Laguna Hills City Council
March 22, 2022

STRADLING YOCCA CARLSON & RAUTH

A PROFESSIONAL CORPORATION
4873-6005-7099V3/200305-0005
155989848.1
B. Extension for five (5) years if, prior to 15 years, Owner has Completed Construction of required elements of Phase One and has obtained building permits for construction of the required elements of Phase Two.

III. Owner Benefits
A. Owner is granted the vested right to rely on Existing Land Use Regulations, including the fixing of Development Fees, for the Term.

IV. City Benefits
A. City also has the right to assert the Existing Land Use Regulations, for the Term.

B. A commitment by the Owner to complete the following elements of the Project.2

1. 100 Lower Income Units and 100 Moderate Income Units in partial satisfaction of RHNA obligations.

2. The Village Park.

3. 210,000 square feet of retail space.

4. The Hotel TO BE COMPLETED PRIOR TO THE GRANTING OF

CERTIFICATES OF OCCUPANCY FOR THE THIRD RESIDENTIAL
BUILDING.
3 5. Residential Buildings I, II, III, and V.

C. Development Fees, Community Benefit Fees, and Other Fees.

1. Normal fees for processing.

2. Annual Development Agreement fee of Twenty Thousand Dollars ($20,000) per year increased at the rate of 3% per annum.

3. Normal fees and taxes payable to City
2 The City’s remedies are limited to retention of Community Benefit Fees (described in IV.C., below), withholding permits, and/or termination of the Development Agreement. 3 The City’s remedies for failure to timely complete the hotel are limited to: (1) withholding Certificates of Occupancy for the fourth and fifth residential buildings (absent Excusable Delay re Hotel due to hotel market failure; (2) additional Community Benefit Fees of $396 annually per occupied residential unit; and (3) $500,000 Community Benefit Fee payment if the hotel is not completed by year seven. Other remedies, including but not limited to termination or withholding of certificate of occupancy for the third residential building, are not available. j
Packet Pg. 325 Attachment: Attachment j - Development Agreement Outline Summary (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 448 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village Outline

STRADLING YOCCA CARLSON & RAUTH

A PROFESSIONAL CORPORATION
4873-6005-7099V3/200305-0005
155989848.1

4. $2,227,066 Community Benefit Fees, $1,113,533 payable 90 days after the Development Agreement Date and $1,113,533 payable within fifteen (15) months of the Development Agreement Date.

5. Public Park In-Lieu Fees at the rate of $15,636 per Residential Unit payable:
a. $2,000,000 90 days after the Development Agreement Date. b. $2,000,000 upon the earlier of
(i) Issuance of building permits for the First Retail Building or the First Office Building, or
(ii) 4 years after the Development Agreement Date.
c. $2,000,000 upon the earlier of
(i) Issuance of Certificate of Occupancy for the First Retail Buildings or the First Office Buildings, or
(ii) 7 years after the Development Agreement Date.
d. $6,571,344 payable
(i) $8,173 per Residential Unit for each of the first 804 Residential Units prior to issuance of building permits for such Residential Buildings.
(ii) Remaining balance on or before the 7th Anniversary Date of the Development Agreement.
e. $5,597,688 payable, as follows
(i) 15,636 for each of next 358 Residential Units.
(ii) Balance due on the 15th Anniversary Date of the
Development Agreement.
f. $15,636 per Residential Unit for all units after the 1162nd Residential Unit.

6. Public Art In-lieu Fees
a. Owner credited with $300,000 paid in connection with Five Lagunas Entitlements.
b. $350,000 on before the 90th day following the Development Agreement Date.
j
Packet Pg. 326 Attachment: Attachment j - Development Agreement Outline Summary (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 449 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village Outline

STRADLING YOCCA CARLSON & RAUTH

A PROFESSIONAL CORPORATION
4873-6005-7099V3/200305-0005
155989848.1

7. Additional Community Benefit Fees
a. All Community Benefit Fees described in C.5 not used as a credit against Public Park In-Lieu Fees.4
b. CONTINGENT FISCAL IMPACT FEE (HOTEL) – $396 PER

RESIDENTIAL UNIT PER YEAR, INFLATED AT THE RATE
OF 3 PERCENT PER ANNUM COMPOUNDED ANNUALLY,

FOR EACH RESIDENTIAL UNIT IN A RESIDENTIAL

BUILDING FOR WHICH CERTIFICATES OF OCCUPANCY
HAVE BEEN GRANTED PAYABLE FOR THE FULL 20

YEAR TERM, BUT TERMINATED UPON OPENING OF THE
HOTEL. In addition, if the Hotel is not constructed within seven (7) years, Owner shall pay an additional Community Benefit Fee of $500,000 in year SEVEN.
c. CONTINGENT FISCAL IMPACT FEE (RETAIL) – $120 PER
RESIDENTIAL UNIT (IN EXCESS OF 805 RESIDENTIAL

UNITS) PER YEAR, INFLATED AT THE RATE OF
3 PERCENT PER ANNUM COMPOUNDED ANNUALLY, IN
THE EVENT THAT LESS THAN 60,000 SQUARE FEET OF

NEW RETAIL IS NOT LEASED BY THE EARLIER OF

COMPLETION CONSTRUCTION OF THE THIRD

RESIDENTIAL BUILDING PAYABLE FOR THE FULL
20 YEAR TERM BUT TERMINATED UPON LEASING OF
THE NEW RETAIL.
d. FISCAL IMPACT FEE (GENERAL) – $120 PER

RESIDENTIAL UNIT, INFLATED AT THE RATE OF
3 PERCENT PER ANNUM COMPOUNDED ANNUALLY,

FOR EACH RESIDENTIAL UNIT IN RESIDENTIAL

BUILDINGS FOR WHICH CERTIFICATES OF OCCUPANCY

HAVE BEEN ISSUED PAYABLE FOR THE TERM,
INCLUDING ANY EXTENSION OF THE TERM. UPON

ANY EARLY TERMINATION FOR A CAUSE OTHER THAN

CITY DEFAULT, OWNER REMAINS OBLIGATED TO PAY
THIS FEE FOR 16 YEARS FROM DEVELOPMENT
AGREEMENT DATE. .
e. By way of example of the Additional Community Benefit Fees described in IV.C., assume Residential Building II, III and IV are constructed totaling 805 Residential Units by end of year seven (7), but the Hotel is not completed and the New Retail is not leased at that point in time.
4 Any portion of the Public Park-in-Lieu Fees paid before they are due are considered Community Benefit Fees until earned, at which point they are credited against Public Park In-Lieu Fees. j
Packet Pg. 327 Attachment: Attachment j - Development Agreement Outline Summary (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 450 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village Outline

STRADLING YOCCA CARLSON & RAUTH

A PROFESSIONAL CORPORATION
4873-6005-7099V3/200305-0005
155989848.1
Owner’s obligation would be
$147.585 x 805 = $118,801.90per year
$487.036 x 805 = $392,059.19 per year
Total $510,861.05 per year
Plus a one time payout of $500,000 in year seven.
5 Inflated at 3% per annum
6 The Contingent Impact Fee (Retail) is not payable until the Residential Unit count exceeds 805. j
Packet Pg. 328 Attachment: Attachment j - Development Agreement Outline Summary (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 451 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village RESOLUTION NO. _______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF LAGUNA HILLS, CALIFORNIA, DENYING THE

REQUEST BY MGP FUND X LAGUNA HILLS, LLC FOR

APPROVAL OF A DEVELOPMENT AGREEMENT FOR
THE VILLAGE AT LAGUNA HILLS PROJECT.

The City Council of the City of Laguna Hills, California, hereby finds, determines, and declares as follows:

1. MGP Fund X Laguna Hills, LLC (“Applicant”) is the owner of and/or has an equitable interest in, the existing approximately 68-acre former Laguna Hills Mall site generally located along the southerly side of El Toro Road and the westerly side of Avenida de la Carlota in the City of Laguna Hills, located at 24155 Laguna Hills Mall (the “Property”).

2. In March 2016, the City approved Site Development Permit, Master Sign Program, Conditional Use Permit, Parking Use Permit, Vesting Tentative Tract Map, and Precise Plan No. 2-15-3114 for the Property, which authorized redevelopment of the existing Laguna Hills Mall and the Property with a mixed-use retail and residential project branded “Five Lagunas.”

3. On July 18, 2018, the City Council approved the first phased final map for a portion of the Five Lagunas Project.

4. The Applicant has now filed an application (Case No. USE-0010-2019) for approval of a Development Agreement and related discretionary development permits, which, if approved, would permit modifications to the approved 2016 Five Lagunas Project and provide the Applicant with vested rights to develop the proposed modified project for a term that is longer than the Applicant would otherwise be entitled under state and local law (the “Village at Laguna Hills Project” or the “Modified Project”). The discretionary development permits requested in conjunction with the Development Agreement include:
a site development permit for the proposed Modified Project; a master sign program for various on-site signs; conditional use permits for a new health club facility and a hotel; a conditional use permit to allow shared parking; a vesting tentative tract map to resubdivide the Property into 16 lots; and, a precise plan for mixed use development of the Property (collectively, the “Development Permits”).

5. The City Council serves as, and is, the Planning Agency of the City pursuant to Government Code Section 65100.

6. Under the Laguna Hills Municipal Code, applicants are not required to apply for or enter into a development agreement in conjunction with requests for approval of discretionary development permits; however, the Applicant has voluntarily applied for and requested the City enter into a Development Agreement in conjunction with and as part of its application for approval of the Development Permits because approval of a k
Packet Pg. 329 Attachment: Attachment k - Resolution Denying the Development Agreement (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 452 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village

Development Agreement would provide the Applicant with greater development rights than would otherwise be allowed under state and local law. These greater development rights include, but are not limited to, the right to develop the Modified Project beyond the term otherwise provided by applicable law and more flexibility in the order and sequencing of development than the Applicant would otherwise be entitled to by right. The Development Agreement and related Development Permits were processed as, presented as, and consistently treated as a single development application, and are inextricably intertwined, such that approval of the Development Permits is dependent on approval of the Development Agreement. At no time during the application process has the City been requested to consider approval of the Development Permits and/or accompanying related conditions of approval separately from the Applicant’s request for approval of the Development Agreement. The recommended conditions of approval associated with the Development Permits were prepared in conjunction with negotiation of the proposed Development Agreement, through concurrent processing, and with the understanding that the Development Agreement would be approved as a necessary and indispensable part of the overall Modified Project, as requested by the Applicant. For example, in many cases, the proposed conditions of approval specifically refer to terms in the proposed Development Agreement. If the Applicant had not applied for approval of the Development Agreement in conjunction with its request for Development Permits, City staff would have recommended different conditions of approval for the Development Permits.

7. On April 2, 2021 and April 5, 2021, the City caused public notice to be given of the City Council's intention to consider the proposed Development Agreement and related Development Permits. The public notice described the Development Agreement and related Development Permits as a single application.

8. On April 27, 2021, June 24, 2021, June 29, 2021, and March 8, 2022, the City Council held a public hearing on the proposed Development Agreement and related Development Permits.

9. At its meeting of June 29, 2021, a majority of the City Council members expressed disagreement with many of the terms and conditions of the proposed Development Agreement for the Village at Laguna Hills Project as presented and directed that the City engage in further negotiations with the Applicant regarding the terms of the Development Agreement.

10. In accordance with the City Council’s direction, the City has continued to negotiate with the Applicant in good faith regarding the terms of the proposed Development Agreement.

11. Despite these good faith negotiations, the City and the Applicant have been unable to reach a meeting of the minds on terms of the Development Agreement that are mutually acceptable to both the Applicant and the City Council. k
Packet Pg. 330 Attachment: Attachment k - Resolution Denying the Development Agreement (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 453 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAGUNA

HILLS, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

SECTION 1. The above recitals are true and correct and are incorporated herein by reference.

SECTION 2. The terms of the proposed Development Agreement presented to the City Council are unacceptable to the City; therefore, the Applicant’s request for approval of a Development Agreement for the proposed Village at Laguna Hills Project is hereby denied.

SECTION 3. Because the Applicant voluntarily applied for and requested the City enter into a Development Agreement in conjunction with and as an integral part of its application for approval of the Development Permits, and approval of the Development Agreement is denied, the City is unable to take action regarding the Development Permits.

SECTION 4. Adoption of this Resolution is exempt from the California Environmental Quality Act (CEQA) pursuant to the provisions of Article 19, Section 15270 of the CEQA Guidelines.

SECTION 5. The advisory ad hoc committee established on September 28, 2021, for the single-purpose of directing further development agreement negotiations for the Village at Laguna Hills Project is hereby dissolved.

DENIED AND ADOPTED this 8th day of March, 2022.
________________________________

DAVE WHEELER, MAYOR
ATTEST:
______________________________________

MELISSA AU-YEUNG, CITY CLERK

k
Packet Pg. 331 Attachment: Attachment k - Resolution Denying the Development Agreement (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 454 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss

CITY OF LAGUNA HILLS )
I, Melissa Au-Yeung, City Clerk of the City of Laguna Hills, California, DO HEREBY CERTIFY that the foregoing is a true and correct copy of Resolution No. PA2022- adopted by the Planning Agency and City Council of the City of Laguna Hills, California, at a Regular Meeting thereof held on the 8th day of March, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_____________________________________

MELISSA AU-YEUNG, CITY CLERK
k
Packet Pg. 332 Attachment: Attachment k - Resolution Denying the Development Agreement (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 455 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village The Village at Laguna Hills
Attachment l
Project Plans
Due to file size limitations, this attachment is provided via direct City website link where the Project Plans can be viewed and downloaded:
https://lagunahillsca.gov/DocumentCenter/View/6842
(Large file, may take some time to load)
l
Packet Pg. 333 Attachment: Attachment l - Project Plans (Link) (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 456 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village The Village at Laguna Hills
Attachment m
Master Sign Program
Due to file size limitations, this attachment is provided via direct City website link where the Master Sign Program can be viewed and downloaded:
https://lagunahillsca.gov/DocumentCenter/View/6845
(Large file, may take some time to load)
m
Packet Pg. 334 Attachment: Attachment m - Master Sign Program (Link) (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 457 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village 1 Jennifer Lee
Subject: FW: Say no to the “Village”
From: Kimberly Maag <[email protected]>
Sent: Tuesday, June 29, 2021 5:16 PM
To: Erica Pezold <[email protected]>; Dave Wheeler <[email protected]>; Janine Heft <[email protected]>; Bill Hunt <[email protected]>; Donald M. Sedgwick <[email protected]>; Cindy Sands <[email protected]>; Public Comments <[email protected]>; Melissa Au‐Yeung <MAu‐[email protected]>
Subject: Say no to the “Village”
City Council Laguna Hills City Council and Staff,
I urge the City to reject this project. Many changes should be made before it could be approved: the City should eliminate the proposed Hotel, require improved bicycle connectivity, require a higher percentage of affordable units, and a better landscaping plan.

Imagine if Laguna Hills residents could bike through the property on dedicated bike lanes and onto the Aliso Creek bike trail. The current plan involves four class III bike lanes, which could be as little as painted arrows on the ground. But we need top level bike trails insulated from the street, including where there are proposed bike lanes. All proposed bike routes should be class I bike trails to the fullest extent possible. We urge greater connectivity with the regions’ excellent bike trails.

Sincerely,
Kimberly Maag
Kimberly Maag
[email protected]
26742 Barkstone Ln.

Laguna Hills, California 92653
[[[External E‐mail]]]
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n
Packet Pg. 335 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 458 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village 1 Jennifer Lee
Subject: FW: Agreement Renegotiation -- the Village at Laguna Hills From: Christine Morinello <[email protected]>
Sent: Thursday, July 1, 2021 1:30 AM
To: Public Comments
Subject: Agreement Renegotiation ‐‐ the Village at Laguna Hills

Dear Mayor Erica Pezold, Mayor Pro Tem Don Sedgwick, Councilwoman Janine Heft, Councilman Bill Hunt and Councilman Dave Wheeler:

Thank you all for the many, many long hours of hard work you have devoted to the creation of the Village at Laguna Hills (mall redevelopment).  I am a senior citizen resident of Rancho Santa Margarita who has patronized Laguna Hills businesses continuously since moving to Orange County in 1993.  The Laguna Hills Mall was always my "go to" and I have been following the redevelopment concepts closely.

It is my understanding that at the June 29, 2021 meeting, the City Council considered eliminating the four office buildings from the Village plan.  That would be a very wise move which I urge the City Council to adopt.  Many employers are now allowing their workforce to continue working remotely, which decreases the need for office space dramatically.  I personally know of one multinational company based in Massachusetts with a branch in Orange County which is in the midst of moving to a smaller O.C. facility due to the number of staff members who wish to continue working from home.  Another consideration is that all cities need tax revenue to operate, and office buildings do not generate the sales taxes and "bed taxes" that restaurants, retail shops and hotels generate.

I respectfully suggest that the Village plan be expanded to include multiple hotels at various "price points" designed to appeal to different travel demographics.  For example, the Village could include a luxury boutique hotel, an extended stay hotel, and a budget motel.  The Village site is ideal for hospitality accommodations with its high visibility from the freeway and a profusion of restaurants and retail shops nearby.

Thank you for allowing me to offer my thoughts on the future of the Village at Laguna Hills.

Very truly yours,
Christine L. Morinello
[email protected]
[[[External E‐mail]]]
ATTENTION: THIS EMAIL ORIGINATED FROM OUTSIDE THE CITY OF LAGUNA HILLS. USE CAUTION WHEN OPENING ATTACHMENTS OR LINKS.
n
Packet Pg. 336 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 459 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village 1 Jennifer Lee
Subject: FW: No to the Village at Laguna Hills
From: Felicity Figueroa <[email protected]>
Sent: Friday, July 2, 2021 3:54 PM
To: Erica Pezold <[email protected]>; Dave Wheeler <[email protected]>; Janine Heft <[email protected]>; Bill Hunt <[email protected]>; Donald M. Sedgwick <[email protected]>; Cindy Sands <[email protected]>; Public Comments <[email protected]>; Melissa Au‐Yeung <MAu‐[email protected]>
Subject: No to the Village at Laguna Hills
City Council Laguna Hills City Council and Staff,
The City should oppose the project as proposed. Unless the developer eliminates the hotel component, improves the landscaping plan, and makes other changes to improve our quality of life, the project should be rejected. For example, the developer should protect any mature trees on site and use only native plants. This creates a harmonious ecosystem and promotes our area’s natural foliage. Please reject this project.

Thank you,
Felicity Figueroa
[email protected]
36 Blazing Star
Irvine, California 92604
[[[External E‐mail]]]
ATTENTION: THIS EMAIL ORIGINATED FROM OUTSIDE THE CITY OF LAGUNA HILLS. USE CAUTION WHEN OPENING ATTACHMENTS OR LINKS.
n
Packet Pg. 337 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 460 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village 1 Jennifer Lee
Subject: FW: Say no to the “Village”
From: Gail Fitzpatrick <[email protected]>
Sent: Monday, July 5, 2021 2:45 PM
To: Erica Pezold <[email protected]>; Dave Wheeler <[email protected]>; Janine Heft <[email protected]>; Bill Hunt <[email protected]>; Donald M. Sedgwick <[email protected]>; Cindy Sands <[email protected]>; Public Comments <[email protected]>; Melissa Au‐Yeung <MAu‐[email protected]>
Subject: Say no to the “Village”
City Council Laguna Hills City Council and Staff,
I urge the City to reject this project. Many changes should be made before it could be approved: the City should eliminate the proposed Hotel, require improved bicycle connectivity, require a higher percentage of affordable units, and a better landscaping plan.

Imagine if Laguna Hills residents could bike through the property on dedicated bike lanes and onto the Aliso Creek bike trail. The current plan involves four class III bike lanes, which could be as little as painted arrows on the ground. But we need top level bike trails insulated from the street, including where there are proposed bike lanes. All proposed bike routes should be class I bike trails to the fullest extent possible. We urge greater connectivity with the regions’ excellent bike trails.

Sincerely,
Gail Fitzpatrick
[email protected]
23301 Ridge Route Dr
Laguna Hills, California 92653
[[[External E‐mail]]]
ATTENTION: THIS EMAIL ORIGINATED FROM OUTSIDE THE CITY OF LAGUNA HILLS. USE CAUTION WHEN OPENING ATTACHMENTS OR LINKS.
n
Packet Pg. 338 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 461 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village 1 Jennifer Lee
Subject: FW: No Hotel at Village at Laguna Hills. Oppose this Massive Project From: Janelle Cranch <[email protected]>
Sent: Monday, July 5, 2021 1:48 PM
To: Erica Pezold <[email protected]>; Dave Wheeler <[email protected]>; Janine Heft <[email protected]>; Bill Hunt <[email protected]>; Donald M. Sedgwick <[email protected]>; Cindy Sands <[email protected]>; Public Comments <[email protected]>; Melissa Au‐Yeung <MAu‐[email protected]>
Subject: No Hotel at Village at Laguna Hills. Oppose this Massive Project City Council Laguna Hills City Council and Staff,
The City should oppose the project as proposed. Instead, we need the modifications to improve quality of life for Laguna Hills residents. For example, the City should reject the proposed hotel. Residents do not need the 100-150 room hotel. That land could be more affordable housing or open space.

Sincerely,
Janelle Cranch
[email protected]
22171 Caminito Petatlan
Laguna Hills, California 92653
[[[External E‐mail]]]
ATTENTION: THIS EMAIL ORIGINATED FROM OUTSIDE THE CITY OF LAGUNA HILLS. USE CAUTION WHEN OPENING ATTACHMENTS OR LINKS.
n
Packet Pg. 339 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 462 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village 1 Jennifer Lee
Subject: FW: No to the Village at Laguna Hills
From: Scott Keach <[email protected]>
Sent: Saturday, July 3, 2021 6:51 AM
To: Erica Pezold <[email protected]>; Dave Wheeler <[email protected]>; Janine Heft <[email protected]>; Bill Hunt <[email protected]>; Donald M. Sedgwick <[email protected]>; Cindy Sands <[email protected]>; Public Comments <[email protected]>; Melissa Au‐Yeung <MAu‐[email protected]>
Subject: No to the Village at Laguna Hills
City Council Laguna Hills City Council and Staff,
The City should oppose the project as proposed. Unless the developer eliminates the hotel component, improves the landscaping plan, and makes other changes to improve our quality of life, the project should be rejected. For example, the developer should protect any mature trees on site and use only native plants. This creates a harmonious ecosystem and promotes our area’s natural foliage. Please reject this project.

Thank you,
Scott Keach
[email protected]
25591 Indian Hill Lane
Laguna Hills, California 92653
[[[External E‐mail]]]
ATTENTION: THIS EMAIL ORIGINATED FROM OUTSIDE THE CITY OF LAGUNA HILLS. USE CAUTION WHEN OPENING ATTACHMENTS OR LINKS.
n
Packet Pg. 340 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 463 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village July 6, 2021
Dear Mayor and Members of the City Council,
I want to propose a compromise plan for the Village at Laguna Hills. By rearranging only 15% of the site plan, the City can accomplish the following goals without changing the total amount of development the developer has proposed yet provides for future retail expansion and a park.

VILLAGE AT LAGUNA HILLS – RETAIL AND PARK EXPANSION PLAN A) PROPOSED GOALS:
• Provide more land for future retail expansion
• Increase retail parking
• Provide a new recreational park
• Provide more meeting space and 150 rooms in the hotel • Add Class 1 bicycle path on Calle de los Caballeros through the site B) RETAIL AND PARK EXPANSION PLAN DESCRIPTION:

The Retail and Park Expansion Plan maintains the existing square footage and intensities for the project including the 1,500 residential units, 250,000 SF of retail & 465,000 SF of office space but rearranges the office site plan (less than 15% of the site) to achieve the above goals.

Moving the surface parking from the office/residential sector to the retail sector will allow the expansion area to provide more future retail space and reduce the likelihood it would be come residential or office uses. This would give the City more control of its ultimate use and encourage expansion of the retail as the retail market evolves. The plan does the following:
1) CONSOLIDATE OFFICE INTO TWO BLOCKS: Consolidate office buildings & parking into two southern blocks. Office buildings floorplans remain the same – the north building relocates to south block and the two parking structures are built to provide 100% of the office parking.
2) RETAIL LAND & PARKING EXPANSION: Increase retail land by 25% (4+ acres) providing approximately 250 additional parking spaces for retail use using the north office block. 3) FUTURE RETAIL EXPANSION: Provide future pad for 50,000 SF of future retail or a second hotel on the 4-acre retail land expansion (20% increase in total retail SF). 4) VILLAGE GREEN PARK Add 1-acre Village Green recreational park with grass field for recreation on the NEC of Calle de los Caballeros and Calle Zocalo which is adjacent to the residential area plus is convenient for all the residents of the UVSP. 5) HOTEL CONFERENCE SPACE: Move 9,000 SF of the 10,805 SF of retail planned on the hotel ground floor to a new building so the hotel can devote this 9,000 SF of space to conference facilities while maintaining the 150 rooms. There would be no change to the hotel footprint, just removing most of the shops and replacing it with meeting space. 6) NEW RETAIL BUIDLING: A new retail building is added in the Village Park (same floor plan) to take 9,000 SF of the retail located in the hotel and move it next to the theater escalators (it will also hide the back of the big box retail). There is no net increase in n
Packet Pg. 341 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

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Packet Pg. 464 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village retail – just moving it around on the site plan from the hotel to the theater area (also it moves the smelly dog park from the theater entrance).
7) CLASS 1 BICYCLE LANE: The proposed 6’ sidewalk on the south side of Calle de los Caballeros could be expanded to 10’ wide to provide a Class 1 bicycle path connecting Avenida de la Carlota to Paseo de Valencia and the transit center with a 4’ parkway separating the bikeway from the street and parking (to avoid doors opening into bikes).

C) ENVIRONMENTAL:

Since the retail, office and residential square footages and hotels rooms are the same as what was analyzed there would no changes to the environmental impacts and the current documentation can be used without any major changes for the approval process. The minor changes to the site plan could be accomplished by updating the Development Agreement and adding the compromise site plan and related conditions to the Conditions of Approval. At such time in the future that the developer wants to add additional 50,000 SF of retail space, a new environmental review and approval by the Planning Commission would be required.

D) RETAIL EXPANSION:

The Retail and Park Expansion Plan provides a better balance of land uses with about 40% of the site land area containing retail uses and retail uses under residential which is a significant increase from the current plan. The extra 4 acres of land devoted to retail uses increase the exclusive retail land by 25% and will provide area for the potential for future expansion of retail by 20% (50,000 SF). Providing 250 more surface parking spaces will increase the success of the retail and make it easier for residents to patronize the retailers.

Part of the new parking along the freeway could be used for community events such as Pumpkin City which allows the retail and restaurants to feed off this special event. Calle de la Magdalena could be closed between the Village and Recreation Parks for the weekly Farmers market allowing the retailers to capitalize on the foot traffic from the Farmers Market.

E) FISCAL IMPACTS:
1) PROVIDES FUTURE SOURCE OF REVENUE: The compromise project will provide the same benefits as the current fiscal analysis but also provides additional potential future revenue sources by adding meeting space to the hotel which could increase ADR and occupancy and providing a future expansion of retail square footage (or even a second hotel site). 2) MAINTENANCE DISTRICT: I would suggest that either a Landscape and Lighting District (LLD) or a Community Facilities District (CFD) be set up that is funded through fees added to the property tax bill of the 68 acres that would maintain the all of the public streets within the UVSP bounded by Avenida de la Carlota, Los Alisos and Paseo de la Valencia. This would provide ongoing revenue for the City to offset costs that are currently coming out of the general fund. The maintenance district would include the following items:
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Packet Pg. 342 Attachment: Attachment n - Comment Letters Received After 3PM June 29, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

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Packet Pg. 465 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village • Median and parkway landscaping
• Street lighting
• Monument and directional signage
• Traffic signal maintenance
• Holiday lighting and decorations
• Maintenance, utilities, and real estate operations of the police substation 3) PUBLIC BENEFITS PAYMENT – I would add an additional public benefits payment for money for the following which improve the quality of life for the City and provide better access to the project for the developer:
i) El Toro/I 5 intersection improvements: Payment for designing a Laguna Hills based solution to the El Toro/5 Freeway interchange to improve traffic flow on El Toro. ii) Traffic Signal Synchronization: Traffic signal synchronization project to improve traffic flows in the City of Laguna Hills & Laguna Woods bounded by Lake Forest Drive on the north, 5 freeway on the east, 73 Toll Road on the west and Alicia Parkway on the south iii) Deferred Road Maintenance – Road repairs on roads that serve the project within the area boarded by Alicia, 5 Freeway, Lake Forest and 73 toll road.

F) ARCHITECTURE: The architectural design of the project does not meet the standards outlined in the UVSP. The project design should be changed to eliminate materials such as:
board form concrete, metal wall panels, metal roofing, perforated metal panels, concrete panels. The Laguna Hills City Hall, Ashley Furniture complex and Oakbrook Village all followed the recommended architectural styles in the UVSP. As the centerpiece of the UVSP, The Village at Laguna Hills should incorporate the architectural styles discussed in the UVSP. If they do not want to follow the UVSP and use the NorCal style they have proposed then they need to propose an amendment to the UVSP Zoning Code and allow the City Council to debate the merits of the amendment to the Zoning Code prior to gaining approval on the project.

CONCLUSION:

This Retail and Park Expansion Plan provides the developer with the intensity of uses they proposed but answers many of the concerns raised by the public and City council including providing more open space, more space for retail, more parking and more conference space for the hotel. Increasing the retail land by 25% will provide more land for future expansion of retail square footage at a later time. I believe that providing the new Recreation Park will expand recreational opportunities for all the residents in the UVSP which currently do not have a park.

I hope you will consider the Retail and Park Expansion Plan to get this project approved with a project the City will be proud of and will provide positive fiscal impacts for the city.

Sincerely,
Carl Christiansen
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Packet Pg. 467 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village at Laguna

SUMMARY OF FINDINGS
Proposed Laguna Hills Hotel

LAGUNA HILLS MALL, CALLE DE LA LOUISA

LAGUNA HILLS, CALIFORNIA
SUBMITTED TO:PR OPOSED
Stephen T. Logan
Merlone Geier Partners
4365 Executive Drive, Suite 1400
San Diego, California 92121
PREPARED BY:

HVS Consulting & Valuation
Division of TS Worldwide, LLC
8430 Santa Monica Boulevard, Suite 200
West Hollywood, California 90069
+1 (310) 270-3240
December-2021
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Packet Pg. 468 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December 13, 2021
Stephen T. Logan
Merlone Geier Partners
4365 Executive Drive, Suite 1400
San Diego, California 92121
Re: Proposed Laguna Hills Hotel
Laguna Hills, California
HVS Reference: 2021022179
Dear Mr. Logan:

Pursuant to your request, we herewith submit our summary of findings pertaining to the above-captioned property. We have inspected the real estate and analyzed the hotel market conditions in the Laguna Hills, California, area. We have studied the proposed project, and the summary results of our fieldwork and analysis are presented in this document.

The purpose of this study is to analyze and test the feasibility of two different scenarios for a proposed hotel in Laguna Hills. The first scenario explores the feasibility of a nationally branded “upscale” hotel, as categorized by Smith Travel Research (STR) Chain Scales. Chain scale segments are grouped primarily according to actual average room rates nationwide. Upscale hotels are typically select-service or full-service in nature. For the purpose of our first analysis we have assumed a select-service hotel. Select-service hotels offer F&B (e.g., a lobby bar and restaurant which may have a more limited menu or operating hours) and meeting facilities, but these are still limited when compared to full-service hotels.

The second purpose of this study was to evaluate the feasibility of a higher caliber hotel (above the upscale chain scale segment). As such, the second scenario analyzes the potential feasibility of a nationally branded upper-upscale hotel as categorized by STR. Upper-upscale hotels are typically full-service in nature with an F&B offering that typically comprises one or more full-service restaurants (typically with more expansive food and beverage offerings, operational hours, and in-room dining) as well as expanded meeting facilities in order to better cater to groups and events. Given the subsequent results of the upper-upscale fullservice analysis, we did not test the feasibility of a hotel of higher caliber than the upper-upscale segment.

Our findings for both scenarios are further described in the subsequent chapters of this report.

HVS LOS ANGELES
8430 Santa Monica Boulevard, Suite
200
West Hollywood, California 90069
+1 (310) 270-3240
+1 (415) 896-0516 FAX
www.hvs.com
Superior results through unrivaled
hospitality intelligence. Everywhere.
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Packet Pg. 346 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

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Packet Pg. 469 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village

FEASIBILITY SUMMARY
Upscale Scenario Upper Upscale Scenario
Net Present Val ue (NPV) $41,500,000 $47,300,000
Estima ted Repla cement Cost $40,900,000 $55,700,000
Difference Between NPV
and Repl acement Cost 1.5% -15.1%
Feasibili ty Concl usion Feasible Not Feasible
Based on our analysis, which is further outlined in this report, there is sufficient support for an upscale, select-service hotel, while there is insufficient support for the upper upscale, full-service scenario. The difference between the Net Present Value (NPV), which is the anticipated value of the property upon completion, and the estimated Replacement Cost is a key indicator of the feasibility of a project.

Investors expect to create additional value following the completion of a hotel; if the NPV is below the cost to construct the property, there is generally limited incentive to pursue the project. Given that the NPV for the upper upscale scenario is significantly below the estimated replacement cost, it is unlikely the project would be feasible in the next five to ten years based on the current scope and market performance.

We hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This study is subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein.

Sincerely,
TS Worldwide, LLC
Luigi Major, MAI, Managing Director
[email protected], +1 (310) 270-3240
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Packet Pg. 347 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

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Packet Pg. 470 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village Table of Contents

SECTION TITLE PAGE

1. Subject of The Study 1
Subject of the Study 1
Ownership, Franchise, and Management Assumptions 4

2. Overview of Local Area Economy 5
Overview of Local Area Economy 5
Overview of Local Area Lodging Market Trends 9

3. Upscale Analysis 18
Forecast of the Proposed Subject Hotel’s Occupancy 18
Forecast of the Proposed Subject Hotel’s Average Rate 20 Forecast of Income and Expense 21
Feasibility Analysis 27

4. Upper-Upscale Analysis 30
Forecast of the Proposed Subject Hotel’s Occupancy 30
Forecast of the Proposed Subject Hotel’s Average Rate 32 Forecast of Income and Expense 33
Feasibility Analysis 39

5. Method of Study & Statement of Assumptions and Limiting Conditions42 Method of Study 42
Addenda
Qualifications
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Packet Pg. 471 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Subject of The Study
Proposed Laguna Hills Hotel – Laguna Hills, California 1

1. Subject of The Study
The subject of the study is an approximately 95,832-square-foot (2.20-acre) parcel to be improved with a either an upscale select-service lodging facility or an upper upscale full-service hotel; the hotel is expected to be associated with a national upscale, select-service or upper upscale full-service hotel brand. The proposed subject property, which is expected to open on June 1, 20231, will feature 150 rooms. The upscale scenario is expected to feature a lobby restaurant and bar, a fitness room, a lobby workstation or small business center, and leased groundfloor retail; the upper upscale scenario is expected to feature a restaurant and a café, a fitness center, a business center, a gift shop, and leased ground-floor retail The hotel will also contain the appropriate parking capacity and all necessary back-of-the-house space.
1 The proposed opening date is for analysis purposes only, and does not account for the time necessary to obtain local implementing approvals (e.g., final map approval, a building permit or a certificate of occupancy) required to construct and then open the hotel.

Subject of the
Study
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Packet Pg. 472 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Subject of The Study
Proposed Laguna Hills Hotel – Laguna Hills, California 2 FIGURE 1-1 SUMMARY OF PLANNED FACILITIES (UPSCALE)
Anticipated Guestroom Configuration
King 75
Queen/Queen 60
Suites 15
Total 150
Anticipated Food & Beverage Facilities
Lobby Restaurant & Bar 100–150
Anticipated Indoor Meeting & Banquet Facilities
Meeting Room(s) TBD by brand
Anticipated Amenities & Services
Fitness Room
Lobby Workstation or Business Center
Ground-Floor Retail (Leased)
Square Footage
Estimated Number of Units
Estimated Seating Capacity
FIGURE 1-2 SUMMARY OF PLANNED FACILITIES (UPPER UPSCALE) Anticipated Guestroom Configuration
King 75
Queen/Queen 60
Suites 15
Total 150
Anticipated Food & Beverage Facilities
Restaurant & Bar 200–250
Café 25–50
Anticipated Indoor Meeting & Banquet Facilities
Ballroom TBD by brand
Meeting Room(s) TBD by brand
Anticipated Amenities & Services
Fitness Center Concierge
Business Center Room Service
Ground-Floor Retail (Leased) Gift Shop/Boutique
Estimated Number of Units
Estimated Seating Capacity
Square Footage
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Packet Pg. 473 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Subject of The Study
Proposed Laguna Hills Hotel – Laguna Hills, California 3 The subject site’s location is the Laguna Hills Mall, Calle de la Louisa, Laguna Hills, California 92653.

LOCATION MAP

VIEW OF SUBJECT SITE
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Packet Pg. 474 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Subject of The Study
Proposed Laguna Hills Hotel – Laguna Hills, California 4 We assume that all utilities will be available to the site and that no hazards are present that will impede its development. We assume that the certificate of occupancy will be issued on or before the opening date for the entirety of the improvements.

The subject site was last sold in 2013. Merlone Geier Partners has owned the site since that time, having purchased it from Simon Property Group for an undisclosed price. At the time of purchase, the site encompassed an indoor shopping mall; the mall was permanently shuttered in late 2018, and most of the original structure has since been demolished. The greater 68-acre tract is expected to be divided into smaller parcels as part of the Village at Laguna Hills mixed-use development; the proposed subject hotel will be a part of this development. No transfers of the property have reportedly occurred since 2013.

Details pertaining to management terms were not yet determined at the time of this report; however, we assume that the proposed hotel will be managed by a professional hotel-operating company, with fees deducted at rates consistent with current market standards. Our projections reflect a management fee of 3.0% of total revenues in our study.

While a specific franchise has not been selected at the time of this report, we assume that the proposed subject hotel will operate as either an upscale, selectservice or an upper upscale, full-service lodging facility. Our projections reflect the associated fees for each scenario. We have positioned the proposed hotel's projected franchise fees based on our review of several hotel brand's current franchise fees. Based on our review of national hotel brand franchise terms and fees are outlined in the table below. Reservations fees will also be due and are included in the rooms expense line item of our forecast.

FIGURE 1-3 FRANCHISE FEES
Royalty Fee (%
of Rooms
Revenue)
Marketing Fee (%
of Rooms
Revenue)
Upscale Scenario 5.50% 3.15%
Upper Upscale Scenario 5.50% 4.00%
Ownership, Franchise,
and Management
Assumptions
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Packet Pg. 475 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 5

2. Overview of Local Area Economy
Orange County comprises 34 incorporated cities with 42 miles of coastline. Orange County adjoins the greater Los Angeles area to the north and has been a direct beneficiary of the aggressive economic growth of the Los Angeles Basin. As the Los Angeles economy expanded in the 1980s, Orange County evolved into a selfsufficient, diverse urban center with mature industrial, commercial, and residential markets. It is known for its sunny beaches, including Laguna Beach, as well as Disneyland and Knott’s Berry Farm. Its population was estimated by the U.S. Census to be nearly 3.2 million people in 2018. Orange County has a diverse economic base, with Santa Ana serving as the government seat of the county, Irvine as the financial center, and Anaheim/Garden Grove as the major tourism destination. The city of Laguna Hills, which was incorporated in 1991, along with nearby Lake Forest and Foothill Ranch, has become a hub for several corporate headquarters and offices including Marie Callender's, Panasonic, Oakley, Saddleback College, Loan Depot, Cox Communications, and Kawasaki. This area is also home to several hiking trails and lakes, which draw outdoor enthusiasts to the region.

Locally, the unemployment rate was 7.5% in 2020; for this same area in 2021, the most recent month’s unemployment rate was registered at 4.2%, versus 7.8% for the same month in 2020.

The following bullet points highlight major demand generators for this market:
· The University of California - Irvine (UC Irvine) is the second-largest employer in Orange County. UC Irvine, whose name originated from the Irvine Company, was founded in 1965 as a public, co-educational research university. UC Irvine offers 68 undergraduate degree programs, 53 minors, 45 master’s degree programs, and 43 doctoral programs. In 2010, UC Irvine opened the 100,000- square-foot Sue and Bill Gross Hall, the first stem-cell research center in Southern California. The facility is equipped with Orange County’s only Level I trauma center and regional burn center, as well as a 45-bed neonatal intensive-care unit. Phase II of this hospital opened in early 2012. The project was touted to be the largest construction project in Orange County's history, at a total cost of $556 million. In 2016, the $92-million expansion of the Mesa Court student-housing complex opened, housing over 800 students. We note that classes and facilities were shut down beginning in March 2020 due to the Overview of Local Area
Economy
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Packet Pg. 476 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 6 onset of the COVID-19 pandemic. Students were limited to remote learning, with few exceptions, in the 2020–21 academic year; however, students returned to in-person learning for the Fall 2021 semester. · Companies representing the technology and automotive sectors have a large presence in Irvine, Lake Forest, Foothill Ranch, and Mission Viejo. Broadcom Corp. is one of the world's largest semiconductor companies and the largest technology company in Irvine; a new, 70-acre, 1.1-million-square-foot campus in Irvine's Great Park neighborhood was completed in 2018. Toshiba America Electronic Components Inc. is an independent operating company owned by Toshiba America Inc., a subsidiary of Toshiba Corporation, which employs approximately 8,000 people in the United States. Toshiba America Electronic Components Inc.'s headquarters are in Irvine, and the company continues to grow in the field of research and development. Quality Systems Inc.'s (QSI) national headquarters are also in Irvine; QSI and its NextGen Healthcare subsidiary provide prepackaged software for healthcare companies looking to digitize their medical records and connectivity services. Although numerous layoffs and furloughs were announced in March and April of 2020, many furloughs ended later in 2020, and many companies are now hiring. Many corporate entities are still encouraging remote working, or a combination of office and remote work. Laguna Hills and the surrounding communities benefit from the breadth of corporate demand generators in Irvine, considered Orange County's financial and technology center.
· MemorialCare Saddleback Medical Center is a major general medical and surgical hospital in Laguna Hills. The hospital is consistently ranked among the Top 100 hospitals in the United States by U.S. News & World Report across a variety of specialties. The hospital is major employer in the area, employing over 1,000 physicians, nurses, and administrative staff. In 2019, the Neuroscience Institute at Saddleback Medical Center was expanded, allowing the hospital to rank among the first three U.S. hospitals to receive Joint Commission Certification as an Advanced Thrombectomy-Capable Stroke Center in the United States. The recognition has made the area a destination for stroke treatment in Orange County and Southern California.

The greater Irvine area, inclusive of Laguna Hills, remains one of the desirable commercial centers in Orange County. The economic base is diverse in this market, with strong employers in the technology, consumer goods, healthcare, and financial sectors. Moreover, the former El Toro Marine Corps Air Station continues to be transformed into an urban park area known as Orange County Great Park, with facilities that include a waterpark, sports park, botanical gardens, and several arts and cultural centers. We also note that land prices have significantly increased in the past several years, but this has not deterred the development of mixed-use projects in the area. Finally, the defunct Laguna Hills Mall is being redeveloped o
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Packet Pg. 477 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 7 into a mixed-use development that will encompass 68 acres and include 250,000 square feet of retail, 465,000 square feet of office space, a hotel, and approximately 1,500 multi-family and townhome residential units. Although the COVID-19 pandemic continues to affect the local and regional economy to some degree, the lifting of most pandemic-related restrictions, coupled with the wide distribution of vaccinations, has aided in a recovery.

This area is served by John Wayne Airport, Long Beach International Airport, and the Los Angeles International Airport.

FIGURE 2-4 AIRPORT STATISTICS
Year
2011 8,609,008 — 3,115,433 — 61,862,052 —
2012 8,857,944 2.9 % 3,205,907 2.9 % 63,688,121 3.0 %
2013 9,232,789 4.2 2,942,873 (8.2) 66,665,726 4.7
2014 9,386,033 1.7 2,823,996 (4.0) 70,662,212 6.0
2015 10,038,466 7.0 2,523,686 (10.6) 74,956,305 6.1
2016 10,496,511 4.6 2,841,144 12.6 80,921,527 8.0
2017 10,423,578 (0.7) 3,783,775 33.2 84,558,776 4.5
2018 10,664,038 2.3 3,884,857 2.7 87,533,177 3.5
2019 10,656,986 (0.1) 3,584,203 (7.7) 88,068,013 0.6
2020 3,794,850 (64.4) 1,043,773 (70.9) 28,779,527 (67.3) Year-to-date, Aug
2020 2,704,119 — 827,903 — 22,676,679 —
2021 4,341,266 60.5 % 1,191,244 43.9 % 33,036,486 45.7 % Traffic Change Traffic Change Traffic Change
Sources: Respective Ai rport Authorities
John Wayne Airport Long Beach Airport Los Angeles International Airport Passenger Percent Passenger Percent Passenger Percent
Although the greater Irvine area itself offers limited tourist attractions, nearby cities such as Costa Mesa, Newport Beach, Laguna Beach, and Anaheim feature a variety of tourist and leisure attractions. The peak season for tourism in this area is typically from May to September. During other times of the year, weekend demand usually comprises travelers passing through en route to other destinations, people visiting friends or relatives, and other similar weekend demand generators. Primary attractions in the area include the following:
· The Irvine Spectrum Center is an outdoor shopping center featuring over 100 shops, the 21-screen Edwards movie theatre, and the 500-seat Irvine Improve Theatre. The shopping center also offers the "Giant Wheel," a Ferris wheel that projects lighting schemes via 52,000 LED lights, visible by passing motorists on o
Packet Pg. 355 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

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Packet Pg. 478 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 8 Interstate 5; other attractions include a carousal and a children's train. The nearby South Coast Plaza is also a major shopping attraction for residents and visitors, alike. We note that many of the shopping outlets and attractions at the Irvine Spectrum Center closed in March 2020 with the onset of the COVID-19 pandemic. However, most retail outlets and attractions have since reopened now that most pandemic-related restrictions have been rescinded. · The Orange County Great Park is a non-aviation reuse of the defunct El Toro Marine Corps Air Station, encompassing over 450 acres, with plans to develop the park to over 1,300 acres. The park currently includes attractions such as the Great Park Balloon, the Great Park Ice Arena, a variety of sports fields, the Palm Court Arts Complex, a Farmer's Market, multiple miles of hiking trails, and a 2,500-seat soccer stadium, which is home to Orange County SC. Future planned projects include a 19-acre outdoor waterpark, slated to open in the summer 2022; a 10,000-seat amphitheater; an aviation museum; and multiple retail and dining outlets. The entire planned development includes a breadth of attractions, which should become a major tourism destination for the region over the coming years. We note that many of the existing attractions closed in March 2020 given the onset of the COVID-19 pandemic. However, most of these attractions have reopened, some with limited capacities per any applicable governmental restrictions.
· Orange County is home to a variety of coastal beaches and towns, which typically receive visitors from around the world. Popular destinations include Laguna Beach, Newport Beach, and Huntington Beach; the beaches are a major attraction for surfers, while Laguna Beach also has tide pools and the oceanfront Crystal Cove State Park. Moreover, the Pacific Coast Highway (State Highway 1), which follows the California coastline, is a famous attraction, with visitors beginning at one end and traveling the route along the coast to see the renowned vistas. The southernmost end of the highway begins at Dana Point, which is just south of the Lake Forest and Laguna Hills area. As a popular starting point for the journey, communities in the area benefit from travelers staying here before they begin the trip.

