Agenda packet, first session — Modesto City Council, July 11, 2023 (part 8 of 9)

DISCUSSION:

The Airport is an enterprise fund and is expected to be self-supporting. This means General Funds from the City are not received to operate the Airport. Currently, the hangar vacancy rate is low with a steady demand, especially for the larger hangars. Therefore, staff recommends Airport rates and fees be adjusted by Consumer Price Index.

A Consumer Price Index (CPI) Increase
To keep enterprise revenues in line with the increases in expenses each year, staff reviewed the Bureau of Labor Statistics Consumer Price Index - West Region CPI adjustment for a 12- month period starting on January 1st of the prior year and ending December 31st of that year.

These adjustments normally take place annually based on the CPI data, however due to the circumstances surrounding the onset of the pandemic, the Airport made the decision to forego any rate increases for calendar year 2021 and 2022. The last increase was implemented on September 1, 2020. By Resolution No. 2020-350, which reflected the CPI data for the west region from calendar year 2019.

The Airport reviewed the CPI data for the west region for the 12-month period starting January 1, 2022, through December 31,2022, showing an increase of 6.2% to all Airport Rates and Fees.

This item was presented to the Airport Advisory Committee on March 16, 2023. The committee made a recommendation to move this item forward.

Attachment B references the proposed new rates to be effective July 12, 2023.

FISCAL IMPACT:

This recommended adjustment to rates and fees will increase Airport revenue, allowing the Airport to cover growing operational expenses. Revenue will increase by an estimated $42,000 annually or approximately 6.2% based on projected lease and service revenues. Revenues will be deposited into the Airport Operating Fund.

COMMITTEE RECOMMENDATION:

This item was presented to the Finance Committee during the budget workshop on April 18, 2023 and was recommended to forward to Council for approval.

RECOMMENDED COUNCIL ACTION
Staff Recommendations:

Resolution approving adjustments to various Airport rates and fees for specific activities and services at the Modesto City-County Airport (Airport), effective July 12, 2023, and rescinding Resolution No: 2020-350.
#30..
- 1701 -
City Council, July 11, 2023
Adjustments to Various Airport Rates and Fees

Page 3 of 3 ends

Approved by:

Bill Sandhu, Public Works Director
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Attachment A – Current 2020 Rates and Fees

3. Attachment B – Proposed 2023 Rates and Fees

4. Attachment C – CPI Data- West Region
#30..
- 1702 -
07/11/2023/PW/GdSilva/Item X 1 2023-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2023-

RESOLUTION APPROVING ADJUSTMENTS TO VARIOUS AIRPORT RATES

AND FEES FOR SPECIFIC ACTIVITIES AND SERVICES AT THE MODESTO CITY-COUNTY AIRPORT (AIRPORT), EFFECTIVE JULY 12, 2023, AND RESCINDING RESOLUTION NO. 2020-350
WHEREAS, the Modesto City-County Airport (Airport) is an enterprise fund and is expected to be self-supporting. The Airport has based its computing of fair market values from the National Consumer Price Index (CPI) for all Urban Consumers, West Urban Area published by the U.S. Department of Labor, Bureau of Labor Statistics, and WHEREAS, the Airport reviewed the CPI data for the west region for the 12- month period starting January 1, 2022, through December 31,2022, showing an increase of 6.2% to all Airport Rates and Fees, and
WHEREAS, adjusting Airport Rates and Fees will increase revenue that will allow the airport to cover growing operational expenses and address deferred maintenance items.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves adjustments to various Airport Rates and Fees for specific activities and services at the Modesto City-County Airport as noted in Attachment B, attached hereto.

BE IT FURTHER RESOLVED that Resolution 2020-350 shall be rescinded.

BE IT FURTHER RESOLVED that this resolution shall go into effect and be in full force and operation on July 12, 2023.
#30..
- 1703 -
07/11/2023/PW/GdSilva/Item X 2 2023-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 11th day of July, 2023, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ? was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmember: ?
NOES: Councilmember: ?
ABSENT: Councilmember: ?
ATTEST: ___________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY:

JOSE M. SANCHEZ, City Attorney
#30..
- 1704 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
SECTION 1. HANGARS. Rental charges for the rental of hangars at the Modesto CityCounty Airport/Harry Sham Field are hereby established as follows, payable in advance:
(a) T-Hangars and Storage Units as of July 2020
Small T-Hangars $189. 19 per month
(No electricity provided)
Hangar A Units 2-12
Hangar B Units 2-9
Hangar C Units 2, 3, 7
Hangar D Units 2-5 & 7-9
Small T-Hangars $221.52 per month
(Electricity provided)
Hangar A Unit 1
Hangar C Units 4-6
Hangar D Unit 6
Medium T-Hangars $235.56 per month
(no electricity provided)
Hangar B Units 1, 10
Hangar C Unit 8
Hangar D Unit 10
Medium T-Hangars $296.66 per month
(electricity provided)
Hangar C Unit 1
Hangar D Unit 1
Hangar E Units 1-10
Hangar F Units 1-10
Hangar G Units 1-8, 10
Hangar H Units 1-8, 10
Hangar J Units 1-10
Hangar L Units 1-10
Large T-Hangars $348.58 per month
(Electricity provided)
Hangar G Unit 9
Hangar H Unit 9
Hangar K Units 2-6, 8-11
Large Modified Box Hangar $423.95 per month
(electricity provided)
Hangar K Unit 1, 7
#30..
- 1705 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
Extra Large T-Hangars $502.90 per month
(Electricity provided)
Hangar I Units 1-8
Storage Units
Hangar G Storage Unit $52.38 per month
Hangar H Storage Unit $52.38 per month
Hangar I Storage Unit $137.70 per month
Hangar J Storage Unit $52.38 per month
Hangar L Storage Unit $52.38 per month
All T-Hangars leased under Section 1 subparagraphs (a) with no electricity which later have electricity installed will increase to the electricity provided rate with corresponding THangar size. (b) Corporate Executive Commercial Box Hangars
Hangar 1 $1,821.42 per month
Hangar 2 $1,483.40 per month
Hangar 3 $813.79 per month
Hangar 4 $1,386.19 per month
Hangar 5 $1,379.17 per month
Hangar 6 $807.69 per month
Hangar 7 $92.29 per month
(ground lease)
(c) Portable Hangars and Ground Lease
Portable Hangars 1-14 $74.52 per month
Ground Lease - Developed (per sq. ft.) $.061 per month
Ground Lease – Undeveloped (per sq. ft.) $.028 per month A five percent (5%) discount will be made in any of the above rental charges when a year’s lease is entered into and the year’s rental charges are paid in advance. #30..
- 1706 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
SECTION 2. AIRPORT KEYS
(a) Two (2) hangar keys and one (1) gate proximity card are included in initial lease
(b) $45.00 for each additional proximity card
(c) $45.00 for each additional hangar key
SECTION 3. TIE-DOWN FEES. Tie-down charges and fees at the Modesto CityCounty Airport/Harry Sham Field are hereby established as follows, payable in advance:
(a) Aircraft less than 12,500 lbs. maximum certificated gross landing weight Permanent $49.16 per month
Transient $8.10 per day
(b) Aircraft greater than 12,501 lbs. maximum certificated gross landing weight Permanent $82.94 per month
Transient $16.07 per day
A five-percent (5%) discount will be made in the rental charges set forth in Section 1 subparagraphs (a), (b), and (c), when a year’s lease is entered into and the year’s rental charges are paid in advance.

A volume discount may be given to Fixed Base Operators (FBO) that operate flight schools for light single and multi-engine aircraft (less than 12,500 lbs. of maximum certificated gross landing weight) for tie-down spaces as set forth in subsections (a) and (b) above. For every two tail-in spaces the FBO agrees to lease, one taxi-in tie-down may be leased for the same price as a tail-in tie-down.
#30..
- 1707 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
Overnight tie-down of aircraft belonging to or in the custody or possession of a lessee at the Modesto City-County Airport/Harry Sham Field shall be subject to the normal tie-down charge as specified by this section.

SECTION 4. OFFICE SPACE. The monthly charge for office space(s) at the Modesto City-County Airport/Harry Sham Field are hereby established as follows:

Old Administration Building …………………… $1.03 per sq. ft.

Utilities furnished by Airport
Office Building(s) 1 & 2 …………………… $1.03 per sq. ft.

Utilities furnished by Tenant
SECTION 5. TEMPORARY USE OF AIRPORT PASSENGER TERMINAL.

Organization and service providers desiring to temporarily use the passenger terminal will be charged a daily rate:
(a) Ticket counter …………………… $1.03 per sq. ft.
(b) Other areas …………………… $1.03 per sq. ft.

SECTION 6. AIRCRAFT CARRYING PASSENGERS AND/OR CARGO FOR HIRE.

