Offer for Acquisition by City of Menifee — Menifee City Council, August 19, 2026

VIA FEDEX
January 05, 2026

Nick Markou and Panagiota Markou
20130 Eyota Road
Apple Valley, CA 92308

Re: Offer to Purchase Permanent and Temporary Construction Easements Riverside County Assessor Parcel No. 333-040-040

Dear Mr. and Mrs. Markou:

By this letter, the City of Menifee presents a statutory offer, under Government Code section 7267.2, to purchase a permanent public road and utility easement and temporary construction easement across portions of your property identified as Riverside County Assessor Parcel Number 333-040-040. These portions of your property are required for the construction of McCall Boulevard/Sherman Way Intersection Improvement Project.

The property interests that the City of Menifee seeks to acquire are an 8,882 square-foot permanent public street and utility easement and a 8,734 square-foot temporary construction easement.

David Houghton, a licensed real estate appraiser with Bender Rosenthal Incorporated, inspected and appraised your property for the purpose of determining fair market value of the easements.

Based on this appraisal, the City has determined that the just compensation for the permanent public road and utility easement and temporary construction easement across portions of your property is $196,000. Enclosed with this letter is a copy of the Appraisal Report dated November 25, 2025, which is the basis for the amount established as just compensation.

Based on the determined just compensation, the City hereby offers to purchase the 8,882-square- foot permanent public street and utility easement and the 8,734 temporary construction easement across portions of your property for $196,000. This is an offer to purchase the easements free of all liens and other encumbrances, except as may be agreed to by the City. This offer is also based on the assumption that the property is free of contamination and requires no remediation. If contamination is found, this offer will be subject to amendment.

If you do not agree with the appraised value determined by the appraisal, please also be advised that under Code of Civil Procedure section 1263.025, the City will reimburse the owner of the property reasonable costs, up to $5,000, to secure his or her own independent appraisal. If you wish to take advantage of this reimbursement, there are conditions and various qualifications that must be met. Please contact the undersigned if you have any questions.

If you accept this offer, the City will transmit to you a purchase-and-sale agreement for the easements prior to opening escrow. The acquisition of the easements is subject to ratification of the offer by execution of the purchase-and-sale agreement by the City and subject to the City's review of the preliminary title report, if any, and acceptance of the conveyance document. The City will pay all incidental expenses associated with the closing of escrow, including any recording fees.

Please note that the proceeds related to the purchase of the easements may be subject to payment demands for county taxes, assessment liens, federal and state tax liens, creditor judgments, and beneficiaries of trust deeds.

In the event negotiations fail to result in an agreement, and City Council ultimately decides to authorize attempted acquisition of the property through eminent domain, you will have the right to have the amount of just compensation to be paid by the City for the property fixed by a court of law. Please be advised that in such event, the terms of this offer and the contents of this letter may be excluded from consideration as an offer of settlement, under California Evidence Code sections 1152, 1154, or other applicable provisions of law. California law requires that you be provided with an informational brochure regarding eminent domain, which is enclosed for your review.

This is provided to you for informational purposes only and is not to be construed as legal advice.

If you choose to accept the City's offer, please sign this letter below the heading 'Offer Accepted' and return it to me using the pre-paid envelope enclosed with this letter at your earliest convenience.

In summary, this letter encloses the following documents:
• A duplicate copy of this letter for your records (Enclosure 1); • An Appraisal Report for your property (Enclosure 2); and • An informational brochure regarding eminent domain (Enclosure 3) • An exhibit depicting the easements (Enclosure4).

Thank you for your careful consideration of this letter. Please contact me, if you have any questions.

Sincerely,

OFFER ACCEPTED

We, the undersigned, accept the offer made by the City of Menifee to purchase the permanent and temporary construction easements as described herein.

___________________________
Nick Markou – Date

___________________________
Panagiota Markou – Date

cc: Angeliki Romanou
Ryan J. Gallant

Enclosure 1

VIA FEDEX
January 05, 2026

Nick Markou and Panagiota Markou
20130 Eyota Road
Apple Valley, CA 92308

Re: Offer to Purchase Permanent and Temporary Construction Easements Riverside County Assessor Parcel No. 333-040-040

Dear Mr. and Mrs. Markou:

The property interests that the City of Menifee seeks to acquire are an 8,882 square-foot permanent public street and utility easement and a 8,734 square-foot temporary construction easement.

David Houghton, a licensed real estate appraiser with Bender Rosenthal Incorporated, inspected and appraised your property for the purpose of determining fair market value of the easements.

This is provided to you for informational purposes only and is not to be construed as legal advice.

Thank you for your careful consideration of this letter. Please contact me, if you have any questions.

Sincerely,

OFFER ACCEPTED

We, the undersigned, accept the offer made by the City of Menifee to purchase the permanent and temporary construction easements as described herein.

___________________________
Nick Markou – Date

___________________________
Panagiota Markou – Date

cc: Angeliki Romanou
Ryan J. Gallant

Enclosure 2

City of Menifee Street Improvement Project
The Markou Family Trust Property
SWC of McCall Boulevard and Sherman Road
Menifee, California 92585
APN: 333-040-040
Date of Value: October 27, 2025
Date of Report: November 25, 2025
BRI 25263B
Appraisal Report

2825 Watt Avenue, Suite 200,
Sacramento, CA 95821
www.benderrosenthal.com
916.978.4900

2825 Watt Avenue, Suite 200 Sacramento, CA 95821 | www.benderrosenthal.com | +1 (916) 978-4900

November 25, 2025
Steve Strapac
Assistant City Engineer/City Surveyor
City of Menifee
29844 Haun Road
Menifee, California 92586

RE: City of Menifee Street Improvement Project
Nick Markou and Panagiota Markou, Trustees of the Markou Family Trust U/T/D November 12, 2005 Property
SWC of McCall Boulevard and Sherman Road, Menifee, California 92585 333-040-040
Bender Rosenthal, Inc. File No: 25263 B
Mr. Strapac:

We have completed the appraisal of the above -referenced subject property that is impacted by the proposed City of Menifee Street Improvement Project. The client and intended user of the appraisal report is City of Menifee . The purpose of this appraisal assignment is to provide an opinion of the fair market value of the larger parcel and the rights required for the project.

The larger parcel consists of one Assessor’s parcel, which is 3.99± acres in size and currently vacant.

This is a narrative Appraisal Report as defined by USPAP. As such, it summarizes the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. The depth of discussion contained in this report is specific to the needs of the client and of the intended use stated in this report. The following report sets forth the descriptive and factual data, the assumptions and conditions affecting the appraisal, and the findings and analyses that lead to and suppor t our value opinion. The appraiser is not responsible for unauthorized use of this report. Every effort has been made to conform to the Uniform Relocation Assistance and Real Property Acquisition Policies Act, 1970 as amended; the Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Appraisal Practice (USPAP). In addition, we intend to comply with applicable eminent domain laws. The undersigned conducted the appraisal and prepared the report.

Mr. Steve Strapac
November 25, 2025
Page II

2825 Watt Avenue, Suite 200 Sacramento, CA 95821 | www.benderrosenthal.com | +1 (916) 978-4900 We are pleased to have this opportunity to provide you with professional appraisal services.

BENDER ROSENTHAL, INC.

David Houghton, MAI
Appraisal Manager
Certified General Real Estate Appraiser
California License No.AG039402
Expiration Date 12/26/2025
(916) 978-4900
[email protected]

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B III

TABLE OF CONTENTS
LETTER OF TRANSMITTAL .................................................................................................................................................... I TABLE OF CONTENTS ......................................................................................................................................................... III EXECUTIVE SUMMARY ........................................................................................................................................................ 1 Aerial Photograph 3
Subject Property Photographs 4
INTRODUCTION .................................................................................................................................................................. 6 Description of the Project 6
Purpose 6
Client/Intended Use/Users of Appraisal 6
Definition of Value 6
Scope of Work 7
Description of The Appraisal Process 8
Property Rights Appraised 9
Right of Way Appraisals 9
General Assumptions and Limiting Conditions 10
Non-Discrimination Statement 11
Extraordinary Assumptions and Hypothetical Conditions 11 REGIONAL AREA MAP ....................................................................................................................................................... 12 REGIONAL AREA ANALYSIS ............................................................................................................................................... 13 Geographic Considerations 13
Transportation 13
Current Population 15
Future Population 15
Unemployment 15
Industry Employment 17
Major Employers 18
Household Income 20
Conclusion 20
LOCAL AREA MAP ............................................................................................................................................................. 21 LOCAL AREA ANALYSIS ...................................................................................................................................................... 22 Introduction 22
Surrounding Land Uses 23
Access and Public Transportation 23
Local Area Summary 23

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B IV
MARKET ANALYSIS ............................................................................................................................................................ 24 Retail Market Analysis 24
Inland Empire Retail Market 26
South Riverside Retail Submarket 27
Market Rent, Sale Price, Vacancy & Inventory 28
Retail Market Analysis Conclusion 28
Multifamily Market Analysis 29
Inland Empire Multifamily Market 30
Multifamily Market Analysis Conclusion 31
IDENTIFICATION OF LARGER PARCEL / PROPERTY DESCRIPTION ..................................................................................... 32 Determination of Larger Parcel 32
Identification of Parcel Ownership 32
Assessor’s Parcel Map 33
Larger Parcel Description 33
Overall Larger Parcel Comments 38
HIGHEST & BEST USE ........................................................................................................................................................ 39 As Vacant Analysis 39
Highest and Best Use Conclusion, As if Vacant 40
VALUATION ....................................................................................................................................................................... 41 Valuation Premise 41
Valuation of the Larger Parcel 41
Land Valuation Exhibits 44
Land Sales Comparison Discussion 44
Land Value Conclusion 47
Value of the Larger Parcel (Land Only) 47
DESCRIPTION OF THE PROPOSED ACQUISITION .............................................................................................................. 48 Photographs of the Proposed Acquisition Area 49
Appraisal Exhibits 50
Valuation of the Proposed Acquisition 52
Valuation of the Remainder as Part of the Larger Parcel (Land Only) 52 Valuation of the Remainder, After Acquisition, Before Benefits 53 Valuation of the Remainder, After Acquisition, Considering Benefits 54 Temporary Construction Easement 55
Opinion of Fair Market Value 55
ADDENDA ......................................................................................................................................................................... 56 Definitions
Appraisal Certifications
appraisal exhibits
Preliminary Title Report
Qualifications of Appraiser

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 1

EXECUTIVE SUMMARY
Project Name City of Menifee Street Improvement Project

Property Address/Location Southwestern Corner of McCall Boulevard and Sherman Road , Menifee, California

Assessor’s Parcel Number 333-040-040

Owner of Record Nick Markou and Panagiota Markou, Trustees of the Markou Family Trust U/T/D November 12, 2005 , per the Preliminary Title Report provided by First American Title Company, dated October 18, 2024.

Larger Parcel Size 173,804 square feet, or 3.99 acres
Source: Riverside County Assessor’s map.

Zoning Economic Development Corridor- McCall Boulevard (EDC-MB)

General Plan Economic Development Corridor- McCall Boulevard (EDC-MB)

Current Use Vacant land.

Highest and Best Use of Larger Parcel (As Vacant) Commercial development.

Purpose of the Appraisal To provide an opinion of Fair Market Value

Appraisal Assignment The appraisal assignment is to develop an opinion of the fair market value of the larger parcel and property rights to be acquired for the project as of the date of value.

Client/Intended User(s) The client of this assignment is City of Menifee , who is also the intended user.

Intended Use Assist the Intended User in developing an offer of compensation for the required real property rights.

Proposed Acquisition:

Fee:

Temporary Construction Easement:

8,882± square feet (0.20± acres)
8,734± square feet (0.20± acres)

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 2
Opinion of Fair Market Value:

Date of Inspection April 2, 2025

Date of Value October 27, 2025

Date of Report November 25, 2025

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 3

AERIAL PHOTOGRAPH

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 4

SUBJECT PROPERTY PHOTOGRAPHS

Street scene facing west on McCall Boulevard.

Street scene facing east on McCall Boulevard.

Street scene facing north on Sherman Road.

Street scene facing south on Sherman Road.

View of the subject property from Sherman Road.

View of the subject property from McCall Boulevard.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 5

SUBJECT PROPERTY PHOTOGRAPHS
Ditch along the McCall Boulevard frontage. Electrical pole and utility boxes.

Utility box. Eastern Municipal Water District (EMWD) signs.

EMWD water pipe.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 6

INTRODUCTION

DESCRIPTION OF THE PROJECT
The City of Menifee is conducting various improvements to street frontage areas, such as adding marking and signs; providing and installing street trees; providing landscaping consisting of grass and parkway trees within parkways on local residential streets; providing streetlights; and providing curb depressions and driveway approaches.

PURPOSE
The purpose of this appraisal assignment is to provide BLC Fleming LLC with an opinion of the fair market value of the larger parcel and property rights required for the proposed project.

CLIENT/INTENDED USE/USERS OF THE APPRAISAL
The client of this assignment is City of Menifee, who is also the intended user. The intended use of the opinion of fair market value is for internal decision-making purposes.

DEFINITION OF VALUE
Fair Market Value
[Source: Section 1263.320 of the Code of Civil Procedure] A) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.

B) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable.

The Code goes on to say that:

The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following:

A) The project for which the property is taken.

B) The eminent domain proceeding in which the property is taken.

C) Any preliminary actions of the plaintiff relating to the taking of the property.

All other appraisal definitions can be found in the appendix.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 7

SCOPE OF WORK
The appraisal assignment is to develop an opinion of the current fair market value of the larger parcel and property rights required for the proposed project. The date of value is based on the inspection date, unless noted otherwise in the appraisal. The date of the report is the date the appraisal is transmitted to the client.

ASSIGNMENT CONDITIONS
None.

VALUATION / RESEARCH OVERVIEW
The following is an overview of the valuation process and research involved for the larger parcel and comparable sales.

The valuation of the property involved an investigation and analysis of the neighborhood, as well as the entire regional area, for social, economic, governmental, and environmental forces and trends that affect or could influence property values.
• The property was inspected on April 2, 2025 by Craig Strawmier, MAI, AI-GRS from Bender Rosenthal, Inc. The owner was offered to attend the inspection, but did not accompany the appraiser. David C. Houghton, MAI made an off-site inspection of the property on July 18, 2025, which is the last time the property was visually inspected.
• Research the area, community, and neighborhood to determine market influences/conditions. • Research of public records to verify information about the subject property and comparables to ensure they are factually accurate and that there are no terms or additional influences that affect price or value. • Research zoning and general plans obtained from the City of Menifee Planning Department and other department websites, and research of the retail market. • Review of applicable soil surveys, flood and seismic hazard areas from appropriate source data. • Review public records obtained from the various city and county governmental agencies including the Planning Department, Assessor’s Office, and Tax Collector’s Office. • A search of specific property transfers occurring during the past five years was conducted for the subject property.
• Research and identify the larger parcel.
• Determine the highest and best use of the property.
• Identify the Approaches of Value to be used in this assignment. • Research comparable property sales, listings, and offers to purchase or sales involving properties like the subject property and within the subject’s or competing market areas. • Interview comparable property owners and/or brokers.
• Determine the fair market value of the larger parcel. • Analyze impact.
• Value the rights required for the project.
• Complete narrative Appraisal Report.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 8

DESCRIPTION OF THE APPRAISAL PROCESS
The valuation process is a systematic series of steps, appropriate for the type of assignment, as the framework to produce a well-supported opinion of value reflecting all of the pertinent factors that influence the value of the property being appraised. Traditionally, specific methodology within the three approaches to value are applied to derive indications of real property value. One or more approaches are used depending on which are necessary to produce credible results.

Reference: The Appraisal of Real Estate, 15th Edition, Chapter 4

VALUATION APPROACHES
There are typically three approaches to value that may be used in the real property valuation process. They are the Sales Comparison Approach, Income Approach, and Cost Approach. Each approach provides an indicated value that is reconciled into a final estimate of value for the subject based on the interests appraised, the defined objective of the valuation and the stated definition of value. The analysis may include one, two or all three approaches to value based on the data available, the type of property and appraisal valuation problem.