Prior to the onset of the COVID-19 pandemic and the corresponding economic crisis, the greater Irvine area, which includes Laguna Hills, was experiencing a period of economic strength and expansion, primarily led by the technology and finance industries and the healthcare sector. However, the COVID-19 pandemic continues to affect the local market to a moderate degree, resulting in decreased business activity, inclusive of the hospitality industry. Nevertheless, the wide distribution of vaccinations and the lifting of many pandemic-related restrictions has sparked a recovery in the second half of 2021; thus, while the near-term o
Packet Pg. 356 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 479 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 9 outlook for the market is best described as one of caution at this time, the longterm outlook is more optimistic.

The subject site is located in the greater Orange County lodging market, which encompasses over 200 open and operating lodging facilities totaling roughly 25,000 guestrooms. Within this greater market, the direct submarket that will include the subject hotel is known as Laguna Hills; competitive hotels are also located in Lake Forest, Irvine, and Mission Viejo. Within this market, the proposed subject hotel will compete with a smaller set of hotels based on various factors, such as price point, product offering, and amenities, among other factors.

STR is an independent research firm that compiles and publishes data on the lodging industry, and this information is routinely used by typical hotel buyers.

HVS has ordered and analyzed an STR Trend Report of historical supply and demand data for this competitive set.

Overview of Local Area
Lodging Market Trends
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Packet Pg. 357 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 480 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 10 FIGURE 2-5 HISTORICAL SUPPLY AND DEMAND TRENDS (STR)
Year
Average Daily
Room Count
Available
Room Nights Change
Occupied
Room Nights Change Occupancy
Average
Rate Change RevPAR Change
2011 1,304 475,960 — 345,566 — 72.6 % $118.69 — $86.17 — 2012 1,304 476,113 0.0 % 337,857 (2.2) % 71.0 125.09 5.4 % 88.77 3.0 % 2013 1,304 475,960 (0.0) 350,842 3.8 73.7 132.08 5.6 97.36 9.7 2014 1,410 514,600 8.1 394,816 12.5 76.7 139.20 5.4 106.79 9.7 2015 1,514 552,610 7.4 435,126 10.2 78.7 151.06 8.5 118.94 11.4 2016 1,632 595,696 7.8 462,779 6.4 77.7 155.62 3.0 120.90 1.6 2017 1,666 608,096 2.1 481,828 4.1 79.2 158.54 1.9 125.62 3.9 2018 1,914 698,610 14.9 530,126 10.0 75.9 167.89 5.9 127.40 1.4 2019 1,914 698,610 0.0 535,038 0.9 76.6 171.03 1.9 130.98 2.8 2020 2,062 752,668 7.7 302,387 (43.5) 40.2 132.26 (22.7) 53.13 (59.4) Year-to-Date Through September
2020 2,004 547,140 — 220,547 — 40.3 % $140.38 — $56.58 — 2021 2,314 631,710 15.5 % 366,687 66.3 % 58.0 146.95 4.7 % 85.30 50.8 % Average Annual Compounded Change:
2011 – 2019 4.9 % 5.6 % 4.7 % 5.4 %
2011 – 2020 5.2 (1.5) 1.2 (5.2)
2016 – 2019 5.5 % 5.0 % 3.2 % 2.7 %
Competitive
Hotels Included in Sample Class Status
Ascend Collection The Hi lls Hotel Upscale Class Secondary 148 Jun 2020 Jan 1977 Fairfield Inn Mission Viejo Orange County Upper Midscale Class Primary 146 Dec 1992 May 1987 Residence Inn Irvine Spectrum Upscale Class Primary 112 May 1989 May 1989 Sonesta Select Laguna Hills Irvine Spectrum Orange County Upscale Class Primary 136 Feb 2021 Jul 1990 DoubleTree by Hilton Hotel Irvine Spectrum Upscale Class Secondary 252 Jul 1999 Jul 1999 Holiday Inn Express & Suites Lake Forest - Irvine East Upper Midscale Class Primary 60 May 2019 Oct 2002 Staybridge Suites Irvine East/Lake Forest Upscale Class Primary 128 Mar 2006 Mar 2006 Renaissance ClubSport Aliso Viejo Laguna Beach Hotel Upper Upscale Class Secondary 174 Jun 2020 Jul 2008 Hilton Garden Inn Irvine Spectrum Lake Forest Upscale Class Primary 148 Oct 2019 Sep 2009 Courtyard Irvine Spectrum Upscale Class Primary 210 Jul 2014 Jul 2014 Homewood Suites by Hil ton Aliso Viejo Laguna Beach Upscale Class Secondary 129 Feb 2016 Feb 2016 Marriott Irvine Spectrum Upper Upscale Class Secondary 271 Dec 2017 Dec 2017 Hampton by Hilton Inn Irvine Spectrum Lake Forest Upper Midscale Class Primary 92 Jun 2020 Jun 2020 Homewood Suites by Hil ton Irvine Spectrum Lake Forest Upscale Class Primary 116 Jun 2020 Jun 2020 TownePlace Suites Irvine Lake Forest Upper Midscale Class Primary 112 Jun 2020 Jun 2020 SpringHill Suites Irvine Lake Forest Upscale Class Primary 102 Mar 2021 Mar 2021 Total 2,336
Year
Opened
Year
Affiliated
Source: STR
Number
of Rooms
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4.5.b
Packet Pg. 481 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December
-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel– Laguna Hills, California 11

MAP OF COMPETITION
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Packet Pg. 359 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 482 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 12 During the illustrated historical period, both occupancy and ADR generally followed a strengthening trend. A number of new hotels began to open within the market in 2014, a trend that continued through 2018, during which available room nights increased by 46%. Continued corporate expansions and developments in the Irvine and Lake Forest areas boosted demand levels, allowing the market to absorb the new supply until 2018, at which time available room nights increased by 15%; thus, occupancy contracted notably. However, ADR increased year-overyear during the same period. In 2016, occupancy declined moderately and ADR growth slowed following layoffs at Oakley. Corporate expansions and increased leisure demand aided in the growth over the past decade. In March 2020, the COVID-19 pandemic began to affect the local market, similar to the rest of the nation, resulting in decreased business activity, inclusive of the hospitality, tourism, and manufacturing industries; thus, all performance metrics declined significantly in 2020. Year-to-date 2021 data illustrate a notable improvement in occupancy and a roughly $6 gain in ADR. The most recent performance metrics can be attributed to increased business activity and heightened leisure travel given the improving conditions. While the pandemic will continue to affect business to some degree in the near term, the overall outlook is optimistic given the dynamics of this market, the successful rollout of vaccines, the removal of many COVID-related restrictions, and the recent increase in travel.

The following table illustrates the historical occupancy and average rate (ADR) levels for selected hotels in the market.
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Packet Pg. 360 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 483 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 13 FIGURE 2-6 PRIMARY COMPETITORS – OPERATING PERFORMANCE
Est. Segmentation Estimated 2018 Estimated 2019
Property Occ. RevPAR RevPAR
Occupancy
Penetration
Yield
Penetration
Residence Inn by Marriott Irvine Spectrum 112 70 % 20 % 10 % 112 60 - 65 % $170 - $180 $105 - $110 112 75 - 80 % $170 - $180 $140 - $150 100 - 110 % 100 - 110 % Courtyard by Marriott Irvine Spectrum 210 75 15 10 210 80 - 85 190 - 200 150 - 160 210 80 - 85 190 - 200 150 - 160 100 - 110 120 - 130 Hilton Garden Inn Lake Forest Irvine Spectrum 148 75 15 10 148 70 - 75 160 - 170 120 - 125 148 50 - 55 150 - 160 85 - 90 70 - 75 60 - 65 Sonesta Select Laguna Hills Irvine Spectrum 136 70 15 15 136 70 - 75 150 - 160 110 - 115 136 70 - 75 140 - 150 105 - 110 95 - 100 80 - 85 TownePlace Suites by Marriott Irvine La ke Forest 112 70 20 10 Staybridge Suites Irvine East Lake Fores t 128 75 10 15 128 80 - 85 160 - 170 130 - 140 128 80 - 85 160 - 170 130 - 140 100 - 110 100 - 110 Hampton Inn Irvine Spectrum Lake Forest 92 70 15 15
Homewood Suites by Hilton Irvine Spectrum Lake
Forest
116 70 15 15
Sub-Totals/Averages 1,054 73 % 15 % 12 % 734 76.3 % $170.48 $130.00 734 74.9 % $169.33 $127 98 % 96.8 % Secondary Competitors 1,180 56 % 25 % 19 % 903 75.6 % $165.76 $125.27 903 78.0 % $172.38 $134 102 % 102.6 % Totals/Averages 2,234 64 % 21 % 16 % 1,637 75.9 % $167.89 $127.39 1,637 76.6 % $171.04 $131 100 % 100.0 % * Specific occupancy and average rate data were utilized in our analysis, but are presented in ranges in the above table for the purposes of confidentiality.

Commercial
Leisure
Group
Average Rate
Weighted
Annual
Room
Count
Number of
Rooms Average Rate Occ.

Weighted
Annual
Room
Count
HOTEL OPENED IN 2020
HOTEL OPENED IN 2020
HOTEL OPENED IN 2020
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4.5.b
Packet Pg. 484 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 14 FIGURE 2-7 SECONDARY COMPETITORS – OPERATING PERFORMANCE Est. Segmentation Estimated 2018 Estimated 2019
Property
Number of
Rooms Occ. Average Rate RevPAR Occ. Average Rate RevPAR Holiday Inn Express & Suites Lake Fores t 146 65 % 20 % 15 % 85 % 124 70 - 75 % $120 - $125 $90 - $95 124 70 - 75 % $125 - $130 $90 - $95 Fairfield by Marriott Mission Viejo Orange
County
60 65 20 15 85 51 75 - 80 120 - 125 90 - 95 51 70 - 75 120 - 125 90 - 95 Homewood Suites by Hilton Aliso Viejo Laguna
Beach 129 65 20 15 80 103 80 - 85 160 - 170 130 - 140 103 80 - 85 160 - 170 125 - 130 Hills Hotel an As cend Collection Hotel 148 45 30 25 75 111 70 - 75 125 - 130 85 - 90 111 65 - 70 125 - 130 85 - 90 DoubleTree by Hilton Irvine Spectrum 252 60 25 15 75 189 75 - 80 160 - 170 125 - 130 189 80 - 85 180 - 190 150 - 160 Marriott Irvine Spectrum 271 50 25 25 75 203 70 - 75 210 - 220 150 - 160 203 80 - 85 210 - 220 180 - 190 Renaissance ClubSport Aliso Viejo 174 50 35 15 70 122 70 - 75 190 - 200 140 - 150 122 70 - 75 180 - 190 130 - 140 Totals/Averages 1,180 56 % 25 % 19 % 77 % 903 75.6 % $165.76 $125.27 903 78.0 % $172.38 $134.41 * Specific occupancy and average rate data was utilized in our analysis, but is presented in ranges in the above table for the purposes of confidentiality.

Commercial
Leisure
Group
Total
Competitive
Level
Weighted
Annual
Room
Count
Weighted
Annual
Room
Count
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Packet Pg. 362 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at

4.5.b
Packet Pg. 485 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 15 Our survey of the primarily competitive hotels in the local market shows a range of lodging types and facilities. Each primary competitor was inspected and evaluated.

According to the City of Laguna Hills Planning Office, and our research and inspection (as applicable), new supply expected to be competitive within the proposed subject hotel's competitive submarket is outlined in the following table.

FIGURE 2-8 NEW SUPPLY
Total
Proposed Property
Number
of Rooms
Competitive
Level
Estimated Opening
Date Development Stage
Proposed Subject Property 150 100 % 150 June 1, 2023 Early Development Springhill Suites by Marriott Lake Forest 102 100 102 March 1, 2021 Recently Opened Totals/Averages 252 252
Weighted
Room Count
Market segmentation is a useful procedure because individual classifications often exhibit unique characteristics in terms of growth potential, seasonality of demand, average length of stay, double occupancy, facility requirements, price sensitivity, and so forth. By quantifying the room-night demand by market segment and analyzing the characteristics of each segment, the demand for transient accommodations can be projected.

FIGURE 2-9 ACCOMMODATED-ROOM-NIGHT DEMAND
Marketwide
Market Segment
Commercia l 291,401 64 %
Lei sure 94,805 21
Group 71,495 16
Total 457,701 100 %
Accommodated
Demand
Percentage
of Total
Various types of economic and demographic data were then evaluated to determine their propensity to reflect changes in hotel demand. Based on this procedure, we forecast the following average annual compounded marketsegment growth rates. o
Packet Pg. 363 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 486 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 16 FIGURE 2-10 AVERAGE ANNUAL COMPOUNDED MARKET-SEGMENT GROWTH RATES Annual Growth Rate
Market Segment
Commercial -45.0 % 64.0 % 28.0 % 15.0 % 7.0 % 1.0 %
Leisure -33.0 75.0 10.0 6.0 3.0 1.0
Group -45.0 50.0 15.0 12.0 10.0 5.0
Base Demand Growth -42.5 % 64.6 % 21.6 % 12.5 % 6.5 % 1.5 % 2020 2021 2022 2023 2024 2025
The following table details our projection of lodging demand growth for the subject market, including the total number of occupied room nights and any residual unaccommodated demand in the market.
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Packet Pg. 364 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 487 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Overview of Local Area Economy
Proposed Laguna Hills Hotel – Laguna Hills, California 17 FIGURE 2-11 FORECAST OF MARKET OCCUPANCY
291,401 160,271 262,844 336,440 386,906 413,989 418,129 418,129 Growth Rate (45.0) % 64.0 % 28.0 % 15.0 % 7.0 % 1.0 % 0.0 % 94,805 63,519 111,159 122,274 129,611 133,499 134,834 134,834 (33.0) % 75.0 % 10.0 % 6.0 % 3.0 % 1.0 % 0.0 %
71,495 39,322 58,984 67,831 75,971 83,568 87,746 87,746 (45.0) % 50.0 % 15.0 % 12.0 % 10.0 % 5.0 % 0.0 %
Base Demand 457,701 263,112 432,986 526,546 592,488 631,057 640,710 640,710 Total Dema nd 457,701 263,112 432,986 526,546 592,488 631,057 640,710 640,710 Overall Demand Growth 0.9 % (42.5) % 64.6 % 21.6 % 12.5 % 6.2 % 1.3 % 0.0 % Market Mix

63.7 % 60.9 % 60.7 % 63.9 % 65.3 % 65.6 % 65.3 % 65.3 %

20.7 24.1 25.7 23.2 21.9 21.2 21.0 21.0

15.6 14.9 13.6 12.9 12.8 13.2 13.7 13.7
1,637 1,796 1,957 1,957 1,957 1,957 1,957 1,957
Proposed Subject Property 188 150 150 150
Springhill Suites by Marriott Lake Forest 286 102 102 102 102 102 Ava ilable Room Nights per Yea r 597,633 655,566 745,645 751,663 783,763 806,413 806,413 806,413 Nights per Yea r 365 365 365 365 365 365 365 365
Total Supply 1,637 1,796 2,043 2,059 2,147 2,209 2,209 2,209 Rooms Supply Growth 0.0 % 9.7 % 13.7 % 0.8 % 4.3 % 2.9 % 0.0 % 0.0 % Marketwide Occupancy 76.6 % 40.1 % 58.1 % 70.1 % 75.6 % 78.0 % 79.0 % 79.0 % 1 Opening in June 2023 of the 100% competitive, 150-room Proposed Subject Property 2 Opening in Ma rch 2021 of the 100% competitive, 102-room Springhill Suites by Ma rriott La ke Forest Commercial
2019 2020 2021 2022 2023 2024 2025 2026
Total Dema nd
Leisure
Total Dema nd
Growth Rate
Group
Total Dema nd
Growth Rate
Group
Existing Hotel Supply
Proposed Hotels
Totals
Commercial
Leisure
These room-night projections for the market area are used in determining the proposed subject hotel’s expected occupancy levels based on penetration levels forecast by segment.
o
Packet Pg. 365 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 488 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 18

3. Upscale Analysis
In the first scenario, the proposed subject hotel is expected to be operated as an upscale, select-service lodging facility, to be affiliated with a national brand. Some brands that fall under this category include Aloft Hotels, AC Hotel by Marriott, Courtyard by Marriott, and Hilton Garden Inn. These hotels typically include a lobby restaurant and bar, which is generally more limited in scope than what is offered at a full-service hotel. Moreover, the proposed subject hotel is anticipated to feature ground-floor retail (leased), meeting space, a fitness room, and a business center or lobby workstation.

The proposed subject hotel's occupancy forecast is set forth as follows, with the adjusted projected penetration rates used as a basis for calculating the amount of captured market demand.

Forecast of the
Proposed Subject
Hotel’s Occupancy
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Packet Pg. 366 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 489 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 19 FIGURE 3-12 FORECAST OF SUBJECT PROPERTY'S OCCUPANCY
Market Segment
Commercial
Demand 386,906 412,733 415,737 415,737
Market Share 3.6 % 6.7 % 7.2 % 7.2 %
Capture 13,945 27,721 29,897 29,897
Penetration 88 % 99 % 106 % 106 %
Leisure
Demand 129,611 133,094 134,063 134,063
Market Share 3.8 % 6.7 % 7.0 % 7.0 %
Capture 4,897 8,978 9,432 9,432
Penetration 92 % 99 % 104 % 104 %
Group
Demand 75,971 83,314 87,244 87,244
Market Share 2.3 % 4.6 % 5.3 % 5.3 %
Capture 1,717 3,844 4,612 4,612
Penetration 55 % 68 % 78 % 78 %
Total Room Nights Captured 20,559 40,542 43,941 43,941
Available Room Ni ghts 32,100 54,750 54,750 54,750
Subject Occupancy 64 % 74 % 80 % 80 %
Market-wide Avai labl e Room Nights 783,763 806,413 806,413 806,413 Fair Share 4 % 7 % 7 % 7 %
Market-wide Occupied Room Nights 592,488 629,141 637,044 637,044 Market Share 3 % 6 % 7 % 7 %
Market-wide Occupancy 76 % 78 % 79 % 79 %
Total Penetration 85 % 95 % 102 % 102 %
2023 2024 2025 2026
These positioned segment penetration rates result in the following market segmentation forecast.
o
Packet Pg. 367 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 490 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 20 FIGURE 3-13 MARKET SEGMENTATION FORECAST – SUBJECT PROPERTY Commercial 68 % 68 % 68 % 68 %
Leisure 24 22 21 21
Group 8 9 10 10
Total 100 % 100 % 100 % 100 %
2023 2024 2025 2026
These projections reflect years beginning June 1, 2023, which correspond to the first projection year in the forecast of income and expense for the proposed subject hotel.

The defined primarily competitive market realized an overall average rate of $144.17 in the 2020 base year, declining from the 2019 level of $169.33. The Marriott Irvine Spectrum Center (a secondary competitor) achieved the highest estimated average rate in the local competitive market, by a significant margin, because of the hotel's upper-upscale product offering, popular brand affiliation, and location adjacent to primary commercial demand generators. Of the primary competitive set, the Courtyard by Marriott Irvine Spectrum achieved the highest estimated average rate because of similar aforementioned factors, although this hotel offers a select-service product. Other important rate aspects of this market include location near Interstate 5 and proximity to commercial demand generators. The selected rate position for the proposed subject hotel, in base-year dollars, takes into consideration expected factors such as its ground-floor retail space, select-service amenities, and upscale product offering. We have selected the rate position of $175.00, in base-year dollars, for the proposed subject hotel. The final forecast reflects years beginning on June 1, 2023, and corresponds with our financial projections, as shown below.

Forecast of the
Proposed Subject
Hotel’s Average Rate
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Packet Pg. 368 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 491 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 21 FIGURE 3-14 ADR FORECAST – MARKET AND PROPOSED SUBJECT HOTEL Calendar Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Market ADR $171.04 $132.27 $149.46 $167.40 $175.77 $181.04 $186.47 $192.07 $197.83 $203.76 Projected Market ADR Growth Rate — -22.7% 13.0% 12.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% Proposed Subject Property ADR (As-If Stabilized) $175.00 $135.33 $152.92 $171.27 $179.83 $185.23 $190.79 $196.51 $202.41 $208.48 ADR Growth Rate -22.7% 13.0% 12.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% Proposed Subject Stabilized ADR Penetration 102% 102% 102% 102% 102% 102% 102% 102% 102% 102.3% Fiscal Year 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Proposed Subject Property Average Rate $182.07 $187.53 $193.15 $198.95 $204.92 $211.07 Opening Discount 3.0% 1.0% 0.0% 0.0% 0.0% 0.0%
Average Rate After Discount $176.60 $185.65 $193.15 $198.95 $204.92 $211.07 Real Average Rate Growth — 5.1% 4.0% 3.0% 3.0% 3.0%
Market ADR $177.95 $183.29 $188.79 $194.45 $200.29 $206.29 Proposed Subject ADR Penetration (After Discount) 99% 101% 102% 102% 102% 102% ADR Expressed in Base-Year Dollars Deflated @ Inflation Rate $160.02 $163.32 $164.97 $164.97 $164.97 $164.97 Historical
Discounts of 3% and 1% have been applied to the stabilized room rates projected for the first two years of operation, as would be expected for a new property of this type as it builds its reputation and becomes established in the market.

FIGURE 3-15 ADR AND OCCUPANCY FORECAST - CONCLUSION
Year
2023/24 68 % $182.07 3.0 % $176.60
2024/25 77 187.53 1.0 185.65
2025/26 80 193.15 0.0 193.15
Occupancy
Average Rate
Before Discount Discount
Average Rate
After Discount
The following table presents a detailed forecast through the fifth projection year, including amounts per available room (PAR) and per occupied room (POR). The second table illustrates our ten-year forecast of income and expense, presented with a lesser degree of detail. The forecasts pertain to years that begin on June 1, 2023, expressed in inflated dollars for each year.

Forecast of Income and
Expense
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Packet Pg. 369 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 492 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 22 FIGURE 3-16 DETAILED FORECAST OF INCOME AND EXPENSE
2023/24 Begins June 2024/25 Stabilized 2026/27 2027/28
Number of Rooms: 150 150 150 150 150
Occupancy: 68% 77% 80% 80% 80%
Average Rate: $176.60 $185.65 $193.15 $198.95 $204.92
RevPAR: $120.09 $142.95 $154.52 $159.16 $163.93
Days Open: 365 365 365 365 365
Occupied Rooms: 37,230 %Gross PAR POR 42,158 %Gross PAR POR 43,800 %Gross PAR POR 43,800 %Gross PAR POR 43,800 %Gross PAR POR

OPERATING REVENUE
Rooms $6,575 89.9 % $43,833 $176.60 $7,827 90.5 % $52,180 $185.66 $8,460 90.7 % $56,400 $193.15 $8,714 90.7 % $58,093 $198.95 $8,975 90.7 % $59,833 $204.91 Food & Beverage 608 8.3 4,054 16.33 686 7.9 4,572 16.27 727 7.8 4,846 16.60 749 7.8 4,991 17.09 771 7.8 5,141 17.61 Other Operated Departments 93 1.3 623 2.51 100 1.2 665 2.36 104 1.1 692 2.37 107 1.1 713 2.44 110 1.1 734 2.52 Miscellaneous Income 35 0.5 234 0.94 37 0.4 249 0.89 39 0.4 260 0.89 40 0.4 267 0.92 41 0.4 275 0.94 Total Operating Revenues 7,312 100.0 48,744 196.39 8,650 100.0 57,666 205.18 9,330 100.0 62,198 213.01 9,610 100.0 64,065 219.40 9,898 100.0 65,984 225.97 DEPARTMENTAL EXPENSES *
Rooms 1,537 23.4 10,245 41.28 1,659 21.2 11,057 39.34 1,734 20.5 11,562 39.60 1,786 20.5 11,909 40.78 1,840 20.5 12,266 42.01 Food & Beverage 585 96.3 3,903 15.72 627 91.4 4,181 14.88 654 90.0 4,361 14.94 674 90.0 4,492 15.38 694 90.0 4,627 15.85 Other Operated Departments 39 41.3 257 1.04 40 40.3 268 0.95 42 40.0 277 0.95 43 40.0 285 0.98 44 40.0 294 1.01 Total Expenses 2,161 29.6 14,405 58.04 2,326 26.9 15,506 55.17 2,430 26.0 16,200 55.48 2,503 26.0 16,686 57.15 2,578 26.0 17,187 58.86 DEPARTMENTAL INCOME 5,151 70.4 34,339 138.35 6,324 73.1 42,160 150.01 6,900 74.0 45,997 157.53 7,107 74.0 47,379 162.26 7,320 74.0 48,797 167.11

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 812 11.1 5,415 21.82 824 9.5 5,496 19.56 818 8.8 5,453 18.67 842 8.8 5,616 19.23 868 8.8 5,785 19.81 Info & Telecom Systems 48 0.7 321 1.29 51 0.6 341 1.21 53 0.6 356 1.22 55 0.6 366 1.25 57 0.6 377 1.29 Marketing 477 6.5 3,179 12.81 484 5.6 3,226 11.48 480 5.1 3,201 10.96 494 5.1 3,297 11.29 509 5.1 3,395 11.63 Franchise Fee 569 7.8 3,792 15.28 677 7.8 4,514 16.06 732 7.8 4,879 16.71 754 7.8 5,025 17.21 776 7.8 5,176 17.72 Prop. Operations & Maint. 244 3.3 1,627 6.55 292 3.4 1,946 6.92 338 3.6 2,252 7.71 348 3.6 2,320 7.94 358 3.6 2,389 8.18 Utilities 257 3.5 1,712 6.90 273 3.2 1,821 6.48 284 3.0 1,897 6.50 293 3.0 1,954 6.69 302 3.0 2,012 6.89 Total Expenses 2,407 32.9 16,046 64.65 2,601 30.1 17,343 61.71 2,705 28.9 18,036 61.77 2,787 28.9 18,577 63.62 2,870 28.9 19,134 65.53 GROSS OPERATING PROFIT 2,744 37.5 18,293 73.70 3,723 43.0 24,817 88.30 4,194 45.1 27,961 95.76 4,320 45.1 28,801 98.63 4,449 45.1 29,663 101.58 Management Fee 219 3.0 1,462 5.89 259 3.0 1,730 6.16 280 3.0 1,866 6.39 288 3.0 1,922 6.58 297 3.0 1,980 6.78 INCOME BEFORE NON-OPR. INC. & EXP. 2,525 34.5 16,831 67.81 3,463 40.0 23,087 82.15 3,914 42.1 26,095 89.37 4,032 42.1 26,879 92.05 4,152 42.1 27,683 94.81

NON-OPERATING INCOME & EXPENSE
Property Taxes 425 5.8 2,834 11.42 434 5.0 2,891 10.29 442 4.7 2,948 10.10 451 4.7 3,007 10.30 460 4.6 3,068 10.51 Insurance 101 1.4 670 2.70 104 1.2 691 2.46 107 1.1 711 2.44 110 1.1 733 2.51 113 1.1 755 2.58 Retail Income (310) (4.2) (2,068) (8.33) (320) (3.7) (2,130) (7.58) (329) (3.5) (2,194) (7.51) (339) (3.5) (2,260) (7.74) (349) (3.5) (2,328) (7.97) Total Expenses 215 3.0 1,436 5.79 218 2.5 1,451 5.16 220 2.3 1,466 5.02 222 2.3 1,480 5.07 224 2.2 1,495 5.12 EBITDA 2,309 31.5 15,395 62.03 3,245 37.5 21,636 76.98 3,694 39.8 24,629 84.35 3,810 39.8 25,399 86.98 3,928 39.9 26,189 89.69 Reserve for Replacement 146 2.0 975 3.93 259 3.0 1,730 6.16 373 4.0 2,488 8.52 384 4.0 2,563 8.78 396 4.0 2,639 9.04 EBITDA LESS RESERVE $2,163 29.5 % $14,420 $58.10 $2,986 34.5 % $19,906 $70.83 $3,321 35.8 % $22,142 $75.83 $3,425 35.8 % $22,836 $78.21 $3,532 35.9 % $23,549 $80.65 *Departmental expenses are expressed as a percentage of departmental revenues. o
Packet Pg. 370 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at

4.5.b
Packet Pg. 493 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 23 FIGURE 3-17 TEN-YEAR FORECAST OF INCOME AND EXPENSE
2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 Number of Rooms: 150 150 150 150 150 150 150 150 150 150 Occupied Rooms: 37,230 42,158 43,800 43,800 43,800 43,800 43,800 43,800 43,800 43,800 Occupancy: 68% 77% 80% 80% 80% 80% 80% 80% 80% 80%
Average Rate: $176.60 % of $185.65 % of $193.15 % of $198.95 % of $204.92 % of $211.07 % of $217.40 % of $223.92 % of $230.64 % of $237.56 RevPAR: $120.09 Gross $142.95 Gross $154.52 Gross $159.16 Gross $163.93 Gross $168.85 Gross $173.92 Gross $179.14 Gross $184.51 Gross $190.04

OPERATING REVENUE
Rooms $6,575 89.9 % $7,827 90.5 % $8,460 90.7 % $8,714 90.7 % $8,975 90.7 % $9,245 90.7 % $9,522 90.7 % $9,808 90.7 % $10,102 90.7 % $10,405 90.7 % Food & Beverage 608 8.3 686 7.9 727 7.8 749 7.8 771 7.8 794 7.8 818 7.8 843 7.8 868 7.8 894 7.8 Other Operated Departments 93 1.3 100 1.2 104 1.1 107 1.1 110 1.1 113 1.1 117 1.1 120 1.1 124 1.1 128 1.1 Miscellaneous Income 35 0.5 37 0.4 39 0.4 40 0.4 41 0.4 43 0.4 44 0.4 45 0.4 46 0.4 48 0.4 Total Operating Revenues 7,312 100.0 8,650 100.0 9,330 100.0 9,610 100.0 9,898 100.0 10,195 100.0 10,501 100.0 10,816 100.0 11,140 100.0 11,475 100.0 DEPARTMENTAL EXPENSES *
Rooms 1,537 23.4 1,659 21.2 1,734 20.5 1,786 20.5 1,840 20.5 1,895 20.5 1,952 20.5 2,011 20.5 2,071 20.5 2,133 20.5 Food & Beverage 585 96.3 627 91.4 654 90.0 674 90.0 694 90.0 715 90.0 736 90.0 758 90.0 781 90.0 805 90.0 Other Operated Departments 39 41.3 40 40.3 42 40.0 43 40.0 44 40.0 45 40.0 47 40.0 48 40.0 50 40.0 51 40.0 Total Expenses 2,161 29.6 2,326 26.9 2,430 26.0 2,503 26.0 2,578 26.0 2,655 26.0 2,735 26.0 2,817 26.0 2,902 26.0 2,989 26.0 DEPARTMENTAL INCOME 5,151 70.4 6,324 73.1 6,900 74.0 7,107 74.0 7,320 74.0 7,540 74.0 7,766 74.0 7,999 74.0 8,239 74.0 8,486 74.0

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 812 11.1 824 9.5 818 8.8 842 8.8 868 8.8 894 8.8 921 8.8 948 8.8 977 8.8 1,006 8.8 Info & Telecom Systems 48 0.7 51 0.6 53 0.6 55 0.6 57 0.6 58 0.6 60 0.6 62 0.6 64 0.6 66 0.6 Marketing 477 6.5 484 5.6 480 5.1 494 5.1 509 5.1 525 5.1 540 5.1 557 5.1 573 5.1 590 5.1 Franchise Fee 569 7.8 677 7.8 732 7.8 754 7.8 776 7.8 800 7.8 824 7.8 848 7.8 874 7.8 900 7.8 Prop. Operations & Maint. 244 3.3 292 3.4 338 3.6 348 3.6 358 3.6 369 3.6 380 3.6 392 3.6 403 3.6 415 3.6 Utilities 257 3.5 273 3.2 284 3.0 293 3.0 302 3.0 311 3.0 320 3.0 330 3.0 340 3.0 350 3.0 Total Expenses 2,407 32.9 2,601 30.1 2,705 28.9 2,787 28.9 2,870 28.9 2,956 28.9 3,045 28.9 3,136 28.9 3,230 28.9 3,327 28.9 GROSS OPERATING PROFIT 2,744 37.5 3,723 43.0 4,194 45.1 4,320 45.1 4,449 45.1 4,584 45.1 4,721 45.1 4,863 45.1 5,008 45.1 5,159 45.1 Management Fee 219 3.0 259 3.0 280 3.0 288 3.0 297 3.0 306 3.0 315 3.0 324 3.0 334 3.0 344 3.0 INCOME BEFORE NON-OPR. INC. & EXP. 2,525 34.5 3,463 40.0 3,914 42.1 4,032 42.1 4,152 42.1 4,278 42.1 4,406 42.1 4,538 42.1 4,674 42.1 4,814 42.1

NON-OPERATING INCOME & EXPENSE
Property Taxes 425 5.8 434 5.0 442 4.7 451 4.7 460 4.6 469 4.6 479 4.6 488 4.5 498 4.5 508 4.4 Insurance 101 1.4 104 1.2 107 1.1 110 1.1 113 1.1 117 1.1 120 1.1 124 1.1 127 1.1 131 1.1 Retail Income (310) (4.2) (320) (3.7) (329) (3.5) (339) (3.5) (349) (3.5) (360) (3.5) (370) (3.5) (382) (3.5) (393) (3.5) (405) (3.5) Total Expenses 215 3.0 218 2.5 220 2.3 222 2.3 224 2.2 226 2.2 228 2.2 230 2.1 232 2.1 234 2.0 EBITDA 2,309 31.5 3,245 37.5 3,694 39.8 3,810 39.8 3,928 39.9 4,051 39.9 4,177 39.9 4,308 40.0 4,442 40.0 4,580 40.1 Reserve for Replacement 146 2.0 259 3.0 373 4.0 384 4.0 396 4.0 408 4.0 420 4.0 433 4.0 446 4.0 459 4.0 EBITDA LESS RESERVE $2,163 29.5 % $2,986 34.5 % $3,321 35.8 % $3,425 35.8 % $3,532 35.9 % $3,644 35.9 % $3,757 35.9 % $3,875 36.0 % $3,996 36.0 % $4,121 36.1 % 0 0 0 0 0 0 0 0 0 0
% of
Gross
o
Packet Pg. 371
Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at

4.5.b
Packet Pg. 494 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 24 Our positioning of each revenue and expense level is supported by comparable operations or trends specific to this market.

FIGURE 3-18 COMPARABLE OPERATING STATEMENTS: RATIO TO SALES Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject
Year: 2019 2018 2018 2018 2017 2019
Edition: 11 11 11 11 11 11
Number of Rooms: 150 to 200 80 to 100 100 to 130 190 to 240 170 to 220 150 Days Open: 365 365 365 365 365 365
Occupancy: 80% 80% 80% 76% 81% 80%
Average Rate: $159 $164 $163 $172 $172 $163
RevPAR: $127 $131 $130 $131 $138 $130

REVENUE
Rooms 82.3 % 93.7 % 93.1 % 92.8 % 84.6 % 90.7 %
Food & Beverage 9.1 4.5 5.4 5.1 13.3 7.8
Other Operated Departments 7.0 1.1 1.0 0.3 1.3 1.1
Mi scellaneous Income 1.6 0.7 0.5 1.8 0.9 0.4
Total 100.0 100.0 100.0 100.0 100.0 100.0
DEPARTMENTAL EXPENSES*
Rooms 21.7 18.8 16.2 20.2 21.7 20.5
Food & Beverage 86.7 131.3 96.7 45.3 85.4 90.0
Other Operated Departments 10.1 36.2 52.8 69.8 15.0 40.0 Total 26.4 23.9 20.8 21.3 29.9 26.0
DEPARTMENTAL INCOME 73.6 76.1 79.2 78.7 70.1 74.0

UNDISTRIBUTED OPERATING EXPENSES
Admi nistrative & General 7.0 10.0 7.6 8.7 11.3 8.8
Info. and Telecom. Systems 0.6 1.0 0.4 1.1 1.1 0.6
Marketi ng 4.9 6.6 3.6 8.1 7.0 5.1
Franchis e Fee 6.2 5.1 6.4 4.4 7.3 7.8
Property Operations & Maintenance 3.6 3.5 3.2 4.2 4.1 3.6 Utilities 3.1 3.3 2.5 2.8 3.6 3.0
Total 25.4 29.5 23.8 29.4 34.3 29.0
GROSS OPERATING PROFIT 48.2 46.6 55.4 49.3 35.8 45.0
Management Fee 2.9 3.5 4.0 4.7 2.0 3.0
INCOME BEFORE NON-OPER. INC. & EXP. 45.3 43.1 51.4 44.6 33.8 42.0 EBITDA LESS RESERVE 36.2 % 35.6 % 47.7 % 36.9 % 29.7 % 35.6 % * Departmental expense ratios are expressed as a percentage of departmental revenues Stabilized $
o
Packet Pg. 372 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 495 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 25 FIGURE 3-19 COMPARABLE OPERATING STATEMENTS: AMOUNTS PER AVAILABLE ROOM Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject
Year: 2019 2018 2018 2018 2017 2019
Edition: 11 11 11 11 11 11
Number of Rooms: 150 to 200 80 to 100 100 to 130 190 to 240 170 to 220 150 Days Open: 365 365 365 365 365 365
Occupancy: 80% 80% 80% 76% 81% 80%
Average Rate: $159 $164 $163 $172 $172 $163
RevPAR: $127 $131 $130 $131 $138 $130

REVENUE
Rooms $46,403 $47,761 $47,444 $47,890 $50,525 $47,581
Food & Beverage 5,103 2,310 2,731 2,648 7,930 4,088
Other Operated Departments 3,964 536 498 143 753 584
Miscellaneous Income 903 380 278 925 513 219
Total 56,374 50,987 50,951 51,606 59,721 52,472

DEPARTMENTAL EXPENSES
Rooms 10,048 8,977 7,704 9,675 10,979 9,754
Food & Beverage 4,426 3,034 2,641 1,200 6,771 3,679
Other Operated Departments 399 194 263 100 113 234
Total 14,873 12,205 10,608 10,975 17,863 13,667
DEPARTMENTAL INCOME 41,500 38,782 40,343 40,630 41,857 38,805

UNDISTRIBUTED OPERATING EXPENSES
Adminis trative & General 3,964 5,095 3,880 4,505 6,754 4,600 Info. and Telecom. Systems 352 507 202 572 628 300
Marketing 2,737 3,347 1,841 4,192 4,166 2,700
Franchise Fee 3,515 2,620 3,275 2,274 4,356 4,116
Property Operati ons & Maintenance 2,024 1,790 1,646 2,159 2,449 1,900 Utiliti es 1,740 1,657 1,295 1,458 2,123 1,600
Total 14,333 15,017 12,138 15,160 20,477 15,216
GROSS OPERATING PROFIT 27,167 23,765 28,205 25,470 21,380 23,589 Management Fee 1,635 1,785 2,038 2,436 1,194 1,574
INCOME BEFORE NON-OPER. INC. & EXP. 25,533 21,980 26,167 23,034 20,186 22,015 EBITDA LESS RESERVE $20,409 $18,119 $24,299 $19,070 $17,777 $18,680 Stabilized $
o
Packet Pg. 373 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 496 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 26 FIGURE 3-20 COMPARABLE OPERATING STATEMENTS: AMOUNTS PER OCCUPIED ROOM Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject
Year: 2019 2018 2018 2018 2017 2019
Edition: 11 11 11 11 11 11
Number of Rooms: 150 to 200 80 to 100 100 to 130 190 to 240 170 to 220 150 Days Open: 365 365 365 365 365 365
Occupancy: 80% 80% 80% 76% 81% 80%
Average Rate: $159 $164 $163 $172 $172 $163
RevPAR: $127 $131 $130 $131 $138 $130

REVENUE
Rooms $158.72 $163.87 $163.33 $172.19 $171.53 $162.95
Food & Beverage 17.45 7.93 9.40 9.52 26.92 14.00
Other Operated Departments 13.56 1.84 1.72 0.51 2.56 2.00 Miscellaneous Income 3.09 1.30 0.96 3.33 1.74 0.75
Tota l 192.82 174.93 175.40 185.55 202.75 179.70

DEPARTMENTAL EXPENSES
Rooms 34.37 30.80 26.52 34.79 37.27 33.40
Food & Beverage 15.14 10.41 9.09 4.32 22.99 12.60
Other Operated Departments 1.36 0.67 0.91 0.36 0.38 0.80 Tota l 50.87 41.88 36.52 39.46 60.65 46.80
DEPARTMENTAL INCOME 141.95 133.06 138.89 146.09 142.10 132.89

UNDISTRIBUTED OPERATING EXPENSES
Adminis trative & General 13.56 17.48 13.36 16.20 22.93 15.75 Info. and Telecom. Systems 1.20 1.74 0.69 2.06 2.13 1.03 Ma rketing 9.36 11.48 6.34 15.07 14.14 9.25
Fra nchis e Fee 12.02 8.99 11.27 8.18 14.79 14.09
Property Operations & Ma intena nce 6.92 6.14 5.67 7.76 8.31 6.51 Utilities 5.95 5.69 4.46 5.24 7.21 5.48
Tota l 49.02 51.52 41.79 54.51 69.52 52.11
GROSS OPERATING PROFIT 92.92 81.53 97.10 91.58 72.59 80.79 Management Fee 5.59 6.12 7.02 8.76 4.05 5.39
INCOME BEFORE NON-OPER. INC. & EXP. 87.33 75.41 90.08 82.82 68.53 75.39 EBITDA LESS RESERVE $69.80 $62.16 $83.65 $68.57 $60.35 $63.97 Stabilized $
In conclusion, our analysis reflects a profitable operation, with net income expected to total 35.9% of total revenue by the stabilized year. The stabilized total revenue comprises primarily rooms revenue, with a secondary portion derived from other income sources. On the cost side, departmental expenses total 26.0% of o
Packet Pg. 374 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 497 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 27 revenue by the stabilized year, while undistributed operating expenses total

28.9% of total revenues; this assumes that the proposed subject property will be operated competently by a well-known hotel operator. After a 3.0% of total revenues management fee, a net income ratio of 40.3% is forecast by the stabilized year.

FIGURE 3-21 DISCOUNTED CASH FLOW FOR FEASIBILITY CALCULATION 3 10.0 %

8.5 3.0
Discounted
Year 10% Cash Flow
2023/24 $2,588,056 $425,583 $2,162,474 0.90909 $1,965,885 2024/25 3,419,517 434,094 2,985,423 0.82645 2,467,291
2025/26 3,763,494 442,776 3,320,718 0.75131 2,494,904
2026/27 3,876,557 451,632 3,424,925 0.68301 2,339,270
2027/28 3,992,521 460,664 3,531,857 0.62092 2,193,005
2028/29 4,112,890 469,877 3,643,013 0.56447 2,056,386
2029/30 4,236,277 479,275 3,757,002 0.51316 1,927,936
2030/31 4,363,365 488,861 3,874,504 0.46651 1,807,485
2031/32 4,494,266 498,638 3,995,628 0.42410 1,694,536
2032/33 4,629,094 508,610 58,368,654 * 0.38554 22,503,643 Estimated Market Value $41,450,342
(SAY) $41,500,000
Per Room 280,000
Reversion Analysis
$4,767,967
Capitali zation Rate (loaded with ta x ra te) 8.5%
Total Sales Proceeds $55,925,949
Less: Tra nsaction Costs @ 3.0% 1,677,778
Net Sales Proceeds (Sa y) 54,248,170
11th Yea r's EBITDA Less Reserves (not i ncluding taxes) *10th year NOI after taxes, plus the reversionary value.

Sta bili zed Year
Discount Rate
Loaded Terminal Ca p
Transaction Costs
Net Income,
Before Taxes
Property
Taxes
Net Income, After
Taxes
Discount Factor @
Our discounted cash flow analysis indicates a net present value for the proposed subject property of $41,500,000 or $280,000 per room.