Aircraft landing at the Modesto City-County Airport/Harry Sham Field shall pay a landing fee as follows:
(a) All aircraft weighing less than 12,500 lbs. maximum certificated gross landing weight - $0.00 per landing
(b) All aircraft weighing greater than 12,501 lbs. maximum certificated gross landing weight – $1.17 per 1,000 pounds per landing
(c) All transient aircraft owned and operated by individuals, companies, and corporations carrying their own products shall not be charged for the first two (2) trips per calendar months. All other trips for the same calendar month shall be charged at the same rates applied to nonscheduled aircraft carrying cargo for hire. #30..
- 1708 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
(d) No landing fee shall be charged for any aircraft, which lands at the airport due toany mechanical or other emergency, except weather, provided that such emergency is reported to the Airport Control Tower prior to landing.

SECTION 7. PASSENGER FACILITY CHARGE (PFC). Commercial air carrying passengers excluding “frequent flyers” or similar airline bonus award enplaning at Modesto CityCounty Airport/Harry Sham Field shall pay a PFC as approved by Federal Aviation Regulations (FAR) Part 158.
(a) Enplaned passenger by airline - $4.63 per ticketed passenger SECTION 8. ADVERTISEMENT CALLBOARD. Firms wishing to advertise in the airport passenger terminal shall have an approved agreement with the City of Modesto. A monthly charge shall be assessed for the use of the advertisement callboard as follows Display Size Display Only Display & Telephone

7.5” x 9.5” $20.00 $30.00

7.5” x 21” $40.00 $60.00
19” x 21” $50.00 $70.00
SECTION 9. MODESTO CITY-COUNTY AIRPORT BASED COMMERCIAL SERVICES Any person engaging in a commercial enterprise based at the Modesto City-County Airport/Harry Sham Field shall pay to the City a fee equivalent to the City Business License Fees set forth in Chapter 1 of Title 6 of the Modesto Municipal Code, except that a minimum fee of $100 will be paid for each aircraft sold, for the privilege of engaging in business in the City of Modesto and on the Airport. Said sum shall be payable at the time and in the manner provided for in Chapter 1 of Title 6 of the Modesto Municipal Code.

SECTION 10. FUEL FLOWAGE FEES. A fuel flowage fee of seven cents ($.07357) per gallon of fuel sold or dispensed on the Airport shall be collected for the City of Modesto by #30..
- 1709 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
the fuel vendors, except that reduced fuel flowage fees collected from scheduled air carriers can be negotiated for volume purchases.

SECTION 12. TEMPORARILY BASED COMMERCIAL SERVICES. Any person engaging in a commercial enterprise, temporarily based at the Modesto City-County Airport/Harry Sham Field, shall pay to the City a license fee in the sum of two hundred and no/100ths ($200.00) dollars, payable in advance.

Each such operator shall also pay to the City as a minimum an additional sum of ninety and no/100ths ($90.00) dollars per month, or any portion thereof, payable in advance, for the privilege of using the Airport and its facilities.

SECTION 12. OFF-AIRPORT CAR RENTAL OPERATOR FEE. Off-airport operators picking up customers at the Modesto City-County Airport/Harry Sham Field will pay to the City of Modesto ten percent (10%) of gross receipt for each vehicle rental. Additionally, the operators will be assessed a parking fee at the same rate on-airport car rental operators are charged for vehicles left in the public parking area overnight.

SECTION 13. MOTOR VEHICLE STORAGE CHARGES. Any person who parks a motor vehicle in Terminal Building Parking Lots at the Modesto City-County Airport/Harry Sham Field shall pay seven and no/100ths ($7.00) dollars per day or forty-two and no/110ths ($42.00) dollars per week.

SECTION 14. PENALTIES. A five percent (5%) per month penalty charge shall be made on any of the charges and fees established by this resolution when such charges and fees are not paid within thirty (30) days after they are due and payable. No penalties will be collected on the PFC.
#30..
- 1710 -
Modesto City-County Airport Rates & Fees
Effective September 1, 2020 Attachment A
SECTION 15. ADJUSTMENT OF RENTS, FEES AND CHARGES.

Rates and fees for the Airport may be adjusted from time to time by Resolution of the City Council.

For other than fair market value adjustments, said rents, fees, and charges shall be adjusted in the following manner: The base for computing the adjustment is the National Consumer Price Index for All Urban Consumers, West Urban Area, published by the United States Department of Labor, Bureau of Labor Statistics (“Index”), with a base year of 1982 – 1984 = 100 (“Beginning Index”). In no case shall the minimum rents, fees and charges be less than existing approved and adopted rents, fees and charges. #30..
- 1711 -
Modesto City-County Airport Rates & Fees
Effective July 11, 2023 Attachment B
SECTION 1. HANGARS. Rental charges for the rental of hangars at the Modesto CityCounty Airport/Harry Sham Field are hereby established as follows, payable in advance:
(a) T-Hangars and Storage Units as of July 2023 rounded to the nearest dollar:

Small T-Hangars $201 per month
(No electricity provided)
Hangar A Units 2-12
Hangar B Units 2-9
Hangar C Units 2, 3, 7
Hangar D Units 2-5 & 7-9
Small T-Hangars $235 per month
(Electricity provided)
Hangar A Unit 1
Hangar C Units 4-6
Hangar D Unit 6
Medium T-Hangars $250 per month
(No electricity provided)
Hangar B Units 1, 10
Hangar C Unit 8
Hangar D Unit 10
Medium T-Hangars $315 per month
(Electricity provided)
Hangar C Unit 1
Hangar D Unit 1
Hangar E Units 1-10
Hangar F Units 1-10
Hangar G Units 1-8, 10
Hangar H Units 1-8, 10
Hangar J Units 1-10
Hangar L Units 1-10
Large T-Hangars $370 per month
(Electricity provided)
Hangar G Unit 9
Hangar H Unit 9
Hangar K Units 2-6, 8-11
Large Modified Box Hangar $450 per month
(Electricity provided)
Hangar K Unit 1,7
#30..
- 1712 -
Modesto City-County Airport Rates & Fees
Effective July 11, 2023 Attachment B
Extra Large T-Hangars $534 per month
(Electricity provided)
Hangar I Units 1-8
Storage Units
Hangar G Storage Unit $56 per month
Hangar H Storage Unit $56 per month
Hangar I Storage Unit $146 per month
Hangar J Storage Unit $56 per month
Hangar L Storage Unit $56 per month
All T-Hangars leased under Section 1 subparagraphs (a) with no electricity which later have electricity installed will increase to the electricity provided rate with corresponding THangar size. (b) Corporate Executive Commercial Box Hangars
Hangar 1 $1,934 per month
Hangar 2 $1,575 per month
Hangar 3 $864 per month
Hangar 4 $1,472 per month
Hangar 5 $1,465 per month
Hangar 6 $864 per month
Hangar 7 $864 per month
(c) Portable Hangars and Ground Lease
Portable Hangars 1-14 $79 per month
Ground Lease - Developed (per sq. ft.) $.064 per month
Ground Lease – Undeveloped (per sq. ft.) $.029 per month #30..
- 1713 -
Modesto City-County Airport Rates & Fees
Effective July 11, 2023 Attachment B
A five percent (5%) discount will be made in any of the above rental charges when a year’s lease is entered into and the year’s rental charges are paid in advance.

SECTION 2. AIRPORT KEYS
(a) Two (2) hangar keys and one (1) gate proximity card are included in initial lease
(b) $45.00 for each additional proximity card
(c) $45.00 for each additional hangar key
SECTION 3. TIE-DOWN FEES. Tie-down charges and fees at the Modesto CityCounty Airport/Harry Sham Field are hereby established as follows, payable in advance:
(a) Aircraft less than 12,500 lbs. maximum certificated gross landing weight Permanent $52 per month
Transient $9 per day
(b) Aircraft greater than 12,501 lbs. maximum certificated gross landing weight Permanent $88 per month
Transient $17 per day
A five-percent (5%) discount will be made in the rental charges set forth in Section 1 subparagraphs (a), (b), and (c), when a year’s lease is entered into and the year’s rental charges are paid in advance.

Overnight tie-down of aircraft belonging to or in the custody or possession of a lessee at the Modesto City-County Airport/Harry Sham Field shall be subject to the normal tie-down charge as specified by this section.

SECTION 4. OFFICE SPACE. The monthly charge for office space(s) at the Modesto City-County Airport/Harry Sham Field are hereby established as follows:

Office Spaces/when …………………… $1.28 per sq. ft.

Utilities furnished by Airport
Office Building(s) 1 & 2 …………………… $1.08 per sq. ft.

Utilities furnished by Tenant
SECTION 5. TEMPORARY USE OF AIRPORT PASSENGER TERMINAL.

Organization and service providers desiring to temporarily use the passenger terminal will be charged a daily rate:
(a) Ticket counter …………………… $1.08 per sq. ft.
(b) Other areas …………………… $1.08 per sq. ft.

