lots (none of which were in escrow). As of October 1, 2024, within the District, 396 residential units had been completed and conveyed to individual homeowners, and Lennar Homes owned 13 completed model units (two of which were in escrow), 81 residential units under construction (74 of which were in escrow), and six finished lots (none of which were in escrow), and the Land Bank owned 28 homes under construction (10 of which were in escrow) and 2 finished lots (none of which were in escrow). Sales contracts are subject to cancellation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers. As of October 1, 202 4, 518 building permits had been obtained within the District. Accordingly, assuming no additional building permits are obtained prior to May 1, 2025, 518 parcels will be classified as Developed Property and eight parcels will be classified as Undeveloped Property for the Fiscal Year 2025-26 Special Tax levy. 435
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The following table describes the development and ownership status as of August 25 , 2024 by neighborhood and floor plan within the development.
TABLE 7
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 112 (THE GARDENS PHASE ONE)
DEVELOPMENT AND OWNERSHIP STATUS
(AS OF AUGUST 25, 2024)
Floor Plan
Plan
Square
Footage
Total
Units
Planned
Base Home
Prices(1)
Owned by
Individuals
Completed
Homes(2)
Homes
Under
Construction
Finished
Pads/Lots
Homes in
Escrow(3)
Day Flower
1 1,582 22 $508,900 17 1 4 0 3
2 1,563 22 529,900 16 2 4 0 5
3 1,669 25 556,900 17 3 5 0 7
Total Dayflower 69 50 6 13 0 15
Blue Sage
1 1,651 26 $589,290 21 0 4 1 1
2 1,761 30 618,290 23 1 5 1 4
3 1,868 23 623,790 13 1 7 2 1
4 1,970 20 641,990 10 1 5 4 5
Total Blue Sage 99 67 3 21 8 11
Acacia
1 2,213 36 $648,060 20 2 8 6 3
2 2,358 36 682,060 19 4 9 4 7
3 2,472 37 701,290 21 4 10 2 8
Total Acacia 109 60 10 27 12 18
Silverberry
1 2,449 25 $742,910 18 4 3 0 5
2 2,666 35 782,210 27 4 4 0 6
3 2,877 37 813,830 26 5 6 0 7
Total Silverberry 97 71 13 13 0 18
Wildrose
1 1,905 23 $729,480 18 3 2 0 3
2 2,985 31 838,490 23 5 3 0 4
3 3,105 34 819,325 25 6 3 0 5
Total Wildrose 88 66 14 8 0 12
Azalea
1 2,215 18 $741,900 16 0 0 2 0
2 3,251 22 838,465 18 4 0 0 3
3 3,339 24 889,670 18 5 0 1 4
Total Azalea 64 52 9 0 3 7
Grand Total 526 366 55 82 23 81
(1) Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives, and any selling concessi ons, mortgage rate buydowns or price reductions currently being offered. Lennar Homes is offering varying concessions, including r ate buy downs, on a case-by-case basis. As of August 25, 2024, the net closing cost and rate buy down concessions for the 366 residential units conveyed to individual homeowners and the 81 residential units in escrow within the District ranged from $ 0 to $85.000, and averaged approximately $42,600 per residential unit.
(2) Includes three model homes for Dayflower, three model homes for Blue Sage, two model homes for Acacia, two model homes for Silverberry, two model homes for Wildrose and two model homes for Azalea. (3) Includes 39 completed homes and 42 homes under construction.
Source: The Developer.
Dayflower. The Dayflower neighborhood consists of 69 proposed triplex homes with three of the homes actually detached. The three plans range in size from 1,563 to 1,669 square feet. Plan 1 has 1,582 square feet and is a stacked unit up over three, two -car garages. Plan 1 has an attached 2 -car garage while Plans 2 and 3 have detached 2-car garages with a small courtyard between the house and the garage. The floorplans each have 436
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three to four bedrooms. The Dayflower homes opened for sale in April 2023, with home closings beginning in November 2023. Le nnar Homes currently expects to complete construction of all of the homes within the Dayflower neighborhood by the second quarter 2025
Blue Sage. The Blue Sage neighborhood consists of 99 proposed single-family detached homes on condominium lots, with some homes in an alley-load format. The floor plans range in size from 1,651 to 1,970 square feet. The four floorplans all are two stories with three to four bedrooms and two -car attached garages.
The Blue Sage homes opened for sale in March 2023, with hom e closings beginning in August 2023. Lennar Homes currently expects to complete construction of all of the homes within the Blue Sage neighborhood by the third quarter of 2025.
Acacia. The Acacia neighborhood consists of 109 proposed single-family detached homes on lots with a minimum lot size of 2,700 square feet. The floor plans range in size from 2,213 to 2,472 square feet. The three floorplans all are two stories, with three to four bedrooms and two-car attached garages. The Acacia homes opened for sale in March 2023, with home closings beginning in August 2023. Lennar Homes currently expects to complete construction of all of the homes within the Acacia neighborhood by the third quarter of 2025 Silverberry. The Silverberry neighborhood consists of 97 proposed single-family detached homes on lots with a minimum lot size of 4,000 square feet. The floor plans range in size from 2,449 to 2,877 square feet.
The three floor plans all are two stories with three to four bedrooms and attached two -car garages. The Silverberry homes opened for sale in March 2023, with home closings beginning in August 2023. Lennar Homes currently expects to complete construction of all of the homes within the Silverberry neighborhood by the second quarter of 2025.
Wildrose. The Wildrose neighborhood consists of 88 proposed single-family detached homes on lots with a minimum lot size of 4,950 square feet. The three floor plans range in size from 1,905 to 3,105 square feet. Plan One is a single-story while Plans 2 and 3 are two-story. The homes have three to five bedrooms and attached two to three -car garages. The Wildrose homes opened for sale in March 2023, with home c losings beginning in August 2023. Lennar Homes currently expects to complete construction of all of the homes within the Wildrose neighborhood by the second quarter of 2025.
Azalea. The Azalea neighborhood consists of 64 proposed single-family detached homes on lots with a minimum lot size of 6,000 square feet. The three floor plans range in size from 2,215 to 3,339 square feet.
Plan One is single-story while Plans 2 and 3 are two-story. The floor plans have four to five bedrooms with two and three-car attached garages. Plan 3 offers a NextGen Suite for an extended family member. The Azalea homes opened for sale in March 2023, with home closings beginning in August 2023. Lennar Homes currently expects to complete construction of all of the homes within the Azalea neighborhood by the first quarter of 2025.
Required Infrastructure. All backbone infrastructure required to build-out all 526 residential units has been completed.
Entitlement Status. Other than certain permits required in the normal course of home construction, all discretionary entitlements required to complete the development and sales of homes in the District have been received. All environmental approvals have been secured in order to complete the development in the District.
Conditions of Approval . None of the remaining infrastructure improvements are required to be completed as a condition of receiving building or occupancy permits.
Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, the Developer has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement. 437
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While the information set forth in this Official Statement reflects the Lennar Homes’ current development expectations, no assurance can be given that final home construction and conveyance to individual home buyers will be carried out as described in this Official Statement.
Option Agreement
In December 2021, AG EHC II (LEN) CA 2, L.P., a Delaware limited partnership (the “Land Bank”) acquired all of the property (to be developed as 526 lots) located in the District (the “District Lots”) to in order to set up a land banking structure.
To facilitate the land banking structure for the District Lots, Lennar Homes and the Land Bank entered into that certain Option Agreement, dated December 14, 2021 (the “Lennar Option Agreement”) whereby Lennar Homes had the option, but not the obligation, to purchase all 526 District Lots from the Land Bank pursuant to a takedown schedule agreed upon between Lennar Homes and the Land Bank. The takedown of lots commenced in November 2022 and continued periodically thereafter, with the most recent takedown occurring on August 14, 2024.
As of October 1, 2024, Lennar Homes has taken down 496 of the 526 lots from the Land Bank, and there are two further takedowns scheduled as follows:
October 14, 2024: 22 lots (8 in Blue Sage, 8 in Acacia, and 6 in Silverberry) December 14, 2024: 8 lots (all 8 in Acacia)
Lennar Homes has the option but not the obligation to acquire the remaining 30 lots in the District from the Land Bank, so there can be no guarantee that Lennar Homes will acquire these lots.
During the term of the Lennar Option Agreement, Lennar Homes is responsible for paying all taxes (including Special Taxes) on the property owned by the Land Bank.
The Land Bank. The Land Bank is an affiliates of, and managed by, Angelo Gordon & Co., L.P. (“Angelo Gordon”). Angelo Gordon is a privately-held alternative investment firm headquartered in New York, with associated offices across the United States, Europe and Asia. Affiliates of the Land Bank have entered into land banking arrangements with Lennar Corporation and its affiliated entities on more than 200 residential development projects. Neither the Land Bank nor Angelo Gordon are affiliated entities of Lennar Homes.
Financing Plan
To date, Lennar Homes has financed its land acquisition and various site development and home construction costs related to its property in the District through internally generated funds (which may include home sales revenues and funding from its parent company Lennar Corporation). As of October 1, 2024, Lennar Homes had expended approximately $_____ million on land acquisition, land development, homebuilding, marketing and sales costs. As of such date, Lennar Homes expected to incur approximately $_____ million on remaining land acquisition and development costs and approximately $_____ million on remaining homebuilding, marketing, and sales costs for its property in the District.
Lennar Homes expects to use internally generated funding (which may include home sales revenues and funding from its parent company Lennar Corporation) to complete its land acquisition and development in the District. Lennar Homes believes that it will have sufficient funds available to complete its planned l and acquisition and development in the District in accordance with the development schedule described in this Official Statement.
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Although Lennar Homes expects to have sufficient funds available to complete its development in the District as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available to Lennar Homes when needed. While Lennar Homes has made such internal funding available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Lennar Homes, nor any other entity or person is under any legal obligation of any kind to expend funds for the development of and construction of homes on Lennar Homes’ property in the District or the payment of ad valorem property taxes or the Special Taxes. Any contributions by Lennar Homes or any other entity or person to fund the costs of such development are entirely voluntary.
If and to the extent that the aforementioned sources are inadequate to pay the costs to complete the planned development by Lennar Homes within the District and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development by Lennar Homes or to pay ad valorem property taxes or Special Taxes related to Lennar Homes’ property in the District, and the remaining portion s of such development may not be completed. Many factors beyond Lennar Homes’ control, or a decision by Lennar Homes to alter its current plans, may cause the actual sources and uses to differ from the projections.
See “SPECIAL RISK FACTORS” herein for a discussion of risk factors.” Although the information in this Official Statement reflects the current development expectations of Lennar Homes, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Lennar Homes reserves the right to change its development at any time without notice. Addi tionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See “SPECIAL RISK FACTORS — Concentration of Property Ownership” and “ — Failure to Develop Properties.”
SPECIAL RISK FACTORS
The principal source of payment of debt service on the Bonds will be payments of the Special Tax made with respect to the Taxable Property. As discussed under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Tax,” the Special Tax is to be levied annually against all such Taxable Property either at the maximum rate authorized by the Rate and Method or at such lower rates as are determined by the District Administrator to raise sufficient funds to comply with the agreements, conditions, covenants and terms contained in the Indenture, and in accordance with the Act. The Special Tax is to be collected on the tax roll of the District at the same time and in the same manner as general ad valorem real property taxes are collected. The Special Tax cannot be lev ied at a tax rate higher than the maximum tax rate even if the maximum tax rate will not produce sufficient Net Special Tax Revenues to pay the principal and interest then payable with respect to the Bonds. See discussions below under “— Levy of the Special Tax” and “— Collection of the Special Tax.” Payment of the Special Tax levied on a parcel is secured by a continuing lien against such parcel. In the event an installment of the Special Tax included in the tax bill for a parcel of Taxable Property is n ot paid when due, the District has covenanted to institute foreclosure proceedings in court to cause the parcel to be sold in order to attempt to recover the delinquent amount from the sale proceeds. Foreclosure and sale may not always result in the recovery of the full amount of delinquent installments of the Special Tax. See “— Collection of the Special Tax.” The sufficiency of the foreclosure sale proceeds to cover the delinquent amount depends in part upon the market for and the value of the parcel at the time of the sale. Sufficiency of the foreclosure sale proceeds to cover a delinquency may also depend upon the value of prior or parity liens and similar claims. Further, other governmental claims, such as hazardous substance claims, may affect th e realizable value even though such claims may not rise to the status of liens. See “— Hazardous Substances.” Timely foreclosure and sale proceedings with respect to a parcel of Taxable Property may be forestalled or delayed by a stay in the event the own er of the parcel becomes the subject of bankruptcy proceedings. Not only may foreclosure and sale proceedings be forestalled or delayed, but the sale of a parcel may also be similarly 439
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affected by a bankruptcy stay. Further, should the stay not be lifted, payment of the Special Tax may be subordinated to bankruptcy law priorities. See “— Bankruptcy and Legal Delays.” Although bankruptcy proceedings may forestall or delay a foreclosure and sale or a tax sale of a delinquent parcel of Taxable Property, the Special Tax is secured by a lien which, assuming proper procedures are followed, may be enforced against the parcel. There may not be any recourse against a bankrupt property owner since the owner is not personally obligated to pay the Special Tax. Furth er, if proper disclosure of the authorization of the Special Tax is not made to the owner, the willingness or ability of an owner to pay the Special Tax may be adversely affected. See “— Payment of the Special Tax is Not a Personal Obligation of the Owners.”
The District is not obligated to advance funds to pay such debt service except from moneys on deposit in the Reserve Fund. See “— Bonds Are Limited Obligations.” Even if debt service is timely paid, interest on the Bonds may have to be included in the gross income of the owner of the Bonds by reason of some circumstance occurring subsequent to issuance of the Bonds, thereby reducing the after-tax yield. See “— Loss of Tax Exemption.” Risks of Real Estate Secured Investments Generally – Declines in Value Purchasers of the Bonds will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses. See the caption “— Increasing Mortgage Interest Rates” below.
No assurance can be given that the individual p roperty owners within the District will pay the Special Tax in the future or that they will be able to pay the Special Tax on a timely basis. See the caption “— Bankruptcy and Legal Delays” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels within the District.
Levy of the Special Tax
The principal source of money with which to pay debt service on the Bonds is the proceeds derived from the annual levy and collection of the Spe cial Tax applicable to the Taxable Property in the District. The amount of the Special Tax that can be levied is limited to the maximum tax rates authorized pursuant to the Rate and Method. Additionally, pursuant to Section 53321(d) of the Government Code, the Special Tax levied against any Assessor’s parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel within the District by more than ten percent above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax on residential parcels in all years. The levies cannot be made at higher rates even if the failure to do so would result in insufficient Net Special Tax Revenues to pay the principal of and interest on the Bonds as the same become due and payable.
The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of a particular parcel and the amount of the levy of the Special Tax against such parcel. Thus, there will rarely, if ever, be a uniform relationship between the value of a parcel and its proportionate share of the debt service on the Bonds. The Special Tax levied in any particular Fiscal Year on a parcel is based upon the revenue needs of the District and the application of the Rate and Method. The a pplication of the Rate and Method will, in turn, be dependent upon certain development factors with respect to each parcel by comparison with similar 440
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development factors with respect to the other parcels in the District. Thus, in addition to annual variations in the revenue needs of the District that must be met from the Special Tax, the following are some of the factors which might cause the levy of the Special Tax on any particular parcel to vary from the Special Tax that might otherwise be expected:
Reduction in the number of parcels of Taxable Property, for reasons such as acquisition of such parcels by a governmental entity and failure of the governmental entity to pay the Special Tax based upon a claim of exemption or, in the case of the federal gover nment or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property; and Failure of the owners of certain parcels of Taxable Property to pay the applicable Special Tax and delays in the collection of or inability to collect such Special Tax by tax sale or foreclosure and sale of the delinquent parcels, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property.
Collection of the Special Tax
The timely payment of the principal of and interest on the Bonds is ultimately dependent upon the timely payment of all of the Special Tax. Any money on deposit in the Reserve Fund can be used to make such payment in the event of delinquencies, but the replenishment o f the Reserve Fund will be dependent on the recovery of such delinquencies. The Indenture provides that the Special Tax is to be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable (or in such other manner as the City Council shall determine, including direct billing of the affected property owners) and, except as provided in the special covenant for foreclosure described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant for Superior Court Foreclosure” and in the Act, is to be subject to the same proportionate penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem taxes on real property.
Pursuant to the Act, in the event of any delinquency in the payment of the Special Tax, the District may order the institution of a superior court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the District has covenanted for the benefit of the owners of the Bonds that it will institute foreclosure proceedings as authorized by the Ac t in order to enforce the lien of the delinquent installments of the Special Tax under certain circumstances. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant for Superior Court Foreclosure.” In the event that foreclosure proceedings are commenced, such foreclosure proceedings could be stayed by the commencement of bankruptcy proceedings by or against the owner of the property being foreclosed. In the event that sales or foreclosures of property are necessary, there could be a delay in payme nts to Owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the District of the proceeds of sale if the Reserve Fund is depleted.
The District may be unable to make full or timely payment of debt service on th e Bonds if property owners in the District fail to pay installments of the Special Tax when due, if the Reserve Fund is depleted, or if the District is unable to sell foreclosed parcels for amounts sufficient to cover the delinquent installments of the Special Tax.
Failure to Develop Properties
Development of property within the District may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of Lennar Homes, or any other property owner to pay the Special Ta x prior to delinquency. Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be 441
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obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any s uch agency approval or satisfy such governmental requirements would adversely affect planned land development. Development of land in the District is also subject to the availability of water. Finally, development of land is subject to economic considerations.
As of August 25, 2024, 366 residential units had been completed and conveyed to individual homeowners, Lennar Homes owned 14 completed model units (none of which were in escrow), 41 homes over 95% complete (39 of which were in escrow), 69 residential units under construction and less than 95% complete (42 of which were in escrow), and six finished lots (none of which were in escrow), and the Land Bank owned 13 homes under construction (none of which were in escrow) and 17 finished lots (none of which were in escrow). As of October 1, 2024, within the District, 396 residential units had been completed and conveyed to individual homeowners, and Lennar Homes owned 13 completed model units (two of which were in escrow), 14 residential units over 95% complete (13 of which were in escrow) and 67 residential units under construction and less than 95% complete (61 of which were in escrow), and six finished lots (none of which were in escrow), and the Land Bank owned 28 homes under construction (10 of which were in escrow) and 2 finished lots (none of which were in escrow). Sales contracts are subject to cancellation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers. As of October 1, 2024, a total of 518 building permits were obtained within the District. Accordingly, if not additional building permits are obtained , 518 parcels will be classified as Developed Property and eight parcels will be classified as Undeveloped Property for the Fiscal Year 2025 -26 Special Tax levy. See “THE COMMUNITY FACILITIES DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” However, no assurance can be given that the remaining proposed residential development will be partially or fully completed; and for purposes of evaluating the investment quality of the Bonds, prospective purchasers should consider the possibility that such parcels will remain vacant and unimproved.
Undeveloped or partially developed land is inherently less valuab le than developed land and provides less security to the Bond Owners should it be necessary for the District to foreclose on the property due to the nonpayment of the Special Tax. The failure to complete development in the District as planned, or substant ial delays in the completion of the development may reduce the value of the property within the District and increase the length of time during which the Special Tax will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Tax prior to delinquency.
There can be no assurance that land development operations within the District will not be adversely affected by a future deterioration of the real estate market and eco nomic conditions or future local, State and federal governmental policies relating to real estate development, an increase in mortgage interest rates, the income tax treatment of real property ownership, or the national economy. A slowdown of the developm ent process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Tax. In that event, there could be a default in the payment of principal of, and interest on, the Bonds when due.
Bond Owners should assume that any event that significantly impacts the ability to develop land in the District would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Tax prior to delinquency.
Concentration of Property Ownership
Based on the development status as of August 1, 2024 and ownership status as of August 25, 2024, the property owned by Lennar Homes and the property owned by the Land Bank are expected to be responsible for approximately 24.04% and 3.66%, respectively, of the projected Fiscal Year 2025-26 Special Tax levied within the District. Lennar Homes reports that since such date, additional development and certain sales contracts for residential units have closed escrow to individual homeowners. Based on the development and ownership status as of October 1, 2024, the property owned by Lennar Homes and the property owned by the Land Bank are 442
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expected to be responsible for approximately _____% and _____%, respectively, of the projected Fiscal Year 2024-25 Special Tax levied within the District.
As described under “PROPE RTY OWNERSHIP AND THE DEVELOPMENT,” Lennar Homes is acquiring the property within the District in phased takedowns from the Land Bank pursuant to the Option Agreement under which Lennar Homes acquires lots in a finished lot condition as development progresses. As of October 1, 2024, Lennar Homes had acquired 496 lots from the Land Bank within the District, with an additional 22 lots scheduled to be acquired October 14, 2024 and the final eight lots scheduled to be acquired December 14, 2024. There is no guarantee that Lennar Homes will acquire the remaining lots as planned. During the term of the Option Agreement, Lennar Homes is contractually obligated to pay the Special Tax levied on the property subject to such agreement. However, in the event the Option Agreement is terminated prior to Lennar Homes having acquired all of the lots thereunder, the Special Tax would continue to be levied on the property in the District owned by the Land Bank and Lennar Homes’ contractual obligation to pay the Special Tax es would terminate. The Land Bank is not a homebuilder. Rather, the Land Bank is a real estate investment manager that was established for the primary purpose of owning property within the District. No assurances can be made of the willingness and the ability of the Land Bank, or its affiliates, to pay such Special Tax.
While the District includes 366 completed residential units owned by individual homeowners as of August 25, 2024, the inability or refusal of Lennar Homes or the Land Bank to pay the Spec ial Tax applicable to its property when due could result in the depletion of the Reserve Fund prior to reimbursement thereof from sale or foreclosure proceedings, and/or insufficient money with which to pay the principal of and interest on the Bonds as the same became due. Additionally, pursuant to the Act, the Special Tax levied in any fiscal year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or default. As a result, while the Maximum Special Tax pursuant to the Rate and Method may be higher, the Maximum Special Tax on parcels of residential parcels cannot be greater than 110% of the projected actual Special Tax levy on such parcels.
Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and Method. In addition, the Act provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property in the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. In addition, the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation t o pay the Special Tax with respect to that property is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested.
In particular, insofar as the Act requires payment of the Spe cial Tax by a federal entity acquiring property in the District, it may be unconstitutional. If for any reason property in the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another pu blic agency, subject to the limitation of the maximum authorized rates, the Special Tax will be reallocated to the remaining Taxable Properties in the District. This would result in the owners of such property paying a greater amount of the Special Tax an d could have an adverse impact upon the timely payment of the Special Tax.
Moreover, if a substantial portion of property in the District becomes exempt from the Special Tax because of public ownership, or otherwise, the Maximum Annual Special Tax which c ould be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default would occur with respect to the payment of such principal and interest. 443
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Constitutional Limitations on Taxation and Appropriations Articles XIIIA and XIIIB of the California Constitution. On June 6, 1978, California voters approved an amendment to the California Constitution, commonly known as Proposition 13 (the Jarvis/Gann Initiative), which added Article XIIIA to the California Constitution. The effect of Article XIIIA is to significantly limit the imposition of new ad valorem taxes, special taxes, transaction taxes, and sales taxes. On November 7, 1978, California voters approved Proposition 8, which made certain clarifications to Article XIIIA.
Article XIIIA of the California Constitution limits the amount of ad valorem taxes on real property to 1% of “full cash value” as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975 -76 tax b ill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The “full cash value” is subject to annual adjustment to reflect increases, not to exceed 2% per year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors.
Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and allows local governments to raise their property tax rates above the constitutionally mandated 1% ceiling for the purpose of paying off certain new general obligation debt issued for the acquisition or improvement of real property and approved by two-thirds of the votes cast by the qualified electorate. Article XIIIA requires a vote of two-thirds of the qualified electorate to impose special taxes on real property, while otherwise generally precluding the imposition of any additional ad valorem taxes, special taxes, transaction taxes, and sales taxes. In addition, Article XIIIA requires the approval of two-thirds of all members of the California Legislature to change any State laws resulting in increased tax revenues.
Enactment of Article XIIIA has reduced the amount of general property tax revenues received by the City. This reduction in such revenues makes it less likely that the City or the District will have surplus funds, other than the Reserve Fund for the Bonds, with which to advance funds to make any payments or to cure any deficiency in the Interest Account or Principal Account of the Special Tax Fund, should the City or the District, as applicable, in the exercise of its discretion, ch oose to do so. If there are additional delinquencies after exhaustion of funds in the Reserve Fund for the Bonds, none of the City or the District has any obligation to transfer into the Interest Account or Principal Account of the Special Tax Fund the am ount of any such delinquencies out of any surplus moneys of the City.
On July 2, 1979, the Fifth District Court of Appeal rendered a 3 -0 decision in the case of County of Fresno v. Malmstrom (94 Cal.App.3d 974), that determined that special assessments are not subject to the limitations of Article XIIIA (Proposition 13). The Court held the one percent tax limitation imposed by California Constitution Article XIIIA on ad valorem taxes does not apply to special assessments levied pursuant to the Improvement Act of 1911 (Streets and Highways Code, Section 5000 et seq., the relevant portions of which are incorporated in the 1915 Act) and the 1913 Act. The Court further held that because special assessments pursuant to such acts are not within the definition of “special taxes” in Article XIIIA, the Constitution does not require the levy of assessments and the issuance of bonds to be approved by a two-thirds vote of the qualified electors in an assessment district. On September 12, 1979, the California Supreme Court refused to hear an appeal of the lower court’s decision.
At the November 6, 1979, general election, Proposition 4 (the Gann Initiative) was approved by the voters of California. Such proposition added Article XIIIB to the California Constitution.
Article XIIIB of the California Constitution limits the annual appropriations of the State and of any city, county, school district, authority, or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is 444
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the fiscal year 1978-79 and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies.
Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of government from (i) regulatory licenses, user charges, and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation), and (ii) the investment of tax revenues. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would have to be allocated to fund schools or be returned by revising tax rates or fee schedules over the subsequent two years.
On December 17, 1980, the Third District Court of Appeal rendered a 3-0 decision in the case County of Placer v. Corin (113 Cal. App. 3d 443) that determined that special assessments are not subject to the limitation of Article XIIIB (Proposition 4). The Court held that the definition of “ proceeds of taxes” imposed by California Constitution Article XIIIB does not apply to special assessments and improvement bonds issued pursuant to the 1915 Act and the 1913 Act. The decision of the Court was not appealed.
The enactment of Article XIIIA of the California Constitution (Proposition 13) and subsequent legislative enactments effectively repeal the otherwise mandatory duty on the part of the City, under the 1915 Act, to levy and collect a special tax (in an amount necessary to meet delinquencies, but not to exceed ten cents on each $100 of assessable property within the City in any one year) if other funds are not available to cover delinquencies.
In early 1990, the U.S. Supreme Court struck down as a violation of equal protection certain propert y tax assessment practices in West Virginia, which had resulted in vastly different assessments of similar properties. Since Article XIIIA provides that property may only be assessed up to 2%, per year, except upon change of ownership or new construction, recent purchasers may pay substantially higher property taxes than long-time owners of comparable property in a community. The Supreme Court in the West Virginia case expressly declined to comment in any way on the constitutionality of Article XIIIA.
Based on this decision, however, property owners in California brought three suits challenging the acquisition value assessment provisions of Article XIIIA. Two cases involve residential property and one case involves commercial property. In all three cases, State trial and appellate courts have upheld the constitutionality of Article XIIIA’s assessment rules and concluded that the West Virginia case did not apply to California’s laws.
On June 3, 1991, the U.S. Supreme Court agreed to hear the appeal in the challenge relating to commercial property, but the plaintiff subsequently decided to drop the case.
On October 7, 1991, the U.S. Supreme Court granted the plaintiff’s petition for a writ of certiorari and agreed to hear the Nordlinger v. Lynch case. On June 18, 1992, the U.S. Supreme Court affirmed the Nordlinger decision (112 U.S. 2326) of the California Court of Appeal, Second Appellate District, which previously held that Article XIIIA does not violate the U.S. Constitution.
The City cannot predict whether any other pending or future challenges to the State’s present system of property tax assessment will be successful, when the ultimate resolution of any challenge will occur, or the ultimate effect any decision regarding the State’s present system of p roperty tax assessment will have on the City’s revenues or on the State’s financial obligations to local governments.
Articles XIIIC and XIIID of the California Constitution . Proposition 218, a state ballot initiative known as the “Right to Vote on Taxes Act,” was approved by California voters on November 6, 1996.