Based on our review of investor surveys, sales transactions, and interviewing market participants, we have selected a discount rate of 10.0% and a terminal cap rate of 8.5% in our analysis. Due to the subject property's California location and the higher property tax implications upon the sale at the end of the hold, the terminal capitalization rate is loaded with the tax rate and is applied to the NOI estimate prior to property taxes.

Feasibility Analysis
o
Packet Pg. 375 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 498 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 28 The below cost estimates are derived from the 2020 HVS Development Cost Survey, as well as our market and industry knowledge.

FIGURE 3-22 COST COMPARABLES
Item
Building $197,137 82.6 % $194,444 73.9 % $197,137 82.6 % $201,222 75.7 % Soft Costs 20,144 8.4 36,343 13.8 20,144 8.4 38,690 14.6 Furniture, Fixtures, & Equipment 20,000 8.4 27,778 10.6 20,000 8.4 18,613 7.0 Pre-Opening Cos ts & Working Capital 1,429 0.6 0 0.0 1,429 0.6 7,320 2.8 Developer Fee (if Applicable) 0 0.0 4,630 1.8 0 0.0 0 0.0 Tota l (Excluding Site Cos t) $238,709 94.3 % $263,194 86.6 % $238,709 94.3 % $265,845 88.0 % Site Cost $14,457 5.7 % $40,741 13.4 % $14,457 5.7 % $36,082 12.0 % Total (Including Site Cost) $253,167 100.0 % $303,935 100.0 % $253,167 100.0 % $301,927 100.0 % Comp #1 Comp #2 Comp #3 Comp #4
Secondary, CA Secondary, CA Secondary, CA Secondary, CA Select-Service Extended Stay Midscale Select-Service Extended Stay Upscale Approx. 180 Rooms Approx. 110 Rooms Approx. 180 Rooms Approx. 190 Rooms Per Room % of Total Per Room % of Total Per Room % of Total Per Room % of Total FIGURE 3-23 HVS DEVELOPMENT COST POSITIONING - UPSCALE
Item
Building $194,444 73.9 % $201,222 82.6 % $197,485 78.7 % $180,000 66.1 % Soft Costs 20,144 8.4 38,690 14.6 28,830 11.3 28,000 10.3 Furniture, Fixtures , & Equipment 18,613 7.0 27,778 10.6 21,598 8.6 25,000 9.2 Pre-Opening Cos ts & Working Capital 0 0.0 7,320 2.8 2,544 1.0 5,000 1.8 Developer Fee (if Applicable) 0 0.0 4,630 1.8 1,157 0.6 5,000 1.8 Tota l (Excluding Site Cos t) $238,709 $265,845 $251,615 $243,000 89.2 % Site Cost $14,457 5.7 % $40,741 13.4 % 26,434 9.2 % $29,333 10.8 % Total (Including Site Cost) $253,167 $306,586 $278,049 $272,333 100.0 % Average Subject Property
Per Room % of Total Per Room % of Total Per Room % of Total Per Room % of Total Minimum Maximum
o
Packet Pg. 376 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 499 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 29 FIGURE 3-24 HVS DEVELOPMENT COST ESTIMATE - UPSCALE
Item
Building $180,000 $27,000,000
Soft Costs 28,000 4,200,000
Furniture, Fixtures, & Equipment 25,000 3,750,000
Pre-Opening Costs & Working Capital 5,000 750,000
Developer Fee (if Applicable) 5,000 750,000
Land 29,333 4,400,000
Total Cost New Before Incentive $273,000 $40,900,000
Cost per Room Cost
The derived net present value of $41,500,000 is 1.5% higher than the estimated replacement cost of $40,900,000.

Based on our market analysis, there is sufficient market support for the proposed, upscale, select-service hotel. It is important to note that the retail component is an important aspect in our analysis and the project's feasibility is based on the inclusion of this component. Our assumption of replacement cost was developed utilizing development costs from comparable select-service properties in California, derived from the 2020 HVS Development Cost Survey. We have utilized a discounted cash flow (DCF) analysis to come to our conclusion of value upon completion of the project. The when-complete value is above the assumed replacement cost, deeming the project feasible.
o
Packet Pg. 377 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 500 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 30

4. Upper-Upscale Analysis
In the second scenario, the proposed subject hotel is expected to be operated as an upper-upscale, full-service lodging facility, to be affiliated with a national brand.

Some brands that fall under this category include Embassy Suites by Hilton, Omni, Sheraton, and the full-service flagship Marriott and Hilton hotels. These hotels typically include a lobby restaurant and bar, which is more complex in scope than what is offered at a select-service hotel; moreover, other food and beverage (F&B) outlets are often provided, such as a fine-dining establishment with elevated offerings and a more robust menu, a café, or a grab-and-go type of outlet. Other services typically present in a full-service hotel include a concierge and room service. Moreover, the proposed subject hotel is anticipated to feature groundfloor retail (leased), meeting space, a fitness center, and a business center, as well as a gift shop.

The proposed subject hotel's occupancy forecast is set forth as follows, with the adjusted projected penetration rates used as a basis for calculating the amount of captured market demand.

Forecast of the
Proposed Subject
Hotel’s Occupancy
o
Packet Pg. 378 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 501 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 31 FIGURE 4-25 FORECAST OF SUBJECT PROPERTY'S OCCUPANCY
Market Segment
Commercial
Demand 386,906 412,733 415,737 415,737
Market Share 3.6 % 6.7 % 7.1 % 7.1 %
Capture 13,800 27,474 29,651 29,651
Penetration 87 % 98 % 105 % 105 %
Leisure
Demand 129,611 133,094 134,063 134,063
Market Share 3.8 % 6.7 % 7.0 % 7.0 %
Capture 4,897 8,978 9,432 9,432
Penetration 92 % 99 % 104 % 104 %
Group
Demand 75,971 83,314 87,244 87,244
Market Share 2.3 % 4.7 % 5.4 % 5.4 %
Capture 1,780 3,957 4,728 4,728
Penetration 57 % 70 % 80 % 80 %
Total Room Nights Captured 20,477 40,409 43,812 43,812
Available Room Nights 32,100 54,750 54,750 54,750
Subject Occupancy 64 % 74 % 80 % 80 %
Market-wide Available Room Nights 783,763 806,413 806,413 806,413 Fair Share 4 % 7 % 7 % 7 %
Market-wide Occupied Room Nights 592,488 629,141 637,044 637,044 Market Share 3 % 6 % 7 % 7 %
Market-wide Occupancy 76 % 78 % 79 % 79 %
Total Penetration 84 % 95 % 101 % 101 %
2023 2024 2025 2026
These positioned segment penetration rates result in the following market segmentation forecast.
o
Packet Pg. 379 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 502 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 32 FIGURE 4-26 MARKET SEGMENTATION FORECAST – SUBJECT PROPERTY Commercial 67 % 68 % 68 % 68 %
Leisure 24 22 22 22
Group 9 10 11 11
Total 100 % 100 % 100 % 100 %
2023 2024 2025 2026
The defined primarily competitive market realized an overall average rate of $144.17 in the 2020 base year, declining from the 2019 level of $169.33. The Marriott Irvine Spectrum Center (a secondary competitor) achieved the highest estimated average rate in the local competitive market, by a significant margin, because of the hotel's upper-upscale product offering, popular brand affiliation, and location adjacent to primary commercial demand generators. Of the primary competitive set, the Courtyard by Marriott Irvine Spectrum achieved the highest estimated average rate because of similar aforementioned factors, although this hotel offers a select-service product. Other important rate aspects of this market include location near Interstate 5 and proximity to commercial demand generators. The selected rate position for the proposed subject hotel, in base-year dollars, takes into consideration expected factors such as its ground-floor retail space, full-service amenities, and upper-upscale product offering. We have selected the rate position of $205.00, in base-year dollars, for the proposed subject hotel. The final forecast reflects years beginning on June 1, 2023, and corresponds with our financial projections, as shown below.

Forecast of the
Proposed Subject
Hotel’s Average Rate
o
Packet Pg. 380 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 503 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 33 FIGURE 4-27 ADR FORECAST – MARKET AND PROPOSED SUBJECT HOTEL Calendar Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Market ADR $171.04 $132.27 $149.46 $167.40 $175.77 $181.04 $186.47 $192.07 $197.83 $203.76 Projected Market ADR Growth Rate — -22.7% 13.0% 12.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% Proposed Subject Property ADR (As-If Stabilized) $205.00 $158.53 $179.14 $200.63 $210.66 $216.98 $223.49 $230.20 $237.10 $244.22 ADR Growth Rate -22.7% 13.0% 12.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% Proposed Subject Sta bilized ADR Penetration 120% 120% 120% 120% 120% 120% 120% 120% 120% 119.9% Fiscal Year 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Proposed Subject Property Average Rate $213.28 $219.68 $226.27 $233.05 $240.05 $247.25 Opening Discount 3.0% 1.0% 0.0% 0.0% 0.0% 0.0%
Average Rate After Discount $206.88 $217.48 $226.27 $233.05 $240.05 $247.25 Real Average Rate Growth — 5.1% 4.0% 3.0% 3.0% 3.0%
Market ADR $177.95 $183.29 $188.79 $194.45 $200.29 $206.29 Proposed Subject ADR Penetration (After Discount) 116% 119% 120% 120% 120% 120% ADR Expressed in Base-Yea r Dollars Deflated @ Inflation Rate $187.45 $191.31 $193.25 $193.25 $193.25 $193.25 Discounts of 3% and 1% have been applied to the stabilized room rates projected for the first two years of operation, as would be expected for a new property of this type as it builds its reputation and becomes established in the market.

FIGURE 4-28 ADR AND OCCUPANCY FORECAST - CONCLUSION
Year
2023/24 68 % $213.28 3.0 % $206.88
2024/25 76 219.68 1.0 217.48
2025/26 80 226.27 0.0 226.27
Occupancy
Average Rate
Before Discount Discount
Average Rate
After Discount
The following table presents a detailed forecast through the fifth projection year, including amounts per available room (PAR) and per occupied room (POR). The second table illustrates our ten-year forecast of income and expense, presented with a lesser degree of detail. The forecasts pertain to years that begin on June 1, 2023, expressed in inflated dollars for each year.

Forecast of Income and
Expense
o
Packet Pg. 381 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 504 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 34 FIGURE 4-29 DETAILED FORECAST OF INCOME AND EXPENSE
2023/24 Begins June 2024/25 Stabilized 2026/27 2027/28
Number of Rooms: 150 150 150 150 150
Occupancy: 68% 76% 80% 80% 80%
Average Rate: $206.88 $217.48 $226.27 $233.05 $240.05
RevPAR: $140.68 $165.28 $181.01 $186.44 $192.04
Days Open: 365 365 365 365 365
Occupied Rooms: 37,230 %Gross PAR POR 41,610 %Gross PAR POR 43,800 %Gross PAR POR 43,800 %Gross PAR POR 43,800 %Gross PAR POR

OPERATING REVENUE
Rooms $7,702 79.8 % $51,347 $206.88 $9,049 79.2 % $60,327 $217.47 $9,910 79.6 % $66,067 $226.26 $10,208 79.6 % $68,053 $233.06 $10,514 79.6 % $70,093 $240.05 Food & Beverage 1,759 18.2 11,727 47.25 2,183 19.1 14,555 52.47 2,336 18.8 15,576 53.34 2,406 18.8 16,043 54.94 2,479 18.8 16,524 56.59 Other Operated Departments 140 1.5 935 3.77 149 1.3 993 3.58 156 1.3 1,038 3.56 160 1.3 1,070 3.66 165 1.3 1,102 3.77 Miscellaneous Income 47 0.5 312 1.26 50 0.4 331 1.19 52 0.4 346 1.19 53 0.4 357 1.22 55 0.4 367 1.26 Total Operating Revenues 9,648 100.0 64,320 259.15 11,431 100.0 76,206 274.71 12,454 100.0 83,027 284.34 12,828 100.0 85,523 292.89 13,213 100.0 88,087 301.67 DEPARTMENTAL EXPENSES *
Rooms 2,020 26.2 13,464 54.25 2,169 24.0 14,458 52.12 2,279 23.0 15,196 52.04 2,348 23.0 15,652 53.60 2,418 23.0 16,122 55.21 Food & Beverage 1,602 91.1 10,682 43.04 1,784 81.7 11,894 42.88 1,869 80.0 12,461 42.67 1,925 80.0 12,834 43.95 1,983 80.0 13,220 45.27 Other Operated Departments 72 51.6 483 1.95 75 50.5 502 1.81 78 50.0 519 1.78 80 50.0 535 1.83 83 50.0 551 1.89 Total Expenses 3,694 38.3 24,629 99.23 4,028 35.2 26,854 96.81 4,226 33.9 28,176 96.49 4,353 33.9 29,021 99.39 4,484 33.9 29,892 102.37 DEPARTMENTAL INCOME 5,954 61.7 39,691 159.92 7,403 64.8 49,352 177.91 8,228 66.1 54,851 187.85 8,475 66.1 56,501 193.50 8,729 66.1 58,195 199.30

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 846 8.8 5,637 22.71 858 7.5 5,721 20.62 853 6.9 5,690 19.49 879 6.9 5,861 20.07 905 6.9 6,036 20.67 Info & Telecom Systems 80 0.8 534 2.15 85 0.7 568 2.05 89 0.7 593 2.03 92 0.7 610 2.09 94 0.7 629 2.15 Marketing 722 7.5 4,815 19.40 733 6.4 4,887 17.62 729 5.9 4,860 16.64 751 5.9 5,006 17.14 773 5.9 5,156 17.66 Franchise Fee 732 7.6 4,878 19.65 860 7.5 5,731 20.66 941 7.6 6,276 21.49 970 7.6 6,465 22.14 999 7.6 6,659 22.80 Prop. Operations & Maint. 231 2.4 1,537 6.19 276 2.4 1,839 6.63 320 2.6 2,134 7.31 330 2.6 2,198 7.53 340 2.6 2,264 7.75 Utilities 296 3.1 1,975 7.96 315 2.8 2,100 7.57 329 2.6 2,193 7.51 339 2.6 2,259 7.74 349 2.6 2,326 7.97 Total Expenses 2,906 30.2 19,375 78.06 3,127 27.3 20,845 75.15 3,262 26.3 21,745 74.47 3,360 26.3 22,398 76.71 3,461 26.3 23,070 79.01 GROSS OPERATING PROFIT 3,047 31.5 20,316 81.85 4,276 37.5 28,507 102.76 4,966 39.8 33,106 113.38 5,115 39.8 34,103 116.79 5,269 39.8 35,125 120.29 Management Fee 289 3.0 1,930 7.77 343 3.0 2,286 8.24 374 3.0 2,491 8.53 385 3.0 2,566 8.79 396 3.0 2,643 9.05 INCOME BEFORE NON-OPR. INC. & EXP. 2,758 28.5 18,386 74.08 3,933 34.5 26,221 94.52 4,592 36.8 30,615 104.85 4,731 36.8 31,537 108.00 4,872 36.8 32,482 111.24

NON-OPERATING INCOME & EXPENSE
Property Taxes 485 5.0 3,233 13.03 495 4.3 3,298 11.89 505 4.1 3,364 11.52 515 4.0 3,431 11.75 525 4.0 3,500 11.99 Insurance 101 1.0 670 2.70 104 0.9 691 2.49 107 0.9 711 2.44 110 0.9 733 2.51 113 0.9 755 2.58 Retail Income (310) (3.2) (2,068) (8.33) (320) (2.8) (2,130) (7.68) (329) (2.6) (2,194) (7.51) (339) (2.6) (2,260) (7.74) (349) (2.6) (2,328) (7.97) Total Expenses 275 2.8 1,836 7.40 279 2.4 1,858 6.70 282 2.4 1,881 6.44 286 2.3 1,904 6.52 289 2.3 1,927 6.60 EBITDA 2,483 25.7 16,551 66.68 3,654 32.1 24,362 87.82 4,310 34.4 28,734 98.40 4,445 34.5 29,633 101.48 4,583 34.5 30,555 104.64 Reserve for Replacement 193 2.0 1,286 5.18 343 3.0 2,286 8.24 498 4.0 3,321 11.37 513 4.0 3,421 11.72 529 4.0 3,523 12.07 EBITDA LESS RESERVE $2,290 23.7 % $15,264 $61.50 $3,311 29.1 % $22,076 $79.58 $3,812 30.4 % $25,413 $87.03 $3,932 30.5 % $26,213 $89.77 $4,055 30.5 % $27,032 $92.58 *Departmental expenses are expressed as a percentage of departmental revenues. o
Packet Pg. 382
Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at

4.5.b
Packet Pg. 505 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 35 FIGURE 4-30 TEN-YEAR FORECAST OF INCOME AND EXPENSE
2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 Number of Rooms: 150 150 150 150 150 150 150 150 150 150 Occupied Rooms: 37,230 41,610 43,800 43,800 43,800 43,800 43,800 43,800 43,800 43,800 Occupancy: 68% 76% 80% 80% 80% 80% 80% 80% 80% 80%
Average Rate: $206.88 % of $217.48 % of $226.27 % of $233.05 % of $240.05 % of $247.25 % of $254.67 % of $262.31 % of $270.17 % of $278.28 RevPAR: $140.68 Gross $165.28 Gross $181.01 Gross $186.44 Gross $192.04 Gross $197.80 Gross $203.73 Gross $209.84 Gross $216.14 Gross $222.62

OPERATING REVENUE
Rooms $7,702 79.8 % $9,049 79.2 % $9,910 79.6 % $10,208 79.6 % $10,514 79.6 % $10,829 79.6 % $11,154 79.6 % $11,489 79.6 % $11,834 79.6 % $12,189 79.6 % Food & Beverage 1,759 18.2 2,183 19.1 2,336 18.8 2,406 18.8 2,479 18.8 2,553 18.8 2,630 18.8 2,709 18.8 2,790 18.8 2,873 18.8 Other Operated Departments 140 1.5 149 1.3 156 1.3 160 1.3 165 1.3 170 1.3 175 1.3 181 1.3 186 1.3 192 1.3 Miscellaneous Income 47 0.5 50 0.4 52 0.4 53 0.4 55 0.4 57 0.4 58 0.4 60 0.4 62 0.4 64 0.4 Total Operating Revenues 9,648 100.0 11,431 100.0 12,454 100.0 12,828 100.0 13,213 100.0 13,609 100.0 14,017 100.0 14,438 100.0 14,872 100.0 15,318 100.0 DEPARTMENTAL EXPENSES *
Rooms 2,020 26.2 2,169 24.0 2,279 23.0 2,348 23.0 2,418 23.0 2,491 23.0 2,565 23.0 2,642 23.0 2,722 23.0 2,803 23.0 Food & Beverage 1,602 91.1 1,784 81.7 1,869 80.0 1,925 80.0 1,983 80.0 2,042 80.0 2,104 80.0 2,167 80.0 2,232 80.0 2,299 80.0 Other Operated Departments 72 51.6 75 50.5 78 50.0 80 50.0 83 50.0 85 50.0 88 50.0 90 50.0 93 50.0 96 50.0 Total Expenses 3,694 38.3 4,028 35.2 4,226 33.9 4,353 33.9 4,484 33.9 4,618 33.9 4,757 33.9 4,900 33.9 5,047 33.9 5,198 33.9 DEPARTMENTAL INCOME 5,954 61.7 7,403 64.8 8,228 66.1 8,475 66.1 8,729 66.1 8,991 66.1 9,261 66.1 9,539 66.1 9,825 66.1 10,120 66.1

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 846 8.8 858 7.5 853 6.9 879 6.9 905 6.9 933 6.9 961 6.9 989 6.9 1,019 6.9 1,050 6.9 Info & Telecom Systems 80 0.8 85 0.7 89 0.7 92 0.7 94 0.7 97 0.7 100 0.7 103 0.7 106 0.7 109 0.7 Marketing 722 7.5 733 6.4 729 5.9 751 5.9 773 5.9 797 5.9 820 5.9 845 5.9 870 5.9 897 5.9 Franchise Fee 732 7.6 860 7.5 941 7.6 970 7.6 999 7.6 1,029 7.6 1,060 7.6 1,091 7.6 1,124 7.6 1,158 7.6 Prop. Operations & Maint. 231 2.4 276 2.4 320 2.6 330 2.6 340 2.6 350 2.6 360 2.6 371 2.6 382 2.6 394 2.6 Utilities 296 3.1 315 2.8 329 2.6 339 2.6 349 2.6 359 2.6 370 2.6 381 2.6 393 2.6 405 2.6 Total Expenses 2,906 30.2 3,127 27.3 3,262 26.3 3,360 26.3 3,461 26.3 3,564 26.3 3,671 26.3 3,781 26.3 3,895 26.3 4,012 26.3 GROSS OPERATING PROFIT 3,047 31.5 4,276 37.5 4,966 39.8 5,115 39.8 5,269 39.8 5,426 39.8 5,589 39.8 5,757 39.8 5,930 39.8 6,108 39.8 Management Fee 289 3.0 343 3.0 374 3.0 385 3.0 396 3.0 408 3.0 421 3.0 433 3.0 446 3.0 460 3.0 INCOME BEFORE NON-OPR. INC. & EXP. 2,758 28.5 3,933 34.5 4,592 36.8 4,731 36.8 4,872 36.8 5,018 36.8 5,169 36.8 5,324 36.8 5,484 36.8 5,649 36.8

NON-OPERATING INCOME & EXPENSE
Property Taxes 485 5.0 495 4.3 505 4.1 515 4.0 525 4.0 535 3.9 546 3.9 557 3.9 568 3.8 580 3.8 Insurance 101 1.0 104 0.9 107 0.9 110 0.9 113 0.9 117 0.9 120 0.9 124 0.9 127 0.9 131 0.9 Retail Income (310) (3.2) (320) (2.8) (329) (2.6) (339) (2.6) (349) (2.6) (360) (2.6) (370) (2.6) (382) (2.6) (393) (2.6) (405) (2.6) Total Expenses 275 2.8 279 2.4 282 2.4 286 2.3 289 2.3 292 2.2 296 2.2 299 2.2 303 2.1 306 2.1 EBITDA 2,483 25.7 3,654 32.1 4,310 34.4 4,445 34.5 4,583 34.5 4,726 34.6 4,873 34.6 5,025 34.6 5,181 34.7 5,343 34.7 Reserve for Replacement 193 2.0 343 3.0 498 4.0 513 4.0 529 4.0 544 4.0 561 4.0 578 4.0 595 4.0 613 4.0 EBITDA LESS RESERVE $2,290 23.7 % $3,311 29.1 % $3,812 30.4 % $3,932 30.5 % $4,055 30.5 % $4,181 30.6 % $4,312 30.6 % $4,447 30.6 % $4,587 30.7 % $4,730 30.7 % % of
Gross
o
Packet Pg. 383
Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at

4.5.b
Packet Pg. 506 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 36 Our positioning of each revenue and expense level is supported by comparable operations or trends specific to this market.

FIGURE 4-31 COMPARABLE OPERATING STATEMENTS: RATIO TO SALES Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject
Year: 2019 2017/18 2017 2017 2016 2019
Edition: 11 11 11 11 11 11
Number of Rooms: 200 to 260 160 to 200 210 to 260 250 to 320 120 to 160 150 Days Open: 365 365 365 365 365 365
Occupancy: 88% 81% 85% 81% 75% 80%
Average Rate: $178 $185 $178 $180 $201 $191
RevPAR: $156 $150 $152 $145 $151 $153

REVENUE
Rooms 82.1 % 83.7 % 81.5 % 66.4 % 79.8 % 79.6 %
Food & Beverage 16.1 15.1 17.3 27.7 17.3 18.8
Other Operated Departments 1.3 0.3 0.8 4.9 0.1 1.3
Miscellaneous Income 0.5 0.9 0.4 1.0 2.8 0.4
Total 100.0 100.0 100.0 100.0 100.0 100.0
DEPARTMENTAL EXPENSES*
Rooms 20.7 20.1 26.7 23.5 23.0 23.0
Food & Beverage 63.4 75.8 81.9 62.6 89.5 80.0
Other Operated Departments 41.4 218.6 40.0 29.2 74.3 50.0 Total 27.7 29.0 36.2 34.4 33.9 33.9
DEPARTMENTAL INCOME 72.3 71.0 63.8 65.6 66.1 66.1

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 7.0 8.1 7.8 7.5 8.3 6.9
Info. and Telecom. Systems 0.1 0.9 1.0 0.0 1.6 0.7
Marketing 6.3 7.1 7.1 7.8 5.9 5.9
Franchise Fee 7.8 6.5 3.0 5.5 0.0 7.6
Property Operations & Maintenance 3.1 2.5 4.9 3.4 3.8 2.6 Utilities 3.0 3.8 4.0 3.9 2.7 2.6
Total 27.3 29.0 27.8 28.1 22.2 26.2
GROSS OPERATING PROFIT 45.0 42.0 36.0 37.5 43.9 39.9
Management Fee 3.0 2.5 5.0 3.0 3.0 3.0
INCOME BEFORE NON-OPER. INC. & EXP. 42.0 39.6 31.0 34.5 40.8 36.9 EBITDA LESS RESERVE 31.1 % 35.9 % 25.7 % 25.0 % 32.9 % 30.6 % * Departmental expense ratios are expressed as a percentage of departmental revenues Stabilized $
o
Packet Pg. 384 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 507 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 37 FIGURE 4-32 COMPARABLE OPERATING STATEMENTS: AMOUNTS PER AVAILABLE ROOM Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject
Year: 2019 2017/18 2017 2017 2016 2019
Edition: 11 11 11 11 11 11
Number of Rooms: 200 to 260 160 to 200 210 to 260 250 to 320 120 to 160 150 Days Open: 365 365 365 365 365 365
Occupancy: 88% 81% 85% 81% 75% 80%
Average Rate: $178 $185 $178 $180 $201 $191
RevPAR: $156 $150 $152 $145 $151 $153

REVENUE
Rooms $57,028 $54,806 $55,610 $52,969 $55,184 $55,737
Food & Beverage 11,165 9,874 11,796 22,084 11,975 13,140 Other Operated Departments 925 227 540 3,911 42 876
Mis cellaneous Income 337 601 259 808 1,918 292
Total 69,455 65,509 68,205 79,772 69,119 70,045

DEPARTMENTAL EXPENSES
Rooms 11,783 11,023 14,840 12,428 12,696 12,820
Food & Beverage 7,076 7,483 9,665 13,835 10,712 10,512
Other Operated Departments 383 497 216 1,143 31 438
Total 19,242 19,003 24,720 27,406 23,440 23,770
DEPARTMENTAL INCOME 50,213 46,506 43,485 52,367 45,680 46,276

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 4,859 5,300 5,313 6,016 5,706 4,800 Info. and Telecom. Systems 47 584 656 25 1,108 500
Marketing 4,406 4,662 4,863 6,187 4,103 4,100
Franchise Fee 5,446 4,262 2,030 4,386 0 5,295
Property Operations & Maintenance 2,155 1,641 3,362 2,679 2,622 1,800 Utilities 2,051 2,521 2,739 3,126 1,838 1,850
Total 18,963 18,970 18,963 22,420 15,378 18,345
GROSS OPERATING PROFIT 31,250 27,536 24,522 29,947 30,302 27,931 Management Fee 2,084 1,620 3,390 2,393 2,073 2,101
INCOME BEFORE NON-OPER. INC. & EXP. 29,167 25,915 21,132 27,554 28,229 25,830 EBITDA LESS RESERVE $21,622 $23,465 $17,501 $19,969 $22,786 $21,441 Stabilized $
o
Packet Pg. 385 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 508 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 38 FIGURE 4-33 COMPARABLE OPERATING STATEMENTS: AMOUNTS PER OCCUPIED ROOM Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Subject
Year: 2019 2017/18 2017 2017 2016 2019
Edition: 11 11 11 11 11 11
Number of Rooms: 200 to 260 160 to 200 210 to 260 250 to 320 120 to 160 150 Days Open: 365 365 365 365 365 365
Occupancy: 88% 81% 85% 81% 75% 80%
Average Rate: $178 $185 $178 $180 $201 $191
RevPAR: $156 $150 $152 $145 $151 $153

REVENUE
Rooms $178.21 $184.78 $178.35 $179.61 $200.77 $190.88
Food & Beverage 34.89 33.29 37.83 74.88 43.57 45.00
Other Operated Departments 2.89 0.77 1.73 13.26 0.15 3.00 Miscellaneous Income 1.05 2.03 0.83 2.74 6.98 1.00
Total 217.05 220.87 218.74 270.49 251.46 239.88

DEPARTMENTAL EXPENSES
Rooms 36.82 37.16 47.59 42.14 46.19 43.90
Food & Beverage 22.11 25.23 31.00 46.91 38.97 36.00
Other Operated Departments 1.20 1.67 0.69 3.88 0.11 1.50 Total 60.13 64.07 79.28 92.93 85.28 81.40
DEPARTMENTAL INCOME 156.92 156.80 139.46 177.56 166.19 158.48

UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 15.19 17.87 17.04 20.40 20.76 16.44 Info. and Telecom. Systems 0.15 1.97 2.10 0.09 4.03 1.71 Marketing 13.77 15.72 15.60 20.98 14.93 14.04
Franchise Fee 17.02 14.37 6.51 14.87 0.00 18.13
Property Operations & Maintenance 6.73 5.53 10.78 9.08 9.54 6.16 Utilities 6.41 8.50 8.78 10.60 6.69 6.34
Total 59.26 63.96 60.82 76.02 55.95 62.82
GROSS OPERATING PROFIT 97.66 92.84 78.64 101.54 110.24 95.65 Management Fee 6.51 5.46 10.87 8.11 7.54 7.20
INCOME BEFORE NON-OPER. INC. & EXP. 91.15 87.37 67.77 93.43 102.70 88.46 EBITDA LESS RESERVE $67.57 $79.11 $56.13 $67.71 $82.90 $73.43 Stabilized $
In conclusion, our analysis reflects a profitable operation, with net income expected to total 30.5% of total revenue by the stabilized year. The stabilized total revenue comprises primarily rooms revenue, with a secondary portion derived from other income sources. On the cost side, departmental expenses total 33.9% of revenue by the stabilized year, while undistributed operating expenses total

26.3% of total revenues; this assumes that the proposed subject property will be operated competently by a well-known hotel operator. After a 3.0% of total revenues management fee, a net income ratio of 34.7% is forecast by the stabilized year.
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Packet Pg. 386 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 509 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 39 FIGURE 4-34 DISCOUNTED CASH FLOW FOR FEASIBILITY CALCULATION 3 10.0 %

8.5 3.0
Discounted
Year 10% Cash Flow
2023/24 $2,774,603 $485,062 $2,289,542 0.90909 $2,081,402 2024/25 3,806,092 494,763 3,311,330 0.82645 2,736,636
2025/26 4,316,484 504,658 3,811,826 0.75131 2,863,881
2026/27 4,446,530 514,751 3,931,779 0.68301 2,685,458
2027/28 4,579,737 525,046 4,054,690 0.62092 2,517,644
2028/29 4,716,798 535,547 4,181,251 0.56447 2,360,207
2029/30 4,858,302 546,258 4,312,044 0.51316 2,212,760
2030/31 5,004,051 557,183 4,446,867 0.46651 2,074,496
2031/32 5,154,172 568,327 4,585,845 0.42410 1,944,846
2032/33 5,308,797 579,693 66,942,691 * 0.38554 25,809,305 Estimated Market Value $47,286,635
(SAY) $47,300,000
Per Room 320,000
Reversion Analysis
$5,468,061
Capitalization Rate (loaded with ta x rate) 8.5%
Total Sales Proceeds $64,137,719
Less: Tra nsaction Costs @ 3.0% 1,924,132
Net Sales Proceeds (Say) 62,213,587
11th Year's EBITDA Less Reserves (not
*10th year NOI after taxes, plus the reversionary value.

Stabilized Year
Discount Rate
Loa ded Terminal Cap
Transaction Costs
Net Income,
Before Taxes
Property
Taxes
Net Income,
After Taxes
Discount Factor @
Our discounted cash flow analysis indicates a net present value for the proposed subject property of $47,300,000 or $320,000 per room.

Based on our review of investor surveys, sales transactions, and interviewing market participants, we have selected a discount rate of 10.0% and a terminal cap rate of 8.5% in our analysis. Due to the subject property's California location and the higher property tax implications upon the sale at the end of the hold, the terminal capitalization rate is loaded with the tax rate and is applied to the NOI estimate prior to property taxes.

Feasibility Analysis
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Packet Pg. 387 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 510 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 40 The below cost estimates are derived from the 2020 HVS Development Cost Survey, as well as our market and industry knowledge.

FIGURE 4-35 COST COMPARABLES
Item
Building $287,295 72.4 % $238,879 75.3 % $267,715 73.5 % $206,118 81.1 % Soft Costs 47,666 12.0 46,300 14.6 30,298 8.3 31,986 12.6 Furniture, Fixtures , & Equipment 32,116 8.1 17,857 5.6 44,371 12.2 16,000 6.3 Pre-Opening Cos ts & Working Capital 24,450 6.2 14,286 4.5 11,921 3.3 0 0.0 Developer Fee (if Applicable) 5,503 1.4 0 0.0 9,934 2.7 0 0.0 Total (Excluding Site Cost) $397,030 93.4 % $317,321 91.9 % $364,238 92.8 % $254,104 100.0 % Site Cost $28,090 6.6 % $27,939 8.1 % $28,146 7.2 % $0 0.0 % Total (Including Site Cost) $425,120 100.0 % $345,261 100.0 % $392,384 100.0 % $254,104 100.0 % Comp #1 Comp #2 Comp #3 Comp #4
Primary, CA Secondary, CA Secondary, CA Primary, CA
Full-Service Full-Service Full-Service Full-Service
Approx. 180 Rooms Approx. 140 Rooms Approx. 150 Rooms Approx. 130 Rooms Per Room % of Total Per Room % of Total Per Room % of Total Per Room % of Total FIGURE 4-36 HVS DEVELOPMENT COST POSITIONING – UPPER UPSCALE Item
Building $206,118 72.4 % $287,295 81.1 % $250,002 75.6 % $250,000 67.3 % Soft Costs 30,298 8.3 47,666 14.6 39,063 11.9 40,000 10.8 Furniture, Fixtures , & Equipment 16,000 5.6 44,371 12.2 27,586 8.0 35,000 9.4 Pre-Opening Cos ts & Working Capital 0 0.0 24,450 6.2 12,664 3.5 12,000 3.2 Developer Fee (if Applicable) 0 0.0 9,934 2.7 3,859 1.4 5,000 1.3 Tota l (Excluding Site Cos t) $254,104 $397,030 $333,174 $342,000 92.1 % Site Cost $0 0.0 % $28,146 8.1 % 21,044 7.3 % $29,333 7.9 % Total (Including Site Cost) $254,104 $425,176 $354,217 $371,333 100.0 % Average Subject Property
Per Room % of Total Per Room % of Total Per Room % of Total Per Room % of Total Minimum Maximum
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Packet Pg. 388 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 511 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Upper-Upscale Analysis
Proposed Laguna Hills Hotel – Laguna Hills, California 41 FIGURE 4-37 HVS DEVELOPMENT COST ESTIMATE – UPPER UPSCALE Item
Building $250,000 $37,500,000
Soft Costs 40,000 6,000,000
Furniture, Fixtures, & Equipment 35,000 5,250,000
Pre-Opening Costs & Working Capital 12,000 1,800,000
Developer Fee (if Applicable) 5,000 750,000
Land 29,333 4,400,000
Total Cost New Before Incentive $371,000 $55,700,000
Cost per Room Cost
The derived net present value of $47,300,000 is -15.1% below the estimated replacement cost of $55,700,000.

Based on our market analysis, there is insufficient market support for the proposed, upper-upscale, full-service hotel scenario. Our assumption of replacement cost was developed utilizing development costs from comparable full-service properties in California, derived from the 2020 HVS Development Cost Survey. We have utilized a discounted cash flow (DCF) analysis to come to our conclusion of value upon completion of the project. The when-complete value is notably below the assumed replacement cost, deeming the project not feasible.

This analysis indicates that a hotel development of this caliber or higher is not feasible at this time in this market.
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Packet Pg. 389 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 512 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Method of Study & Statement of Assumptions and Limiting Conditions Proposed Laguna Hills Hotel – Laguna Hills, California 42

5. Method of Study & Statement of Assumptions and
Limiting Conditions
The methodology used to develop this study is based on the market research and valuation techniques set forth in the textbooks authored by HVS for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,2 Hotels, Motels and Restaurants: Valuations and Market Studies,3 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,4 and Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations.5

1. The subject site has been evaluated from the viewpoint of its physical utility for the future operation of a hotel, as well as access, visibility, and other relevant location factors.

2. The surrounding economic environment, on both an area and neighborhood level, has been reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels.

3. Dividing the market for transient accommodations into individual segments defines specific market characteristics for the types of travelers expected to utilize the area's hotels. The factors investigated include purpose of visit, average length of stay, required facilities and amenities, seasonality, daily demand fluctuations, and price sensitivity.

4. An analysis of existing and proposed competition provides an indication of the current accommodated demand, along with market penetration and the degree of competitiveness.
2 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978).
3 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 4 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990). 5 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations. (Chicago: Appraisal Institute, 1992).

Method of Study
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Packet Pg. 390 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 513 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Method of Study & Statement of Assumptions and Limiting Conditions Proposed Laguna Hills Hotel – Laguna Hills, California 43

5. The subject property's proposed improvements have been evaluated or recommended for optimal capture of demand in this market and at the subject site’s location.

6. Documentation for an occupancy and average rate projection is derived utilizing the build-up approach based on an analysis of lodging activity.

7. A detailed projection of income and expense made in accordance with the Uniform System of Accounts for the Lodging Industry sets forth the anticipated economic benefits of the subject property.

The subject property was inspected by Marc Greeley on November 9, 2021

1. This report is set forth as a summary of findings only for a market study of the proposed subject hotel; this is not an appraisal report.

2. This report is to be used in whole and not in part.

3. No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed marketable and free of any deed restrictions and easements. The property is evaluated as though free and clear unless otherwise stated.

4. We assume that there are no hidden or unapparent conditions of the subsoil or structures, such as underground storage tanks, that would affect the property’s development potential. No responsibility is assumed for these conditions or for any engineering that may be required to discover them.

5. We have not considered the presence of potentially hazardous materials or any form of toxic waste on the project site. We are not qualified to detect hazardous substances and urge the client to retain an expert in this field if desired.

6. The Americans with Disabilities Act (ADA) became effective on January 26, 1992. We have assumed the proposed hotel would be designed and constructed to be in full compliance with the ADA.

7. We have made no survey of the site, and we assume no responsibility in connection with such matters. Sketches, photographs, maps, and other exhibits are included to assist the reader in visualizing the property. It is assumed that the use of the described real estate will be within the boundaries of the property described, and that no encroachment will exist.

8. All information, financial operating statements, estimates, and opinions obtained from parties not employed by TS Worldwide, LLC are assumed true and correct. We can assume no liability resulting from misinformation.

Date of Inspection
Statement of
Assumptions and
Limiting Conditions
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Packet Pg. 391 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 514 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Method of Study & Statement of Assumptions and Limiting Conditions Proposed Laguna Hills Hotel – Laguna Hills, California 44

9. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the subject site.

10. The property is assumed to be in full compliance with all applicable federal, state, local, and private codes, laws, consents, licenses, and regulations (including the appropriate liquor license if applicable), and that all licenses, permits, certificates, franchises, and so forth can be freely renewed or transferred to a purchaser.

11. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise.

12. None of this material may be reproduced in any form without our written permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media.

13. We are not required to give testimony or attendance in court because of this analysis without previous arrangements and shall do so only when our standard per-diem fees and travel costs have been paid prior to the appearance.

14. If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us.

15. We take no responsibility for any events or circumstances that take place subsequent to the date of our field inspection.

16. The quality of a lodging facility's onsite management has a direct effect on a property's economic viability. The financial forecasts presented in this analysis assume responsible ownership and competent management. Any departure from this assumption may have a significant impact on the projected operating results.

17. The estimated operating results presented in this report are based on an evaluation of the overall economy, and neither consider nor make provision for the effect of any sharp rise or decline in local or national economic conditions. To the extent that wages and other operating expenses may advance during the economic life of the property, we expect that the prices of rooms, food, beverages, and services will be adjusted to at least offset those advances. We do not warrant that the estimates will be attained, but they have been prepared based upon information obtained during the course of this study and are intended to reflect the expectations of a typical hotel investor.

18. This analysis assumes continuation of all provisions of the Internal Revenue Code of 1986, as amended to date.
o
Packet Pg. 392 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 515 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021 Method of Study & Statement of Assumptions and Limiting Conditions Proposed Laguna Hills Hotel – Laguna Hills, California 45

19. Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity, most numbers have been rounded to the nearest tenth of a percent. Thus, these figures may be subject to small rounding errors.

20. It is agreed that our liability to the client is limited to the amount of the fee paid as liquidated damages. Our responsibility is limited to the client; the use of this report by third parties shall be solely at the risk of the client and/or third parties. The use of this report is also subject to the terms and conditions set forth in our engagement letter with the client.

21. Evaluating and comprising financial forecasts for hotels is both a science and an art. Although this analysis employs various mathematical calculations to provide value indications, the final forecasts are subjective and may be influenced by our experience and other factors not specifically set forth in this report.