SECTION 6. UTILITY COST
(a) When electricity is provided, …………………… $.20 per sq. ft. an additional utility rate will
be included each month
SECTION 7. AIRCRAFT CARRYING PASSENGERS AND/OR CARGO FOR HIRE.

Aircraft landing at the Modesto City-County Airport/Harry Sham Field shall pay a landing fee as follows:
(a) All aircraft weighing less than 12,500 lbs. maximum certificated gross landing #30..
- 1715 -
Modesto City-County Airport Rates & Fees
Effective July 11, 2023 Attachment B
weight - $0.00 per landing
(b) All aircraft weighing greater than 12,501 lbs. maximum certificated gross landing weight – $1.20 per 1,000 pounds per landing
(c) All transient aircraft owned and operated by individuals, companies, and corporations carrying their own products shall not be charged for the first two (2) trips per calendar months. All other trips for the same calendar month shall be charged at the same rates applied to nonscheduled aircraft carrying cargo for hire. (d) No landing fee shall be charged for any aircraft, which lands at the airport due to any mechanical or other emergency, except weather, provided that such emergency is reported to the Airport Control Tower prior to landing.

SECTION 8. PASSENGER FACILITY CHARGE (PFC). Commercial air carrying passengers excluding “frequent flyers” or similar airline bonus award enplaning at Modesto CityCounty Airport/Harry Sham Field shall pay a PFC as approved by Federal Aviation Regulations (FAR) Part 158.
(a) Enplaned passenger by airline - $4.63 per ticketed passenger SECTION 9. ADVERTISEMENT CALLBOARD. Firms wishing to advertise in the airport passenger terminal shall have an approved agreement with the City of Modesto. A monthly charge shall be assessed for the use of the advertisement callboard as follows Display Size Display Only Display & Telephone

7.5” x 9.5” $21.00 $32.00

7.5” x 21” $42.00 $64.00
19” x 21” $53.00 $74.00
SECTION 10. MODESTO CITY-COUNTY AIRPORT BASED COMMERCIAL SERVICES Any person engaging in a commercial enterprise based at the Modesto City-County Airport/Harry Sham Field shall pay to the City a fee equivalent to the City Business License Fees set forth in Chapter 1 of Title 6 of the Modesto Municipal Code, except that a minimum fee of #30..
- 1716 -
Modesto City-County Airport Rates & Fees
Effective July 11, 2023 Attachment B
$100 will be paid for each aircraft sold, for the privilege of engaging in business in the City of Modesto and on the Airport. Said sum shall be payable at the time and in the manner provided for in Chapter 1 of Title 6 of the Modesto Municipal Code.

SECTION 11. FUEL FLOWAGE FEES. A fuel flowage fee of seven cents ($.07813) per gallon of fuel sold or dispensed on the Airport shall be collected for the City of Modesto by the fuel vendors, except that reduced fuel flowage fees collected from scheduled air carriers can be negotiated for volume purchases.

Each such operator shall also pay to the City as a minimum an additional sum of ninetysix and no/100ths ($96.00) dollars per month, or any portion thereof, payable in advance, for the privilege of using the Airport and its facilities.

SECTION 13. OFF-AIRPORT CAR RENTAL OPERATOR FEE. Off-airport operators picking up customers at the Modesto City-County Airport/Harry Sham Field will pay to the City of Modesto ten percent (10%) of gross receipt for each vehicle rental. Additionally, the operators will be assessed a parking fee at the same rate on-airport car rental operators are charged for vehicles left in the public parking area overnight.

SECTION 14. MOTOR VEHICLE STORAGE CHARGES. Any person who parks a motor vehicle in Terminal Building Parking Lots at the Modesto City-County Airport/Harry Sham Field shall pay eight and no/100ths ($8.00) dollars per day. #30..
- 1717 -
Modesto City-County Airport Rates & Fees
Effective July 11, 2023 Attachment B
SECTION 15. PENALTIES. A five percent (5%) per month penalty charge shall be made on any of the charges and fees established by this resolution when such charges and fees are not paid within thirty (30) days after they are due and payable. No penalties will be collected on the PFC.

SECTION 16. ADJUSTMENT OF RENTS, FEES AND CHARGES.

Rates and fees for the Airport may be adjusted from time to time by Resolution of the City Council.

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

July 11, 2023
Date: June 21, 2023
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Bill Sandhu, Director of Public Works
SUBJECT: Federal Aviation Administration and State of California, Division of Aeronautics Grant Programs
CONTACT: Gabe da Silva, Airport Manager [email protected] 209-577-5319 DESCRIPTION:

Consider the submittal of Grant Applications to the Federal Aviation Administration and the State of California Department of Transportation, Division of Aeronautics for eligible Airport Improvement Projects. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item is in conformance with the City of Modesto Strategic Plan Area: Economic Vitality Goals and Strategies. “Retain and attract residential, commercial, and industrial development to meet the community’s needs today and for the next generation”; Goal F: “Build and promote a recognizable and desirable identity for the City of Modesto”.

BACKGROUND:

The Modesto City-County Airport (Airport) is a Federally obligated facility and is required to meet Federal Aviation Administration (FAA) and State of California Department of Transportation (DOT) Division of Aeronautics standards, including maintaining perimeter fencing, runways, taxiways, aircraft parking areas, landing systems and/or any other surfaces or areas deemed for aeronautical use. The Airport receives annual entitlements in the amount of $100,000 per year that can be applied for to be used for Airport Improvement Projects (AIP) that are identified on the Airport Capital Improvement Plan (ACIP). The Airport applies for these funds as they accumulate, or further discretionary funds become available for eligible projects defined by the ACIP.

DISCUSSION:

Under Administrative Directive – Grant Management 7.2, all grant applications that require a local match regardless of dollar threshold must be approved by City Council.

Grant application windows can sometimes be short depending on the type of funds available or other circumstances such as working with a consultant and awaiting documentation. This has #31..
- 1720 -
City Council, July 11, 2023
Federal Aviation Administration and State of California, Division of Aeronautics Grant Programs

Page 2 of 2 ends

proven to be problematic causing a potential to miss the application window pushing these opportunities out many months before the new application window opens.

The Airport most recently was engaged with our consultant Kimley Horn looking to obtain a project scope with associated costs to apply for an FAA Grant in the amount of $54,000 for the design upgrades to the Airport Vault and Air Traffic Control Tower Vault. This design would encompass the Airfield Lighting and Control Monitoring System and Airfield regulators. Due to finding out just a short time ago the Airport had entitlement funds that were eligible for this project and being that this is a project with a local match, staff did not have enough time to gather information and submit the application through the Committee and Council process prior to the July 1, 2023 deadline. With this shortened timeline, staff would have to wait until October 2023 to submit the application thus pushing the project further out.

FISCAL IMPACT:

AIP projects have a required match, 90% Federal and 10% Local. The local match from the Airport comes from either the Airport Operating Fund or the Stanislaus County Aircraft Tax Fund which neither impact the general fund. Upon grant awards, items will be brought to Committee and Council to amend the budget and will include the specific fund that will be used for the local match portion. Both the Airport Operating Fund and the County Aircraft Tax Fund have sufficient reserves to meet local match requirements.

COMMITTEE RECOMMENDATION:

This item was presented to the Finance Committee on June 26, 2023 and was recommended to forward to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the submittal of applications to the Federal Aviation Administration (FAA) and State of California Department of Transportation (DOT) Division of Aeronautics for Airport Improvements, and authorizing the City Manager or his designee, to sign Grant Applications and related forms.

Approved by:

Bill Sandhu, Public Works Director
Joseph P Lopez, City Manager
Attachments:

1. Resolution
#31..
- 1721 -
1 MODESTO CITY COUNCIL
RESOLUTION NO. 2023-

RESOLUTION APPROVING THE SUBMITTAL OF APPLICATIONS TO THE

FEDERAL AVIATION ADMINSITRATION (FAA) AND STATE OF

CALIFORNIA DEPARTMENT OF TRANSPORTATION (DOT) DIVISION OF

AERONAUTICS FOR AIRPORT IMPROVEMENTS, AND AUTHORIZING THE

CITY MANAGER OR HIS DESIGNEE, TO SIGN GRANT APPLICATIONS AND

RELATED FORMS
WHEREAS, the Modesto City-County Airport (Airport) is a Federally obligated facility and is required to meet Federal Aviation Administration (FAA) and State of California Department of Transportation (DOT) Division of Aeronautics standards; and WHEREAS, the Airport receives annual entitlements in the amount of $100,000 per year that can be applied for to be used for Airport Improvement Projects (AIP) that are identified on the Airport Capital Improvement Plan (ACIP); and WHEREAS, under Administrative Directive – Grant Management 7.2, all grant applications that require a local match regardless of dollar threshold must be approved by City Council; and
WHEREAS, grant application windows can sometimes be short depending on the type of funds available or other circumstances such as working with a consultant and awaiting documentation; and
WHEREAS, the Airport most recently engaged with our consultant looking to obtain a project scope and associated costs to apply for an FAA grant; and WHEREAS, due to finding out just a short time ago the Airport had entitlement funds that were eligible for this project and being that this is a project with a local match, staff did not have enough time to gather information and submit the application through the Committee and Council process prior to the July 1, 2023 deadline. #31..
- 1722 -
2 NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the submittal of applications to the FAA and DOT for Airport Improvement Grants.