Proposition 218 added Articles XIIIC and XIIID to the State Constitution, and, with the exception of certain provisions, Articles XIIIC and XIIID became effective on November 6, 1996. 445
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Among other things, Proposition 218 imposed certain voting requirements and other limitations on the imposition of new or increased taxes, assessments, and property-related fees and charges. Under Proposition 218 (i) all taxes imposed by local governments are deeme d to be either general taxes, or special taxes, (ii) no local government may impose, extend, or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote, and (iii) no local government may impose, extend, or increase any special tax unless and until such tax is submitted to the electorate and approved by a two -thirds vote. Special purpose districts, including community facilities districts and assessment districts, have no power to levy general taxes. The City believes that the issuance of the Bonds does not require the conduct of further proceedings under the Refunding Act, the 1915 Act, the 1913 Act, the Mello -Roos Act, or Proposition 218, as applicable, other than as described herein.
Proposition 218 provides that the initiative power shall “not be prohibited or otherwise limited in matters reducing or repealing any local tax, assessment, fee or charge...” Thus, Proposition 218 removes limitations on the initiative power in matters of, among other things, the Special Tax. Consequently, it is conceivable that the voters of the City or the District could, by future initiative, repeal, reduce, or prohibit the future imposition or increase of any Special Tax, subject to overriding federal constitutiona l principles relating to impairment of contracts.
Although the provisions of Article XIIIC have not been interpreted by the courts, the City believes that the initiative power cannot be used to reduce or repeal the unpaid Special Tax that are pledged as se curity for payment of the Bonds or to otherwise interfere with the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Special Tax that are pledged as security for payment of the Bonds.
The Appellate District, Division One, issued its opinion in 2014 in City of San Diego v. Melvin Shapiro, et al. (228 Cal. App. 4th 756) (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a f inancing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in the entire City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.
The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district.
The facts of the San Diego Decision show that there were hundreds of thousands of registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). There were no registered voters in the District at the time of formation. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court’s holding does not apply to the Special Tax elections in the District. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. Voters in the District approved the Special Tax and the issuance of bonds on April 25, 2023. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, the City believes the Special Tax is being levied in accordance with the Rate and Method and the Act. 446
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The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination.
Ballot Initiatives
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Articles XIII A, XIII B, XIII C, and XIII D of the California Constitution were adopted pursuant to measures qu alified for the ballot pursuant to the State’s constitutional initiative process, including through Proposition 13 in 1978, Proposition 218 in 1996 and Proposition 26 in 2010.
From time to time, other initiative measures could be adopted by California vot ers. The adoption of any such initiative might place limitations on the ability of the State, the City, or other local agencies to increase revenues or to increase appropriations.
As described above, Proposition 218 was approved by California voters in 19 96 and added Article XIII C to the California Constitution. On November 2, 2010, the voters of the State approved Proposition 26, known as the “Supermajority Vote to Pass New Taxes and Fees Act” (“Proposition 26”). Proposition 26, among other things, amends Article XIIIC to the California Constitution principally to define what constitutes a “tax” under the limitations and requirements of that provision. Article XIIIC imposes limitations on local governments when imposing certain taxes, including a requi rement that the local government submit certain taxes to the electorate for its approval. Before Proposition 26, Article XIIIC did not define the term “tax.” Proposition 26 broadly defines a tax under Article XIIIC to include “any levy, charge, or exactio n of any kind imposed by a local government.” Proposition 26 lists several exceptions to the definition of “tax,” which include (a) a charge for a specific benefit or privilege, which does not exceed the reasonable costs of providing the benefit or privile ge, (b) a charge for a government service or product, which does not exceed the reasonable costs of providing the service or product, (c) a charge for the reasonable regulatory costs of issuing licenses and permits, performing investigations, inspections, and audits, and the administrative enforcement thereof, (d) a charge for entrance to or use of local government property, or the purchase, rental, or lease of local government property, (e) a fine, penalty, or other monetary charge imposed as a result of a violation of law, (f) a charge imposed as a condition of property development, and (g) assessments and property -related fees imposed in accordance with the provisions of Article XIIID.
From time to time constitutional initiatives or other initiative measu res may be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State or any political subdivision thereof, including the City, to increase revenues or to increase appropriations, or might affect the ability of the District to collect the Special Tax.
Maximum Special Tax
Within the limits of the Special Tax, the District may adjust the Special Tax levied on all property in the District to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to cure delinquencies and replenish the Reserve Fund to an amount equal to the Reserve Requirement for the respective Bonds and to pay Administrative Expenses. However, the amount of the Special Tax that may be levied against any property in the District is subject to the Maximum Special Tax applicable to it. There is no assurance that the Maximum Special Tax on the property in the District will be sufficient to pay the amounts required to be paid by the Indenture at all times. Additionally, pursuant to the Act, the Special Tax levied in any fiscal year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Tax.” 447
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Payment of the Special Tax is Not a Personal Obligation of the Owners An owner of a parcel of Taxable Property is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation only against the parcel of Taxable Property. If the value of a parcel is not sufficient, taking into account other obligations also payable thereby, to fully secure the Special Tax, the District has no recourse against the owner.
Disclosures to Future Purchasers
The District has recorded a notice of the Special Tax Lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in th e purchase of a parcel of land, a home or a commercial or industrial facility in the District or the lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello–Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.
Parity Taxes and Special Assessments
The ability or willingness of a property owner in the District to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property. The Special Tax and any penalties thereon will constitute a lien against t he lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special tax and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxe s, other special taxes, and certain special assessments regardless of when they are imposed upon the same property. The Special Tax has priority over all existing and future private liens imposed on the property. In addition, other public agencies whose boundaries overlap those of the District could, with or in some circumstances without the consent of the owners of the land in the District, impose additional taxes or assessment liens on the property in the District in order to finance public improvements to be located inside or outside of the District.
The District has no control over the ability of other entities and districts to issue indebtedness secured by special tax or assessments payable from all or a portion of the property in the District. In ad dition, the City is not prohibited itself from establishing assessment districts, community facilities districts or other districts which might impose assessments or taxes against property in the District. In the event any additional improvements are financed pursuant to the establishment of an assessment district, community facilities district or other district, any taxes or assessments levied to finance such improvements will have a lien on a parity with the lien of the Special Tax. The imposition of additional liens on a parity with the Special Tax could reduce the ability or willingness of the property owners to pay the Special Tax and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Tax or the principal of and interest on the Bonds when due.
Depletion of Reserve Fund
The Reserve Fund is to be maintained at an amount equal to the Reserve Requirement. Money in said fund may be used to pay debt service on the Bonds in the event the proceeds of the levy and collection of the Special Tax against property in the District are insufficient. If funds in the Reserve Fund are used to pay debt service on the Bonds, the funds can be replenished from the proceeds of the levy and collection of the Special Tax that are in excess of the amount required to pay all amounts to be paid pursuant to the Indenture. However, 448
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no replenishment from the proceeds of a levy of the Special Tax can occur as long as the proceeds that are collected from the levy of the Special Tax at the maximum tax rates, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the Reserve Fund will be depleted by its use to pay such amounts and will not be replenished by the levy of the Special Tax. There is no assurance that the amount in the Reserve Fund will, at any particular time, be sufficient to pay all such amounts or that any amounts of the Reserve Requirement used for debt service on the Bonds will be fully replenished from the proceeds of the levy and collection of the Special Tax.
Bankruptcy and Legal Delays
The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent unpaid tax, as discussed in “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local co urt calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the obligation to pay the Special Tax to become extinguished, the bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings because federal bankruptcy laws may provide for an automatic stay of f oreclosure and sale of tax sale proceedings. Any such delays could increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full. Moreover, if the value of the subject property is less than the lien of the Special Tax, such excess could be treated as an unsecured claim by the bankruptcy court. Further, should remedies be exercised under the federal bankruptcy laws against Taxable Property, p ayment of the Special Tax may be subordinated to bankruptcy law priorities.
Thus, certain claims may have priority over the Special Tax in a bankruptcy proceeding even though they would not outside of a bankruptcy proceeding.
FDIC/Federal Government Interests In Properties
The ability of the District to collect interest and penalties specified by the Act and to foreclose the lien of delinquent Special Tax may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the “FDIC”), or other federal government entities such as Fannie Mae or Freddie Mac, has or obtains an interest.
In the case of the FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an i nterest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non-payment of taxes.
The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County, California, in United States Bankruptcy Court and in Federal District Court. 449
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The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross -appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with respect to the payment of pre-receivership liens based upon delinquent property tax.
The District is unable to predict what effect the application of the Policy S tatement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale.
In the case of Fannie Mae and Freddie Mac, in the event a parcel of Taxable Property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or in the event a private deed of trust secured by a parcel of Taxable Property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Tax may be limited. Federal courts have h eld that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of Taxable Property but does not pay taxes and assessments levied on the parcel (including the Special Tax), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Tax, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Tax and preserve the federal government’s mortgage interest.
The District’s remedies may also be limited in the case of delinquent Special Tax with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.
Geologic, Topographic and Climatic Conditions
The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event.
Like all of Southern California, the land within the District is subject to seismic activity. The District is not located in a County Designated Fault Zone or an Earthquake Fault Zone Boundary. However, faults that have the potential to generate the strongest ground s haking in the Fontana area include the Cucamonga (thrust fault), the San Jacinto (strike -slip fault), and the San Andreas (strike -slip) fault. The Cucamonga fault is an active fault that crosses the northern portion of the City, trending northwest along t he foot of the San Gabriel Mountains. The Lytle Creek Branch of the San Jacinto Fault is an active fault that crosses the extreme northeast portion of the City in a southeastern direction. There are several other faults that border the Lytle Creek alluvial basin, including the Chino, San Andreas and San Jacinto faults.
The Federal Emergency Management Agency has determined that the District is located in a Zone “X” flood area (an area determined to be outside of the 0.2 percent annual chance floodplain), a nd flood insurance will not be required.
In recent years, wildfires have caused extensive damage throughout the State. The last major wildfire in the vicinity of the City was the Grand Prix Fire in October 2003. There have been smaller fires, such as the 450
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147-acre Sierra Fire that burned in November 2018, the 277-acre Karen Fire in July 2020 and the Sierra Fire that burned in June 2024. Per the City’s General Plan and Zoning Map, the District is within a fire overlay zone, which, per the State of Californ ia’s Fire Hazard Map, is within a Local Responsibility Area with the recommendation for the site to be partially in a high and partially in a very high fire severity zone.
While fire breaks and fire roads have been incorporated into the development, recent ly 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.
Some commentators believe that climate change will lead to even more frequent and more damaging wildfires in the future. Property damage due to wildfire could result in a significant decrease in the market value of property in the District and in the ability or willingness of property owners to pay the Special Tax.
In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Tax when due. In addition, the value of land in the District could be diminished in the aftermath of one or more of such events, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Tax.
Hazardous Substances
While governmental taxes, assessments, and charges are a common claim against the value of a parcel of Taxable Property, o ther less common claims may be relevant. One example is a claim with regard to a hazardous substance.
In general, the owners and operators of a parcel of Taxable Property may be required by law to remedy conditions of the parcel relating to releases or th reatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affected by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because t he purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilit ies could significantly affect the value of the property that is realizable upon a delinquency and foreclosure.
While the District is not aware that the owner (or operator) of any of Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist and that the District is not aware of them. Lennar Homes has also represented to the District that it is not aware of any substances currently classified as hazardous by the federal government or the State located on its property within the District.
Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel of Taxable Property that is realizable upon a delinquency. 451
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No Acceleration Provision
The Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture.
Bonds Are Limited Obligations
Neither the faith and credit nor the taxing power of the District (except to the limited extent set forth in the Indenture), the City, the State or any political subdivision thereof is pledged to the payment of the Bonds or any Additional Bonds. The Bonds are limited obligations of the District; and, except as provided in the Indenture, they are payable solely from Net Special Tax Revenues and the other assets pledged therefore under the Indenture. Net Special Tax Revenues cou ld be insufficient to pay debt service on the Bonds as a result of delinquencies in the payment of the Special Tax or the insufficiency of proceeds derived from the sale of land within the District following a delinquency in the payment of the applicable S pecial Tax. The District has no obligation to pay debt service on the Bonds in the event of insufficient Net Special Tax Revenues, except to the extent that money is available for such purpose in the Reserve Fund. The District’s only obligation with respect to delinquent Special Tax is to pursue judicial foreclosure proceedings under the circumstances described in the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant for Superior Court Foreclosure.”
Loss of Tax Exemption
As discussed under “TAX MATTERS,” interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance, as a result of acts or omissions of the District subsequent to the issuance of the Bonds in violation of the District’s covenants with respect to the Bonds.
Should interest become includable in gross income, the Bonds are not subject to redemption by reason thereof and will remain outstanding until maturity or unless earlier redeemed pursuant to optional or mandatory redemption or redemption upon prepayment of the Special Tax.
Potential Early Redemption of Bonds from Special Tax Prepayments Property owners within the District are permitted to prepay their Special Tax at any time. Such payments will result in a mandatory redemption of Bonds from Special Tax prepayments on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of such Special Tax prepayment. The resulting redemption of Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See “THE BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments.”
Cybersecurity
The City, like many other public and private entities, relies on a larg e and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage. To date, the City has not experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity systems that are in place. However, no assurances can be given that the City’s efforts to manage cyber threats and attacks will be successful or that any such attack will not materially impact the operations or finances of the City.
In May 2021, a public facing web server of the City that was responsible for building permit and inspection scheduling was compromised. The system contained vendor and database account credentials that were promptly changed. An investigation revealed that the credentials had not been used since the compromise 452
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and that changing the credentials prevented any further unauthorized access. All traces of the compromise were removed. Mitigation measures, including a web application firewall and Secure Sockets Layer (SSL) decryption, were put into place to prevent future compromises and additional prevention measures have been implemented.
No data was lost and no damage to any systems, financial or otherwise, occurred. There were no costs associated with remediation.
Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which Lennar Homes is able to complete and sell homes and demand by and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the war in Ukraine. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.
Amid an unexpected run on deposits, the Federal Deposit Insurance Corporation (the “FDIC”) announced on March 10, 2023 that it had been appointed as receiver for Silicon Valley Bank ( “SVB”), a large California bank and the 16th largest bank in the United States, and was liquidating SVB as a going concern.
Additionally, on March 12, 2023, the FDIC announced that it had been appointed as receiver for Signature Bank, another large region al bank. However, the United States Treasury Department, the Federal Reserve and the FDIC issued a joint statement that all deposits at both institutions would be honored, regardless of dollar amount.
On March 26, 2023, First Citizens BancShares announce d that it would acquire SVB. On May 1, 2023, the FDIC announced that it had been appointed as receiver for First Republic Bank and reached a purchase and assumption agreement with JPMorgan Chase Bank, National Association, to assume all of the deposits an d substantially all of the assets of First Republic Bank. Due to the failures of SVB, Signature Bank, and First Republic Bank, there has been uncertainty and concern in the financial markets that there may be additional bank liquidity issues.
Lennar Homes expects to use internally generated funds (which may include home sales proceeds and funding from its parent company) to complete its development in the District. However, the uncertainty in the financial markets may affect homebuyers’ willingness or ab ility to obtain financing for the purchase of new homes within the District, which, in turn, could impact Lennar Homes’ ability or determination to complete its development in the District in the budget and timeframe described herein. See “PROPERTY OWNERS HIP AND THE DEVELOPMENT.”
CONTINUING DISCLOSURE
Pursuant to a Continuing Disclosure Agreement (the “District Continuing Disclosure Agreement”) with U.S. Bank Trust Company, National Association, in its capacity as Trustee and in its capacity as dissemination agent, the District has agreed to provide, or cause to be provided, to the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found on the Internet at www.emma.msrb.org (“EMMA”), on an annual basis certain financial information and operating data concerning the District. The District has further agreed to provide notice to EMMA of certain listed events. The District’s covenants have been made in order to assist the Underwriter in complying with the Rule.
The District has not previously entered into a ny undertaking with respect to the Rule. However, the City, as well as the Fontana Public Financing Authority (the “Authority”), the Fontana Public Facilities Financing Authority (the “Facilities Authority”), the Successor Agency to the Fontana Redevelopment Agency (the “Successor Agency”) and various community facilities districts within the City (each, a “CFD”), all of which are entities with the City Council as the legislative body, have entered into numerous continuing disclosure undertakings.
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Except as described below, within the last five years, the City and its related entities have complied in all material respects with its undertakings under the Rule: (i) t he Authority and the Facilities Authority with respect to their respective bond issues and 12 CFDs with respect to each such CFD’s bond issue(s) filed the City’s Fiscal Year 2019-20 audited financial statements late and failed to file unaudited financial statements on or before the deadlines therefore; (ii) 12 CFDs with respect to each such CFDs’ bond issue(s) and the Facilities Authority with respect to its bond issues filed unaudited financial statements for Fiscal Year 2020-21 but did so after the deadline for meeting those continuing disclosure obligations; the audited financial statement s were subsequently filed to EMMA when they became available; (iii) the Successor Agency with respect to its bonds filed unaudited financial statements for Fiscal Year 2020-21 prior to the deadline therefore and posted audited financial statements when such document became available; (iv) the Successor Agency with respect to its bonds filed its Fiscal Year 2022 audited financial statements late and failed to file unaudited financial statements on or before the deadline therefore; (v) with respect to its Fiscal Year 2021-22 disclosure, the Facilities Authority filed unaudited financial information when its audited financial statements were not available, but such filing excluded certain required information typically included in audited financial statements; the Fiscal Year 2021-22 audited financial statements were subsequently posted to EMMA when they became available; (vi) a CFD failed to file one annual report for one issue of bonds for which the official statement relating to such bonds contained all of the information required to be contained in such report; (vii) t he Facilities Authority with respect to two bond issues filed the City’s Fiscal Year 2022-23 audited financial statements six days late and failed to file unaudited financial statements on or before the deadlines therefor; and (viii) the District is aware that not all of the required information was included with respect to a number of annual report filings by the City, the Authority, the Successor Agency and several CFDs, including required tabular information.
The City has since made filings on behalf of itself and its related entities to correct material omissions with respect to the filings that were required to have been made within the past five years and has adopted written procedures to ensure future compliance with the City’s disclosure undertakings and those of its related entities.
Except as disclosed in this Official Statement, within the last five years, the City, the Successor Agency, the Facilities Authority and the Authority have not failed to timely comply with their respective prior continuing disclosure obligations under the Rule in all material respects. The full text of the form of the District Continuing Disclosure Agreement is set forth in Appendix G.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax.
Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX D hereto.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be in terest and payable at least annually over the term of such Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is e xcluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any 454
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maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight -line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon trade or business disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner.
Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compli ance with these covenants.
Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of i ssuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds.
Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts trea ted as interest on, the Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interes t. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should co nsult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
The opinion of Bond Counsel is based on current legal authori ty, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts.
Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the District, or about the effect of future changes in the Code, the applicable regulations, the interpretation 455
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thereof or the enforcement the reof by the IRS. The District has covenanted, however, to comply with the requirements of the Code.
Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the District or the Beneficial Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax -exempt bonds is difficult, obtaining an independent review of IRS positions with which the District legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the District or the Beneficial Owners to incur significant expense.
Payments on the Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations is sued thereunder, a non-corporate Beneficial Owner of Bonds may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TI N furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.
ABSENCE OF LITIGATION
In connection with the issuance of the Bonds, the City Attorney of the City will deliver a certificate to the effect that, to the best of the City Attorney’s knowledge, after due inquiry and investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened, or any unfavorable decision, ruling or finding, against or affecting the City or the District, which would adversely impact the ability of the City or the D istrict to complete the transactions described in, or contemplated by, the Indenture or this Official Statement, restrain or enjoin the collection of the Special Tax, or in any way contest or affect the validity of the Bonds, the Indenture, the Special Tax, or the transactions described herein.
ABSENCE OF RATINGS
The District has not made, and does not contemplate making, application to any rating organization for a rating on the Bonds.
CERTAIN LEGAL MATTERS
Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, will render an opinion with respect to the validity and enforceability of the Indenture and as to the validity of the Bonds. A copy of the form of such approving opinion is attached hereto as Appendix D. Bond Counsel has not undertaken a ny responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Bonds and expresses no opinion relating thereto. Certain legal matters will be passed upon for the City by the City Attorney and by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, as Disclosure Counsel. 456
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Certain legal matters will be passed upon for the Underwriter by its counsel, Anzel Galvan LLP, San Francisco, California.
Although it is serving as Bond Counse l to the District in connection with the issuance and sale of the Bonds, Bond Counsel represents the Underwriter in connection with other financings and matters unrelated to the Bonds. Disclosure Counsel and the City Attorney also represent the Underwrite r in connection with other financings and matters unrelated to the Bonds.
UNDERWRITING
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at a price of $_________ _, being the $__________ principal amount, [plus/less] [net] original issue [premium/discount] of $__________ and less an Underwriter’s discount of $__________). The Bond Purchase Agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter’s compensation is contingent upon the successful issuance of the Bonds.
Under certain circumstances, the Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the inside front cover page hereof. The offering prices may be changed from time to time by the Underwriter.
FINANCIAL INTERESTS
The fees being paid to the Municipal Advisor, Bond Counsel, Disclosure Counsel, Underwriter, and Underwriter’s Counsel are contingent upon the issuance and delivery of the Bonds.
MUNICIPAL ADVISOR
The District has retained CSG Advisors Incorporated, San Francisco, California, as municipal advisor (the “Municipal Advisor”) for the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.
CSG Advisors Incorporated is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds.
Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions.
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The execution and delivery of this Official Stat ement by the City Manager of the City has been duly authorized by the City Council of the City of Fontana acting in its capacity as the legislative body of the District.
CITY OF FONTANA COMMUNITY FACILITIES
DISTRICT NO. 112 (THE GARDENS PHASE ONE)
By:
City Manager
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APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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RATE AND METHOD OF APPORTIONMENT FOR
CITY OF FONTANA COMMUNITY FACILITIES DISTRICT NO. 112
(THE GARDENS PHASE ONE)
A Special Tax as hereinafter defined shall be levied on all Assessor ’s Parcels of Taxable Property in City of Fontana Community Facilities District No. 112 (The Gardens Phase One) (“CFD No. 112”) and collected each Fiscal Year, in an amount determined by the City Council of the City of Fontana, through the application of the Rate and Method of Apportio nment as described below. All of the real property in CFD No. 112, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the land area expressed in acres of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County map or the land area calculated to the reasonable satisfaction of the CFD Administrator using the boundaries set forth on such map or plan . For residential dwelling units within a condominium plan, the Acres applicable to each residential dwelling unit shall be determined by dividing (i) the Acres of the underlying lot or parcel on which the residential dwelling unit is constructed or to be constructed, by (ii) the total number of residential dwelling units constructed or to be constructed on such lot or parcel. The square footage of an Assessor ’s Parcel is equal to the Acreage of such parcel multiplied by 43,560.
“Act” means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 (commencing with Section 53311) of the California Government Code. “Administrative Expenses” means the following actual or reasonably estimated costs directly r elated to the administration of CFD No. 112, including but not limited to : the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Sp ecial Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 112 or any designee thereof of complying with arbitrage rebate requirements with respect to the Special Tax and CFD No. 112 Bonds; the costs to the City, CFD No. 112 or any designee thereof of complying with disclosure requirements of the City, CFD No. 112 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 112, or any designee thereof related to the reduction of the Assigned Facilities Special Tax and Backup Facilities Special Tax in accordance with Section C.1 herein; the costs of the City, CFD No. 112 or any designee thereof related to an appeal o f the Special Tax; and the City ’s annual administration fees and third party expenses related to CFD No. 112 Bonds. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 112 for any other administrative purposes of CFD No. 112, including attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
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“Assessor” means the Assessor of the County.
“Assessor’s Parcel” means a lot or parcel to which an Assessor’s parcel number is assigned as determined from an Assessor’s Parcel Map or the applicable assessment roll. “Assessor’s Parcel Map ” means an official map of the Assessor designating parcels by Assessor ’s Parcel number.
“Assigned Facilities Special Tax” means the applicable Facilities Special Tax for (i) Residential Property as determined in accordance with Section C.1.a.(2) herein, an d (ii) Non-Residential Property as determined in accordance with Section C.1.a.(3) herein.
“Assigned Services Special Tax” means the Services Special Tax, determined in accordance with Section C.2.b herein, that can be levied in any Fiscal Year on any Assessor’s Parcel of Developed Property. “Authorized Facilities” means those facilities eligible to be funded by CFD No. 112. “Authorized Services” means those services eligible to be funded by CFD No. 112 in accordance with the Act, including, but not limited to, 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.
“Backup Facilities Special Tax ” means the Facilities Special Tax applicable to each Assessor ’s Parcel of Developed Property, as determined in accordance with Section C.1.a.(4) herein. “Buildout” means, for CFD No. 112, that all expected building permits for residential dwelling units and/or non-residential development to be constructed within CFD No. 112 have been issued, as determined by the CFD Administrator.
“CFD Administrator” means an official of the City, or desi gnee thereof, responsible for determining the Special Tax Requirement for Facilities and the Special Tax Requirement for Services, providing for the levy and collection of the Special Taxes, and performing other duties as set forth herein. “CFD No. 112” means City of Fontana Community Facilities District No. 112 (The Gardens Phase One). “CFD No. 112 Bonds” means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 112 and secured by the Facilities Special Tax levy on property within the boundaries of CFD No. 112 under the Act.
“City” means the City of Fontana, California.
“Contractual Impositions ” means (a) a voluntary contractual assessment established and levied on an Assessor’s Parcel pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.10 et seq.), as amended from time to time, (b ) a special tax established and levied on an Assessor ’s Parcel pursuant to Section 53328.1 of the California Government Code and related provisions of the Act, as amended from time to time, and (c) any other fee, charge, tax or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof.
“Council” means the City Council of the City acting as the legislative body of CFD No. 112. “County” means the County of San Bernardino.
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“Developed Property” means, for each Fiscal Year, (i ) with respect to the Fa cilities Special Tax, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which a building permit for new construction, other than the construction of a garage, parking lot, or parking structure, was issued after January 1, 2023 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Facilities Special Taxes are being levied, and (ii ) with respect to the Services Special Tax, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, (a) for which the Final Residential Subdivision was recorded prior to the Fiscal Year for which the Services Special Taxes are being levied, or (b) for which a building permit has been issued with respect to Non-Residential Property on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Services Special Taxes are being levied. “Facilities Special Tax” means the special tax to be levied in each Fiscal Year on each Assessor ’s Parcel of Taxable Property within CFD No. 112 to fund the Special Tax Requirement for Facilities , as set forth in Section C.1 herein.
“Final Residential Subdivision ” means a Final S ubdivision that creates individual lots for which building permits may be issued for residential dwelling units without further subdivision of such property. “Final Subdivision” means (i) a subdivision of property by recordation of a final map , parcel map, or lot line adjustment approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots or parcels for which building permits may be issued, or (ii) for condominiums, a final map approved by the City and a condominium plan recorded pursuant to California Civil Code Section 4285 that creates an individual lot(s) for which a building permit(s) may be issued without further subdivision. The term “Final Subdivision” shall not include any Assessor’s Parcel Map or subdivision map or portion thereof that does not create individual lots for which a building permit may be issued, including Assessor’s Parcels that are designated as remainder parcels . Notwithstanding the above, a condominium pla n for which one or more building permits have been issued, but no individual lots have been created for such building permits, shall be considered a Final Subdivision, and the portion of the condominium plan for which building permits have been issued shall be defined as Developed Property. “Fiscal Year” means the period starting July 1 and ending on the following June 30. “Indenture” means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which CFD No. 112 Bonds are issued, as modified, amended and/or supplemented from time to time. “Land Use Class” means any of the classes listed in Table 1, Table 5, or Table 6 herein. “Lower Income Households Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s Parcel within the boundaries of CFD No. 112 that is subject to a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the County’s assessment roll finalized as of the last preceding January 1.
“Maximum Facilities Special Tax” means the maximum Facilities Special Tax, determined in accordance with Section C.1 herein, that can be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property. “Maximum Services Special Tax” means the maximum Services Special Tax, determined in accordance with Section C.2 herein, that can be levied in any Fiscal Year on any Assessor’s Parcel of Developed Property. “Minimum Sale Price” means the minimum price at which any parcel in a given Land Use Class has sold or is expected to be sold in a normal marketing environment and shall not include prices for such parcels that are sold at a discount to expected sales prices for the purpose of stimulating the initial sales activity with respect to such Land Use Class.
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“Non-Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit(s) has been issued by the City permitting the construction of one or more non-residential structures or facilities. “One Story Residential Property” means an Assessor’s Parcel of Residential Property containing a one-story residential dwelling unit as set forth in the building permit(s) issued for such Assessor’s Parcel and/or as set forth in the appropriate records kept by the Building and Safety Department of the City , or other applicable City department, as determined by the CFD Administrator.