SALES COMPARISON APPROACH
A value indication is derived by comparing the property being appraised to similar properties that have sold recently; making qualitative or quantitative comparisons to the subject; then applying units of comparisons to indicate a value for the larger parcel or remainder parcel. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant; it is the most common and preferred method of valuation when an adequate supply of comparable sales is a vailable. Sales, listings and current escrows of comparables were considered in this analysis. Reliance has been placed on closed transactions.

INCOME APPROACH
A value indication is derived for income -producing property by converting its anticipated benefits (cash flows and reversion) into a value for real property interests. Typically, the annual net income is capitalized at a market -derived capitalization rate to estimate the desired value. The income approach is most often used for income producing properties or real estate acquired as an investment. The Income Approach was not utilized to value the subject as this is not a typical method utilized to value vacant land.

COST APPROACH
A value indication is derived for a property by estimating the current cost to construct a replacement/reproduction of the existing structure(s); deducting depreciation from all sources; and adding the estimated land value. The cost approach is most often used when valuing properties with new or relatively new improvements and special use properties. The Cost Approach is not considered to be applicable to this appraisal problem because this is not a typical approach employed to estimate the value of vacant land.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 9

PROPERTY RIGHTS APPRAISED
The property rights appraised constitute the fee simple estate interest.

FEE SIMPLE INTEREST
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.1

RIGHT OF WAY APPRAISALS
A valuation premise applicable in condemnation appraisals. The “unit rule”, a valuation premise applicable in condemnation appraisals, has two aspects. The first dealing with ownership interests and the second dealing with physical components. The first aspect of the rule, also referred to as the undivided fee rule , requires that property be valued as a whole rather than by the sum of the values of the various interests into which it may have been carved.

The second aspect of the rule is that different phy sical elements or components of a tract of land are not to be separately valued and added together.

Valuation of the major structures may be omitted if the project requirements do not impact the structures and do not alter their highest and best use and contributory value to the valuation assignment.

PARTIAL ACQUISITION INTEREST ANALYSIS
The partial acquisition interest analysis starts with an opinion of the fair market value for the undivided fee interest of the larger parcel using the most applicable method for valuing similar properties. Once the larger parcel value is estimated the following partial acquisition appraisal methodology is utilized:
• Value the part acquired is based on the contributory value in the larger parcel. • Value of the remainder parcel as part of the larger parcel, is based on its contributory value developed in the larger parcel.
• Value the remainder parcel, after the acquisition and before benefits. When this value is compared to the value of remainder as part of the larger parcel any loss in market value is the measure of damages. • Value the remainder parcel, after the acquisition with benefits. When this value is compared to the value of the remainder without benefits any gain in market value is the measure of benefits. • The opinion of fair market value includes the value of the partial acquisition and the net damages.

REPORT TYPE
The opinion of fair market value is reported in an Appraisal Report format as defined by USPAP.

1 The Dictionary of Real Estate Appraisal, Seventh Edition, Appraisal Institute, Chicago, Illinois, 2022

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 10

GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report and the value estimates it contains are expressly subject to the following assumptions and/or limiting conditions.

1. Title to the property is marketable.

2. No survey of the property has been made by the appraisers and property lines as they appear on the ground are assumed to be correct.

3. Data, maps, and descriptive data furnished by the client or his/her representatives are accurate and correct.

4. No responsibility is assumed for matters of law or legal interpretation.

5. No conditions exist that would affect the use and value of the property, which are not discoverable through normal, diligent investigation.

6. The valuation is based on information from sources believed reliable, and that such information is correct and accurately reported.

7. The value estimate is made subject to the purpose, date, and definition of value.

8. The report is to be considered in its entirety and use of only a portion will invalidate the appraisal.

9. This appraisal was made on the premise that there are no encumbrances prohibiting utilization of the property under the appraiser's estimate of highest and best use.

10. Possession of this report or a copy does not carry with it the right of publication nor may it be used for any purpose by anyone other than the client without the previous written consent of Bender Rosenthal, Inc., and then only with proper qualifications.

11. Disclosure of the contents of this appraisal report is governed by the By-Laws and Regulations of the Appraisal Institute. No part of this narrative report may be reproduced by any means nor disseminated to the public in any way without the prior written consent of Bender Rosenthal, Inc.

12. Any person or entity who obtains or reads this report, or a copy, other than the client specified in this report, expressly assumes all risk of damages to himself or third persons arising out of reliance on this report and waives the right to bring any act ion based on the appraisal, and neither the appraisers nor the appraisal firm shall have any liability to any such person or entity.

13. The appraiser shall not be required to give testimony or appear in court by reason of this appraisal with reference to the property described in this report unless prior arrangements have been made.

14. No responsibility is assumed for building permits, zone changes, engineering or any other services or duty connected with legally utilizing the subject property.

15. The property appraised may or may not be subject to the Americans with Disabilities Act of 1990 (ADA). Title III of this act provides for penalties for discrimination in failing "to remove architectural barriers in existing facilities [unless] an entity can demonstrate that the removal is not readily achievable." Unless otherwise noted in this appraisal, it is assumed that the property appraised is not substantially impacted by this law.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 11

16. The presence of such substances as asbestos, urea -formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value opinion is predicated on the assumption that there is no such material on or in the pro perty that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them.

The client is urged to retain an expert in this field, if desired.

17. It is assumed that the property appraised is competently managed and marketed.

NON-DISCRIMINATION STATEMENT
This appraisal has been completed without regard to race, color, religion, national origin, sex, marital status or any other prohibited basis, and does not contain references which could be regarded as discriminatory.

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS
Note to Reader: The subject property is subject to the following extraordinary assumptions and/or hypothetical conditions, which might have affected the assignment results.

EXTRAORDINARY ASSUMPTIONS

1. We were provided with a preliminary title report from First American Title Company, dated October 18, 2024.

Exceptions 9 through 16 refer to Notice of Pendency of Administrative Proceedings documents, ranging in dates from October 6, 2022 to October 22, 20 24. This appraisal assumes there are no outstanding issues relating to these documents that would impact the highest and best use, nor the value of the subject property.

2. We last made an off-site inspection of the property on July 18, 2025. As of the date of value, October 27, 2025, we assume the property is in similar condition as it was on the last inspection.

HYPOTHETICAL CONDITIONS

1. The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: 1) the project for which the property is taken: 2) the eminent domain proceeding in which the property is taken; and 3) any preliminary actions of the plaintiff relating to the taking of the property. [California Code of Civil Procedure, Section 1263.330] Therefore, the fair market value of the larger parcel assumes the property is appraised as if there is no project.

2. The valuation of the subject property, in the condition after the partial acquisition and the construction and use of the proposed project, is based on a hypothetical condition the project has been completed.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 12

REGIONAL AREA MAP

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B 13

REGIONAL AREA ANALYSIS

GEOGRAPHIC CONSIDERATIONS
The subject property is in the City of Menifee, within Riverside County. This county is a part of the Riverside -San Bernardino – Ontario Metropolitan Statistical Area (MSA). Generally, this area is referred to as the Inland Empire, and it comprises both Ri verside and San Bernardino counties. This area covers more than 27,000 square miles and has a population of approximately 4.5 million. Most of the area's population is located in southwestern San Bernardino County and northwestern Riverside County, which are generally adjacent to Orange and Los Angeles Counties. At the end of the 19th century, the Inland Empire was a major center of agriculture, including citrus, dairy, and winemaking.

Agriculture declined through the 20th century, and a rapidly growing population, led by families migrating in search of affordable housing, has led to more residential, industrial, and commercial development.

Social, economic, governmental, and environmental forces influence property value since real estate is an immobile asset. In this section, an examination of these locational factors provides the context for the valuation of the subject properties. The subject properties are situated in San Bernardino County. The area analysis begins with regional data and relevant trends.

Physical boundaries between Los Angeles and the Inland Empire (IE) from west to east are the San Jose Hills splitting the San Gabriel Valley from the Pomona Valley, leading to the urban populations centered in the San Bernardino Valley.

From the south to north, the Santa Ana Mountains physically divide Orange County from Riverside County. The Santa Rosa Mountains, as well as the Southern California portion of the Sonoran Desert, physically divide Riverside County from San Diego County. Some definitions for the IE consist of the Chino Valley, Coachella Valley, Cucamonga Valley, Menifee Valley, Murrieta Valley, Perris Valley, San Jacinto Valley, Temecula Valley, Pomona Valley, and Victor Valley.

Incorporated cities within the County of Riverside include Banning, Beaumont, Blythe, Calimesa, Canyon Lake, Cathedral City, Coachella, Corona, Desert Hot Springs, Eastvale, Hemet, Indian Wells, Indio, Jurupa Valley, Lake Elsinore, La Quinta, Menifee, Moreno Valley, Norco, Palm Desert, Palm Springs, Perris, Rancho Mirage, Riverside, San Jacinto, Temecula and Wildomar. The name for the county itself was taken from the City of Riverside, which is the county seat.

Incorporated cities within the county of San Bernardino include Adelanto, Apple Valley, Barstow, Big Bear Lake, Chino Hills, Chino, Colton, Fontana, Grand Terrace, Hesperia, Highland, Loma Linda, Montclair, Needles, Ontario, Rancho Cucamonga, Redlands, Rialto, San Bernardino, Twentynine Palms, Upland, Victorville, Yucaipa and Yucca Valley. The city of San Bernardino serves as the county seat for San Bernardino County.

TRANSPORTATION
Transportation in the region has not kept pace with the rapidly growing county population. Many of the existing freeways were completed in the late 1970s, except for the segment of the Foothill Freeway, State Route 210 (SR-210), between San Dimas and San Bernardino, which was completed in July 2007. However, new freeways or highway "fix - ups" are being planned including the construction of Mid County Parkway between Perris and San Jacinto or the addition of toll lanes on I -15 through heavily urbanized portio ns of Riverside and San Bernardino counties. Other problems exist, however, including the imbalance between housing and job availability. The Inland Empire population grew as a result of affordable housing, at least relative to the rest of Southern California.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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However, most of the higher -paying jobs are located in Los Angeles, San Diego, and Orange counties. Thus, many workers must drive daily from the Inland Empire to their jobs in these counties – sometimes up to two hours in each direction. As the population increases, traffic congestion is projected to increase.

Unlike many major metropolitan areas, the Inland Empire has minimal public transportation. Due to the large physical size of the region, most people use automobiles for convenient travel. Fewer than 5% of the Inland Empire's working- age residents use public transportation to get to work.

Omnibus in San Bernardino County and Riverside Transit Agency in Riverside County also provide bus service in the area. Currently, however, many of these bus routes run one to two hours apart, and some routes stop service in the early evening or may not run-on weekends.

Local agencies are working to increase the use of public transportation in the Inland Empire. Several projects have moved forward and opened in the 2010s to improve transit accessibility in the region. Major projects include the Perris Valley portion of the Metrolink 91/Perris Valley Line, the San Bernardino Transit Center, and the Omnitrans sbX Green Line, which connects the cities of Loma Linda and San Bernardino, two universities, and the Loma Linda VA Hospital to the San Bernardino Transit Center. In addition to sbX, there are other express services available to public transportation users in the region. RTA operates a BRT -lite system in the RapidLink Gold Line, which runs from UCR to the Corona Transit Center.

The metropolitan area's first rapid transit line, a new bus rapid transit system, was launched in April 2014. The new line, dubbed San Bernardino Express (sbX), offers rapid transit service that functions like light -rails, with stations, designated sbX lanes, and passengers purchasing tickets before boarding. Stations are approximately one mile apart with its northern terminus in Verdemont and southern terminus at Loma Linda's VA hospital, passing through downtown San Bernardino and the city's Hospitality Lane Business District. Metrolink offers rail service to Los Angeles, Orange, and San Diego Counties.

Two commercial airports serve the Inland Empire. Ontario Airport (ONT) is near the Los Angeles area. Further east in Riverside County is the Palm Springs Airport (PSP). Other airports in the Greater Los Angeles area include Los Angeles (LAX), Burbank (BUR), Long Beach (LGB), and Santa Ana (SNA / Orange County). There are also several general aviation airports across the two-county region.

The region is making some progress in developing dedicated bicycle commuter and recreation trails. The largest of these, the Santa Ana River bicycle path, currently connects Corona to Huntington Beach and is eventually projected to stretch for 84 miles to Redlands when completed. A shorter trail exists along the former path of the Pacific Electric Railway from Claremont to Rialto.

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CURRENT POPULATION
As of January 1, 202 5, the population of Riverside County was 2,495,640, according to the California Department of Finance. The table below contains the population estimates as of January 1st for each of the last four years for the State of California and the two counties of the Inland Empire (Riverside and San Bernardino).

Population Estimates
Area 2022 2023 2024 2025 23-24 %
Change
California 39,179,680 39,228,444 39,420,663 39,529,101 0.275% Riverside County 2,435,510 2,467,690 2,491,037 2,495,640 0.185% San Bernardino County 2,183,077 2,182,351 2,200,351 2,207,424 0.321X% Source: State of California, Department of Finance, Demographic Research Unit

FUTURE POPULATION
The following table illustrates the population projections for the counties in the Inland Empire, as well as the State of California as a whole, per data from the California Department of Finance.

Population Projections
Area 2030 2035 2040 2045 2050 2060
California 39,651,187 40,105,580 40,468,122 40,729,125 40,819,078 40,410,637 Riverside County 2,499,829 2,558,733 2,618,844 2,670,407 2,707,319 2,738,644 San Bernardino
County 2,213,666 2,219,560 2,214,759 2,199,102 2,169,674 2,065,475 Source: State of California, Department of Finance
Population projections indicate that the population in San Bernardino County is expected to decrease by 6.6% by the year 2060. This is compared to the much higher rate in Riverside County, projected at 9.5 5% over the same period.

Both counties within the Inland Empire are projected to grow at a higher rate than the state as a whole, which is projected to grow by only 1.9% by 2060.

UNEMPLOYMENT
The unemployment rate in the Riverside- San Bernardino-Ontario MSA was 6.1 percent in August 2025, down from a revised 6.4 percent in July 2025, and below the year -ago estimate of 5.2 percent. This compares with an unadjusted unemployment rate of 5. 8 percent for California and 4.5 percent for the nation during the same period. The unemployment rate was 6.3 percent in Riverside County, and 5.9 percent in San Bernardino County.

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Source: California Employment Development Department, September 2025 Publication Between July 2025 and August 2025, total nonfarm employment increased from 1,693,700 to 1,700,100, an increase of 6,400 jobs. Agricultural employment decreased by 2,000 jobs. Government added the most jobs over the month, increasing by 4,200 jobs. All the job increases registered in local government (up 5,100), more specifically in local government educational services (up 5,500). State government offset the job expansion with a decline of 800 jobs.

Federal government also declined by 100 jobs. Private educ ation and health services increased by 2,000 jobs. Health care and social assistance (up 1,800) gained the most jobs within the sector, followed by job gains in private educational services (up 200). Three other sectors added jobs over the month, including professional and business services (up 1,100). Construction lost the most jobs over the month (down 1,200). Specialty trade contractors (down 1,000) lost the most jobs within the sector, followed by job losses in construction of buildings (down 100), and heavy civil engineering construction (down 100). Three other sectors lost jobs, including trade, transportation, and utilities (down 300). Two sectors remained unchanged: mining and logging and financial activities.

Between August 2024 and August 2025, total nonfarm employment increased by 14,600, a 0.9 percent change.

Agricultural employment decreased by 1,000 jobs or 8.3 percent. Private education and health services gained the most jobs over the year, adding 14,300 jobs. Most of the job expansion registered in health care and social assistance (up 14,400). Private educational services offset the sectoral job expansion with a decline of 100 jobs. Government increased by 10,400 jobs. Local government added 12,000, whi le losses in federal government (down 900) and state government (down 700) offset sectoral job gains. Two other sectors gained jobs over the year, including leisure and hospitality (up 1,900). Construction declined the most over the year, down by 6,500 job s. Specialty trade contractors (down 5,100) lost the most jobs within the sector. Construction of buildings declined by 900 jobs, followed by losses in heavy civil engineering construction (down 500). Six other sectors declined over the year, including man ufacturing (down 2,800) and financial activities (down 1,300).