22. This study was prepared by TS Worldwide, LLC. All opinions, recommendations, and conclusions expressed during the course of this assignment are rendered by the staff of TS Worldwide, LLC as employees, rather than as individuals.
o
Packet Pg. 393 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 516 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 1 Luigi Major, MAI

HVS CONSULTING AND VALUATION SERVICES
Los Angeles, California
BS – Hotel & Restaurant Management, University of Houston Other Specialized Training Classes Completed:

Uniform Standards of Professional Appraisal Practice – 15 hours Basic Appraisal Procedures – 30 hours
Basic Appraisal Principles – 30 hours
General Appraiser Income Approach (Parts I and II) – 60 hours General Appraiser Sales Comparison Approach – 30 hours
General Appraiser Market Analysis and HBU – 30 hours
General Appraiser Site Valuation and Cost Approach – 30 hours General Appraiser Report Writing and Case Studies – 30 hours Business Practices and Ethics – 7 hours
Statistics, Modeling and Finance – 15 hours
Advanced Income Capitalization – 40 hours
Advanced Sales Comparison & Cost Approach – 40 hours
Report Writing and Valuation Analysis – 40 hours
Advanced Applications – 40 hours
Fundamentals of Separating Real, Personal Property, and Intangible Business Assets – 15 hours
General Demonstration Report Writing
The Appraiser as an Expert Witness: Preparation and Testimony – 16 hours California Law – 4 hours
Mortgage Fraud – Protect Yourself – 7 hours
Supervisor Trainee Course for Texas – 7 hours
Appraisal of Land Subject to Ground Lease – 7 hours
Basic Hotel Appraising – 7 hours
Advanced Hotel Appraising – 7 hours
Appraisal of Land Subject to Ground Lease – 7 hours
CA Supervisor/Trainee – 4 hours
The Dirty Dozen – 3 hours

EMPLOYMENT
2007 to present
EDUCATION AND OTHER

TRAINING
o
Packet Pg. 394 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 517 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 2 Income Approach – 7 hours
Small Hotel/Motel Valuation – 7 hours
NV Law – 3 hours
Basics of Expert Witness – 7 hours
Appraisal of Owner-Occupied Commercial Properties – 7 hours CA Law – 4 hours
Biennial USPAP Updates
Arizona, California, Hawaii, Nevada, Texas
Appraisal Institute – Designated Member (MAI)
“COVID-19’s Impact on the Los Angeles Hotel Market,” April 2021 “U.S. Hotel Development Cost Survey 2020,” October 2020 “Impact of COVID-19 on the Tucson Hotel Market,” July 2020 “Impact of COVID-19 on Los Angeles & Southern California Hotel Markets,” April 2020 “U.S. Hotel Development Cost Survey 2018/19,” September 2019 “Market Pulse: Los Angeles, CA,” March 2019
“HVS Hotel Development Cost Survey 2017/18,” November 2018 “Blurred Lines between Hotels and Airbnb,” September 2018 “Market Pulse: Palm Springs & Desert Cities,” February 2018 “Top 6 Hotel Success Factors,” August 2017
“In Focus: Houston, Texas,” February 2016
“Four Key Takeaways: Meet the Money 2015,” co-authored with Li Chen and Susan Furbay, May 2015
“In Focus: Houston, Texas,” co-authored with Yimei Tang, July 2014 “Effects of Major Renovations on Hotel Market Penetration and Net Present Value,” February 2014
“HVS Market Intelligence Report 2013: Houston,” June 2013

EDUCATION
(CONTINUED)
STATE CERTIFICATIONS

PROFESSIONAL

AFFILIATIONS
PUBLISHED ARTICLES
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
o
Packet Pg. 395 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 518 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 3 “HVS Market Intelligence Report: Houston Hotels in 2012,” April 2012 “HVS Report: Foreign Direct Investment, Commercial Real Estate, and Hotel Development in Mexico City.” Co-authored by Raul Duarte and Richard Katzman, February 2011 “San Miguel de Allende – A Beacon for the Tourism Potential of Colonial Towns and Villages,” January 2009
“Mexico’s Growing Trend: Master-Planned Resort-Residential Communities,” November 2008
“Guadalajara – Preparing for the Future,” May 2008
“HVS Market Intelligence Report: San Juan, Puerto Rico,” November 2007 “HVS Market Intelligence Report: Liberia, Costa Rica,” September 2007 HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
HVS Journal
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Packet Pg. 396 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 519 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 4 EXAMPLES OF PROPERTIES APPRAISED
OR EVALUATED

PORTFOLIO ANALYSIS
Portfolio of 6 Embassy Suites Hotels,
Various Locations
Portfolio of 5 Proposed Hotels,
Colombia
Ladder Capital Portfolio of 6 Hotels,
Colorado and Texas
Ladder Capital Package of 4 Hotels,
Texas
Portfolio of 8 Embassy Suites Hotels,
Various Locations
Lone Star Portfolio of 38 Hyatt Hotels,
Various Locations
Portfolio of 13 Hotels for JPMorgan
Chase, Texas and New Mexico
Portfolio of 5 Extended-Stay Hotels
throughout the South
Portfolio of 3 Hotels, San Diego
Portfolio of 2 Full-Service Hotels,
Houston
Portfolio of 8 Marriott or Embassy
Suites Hotels, California and Nevada
Portfolio of 2 Proposed Hotels, Mesa,
Arizona
Portfolio of 2 Ayres Hotels, Southern
California
Portfolio of 2 Hotels, Beverly Hills

ALABAMA
Hampton Inn, Birmingham
City Lodge, Florence
Holiday Inn, Hoover
Hampton Inn, Pell City

ARIZONA
Proposed EVEN Hotel Avondale,
Avondale
Proposed Home2 Suites by Hilton,
Avondale
Proposed Hotel, Campe Verde
Holiday Inn, Casa Grande
Proposed Limited-Service Hotel at the
Promenade, Casa Grande
Proposed Hotel near Gilbert Heritage
District, Gilbert
Proposed SpringHill Suites by
Marriott, Lake Havasu
Proposed Hotel near Harrah's Ak-Chin
Casino, Maricopa
Proposed La Quinta Maricopa,
Maricopa
Proposed Hotel, Mesa
Proposed Hotel near Phoenix Mesa
Gateway Airport, Mesa
Proposed Resort Page, Page
Courtyard Phoenix Airport, Phoenix
Four Points by Sheraton Phoenix
North, Phoenix
Proposed Dual-Brand AC/Element,
Phoenix
Proposed Hampton Inn at Metro
Center, Phoenix
Proposed Holiday Inn Express &
Suites - Phoenix Airport North,
Phoenix
Proposed Home2 Suites by Hilton
Phoenix Airport North, Phoenix
Proposed Hotel at Park Central Mall,
Phoenix
Proposed Hotel Central Station,
Phoenix
Proposed Hyatt Place Downtown
Phoenix, Phoenix
Proposed La Quinta - BannerUniversity Medical Center, Phoenix Proposed La Quinta Inn & Suites
McDowell Road, Phoenix
Proposed Marriott Tribute, Phoenix
Proposed Midtown Hotel, Phoenix
Proposed WoodSpring Suites Happy
Valley, Phoenix
Ramada, Phoenix
Red Roof Inn Phoenix Bell Road,
Phoenix
Residence Inn by Marriott at Mayo
Clinic, Phoenix
Proposed Quartzsite Limited-Service
Hotel, Quartzsite
Proposed Hotel, Queen Creek
Proposed Hotel, Rancho Sahuarita
Navajoland Inn & Suites / Saint
Michaels Arizona, Saint Michaels
Proposed Ceasars Hotel at Scottsdale
Fashion Square, Scottsdale
Proposed Hilton Hotel at Cavasson,
Scottsdale
Proposed Holiday Inn, Scottsdale
Proposed Hyatt Place and Hyatt
House Dual-Branded Hotel,
Scottsdale
Talking Stick Resort, Scottsdale
Las Posadas of Sedona, Sedona
Aloft, Tempe
Comfort Suites Airport, Tempe
MOXY Phoenix Tempe/ASU Area,
Tempe
Proposed Full-Service Hotel, Tempe
Proposed Residence Inn by Marriott,
Tempe
Proposed Westin Tempe, Tempe
Proposed Best Western, Topock
Four Points by Sheraton Tucson
Airport, Tucson
Proposed Graduate Hotel Tucson,
Tucson
Proposed Hotels at the Marketplace,
Tucson
Radisson Suites, Tucson
Westin La Paloma Resort & Spa,
Tucson
Proposed Grand Canyon Resort,
Tusayan
Grand Canyon Railway Hotel,
Williams

ARKANSAS
Proposed Hotel, Fairfield Bay
Proposed Hotel, Hot Springs
La Quinta Inn & Suites, Russellville

CALIFORNIA
Proposed Hotel Adelanto, Adelanto
Proposed Holiday Inn Express
Alameda, Alameda
Alhambra Inn & Suites, Alhambra
Fremont Inn, Alhambra
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Packet Pg. 397 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 520 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 5 Proposed Hotel American Canyon,
American Canyon
Candlewood Suites Anaheim - Resort
Area, Anaheim
Four Points by Sheraton, Anaheim
Gaia Hotel & Spa, Anderson
Apple Valley Lodge, Apple Valley
Best Western, Bakersfield
Proposed Best Western Bakersfield,
Bakersfield
Proposed Staybridge Suites,
Bakersfield
Holiday Inn Express Hotel & Suites
Barstow Outlet Center, Barstow
Proposed Dual-Branded Marriott,
Barstow
Hampton Inn & Suites Buellton/Santa
Ynez Valley, Buellton
Proposed Aloft Buena Park, Buena
Park
Proposed Stanford Hotel, Buena Park
The Hotel at the Source, Buena Park
Quality Inn Burbank, Burbank
Proposed Cabazon Glamping
Recreation Center, Cabazon
DoubleTree by Hilton Golf Resort
Palm Springs Area, Cathedral City
Staybridge Suites Cathedral City Golf
Resort, Cathedral City
Proposed Gaylord Pacific Resort &
Convention Center, Chula Vista
Motel 6 Coalinga East, Coalinga
Proposed Everhome Suites Corona,
Corona
Proposed Boutique Hotel, Diablo
Grande
Proposed Hampton Inn, Diamond Bar
Proposed Select Service Hotel
Downey, Downey
Proposed Home 2 Suites by Hilton, El
Centro
Proposed Residence Inn El Centro, El
Centro
Proposed Hotel El Dorado Hills, El
Dorado Hills
Holiday Inn Express, Elk Grove
Proposed Candlewood Suites, Elk
Grove
Hyatt Place, Emeryville
Proposed Home2 Suites by Hilton,
Fairfield
La Quinta Inn & Suites, Fresno
San Joaquin Hotel, Fresno
Proposed Tapestry Collection by
Hilton Fullerton, Fullerton
Hampton Inn, Goleta
Holiday Inn Express, Grover Beach
Home2 Suites by Hilton Hanford
Lemoore, Hanford
Proposed Home2 Suites, Hanford
Proposed Dual-Branded Hotel,
Hawthorne
TownePlace Suites by Marriott Los
Angeles LAX Hawthorne,
Hawthorne
Proposed Hotel, Hermosa Beach
Proposed Kokoro Wellness Resort,
Howard Springs
Paséa Hotel & Spa, Huntington Beach
Miramonte Indian Wells Resort & Spa
Curio Collection by Hilton, Indian
Wells
Irvine Marriott, Irvine
Holiday Inn San Diego La Mesa, La
Mesa
Best Western Laguna Brisas Spa
Hotel, Laguna Beach
Coast Inn, Laguna Beach
Pacific Edge Hotel, Laguna Beach
Seaside Laguna Inn & Suites, Laguna
Beach
Hilton Garden Inn, Lompoc
Hampton Inn Long Beach Airport,
Long Beach
Proposed Breakers Hotel Long Beach,
Long Beach
Dixie Hollywood Hotel, Los Angeles
hClub, Los Angeles
InterContinental Los Angeles
Downtown, Los Angeles
Loews Hollywood, Los Angeles
Mr C Beverly Hills, Los Angeles
Proposed Found Santa Monica, Los
Angeles
Proposed Hampton Inn & Suites
Koreatown, Los Angeles
Proposed Hotel Koreatown, Los
Angeles
Proposed Hyatt Place Olive Street, Los
Angeles
Proposed Spring Street Hotel, Los
Angeles
Proposed SpringHill Suites by
Marriott, Marina
Proposed Staybridge Suites Los
Angeles, Los Angeles
Proposed Unscripted Hotel, Los
Angeles
Proposed Wellness Hotel Malibu,
Malibu
Proposed Hotel Mammoth Village,
Mammoth Lakes
Proposed Resort Mammoth Lakes,
Mammoth Lakes
Proposed Hampton Inn & Suites,
Marina
Best Western, Merced
Mountain Home Inn, Mill Valley
Proposed Montebello Hotel,
Montebello
Comfort Inn & Suites Temecula Wine
Country, Murrieta
Best Western Elm House Inn, Napa
Hampton by Hilton Napa, Napa
Aloft Silicon Valley, Newark
TownePlace Suites by Marriott,
Newark
Proposed Hotel North Hollywood,
North Hollywood
Proposed Select-Service Hotel,
Northridge
Proposed Homage Oakland, Oakland
Courtyard by Marriott Oceanside,
Oceanside
Proposed Cambria Hotel Ontario,
Ontario
Proposed Dual-Branded Homewood
Suites by Hilton and Hampton by
Hilton Ontario, Ontario
o
Packet Pg. 398 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 521 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 6 Proposed Element by Westin Ontario,
Ontario
Proposed Dual-Branded Residence
Inn & Courtyard by Marriott
Orange, Orange
Hampton Inn Channel Islands Harbor,
Oxnard
Proposed Tru, Oxnard
Ivy Palm Resort & Spa, Palm Springs
Proposed Andaz Palm Springs, Palm
Springs
Proposed BODE: Palm Springs, Palm
Springs
Riviera Palm Springs, a Tribute
Portfolio Resort, Palm Springs
Tova Hotel & Beach Club, Palm
Springs
Travelodge Palm Springs, Palm
Springs
Holiday Inn Palmdale Lancaster,
Palmdale
Motel 6 Paso Robles, Paso Robles
Proposed Hotel Ava, Paso Robles
Proposed Patterson Hotel, Patterson
Proposed Hotel Perris, Perris
Sheraton Sonoma County Petaluma,
Petaluma
Motel 6, Pittsburg
Comfort Inn Near Fairplex Pomona,
Pomona
Comfort Inn & Suites, Rancho Cordova
Proposed Hampton Inn, Rancho
Cucamonga
Proposed Hotel at The River Mall,
Rancho Mirage
Proposed Home2 Suites, Ridgecrest
Proposed Roseville Hotel, Roseville
Courtyard by Marriott Cal Expo,
Sacramento
DoubleTree by Hilton, Sacramento
Fairfield Inn Cal Expo, Sacramento
La Quinta Inn by Wyndham
Sacramento North, Sacramento
Quality Inn & Suites, Sacramento
DoubleTree by Hilton Golf Resort, San
Diego
DoubleTree by Hilton San Diego Del
Mar, San Diego
Fairmont Grand Del Mar, San Diego
Holiday Inn Express Hotel & Suites
Otay Mesa, San Diego
Holiday Inn Express & Suites San
Diego Mission Valley, San Diego
Lafayette Hotel Swim Club &
Bungalows, San Diego
Marriott San Diego Del Mar, San Diego
The Monsaraz Inn, Tapestry
Collection by Hilton, San Diego
Proposed Fairfield Inn, San Diego
Proposed Hotel, San Diego
San Diego Marriott Del Mar, San Diego
SpringHill Suites by Marriott San
Diego Mission Valley, San Diego
US Grant, San Diego
Proposed Boutique Hotel San Dimas,
San Dimas
Holiday Inn Fisherman's Wharf San
Francisco, San Francisco
Proposed Fairfield Inn & Suites by
Marriott South San Francisco, South
San Francisco
San Jacinto Inn, San Jacinto
Proposed Hyatt Place, San Jose
Proposed Dual-Brand Hotel San
Marcos, San Marcos
Proposed La Quinta Inn & Suites, San
Pablo
Proposed AC Hotel by Marriott San
Rafael, San Rafael
Proposed Homewood Suites, Santa
Clarita
Hampton Inn, Santa Cruz
Proposed Hampton by Hilton Santa
Cruz, Santa Cruz
Holiday Inn & Suites, Santa Maria
Proper Hotel, Santa Monica
Hotel Santa Rosa, Santa Rosa
Proposed Hotel, Sonora
Sonora Inn, Sonora
Proposed Galway House, Temecula
Proposed Hampton Inn Three Rivers,
Three Rivers
Travelodge Yucca Valley, Twentynine
Palms
Embassy Suites by Hilton, Valencia
Hotel Erwin, Venice Beach
Four Points by Sheraton Ventura
Harbor Resort, Ventura
Proposed Avid Hotel Victorville,
Victorville
Marriott, Walnut Creek
Proposed Hyatt Place Walnut Creek,
Walnut Creek
Proposed Residence Inn Walnut
Creek, Walnut Creek
Proposed Home2 Suites by Hilton
Watsonville, Watsonville
Hampton Inn, West Covina
Holiday Inn West Covina, West Covina
The Charlie Hotel, West Hollywood
London West Hollywood at Beverly
Hills, West Hollywood
DoubleTree by Hilton Whittier Los
Angeles, Whittier
Comfort Suites Woodland, Woodland
Marriott Warner Center, Woodland
Hills
Proposed Staybridge Suites
Woodland, Woodland

COLORADO
Proposed Gaylord Rockies Hotel &
Convention Center, Aurora
Hyatt Summerfield Suites, Broomfield
Best Western Academy Hotel,
Colorado Springs
Proposed EVEN Hotel Victory Ridge,
Colorado Springs

DISTRICT OF COLUMBIA
Georgetown Suites Land Valuation
Proposed Maison Kesh Hotel

FLORIDA
Marriott, Boca Raton
Proposed Dual-Branded Residence
Inn/SpringHill Suites by Marriott,
Clearwater Beach
Mayfair Hotel & Spa, Coconut Grove
o
Packet Pg. 399 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 522 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 7 Hyatt Place, Delray Beach
Hyatt Place at Coconut Point, Estero
Hyatt Place, Fort Lauderdale
Hilton Garden Inn, Fort Myers
Four Points, Ft. Walton Beach
Holiday Inn, Houston
Proposed Courtyard, Jacksonville
Wyndham Riverwalk, Jacksonville
Terrace Hotel, Lakeland
Proposed Holiday Inn & Suites, Miami
Proposed Hotel, Miami
Proposed Le Meridien, Miami
Proposed Meininger Hotel, Miami
Beach
Proposed Hilton, Miami Beach
The Raleigh Hotel, Miami Beach
Proposed SpringHill Suites by
Marriott, Navarre
Embassy Suites Orlando Lake Buena
Vista, Orlando
Holiday Inn Express Hotel & Suites
Orlando International Airport,
Orlando
Proposed WoodSpring Suites, Orlando
Proposed Comfort Inn & Suites
Panama City Beach, Panama City
Beach
Sheraton Suites Fort Lauderdale
Plantation, Plantation
Proposed Hotel, St. Augustine
SpringHill Suites by Marriott, Sarasota
Sawgrass Grand Hotel & Suites,
Sunrise
Hampton Inn, Tallahassee
Hampton Inn Veterans Expressway,
Tampa

GEORGIA
Proposed Curio - A Collection by
Hilton, Alpharetta
Courtyard by Marriott, Atlanta
Holiday Inn Atlanta Perimeter
Dunwoody, Atlanta
Proposed Radisson, College Park
Country Inn & Suites, Hiram
Candlewood Suites, Lithia Springs
Proposed Full-Service Tribute Hotel,
Macon
Holiday Inn Express, St. Simons Island
Island Inn, St. Simons Island
HAWAII
Sheraton Keauhou Bay Resort & Spa,
Kailua
Proposed Kona Village, a Rosewood
Resort, Kailua-Kona
Four Seasons Resort O'ahu at Ko
Olina, Kapolei
IDAHO
Proposed Hotel Boise Airport, Boise
Proposed Economy Extended Stay,
Coeur D’Alene

ILLINOIS
Proposed Extended-Stay Hotel,
Bolingbrook
Proposed Hampton Inn, Burr Ridge
SpringHill Suites by Marriott, Burr
Ridge
Renaissance Chicago O’Hare Suites,
Chicago
SpringHill Suites by Marriott,
Elmhurst

INDIANA
Proposed Aloft, Indianapolis
IOWA
Proposed Waterpark Hotel,
Davenport
Proposed University of Iowa Hotel,
Iowa City
KANSAS
Crowne Plaza Kansas City Overland
Park, Lenexa

LOUISIANA
Proposed Residence Inn by Marriott,
Bossier City
Hampton Inn, Houma
Hotel Acadiana, Lafayette
Wyndham Garden, Lafayette
Proposed Candlewood Suites,
Leesville
Astor Crowne Plaza, New Orleans
Hilton Garden Inn French Quarter,
New Orleans
Hyatt Regency, New Orleans
Proposed Hotel Alessandra, New
Orleans
Troubadour Hotel New Orleans,
Tapestry Collection by Hilton, New
Orleans
Wyndham Chateau Bourbon, New
Orleans
Holiday Inn, Ruston
Holiday Inn Express Hotel & Suites,
Ruston
Proposed La Quinta Inn & Suites,
Ruston
Nottoway Plantation Resort, White
Castle

MARYLAND
Proposed Hilton Garden Inn,
Baltimore
Sheraton Washington North, Beltsville
Country Inn & Suites by Carlson,
Frederick
Proposed Hotel Sorella, Rockville

MINNESOTA
Loews, Minneapolis
Westin, Minneapolis

MISSISSIPPI
Four Points, Biloxi
Proposed SpringHill Suites, Biloxi
South Beach Biloxi Hotel, Biloxi
Hampton Inn, Brookhaven
Magnuson Hotel Hattiesburg, North
Hattiesburg

MISSOURI
Hilton Kansas City Airport, Kansas
City

MONTANA
o
Packet Pg. 400 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 523 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 8 Proposed Hotel, Big Sky
Proposed Hotel Gardiner, Gardiner
Proposed Best Western, Shelby
Holiday Inn Express, Sidney
NEVADA
Hampton Inn, Las Vegas
Proposed Delta Las Vegas, Las Vegas
Proposed Fairfield Inn & TownePlace
Suites Dual-Branded Hotel, Las
Vegas
Proposed Hotel Raiders Stadium, Las
Vegas
Proposed Limited/Select-Service
Hotel, Las Vegas
Vegas Vacant Land, Spring Valley

NEW JERSEY
Proposed Holiday Inn, Bayonne
TownePlace Suites by Marriott, Mount
Laurel
Holiday Inn, Princeton

NEW MEXICO
Proposed Home2 by Hilton
Alamogordo, Alamogordo
Proposed Downtown Hotel,
Albuquerque
Proposed TownePlace Suites
Albquerque, Albuquerque
Sleep Inn & Suites, Hobbs
Proposed La Quinta Inn, Los Lunas
Holiday Inn Express, Portales
Proposed Hotel, Ruidoso
Hotel Santa Fe, Santa Fe
Inn at Loretto, Santa Fe
Proposed Boutique Hotel, Santa Fe
Hampton Inn, Santa Rosa
Holiday Inn Express, Santa Rosa
La Quinta Inn, Santa Rosa
Sagebrush Inn, Taos

NEW YORK
Marriott, Buffalo
Proposed Hampton Inn, Dewitt
Courtyard by Marriott New York
LaGuardia Airport, East Elmhurst
Proposed Tryp by Wyndham Long
Island City, Long Island City
Residence Inn, White Plains
Proposed Selina Woodstock,
Woodstock

NORTH CAROLINA
Proposed Fairfield Inn by Marriott,
Maggie Valley
Courtyard by Marriott, Raleigh
OHIO
Proposed Hilton, Chippewa Lake
Proposed Baldwin Hotel, Cincinnati
Holiday Inn, West Chester
Proposed Holiday Inn & Conference
Center, West Chester
Radisson Hotel at the University of
Toledo, Toledo

OKLAHOMA
Hilton Skirvin, Oklahoma City
OREGON
Hilton, Eugene

PENNSYLVANIA
DoubleTree by Hilton Pittsburgh
Garden Tree, Pittsburgh

SOUTH CAROLINA
Proposed 5-Star Hotel, Charleston
Proposed Marion Square Hotel,
Charleston
3 Palms Hotel, Myrtle Beach

TENNESSEE
Holiday Inn, Chattanooga
Proposed Select-Service Hotel,
Knoxville
Holiday Inn Memphis Downtown
Beale Street, Memphis
Proposed Dual-Brand Tru & Hampton
Inn, Nashville
TEXAS
Holiday Inn Express, Allen
Proposed 21c Hotel, Austin
Proposed Hotel Granduca, Austin
Proposed SpringHill Suites, Baytown
Value Place, Beaumont
Homewood Suites by Hilton, Bedford
Proposed Hotel Texas A&M
University, College Station
Proposed Tryp by Wyndham, College
Station
Proposed Staybridge Suites, The
Colony
Fairfield Inn & Suites Houston Conroe,
Conroe
Candlewood Suites, Corpus Christi
Comfort Suites Calallen, Corpus
Christi
Embassy Suites, Corpus Christi
Holiday Inn Airport, Corpus Christi
Holiday Inn Downtown, Corpus
Christi
Holiday Inn Express, Corpus Christi
La Quinta Inn & Suites, Corpus Christi
Proposed Schlitterbahn Resort,
Corpus Christi
Staybridge Suites, Corpus Christi
Proposed Hotel, Cypress
Le Méridien The Stoneleigh, Dallas
Proposed Aloft/Element DualBranded Hotel, Dallas
Proposed Autograph Collection
Trinity Groves, Dallas
Proposed Residence Inn by Marriott,
Dallas
Proposed Residence Inn and AC by
Marriott Dual-Branded Hotel, Dallas
Proposed Saint Elm Hotel, Dallas
Hilton Garden Inn Denison Sherman
at Texoma Event Center, Denison
Proposed Hotel, Edinburg
Proposed Hyatt Place, Edinburg
Proposed Artisan Hotel Conversion, El
Paso
Sheraton Fort Worth Downtown
Hotel, Fort Worth
Proposed Hilton Garden Inn, Frisco
Westin Stonebriar, Frisco
o
Packet Pg. 401 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 524 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 9 Sheraton Fort Worth Downtown
Hotel, Fort Worth
SpringHill Suites by Marriott Fort
Worth University, Fort Worth
Proposed Full-Service Hotel Baybrook
Mall, Friendswood
Courtyard by Marriott, Galveston
Proposed Beachfront Hotel, Galveston
Proposed Beachtown Grand Hotel,
Galveston
Proposed Courtyard by Marriott,
Galveston
Proposed Downtown Hotel, Galveston
Proposed TownePlace Suites,
Galveston
TownePlace Suites by Marriott,
Galveston
Proposed Hotel, Georgetown
Best Western Fountainview, Houston
Crowne Plaza, Houston
Crowne Plaza Suites, Houston
DoubleTree Suites by Hilton Houston
Galleria, Houston
DoubleTree IAH, Houston
Four Seasons, Houston
Hampton Inn Houston Interstate 10
West, Houston
Hampton Inn & Suites Houston
Medical Center, Houston
Hilton Garden Inn Houston Bush
Intercontinental Airport, Houston
Hilton Garden Inn Houston
Northwest, Houston
Hilton Houston North, Houston
Hilton Houston Westchase, Houston
Holiday Inn Southwest, Houston
Holiday Inn Westchase, Houston
Homewood Suites by Hilton, Houston
Hotel Icon, Houston
Hyatt Regency, Houston
Intercontinental Houston Medical
Center, Houston
Magnolia Hotel, Houston
Marriott Houston North Greenspoint,
Houston
Proposed 314 Hotel, Houston
Proposed AC Hotel Houston
Downtown, Houston
Proposed Aloft, Houston
Proposed Embassy Suites, Houston
Proposed Hampton Inn/Homewood
Suites Downtown, Houston
Proposed Heights Hotel, Houston
Proposed Holiday Inn & Conference
Center Willowbrook, Houston
Proposed Holiday Inn Downtown,
Houston
Proposed Homewood Suites by
Hilton, Houston
Proposed Hotel Alessandra, Houston
Proposed Hotel Galleria, Houston
Proposed Hotel Zaza & Apartments,
Houston
Proposed Hyatt Place and Hyatt
House Dual-Brand Hotel, Houston
Proposed Hyatt Place, Houston
Proposed InterContinental Hotel,
Houston
Proposed JW Marriott, Houston
Proposed Le Méridien, Houston
Proposed Lifestyle Hotel, Houston
Proposed Luxury Hotel Houston
Galleria, Houston
Proposed Marriott Marquis, Houston
Proposed Montrose Hotel, Houston
Proposed Select-Service Hotel,
Houston
Proposed SpringHill Suites, Houston
Proposed Triple-Branded Hotel
Houston Downtown, Houston
Sam Houston Hotel (Curio
Conversion), Houston
Sheraton Houston North, Houston
Sheraton Houston West, Houston
Staybridge Suites, Houston
Staybridge Suites Houston IAH
Beltway 8, Houston
Staybridge Suites Houston West
Energy Corridor, Houston
Staybridge Suites Houston
Willowbrook, Houston
Westin Galleria, Houston
Westin Oaks, Houston
Wingate by Wyndham Houston Bush
Intercontinental, Houston
Proposed Hotel & Conference Center,
Huntsville
Studio 6, Ingleside
Proposed Westin, Irving
Wingate Las Colinas, Irving
Sleep Inn & Suites, Jourdanton
Super 8, Karnes City
Homewood Suites by Hilton
Houston/Katy Mills Mall, Katy
Proposed Homewood Suites by
Hilton, Katy
South Shore Harbour Resort & Spa,
League City
Best Western, Luling
Renaissance, McAllen
Proposed Home2 Suites by Hilton,
McKinney
Proposed SpringHill Suites by
Marriott, McKinney
Proposed Westin, McKinney
Proposed Limited-Service Hotel,
Melissa
Proposed Extended-Stay Hotel,
Midland
Candlewood Suites, Monahans
La Toretta del Lago Resort & Spa,
Montgomery
Candlewood Suites, Odessa
Proposed Home2 Suites by Hilton,
Pasadena
Courtyard by Marriott Houston
Pearland, Pearland
Proposed Pearland Hotel, Pearland
Proposed Fairfield Inn by Marriott,
Pecos
TownePlace Suites by Marriott Plano,
Plano
Holiday Inn Express Hotel & Suites,
Port Aransas
Holiday Inn Express, Port Arthur
Proposed Hilton Garden Inn Porter,
Porter
Holiday Inn Express, Rockport
Microtel Inn & Suites, Round Rock
o
Packet Pg. 402 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 525 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 10 Proposed Holiday Inn (land), San
Angelo
Hilton San Antonio Airport, San
Antonio
Homewood Suites by Marriott, San
Antonio
Marriott Plaza, San Antonio
Microtel Inn & Suites Airport, San
Antonio
Microtel Inn & Suites SeaWorld, San
Antonio
Proposed Thompson Hotel, San
Antonio
Baymont Inn & Suites, Snyder
Proposed Fairfield Inn by Marriott,
Snyder
Schlitterbahn Resort, South Padre
Island
Proposed Home2 Suites, Stafford
Marriott Hotel and Conference Center,
Sugar Land
Proposed Red Lion Inn & Suites, Texas
City
Baymont Inn & Suites, Victoria
Proposed Hotel, Webster
Proposed Hotel & Conference Center,
Webster
Proposed Extended-Stay Hotel, The
Woodlands
Woodlands Resort & Conference
Center, The Woodlands
UTAH
Peery Hotel, Salt Lake City
Proposed Inn at St. George, St. George

VIRGINIA
Wingate Inn Dulles Airport, Chantilly
Proposed Staybridge Suites,
Charlottesville
Delta Hotels, Chesapeake
Westin Tysons Corner, Falls Church
Proposed Hampton Inn, Gordonsville
Holiday Inn, Lynchburg
Magnuson Hotel & Convention Center
at Oyster Point, Newport News
Proposed Hotel Norfolk, Norfolk
Holiday Inn Express & Suites
Petersburg Fort Lee, Petersburg
TownePlace Suites by Marriott,
Stafford

WASHINGTON
Proposed AC Hotel, Bellevue
Holiday Inn Express, Marysville
Proposed Homewood Suites, Richland
Proposed 4/C Tower Hotel, Seattle
Holiday Inn Express, Sumner

WISCONSIN
Holiday Inn, Milwaukee

INTERNATIONAL
Colombia
Proposed Hyatt Place, Bogota
Conrad, Cartagena
Proposed City Express Hotel,
Cartagena
Proposed Luxe Resort by The Charlee,
Guatape
Proposed City Express Hotel, Medellín
Proposed Courtyard by Marriott,
Medellin
Proposed Marriott, Medellín
Proposed Hilton Garden Inn, Rionegro
Proposed Airport Hotel, Rionegro
Costa Rica
Proposed Andaz, Guanacaste
Proposed Boutique Resort,
Guanacaste
Proposed Paradisus Papagayo Bay
Resort & Luxury Villas, Guanacaste
Proposed Resort, Guanacaste
Punta Cacique Proposed Resort,
Guanacaste
Proposed Boutique Resort,
Guanacaste
Proposed Limited-Service Hotel,
Liberia
Proposed Wellness Boutique Hotel,
Matapalo
Marriott Los Suenos, Playa Herradura
Proposed Extended-Stay, San Jose
Proposed Hyatt Place Pinares, San
Jose
Proposed Select-Service Hotel, San
Jose
Marriott Costa Rica, San Jose
Proposed Hyatt Place, San Jose
Proposed Lifestyle Hotel & Club, San
Jose
Proposed Luxury Hotel, San Jose
Dominican Republic
Proposed Auberge Resort, El Seibo
Proposed Four Seasons, El Seibo
El Salvador
Proposed Full-Service Hotel, San
Salvador
Proposed Select-Service Hotel, San
Salvador
Guatemala
Proposed Four Seasons, Antigua
Proposed Hotel, Guatemala City
Honduras
Proposed Hotel, San Pedro Sula
Mexico
Fairmont Acapulco Princess, Acapulco
Fairmont Pierre Marques, Acapulco
Proposed Hotel, Acapulco
Bacalar Land Parcels, Bacalar
Proposed Bacalar Hotel, Bacalar
Cabo de Cortes Fairmont/Raffles
Development, Cabo San Lucas
Cabo San Cristobal, Cabo San Lucas
Proposed Luxury Hotel & Villa Project,
Campeche
Proposed Master-Planned
Development (2), Campeche
Dreams Resort, Cancun
Elan Resort & Spa, Cancun
El Pueblito, Cancun
Fiesta Americana Condesa Cancun,
Cancun
Le Meridien, Cancun
o
Packet Pg. 403 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 526 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village HVS, Los Angeles, California  Qualifications of Luigi Major, MAI 11 Yalmakan Resort, Cancun
Westin Soberano, Chihuahua
Proposed Quinta Real Hotel
Development, Culiacán
Proposed Banyan Tree, Ensenada
Proposed Boutique Hotel Project,
Guadalajara
Proposed Fiesta Inn del Tapatio,
Guadalajara
Proposed Hotel Project, Guadalajara
Proposed Mixed-Use Development,
Guadalajara
Proposed Vi Hotel, Guadalajara
Hotel Condesa, Leon, Guanajuato
Tesoro, Ixtapa
Proposed Hotel & Residential
Development, Ixtapan de la Sal
Proposed Park Hyatt, Kanai
Proposed St. Regis, Kanai
Proposed W Hotel, Kanai
Desire Resort, Los Cabos
Esperanza Resort, Los Cabos
Proposed Thompson Hotel, Los
Veneros
Tesoro Manzanillo, Manzanillo
Embassy Suites, Mexico City
Le Méridien, Mexico City
Proposed City Express Hotel, Mexico
City
Proposed Limited-Service Hotel,
Mexico City
Proposed Hotel & Condo, Monterrey
Proposed Hotel, Monterrey
Proposed Limited-Service Hotel, Playa
del Carmen
Proposed Resort, Playa del Carmen
Ceiba del Mar, Puerto Morelos
Paraiso de la Bonita, Puerto Morelos
Proposed Puerto Telchac Hotel &
Residential Project, Puerto Progreso
Presidente InterContinental, Puerto
Vallarta
Proposed City Express Hotel,
Queretaro
Proposed Capella Punta Maroma,
River Maya
Proposed Grand Hyatt, Riviera Maya
El Dorado Ranch Hotel & Excess Land,
San Felipe
Proposed Hotel, San Miguel de
Allende
Prposed Quinta Real Hotel &
Residential, San Miguel de Allende
Dreams Resort, Tulum
Secrets Capri Resort, Tulum
Panama
Proposed Boutique Hotel, Panama
City
Proposed Full-Service Hotel, Panama
City
Proposed Limited-Service Hotel,
Panama City
Peru
Proposed Hyatt Place, Lima
Puerto Rico
Hilton, Caribe
Embassy Suites San Juan Hotel &
Casino, Carolina
Proposed Boutique Hotel, Ponce
Proposed El Vigía Hotel and
Residences, a Tribute Portfolio
Resort, Ponce
Courtyard by Marriott (Expansion),
San Juan
Proposed 1,000-Room Hotel & Casino
San Juan, San Juan
Saint Lucia
Proposed Master Planned
Development
Spain
Villaitana Wellness Golf & Business
Sun Resort, Benidorm
o
Packet Pg. 404 Attachment: Attachment o - Hotel Feasibility Study, HVS, dated December 13, 2021 (2767 : Village at Laguna Hills Continued Public Hearing)

4.5.b
Packet Pg. 527 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village ADDENDUM – COMMENTARY ON FULL-SERVICE UPSCALE FEASIBILITY Proposed Laguna Hills Hotel

LAGUNA HILLS MALL, CALLE DE LA LOUISA

LAGUNA HILLS, CALIFORNIA
SUBMITTED TO:PR OPOSED
Stephen T. Logan
Merlone Geier Partners
4365 Executive Drive, Suite 1400
San Diego, California 92121
PREPARED BY:

HVS Consulting & Valuation
Division of TS Worldwide, LLC
8430 Santa Monica Boulevard, Suite 200
West Hollywood, California 90069
+1 (310) 270-3240
December-2021
p
Packet Pg. 405 Attachment: Attachment p - Addendum to Hotel Feasibility Study, HVS, dated December 14, 2021 (2767 : Village at Laguna Hills Continued

4.5.b
Packet Pg. 528 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021
Proposed Laguna Hills Hotel – Laguna Hills, California 2 December 14, 2021
Stephen T. Logan
Merlone Geier Partners
4365 Executive Drive, Suite 1400
San Diego, California 92121
Re: Proposed Laguna Hills Hotel
Laguna Hills, California
HVS Reference: 2021022179
Dear Mr. Logan:

Pursuant to your request, we herewith submit our response pertaining to your question on the feasibility of an upscale full-service hotel for the above-referenced project in the Laguna Hills, California, area.

As a reminder STR categorizes hotels by ADR. Therefore, an upscale full-service hotel would not be expected to have a significantly higher ADR than an upscale select-service hotel. Starting from this understanding, it would be challenging to make an upscale full-service hotel feasible if ADR levels will be relatively similar to the select-service scenario, since construction costs for the full-service scenario will be much higher.

If we take it a step further, we have in our competitive set one upscale full-service hotel, which can provide an understanding of ADR levels for this specific product.

The DoubleTree by Hilton Irvine Spectrum in our competitive achieved an ADR of ~$185 in 2019. We also have the Sonesta Laguna Hills, which is categorized as upscale, but one could argue that falls between select and full service. The Sonesta is seeking to move more toward a full-service offering. The Sonesta had an ADR of ~$145 in 2019.

Our selected ADR for the upscale select-service scenario was $175 in 2019 dollars and $205 for the upper-upscale full-service scenario. The above information means that on a best-case scenario we would be looking at an ADR of $185-$190 for upscale full-service scenario, ultimately falling between the two scenarios previously studied.

As such, the upscale full-service scenario is likely to achieve an ADR increase of $10 to $15 over the select-service scenario, or approximately 5% to 9% higher.

However, construction costs are likely to fall between the select service upscale and the full-service upper-upscale category. Development costs for select-service were about $275,000 per room and for full-service $375,000. Construction costs for a full-service hotel would be higher due to the additional requirements that arise from the inclusion of an expanded food and beverage offering as well larger meeting venues. Furthermore, the clientele and brand expectations for a fullservice property would demand a higher level of quality, which would result in higher costs associated with flooring and wall finishes, furniture, fixtures, and

HVS LOS ANGELES
8430 Santa Monica Boulevard, Suite
200
West Hollywood, California 90069
+1 (310) 270-3240
+1 (415) 896-0516 FAX
www.hvs.com
Superior results through unrivaled
hospitality intelligence. Everywhere.
p
Packet Pg. 406 Attachment: Attachment p - Addendum to Hotel Feasibility Study, HVS, dated December 14, 2021 (2767 : Village at Laguna Hills Continued

4.5.b
Packet Pg. 529 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village December-2021
Proposed Laguna Hills Hotel – Laguna Hills, California 3 equipment. As such, the development of an upscale full-service hotel is likely to fall in the middle, at approximately $325,000 or higher, or approximately 18% higher than the select-service scenario.

As illustrated in the select-service scenario, the valuation at opening was expected to be 1.5% higher than the estimated development costs. In this new upscale fullservice scenario, with ADR being 9% higher but costs at least 18% higher, the fullservice upscale scenario would not be feasible.

We hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This memo is meant to be part of the summary of findings previously completed for the abovereferenced subject property and is subject to the comments made throughout that report and to all assumptions and limiting conditions set forth therein.

Sincerely,
TS Worldwide, LLC
Luigi Major, MAI, Managing Director
[email protected], +1 (310) 270-3240
p
Packet Pg. 407 Attachment: Attachment p - Addendum to Hotel Feasibility Study, HVS, dated December 14, 2021 (2767 : Village at Laguna Hills Continued

4.5.b
Packet Pg. 530 Attachment: March 8, 2022 - Introduction of Ordinance Staff Report and Attachments (2775 : Second Reading & Adoption of Ordinance - Village City of Laguna Hills
City Council/Planning Agency
Staff Report
DATE: March 22, 2022
TO: Mayor and Council Members
FROM: Melissa Au-Yeung
Deputy City Manager
ISSUE: Legislative Update for the 2022 Regular Session and Overview of Initiative No. 21-0042A1
RECOMMENDATION: That the City Council receive and file the report and take a Watch position on Legislation until later in the Legislative Session.

SUMMARY:

The California State Legislature reconvened in early January, and since that time the Senate and the Assembly have each introduced hundreds of legislative bills to be heard in the current legislative session. Each year, the City actively monitors the activity of the Legislature and advocates on legislation that may have an impact, either positive or negative, on the Laguna Hills community.

The purpose of this report is to provide the City Council with 1) a review of legislative resources that are currently available to the City as it pertains to the identification, monitoring, and advocacy of bills, 2) an overview of key legislative dates as outlined by the State Legislature’s 2022 Legislative Calendar, and 3) a summary of legislation that Staff has identified as being of particular importance to the City. In addition, as requested by City Council, Staff is also providing an overview of the initiative process including an overview of proposed Initiative No. 21-0042A1.

BACKGROUND:

The State Legislature reconvened on January 3, 2022, for its 2022 Regular Session. The Legislature has been busy since the start of its session, and together, both the Senate

4.6 Packet Pg. 531
Legislative Update for the 2022 Regular Session
March 22, 2022

and the Assembly introduced over 2,000 legislative bills.

Many of the bills introduced in the current legislative session are related to local control of zoning, housing development, and homelessness, all of which have been, and continue to be, key policy and legislative priorities for the Legislature and the Governor.

Given that such priorities may have severe long-term consequences on the City’s ability to maintain its authority over local issues, it is important for the City Council to be informed and for the City to actively monitor and advocate bills during this legislative session.
1) Legislative Resources
As it pertains to legislative affairs and advocacy, the City has a variety of resources available to it which are coordinated by the City Manager’s Office. • Lobbying and Legislative Monitoring: The City’s long-term partner, Gonsalves & Son, provides lobbying and legislative services, which includes analysis of bills and policies from the Legislature. Additionally, Gonsalves & Son provides legislative monitoring services to the City and notifies the City of potentially problematic legislation.
• Legal Analysis: The City Attorney provides detailed legal analysis of legislation and assists the City Manager’s Office with the identification of policy language that may be of significance to the City.
• Association of California Cities – Orange County: The City is a member of the Association of California Cities – Orange County (ACC-OC), which represents the interests of Laguna Hills and Orange County cities on regional public policy issues.

ACC-OC has numerous policy committees and working groups that advocate on behalf of the City.
• CalCities: The League of California Cities provides bill briefs, bill analyses, and advocacy letter.
• Legislative Calendar: Each year, the Legislature adopts a new Legislative Calendar that identifies key legislative deadlines for each house and provides an overview of important activities throughout the session.
2) Key Deadlines on the Legislative Calendar

4.6 Packet Pg. 532
Legislative Update for the 2022 Regular Session
March 22, 2022

With these resources, and by utilizing the deadlines of the Legislative Calendar, the City can develop a strategy to maximize its advocacy efforts during the legislative session. To that end, there are a few important dates on this year’s Legislative Calendar that may be of particular importance to the City Council.
• Friday, February 18, 2022: This was the last day for the Assembly and the Senate to introduce bills. A summary of bills of interest to the City is provided later in this report.
• Friday, May 27, 2022: This is the last day for each house to pass bills introduced in that house. After this date, the City will know which bills are still active, and staff can provide a legislative update to the City Council. • Friday, June 30, 2022: This is the last day for a legislative measure, such as an initiative, to qualify for the November 8, 2022, General election ballot. • Friday, August 31, 2022: This is the last day for any bill to be passed. After this date, the City will know which bills have passed the committee process and are headed to the Governor’s desk to be signed into law or vetoed. At this point, staff can provide a legislative update to the City Council with its recommendations to continue, or not, to advocate a position on a bill.
• Friday, September 30, 2022: This is the last day for the Governor to sign into law or veto a bill. After this date, staff can provide the City Council with a legislative update describing which bills of interest to the City were signed into law, including any impact the bill will have on the City, if any. 3) Legislative Update
Since February 18, 2022, the deadline for the Legislature to introduce bills, Staff has identified a number of bills that the City may be interested in taking a position on in the near future. A summary of each bill is provided below, and it should be noted that this is not an exhaustive or complete list of bills that the City may take a position on during the legislative session.

Assembly Bill (AB) 682 (Bloom) – Planning and zoning: density bonuses: cohousing buildings.

Status: This is an active bill in the Senate, currently in the Senate Committee on Rules awaiting committee assignment.

4.6 Packet Pg. 533
Legislative Update for the 2022 Regular Session
March 22, 2022

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: Current law, commonly referred to as the Density Bonus Law, requires a city or county to provide a developer that proposes a housing development within the city or county with a density bonus and other incentives or concessions, as specified, if the developer agrees to construct, among other options, specified percentages of units for moderate-income, lower income, or very low income households and meets other requirements. This bill would additionally require that a density bonus be provided under these provisions to a developer who agrees to construct a housing development that is a cohousing building, as defined, that meets specified requirements and will contain either 10% of the total square footage for lower income households, as defined, or 5% of the total square footage for very low income households, as defined.

AB 916 (Salas) – Zoning: accessory dwelling units: bedroom addition.

Status: This is an active bill in the Senate, currently being heard by the Senate Committee on Rules.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: This bill would prohibit a city or county legislative body from adopting or enforcing an ordinance requiring a public hearing as a condition of adding space for additional bedrooms or reconfiguring existing space to increase the bedroom count within an existing house, condominium, apartment, or dwelling. The bill would include findings that ensuring adequate housing is a matter of statewide concern and is not a municipal affair, and that the provision applies to all cities, including charter cities.

AB 1551 (Santiago) – Planning and zoning: development bonuses: mixed-use projects.

Status: This is an active bill in the Senate, currently in the Senate Committee on Rules awaiting committee assignment.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: The Density Bonus Law requires a city or county to provide a developer that

4.6 Packet Pg. 534
Legislative Update for the 2022 Regular Session
March 22, 2022

proposes a housing development within the city or county with a density bonus and other incentives or concessions if the developer agrees to construct specified percentages of units for lower income, very low income, or senior citizen housing, among other things, and meets other requirements. Previously existing law, until January 1, 2022, required a city, county, or city and county to grant a commercial developer a development bonus when an applicant for approval of a commercial development had entered into an agreement for partnered housing with an affordable housing developer to contribute affordable housing through a joint project or 2 separate projects encompassing affordable housing. This bill would reenact the above-described provisions regarding the granting of development bonuses to certain projects.

AB 1599 (Kiley) – Proposition 47: repeal.

Status: This is an active bill in the Assembly, currently being heard by the Assembly Committee on Public Safety. The next hearing date is scheduled for March 18, 2021.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: This bill would repeal the changes and additions made by Proposition 47, except those related to reducing the penalty for possession of concentrated cannabis.

Upon passage by the legislature and approval by the Governor, this repeal to Proposition 47 is to be placed on the general election ballot on November 8, 2022, and requires a majority vote for final approval.

AB 2063 (Berman) – Density bonuses: affordable housing impact fees.

Status: This is an active bill in the Assembly, currently being heard by the Assembly Committee on Housing and Community Development. The next hearing date is scheduled for March 23, 2022.

City Recommended Position: Watch.

Other entities ’positions: Cal Cities has taken a Watch position.

Summary: The Density Bonus Law requires a city or county to provide a developer that proposes a housing development in the city or county with a density bonus and other incentives or concessions for the production of lower income housing units, or for the donation of land within the development, if the developer agrees to, among other

4.6 Packet Pg. 535
Legislative Update for the 2022 Regular Session
March 22, 2022

things, construct a specified percentage of units for very low income, low-income, or moderate-income households or qualifying residents, including lower income students.

This bill would prohibit affordable housing impact fees, including inclusionary zoning fees, in-lieu fees, and public benefit fees, from being imposed on a housing development’s density bonus units.

AB 2221 (Quirk-Silva) – Accessory dwelling units.