“Outstanding Bonds” means all CFD No. 112 Bonds which are outstanding under the Indenture. “Planning Area” means an area designated with the letters “P.A.” as shown on Exhibit B. “Price Point Consultant ” means any consultant or firm of such consultants selected by CFD No. 112 that (a) has substantial experience in performing price point studies for residential dwelling units within community facilities districts or otherwise estimating or confirming pricing for residential dwelling units in community facilities districts, (b) has recognized expertise in analyzing economic and real estate data that relates to the pricing of residential dwelling units in community facilities districts, (c) is in fact independent and not under the control of CFD No. 112 or the City, (d) does not have any substantial interest, direct or indirect, with or in (i) CFD No. 112, (ii) the City, (iii) any owner of real property in CFD No. 112, or (iv) any real property in CFD No. 112, and (e) is not connected with CFD No. 112 or the City as an officer or employee thereof, but who may be regularly retained to make reports to CFD No. 112 or the City. “Price Point Study” means a price point study or a letter updating a previous price point study prepared by the Price Point Consultant pursuant to Section C herein.
“Property Owner Association Property” means, for each Fiscal Year, (i) any property within the boundaries of CFD No. 112 for which the owner of record, as determined from the County’s assessment roll for the Fiscal Year in which the Special Tax is being levied, is a property owner ’s association, including any master or sub - association, or (ii) any property located in a Final Subdivision that was recorded as of the January 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street. Notwithstanding the foregoing, any property previously classified as Developed Property and subsequently owned in fee or by easement, or dedicated to, a property owner assoc iation, including any master or sub -association, shall remain classified as Developed Property.
“Proportionately” means that the ratio of the actual Facilities Special Tax levy to the Assigned Facilities Special Tax is equal for all Assessor ’s Parcels of Developed Property, and that the ratio of the actual Services Special Tax levy to the Assigned Services Special Tax is equal for all Assessor ’s Parcels of Developed Property. For Undeveloped Property, “Proportionately” means that the ratio of the actual Facilities Special Tax levy per Acre to the Maximum Facilities Special Tax per Acre is equal for all Assessor ’s Parcels of Undeveloped Property.
The term “Proportionately” shall similarly be ap plied to other categories of Taxable Property as listed in Section D herein.
“Public Property” means, for each Fiscal Year, any property within the boundaries of CFD No. 112 that is (i) owned by, irrevocably offered or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided , however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement.
“Rate and Method of Apportionment” means this Rate and Method of Apportionment for CFD No. 112. 462
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“Residential Floor Area” means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for a n Assessor’s Parcel shall be as set forth in the building permit(s) issued for such Assessor’s Parcel and/or as set forth in the appropriate records kept by the Building and Safety Department of the City, or other applicable City department, as determined by the CFD Administrator. “Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit(s) has been issued by the City permitting the construction thereon of one or more residential dwelling units. “Services Special Tax ” means the special tax to be levied in each Fiscal Year on each Assessor ’s Parcel of Developed Property within CFD No. 112 to fund the Special Tax Requirement for Services , as set forth in Section C.2 herein.
“Special Tax” or “Special Taxes” means the Facilities Special Tax and/or Services Special Tax, as applicable. “Special Tax Requirement for Facilities” means, for any Fiscal Year, that amount required, after taking into account available amounts held in the funds and accounts under the Indenture, for the following items: (i) debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Year; (ii) periodic costs with respect to the CFD No. 112 Bonds, including but not limited to, costs of credit enhancement and f ederal rebate payments due in the calendar year commencing in such Fiscal Year; (iii ) pay all or a portion of Administrative Expenses ; (iv ) any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) without duplicating any amounts described in clause (iv), above, reasonably anticipated Facilities Special Tax delinquencies based on the delinquency rate for the Facilities Special Tax in the previous Fiscal Year, as said levy for delinquencies shall be limited by the Act; and (vi) pay directly for the acquisition or construction of Authorized Facilities, provided that the inclusion of such amount does not increase the Facilities Special Tax levy beyond the first step in Section D.1 herein. “Special Tax Requirement for Services” means that amount required in any Fiscal Year for CFD No. 112 to (i) pay directly for the Authorized Services; (ii) pay Administrative Expenses not funded through the Special Tax Requirement for Facilities as determined by the CFD Administrator ; (iii) pay for reasonably anticipated Services Special Tax delinquencies based on the delinquency rate for the Services Special Tax levy in the previous Fiscal Year; less (iv ) a credit for funds available to reduce the annual Services Special Tax levy, as determined by the CFD Administrator, so long as the amount required is not less than zero. “State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD No. 112 which are not exempt from the Special Tax pursuant to applicable law or Section E herein. “Taxable Property Owner Association Property ” means all Assessor ’s Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. “Taxable Public Property” means all Assessor’s Parcels of Public Property that are not exempt pursuant to Section E herein.
“Total Tax Burden” means, for a parcel of residential property within a Land Use Class, for the Fiscal Year in which Total Tax Burden is being calculated, the sum of (a ) the Assigned Facilities Special Tax for such Fiscal Year, plus (b) the Assigned Services Special Tax for such Fiscal Ye ar, plus (c) the ad valorem property taxes, special assessments, special taxes for any overlapping community facilities districts, and any other governmental fees, charges (other than fees or charges for services such as sewer and trash), taxes and assessments (which, for purposes of clarity, do not include Contractual Impositions) collected by the County on ad valorem tax bills and that the CFD Administrator estimates would be levied or imposed on such residential property in such Fiscal 463
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Year if the residential dwelling unit thereon or therein had been completed and sold, and was subject to such fees, charges, taxes and assessments in such Fiscal Year.
“Trustee” means the trustee or fiscal agent under the Indenture. “Two Story Residential Property” means an Assessor’s Parcel of Residential Property containing a two-story residential dwelling unit as set forth in the building permit(s) issued for such Assessor’s Parcel and/or as set forth in the appropriate records kept by the Building and Safety Dep artment of the City , or other applicable City department, as determined by the CFD Administrator.
“Undeveloped Property ” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property.
Please refer to additional definitions in Section H herein relating to the Prepayment of Facilities Special Tax.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, commencing with Fiscal Year 2023-2024, all Taxable Property within CFD No. 112 shall be classified as Developed Property, Undeveloped Property, Taxable Public Property or Taxable Property Owner Association Property, and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D herein.
C. MAXIMUM SPECIAL TAX RATE
1. Facilities Special Tax
At least 30 days prior to the issuance of the first series of CFD No. 112 Bonds, the Assigned Facilities Special Tax for Residential Property (set forth in Table 1 below) shall be analyzed in accordance with and subject to the conditions set forth in this Section C. At such time, the CFD Administrator shall request the Price Point Consultant to prepare a Price Point Study setting fort h the Minimum Sale Price of residential property within each Land Use Class. If based upon such Price Point Study the CFD Administrator calculates that the Total Tax Burden applicable to one or more Land Use Classes of residential property constructed or to be constructed within CFD No. 112 shall exceed 1.95% of the Minimum Sale Price of such residential property constructed or to be constructed within CFD No. 112, the CFD Administrator shall reduce the Assigned Facilities Special Tax to the extent necessary to cause the Total Tax Burden that shall apply to residential property within such Land Use Class(es) to not exceed 1.95% of the Minimum Sale Price of such residential property. Each Assigned Facilities Special Tax reduction for a Land Use Class shall be calculated separately, and it shall not be required that such reduction be proportionate among Land Use Classes. In connection with any reduction in the Assigned Facilities Special Tax for Residential Property, the CFD Administrator shall also reduce the Assigned Facilities Special Tax for Non-Residential in accordance with Section C.1.a.(3) herein, and the Backup Facilities Special Tax in accordance with Section C.1.a.(4) herein. Upon determining the reductions, if any, in the Assigned Facilities Spec ial Tax and Backup Facilities Special Tax required pursuant to this Section C, the CFD Administrator shall complete the Certificate to Amend Facilities Special Tax substantially in the form attached hereto as Exhibit A (the “Certificate to Amend”) and shall execute such completed Certificate to Amend and shall deliver such Certificate to Amend to CFD No. 112. Upon receipt thereof, if in satisfactory form, CFD No. 112 shall execute such Certificate to Amend. The reduced Assigned Facilities Special Tax and Ba ckup Facilities Special Tax specified in such Certificate to Amend shall become effective upon the execution of such Certificate to Amend by CFD No. 112. The Assigned Facilities Special Tax and Backup Facilities Special Tax reductions permitted pursuant to this Section C shall be reflected in an amended notice of Special Tax lien which CFD No. 112 shall cause to be recorded with the San Bernardino County Recorder as soon as practicable after execution of the Certificate to Amend by CFD No. 112. If based u pon such Price Point Study the CFD Administrator calculates that the Total Tax Burden applicable to each Land Use Class of residential property constructed or to be constructed within CFD No. 112 does not exceed 1.95% of the Minimum Sale Price of each 464
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such Land Use Class of residential property constructed or to be constructed within CFD No. 112, then there shall be no reduction in the Assigned Facilities Special Tax, nor shall there be a reduction in the Backup Facilities Special Tax.
a. Developed Property
(1). Maximum Facilities Special Tax
The Maximum Facilities Special Tax for each Assessor’s Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Facilities Special Tax or (ii) the amount derived by application of the Backup Facilities Special Tax. (2). Assigned Facilities Special Tax for Residential Property Residential Property shall be assigned to Land Use Classes 1 through 15 as listed in Table 1 below based on the Planning Area, Description, and the Residential Floor Area associated with each such residential dwelling unit. The Assigned Facilities Special Tax that shall be levied in any Fiscal Year for each Land Use Class is shown below in Table 1 and shall not be subject to escalation.
Table 1
Assigned Facilities Special Tax for Residential Property City of Fontana CFD No. 112 (The Gardens Phase One)
Land
Use
Class
Planning
Area Description
Residential Floor Area
(square feet)
Assigned
Facilities
Special Tax
1 Planning
Area
7, 8, 9 & 10
Two Story Residential Property 3,400 or greater $5,626 per unit 2 Two Story Residential Property 3,200 to less than 3,400 $5,417 per unit 3 Two Story Residential Property 3,000 to less than 3,200 $5,208 per unit 4 Two Story Residential Property 2,800 to less than 3,000 $5,007 per unit 5 Two Story Residential Property 2,600 to less than 2,800 $4,883 per unit 6 Two Story Residential Property 2,400 to less than 2,600 $4,381 per unit 7 Two Story Residential Property 2,200 to less than 2,400 $4,164 per unit 8 Two Story Residential Property Less than 2,200 $3,947 per unit 9 One Story Residential Property 2,000 or greater $4,829 per unit 10 One Story Residential Property Less than 2,000 $4,613 per unit 11 Planning
Area
5 & 6
Residential Property 1,900 or greater $3,845 per unit
12 Residential Property 1,700 to less than 1,900 $3,414 per unit 13 Residential Property 1,500 to less than 1,700 $2,953 per unit 14 Residential Property 1,300 to less than 1,500 $2,768 per unit 15 Residential Property Less than 1,300 $2,583 per unit
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(3). Assigned Facilities Special Tax for Non-Residential Property The Assigned Facilities Special Tax for an Assessor ’s Parcel of Non-Residential Property within a Planning Area shall equal the lesser of (a ) the Assigned Facilities Special Tax applicable for such Planning Area set forth in Table 2 below (as such Assigned Facilities Special Tax shall not be subject to escalation), or (b ) in connection with any reduction in the Assigned Facilities Special Tax for Residential Property as set forth in Section C.1 herein, the amount per Acre calculated for each Planning Area pursuant to the formula below:
RAFST = AFST ATP
These terms have the following meaning:
RAFST = the reduced Assigned Facilities Special Tax for Non-Residential Property within a Planning Area.
AFST = The total estimated Assigned Facilities Special Tax levy within such Planning Area based on the reduced Assigned Facilities Special Tax es for Developed Property permitted pursuant to Section C.1 herein which could be levied on all expected development within such Planning Area assuming Buildout of CFD No. 112.
ATP = The sum of the Acreage of all Taxable Property within a Final Subdivision (assuming Buildout of CFD No. 112) within such Planning Are a (after excluding Public Property and Property Owner Association Property as set forth in Section E.1 herein).
Table 2
Assigned Facilities Special Tax for Non-Residential Property City of Fontana CFD No. 112 (The Gardens Phase One)
Planning Area
Assigned
Facilities
Special Tax
P.A. 5 $55,240 per Acre
P.A. 6 $50,260 per Acre
P.A. 7 $63,050 per Acre
P.A. 8, 9 & 10 $40,030 per Acre
(4). Backup Facilities Special Tax
The Backup Facilities Special Tax for an Assessor ’s Parcel of Developed Property within a Planning Area shall equal the lesser of (a) the Backup Facilities Special Tax applicable for such Planning Area set forth in Table 3 below (as such Backup Facilities Special Tax shall not be subject to escalation), or (b) in connection with any reduction in the Assigned Facilities Special Tax as set forth in Section C.1 herein, the amount per Acre calculated for each Planning Area pursuant to the formula below:
RBFST = AFST ATPX
These terms have the following meaning:
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RBFST = the reduced Backup Facilities Special Tax for Developed Property within a Planning Area.
AFST = The total estimated Assigned Facilities Special Tax levy within such Planning Area based on the reduced Assigned Facilities Special T axes for Developed Property permitted pursuant to Section C.1 herein which could be levied on all expected development within such Planning Area assuming Buildout of CFD No. 112.
ATPX = The sum of the Acreage of all Taxable Property within a Final Subdivision (assuming Buildout of CFD No. 112) within such Planning Area (after excluding Public Property and Property Owner Association Property as set forth in Section E.1 herein) multiplied by 90%.
Table 3
Backup Facilities Special Tax for Developed Property
City of Fontana CFD No. 112 (The Gardens Phase One)
Planning Area
Backup
Facilities
Special Tax
P.A. 5 $64,990 per Acre
P.A. 6 $59,120 per Acre
P.A. 7 $70,050 per Acre
P.A. 8, 9 & 10 $44,480 per Acre
Furthermore, all Assessors ’ Parcels within CFD No. 112 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Facilities Special Tax if the CFD Administrator calculates that (i ) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Facilities Special Tax that shall be levied against all Assessors ’ Parcels of Developed Property in CFD No. 112 results in 110% debt service coverage (i.e., the Assigned Facilities Special Tax that shall be levied against all Developed Property in CFD No. 112 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, a nd (b) Administrative Expenses), and (ii) all authorized CFD No. 112 Bonds have already been issued or the Council has covenanted that it shall not issue any additional CFD No. 112 Bonds (except refunding bonds) to be supported by the Facilities Special Tax in CFD No. 112. (5). Multiple Land Uses
In some instances an Assessor ’s Parcel may contain both Developed Property and Undeveloped Property. In such cases , the Acreage of the Assessor’s Parcel shall be allocated between Developed Property and Undeveloped Property based on the portion of the Assessor’s Parcel for which building permits had been issued prior to May 1 of the prior Fiscal Year and the portion of the Assessor’s Parcel for which building permits had not been issued prior to May 1 of the prior Fiscal Year.
Furthermore, Developed Property may contain more than one Land Use Class. In such cases, the Acreage that is considered Developed Property shall be allocated between Residential Property and Non-Residential Property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor’s Parcel. The Maximum Facilities Special Tax that can be levied on such Assessor’s Parcel shall be the sum of the Maximum Facilities Special Tax that can be levied on each type of property located on that Assessor’s Parcel. 467
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The CFD Administrator’s allocation to each type of property shall be final. b. Undeveloped Property , Taxable Public Property , and Taxable Property Owner Association Property
The Maximum Facilities Special Tax for each Assessor ’s Parcel of Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property within a Planning Area shall be the applicable amount for such Planning Area set forth in Table 4 below. The Maximum Facilities Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall not be subject to escalation and shall therefore remain the same in every Fiscal Year.
Table 4
Maximum Facilities Special Tax for Undeveloped Property, Taxable Public Property and Taxable Property Owner Association Property City of Fontana CFD No. 112 (The Gardens Phase One)
Planning Area
Maximum
Facilities
Special Tax
P.A. 5 $64,990 per Acre
P.A. 6 $59,120 per Acre
P.A. 7 $70,050 per Acre
P.A. 8, 9 & 10 $44,480 per Acre
2. Services Special Tax
For purposes of the Services Special Tax, an Assessor(s) Parcel of Developed Property within a Final Residential Subdivision shall be assigned to Land Use Classes 1 through 4, as identified in Table 5 and Table 6 below, based on the Planning Area associated with such Assessor ’s Parcel. Non -Residential Property shall be assigned to Land Use Class 5. Furthermore, the Services Special Tax levied agains t each Assessor’s Parcel within a Final Residential Subdivision shall be based on the number of residential dwelling units for which building permits have been issued or are expected to be issued for such Assessor ’s Parcel, as determined by the CFD Administrator based on such Final Residential Subdivision or other available documents. a. Maximum Services Special Tax
The Fiscal Year 2023-2024 Maximum Services Special Tax for each Land Use Class of Developed Property is shown below in Table 5.
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Table 5
Maximum Services Special Tax for Developed Property
City of Fontana CFD No. 112 (The Gardens Phase One)
Fiscal Year 2023-2024
Land
Use
Class Planning Area Description
Maximum
Services
Special Tax
1 P.A. 5 Final Residential Subdivision $770 per unit
2 P.A. 6 Final Residential Subdivision $770 per unit
3 P.A. 7 Final Residential Subdivision $810 per unit
4 P.A. 8, 9 & 10 Final Residential Subdivision $810 per unit 5 NA Non-Residential Property $7,820 per Acre
b. Assigned Services Special Tax
The Fiscal Year 2023-2024 Assigned Services Special Tax for each Land Use Class of Developed Property is shown below in Table 6.
Table 6
Assigned Services Special Tax for Developed Property
City of Fontana CFD No. 112 (The Gardens Phase One)
Fiscal Year 2023-2024
Land
Use
Class Planning Area Description
Assigned
Services
Special Tax
1 P.A. 5 Final Residential Subdivision $550 per unit
2 P.A. 6 Final Residential Subdivision $550 per unit
3 P.A. 7 Final Residential Subdivision $576 per unit
4 P.A. 8, 9 & 10 Final Residential Subdivision $576 per unit 5 NA Non-Residential Property $5,580 per Acre
c. Increase in the Maximum Services Special Tax
The Maximum Services Special Tax in Table 5 above shall be applicable for Fiscal Year 2023-2024, and shall increase thereafter, commencing on July 1, 2024, and on each July 1 thereafter by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. d. Increase in the Assigned Services Special Tax
The Assigned Services Special Tax in Table 6 above shall be applicable for Fiscal Year 2023-2024, and shall increase thereafter, commencing on July 1, 2024, and on each July 1 thereafter in an amount estimated to fund the Special Tax Requirement for Services for the Fiscal Year commencing on such July 1. However, in no case shall the Assigned Services Special Tax for an Assessor ’s Parcel of 469
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Developed Property exceed the applicable Maximum Services Special Tax for such Assessor’s Parcel of Developed Property in any Fiscal Year.
e. Multiple Land Uses
In some instances an Assessor ’s Parcel of Developed Property may contain more than one Land Use Class. In such cases, the Acreage of Developed Property shall be allocated between Residential Property and Non -Residential Property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor’s Parcel. The Maximum Services Special Tax that can be levied on such Assessor ’s Parcel shall be the sum of the Maximum Services Special Tax that can be levied on each type of property located on that Assessor ’s Parcel. The CFD Administrator’s allocation to each type of property shall be final.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Facilities Special Tax
Commencing with Fiscal Year 2023-2024, and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement for Facilities and shall provide for the levy of the Facilities Special Tax each Fiscal Year as follows:
First: The Facilities Special Tax shall be levied on each Assessor’s Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Facilities Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Facilities Special Tax shall be levied Proportionately on each Assessor ’s Parcel of Undeveloped Property at up to 100% of the Maximum Facilities Special Tax for Undeveloped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, then the levy of the Facilities Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Facilities Special Tax is determined through the application of the Backup Facilities Special Tax shall be increased in equal percentages from the Assigned Facilities Special Tax up to the Maximum Facilities Special Tax for each such Assessor’s Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Facilities Special Tax shall be levied Proportionately on each Assessor ’s Parcel of Taxable Public Property and Taxable Property Owner Association Property at up to 100% of the Maximum Facilities Special Tax for Taxable Public Property and Taxable Property Owner Association Property, as needed to satisfy the Special Tax Requirement for Facilities.
Notwithstanding the above, the CFD Administrator shall, in any Fiscal Year, calculate a levy Proportionately less than 100% of the Assigned Facilities Special Tax in step one (above), when (i) the CFD Administrator is no longer required to provide for the levy of the Facilities Special Tax pursuant to steps two through four above in order to meet the Special Tax Requirement for Facilities; and (ii) all authorized CFD No. 112 Bonds have already been issued or the Council has covenanted that it shall not issue an y additional CFD No. 112 Bonds (except refunding bonds) to be supported by the Facilities Special Tax.
Further notwithstanding the above, under no circumstances shall the Facilities Special Tax levied in any Fiscal Year against any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued (in accordance with Section 53321(d)(3) of the California Government Code), be increased as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within CFD No. 112 by more than ten percent above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. To the extent that the levy of the Facilities Special Tax on R esidential 470
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Property is limited by the provision in the previous sentence, the levy of the Facilities Special Tax on each Assessor’s Parcel of Non-Residential Property shall continue in equal percentages up to 100% of the applicable Maximum Facilities Special Tax.
2. Services Special Tax
Commencing with Fiscal Year 2023-2024 and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement for Services and shall provide for the levy of the Services Special Tax until the total Services Special Tax levy equals the Special Tax Requirement for Services. The Services Special Tax shall be levied each Fiscal Year as follows:
First: The Services Special Tax shall be levied Proportionately each Fiscal Year on each Assessor ’s Parcel of Developed Property at up to 100% of the applicable Assigned Services Special Tax as needed to satisfy the Special Tax Requirement for Services;
Second: If additional monies are needed to satisfy the Special Tax Requirement for Services after the first step has been completed, then the levy of the Services Special Tax on each Assessor’s Parcel of Developed Property shall be increased in equal percentages from the Assigned Services Special Tax up to the Maximum Services Special Tax for each such Assessor’s Parcel.
E. EXEMPTIONS
1. Facilities Special Tax
No Facilities Special Tax shall be levied on the applicable Acreage Limit of Public Property and/or Property Owner Association Property established for each Planning Area as set forth in Table 7 below. Tax-exempt status shall be assigned by the CFD Administrator in the chronological order in which property within a Planning Area becomes Public Property or Property Owner Association Property . However, should an Assessor ’s Parcel no longer be classified as Public Property or Property Owner Association Property, it shall, from that point forward, be subject to the Facilities Special Tax.
Table 7
Exempt Acreage Limits
City of Fontana CFD No. 112 (The Gardens Phase One)
Planning
Area
Exempt
Acreage Limit
P.A. 5 2.04 Acres
P.A. 6 1.07 Acres
P.A. 7 4.92 Acres
P.A. 8, 9 & 10 13.74 Acres
Notwithstanding the above, an Assessor’s Parcel within a Planning Area that is transferred to a public agency or property owner’s association prior to the issuance of the first series of CFD No. 112 Bonds that causes the Acreage of Public Property and Property Owner Association Property within such Planning Area to exceed the applicable Acreage limit that can be designated by the CFD Administrator under this Section E.1 shall also be exempted from paying the Special Tax.
Public Property or Property Owner Association Property that is not exempt from the Facilities Special Tax under this Section E.1 shall be subject to the levy of the Facilities Special Tax and shall be taxed Proportionately as 471
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part of the fourth step in Section D herein, at up to 100% of the applicable Maximum Facilities Special Tax for Taxable Public Property and Taxable Property Owner Association Property.
In addition, no Facilities Special Tax shall be levied on Lower Income Households Welfare Exemption Property, provided that if, in any Fiscal Year, applicable law does not require that an Assessor ’s Parcel that is Lower Income Households Welfare Exemption Property be exempt from the Facilities Special Tax, then the Facilities Special Tax shall be levied on such Assessor’s Parcel in accordance with this Rate and Method of Apportionment as if such Assessor’s Parcel were not classified as Lower Income Households Welfare Exemption Property.
2. Services Special Tax
No Services Special Tax shall be levied on Undeveloped Property , Taxable Public Property, Taxable Property Owner Association Property, Public Property, or Property Owner Association Property.
In addition, no Services Special Tax shall be levied on Lower Income Households Welfare Exemption Property, provided that if, in any Fiscal Year, applicable law does not require that an Assessor ’s Parcel that is Lower Income Households Welfare Exemption Property be exempt from the Services Special Tax, then the Services Special Tax shall be levied on such Assessor’s Parcel in accordance with this Rate and Method of Apportionment as if such Assessor’s Parcel were not classified as Lower Income Households Welfare Exemption Property.
F. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 112 may directly bill the Special Tax, and/or may collect Special Taxes at a different time or in a different manner if necessary to meet financial obligations, and, to the extent of the Facilities Special Tax, may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels.
G. APPEALS AND INTERPRETATIONS
Any landowner or resident who feels that the amount of the Special Tax levied on his/her Assessor ’s Parcel is in error may submit a written appeal to the CFD Administrator, provided that the appellant is current in his/her payment of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, a cash refund shall not be made (except for the last year of levy), but the amount of the Speci al Tax levied shall be appropriately modified through an adjustment to the Special Tax levy in the following Fiscal Year. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then ha s 30 days in which to appeal to the Council by filing a written notice of appeal with the City Clerk, provided that the appellant is current in his/her payment of Special Taxes. This second appeal must specify the reasons for its disagreement with the CFD Administrator’s determination.
The CFD Administrator shall interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the CFD Administrator shall be subject to appeal to the Council whose decision shall be final and binding as to all persons.
H. PREPAYMENT OF FACILITIES SPECIAL TAX
Under this Rate and Method of Apportionment, an Assessor’s Parcel within CFD No. 112 is permitted to prepay the Facilities Special Tax. The obligation of the Assessor’s Parcel to pay the Facilities Special Tax may be fully prepaid and permanently satisfied or partially prepaid as described herein, provided that a p repayment may be made only for Assessor’s Parcels of Developed Property, or for an Assessor’s Parcel of Undeveloped Property 472
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for which a building permit has been issued after January 1, 2023, and only if there are no delinquent Special Taxes with respect to such Assessor ’s Parcel at the time of prepayment. An owner of an Assessor ’s Parcel intending to prepay the Facilities Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor’s Parcel. The CFD Administrator may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than 30 days prior to a date that notice of redemption of CFD No. 112 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture that is specified in the report of the Facilities Special Tax Prepayment Amount (defined below).
The following additional definitions apply to this Section H:
“CFD Public Facilities Costs ” means either $ 31,460,000 in 2023 dollars, which shall increase by the Construction Inflation Index on July 1, 2024, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 112, or (ii) shall be determined by the Council concurre ntly with a covenant that it shall not issue any more CFD No. 112 Bonds (except refunding bonds) to be supported by the Facilities Special Tax levy under this Rate and Method of Apportionment. “Construction Inflation Index” means the annual percentage change in the Engineering News Record Building Cost Index for the City of Los Angeles, measured as of the month of December in the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News Record Building Cost Index for the City of Los Angeles. “Future Facilities Costs ” means the CFD Public Facilities Costs minus (i ) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, and ( iii) the amount the CFD Administrator reasonably expects to derive from the reinvestment of these funds.
“Improvement Fund” means a fund or account specifically identified in the Indenture (or prior to the issuance of the first series of CFD No. 112 Bonds a fund or account held by the City) to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. “Previously Issued Bonds” means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year.
1. Prepayment in Full
The Facilities Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Facilities Special Tax Prepayment Amount
As of the proposed date of prepayment, the Facilities Special Tax Prepayment Amount shall be calculated according to the following paragraphs:
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1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
2. For Assessor’s Parcels of Developed Property, compute the Assigned Facilities Special Tax and Backup Facilities Special Tax for the Assessor’s Parcel to be prepaid. For Assessor’s Parcels of Undeveloped Property for which a building permit has been issued after January 1, 2023, compute the Assigned Facilities Special Tax and Backup Facilities Special Tax for that Assessor ’s Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for such Assessor’s Parcel.
3. (a) Divide the Assigned Facilities Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Facilities Special Tax levy for CFD No. 112 based on the Assigned Facilities Special Taxes for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 112, excluding any Assessor’s Parcels which have been prepaid, and (b) Divide the Backup Facilities Special Tax computed pursuant to paragraph 2 by the total estimated Backup Facilities Special Taxes at Buildout for the entire CFD No. 112, excluding any Assessor’s Parcels which have been prepaid.
4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the “Bond Redemption Amount”).
5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (e.g., the redemption price minus 100%) set forth in the Indenture, if any, on the Previously Issued Bonds to be redeemed (the “Redemption Premium”).
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to paragraph 3 (a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (t he “Future Facilities Amount”).
8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the redemption date for the Previously Issued Bonds specified in the report of the Facilities Special Tax Prepayment Amount.
9. Determine the Facilities Special Tax levied on the Assessor ’s Parcel in the current Fiscal Year which has not yet been paid.