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INDUSTRY EMPLOYMENT
The following pie chart illustrates the employment by industry in the region, per the Employment Development Department’s March 2025 publication.

Source: California Employment Development Department, Labor Market Division, Press Release, September 2025 Publication.

The largest industry by number employed in the region is Trade, Transportation, and Utilities at 2 6% of total employment. This is followed by Private Education and Health Services at 1 8%; Government at 1 5%; Leisure and Hospitality at 10%; and Mining, Logging, and Construction at 12%.

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MAJOR EMPLOYERS
The Riverside-San Bernardino-Ontario MSA Labor market is becoming markedly skilled, primarily due to the availability of intellectual capital afforded by several public and private universities and colleges within the region as well as the numerous colleges and universities in the surrounding Los Angeles, Orange, Riverside, and San Diego Counties. The following charts show the major employers within the MSA region with 1,000 or more employees, per the California Employment Development Department.

Riverside County
Employer Name Location Industry No. of Employees
Riverside County Admin Ctr Riverside Government Offices-County 10,000+ KSL Development Corp La Quinta Golf Courses 5,000-9,999 1882 Cantina Temecula Restaurants 1,000-4,999
Abbott Vascular Inc Temecula Hospital Equipment & Supplies-Mfrs 1,000-4,999 Amazon Fulfillment Ctr Moreno Valley Mail Order Fulfillment Service 1,000-4,999 Citrus Club La Quinta Clubs 1,000-4,999
Coachella Valley Unified SCH Thermal School Districts 1,000-4,999 Collins Aerospace Riverside Aircraft Components-Manufacturers 1,000-4,999 Corona City Hall Corona City Hall 1,000-4,999
Corona Regional Medical Ctr Corona Hospitals 1,000-4,999 Department-Corrections-Rehab Norco State Govt-Correctional Institutions 1,000-4,999 Desert Regional Medical Ctr Palm Springs Hospitals 1,000-4,999 Eisenhower Health Rancho Mirage Hospitals 1,000-4,999
Fantasy Springs Resort Casino Indio Casinos 1,000-4,999 Jurupa School District Supt Riverside School Districts 1,000-4,999 Riverside Community Hospital Riverside Hospitals 1,000-4,999 Riverside County Office of Edu Riverside Schools 1,000-4,999 Riverside County Public Health Riverside Government Offices-County 1,000-4,999 Riverside University Health Moreno Valley Hospitals 1,000-4,999 Southwest Healthcare System Murrieta Health Care Management 1,000-4,999 Starcrest Products Perris Internet & Catalog Shopping 1,000-4,999 Sun World Intl LLC Coachella Fruits & Vegetables-Wholesale 1,000-4,999 Universal Protection Svc Palm Desert Security Control Equip & Systems-Mfrs 1,000-4,999

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San Bernardino County
Employer Name Location Industry No. of Employees
Loma Linda Univ Health Board Loma Linda Univ/Clg-Governing Body/Regent/Trustee 5,000-9,999 Loma Linda University Med Ctr Loma Linda Hospitals 5,000-9,999 Ontario International Airport Ontario Airports 5,000-9,999 Amazon Fulfillment Ctr Redlands Mail Order Fulfillment Service 1,000-4,999 Amazon Fulfillment Ctr San Bernardino Mail Order Fulfillment Service 1,000-4,999 Arrowhead Regional Medical Ctr Colton Hospitals 1,000-4,999 Big Bear Mountain Resorts Big Bear Lake Resorts 1,000-4,999 Burlington Distribution Ctr San Bernardino Distribution Centers (whls) 1,000-4,999 California State Univ Sn San Bernardino Schools-Universities & Colleges Academic 1,000-4,999 Dignity Health Cmnty Hosp-Sn San Bernardino Hospitals 1,000-4,999 Dignity Health-St Bernardine San Bernardino Hospitals 1,000-4,999 Environmental Systems Research Redlands Geographics Information Systems 1,000-4,999 FedEx Ground Bloomington Delivery Service 1,000-4,999
Inland Empire Health Plan Rancho Cucamonga Health Plans 1,000-4,999 Mountain High Ski Resort Wrightwood Skiing Centers & Resorts 1,000-4,999 Ontario-Montclair School Dist. Ontario School Districts 1,000-4,999 Patton State Hospital Patton Hospitals 1,000-4,999
Primary Care Assoc Med Group Ontario Physicians & Surgeons 1,000-4,999 Redlands Community Hospital Redlands Hospitals 1,000-4,999 San Antonio Regional Hospital Upland Hospitals 1,000-4,999 San Bernardino County Sch Supt San Bernardino Schools & Educational Services NEC 1,000-4,999 San Bernardino County Sheriff San Bernardino County Government-General Offices 1,000-4,999 St Mary's Medical Ctr Apple Valley Hospitals 1,000-4,999 Transportation Department San Bernardino State Government-Transportation Programs 1,000-4,999 YRC Freight Bloomington Trucking-Motor Freight 1,000-4,999

Both counties in the region are home to a variety of large employers. Of note, between the two counties, Hospital employers appear on the lists 13 times.

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HOUSEHOLD INCOME
As of 2025 , 45.9% of the region’s households generated income of $100,000 or more per year. The following table summarizes the 2025 estimated and 2030 projected household income levels for the Inland Empire.

Inland Empire Household Income Distribution
Income Cohort
2025 2030
Number Percentage Number Percentage
<$15,000 105,098 7.0% 99,1300 6.4%
$15,000 - $24,999 73,569 4.9% 61,957 4.0%
$25,000 - $34,999 90,084 6.0% 77,446 5.0%
$35,000 - $49,999 129,120 8.6% 116,168 7.5%
$50,000 - $74,999 211,697 14.1% 199,810 12.9%
$75,000 - $99,999 202,689 13.5% 202,908 13.1%
$100,000 - $149,999 292,773 19.5% 309,783 20.0%
$150,000 - $199,999 186,173 12.4% 213,750 13.8%
$200,000+ 210,196 14.0% 269,511 17.4%
Total 1,501,398 100% 1,550,462 100%
Avg. Household Income $117,499 $129,224
Est. Median Household Income $186,173 $199,810
Source: STDB Data
As can be seen from the above table, the estimated 202 5 average household income is $11 7,499. This particular amount is projected to increase by approximately 9.98%, which is slightly more than the median household income projected increase of 7.32%.

CONCLUSION
The Inland Empire is regarded as a robust market in several categories , including population growth, job creation, construction, and industrial space absorption. Population projections for the Inland Empire indicate that the population in the region is growing at a much faster pace when compared to the state in general. As positive trends in the region continue and the population generally increases, growth in residential, commercial, and industrial markets is expected.

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LOCAL AREA MAP

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LOCAL AREA ANALYSIS

INTRODUCTION
The subject property is located in the City of Menifee. The immediate area of the subject is characterized by a combination of commercial, office, and residential uses.

DEMOGRAPHICS
The following information reflects the demographics for the subject’s area.

POPULATION
The estimate provided by ESRI for the current 2025 population within the subject neighborhood’s 3 mile radius is 79,958 representing a 14.65%change since 2020. ESRI’s 2020 population estimate for the subject’s 5 mile radius is 152,369, which represents a 16.38% change since 2020.

Looking forward, ESRI estimates that the population within the subject neighborhood’s 3 mile radius is forecasted to change to 82,192 by the year 2030. As for the broader area, ESRI forecasts that the population within the subject’s 5 mile radius will change to 158,218 over the next five years. The population estimates for the next five years within the subject’s 5 mile radius represents a 3.84% change as well as a (0.47%) change within the subject’s 1 mile radius for the same period.

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HOUSEHOLDS
The estimates provided by ESRI indicate that the number of households within the subject neighborhood’s 3 mile radius is 29,057, which is a 14.39% change since 2020 . Within the subject’s broader 5 mile radius, ESRI estimates that the number of households is 49,929, a 16.57% change over the same period of time.

By the year 2030, the estimates provided by ESRI indicate that the number of households within the subject neighborhood’s 3 mile radius will change by 3.65% to 30,118 households. Additionally, ESRI’s estimate for total households over the next five years within the subject’s broader 5 mile radius indicates an expected change of 4.67% which will result in a total household estimate of 52,263.

Looking back, the number of households in the subject neighborhood’s 3 mile radius changed 19.78% during the ten- year period of 2010 to 2020. Since then it has changed by 14.39%.

INCOME
Income estimates provided by ESRI for the subject neighborhood’s 3 mile radius indicates that the median household income is $85,874 and that the average household income is $109,006. Further, the estimates provided by ESRI indicate that, for the subject’s broader 5 mile radius the median household income is $97,346, and the average household income is $119,370. Given that there are reportedly 49,929 households in the subject’s 5 mile radius, it is estimated that the local effective buying income is around $5,960,024,730.

SURROUNDING LAND USES
The area surrounding the subject is home to a variety of land uses. Commercial uses include gas stations with convenience stores, restaurants, and multiple storage facilities for vehicles and personal items. A medical center is located off Sherman Road. A large amount of residential properties are located nearby, most of which are traditional single-family developments, although there are some multi-family properties and a mobile home park. A middle school is located in the neighborhood. A large amount of vacant land is also located in the area.

ACCESS/PUBLIC TRANSPORTATION
Primary road access in the neighborhood is via McCall B oulevard, which generally runs in an east -west direction and interchanges with Interstate 215. Interstate 215 generally runs in a north-south direction. To the north, it runs through the City of Riverside and into neighboring San Bernardino County. To the south, it eventually merges into Interstate

15. Bus service in the neighborhood is provided by Riverside Transit Agency, which services much of western Riverside County. Overall, access within the neighborhood is average for the metropolitan area.

LOCAL AREA SUMMARY
The local area is reflective of a suburban city in the Inland Empire. The immediate area (within one mile of the subject) saw rapid growth between 2010 and 2020. Growth in the immediate area has slowed but continues. Incomes generally increase into the three— and five-mile radii from the subject. The neighborhood is characterized by a variety of land uses, including commercial, residential, school, and undeveloped land. The neighborhood benefits from its proximity to Interstate 215. Overall, the outlook for the neighborhood is considered to be good going into the foreseeable future.

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MARKET ANALYSIS
In this section, market conditions which influence the subject property are analyzed. Overviews of Retail supply and demand conditions for the Inland Empire market and South Riverside submarket, as well as an overview of Multifamily supply and demand conditions for the Inland Empire Market and San Jacinto submarket are presented. Key supply and demand statistics for the most recent year, historical averages and a projection are summarized in the tables below.

RETAIL MARKET ANALYSIS

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INLAND EMPIRE RETAIL MARKET
Retail market fundamentals in the Inland Empire remain tight from a historical perspective but have softened over the past two years. Space availability has expanded approximately 100 basis points from a decade's -plus low, reaching

6.7% as of the first quarter of 2025. Nevertheless, availability is still down substantially from an early pandemic -era peak of 8.1%. Retailers expanded in the market to meet a rise in resident buying power driven by higher -income households moving into the area for its affordability. Assuming the economy continues to expand at a slow pace, availability in the market will remain compressed.

However, net absorption ran negative throughout 2024 and into 2025. Closed furniture stores, department stores, and bankrupt retailers, including Big Lots, 99 Cents Only, and Rite Aid, drove the recent occupancy losses. Additionally, several big-box stores were closed at the opening of 2025. Absorption is not likely to ramp up in the next few quarters as leasing activity remains a bit subdued.

Market observers have noted that a lack of competitive available space contributed to weaker leasing and slower retail tenant occupancy expansion. Subdued leasing and negative absorption also reflect a slowdown in local economic expansion. Employment growth slowed to 1.6% in 2023 and is on pace to rise near 2% in 2024. Meanwhile, migration into the market has slowed from pandemic -era highs. New quarterly retail leasing volume averaged under 1 million square feet in 2023 -24, declining slightly from 2021 -22 l evels and falling 25% short of the market's prior decade quarterly average.

Owners are pushing market rents higher, but at a slower pace than in recent years as space availability inches higher.

Average market asking rent levels increased around 2% in 2024, below historical averages, following an above-average 5% increase in 2023 and a record 6% increase in 2022.

Rents for retail space in the Inland Empire are rising, but the pace of increase has moderated from record levels as availability has lifted slightly higher and leasing has moderated. Rent growth has decelerated from 4.8% in 2023 to

2.9% in 2024, and measures 2.0% over the trailing year as of the first quarter of 2025.

Retail development in the Inland Empire has been moderate over the past ten years and is concentrated in submarkets where housing development has been more active. Deliveries have generally trended lower since 2018 and, in 2023 and 2024, fell slightly short of the market's prior decade average with roughly 700,000 square feet of space completed.

Deliveries should remain consistent into 2025, with another 700,000 square feet schueduled for completion.

Rent growth among neighborhood centers registers slightly above market average, at 2.0% due to historically compressed availability in the sector. Conversely, availability among general retail space has expanded from two years ago, and rent growth in the sector has dissipated to 1.3%.

Due to a severe downturn in rents that lingered for over five years following the global financial crisis, it took more than 15 years for retail rents in the Inland Empire to recover to their pre-Great Financial Crisis levels, a feat reached in 2022. Rents average $27.00/square foot, triple-net as of the first quarter of 2025, overtaking the national average again in 2019. Local rent growth outpaced the national average from 2014 -23 but decelerated at a quicker pace in 2024, falling below it for the first time in a decade. Based on a continual expansion of vacancy, rent growth is forecast to be moderate in 2025.

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Sales activity among retail assets in the Inland Empire ramped up in the second half of 2024. Annual sales volume in 2024 totaled $1.2 billion, matching 2023's total and falling below the prior decade's annual average of $1.5 billion.

Activity could continue to increase heading into 2025 as supply/demand fundamentals tighten.

Higher interest rates and stricter lending standards have cooled investment among institutional investors and REITs especially, which only account for 6% of acquisition volume over the past three years, down from 12% historically.

Users account for 10% of buyer volume in the past three years, up slightly from historical averages.

Cap rates in the Inland Empire trend significantly above Southern California's coastal markets, where acquisition demand remains stronger. As yields adjust to higher capital costs, cap rates have expanded by more than 100 basis points from a low of 5.2% in 2022 into the 6% range in 2024. Pricing for strip centers fell to an average of $308/square foot in 2024, down from a peak of $315/square foot in 2023. Neighborhood center cap rates average 6.5% in 2024, and pricing fell to $317/square foot. Truck stops typically trade at lower cap rates, in the 5% range.

Center Point Plaza in Yucaipa, a 25,000 -square foot neighborhood center developed in 2007 and fully leased to a diverse mix of tenants with staggered leases, was acquired for $10.8 million, or $374/square foot, at a 7.0% cap rate in November 2024. The center was marketed as a value-add investment. Sun Lakes Village in Banning, a 97,400-square foot center developed in 2016 and fully leased to Marshalls, Hobby Lobby, and Big 5 Sporting Goods, sold for $8.7 million, or $90/square foot, at a 7.2% cap rate in De cember 2024. Average blended rates at the center were $0.80/square foot
Single-tenant net leased assets are still attracting robust investment interest. A 38,800 square foot building, 35914 Winchester Rd in the French Valley Marketplace developed in 2024, and triple -net leased to EOS Fitness for 20 years with an option to extend, traded for $13.3 million, or $342/square foot at a 6.3% cap rate, in July 2024.

Farther South down SR 79, near I-15, a 129,000-square foot portion of the Promenade Temecula shopping center, fully leased to Round1, Dick's Sporting Goods, and SoCal Auto Style with a 7.4 -year weighted average lease term, was acquired by AXS Opportunity Fund for $24 million, or $186/square foot, at a 9.4% cap rate on existing income, and a proforma cap rate of 10.3%, in August 2024. The sale also included a future 8,000 square foot building preleased to Texas Roadhouse that is on the verge of breaking ground.