BE IT FURTHER RESOLVED that the City Manager or his designee, is authorized to sign grant applications and related forms.

BE IT FURTHER RESOLVED that this resolution shall go into effect and be in full force and operation on July 11, 2023.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 11th day of July, 2023, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ? was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmember: ?
NOES: Councilmember: ?
ABSENT: Councilmember: ?
ATTEST: ___________________________
DIANE NAYARES-PEREZ, CMC, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY:

JOSE M. SANCHEZ, City Attorney
#31..
- 1723 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

July 11, 2023
Date: June 21, 2023
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities Department
SUBJECT: Purchase Agreement for Property Located at 131 9th Street Modesto CONTACT: Cristian Ciotau, Senior Civil Engineer
[email protected], 209-577-5260
DESCRIPTION:

Consider approving the purchase of 1.38 acres of real property at 131 9th Street owned by Varni Brothers Corporation for $2,500,000, plus $100,000 in closing costs to be used for the River Trunk Pump Station Project. (Funding Source: Wastewater Fund) STRATEGIC PLAN ELEMENT:

The recommended action supports the 2020-2025 City’s Strategic Plan Initiatives, Goal D:

Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.

BACKGROUND:

The 2016 Wastewater Master Plan identified the importance of correcting the hydraulic deficiencies and increasing the reliability of the River Trunk. The pipeline was exposed by riverbank erosion during high river flows in 2006-2007. In 2014, the City discovered another section of exposed pipe along the river. The City has constructed temporary bank reinforcement for both locations. However, a permanent solution will be required to prevent a washout of the pipeline along the riverbank during high river flows. A permanent solution is critical because:
 The River Trunk conveys nearly 50 percent of the City’s domestic wastewater to the City of Modesto Regional Water Recycling Facility (RWRF) Sutter Campus.  Once the new River Trunk Realignment Project, including the new pump station, is constructed, the current/existing (old) River Trunk will be rehabilitated and repurposed as a redundant line for both domestic and Cannery Segregation Line (CSL) flows.
 Exposure by riverbank erosion during high river flows, combined with the age of the existing pipe, increases the risk of pipe collapse, which could result in wastewater spill into the river.
#32..
- 1724 -
City Council, July 11, 2023
Purchase Agreement for Property Located at 131 9th Street Modesto

Page 2 of 5 ends

The City previously approved a recommended plan to address the failing River Trunk facility by moving forward with final design of the River Trunk Realignment Project. The Realignment Project consists of the following components:
 River Trunk Pump Station with dual force mains (Project No. 1)  River Trunk Gravity System (Project No. 2)
 River Trunk Shackelford Pump Station (Project No. 3)
All three of the projects were designed over the period of 2016 through 2021. Currently, Project No. 2 and Project No. 3 are under construction.

DISCUSSION:

The original River Trunk Pump Station and dual force main facilities were designed to be located at a property owned by the City near the intersection of B Street and 9th Street. Near the end of the design phase of the project, in late 2017, it was discovered that the property had a deed restriction requiring the property to be used as a park due to the grant funding that had been previously received from the State and Federal Governments. This restriction prevented the City from using the property for River Trunk Pump Station.

The design for Project No. 1 was placed on hold while the City attempted to work with the relevant grant funding agencies to remove the deed restriction, so that the City could construct the pump station facilities at that location. Over the course of the next two years, the City diligently negotiated with the grant funding agencies to remove the deed restriction but were unable to obtain the necessary approval. In late 2020 the City decided, due to the relevant agencies refusing to remove the deed restriction, the Project No. 1 facilities would need to be constructed in a different location.

In 2021, the City explored opportunities of purchasing land near the intersection of 10th Street and Morton Avenue. However, after numerous discussions, it was determined that the property was not a feasible location for the Project No. 1 facilities.

In mid-2022, the City explored the potential of constructing the pump station facilities within the unused portion of the Morton Avenue right-of-way (ROW) between 9th Street and B Street. This segment of ROW is approximately 80 feet long and 500 feet long. Due to the tight space and the numerous deep structures required for the pump station, it was determined that the ROW was not large enough to accommodate the facilities.

The City has determined that the triangular piece of property at the southwest corner of B Street and 9th Street is the best location for the pump station. This property is large enough to adequately construct, operate, and maintain the facilities required for Project No. 1. This property is currently owned by a private party, the Varni Brothers Corporation.

The following graphic represents the portion of the parcel to be acquired, which is approximately

1.38 acres:
#32..
- 1725 -
City Council, July 11, 2023
Purchase Agreement for Property Located at 131 9th Street Modesto

Page 3 of 5 ends

Advantages of having the Pump Station at this new proposed location is that the City will incur relatively minimal costs in redesign and construction of the project because of the close proximity to the original design site and a larger construction site. It is estimated that the increase in the design is around $850,000 thousand and construction cost increase will be between $3 to $5 million. For comparison, the redesign cost of the Pump Station using only the smaller City ROW portion of the site would be around $2 million and the construction costs could go up to an additional $20 million due to the limited space available for construction as well as other constraints (such as the need of temporary construction easements (TCEs)).

Another advantage of purchasing the entire property is the possibility that, after construction of the Pump Station is complete, the City may be able to use any remnant portion of the property for other uses in the future.

Currently, the Liz Andrews Furniture Store is located on the property and has a lease that expires on December 31, 2024, with a monthly rent of approximately $3,500 per month. The City will take over the lease as the new property owner. Currently, Staff does not anticipate any work beginning on the property prior to that date. However, in the event that work is ready to begin on the property before the current lease agreement expires, the proposed resolution authorizes the City Manager to negotiate a modification to the lease with the tenant, including decreasing rent if appropriate.

FISCAL IMPACT:

The attached appraisal was prepared by Associated Right of Way Services, Inc. on May 26, 2023, and the property was appraised at $2,000,000. Funding for the acquisition of the property is available in the current FY 2023-2024 CIP budget account for the River Trunk Realignment Project: 100646. It is anticipated that there could be up to $100,000 of closing costs. The Wastewater Fund will pay for the entire cost of the purchase.

Purchase price of land $ 2,500,000
Preliminary estimate for closing costs $ 100,000
TOTAL ANTICIPATED LAND EXPENDITURES $2,600,000
#32..
- 1726 -
City Council, July 11, 2023
Purchase Agreement for Property Located at 131 9th Street Modesto

Page 4 of 5 ends

Although the property was appraised at $2,000,000, Staff has determined that $2,500,000 is a fair and reasonable cost for the property for a number of reasons. Acquiring the property is critical for the River Trunk Realignment Project, as Projects 2 and 3 are already in construction.

Staff has been attempting the purchase the property for months, but the property owner has been unwilling to sell the property to the City. In addition, the property owner has received interest from other buyers, and the property was recently under contract to be sold to another buyer. The property owner rejected offers from the City to purchase the property for the appraised amount of $2,000,000, but accepted an offer of $2,500,000.

If the property owner was unwilling to voluntarily sell the property to the City, the City would need to use eminent domain to acquire the property, which could result in up to hundreds of thousands of dollars in legal fees and related costs. Acquiring the property through a negotiated agreement avoids those costs. In addition, using eminent domain to acquire the property would result in delays, both in finishing the redesign work and commencing construction. Given current high inflation, especially for construction costs, the longer the City delays constructing the project, the greater the costs will likely be. A few months delay could easily result in hundreds of thousands of dollars in increased costs. As described above, if the City is unable to purchase this property, and must locate the pump station at a different site, the City’s costs for the River Trunk Realignment Project would likely increase by several million dollars. For these reasons, Staff has determined that $2,500,000 is a fair price for the property to facilitate completion of the critical River Trunk Realignment Project as soon as possible, at the cheapest overall cost.

COMMITTEE RECOMMENDATION:

There has been no Committee action taken on this item.

CEQA/NEPA REQUIREMENTS:

Environmental review has been provided through the 2017 Wastewater Master Plan Environmental Impact Report (EIR) (SCH # 2016062033) certified by Council on January 28, 2020.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the purchase of 1.38 Acres of real property located at 131 9th Street owned by Varni Brothers Corporation for $2,500,000, plus $100,000 in closing costs, to be used for the River Trunk Pump Station Project, and authorizing the City Manager, or his designee, to execute the Purchase and Sale Agreement and all related documents required to complete the transaction.