10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Facilities Special Tax Prepayment Amount, less any interest earnings attributed to the Future Facilities Amount, and less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the “Defeasance Amount”).
12. The administrative fees and expenses of CFD No. 112 are as calculated by the CFD Administrator and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 112 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”). 474
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13. The reserve fund credit (the “Reserve Fund Credit”) shall equal the lesser of: (a) the expected reduction in the r eserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on d eposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture).
14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized i nterest fund or account under the Indenture after such first interest and/or principal payment date (the “Capitalized Interest Credit”).
15. The Facilities Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 1 1 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the “Facilities Special Tax Prepayment Amount”).
2. Prepayment in Part
The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula:
PP = [(PE – A) x F] + A
These terms have the following meaning:
PP = the partial prepayment.
PE = the Facilities Special Tax Prepayment Amount calculated according to Section H.1.
F = the percentage, expressed as a decimal, by which the owner of the Assessor ’s Parcel is partially prepaying the Facilities Special Tax.
A = the Administrative Fees and Expenses calculated according to Section H.1.
3. General Provisions Applicable to the Prepayment of Facilities Special Tax (a). Use of the Facilities Special Tax Prepayment Amount The Facilities Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Section H.1 which shall be retained by CFD No. 112, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds.
(b). Full Prepayment of Facilities Special Tax
Upon confirmation of the payment of the current Fiscal Year’s entire Facilities Special Tax obligation, the CFD Administrator shall remove the current Fiscal Year ’s Facilities Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor ’s Parcel that is prepaid in 475
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accordance with Section H.1, the CFD Administrator shall cause a suitable notice t o be recorded in compliance with the Act, to indicate the prepayment of the Facilities Special Tax and the release of the Facilities Special Tax lien on such Assessor ’s Parcel, and the obligation of such Assessor ’s Parcel to pay the Facilities Special Tax shall cease.
(c). Partial Prepayment of Facilities Special Tax
With respect to any Assessor’s Parcel that is partially prepaid, the CFD Administrator shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.3.(a) and (ii) indicate in the records of CFD No. 112 that there has been a partial prepayment of the Facilities Special Tax and that a portion of the Facilities Special Tax with respect to such Assessor’s parcel, equal to the outstanding percentage (1.00 – F) of the remaining Maximum Facilities Special Tax, shall continue to be levied on such Assessor’s Parcel pursuant to Section D herein.
(d). Debt Service Coverage
Notwithstanding the foregoing, no prepayment of the Facilities Special Tax shall be allowed unless the amount of Facilities Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 112 in each future Fiscal Year (after excluding Pub lic Property and Property Owner Association Property as set forth in Section E.1 herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) Administrative Expenses.
I. TERM OF SPECIAL TAX
The Facilities Special Tax shall be levied for a period not to exceed fi fty years commencing with Fiscal Year 2023-2024. The Services Special Tax shall be levied in perpetuity to fund the Special Tax Requirement for Services.
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EXHIBIT A
CERTIFICATE TO AMEND FACILITIES SPECIAL TAX
CFD NO. 112 CERTIFICATE
1. Pursuant to Section C.1 of the Rate and Method of Apportionment (the “Rate and Method ”) for City of Fontana Community Facilities District No. 112 (The Gardens Phase One) (“CFD No. 112”), the Assigned Facilities Special Tax and the Backup Facilities Special Tax for Developed Property within CFD No. 112 has been reduced as described herein.
(a) The information in Table 1 of the Rate and Method relating to the Assigned Facilities Special Tax for Residential Property within CFD No. 112 shall be modified as follows:
Land
Use
Class
Planning
Area Description
Residential Floor Area
(square feet)
Original
Assigned
Facilities
Special Tax
Modified
Assigned
Facilities
Special Tax
1 Planning
Area
7, 8, 9 &
10 Two Story Residential Property 3,400 or greater $5,626 per unit $[____] per unit 2 Two Story Residential Property 3,200 to less than 3,400 $5,417 per unit $[____] per unit 3 Two Story Residential Property 3,000 to less than 3,200 $5,208 per unit $[____] per unit 4 Two Story Residential Property 2,800 to less than 3,000 $5,007 per unit $[____] per unit 5 Two Story Residential Property 2,600 to less than 2,800 $4,883 per unit $[____] per unit 6 Two Story Residential Property 2,400 to less than 2,600 $4,381 per unit $[____] per unit 7 Two Story Residential Property 2,200 to less than 2,400 $4,164 per unit $[____] per unit 8 Two Story Residential Property Less than 2,200 $3,947 per unit $[____] per unit 9 One Story Residential Property 2,000 or greater $4,829 per unit $[____] per unit 10 One Story Residential Property Less than 2,000 $4,613 per unit $[____] per unit 11 Planning
Area
5 & 6
Residential Property 1,900 or greater $3,845 per unit $[____] per unit 12 Residential Property 1,700 to less than 1,900 $3,414 per unit $[____] per unit 13 Residential Property 1,500 to less than 1,700 $2,953 per unit $[____] per unit 14 Residential Property 1,300 to less than 1,500 $2,768 per unit $[____] per unit 15 Residential Property Less than 1,300 $2,583 per unit $[____] per unit
(b) The Assigned Facilities Special Tax for Non-Residential Property within a Planning Area, set forth in Table 2 within Section C.1.a.(3) of the Rate and Method, shall be modified as follows:
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Planning
Area
Original
Assigned
Facilities
Special Tax
Modified
Assigned
Facilities
Special Tax
P.A. 5 $55,240 per Acre $[____] per Acre
P.A. 6 $50,260 per Acre $[____] per Acre
P.A. 7 $63,050 per Acre $[____] per Acre
P.A. 8, 9 & 10 $40,030 per Acre $[____] per Acre
(c) The Backup Facilities Special Tax for Developed Property within a Planning Area, set forth in Table 3 within Section C.1.a.(4) of the Rate and Method, shall be modified as follows:
Planning
Area
Original
Backup
Facilities
Special Tax
Modified
Backup
Facilities
Special Tax
P.A. 5 $64,990 per Acre $[____] per Acre
P.A. 6 $59,120 per Acre $[____] per Acre
P.A. 7 $70,050 per Acre $[____] per Acre
P.A. 8, 9 & 10 $44,480 per Acre $[____] per Acre
2. The Assigned Facilities Special Tax and the Backup Facilities Special Tax for Developed Property may only be reduced prior to the first issuance of CFD No. 112 Bonds.
3. Upon execution of the certificate by CFD No. 112, CFD No. 112 shall cause an amended notice of Special Tax lien for CFD No. 112 to be recorded reflecting the reductions set forth herein.
All capitalized terms used herein shall have the meanings set forth in the Rate and Method.
By:___________________________ Date:______________________ CFD Administrator
By execution hereof, the undersigned acknowledge, on behalf of CFD No. 112, receipt of this certificate and modification of the Rate and Method as set forth in this certificate.
CITY OF FONTANA COMMUNITY FACILITIES DISTRICT NO. 112
(THE GARDENS PHASE ONE)
By:___________________________ Date:______________________
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EXHIBIT B
PLANNING AREAS
Planning Area (P.A.) Legal Description
Planning Area 5 Lot 5 of Tract No. 20362
Planning Area 6 Lot 6 of Tract No. 20362
Planning Area 7 All of Tract No. 20364
Planning Area 8, 9 & 10 All of Tract No. 20363
Reference is hereby made to Tract No. 20362 filed in Book 3 62 of Tract Maps at Pages 78 through 84 in the Office of the San Bernardino County Recorder (recor ded as Document No. 2022-0129505), Tract No. 20363 filed in Book 363 of Tract Maps at Pages 58 through 66 in the Office of the San Bernardino County Recorder (recorded as Document No. 2022- 0259528), and Tract No. 20364 filed in Book 363 of Tract Maps at Pages 67 through 71 in the Office of the San Bernardino County Recorder (recorded as Document No. 2022-0259529) for a description of the lines and dimensions of the tracts and lots listed above.
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APPENDIX B
APPRAISAL REPORT
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APPENDIX C
UPDATED PRICE POINT STUDY
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
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APPENDIX E
GENERAL INFORMATION CONCERNING
THE CITY OF FONTANA
This appendix sets forth general information about the City of Fontana (“Fontana”) including information with respect to its finances. The following information concerning Fontana, the County of San Bernardino (the “County”) and the State of California (the “State”) are included only for general background purposes. The Bonds are not obligations of the City, County or State or any political subdivision thereof an d neither the faith and credit nor the taxing power of the City, County or the State, or any political subdivision thereof, is pledged to the payment of the Bonds or any Additional Bonds.
General
The City of Fontana encompasses approximately 42.4 square mi les of land and has an estimated population in 2023 of approximately 213,851. The City is located 50 miles east of Los Angeles, and approximately 10 miles west of the cities of Riverside and San Bernardino. Founded in 1913, Fontana is the second largest city in San Bernardino County, and the 20th largest in the State. The Riverside-San Bernardino area is often referred to as Southern California’s “Inland Empire.” As one of the cities in the Inland Empire, Fontana is part of a region whose population base exceeds 4.4 million people.
The earliest recorded landowner in the Fontana area was Don Antonio Maria Lugo, who received a land grant in 1813. A second grant, in 1842, secured the land known as Rancho de San Bernardino for his sons. The Lugo sons sold a portion of their land, which included part of what is now Fontana, to a group of Mormon settlers in 1851. The Mormon settlers eventually returned to Salt Lake City, and the Semi -Tropical Land & Water Company gained control of the Rancho. Active development of the area, however, did not begin until the early 1900’s when the Fontana Development Company acquired the acreage and began a community called Rosena - a name that was changed to Fontana in 1913.
Fontana quickly became a diversified agricultural ar ea, with citrus, grain, grapes, poultry, and swine being the leading agricultural commodities. The community faced a transition beginning in 1942 when the Fontana area was selected as the site for a steel mill. Fontana incorporated in 1952 and the area became Southern California’s leading producer of steel and steel related products.
The steel industry dominated the City’s economy from the time the mill was built until the mid-1980’s.
In the late 1970’s, however, Kaiser Steel began to cut down on product ion and manpower, and the steel mill closed in 1984. The mill site, located outside of City limits, is in the process of being developed into an integrated community of transportation-related industrial, commercial and business park uses to take advantage of the site’s excellent highway and rail access. The plate steel and rolling mill plant was acquired by California Steel Industries, which continues to produce steel products. In addition, railroad and trucking operations and a number of industrial faci lities and warehousing/distribution centers are located in Fontana because of its convenient geographical location and excellent transportation network.
City Government
The City was incorporated as a general law city in 1952 and is governed by a Mayor and four council members elected by geographical district to serve four -year terms. The City operates under the Council - Manager form of government. Effective July 1, 2008, the Fontana City Council established the Fontana Fire Protection District, which is governed by the same members who comprise the City Council, and which provides fire and related services to the City and certain adjacent unincorporated areas by means of contract with the San Bernardino County Fire Department. The City Council appoints t he City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments of the City. 483
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The City of Fontana provides police protection, street sweeping, park maintenance, building inspection, library, sewer, storm drain and sanitation services. Numerous hospitals and health care facilities are located near Fontana.
Population
Fontana has been one of the most rapidly growing cities in Southern California. The population in Fontana increased approximately 5.12% from 2014 to 2024. The population growth in the City, County and State is shown on the following chart.
POPULATION ESTIMATES
City of Fontana, County of San Bernardino and State of California 2015-2024
Year City of Fontana
County of San
Bernardino State of California
2015 203,790 2,112,187 38,865,532
2016 205,180 2,122,579 39,103,587
2017 208,003 2,139,520 39,352,398
2018 209,113 2,150,017 39,519,535
2019 211,123 2,165,876 39,605,361
2020 208,482 2,181,654 39,538,223
2021 210,389 2,179,006 39,327,868
2022 212,741 2,179,845 39,114,785
2023 212,772 2,172,694 39,061,058
2024 214,223 2,181,433 39,128,162
Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2011-2020, with 2010 Census Benchmark . Sacramento, California, May 2022 for 2015 -2019; State of California, Department of Finance, E -4 Population Estimates for Cities, Counties, and the State, 2021 -2024, with 2020 Census Benchmark. Sacramento, Calif ornia, May 2024 for 2020 -2024.
Transportation
The City of Fontana is strategically located in the hub of surface, rail and air transportation facilities.
Union Pacific and Burlington Northern/Santa Fe rail lines provide rail service to Fontana. Switch yards and multi-modal terminals are located nearby.
Major interstate freeways and state highways provide direct access to the City, making shipping and transportation to and from seaports, North American Free Trade Agreement ports of entry, and the rest of the nation highly dependable. Interstate 10 traverses the southern section of the City, Interstate 15 borders the western portion of the City, and Interstate 210, which is the extension of Route 30, opened in November 2002, links the San Bernardin o Valley with the San Fernando Valley and traverses the northern portion of the City.
State freeways 57, 60 and 91 are minutes from Fontana.
The LA/Ontario International Airport is a medium -hub, full-service airport, which offers more than 70 daily flights to cities in the U.S., Mexico and Taiwan and is served by nine commercial carriers. The airport is owned and operated by Ontario International Airport Authority, a joint powers agency, and is served by AeroMexico, Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, United Airlines/United Express, US Airways and Volaris. Various airlines provide freight services at Ontario International Airport.
With approximately 570,000 square feet and 26 passenger gates within two terminals, Ontar io International Airport is the Western States Regional Terminal for United Parcel Service. In 2023 approximately 484
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6.4 million passengers used the airport. The passenger count included approximately 6 million domestic travelers and 417,000 international passengers, increases of 8.4% and 113.5% over 2022, respectively.
Transit services are provided by Metrolink commuter rail service to Los Angeles with connections to the numerous surrounding cities provided by Omnitrans bus service, Dial -a-Ride, Yellow Ca b Company and Bell Cab Company.
Education
Five school districts serve students in the City of Fontana. There are thirty public elementary schools, seven middle schools, five high schools, three alternative high schools, seven private elementary/middle schools, one School of Language Development and one adult school. Local colleges and universities include Universal Technical Institute of California Inc., Chaffey College, San Bernardino Valley College, California State University-San Bernardino, Riverside Community College, Westech College and the University of California- Riverside.
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Employment
The following table summarizes the labor force, employment and unemployment figures for the years 2019 through 2023 for the City, the County, the State and the United States.
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT RATE
City of Fontana, San Bernardino County, State of California and United States 2019 through 2023(1)
Year and Area Labor Force Employment(2) Unemployment(3) Unemployment
Rate (%)
2019
City of Fontana 99,400 95,800 3,600 3.6%
San Bernardino County 965,400 928,100 37,400 3.9
State of California 19,385,000 18,589,600 795,700 4.1
United States 163,539,000 157,538,000 6,001,000 3.7
2020
City of Fontana 100,500 91,100 9,400 9.4%
San Bernardino County 972,800 879,300 93,500 9.6
State of California 18,958,600 17,037,000 1,921,600 10.1 United States 160,742,000 147,795,000 12,947,000 8.1
2021
City of Fontana 102,200 95,000 7,300 7.1%
San Bernardino County 990,000 916,600 73,500 7.4
State of California 18,956,600 17,568,700 1,387,800 7.3 United States 161,204,000 152,581,000 8,623,000 5.3
2022
City of Fontana 103,500 99,600 4,000 3.8%
San Bernardino County 1,003,000 961,200 41,700 4.2
State of California 19,169,300 18,348,900 820,400 4.3
United States 164,287,000 158,291,000 5,996,000 3.6
2023
City of Fontana 104,800 100,100 4,600 4.4%
San Bernardino County 1,013,700 966,500 47,200 4.7
State of California 19,308,300 18,388,300 920,000 4.8
United States 167,116,000 161,037,000 6,080,000 3.6
Note: Data is not seasonally adjusted.
(1) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. March 2023 Benchmark.
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Listed below are the major employers in the City.
CITY OF FONTANA - MAJOR EMPLOYERS – 2023
Employer Number of Employees
Kaiser Permanente 9,677
Fontana Unified School District 5,983
Amazon.com Services LLC 3,145
St Bernardine Medical Center 1,775
Target Stores T 553 1,297
City of Fontana (includes part-time employees) 1,143
Walmart D C #6060 CD Drop Yard 1,004
Walmart #6060 1,004
Saia Motor Freight Line LLC 349
Legendary Staffing, Inc. 325
Source: City of Fontana Fiscal Year Ending June 30, 2023 Annual Comprehensive Financial Report.
Listed below are the major employers in the County.
PRINCIPAL EMPLOYERS
San Bernardino County
Fiscal Year 2022-23
Rank Name of Business
Approximate No. of San
Bernardino County
Employees(1)
1 County of San Bernardino 10,000+
2 Loma Linda University Medical Center 1,000-4,999
3 Ontario International Airport 1,000-4,999
4 Amazon 1,000-4,999
5 Burlington Distribution Corp 1,000-4,999
6 California State University, San Bernardino 1,000-4,999 7 Dignity Health Community Hospital of San Bernardino 1,000-4,999 8 Environmental Systems Research Institute 1,000-4,999
9 Fedex Ground 1,000-4,999
10 Inland Empire Health Plan 1,000-4,999
(1) Data represents estimated number of employees.
(1) Due to confidentiality of reporting number of employees, ranges have been provided.
Source: San Bernardino County Annual Comprehensive Report for the year ending June 30, 2023.
(1) Due to confidentiality of reporting number of employees, ranges have been provided.
Source: San Bernardino County Annual Comprehensive Financial Report for the year ending June 30, 2023. 487
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Industries
Residents of the City find employment throughout the Riverside-San Bernardino-Ontario Labor Market Area. This labor market area, as defined for reporting purposes by the California Employment Development Department, has boundaries coterminous with those of Riverside and San Bernardino Counties. The following table sets forth certain employment data for the Riverside - San Bernardino-Ontario Metropolitan Statistical Area and the County for the period from 2019 through 2023.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2019 2020 2021 2022 2023
Civilian Labor Force 2,071,600 2,091,700 2,120,600 2,148,700 2,171,500 Civilian Employment 1,987,500 1,885,400 1,964,300 2,058,400 2,068,800 Civilian Unemployment 84,000 206,200 156,300 90,200 102,700 Civilian Unemployment Rate 4.1% 9.9% 7.4% 4.2% 4.7%
Total Farm 15,400 14,100 13,700 13,800 13,100
Total Nonfarm 1,552,700 1,495,800 1,575,100 1,659,800 1,679,800 Total Private 1,291,500 1,247,800 1,333,100 1,409,800 1,418,900 Goods Producing 209,700 202,200 207,700 216,300 216,100 Mining & Logging 1,200 1,300 1,400 1,500 1,500
Construction 107,200 104,900 110,100 114,700 115,700
Manufacturing 101,300 96,000 96,100 100,000 98,900
Service Providing 1,343,000 1,293,700 1,367,400 1,443,500 1,463,700 Trade, Transportation & Utilities 395,100 406,900 443,200 464,900 456,500 Wholesale Trade 67,700 65,600 67,400 69,500 68,700
Retail Trade 180,700 168,800 177,000 181,000 182,700
Transportation, Warehousing & Utilities 146,600 172,500 198,800 214,400 205,100 Information 14,100 12,400 12,500 13,000 13,300
Financial Activities 45,000 44,100 45,200 46,000 44,900 Professional & Business Services 155,300 152,100 166,600 173,900 164,800 Educational & Health Services 250,300 248,800 254,300 267,500 287,500 Leisure & Hospitality 175,900 141,300 160,200 180,900 186,500 Other Services 46,200 40,200 43,600 47,400 49,300
Government 261,200 248,000 242,000 250,000 260,900 Total, All Industries 1,568,100 1,509,900 1,588,800 1,673,500 1,692,900
Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix E.
Source: State of California, Employment Development Department, March 2023 Benchmark. 488
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Tax Levy and Tax Collection
Below is a chart which indicates the tax levy and collection records for the City for Fiscal Years 2014 through 2023.
Fiscal Year
Percent of Levy
Collected to Date
Total Tax Collections
to Tax Levy to Date
2014 101.55% $100,966,890
2015 106.51 115,888,404
2016 101.77 116,422,050
2017 104.24 125,264,871
2018 106.48 135,757,922
2019 107.57 154,079,402
2020 103.19 160,025,650
2021 103.78 172,050,509
2022 106.23 188,891,255
2023 107.07 215,154,745
Note: The amounts presented include City property taxes and the Former Redevelopment Agency of the City of Fontana (the “Redevelopment Agency”) tax increment. This schedule also includes amounts collected by the City and Redevelopment Agency that were passed-through to other agencies.
Source: City of Fontana Fiscal Year Ending June 30, 2023 Annual Comprehensive Financial Report.
Largest Taxpayers
The principal property taxpayers in the City for 2023 are as follows:
Taxpayer
2023 Assessed
Valuation
% of Total
Assessed
Valuation
San Gabriel Valley Water Company $ 355,028,013 1.31%
Duke Realty LP 243,765,176 0.90
GLC Fontana LLC 219,604,656 0.81
LBA RV – Company LLC 174,942,701 0.65
USPP Jurupa LLC 170,313,480 0.63
Idil West Valley Logistics Center LLC 159,120,000 0.59
Rexford Industrial Realty LP 153,756,226 0.57
Vintage Park LLC 138,146,361 0.51
Target Corporation 134,224,954 0.50
Lit Industrial LP 115,123,474 0.43
Intex Properties Inland Empire Corporation -- --
TOTAL: $ 1,864,025,041
Source: City of Fontana Fiscal Year Ending June 30, 2023 Annual Comprehensive Financial Report. 489
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Taxable Sales
The table below presents taxable sales for the years 2019 through 2023 for the City.
TAXABLE SALES
City of Fontana
2019 through 2023
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2019 4,101 $2,688,599 5,870 $3,713,486
2020 4,467 2,768,279 6,543 3,637,135
2021 3,997 3,393,088 5,969 7,374,359
2022 4,209 3,569,599 6,197 4,804,617
2023 4,170 3,450,192 6,183 4,653,260
Source: Taxable Sales in California, California Department of Tax and Fee Administration.
The table below presents taxable sales for the years 2019 through 2023 for the County.
TAXABLE SALES
San Bernardino County
2019 through 2023
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2019 40,964 $27,585,905 64,771 $41,768,747
2020 44,330 28,745,277 71,145 43,265,512
2021 40,801 38,345,912 66,585 55,378,096
2022 41,690 40,048,058 68,480 59,992,846
2023 40,632 38,103,699 67,336 57,475,069
Source: Taxable Sales in California, California Department of Tax and Fee Administration.
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Personal Income
The following tables show the personal income and per capita personal income for the City, County, State of California and United States from 2018 through 2022.
PERSONAL INCOME(1)
City of Fontana, County of San Bernardino, State of California, and United States 2018-2022
Year
City of
Fontana
County of
San Bernardino California United States
2018 4,444,518 $ 83,514,331 $2,411,055,100 $17,514,402,000 2019 4,775,796 89,182,422 2,537,950,600 18,343,601,000
2020 5,061,439 100,359,889 2,767,521,400 19,609,985,000 2021 5,432,476 108,700,135 3,013,676,900 21,392,812,000 2022 (n/a) 108,081,645 3,006,647,300 21,820,248,000
Note: Dollars in Thousands.
Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Fontana Annual Comprehensive Financial Report for the year ending June 30, 2022.
PER CAPITA PERSONAL INCOME(1)(2)
City of Fontana, County of San Bernardino, State of California, and United States 2018-2022
Year
City of
Fontana
County of
San Bernardino California United States
2018 20,965 $38,663 $60,984 $53,309
2019 22,519 41,079 64,174 55,547
2020 23,763 45,698 70,061 59,153
2021 25,392 49,570 76,991 64,430
2022 (n/a) 49,270 77,036 65,470
(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation).
Source: City of Fontana Comprehensive Annual Financial Report for the year ending June 30, 2022 , Bureau of Economic Analysis for County, State and U.S.
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Construction Trends
Below is a table indicating residential and non-residential building permits valuations for the City.
CITY OF FONTANA
BUILDING PERMIT VALUATION
(in thousands of dollars)
Type 2019 2020 2021 2022 2023
Valuation ($000’s)
Residential: $ 241,481 $ 311,547 $ 216,978 $ 211,710 $ 349,920 Non-Residential: 290,767 149,761 126,814 363,353 111,182 Total Valuation: $ 532,248 $ 461,308 $ 343,792 $ 575,063 $ 461,102
New Housing Units:
Single Family 642 848 670 509 1,068
Multi Family 202 234 382 562 678
Total Units: 844 1,082 1,052 1,071 1,746
Note: Totals may not add to sums because of independent rounding.
Source: Construction Industry Research Board.
Recreation
The City of Fontana maintains over 40 parks, tot lots, sports facilities and other facilities in the community. The City of Fontana operates eight centers throughout the community. The Center Stage Theatre was originally built in 1937 as a sin gle screen movie theatre and was remodeled in 2008 and re-opened as the premiere performing arts venue in the City of Fontana. The Center Stage Theatre was remodeled again beginning in 2022 and re-opened again in June 2024 as Stage Red.
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APPENDIX F
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIX G
FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT
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APPENDIX H
INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY
AND ITS BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of be neficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC to the District which the District believes to be reliable, but the District and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company (“DTC”), New York, New York, will act as securities dep ository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Cl earing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their pu rchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered in to the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
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To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nomine e, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC h as no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indir ect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmis sion to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bond s for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Truste e, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book- entry credit of tendered Bonds to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. 496
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THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY
FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT
THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF
THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
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APPRAISAL REPORT
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 112
(The Gardens Phase One)
City of
Fontana
, San Bernardino
County, California
(Appraisers’ File No. 2024-1300
)
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
498
KITTY SIINO & ASSOCIATES, IC.
REAL ESTATE APPRAISERS & CONSULTANTS
September 30, 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. 112 (The Gardens Phase One) Generally Southeast of Duncan Canyon Road and Cassava Drive 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. 112 (The Gardens Phase One) (“Fontana CFD No. 112”) which consists of a portion of the Gardens community within the Arboretum master plan, located in the northern portion of the City of Fontana. The Gardens Phase One includes a total of 526 proposed homes being built-out into six neighborhoods by Lennar Homes. The six neighborhoods include Dayflower, Blue Sage, Acacia, Silverberry, Wildrose and Azalea.
Dayflower is proposed for 69 homes in a triplex format. Blue Sage is proposed for 99 detached condominium homes, Acacia is proposed for 109 homes on minimum 2,700 square foot lots , Silverberry is proposed for 97 homes on minimum 4,000 square foot lots, Wild Rose is proposed for 88 homes on minimum 4,950 square foot lots and Azalea is proposed for 64 homes on minimum 6,000 square foot lots . All are being developed by Lennar Homes of California, LLC (“Lennar”). Out of the total 526 proposed homes within The Gardens Phase One, 366 have closed to individual homeowners to date with an additional 81 in escrow which are due to close upon completion. The remaining property is held by Lennar and AG EHC II (LEN) CA2, L.P. (“AG EHC II”), a landbank company for Lennar. The builder-owned property ranges from completed model homes to houses under construction to physically finished lots and/or pads.
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. 112 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. 112. As a result of our investigation, the concluded minimum market value for the subject property is shown below.
The Gardens Phase One:
Lennar (75 lots/pads & 55 houses) $ 46,873,063
AG EHC II (30 lots/pads) $ 7,679,851
Individual Owners (366 houses) $237,352,185
Total Aggregate Value CFD No. 112 $291,905,099
The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of August 25, 2024.
115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] 499
Jessica Brown
City of
Fontana
September 30, 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 resp
onsible 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)
500
TABLE OF CONTENTS
Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Fontana CFD No. 112 (The Gardens Phase One) .................................. iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................. 3 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 The Arboretum Specific Plan / Immediate Surroundings ............................................... 24 Community Facilities District No. 112 ........................................................................... 27 Subject Property Description ......................................................................................... 30 Inland Empire Housing Market ...................................................................................... 48 Highest and Best Use Analysis ..................................................................................... 61 Valuation Analysis and Conclusions ............................................................................. 66 Appraisal Report Summary ......................................................................................... 105 Appraiser’s Certification ............................................................................................. 106
ADDENDA
Fontana CFD No. 112 Boundary Map
Tract Map Nos. 20362 and 20363 and 20364 & 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
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_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page i
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. 112.
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 502
_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page ii
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 a 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 t hat 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 t hem. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.
14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.
15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings , if any, must not be used in conjunction with any other appraisal and are invalid if so used.
16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992, and have been updated several times since then. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property.
Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.
17. It is assumed there are no environmental concerns that would slow or thwart development of the subject properties and that the soils are adequate to support the highest and best use conclusions.
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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. 112 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. 112 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, 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. 112 can obtain fire insurance. The property is within a recommended 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.
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Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
iv
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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. 112.