SOUTH RIVERSIDE RETAIL SUBMARKET
Housing development is rampant in Temecula and Murrieta, and the area is attracting new residents with its affordability. In addition to a growing population, rising tourism from bordering San Diego and Orange Counties to over 50 wineries in the area suppo rts retailers in the area, which are predominantly clustered around the I -15 and I -215 freeways.

Demand for retail space has been strong as a result, and availability has declined from over 8% in 2020 to 5.3% as of the first quarter of 2025. Tenant demand for new inventory has been strong, with deliveries rarely remaining vacant for long, if not reaching completion already pre-leased.

Retail development across the Inland Empire is highly concentrated in South Riverside, as developers have been attracted to the market's robust housing pipeline and strong retail fundamentals. Supply will grow significantly over the next five years, bolste red by the area's strong population growth. Tenant demand for new inventory has been strong, with deliveries rarely remaining vacant for long, if not reaching completion already pre-leased.

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MARKET RENT, SALE PRICE, VACANCY & INVENTORY

RETAIL MARKET ANALYSIS CONCLUSION
The Inland Empire retail market has been showing somewhat mixed signals lately. Market fundamentals in the Inland Empire remain tight from a historical perspective but have softened over the past two years and net absorption ran negative throughout 2024 an d into 2025. Rates are still increasing, but at a slower pace than what was observed in recent years prior. The South Riverside submarket appears to be stronger than the market as a whole, largely influenced by the strong housing development and population growth. For this reason, the subject’s area is still in a healthy position for future development, with significant expectations for new development into the foreseeable future.

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MULTIFAMILY MARKET ANALYSIS

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INLAND EMPIRE MULTIFAMILY MARKET
Absorption of Inland Empire apartments increased in 2025 as a wave of new supply is reaching completion. Absorption increased from approximately 900 units in the fourth quarter of 2024 to over 1,500 units in the first quarter of 2025.

Absorption outpaced supply growth in the first quarter.

Including the new apartments in lease-up, overall vacancy has ticked down to 6.1% as of the second quarter of 2025.

Vacancy among stabilized apartments peaked at the end of 2023 and has trended lower since then, falling below 5% in recent quarters. Absorpt ion remains positive due to ongoing job and population growth. Also, affordability is improving as rising incomes catch up to higher rents. Absorption is still trending above historical averages, boosted by the lease-up of recently delivered high-quality apartment complexes, which have added capacity for more renters in the growing market.

Residents have been continually drawn to the market's affordability in comparison to L.A., Orange County, and San Diego. Lease-up rates in new high-quality apartments accelerated in 2024 and into 2025, and vacancy among low- and mid-quality apartment buildings is declining after rising slightly above historical averages in 2023.

Deliveries have ramped up as developers' complete construction projects initiated mid -pandemic in response to an initial spike in demand. Over 4,100 units were delivered in 2024, representing a multi-decade high. Another 3,100 units are forecast for completion in 2025.

Market rents have only increased moderately following a 14% hike in 2021. Rent growth fell below 4% in 2022 and to

0.5% in 2023, increasing to 1.2% in 2024. Stronger rent growth could be in store for 2025 now that demand has rebounded and stabilized vacancy is declining. Furthermore, supply additions are set to moderate in the years ahead.

Rents are forecasted to increase by over 3% in 2025 and closer to 4% in 2026, more in line with historical market averages.

Apartment development is geographically concentrated on the western side of the Inland Empire near job centers and in closer proximity LA. Recent deliveries have placed upward pressure on vacancies in Southwest Riverside County, specifically in Murrieta an d Temecula, and further north in Moreno Valley, which falls in the San Jacinto Submarket boundary. Conversely, supply growth risk remains limited in Ontario/Rancho Cucamonga, San Bernardino, Riverside/Corona, and Palm Springs.

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MULTIFAMILY MARKET ANALYSIS CONCLUSION
The Inland Empire has historically drawn residents from nearby coastal regions due to its relative affordability. A large amount of new construction occurred as a result of significant inward migration due to the COVID pandemic. The San Jacinto submarket has been experiencing increases in vacancy due to the recent additions to inventory. Construction peaked in the submarket in 2023, and no projects are currently underway. Overall, market conditions indicate that the submarket needs time to absorb recent construction before any significant amount of new construction becomes feasible, moving forward.

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IDENTIFICATION OF LARGER PARCEL / PROPERTY DESCRIPTION

DETERMINATION OF LARGER PARCEL
The process of determining the “Larger Parcel” involves the analysis of an owner’s holdings regarding multiple properties, a whole property or portion of a property which has unity of ownership, unity of use, and contiguity.

Ownership records for surrounding properties have been reviewed, and the subject property owner has no title interest in any parcels contiguous to the subject. The Impacted parcel is identified as APN: 333-040-040 which meets all the tests of the larger parcel for this appraisal and contains 3.99 acres (or 173,804 square feet).

IDENTIFICATION OF PARCEL OWNERSHIP
Location The subject property is located along the southwest corner of McCall Boulevard and Sherman Road in Menifee, California.

Census Tract 06-065-042751
Assessor Parcel Number 333-040-040
Owner of Record Nick Markou and Panagiota Markou, Trustees of the Markou Family Trust U/T/D November 12, 2005, per the Preliminary Title Report provided by First American Title Company, dated October 18, 2024.

Owner’s Interest Title Fee Simple Interest
Ownership History To our knowledge there have been no sales, listings or offers to purchase the subject property within the past five years.

Date of Value October 27, 2025
Date of Report November 25, 2025

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ASSESSOR’S PARCEL MAP

LARGER PARCEL DESCRIPTION

ADJACENT PROPERTIES
North Storage.

South Single-family residential.

East Gas station and medical facility.

West Vacant land.

Size 173,804 square feet, or 3.99 acres
Source: Riverside County Assessor’s map.

Site Topography Level
Corner No
Site Shape Generally Rectangular

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Site Access Access to the subject site is considered good overall due to its proximity with Interstate 215 and corner location at a signalized intersection.

Exposure & Visibility Exposure of the subject is above average with its corner location along McCall Boulevard (a thoroughfare) and Sherman Road (a connector).

Utilities Electricity and EMWD water are stubbed to the site. Multiple utility boxes were observed on the property, although we could not verify if any additional utilities were stubbed.

Zoning The subject is located in the Economic Development Corridor- McCall Boulevard (EDC- MB) zone which is envisioned as a mix of office, medical, and residential uses (assisted living, senior apartments, townhomes, etc.) that would be compatible with the Regional Medical Center and would provide health-related services in close proximity to Sun City residents.

A zoning change does not appear to be likely for the subject.

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General Plan Designation Economic Development Corridor- McCall Boulevard (EDC-MB) per the City of Menifee.

The EDC designation is intended to provide economic vitality and flexibility in land use options to promote economic development along the City’s major corridors. The Economic Development Corridor areas identified on the Land Use Plan are intended to func tion differently than the typical patterns of segregated uses in that the distribution of uses is generally more concentrated and integrated to enhance the functionality of a large area. Economic Development Corridor areas are generally located in the larg e, undeveloped areas adjacent to I -215 and along the City’s major corridors (such as Newport, Scott and Ethanac Roads as well as McCall Boulevard), since land uses in these areas have a higher likelihood to transition over time in comparison to other areas of the City. It is intended that the majority of the City’s new development (that is not already planned as part of an approved specific plan) will be located in these areas, to promote infill development and to preserve the rural areas that are an integral part of Menifee’s community character.

The McCall Boulevard sub area is envisioned as a mix of office, medical, and residential uses (assisted living, senior apartments, townhomes, etc.) that would be compatible with the Regional Medical Center and would provide health -related services in clos e proximity to Sun City residents.

Improvements The subject property has no building improvements.

Site Improvements The subject property has no site improvements.

Flood Plain Zone X (Unshaded). This is referenced by Panel Number 06065C2060H, dated August 18, 2014. Zone X (unshaded) is a moderate and minimal risk area. Areas of moderate or minimal hazard are studied based upon the principal source of flood in the area.

However, buildings in these zones could be flooded by severe, concentrated rainfall coupled with inadequate local drainage systems. Local storm water drainage systems are not normally considered in a community’s flood insurance study. The failure of a local drainage system can create areas of high flood risk within these zones. Flood insurance is available in participating communities, but is not required by regulation in these zones. Nearly 25% of all flood claims filed are for structures located within these zones. Minimal risk areas outside the 1% and 0.2% annual chance floodplains.

No BFEs or base flood depths are shown within these zones. (Zone X (unshaded) is used on new and revised maps in place of Zone C.)

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Seismic The subject property is not within a Fault -Rupture Hazard Zone (formerly an Alquist - Priolo Special Studies Zone), according to Special Publication 42, "Fault -Rupture Hazard Zones in California", published by the California Department of Conservation, Division of Mines and Geology, revised 2007. No active faults are located on or in the proximity of the property. However, strong earthquakes generated along any of the active California faults may affect the site depending on the characteristics of the earthquake and the location of the epicenter. In general, the effects should be confined to shaking and/or acceleration (shock waves) and potential damage to structures should be minimized by employing adequate design and construction procedures. Current engineering design, and construction practices, such as the Uniform Building Code, provides the opportunity to reduce earthquake related hazards.

Easements A preliminary title report was provided by First American Title Company, dated October 18, 2024, which lists 20 exceptions to title, including the following:

3. An easement for right of way to erect and maintain its poles or other supports with wires and
fixtures and incidental purposes, recorded May 18, 1928 in Book 767 of Deeds, Page 131.

In Favor of: Southern Sierras Power Company
Affects: as described therein
The location of the easement cannot be determined from record information.

4. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded November 29, 1957 as Book 2185, Page 189 of Official Records, but deleting any covenant, condition, or restriction, if any, indicating a preference, limitation, or discrimination based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, handicap, veteran or military status, genetic information, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, to the extent that such covenants, conditions or restrictions violate applicable state or federal laws. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.

5. An easement for ingress and egress and incidental purposes, recorded April 4, 1968 as Instrument
No. 31138 of Official Records.

In Favor of: Sun City Development Corporation, a New York corporation Affects: as described therein

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6. An easement for ingress and egress and for road or utility purposes and incidental purposes,
recorded September 30, 1968 as Instrument No. 93785 of Official Records.

In Favor of: Klamath Falls Land Co.

Affects: as described therein

7. The effect of a declaration of dedication recorded October 23, 1985 as Instrument No. 238413 of
Official Records, purporting to irrevocably dedicate in perpetuity for public road purposes, including
public utility and public service uses.

Reference is hereby made to said document for further and other particulars.

8. The effect of a declaration of dedication recorded October 23, 1985 as Instrument No. 238414 of
Official Records, purporting to irrevocably dedicate in perpetuity for public road purposes, including
public utility and public service uses.

Reference is hereby made to said document for further and other particulars.

17. Rights of the public in and to that portion of the Land lying within any Road, Street, Alley or Highway.

Additionally, exceptions 9 -16 refer to Notice of Pendency of Administrative Proceedings documents recorded at various dates. This appraisal assumes there are no violations that could impact the subject property’s highest and best use, nor its value associated with these exceptions. Please refer to Extraordinary Assumption #1.

All the listed easements are typical of similar properties and are not believed to impact the subject’s highest and best use, nor its value.

Soils A detailed soils analysis was not available for review. Based on nearby development, it appears the soils are stable and suitable for future improvements.

Hazardous Waste We have not conducted an independent investigation to determine the presence or absence of toxins on the subject property. If questions arise, the reader is strongly cautioned to seek qualified professional assistance in this matter. Please see the Assumptions and Limiting Conditions for a full disclaimer. As of the date of value, a Phase 1 Environmental Site Assessment report was not provided. A search of the State Water Resources GeoTracker website shows no cleanup sites on, nor within 1,000 feet of the subject. Please refer to General Limiting Condition Number 16 regarding hazardous materials.

Wetlands Per the U.S. Department of Fish and Wildlife’s wetlands mapper, no wetlands are located on the subject property.

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Property Tax Data In California, Proposition 13 establishes that annual increases of assessed value of real property should not exceed 2% per year except in cases of a change in ownership, completion of new construction, and/or in the case of a value restoration due to a prior year decline in value (Proposition 8) assessment. The total assessment for the subject property for the tax year 2024 is $848,703. There are no exemptions in place.

The total tax bill for the property is $10,472. This is within the general range for comparable lots in the area. The subject’s assessed values and property taxes for the current year are summarized in more detail in the following table.

The tax rate and direct assessments are typical to other properties in the area.

OVERALL LARGER PARCEL COMMENTS
The larger parcel consists of one Assessor’s parcel that measures 3.99± acres with generally level topography. The property is zoned Economic Development Corridor- McCall Boulevard, which allows a variety of commercial uses. The property has a corner location at a signalized intersection of a thoroughfare and a connector street. Additionally, the property benefits from its proximity to Interstate 215. Land use in the surrounding area is varied, with residences, commercial properties, a school, and undeveloped land.

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HIGHEST & BEST USE
Highest and best use may be defined as the reasonably probable use of property that results in the highest value.

There are four analysis criteria used to develop the highest and best use. These are:

1. Legally Permissible Use
What uses are permitted legally under existing zoning, building codes, historic district controls, environmental regulations, deed (private) restrictions, and long-term lease provisions on the site in question?

2. Physically Possible Use
What uses of the site are physically possible, given its size, shape, area, terrain, soils composition, accessibility, assembly potential, and risk potential from natural disasters?

3. Financially Feasible Use
Which possible and permissible uses will produce a positive net return to the owner of the property?

4. Maximally Productive Use
Among the feasible uses, which use will produce the highest residual land value consistent with the rate of return warranted by the market for that use?

This section develops the highest and best use of the subject property As-Vacant.

AS VACANT ANALYSIS

LEGALLY PERMISSIBLE USES
Private restrictions, zoning, general plan designation, building codes, historic district controls, and environmental regulations are considered, if applicable to the subject site. The legal factors influencing the highest and best use of the subject site are primarily government regulations such as zoning ordinances or general plan designations.

Per the City of Menifee, the subject property is zoned EDC -MB (Economic Development Corridor McCall Boulevard).

This zone is envisioned as a mix of office, medical, and residential uses (assisted living, senior apartments, townhomes, etc.) that would be compatible with the Regional Medical Center and would provide health -related services in close proximity to Sun City residents. This zone allows various commercial uses, as well as multifamily residential development per AB 2011 and SB 6. Additional uses are allowed with the approval of a conditional use permit.

Menifee’s General Plan land use designation for the subject also refers to Economic Development Corridor – McCall Boulevard. The General Plan policy document states that the intent of the Economic Development Corridor designation is to identify areas where a mixture of residential, commercial, office, civic, industrial, entertain ment, educational, and/or recreational uses or other uses is planned. Both horizontal and vertical mixed uses are permitted. In general, areas designated EDC are envisioned to devel op primarily as nonresidential uses, with residential uses playing a supporting role. Residential uses shall be integrated vertically or horizontally with other uses and shall not be allowed as stand -alone projects. New development, including residential m ixed use, shall encourage a balance of retail, services, and public/private open spaces. Residential uses shall not be allowed directly adjacent to the freeway.

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Overall, the uses legally permissible on the subject property are all those uses detailed within the Economic Development Corridor – McCall Boulevard zoning and General Plan land use designations , which are generally for a mix of commercials .

PHYSICALLY POSSIBLE USES
The test of what is physically possible for the subject site considers physical and locational characteristics that influence its highest and best use. In terms of physical features, the subject site totals 3.99-acres (173,804 SF), it has a generally rectangular shape and level topography. The site has above average exposure and good overall access. The immediate neighborhood has a variety of land uses. Overall, there are no physical limitations that would prohibit the development of any of the by-right uses on the site previously shown in the legally permissible section.