Status: This is an active bill in the Assembly, currently being heard by the Assembly Committee on Housing and Community Development.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: The Planning and Zoning Law provides for the creation of accessory dwelling units by local ordinance, or, if a local agency has not adopted an ordinance, by ministerial approval, in accordance with specified standards and conditions. Current law requires a permitting agency to act on the application to create an accessory dwelling unit or a junior accessory dwelling unit within specified timeframes. This bill would provide that the requirement for an agency to act on an application means either to return in writing a full set of comments to the applicant with a comprehensive request for revisions or to return the approved permit application. The bill would require the permitting agency to complete all required service upgrades within 60 days of request if service upgrades are required for the project to pass final inspection.

AB 2328 (Flora) – Local ordinances: home experience sharing.

Status: This is an active bill in the Assembly located in the Assembly Committee on Local Government.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: Current law defines "hosting platform" as a marketplace that is created for the primary purpose of facilitating the rental of a residential unit. This bill would prohibit a city or county from prohibiting or effectively prohibiting the use of property as a home experience sharing unit. The bill would define "home experience sharing unit" as a privately owned, noncommercial property or residential dwelling unit that is rented

4.6 Packet Pg. 536
Legislative Update for the 2022 Regular Session
March 22, 2022

partially for a fee for a period of fewer than 18 continuous hours and that does not provide sleeping accommodations to transients. The bill would authorize a city or county to reasonably regulate home experience sharing units to protect the public’s health and safety.

AB 2339 (Bloom) – Housing element: emergency shelters: regional housing need.

Status: This is an active bill in the Assembly located in the Assembly Committee on Housing and Community Development.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: The Planning and Zoning Law requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city that includes a housing element. This bill would revise the requirements of the housing element in connection with zoning designations that allow residential use, including mixed use, where emergency shelters are allowed as a permitted use without a conditional use or other discretionary permit. The bill would prohibit a city or county from establishing overlay districts to comply with these provisions.

AB 2449 (Rubio) – Open Meetings: local agencies: teleconferences.

Status: This is an active bill in the Assembly, currently located in the Assembly Committee on Local Government.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: Current law, until January 1, 2024, authorizes a local agency to use teleconferencing without complying with specified teleconferencing requirements in specified circumstances when a declared state of emergency is in effect, or in other situations related to public health. This bill would authorize a local agency to use teleconferencing without complying with those specified teleconferencing requirements if at least a quorum of the members of the legislative body participates in person from a singular location clearly identified on the agenda that is open to the public and situated within the local agency’s jurisdiction. The bill would impose prescribed requirements for

4.6 Packet Pg. 537
Legislative Update for the 2022 Regular Session
March 22, 2022

this exception relating to notice, agendas, the means and manner of access, and procedures for disruptions.

AB 2668 (Grayson) – Planning and zoning: housing: streamlined, ministerial approval.

Status: This is an active bill in the Assembly, currently located in the Assembly Committee on Housing and Community Development.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: This bill would prohibit a local government from determining that a development, including an application for a modification, is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains sufficient information that would allow a reasonable person to conclude that the development is consistent with the objective planning standards.

Senate Bill (SB) 897 (Wieckowski) – Accessory dwelling units: junior accessory dwelling units.

Status: This is an active bill in the Senate and is currently located in the Senate Committee on Housing. The next scheduled hearing date is March 24, 2022.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: The Planning and Zoning Law authorizes a local agency, by ordinance or ministerial approval, to provide for the creation of accessory dwelling units in areas zoned for residential use, as specified. Current law authorizes a local agency to impose standards on accessory dwelling units that include, but are not limited to, parking, height, setback, landscape, architectural review, and maximum size of a unit. This bill would require that the standards imposed on accessory dwelling units be objective. For purposes of this requirement, the bill would define “objective standard” as a standard that involves no personal or subjective judgment by a public official and is uniformly verifiable.

SB 1100 (Cortese) – Open Meetings: orderly conduct.

Status: This is an active bill in the Senate and is currently located in the Senate

4.6 Packet Pg. 538
Legislative Update for the 2022 Regular Session
March 22, 2022

Committee on Governance and Finance.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: The Ralph M. Brown Act requires, with specified exceptions, that all meetings of a legislative body of a local agency be open and public and that all persons be permitted to attend and participate. This bill would authorize the members of the legislative body conducting a meeting to remove an individual for willfully interrupting the meeting. The bill, except as provided, would require removal to be preceded by a warning by the presiding member of the legislative body that the individual is disrupting the proceedings, a request that the individual curtail their disruptive behavior or be subject to removal, and a reasonable opportunity to respond to the warning.

SB 1464 (Pan) – Law enforcement: public health orders.

Status: This is an active bill in the Senate and is currently located in the Senate Committee on Health.

City Recommended Position: Watch.

Other entities’ positions: Cal Cities has taken a Watch position.

Summary: Current law requires all sheriffs to execute all lawful orders of a department in their counties. Current law authorizes each sheriff to enforce all orders of the State Department of Public Health or of the local health officer issued for the purpose of preventing the spread of any contagious, infectious, or communicable disease. This bill would instead require those sheriffs and peace officers to enforce those orders.

Initiative Process Overview
In a special election held on October 10, 1911, California became the 10th state to adopt the initiative process. The initiative is the power of the people of California to propose statutes and to propose amendments to the California Constitution. Generally, any matter that is a proper subject of legislation can become an initiative measure; however, no initiative measure addressing more than one subject area may be submitted to the voters or have any effect.

The steps for an initiative to become law are as follows:

4.6 Packet Pg. 539
Legislative Update for the 2022 Regular Session
March 22, 2022

1. Proponent writes the text of the proposed law, referred to as an initiative draft.

2. Proponent submits the initiative draft to the Attorney General for official title and summary.

3. Initiative petitions are circulated to collect enough signatures from registered voters.

4. Signatures are turned into county election officials for verification.

5. The initiative will either be qualified for ballot or be failed by the Secretary of State.

6. If qualified for ballot, California voters will approve or deny the initiative.

Required Number of Signatures
In order to qualify for the ballot, the initiative petition must be signed by a specified number of registered voters depending on the type of proposed initiative measure submitted. The number of signatures for petitions proposing initiative statutes or initiative referendums must be equal to at least 5% of the total votes cast for the office of the Governor at the last gubernatorial election. The number of signatures for petitions proposing initiative constitutional amendments must be equal to at least 8% of the total votes cast for the office of the Governor at the last gubernatorial election. The following table shows the number of signatures required for an initiative to qualify for the November 8, 2022, General Election.

Type of Initiative
Number of
Signatures
Required
Initiative Statute 623,212
Initiative Constitutional Amendment 997,139
Initiative Referendum 623,212

4.6 Packet Pg. 540
Legislative Update for the 2022 Regular Session
March 22, 2022

Circulation Period
Proponents are allowed a maximum of 180 days from the official summary date to circulate petitions, collect signatures, and file petitions with county elections officials. If the petition reaches the number of valid signatures required, it will qualify for the next statewide general election held at least 131 days after it qualifies or at any special statewide election held prior to that general election. Proponents may shorten the 180- day circulation period in order to ensure that the proposed initiative measure is certified at least 131 days before a particular election.

Overview of Initiative No. 21-0042A1, The Taxpayer Protection and Government Accountability Act
Initiative No. 21-0042A1, an initiative constitutional amendment, would change the rules for how state and local governments can impose taxes, fees, and other charges.

For new state taxes, the Initiative would require approval by two-thirds of each house of the legislature and by majority vote of the statewide electorate. New local taxes would require approval by two-thirds of local voters, and local governments would be required to identify the type and amount or rate of the tax, including its duration.

New state and local government fees would require approval by majority vote of the legislature or local government body. The Initiative would also prohibit state and local governments from delegating fee changes to administrative entities. Furthermore, certain categories of fees could not exceed actual costs.

According to a fiscal analysis prepared by the Legislative Analyst’s Office, the Initiative may lead to substantially lower annual state and local tax and fee revenues.

Additionally, state and local governments may have increased costs to adjust certain fee levels.

To qualify for the ballot, the Initiative requires at least 997,139 signatures from registered voters during the 180-day circulation period beginning on February 3, 2022.

Additional information about this initiative is attached. Staff will further advise the City Council on the status of this initiative during the 180-day period and if it qualifies for a future ballot.

ATTACHMENTS:
• 2022 Legislative Calendar

4.6 Packet Pg. 541
Legislative Update for the 2022 Regular Session
March 22, 2022

• Initiative No. 21-0042A1

4.6 Packet Pg. 542
2022 TENTATIVE LEGISLATIVE CALENDAR

COMPILED BY THE OFFICE OF THE SECRETARY OF THE SENATE & THE OFFICE OF THE ASSEMBLY CHIEF CLERK Revised 10-21-2021

JANUARY

S M T W TH F S
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31

DEADLINES
Jan. 1 Statutes take effect (Art. IV, Sec. 8(c)).

Jan. 3 Legislature reconvenes (J.R. 51(a)(4)).

Jan. 10 Budget must be submitted by Governor (Art. IV, Sec. 12 (a)).

Jan. 14 Last day for policy committees to hear and report to fiscal Committees fiscal bills introduced in their house in 2021 (J.R. 61(b)(1)).

Jan. 17 Martin Luther King, Jr. Day.

Jan. 21 Last day for any committee to hear and report to the Floor bills introduced in their house in 2021 (J.R. 61(b)(2)).

Jan. 21 Last day to submit bill requests to the Office of Legislative Counsel.

Jan. 31 Last day for each house to pass bills introduced in 2021 in their house (Art. IV, Sec. 10(c)), (J.R. 61(b)(3)).

FEBRUARY

S M T W TH F S
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28
Feb. 18 Last day for bills to be introduced (J.R. 61(b)(4)), (J.R. 54(a)).

Feb. 21 Presidents’ Day.

MARCH

S M T W TH F S
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31
APRIL

S M T W TH F S
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
Apr. 1 Cesar Chavez Day observed
Apr. 7 Spring Recess begins upon adjournment of this day’s session (J.R. 51(b)(1)).

Apr. 18 Legislature reconvenes from Spring Recess (J.R. 51(b)(1)).

Apr. 29 Last day for policy committees to hear and report to fiscal Committees fiscal bills introduced in their house (J.R. 61(b)(5)).

May 6 Last day for policy committees to hear and report to the floor non-fiscal bills introduced in their house (J.R. 61(b)(6)).

MAY

S M T W TH F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31
May 13 Last day for policy committees to meet prior to May 31 (J.R. 61(b)(7)).

May 20 Last day for fiscal committees to hear and report to the Floor bills introduced in their house (J.R. 61 (b)(8)). Last day for fiscal committees to meet prior to May 31 (J.R. 61 (b)(9)).

May 23-27 Floor Session only. No committee, other than conference or Rules, may meet for any purpose (J.R. 61(b)(10)).

May 27 Last day for bills to be passed out of the house of origin (J.R. 61(b)(11)).

May 30 Memorial Day.

May 31 Committee meetings may resume (J.R. 61(b)(12)).
*Holiday schedule subject to final approval by the Rules Committee 1 of 2

4.6.a
Packet Pg. 543 Attachment: 2022 Legislative Calendar (2793 : Legislative Update for the 2022 Regular Session) 2022 TENTATIVE LEGISLATIVE CALENDAR

COMPILED BY THE OFFICE OF THE SECRETARY OF THE SENATE & THE OFFICE OF THE ASSEMBLY CHIEF CLERK Revised 10-21-2021
JUNE

S M T W TH F S
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30
June 15 Budget Bill must be passed by midnight (Art. IV, Sec. 12 (c)).

June 30 Last day for a legislative measure to qualify for the Nov. 8 General election ballot (Elec. Code Sec. 9040).

JULY

S M T W TH F S
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 July 1 Last day for policy committees to meet and report bills (J.R. 61(b)(13)).

Summer Recess begins at the end of this day’s session if Budget Bill has been passed (J.R. 51(b)(2)).

July 4 Independence Day.

AUGUST

S M T W TH F S
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31
Aug. 1 Legislature reconvenes from Summer Recess (J.R. 51(b)(2)).

Aug. 12 Last day for fiscal committees to meet and report bills to the Floor (J.R. 61(b)(14)).

Aug. 15 - 31 Floor Session only. No committees, other than conference and Rules, may meet for any purpose (J.R. 61(b)(15)).

Aug. 25 Last day to amend bills on the Floor (J.R. 61(b)(16)).

Aug. 31 Last day for each house to pass bills (Art. IV, Sec. 10(c)), (J.R. 61(b)(17)).

Final Recess begins at end of this day’s session (J.R. 51(b)(3)).

IMPORTANT DATES OCCURRING DURING FINAL RECESS
2022
Sept. 30 Last day for Governor to sign or veto bills passed by the Legislature before Sept. 1 and in the Governor’s possession on or after Sept. 1 (Art. IV, Sec. 10(b)(2)).

Nov. 8 General Election.

Nov. 30 Adjournment Sine Die at midnight (Art. IV, Sec. 3(a)).

Dec. 5 12 m. convening of the 2023-24 Regular Session (Art. IV, Sec. 3(a)). 2023
Jan. 1 Statutes take effect (Art. IV, Sec. 8(c)).
2 of 2

4.6.a
Packet Pg. 544 Attachment: 2022 Legislative Calendar (2793 : Legislative Update for the 2022 Regular Session) BELL, McANDREWS & HILTACHK, LLP
Anabel Renteria
Initiative Coordinator
ATTORNEYS AND COUNSEL-ORS AT I.AW
455 C APITO L MALL, S UITE 600
SACRAMENTO, CALIFOE=INIA 95014
(916) 44;a-7757
FAX [916) 44-;a-77 59
www.bmhlaw.com
January 4, 2022
2 1 - 0 0 4 2

RECEIVED
JAN O 4 2022
Office of the Attorney General
State of California

INITIATIVE COORDINATOR

ATTORNEY GENERAL'S OFFICE
PO Box 994255
Sacramento, CA 94244-25550
Re: Initiative 21-0042 - Amendment Number One
Dear Initiative Coordinator:

Pursuant to subdivision (b) of Section 9002 of the Elections Code, enclosed please find Amendment #1 to Initiative No. 21-0042 "The Taxpayer Protection and Government Accountability Act." The amendments are reasonably germane to the theme, purpose or subject of the initiative measure as originally proposed.

I am the proponent of the measure and request that the Attorney General prepare a circulating title and summary of the measure as provided by law, using the amended language.

Thank you for your time and attention processing my request.

Sincerely,
Thomas W.
~ Hiltachk

4.6.b
Packet Pg. 545 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) 2 1 - 0 0 4 2 Arndt. # /
The Taxpayer Protection and Government Accountability Act [Deleted codified text is denoted in strikeout. Added codified text is denoted by italics and underline.] Section 1. Title
This Act shall be known, and may be cited as, the Taxpayer Protection and Government Accountability Act.

Section 2. Findings and Declarations
(a) Californians are overtaxed. We pay the nation's highest state income tax, sales tax, and gasoline tax. According to the U.S. Census Bureau, California's combined state and local tax burden is the highest in the nation. Despite this, and despite two consecutive years of obscene revenue surpluses, state politicians in 2021 alone introduced legislation to raise more than $234 billion in new and higher taxes and fees.
(b) Taxes are only part of the reason for California's rising cost-of-living crisis. Californians pay billions more in hidden "fees" passed through to consumers in the price they pay for products, services, food, fuel, utilities and housing. Since 2010, government revenue from state and local "fees" has more than doubled.
(c) California's high cost of living not only contributes to the state's skyrocketing rates of poverty and homelessness, they are the pushing working families and job-providing businesses out of the state. The most recent Census showed that California's population dropped for the first time in history, costing us a seat in Congress. In the past four years, nearly 300 major corporations relocated to other states, not counting thousands more small businesses that were forced to move, sell or close. (d) California voters have tried repeatedly, at great expense, to assert control over whether and how taxes and fees are raised. We have enacted a series of measures to make taxes more predictable, to limit what passes as a "fee," to require voter approval, and to guarantee transparency and accountability. These measures include Proposition 13 (1978), Proposition 62 (1986), Proposition 218 (1996), and Proposition 26 (2010).
(e) Contrary to the voters' intent, these measures that were designed to control taxes, spending and accountability, have been weakened and hamstrung by the Legislature, government lawyers, and the courts, making it necessary to pass yet another initiative to close loopholes and reverse hostile court decisions.

Section 3. Statement of Purpose
(a) In enacting this measure, the voters reassert their right to a voice and a vote on new and higher taxes by requiring any new or higher tax to be put before voters for approval. Voters also intend that all fees and other charges are passed or rejected by the voters themselves or a governing body elected by voters and not unelected and unaccountable bureaucrats.
(b) Furthermore, the purpose and intent of the voters in enacting this measure is to increase transparency and accountability over higher taxes and charges by requiring any tax measure placed on the ballot1

4.6.b
Packet Pg. 546 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) either at the state or local level-to clearly state the type and rate of any tax, how long it will be in effect, and the use of the revenue generated by the tax.
(c) Furthermore, the purpose and intent of the voters in enacting this measure is to clarify that any new or increased form of state government revenue, by any name or manner of extraction paid directly or indirectly by Californians, shall be authorized only by a vote of the Legislature and signature of the Governor to ensure that the purposes for such charges are broadly supported and transparently debated. (d) Furthermore, the purpose and intent of the voters in enacting this measure is also to ensure that taxpayers have the right and ability to effectively balance new or increased taxes and other charges with the rapidly increasing costs Californians are already paying for housing, food, childcare, gasoline, energy, healthcare, education, and other basic costs of living, and to further protect the existing constitutional limit on property taxes and ensure that the revenue from such taxes remains local, without changing or superseding existing constitutional provisions contained in Section 1{c) of Article XIII A. (e) In enacting this measure, the voters also additionally intend to reverse loopholes in the legislative twothirds vote and voter approval requirements for government revenue increases created by the courts including, but not limited to, Cannabis Coalition v. City of Upland, Chamber of Commerce v. Air Resources Board, Schmeer v. Los Angeles County, Johnson v. County of Mendocino, Citizens Assn. of Sunset Beach v.

Orange County Local Agency Formation Commission, and Wilde v. City of Dunsmuir.

Section 4. Section 3 of Article XIII A of the California Constitution is amended to read:

Sec. 3(a} Every levy, charge. or exaction of any kind imposed by state law is either a tax or an exempt charge.
illlJ1l ~ Any change in state statute Jaw which results in any taxpayer paying a new or higher tax must be imposed by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature, and submitted to the electorate and approved by a maiority vote, except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property, may be imposed. Each Act shall include:
(A) A specific duration of time that the tax will be imposed and an estimate of the annual amount expected to be derived from the tax.
(BJ A specific and legally binding and enforceable limitation on how the revenue from the tax can be spent.

If the revenue from the tax can be spent for unrestricted general revenue purposes. then a statement that the tax revenue can be spent for "unrestricted general revenue purposes" shall be included in a separate, stand-alone section. Any proposed change to the use of the revenue from the tax shall be adopted by a separate act that is passed by not less than two-thirds of all members elected to each of the two houses of the Legislature and submitted to the electorate and approved by a maiority vote. (2) The title and summary and ballot label or question required for a measure pursuant to the Elections Code shall. for each measure providing for the imposition of a tax, including a measure proposed by an elector pursuant to Article II, include:
{A) The type and amount or rate of the tax;
(BJ The duration of the tax: and
2 4.6.b
Packet Pg. 547 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) (CJ The use of the revenue derived from the tax.
(c} Any change in state law which results in any taxpayer paying a new or higher exempt charge must be imposed by an act passed by each of the two houses of the Legislature. Each act shall specify the type of exempt charge as provided in subdivision (e ), and the amount or rate of the exempt charge to be imposed.

Ml._fbt As used in this section and in Section 9 of Article II, "tax" means every aA1f levy, charge, or exaction of any kind imposed by the State state law that is not an exempt charge. e1<eept the follo•Ning:
(e) As used in this section. "exempt charge" means only the following:
(1) a el:iarge imposes fer a s1=1eeifie eenefit eonferreEl or pri'+'ilege granteEl aireetly to tl:ie 13ayor tl:iat is not 1=1ro>viaeEl to tl:iose not et:iargeEI, anEI whiel:i aoes not e1<ceeEl tl:ie reasonal3Ie costs to tl:ie State of eonferring the benefit or granting the pri¥ilege to the 1=1a¥OF.
ill {-2+ A reasonable charge irnposeEl for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the rnasonable actual costs to the State of providing the service or product to the payor. f.11 ~ A charge in,poseEl for the reasonable regulatory costs to the State incident to issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. (3) A levy, charge. or exaction collected from local units of government. health care providers or health care service plans that is primarily used by the State of California for the purposes of increasing reimbursement rates or payments under the Medi-Cal program, and the revenues of which are primarily used to finance the non-federal portion of Medi-Cal medical assistance expenditures. (4) A reasonable charge iR'l13oseEl for entrance to or use of state property, or the purchase. rental, or lease of state property, except charges governed by Section 15 of Article XI. (5} A fine, or penalty, or other monetary el:large including any applicable interest for nonpayment thereot imposed by the judicial branch of government or the State, as a result of a state administrative enforcement agency pursuant to adiudicatorv due process, to punish a violation of law. (6} A levy, charge, assessment, or exaction collected for the promotion of California tourism pursuant to Chapter 1 (commencing with Section 13995) of Part 4.7 of Division 3 of Title 2 of the Government Code. flL~Any tax or exempt charge adopted after January 1, 2022 ~, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax or exempt charge is reenacted B'l the begislatuFe anel signea into law ey tl:ie <iio¥ernoF in compliance with the requirements of this section. [gl[.JlJG:} The State bears the burden of proving by a preponEleranee oftl:le clear and convincing evidence that a levy, charge, or other exaction is an exempt charge and not a tax. The State bears the burden of proving by clear and convincing evidence that the amount of the exempt charge is reasonable and that the amount charged does not exceed the actual cost of providing the service or product to the payor. ,tR-a-t tl:ie amouRt is RO n,ore tl:ian neeessary to cover the reasonable costs of the go•.•emn,ental actii,•i:t>,• ane 3 4.6.b
Packet Pg. 548 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) that the manner in •Nhiel.:i these cests are allecated ts a pa·1er bear a fair er reasenable relatienshi13 ts the 13a·1or's b1:1relens on, or benefits reeei11eel from, the go•.ieFRmental actit.iit'( (2) The retention ofrevenue by, or the payment to. a non-governmental entity ofa levv. charge, or exaction of any kind imposed by state law, shall not be a factor in determining whether the levy. charge, or exaction is a tax or exempt charge.
(3) The characterization of a levy, charge, or exaction of any kind as being voluntary, or paid in exchange for a benefit, privilege, allowance, authorization, or asset, shall not be a factor in determining whether the levy, charge, or exaction is a tax or an exempt charge. /4} The use of revenue derived from the levy, charge or exaction shall be a factor in determining whether the levy, charge, or exaction is a tax or exempt charge. (h) As used in this section:
(1) "Actual cost" of providing a service or product means: (i) the minimum amount necessary to reimburse the government for the cost of providing the service or product to the payor, and {ii) where the amount charged is not used by the government for any purpose other than reimbursing that cost. In computing "actual cost" the maximum amount that may be imposed is the actual cost less all other sources of revenue including, but not limited to taxes, other exempt charges, grants, and state or federal funds received to provide such service or product.
(2) "Extend" includes, but is not limited to, doing any of the following with respect to a tax or exempt charge: lengthening its duration. delaying or eliminating its expiration, expanding its application to a new territory or class ofpayor, or expanding the base to which its rate is applied. (3) "Impose" means adopt, enact, reenact, create, establish, collect, increase or extend. (4) "State law" includes, but is not limited to. any state statute, state regulation, state executive order. state resolution, state ruling, state opinion Jetter, or other legal authority or interpretation adopted, enacted. enforced, issued, or implemented by the legislative or executive branches of state government. "State law" does not include actions taken by the Regents of the University of California, Trustees of the California State University, or the Board of Governors of the California Community Colleges.

Section 5. Section 1 of Article XIII C of the California Constitution is amended, to read:

Sec. 1. Definitions. As used in this article:
{a) "Actual cost" of providing a service or product means: (i) the minimum amount necessary to reimburse the government for the cost of providing the service or product to the payor. and {ii) where the amount charged is not used by the government for any purpose other than reimbursing that cost. In computing "actual cost" the maximum amount that may be imposed is the actual cost less all other sources of revenue including, but not limited to taxes. other exempt charges, grants, and state or federal funds received to provide such service or product.
(b) "Extend" includes, but is not limited to. doing any of the following with respect to a tax. exempt charge, or Article XIII D assessment. fee, or charge: lengthening its duration, delaying or eliminating its expiration. expanding its application to a new territory or class of payor, or expanding the base to which its rate is applied.
4 4.6.b
Packet Pg. 549 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) .lfl..W 11General tax" means any tax imposed for general governmental purposes. (d} "Impose" means adopt, enact, reenact, create, establish, collect, increase, or extend. {clJb} "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity, or an elector pursuant to Article fl or the initiative power provided by a charter or statute.
(f) "Local law" includes. but is not limited to, any ordinance, resolution, regulation. ruling, opinion letter, or other legal authority or interpretation adopted, enacted, enforced, issued, or implemented by a local government.
{gl_{t} "Special district" means an agency of the State, formed pursuant to general law or a special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies. f11L{d} "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.
111 i@} As used in this article, and in Section 9 of Article II, "tax" means every aRV-levy, charge, or exaction of any kind, imposed by a local go,;ernmeRt law that is not an exempt charge., exeept tl=le fellowiRg:
(i) As used in this section, "exempt charge" means only the following:
(1) A cl=large imposeel fer a speeifie beAefit eoAferreel or pri,;ilege graAteel eliFeetl')' to tl=le pa1,ior tl=lat is Rot pre1,•ieleel to these Rot ehargea, aA£l which £lees Rot exeeeel tl=le reaseAable costs to tl=le loeal gm,·ernFAeAt of conferriAg the beAefit or graAting tl:1e pri¥ilege.
ill R} A reasonable charge imposes for a specific local government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasoAable actual costs to the local government of providing the service or product. fl1 WA charge im13ose£l for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.

W {4t A reasonable charge imposeel for entrance to or use of local government property, or the purchase, rental, or lease of local government property.

Ml. fSt A fine, or penalty, or other FAOA@tar,· eharge including any applicable interest for nonpayment thereat imposed by the judicial branch of government or a local government administrative enforcement agency pursuant to adiudicatorv due process, as a res1,1lt of to punish a violation of law. ill -f6t A charge imposed as a condition of property development. No levv, charge, or exaction regulating or related to vehicle miles traveled may be imposed as a condition of property development or occupancy. f.i1 f7t An AssessFAeRts a Rel property relate el fees assessment. fee. or charge imJ;1oseel iA aeeoraanee witl=l the pro¥isio A5 of subject to Article XI 11 D, or an assessment imposed upon a business in a tourism marketing district, a parking and business improvement area, or a property and business improvement district. 5 4.6.b
Packet Pg. 550 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) (7) A charge imposed for a specific health care service provided directly to the payor and that is not provided to those not charged. and which does not exceed the reasonable costs to the local government of providing the health care service. As used in this paragraph, a "health care service" means a service licensed or exempt from licensure by the state pursuant to Chapters 1. 1.3, or 2 of Division 2 of the Health and Safety Code.

The local government bears the b1:1rden of proving by a preponderance of the e .. ·ielence that a lew, charge, or other exaction is not a ta1<, that the amo1:1nt is no more than necessaPJ' to cover the reasonable costs of the go•,ernfflental acti•.«ity anel that tJ:ie manner in which those costs are allocateel to a pa•ror bear a fair or reasonable relationship to the pa•ror's blslrdens on, or bene:fits receiveel from, the go1a1ernmental acfa•ity.

Section 6. Section 2 of Article XIII C of the California Constitution is amended to read:

Sec. 2. Local Government Tax Limitation. Notwithstanding any other provision of this Constitution:
(a) Every levy. charge. or exaction of any kind imposed by local law is either a tax or an exempt charge. All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes. (b) No local Jaw go,.·ernment whether proposed by the governing body or by an elector, may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body. (c) An•r general tax imposed, el<tended, or increaseel, •.-.iitho1:1t •.·oter approval, lay any local go,.·ernment on or after Janlslary 1, 1995, ana prior ta the effecti,.·e date of this article, shall contin1:1e to be imposed only if appro,.·ea b1• a majority vote of the voters voting in an election OR the issye of the in:iposition, whicl::i election sl::iall be l::ield witl::iin t•Ne 1•ears ef the effectii.ie date of this article and in com13liance with slslbdi\·isien (b}. {El) No local law government. whether proposed by the governing body or by an elector. may impose, eMteRd, er increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. {d) The title and summary and ballot label or question required for a measure pursuant to the Elections Code shall. for each measure providing for the imposition of a tax, include:
(1) The type and amount or rate of the tax;
(2) the duration of the tax; and
(3) The use of the revenue derived from the tax. If the proposed tax is a general tax. the phrase "for general government use" shall be required, and no advisory measure may appear on the same ballot that would indicate that the revenue from the general tax will. could. or should be used for a specific purpose. (e) Only the governing body of a local government. other than an elector pursuant to Article II or the initiative power provided by a charter or statute. shall have the authority to impose any exempt charge.

The governing body shall impose an exempt charge by an ordinance specifying the type of exempt charge 6 4.6.b
Packet Pg. 551 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) as provided in Section l(i) and the amount or rate of the exempt charge to be imposed. and passed by the governing body. This subdivision shall not apply to charges specified in paragraph (7) of subdivision (i) of Section 1.
ff) No amendment to a Charter which provides for the imposition, extension, or increase of a tax or exempt charge shall be submitted to or approved by the electors. nor shall any such amendment to a Charter hereafter submitted to or approved by the electors become effective for any purpose. (q) Any tax or exempt charge adopted after January 1, 2022, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax or exempt charge is reenacted in compliance with the requirements of this section.
{h)(1) The focal government bears the burden of proving by clear and convincing evidence that a levy, charge or exaction is an exempt charge and not a tax. The local government bears the burden of proving by clear and convincing evidence that the amount of the exempt charge is reasonable and that the amount charged does not exceed the actual cost of providing the service or product to the payor. (2} The retention of revenue by, or the payment to, a non-governmental entity of a levy. charge, or exaction of any kind imposed by a local law, shall not be a factor in determining whether the levy, charge, or exaction is a tax or exempt charge.
(3) The characterization of a levy. charge. or exaction of any kind imposed by a local law as being paid in exchange for a benefit. privilege, allowance, authorization, or asset, shall not be factors in determining whether the levy, charge, or exaction is a tax or an exempt charge. (4) The use of revenue derived from the levy, charge or exaction shall be a factor in determining whether the levy, charge, or exaction is a tax or exempt charge.

Section 7. Section 3 of Article XIII D of the California Constitution is amended, to read:

Sec. 3. Property Taxes, Assessments, Fees and Charges Limited (a) No tax, assessment, fee, 6f charge, or surcharge, including a surcharge based on the value ofpropertv, shall be assessed 13y a Ry ageRC'f upon any parcel of property or upon any person as an incident of property ownership except:
(1) The ad valorem property tax impeseEI p1::1rsYaRt te described in Section 1(a) of Article XIII and Section 1/a) of Article XIII A, and described and enacted pursuant to the voter approval requirement in Section 1/b) Q[Article XII I A.
(2) Any special non-ad valorem tax receiving a two-thirds vote of qualified electors pursuant to Section 4 of Article XIII A, or after receiving a two-thirds vote of those authorized to vote in a community facilities district by the Legislature pursuant to statute as it existed on December 31, 2021. (3) Assessments as provided by this article.
(4) Fees or charges for property related services as provided by this article. 7 4.6.b
Packet Pg. 552 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) (b) For purposes of this article, fees for the provision of electrical or gas service shall not be deemed charges or fees imposed as an incident of property ownership.

Section 8. Sections 1 and 14 of Article XIII are amended to read:

Sec. 1 Unless otherwise provided by this Constitution or the laws of the United States:
(a) All property is taxable and shall be assessed at the same percentage of fair market value. When a value standard other than fair market value is prescribed by this Constitution or by statute authorized by this Constitution, the same percentage shall be applied to determine the assessed value. The value to which the percentage is applied, whether it be the fair market value or not, shall be known for property tax purposes as the full value.
(b) All property so assessed shall be taxed in proportion to its full value. (c) All proceeds from the taxation of property shall be apportioned according to law to the districts within the counties.

Sec. 14. All property taxed by state or local government shall be assessed in the county, city, and district in which it is situated. Notwithstanding any other provision of/aw, such state or local property taxes shall be apportioned according to law to the districts within the counties.

Section 9. General Provisions
A. This Act shall be liberally construed in order to effectuate its purposes.

B. (1) In the event that this initiative measure and another initiative measure or measures relating to state or local requirements for the imposition, adoption, creation, or establishment of taxes, charges, and other revenue measures shall appear on the same statewide election ballot, the other initiative measure or measures shall be deemed to be in conflict with this measure. In the event that this initiative measure receives a greater number of affirmative votes, the provisions of this measure shall prevail in their entirety, and the provisions ofthe other initiative measure or measures shall be null and void. (2) In furtherance of this provision, the voters hereby declare that this measure conflicts with the provisions of the "Housing Affordability and Tax Cut Act of 2022" and "The Tax Cut and Housing Affordability Act," both of which would impose a new state property tax (called a "surcharge") on certain real property, and where the revenue derived from the tax is provided to the State, rather than retained in the county in which the property is situated and for the use of the county and cities and districts within the county, in direct violation of the provisions of this initiative. (3) If this initiative measure is approved by the voters, but superseded in whole or in part by any other conflicting initiative measure approved by the voters at the same election, and such conflicting initiative is later held invalid, this measure shall be self-executing and given full force and effect.

C. The provisions of this Act are severable. If any portion, section, subdivision, paragraph, clause, sentence, phrase, word, or application of this Act is for any reason held to be invalid by a decision of any court of competent jurisdiction, that decision shall not affect the validity of the remaining portions of this Act. The People of the State of California hereby declare that they would have adopted this Act and each and every portion, section, subdivision, paragraph, clause, sentence, phrase, word, and application not 8 4.6.b
Packet Pg. 553 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) declared invalid or unconstitutional without regard to whether any portion of this Act or application thereof would be subsequently declared invalid.

D. If this Act is approved by the voters of the State of California and thereafter subjected to a legal challenge alleging a violation of state or federal law, and both the Governor and Attorney General refuse to defend this Act, then the following actions shall be taken:
(1) Notwithstanding anything to the contrary contained in Chapter 6 of Part 2 of Division 3 ofTitle 2 of the Government Code or any other law, the Attorney General shall appoint independent counsel to faithfully and vigorously defend this Act on behalf of the State of California. (2) Before appointing or thereafter substituting independent counsel, the Attorney General shall exercise due diligence in determining the qualifications of independent counsel and shall obtain written affirmation from independent counsel that independent counsel will faithfully and vigorously defend this Act. The written affirmation shall be made publicly available upon request. (3) A continuous appropriation is hereby made from the General Fund to the Controller, without regard to fiscal years, in an amount necessary to cover the costs of retaining independent counsel to faithfully and vigorously defend this Act on behalf of the State of California. (4) Nothing in this section shall prohibit the proponents of this Act, or a bona fide taxpayers association, from intervening to defend this Act.
9 4.6.b
Packet Pg. 554 Attachment: Initiative No. 21-0042A1 (2793 : Legislative Update for the 2022 Regular Session) City of Laguna Hills
City Council/Planning Agency
Staff Report
DATE: March 22, 2022
TO: Mayor and Council Members
FROM: Melissa Au-Yeung
Deputy City Manager
ISSUE: Proposed Office Lease for Suite 203 with Premier Group International for 24031 El Toro Road, Suite 203, Laguna Hills, California RECOMMENDATION: That the City Council approve an office lease with Premier Group International, a California corporation, for 24031 El Toro Road, Suite 203, Laguna Hills, California, and authorize the City Manager to execute the Lease.

SUMMARY:

Staff has negotiated a three (3) year lease renewal with Premier Group International, a California corporation, for 24031 El Toro Road, Suite 203. Premier Group International operates a general office for an investigative and security company and has been a tenant in the Civic Center since 2019. The following is a summary of the key lease terms and financial analysis:

Commencement Date: May 1, 2022
Term: Three (3) years
Rentable Square Feet: 1,377
Upfront Capital: $ 2,962
Rate: Years 1 - 3: $ 2.39/ sq. ft.

Total Rent Payments: $ 118,477
Net Present Value: $ 75,688 (12% Discount Rate)
The final lease has been included as an attachment and staff is recommending approval

4.7 Packet Pg. 555
Proposed Civic Center Lease for Suite 203 with Premier Group International March 22, 2022

FISCAL IMPACT:

The lease has a positive net present value of $75,688 and requires upfront capital of $2,962.

ATTACHMENTS:
• Proposed Lease

4.7 Packet Pg. 556
________ ________
________ ________

INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM OFG-21.20, Revised 01-01-2019 Page 1 of 18

1. Basic Provisions ("Basic Provisions").

1.1 ParƟes. This Lease ("Lease"), dated for reference purposes only March 22, 2022 , is made by and between The City of Laguna Hills, a municipal corporaƟon organized and exisƟng under the laws of the State of California ("Lessor") and Premier Group InternaƟonal, a California CorporaƟon ("Lessee"), (collecƟvely the "ParƟes", or individually a "Party").

1.2(a) Premises: That certain PorƟon of the Project (as defined below), commonly known as (street address, suite, city, state): 24031 El Toro Road, Suite 203 Laguna Hills, CA 92654 ("Premises"). The Premises are located in the County of Orange , and consist of approximately 1,151 rentable square feet and approximately 1,377 useable square feet. In addiƟon to Lessee'srights to use and occupy the Premises as hereinaŌer specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinaŌer specified, but shall not have any rights to the roof, the exterior walls, the area above the dropped ceilings, or the uƟlity raceways of the building containing the Premises("Building") orto any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collecƟvely referred to asthe "Project." The Project consists of approximately 51,946 rentable square feet. (See also Paragraph 2)

1.2(b) Parking: 4/1000sf unreserved and N/A reserved vehicle parking spaces at a monthly cost of N/A per unreserved space and N/A per reserved space. (See Paragraph 2.6)

1.3 Term: 3 years and 0 months ("Original Term") commencing May 1, 2022 ("Commencement Date") and ending April 30, 2025 ("ExpiraƟon Date"). (See also Paragraph 3)

1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing N/A ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $3,291.03 per month ("Base Rent"), payable on the First day of each month commencing May 1, 2022 . (See also Paragraph 4) If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 4.4 . (See Addendum Paragraph 1)

1.6 Lessee's Share of OperaƟng Expense Increase: two point six five percent ( 2.65 %) ("Lessee's Share"). In the event that that size of the Premises and/or the Project are modified during the term of this Lease, Lessor shall recalculate Lessee's Share to reflect such modificaƟon.

1.7 Base Rent and Other Monies Paid Upon ExecuƟon:

1.8 Agreed Use: General Office . (See also Paragraph 6)

1.9 Base Year; Insuring Party. The Base Year is 2019 . Lessor is the "Insuring Party". (See also Paragraphs 4.2 and 8)

1.10 Real Estate Brokers. (See also Paragraph 15 and 25) agency relaƟonships in this Lease with the following real estate brokers (“Broker(s)”) and/or their agents(“Agent(s)”):

Lessor’s Brokerage Firm Essex Realty Management, Inc. License No. 00965485 Isthe broker of (check one): the Lessor; or both the Lessee and Lessor (dual agent).

Lessor’s Agent Angela Draper License No. 01972882 Is(check one): the Lessor’s Agent (salesperson or broker associate); or both the Lessee’s Agent and the Lessor’s Agent (dual agent).

Lessee’s Brokerage Firm License No. Is the broker of (check one): the Lessee; or both the Lessee and Lessor (dual agent).

Lessee’s Agent License No. Is (check one): the Lessee’s Agent (salesperson or broker associate); or both the Lessee’s Agent and the Lessor’s Agent (dual agent).
separate wriƩen agreement (or if there is no such agreement, the sum of or % of the total Base Rent) for the brokerage services rendered by the Brokers.

1.11 Guarantor. The obligaƟons of the Lessee under this Lease are to be guaranteed by Joseph Dalu, personally in his individual capacity ("Guarantor"). (See also Paragraph 37)

1.12 Business Hours for the Building: 7:00 a.m. to 6:00 p.m., Mondays through Fridays (except Building Holidays) and 8:00 a.m. to 2:00 p.m. on Saturdays (except Building Holidays). "Building Holidays" shall mean the dates of observaƟon of New Year's Day, President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and N/A .

1.13 Lessor Supplied Services. Notwithstanding the provisions of Paragraph 11.1, Lessor is NOT obligated to provide the following within the Premises:

Janitorial services
Electricity

STANDARD MULTI-TENANT OFFICE LEASE - GROSS
(a) Base Rent: $3,291.03 for the period May 1, 2022 - May 31, 2022 . (b) Security Deposit: $3,291.03 on File ("Security Deposit"). (See also Paragraph 5) (c) Parking: N/A for the period N/A .
(d) Other: N/A for N/A .
(e) Total Due Upon ExecuƟon of this Lease: $3,291.03 .
(a) RepresentaƟon: Each Party acknowledges receiving a Disclosure Regarding Real Estate Agency RelaƟonship, confirms and consents to the following (b) Payment to Brokers: Upon execuƟon and delivery of this Lease by both ParƟes, Lessor shall pay to the Brokersthe brokerage fee agreed to in a

4.7.a
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Other (specify):

1.14 AƩachments. AƩached hereto are the following, all of which consƟtute a part of this Lease:
an Addendum consisƟng of Paragraphs 1 through 6 ;
a plot plan depicƟng the Premises; Exhibit "A"
a current set of the Rules and RegulaƟons; Exhibit "B"
a Work LeƩer/Requirements for Improvements or Alterations by Lessee; Exhibit "D" a janitorial schedule;
other (specify): Exhibit "C" Waiver and Release; Exhibit "E" Personal Guaranty .

2. Premises.

2.1 Leƫng. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and condiƟons set forth in this Lease. While the approximate square footage of the Premises may have been used in the markeƟng of the Premisesfor purposes of comparison, the Base Rentstated herein is NOT Ɵed to square footage and is notsubject to adjustment should the actual size be determined to be different. NOTE: Lessee is advised to verify the actual size prior to execuƟng this Lease.

2.2 CondiƟon. Lessor shall deliver the Premises to Lessee in a clean condiƟon on the Commencement Date or the Early Possession Date, whichever first occurs ("Start Date"), and warrants that the exisƟng electrical, plumbing, fire sprinkler, lighƟng, heaƟng, venƟlaƟng and air condiƟoning systems("HVAC"), and all other items which the Lessor is obligated to construct pursuant to the Work LeƩer aƩached hereto, if any, other than those constructed by Lessee,shall be in good operaƟng condiƟon on said date, that the structural elements of the roof, bearing walls and foundaƟon of the Unit shall be free of material defects, and that the Premises do not contain hazardous levels of any mold or fungi defined astoxic under applicable state or federal law. Lessor also warrants, that unless otherwise specified in wriƟng, Lessor is unaware of (i) any recorded NoƟces of Default affecƟng the Premise; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecƟng the Premises.

2.3 Compliance. Lessor warrantsthat to the best of its knowledge the improvements on the Premises and the Common Areas comply with the building codes, applicable laws, covenants or restricƟons of record, regulaƟons, and ordinances ("Applicable Requirements") that were in effect at the Ɵme that each improvement, or porƟon thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the Premises, modificaƟons which may be required by the Americans with DisabiliƟes Act or any similar laws as a result of Lessee's use (see Paragraph 49), or to any AlteraƟons or UƟlity InstallaƟons (as defined in Paragraph

7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the zoning and other Applicable Requirements are appropriate for Lessee's intended use, and acknowledgesthat past uses ofthe Premises may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided, promptly aŌer receipt of wriƩen noƟce from Lessee seƫng forth with specificity the nature and extent ofsuch non-compliance, recƟfy the same. If the Applicable Requirements are hereaŌer changed so asto require during the term of this Lease the construcƟon of an addiƟon to or an alteraƟon of the Premises, the remediaƟon of any Hazardous Substance, or the reinforcement or other physical modificaƟon of the Premises("Capital Expenditure"), Lessor and Lessee shall allocate the cost ofsuch work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however, that if such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease unless Lessor noƟfies Lessee, in wriƟng, within 10 days aŌer receipt of Lessee's terminaƟon noƟce that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. If Lessee elects terminaƟon, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor wriƩen noƟce specifying a terminaƟon date at least 90 days thereaŌer. Such terminaƟon date shall, however, in no event be earlierthan the last day that Lessee could legally uƟlize the Premises without commencing such Capital Expenditure. (b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modificaƟons), then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the porƟon of such costs reasonably aƩributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligaƟon at any Ɵme. If, however, such Capital Expenditure is required during the last 2 years of this Lease or if Lessorreasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the opƟon to terminate this Lease upon 90 days prior wriƩen noƟce to Lessee unless Lessee noƟfies Lessor, in wriƟng, within 10 days aŌer receipt of Lessor'sterminaƟon noƟce that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and failsto tender itsshare of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent unƟl Lessor's share of such costs have been fully paid. If Lessee is unable to finance Lessor'sshare, orif the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days wriƩen noƟce to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modificaƟon to the Premises then, and in that event, Lessee shall either: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not have any right to terminate this Lease.

2.4 Acknowledgements. Lessee acknowledgesthat: (a) it has been given an opportunity to inspect and measure the Premises, (b) Lessee has been advised by Lessor and/or Brokersto saƟsfy itself with respect to the size and condiƟon of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements), and their suitability for Lessee's intended use, (c) Lessee has made such invesƟgaƟon as it deems necessary with reference to such maƩers and assumes all responsibility therefor as the same relate to its occupancy of the Premises, (d) it is not relying on any representaƟon asto the size of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessor's agents, nor Brokers have made any oral or wriƩen representaƟons or warranƟes with respect to said maƩers other than as set forth in this Lease. In addiƟon, Lessor acknowledges that: (i) Brokers have made no representaƟons, promises or warranƟes concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's sole responsibility to invesƟgate the financial capability and/or suitability of all proposed tenants.