Approved by:

William Wong, Director of Utilities Department
Joseph P. Lopez, City Manager
#32..
- 1727 -
City Council, July 11, 2023
Purchase Agreement for Property Located at 131 9th Street Modesto

Page 5 of 5 ends

Attachments:

1. Resolution

2. Purchase Agreement

3. Appraisal from Associated Right of Way Services Inc., May 26, 2023

4. Layout Exhibit of the River Trunk Pump Station Project #32..
- 1728 -
07/11/2023/Utilities/CCiotau/Item X 1 2023-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2023-
RESOLUTION APPROVING THE PURCHASE OF 1.38 ACRES OF REAL PROPERTY LOCATED AT 131 9TH STREET OWNED BY VARNI BROTHERS CORPORATION FOR $2,500,000, PLUS $100,000 IN CLOSING COSTS, TO BE

USED FOR THE RIVER TRUNK PUMP STATION PROJECT AND

AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE

THE PURCHASE AND SALE AGREEMENT AND ALL RELATED
DOCUMENTS REQUIRED TO COMPLETE THE TRANSACTION.

WHEREAS, the 2016 Wastewater Master Plan identified the importance of correcting the hydraulic deficiencies and increasing the reliability of the sewer River Trunk with the River Trunk Realignment Project, and
WHEREAS, the River Trunk Realignment Project consists of three distinct individual projects, of which two of them are currently in the construction phase, and WHEREAS, the River Trunk Pump Station is the last project that will need to be constructed to finalize the sewer River Trunk Realignment Project, and WHEREAS, the City has attempted to locate the River Trunk Pump Station on other sites, but has been unsuccessful due to various limitations and constraints, and WHEREAS, the property located at 131 9th Street Modesto, CA. (APN 103-006- 002) is owned by Varni Bros Corporation and has an area of approximately 1.38 Acres (the “Property”), and
WHEREAS, the City has determined that is the best location for the pump station, since the Property will be large enough to construct, operate, and maintain the facilities required for the River Trunk Pump Station, and
WHEREAS, acquiring the property is critical for the River Trunk Realignment Project, and
#32..
- 1729 -
07/11/2023/Utilities/CCiotau/Item X 2 2023-XX
WHEREAS, an appraisal prepared by Associated Right of Way Services, Inc., on May 26, 2023, appraised the value of the Property at $2,000,000, and WHEREAS, the property owner rejected offers from the City to purchase the property for the appraised amount of $2,000,000, and
WHEREAS, the property owner accepted the City’s offer of $2,500,000, and WHEREAS, the City Council has determined that $2,500,000 is a fair price for the property to facilitate completion of the critical River Trunk Realignment Project as soon as possible, at the lowest overall project cost, and WHEREAS, other alternative sites or property acquisition delays would result in significant additional costs to the design and construction of the project, and WHEREAS, once the Property is acquired final design work will be completed and thereafter construction will begin, and
WHEREAS, an existing business is currently located on the property and has a lease that expires on December 31, 2024, with a monthly rent of approximately $3,500 per month; and
WHEREAS, in the event that work is ready to begin on the property before the current lease agreement expires, the City Manager may negotiate a negotiate a modification to the lease with the tenants, including decreasing rent if appropriate.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby authorizes the purchase of 1.38 Acres of real property located at 131 9th Street owned by Varni Brothers Corporation for $2,500,000, plus $100,000 in closing costs, to be used by the Utilities Department for the River Trunk Pump Station Project. #32..
- 1730 -
07/11/2023/Utilities/CCiotau/Item X 3 2023-XX
BE IT FURTHER RESOLVED that the City Manager, or his designee, is authorized to execute the Purchase Agreement, in a form approved by the City Attorney, and negotiate minor changes that the City Manager deems appropriate.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is authorized to negotiate and execute all related documents required to complete the transaction and take all other actions necessary to carry out the purpose and intent of this resolution.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is authorized to negotiate an amendment to the lease agreement for the property with the current tenants if necessary to facilitate the River Trunk Realignment Project, including decreasing the rent due from the tenant if appropriate. #32..
- 1731 -
07/11/2023/Utilities/CCiotau/Item X 0 2023-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 11th day of July, 2023, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:____________________________________
DIANE NAYARES-PEREZ, CMC, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#32..
- 1732 -
5400617.1
1 PURCHASE AND SALE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this “Agreement”) is entered into as of ________, 2023 (the “Effective Date”), by and between the City of Modesto, a California charter city (“Buyer”), and Varni Brothers Corporation, a California Corporation (“Seller”). Seller and Buyer may each be referred to herein as a “Party” or collectively as the “Parties.”

RECITALS
A. Seller is the owner of that certain real property located at 131 9th Street, Modesto, California 95351, also known as Stanislaus County Assessor’s Parcel Number 103-006-002, and more particularly described in Exhibit A, attached hereto and incorporated herein (the “Property”).

B. The Property is approximately 1.38 acres in size and includes an approximately 14,615 square foot concrete block building and miscellaneous other improvements.

C. Buyer has offered to purchase the Property for Two Million Five Hundred Thousand Dollars ($2,500,000).

D. Upon the execution of this Agreement, Seller agrees that Seller will not market the Property to any other potential third party buyer so long as this Agreement is in full force and effect
E. Seller previously entered into a lease agreement with Juana Monreal and Jose Solis, doing business as Liz Andrews Furniture, to lease the Property and improvements thereon. The commercial least was made August 1, 2008, amended by two addenda effective November 16, 2018 and February 28, 2020 (collectively, the “Lease”).

F. Buyer agrees to purchase the Property, and Seller agrees to sell the Property to Buyer, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, Seller and Buyer hereby agree as follows:

1. INCORPORATION OF RECITALS AND EXHIBITS. The Recitals set forth above and the Exhibits attached to this Agreement are each incorporated into the body of this Agreement as if set forth in full.
#32..
- 1733 -
5400617.1
2 2. PURCHASE AND SALE.

2.1 Agreement to Buy and Sell. Subject to the terms and conditions set forth herein, Seller agrees to sell the Property to Buyer, and Buyer hereby agrees to acquire the Property from Seller. The Property shall include all improvements located thereon, as well as any and all privileges, rights, easements appurtenant to the Property.

2.2 Purchase Price. The purchase price for the Property to be paid by Buyer to Seller (the “Purchase Price”) is Two Million Five Hundred Thousand Dollars ($2,500,000). The Purchase Price will be paid in immediately available funds to Seller on the Closing Date at the address of Seller as provided in Section 10.8 of this Agreement.

3. ESCROW.

3.1 Escrow Account. Seller has opened, or within three (3) business days of the Effective Date shall open, an escrow account (the “Escrow”) maintained by Cypress Title Corporation(the “Title Company”), 1600 N. Carpenter Rd. Ste. # A-2 Modesto, CA 95351 Attn: Debbi Johnson, or such other title company as selected by the City (the “Escrow Holder”), with interest accruing to the benefit of Buyer. Escrow Holder shall perform all escrow and title services in connection with this Agreement.

3.2 Opening of Escrow. Within three (3) business days after the Effective Date, the Parties will deposit into Escrow the fully executed Agreement, or executed counterparts thereto. The date such fully executed Agreement is received by Escrow Holder will be deemed the “Opening of Escrow” and Escrow Holder will give written notice to the Parties of such occurrence.

3.3 3.3 Buyer’s Deposit. Within five (five) business days after the Opening of Escrow, the Buyer shall deposit the sum of Ten Thousand Dollars ($10,000) in Escrow (“Deposit”).

3.4 Satisfaction of Due Diligence Contingency. Buyer shall have the right, in its sole discretion, to terminate this Agreement for any reason prior to the expiration of the Due Diligence Contingency Period (as defined in Section 5(a) below).

Buyer hereby agrees to provide written notice to Seller prior to the expiration of the Due Diligence Contingency Period if Buyer disapproves any due diligence items or approves all due diligence items (“Approval Notice”). If Buyer disapproves any items through the delivery of the Approval Notice to Seller before 5:00 p.m. on the last day of the Due Diligence Contingency Period, this Agreement shall terminate, and all amounts deposited by Buyer into escrow, together with interest thereon, if any, will be returned to Buyer, and neither party shall have any further rights or obligations hereunder except those which expressly survive the termination hereof. Notwithstanding the foregoing, if Buyer fails to timely deliver the Approval Notice to Seller, it will be conclusively presumed that Buyer has approved all such items, matters or documents.
#32..
- 1734 -
5400617.1
3 4. PROPERTY DISCLOSURE REQUIREMENTS.

4.1 Condition of Title/Preliminary Title Report. Escrow Holder shall deliver a Preliminary Title Report for the Property (the “Preliminary Report”) to Buyer within three (3) days after the Opening of Escrow. Buyer shall have until the end of the Due Diligence Contingency Period to approve the condition of title to the Property. If Buyer delivers the Approval Notice, Buyer agrees to take title to the Property subject to the following “Permitted Exceptions:” (a) standard printed exceptions in the Preliminary Report acceptable to Buyer; (b) general and special real property taxes and assessments constituting a lien not yet due and payable; and (c) the exceptions to the title referenced in the Approval Notice.