FINANCIALLY FEASIBLE/MAXIMALLY PRODUCTIVE USES
A proposed property improvement must be able to deliver an income return that, in turn, generates a market value sufficient to pay for the development costs, undertaking of the risks involved, and a profit appropriate for the development. The previously mentioned uses include commercial and multifamily residential uses. As discussed in the Market Analysis section of this report, both the retail (commercial) and multifamily markets have seen growth in recent years, although the outlook for multifamily development is indicative of a slowdown, while retail development is anticipated to be strong into the foreseeable future. For this reason, the financially feasible/maximally productive use of the subject is for commercial development.

HIGHEST AND BEST USE CONCLUSION, AS IF VACANT
Considering all of the preceding factors, it is concluded that the highest and best use of the site, as if vacant, is for commercial development.

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Menifee, California

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VALUATION

VALUATION PREMISE
The opinion of value will be developed in accordance with accepted valuation principles, consistent with California eminent domain law (Code of Civil Procedure 1230.010). Every effort has been made to conform to The Uniform Relocation Assistance and Real P roperty Acquisition Policies Act, 1970 as amended; the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation; and Standards of Professional Appraisal Practice of the Appraisal Institute. In addition, we intend to comply with applicable eminent domain laws.

The three recognized approaches to value are the cost approach, sales comparison approach, and income capitalization approach.

We have utilized the Sales Comparison Approach to develop the opinion of the fair market value for the larger parcel and the remainder parcel(s). The Sales Comparison Approach compares the similar properties that have recently sold in the market area to the larger parcel and is usually the preferred method of valuation. The development of the Income and Cost Approaches are not necessary for credible assignment results, and the valuation of the larger parcel is not weakened by the exclusion of the Income and Cost approaches.

The quantitative adjustment process (using paired sales) requires an abundance of market data to develop the monetary or percentage adjustments for the varying economic and physical characteristics. The research of the current market and the lack of sufficient relevant sales data to develop adjustments, we have elected to develop a qualitative analysis. More specifically, a narrative analysis for the economic and physical characteristics of the comparables is developed for comparison with the subject property. Comparable data is ranked and then the subject is bracketed by the most comparable sales.

The potential of project influence will be carefully considered. This applies to the Value of the Larger Parcel before acquisition. Also, we will consider appropriate general rises in market value resulting from the indirect benefit compiled over the last several years. The project is constructed in phases which has led to advanced public knowledge and a portion of the increases may be considered. The analysis of the comparable data will not reflect project influence.

The proposed acquisition as related to the larger parcel and remainder parcel as land was analyzed. The current use (vacant land) is not affected by the acquisition. Further, no change in the highest and best use results from the proposed acquisition or construction in the manner proposed. As such, the larger parcel is valued as land only. It is our opinion that credible results can be achieved with the valuation of land only including the presence and valuation of minor site improvements in the partial acquisition.

VALUATION OF THE LARGER PARCEL
We have estimated the fair market value of the underlying land at its highest and best use as vacant via the sales comparison approach. The sales comparison approach is based on the premise that the buyer would pay no more for a specific property than the cost of obtaining a propert y with the same quality, utility, and perceived benefits of ownership. It is based on the principles of supply and demand, balance, substitution and externalities. The following steps describe the applied process of the sales comparison approach.

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• The market in which the subject property competes is investigated; comparable sales, contracts for sale and current offerings are reviewed.
• The most pertinent data is further analyzed, and the quality of the transaction is determined. • The most meaningful unit of value for the subject property is determined which is the price per SF. • Each comparable sale is analyzed and, where appropriate, adjusted to account for differences in the subject property.
• The value indication of each comparable sale is analyzed, and the data reconciled for a final indication of value via the sales comparison approach.

A thorough search was made for similar land sales in the area.

COMPARABLE LAND SALES SUMMARY TABLE AND MAP

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LAND VALUATION EXHIBITS

LAND SALES COMPARISON DISCUSSION
The following analysis identifies the similarities and differences between comparable properties and the larger parcel.

The elements of comparison include property rights; financing terms; conditions of sale (motivation); expenditures after sale; market conditions (sale date); location; and physical, economic and legal characteristics. The most relevant unit of comparison for competing commercial land is the $/ SF. All of the comparable sales presented in this section were reported on this basis.

In developing a qualitative analysis of the sales data, we observed a lack of adequate and relevant additional data to develop quantitative adjustments. As a result, our analysis will arrive at an economic position within the data.

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Land Sale 1 - This is the sale of 15.15 acres of commercial land located at 26155 Ynez Rd in Temecula. The property sold on January 7, 2025 for $10,800,000 or $16.37/SF in an all cash deal. Adjacent uses include office and industrial uses to the north, a Sky Zone trampo line park to the south, office development to the east and Interstate 15 to the west. The property is zoned SC, Service Commercial by the City of Temecula. At the time of sale the property did not have any approvals or entitlements, per the buyer’s broker . The broker was under a n NDA, so he could not disclose what the buyer intends to do with the site. The property was listed on the open market, but the buyer’s broker could not confirm how long it was listed; however, CoStar indicates the property was listed for 2,029 days. Utilit ies were stubbed to the site and curb; gutter and sidewalk off-site improvements were completed at the time of sale. The level site was raw land at the time of sale that was graded in the 1990’s and there was nothing unusual about the property or the transaction that impacted the sale price, per the buyer’s broker. The site is located in Flood Zone X (Unshaded).

The broker indicated sale prices have been relatively stable to slightly increasing over the last 12-18 months.

The slightly superior exposure , access, all utilities stubbed to the site and complete off -site improvements are more than offset by the substantially larger size(inferior). Overall, this comparable is considered to be inferior to the subject, indicating a unit value for the subject above $16.37/SF is appropriate.

Land Sale 2 - This is the sale of 2.03 acres of commercial land located on Bradley Road, near Augusta Dr in Menifee.

The property sold on April 1, 2024 for $2,250,000 or $25.45/SF. The broker indicated he thought the buyer obtained a conventional loan. Adjacent uses include retail and auto service uses to the north, vacant commercial land and a senior living community to the south, Interstate 15 to the east and a fire station and dental office to the west. The property is zoned CR, Commercial Retail by the City of Menife e. At the time of sale the property did not have any approvals or entitlements, per the seller’s broker. The broker indicated the buyer intends to develop a medical office on the site.

The property was listed on the open market and the broker indicated it was taken off the market after it had been listed for a while, but the broker could not confirm exactly how long it was listed; however, CoStar indicates the property was listed for 1,687 days. Nearby traffic counts on Bradley Road and exposure to Interst ate 215 indicate an average of 108,594 vehicles per day. Utilities are unknown to the broker; however, multiple adjacent sites are developed, indicating utilities are likely in the street frontage or nearby. The property did not have any curb, gutter or sidewalk off-site improvements at the time of sale. The level site was raw land at the time of sale and there was nothing unusual about the property or the transaction that impacted the sale price, per the buyer’s broker. The site is located in Flood Zone X (Unshaded). The broker indicated sale prices have been relatively stable over the last 12-18 months.

The smaller (superior) size, superior exposure, and partially complete off-site improvements indicate this comparable is superior to the subject. Overall, this comparable indicates a unit value for the subject below $25.45/SF is appropriate.

Land Sale 3 - This is the sale of 33.45 acres of commercial land located on Haun Road, near Holland Road in Menifee.

The property sold on March 5, 2024 for $13,950,360 or $9.57/SF. Public records indicates a sale price of $13,300,000, but the broker corrected the amount and indicated $13,950,360 was the correct sale price. We have utilized $13,950,360 for this comparable. The broker indicated it was an all cash deal. Adjacent uses include vacant commercial land to the north, self-storage and industrial to the south, Interstate 215 to the east and vacant commercial land and single-family residential development to the west. The property has good exposure to Interstate 215. The property is zoned EDC-CC, Economic Development Corridor - Community Core by the City of Menifee. At the time of sale the property did not have any approvals or entitlements, per the seller’s broker. The broker indicated the buyer is a church, but does not know what the buyer intends to do with the site. The property was listed on the open market for about 7 months. Utilities are available in the street frontage.

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The property did not have any curb, gutter or sidewalk off -site improvements at the time of sale. The level site was raw land at the time of sale and there was nothing unusual about the property or the transaction that impacted the sale price, per the buyer’s broker. The site is located in Flood Zone X (Unshaded). The broker indicated sale prices have slightly decreased over the last 12-18 months.

The superior exposure of this comparable is more than offset by the significantly larger size(inferior), and slightly inferior access. Overall, this comparable is considered very inferior to the subject, indicating a unit value for the subject well above $9.57/SF is appropriate.

Land Sale 4 - This is the sale of 1.31 acres of commercial land located on Antelope Road, near Newport Road in Menifee.

The property is located in the Menifee Lakes Plaza shopping center, a neighborhood shopping center with some national tenants. The property sold on No vember 20, 2023 for $1,552,000 or $27.20/SF. This was part of the buyer’s 1031 exchange. Adjacent uses include retail to the north, south, east and west. Substantial single family residential development is in the immediate area as well. The property is zo ned SP, Menifee Village Specific Plan by the City of Menifee. At the time of sale the property had entitlements for a junior anchor retail building, which the buyer will not utilize to develop. The buyer will develop a restaurant with a much smaller building and more parking than the entitlements were planned for. The broker indicated the City code required the buyer to complete a major modification due to the change in square footage, even though it is significantly less. Additionally, the new building co des require additional ADA and EV parking when making any additions to parking areas. The broker believes that these costs for design and modifications in entitlement processing have likely zeroed out the benefit of the original entitlement value, other than for time. The buyer’s broker believed the entitlements contributed no value to the sale price. The property was listed on the open market; but the buyer’s broker did not know how long it was listed. Utilities were stubbed to the site and all offsites (curb, gutter and sidewalk) were completed at the time of sale with the exception of the building pad envelope. The level site was essentially a finished pad at the time of sale, except for the building pad envelope and there was nothing unusual about the property or the transaction that impacted the sale price, per the broker. The site is located in Flood Zone X (Unshaded). Nearby traffic counts on Newport Road indicate an average of 37,167 vehicles per day. The broker indicated sale prices have been fairly stable over the last 12 -18 months; however, construction costs have increased substantially.

The smaller (superior) size, superior location in a shopping center, superior exposure, all utilities stubbed to the site and completed off-site improvements including a portion of the parking lot, indicate this comparable is very superior to the subject. Overall, this comparable indicates a unit value for the subject well below $27.20/SF is appropriate.

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LAND VALUE CONCLUSION
The comparables indicate a unit value, based on a general bracketing analysis, between $ 9.57 per SF and $27.20 per SF as shown below.

Sale No. Greater Than/
Less Than
Price Per
Square Foot Sale Date
Sale 4 < $27.20/ SF November 2023
Sale 2 < $25.45/ SF April 2024
The subject property is bracketed by $16.37 and $25.45 per square foot.

Sale 1 > $16.37/ SF January 2025
Sale 3 > $9.57/ SF March 2024
The subject property is bracketed by Sale 1 and Sale 2, which indicate a bracketed range between $16.37 and $25.45 per square foot, with a midpoint of $20.91 per square foot. Both bracketing sales have offsetting positive and negative characteristics. For these reasons, a near the midpoint is considered appropriate. Based upon the subject’s qualities, a value of $21.00 per SF is concluded for the subject property.

VALUE OF THE LARGER PARCEL (LAND ONLY)
The preceding analysis and development of the price per SF provides an indication of the fair market value for the larger parcel.

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Menifee, California

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DESCRIPTION OF THE PROPOSED ACQUISITION
Based upon the location of the subject within the bounds of the project, the larger parcel is impacted by City of Menifee Street Improvement Project. Construction in the manner proposed indicates that a portion of the larger parcel will be required in fee. The City of Menifee is proposing to acquire 8,882 square feet of the subject property in fee, along the northern boundary of the subject. In addition, an 8,734 square foot area for a temporary construction easement (TCE) is also needed. The temporary construction easement will be in place for 6 months.

There are site improvements in the permanent acquisition areas , including power line poles, utility boxes, and water lines; however, as indicated by the client , the city intends to relocate the impacted site improvements and will construct and pay for the new street improvements . Therefore, this analysis does not include any impacted site improvements in the proposed acquisition area.

A summary of the planned acquisition follows:

Source: Larger Parcel size is from the Tax Assessor’s Map, and the Acquisition Area Size is from information provided by the client

Photographs and mapping of the proposed acquisition area are presented next.

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PHOTOGRAPHS OF THE PROPOSED ACQUISITION AREA

Western portion of the acquisition area facing east.

Improvements in the acquisition area.

Eastern portion of the acquisition area facing east.

Eastern portion of the acquisition area facing northwest.

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APPRAISAL EXHIBIT: FEE AREA

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APPRAISAL EXHIBIT: TCE AREA

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VALUE OF THE PROPOSED ACQUISITION
LAND
In order to facilitate the street improvement project along McCall Boulevard, the City needs to acquire a fee acquisition of a portion of the subject property along McCall Boulevard.

The property, rights, and/or interests being acquired from the larger parcel is valued based on its contributory value as part of the larger parcel. The City of Menifee is proposing to acquire a fee acquisition of 8,882 SF. The unit value of the subject was previously determined to be $21.00 per SF. The value of the proposed acquisition is presented next.

SITE IMPROVEMENTS IN THE PROPOSED ACQUISITION AREA
Improvements within the proposed easement area include: power line poles, utility boxes, and water lines.

However, as indicated by the client, the City intends to relocate the impacted site improvements and will construct and pay for the new street improvements. Therefore, this analysis does not include any impacted site improvements in the proposed acquisition area.

TOTAL VALUE OF THE PROPOSED PERMANENT ACQUISITION
The total value of the proposed permanent acquisition, which includes the land and the site improvements within the acquisition area, is presented below:

VALUE OF THE REMAINDER AS PART OF LARGER PARCEL (LAND ONLY) The value of the remainder as part of the larger parcel is its contributory value to the larger parcel. Deducting the land value for the part acquired from the value of the larger parcel, land only, yields:

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VALUE OF THE REMAINDER, AFTER ACQUISITION BEFORE BENEFITS The remainder parcel is appraised as a separate and distinct assignment to develop an opinion of its fair market value before benefits. Damages are considered when there is a demonstrable impact on the fair market value of the remainder that is not conjectural, speculative or a result of an agency’s police powers.

DESCRIPTION OF THE REMAINDER
The project proposes to acquire a fee acquisition from the larger parcel. The fee acquisition area is located along the entire northern boundary, is approximately 24 feet in width along the majority of the acquisition area; however, at the eastern end it expands to over 30 feet. Overall, the property’s size is slightly decreased by 5%, but the shape, access and utility are not negatively impacted due to the proposed acquisition and no damages to the property are anticipated due to the proposed project. The highest and best use of the remainder parcel remains the same as in the “before” condition, commercial development.

HIGHEST AND BEST USE OF THE REMAINDER
We have analyzed the reminder parcel before benefits and find no indication of a change in highest and best use or unit value due to the severance from the larger parcel or construction in the manner proposed. The Sales Comparison Approach was utilized to develop the opinion of the fair market value of the remainder, before benefits. The unit value previously derived for the larger parcel is applicable to the reminder parcel valuation before damages.

DAMAGES
Based upon the preceding analysis, the proposed acquisition does not adversely affect the utility, desirability or marketability of the remainder property. The remainder as valued above is compared to the remainder as part of the larger parcel to measure the loss in market value damages.

LOSS IN MARKET VALUE

CONSTRUCTION CONTRACT WORK
Per the direction of the client, the client will relocate the impacted site improvements.

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COST TO CURE
The cost to cure is a proper measure of severance damages when it is no greater in amount than the decrease in the market value of the property if left as it stood. (People ex rel. Dept. Pub. Wks. V Hayward Bldg. Materials Co. (1963) 213 Cal. App. 2d 457, 465-466; People ex rel. Dept. Pub. Wks. V Flintkote Co. (1968) 264 Cal. App. 2d 97, 106.).

The appraisers have not identified any curative measures needed.

DAMAGE SUMMARY

VALUE OF THE REMAINDER, AFTER ACQUISITION, CONSIDERING BENEFITS The remainder parcel is appraised as a separate and distinct assignment to develop an opinion of its fair market value considering benefits. Benefits are considered when there is a demonstrable impact on the fair market value of the remainder parcel considering benefits that are not conjectural or speculative and measured as a gain in market value.