2.5 Lessee as Prior Owner/Occupant. The warranƟes made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date, Lessee wasthe owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary correcƟve work.

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2.6 Vehicle Parking. So long as Lessee is not in default, and subject to the Rules and RegulaƟons aƩached hereto, and as established by Lessor from Ɵme to Ɵme, Lessee shall be enƟtled to rent and use the number of parking spaces specified in Paragraph 1.2(b) at the rental rate applicable from Ɵme to Ɵme for monthly parking as set by Lessor and/or its licensee.
(a) If Lessee commits, permits or allows any of the prohibited acƟviƟes described in the Lease or the rules then in effect, then Lessor shall have the right, without noƟce, in addiƟon to such other rights and remediesthat it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
(b) The monthly rent per parking space specified in Paragraph 1.2(b) is subject to change upon 30 days prior wriƩen noƟce to Lessee. The rent for the parking is payable one month in advance prior to the first day of each calendar month.

2.7 Common Areas- DefiniƟon. The term "Common Areas" is defined as all areas and faciliƟes outside the Premises and within the exterior boundary line of the Project and interior uƟlity raceways and installaƟons within the Premisesthat are provided and designated by the Lessor from Ɵme to Ɵme for the general nonexclusive use of Lessor, Lessee and other tenants of the Project and their respecƟve employees, suppliers, shippers, customers, contractors and invitees, including, but not limited to, common entrances, lobbies, corridors, stairwells, public restrooms, elevators, parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.

2.8 Common Areas- Lessee's Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others enƟtled to such use, the Common Areas as they exist from Ɵme to Ɵme, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulaƟons or restricƟons governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permiƩed only by the prior wriƩen consent of Lessor or Lessor's designated agent, which consent may be revoked at any Ɵme. In the event that any unauthorized storage shall occur, then Lessor shall have the right, without noƟce, in addiƟon to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which costshall be immediately payable upon demand by Lessor.

2.9 Common Areas- Rules and RegulaƟons. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from Ɵme to Ɵme, to adopt, modify, amend and enforce reasonable rules and regulaƟons ("Rules and RegulaƟons") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservaƟon of good order, as well asfor the convenience of other occupants or tenants of the Building and the Project and their invitees. The Lessee agrees to abide by and conform to all such Rules and RegulaƟons, and shall use its best efforts to cause its employees,suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the noncompliance with said Rules and RegulaƟons by other tenants of the Project.

2.10 Common Areas - Changes. Lessor shall have the right, in Lessor'ssole discreƟon, from Ɵme to Ɵme:
(a) To make changes to the Common Areas, including, without limitaƟon, changes in the locaƟon,size, shape and number of the lobbies, windows, stairways, air shaŌs, elevators, escalators,restrooms, driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direcƟon of traffic, landscaped areas, walkways and uƟlity raceways; (b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available; (c) To designate other land outside the boundaries of the Project to be a part of the Common Areas; (d) To add addiƟonal buildings and improvementsto the Common Areas; (e) To use the Common Areas while engaged in making addiƟonal improvements, repairs or alteraƟons to the Project, or any porƟon thereof; and (f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be appropriate.

3. Term.

3.1 Term. The Commencement Date, ExpiraƟon Date and Original Term of this Lease are as specified in Paragraph 1.3.

3.2 Early Possession. Any provision herein granƟng Lessee Early Possession of the Premises issubject to and condiƟoned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Lessee totally or parƟally occupies the Premises prior to the Commencement Date, the obligaƟon to pay Base Rentshall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited to the obligaƟons to pay Lessee's Share of the OperaƟng Expense Increase) shall be in effect during such period. Any such Early Possession shall not affect the ExpiraƟon Date.

3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the ExpiraƟon Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligaƟons unƟl Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and conƟnue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days aŌer the Commencement Date, asthe same may be extended under the terms of any Work LeƩer executed by ParƟes, Lessee may, at its opƟon, by noƟce in wriƟng within 10 days aŌer the end ofsuch 60 day period, cancel this Lease, in which event the ParƟesshall be discharged from all obligaƟons hereunder. If such wriƩen noƟce is not received by Lessor within said 10 day period, Lessee's right to cancel shall terminate. If possession of the Premises is not delivered within 120 days aŌer the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in wriƟng.

3.4 Lessee Compliance. Lessor shall not be required to deliver possession of the Premises to Lessee unƟl Lessee complies with its obligaƟon to provide evidence of insurance (Paragraph 8.5).Paragraph 8 of the Lease ( See Addendum Paragraph 3) Pending delivery of such evidence, Lessee shall be required to perform all of its obligaƟons under this Lease from and aŌer the Start Date, including the payment of Rent, notwithstanding Lessor's elecƟon to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other condiƟons prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession unƟl such condiƟons are saƟsfied.

4. Rent.

4.1 Rent Defined. All monetary obligaƟons of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent ("Rent").

4.2 OperaƟng Expense Increase. Lessee shall pay to Lessor during the term hereof, in addiƟon to the Base Rent, Lessee's Share of the amount by which all OperaƟng Expenses for each Comparison Year exceeds the amount of all OperaƟng Expenses for the Base Year,such excess being hereinaŌer referred to as the "OperaƟng Expense Increase", in accordance with the following provisions:
(a) "Base Year" is asspecified in Paragraph 1.9.
(b) "Comparison Year" is defined as each calendar year during the term of this Lease subsequent to the Base Year; provided, however, Lessee shall have no obligaƟon to pay a share of the OperaƟng Expense Increase applicable to the first 12 months of the Lease Term (other than such as are mandated by a

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governmental authority, as to which government mandated expenses Lessee shall pay Lessee's Share, notwithstanding they occur during the first twelve (12) months).

Lessee's Share of the OperaƟng Expense Increase for the first and last Comparison Years of the Lease Term shall be prorated according to that porƟon of such Comparison Year asto which Lessee is responsible for a share ofsuch increase. (c) The following costsrelaƟng to the ownership and operaƟon of the Project, calculated as if the Project was at least 95% occupied, are defined as "OperaƟng Expenses":
(i) Costs relaƟng to the operaƟon, repair, and maintenance in neat, clean, safe, good order and condiƟon, but not the replacement (see subparagraph (g)), of the following:
(aa) The Common Areas, including their surfaces, coverings, decoraƟve items, carpets, drapes and window coverings, and including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigaƟon systems, Common Area lighƟng faciliƟes, building exteriors and roofs, fences and gates; (bb) All heaƟng, air condiƟoning, plumbing, electrical systems, life safety equipment, communicaƟon systems and other equipment used in common by, or for the benefit of, tenants or occupants of the Project, including elevators and escalators, tenant directories, fire detecƟon systems including sprinkler system maintenance and repair.
(cc) All other areas and improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any other space occupied by a tenant.
(ii) The cost of trash disposal, janitorial and security services, pest controlservices, and the costs of any environmental inspecƟons; (iii) The cost of any other service to be provided by Lessor that is elsewhere in this Lease stated to be an "OperaƟng Expense"; (iv) The cost of the premiumsfor the insurance policies maintained by Lessor pursuant to paragraph 8 and any deducƟble porƟon of an insured loss concerning the Building or the Common Areas;
(v) The amount of the Real Property Taxes payable by Lessor pursuant to paragraph 10; (vi) The cost of water, sewer, gas, electricity, and other publicly mandated services not separately metered; (vii) Labor,salaries, and applicable fringe benefits and costs, materials, supplies and tools, used in maintaining and/or cleaning the Project and accounƟng and management fees aƩributable to the operaƟon of the Project; (viii) The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such capital improvement over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of 1/144th of the cost of such Capital Expenditure in any given month; (ix) The cost to replace equipment or improvements that have a useful life for accounƟng purposes of 5 years orless. (x) Reservesset aside for maintenance, repair and/or replacement of Common Area improvements and equipment. (d) Any item of OperaƟng Expense that is specifically aƩributable to the Premises, the Building or to any other building in the Project or to the operaƟon, repair and maintenance thereof, shall be allocated enƟrely to such Premises, Building, or other building. However, any such item that is not specifically aƩributable to the Building or to any other building or to the operaƟon, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project. (e) The inclusion of the improvements, faciliƟes and services set forth in Subparagraph 4.2(c) shall not be deemed to impose an obligaƟon upon Lessor to either have said improvements or faciliƟes or to provide those services unlessthe Project already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them. (f) Lessee's Share of OperaƟng Expense Increase is payable monthly on the same day as the Base Rent is due hereunder. The amount ofsuch payments shall be based on Lessor's esƟmate of the OperaƟng Expense Expenses. Within 60 days aŌer wriƩen request (but not more than once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing Lessee's Share of the actual Common Area OperaƟng Expenses for the preceding year. If Lessee's payments during such Year exceed Lessee's Share, LesseeLessor shall credit the amount of such over-payment against Lessee's future payments. If Lessee's payments during such Year were less than Lessee's Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days aŌer delivery by Lessor to Lessee of said statement. Lessor and Lessee shall forthwith adjust between them by cash payment any balance determined to exist with respect to that porƟon of the last Comparison Year for which Lessee is responsible as to OperaƟng Expense Increases, notwithstanding that the Lease term may have terminated before the end of such Comparison Year. (g) OperaƟng Expensesshall not include the costs of replacement for equipment or capital componentssuch asthe roof, foundaƟons, exterior walls or a Common Area capital improvement, such asthe parking lot paving, elevators, fences that have a useful life for accounƟng purposes of 5 years or more. (h) OperaƟng Expenses shall not include any expenses paid by any tenant directly to third parƟes, or asto which Lessor is otherwise reimbursed by any third party, other tenant, or by insurance proceeds.

4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States on or before the day on which it is due, without offset or deducƟon (except asspecifically permiƩed in this Lease). All monetary amountsshall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor isinaccurate such inaccuracy shall not consƟtute a waiver and Lessee shall be obligated to pay the amountset forth in this Lease. Rent for any period during the term hereof which is for lessthan one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rentshall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from Ɵme to Ɵme designate in wriƟng. Acceptance of a payment which isless than the amount then due shall not be a waiver of Lessor's rightsto the balance of such Rent, regardless of Lessor's endorsement of any check so staƟng. In the event that any check, draŌ, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $2575 in addiƟon to any Late Charge and Lessor, at its opƟon, may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and aƩorney's fees, second to accrued interest, then to Base Rent and Common Area OperaƟng Expenses, and any remaining amount to any other outstanding charges or costs.

5. Security Deposit. Lessee shall deposit with Lessor upon execuƟon hereof the Security Deposit as security for Lessee's faithful performance of its obligaƟons under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any porƟon ofsaid Security Deposit for the payment of any amount already due Lessor, for Rents which will be due in the future, and/ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer orincur by reason thereof. If Lessor uses or applies all or any porƟon of the Security Deposit, Lessee shall within 10 days aŌer wriƩen request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon wriƩen request from Lessor, deposit addiƟonal monies with Lessor so that the total amount of the Security Deposit shall at all Ɵmes bear the same proporƟon to the increased Base Rent as the iniƟal Security Deposit bore to the iniƟal Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor'sreasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condiƟon of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such addiƟonal monies with Lessor asshall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in

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financial condiƟon. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 90 days aŌer the expiraƟon or terminaƟon of this Lease, Lessor shall return that porƟon of the Security Deposit not used or applied by Lessor. Lessor shall upon wriƩen request provide Lessee with an accounƟng showing how that porƟon of the Security Deposit that was not returned was applied. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. THE SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN LIEU OF PAYMENT OF THE LAST MONTH'S RENT.

6. Use.( See Addendum Paragraph 2)

6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which isreasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properƟes. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or repƟles. Lessorshall not unreasonably withhold or delay its consent to any wriƩen request for a modificaƟon of the Agreed Use,so long as the same will not impair the structural integrity of the improvements of the Building, will not adversely affect the mechanical, electrical, HVAC, and other systems of the Building, and/or will not affect the exterior appearance of the Building. If Lessor elects to withhold consent, Lessor shall within 7 days aŌer such request give wriƩen noƟficaƟon of same, which noƟce shall include an explanaƟon of Lessor's objecƟons to the change in the Agreed Use.

6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportaƟon, or release, either by itself or in combinaƟon with other materials expected to be on the Premises, is either: (i) potenƟally injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potenƟal liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, byproducts or fracƟons thereof. Lessee shall not engage in any acƟvity in or on the Premises which consƟtutes a Reportable Use of Hazardous Substances without the express prior wriƩen consent of Lessor and Ɵmely compliance (at Lessee's expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the installaƟon or use of any above or below ground storage tank, (ii) the generaƟon, possession, storage, use, transportaƟon, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, noƟce, registraƟon or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a noƟce be given to persons entering or occupying the Premises or neighboring properƟes. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use such as ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long assuch use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contaminaƟon or damage or expose Lessor to any liability therefor. In addiƟon, Lessor may condiƟon its consent to any Reportable Use upon receiving such addiƟonal assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contaminaƟon, injury and/or liability, including, but not limited to, the installaƟon (and removal on or before Lease expiraƟon or terminaƟon) of protecƟve modificaƟons (such as concrete encasements) and/or increasing the Security Deposit. (b) Duty to Inform Lessor. If Lessee knows, or hasreasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give wriƩen noƟce ofsuch fact to Lessor, and provide Lessor with a copy of any report, noƟce, claim or other documentaƟon which it has concerning the presence of such Hazardous Substance. (c) Lessee RemediaƟon. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, comply with all Applicable Requirements and take all invesƟgatory and/or remedial acƟon reasonably recommended, whether or not formally ordered or required, for the cleanup of any contaminaƟon of, and for the maintenance, security and/or monitoring of the Premises or neighboring properƟes, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party. (d) Lessee IndemnificaƟon. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabiliƟes, judgments, claims, expenses, penalƟes, and aƩorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migraƟon of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Lessee). Lessee's obligaƟons shall include, but not be limited to, the effects of any contaminaƟon or injury to person, property or the environment created or suffered by Lessee, and the cost of invesƟgaƟon, removal, remediaƟon, restoraƟon and/or abatement, and shall survive the expiraƟon or terminaƟon of this Lease. No terminaƟon, cancellaƟon or release agreement entered into by Lessor and Lessee shall release Lessee from its obligaƟons under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in wriƟng at the Ɵme ofsuch agreement. (e) Lessor IndemnificaƟon. Except as otherwise provided in paragraph 8.7, Lessor and its successors and assigns shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediaƟon, which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligaƟons, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of invesƟgaƟon, removal, remediaƟon, restoraƟon and/or abatement, and shall survive the expiraƟon or terminaƟon of this Lease. (f) InvesƟgaƟons and RemediaƟons. Lessor shall retain the responsibility and pay for any invesƟgaƟons or remediaƟon measuresrequired by governmental enƟƟes having jurisdicƟon with respect to the existence of Hazardous Substances on the Premises prior to Lessee's occupancy, unlesssuch remediaƟon measure is required as a result of Lessee's use (including "AlteraƟons", as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such acƟviƟes at the request of Lessor, including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable Ɵmesin order to carry out Lessor's invesƟgaƟve and remedial responsibiliƟes. (g) Lessor TerminaƟon OpƟon. If a Hazardous Substance CondiƟon (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the invesƟgaƟon and remediaƟon thereof required by the Applicable Requirements and this Lease shall conƟnue in full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's opƟon, either (i) invesƟgate and remediate such Hazardous Substance CondiƟon, if required, assoon asreasonably possible at Lessor's expense, in which event this Lease shall conƟnue in full force and effect, or (ii) if the esƟmated cost to remediate such condiƟon exceeds 12 Ɵmes the then monthly Base Rent or $100,000, whichever is greater, give wriƩen noƟce to Lessee, within 30 days aŌer receipt by Lessor of knowledge of the occurrence of such Hazardous Substance CondiƟon, of Lessor's desire to terminate this Lease as of the date 60 daysfollowing the date of such noƟce. In the event Lessor electsto give a terminaƟon noƟce, Lessee may, within 10 days thereaŌer, give wriƩen noƟce to Lessor of Lessee's commitment to pay the amount by which the cost of the remediaƟon of such Hazardous Substance CondiƟon exceeds an amount equal to 12 Ɵmesthe then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or saƟsfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall conƟnue in full force and effect, and Lessor shall proceed to make such remediaƟon assoon asreasonably possible aŌer

4.7.a
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the required funds are available. If Lessee does not give such noƟce and provide the required funds or assurance thereof within the Ɵme provided, this Lease shall terminate as of the date specified in Lessor's noƟce of terminaƟon.

6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee'ssole expense, fully, diligently and in a Ɵmely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or raƟng bureau, and the recommendaƟons of Lessor's engineers and/or consultants which relate in any manner to the Premises, without regard to whethersaid Applicable Requirements are now in effect or become effecƟve aŌer the Start Date. Lessee shall, within 10 days aŌer receipt of Lessor's wriƩen request, provide Lessor with copies of all permits and other documents, and other informaƟon evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, noƟfy Lessor in wriƟng (with copies of any documents involved) of any threatened or actual claim, noƟce, citaƟon, warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give wriƩen noƟce to Lessor of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness or other condiƟon conducive to the producƟon of mold; or(ii) any musƟness or other odors that might indicate the presence of mold in the Premises.

6.4 InspecƟon; Compliance. Lessor and Lessor's "Lender" (as defined in Paragraph 30) and consultants authorized by Lessor shall have the right to enter into Premises at any Ɵme, in the case of an emergency, and otherwise at reasonable Ɵmes, aŌer reasonable noƟce, for the purpose of inspecƟng and/or tesƟng the condiƟon of the Premises and/or for verifying compliance by Lessee with this Lease. The cost of any such inspecƟons shall be paid by Lessor, unless a violaƟon of Applicable Requirements, or a Hazardous Substance CondiƟon (see Paragraph 9.1e) is found to exist or be imminent, or the inspecƟon is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspecƟon, so long as such inspecƟon is reasonably related to the violaƟon or contaminaƟon. In addiƟon, Lessee shall provide copies of all relevant material safety data sheets(MSDS) to Lessor within 10 days of the receipt of wriƩen request therefor. Lessee acknowledges that any failure on its part to allow such inspecƟons or tesƟng will expose Lessor to risks and potenƟally cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to allow such inspecƟons and/or tesƟng in a Ɵmely fashion the Base Rent shall be automaƟcally increased, without any requirement for noƟce to Lessee, by an amount equal to 10% of the then exisƟng Base Rent or $100, whichever is greater for the remainder to the Lease. The ParƟes agree that such increase in Base Rent represents fair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee'sfailure to allow such inspecƟon and/or tesƟng. Such increase in Base Rent shall in no event consƟtute a waiver of Lessee's Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and remedies granted hereunder.

7. Maintenance; Repairs; UƟlity InstallaƟons; Trade Fixtures and AlteraƟons.

7.1 Lessee's ObligaƟons. Notwithstanding Lessor's obligaƟon to keep the Premises in good condiƟon and repair, Lessee shall be responsible for payment of the cost thereof to Lessor as addiƟonal rent for that porƟon of the cost of any maintenance and repair of the Premises, or any equipment (wherever located) that serves only Lessee or the Premises, to the extent such cost is aƩributable to abuse or misuse. In addiƟon, Lessee rather than the Lessor shall be responsible for the cost of painƟng, repairing or replacing wall coverings, and to repair or replace any similar improvements within the Premises. Lessor may, at its opƟon, upon reasonable noƟce, elect to have Lessee perform any parƟcular such maintenance or repairs the cost of which is otherwise Lessee'sresponsibility hereunder."

7.2 Lessor's ObligaƟons. Subject to the provisions of Paragraphs 2.2 (CondiƟon), 2.3 (Compliance), 4.2 (OperaƟng Expenses), 6 (Use), 7.1 (Lessee's ObligaƟons), 9 (Damage or DestrucƟon) and 14 (CondemnaƟon), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condiƟon and repair the foundaƟons, exterior walls, structural condiƟon of interior bearing walls, exterior roof, fire sprinkler system, fire alarm and/or smoke detecƟon systems, fire hydrants, and the Common Areas.

7.3 UƟlity InstallaƟons; Trade Fixtures; AlteraƟons.
(a) DefiniƟons. The term "UƟlity InstallaƟons" refersto all floor and window coverings, air lines, vacuum lines, power panels, electrical distribuƟon, security and fire protecƟon systems, communicaƟon cabling, lighƟng fixtures, HVAC equipment, and plumbing in or on the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The term "AlteraƟons" shall mean any modificaƟon of the improvements, other than UƟlity InstallaƟons or Trade Fixtures, whether by addiƟon or deleƟon. "Lessee Owned AlteraƟons and/or UƟlity InstallaƟons" are defined as AlteraƟons and/or UƟlity InstallaƟons made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b) Consent. Lessee shall not make any AlteraƟons or UƟlity InstallaƟonsto the Premises without Lessor's prior wriƩen consent. Lessee may, however, make non-structural AlteraƟons or UƟlity InstallaƟons to the interior of the Premises(excluding the roof) without such consent but upon noƟce to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocaƟng or removing the roof, ceilings, floors or any exisƟng walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, do not trigger the requirement for addiƟonal modificaƟons and/or improvements to the Premises resulƟng from Applicable Requirements, such as compliance with Title 24, and the cumulaƟve cost thereof during this Lease as extended does not exceed $2000. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetraƟons and/or install anything on the roof without the prior wriƩen approval of Lessor. Lessor may, as a precondiƟon to granƟng such approval, require Lessee to uƟlize a contractor chosen and/or approved by Lessor. Any AlteraƟons or UƟlity InstallaƟons that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in wriƩen form with detailed plans. Consent shall be deemed condiƟoned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specificaƟons prior to commencement of the work, and (iii) compliance with all condiƟons ofsaid permits and other Applicable Requirements in a prompt and expediƟous manner.

Any AlteraƟons or UƟlity InstallaƟons shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon compleƟon furnish Lessor with as-built plans and specificaƟons. For work which costs an amount in excess of one month's Base Rent, Lessor may condiƟon its consent upon Lessee providing a lien and compleƟon bond in an amount equal to 150% of the esƟmated cost ofsuch AlteraƟon or UƟlity InstallaƟon and/or upon Lessee's posƟng an addiƟonal Security Deposit with Lessor. In addition to and without limiting the other requirements of this Paragraph

7.3, all utilities, installations, and alterations made by Lessee shall also be subject to the provisions of Exhibit "D" attached to this Lease.
(c) Liens; Bonds. Lessee shall pay, when due, all claimsfor labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not lessthan 10 days noƟce prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post noƟces of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at itssole expense defend and protect itself, Lessor and the Premises against the same and shall pay and saƟsfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessorshall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to parƟcipate in any such acƟon, Lessee shall pay Lessor's aƩorneys' fees and costs.

7.4 Ownership; Removal; Surrender; and RestoraƟon.
(a) Ownership. Subject to Lessor's right to require removal or elect ownership as hereinaŌer provided, all AlteraƟons and UƟlity InstallaƟons made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any Ɵme, elect in wriƟng to be the owner of all or any specified part of

4.7.a
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the Lessee Owned AlteraƟons and UƟlity InstallaƟons. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned AlteraƟons and UƟlity InstallaƟons shall, at the expiraƟon or terminaƟon of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By delivery to Lessee of wriƩen noƟce from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned AlteraƟons or UƟlity InstallaƟons be removed by the expiraƟon or terminaƟon of this Lease. Lessor may require the removal at any Ɵme of all or any part of any Lessee Owned AlteraƟons or UƟlity InstallaƟons made without the required consent. (c) Surrender; RestoraƟon. Lessee shall surrender the Premises by the ExpiraƟon Date or any earlier terminaƟon date, with all of the improvements, parts and surfacesthereof clean and free of debris, and in good operaƟng order, condiƟon and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioraƟon that would have been prevented by good maintenance pracƟce. Notwithstanding the foregoing and the provisions of Paragraph 7.1(a), if the Lessee occupies the Premises for 12 months or less, then Lessee shall surrender the Premisesin the same condiƟon as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installaƟon, maintenance or removal of Trade Fixtures, Lessee owned AlteraƟons and/or UƟlity InstallaƟons, furnishings, and equipment as well asthe removal of any storage tank installed by or for Lessee. Lessee shall also remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migraƟon from areas outside of the Premises) to the level specified in Applicable Requirements. Trade Fixturesshall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the ExpiraƟon Date or any earlierterminaƟon date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to Ɵmely vacate the Premises pursuant to this Paragraph 7.4(c) without the express wriƩen consent of Lessor shall consƟtute a holdover under the provisions of Paragraph 26 below.

8. Insurance; Indemnity.(See Addendum Paragraph 3)

8.1 Insurance Premiums. The cost of the premiums for the insurance policies maintained by Lessor pursuant to paragraph 8 are included as OperaƟng Expenses (see paragraph 4.2 (c)(iv)). Said costs shall include increases in the premiums resulƟng from addiƟonal coverage related to requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or Project, increased valuaƟon of the Premises, Building and/or Project, and/or a general premium rate increase. Said costs shall not, however, include any premium increases resulƟng from the nature of the occupancy of any other tenant of the Building. If the Project was not insured for the enƟrety of the Base Year, then the base premium shall be the lowest annual premium reasonably obtainable for the required insurance as of the Start Date, assuming the most nominal use possible of the Building and/or Project. In no event, however, shall Lessee be responsible for any porƟon of the premium cost aƩributable to liability insurance coverage in excess of $2,000,000 procured under Paragraph 8.2(b).

8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecƟng Lessee and Lessor as an addiƟonal insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an addiƟonal insured by means of an endorsement at least as broad as the Insurance Service OrganizaƟon's "AddiƟonal Insured-Managers or Lessors of Premises" Endorsement and coverage shall also be extended to include damage caused by heat,smoke or fumesfrom a hosƟle fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizaƟons, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee'sindemnity obligaƟons under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligaƟon hereunder. Lessee shall provide an endorsement on itsliability policy(ies) which provides that itsinsurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excessinsurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addiƟon to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an addiƟonal insured therein.

8.3 Property Insurance - Building, Improvements and Rental Value. (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Building and/or Project. The amount of such insurance shall be equal to the full insurable replacement cost of the Building and/or Project, asthe same shall exist from Ɵme to Ɵme, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned AlteraƟons and UƟlity InstallaƟons, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debrisremoval and the enforcement of any Applicable Requirements requiring the upgrading, demoliƟon, reconstrucƟon or replacement of any porƟon of the Premises asthe result of a covered loss. Said policy or policies shall also contain an agreed valuaƟon provision in lieu of any coinsurance clause, waiver ofsubrogaƟon, and inflaƟon guard protecƟon causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deducƟble clause, the deducƟble amountshall not exceed $5,000 per occurrence. (b) Rental Value. Lessor shall also obtain and keep in force a policy or policiesin the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an addiƟonal 180 days("Rental Value insurance"). Said insurance shall contain an agreed valuaƟon provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12 month period.
(c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises. (d) Lessee'sImprovements. Since Lessor isthe Insuring Party, Lessor shall not be required to insure Lessee Owned AlteraƟons and UƟlity InstallaƟons unless the item in quesƟon has become the property of Lessor under the terms of this Lease.

8.4 Lessee's Property; Business InterrupƟon Insurance; Worker's CompensaƟon Insurance. (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned AlteraƟons and UƟlity InstallaƟons. Such insurance shall be full replacement cost coverage with a deducƟble of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned AlteraƟons and UƟlity InstallaƟons. (b) Worker's CompensaƟon Insurance. Lessee shall obtain and maintain Worker's CompensaƟon Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a 'Waiver of SubrogaƟon' endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the cerƟficate of insurance or copy of the policy required by paragraph 8.5. (c) Business InterrupƟon. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings aƩributable to all perils commonly insured against by prudent lessees in the business of Lessee or aƩributable to prevenƟon of accessto the Premises as a result of such perils.

4.7.a
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(d) No RepresentaƟon of Adequate Coverage. Lessor makes no representaƟon that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operaƟons or obligaƟons under this Lease.

8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders RaƟng" of at least A-, VII, as set forth in the most current issue of "Best'sInsurance Guide", or such other raƟng as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor cerƟfied copies of policies of such insurance or cerƟficates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modificaƟon except aŌer 10 days prior wriƩen noƟce to Lessor. Lessee shall, at least 30 days prior to the expiraƟon ofsuch policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may increase his liability insurance coverage and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.

8.6 Waiver of SubrogaƟon. Without affecƟng any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their enƟre right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perilsrequired to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deducƟbles applicable hereto. The ParƟes agree to have their respecƟve property damage insurance carriers waive any right to subrogaƟon that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.

8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalƟes, aƩorneys' and consultants' fees, expenses and/or liabiliƟes arising out of, involving, or in connecƟon with, a Breach of the Lease by Lessee and/or the use and/or occupancy of the Premises and/or Project by Lessee and/or by Lessee's employees, contractors or invitees. If any acƟon or proceeding is brought against Lessor by reason of any of the foregoing maƩers, Lessee shall upon noƟce defend the same at Lessee's expense by counsel reasonably saƟsfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.

8.8 ExempƟon of Lessor and its Agentsfrom Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agentsshall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whethersuch damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstrucƟon or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighƟng fixtures, or from any other cause, whether the said injury or damage results from condiƟons arising upon the Premises or upon other porƟons of the Building, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor orits agents to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee's business or for any loss of income or profit therefrom. Instead, it isintended that Lessee'ssole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8.

8.9 Failure to Provide Insurance. Lessee acknowledgesthat any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potenƟally cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or porƟon thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or cerƟficates evidencing the existence of the required insurance, the Base Rent shall be automaƟcally increased, without any requirement for noƟce to Lessee, by an amount equal to 10% of the then exisƟng Base Rent or $100, whichever is greater. The parƟes agree that such increase in Base Rent representsfair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee'sfailure to maintain the required insurance. Such increase in Base Rentshall in no event consƟtute a waiver of Lessee's Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligaƟon to maintain the insurance specified in this Lease.

9. Damage or DestrucƟon.

9.1 DefiniƟons.
(a) "Premises ParƟal Damage" shall mean damage or destrucƟon to the improvements on the Premises, other than Lessee Owned AlteraƟons and UƟlity InstallaƟons, which can reasonably be repaired in 3 months orless from the date of the damage or destrucƟon, and the cost thereof does not exceed a sum equal to 6 month's Base Rent. Lessor shall noƟfy Lessee in wriƟng within 30 days from the date of the damage or destrucƟon asto whether or not the damage is ParƟal or Total. (b) "Premises Total DestrucƟon" shall mean damage or destrucƟon to the improvements on the Premises, other than Lessee Owned AlteraƟons and UƟlity InstallaƟons and Trade Fixtures, which cannot reasonably be repaired in 3 months or lessfrom the date of the damage or destrucƟon and/or the cost thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall noƟfy Lessee in wriƟng within 30 days from the date of the damage or destrucƟon as to whether or not the damage is ParƟal or Total.
(c) "Insured Loss" shall mean damage or destrucƟon to improvements on the Premises, other than Lessee Owned AlteraƟons and UƟlity InstallaƟons and Trade Fixtures, which was caused by an event required to be covered by the insurance described inParagraph 8 of this Lease (See Addendum Paragraph 3)Paragraph 8.3(a), irrespecƟve of any deducƟble amounts or coverage limitsinvolved. (d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the Ɵme of the occurrence to their condiƟon exisƟng immediately prior thereto, including demoliƟon, debris removal and upgrading required by the operaƟon of Applicable Requirements, and without deducƟon for depreciaƟon.
(e) "Hazardous Substance CondiƟon" shall mean the occurrence or discovery of a condiƟon involving the presence of, or a contaminaƟon by, a Hazardous Substance, in, on, or under the Premises which requires restoraƟon.

9.2 ParƟal Damage - Insured Loss. If a Premises ParƟal Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned AlteraƟons and UƟlity InstallaƟons) as soon as reasonably possible and this Lease shall conƟnue in full force and effect; provided, however, that Lessee shall, at Lessor's elecƟon, make the repair of any damage or destrucƟon the total cost to repair of which is $5,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basisfor that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligaƟon to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of wriƩen noƟce ofsuch shortage and request therefor. If Lessor receivessaid funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them assoon asreasonably possible and this Lease shall remain in full force and effect. If such funds or

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assurance are not received, Lessor may nevertheless elect by wriƩen noƟce to Lessee within 10 days thereaŌer to: (i) make such restoraƟon and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 daysthereaŌer. Lessee shall not be enƟtled to reimbursement of any funds contributed by Lessee to repair any such damage or destrucƟon. Premises ParƟal Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

9.3 ParƟal Damage - Uninsured Loss. If a Premises ParƟal Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor's expense (subject to reimbursement pursuant to Paragraph 4.2), in which event this Lease shall conƟnue in full force and effect, or (ii) terminate this Lease by giving wriƩen noƟce to Lessee within 30 days aŌer receipt by Lessor of knowledge of the occurrence of such damage. Such terminaƟon shall be effecƟve 60 days following the date of such noƟce. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days aŌer receipt of the terminaƟon noƟce to give wriƩen noƟce to Lessor of Lessee's commitment to pay for the repair ofsuch damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or saƟsfactory assurance thereof within 30 days aŌer making such commitment. In such event this Lease shall conƟnue in full force and effect, and Lessor shall proceed to make such repairs as soon asreasonably possible aŌer the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the terminaƟon noƟce.

9.4 Total DestrucƟon. Notwithstanding any other provision hereof, if a Premises Total DestrucƟon occurs, this Lease shall terminate 60 days following such DestrucƟon. If the damage or destrucƟon was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee,. except as provided in Paragraph 8.6.

9.5 Damage Near End of Term. If at any Ɵme during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effecƟve 60 daysfollowing the date of occurrence of such damage by giving a wriƩen terminaƟon noƟce to Lessee within 30 days aŌer the date of occurrence ofsuch damage. Notwithstanding the foregoing, if Lessee at that Ɵme has an exercisable opƟon to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such opƟon and (b) providing Lessor with any shortage in insurance proceeds(or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days aŌer Lessee's receipt of Lessor's wriƩen noƟce purporƟng to terminate this Lease, or (ii) the day prior to the date upon which such opƟon expires. If Lessee duly exercises such opƟon during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such damage as soon asreasonably possible and this Lease shall conƟnue in full force and effect. If Lessee fails to exercise such opƟon and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the terminaƟon noƟce and Lessee's opƟon shall be exƟnguished.

9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises ParƟal Damage or Premises Total DestrucƟon or a Hazardous Substance CondiƟon for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediaƟon or restoraƟon of such damage shall be abated in proporƟon to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligaƟons of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destrucƟon, remediaƟon, repair or restoraƟon except as provided herein.
(b) Remedies. If Lessor is obligated to repair or restore the Premises and does not commence, in a substanƟal and meaningful way, such repair or restoraƟon within 90 days aŌersuch obligaƟon shall accrue, Lessee may, at any Ɵme prior to the commencement of such repair or restoraƟon, give wriƩen noƟce to Lessor and to any Lenders of which Lessee has actual noƟce, of Lessee's elecƟon to terminate this Lease on a date not lessthan 60 days following the giving of such noƟce. If Lessee givessuch noƟce and such repair or restoraƟon is not commenced within 30 days thereaŌer, this Lease shall terminate as of the date specified in said noƟce. If the repair or restoraƟon is commenced within such 30 days, this Lease shall conƟnue in full force and effect. "Commence" shall mean either the uncondiƟonal authorizaƟon of the preparaƟon of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

9.7 TerminaƟon; Advance Payments. Upon terminaƟon of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addiƟon, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor.

10. Real Property Taxes.

10.1 DefiniƟons. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor'sright to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or indirect powerto tax and where the funds are generated with reference to the Project address. "Real Property Taxes" shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Project, (ii) a change in the improvements thereon, and/or (iii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.

10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the Real Property Taxes applicable to the Project, and said payments shall be included in the calculaƟon of OperaƟng Expenses in accordance with the provisions of Paragraph 4.2.

10.3 AddiƟonal Improvements. OperaƟng Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by addiƟonal improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the Ɵme OperaƟng Expenses are payable under Paragraph 4.2, the enƟrety of any increase in Real Property Taxes if assessed solely by reason of AlteraƟons, Trade Fixtures or UƟlity InstallaƟons placed upon the Premises by Lessee or at Lessee'srequest or by reason of any alteraƟons or improvementsto the Premises made by Lessor subsequent to the execuƟon of this Lease by the ParƟes.

10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proporƟon of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proporƟon to be determined by Lessor from the respecƟve valuaƟons assigned in the assessor's work sheets or such other informaƟon as may be reasonably available. Lessor's reasonable determinaƟon thereof, in good faith, shall be conclusive.

10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned AlteraƟons and UƟlity InstallaƟons, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owned AlteraƟons and UƟlity InstallaƟons, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee'ssaid property shall be assessed with Lessor'sreal property, Lessee shall pay Lessor the taxes aƩributable to Lessee's property within 10 days aŌer receipt of a wriƩen statement seƫng forth the taxes applicable to Lessee's property.

11. UƟliƟes and Services.

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11.1 Services Provided by Lessor. Lessor shall provide heaƟng, venƟlaƟon, air condiƟoning, reasonable amounts of electricity for normal lighƟng and office machines, water for reasonable and normal drinking and lavatory use in connecƟon with an office, and replacement light bulbs and/or fluorescent tubes and ballasts forstandard overhead fixtures. Lessor shall also provide janitorial services to the Premises and Common Areas 5 Ɵmes per week, excluding Building Holidays, or pursuant to the aƩached janitorial schedule, if any. Lessor shall not, however, be required to provide janitorial services to kitchens or storage areas included within the Premises.

11.2 Services Exclusive to Lessee. Notwithstanding the provisions of paragraph 11.1, Lessee shall pay for all water, gas, light, power, telephone and other uƟliƟes and servicesspecially or exclusively supplied and/or metered exclusively to the Premises or to Lessee, together with any taxesthereon. Notwithstanding the provisions of Paragraph 4.2(vi), if a service is deleted by Paragraph 1.13 and such service is notseparately metered to the Premises, Lessee shall pay at Lessor's opƟon, either Lessee's Share or a reasonable proporƟon to be determined by Lessor of all charges for such jointly metered service.

11.3 Hours of Service. Said services and uƟliƟesshall be provided during Ɵmesset forth in Paragraph 1.12. UƟliƟes and servicesrequired at other Ɵmes shall be subject to advance request and reimbursement by Lessee to Lessor of the cost thereof.

11.4 Excess Usage by Lessee. Lessee shall not make connecƟon to the uƟliƟes except by or through exisƟng outlets and shall not install or use machinery or equipment in or about the Premises that uses excess water, lighƟng or power, or suffer or permit any act that causes extra burden upon the uƟliƟes or services, including but not limited to security and trash services, over standard office usage for the Project. Lessor shall require Lessee to reimburse Lessor for any excess expenses or costs that may arise out of a breach of this subparagraph by Lessee. Lessor may, in itssole discreƟon, install at Lessee's expense supplemental equipment and/or separate metering applicable to Lessee's excess usage or loading.

11.5 InterrupƟons. There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interrupƟon or disconƟnuance of any uƟlity or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or in cooperaƟon with governmental request or direcƟons.

11.6 Within fiŌeen days of Lessor’s wriƩen request, Lessee agrees to deliver to Lessor such informaƟon, documents and/or authorizaƟon as Lessor needs in order for Lessorto comply with new or exisƟng Applicable Requirements relaƟng to commercial building energy usage, raƟngs, and/or the reporƟng thereof.

12. Assignment and Subleƫng.

12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operaƟon of law assign, transfer, mortgage or encumber (collecƟvely, "assign or assignment") orsublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior wriƩen consent. (b) Unless Lessee is a corporaƟon and its stock is publicly traded on a naƟonal stock exchange, a change in the control of Lessee shall consƟtute an assignment requiring consent. The transfer, on a cumulaƟve basis, of 25% or more of the voƟng control of Lessee shall consƟtute a change in control for this purpose. (c) The involvement of Lessee or its assets in any transacƟon, or series of transacƟons (by way of merger, sale, acquisiƟon, financing, transfer, leveraged buyout or otherwise), whether or not a formal assignment or hypothecaƟon of this Lease or Lessee's assets occurs, which results or willresult in a reducƟon of the Net Worth of Lessee by an amount greater than 25% of such Net Worth asit was represented at the Ɵme of the execuƟon of this Lease or at the Ɵme of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transacƟon or transacƟons consƟtuƟng such reducƟon, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounƟng principles. (d) An assignment or subleƫng without consentshall, at Lessor's opƟon, be a Default curable aŌer noƟce per Paragraph 13.1(d), or a noncurable Breach without the necessity of any noƟce and grace period. If Lessor elects to treatsuch unapproved assignment or subleƫng as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days wriƩen noƟce, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event ofsuch Breach and rental adjustment, (i) the purchase price of any opƟon to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injuncƟve relief. (f) Lessor may reasonably withhold consent to a proposed assignment or subleƫng if Lessee is in Default at the Ɵme consent is requested. (g) Notwithstanding the foregoing, allowing a de minimis porƟon of the Premises, ie. 20 square feet or less, to be used by a third party vendor in connecƟon with the installaƟon of a vending machine or payphone shall not consƟtute a subleƫng.

12.2 Terms and CondiƟons Applicable to Assignment and Subleƫng. (a) Regardless of Lessor's consent, no assignment orsubleƫng shall : (i) be effecƟve without the express wriƩen assumpƟon by such assignee or sublessee of the obligaƟons of Lessee under this Lease, (ii) release Lessee of any obligaƟons hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligaƟons to be performed by Lessee. (b) Lessor may accept Rent or performance of Lessee's obligaƟons from any person other than Lessee pending approval or disapproval of an assignment.

Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall consƟtute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment orsubleƫng shall not consƟtute a consent to any subsequent assignment orsubleƫng. (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligaƟons under this Lease, including any assignee or sublessee, without first exhausƟng Lessor's remedies against any other person or enƟty responsible therefor to Lessor, or any security held by Lessor. (e) Each request for consent to an assignment or subleƫng shall be in wriƟng, accompanied by informaƟon relevant to Lessor's determinaƟon as to the financial and operaƟonal responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modificaƟon of the Premises, if any, together with a fee of $500 as consideraƟon for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other or addiƟonal informaƟon and/or documentaƟon as may be reasonably requested. (See also Paragraph 36) (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepƟng such assignment, entering into such sublease, or entering into possession of the Premises or any porƟon thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condiƟon and obligaƟon herein to be observed or performed by Lessee during the term of said assignment orsublease, other than such obligaƟons as are contrary to or inconsistent with provisions of an assignment orsublease to which Lessor hasspecifically consented to in wriƟng. (g) Lessor's consent to any assignment or subleƫng shall not transfer to the assignee or sublessee any OpƟon granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in wriƟng. (See Paragraph 39.2)

12.3 AddiƟonal Terms and CondiƟons Applicable to Subleƫng. The following terms and condiƟons shall apply to any subleƫng by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

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(a) Lessee hereby assigns and transfersto Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collectsuch Rent and apply same toward Lessee's obligaƟons under this Lease; provided, however, that unƟl a Breach shall occur in the performance of Lessee's obligaƟons, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligaƟons any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment ofsuch sublease, nor by reason of the collecƟon of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligaƟons to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a wriƩen noƟce from Lessor staƟng that a Breach exists in the performance of Lessee's obligaƟons under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such noƟce from Lessor and shall pay all Rents to Lessor without any obligaƟon or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breach by Lessee, Lessor may, at its opƟon, require sublessee to aƩorn to Lessor, in which event Lessor shall undertake the obligaƟons of the sublessor undersuch sublease from the Ɵme of the exercise of said opƟon to the expiraƟon of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. (c) Any maƩer requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior wriƩen consent. (e) Lessor shall deliver a copy of any noƟce of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any,specified in such noƟce. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, condiƟons or Rules and RegulaƟons under this Lease. A "Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises; or the vacaƟng of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 8 (See Addendum Paragraph 3)is jeopardized as a result thereof, or without providing reasonable assurances to minimize potenƟal vandalism. (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligaƟon under this Lease which endangers or threatens life or property, where such failure conƟnues for a period of 3 business daysfollowing wriƩen noƟce to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF

RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts consƟtuƟng public or private nuisance, and/or an illegal acƟvity on the Premises by Lessee, where such acƟons conƟnue for a period of 3 business days following wriƩen noƟce to Lessee. In the event that Lessee commits waste, a nuisance or an illegal acƟvity a second Ɵme then, the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable wriƩen evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subleƫng, (iv) an Estoppel CerƟficate or financial statements, (v) a requested subordinaƟon, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41, (viii) material safety data sheets (MSDS), or (ix) any other documentaƟon or informaƟon which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure conƟnues for a period of 10 daysfollowing wriƩen noƟce to Lessee.
(e) A Default by Lessee asto the terms, covenants, condiƟons or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1(a), (b) or (c), above, where such Default conƟnues for a period of 30 days aŌer wriƩen noƟce; provided, however, that if the nature of Lessee's Default issuch that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereaŌer diligently prosecutes such cure to compleƟon. (f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a peƟƟon filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substanƟally all of Lessee's assets located at the Premises or of Lessee'sinterest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the aƩachment, execuƟon or other judicial seizure of substanƟally all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (h) If the performance of Lessee's obligaƟons under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the terminaƟon of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligaƟon on an anƟcipatory basis, and Lessee's failure, within 60 days following wriƩen noƟce of any such event, to provide wriƩen alternaƟve assurance or security, which, when coupled with the then exisƟng resources of Lessee, equals or exceedsthe combined financial resources of Lessee and the Guarantors that existed at the Ɵme of execuƟon of this Lease.