4.2 Environmental and Natural Hazards Disclosure. California Health & Safety Code section 25359.7 requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substances are located on or beneath the real property to provide written notice of same to the buyer of real property. Other applicable laws require Seller to provide certain disclosures regarding natural hazards affecting the Property. Seller agrees to make all necessary disclosures required by law within ten (10) business days of the effective date.

5. CLOSING AND PAYMENT OF PURCHASE PRICE.

5.1 Closing. The closing (the “Closing” or “Close of Escrow”) will occur no later than thirty (30) days after the Effective Date (“Closing Date”). The Closing Date may be extended for an additional thirty (30) days by the Buyer in its sole discretion, or for any length by mutual agreement of the Parties in writing. If Close of Escrow has not occurred by the Closing Date, Seller or Buyer may elect to terminate this Agreement.

Nothing herein shall prevent the Close of Escrow prior to the Closing Date once all conditions in Section 5.2 have been satisfied.

5.2 Buyer’s Conditions to Closing. Buyer's obligation to purchase the Property is subject to the satisfaction of all of the following conditions or Buyer's written waiver thereof (in Buyer’s sole discretion) on or before the Closing Date:
(a) Buyer will have twenty-five (25) days from the Opening of Escrow (the “Due Diligence Contingency Period”) to complete physical inspections of the Property and due diligence related to the purchase of the Property. Buyer may extend the Due Diligence Period by an additional thirty (30) days in its sole discretion, upon notice to the Seller. Seller shall provide to Buyer copies of all reasonably available and known documents relating to the ownership and operation of the Property, including but not limited to plans, permits and reports (environmental, structural, mechanical, engineering and land surveys) that Seller has in its possession not later than five (5) business days following the execution and delivery of this Agreement. All physical inspections must be coordinated with Seller’s representative and require twenty-four (24) hour prior notice to #32..
- 1735 -
5400617.1
4 Seller. Physical inspections may be conducted by the Buyer, or its representative, an may include minor disturbances of the property, such as disturbing pavement for soil sampling (b) Seller has performed all obligations to be performed by Seller pursuant to this Agreement.
(c) Seller's representations and warranties herein are true and correct in all material respects as of the Closing Date. (d) The Title Company is irrevocably committed to issue a ALTA Title Policy to Buyer, effective as of the Closing Date, insuring title to Buyer in the full amount of the Purchase Price subject only to the Permitted Exceptions.

5.3 Seller’s Conditions to Closing. The Close of Escrow and Seller's obligation to sell and convey the Property to Buyer are subject to the satisfaction of the following conditions or Seller's written waiver (in Seller’s sole discretion) of such conditions on or before the Closing Date:
(a) Buyer has performed all obligations to be performed by Buyer pursuant to this Agreement before Closing Date.
(b) Buyer's representations and warranties set forth herein are true and correct in all material respects as of the Closing Date.

5.4 Conveyance of Title. Seller will deliver marketable fee simple title to Buyer at the Closing, subject only to the Permitted Exceptions. The Property will be conveyed by Seller to Buyer in an “as is” condition; provided, however, that the foregoing shall not relieve Seller from disclosure of any such conditions of which Seller has actual knowledge.

5.5 Deliveries at Closing.
(a) Deliveries by Seller. No less than one (1) business day prior to the close of escrow, Seller shall deposit into the Escrow for delivery to Buyer at Closing:
(i) a grant deed;
(ii) an affidavit or qualifying statement which satisfies the requirements of paragraph 1445 of the Internal Revenue
Code of 1986, as amended, any regulations thereunder (the “Non-Foreign Affidavit”);
(iii) a California Franchise Tax Board form 590 to satisfy the requirements of California Revenue and Taxation Code
Section 18805(b) and 26131;
(iv) such resolutions, authorizations, or other documents or agreements relating to Seller as shall be reasonably required by Title Company; and
#32..
- 1736 -
5400617.1
5 (v) all other documents required by this Agreement to complete the Closing.
(b) Deliveries by Buyer. No less than one (1) business day prior to the close of escrow, Buyer shall deposit into the Escrow at Closing immediately available funds in the amount, which together with the Deposit plus interest thereon, if any, is equal to:
(i) the Purchase Price as adjusted by any prorations between the Parties;
(ii) Buyer’s share of the escrow fees and recording fees; and (iii) the cost of the Title Policy;
(iv) a certificate of acceptance for the grant deed;
(v) such resolutions, authorizations, or other documents or agreements relating to Buyer as shall be reasonably required by Title Company; and
(vi) all other documents required by this Agreement to
complete the Closing.
(c) Closing. Upon Closing, Escrow Holder shall: (i) record the grant deed and certificate of acceptance; (ii) disburse to Seller the Purchase Price, less Seller’s share of any escrow fees, costs and expenses; (iii) deliver to Buyer the NonForeign Affidavit, the California Certificate and the original recorded grant deed; and (iv) deliver the title policy to the Buyer. (v) distribute to itself the payment of escrow fees and expenses required hereunder.
(d) Closing Costs. Buyer and Seller will equally split all escrow fees (including the costs of preparing documents and instruments), title report costs, and recording fees. Buyer will pay title insurance. Pursuant to Revenue & Taxation Code section 11922 sale of the Property is exempt from transfer tax because the Buyer is a public agency. All other costs and fees shall be paid in accordance with custom and practice in Stanislaus County.
(e) Pro-Rations. At the close of escrow, the Escrow Agent shall make the following prorations: (i) property taxes will be prorated as of the Close of Escrow based upon the most recent tax bill available, including any property taxes which may be assessed after the close of escrow but which pertain to the period prior to the transfer of title to the Property to Buyer, regardless of when or to whom notice thereof is delivered (Buyer is a public agency exempt from the payment of property taxes and shall not be responsible for the payment of any portion of property taxes assessed on the Property); and (ii) any bond or assessment that constitutes a lien on the Property at the Close of Escrow will be assumed by Buyer. Buyer is a public agency exempt from the payment of property taxes and shall not be responsible for the payment of any property taxes through prorations.

6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
#32..
- 1737 -
5400617.1
6 6.1 Seller’s Representations, Warranties and Covenants. In addition to the representations, warranties and covenants of Seller contained in other sections of this Agreement, Seller hereby represents, warrants and covenants to Buyer that the statements below in this Section 6.1 are each true and correct as of the Closing Date:
(a) Authority. Seller is a California corporation, lawfully formed, in existence and in good standing under the laws of the State of California. Seller has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. The Seller explicitly represents and warrants that it has the full right to sell or otherwise dispose the Property to Buyer. This Agreement has been duly executed by Seller, and upon delivery to and execution by Buyer is a valid and binding agreement of Seller.
(b) Encumbrances. Seller has not alienated, encumbered, transferred, mortgaged, assigned, pledged, or otherwise conveyed its interest in the Property or any portion thereof, nor entered into any Agreement to do so, and there are no liens, encumbrances, mortgages, covenants, conditions, reservations, restrictions, easements or other matters affecting the Property, except as disclosed in the Preliminary Report. Seller will not, directly or indirectly, alienate, encumber, transfer, mortgage, assign, pledge, or otherwise convey its interest prior to the Close of Escrow, as long as this Agreement is in force.
(c) Conflicts. There are no agreements affecting the Property except those which have been disclosed by Seller and the Lease. There are no agreements which will be binding on the Buyer or the Property after the Close of Escrow, which cannot be terminated on thirty (30) days prior written notice. (d) Condition of Property. Seller hereby represents and warrants to the best of its knowledge that, except as disclosed in writing to Buyer, as of the Effective Date and as of the Close of Escrow: (i) Seller has received no notice, warning, notice of violation, administrative complaint, judicial complaint, or other formal or informal notice alleging that conditions on the Property are or have ever been in violation of any environmental law or informing Seller that the Property is subject to investigation or inquiry regarding hazardous materials on the Property or the potential violation of any environmental law; (ii) there is no monitoring program required by the Environmental Protection Agency or any other governmental agency concerning the Property; (iii) Seller has disclosed to Buyer all information, records, and studies in Seller’s possession or reasonably available to Seller relating to the Property concerning hazardous materials; (iv) Seller has not received any notice from any governmental authority of any threatened or pending zoning, building, fire, or health code violation or violation of other governmental regulations concerning the Property that have not previously been corrected, and no condition on the Property violates any health, safety, fire, environmental, sewage, building, or other federal, state or local law, ordinance or regulation; (v) no contracts, licenses, leases or commitments regarding the maintenance or use of the Property or allowing any third party rights to use the Property are in force, other than the Lease; (vi) there are no threatened or pending actions, suits, or #32..
- 1738 -
5400617.1
7 administrative proceedings against or affecting the Property or any portion thereof or the interest of Seller in the Property; (vii) there are no threatened or pending condemnation, eminent domain, or similar proceedings affecting the Property or any portion thereof; (viii) Seller has not received any notice from any insurer of defects of the Property which have not been corrected; (ix) all information that Seller has delivered to Buyer, either directly or through Seller's agents, is accurate and complete; and (x) Seller has disclosed all material facts concerning the Property in Seller’s possession. (e) Violations. There is not pending or threatened from any Federal, State, City or local authority, litigation, suit of judgment relating to the Property.