On August 25, 1997, the California Supreme Court ended the rule that only benefits identified as "special benefits" could be offset against damages in determining compensation in condemnation actions. Under its decision in the Continental Development case, all benefits, general and special can reduce compensation for damage.

We have analyzed the reminder parcel and find no indication of a change in highest and best use or unit value due to the construction in the manner proposed. The unit value derived for the larger parcel is applicable to the reminder parcel valuation considering benefits.

BENEFITS
Under California eminent domain law, any measure of benefits to the remainder can only be used to offset damages to the remainder. The construction in the manner proposed may provide physical improvements to the general area but provides no quantifiable benefits directly to the remainder parcel in the after condition.

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TEMPORARY CONSTRUCTION EASEMENT
The project design also requires a temporary construction easement (TCE) which totals 8,734 square feet from the larger parcel. Based upon information provided by the client, a TCE is needed for a total of six months. The TCE will be used in order to do the work necessary for constructing the proposed sidewalk improvement.

The compensable period for the temporary construction easement starts on the right of way certification date and expires no later than the project’s construction contract acceptance date.

A temporary construction easement is considered the involuntary occupancy, use and rental of the owner’s land. In the absence of comparable data the valuation will be based on the estimated rate of return to the land for the occupancy and use required by the agency. That rate will be applied to the value of the required area per month for the period identified by the construction schedule. The impact of the agency’s use of the easement area and potential for damages to the remainder are considered in establishing the rate of return. An element of entrepreneurial profit is included to recognize the owner’s market value of the development of the property.

Historically, relatively low rates of return have been realized for long-term credit tenants. From a buyer’s perspective, the durability, length, and quality of the income stream are paramount factors. One would expect land rent factors, especially for TCE arrangements, to be negotiated at higher rates. Since a TCE conveys an exclusive temporary right with limited access by the owner during the TCE period. In addition, the TCE typically allows some level of construction within the easement area for laydown, equipment, staging, etc. The nature of the TCE warrants a return to the landowner based on risk factors indicated by the difference in returns beyond a safe investment (around 4 -6%). The spread between safe A-rated bonds and high-risk junk bonds is approximately 3% to 6%. By adding the risk factor (3 - 6%) to a safe rate (4-6%), this results in a TCE rate from 7.0% to 12%.

Taking into account that the TCE agreements are typically holding exclusive rights to the area for the duration and usually including an option to extend, an 10% annual rent factor has been used in this analysis.

OPINION OF FAIR MARKET VALUE

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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ADDENDA

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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DEFINITIONS

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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Definition of an Appraisal
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute,7th Edition P. 9 The act or process of developing an opinion of value, an opinion of value.

Market Value
Source: Office of the Comptroller of the Currency. CFR Title 12, Part 34, Subpart C, § 34.42 Definitions The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider their own best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Market Value
Source: The Appraisal of Real Estate (Fifteenth Edition), Appraisal Institute, Chicago, Illinois, 2020, P. 48 The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.

Fair Market Value
Source: Section 1263.320 of the Code of Civil Procedure A) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.

B) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable.

The Code goes on to say that:

The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following:

A) The project for which the property is taken.

B) The eminent domain proceeding in which the property is taken.

C) Any preliminary actions of the plaintiff relating to the taking of the property.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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Fair Market Value
Source: IRS Regulation 20.2031-1
The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property the sale price in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.

Market Rent
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 117 The most probable rent that a property should bring in a competitive and open market under all conditions requisite to a fair lease transaction, the lessee and lessor each acting prudently and knowledgeably, and assuming the rent is not affected by undue stimulus. Implicit in this definition is the execution of a lease as of a specified date under conditions whereby
• Lessee and lessor are typically motivated;
• Both parties are well informed or well advised, and acting in what they consider their best interests; • Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and • The rent reflects specified terms and conditions typically found in that market, such as permitted uses, use restrictions, expense obligations, duration, concessions, rental adjustments and revaluations, renewal and purchase options, frequency of payments (annual, monthly, etc.), and tenant improvements (TIs).

Full Interest Analysis.

The acquisition of all property rights using the applicable valuation methodology.

Partial Acquisition Interest Analysis.

The partial acquisition interest analysis starts with an opinion of fair market value for the undivided fee interest of the larger parcel using the most applicable method for valuing similar properties. Once the larger parcel value is estimated the following partial acquisition appraisal methodology is utilized:
• Value of the part acquired is based on the contributory value in the larger parcel. • Value of the remainder parcel as part of the larger parcel, is based on its contributory value developed in the larger parcel.
• Value the remainder parcel, after the acquisition and before benefits. When this value is compared to the value of remainder as part of the larger parcel any loss in market value is the measure of damages. • Value the remainder parcel, after the acquisition with benefits. When this value is compared to the value of the remainder without benefits any gain in market value is the measure of benefits. • The opinion of fair market value includes the value of the partial acquisition and the net damages.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 60
Unit Rule
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 197 A valuation premise often applicable in condemnation appraisals. The unit rule has two aspects, the first dealing with ownership interests and the second dealing with physical components. The first aspect of the rule, also referred to as the undivided fee rule, requires that property be valued as a whole rather than by the sum of the values of the various interests into which it may have been carved (such as lessor and lessee, life tenant and remainderman, and mortgagor and mortgagee, etc.). This is an app lication of the principle that it is the property, not the interests, that is being acquired.

The second aspect of the rule is that different physical elements or components of a tract of land (such as the value of timber and the value of minerals on the same land) are not to be separately valued and added together.

Undivided Fee Rule
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 196 In condemnation appraisal, a rule that states that property is to be valued as if the title were held by a single entity, even if the real property is divided into more than one estate owned by more than one individual or entity.

Retrospective Value Opinion
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute,7th Edition, P. 166 value opinion effective as of a specified historical date. The term retrospective does not define a type of value. Instead, it identifies a value opinion as being effective at some specific prior date. Value as of a historical date is frequently sought in connection with property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion.”
Investment Value
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 99

1. The value of a property to a particular investor or class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market.

2. The value of an asset to the owner or a prospective owner given individual investment or operational objectives (may also be known as worth). (IVS)
Extraordinary Assumption
Source: Uniform Standards of Professional Appraisal Practice, 2024 Edition, P. 4 An assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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Hypothetical Condition
Source: Uniform Standards of Professional Appraisal Practice, 2024 Edition, P. 4 A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.

Jurisdictional Exception
Source: Uniform Standards of Professional Appraisal Practice, 2024 Edition, P. 5.

An assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP.

Leased Fee Estate
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 105 An ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.

Leasehold Estate
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 105 The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease.

Stabilized
A state, condition, or premise under which a property is operating in a normal or usual way: occupancy is at a level that might be expected for an extended period of time, rents are being collected at normal and typical rates (i.e., initial lease-up rent concessions and extraordinary tenant improvement costs have been amortized) and operating expenses have normalized (taxes are fully assessed, etc.).

Exposure Time
Source: Uniform Standards of Professional Appraisal Practice, 2024 Edition, P. 4 An opinion, based on supporting market data, of the length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.

Larger Parcel
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 105 In governmental land acquisitions and in valuation of charitable donations of partial interests in property such as easements, the tract or tracts of land that are under the beneficial control of a single individual or entity and have the same, or an integrated, highest and best use. Elements for consideration by the appraiser in making a determination in this regard are contiguity, or proximity, as it bears on the highest and best use of the property, unity of ownership, and unity of highest and best use. In most states, unity of ownership, contiguity, and unity of use are the three conditions that establish the larger parcel for the consideration of severance damages. In federal and some state cases, however, contiguity is sometimes subordinated to unitary use.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 62
Temporary Easement
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 190 An easement granted for a specific purpose and applicable for a specific time period. A construction easement, for example, is terminated after the construction of the improvement and the unencumbered fee interest in the land reverts to the owner.

Damage to Remainder
Source: Section 1263.420 of the Code of Civil Procedure Damage to the remainder is the damage, if any, caused to the remainder by either or both of the following:
(a) The severance of the remainder from the part taken. (b) The construction and use of the project for which the property is taken in the manner proposed by the plaintiff whether or not the damage is caused by a portion of the project located on the part taken.

Benefit to Remainder
Source: Section 1263.430 of the Code of Civil Procedure Benefit to the remainder is the benefit, if any, caused by the construction and use of the project for which the property is taken in the manner proposed by the plaintiff whether or not the benefit is caused by a portion of the project located on the part taken.

Easement
Source: The Appraisal of Real Estate (Fifteenth Edition), Appraisal Institute, Chicago, Illinois, 2020, P. 64 An easement is an interest in real estate that transfers use, but not ownership, of a portion of an owner’s property.

Easements usually permit a specific portion of a property to be used for identified purposes, such as access to an adjoining property or as the location of a certain underground utility.

Conservation Easement
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 38 An interest in real estate restricting future land use to preservation, conservation, wildlife habitat, or some combination of those uses. A conservation easement may permit farming, timber harvesting, or other uses of a rural nature as well as some types of conservation-oriented development to continue, subject to the easement.

Compensation
Source: Section 1263.310 of the Code of Civil Procedure Compensation shall be awarded for the property taken. The measure of this compensation is the fair market value of the property taken.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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Surplus Land
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 186 Land that is not currently needed to support the existing use but cannot be separated from the property and sold off for another use. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved parcel.

Improvements Pertaining to the Realty
Source: Section 1263.205 of the Code of Civil Procedure. include any machinery or equipment installed for use on property taken by eminent domain, or on the remainder if such property is part of a larger parcel, that cannot be removed without a substantial economic loss or without substantial damage to the prope rty on which it is installed, regardless of the method of installation. In determining whether particular property can be removed "without a substantial economic loss" within the meaning of this section, the value of the property in place considered as a part of the realty should be compared with its value if it were removed and sold.
…the Appraisal Institute
The Appraisal Institute is a national organization of appraisers that self-regulates its members, and the undersigned are designated Members of the Appraisal Institute (MAI). A Member must adhere to the Institute's ethics code and standards.

The U.S. congress has tasked the Appraisal Foundation to set standards and procedures with which state -certified appraisers must comply when appraising property interests involved in federally regulated transactions.

Excess Land
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 66 Land that is not needed to serve or support the existing use. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land has the potential to be sold separately and is valued separately.

Leased Fee Interest
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 105 The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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Highest and Best Use
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 88

1. The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.

2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (IVS)

3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions)

4. [For fair value determination] The use of a nonfinancial asset by market participants that would maximize the value of the asset or the group of assets and liabilities (for example, a business) within which the asset would be used. (FASB Glossary) The highest and best use of a nonfinancial asset takes into account the use that is physically possible, legally permissible, and financially feasible. (FASB 820 -10-35-10B). The highest and best use of a nonfinancial asset establishes the valuation premise used to measure the fair value of the asset, as follows: (a) The highest and best use of a nonfinancial asset might provide maximum value to market participants through its use in combination with other assets as a group (as installed or otherwise configured for use) or in combination with other assets and liabilities (for example, a business). (b) The highest and best use of the asset might provide maximum value to market participants on a standalone basis. (FASB 820-10-35-10E)
Value in Use
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 201

1. The amount determined by discounting the future cash flows (including the ultimate proceeds of disposal) expected to be derived from the use of an asset at an appropriate rate that allows for the risk of the activities concerned. (FASB Accounting Standards Codification, Master Glossary)

2. Formerly used in valuation practice as a synonym for contributory value or use value.

Across the Fence (ATF) Method
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 3 A land valuation method used in the appraisal of corridors. The across -the-fence method is used to develop a value opinion based on comparison to abutting land.

Special-Purpose Property
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 178 An improved property with a unique physical design, special construction materials, or a layout that particularly adapts its utility to the use for which it was built and may be costly to modify to another use; also called a special-design property.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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Police Power
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 144 The inherent power of government to regulate property in order to protect public health, safety, and general welfare.

Transportation Corridor
Source: Caltrans Right of Way Manual, Section 7.13.60.00 (Rev 1/2014) A corridor which includes existing operating and nonoperating railroad property with reasonably probable future transportation uses, including railroad tracks, excess width, utility lines, pipelines, fiber-optic lines, etc. These uses must not be speculative.

Operating Railroad Property
Source: Caltrans Right of Way Manual, Section 7.13.60.00 (Rev 1/2014) The property necessary for operation of rail service over the railroad right of way. The area covered by the nonabandoned tracks plus the minimum additional clearance width as set by the Public Utilities Commission (PUC) and/or the safety standards set by the railroad. It may include switching yards, station sites and their parking lots, and crossing gates and associated equipment. All operating railroad property is located within a transportation corridor.

Non-Operating Railroad Property
Source: Caltrans Right of Way Manual, Section 7.13.60.00 (Rev 1/2014) Anything other than operating railroad property; i.e., property which is not required to operate rail service on a right of way. This may include unused right of way where track has been removed, area required for flood protection, grading, land leased to others, administrative properties, etc. It is important to note that railroad property converted to hiking or biking trails might not change the “transportation corridor” status.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 66

APPRAISAL CERTIFICATIONS

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

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CERTIFICATION
I certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.

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

4. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

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

11. As of the date of this report, I have completed the continuing education program for Designated Appraisers of the Appraisal Institute.

12. I have made a prior inspection of the property that is the subject of this report, from the adjacent right of way.

13. I have not revealed the findings and results of this appraisal to anyone other than the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

14. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

15. To the best of my knowledge, no portion of the value of the property appraised consists of items which are non-compensable under the established laws of California. It is my understanding that federal funds may be involved in the project that pertains to the subject of this report.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 68

16. Nicholas Maniscalco and Theodore Libby provided significant assistance in the preparation of this report, including researching the subject property, analyzing regional and neighborhood characteristics, and highest and best use analysis under the direct supervision of the undersigned.

17. My opinion of the total fair market value of the appraised property identified in this report was derived without collusion, coercion or direction as to value.

David Houghton, MAI
Appraisal Manager
State Certified General Real Estate Appraiser
California License No.AG039402
Expiration Date 12/26/2025
(916) 978-4900
[email protected]

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 69

APPRAISAL EXHIBITS
engineering consultants

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 70

PRELIMINARY TITLE REPORT

CLTA Preliminary Report Form Order Number: NHSC-7190040 (tc) (Rev. 11/06) Page Number: 1

First American Title

First American Title Company
1250 Corona Pointe Court, Ste 200
Corona, CA 92879

Newport Pacific Land Company
100 Bayview Circle, Suite 240
Newport Beach, CA 92660

Customer Reference: APN: 333-040-040

Order Number: NHSC-7190040 (tc)

Title Officer: Terrell Crutchfield
Phone: (951)256-5879
Fax No.: (866)558-2872
E-Mail: [email protected]

Buyer:
.

PRELIMINARY REPORT
In response to the above referenced application for a policy of title insurance, this company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms.

The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report.

Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered.

It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land.

Please be advised that any provision contained in this document, or in a document that is attached, linked or referenced in this document, that under applicable law illegally discriminates against a class of individuals based upon personal characteristics such as race, color, religion, sex, sexual orientation, gender identity, familial status, disability, national origin, or any other legally protected class, is illegal and unenforceable by law.

Order Number: NHSC-7190040 (tc)
Page Number: 2

First American Title
This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested.

Order Number: NHSC-7190040 (tc)
Page Number: 3

First American Title

Dated as of October 18, 2024 at 7:30 A.M.

The form of Policy of title insurance contemplated by this report is:

To Be Determined
A specific request should be made if another form or additional coverage is desired.

Title to said estate or interest at the date hereof is vested in:

NICK MARKOU AND PANAGIOTA MARKOU, TRUSTEES OF THE MARKOU FAMILY TRUST U/T/D NOVEMBER 12, 2005
The estate or interest in the land hereinafter described or referred to covered by this Report is:

A Fee.