13.2 Remedies. If Lessee fails to perform any of its affirmaƟve duƟes or obligaƟons, within 10 days aŌer wriƩen noƟce (or in case of an emergency, without noƟce), Lessor may, at its opƟon, perform such duty or obligaƟon on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or without further noƟce or demand, and without limiƟng Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee'sright to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be enƟtled to recover from Lessee: (i) the unpaid Rent which had been earned at the Ɵme of terminaƟon; (ii) the worth at the Ɵme of award of the amount by which the unpaid rent which would have been earned aŌer terminaƟon unƟl the Ɵme of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the Ɵme of award of the amount by which the unpaid rent for the balance of the term aŌer the Ɵme of award exceeds the amount of such rental lossthat the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligaƟons under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of releƫng, including necessary renovaƟon and alteraƟon of the Premises, reasonable aƩorneys' fees, and that porƟon of any leasing commission paid by Lessor in connecƟon with this

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Lease applicable to the unexpired term of this Lease. The worth at the Ɵme of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounƟng such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the Ɵme of award plus one percent. Efforts by Lessor to miƟgate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover any damagesto which Lessor is otherwise enƟtled. If terminaƟon of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a noƟce and grace period required under Paragraph 13.1 was not previously given, a noƟce to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also consƟtute the noƟce required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periodsshall consƟtute both an unlawful detainer and a Breach of this Lease enƟtling Lessor to the remedies provided for in this Lease and/or by said statute. (b) ConƟnue the Lease and Lessee's right to possession and recover the Rent asit becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitaƟons. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor'sinterests, shall not consƟtute a terminaƟon of the Lessee's right to possession.
(c) Pursue any other remedy now or hereaŌer available under the laws or judicial decisions of the state wherein the Premises are located. The expiraƟon or terminaƟon of this Lease and/or the terminaƟon of Lessee'sright to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to maƩers occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises.

13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, the cost of tenant improvementsfor Lessee paid for or performed by Lessor, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideraƟon for Lessee's entering into this Lease, all of which concessions are hereinaŌer referred to as "Inducement Provisions," shall be deemed condiƟoned upon Lessee's full and faithful performance of all of the terms, covenants and condiƟons of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automaƟcally be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideraƟon theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure ofsaid Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which iniƟated the operaƟon of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in wriƟng by Lessor at the Ɵme of such acceptance.

13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costsinclude, but are not limited to, processing and accounƟng charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days aŌer such amountshall be due, then, without any requirement for noƟce to Lessee, Lessee shall immediately pay to Lessor a one-Ɵme late charge equal to 10% of each such overdue amount or $100, whichever is greater. The parƟes hereby agree that such late charge represents a fair and reasonable esƟmate of the costs Lessor will incur by reason ofsuch late payment.

Acceptance of such late charge by Lessor shall in no event consƟtute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecuƟve installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's opƟon, become due and payable quarterly in advance.

13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day aŌer it was due. The interest ("Interest") charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addiƟon to the potenƟal late charge provided for in Paragraph 13.4.

13.6 Breach by Lessor. (See Addendum Paragraph 4)
(a) NoƟce of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable Ɵme to perform an obligaƟon required to be performed by Lessor. For purposes of this Paragraph, a reasonable Ɵme shall in no event be less than 30 days aŌer receipt by Lessor, and any Lender whose name and address shall have been furnished to Lessee in wriƟng for such purpose, of wriƩen noƟce specifying wherein such obligaƟon of Lessor has not been performed; provided, however, that if the nature of Lessor's obligaƟon issuch that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereaŌer diligently pursued to compleƟon. (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days aŌer receipt of said noƟce, or if having commenced said cure they do not diligently pursue it to compleƟon, then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform such cure, provided, however, thatsuch offset shall not exceed an amount equal to the greater of one month's Base Rent or the Security Deposit, reserving Lessee'sright to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost ofsaid cure and supply said documentaƟon to Lessor.

14. CondemnaƟon. If the Premises or any porƟon thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collecƟvely "CondemnaƟon"), this Lease shall terminate as to the part taken as of the date the condemning authority takes Ɵtle or possession, whichever first occurs.

If more than 10% of the rentable floor area of the Premises, or more than 25% of Lessee's Reserved Parking Spaces, if any, are taken by CondemnaƟon, Lessee may, at Lessee's opƟon, to be exercised in wriƟng within 10 days aŌer Lessor shall have given Lessee wriƩen noƟce of such taking (or in the absence of such noƟce, within 10 days aŌer the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takessuch possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the porƟon of the Premises remaining, except that the Base Rent shall be reduced in proporƟon to the reducƟon in uƟlity of the Premises caused by such CondemnaƟon. CondemnaƟon awards and/or payments shall be the property of Lessor, whethersuch award shall be made as compensaƟon for diminuƟon in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be enƟtled to any compensaƟon paid by the condemnor for Lessee'srelocaƟon expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All AlteraƟons and UƟlity InstallaƟons made to the Premises by Lessee, for purposes of CondemnaƟon only, shall be considered the property of the Lessee and Lessee shall be enƟtled to any and all compensaƟon which is payable therefor. In the event that this Lease is not terminated by reason of the CondemnaƟon, Lessor shall repair any damage to the Premises caused by such CondemnaƟon.

15. Brokerage Fees.

15.1 AddiƟonal Commission. In addiƟon to the payments owed pursuant to Paragraph 1.10 above, Lessor agrees that: (a) if Lessee exercises any OpƟon, (b) if Lessee or anyone affiliated with Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and located within the Project, (c) if Lessee remainsin possession of the Premises, with the consent of Lessor, aŌer the expiraƟon of this Lease, or (d) if Base Rent isincreased, whether by agreement or operaƟon of an escalaƟon clause herein, then, Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokersin effect at the Ɵme the Lease was executed.

15.2 AssumpƟon of ObligaƟons. Any buyer or transferee of Lessor'sinterest in this Lease shall be deemed to have assumed Lessor's obligaƟon hereunder.

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Brokersshall be third party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such amountsshall accrue Interest. In addiƟon, if Lessor fails to pay any amountsto Lessee's Broker when due, Lessee's Broker may send wriƩen noƟce to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days aŌer said noƟce, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addiƟon, Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor's Broker for the limited purpose of collecƟng any brokerage fee owed.

15.3 RepresentaƟons and IndemniƟes of Broker RelaƟonships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker, agent or finder (other than the Brokers and Agents, if any) in connecƟon with this Lease, and that no one other than said named Brokers and Agentsis enƟtled to any commission or finder's fee in connecƟon herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensaƟon or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or acƟons of the indemnifying Party, including any costs, expenses, aƩorneys' feesreasonably incurred with respect thereto.

16. Estoppel CerƟficates.
(a) Each Party (as "Responding Party") shall within 10 days aŌer wriƩen noƟce from the other Party (the "RequesƟng Party") execute, acknowledge and deliver to the RequesƟng Party a statement in wriƟng in form similar to the then most current "Estoppel CerƟficate" form published BY AIR CRE, plussuch addiƟonal informaƟon, confirmaƟon and/or statements as may be reasonably requested by the RequesƟng Party. (b) If the Responding Party shall failto execute or deliver the Estoppel CerƟficate within such 10 day period, the RequesƟng Party may execute an Estoppel CerƟficate staƟng that: (i) the Lease isin full force and effect without modificaƟon except as may be represented by the RequesƟng Party, (ii) there are no uncured defaults in the RequesƟng Party's performance, and (iii) if Lessor isthe RequesƟng Party, not more than one month's rent has been paid in advance.

ProspecƟve purchasers and encumbrancers may rely upon the RequesƟng Party's Estoppel CerƟficate, and the Responding Party shall be estopped from denying the truth of the facts contained in said CerƟficate. In addiƟon, Lessee acknowledges that any failure on its part to provide such an Estoppel CerƟficate will expose Lessor to risks and potenƟally cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppel CerƟficate in a Ɵmely fashion the monthly Base Rentshall be automaƟcally increased, without any requirement for noƟce to Lessee, by an amount equal to 10% of the then exisƟng Base Rent or $100, whichever is greater for remainder of the Lease. The ParƟes agree that such increase in Base Rent represents fair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee's failure to provide the Estoppel CerƟficate. Such increase in Base Rentshall in no event consƟtute a waiver of Lessee's Default or Breach with respect to the failure to provide the Estoppel CerƟficate nor prevent the exercise of any of the other rights and remedies granted hereunder. (c) If Lessor desiresto finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantorsshall within 10 days aŌer wriƩen noƟce from Lessor deliver to any potenƟal lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee's financial statementsfor the past 3 years. Allsuch financial statementsshall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17. DefiniƟon of Lessor. The term "Lessor" as used herein shall mean the owner or owners at the Ɵme in quesƟon of the fee Ɵtle to the Premises, or, if thisis a sublease, of the Lessee's interest in the prior lease. In the event of a transfer of Lessor's Ɵtle or interest in the Premises orthis Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligaƟons and/or covenants under this Lease thereaŌer to be performed by the Lessor.

Subject to the foregoing, the obligaƟons and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.

18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdicƟon, shall in no way affect the validity of any other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days.

20. LimitaƟon on Liability. The obligaƟons of Lessor under this Lease shall not consƟtute personal obligaƟons of Lessor, or its partners, members, directors, officers or shareholders, and Lessee shall look to the Project, and to no other assets of Lessor, for the saƟsfacƟon of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor's partners, members, directors, officers or shareholders, or any of their personal assets for such saƟsfacƟon.

21. Time of Essence. Time is of the essence with respect to the performance of all obligaƟons to be performed or observed by the ParƟes under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the ParƟes with respect to any maƩer menƟoned herein, and no other prior or contemporaneous agreement or understanding shall be effecƟve. Lessor and Lessee each represents and warrantsto the Brokers that it has made, and isrelying solely upon, its own invesƟgaƟon asto the nature, quality, character and financial responsibility of the other Party to this Lease and asto the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.

23. NoƟces.

23.1 NoƟce Requirements. All noƟces required or permiƩed by this Lease or applicable law shall be in wriƟng and may be delivered in person (by hand or by courier) or may be sent by regular, cerƟfied or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given ifserved in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of noƟces. Either Party may by wriƩen noƟce to the otherspecify a different address for noƟce, except that upon Lessee's taking possession of the Premises, the Premises shall consƟtute Lessee's address for noƟce. A copy of all noƟces to Lessor shall be concurrently transmiƩed to such party or parƟes at such addresses as Lessor may from Ɵme to Ɵme hereaŌer designate in wriƟng.

23.2 Date of NoƟce. Any noƟce sent by registered or cerƟfied mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date isshown, the postmark thereon. If sent by regular mail the noƟce shall be deemed given 72 hours aŌer the same is addressed as required herein and mailed with postage prepaid. NoƟces delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours aŌer delivery of the same to the Postal Service or courier. NoƟces delivered by hand, or transmiƩed by facsimile transmission or by email shall be deemed delivered upon actual receipt. If noƟce is received on a Saturday, Sunday or legal holiday, itshall be deemed received on the next business day.

23.3 OpƟons. Notwithstanding the foregoing, in order to exercise any OpƟons (see paragraph 39), the NoƟce must be sent by CerƟfied Mail (return receipt requested), Express Mail (signature required), courier (signature required) or some other methodology that provides a receipt establishing the date the noƟce was received by the Lessor.

24. Waivers.

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(a) No waiver by Lessor of the Default or Breach of any term, covenant or condiƟon hereof by Lessee, shall be deemed a waiver of any other term, covenant or condiƟon hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condiƟon hereof. Lessor's consent to, or approval of, any actshall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or condiƟons made by Lessee in connecƟon therewith, which such statements and/or condiƟons shall be of no force or effect whatsoever unless specifically agreed to in wriƟng by Lessor at or before the Ɵme of deposit of such payment. (c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.

25. Disclosures Regarding The Nature of a Real Estate Agency RelaƟonship. (a) When entering into a discussion with a real estate agent regarding a real estate transacƟon, a Lessor or Lessee should from the outset understand what type of agency relaƟonship or representaƟon it has with the agent or agents in the transacƟon. Lessor and Lessee acknowledge being advised by the Brokers in thistransacƟon, asfollows:
(i) Lessor's Agent. A Lessor's agent under a lisƟng agreement with the Lessor acts as the agent for the Lessor only. A Lessor's agent or subagent hasthe following affirmaƟve obligaƟons: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent's duƟes. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecƟng the value or desirability of the property that are not known to, or within the diligent aƩenƟon and observaƟon of, the ParƟes. An agent is not obligated to reveal to either Party any confidenƟal informaƟon obtained from the other Party which does not involve the affirmaƟve duƟes set forth above.
(ii) Lessee's Agent. An agent can agree to act as agent for the Lessee only. In these situaƟons, the agent is not the Lessor's agent, even if by agreement the agent may receive compensaƟon for servicesrendered, either in full or in part from the Lessor. An agent acƟng only for a Lessee hasthe following affirmaƟve obligaƟons. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent's duƟes. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecƟng the value or desirability of the property that are not known to, or within the diligent aƩenƟon and observaƟon of, the ParƟes.

An agent is not obligated to reveal to either Party any confidenƟal informaƟon obtained from the other Party which does not involve the affirmaƟve duƟesset forth above.
(iii) Agent RepresenƟng Both Lessor and Lessee. A real estate agent, either acƟng directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transacƟon, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situaƟon, the agent has the following affirmaƟve obligaƟons to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other duƟesto the Lessor and the Lessee asstated above in subparagraphs (i) or (ii). In represenƟng both Lessor and Lessee, the agent may not, without the express permission of the respecƟve Party, disclose to the other Party confidenƟal informaƟon, including, but not limited to, facts relaƟng to either Lessee’s or Lessor’s financial posiƟon, moƟvaƟons, bargaining posiƟon, or other personal informaƟon that may impact rent, including Lessor’s willingness to accept a rent less than the lisƟng rent or Lessee’s willingness to pay rent greater than the rent offered. The above duƟes of the agent in a real estate transacƟon do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transacƟon. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. Both Lessor and Lessee should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transacƟon can be complex and subject to change. (b) Brokers have no responsibility with respect to any default or breach hereof by either Party. The ParƟes agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relaƟng to this Lease may be brought against Broker more than one year aŌer the Start Date and that the liability (including court costs and aƩorneys' fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitaƟon on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c) Lessor and Lessee agree to idenƟfy to Brokers as "ConfidenƟal" any communicaƟon or informaƟon given Brokers that is considered by such Party to be confidenƟal.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiraƟon or terminaƟon of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiraƟon or terminaƟon.

Holdover Base Rentshall be calculated on a monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.

27. CumulaƟve Remedies. No remedy or elecƟon hereunder shall be deemed exclusive but shall, wherever possible, be cumulaƟve with all other remedies at law or in equity.

28. Covenants and CondiƟons; ConstrucƟon of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and condiƟons.

In construing this Lease, all headings and Ɵtles are for the convenience of the ParƟes only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed asif prepared by one of the ParƟes, but rather according to itsfair meaning as a whole, asif both ParƟes had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the parƟes, their personal representaƟves, successors and assigns and be governed by the laws of the State in which the Premises are located. Any liƟgaƟon between the ParƟes hereto concerning this Lease shall be iniƟated in the county in which the Premises are located.

30. SubordinaƟon; AƩornment; Non-Disturbance.

30.1 SubordinaƟon. This Lease and any OpƟon granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecaƟon or security device (collecƟvely, "Security Device"), now or hereaŌer placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modificaƟons, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender") shall have no liability or obligaƟon to perform any of the obligaƟons of Lessor under this Lease. Any Lender may elect to have this Lease and/or any OpƟon granted hereby superior to the lien of its Security Device by giving wriƩen noƟce thereof to Lessee, whereupon this Lease and such OpƟons shall be deemed prior to such Security Device, notwithstanding the relaƟve dates of the documentaƟon or recordaƟon thereof.

30.2 AƩornment. In the event that Lessor transfers Ɵtle to the Premises, or the Premises are acquired by another upon the foreclosure or terminaƟon of a

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Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, aƩorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the elecƟon of the new owner, this Lease will automaƟcally become a new lease between Lessee and such new owner, and (ii) Lessor shall thereaŌer be relieved of any further obligaƟons hereunder and such new owner shall assume all of Lessor's obligaƟons, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisiƟon of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month'srent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.

30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor aŌer the execuƟon of this Lease, Lessee'ssubordinaƟon of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, including any opƟonsto extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and aƩorns to the record owner of the Premises. Further, within 60 days aŌer the execuƟon of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable effortsto obtain a Non-Disturbance Agreement from the holder of any pre-exisƟng Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's opƟon, directly contact Lender and aƩempt to negoƟate for the execuƟon and delivery of a Non-Disturbance Agreement.

30.4 Self-ExecuƟng. The agreements contained in this Paragraph 30 shall be effecƟve without the execuƟon of any further documents; provided, however, that, upon wriƩen request from Lessor or a Lender in connecƟon with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further wriƟngs as may be reasonably required to separately document any subordinaƟon, aƩornment and/or Non-Disturbance Agreement provided for herein.

31. AƩorneys' Fees. If any Party or Broker brings an acƟon or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereaŌer defined) in any such proceeding, acƟon, or appeal thereon, shall be enƟtled to reasonable aƩorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such acƟon or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitaƟon, a Party or Broker who substanƟally obtains or defeats the relief sought, asthe case may be, whether by compromise, seƩlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The aƩorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all aƩorneys' feesreasonably incurred. In addiƟon, Lessor shall be enƟtled to aƩorneys' fees, costs and expenses incurred in the preparaƟon and service of noƟces of Default and consultaƟons in connecƟon therewith, whether or not a legal acƟon is subsequently commenced in connecƟon with such Default or resulƟng Breach ($200 is a reasonable minimum per occurrence forsuch services and consultaƟon).

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agentsshall have the right to enter the Premises at any Ɵme, in the case of an emergency, and otherwise at reasonable Ɵmes aŌer reasonable prior noƟce for the purpose ofshowing the same to prospecƟve purchasers, lenders, or tenants, and making such alteraƟons, repairs, improvements or addiƟons to the Premises as Lessor may deem necessary or desirable and the erecƟng, using and maintaining of uƟliƟes, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessee's use of the Premises. Allsuch acƟviƟesshall be without abatement of rent or liability to Lessee.

33. AucƟons. Lessee shall not conduct, nor permit to be conducted, any aucƟon upon the Premises without Lessor's prior wriƩen consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an aucƟon.

34. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any Ɵme and ordinary "For Lease" signs during the last 6 months of the term hereof. Lessor may not place any sign on the exterior of the Building that covers any of the windows of the Premises. Except for ordinary "For Sublease" signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessor's prior wriƩen consent. Allsigns must comply with all Applicable Requirements.

35. TerminaƟon; Merger. Unlessspecifically stated otherwise in wriƟng by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual terminaƟon or cancellaƟon hereof, or a terminaƟon hereof by Lessor for Breach by Lessee, shall automaƟcally terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to conƟnue any one or all exisƟng subtenancies. Lessor'sfailure within 10 days following any such event to elect to the contrary by wriƩen noƟce to the holder of any such lesser interest, shall consƟtute Lessor's elecƟon to have such event consƟtute the terminaƟon ofsuch interest.

36. Consents. All requestsfor consent shall be in wriƟng. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to architects', aƩorneys', engineers' and other consultants' fees) incurred in the consideraƟon of, or response to, a request by Lessee for any Lessor consent, including but not limited to consentsto an assignment, a subleƫng or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporƟng documentaƟon therefor. Lessor's consent to any act, assignment or subleƫng shall not consƟtute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then exisƟng Default or Breach, except as may be otherwise specifically stated in wriƟng by Lessor at the Ɵme of such consent. The failure to specify herein any parƟcular condiƟon to Lessor's consent shall not preclude the imposiƟon by Lessor at the Ɵme of consent of such further or other condiƟons as are then reasonable with reference to the parƟcular maƩer for which consent is being given. In the event that either Party disagrees with any determinaƟon made by the other hereunder and reasonably requests the reasons for such determinaƟon, the determining party shall furnish its reasons in wriƟng and in reasonable detail within 10 business daysfollowing such request.

37. Guarantor.

37.1 ExecuƟon. The Guarantors, if any, shall each execute a guaranty in the form most recently published BY AIR CRE., attached hereto as Exhibit "E".

37.2 Default. It shall consƟtute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execuƟon of the guaranty, including the authority of the party signing on Guarantor's behalf to obligate Guarantor, and in the case of a corporate Guarantor, a cerƟfied copy of a resoluƟon of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel CerƟficate, or (d) wriƩen confirmaƟon that the guaranty is sƟll in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, condiƟons and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.

39. OpƟons. If Lessee is granted any opƟon, as defined below, then the following provisions shall apply.

39.1 DefiniƟon. "OpƟon" shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase,

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the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor.

39.2 OpƟons Personal To Original Lessee. Any OpƟon granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee cerƟfying that Lessee has no intenƟon of thereaŌer assigning or subleƫng.

39.3 MulƟple OpƟons. In the event that Lessee has any mulƟple OpƟonsto extend or renew this Lease, a later OpƟon cannot be exercised unless the prior OpƟons have been validly exercised.

39.4 Effect of Default on OpƟons.
(a) Lessee shall have no right to exercise an OpƟon: (i) during the period commencing with the giving of any noƟce of Default and conƟnuing unƟlsaid Default is cured, (ii) during the period of Ɵme any Rent is unpaid (without regard to whether noƟce thereof is given Lessee), (iii) during the Ɵme Lessee is in Breach of this Lease, or(iv) in the event that Lessee has been given 3 or more noƟces of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the OpƟon.
(b) The period of Ɵme within which an OpƟon may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an OpƟon because of the provisions of Paragraph 39.4(a).
(c) An OpƟon shall terminate and be of no further force or effect, notwithstanding Lessee's due and Ɵmely exercise of the OpƟon, if, aŌer such exercise and prior to the commencement of the extended term or compleƟon of the purchase, (i) Lessee failsto pay Rent for a period of 30 days aŌersuch Rent becomes due (without any necessity of Lessor to give noƟce thereof), or (ii) if Lessee commits a Breach of this Lease.

40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligaƟon whatsoever to provide same. Lessee assumes all responsibility for the protecƟon of the Premises, Lessee, its agents and invitees and their property from the acts of third parƟes. In the event, however, that Lessor should elect to provide security services, then the cost thereof shall be an OperaƟng Expense.

41. ReservaƟons.
(a) Lessor reservesthe right: (i) to grant, without the consent or joinder of Lessee,such easements, rights and dedicaƟons that Lessor deems necessary, (ii) to cause the recordaƟon of parcel maps and restricƟons, (iii) to create and/or install new uƟlity raceways,so long as such easements, rights, dedicaƟons, maps, restricƟons, and uƟlity raceways do not unreasonably interfere with the use of the Premises by Lessee. Lessor may also: change the name, address or Ɵtle of the Building or Project upon at least 90 days prior wriƩen noƟce; provide and install, at Lessee's expense, Building standard graphics on the door of the Premises and such porƟons of the Common Areas as Lessor shall reasonably deem appropriate; grant to any lessee the exclusive right to conduct any business aslong assuch exclusive right does not conflict with any rights expressly given herein; and to place such signs, noƟces or displays as Lessor reasonably deems necessary or advisable upon the roof, exterior of the Building or the Project or on signs in the Common Areas. Lessee agreesto sign any documentsreasonably requested by Lessor to effectuate such rights. The obstrucƟon of Lessee's view, air, or light by any structure erected in the vicinity of the Building, whether by Lessor or third parƟes, shall in no way affect this Lease or impose any liability upon Lessor.
(b) Lessor also reservesthe right to move Lessee to other space of comparable size in the Building or Project. Lessor must provide at least 45 days prior wriƩen noƟce ofsuch move, and the new space must contain improvements of comparable quality to those contained within the Premises. Lessor shall pay the reasonable out of pocket costs that Lessee incurs with regard to such relocaƟon, including the expenses of moving and necessary staƟonary revision costs. In no event, however, shall Lessor be required to pay an amount in excess of two months Base Rent. Lessee may not be relocated more than once during the term of this Lease.
(c) Lessee shall not: (i) use a representaƟon (photographic or otherwise) of the Building or Project or their name(s) in connecƟon with Lessee's business; or (ii) suffer or permit anyone, except in emergency, to go upon the roof of the Building.

42. Performance Under Protest. If at any Ɵme a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligaƟon to pay the money is asserted shall have the right to make payment "under protest" and such paymentshall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to insƟtute suit for recovery ofsuch sum. If it shall be adjudged that there was no legal obligaƟon on the part of said Party to pay such sum or any part thereof, said Party shall be enƟtled to recover such sum or so much thereof asit was not legally required to pay. A Party who does not iniƟate suit for the recovery of sums paid "under protest" within 6 months shall be deemed to have waived itsright to protest such payment.

43. Authority; MulƟple ParƟes; ExecuƟon.
(a) If either Party hereto is a corporaƟon, trust, limited liability company, partnership, or similar enƟty, each individual execuƟng this Lease on behalf of such enƟty represents and warrantsthat he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days aŌer request, deliver to the other Party saƟsfactory evidence of such authority. (b) If this Lease is executed by more than one person or enƟty as "Lessee", each such person or enƟty shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same asif all of the named Lessees had executed such document. (c) This Lease may be executed by the ParƟesin counterparts, each of which shall be deemed an original and all of which togethershall consƟtute one and the same instrument.

44. Conflict. Any conflict between the printed provisions of this Lease and the typewriƩen or handwriƩen provisionsshall be controlled by the typewriƩen or handwriƩen provisions.

45. Offer. PreparaƟon of this Lease by either party or their agent and submission of same to the other Party shall not be deemed an offerto lease to the other Party. This Lease is not intended to be binding unƟl executed and delivered by all ParƟes hereto.

46. Amendments. This Lease may be modified only in wriƟng, signed by the ParƟesin interest at the Ɵme of the modificaƟon. Aslong asthey do not materially change Lessee's obligaƟons hereunder, Lessee agreesto make such reasonable non-monetary modificaƟonsto this Lease as may be reasonably required by a Lender in connecƟon with the obtaining of normal financing or refinancing of the Premises.

47. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

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48. ArbitraƟon of Disputes. An Addendum requiring the ArbitraƟon of all disputes between the ParƟes and/or Brokers arising out of this Lease is is not aƩached to this Lease.

49. Accessibility; Americans with DisabiliƟes Act.
(a) The Premises:
have not undergone an inspecƟon by a CerƟfied Access Specialist (CASp). Note: A CerƟfied Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construcƟon-related accessibility standards under state law. Although state law does not require a CASp inspecƟon of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspecƟon of the subject premises for the occupancy or potenƟal occupancy of the lessee or tenant, if requested by the lessee or tenant. The parƟesshall mutually agree on the arrangementsfor the Ɵme and manner of the CASp inspecƟon, the payment of the fee for the CASp inspecƟon, and the cost of making any repairs necessary to correct violaƟons of construcƟon-related accessibility standards within the premises. have undergone an inspecƟon by a CerƟfied Access Specialist (CASp) and it was determined that the Premises met all applicable construcƟon-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspecƟon report at least 48 hours prior to execuƟng this Lease and agrees to keep such report confidenƟal.
have undergone an inspecƟon by a CerƟfied Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construcƟon-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledgesthat it received a copy of the inspecƟon report at least 48 hours prior to execuƟng this Lease and agreesto keep such report confidenƟal except as necessary to complete repairs and correcƟons of violaƟons of construcƟon related accessibility standards.

In the event that the Premises have been issued an inspecƟon report by a CASp the Lessor shall provide a copy of the disability accessinspecƟon cerƟficate to Lessee within 7 days of the execuƟon of this Lease.
(b) Since compliance with the Americans with DisabiliƟes Act (ADA) and otherstate and local accessibility statutes are dependent upon Lessee'sspecific use of the Premises, Lessor makes no warranty or representaƟon as to whether or not the Premises comply with ADA or any similar legislaƟon. In the event that Lessee's use of the Premisesrequires modificaƟons or addiƟons to the Premisesin order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modificaƟons and/or addiƟons at Lessee's expense.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY AIR CRE OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING AND SIZE OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF

THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.

The parƟes hereto have executed this Lease at the place and on the dates specified above their respecƟve signatures.

Executed at: 24031 El Toro Road, Suite 100, Laguna Hills, CA 92654
On:

By LESSOR:

The City of Laguna Hills, a municipal corporaƟon organized and exisƟng under the laws of the State of California
By:

Name Printed: Kenneth H. Rosenfield
Title: Interim City Manager
Phone:

Fax:

Email:

By:

Name Printed:

Title:

Phone:

Executed at: 24031 El Toro Road, Suite 203
On:

By LESSEE:

Premier Group InternaƟonal, a California CorporaƟon
By:

Name Printed: Joseph Dalu
Title: President
Phone:

Fax:

Email:

By:

Name Printed: Joseph Dalu
Title: CFO
Phone:

Fax:

Email:

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Fax:

Email:

Address:

Federal ID No.:

Address:

Federal ID No.:

BROKER
Essex Realty Management, Inc.

AƩn: Angela Draper
Title: Property Manager
Address: 17744 Sky Park Circle, Suite 100, Irvine CA 92614 Phone: 949-798-8100
Fax:

Email: [email protected]
Federal ID No.:

Broker/AGENT DRE License #: 00965485 / 01972882
BROKER
AƩn:

Title:

Address:

Phone:

Fax:

Email:

Federal ID No.:

Broker/AGENT DRE License #:

AIR CRE. 500 North Brand Blvd, Suite 900, Glendale, CA 91203, Tel 213-687-8777, Email [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng.

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ADDENDUM TO LEASE
THIS ADDENDUM TO LEASE (this “Addendum”) shall constitute part of that certain STANDARD MULTI-TENANT OFFICE LEASE – GROSS (“Lease”), dated as of March 22, 2022, between The City of Laguna Hills, a municipal corporation organized and existing under the laws of the State of California (“Lessor”), and Premier Group International, a California Corporation (“Lessee”). The terms of this Addendum shall be incorporated into the Lease for all purposes. In the event of any conflict between the terms of the Lease and the terms of this Addendum, the terms of this Addendum shall control.

1. Base Rent Increase. Paragraph 4.4. is hereby added to the Lease to read as follows:

4.4.1 The monthly Base Rent payable as set forth Paragraph 1.5 and as set forth in Paragraph 1.7 (a) of the Lease shall be adjusted annually on the Commencement Date of the Lease, and on such other dates stated, to the amounts set forth below:
04/01/22-04/30/25 $3,291.03 $2.39 PSF

2. Use. Paragraph 6.1 of the Lease is hereby deleted in its entirety and replaced by the following:
“6.1. Use. The Premises shall be used only for the Agreed Use and for no other use. Lessee’s use of the Premises shall be in compliance with and subject to all Applicable Requirements relating to or affecting the Project, the Premises or the Building or the use or operation thereof, whether now existing or hereafter enacted, including, without limitation, the Americans with Disabilities Act of 1990, 42 USC 12111 et seq. (the “ADA”) as the same may be amended from time to time, any and all federal, state or local environmental, health and/or safety-related laws, regulations, standards, decisions of courts, ordinances, rules, codes, orders, decrees, directives, guidelines, permits or permit conditions, currently existing and as amended, enacted, issued or adopted in the future which are or become applicable to Lessee, the Premises, the Building, or the Project (“Environmental Laws”), any transportation or traffic management plan in satisfaction of any requirement imposed on the Project by a governmental agency with jurisdiction over the Project, and any CC&Rs or any supplement thereto recorded in any official or public records with respect to the Project or any portion thereof (collectively, “Applicable Laws”). Lessee shall be responsible for obtaining any permit, business license, or other permits or licenses required by any governmental agency permitting Lessee’s use or occupancy of the Premises. Lessee shall not commit waste, overload the floors or structure of the Building, subject the Premises, the Building, the Common Area or the Project to any use which would damage the same or increase the risk of loss or violate any insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances, noise or vibrations to emanate from the Premises, take any action which would constitute a nuisance or would disturb, obstruct or endanger any other tenants, take any action which would abrogate any warranties, or use or allow the Premises to be used for any unlawful purpose. Lessor shall not be responsible for non-compliance by any other tenant or occupant of the Project with, or Lessor’s failure to enforce, any of the rules or regulations or CC&Rs or any other terms or provisions of such tenant’s or occupant’s lease. Lessee shall promptly comply with the reasonable requirements of any board of fire insurance underwriters or other similar body now or hereafter constituted. Lessee shall not do any act which shall in any way encumber the title of Lessor in and to the Premises, the Building or the Project.

3. Insurance; Indemnity. Paragraph 8.1 through 8.6 of the Lease are hereby deleted in their entirety and replaced by the following:

4.7.a
Packet Pg. 575 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 2 “8.1 Lessor’s Insurance. Lessor shall maintain insurance through individual or blanket policies insuring the Building against fire and extended coverage (including, if Lessor elects, “all risk” coverage, earthquake/volcanic action, flood and/or surface water insurance) for the full replacement cost of the Building, with deductibles and the form and endorsements of such coverage as selected by Lessor, together with rental abatement insurance against loss of Rent in an amount equal to the amount of Rent for a period of at least twelve (12) months commencing on the date of loss. Lessor may also carry such other insurance as Lessor may deem prudent or advisable, including, without limitation, liability insurance in such amounts and on such terms as Lessor shall determine. Lessee shall pay to Lessor, as a portion of the Operating Expenses, the costs of the insurance coverages described herein, including, without limitation, Lessor’s cost of any self-insurance deductible or retention.

8.2 Lessee’s Compliance with Insurance Requirements. Lessee shall obtain, maintain, and keep in full force and effect during the term of this Lease, at its sole cost and expense, and in a form and content satisfactory to Lessor, all insurance required under this Paragraph 8 against claims for injuries to persons or damages to property which may arise from or in connection with Lessee's operation and use of the Premises and the activities of the Lessee, its guests, agents, representatives, employees, or subcontractors. Lessee shall not take possession of the Premises unless and until it has provided evidence satisfactory to Lessor that it has secured all insurance required by this Paragraph 8.

8.3 Types of Insurance Required of Lessee. Without limiting the indemnity provisions set forth in this Lease, Lessee shall obtain and maintain in full force and effect during the term of this Lease, including any extension thereof, the following policies of insurance:
(a) Commercial General Liability Insurance. A policy of Commercial General Liability insurance written on an occurrence basis, including products and completed operations, property damage, bodily injury and personal and advertising injury with limits of at least Two Million Dollars ($2,000,000) per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this Premises/location, or the general aggregate limit shall be twice the required occurrence limit. Defense costs shall be paid in addition to the limits. The policy shall contain no endorsements or provisions limiting coverage for: (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; or (3) contain any other exclusion contrary to this Lease. (b) Automobile Liability Insurance. A policy of Automobile Liability Insurance written on a per occurrence basis with limits of at least One Million Dollars ($1,000,000) combined limit for each occurrence covering bodily injury and property damage. The policy shall specifically include coverage for owned, non-owned, leased, and hired automobiles. (c) Workers’ Compensation and Employer’s Liability Insurance. A policy of Workers’ Compensation Insurance in at least the minimum statutory amounts, and in compliance with all other statutory requirements, as required by the State of California. Lessee agrees to waive and obtain endorsements from its workers’ compensation insurer waiving all subrogation rights under its workers’ compensation insurance policy against Lessor, its officials, officers, employees, agents and volunteers.

Lessee shall obtain and maintain, in full force and effect throughout the term of this Lease, a policy of Employer’s Liability Insurance written on a per occurrence basis with limits of at least One Million Dollars ($1,000,000) per accident for bodily injury or disease. (d) Property Insurance. A policy of Property Insurance against all risk of loss to any tenant improvements or betterments, at full replacement cost with no coinsurance penalty provision. (e) Equipment Breakdown/ Boiler & Machinery Insurance. A policy of Equipment Breakdown / Boiler & Machinery Insurance with limits of not less than actual replacement costs

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Packet Pg. 576 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 3 for all property and improvements, encompassing explosion and breakdown. Lessee shall obtain and deliver to Lessor, along with copies of all polices of insurance required herein, a joint loss endorsement for the Property Insurance and Equipment Breakdown /Boiler & Machinery Insurance policies. Lessor is to be included as an additional insured on the Equipment Breakdown /Boiler & Machinery Insurance coverage. (f) Business Interruption. Loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all peril commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.

8.4 General.
(a) Acceptability of Insurers. Insurance required by this Paragraph 8 shall be issued by a licensed company authorized to transact business in the state by the Department of Insurance for the State of California with a current rating of A-:VII or better (if an admitted carrier), or a current rating of A:X or better (if offered by a non-admitted insurer listed on the State of California List of Approved Surplus Line Insurers (LASLI), by the latest edition of A.M. Best’s Key Rating Guide, except that Lessor will accept workers’ compensation insurance from the State Compensation Fund. In the event Lessor determines that Lessee's use of the Premises creates an increased or decreased risk of loss to Lessor, Lessee agrees that the minimum limits of the insurance policies may be changed accordingly upon receipt of written notice from Lessor. Lessee shall immediately substitute any insurer whose A.M. Best rating drops below the levels specified herein.
(b) Insurance Endorsements. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to Lessor for written approval. Required insurance policies shall contain the following provisions, or Lessee shall provide endorsements on forms approved by Lessor to add the following provisions to the insurance policies:
(i) Additional Insured. Lessee's policy or policies of Commercial General Liability Insurance and Automobile Liability Insurance shall be endorsed to include Lessor, its officials, officers, employees, agents and volunteers, Lessor's lender, and any property management company of Lessor for the Premises. The additional insured endorsement shall not (1) be restricted to “ongoing operations”, (2) exclude “contractual liability”, (3) restrict coverage to “sole” liability of Lessee, or (4) contain any other exclusions contrary to this Lease; and, the coverage shall contain no special limitations on the scope of protection afforded to additional insureds. (ii) Notice. Each insurance policy required by this Paragraph 8, except for workers' compensation and employer's liability insurance, shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or modified, or reduced in coverage or in limits, except after thirty (30) days prior written notice by First Class U.S. Mail, postage-prepaid, has been provided to Lessor.

Notwithstanding the foregoing, if coverage is to be suspended, voided, or cancelled because of Lessee's failure to pay the insurance premium, the notice provided to Lessor shall be by ten (10) days prior written notice.
(iii) Primary and Non-Contributing Insurance. All policies of insurance maintained by Lessee pursuant to this Paragraph 8, except for workers' compensation and employer's liability insurance, shall be primary and any other insurance, deductible, or self-insurance maintained by Lessor, its officials, officers, employees, agents or volunteers, shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.

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Packet Pg. 577 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 4 (iv) Waiver of Subrogation. All policies of insurance maintained by Lessee pursuant to this Paragraph 8 shall contain or be endorsed to waive subrogation against Lessor, its officials, officers, employees, agents and volunteers, or shall specifically allow Lessee to waive its right to recovery prior to a loss. Lessee hereby agrees to waive its own right of recovery against Lessor, its officials, officers, employees, agents and volunteers.
(c) Evidence of Coverage. Concurrently with the execution of this Lease, Lessee shall deliver certificates of insurance together with original endorsements affecting each of the insurance policies required by this Paragraph 8. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to Lessor for written approval. The certificates of insurance and original endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15) days prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with Lessor. If such coverage is cancelled or reduced and not replaced immediately so as to avoid a lapse in the required coverage, Lessee shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with Lessor evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. Lessee shall promptly furnish, at Lessor’s request, copies of actual policies including all declaration pages, endorsements, exclusions and any other policy documents Lessor requires to verify coverage.
(d) Requirements Not Limiting. Requirement of specific coverage or minimum limits contained in this Lease are not intended as a limitation on coverage, limits, or other requirements, or a waiver of any coverage normally provided by any insurance. Nothing contained herein shall be construed as limiting in any way the indemnification provision contained in this Lease, or the extent to which Lessee may be held responsible for payments of damages to persons or property. (e) Enforcement of Agreement (Non-Estoppel). Lessee acknowledges and agrees that actual or alleged failure on the part of the Lessor to inform Lessee of any non-compliance with any of the insurance requirements set forth herein imposes no additional obligation on the Lessor nor does it waive any rights hereunder.
(f) Notification of Incidents. Lessee shall notify Lessor within twenty-four (24) hours after the occurrence of any accidents or incidents in the Premises, the Building, Common Areas or the Project which could give rise to a claim under any of the insurance policies required under this Paragraph 8.

8.5 Other Insurance Requirements. The following terms and conditions shall apply to the insurance policies required of Lessee pursuant to this Paragraph 8:
(a) Lessee shall provide immediate written notice to Lessor if (1) any of the insurance policies required herein are terminated, cancelled or suspended, (2) the limits of any of the insurance coverages required herein are reduced, or (3) the deductible or self-insured retention is increased. (b) All insurance coverage and limits provided by Lessee and available or applicable to this Lease are intended to apply to each insured, including additional insureds, against whom a claim is made or suit is brought to the full extent of the policies. Nothing contained in this Lease or any other agreement relating to Lessor or its operations shall limit the application of such insurance coverage. (c) None of the insurance coverages required herein will be in compliance with the requirements of this Paragraph 8 if they include any limiting endorsement which substantially

4.7.a
Packet Pg. 578 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 5 impairs the coverages set forth herein (e.g., elimination of contractual liability or reduction of discovery period), unless the endorsement has first been submitted to Lessor and approved in writing. (d) Certificates of insurance will not be accepted in lieu of required endorsements, and submittal of certificates without required endorsements may delay Lessee's occupancy of the Premises. It is Lessee’s obligation to ensure timely compliance with all insurance submittal requirements as provided herein.
(e) Lessee agrees to ensure that its subconsultants and subcontractors, if any, and any other parties involved with the Project who are brought onto or involved in the Project by Lessee, provide the same minimum insurance coverage required of Lessee. Lessee agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this Paragraph 8. Lessee agrees that upon request, all agreements with subconsultants, subcontractors and others engaged in the Project will be submitted to Lessor for review."

4. Breach by Lessor; Performance by Lessee on Behalf of Lessor. Paragraph

13.6(c) is hereby added to the Lease to read as follows:
“13.6(c). Lessee’s Remedies. Lessee and all successors and assigns covenant and agree that, in the event of any actual or alleged default by Lessor, Lessee’s sole and exclusive remedy shall be either to seek either specific performance or monetary damages, provided that Lessor shall not be liable for loss of business profits or consequential damages, and provided further, that any recourse for monetary damages by Lessee against Lessor shall be limited solely and exclusively to an amount which is equal to the amounts paid by Lessee to Lessor under the Lease (and Lessee hereby expressly waives and releases personal liability of Lessor in excess of such amount on behalf of itself and all persons claiming by through, or under the lease) Further, in no event shall the obligations of Lessor under the Lease constitute the personal obligations of Lessor or its elected or appointed officers and officials, employees, agents, and volunteers, and Lessee shall have no right to seek recourse against Lessor’s elected or appointed officers and officials, employees, agents, and volunteers, or any of their personal assets for the satisfaction of any liability of Lessor with respect to the Lease. Lessee expressly waives all remedies except those specifically set forth in the Lease, including, without limitation, any right of offset or abatement except as specifically set forth in the Lease, any right to terminate the Lease under Civil Code Sections 1932(2), 1933(4) and 1941 or any other successor statute, or any statutory, legal or equitable self-help remedy including, without limitation, Civil Code Section 1942 or any other current or future law. Nothing contained in the Lease shall entitle Lessee to terminate the Lease as a result of Lessor’s default nor excuse Lessee from paying Rent or Additional Rent due hereunder.”

5. Estoppel Certificates. All references in the Lease to “Estoppel Certificate”, including, but not limited to the definition in Paragraph 16(a), shall refer to Lessor’s standard form certificate.

6. Recordation. Lessee shall not have any right to cause the Lease or any short form or memorandum thereof to be recorded.

Signatures on the following page

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Packet Pg. 579 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 6 IN WITNESS WHEREOF, the parties have executed this Addendum as of the date of the Lease. “Lessor”

THE CITY OF LAGUNA HILLS
By:

Name Printed: Kenneth H. Rosenfield
Its: Interim City Manager
By:

Name Printed: Melissa Au-Yeung
Its: City Clerk

“Lessee”
Premier Group International, a California
Corporation
By:

Name Printed: Joseph Dalu
Its: President
By:

Name Printed: Joseph Dalu
Its: CFO

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Packet Pg. 580 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International)

4.7.a
Packet Pg. 581
Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 1 EXHIBIT B

RULES AND REGULATIONS

ATTACHED TO AND MADE A PART OF STANDARD OFFICE LEASE
The following Rules and Regulations shall be in effect at the Office Building Project.

Lessor reserves the right to adopt reasonable modifications and additions hereto. In the case of any conflict between these Rules and Regulations and the Lease, the Lease shall be controlling.

1. Except with the prior written consent of Lessor, no Lessee shall conduct any retail sales or any manufacturing of any kind in or from the Premises, or any business other than that specifically provided for in the Lease.

2. Lessor reserves the right to prohibit personal goods and services vendors from access to the Office Building Project except upon such reasonable terms and conditions, including but not limited to the payment of a reasonable fee and provision for insurance coverage, as are related to the safety, care and cleanliness of the Office Building Project, the preservation of good order thereon, and the relief of any financial or other burden on Lessor occasioned by the presence of such vendors or the sale by them of personal goods or services to the Lessee or its employees. If reasonably necessary for the accomplishment of these purposes, Lessor may exclude a particular vendor entirely or limit the number of vendors who may be present at any one time in the Office Building Project. The term “personal goods or services vendors” means persons who periodically enter the Office Building Project of which the Premises are a part for the purpose of selling goods or services to a Lessee, other than goods or services, which are used by a lessee only for the purpose of conducting its business on the Premises. “Personal goods or services” include, but are not limited to, drinking water and other beverages, food, barbering services, and shoe shining services. This Section 2 shall not apply to Lessee’s vendors and suppliers in connection with Lessee’s operation of its business.