Seller has not been formally notified in writing (including by service of process) by any governmental or quasi-governmental entity that the property is in violation of any environmental laws.
(f) Litigation. There is no litigation, arbitration or adversary proceeding pending or threatened before any court or administrative agency that relates to or affects the Property. Seller’s performance hereunder, or which will result in any unsatisfied lien, charge, encumbrance or judgment against any part of or any interest in the Property.
(g) No Contracts. Seller has not entered into any contracts, agreements, or understandings, verbal or written, which are still in effect for the sale, transfer, or alienation of any portion of the Property, or any option, right of refusal, right of first offer or other right relating to any of the foregoing, other than the Lease. Between the Effective Date and Closing, no part of the Property shall be alienated, encumbered or transferred in a manner which will be binding on Buyer after Closing. Seller previously entered into one or more agreements to sell the Property to another entity. Seller represents and warrants that all such prior agreements have been terminated and Seller was not in default or breach of such agreements at the time of termination. (h) No Breach. The execution and delivery of this Agreement and all instruments and agreements associated herewith, and the consummation of the transactions contemplated hereby will not: (i) constitute or result in the breach of, or default under, any oral or written agreement to which Seller is a party or which affects the Property; (ii) constitute or result in violation of any order, decree, or injuction with respect to which Seller and the Property, or either of them, are bound; (iii) cause or entitle any party to have a right to accelerate or declare a default under any oral or written agreement to which Seller is a party; and/or (iv) to the best of Seller’s actual knowledge, violate any provisions of any Municipal, State or Federal law, statutory or otherwise, to which Seller or the Property is or may be subject
The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Seller contained in this Agreement are conditions precedent to Buyer’s obligation to proceed with the Closing hereunder. The foregoing representations and warranties shall survive the expiration, termination, or close of escrow of this Agreement and shall not be deemed merged into the deed upon closing. #32..
- 1739 -
5400617.1
8 6.2 Buyer’s Representations and Warranties. In addition to the representations, warranties and covenants of Buyer contained in other sections of this Agreement, Buyer hereby represents, warrants and covenants to Seller that the statements below in this Section 6.2 are each true as of the Closing Date:
(a) Buyer is a California charter city. Buyer has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Buyer, and upon delivery to and execution by Seller shall be a valid and binding agreement of Buyer.

The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Buyer contained in this Agreement are conditions precedent to Seller’s obligation to proceed with the Closing hereunder.

7. REMEDIES In the event of a breach or default under this Agreement by Seller, if such breach or default occurs prior to Close of Escrow, Buyer reserves the right to either (a) seek specific performance from Seller or (b) to do any of the following: (i) to waive the breach or default and proceed to close as provided herein; (ii) to extend the time for performance and the Closing Date until Seller is able to perform; or (iii) to terminate this Agreement upon written notice to Seller, whereupon Seller shall cause Escrow Holder to return to Buyer any and all sums placed into the Escrow by Buyer, and except for the rights and obligations expressly provided to survive termination of this Agreement, neither party shall have any further obligations or liabilities hereunder. IN

THE EVENT OF A BREACH OR DEFAULT HEREUNDER BY BUYER AND THE CLOSING DOES NOT OCCUR DUE TO SUCH DEFAULT, SELLER’S SOLE REMEDY SHALL BE TO RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES

AGREE THAT IN SUCH INSTANCE, THE DEPOSIT REPRESENTS A REASONABLE APPROXIMATION OF SELLER’S DAMAGES AND ARE NOT INTENDED AS A

FORFEITURE OR PENALTY BUT RATHER AN ENFORCEABLE LIQUIDATED DAMAGES PROVISION PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, ET SEQ. IN NO EVENT SHALL EITHER PARTY BE ENTITLED TO LOST PROFITS OR CONSEQUENTIAL DAMAGES AS A RESULT OF THE OTHER PARTY’S BREACH OF THIS AGREEMENT.

Buyer’s Initials Seller’s Initials

8. BROKERS & REAL ESTATE AGENTS.

8.1. Brokers. If either Party retained a real estate broker in the sale of the Property or the negotiation of this Agreement, that Party shall pay compensation to such broker as specified in a separate written agreement between the broker and the Party.

Each Party shall indemnify, hold harmless and defend the other Party from any and all claims, actions and liability for any breach of the preceding sentence, and any #32..
- 1740 -
5400617.1
9 commission, finder’s fee, or similar charges arising out of the indemnifying Party’s conduct

8.2 Real Estate Agents. Diane Wirowek and Jean Oliver are licensed Real Estate Agents in California and are shareholders of Varni Brothers Corporation and related to all the sellers.”

9. ASSIGNMENT. Neither Seller nor Buyer may assign its rights or delegate its duties under this Agreement without the express written consent of the other, which consent may be withheld for any reason.

10. MISCELLANEOUS.

10.1 Attorneys’ Fees. If any party employs counsel to enforce or interpret this Agreement, including the commencement of any legal proceeding whatsoever (including insolvency, bankruptcy, arbitration, mediation, declaratory relief or other litigation), the prevailing party shall be entitled to recover its reasonable attorneys’ fees and court costs (including the service of process, filing fees, court and court reporter costs, investigative fees, expert witness fees, and the costs of any bonds, whether taxable or not) and shall include the right to recover such fees and costs incurred in any appeal or efforts to collect or otherwise enforce any judgment in its favor in addition to any other remedy it may obtain or be awarded. Any judgment or final order issued in any legal proceeding shall include reimbursement for all such attorneys’ fees and costs. In any legal proceeding, the “prevailing party” shall mean the party determined by the court to most nearly prevail and not necessarily the party in whose favor a judgment is rendered.

10.2 Interpretation. This Agreement has been negotiated at arm’s length and each party has been represented by, or had the opportunity to consult with, independent legal counsel in this transaction and this Agreement has been reviewed and revised by counsel to each of the Parties. Accordingly, each party hereby waives any benefit under any rule of law (including Section 1654 of the California Civil Code) or legal decision that would require interpretation of any ambiguities in this Agreement against the drafting party.

10.3 Survival. All indemnities, covenants, representations and warranties contained in this Agreement shall survive Close of Escrow.

10.4 Successors. Except as provided to the contrary in this Agreement, this Agreement shall be binding on and inure to the benefit of the Parties and their successors and assigns.

10.5 Governing Law & Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. Venue for any dispute arising out of this Agreement shall be the state or federal courts in Stanislaus County, California.
#32..
- 1741 -
5400617.1
10 10.6 Integrated Agreement; Modifications. This Agreement contains all the agreements of the Parties concerning the subject hereof any cannot be amended or modified except by a written instrument executed and delivered by the parties. There are no representations, agreements, arrangements or understandings, either oral or written, between or among the parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. In addition there are no representations, agreements, arrangements or understandings, either oral or written, between or among the Parties upon which any party is relying upon in entering this Agreement that are not fully expressed herein.

10.7 Severability. If any term or provision of this Agreement is determined to be illegal, unenforceable, or invalid in whole or in part for any reason, such provisions or part thereof shall be stricken from this Agreement, any such provision shall not be affected by the legality, enforceability, or validity of the remainder of this Agreement.

10.8 Notices. Any delivery of this Agreement, notice, modification of this Agreement, consent, approval, waiver, or other communication that either party desires or is required to give to the other party or any other person shall be in writing. Any such communication may be served personally, or by nationally recognized overnight delivery service (i.e., Federal Express) which provides a receipt of delivery, or sent by prepaid, first class mail, return receipt requested to the party’s address as set forth below:

To Buyer City of Modesto
1010 10th Street
Modesto, CA 95354
Attention: City Manager
To Seller: Varni Brothers Corporation
215 Hosmer Avenue
Modesto, CA 95351
Attn: Diane Wirowek
To Escrow Holder: Debbi Johnson
Cypress Title Corporation
1600 N. Carpenter Rd. Ste. # A-2
Modesto, CA 95351
Any such communication shall be deemed effective upon personal deliver or on the date of first refusal to accept delivery as reflected on the receipt of delivery or return receipt, as applicable.

10.9 Time. Time is of the essence to the performance of each and every obligation under this Agreement.
#32..
- 1742 -
5400617.1
11 10.10 Days of Week. If any date for exercise of any right, giving of any notice, or performance of any provision of this Agreement falls on a Saturday, Sunday or holiday, the time for performance will be extended to 5:00 p.m. on the next business day of the City of Modesto

10.11 Waivers. Any waiver by any party shall be in writing. No waiver will be implied from any delay or failure to take action on account of any default by any party. Consent by any party to any act or omission by another party shall not be construed to be a consent to any other subsequent act or omission.