The Land referred to herein is described as follows:

(See attached Legal Description)

At the date hereof exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows:

1. General and special taxes and assessments for the fiscal year 2024-2025.

First Installment: $5,318.65, OPEN
Penalty: $0.00
Second Installment: $5,318.65, OPEN
Penalty: $0.00
Tax Rate Area: 026-168
A. P. No.: 333-040-040

2. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code.

3. An easement for right of way to erect and maintain its poles or other supports with wires and fixtures and incidental purposes, recorded May 18, 1928 in Book 767 of Deeds, Page 131.

In Favor of: Southern Sierras Power Company
Affects: as described therein

The location of the easement cannot be determined from record information.

Order Number: NHSC-7190040 (tc)
Page Number: 4

First American Title

5. An easement for ingress and egress and incidental purposes, recorded April 4, 1968 as Instrument No. 31138 of Official Records.

In Favor of: Sun City Development Corporation, a New York corporation Affects: as described therein

6. An easement for ingress and egress and for road or utility purposes and incidental purposes, recorded September 30, 1968 as Instrument No. 93785 of Official Records.

In Favor of: Klamath Falls Land Co.

Affects: as described therein

7. The effect of a declaration of dedication recorded October 23, 1985 as Instrument No. 238413 of Official Records, purporting to irrevocably dedicate in perpetuity for public road purposes, including public utility and public service uses.

Reference is hereby made to said document for further and other particulars.

8. The effect of a declaration of dedication recorded October 23, 1985 as Instrument No. 238414 of Official Records, purporting to irrevocably dedicate in perpetuity for public road purposes, including public utility and public service uses.

Reference is hereby made to said document for further and other particulars.

9. Any lien, assessment, and/or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Non Compliance recorded October 6, 2011 as Instrument No. 2011-0443206 of Official Records.

10. Any lien, assessment, and/or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded January 31, 2014 as Instrument No. 2014-0043805 of Official Records.

11. Any lien, assessment, and /or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded July 14, 2017 as Instrument No. 2017-0287232 of Official Records.

12. Any lien, assessment, and /or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded August 20, 2018 as Instrument No. 2018-0331639 of Official Records.

Order Number: NHSC-7190040 (tc)
Page Number: 5

First American Title

13. Any lien, assessment, and /or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded September 24, 2019 as Instrument No. 2019-0376769 of Official Records.

14. Any lien, assessment, and /or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded August 21, 2020 as Instrument No. 2020-0386825 of Official Records.

15. Any lien, assessment, and /or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded October 05, 2023 as Instrument No. 2023-0295111 of Official Records.

16. Any lien, assessment, and /or violation or enforcement of any law, ordinance, permit or governmental regulation arising from the document entitled Notice of Pendency of Administrative Proceedings recorded October 22, 2024 as Instrument No. 2024-0317329 of Official Records.

17. Rights of the public in and to that portion of the Land lying within any Road, Street, Alley or Highway.

18. Water rights, claims or title to water, whether or not shown by the Public Records.

19. Rights of parties in possession.

20. Any facts, rights, interests or claims which would be disclosed by a correct ALTA/NSPS survey.

Prior to the issuance of any policy of title insurance, the Company will require:

21. With respect to the trust referred to in the vesting:
a. A certification pursuant to Section 18100.5 of the California Probate Code in a form satisfactory to the Company.
b. Copies of those excerpts from the original trust documents and amendments thereto which designate the trustee and confer upon the trustee the power to act in the pending transaction. c. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require.

22. An ALTA/NSPS survey of recent date which complies with the current minimum standard detail requirements for ALTA/NSPS land title surveys.

Order Number: NHSC-7190040 (tc)
Page Number: 6

First American Title

INFORMATIONAL NOTES

Note: The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the certain dollar amount set forth in any applicable arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. If you desire to review the terms of the policy, including any arbitration clause that may be included, contact the office that issued this Commitment or Report to obtain a sample of the policy jacket for the policy that is to be issued in connection with your transaction.

1. The property covered by this report is vacant land.

2. According to the public records, there has been no conveyance of the land within a period of twenty- four months prior to the date of this report, except as follows:

None

3. We find no outstanding voluntary liens of record affecting subject property. Disclosure should be made concerning the existence of any unrecorded lien or other indebtedness which could give rise to any possible security interest in the subject property.

The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached.

Order Number: NHSC-7190040 (tc)
Page Number: 7

First American Title

LEGAL DESCRIPTION

Real property in the City of Menifee, County of Riverside, State of California, described as follows:

That portion of Lot 1 of Amended Map of ROMOLA FARMS NO. 14, in the County of Riverside, State of California, as per Map recorded in Map Book 19 Page 56 in the office of the County Recorder of said County, described as follows:

Beginning at the South quarter corner of Section 22, Township 5 South, Range 3 West, San Bernardino Meridian; thence from said Point of Beginning along the North-South centerline of said section North 0° 06' 04" West 589.23 feet to the intersection of said North-South centerline and the Southerly line of Grand Avenue as said avenue was deeded to the County of Riverside on August 2, 1966 by Instrument No. 78840; thence leaving said North-South centerline and along said Southerly line of Grand Avenue Southwesterly from a tangent which bears South 59° 28' 14" West on the arc of a curve to the right having a radius of 2050.00 feet and a central angle of 11° 33' 38" an arc distance of 413.63 feet to the intersection of said Southerly line of Grand Avenue with a line that is parallel with and perpendicularly distant 1033.60 feet Easterly of the Northerly prolongation of the Easterly line of Lot 6 as said Lot is shown on the record of survey amendment Map of Tract 3072 as said record of survey being filed for record in Book 45 of records of Survey at Page 31, Riverside County records; thence leaving said South line of Grand Avenue and along last said parallel line South 0° 28' 11" West 409.86 feet to the Southerly line of said Section 22; thence along said South line of Section 22 South 89° 01' 01" East 379.46 feet to the Point of Beginning.

Excepting therefrom that portion of land conveyed to Menifee Union School District described in Grant Deed recorded January 09, 2009 as Instrument No. 2009-0010341 of Official Records.

Excepting therefrom 60% of the 100% of oil, and mineral rights, as set out in Grant Deed recorded November 29, 1957 as Instrument No. 84979 of Official Records in Book 2185, Page 192 of Official Records.

APN: 333-040-040

Order Number: NHSC-7190040 (tc)
Page Number: 8

First American Title

Order Number: NHSC-7190040 (tc)
Page Number: 9

First American Title

NOTICE

Section 12413.1 of the California Insurance Code, effective January 1, 1990, requires that any title insurance company, underwritten title company, or controlled escrow company handling funds in an escrow or sub- escrow capacity, wait a specified number of days after depositing funds, before recording any documents in connection with the transaction or disbursing funds. This statute allows for funds deposited by wire transfer to be disbursed the same day as deposit. In the case of cashier's checks or certified checks, funds may be disbursed the next day after deposit. In order to avoid unnecessary delays of three to seven days, or more, please use wire transfer, cashier's checks, or certified checks whenever possible.

Order Number: NHSC-7190040 (tc)
Page Number: 10

First American Title

EXHIBIT A

LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) CLTA/ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE [(07-01-2021) v. 01.00]

EXCLUSIONS FROM COVERAGE

The following matters are excluded from the coverage of this policy and We will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of:

1. a. any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) that restricts, regulates, prohibits, or relates to:
i. the occupancy, use, or enjoyment of the Land;
ii. the character, dimensions, or location of any improvement on the Land; iii. the subdivision of land; or
iv. environmental remediation or protection.
b. any governmental forfeiture, police, or regulatory, or national security power. c. the effect of a violation or enforcement of any matter excluded under Exclusion 1.a. or 1.b.

Exclusion 1 does not modify or limit the coverage provided under Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23, or 27.

2. Any power to take the Land by condemnation. Exclusion 2 does not modify or limit the coverage provided under Covered Risk 17.

3. Any defect, lien, encumbrance, adverse claim, or other matter:
a. created, suffered, assumed, or agreed to by You;
b. not Known to Us, not recorded in the Public Records at the Date of Policy, but Known to You and not disclosed in writing to Us by You prior to the date You became an Insured under this policy; c. resulting in no loss or damage to You;
d. attaching or created subsequent to the Date of Policy (Exclusion 3.d. does not modify or limit the coverage provided under Covered Risk 5, 8.f., 25, 26, 27, 28, or 32); or
e. resulting in loss or damage that would not have been sustained if You paid consideration sufficient to qualify You as a bona fide purchaser of the Title at the Date of Policy.

4. Lack of a right:
a. to any land outside the area specifically described and referred to in Item 3 of Schedule A; and b. in any street, road, avenue, alley, lane, right-of-way, body of water, or waterway that abut the Land.

Exclusion 4 does not modify or limit the coverage provided under Covered Risk 11 or 21.

5. The failure of Your existing structures, or any portion of Your existing structures, to have been constructed before, on, or after the Date of Policy in accordance with applicable building codes. Exclusion 5 does not modify or limit the coverage provided under Covered Risk 14 or 15.

6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights law, that the transfer of the Title to You is a:
a. fraudulent conveyance or fraudulent transfer;
b. voidable transfer under the Uniform Voidable Transactions Act; or c. preferential transfer:
i. to the extent the instrument of transfer vesting the Title as shown in Schedule A is not a transfer made as a contemporaneous exchange for new value; or
ii. for any other reason not stated in Covered Risk 30.

7. Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence.

8. Negligence by a person or an entity exercising a right to extract or develop oil, gas, minerals, groundwater, or any other subsurface substance.

9. Any lien on Your Title for real estate taxes or assessments imposed or collected by a governmental authority that becomes due and payable after the Date of Policy. Exclusion 9 does not modify or limit the coverage provided under Covered Risk 8.a. or 27.

10. Any discrepancy in the quantity of the area, square footage, or acreage of the Land or of any improvement to the Land.

LIMITATIONS ON COVERED RISKS

Your insurance for the following Covered Risks is limited on the Owner’s Coverage Statement as follows:

For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.

The deductible amounts and maximum dollar limits shown on Schedule A are as follows:

Your Deductible Amount Our Maximum Dollar Limit of Liability

Covered Risk 16: 1% of Policy Amount Shown in Schedule A or $2,500 $10,000 (whichever is less)

Covered Risk 18: 1% of Policy Amount Shown in Schedule A or $5,000 $25,000 (whichever is less)

Covered Risk 19: 1% of Policy Amount Shown on Schedule A or $5,000 $25,000 (whichever is less)

Covered Risk 21: 1% of Policy Amount Shown on Schedule A or $2,500 $5,000 (whichever is less)

Order Number: NHSC-7190040 (tc)
Page Number: 11

First American Title

ALTA OWNER'S POLICY [(07-01-2021) V. 01.00]
CLTA STANDARD COVERAGE OWNER'S POLICY [(02-04-22) V. 01.00]

EXCLUSIONS FROM COVERAGE

The following matters are excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by reason of:

1. a. any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) that restricts, regulates, prohibits, or relates to:
i. the occupancy, use, or enjoyment of the Land;
ii. the character, dimensions, or location of any improvement on the Land; iii. the subdivision of land; or
iv. environmental remediation or protection.
b. any governmental forfeiture, police, regulatory, or national security power. c. the effect of a violation or enforcement of any matter excluded under Exclusion 1.a. or 1.b.

Exclusion 1 does not modify or limit the coverage provided under Covered Risk 5 or 6.

2. Any power of eminent domain. Exclusion 2 does not modify or limit the coverage provided under Covered Risk 7.

3. Any defect, lien, encumbrance, adverse claim, or other matter:
a. created, suffered, assumed, or agreed to by the Insured Claimant; b. not Known to the Company, not recorded in the Public Records at the Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;
c. resulting in no loss or damage to the Insured Claimant; d. attaching or created subsequent to the Date of Policy (Exclusion 3.d. does not modify or limit the coverage provided under Covered Risk 9 or 10); or
e. resulting in loss or damage that would not have been sustained if consideration sufficient to qualify the Insured named in Schedule A as a bona fide purchaser had been given for the Title at the Date of Policy.

4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights law, that the transaction vesting the Title as shown in Schedule A is a:
a. fraudulent conveyance or fraudulent transfer;
b. voidable transfer under the Uniform Voidable Transactions Act; or c. preferential transfer:
i. to the extent the instrument of transfer vesting the Title as shown in Schedule A is not a transfer made as a contemporaneous exchange for new value; or
ii. for any other reason not stated in Covered Risk 9.b.

5. Any claim of a PACA-PSA Trust. Exclusion 5 does not modify or limit the coverage provided under Covered Risk 8.

6. Any lien on the Title for real estate taxes or assessments imposed or collected by a governmental authority that becomes due and payable after the Date of Policy. Exclusion 6 does not modify or limit the coverage provided under Covered Risk 2.b.

7. Any discrepancy in the quantity of the area, square footage, or acreage of the Land or of any improvement to the Land.

NOTE: The 2021 ALTA Owner’s Policy may be issued to afford either Standard Coverage or Extended Coverage. In addition to variable exceptions such as taxes, easements, CC&R’s, etc., the Exceptions from Coverage in a Standard Coverage policy will also include the Western Regional Standard Coverage Exceptions listed below as numbers 1 through 7. The 2021 CLTA Standard Coverage Owner’s Policy will include the Western Regional Standard Coverage Exceptions listed below as numbers 1 through 7.

EXCEPTIONS FROM COVERAGE

Some historical land records contain Discriminatory Covenants that are illegal and unenforceable by law. This policy treats any Discriminatory Covenant in a document referenced in Schedule B as if each Discriminatory Covenant is redacted, repudiated, removed, and not republished or recirculated. Only the remaining provisions of the document are excepted from coverage.

This policy does not insure against loss or damage and the Company will not pay costs, attorneys’ fees, or expenses resulting from the terms and conditions of any lease or easement identified in Schedule A, and the following matters:

1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records.

2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records.

4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records.

5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.

6. Any lien or right to a lien for services, labor or material unless such lien is shown by the Public Records at Date of Policy.

7. Any claim to (a) ownership of or rights to minerals and similar substances, including but not limited to ores, metals, coal, lignite, oil, gas,

Order Number: NHSC-7190040 (tc)
Page Number: 12

First American Title
uranium, clay, rock, sand, and gravel located in, on, or under the Land or produced from the Land, whether such ownership or rights arise by lease, grant, exception, conveyance, reservation, or otherwise; and (b) any rights, privileges, immunities, rights of way, and easements associated therewith or appurtenant thereto, whether or not the interests or rights excepted in (a) or (b) appear in the Public Records or are shown in Schedule B.

2006 ALTA OWNER'S POLICY (06-17-06)

EXCLUSIONS FROM COVERAGE

The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of:

1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to
(i) the occupancy, use, or enjoyment of the Land;
(ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or
(iv) environmental protection;
or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5.
(b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.

2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8.

3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;
(c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or
(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title.

4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction vesting the Title as shown in Schedule A, is
(a) a fraudulent conveyance or fraudulent transfer; or
(b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy.

5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.

NOTE: The 2006 ALTA Owner’s Policy may be issued to afford either Standard Coverage or Extended Coverage. In addition to variable exceptions such as taxes, easements, CC&R’s, etc., the Exceptions from Coverage in a Standard Coverage policy will also include the Western Regional Standard Coverage Exceptions listed below as numbers 1 through 7.

EXCEPTIONS FROM COVERAGE

This policy does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees or expenses, that arise by reason of:

The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage:

2. Any facts, rights, interests, or claims that are not shown by the Public Records at Date of Policy but that could be (a) ascertained by an inspection of the Land, or (b) asserted by persons or parties in possession of the Land.

3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records at Date of Policy.

4. Any encroachment, encumbrance, violation, variation, easement, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records at Date of Policy.

6. Any lien or right to a lien for services, labor, material or equipment unless such lien is shown by the Public Records at Date of Policy.

7. Any claim to (a) ownership of or rights to minerals and similar substances, including but not limited to ores, metals, coal, lignite, oil, gas, uranium, clay, rock, sand, and gravel located in, on, or under the Land or produced from the Land, whether such ownership or rights arise by lease, grant, exception, conveyance, reservation, or otherwise; and (b) any rights, privileges, immunities, rights of way, and easements associated therewith or appurtenant thereto, whether or not the interests or rights excepted in (a) or (b) appear in the Public Records or are shown in Schedule B.