3. The sidewalks, halls, passages, elevators and stairways shall not be obstructed by any Lessee or used by it for any purpose other than for ingress to and egress from their respective Premises. The halls, passages, entrances, elevators, stairways, balconies and roof are not for the use of the general public, and Lessor shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of Lessor shall be prejudicial to the safety, character, reputation and interests of the Office Building Project and its lessees, provided that nothing herein contained shall be construed to prevent such access to persons with whom Lessee normally deals only for the purpose of conducting its business on the Premises (such as clients, customers, office suppliers and equipment vendors, and the like) unless such persons are engaged in illegal activities. No Lessee and no employees of any Lessee shall go upon the roof of the Building without the written consent of Lessor. This Section 3 shall not apply to Lessee’s vendor’s suppliers in connection with Lessee’s operation of its business.

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Packet Pg. 582 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 2 4. The sashes, sash doors, windows, glass lights, and any lights or skylights that reflect or admit light into the halls or other places of the Building shall not be covered or obstructed. The toilet rooms, water and wash closets and other water apparatus shall not be used for any purpose other than that or which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein, and the expense of any breakage, stoppage or damage, resulting from the violation of this rule shall be borne by the Lessee who, or whose clerks, agents, employees, or visitors, shall have caused it.

5. No sign, advertisement or notice visible from the exterior of the Premises or Building shall be inscribed, painted or affixed by Lessee on any part of the Office Building Project or the Premises without the prior written consent of Lessor. If Lessor shall have given such consent at any time, whether before or after the execution of this Lease, such consent shall in no way operate as a waiver or release of any of the provisions hereof or of this Lease, and shall be deemed to relate only to the particular sign, advertisement or notice so consented to by Lessor and shall not be construed as dispensing with the necessity or obtaining the specific written consent of Lessor with respect to each and every such sign, advertisement or notice, as the case may be, so consented to by Lessor. Lessor shall have the right to remove any non-approved sign, advertisement or notice, without notice to and at the expense of Lessee, and Lessor shall not be liable in damages for such removal.

6. In order to maintain the outward professional appearance of the Office Building Project all window coverings to be installed at the Premises shall be subject to Lessor’s prior approval. If Lessor, by a notice in writing to Lessee, shall object to any curtain, blind, shade or screen attached to or hung in, or used in connection with, any window door of the Premises, such use of such curtain, blind, shade or screen shall be forthwith discontinued by Lessee. No awnings shall be permitted on any part of the Premises.

7. Lessee shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved by Lessor.

8. Lessee shall not do or permit anything to be done in the Premises, or bring or keep anything therein, which shall in any way increase the rate of fire insurance on the Office Building Project, or on the property kept therein, or obstruct or interfere with the rights of other Lessees, or in any way injure or annoy them, or conflict with the regulations of the Fire Department or the fire laws, or with any insurance policy upon the Office Building Project, or any part thereof, or with any rules and ordinances established by the Board of Health or other governmental authority.

9. No Lessee shall sweep or throw or permit to be swept or thrown from the

4.7.a
Packet Pg. 583 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 3 Premises any dirt or other substance into any of the corridors or halls or elevators, or out of the doors or windows or stairways of the Building. Lessee shall not use, keep or permit to be used any foul or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Lessor or other occupants of the Office Building Project by reason of noise, odors, fire hazards and/or vibrations, or interfere in any way with other Lessees or those having business therein, nor shall any animals or birds be kept in or about the Office Building Project.

10. Lessee and its employees, agents and invitees shall not smoke any tobacco products or any other smoking materials whatsoever in the Premises, Building, common areas or any other area of the Project except in such areas, if any, as shall be designated by Lessor for smoking, in Lessor’s sole and absolute discretion.

11. No cooking shall be done or permitted by Lessee on the Premises, except for the use of a microwave oven for food or Underwriter’s Laboratory approved equipment for brewing coffee, tea, and similar beverages shall be permitted, provided that such use is in compliance with law. Offices in the Office Building Project shall not be used for the storage of merchandise or for sleeping or lodging.

12. Lessee, upon the termination of its tenancy, shall deliver to Lessor all the keys of offices, rooms and toilet rooms which shall have been furnished Lessee or which Lessee shall have had made, and in the event of loss of any keys so furnished, shall pay Lessor therefore.

13. On Saturdays after 6:00pm., Sundays and legal holidays, and on other days between the hours of 9:00 p.m. and 7:00 a.m., access to the Office Building Project or to the halls, corridors, elevators or stairways in the Building, or to the Premises may be refused unless the person seeking access is known to the building watchman, if any, in charge and has a pass or is properly identified. Lessor shall in no case be liable for damages for the admission to or exclusion from the Office Building Project of any person whom Lessor has the right to exclude under Rule 3 above. In case of invasion, mob, riot, public excitement, or other commotion, Lessor reserves the right but shall not be obligated to prevent access to the Office Building Project during the continuance of the same by closing the doors or otherwise, for the safety of the tenants and protection of property in the Office Building Project.

14. Lessee shall see that the windows and doors of the Premises are closed and securely locked before leaving the building and Lessee shall exercise extraordinary care and caution that all water faucets or water apparatus are entirely shut off before Lessee or Lessee’s employees leave the Building, and that all electricity, gas or air shall likewise be carefully shut off, so as to prevent waste or damage, and for any default or carelessness Lessee shall make good all injuries sustained by other Lessees or occupants of the Building or Lessor.

15. Lessee shall not alter any lock or install a new or additional lock or any bolt

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Packet Pg. 584 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 4 on any door of the Premises without prior written consent of Lessor. If Lessor shall give its consent, Lessee shall in each case furnish Lessor with a key for any such lock.

16. Lessee shall not install equipment such as, but not limited to, electronic tabulating or computer equipment requiring electrical or air conditioning service in excess of those to be provided by Lessor under the Lease and any such equipment shall be placed in the Premises in settings approved by Lessor to adsorb or prevent any vibration, noise or annoyance.

17. No bicycle, or shopping cart, or other vehicle or any animal shall be brought into the Premises or the halls, corridors, elevators or any part of the Building by Lessee.

18. Lessor shall have the right to prohibit the use of the name of the Office Building Project or any other publicity by Lessee which in Landlord’s opinion tends to impair the reputation of the Office Building Project, or their desirability for other Lessees, and upon written notice from Lessor, Lessee will refrain from or discontinue such publicity.

19. Lessee shall not erect any aerial or antenna on the roof or exterior walls of the Premises, the Building, or the Office Building Project.

20. Lessee shall not overload the floor of the Premises. In addition, Lessee shall not mark, drive nails, screw or drill into partitions, ceilings or floor of the Premises or deface the Premises.

21. No furniture, freight or equipment of any kind shall be brought into the Building or the Building’s elevator without the consent of Lessor and all moving of the same into or out of the Building shall be done at such time and in such manner, as Lessor shall designate. Lessor shall have the right to prescribe the weight, size and position of all safes and other heavy equipment brought into the Building and also the times and manner of moving the same in and out of the Office Building Project. Safes or other heavy objects shall, if considered necessary by Lessor, stand on wood strips of such thickness as is necessary to properly distribute the weight. However, Lessor’s consent to placement of Lessee’s safes, heavy equipment or furniture shall not constitute a representation or warranty by Lessor that the safe, heavy equipment or furniture complies, with regard to distribution of weight and/or vibration, with the provisions of the Rule 21 nor relieve Lessee from responsibility for the consequences of noncompliance. Lessor will not be responsible for loss of or damage to any safe or property from any cause and all damage done to the Building by moving or maintaining any such safe or property from any cause and all damage done to the Building by moving or maintaining any such safe or other property shall be repaired at the expense of Lessee.

There shall not be used in any space, or in the public halls of the Building, either by any Lessee or others, any hand trucks except those equipped with rubber tires and side guards.

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Packet Pg. 585 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 5 22. Except with the written consent of Lessor, no person or persons other than those approved by Lessor shall be permitted to enter the Building for their purpose of cleaning the same. Lessee shall not cause any unnecessary labor by reason of Lessee’s carelessness or indifference in the preservation of good order and cleanliness. Lessor shall in no way be responsible to any Lessee for any loss of property on the Premises, however occurring, or for any damage done to the effects of any lessee by the janitor or any other employee or any other person. Janitor service shall include ordinary dusting and cleaning by the janitor assigned to such work and shall not include cleaning of carpets or rugs, except normal vacuuming, or moving of furniture and other special services. Janitor service may not be furnished on nights when rooms are occupied after 9:00p.m.

23. Lessor will direct electricians as to where and how telephone and telegraph wires are to be introduced. No boring or cutting for wires will be allowed without the consent of Lessor. The location of telephones, call boxes and other office equipment affixed to the Premises shall be subject to the approval of Lessor.

24. No furniture, packages, supplies, equipment or merchandise will be received in the Building or carried up or down in the elevators, except between such hours and in such elevators as shall be designated by Lessor.

25. Lessor reserves the right to exclude or expel from the Office Building Project any person who in the judgment of Lessor, is intoxicated or under the influence of liquor or illegal, non-prescription drugs, or who shall in any manner do any act in violation of any of the Rules and Regulations of the Office Building Project.

26. The requirements of Lessee will be attended to only upon application to Lessor. Contractors, vendors and employees of Lessor shall not perform any work or do anything outside of their regular duties unless under special instructions from the Lessor or Lessor’s agent.

27. No vending machine shall be installed, maintained or operated upon the Premises without the written consent of the Lessor.

28. Lessor shall have the right, exercisable without notice and without liability to Lessee, to change the name and the street address of the Building and/or Office Building Project of which the Premises are a part.

29. Lessee agrees that it shall comply with all fire and security regulations that may be issued from time-to-time by Lessor and Lessee also shall provide Lessor with the name of a designated responsible employee to represent Lessee in all matters pertaining to such fire or security regulations.

30. Lessor reserves the right by written notice to Lessee, to rescind, alter or

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Packet Pg. 586 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 6 waive any rule or regulation at any time prescribed for the Office Building Project when, in Lessor’s judgment, it is necessary, desirable or proper for the best interest of the Office Building Project and its lessees.

31. Lessees shall not disturb, solicit, or canvas any occupant of the Office Building Project and shall cooperate to prevent same.

32. Lessor shall furnish heating and air conditioning during the hours of 7:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 12:00 p.m. on Saturday except for holidays. In the event Lessee requires heating and air conditioning during off hours, Sundays or Holidays, Lessor shall on notice provide such services at the then prevailing rate for such extra services.

33. Lessee shall cooperate with Lessor in obtaining maximum effectiveness of the cooling system by closing blinds when the sun’s rays fall directly on windows of the premises. Lessee shall not obstruct, alter, or in any way impair the efficient operation of Lessor’s heating, ventilating and air-conditioning system. Lessee shall not tamper with or change the setting of any thermostats or control valves.

34. Parking
(a) The parking lot shall be accessible twenty-four (24) hours per day, subject to parking card or other reasonable Identification or security restriction as may be reasonably established by Lessor from time-to-time. Lessee agrees to cooperate with Lessor in completing regular maintenance of the parking lot.
(b) Automobiles must be parked entirely within the stall lines. (c) All directional signs and arrows must be observed and the speed limit shall be 5 miles per hour.
(d) Parking is prohibited in areas not striped for parking. (e) Lessor may refuse to permit any person who violates the within rules to park in the parking lot, and any violation of the rules shall subject the automobile to removal from the parking lot at the parker’s expense.
(f) Every parker is required to park and lock his or her own automobile. All responsibility for any loss or damage to automobile or any personal property therein is assumed by the parker.

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Packet Pg. 587 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 7 (g) The parking lot is for the sole purpose of parking one automobile per space. Washing, waxing, cleaning or servicing of any vehicles by the parker or his agents is prohibited.
(h) Storage of vehicles in the parking facilities is prohibited. Lessee and Lessee’s employees and visitors shall not leave vehicles in the parking lot overnight.
(I ) Lessor reserves the right to restrict customer, Lessee and Lessee’s employees parking to a limited designated area or areas.

35. Lessee agrees to comply and acquaint its employees with such reasonable rules and regulations in the use of such Common areas as Lessor may adopt from time to time for the orderly and proper operation of said Common Areas.

Lessor reserves the right to make such other and further rules and regulations as in its judgment may be for the safety, care and cleanliness of the Office Building Project and for the preservation of good order therein. Lessee agrees to abide by these Rules and Regulations herein above stated and any additional rules and regulations, which are adopted hereafter.

Date: ___________________ Date: __________________
Lessor’s Initials: __________________ Lessee’s Initials: __________________

4.7.a
Packet Pg. 588 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International)

4.7.a
Packet Pg. 589 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 1 EXHIBIT "D"

WORK LETTER/REQUIREMENTS FOR IMPROVEMENTS OR ALTERATIONS BY LESSEE If Lessor shall permit Lessee to construct any interior improvements (subsequent to the initial improvements to be constructed by Lessor, if any) in the Premises or to have any work performed in the Premises at any time prior to or during the Lease term by a contractor retained by Lessee (“Lessee’s Work”), then Lessee shall comply with the requirements set forth herein. If Lessee’s Work has been properly authorized, Lessee will receive written approval and consent for alterations to the Premises. All alterations to the Premises, excepting movable furniture and trade fixtures, shall, at Lessor’s option, become a part of the realty and belong to Lessor.

1. SUBMITTAL OF PLANS. Prior to commencing any work in the Premises, Lessee shall submit to Lessor for approval its proposed plans for the work. Without limiting the foregoing, Lessee shall provide:
(a) A separate scale drawing denoting all proposed construction and/or demolition, if necessary.
(b) A separate drawing for each trade proposing structural, electrical, mechanical, civil or landscaping modifications.
(c) Specify all dimensions and complete references to all work to be performed in the affected areas.
(d) If adding extra electrical or mechanical equipment, provide complete operating and maintenance specifications for each item.

2. CHECKLIST. With respect to each project, Lessor will provide Lessee with a checklist listing the items required to be furnished to Lessor in connection with the proposed work. Lessee shall furnish to Lessor prior to, during, or upon completion of Lessee’s Work, as applicable, each of the items specified in the checklist attached hereto as Attachment 1.

3. CONTRACTORS PROVIDING INTERIOR IMPROVEMENT SERVICES. (a) The contractor employed by Lessee and any subcontractors shall be (i) duly licensed in the state in which the Premises are located, and (ii) subject to Lessor’s prior written approval, which approval shall not be unreasonably withheld. If more than one trade is employed on a single job, state law requires the services of a general contractor in addition to contractors for specialty work being performed. (b) Each contractor shall provide proof of licensing as a general or specialty contractor in accordance with state law. Additionally, each contractor shall furnish proof of licensing in the city or municipality in which the construction related activity is to take place. (c) Lessee shall use Lessor’s subcontractor for mechanical, electrical, plumbing, roofing and roofing consultant if available at competitive rates. (d) Lessee and Lessee’s contractors shall comply with all Applicable Laws pertaining to the performance of Lessee’s Work and the completed improvements and all applicable safety regulations established by Lessor or the general contractor.
(e) Prior to commencement of any work in the Premises, Lessee and Lessee’s contractors (and any subcontractors) shall obtain and provide Lessor with certificates evidencing Workers’ Compensation, public liability and property damage insurance in amounts and forms and with companies

4.7.a
Packet Pg. 590 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 2 satisfactory to Lessor. Each general contractor (and any subcontractor) employed on the Premises shall provide Lessor with a current certificate of insurance in effect for that contractor with a thirty day notice of cancellation or revocation clause. Insurance requirements are as follows:
(i) Comprehensive General Liability with a $1,000,000 Combined Single Limit covering the liability of Lessor and contractor for bodily injury and property damage arising as a result of the construction of the improvements and the services performed thereunder. Lessor and any Management Company shall be named as an additional insured. (ii) Comprehensive Automobile Liability with a $1,000,000 Combined Single Limit covering Lessor and vehicles used by contractor (and any subcontractor) in connection with the construction of the improvements.
(iii) Workers’ Compensation and Employer’s Liability as required by law, for employees of the contractor (and any subcontractors) performing work on the Premises.
(f) The following requirements shall be incorporated as “Special Conditions” into the contract between Lessee and its contractors and a copy of the contract shall be furnished to Lessor prior to the commencement of Lessee’s Work:
(i) Prior to start of Lessee’s Work, Lessee’s contractor shall provide Lessor with a construction schedule in “bar graph” form indicating the completion dates of all phases of Lessee’s Work.
(ii) Lessee’s contractor shall be responsible for the repair, replacement or clean-up of any damage done by it to other contractors’ work which specifically includes accessways to the Premises which may be concurrently used by others.
(iii) Lessee’s contractor shall accept the Premises prior to starting any trenching operations. Any rework of sub-base or compaction required after the contractor’s initial acceptance of the Premises shall be done by Lessee’s contractor, which shall include the removal from the Project of any excess dirt or debris.
(iv) Lessee’s contractor shall contain its storage of materials and its operations within the Premises and such other space as it may be assigned by Lessor or Lessor’s contractor. Should Lessee’s contractor be assigned space outside the Premises, it shall move to such other space as Lessor or Lessor’s contractor shall direct from time to time to avoid interference or delays with other work.
(v) Lessee’s contractor shall clean up the construction area and surrounding exterior areas daily. All trash, demolition materials and surplus construction materials shall be stored within the Premises and promptly removed from the Premises and the Project and disposed of in an approved sanitation site.
(vi) Lessee’s contractor shall provide temporary utilities, portable toilet facilities, and potable drinking water as required for its work within the Premises and shall pay to Lessor’s contractor the cost of any temporary utilities and facilities provided by Lessor’s contractor at Lessee’s

4.7.a
Packet Pg. 591 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 3 contractor’s request.
(vii) Lessee’s contractor shall notify Lessor or Lessor’s project manager of any planned work to be done on weekends or other than normal job hours.
(viii) Lessee’s contractor or subcontractors shall not post signs on any part of the Project or on the Premises.

4. COSTS.
(a) Lessee shall promptly pay any and all costs and expenses in connection with or arising out of the performance of Lessee’s Work (including the costs of permits thereof) and shall furnish to Lessor evidence of such payment upon request.
(b) Except in the case of carpet replacement or repainting, Lessee shall pay Lessor an amount equal to five percent (5%) of the total hard costs of construction and installation of Lessee’s Work as compensation to Lessor for review of plans, use of facilities and other miscellaneous costs of Lessor incurred as a result of such work.

5. CONTRACTOR’S BONDS. At Lessor's sole discretion, Lessor may require Lessee to obtain performance and completion bonds to insure Interior Work

6. MECHANIC’S LIENS.
(a) Lessee shall not suffer or permit to be enforced against the Premises or any part of the Project any mechanic’s, materialman’s, contractor’s or subcontractor’s lien arising out of any work of improvement, however it may arise.
(b) Lessee shall notify Lessor at least ten (10) days prior to the commencement of construction of any Lessee’s Work and Lessor shall have the right to post and record a notice of no responsibility in conformity with applicable law. Within ten (10) days following completion of Lessee’s Work, Lessee shall file a Notice of Completion and deliver to Lessor an unconditional release and waiver of lien executed by each contractor, subcontractor and materialman involved in Lessee’s Work. (c) In the event any lien is filed against the Project or any portion thereof or against Lessee’s leasehold interest therein as a result of Lessee’s work, Lessee shall obtain the release and/or discharge of said lien, within ten (10) days after the filing thereof. In the event Lessee fails to do so, Lessor may obtain the release and/or discharge of said lien and Lessee shall indemnify Lessor for the costs thereof, including reasonable attorney’s fees, together with interest at the Applicable Interest Rate from the date of demand. Nothing herein shall prohibit Lessee from contesting the validity of any such asserted claim, provided Lessee has furnished to Lessor a lien release bond freeing the Premises from the effect of the lien claim.

7. INDEMNITY. Lessee shall indemnify, defend (with counsel satisfactory to Lessor) and hold Lessor harmless from and against any and all suits, claims, actions, loss, cost or expense (including claims for workers’ compensation, attorney’s fees and costs) based on personal injury or property damage, or otherwise (including, without limitation, contract and breach of warranty claims) arising from the performance of Lessee’s Work. Lessee shall repair or replace (or, at Lessor’s election, reimburse Lessor for the cost of repairing or replacing) any portion of the Building or item of Lessor’s equipment or any of Lessor’s real or personal property damaged, lost or destroyed in the performance of Lessee’s Work.

8. BUILDING STANDARDS. All work shall conform to Lessor’s established building standards and specifications. Lessee is required to make these standards part of the construction documents.

4.7.a
Packet Pg. 592 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 4 9. ROOF PENETRATIONS. If improvements penetrate the roof membrane, the penetrations will be sealed per Lessor/IRC roofing specifications and inspected by IRC to maintain roof warranty. The cost of inspection and all corrective work shall be borne by Lessee. Lessee shall use Lessor’s original roofing contractor.

10. BUILDING MODIFICATIONS. Work will only be approved within the confines of a given space. Lessee will not be allowed to modify building exterior or mechanical and electrical service as provided to the building in common with other tenants.

11. ELECTRICAL WORK. All electrical work shall be approved from the unit space electrical panel only. Additional service requirements shall be secured only by direction of Lessor. Lessee shall use Lessor’s original electrical contractor if available at competitive rates.

12. SCHEDULE OF WORK. Lessee shall be required to provide a schedule of all work to be performed, subject to Lessor approval. All costs to produce such schedule shall be borne solely by Lessee.

13. CLEAN UP AND DISPOSAL OF CONSTRUCTION DEBRIS. Building trash containers are provided for office generated trash only and are not to be used for disposal of construction-related materials and debris. Unapproved usage will result in a penalty assessment to the Lessee equal to the cost of an extra pick-up service as provided under the current rate schedule of regular trash removal service.

14. INSPECTION BY LANDLORD. Lessor reserves the following rights: (i) the right of inspection prior to, during and at completion of all construction and/or demolition, (ii) the right to post and record a notice of nonresponsibility in conformity with California law, and (iii) the right to order, if reasonable, a total stop to all improvements underway for non-compliance with any of the requirements hereof.

15. GENERAL PROVISIONS.
(a) If Lessor has agreed to provide an allowance toward the cost of tenant improvements (other than the initial Lessee Improvement Allowance), Lessor shall retain from such funds an amount determined by Lessor until Lessee has fully complied with the requirements hereof. (b) All materials, work, installations and decorations of any nature whatsoever brought on or installed in the Premises before the commencement of the Term or throughout the Term shall be at Lessee’s risk, and neither Lessor nor any party acting on Lessor’s behalf shall be responsible for any damage thereto or loss or destruction thereof due to any reason or cause whatsoever. (c) Nothing contained herein shall make or constitute Lessee as the agent of Lessor.

4.7.a
Packet Pg. 593 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) 1 Attachment 1 to “Exhibit D”

ITEMS TO BE FURNISHED TO LESSOR FOR EACH WORK OF IMPROVEMENT

1. Plan of Alterations for Lessor Approval.

2. Contractor(s), Address, Telephone Number, Contact Person.

3. Copy of Contractor’s State and City Business License.

4. Copy of Building Permit.

5. Copy of Final Inspection and Signed Building Permit Cards.

6. Copy of Certificate of Insurance Naming The City of Laguna Hills and Essex Realty Management as Additional Insured. Insurance to include Comprehensive General Liability, Comprehensive Auto, Workers’ Compensation, Employer’s Liability and original Endorsement.

7. Signed Unconditional Lien Waiver in favor of Development Corporation.

8. Schedule of Work.

9. Copy of Completion and Payment Bond.

10. Architect’s License and Expiration.

11. Copy of Permit Plans.

12. Copy of As-Builts.

13. Copy of Recorded Notice of Completion.

14. Certificate of Occupancy.

15. Evidence of Insurance for All-Risk/Builder’s Risk Insurance to the Amount of Improvements.

4.7.a
Packet Pg. 594 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) ________ ________
________ ________

INITIALS INITIALS
© 2017 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM GR-3.22, Revised 10-22-2020 Page 1 of 2

GUARANTY OF LEASE
WHEREAS, The City of Laguna Hills, a municipal corporaƟon organized and exisƟng under the laws of the State of California , hereinaŌer "Lessor", and Premier Group InternaƟonal, a California CorporaƟon , hereinaŌer "Lessee", are about to execute a document enƟtled "Lease" dated March 22, 2022 concerning the premises commonly known as (street address, city, state, zip) 24031 El Toro Road, Suite 203 Laguna Hills, CA 92654 wherein Lessor will lease the premises to Lessee, and WHEREAS, Joseph Dalu hereinaŌer "Guarantors" have a financial interest in Lessee, and WHEREAS, Lessor would not execute the Lease if Guarantors did not execute and deliver to Lessor this Guaranty of Lease.

NOW THEREFORE, in consideraƟon of the execuƟon of said Lease by Lessor and as a material inducement to Lessor to execute said Lease, Guarantors hereby jointly,severally, uncondiƟonally and irrevocably guarantee the prompt payment by Lessee of all rents and all other sums payable by Lessee under said Lease and the faithful and prompt performance by Lessee of each and every one of the terms, condiƟons and covenants of said Lease to be kept and performed by Lessee.

It is specifically agreed by Lessor and Guarantors that: (i) the terms of the foregoing Lease may be modified by agreement between Lessor and Lessee, or by a course of conduct, and (ii)said Lease may be assigned by Lessor or any assignee of Lessor without the consent of or noƟce to Guarantors and that this Guaranty shall guarantee the performance of said Lease as so modified.

This Guaranty shall not be released, modified or affected by the failure or delay on the part of Lessor to enforce any of the rights or remedies of the Lessor under said Lease.

No noƟce of default by Lessee under the Lease need be given by Lessor to Guarantors, it being specifically agreed that the guarantee of the undersigned is a conƟnuing guarantee under which Lessor may proceed immediately against Lessee and/or against Guarantors following any breach or default by Lessee or for the enforcement of any rights which Lessor may have as against Lessee under the terms of the Lease or at law or in equity.

Lessor shall have the right to proceed against Guarantors following any breach or default by Lessee under the Lease without first proceeding against Lessee and without previous noƟce to or demand upon either Lessee or Guarantors.

Guarantors hereby waive (a) noƟce of acceptance of this Guaranty. (b) demand of payment, presentaƟon and protest, (c) all right to assert or plead any statute of limitaƟons relaƟng to this Guaranty or the Lease, (d) any right to require the Lessor to proceed against the Lessee or any other Guarantor or any other person or enƟty liable to Lessor, (e) any right to require Lessorto apply to any default any security deposit or other security it may hold under the Lease, (f) any right to require Lessor to proceed under any other remedy Lessor may have before proceeding against Guarantors, (g) any right ofsubrogaƟon that Guarantors may have against Lessee.

Guarantors do hereby subordinate all exisƟng or future indebtedness of Lessee to Guarantors to the obligaƟons owed to Lessor under the Lease and this Guaranty.

If a Guarantor is married, such Guarantor expressly agrees that recourse may be had against his or her separate property for all of the obligaƟons hereunder.

The obligaƟons of Lessee under the Lease to execute and deliver estoppelstatements and financial statements, astherein provided, shall be deemed to also require the Guarantors to provide estoppelstatements and financial statementsto Lessor. The failure of the Guarantors to provide the same to Lessor shall consƟtute a default under the Lease.

The term "Lessor" refers to and means the Lessor named in the Lease and also Lessor's successors and assigns. So long as Lessor's interest in the Lease, the leased premises or the rents, issues and profitstherefrom, are subject to any mortgage or deed of trust or assignment for security, no acquisiƟon by Guarantors of the Lessor'sinterest shall affect the conƟnuing obligaƟon of Guarantors under this Guaranty which shall nevertheless conƟnue in full force and effect for the benefit of the mortgagee, beneficiary, trustee or assignee undersuch mortgage, deed of trust or assignment and their successors and assigns.

The term "Lessee" refers to and means the Lessee named in the Lease and also Lessee's successors and assigns.

Any recovery by Lessor from any other guarantor or insurer shall first be credited to the porƟon of Lessee's indebtedness to Lessor which exceeds the maximum liability of Guarantors under this Guaranty.

No provision of this Guaranty or right of the Lessor can be waived, nor can the Guarantors be released from their obligaƟons except in wriƟng signed by the Lessor.

Any liƟgaƟon concerning this Guaranty shall be iniƟated in a state court of competent jurisdicƟon in the county in which the leased premises are located and the Guarantors consent to the jurisdicƟon ofsuch court. This Guaranty shall be governed by the laws of the State in which the leased premises are located and for the purposes of any rules regarding conflicts of law the parƟesshall be treated as if they were all residents or domiciles of such State.

In the event any acƟon be brought by said Lessor against Guarantors hereunder to enforce the obligaƟon of Guarantors hereunder, the unsuccessful party in such acƟon shall pay to the prevailing party therein a reasonable aƩorney'sfee. The aƩorney's fee award shall not be computed in accordance with any court fee schedule, but shall be such asto full reimburse all aƩorneys' feesreasonably incurred.

If any Guarantor is a corporaƟon, partnership, or limited liability company, each individual execuƟng this Guaranty on said enƟty's behalf represents and warrantsthat he or she is duly authorized to execute this Guaranty on behalf ofsuch enƟty. Signatures to this Guaranty accomplished by means of electronic signature or similar technology shall be legal and binding.

4.7.a
Packet Pg. 595 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) ________ ________
________ ________

INITIALS INITIALS
© 2017 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM GR-3.22, Revised 10-22-2020 Page 2 of 2
If this Form has been filled in, it has been prepared for submission to your aƩorney for his approval. No representaƟon or recommendaƟon is made by AIR CRE, the real estate broker or its agents or employees as to the legalsufficiency, legal effect, or tax consequences of this Form or the transacƟon relaƟng thereto.

GUARANTORS
Joseph Dalu
Executed At:

On:

By:

Name Printed: Joseph Dalu
Title: President
Address:

By:

Name Printed:

Title:

Address:

AIR CRE * hƩps://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng.

4.7.a
Packet Pg. 596 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) ________ ________
________ ________

INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM AD-3.00, Revised 01-01-2019 Page 1 of 4

DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
(As required by the Civil Code)
When you enter into a discussion with a real estate agent regarding a real estate transacƟon, you should from the outset understand what type of agency relaƟonship or representaƟon you wish to have with the agent in the transacƟon.

SELLER'S AGENT
A Seller's agent under a lisƟng agreement with the Seller acts as the agent for the Seller only. A Seller's agent or a subagent of that agent has the following affirmaƟve obligaƟons:

To the Seller: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Seller.

To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance of the agent's duƟes. (b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially affecƟng the value or desirability of the property that are not known to, or within the diligent aƩenƟon and observaƟon of, the parƟes.

An agent is not obligated to reveal to either party any confidenƟal informaƟon obtained from the other party that does not involve the affirmaƟve duƟesset forth above.

BUYER'S AGENT
A Buyer's agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situaƟons, the agent is not the Seller's agent, even if by agreement the agent may receive compensaƟon forservices rendered, either in full or in part from the Seller. An agent acƟng only for a Buyer has the following affirmaƟve obligaƟons:

To the Buyer: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Buyer.

To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance of the agent's duƟes. (b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially affecƟng the value or desirability of the property that are not known to, or within the diligent aƩenƟon and observaƟon of, the parƟes.

An agent is not obligated to reveal to either party any confidenƟal informaƟon obtained from the other party that does not involve the affirmaƟve duƟesset forth above.

AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acƟng directly or through one or more salesperson and broker associates, can legally be the agent of both the Seller and the Buyer in a transacƟon, but only with the knowledge and consent of both the Seller and the Buyer.

In a dual agency situaƟon, the agent hasthe following affirmaƟve obligaƟonsto both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the Seller or the Buyer. (b) Other duƟes to the Seller and the Buyer as stated above in their respecƟve secƟons.

In represenƟng both Seller and Buyer, a dual agent may not, without the express permission of the respecƟve party, disclose to the other party confidenƟal informaƟon, including, but not limited to, facts relaƟng to either the Buyer’s or Seller’s financial posiƟon, moƟvaƟons, bargaining posiƟon, or other personal informaƟon that may impact price, including the Seller’s willingness to accept a price less than the lisƟng price or the Buyer’s willingness to pay a price greater than the price offered.

SELLER AND BUYER RESPONSIBILITIES
Either the purchase agreement or a separate document will contain a confirmaƟon of which agent is represenƟng you and whether that agent isrepresenƟng you exclusively in the transacƟon or acƟng as a dual agent. Please pay aƩenƟon to that confirmaƟon to make sure it accurately reflects your understanding of your agent’s role. The above duƟes of the agent in a real estate transacƟon do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transacƟon. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. If you are a Buyer, you have the duty to exercise reasonable care to protect yourself, including as to those facts about the property which are known to you or within your diligent aƩenƟon and observaƟon. Both Sellers and Buyers should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transacƟon can be complex and subject to change.

Throughout your real property transacƟon you may receive more than one disclosure form, depending upon the number of agents assisƟng in the transacƟon. The law requires each agent with whom you have more than a casual relaƟonship to present you with this disclosure form. You should read its contents each Ɵme it is presented to you, considering the relaƟonship between you and the real estate agent in your specific transacƟon. This disclosure form includesthe provisions of SecƟons 2079.13 to 2079.24, inclusive, of the Civil Code set forth on page 2. Read it carefully. I/WE ACKNOWLEDGE RECEIPT OF A COPY OF THIS DISCLOSURE AND THE PORTIONS OF THE CIVIL CODE PRINTED ON THE BACK (OR A SEPARATE PAGE).

Buyer Seller Lessor Lessee The City of Laguna Hills Date:

Buyer Seller Lessor Lessee Premier Group International Date:

Agent: Essex Realty Management DRE Lic. #: 00965485
Real Estate Broker (Firm)
By: Angela Draper DRE Lic. #: 01972882 Date: 3/22/2022
(Salesperson or Broker-Associate)

4.7.a
Packet Pg. 597 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) ________ ________
________ ________

INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM AD-3.00, Revised 01-01-2019 Page 2 of 4
THIS FORM HAS BEEN PREPARED BY AIR CRE. NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF THIS FORM FOR ANY SPECIFIC TRANSACTION. PLEASE SEEK LEGAL COUNSEL AS TO THE APPROPRIATENESS OF THIS FORM.

4.7.a
Packet Pg. 598 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) ________ ________
________ ________

INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM AD-3.00, Revised 01-01-2019 Page 3 of 4

DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
CIVIL CODE SECTIONS 2079.13 THROUGH 2079.24 (2079.16 APPEARS ON THE FRONT) 2079.13. As used in SecƟons 2079.7 and 2079.14 to 2079.24, inclusive, the following terms have the following meanings:
(a) “Agent” means a person acƟng under provisions of Title 9 (commencing with SecƟon 2295) in a real property transacƟon, and includes a person who is licensed as a real estate broker under Chapter 3 (commencing with SecƟon 10130) of Part 1 of Division 4 of the Business and Professions Code, and under whose license a lisƟng is executed or an offer to purchase is obtained. The agent in the real property transacƟon bears responsibility for that agent’s salespersons or broker associates who perform as agents of the agent. When a salesperson or broker associate owes a duty to any principal, or to any buyer or seller who is not a principal, in a real property transacƟon, that duty is equivalent to the duty owed to that party by the broker for whom the salesperson or broker associate funcƟons. (b) “Buyer” means a transferee in a real property transacƟon, and includes a person who executes an offer to purchase real property from a seller through an agent, or who seeks the services of an agent in more than a casual, transitory, or preliminary manner, with the object of entering into a real property transacƟon. “Buyer” includes vendee or lessee of real property. (c) “Commercial real property” means all real property in the state, except (1) single-family residenƟal real property, (2) dwelling units made subject to Chapter 2 (commencing with SecƟon 1940) of Title 5, (3) a mobilehome, as defined in SecƟon 798.3, (4) vacant land, or(5) a recreaƟonal vehicle, as defined in SecƟon 799.29. (d) “Dual agent” means an agent acƟng, either directly or through a salesperson or broker associate, as agent for both the seller and the buyer in a real property transacƟon. (e) “LisƟng agreement” means a wriƩen contract between a seller of real property and an agent, by which the agent has been authorized to sell the real property or to find or obtain a buyer, including rendering other servicesfor which a real estate license isrequired to the seller pursuant to the terms of the agreement. (f) “Seller’s agent” means a person who has obtained a lisƟng of real property to act as an agent for compensaƟon. (g) “LisƟng price” is the amount expressed in dollars specified in the lisƟng for which the seller is willing to sell the real property through the seller’s agent. (h) “Offering price” is the amount expressed in dollars specified in an offer to purchase for which the buyer is willing to buy the real property. (i) “Offer to purchase” means a wriƩen contract executed by a buyer acƟng through a buyer’s agent that becomes the contract for the sale of the real property upon acceptance by the seller. (j) “Real property” means any estate specified by subdivision (1) or (2) of SecƟon 761 in property, and includes (1) single-family residenƟal property, (2) mulƟunit residenƟal property with more than four dwelling units, (3) commercial real property, (4) vacant land, (5) a ground lease coupled with improvements, or (6) a manufactured home as defined in SecƟon 18007 of the Health and Safety Code, or a mobilehome as defined in SecƟon 18008 of the Health and Safety Code, when offered for sale or sold through an agent pursuant to the authority contained in SecƟon 10131.6 of the Business and Professions Code. (k) “Real property transacƟon” means a transacƟon for the sale of real property in which an agent is retained by a buyer, seller, or both a buyer and seller to act in that transacƟon, and includes a lisƟng or an offer to purchase. (l) “Sell,” “sale,” or “sold” refersto a transacƟon for the transfer of real property from the seller to the buyer and includes exchanges of real property between the seller and buyer, transacƟons for the creaƟon of a real property sales contract within the meaning of SecƟon 2985, and transacƟons for the creaƟon of a leasehold exceeding one year’s duraƟon. (m) “Seller” means the transferor in a real property transacƟon and includes an owner who lists real property with an agent, whether or not a transfer results, or who receives an offer to purchase real property of which he or she is the owner from an agent on behalf of another. “Seller” includes both a vendor and a lessor of real property. (n) “Buyer’s agent” means an agent who represents a buyer in a real property transacƟon. 2079.14. A seller’s agent and buyer’s agent shall provide the seller and buyer in a real property transacƟon with a copy of the disclosure form specified in SecƟon 2079.16, and shall obtain a signed acknowledgment of receipt from that seller and buyer, except as provided in SecƟon 2079.15, as follows: (a) The seller’s agent, if any, shall provide the disclosure form to the seller prior to entering into the lisƟng agreement. (b) The buyer’s agent shall provide the disclosure form to the buyer as soon as pracƟcable prior to execuƟon of the buyer’s offer to purchase. If the offer to purchase is not prepared by the buyer’s agent, the buyer’s agent shall present the disclosure form to the buyer not later than the next business day aŌer receiving the offer to purchase from the buyer. 2079.15. In any circumstance in which the seller or buyer refuses to sign an acknowledgment of receipt pursuant to SecƟon 2079.14, the agent shall set forth, sign, and date a wriƩen declaraƟon of the facts of the refusal. 2079.16 Reproduced on Page 1 of this AD form.
2079.17(a) As soon as pracƟcable, the buyer’s agent shall disclose to the buyer and seller whether the agent is acƟng in the real property transacƟon as the buyer’s agent, or as a dual agent represenƟng both the buyer and the seller. This relaƟonship shall be confirmed in the contract to purchase and sell real property or in a separate wriƟng executed or acknowledged by the seller, the buyer, and the buyer’s agent prior to or coincident with execuƟon of that contract by the buyer and the seller, respecƟvely. (b) As soon as pracƟcable, the seller’s agent shall disclose to the seller whether the seller’s agent is acƟng in the real property transacƟon as the seller’s agent, or as a dual agent represenƟng both the buyer and seller. This relaƟonship shall be confirmed in the contract to purchase and sell real property or in a separate wriƟng executed or acknowledged by the seller and the seller’s agent prior to or coincident with the execuƟon of that contract by the seller. (C) CONFIRMATION: The following agency relaƟonships are confirmed for thistransacƟon.

Seller’s Brokerage Firm DO NOT COMPLETE, SAMPLE ONLY License Number Is the broker of (check one):  the seller; or  both the buyer and seller. (dual agent) Seller’s Agent DO NOT COMPLETE, SAMPLE ONLY License Number Is (check one):  the Seller’s Agent. (salesperson or broker associate); or  both the Buyer’s Agent and the Seller’s Agent. (dual agent) Buyer’s Brokerage Firm DO NOT COMPLETE, SAMPLE ONLY License Number Is the broker of (check one):  the buyer; or  both the buyer and seller. (dual agent) Buyer’s Agent DO NOT COMPLETE, SAMPLE ONLY License Number Is (check one):  the Buyer’s Agent. (salesperson or broker associate); or  both the Buyer’s Agent and the Seller’s Agent. (dual agent) (d) The disclosures and confirmaƟon required by thissecƟon shall be in addiƟon to the disclosure required by SecƟon 2079.14. An agent’s duty to provide disclosure and confirmaƟon of representaƟon in thissecƟon may be performed by a real estate salesperson or broker associate affiliated with that broker. 2079.18 (Repealed pursuant to AB-1289, 2017-18 California LegislaƟve session) 2079.19 The payment of compensaƟon or the obligaƟon to pay compensaƟon to an agent by the seller or buyer is not necessarily determinaƟve of a parƟcular agency relaƟonship between an agent and the seller or buyer. A lisƟng agent and a selling agent may agree to share any compensaƟon or commission paid, or any right to any compensaƟon or commission for which an obligaƟon arises as the result of a real estate transacƟon, and the terms of any such agreement shall not necessarily be determinaƟve of a parƟcular relaƟonship.
2079.20 Nothing in this arƟcle prevents an agent from selecƟng, as a condiƟon of the agent’s employment, a specific form of agency relaƟonship not specifically

4.7.a
Packet Pg. 599 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) ________ ________
________ ________

INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 3/17/2022 4:36 PM AD-3.00, Revised 01-01-2019 Page 4 of 4
prohibited by this arƟcle if the requirements of SecƟon 2079.14 and SecƟon 2079.17 are complied with. 2079.21 (a) A dual agent may not, without the express permission of the seller, disclose to the buyer any confidenƟal informaƟon obtained from the seller. (b) A dual agent may not, without the express permission of the buyer, disclose to the seller any confidenƟal informaƟon obtained from the buyer. (c) “ConfidenƟal informaƟon” meansfacts relaƟng to the client’s financial posiƟon, moƟvaƟons, bargaining posiƟon, or other personal informaƟon that may impact price, such as the seller is willing to accept a price lessthan the lisƟng price or the buyer is willing to pay a price greater than the price offered. (d) ThissecƟon does not alter in any way the duty or responsibility of a dual agent to any principal with respect to confidenƟal informaƟon other than price. 2079.22 Nothing in this arƟcle precludes a seller’s agent from also being a buyer’s agent. If a seller or buyer in a transacƟon chooses to not be represented by an agent, that does not, of itself, make that agent a dual agent. 2079.23 (a) A contract between the principal and agent may be modified or altered to change the agency relaƟonship at any Ɵme before the performance of the act which is the object of the agency with the wriƩen consent of the parƟes to the agency relaƟonship. (b) A lender or an aucƟon company retained by a lender to control aspects of a transacƟon of real property subject to this part, including validaƟng the sales price, shall not require, as a condiƟon of receiving the lender’s approval of the transacƟon, the homeowner or lisƟng agent to defend or indemnify the lender or aucƟon company from any liability alleged to result from the acƟons of the lender or aucƟon company. Any clause, provision, covenant, or agreement purporƟng to impose an obligaƟon to defend or indemnify a lender or an aucƟon company in violaƟon of thissubdivision is against public policy, void, and unenforceable. 2079.24 Nothing in this arƟcle shall be construed to either diminish the duty of disclosure owed buyers and sellers by agents and their associate licensees,subagents, and employees or to relieve agents and their associate licensees, subagents, and employeesfrom liability for their conduct in connecƟon with acts governed by this arƟcle or for any breach of a fiduciary duty or a duty of disclosure.

AIR CRE. 500 North Brand Blvd, Suite 900, Glendale, CA 91203, Tel 213-687-8777, Email [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng.

4.7.a
Packet Pg. 600 Attachment: Proposed Lease (2800 : Proposed Civic Center Lease for Suite 203 with Premier Group International) City of Laguna Hills
City Council/Planning Agency
Staff Report
DATE: March 22, 2022
TO: Mayor and Council Members
FROM: Janice Reyes
Finance Director
ISSUE: Resolution Establishing Banking Relations with Bank of the West and Designating the Persons Authorized to Transact Business on Behalf of the City
RECOMMENDATION: That the City Council adopt a Resolution entitled: "A Resolution of the City Council of the City of Laguna Hills, California, establishing banking relations with Bank of the West, designating the persons authorized to transact business on behalf of the City, and rescinding Resolution No. 2010-08-24-1." SUMMARY:

The City currently maintains a primary banking relationship with one depository institution in order to maximize cash flow and minimize administrative burden. City Council Policy No. 105 requires a competitive Request for Proposal (“RFP”) process in the selection of a primary banking service provider on a ten-year timeframe basis. Staff has completed a competitive RFP process at this time and is recommending that the City Council adopt the proposed Resolution, as attached to this report as Attachment A, establishing banking relations with Bank of the West. The proposed agreement for banking services, the Contract for Deposit of Public Funds, a standardized agreement, along with other related banking forms are available in the City Clerk’s department for inspection.

BACKGROUND:

The City currently maintains its primary banking services with one depository institution, Union Bank, which was established by Resolution No. 2010-08-24-1 after the completion

4.8 Packet Pg. 601
Banking Services
March 22, 2022