THE SUBJECT PROPERTY
The subject property consists of 526 proposed single-family homes being developed into Phase One of the community known as The Gardens within the master planned community known as The Arboretum in the City of Fontana (“City”). The Gardens Phase One is located along both sides of Cassava Drive, south of Duncan Canyon Road and north of Casa Grande Avenue. The community is being built and sold by L ennar and features six neighborhoods. Dayflower is proposed for 69 homes in a triplex format with two detached homes and one carriage house up over the garages. The homes range in size from 1,563 to 1,669 square feet. Blue Sage includes 99 proposed single- family detached homes on detached condominium lots with a size range of 1,651 to 1,970 square feet. Acacia is proposed for 109 single-family detached homes on minimum 2,700 square foot small lots with home sizes ranging from 2,213 to 2,472 square feet.
Silverberry is proposed for 97 single-family detached homes on minimum 4,000 square foot lots with home sizes from 2,449 to 2,877 square feet. Wildrose is proposed for 88 single-family detached homes on minimum 4,700 square foot lots with home sizes from 1,905 to 3,105 square feet and Azalea is proposed for 64 single family detached homes on minimum 6,000 square foot lots with home sizes from 2,215 to 3,339 square feet. The Gardens Phase One is encompassed by a portion of Tract Map 20362 and Tract Maps 20363 and 20364 along with subsequent condominium maps on Lot 5 and 6 of Tract 20362, all of which subdivide the property into 526 residences. Lennar uses a land bank company (AG EHC II) to fund the lots with options to purchase them back at certain intervals. 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 on the following page.
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Description / Name
No.
Units
Owner
Product / Condition / Status
Dayflower (Triplex) Lot 6 of Tract 20362
Units 1041, 1043, 1051, 1091, 1101-
1103, 1111-1113, 1121-1123, 1131-
1133, 1141-1143, 1151-1153, 1161-
1163, 1171-1173, 1181, 1191-1193,
1201-1203, 1211-1213, 1221-1223,
1231-1233, 1241-1243 and 1251-1253
50 Individuals Completed Homes
Units 1011 – 1013 3 Lennar Model Homes (0 in escrow)
Units 1042, 1052-1053 3 Lennar Homes over 95% (3 in esc) Units 1021-1023, 1031-1033, 1061-
1063, 1071-1073 and 1081
13 Lennar Homes Under Construction (12
in escrow)
N/A 0 Lennar Finished Pads/Lots
Subtotal Dayflower 69
Blue Sage (Condo Lots Detached) Lot 5 of Tract 20362 – Units 1-99 Units 1-34, 41-56, 63-70 and 91-99 67 Individuals Completed Homes Units 79-81 3 Lennar Model Homes
N/A 0 Lennar Homes over 95%
Units 35-40, 71-78 and 84-90 21 Lennar Homes U/C (11 in escrow) Units 57-62 and 82-83 8 AG EHC II Finished Pads
Subtotal Blue Sage 99
Acacia (2,700 sf SFD lots) Lots 1- 109 of Tract 20364
Lots 1-35, 59-64, 78-81, 95-109 60 Individuals Completed Homes Lots 48-49 2 Lennar Model Homes
Lots 74-77 and 82-85 8 Lennar Homes over 95% (8 in esc) Lots 36-37, 65-73 and 86-94 20 Lennar Homes U/C (10 in escrow) Lots 38-44 7 AG EHC II Homes U/C (none in escrow)
Lots 45-47 3 Lennar Finished Lots
Lots 50-58 9 AG EHC II Finished Lots
Subtotal Acacia 109
Silverberry (4,000 sf lots) Lots 58-71, 77-78, 123-190, 194-206 of Tract 20363.
Lots 58-71, 123-178 and 205 71 Individuals Completed Homes Lots 77-78 2 Lennar Model Homes
Lots 179-183, 200-204 and 206 11 Lennar Homes over 95% (11 in esc) Lots 184-186 and 196-199 7 Lennar Homes U/C (7 in escrow) Lots 187-190 and 194-195 6 AG EHC II Homes U/C (none in escrow) Subtotal Silverberry 97
Wildrose (4,700 sf lots) Lots 18-57, 75-76, 191-193 and 207-249 of Tract 20363 Lots 29-31, 35-57, 207-221, 225-249 66 Individuals Completed Homes Lots 75-76 2 Lennar Model Homes
Lots 25-28, 32-34, 192-193, 222-224 12 Lennar Homes over 95% (10 in esc) Lots 18-24 and 191 8 Lennar Homes U/C (2 in escrow)
N/A 0 Finished Lots
Subtotal Wildrose 88
Azalea (6,000 sf lots) Lots 1-17, 72-74, 79-122 of Tract 20363 Lots 2-17, 81-82 and 88-100 and 102-
122
52 Individuals Completed Homes
Lots 72-73 2 Lennar Models
Lots 1, 83-87 and 101 7 Lennar Homes over 95% (7 in esc) N/A 0 Homes U/C
Lots 74, 79 and 80 3 Lennar Finished Lots
Subtotal Azalea 64
TOTAL CFD No. 112 526
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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. 112 Special Tax Bonds. This report may be included in the Official Statement or similar document to be distributed in connection with the marketing and offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report.
DEFINITIONS
Market Value
The term “Market Value” as used in this report is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the 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 Lennar owned property or investor-owned property (AG EHC II), in a bulk sale, is less than one year.
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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 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 three homes currently listed for resale with one pending within the subject property.
Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
2 USPAP 2018-2019 Edition
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“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. 112.
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 Lennar 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 a recommended Very High Fire Severity Zone by CalFire. While fire resistant construction has 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.
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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. 112. 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 August 25, 2024.
DATE OF REPORT
The date of this report is September 30, 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. 112 , which is known as Phase One of The Gardens within the master plan known as The Arboretum .
Lennar is the builder and is actively marketing six neighborhoods of homes with three nearing sell -out. The Gardens Phase One offers one and two-story floorplans both attached and detached, ranging in size from 1,563 to 3,339 square feet with product types ranging from triplexes to single-family detached homes on 6,000 square foot minimum lots. There are a total of 526 proposed homes within The Gardens Phase One . This appraisal will be presented in the following format:
• County of San Bernardino Description
• City of Fontana Description
• The Arboretum Specific Plan / Immediate Surroundings Description • Brief Description of Fontana CFD No. 112
• Subject Property Description
• Inland Empire Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analysis and Conclusions
• Appraisal Report Summary
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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 15, 2024, and August 25, 2024.
4. Had the site flown by an aerial photographer on August 10, 2024.
5. Interviewed representatives from Lennar and/or their consultants in order to obtain project information.
6. Reviewed preliminary title reports on the subject property.
7. Reviewed The Arboretum Specific Plan, the controlling land use document on the subject property.
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8. Searched the area for relevant comparable residential land sales , inspected and verified each sale with a buyer or seller or broker familiar with the transaction.
9. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable project.
10. Reviewed the sales brochures and websites for the subject communities.
11. Reviewed developer sales information on each home within each neighborhood in the community along with reviewing public record on sample lots in each community.
12. Reviewed Multiple Listing Service information to determine if there are any resales, pending resales or listings of resale homes.
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City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
9 REGIONAL AREA MAP
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COUNTY OF SAN BERNARDINO AREA DESCRIPTION
Location
The subject property is located in the southwestern portion of San Bernardino County, in the northern most portion of the City of Fontana, along both sides of Cassava Drive, south 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 Bernardino County has been a major growth area and is perceived by most observers as an area expected to continue to gr ow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.
Transportation
The subject property is situated about one mile east of I-15, approximately 1.5 miles north of the 210 Freeway, five miles south of the intersection of I-15 and I-215, and about 6.5 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, east one mile to Cassava Drive . 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 is located about four miles north of the historical Route 66, the original Los Angeles to Chicago cross country route.
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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 ten miles southwest of the subject property. San Bernardino International Airport is located approximately 12 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 pandem ic. 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 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 516
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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 legislatio n 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 July 2024, the national inflation rate was at 2.95 percent; the lowest since 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 hit 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 suggested there will possibly 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 6.49 percent as of August 15 , 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 significantly affected the real estate market.
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 517
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a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing up to a then 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 202 2 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) with the current average at 40,965 (as of August 21, 2024).
It appears the Board’s decision not to increase rates further and their suggestion that decreases may occur in the next few 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 t he 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 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 518
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interest rates; millennials finally buying homes; and the work from home factor 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 slowdown in sales within the Inland Empire. The high mortgage rates have significantly 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 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 Ju ly 2024 National unemployment rate at 4. 5 percent (Employment Development Department, not seasonally adjusted). The unemployment rate for the MSA was estimated at 5. 8 percent (as of Ju ly 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 Ju ly 2024, Riverside County’s unemployment rate was 5. 9 and San Bernardino County had a 5.7 percent unemployment rate, both have increased one-half percent month over month. The current unemployment rate for the MSA of 5.8 percent is the same as the California rate at 5.8 percent and higher than the July 2024 National rate of 4.5 percent. Below is a table comparing San Bernardino County’s unemployment rate to the unemployment rates of the surrounding counties as of July 2024.
Jurisdiction As of Unemployment
Rate*
Los Angeles County July-2024 6.5%
Riverside County July-2024 5.9%
San Bernardino County July-2024 5.7%
Orange County July-2024 4.4%
San Diego County July-2024 4.9%
Source: State of California E.D.D.; *Not Seasonally Adjusted
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 519
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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 residential 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 the Forecast believes 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 passi ng 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 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.
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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 with a slight decline in July to $515,000 .
The median home price had been bouncing generally between $475,000 and $500,000 over the previous six months (all statistics per the California Association of Realtors). The median home price in San Bernardino County is up 6.2 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 wareh ouses in the Inland Empire linked to supply-chain nodes in the Pacific Rim. The chart on the following page 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 and 2023 calendar years saw decreases of 2.6 and
12.2 percent respectively, year over year. It should be noted that consumer demand cooled in mid- 2022 leaving fewer TEUs needed. For the calendar year 2024, thus far TEUs are up over 20 percent year-over-year bringing them back on track.
521
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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 commis sions. 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 5.0
6.0 7.0
8.0 9.0
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
522
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 18
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 econom y include the uncertainty of the upcoming election , 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.
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City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
19 CITY OF FONTANA DESCRIPTION
General Area
The subject property is located in the northern 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 a pproximate location of Fontana CFD No. 112 within the City limits.
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History
Fontana was founded in 1913 and is the second largest city in San Bernardino County and the 20th largest city in the State of California. The area was 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 525
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar 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 po pulation 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 484-unit community of Narra Hills; Ventana at 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
526
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Vasari a mixed -use neighborhood proposed for 842 residential units along with retail, office and hotel uses; Highland Park; and the Arboretum Specific Plan which is ongoing and will eventually create 3,500 new homes which includes the subject 526 units. 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 July 2024 median home price in overall Fontana was $650,000 (median of 92 homes) which is 7.9 percent higher than one year prior while the median home price in North Fontana was $ 718,000 (median of 52 homes) which was 7.5 percent higher than one year prior.
Current new homes communities selling within Fontana include: Narra Hills with five neighborhoods currently being marketed by Landsea Homes, The Gardens/Arboretum by Lennar with six neighborhoods (subject property) 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). Richmond American is opening a new home community within The Arboretum within the next few months (models currently are under construction).
Access
Fontana has good access with I -15 generally forming the northwest border of the City.
The 210 Freeway provides east -west access through the upper third of the City; Route 66 (also known as Foothill Boulevard) provides east -west access through the approximate middle of the City and the I-10 provides east-west access through the bottom third of the City. Major on/off ramps to the City from I- 15 include Foothill Boulevard, Baseline Avenue, the 210 Freeway, Summit Avenue, Duncan Canyon Road and Sierra Avenue. On/off ramps from the 210 Freeway within the City include Cherry Avenue, Citrus Avenue and Sierra Avenue. Route 66/Foothill Boulevard has stop lights at major intersections while the major on/off ramps from I-10 in the City include Etiwanda Avenue, Cherry Avenue, Citrus Avenue and Sierra Avenue. Access to the subject is via I -15 to 527
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Duncan Canyon Road and east to Cassava Road at the subject. Additional access is via I-210 to Sierra, north to Casa Grande Avenue at 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 at Citrus Avenue and Duncan Canyon Road 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 2022 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.
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City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
24 THE ARBORETUM SPECIFIC PLAN / IMMEDIATE SURROUNDINGS
The Arboretum Specific Plan was approved in October 2009 and amended in June 2021.
The Specific Plan covers 525.7 gross acres allowing for 3,532 residential units. The entire Specific Plan is shown on the land use map below with the subject property and surrounding streets and the social club, consisting of about
7 5 gross acres, outlined in
yellow. The site has convenient freeway access to the I-15 via Duncan Canyon Road with both on and offramps to I-15
.
The Arboretum is divided into four distinct villages which include The Meadows, The Gardens, The Resort and the Arboretum. The Meadows is developed and sold out except 529
_________________________________________________________________________________________________________ Appraisal Report
City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
25 for a 24-acre school site at the southwest corner of the planning area. The Gardens Phase One is outlined in yellow above and includes the subject property with Phase Two beginning development with one
tract under construction by Richmond American and
mass grading and underground utilities underway on the remainder of Phase Two. The Resort is located north of the Gardens and has not
yet
begun development and The
Arboretum which will contain a 10.7
-
acre park that will provide the hear t of the overall
Arboretum communit y has not yet begun development . Per the Specific Plan, The Gardens has an overall average gross density of 7.8 dwelling units per acre. The subject Phase One of the Gardens encompasses 69.9 acres and houses 526 dwelling units which equates to an overall density of 7.52 dwelling units pe
r acre.
The entire Arboretum project is surrounded by Grapeland Street to the north, Sierra Avenue to the east, Casa Grande Avenue to the south, Citrus Avenue to the west and a high wire Edison easement to the northwest. North of Grapeland Street are vacant lands, the I-15 and Lytle Creek beyond which is the community known as Devore. West of Citrus Avenue are vacant lands and existing residential uses. South of Casa Grande Avenue are existing residences while east of Sierra Avenue are existing residences north of Duncan Canyon Road and large industrial buildings south of Duncan Canyon Road.
530
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 26
Above is a site plan for the entire Gardens quadrant with the subject neighborhoods identified. The subject is generally the east side and is surrounded by Duncan Canyon Road to the north beyond which is vacant land entitled for The Resort at The Arboretum; Sierra Avenue to the east beyond which is vacant lands and a large industrial building .
South of Blue Sage is an existing condominium project that was part of another Specific Plan known as Gabion Ranch which was developed in the early 2020s. South of Dayflower and Acacia is Casa Grande Avenue beyond which is existing residential use (Gabion Ranch). West of Dayflower is the existing condominium project and Cassava Drive beyond which is Blue Sage beyond which is a portion of Phase Two of the Gardens which has been purchased by Richmond American Homes and begun construction. North of Blue Sage are undeveloped lands which are also included in Phase Two of The Gardens. The subject site surrounds The Gardens Clubhouse and meeting area which includes basketball courts, pickleball courts, a dog park, a playground, a pool and clubhouse and a large grassy area along with sever al picnicking areas, one with a large shade cover. The Gardens Clubhouse will serve all of the residents within The Gardens.
Within a mile west of the subject on the north side of Duncan Canyon Road is the new luxury apartment complex which recently opened known as Vasari at Ventana and Monterado by Lennar. Ventana will eventually include residential, retail and commercial land uses. Monterado is a gated community with cluster and alley -loaded homes which is nearing sell-out. Across I-15 the master planned community of Narra Hills is currently selling with five communities ranging from duplex homes to single -family detached on 10,000 square foot minimum lots.
Schools that serve The Gardens include Summit High School (about two miles southwest), Ruble Middle School (about t wo miles south), and, Sierra Lake Elementary (about one mile southwest).
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_________________________________________________________________________________________________________ Appraisal Report
City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
27 FONTANA CFD NO. 112 (THE GARDENS PHASE ONE )
We have reviewed the City of Fontana CFD Report for Community Facilities District No. 112 (The Gardens Phase One) dated May 29, 2023, as prepared by David Taussig & Associates, Inc. The CFD Report provides a brief description of
Fontana
CFD No. 112, 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. 112
(The Gardens Phase One
)
on March 14, 2023.
The exterior boundaries of
Fontana
CFD No. 112 per the Proposed Boundary map are
shown below.
Per the CFD Report, at time of formation,
Fontana
CFD No. 112 encompassed
approximately 69.9
gross acres of which 48.2
are estimated to be taxable. There
are 526
proposed single-family homes at time of report which is the same as the current mapping
.
At time of report they were
comprised of
358
single-family detached units ranging in size
532
_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 28
from 1,905 to 3,381 square feet, 99 detached condominium units ranging in size from 1,651 to 1,970 square feet and 69 triplex units ranging in size from 1,448 to 1,649 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, flood control facilities, fire protection facilities, police facilities, public facilities, landscaping, library facilities, park and recreational facilities, water distribution, treatment and storage facilities and land, rights-of-way, and easements necessary for any of such facilities. The types of public facilities proposed to be eligible to be purchased as completed facilities by CFD No. 112 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, water distribution, treatme nt 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. 112 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. 112 , 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. 112 ; 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. 112 Report was created were estimated as:
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 29
PUBLIC FACILITIES AMOUNT
Acquisition Facilities: $26,622,163(1)
Storm Drain Improvements $7,556,747
Landscape Improvements $7,238,483
Street Improvements $7,213,962
Traffic Signal Improvements $1,894,465
Sewer Improvements $1,445,003
Water System Improvements $1,028,040
Right-of-Way Acquisition $245,461
Other Public Facilities: $9,116,671(2)
Water System Capacity Improvements $7,127,773
Circulation Facility Improvements $1,060,398
Police Facility Improvements $248,272
Public Facility Improvements $219,508
Fire Facility Improvements $86,264
Library Facility Improvements $52,074
Additional Circulation Facility Improvements (3) $322,382 Advance and Reimbursement Agreement Fee $1,000,000
TOTAL ESTIMATED COSTS $36,738,834
(1) Estimates provided by Project Developer and subject to review and confirmation. (2) Estimated amount of permit fees subject to review and confirmation. (3) Represents additional circulation facilities per Second Amendment to Development Agreement.
The assigned Special Taxes per the CFD Report range from $3,947 to $5,626 for the detached, mapped lots and from $2,583 to $3,845 for the condominium lots and triplexes.
In addition, CFD 112 is expected to finance the 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 property or other tangible property with an estimated useful life of five or more years that is owned by the City. The Services Special Tax within CFD 112 has been established to pay for these public services at approximately $576 per single family detached residence, $550 per detached condominium unit and $550 per detached trio-plex unit per year. These amounts are subject to change based on the actual need that arises as development progresses within CFD No. 112 and shall be subject to an annual increase as specified in the Rate and Method of Apportionment. The maximum bonded indebtedness for CFD No. 112 is $36,000,000. Per the latest sources and uses of funds (dated August 28, 2024) for the proposed bond issuance, there will be an estimated $30,760,000 in Bond Par Amount and a Premium of $1,240,860 for a total bond fund deposit of $32,000,860 with $29,372,380 going to the Project Fund, $1,995,000 in Debt Service Reserve Fund and $633,480? in Underwriter’s Discount and Cost of Issuance (all amounts subject to change). A larger copy of the Fontana CFD No. 112 boundary map is located in the Addenda for your review.
534
_________________________________________________________________________________________________________ Appraisal Report
City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
30 SUBJECT PROPERTY DESCRIPTION
The subject propert y consists of 526 proposed units be
ing
developed as The Gardens
Phase One
with six neighborhoods. The
neighborhoods
include Dayflower, a
triplex
/small
lot detached product; Blue Sage
, a detached
condominium project; Acacia a detached
product on 2,700
square foot minimum lots, Silverberry, a detached product on 4,000 square foot
minimum
lots, Wildrose, a detached product on 4,700 square foot minimum lots and Azalea, a
detached product on 6,000 square foot minimum lots. The subject site is shown on the below site plan outlined in black with The Gardens Clubhouse (outlined in red) not included. The lands within Fontana CFD 112 are described as follows:
535
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 31
Location: South of Duncan Canyon Road along both sides of Cassava Road, Fontana, California
Legal Property
Description: Lot 6 of Tract 20362 – 69 Units (Dayflower), Lot 5 of Tract 20362 – Units 1-99 (Blue Sage), Lots 1-109 of Tract 20364 (Acacia), Lots 58- 71, 77-78, 123-190 and 194- 206 of Tract 20363 (Silverberry) Lots 18-57, 75-76, 191-193 and 207 -249 of Tract 20363 (Wildrose) and lots 1-17, 72-74 and 79 -122 of Tract 20363 (Azalea) , all located in the City of Fontana, County of San Bernardino, State of California
Property Owner: Dayflower:
Individual Owners as to Units 1041, 1043, 1051, 1091, 1101-1103, 1111-1113, 1121- 1123, 1131- 1133, 1141- 1143, 1151- 1153, 1161 - 1163, 1171-1173, 1181, 1191- 1193, 1201-1203, 1211-1213, 1221- 1223, 1231-1233, 1241-1243 and 1251-1253 of Lot 6 of Tract 20362.
Lennar Homes of California LLC, a California limited liability company as to U nits 1011-1013, 1021 -1023, 1031- 1033, 1042, 1052-1053, 1061-1063, 1071-1073 and 1081 of Lot 6 of Tract 20362.
Blue Sage:
Individual Owners as to Units 1-34, 41-56, 63-70 and 91-99 of Lot 5 of Tract 20362. Lennar Homes of California LLC, a California limited liability company as to Units 35-40, 71-81 and 84-90 of Lot 5 of Tract 20362, and AG EHC II (LEN) CA 2 L.P., a Delaware limited partnership as to Units 57-62 and 82-83 of Lot 5 of Tract 20632.
Acacia:
Individual Owners as to Lots 1 -35, 59 -64, 78 -81, 95 -109 of Tract 20364. Lennar Homes of California LLC , a California limited liability company as to Lots 36-37, 45-49, 65-77, 82-94 of Tract 20364, and AG EHC II (LEN) CA 2 L.P., a Delaware limited partnership as to Lots 38-44 and 50-58 of Tract 20364.
Silverberry:
Individual Owners as to Lots 58-71, 123-178 and 205 of Tract 20363.
Lennar Homes of California LLC, a California limited liability company as to Lots 77- 78, 179- 186, 196- 204 and 206 of Tract 20363, and AG EHC II (LEN) CA 2 L.P., a Delaware limited partnership as to Lots 187-190 and 194-195 of Tract 20363.
Wildrose:
Individual Owners as to Lots 29-31, 35-57, 207-221 and 225-249 of Tract 20363. Lennar Homes of California LLC, a California limited liability company as to Lots 18- 28, 32-34, 75-76, 191-193 and 222- 224 of Tract 20363.
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 32
Azalea:
Individual Owners as to Lots 2-17, 81-82 and 88-100 and 102-122 of Tract 20363. Lennar Homes of California LLC, a California limited liability company as to Lots 1, 72-74, 79-80, 83-87 and 101 of Tract 20363.
Assessors
Parcel Nos.: Dayflower: 1118-463-01 thru 09; 1118-463-11 thru 20; 1118-463-24 thru 33; 1118-463-35 thru 40; 1118-463-43 thru 48; 1118-463-50 thru 59; 1118-463-62 thru 67; 1118-463-70 thru 75; 1118-463-77 thru 82.
Blue Sage: 1118-442-01 thru 09; 1118-442-19 thru 27; 1118-442-29 thru 36; 1118-442-39 thru 47; 1118-442-49 thru 56; 1118-442-58 thru 65; 1118-444-01 thru 05; 1118-444-07 thru 14; 1118-444-16 thru 23; 1118-444-25 thru 32; 1118- 444-35 thru 41; 1118- 444-43 thru 48; 1118-444-51 thru 56.
Acacia: 1118-461-04 thru 52; 1118-462-01 thru 60.
Silverberry: 1118-413-04 thru 16; 1118-432-01 thru 13; 1118-434-01 thru 34; 1118-435-01 thru 34; 1118-451-01 and 1118-451-17 thru 18.
Wildrose: 1118-412-01 thru 35; 1118-413-01 thru 03 and 20 thru 34; 1118-414-01 thru 14 and 17 thru 30; 1118-431-09 thru 13; 1118-451- 15 thru 16.
Azalea: 1118-431-01 thru 08; 1118-433-01 thru 28; 1118-451-02 thru 10; 1118-451-12 thru 14 and 1118-451-19 thru 34.
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 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 Lewis Company representatives , a related entity to North Fontana Investment Company LLC (the seller), Lennar (or a related entity) purchased the subject property in December of 2021 for $91,935,447. AG EHC II (LEN) CA 2 L.P. (a land bank company for Lennar) took title to the property and Lennar began taking down lots as needed for construction. It is the appraiser’s understanding that there is a construction agreement that lets Lennar begin construction prior to the lots being taken down. They have completed take-downs of 496 lots as of August 25, 2024. The next scheduled take-down for 22 lots is anticipated for October 14, 2024, with the final eight lots anticipated to be transferred Decem ber 14, 2024 (all dates subject 537
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 33
to change). Lennar began closing homes within the subject property to individual owners in July 31, 2023, and has closed 366 houses between July 31, 2023, and August 25, 2024.
Size and Shape: The subject site is irregular in shape and contains 69.919 gross and
53.647 net acres per Tract Maps 20362, 20363 and 20364 which subdivides the entire site into 358 single family detached lots and two large lots that were further subdivided into 168 condominium lots/pads. More specifically, Dayflower contains 5.043 acres and is known as Lot 6 of Tract 20362. Blue Sage contains 8.137 acres and is known as Lot 5 of Tract 20362. Acacia contains 12.24 gross acres and 6.126 net acres (difference due to internal streets, open space and setback areas) and is known as Tract Map 20364. Silverberry, Wildrose and Azalea together make up Tract Map 2036 3 which contains 44.499 gross acres and 30.780 net acres (again difference due to internal streets, open space and setback areas).
Zoning: We have reviewed a letter from the Planning Division of Fontana dated July 14 , 20 21, which states MCN 20 -096 Specific Plan Amendment (SPA 20-005) which allows for a density transfer within The Gardens and introduction of two new housing products, Tentative Parcel Map 203 62 and Tentative Tract Maps 20 363 and 20364 which are comprised of five parcels that will be subdivided to create lots for the development of residential units have all been approved, subject to the conditions of approval. Attached to the letter were the conditions of approval for the project.
Per the current City of Fontana General Plan and the current City of Fontana Zoning Map , the subject is shown as located within The Arboretum Specific Plan. Per the Arboretum Specific Plan adopted October 14, 2009 and amended June 2021, Tract Maps 20363 and 20364 are identified RMF (Residential - Multi-Family with 3 -8 dwelling units per acre) while lots 5 and 6 of P arcel Map 20362 are RMF (Residential – Multi-Family with 8.1-16.1 dwelling units an acre.
The current City of Fontana Zoning Map is consist ent with the General Plan.
Entitlements: Per the Arboretum Specific Plan, the subject is shown as Planning Areas G5 thru G10 which has entitlements for 526 units. Tract Maps 20363 and 20364 contain 56.739 acres and allow for 358 units (within Acacia, Silverberry, Wildrose and Azalea) suggesting a density of 6.31 dwelling units per acre. Lots 5 and 6 of Tract Map 20362 contain 13.18 acres and allow for 168 units suggesting 12.75 dwelling units per acre. All densities are within the allowed densities per the Zoning and General Plan and the total units of 526 is allowed per the Specific Plan. A copy of the t hree maps along with the site 538
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plans are located in the Addenda for your review.
Homeowner’s
Association: Per Lewis Management Corporation, the master developer of The Arboretum, the Master HOA dues which apply to all units is $155 per month. In addition, there are additional assessments of $285 per month for Dayflower (attached/detached Triplex format) which includes outside walls, roofs, internal streets and landscaping, $49 per month for Blue Sage (detached condominiums ) which includes common driveways and landscaping and $58 per month for Acacia (2,700 square foot lots) for common area, landscaping and internal streets. The overall 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 were in excellent condition and were open for use.
Topography: The subject lands are generally level at grade of surrounding streets of Cavassa Drive, Casa Grande Avenue, Sierra Avenue and Duncan Canyon Road, all which are improved at the site. In addition, the site has been graded into 526 residential lots and/or pads. The subject has been fully mass graded and developed into two condominium lots along with 358 single family lots. The condominium lots have been graded into 99 detached condominium lots and 66 triplex pads along with three detached lots within Dayflower . Drainage appears to be within an engineered street drainage system that ties with surrounding lands to alleviate any drainage issues on the property.
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 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 Investigation” for the entire Arboretum project (includes the subject property) prepared by RMA Geotechnical Consultants of Rancho Cucamonga dated July 15, 2015, along with a Geotechnical Investigation Update, also prepared by RMA and dated February 22, 2024. The reports conclude that the proposed development of 3,500+ units on the entire 447 acres is geologically and geotechnically feasible provided that the 539
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recommendations presented within the report are fully implemented during design, grading and construction. The Update dated 2024 brought the recommendations up to current building codes.