City of Menifee Street Improvement Project
SWC of McCall Boulevard and Sherman Road
Menifee, California

25263 B Menifee Appraisals_333-040-040 Markou 71

QUALIFICATIONS OF APPRAISER
2825 Watt Avenue, Suite 200,
Sacramento, CA 95821
(916) 978-4900
David Houghton is an Appraisal Manager with Bender Rosenthal (BRI). He has been involved in real estate appraisal services since 2005 and is a Certified General Appraiser in the State of California. He has professional experience appraising a wide range of property types, including industrial, office, medical office, retail, multifamily, condemnation, right of way, residential subdivisions, and various agricultural/rural residential property types. Between 2007 and 2014 he worked exclusively on low income housing appraisal assignments. While focused on that specialty, David gained experience appraising affordable housing and conducting market studies for Low Income
Housing Tax Credit (LIHTC) developers. In 2014, he began working with BRI and has since shifted his focus and expertise into right of way appraisal assignments for public agencies throughout California. For the past eleven (11) years, David has solely worked with public agencies to provide right of way appraisals throughout California.

David Houghton, MAI
Appraisal Manager
Representative Valuation Experience
• Extensive public agency experience
• Deep understanding of right of way appraisal
• Experienced in managing high-volume appraisal projects • Appraisal experience throughout California; understanding of local nuances, rules and regulations Special Qualifications
Years of Experience
19 Years (11 with BRI)
Education
B.S. Science of Business Management,
University of Phoenix, Phoenix, AZ
Licenses & DESIGNATIONs
CA Certified General Appraiser License,
License No. AG039402
Appraisal Institute, Northern California
Chapter, MAI Member
• Single Family Residential
• Multi Family Residential
• Vacant Land
• Commercial
• Industrial
• Retail
• Mixed Use
• Surplus Land
• Rail Corridors
• Special Use
• Affordable Housing
• Agriculture
• Airports
• Eminent Domain
• Office
• Yellow Book
• Appraisal Reviews
• Medical
• Land
Enclosure 3

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ACQUISITION/EMINENT DOMAIN INFORMATION BROCHURE

TABLE OF CONTENTS
Page
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WHAT RIGHT DOES THE CITY HAVE TO ACQUIRE MY PROPERTY? ................................... 1 WHO MAKES THE DECISION TO BUY MY PROPERTY? ........................................................... 1 HOW DID THE CITY DETERMINE HOW MUCH TO OFFER ME FOR MY PROPERTY? ........ 1 WHAT IS FAIR MARKET VALUE? .................................................................................................. 1

HOW DOES AN APPRAISER DETERMINE THE FAIR MARKET VALUE OF MY PROPERTY? ........................................................................................................................................ 1 WHAT IS IN THE CITY’S STATEMENT OF THE BASIS FOR ITS DETERMINATION OF JUST COMPENSATION? ................................................................................................................... 2 MUST I ACCEPT THE CITY’S INITIAL OFFER? .......................................................................... 2 MAY I HAVE SOMEONE REPRESENT ME DURING NEGOTIATIONS? ................................... 2 IF I AGREE TO ACCEPT THE CITY’S OFFER, HOW SOON WILL I BE PAID? ......................... 2

WHAT HAPPENS IF I DO NOT AGREE TO THE FINAL PURCHASE OFFER BY THE CITY? ................................................................................................................................................... 2 WHAT HAPPENS IF THE CITY CONDEMNS MY PROPERTY? .................................................. 3 WHAT IS AN ORDER OF POSSESSION? ........................................................................................ 3 WHAT CAN I DO IF I AM NOT SATISFIED WITH THE COURT’S DETERMINATION? .......... 3 WILL I HAVE TO PAY ANY SETTLEMENT COSTS? ................................................................... 4

MAY I KEEP ANY OF THE BUILDINGS OR OTHER IMPROVEMENTS ON MY PROPERTY? ........................................................................................................................................ 4 CAN THE CITY TAKE ONLY A PART OF MY PROPERTY? ........................................................ 4 WILL I HAVE TO PAY RENT TO THE CITY AFTER MY PROPERTY IS ACQUIRED? ............ 4 HOW SOON MUST I MOVE? ............................................................................................................ 5 I AM A VETERAN, HOW ABOUT MY GI LOAN?.......................................................................... 5 WHAT IS TITLE II OF THE UNIFORM ACT? ................................................................................. 5 MY PROPERTY IS WORTH MORE NOW THAN WHEN I BOUGHT IT ...................................... 5 IS IT POSSIBLE TO DONATE PROPERTY TO THE CITY? ........................................................... 6 WHAT IF I HAVE OTHER QUESTIONS ABOUT THE PROCESS? ............................................... 6

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WHAT RIGHT DOES THE CITY HAVE TO ACQUIRE MY PROPERTY?
Every public entity has certain powers which are necessary for it to operate effectively. For example, States have the power to levy taxes and the power to maintain order. Another power is the power to acquire private property for public purposes. This is known as the power of the eminent domain.

The rights of each of us are protected by the Fifth and Fourteenth Amendments of the U.S. Constitution and by State Constitutions and eminent domain laws which guarantee that if a privately-owned public utility takes private property it must pay “just compensation” to the owner.

Further, under the Uniform Relocation Assistance and Real Property Acquisitions Policy Act of 1970 (Uniform Act), the owner has additional protections, some of which are explained in this brochure.

WHO MAKES THE DECISION TO BUY MY PROPERTY?
The decision to acquire a specific property for a public project usually involves many persons and many decisions. The final decision to proceed with the project is made by the City of Menifee’s City Council after a thorough review.

If you have any questions about the project or the selection of your property for acquisition, you should contact the representative for the project listed in the offer letter.

HOW DID THE CITY DETERMINE HOW MUCH TO OFFER ME FOR MY PROPERTY? Before preparing your offer, the City obtained an appraisal of your property. The appraisal was done by a qualified real property appraiser who is familiar with local property values. The appraiser inspected your property and stated his professional opinion of its current fair market value in an appraisal report.

The City is required to offer you “just compensation” for your property. This amount cannot be less than the fair market value of your property, as determined by the City on the basis of its appraisal.

WHAT IS FAIR MARKET VALUE?
Fair market value is sometimes defined as that amount of money which would probably be paid for a property in a sale between a willing seller, who does not have to sell, and a willing buyer, who does not have to buy.

The fair market value of a property is generally considered to be “just compensation.” Fair market value does not take into account intangible elements such as sentimental value, good will, business profits, or any other “special” value that your property may have for you as an individual.

HOW DOES AN APPRAISER DETERMINE THE FAIR MARKET VALUE OF MY PROPERTY?

Each parcel or real property is different and therefore no single formula can be devised to appraise all properties. Among the factors an appraiser typically considers in estimating the value of real property are:

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• How it compares with similar properties in the area that have been sold recently. • How much it would cost to reproduce the buildings and other structures, less any depreciation. • How much rental income it could produce.

WHAT IS IN THE CITY’S STATEMENT OF THE BASIS FOR ITS DETERMINATION OF JUST COMPENSATION?
The City’s statement of the basis for its determination of just compensation must be provided to you with the written purchase offer. Among other things, this statement must include:
• An accurate description of the property to be acquired. • The amount of the offer.
• An indication that the offer does not reflect any relocation payments or other relocation assistance which you may receive under other regulations.
• The recognized definition of the term “fair market value” or the equivalent term.

MUST I ACCEPT THE CITY’S INITIAL OFFER?
NO. You are entitled to present your evidence as to the amount you believe is the value of your property and to make suggestions for changing the terms and conditions of the offer. The City must make reasonable efforts to consider and respond to your evidence and suggestions. When fully justified by the available evidence of value, an adjustment in the offer may be made.

MAY I HAVE SOMEONE REPRESENT ME DURING NEGOTIATIONS?
YES. If you would like an attorney or anyone else to represent you during negotiations, please inform the City in writing. However, there are no provisions for the City to pay the costs of any such representation.

IF I AGREE TO ACCEPT THE CITY’S OFFER, HOW SOON WILL I BE PAID? If you reach a voluntary agreement to sell your property and your ownership (title) is clear, payment will be made at a mutually acceptable time. Generally, this should be possible within 30 to 60 days after you sign a purchase contract. If the title evidence obtained by the City indicates that further action is necessary to show that your ownership is clear, you may be able to hasten the payment by helping the City to obtain the necessary proof. (Title evidence is a legal record of ownership of the property. It identifies the owners of record and lists the restrictive deed covenants and recorded mortgages, liens and other instruments affecting your ownership of the property.) WHAT HAPPENS IF I DO NOT AGREE TO THE FINAL PURCHASE OFFER BY THE CITY? If you do not agree with the property valuation you may be eligible to receive reimbursement of up to $5,000 for the reasonable cost of an independent appraisal. The reimbursement is based on:
• The appraisal must be initiated by the owner.
• The selected appraiser must be licensed with the Office of Real Estate Appraisers.

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• To ensure the appraisal costs are reasonable and justifiable, the City should approve the amount of reimbursable cost prior to beginning the appraisal process.

If you are unable to reach a voluntary agreement through negotiations or fail to respond to the City’s offer, the City may file a suit in court to acquire your property through an eminent domain proceeding.

Eminent domain proceedings are often referred to as condemnations. If your property is to be acquired by condemnation and you would like it done promptly, the City must file the condemnation suit without unreasonable delay.

WHAT HAPPENS IF THE CITY CONDEMNS MY PROPERTY?
You will be notified of the action if the City files a condemnation suit.

During the condemnation proceeding, you will be provided an opportunity to introduce your evidence as to the value of your property. Of course, the City will have the same right. After hearing the evidence of all parties, the court will determine the amount of just compensation.

To help you in presenting your case in a condemnation proceeding, you may wish to consider employing an attorney and an appraiser. However, the costs of these professional services and other costs which you incur in presenting your case to the court are your responsibility.

WHAT IS AN ORDER OF POSSESSION?
An order of possession is a process within a condemnation action which allows the City to have the use of your property prior to a negotiated settlement or an award of just compensation in court. This procedure is used typically only where the use of your property is necessary to accomplish timely construction of the project for which your property is required.

To obtain an order of possession, the City must deposit with the court (or in an escrow account) an amount not less than its appraisal of the fair market value of the property. Ordinarily, the owner or lessees are then permitted to withdraw their share of this amount, LESS any amounts necessary to pay off any mortgage or other liens on the property and sums necessary to resolve any special ownership problems. Early withdrawal of your share of the money will not affect your right to seek additional compensation for your property. It is recommended that you have the help of an attorney if you intend to do this. Should the negotiated settlement or court award exceed the amount deposited by the City, you will be paid the difference plus any interest that may be provided by California law.

WHAT CAN I DO IF I AM NOT SATISFIED WITH THE COURT’S DETERMINATION? If you are not satisfied with the court judgment, you may file an appeal with the appropriate Appellate Court for the area where your property is located. The City may also file an appeal if it believes the amount of the judgment is too high.

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WILL I HAVE TO PAY ANY SETTLEMENT COSTS?
You will be responsible for the payment of the balance on any mortgage on your property. Also, if your ownership is not clear, you may have to pay the cost of clearing it. You will not be responsible for the reasonable and necessary costs of:
• Typical legal and other services required to complete the sale, recording fees, transfer taxes and any similar expenses which are incidental to transfer ownership to the City. • Penalty costs and other charges necessary to permit prepayment of an earlier recorded mortgage on the property which was entered into in good faith. Real property taxes covering the period after the City acquires your property.

The City will identify these items in a Settlement Cost Statement to be given to you at the time of settlement or soon after the court award of compensation, if the property is acquired by condemnation.

Ordinarily, if you have paid any of these expenses yourself, you will be repaid at that time. If you later discover other costs for which you should be repaid, you should request repayment from the City within six months after the acquisition. The City will assist you in filing a claim for these costs. Finally, if you believe that you were not properly repaid, you may appeal first to the City, and if not satisfied, then to the courts.

MAY I KEEP ANY OF THE BUILDINGS OR OTHER IMPROVEMENTS ON MY PROPERTY? Sometimes improvements on a property are not required by the City. This might include such items as a fireplace mantel, your favorite shrubbery, or even an entire house. If you wish to keep any improvements, please let your Acquisition Agent know as soon as possible.

If you do arrange to keep any improvement(s), the City will deduct its salvage value from the purchase price you would otherwise receive. (The salvage value of an item is its probable selling price if offered for sale on the condition that the buyer will remove it at his own expense.) If you arrange to keep any real property improvement (such as a fireplace mantel or a shrub), you will not be entitled to receive a relocation payment for the cost of moving it to a new location.

CAN THE CITY TAKE ONLY A PART OF MY PROPERTY?
YES. But, if the purchase of only a part of your property reduces the value of the remaining part(s), you must be paid for the loss in value. Also, if any remaining part would have little or no utility or value to you, the City must offer to buy that remaining part from you.

WILL I HAVE TO PAY RENT TO THE CITY AFTER MY PROPERTY IS ACQUIRED? If you remain in the property after acquisition, you will be required to pay a fair rent to the City.

Generally, such rent will not be more than that charged as rent for the use of a property similar to yours in a similar area.

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HOW SOON MUST I MOVE?
Every reasonable effort will be made to give you ample time to relocate after the acquisition of your property. In most cases, a mutually satisfactory arrangement can be worked out. Except in an unusual instance where there is an urgent need for your property for construction, you cannot be required to move from your residence or to move your business or farm operation without at least 90 days advance written notice of the date by which your move is required.

If you reach a voluntary agreement to sell your property, you cannot be required to move before you receive the agreed purchase price. In the case of a condemnation, you cannot be required to move before the estimated fair market value of the property has been deposited with the court (or into escrow) so that you can withdraw your share.

If you are being displaced from your residence, decent, safe and sanitary replacement housing must be available before you can be required to move.

I AM A VETERAN, HOW ABOUT MY GI LOAN?
After your GI home mortgage loan has been repaid, you will be permitted to obtain another GI loan to purchase another property. Check on such arrangements with your nearest VA office.

WHAT IS TITLE II OF THE UNIFORM ACT?
Title II (Uniform Relocation Assistance) of the Uniform Act specifies certain relocation payments and other assistance which the City must provide to families, individuals, businesses, farms and nonprofit organizations when they are displaced.

The City must furnish you with a full explanation of the relocation benefits to which you may be entitled.

If you have any questions about these benefits, or your right to receive them, please contact the City. In order for the City to fulfill its relocation obligations to you, you must keep the City informed of your plans.

MY PROPERTY IS WORTH MORE NOW THAN WHEN I BOUGHT IT. MUST I PAY CAPITAL GAINS TAX ON THE INCREASE?
In most cases when the City acquires real property, the property owner may postpone the payment of Federal capital gains taxes on any profit from the sale if the profit is reinvested in similar property within a certain replacement period. To take advantage of this right, you should file the details in a statement with your Federal income tax return for the tax year in which you realize the gains.

Internal Revenue Service (IRS) Publication 549, “Condemnations of Private Property for Public Use,” is available from the IRS. It explains how the Federal income tax would apply to a gain or loss resulting from the condemnation of real property or its sale under the threat of condemnation for public purposes.

If you have any questions about the IRS rules, you should discuss your particular circumstances with your personal tax advisor or your local IRS office.
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IS IT POSSIBLE TO DONATE PROPERTY TO THE CITY?
YES. However, prior to accepting any donation of real property, the City must inform the owner in writing of the amount it believes to be just compensation for the property. The property owner must indicate in writing that, although they understand that they cannot be required to sell their property for less than just compensation, they voluntarily agree to do so.

WHAT IF I HAVE OTHER QUESTIONS ABOUT THE PROCESS?
Contact the City’s designated representative directly. The representative will answer your questions and provide any needed additional information.

Enclosure 4

Menifee City CouncilAugust 19, 2026

Menifee City Council
August 19, 2026