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, it states the site is not located within the boundaries of an Earthquake Fault Zone.
The nearest faults are located 1,600 feet to the northwest along the Cucamonga fault zone and about 800 feet northeast along the San Jacinto fault zone. There is a discussion in the report about a possible concealed fault, however after further research, it was concluded in the report that it appears unlikely that there was past surficial faulting. 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. 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 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 Report s prepared by Lennar Title which cover the three recorded tract maps that encompass the subject property. They are Report Order Number 192002-001424, dated July 2, 2024, covering Tract 20362 (Lots 5 and 6 – Dayflower and Blue Sage and additional lands); Report Oreder Number 192002-001425, dated July 2, 2024, covering Tract 20363 (Silverberry, Wildrose and Azalea); and Report Order Number 192-002-001426 covering Tract 20364 (Acacia). While the exceptions appear typical for subject-type lands, it is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 112 . The appraiser is not a title expert, and it is recommended that any 540
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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, east about one mile to Cassava Drive. The gated entrances are on both the north and south side of the Arboretum at Cassava Drive from the north and at Montelena Road from the South. There is also a gated entrance off Sierra Avenue at Fieldcress Drive into the subject property. There will also be a gated entrance into The Gardens within Phase Two, off Cypress Avenue at Gardens Street. Additional access is via I -15 from Sierra Avenue and south about one mile or from I-210 exit Sierra Avenue and north about 1.5 miles.
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.
Sierra Avenue is the eastern boundary of the subject property. Sierra Avenue is a major north/south arterial through Fontana. Sierra Avenue has on/off ramps from the I-15, the I-210 and the I-10 (about six miles south of the subject. North of the subject Sierra Avenue becomes Lytle Creek Road past I -15 and to the south, it provides access throughout the City of Fontana and into Jurupa Valley. Sierra Avenue is a commercial corridor through most of Fontana.
Cassava Drive is a main entrance providing access into The Gardens off of Duncan Canyon Road.
Casa Grande Avenue is an east/west access street and the southern border of the subject site. Casa Grande Avenue begins 1.5 miles east of the subject at Locust Avenue and provides the southern 541
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border of The Gardens past Citrus Avenue where it bends south and becomes Knox Avenue.
Internal streets include Boston Ivy, Yarrow Lane, Mistletoe Lane, Camphor Street, Fern Pine Street, Island Oak Street, Baylaurel Drive, Tulip Tree Street, Broadlea f Way, Tea Tree Lane and Hazelnut Lane within Tract No. 20363 (Silverberry, Wildrose and Azalea), Plantain Way, Kumquat Lane, Tangerine Way, Grapefruit Lane, Lychee Lane and Haz elnut Lane within Tract No. 20364 (Acacia), Crocus Lane, Rose Petal Way, Wildflower Lane, Aster Way and Snowdrop Lane for Lot 6 of Tract 20362 (Dayflower), and Shallot Street, Oregano Way, Marjoram Way, Endive Lane, Quince Lane, Poppy Seed Lane and Anise Way within Lot 5 of Tract 20362 (Blue Sage).
Current Condition: The subject is being developed into 69 triplex homes and small-lot homes (Dayflower), 99 single-family detached condominium homes (Blue Sage), 109 single-family detached lots with a minimum lot size of 2,700 square feet (Acacia), 97 single family detached lots with a minimum size of 4,000 square feet (Silverberry), 88 single family detached lots with a minimum lot size of 4,700 square feet (Wildrose) and 64 single family detached lots with a minimum lot size of 6 ,000 square feet (Azalea) . The lots are all in a physically finished condition. All internal streets are in place (with the exception of some triplex alleys and driveways. Upon our inspection, 421 of the 526 proposed homes were over 95 percent complete including 3 66 individually owned homes, 14 model homes, 41 production homes (39 in escrow), 83 homes under construction (42 in escrow) and 22 remaining finished pads/lots.
Costs to Complete: The subject property has been developed into 526 finished lots/pads with internal streets generally complete and utilities stubbed to each lot/pad. Per L ennar representatives, the remaining hard costs include $4,494,382 in remaining land development costs (includes grading, consultants, streets, sewer/water,
parks/landscaping/common area, walls and dry utilities). In addition, there is $1,533,075 in remaining fees which are not included in the CFD (this appraisal assumes the bonds are in place). Adding the remaining hard costs and the remaining fees results in total remaining costs of $6,027,45 7. 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 526 lots/pads, 366 are individually owned leaving 160 lots, pads , homes under construction or completed homes owned by the builder and/or investor. Dividing the 542
_________________________________________________________________________________________________________ Appraisal Report
City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
38 $6,027,45 7 by the 160 homes/lots/pads results in remaining land development costs of $
37,671.60
per lot/pad.
Improvement
Description: Below is a site plan followed by a brief description for each of the neighborhoods.
Dayflower:
Dayflower is made up of 69 proposed triplex homes with three of the homes actually detached
. The
three
plans range in size
from
1,563
to 1,669 square feet. Plan 1 has 1,582 square feet and is a stacked unit up over three
, two
-car garages (“carriage house”). Thus, Plan 1
has an attached 2
-
car garage while Plans 2 and 3 have detached 2
-
car garages with a
small
courtyard between the house and the
garage. The floorplans each have
t
hree to four bedrooms. The plans
are offered with Spanish, American Farmhouse and Santa Barbara influenced architecture detailing. Exteriors include designer coach lights and block rear fencing with vinyl side yard fencing (per homesite). Interiors include Shaw vinyl flooring and Shaw carpeting along with upgraded baseboards, casings and 2
-
panel interior doors,
bull-nose corners, fully dry -walled garages and cable outlets (per plan). The kitchens include GE stainless steel appliances (slide
-
in
oven/stove) and granite countertops with thermofoil flat panel 543
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City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
39 cabinetry and a pull -out receptable with recycle bins along with a kitchen island. The
o
wner’s suite includes a tub/shower combo,
elongated toilets and a separate water closet along with a walk -in closet. Connectivity includes a Legrand On
-
Q 30” RF
t
ransparent
s
tructured
media enclosure and a Honeywell smart thermostat.
Energy efficiency includes a tankless water heater dual -glazed windows, insulated roll -up garage doors, LED lighting throughout and Boral cool roof tiles. There is also an integrated solar energy system provided through participation in the buyer -friendly new home energy plan by Sunnova.
The models are located on C rocus Lane
at Aster Way. There are
three model homes, one for each plan
.
Fifty of the homes have
closed escrow to homebuyers and there are three models and three homes over 95 percent complete (all three in escrow). There are
13 homes under construction with 12 of thos
e in escrow. The project
opened for sale April 22,
2023,
with base pricing $ 479,900 to
$513,900
while current base pricing is $5 08
,9
00 to $5
56,900
. The
homes began closing November 14 , 202 3, with actual closed net sales prices (as reported by the builder) ranging from $414,530
to
$526,577
.
These reported prices include all premiums, options and incentives. Our search of the MLS revealed no resales and no current resale listing
s
. 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
interest
rate buydowns,
on a case
-
by-case basis. The total incentives including
closing
cost/rate buy down
s
have ranged from $8,718
to $ 66,528. The
houses which are over 95 percent complete are shown in the table following the descriptions.
Blue Sage
544
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Blue Sage is proposed for 99 single-family detached homes on condominium lots, some in an alley-load format. The plans range in size from 1,651 to 1,970 square feet. The four floorplans all are two stories with three to four bedrooms and two- car attached garages.
The plans are offered with Santa Barbara, Farmhouse and Provence influenced architecture detailing. Exteriors include designer coach lights and block rear fencing with vinyl side yard fencing (per homesite). Interiors include ceramic tile entry, Shaw vinyl flooring and Shaw carpeting along with upgraded baseboards, casings and 2-panel i nterior doors, bull -nose corners, fully dry -walled garages and cable outlets (per plan). The kitchens include GE stainless steel appliances and granite countertops with thermofoil flat panel cabinetry and a pull -out receptable with recycle bins along with a kitchen island. The o wner’s suite includes a separate tub and shower, elongated toilets and a separate water closet along with a walk-in closet. Connectivity includes a Legrand On- Q 30” RF transparent structured media enclosure and a Honeywell smart thermostat. Energy efficiency includes a tankless water heater dual- glazed windows, insulated roll -up garage doors, LED lighting throughout and Boral cool roof tiles. There is also an integrated solar energy system provided through participation in the buyer -friendly new home energy plan by Sunnova.
The models are located on Shallot Street and Oregano Way. There are three models, with Plan One not modeled. Sixty-seven of the homes have closed escrow to homebuyers. There are three models and no production homes over 95 percent complete along with 21 homes under construction (11 in escrow ) and eight remaining finished pads. The project opened for sale March 11, 2023, with base pricing $566,990 to $600,990 while current base pricing is $589,290 to $641,990. The homes began closing August 14, 2023, with actual closed net sales prices (as reported by the builder) ranging from $495,372 to $640,990. 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 $89,318. The houses which are over 95 percent complete are shown in the table following the descriptions.
545
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City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
41 Acacia
Acacia is proposed for 109 single
-
family detached homes on lots with
a minimum lot size of 2,700 square feet. The plans range in size
from
2,213 to 2,472
square feet. The three floorplans all are two stories
with three to four bedrooms and two
-
car attached garages. The plans
are offered with Italianate, American Traditional and California Craftsman influenced architecture detailing. Exteriors include designer coach lights and block rear fencing with vinyl side yard fencing (per homesite). Interiors include ceramic tile entry, Shaw vinyl flooring and Shaw carpeting along with upgraded baseboards, cas
ings and 2
-
panel interior doors, bull-nose corners, fully dry-walled garages and cable outlets (per plan). The kitchens include GE stainless steel appliances and granite countertops with thermofoil flat panel cabinetry and a pull-out receptable with recycle bins along with a kitchen island. The
o
wner’s suite includes a separate tub and
shower, elongated toilets and a separate water closet along with a walk-in closet. Connectivity includes a Legrand On
-
Q 30” RF
transparent s
tructured
media enclosure and a Honeywell smart
thermostat. Energy
e
fficiency includes a tankless water heater dual-
glazed windows, insulated roll -up garage doors, LED lighting throughout and Boral cool roof tiles. There is also an integrated solar energy system provided through participation in the buyer -friendly new home energy plan by Sunnova.
The models are located on Hazelnut Lane and Plantain Way.
There
are two models, with Plan One not
modeled.
Sixty of the homes have
closed escrow to homebuyers. There are
eight
production homes
over 95 percent complete ( all
in escrow), two model homes and an
additional 27 homes under construction ( 10
in escrow). The project
opened for sale March 11, 2023 with base pricing $
632,990
to
546
_________________________________________________________________________________________________________ Appraisal Report
City of
Fontana
CFD No. 112
(The Gardens Phase One
)
- by Lennar
Kitty Siino & Associates, Inc.
Page
42 $655,990 while current base pricing is $ 648,060 to $701,290 . The homes began closing August 14, 2023, with actual closed net sales prices (as reported by the builder)
ranging from $
558,421
to
$687,165. 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
$10,967
to $90,882
. The houses which
are over 95 percent complete are shown below in the table following the descriptions.
Silverberry (Outlined in Blue)
Silverberry is proposed for
97 single-family detached homes on lots
with a minimum lot size of 4,000
square feet. The plans range in size
from 2,449 to 2,877
square feet. The
three
floor plans all are two
stories with three to four bedrooms and
attached
two-car garages.
The plans are offered with Spanish, Prairie or California Craftsman influenced architecture detailing. Exteriors include designer coach lights and block rear fencing with tubular steel gates (per homesite).
Interiors include ceramic tile entry, Shaw vinyl flooring and Shaw carpeting along with upgraded baseboards, casings and 2
-
panel
interior doors, bull-nose corners, fully dry-walled garages and cable 547
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 43
outlets (per plan). The kitchens include GE stainless steel appliances including built-in dual ovens, and granite or quartz countertops with thermofoil shaker cabinetry and a pull -out receptable with recycle bins along with a kitchen island. The owner’s suite includes a separate tub and shower, elongated toilets and a separate water closet along with a walk -in closet. Connectivity includes a Legrand On-Q 30” RF t ransparent structured media enclosure and a Honeywell smart thermostat. Energy efficiency includes a tankless water heater dual -glazed windows, insulated roll -up garage doors, LED lighting throughout and Boral cool roof tiles. There is also an integrated solar energy system provided through participation in the buyer-friendly new home energy plan by Sunnova.
The models are located on Tea Tree Lane, off Hazel Nut Lane. There are two models, with Plan One not modeled. Seventy-one of the homes have closed escrow to homebuyers. There are 11 production homes over 95 percent complete (all in escrow) and an additional 13 homes under construction (seven in escrow). The project opened for sale March 11, 2023, with base pricing $690,990 to $729,990 while current base pricing is $742,910 to $813,830. The homes began closing August 16, 2023, with actual closed net sales prices (as reported by the builder) ranging from $638,120 to $784,370. 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 $107,780. The houses which are over 95 percent complete are shown below in the table following the descriptions.
548
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 44
Wildrose (Outlined in Blue)
Wildrose is proposed for 88 single- family detached homes on lots with a minimum lot size of 4,950 square feet. The three plans range in size from 1,905 to 3,105 square feet. Plan One is a single-story while Plan s 2 and 3 are two- story. The homes have three to f ive bedrooms and attached two to three -car garages. The plans are offered with S anta Barbara, Modern Farmhouse and European Cottage influenced architecture detailing. Exteriors include designer coach lights and block rear fencing with tubular steel gates (per homesite). Interiors include ceramic tile entry, Shaw vinyl flooring and Shaw carpeting along with upgraded baseboards, casings and 2-panel interior doors, bull -nose corners, fully dry -walled garages and cable outlets (per plan). The kitchens include GE stainless steel appliances including built -in dual ovens, and granite or quar tz countertops with thermofoil shaker cabinetry and a pull -out receptable with recycle bins along with a kitchen island. The owner’s suite includes a separate tub and shower, elongated toilets and a separate water closet along with a walk -in closet. Connec tivity includes a Legrand On- Q 30” RF t ransparent structured media enclosure and a Honeywell smart thermostat. Energy efficiency includes a tankless water heater dual-glazed windows, insulated roll- up garage doors, LED lighting throughout and Boral cool roof tiles.
There is also an integrated solar energy system provided through participation in the buyer -friendly new home energy plan by Sunnova.
The models are located at Tea Tree Lane and Broad Leaf Way .
There are two models, with Plan One not modeled. Sixty-six of the 549
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 45
homes have closed escrow to homebuyers. There are 12 production homes over 95 percent complete ( ten in escrow) with the final eight homes under construction ( two in escrow). The project opened for sale March 11, 2023, with base pricing $660,990 to $766,990 while current base pricing is $729,480 to $819,325. The homes began closing August 1 1, 2023, with actual closed net sales prices (as reported by the builder) ranging from $ 610,644 to $810,206. These reported prices include all premiums, options and incentives. Our search of the MLS revealed no closed resales however two homes within Wildrose are currently listed for sale, with one pending and the other currently offered on the market. 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 $92,208. The houses which are over 95 percent complete are shown below in the table following the descriptions.
Azalea
(Outlined in Blue-includes Silverberry & Wildrose Models)
Azalea is proposed for 64 single-family detached homes on lots with a minimum lot size of 6,000 square feet. The three plans range in size from 2,215 to 3,339 square feet. Plan One is single-story while Plans 2 and 3 are two -story. The plans have four to five bedrooms with two and three- car attached garages. Plan 3 offers a NextGen Suite for an extended family member. The plans are offered with Craftsman, California Prairie and Modern Farmhouse influenced architecture detailing. Exteriors include designer coach lights and block rear fencing with tubular steel gates (per homesite). Interiors include ceramic tile entry, Shaw vinyl flooring and Shaw carpeting along with upgraded baseboards, casings and 2-panel interior doors, 550
_________________________________________________________________________________________________________ Appraisal Report
City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 46
bull-nose corners, fully dry -walled garages and cable outlets (per plan). The kitchens include GE stainless steel appliances including built-in dual ovens, and granite or quartz countertops with thermofoil shaker cabinetry and a pull -out receptable with recycle bins along with a kitchen island. The owner’s suite includes a separate tub and shower, elongated toilets and a separate water closet along with a walk-in closet. Connectivity includes a Legrand On- Q 30” RF transparent structured media enclosure and a Honeywell smart thermostat. Energy efficiency includes a tankless water heater dual- glazed windows, insulated roll -up garage doors, LED lighting throughout and Boral cool roof tiles. There is also an integrated solar energy system provided through participation in the buyer -friendly new home energy plan by Sunnova. The models are located on Broad Leaf Way at Tulip Tree Street. There are two models, with Plan One not modeled. Fifty-two of the homes have closed escrow to homebuyers. There are seven production homes over 95 percent complete (all in escrow) and two model homes, along with no homes under construction and three remaining lots around the model complex. The project opened for sale March 11, 2023 , with base pricing $698,990 to $822,990 while current base pricing is $741,990 to $889,670. The homes began closing August 14, 2023, with actual closed net sales prices (as reported by the builder) ranging from $622,812 to $856,352. These reported prices include all premiums, options and incentives. Our search of the MLS revealed one current resale listing and no closed resales. 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 $87,034. The houses which are over 95 percent complete are shown below in the table.
The Gardens Phase One by Lennar
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Dayflower
1 3 / 2 2 / 2 1,582 17 1*
2 4 / 3 2 / 2 1,563 16 2*
3 4 / 3 2 / 2 1,669 17 3*
Subtotal Dayflower 50 6
Blue Sage
1 3 / 2.5 2 / 2 1,651 21 0
2 3 / 2.5 2 / 2 1,761 23 1*
3 4 / 2.5 2 / 2 1,868 13 1*
4 4 / 3 2 / 2 1,970 10 1*
Subtotal Blue Sage 67 3
Acacia
1 3 / 2.5 2 / 2 2,213 20 2
2 3 / 2.5 2 / 2 2,358 19 4*
3 4 / 2.5 2 / 2 2,472 21 4*
Subtotal Acacia 60 10
551
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 47
*One of each of these is a model. NG stands for NextGen, a floorplan that features a first-floor suite. There are an additional 83 homes under construction (68 owned by Lennar and 15 owned by AG EHC II), and 22 additional pads/lots with five owned by Lennar and 17 owned by AG EHC II, not shown on the above table.
Silverberry
1 4 / 3 2 / 2 2,449 18 4
2 4 / 3 2 / 2 2,666 27 4*
3 4 / 3 2 / 2 2,877 26 5*
Subtotal Silverberry 71 13
Wildrose
1 3 / 2 1 / 2 1,905 18 3
2 5 / 3 2 / 3 2,985 23 5*
3 4 / 3 2 / 3 3,105 25 6*
Subtotal Wildrose 66 14
Azalea
1 4 / 2 1 / 2 2,215 16 0
2 5 / 4 2 / 3 3,251 18 4*
3 (NG) 4 / 3.5 2 / 3 3,339 18 5*
Subtotal Azalea 52 9
Total The Gardens Phase One
552
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 48
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 peak of $522,500 while the July median price is $515,000 per the California Association of Realtors. This is 6. 2 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 5.7 percent (per the July 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 and thus far in 2024, unemployment has been rising from 3.6 to a high of 5. 7 percent. This past month unemployment has increased by about one-half 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 554
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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 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 15, 2024, the rate for the same loan is 6. 49 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 $3,768 or over 45 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 t o 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 the Spring of 2024 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 has helped to sustain new home sales. Per Zonda, in March 2024, 80 percent of new home builders in the Inland 555
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Empire are offering incentives. Recently, it appears rate buy -downs have been slowing with some public builders lowering their pricing rather than offering rate buy-downs.
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 Lennar representatives, the concessions have ranged from zero to $ 107,780. 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 eighth 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 in early 2024. The stock market hit an all -time high in late July 2024, 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 556
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are showing inflation in Ju ly 2024 at 2 .9 percent, significantly down from a high of 9.1 percent in June 2022.
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 an under 4 percent mortgage are not moving up due to the current near 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 ho me 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 trac ts 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 Land sea and The Gardens Phase One at the Arboretum by Lennar (subject property).
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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. 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 l and 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.
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 August 18 , 2024, Ryness Report, the year -to-date average sales rate (4. 0 sales per month) is the same as the same time period of the previous year. The market commentary 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 the average number of sales per month the same as one year prior; however, within the subject’s submarket of Central San Bernardino (included Fontana, Rialto and Bloomington) sales year to date are down about eight percent from the same time period in 2023 (647 sales year to date in 22 projects in 2024 and 727 sales year to date in 25 projects in 2023). It should be noted however, of the 22 active projects reported by Ryness, five are nearing completion, 558
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thus there are closer to 1 7 active 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 slightly 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 August 18, 2024, Inland Empire Ryness Report to one year prior, there are 27 less projects (234 in July 2023 and 207 in July 2024) and sales are the same with the monthly average year to date at 4. 0 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 disru ption, 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 $611,000 for a detached home and $528,000 for an attached home, with detached homes nearing the peak which was obtained in January 2024 and attached at a new peak. 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; 559
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however, there have been inflationary increases in construction costs adding to this increase. Construction materials have increased over 40 percent since 2019.
We have reviewed Empire Economics’ Price Point Review Study on Fontana CFD No. 112 (The Gardens Phase One) dated August 16, 2024. Empire Economics did an original Price Point Study on the project in November 2022 in order to determine their price points for the various plans within The Gardens Phase One. 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 one plan within Silverberry had a current base price conclusion which was below the original base price conclusions in November 2022 by 1.6 percent while the remainder of the plans has price points above the conclusions in November 2022. The 19 remaining plans within The Gardens Phase One showed increases ranging from 0. 8 to 16.3 percent. Overall, the plans averaged a 4. 56 percent increase from the original November 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 . We found 16 communities comparable to the homes at The Gardens Phase One. The comparables have current base prices ranging from $508,900 to over $1,000,000. The Gardens Phase One new homes have a range of base prices from $508,900 to $889,670, which falls within the range of comparable new homes in the area and includes the lowest of all the comparables price range for the carriage house single-story unit within Dayflower which is up over garages.
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’ 560
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most recent data, within overall Southern California, the median price paid for an existing single-family home in July 2024 ($881,000) is 0.7 percent higher than the month prior median home price ($875,000), and up 6.1 percent year-over-year from $830,000 in July 2023. These overall Southern California numbers compare to San Bernardino County with $515,000 as the median price paid for an existing home in the County in Ju ly 2024, down 1.4 percent from the previous month ($522,500), however up 6.2 percent on a year- over-year basis ($ 485,000). 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 July 2024 June 2024 July 2023
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $909,020 $889,180 $851,540 2.2% 6.7% 9.1%
Orange $1,390,000 $1,450,000 $1,300,000 -4.1% 6.9% 12.4% Riverside $650,000 $643,500 $615,000 1.0% 5.7% 11.5%
San Bernardino $515,000 $522,500 $485,000 -1.4% 6.2% 22.4% San Diego $1,020,000 $1,054,180 $926,020 -3.2% 5.3% 11.1% Ventura $972,000 $964,500 $920,000 0.8% 5.7% 7.9%
Southern Calif. $881,000 $875,000 $830,000 0.7% 6.1% 11.4% Source: California Association of Realtors
Based on July 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 $135 ,000 as compared to Riverside County, $3 94,020 as compared to Los Angeles County, $457 ,000 as compared to Ventura County, $5 05,000 as compared to San Diego County and $875 ,000 as compared to Orange County. That is, in Ju ly 2024, the median priced home in San Bernardino County ($ 515,000) was $875,000 less than the median priced home in Orange County ($1, 390,000). 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 majority of counties. With the current work-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. 561
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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 July 2024
The median home price of a detached home in the subject’s vicinity of North Fontana in July 2024 was $720,000, 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 6.2% percent year-over-year from July 2023 to July 2024.
According to the Ryness Report dated August 18, 2024, there are currently 22 new home projects in the subject’s Central San Bernardino submarkets, with the City of Fontana housing 16 of them (including the subject’s six).
The Gardens Phase One - Sales and Pricing
The Gardens Phase One is comprised of 526 proposed single-family homes with marketed sizes from 1,563 to 3,339 square feet with products ranging from attached triplex homes to single-family detached homes on minimum 6 ,000 square foot lots. The Gardens Phase One began sales in March 2023 with the exception of Dayflower which opened in April 2023. They have sold a total of 447 homes suggesting an average sales rate of 26.3 homes per month since March 2023. Base pricing has increased from 3.0 to
11.5 percent depending on the home type and plan with no price reductions.
Community
Name
Location
To Subject
No. of
Sales
July ‘24
July ‘24
Median
Sale Price
Price %
Change
Y-O-Y
North Fontana Larger Subject Vicinity 51 $720,000 7.8%
All of Fontana Subject and South 89 $650,000 7.9%
Rialto East 53 $599,000 6.3%
Rancho Cucamonga West 109 $762,000 5.1%
Jurupa Valley South 41 $685,000 1.5%
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Dayflower
Within Dayflower they have sold 65 homes resulting in an average absorption rate of 4.1 homes per month with base prices increasing from 4.7 to 8.4 percent depending on the plan. Original base pricing was from $479,900 to $513,900 while current base pricing is from $508,900 to $556,900. Actual sales prices on closed homes range from $414,530 to $526,577 (these prices include all premiums, options and a deduction of all incentives).
Blue Sage
Within Blue Sage they have sold 78 homes resulting in an average absorption rate of 4.6 homes per month with base prices increasing from 3.9 to 6.8 percent depending on the plan. Original base pricing was from $566,990 to $600,990 while current base pricing is from $589,290 to $641,990. Actual sales prices on closed homes range from $ 495,372 to $640,990 (these prices include all premiums, options and a deduction of all incentives).
Acacia
Within Acacia they have sold 78 homes resulting in an average absorption rate of 4. 6 homes per month with base prices increasing from 2.4 to 6.9 percent depending on the plan. Original base pricing was from $632,990 to $655,990 while current base pricing is from $$648,060 to $701,290. Actual sales prices on closed homes range from $558.421 to $687,165 (these prices include all premiums, options and a deduction of all incentives).
Silverberry
Within Silverberry they have sold 89 homes resulting in an average absorption rate of 5.2 homes per month with base prices increasing from 7.5 to 11.5 percent depending on the plan. Original base pricing was from $690,990 to $729,990 while current base pricing is from $742,910 to $813,830. Actual sales prices on closed homes range from $638,120 to $784,370 (these prices include all premiums, options and a deduction of all incentives).
Wildrose
Within Wildrose they have sold 78 homes resulting in an average absorption rate of 4. 6 homes per month with base prices increasing from 6.8 to 10.9 percent depending on the 563
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plan. Original base pricing was from $660,990 to $766,990 while current base pricing is from $729,480 to $819,325. Actual sales prices on closed homes range from $ 610,644 to $810,206 (these prices include all premiums, options and a deduction of all incentives).
Azalea
Within Azalea they have sold 59 homes, however they have been temporarily sold out since June 2024 which results in an average absorption rate of 3.9 homes per month with base prices increasing from 6.1 to 8.1 percent depending on the plan. Original base pricing was from $698,990 to $822,990 while current base pricing is from $741,900 to $889,670. Actual sales prices on closed homes range from $622,812 to $856,352 (these prices include all premiums, options and a deduction of all incentives).
The sales rates for the five communities range from 3.9 to 5.2 sales per month, which is generally above 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 August 18, 2024, year -to-date average sales per project per month in the Inland Empire is 4 .0 homes while within the subject’s submarket of Central San Bernardino the year -to-date average sales per project per month is 3.6. The subject has a higher sales rate than the averages in the area and homes are still selling, along with 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 today .
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 during COVID. The latest statistics indicate a recent slowdown in sales , possibly as buyers are on the sidelines waiting for rates to come down. The Fontana new-home submarket is performing slightly below the Inland Empire market as a whole, however five of the subject’s six neighborhoods are experiencing higher absorption rates along with increased pricing with the sixth neighborhood just slightly below the Inland Empire’s average and above the 564
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subject’s submarket’s average. 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.
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HIGHEST AND BEST USE ANALYSIS
The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:
"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”
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 69.919 gross acres per recorded Tract Map Nos. 20362, 20363 and 20364. The site is south of Duncan Canyon Road with the majority of the property along the east side of Cassava Way with one square shaped parcel on the west side of Cassava Way, all located within the northern portion of the City of Fontana. The lands are essentially level at grade of surrounding streets . The site is bounded by Sierra Avenue to the east, Casa Grande Road to the south, Cassav a Drive, vacant lands (currently being developed by Richmond American) or an existing
5 The Appraisal of Real Estate, 11th Edition
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condominium complex in Gabion Ranch to the west and Duncan Canyon Road to the north. Beyond the surrounding streets is vacant land north of Duncan Canyon Road (future section of Arboretum Specific Plan known as The Resort) , and a new industrial building and vacant land for industrial use on the east side of Sierra Avenue beyond which are existing residential lands. To the south below Casa Grande Road is the master plan of Gabion Ranch which is built and sold out while beyond Cassava Drive to the west is Phase Two of The Gardens (beginning development) beyond which is The Meadows, another section within The Arboretum Specific Plan which is built and sold out.
The subject site has been graded for 526 single-family homes: 64 detached lots with a minimum lot size of 6,000 square feet; 88 detached lots with a minimum lot size of 4,700 square feet, 97 lots with a minimum lot size of 4,000 square feet, 109 detached lots with a minimum lot size of 2,700 square feet and two condominium lots, one graded for 99 detached homes on approximate 2,000 square foot lots and the other for 69 triplex homes.
We have reviewed a Soils Report on the subject site which concluded that the development of the site into the proposed residential use is feasible; however, all mitigation measures recommended within the report should be adhered to during construction. 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 drainage system appears to have been designed into a street drainage system for the entire tract. All standard utilities are available to serve the subject property.
The site has excellent access via I -15, exit Duncan Canyon Road and east about one mile to the subject. 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.
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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 Maps 20362, 20363 and 20364 to be developed into 358 single-family detached lots and two condominium lots along with site plans for the two condominium lots which show 168 units for a total of 526 residential units. Per the City of Fontana General Plan and their Zoning Map, the subject is shown as within The Arboretum Specific Plan. Per The Arboretum Specific Plan, the site is shown as RMF (Residential Multi-Family with varying densities ranging from 3 to 16.1 dwelling units per acre. The subject has an overall density of 6.31 dwelli ng units per acre for Tract Maps 20363 and 20364 (Acacia, Silverberry, Wildrose and Azalea) and an overall density of 12.75 units per acre for the two condominium lots. These are within the allowed densities per the Specific Plan.
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 The Gardens Phase One there have been 447 sales to date with the first sale occurring in March 2023, suggesting an overall sales rate between the six communities of 26.3 sales per month with actual per project absorption 568
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rates between 3.9 and 5.2 homes per month which is generally above the average year to date sales per month in the Inland Empire (4. 0) and all above the average sales per month in the subject’s submarket (3.6). While the absorption rates are above 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, we found 1 5 projects (including the six subject neighborhoods) to be most comparable to the subject property.
While the market softened, beginning the second half of 2022 due to interest rates rising, the Inland Empire is still seeing demand and new homes are still selling. Our search for land sales found 1 1 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 housing. Based on the above analysis, the highest and best use for the subject property appears to be for single-family 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 six neighborhoods within the community of The Gardens Phase One with a total of 526 proposed homes which are currently being marketed by Lennar. The Gardens Phase One began selling in March 2023 and has sold 447 homes to date, reflecting a sales rate of 26.3 sales per month spread across the six product lines.
Independently, Dayflower has a sales rate of 4.1 homes per month, Blue Sage has an average sales rate of 4.6 homes per month, Acacia has an average sales rate of 4. 6 homes per month, Silverberry has an average sales rate of 5. 2 homes per month, 569
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Wildrose has an average sales rate of 4.6 homes per month and Azalea has an average sales rate of 3. 9 homes per month. Base prices at The Gardens Phase One have generally increased since grand-opening on all communities with base price increases ranging from 2.4 to 11.5 percent depending on the plan and no price decreases . The absorption rates within the subject communities are all faster than the subject submarket average (3.6 homes per month) with only Azalea (3. 9 sales per month) having a slightly slower sales rate than the average absorption rate within the overall Inland Empire (4. 0 sales per month). It should be noted that Azalea has temporarily sold out, which is affecting the overall average sales rate. In addition, prices on all plans have been increasing. Builders are offering concessions to increase absorption rates in the area. I n marketing The Gardens Phase One, the builder is offering concessions , including rate buy-downs and help with closing costs, on a case-by-case basis, at times offering significant amounts if a house is going to be standing inventory. These concessions have ranged from $0 to $107,780 with an average of $43,291 per closed sale and an average of $33,971 on the 81 homes currently in escrow. Some builders in the area, including Lennar, appear to offer higher concessions in order to maintain higher absorption rates.
Per Empire Economics’ Price Point Review Study, the plan pricing (including incentives being offered) has decreased on one plan within Silverberry however increased on the remaining plans with an average increase of 4. 56 percent between proposed pricing in November 2022 and current pricing. The sales absorption rate within The Gardens Phase One is above the market area. All of the homes are of good design and appear to be of good quality workmanship. It appears the homes within The Gardens Phase One are being well received and the neighborhoods are 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. 570
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VALUATION ANALYSIS AND CONCLUSIONS
The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the 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 s ingle-family detached lots or some detached cluster or detached condominium lots along with some attached product. At times, the detached condominium 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 s ingle ownership. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining development 571
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costs (if any), the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. A home under construction (under 95 percent complete) will be valued as a finished lot /pad rather than attribute value to a partially complete improvement. In the case of 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. 112 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 The Gardens Phase One there are 526 lots/pads in a generally physically finished condition. The lands include 64 single-family detached lots with a minimum lot size of 6,000 square feet (Azalea); 88 single-family detached lots with a minimum lot size of 4,700 square feet (Wildrose); 97 lots with a minimum lot size of 4,000 square feet (Silverberry) and 109 lots with a minimum lot size of 2,700 square feet (Acacia). In addition, there are two condominium maps, one with 99 lots approximately 2,000 square feet in size for detached homes (Blue Sage) and 69 triplex homes ( Dayflower). Within Azalea there are three remaining lots owned by Lennar and no homes under construction.
The three lots are the final build- out surrounding the model complex. Within Wildrose there are no remaining finished lots and eight homes under construction owned by Lennar. A home under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement, thus we will value eight lots with in Wildrose . For Silverberry there are no remaining fi nished lots however six homes under construction owned by AG EHC II and seven homes U/C owned by Lennar. Therefore, we will value six lots under the AG EHC II ownership and seven lots owned by Lennar within Silverberry. Within Acacia there are 2 7 homes under 572
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construction (20 owned by Lennar and seven owned by AG EHC II) and 12 remaining lots (three owned by Lennar and nine owned by AG EHC II). Therefore, we will value 23 lots under Lennar ownership and 16 lots under the AG EHC II ownership within Silverberry.
Within Blue Star there are 21 homes under construction owned by Lennar and eight remaining pads owned by AG EHC II which will be valued as finished lots/pads. Finally, within Dayflower there are 13 homes under construction owned by Lennar and no remaining pads, thus 13 pads will be valued.
We have searched the area and found the 11 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 573
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employment centers for commuters. H owever, 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 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 6,000 square foot detached lots as these do not have the amenities associated with The Gardens and due to the freeway frontage of this site.
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 f inished 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 triplex and condominium small lot product.
This site is considered inferior when compared to the significant amenities located in The Gardens.
Land Sale No. 4 refers to the January 2024 closing of a site located in North Fontana, immediately adjacent to the subject Blue Sage within The Gardens Phase Two 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 574
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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 and they will be within The Gardens Phase Two so can access the pools, social club and gathering spots. In comparison to the subject property this transaction is considered to be similar to the higher density product (Dayflower, Blue Sage and Acacia).
Land Sale No. 5 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) , however inferior in density to all of the subject neighborhoods.
Land Sale No. 6 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 considered to be slightly superior due to the Rancho Cucamonga address and si milar in density to the subject Dayflower, Blue Sage and Acacia, however inferior in amenities due to the size of the project.
Land Sale No. 7 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 575
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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 reported 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 to Dayflower, Blue Sage and Acacia, however inferior of number of lots (333 would be considered a bulk sale) and superior in location with Ontario Ranch closer into the employment centers of Los Angeles, Orange and Riverside.
Land Sale No. 8 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 estimated 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.
Land Sale No. 9 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 576
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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 inferior due to the proximity of the I-210 Freeway. This site is also inferior in amenities.
Land Sale No. 10 refers to D.R. Horton’s 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 even the subject’s high-density projects (highest at 13.6 dwelling units per acre). 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 and amenities.
Land Sale No. 11 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 8 4 detached cluster units and sold for $9,850,000 or $117,262 per unit based on an estimated finished lot value of $272,000. 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 similar in density to Dayflower, Blue Sage and Acacia.
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,
Inferior – Highwire Easement
Jurupa Valley 4 / 24 6,300 sf $308,000 Inferior – Amenities & Fwy Frontage 577
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2 3 North Fontana 4 / 24 8 du/ac $252,000
Inferior – Amenities
4 North Fontana 1 / 24 10 du/ac $279,465
Similar
5 Ontario Ranch 12 / 23 16 du/ac $250,000 Superior – Location Inferior – Density
6 Rancho
Cucamonga 12 / 23 12 du/ac $250,000
Superior – Location
7 Ontario Ranch 12 / 23 11 du/ac
$315,000
(401,000/
$315,000
$258,000)
Superior – Location
Inferior – No. of Lots
8 Ontario Ranch 10 / 23 12 du/ac
$297,000
($365,000/
$315,000/
$260,000)
Superior – Location
Inferior – Amenities
9 North Fontana 10 / 23 14 du/ac $220,000 Inferior – Location
10 North Fontana 8 / 23 16 du/ac $219,000 Inferior – Amenities
11 North Fontana 7 / 23 9 du/ac $272,000 Inferior- Amenities
All 11 of the market data transactions have closed within the past year and the data is considered to be good. 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.
Dayflower encompasses 69 triplex pads and contains 5.043 acres per the tract map suggesting a density of 13.68 dwelling units per acre. For this site the best comparables are Data Nos. 1, 6, 7 and 8 (attached product) and 5, 9 and 10 which have densities most similar to the subject. These Data have a finished lot range from $219,000 to $280,000 per finished pad with generally the lower prices (Data Nos. 9 and 10 ) for the higher densities. The subject is within a gated community with significant amenities including a pool, basketball courts, pickle ball courts and social club. The most recent North Fontana sales (Data Nos. 3 and 4) each have slightly lower overall densities and sold for $252,000 and $279,465 per unit. We have concluded that the Dayflower pads have a finished pad value of $235,000.
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Blue Sage includes 99 condominium pads on 8.137 acres per the tract map which equates to an overall density of 12.16 dwelling units per acre. The best comparable are Data Nos. 1, 3, 4, 7 and 8 (for cluster) and Data No. 11 (for cluster) which have a range from $252,000 to $315,000 per finished pad. The most recent North Fontana sales (Data Nos. 3 and 4) each have slightly lower overall densities and sold for $252,000 and $279,465 per unit. Blue Sage has an overall density of 12 dwelling units per acre which is higher than a lot of the Cluster product. We have concluded that the Blue Sage pads have a finished pad value of $270,000.
Acacia includes 109 single family detached lots with a minimum lot size of 2,700 square feet with an overall density of 8.9 dwelling units per acre. For this site the best comparables are Data Nos. 1, 7 and 8, for the detached cluster and Data Nos. 3, 4 and 11 which have densities most similar to the subject. These Data have a finished lot range from $252,000 to $410,000 per finished pad with the best comparable being Data No. 4, which closed for $279,465, however this transaction closed 10 months ago. The subject is within a gated community with significant amenities including a pool, basketball courts, pickle ball courts and social club. We have concluded that the Acacia lots have a finished lot value of $290,000.
Silverberry includes 97 single family detached lots with a minimum lot size of 4,000 square feet. For this site the best comparables are Data Nos. 1, 7 and 8, for the large, detached cluster and Data Nos. 2 which is for larger detached lots, however in an inferior location.
These data have a finished lot range from $308,000 to $560,000 per finished pad however Data No. 1 at the high end is in Ontario, a superior location. The subject is within a gated community with significant amenities including a pool, basketball courts, pickle ball courts and social club. We have concluded that the Silverberry lots have a finished lot value of $335,000.
Wildrose includes 88 single family detached lots with a minimum lot size of 4,700 square feet. For this site the best comparables are Data Nos. 1, 7 and 8, for the large, detached 579
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cluster and Data Nos. 2 which is for larger detached lots, however in an inferior location.
These data have a finished lot range from $308,000 to $560,000 per finished pad however Data No. 1 at the high end is in Ontario, a superior location. The subject is within a gated community with significant amenities including a pool, basketball courts, pickle ball courts and social club. We have concluded that the Wildrose lots have a finished lot value of $350,000.
Azalea includes 64 single family detached lots with a minimum lot size of 6,000 square feet. For this site the best comparables are Data Nos. 1, 7 and 8, for the large, detached cluster and Data Nos. 2 which is for larger detached lots, however in an inferior location.
These data have a finished lot range from $308,000 to $560,000 per finished pad however Data No. 1 at the high end is in Ontario, a superior location. The remaining Market Data have a range from $308,000 to $401,000 per finished lot. The subject is within a gated community with significant amenities including a pool, basketball courts, pickle ball courts and social club. We have concluded that the Wildrose lots have a finished lot value of $390,000.
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 $37,671.60 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.
Dayflower
The concluded value for the Dayflower pads in a finished condition is $235 ,000. There are 13 pads owned by Lennar (all under construction). The value is calculated as follows:
Lennar Ownership
13 pads x $235,000 $ 3,055,000
Less: $37,671.60 x 13 ( 489,731)
As is Value 13 Dayflower Pads $ 2,565,269
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Blue Sage
The concluded value for the Blue Sage pads in a finished condition is $2 70,000. There are 21 lots owned by Lennar (all under construction) and eight pads owned by AG EHC II. The value is calculated as follows:
Lennar Ownership
21 Pads x $270,000 $ 5,670,000
Less: $37,671.60 x 21 ( 791,104)
As is Value 21 Blue Sage Pads $ 4,878,896
AG EHC II Ownership
8 Pads x $270,000 $ 2,160,000
Less: $37,671,60 x 8 ( 301,373)
As is Value 8 Blue Sage Pads $ 1,858,627
Acacia
The concluded value for the Acacia small lots in a finished condition is $2 90,000. There are 23 lots owned by Lennar ( 20 under construction) and 16 lots owned by AG EHC II (seven under construction). The value is calculated as follows:
Lennar Ownership
23 Lots x $290,000 $ 6,670,000
Less: $37,671.60 x 23 ( 866,447)
As is Value 23 Acacia Lots $ 5,803,553
AG EHC II Ownership
16 Lots x $290,000 $ 4,640,000
Less: $37,671.60 x 16 ( 602,746)
As is Value 16 Acacia Lots $ 4,037,254
Silverberry
The concluded value for the Acacia lots in a finished condition is $335,000. There are seven lots owned by Lennar (all under construction) and six lots owned by AG EHC II (all under construction). The value is calculated as follows:
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Lennar Ownership
7 Lots x $335,000 $ 2,345,000
Less: $37,671.60 x 7 ( 263,701)
As is Value 7 Silverberry Lots $ 2,081,299
AG EHC II Ownership
6 Lots x $335,000 $ 2,010,000
Less: $37,671.60 x 6 ( 226,027)
As is Value 6 Silverberry Lots $ 1,783,970
Wildrose
The concluded value for the Wildrose lots in a finished condition is $350,000. There are no lots owned by AG EHC II and eight lots owned by Lennar (all under construction). The value is calculated as follows:
Lennar Ownership
8 Lots x $350,000 $ 2,800,000
Less: $37,671.60 x 8 ( 301,373)
As is Value 8 Wildrose Lots $ 2,498,627
Azalea
The concluded value for the Azalea lots in a finished condition is $390,000. There are no lots owned by A G EHC II and three lots owned by Lennar (final build-out around model complex). The value is calculated as follows:
Lennar Ownership
3 Lots x $390,000 $ 1,170,000
Less: $37,671.60 x 3 ( 113,015)
As is Value 3 Azalea Lots $ 1,056,985
Land Valuation Conclusions
There are currently 83 homes under construction and 22 remaining lots/pad with 7 5 lots/pads owned by L ennar and 30 lots/pads owned by A G EHC II . The homes under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement. The final land values are calculated as follows.
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Lennar Ownership:
Dayflower (13 pads) $ 2,565,269
Blue Sage (21 pads) 4,878,896
Acacia (23 lots) 5,803,553
Silverberry (7 lots) 2,081,299
Wildrose (8 lots) 2,498,627
Azalea (3 lots) 1,056,985
Lennar Land Value (75 lots/pads) $18,884,629
AG EHC II Ownership:
Dayflower (0 pads) $ 0
Blue Sage (8 pads) 1,858,627
Acacia (16 lots) 4,037,254
Silverberry (6 lots) 1,783,970
Wildrose (0 lots) 0
Azalea (0 lots) 0
AG EHC II Ownership (30 lots/pads) $ 7,679,851
Retail House Valuation – The Gardens Phase One
Within The Gardens Phase One there are six neighborhoods with 366 individually owned homes, 55 homes over 95 percent complete owned by Lennar. The builder-owned homes over 95 percent complete include 41 production homes (39 in escrow) and 14 model homes.
Due to the single ownership of multiple houses ( 55 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 . This will be further discussed below. Prior to completing a DCF, the retail value of the homes needs to be determined. For purposes of this valuation, the retail value is based on actual sales prices less concessions along with reviewing all comparable homes in the subject marketplace.
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. The majority of the new home comparables are located within the City of Fontana, which currently houses a multitude of actively selling new home 583
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communities with the exception of one neighborhood located in Ontario. Our search of the subject property and the local Multiple Listing Service (MLS) has resulted in no resales and three current resale listings within The Gardens Phase One which will be discussed below.
Dayflower
Dayflower homes include Plan 1 which is a carriage house up over three, two-car garages.
The homes are built in a triplex format, however, Plans 2 and 3 are detached with their garages under Plan 1 and are not attached to the homes, thus have a detached garage. *One of each of these plans is a model home. There are an additional 13 homes under construction, and no remaining pads (not shown on the above table).
The most appropriate new home comparable data for Dayflower Plan 1 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2 1 / 2 1,582 --
1 2 4 / 3 2 / 2 1,563 $330.03
1 3 4 / 3 2 / 2 1,669 $333.67
2 1 3 / 2.5 2 / 2 1,651 $356.93
2 2 3 / 2.5 2 / 2 1,761 $351.10
8 1 3 / 2.5 2 / 2 1,372 $408.28
8 2 3 / 2.5 2 / 2 1,450 $398.95
8 3 4 / 2.5 2 / 2 1,661 $372.38
12 5 3 / 2 1 / 2 1,557 $380.85
The comparable communities are all located in Fontana with the exception of Data No. 12, which is located in Ontario proper, about five miles southwest of the subject. We have included this Data as it is the only other single story as it is a stacked flat. All are of similar quality, design, and appeal. Plan 1 within Dayflower is a carriage house single level above three attached two-car garages. There is no other carriage home product selling, thus we included a stacked flat condominium (Data No. 12), a duplex product, zero lot line, cluster The Gardens Phase One by Lennar
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Dayflower
1 3 / 2 2 / 2 1,582 17 1*
2 4 / 3 2 / 2 1,563 16 2*
3 4 / 3 2 / 2 1,669 17 3*
Subtotal Dayflower 50 6
584
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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 $330.03 to $408.28 with the two highest priced homes per square foot, being the smallest homes. This is typical due to the economies of scale obtained during construction of the homes. Dayflower Plan 1 has a current base asking price of $321.68 per square foot, which is lower than the comparable ranges. This is due to the single floor up over garages. 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 Dayflower Plan 1 with sales prices ranging from $262.03 to $318.74 per square foot. There are three current escrows of Dayflower Plan 1 with a sales price range of $285.24 to $326.11. 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 and are included in this analysis. It has been concluded that Dayflower Plan 1 has a base current market value of $290.00 per square foot. This calculates as follows:
1,582 sf x $290.00 = $458,780
The most appropriate new home comparable data for Dayflower Plan 2 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3 2 / 2 1,563 --
1 1 3 / 2.5 1 / 2 1,582 $321.68
1 3 4 / 3 2 / 2 1,669 $333.67
2 1 3 / 2.5 2 / 2 1,651 $356.93
2 2 3 / 2.5 2 / 2 1,761 $351.10
8 2 3 / 2.5 2 / 2 1,450 $385.51
8 3 4 / 2.5 2 / 2 1,661 $358.21
12 5 3 / 2 1 / 2 1,557 $380.85
15 2 3 / 2.5 2 / 2 1,650 $382.16
585
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 81
The comparable communities are all located in Fontana with the exception of Data No.12, which is located in Ontario proper, about five miles southwest of the subject. All are of similar quality, design, and appeal. Plan 2 within Dayflower is a detached home with a detached garage that supports the Plan 1 carriage house (single level above three two-car garages).
We have included duplex product, 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 $321.68 to $385.51 with the highest priced homes per square foot, being the smallest home. This is typical due to the economies of scale obtained during construction of the homes. Dayflower Plan 2 has a current base asking price of $339.03 per square foot. 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 17 closings of Dayflower Plan 2 with sales prices ranging from $286.04 to $336.90 per square foot. There are five current escrows of Dayflower Plan 2 with a sales price range of $306.57 to $332.25. 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 and are included in this analysis. It has been concluded that Dayflower Plan 2 has a base current market value of $305.00 per square foot. This calculates as follows:
1,563 sf x $305.00 = $476,715
The most appropriate new home comparable data for Dayflower Plan 3 are shown below.
586
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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3 2 / 2 1,669 --
1 1 3 / 2.5 1 / 2 1,582 $321.68
1 2 4 / 3 2 / 2 1,563 $339.03
2 1 3 / 2.5 2 / 2 1,651 $356.93
2 2 3 / 2.5 2 / 2 1,761 $351.10
8 2 3 / 2.5 2 / 2 1,450 $385.51
8 3 4 / 2.5 2 / 2 1,661 $358.21
12 5 3 / 2 1 / 2 1,557 $380.85
15 2 3 / 2.5 2 / 2 1,650 $382.16
The comparable communities are all located in Fontana with the exception of Data No.12 which is located in Ontario proper, about five miles southwest of the subject. All are of similar quality, design, and appeal. Plan 3 within Dayflower is a detached home with a detached garage that supports the Plan 1 carriage house (single level above three two-car garages).
We have included duplex product, 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 $321.68 to $385.51 with the highest priced home per square foot, being the smallest home. This is typical due to the economies of scale obtained during construction of the homes. Dayflower Plan 3 has a current base asking price of $333.67 per square foot. 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 17 closings of Dayflower Plan 3 with sales prices ranging from $281.39 to $309.80 per square foot. There are seven current escrows of Dayflower Plan 3 with a sales price range of $295.06 to $319.54. 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 and are considered in this analysis. It has been concluded that Dayflower Plan 3 has a base current market value of $295.00 per square foot. This calculates as follows:
1,669 sf x $295.00 = $492,355
587
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 83
Blue Sage
Blue Sage homes are on condominium pads with detached homes.
*One of each of these plans is a model home. There are an additional 21 homes under construction owned by Lennar, and 8 additional pads owned by AG EHC II (not shown on the above table).
The most appropriate new home comparable data for Blue Sage Plan 1 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2.5 2 / 2 1,651 --
1 2 4 / 3 2 / 2 1,563 $339.03
1 3 4 / 3 2 / 2 1,669 $333.67
2 2 3 / 2.5 2 / 2 1,761 $351.10
2 3 4 / 2.5 2 / 2 1,868 $333.93
7 1 3 / 2.5 2 / 2 1,822 $348.76
14 1 3 / 2.5 2 / 2 2,006 $338.53
15 2 3 / 2.5 2 / 2 1,650 $382.16
15 3 3 / 2.5 2 / 2 1,710 $383.62
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 $333.93 to $383.62 per square foot. Blue Sage Plan 1 has a current base asking price of $356.93 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 21 closings of Blue Sage 1 with sales prices ranging from $ 300.04 to $351.59 per square foot. There is one current escrow of Blue Sage Plan 1 with a reported sales price of $332.39 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,
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Blue Sage
1 3 / 2.5 2 / 2 1,651 21 0
2 3 / 2.5 2 / 2 1,761 23 1*
3 4 / 2.5 2 / 2 1,868 13 1*
4 4 / 3 2 / 2 1,970 10 1*
Subtotal Blue Sage 67 3
588
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 84
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 and are considered in this analysis. It has been concluded that Blue Sage Plan 1 has a base current market value of $3 20.00 per square foot. This calculates as follows:
1,651 sf x $320.00 = $528,320
The most appropriate new home comparable data for Blue Sage Plan 2 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 3 / 2.5 2 / 2 1,761 --
1 3 4 / 3 2 / 2 1,669 $333.67
2 1 3 / 2.5 2 / 2 1,651 $356.93
2 3 4 / 2.5 2 / 2 1,868 $333.93
7 1 3 / 2.5 2 / 2 1,822 $348.76
14 1 3 / 2.5 2 / 2 2,006 $338.53
15 3 3 / 2.5 2 / 2 1,710 $383.62
15 4 4 / 3 2 / 2 1,950 $346.74
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 $333.67 to $383.62 per square foot. Blue Sage Plan 2 has a current base asking price of $351.10 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 3 closings of Blue Sage 2 with sales prices ranging from $ 289.27 to $337.07 per square foot. There are four current escrows of Blue Sage Plan 2 with a reported sales price range of $317.50 to $354.94 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 and are considered in this analysis. It has been concluded that Blue Sage Plan 2 has a base current market value of $3 15.00 per 589
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square foot. This calculates as follows:
1,761 sf x $315.00 = $554,715
The most appropriate new home comparable data for Blue Sage Plan 3 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 2.5 2 / 2 1,868 --
1 3 4 / 3 2 / 2 1,669 $333.67
2 2 3 / 2.5 2 / 2 1,761 $351.10
2 4 4 / 3 2 / 2 1,970 $325.88
7 1 3 / 2.5 2 / 2 1,822 $348.76
7 2 3 / 2.5 2 / 2 1,932 $333.81
14 1 3 / 2.5 2 / 2 2,006 $338.53
15 3 3 / 2.5 2 / 2 1,710 $383.62
15 4 4 / 3 2 / 2 1,950 $346.74
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 $333.67 to $383.62 per square foot. Blue Sage Plan 3 has a current base asking price of $333.93 per square foot, which is at the low- end 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 13 closings of Blue Sage 3 with sales prices ranging from $ 283.09 to $321.94 per square foot. There is one current escrow of Blue Sage Plan 3 with a reported sales price of $331.95 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 and are considered in this analysis. It has been concluded that Blue Sage Plan 3 has a base current market value of $3 10.00 per square foot. This calculates as follows:
590
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 86
1,868 sf x $310.00 = $579,080
The most appropriate new home comparable data for Blue Sage Plan 4 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 4 / 3 2 / 2 1,970 --
1 3 4 / 3 2 / 2 1,669 $333.67
2 2 3 / 2.5 2 / 2 1,761 $351.10
2 3 4 / 2.5 2 / 2 1,868 $333.93
3 1 3 / 2.5 2 / 2 2,213 $292.84
7 2 3 / 2.5 2 / 2 1,932 $333.81
14 1 3 / 2.5 2 / 2 2,006 $338.53
15 4 4 / 3 2 / 2 1,950 $346.74
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 $351.10 per square foot with the lowest price per square foot for the largest sized home. This is typical due to the economies of scale obtained during construction. Blue Sage Plan 4 has a current base asking price of $325.88 per square foot. 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 10 closings of Blue Sage Plan 4 with sales prices ranging from $268.39 to $325.38 per square foot. There are five current escrows of Blue Sage Plan 4 with a reported sales price range of $301.16 to $314.59 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 and are considered in this analysis. It has been concluded that Blue Sage Plan 4 has a base current market value of $300.00 per square foot. This calculates as follows:
1,970 sf x $300.00 = $591,000
591
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 87
Acacia
Acacia homes are all detached on minimum 2,700 square foot lots.
*One of each of these plans is a model home. There are an additional 28 homes under construction (19 owned by Lennar and 9 owned by AG EHC II) , and 11 additional lots (two owned by Lennar and nine owned by AG EHC II) not shown on the above table.
The most appropriate new home comparable data for Acacia Plan 1 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2.5 2 / 2 2,213 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 2 3 / 2.5 2 / 2 2,358 $289.25
7 3 3 / 2.5 2 / 2 2,207 $306.75
9 1 3 / 2.5 2 / 2 2,099 $322.05
13 1 3 / 2.5 2 / 2 2,006 $338.53
14 3 4 / 3 2 / 2 2,065 $316.22
15 4 4 / 3 2 / 2 1,950 $346.74
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 $346.74 per square foot with the lowest price per square foot for the largest sized home. This is typical due to the economies of scale obtained during construction. Acacia Plan 1 has a current base asking price of $292.84 per square foot, at the low end of the range. 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 20 closings of Acacia Plan 1 with sales prices ranging from $252.34 to $280.28 per square foot. There are three current escrows of Acacia Plan 1 with a reported sales price range of $268.70 to $291.03 per square foot. It should be
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Acacia
1 3 / 2.5 2 / 2 2,213 20 2
2 3 / 2.5 2 / 2 2,358 19 4*
3 4 / 2.5 2 / 2 2,472 21 4*
Subtotal Acacia 60 10
592
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City of Fontana CFD No. 112 (The Gardens Phase One) - by Lennar Kitty Siino & Associates, Inc. Page 88
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 and are considered in this analysis. It has been concluded that Acacia Plan 1 has a base current market value of $275.00 per square foot. This calculates as follows:
2,213 sf x $275.00 = $608,575
The most appropriate new home comparable data for Acacia Plan 2 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 3 / 2.5 2 / 2 2,358 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 1 3 / 2.5 2 / 2 2,213 $292.84
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 1 4 / 3 2 / 2 2,449 $303.35
7 3 3 / 2.5 2 / 2 2,207 $306.75
9 3 4 / 3 2 / 2 2,311 $314.58
9 4 4 / 3 2 / 2 2,552 $289.96
13 2 4 / 3 2 / 2 2,303 $318.18
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 $283.69 to $325.88 per square foot.
Acacia Plan 2 has a current base asking price of $ 289.25 per square foot , within the comparable’s range. 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 19 closings of Acacia Plan 2 with sales prices ranging from $242.35 to $278.53 per square foot. There are seven current escrows of Acacia Plan 2 with a reported sales price range of $259.70 to $288.65 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 593
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home, however, are a cost of selling the home and are considered in this analysis. It has been concluded that Acacia Plan 2 has a base current market value of $265.00 per square foot. This calculates as follows:
2,358 sf x $265.00 = $624,870
The most appropriate new home comparable data for Acacia Plan 3 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 2.5 2 / 2 2,472 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 2 3 / 2.5 2 / 2 2,358 $289.25
4 1 4 / 3 2 / 2 2,449 $303.35
4 2 4 / 3 2 / 2 2,666 $293.40
7 3 3 / 2.5 2 / 2 2,207 $306.75
9 4 4 / 3 2 / 2 2,552 $289.96
10 1 4 / 3.5 2 / 2 2,747 $299.96
13 2 4 / 3 2 / 2 2,303 $318.18
13 3 5 / 4 2 / 2 2,777 $283.62
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 $283.62 to $325.88 per square foot with the lowest price per square foot being for the largest sized home. This is typical due to the economies of scale obtained during construction. Acacia Plan 3 has a current base asking price of $283.69 per square foot, at the low end of comparable’s range. 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 21 closings of Acacia Plan 3 with sales prices ranging from $241.15 to $277.98 per square foot. There are eight current escrows of Acacia Plan 3 with a reported sales price range of $260.74 to $283.29 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 and are considered in this analysis. It has been concluded that Acacia Plan 2 has a base 594
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current market value of $260.00 per square foot. This calculates as follows:
2,472 sf x $260.00 = $642,720
Silverberry
Silverberry homes are all detached on minimum 4,000 square foot lots.
*One of each of these plans is a model home. There are an additional 13 homes under construction (7 owned by Lennar and 6 owned by AG EHC II) not shown on the above table.
The most appropriate new home comparable data for Silverberry Plan 1 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3 2 / 2 2,449 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 2 3 / 2.5 2 / 2 2,358 $289.25
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 2 4 / 3 2 / 2 2,666 $293.40
7 3 3 / 2.5 2 / 2 2,207 $306.75
9 4 4 / 3 2 / 2 2,552 $289.96
10 1 4 / 3.5 2 / 2 2,747 $299.96
13 2 4 / 3 2 / 2 2,303 $318.18
13 3 5 / 4 2 / 2 2,777 $283.62
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 $283.62 to $325.88 per square foot with the lowest price per square foot being for the largest sized home. This is typical due to the economies of scale obtained during construction. Silverberry Plan 1 has a current base asking price of $303.35 per square foot, within the comparable’s range. It should be noted
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Silverberry
1 4 / 3 2 / 2 2,449 18 4
2 4 / 3 2 / 2 2,666 27 4*
3 4 / 3 2 / 2 2,877 26 5*
Subtotal Silverberry 71 13
595
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that the base prices do not take into consideration the mortgage concessions (either rate buy-downs or closing cost assistance). There have been 18 closings of Silverberry Plan 1 with sales prices ranging from $262.46 to $292.42 per square foot. There are five current escrows of Silverberry Plan 1 with a reported sales price range of $291.38 to $295.51 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, w hile 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 and are considered in this analysis. It has been concluded that Silverberry Plan 1 has a base current market value of $ 285.00 per square foot. This calculates as follows:
2,449 sf x $285.00 = $697,965
The most appropriate new home comparable data for Silverberry Plan 2 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 4 / 3 2 / 2 2,666 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 1 4 / 3 2 / 2 2,449 $303.35
4 3 4 / 3 2 / 2 2,877 $282.87
5 2 5 / 3 2 / 2 2,985 $280.90
9 4 4 / 3 2 / 2 2,552 $289.96
10 1 4 / 3.5 2 / 2 2,747 $299.96
13 2 4 / 3 2 / 2 2,303 $318.18
13 3 5 / 4 2 / 2 2,777 $283.62
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 $280.90 to $325.88 per square foot with the lowest price per square foot being for the largest sized home. This is typical due to the economies of scale obtained during construction. Silverberry Plan 2 has a current base asking price of $293.40 per square foot, within the comparable’s range. It should be noted that the base prices do not take into consideration the mortgage concessions (either rate 596
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buy-downs or closing cost assistance). There have been 27 closings of Silverberry Plan 2 with sales prices ranging from $239.35 to $281.95 per square foot. There are six current escrows of Silverberry Plan 2 with a reported sales price range of $279.04 to $293.89 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 and are considered in this analysis. It has been concluded that Silverberry Plan 2 has a base current market value of $ 270.00 per square foot. This calculates as follows:
2,666 sf x $270.00 = $719,820
The most appropriate new home comparable data for Silverberry Plan 3 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3 2 / 2 2,877 --
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 2 4 / 3 2 / 2 2,666 $293.40
5 2 5 / 3 2 / 2 2,985 $280.90
5 3 4 / 3 2 / 2 3,105 $263.87
9 4 4 / 3 2 / 2 2,552 $289.96
10 1 4 / 3.5 2 / 2 2,747 $299.96
10 2 4 / 4 2 / 2 2,961 $287.06
13 2 4 / 3 2 / 2 2,303 $318.18
13 3 5 / 4 2 / 2 2,777 $283.62
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 $263.87 to $318.18 per square foot with the lowest price per square foot being for the largest sized home. This is typical due to the economies of scale obtained during construction. Silverberry Plan 3 has a current base asking price of $282.87 per square foot, within the comparable’s range. 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 26 closings of Silverberry Plan 3 597
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with sales prices ranging from $235.55 to $272.63 per square foot. There are seven current escrows of Silverberry Plan 3 with a reported sales price range of $267.10 to $281.47 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 and are considered in this analysis. It has been concluded that Silverberry Plan 3 has a base current market value of $ 255.00 per square foot. This calculates as follows:
2,877 sf x $255.00 = $733,635
Wildrose
Wildrose homes are on single family detached lots with a minimum lot size of 4,700 square feet.
*One of each of these plans is a model home. There are an additional 8 homes under construction owned by Lennar (not shown on the above table).
The most appropriate new home comparable data for Wildrose Plan 1 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2 1 / 2 1,905 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 2 3 / 2.5 2 / 2 2,358 $289.25
4 1 4 / 3 2 / 2 2,449 $303.35
6 1 4 / 2 1 / 2 2,215 $334.94
9 1 3 / 2.5 2 / 2 2,099 $322.05
11 1 3 / 3 1 / 2 2,375 $374.73
The comparable communities are all located in Fontana. There are few single-story homes in the Fontana market at this time. Single-story homes may command a premium due to empty nesters and aging homebuyers wanting a single-story home. Data No. 11 has homes
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Wildrose
1 3 / 2 1 / 2 1,905 18 3
2 5 / 3 2 / 3 2,985 23 5*
3 4 / 3 2 / 3 3,105 25 6*
Subtotal Wildrose 66 14
598
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located on minimum 10,000 square foot lots, many with views, which is significantly superior to the subject’s 4,700 square foot lots. The remaining market data 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 $289.25 to $374.73 per square foot with the highest price per square foot having a significantly larger lot. Wildrose Plan 1 has a current base asking price of $382.93 per square foot. 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 18 closings of Wildrose Plan 1 with sales prices ranging from $320.55 to $393.94 per square foot. There are three current escrows of Wildrose Plan 1 with a reported sales price range of $343.57 to $351.12 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 and are considered in this analysis. In addition, we have found one Wildrose Plan 1 home that is currently listed for resale. The asking price is $724,900 which equates to $380.52 per square foot. The sale is “pending” however the actual sales price is not yet available. It has been concluded that Wildrose Plan 1 has a base current market value of $340.00 per square foot. This calculates as follows:
1,905 sf x $340.00 = $647,700
The most appropriate new home comparable data for Wildrose Plan 2 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 5 / 3 2 / 2 2,985 --
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 3 4 / 3 2 / 2 2,877 $282.87
5 3 4 / 3 2 / 2 3,105 $263.87
6 2 5 / 4 2 / 2 3,251 $257.91
9 4 4 / 3 2 / 2 2,552 $289.96
10 2 4 / 4 2 / 2 2,961 $287.06
11 3 4 / 3.5 2 / 3 3,080 $289.26
13 3 5 / 4 2 / 2 2,777 $283.62
599
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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 $263.87 to $289.96 per square foot with the lowest price per square foot being for the largest sized home. This is typical due to the economies of scale obtained during construction. Wildrose Plan 2 has a current base asking price of $280.90 per square foot, within the comparable’s range. 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 23 closings of Wildrose Plan 2 with sales prices ranging from $223.31 to $271.43 per square foot. There are four current escrows of Wildrose Plan 2 with a reported sales price range of $252.46 to $258.97 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 and are considered in this analysis. It has been concluded that Wildrose Plan 2 has a base current market value of $250.00 per square foot. This calculates as follows:
2,985 sf x $250.00 = $746,250
The most appropriate new home comparable data for Wildrose Plan 3 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3 2 / 2 3,105 --
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 3 4 / 3 2 / 2 2,877 $282.87
5 2 5 / 3 2 / 2 2,985 $280.90
6 2 5 / 4 2 / 2 3,251 $257.91
6 3 4 / 3.5 2 / 2 3,339 $266.45
10 2 4 / 4 2 / 2 2,961 $287.06
10 3 5 / 4.5 2 / 3 3,079 $292.30
11 1X 4 / 3.5 2 / 3 3,080 $296.43
11 2 4 / 4.5 2 / 3 3,298 $289.26
13 3 5 / 4 2 / 2 2,777 $283.62
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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 $2 57.91 to $292.30 per square foot.
Wildrose Plan 3 has a current base asking price of $2 63.87 per square foot, within the comparable’s range. 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 25 closings of Wildrose Plan 3 with sales prices ranging from $206.92 to $259.62 per square foot. There are five current escrows of Wildrose Plan 3 with a reported sales price range of $252.33 to $260.36 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 h ome and are considered in this analysis . In addition, our search of the local MLS has revealed one Wildrose Plan 3 that is currently listed for resale. The asking price is $999,900 or $322.02 per square foot. The home has been on the market for over 50 days and the asking price was recently reduced by $50,000.
It has been concluded that Wildrose Plan 3 has a base current market value of $245.00 per square foot. This calculates as follows:
3,105 sf x $245.00 = $760,725
601
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Azelea
Azelea consists of single-family detached homes on minimum 6,000 square foot lots.
*One of each of these plans is a model home. There are an additional three finished lots (in the model complex) owned by Lennar (not shown on the above table).
The most appropriate new home comparable data for Azalea Plan 1 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 2 1 / 2 2,215 --
2 4 4 / 3 2 / 2 1,970 $325.88
3 2 3 / 2.5 2 / 2 2,358 $289.25
4 1 4 / 3 2 / 2 2,449 $303.35
5 1 3 / 2 1 / 2 1,905 $382.93
9 1 3 / 2.5 2 / 2 2,099 $322.05
11 1 3 / 3 1 / 2 2,375 $374.73
The comparable communities are all located in Fontana. There are few single-story homes in the Fontana market at this time. Single-story homes may command a premium due to empty nesters and aging homebuyers wanting a single-story home. Data No. 11 has homes located on minimum 10,000 square foot lots, many with views, which is superior to the subject’s 6,000 square foot lots. The remaining market data 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 $289.25 to $374.73 per square foot with the highest price per square foot having a significantly larger lot. Azalea Plan 1 has a current base asking price of $334.94 per square foot. 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 Azalea Plan 1 with sales prices ranging from $281.18 to $324.74 per square foot. There are no current escrows of Azalea Plan 1 as the project is nearly sold out. It should be noted that the reported sales prices include upgrades,
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Azelea
1 4 / 2 1 / 2 2,215 16 0
2 5 / 4 2 / 3 3,251 18 4*
3 (NG) 4 / 3.5 2 / 3 3,339 18 5*
Subtotal Azalea 52 9
602
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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 and are considered in this analysis. It has been concluded that Azalea Plan 1 has a base current market value of $ 320.00 per square foot. This calculates as follows:
2,215 sf x $320.00 = $708,800
The most appropriate new home comparable data for Azalea Plan 2 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 5 / 4 2 / 2 3,251 --
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 3 4 / 3 2 / 2 2,877 $282.87
5 2 5 / 3 2 / 2 2,985 $280.90
5 3 4 / 3 2 / 2 3,105 $263.87
6 3 4 / 3.5 2 / 2 3,339 $266.45
10 3 5 / 4.5 2 / 3 3,079 $292.30
11 1X 4 / 3.5 2 / 3 3,080 $296.43
11 2 5 / 4.5 2 / 3 3,298 $289.26
13 3 5 / 4 2 / 2 2,777 $283.62
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 $257.91 to $292.30 per square foot.
Azalea Plan 2 has a current base asking price of $257.91 per square foot, at the low-end of the comparable’s range. 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 18 closings of Azalea Plan 2 with sales prices ranging from $221.62 to $258.40 per square foot. There are three current escrows of Azalea Plan 2 with a reported sales price range of $247.47 to $252.10 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 603
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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 and are considered in this analysis. It has been concluded that Azalea Plan 2 has a base current market value of $240.00 per square foot. This calculates as follows:
3,251 sf x $240.00 = $780,240
The most appropriate new home comparable data for Azalea Plan 3 are shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3.5 2 / 2 3,339 --
3 3 4 / 2.5 2 / 2 2,472 $283.69
4 3 4 / 3 2 / 2 2,877 $282.87
5 2 5 / 3 2 / 2 2,985 $280.90
5 3 4 / 3 2 / 2 3,105 $263.87
6 2 5 / 4 2 / 2 3,251 $257.91
10 3 5 / 4.5 2 / 3 3,079 $292.30
11 2 5 / 4.5 2 / 3 3,298 $289.26
13 3 5 / 4 2 / 2 2,777 $283.62
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 $257.91 to $292.30 per square foot.
Azalea Plan 3 has a current base asking price of $266.45 per square foot , within the comparable’s range. 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 18 closings of Azalea Plan 3 with sales prices ranging from $229.05 to $256.47 per square foot. There are four current escrows of Azalea Plan 3 with a reported sales price range of $253.36 to $266.45 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 and are considered in this analysis . Our search of the local MLS revealed one current listing resale of an Azalea Plan 3 home with 604
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the asking price of $930,000 or $278.53 per square foot. It has been concluded that Azalea Plan 3 has a base current market value of $ 240.00 per square foot. This calculates as follows:
3,339 sf x $240.00 = $801,360
Discounted Cash Flow Analysis
Due to the single ownership of multiple houses ( 55 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 – The Gardens Phase One
Within the subject property, there are 55 builder-owned houses over 95 percent complete, 14 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 The Gardens Phase One are calculated below:
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Dayflower Plan 1 (1 x $458,780) $ 458,780
Dayflower Plan 2 (2 x $476,715) 953,430
Dayflower Plan 3 (3 x $492,355) 1,477,065
Blue Sage Plan 1 (0 x $528,320) 0
Blue Sage Plan 2 (1 x $554,715) 554,715
Blue Sage Plan 3 (1 x $579,080) 579,080
Blue Sage Plan 4 (1 x $591,000) 591,000
Acacia Plan 1 (2 x $608,575) 1,217,150
Acacia Plan 2 (4 x $624,870) 2,499,480
Acacia Plan 3 (4 x $642,720) 2,570,880
Silverberry Plan 1 (4 x $697,965) 2,791,860
Silverberry Plan 2 (4 x $719,820) 2,879,280
Silverberry Plan 3 (5 x $733,635) 3,668,175
Wildrose Plan 1 (3 x $647,700) 1,943,100
Wildrose Plan 2 (5 x $746,250) 3,731,250
Wildrose Plan 3 (6 x $760,725) 4,564,350
Azalea Plan 1 (0 x $708,800) 0
Azalea Plan 2 (4 x $780,240) 3,120,960
Azalea Plan 3 (5 x $801,360) 4,006,800
Model Upgrades (14 x $50,000) 700,000
Total Retail Value $ 38,307,355
Absorption Period
In order to arrive at an absorption period for the 55 builder-owned homes, the absorption rate for the subject neighborhoods along with the surrounding developments has been reviewed. The Gardens Phase One began sales in March 2023 and consists of 526 proposed homes. There have been 447 sales suggesting an average absorption of 26.3 homes per month across the six product lines, which is considered to be above average for the subject area. When looking at each product line individually, Dayflower has averaged a sales pace of 4.1 sales per month, Blue Sage has averaged 4.6 sales per month, Acacia has averaged 4.6 sales per month, Silverberry has averaged 5.2 sales per month, Wildrose has averaged 4.6 sales per month and Azalea has averaged 3.9 sales per month. The market comparables have a range of 2.1 to 5.2 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 55 builder-owned homes will be absorbed within a four- month time period at the concluded values.
606
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Remaining Costs
As discussed under the remaining costs section earlier within this report, there is $37,671.60 per home/lot/pad in remaining land development costs associated with the builder-owned homes, which equates to a total of $ 2,071,938 for the subject 55 homes.
It is an assumption of this analysis that the remaining costs will be spread evenly over the four-month absorption time period.
Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. 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 s ales 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 i n 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 The Gardens Phase One began selling in March 2023 with the product being very well received in the marketplace with a 26.3 sales per month average across the 607
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six product lines with the averages per community ranging from 3.9 and 5.2 sales per month.
This compares to the overall Inland Empire average sales rate per community of 4.0 sales per month (year to date as of August 18, 2024). The subject is performing very near or above the average of the overall market. The excellent absorption rate is thought to be due to the incentives being offered by the builder including closing cost help and mortgage rate buydowns. Based on the sales rate within the six 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 $27,988,434
.
The Gardens Phase One – Lennar Ownership
75 Lots/Pads owned by Lennar $ 18,884,629
55 Houses (including 14 models) Builder-owned 27,988,434 Total Lennar Ownership $ 46,873,063
The Gardens Phase One – AG EHC II Ownership
30 Lots/Pads owned by AG EHC II $ 7,679,851
Individual Owners Value Conclusion – The Gardens Phase One There are 366 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:
Dayflower Plan 1 (17 x $458,780) $ 7,799,260
Dayflower Plan 2 (16 x $476,715) 7,627,440
Dayflower Plan 3 (17 x $492,355) 8,370,035
Blue Sage Plan 1 (21 x $528,320) 11,094,720
Blue Sage Plan 2 (23 x $554,715) 12,758,445
Blue Sage Plan 3 (13 x $579,080) 7,528,040
Blue Sage Plan 4 (10 x $591,000) 5,910,000
608
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Acacia Plan 1 (20 x $608,575) 12,171,500
Acacia Plan 2 (19 x $624,870) 11,872,530
Acacia Plan 3 (21 x $642,720) 13,497,120
Silverberry Plan 1 (18 x $697,965) 12,563,370
Silverberry Plan 2 (27 x $719,820) 19,435,140
Silverberry Plan 3 (26 x $733,635) 19,074,510
Wildrose Plan 1 (18 x $647,700) 11,658,600
Wildrose Plan 2 (23 x $746,250) 17,163,750
Wildrose Plan 3 (25 x $760,725) 19,018,125
Azalea Plan 1 (16 x $708,800) 11,340,800
Azalea Plan 2 (18 x $780,240) 14,044,320
Azalea Plan 3 (18 x $801,360) 14,424,480
Total Individual Owned Value $ 237,352,185
In an additional review, we have reviewed the original builder sales prices for the homes within the subject property. Closings for the 366 homes occurred between August 11, 2023, and August 23, 2024. The reported closing prices by the builder for the 366 individually owned homes total $233 ,463,329, which is 1.6 percent lower than the concluded value. The builder’s reported prices include premiums, upgrades and purchased options as well as taking into consideration all concessions given by the builder, including closing costs and mortgage buydowns . Base pricing has increased since the project opened with base pricing increasing from 2.38 percent up to 11.49 percent depending on the neighborhood and the plan. Offsetting these increases, however, are the increased concessions including rate buy-downs. The current market and the current incentives in today’s market 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. 609
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APPRAISAL REPORT SUMMARY
The appraisal assignment was to value the subject property within Fontana CFD No. 112 which consists of 526 proposed residential units . The 526 units are known as The Gardens Phase One, being marketed, and sold by Lennar, and are located in the northern portion of the City of Fontana. The subject includes six product li nes: Dayflower, 69 proposed Triplex homes including a carriage house up over garages and two detached units in each configuration; Blue Sage, 99 proposed detached condominiums; Acacia, 109 proposed single-family detached homes on 2,700 square foot minimum lots ; Silverberry, 97 proposed homes on 4,000 square foot minimum lots; Wildrose, 88 proposed homes on 4,700 square foot minimum lots; and Azalea, 64 proposed homes on 6,000 square foot minimum lots. As of August 25, 2024, individuals have purchased and closed 366 of the total 526 proposed houses, with an additional 81 homes in escrow which are due to close upon completion. The community has sold at equal to or above the 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 3 current resale listings with one of the transactions pending.
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. 112 bond proceeds along with the Fontana CFD No. 112 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:
The Gardens Phase One:
Lennar (75 lots/pads & 55 houses) $ 46,873,063
AG EHC II (30 lots/pads) $ 7,679,851
Individual Owners (366 houses) $237,352,185
Total Aggregate Value CFD No. 112 $291,905,099
The above values are stated as of said date of value and subject to the attached Assumptions and Limiting Conditions and Appraiser’s Certification. 610
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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)
611
ADDENDA
612
FONTANA CFD NO. 112
BOUNDARY MAP
613
614
TRACT MAP Nos. 20362, 20363 and 20364
And DAYFLOWER AND BLUE SAGE
SITE PLANS
615
Blue Star is Blue Sage (Lot 5) and Red Star is Dayflower (Lot 6)
616
617
618
Dayflower Site Plan
619
Blue Sage Site Plan
620
California Fire Hazard Map
621
California Fire Hazard Map
–
Approximate Location of
The Gardens Phase One
is Blue Star
622
DISCOUNTED CASH FLOW ANALYSIS
623
The Gardens Phase One Builder-Owned Houses Discounted Cash Flow Analysis
MONTH Months MONTH 1 MONTH 2 MONTH 3 MONTH 4 TOTAL
4 INCOME:
Retail Sales 38,307,355 $9,576,839 $9,576,839 $9,576,839 $9,576,839 $38,307,355
TOTAL INCOME $9,576,839 $9,576,839 $9,576,839 $9,576,839 $38,307,355
EXPENSES:
Remaining Costs ($517,984) ($517,985) ($517,984) ($517,985) ($2,071,938) Marketing & Carrying Expenses 10% ($957,684) ($957,684) ($957,684) ($957,684) ($3,830,736) Profit 10% ($957,684) ($957,684) ($957,684) ($957,684) ($3,830,736)
TOTAL EXPENSES ($2,433,352) ($2,433,353) ($2,433,352) ($2,433,353) ($9,733,409)
NET CASH FLOW $7,143,487 $7,143,486 $7,143,487 $7,143,486 $28,573,946 Discount Factor 10% 0.9917 0.9835 0.9754 0.9673
DISCOUNTED CASH FLOW $7,084,450 $7,025,900 $6,967,835 $6,910,249 $27,988,434
CUMULATIVE DISCOUNTED $7,084,450 $14,110,350 $21,078,185 $27,988,434 $27,988,434
CASH FLOW
624
FINISHED LOT LAND SALES MAP
& SUMMARY CHART
625
FINISHED LOT LAND SALES MAP
626
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 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
5 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
6 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
627
7 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
8 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
9 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
10 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
11 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
628
IMPROVED RESIDENTIAL
SALES MAP & SUMMARY CHART
629
IMPROVED RESIDENTIAL SALES SUMMARY CHART
630
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 Dayflower at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 3 / 2 2 / 2 1,582 Triplex Attached $508,900 $321.68
2 4 / 3 2 / 2 1,563 4.1 sales/mo $529,900 $339.03
3 4 / 3 2 / 2 1,669 $556,900 $333.67
2 Blue Sage at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 3 / 2.5 2 / 2 1,651 $589,290 $356.93
2 3 / 2.5 2 / 2 1,761 2,000 sf lots $618,290 $351.10
3 4 / 2.5 2 / 2 1,868 4.6 sales/mo $623,790 $333.93
4 4 / 3 2 / 2 1,970 $641,990 $325.88
3 Acacia at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 3 / 2.5 2 / 2 2,213 2,700 sf lots $648,060 $292.84
2 3 / 2.5 2 / 2 2,358 4.6 sales/mo $682,060 $289.25
3 4 / 2.5 2 / 2 2,472 $701,290 $283.69
4 Silverberry at Arboretum, Sierra Avenue and
Casa Grande Avenue, Fontana / Lennar
1 4 / 3 2 / 2 2,449 4,000 sf lots $742,910 $303.35
2 4 / 3 2 / 2 2,666 5.2 sales/mo $782,210 $293.40
3 4 / 3 2 / 2 2,877 $813,830 $282.87
5 Wildrose at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 3 / 2 1 / 2 1,905 6,000 sf lots $729,480 $382.93
2 5 / 3 2 / 2 2,985 4.6 sales/mo $838,490 $280.90
3 4 / 3 2 / 2 3,105 $819,325 $263.87
6 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 3.9 sales/mo $838,465 $257.91
3 4 / 3.5 2 / 2 3,339 $889,670 $266.45
7 Salerno at Monterado, Citrus Avenue and Duncan
Canyon Road, Fontana / Lennar (nearing sell-out)
1 3 / 2.5 2 / 2 1,822 3,000 sf lots $635,436 $348.76
2 3 / 2.5 2 / 2 1,932 (Det. Cluster) $644,915 $333.81 3 3 / 2.5 2 / 2 2,207 3.9 sales/mo $676,990 $306.75
8 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
631
9 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 3.2 sales/mo $726,990 $314.58
4 4 / 3 2 / 2 2,552 $739,990 $289.96
10 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
11 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
12 Radius at Piemonte, S of Fourth Street and W of
Milliken Avene, Ontario / Taylor Morrison
1 1 / 1 1 / 2 654 Stacked flat $450,990 $689.59
2 2 / 2 1 / 2 956 Condos $514,990 $538.69
4 3 / 2 1 / 2 1,459 2.6 sales/mo $576,990 $395.47
5 3 / 2 1 / 2 1,557 $592,990 $380.85
13 Goldenrod at Aurora Park, Victoria Street and
Kestral Drive, Fontana / TRI Pointe Homes
(nearing sell-out)
1 3 / 2.5 2 / 2 2,006 2,000 sf lots $679,100 $338.53
2 4 / 3 2 / 2 2,303 (Det. Cluster) $732,762 $318.18
3 5 / 4 2 / 3 2,777 2.7 sales/mo $787,600 $283.62
14 Cascade at Highland Park, South Highland
Avenue and San Servaine Road, Fontana /
Richmond American (nearing sell-out)
1 3 / 2.5 2 / 2 1,860 Alley load lots $638,883 $343.49 2 3 / 2.5 2 / 3 1,930 2.1 sales/mo $676,487 $350.51
3 4 / 3 2 / 3 2,065 $652,990 $316.22
15 Talise at Highland Park, South Highland Avenue
and San Servaine Road, Fontana / Richmond
American (nearing sell-out)
1 3 / 2.5 2 / 2 1,410 $590,309 $418.66
2 3 / 2.5 2 / 2 1,650 Cluster lots $630,571 $382.16
3 3 / 2.5 2 / 2 1,710 3.1 sales/mo $655,990 $383.62
4 4 / 3 2 / 2 1,950 $676,135 $346.74
632
APPRAISER’S QUALIFICATIONS
633
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 form ing 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.
634
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
635