10.12 Further Assurances. The Parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement.

10.13 Signatures/Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one of such completely executed counterparts shall be sufficient proof of this Agreement.

10.14 Date and Delivery of Agreement. Notwithstanding anything to the contrary contained in this Agreement, the parties intend that this Agreement shall be deemed effective, and delivered for all purposes under this Agreement, and for the calculation of any statutory time periods based on the date an agreement between parties is effective, executed, or delivered, as of the Effective Date.

10.15 Representation on Authority of Parties. Each person signing this Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Agreement

SIGNATURES ON FOLLOWING PAGE
#32..
- 1743 -
5400617.1
12 IN WITNESS WHEREOF, this Agreement is executed by Buyer and Seller as of the Effective Date.

BUYER SELLER
City of Modesto Varni Brothers Corporation,
a California Municipal Corporation a California Corporation By:_________________________ By:_________________________ Joseph Lopez, City Manager
Printed Name:____________________
Title:_________________________
Attest:

Diane Nayares-Perez, City Clerk
Approved as to Form:

Jose M. Sanchez, City Attorney
#32..
- 1744 -
- A-1 -

EXHIBIT A

LEGAL DESCRIPTION
5400617.1
#32..
- 1745 -
_________________________________________________________________________________________________________ Associated Right of Way Services, Inc.
1255 Treat Blvd., Suite 815
Walnut Creek, CA 94597
925.691.8500
No. 22149
Appraisal Report
for
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
Varni Brothers Corporation
131 9th Street
Modesto, CA
APN: 103-006-002
Prepared by:

Brian Drake, R/W-AC
Appraiser
Matthew Schock, R/W-AC
Appraiser
Date of Report: May 26, 2023
Date of Value: April 25, 2023
#32..
- 1746 -
Corporate Office
1255 Treat Blvd., Suite 815
Walnut Creek, CA 94597
925.691.8500 phone
925.691.6505 fax
www.arws.com
May 26, 2023
Cristian C. Ciotau, PE | SE | LEED AP
Senior Civil Engineer
Utilities Department | Construction Administration Office City of Modesto
1010 Tenth Street, Suite 4600
Modesto, CA 95353
Re: River Trunk Realignment Project Phase I - Pump Station Owner: Varni Brothers Corporation
Property Address: 131 9th Street, Modesto, CA
APN: 103-006-002
Dear Mr. Ciotau:

In accordance with our contract with the City of Modesto, an appraisal has been made of the fair market value of the above referenced property as requested for the River Trunk Realignment Project Phase I - Pump Station. The proposed property interest to be acquired includes one partial fee simple acquisition under one valuation scenario and a full fee simple acquisition of the subject of this appraisal under another valuation scenario, as requested.

This Appraisal Report is prepared in conformance with the Uniform Standards of Professional Appraisal Practice, Standard Rule 2-2(a). This report contains a description of the subject property, the property rights to be acquired, and valuation conclusions for the property to be acquired. Brian Drake has completed an inspection of the subject, and we have gathered pertinent information, sales and other data relevant to the valuation and analyzed the data to reach our conclusions.

The property owner was sent a Notice of Decision to Appraise letter dated April 3, 2023. Property owners Diane Wirowek and Jean Oliver accompanied Mr. Drake during an inspection of the property on April 25, 2023. Joe Castellanos with ARWS was also present at the time of the site visit. The date of value is the date of the inspection.

The opinions of the fair market value of the property interests considered for acquisition for the project are as shown in the following Summary of Salient Facts and Conclusions, which is made a part of this transmittal letter and appraisal report and is subject to the Assumptions and Limiting Conditions included herein. The accompanying report is submitted for your review and approval for acquisition purposes.

Sincerely,
Brian Drake, R/W-AC Matthew Schock, R/W-AC
State Certified General Appraiser State Certified General Appraiser CA License No. AG031568 CA License No. AG043887
#32..
- 1747 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
Summary of Salient Facts and Conclusions
Full Acquisition Valuation
Estimate of Fair Market Value
$2,000,000
Partial Acquisition Valuation
Fee Simple
Acquisition
Site
Improvements Damages Benefits
Estimate of Fair
Market Value
$255,708 $13,211 $4,275 $0 $273,000
(Rounded)
Date of Valuation: April 25, 2023 (date of site visit)
Assessor's Parcel Number: 103-006-002
Property Location/Address: 131 9th Street, Modesto, CA 95351 Owner: Stanislaus Distributing Co, Inc. (Varni Brothers Corporation)
Owner’s Address: 215 Hosmer Avenue, Modesto, CA 95351; attn. Diane Wirowek
Owned Since: For more than 5 years
Occupied By: Tenant (Liz Andrews Furniture)
Principal Improvements: 14,615 square foot concrete block building with an approximately 2,350 square foot storage mezzanine
(Appraiser Estimate) constructed in 1945 (Public
Records); floor area ratio of 0.24, or 0.48 excluding
surplus land area
Total Site Area (Larger Parcel): 1.38 acres or approximately 60,112 square feet; surplus land area of 29,500 square feet
Proposed Area to be Acquired: Approximately 21,309 square feet in fee simple interest under the Partial Acquisition Valuation
Zoning: M-1 – Light Industrial
#32..
- 1748 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
General Plan: Downtown
Highest and Best Use:

As Vacant Development of a commercial/industrial use or uses that take advantage of the subject’s high traffic location
As Improved Continue the current quasi-retail use
Flood Hazard Information: Flood Zone X, Map No. 06099C0338F, dated August 24, 2021
Earthquake Information: Not located in an Earthquake Fault Zone Environmental Assessment: Not provided. This appraisal assumes that no environmental remediation would be required.

Construction Contract Work: None
The intent of this appraisal assignment is to conduct an investigation approximating the thoroughness that a typical buyer would conduct when considering similar property on the open market in the subject’s neighborhood and competing markets, and in conformance with the necessary policies and techniques used by appraisers in developing an estimate of fair market value.

An inspection of the subject was conducted to determine size, condition and utility of the property.

The subject is improved with an older single-tenant industrial building rented on a short-term basis (lease expires at the end of 2025) that is currently in contract to be purchased by a long-term tenant, Liz Andrews Furniture. Due to the lack of recent rental data, in what is determined to be a predominantly owner-user market for this product type (industrial properties being used for quasiretail use), the income approach has not been applied in estimating the fair market value of the improved property (Full Acquisition Valuation). Given the age of the subject improvements and the difficulty in estimating depreciation of older properties, the cost approach has not been utilized either. Therefore, only the sales comparison approach has been used for this estimate of market value. In the sales comparison approach, searches of public records, real estate listings and sales services were employed to obtain data. Relevant property sales were researched and confirmed to the extent possible. The conclusion of value for the sales comparison approach is determined following appropriate adjustments to properties that have sold and are similar to the subject, considering the unit prices paid in the market for this type of property. The concluded unit value has been used to value the improved property.

Since the proposed acquisition under the Partial Acquisition Valuation will include primarily land and minor site improvements, market value has been estimated by applying just the sales comparison approach. The concluded unit value has been used to value the proposed acquisition.

A modified cost approach has been used to value site improvements that will be affected as a result of the project. The income approach was not utilized because sellers, buyers, and our peers #32..
- 1749 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
in this market rarely rely on this approach when offering, purchasing, or valuing properties similar to the subject that consists of land only. Damages and benefits, if any, have been analyzed separately considering the proposed acquisition and the construction of the project as planned. #32..
- 1750 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
Subject Location Map

SUBJECT
#32..
- 1751 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
Table of Contents

LETTER OF TRANSMITTAL

SUMMARY OF SALIENT FACTS AND CONCLUSIONS

SUBJECT LOCATION MAP
INTRODUCTION ........................................................................................................................................ 1 PURPOSE OF THE APPRAISAL ..................................................................................................................... 1 SCOPE OF ASSIGNMENT ............................................................................................................................ 1 INTENDED USE OF THE APPRAISAL ............................................................................................................. 1 CLIENT AND INTENDED USER OF THE APPRAISAL ......................................................................................... 1 DATE OF VALUATION.................................................................................................................................. 1 PROPERTY INTEREST APPRAISED............................................................................................................... 2 MARKET VALUE DEFINED........................................................................................................................... 2 REASONABLE EXPOSURE TIME................................................................................................................... 2 CERTIFICATION OF APPRAISERS ................................................................................................................. 3 ASSUMPTIONS AND LIMITING CONDITIONS ................................................................................................... 5 PROJECT ASSUMPTIONS AND LIMITING CONDITIONS .................................................................................... 6 HYPOTHETICAL CONDITIONS ...................................................................................................................... 7 EXTRAORDINARY ASSUMPTIONS................................................................................................................. 7 GENERAL INFORMATION ........................................................................................................................ 9 REGION, CITY AND NEIGHBORHOOD DATA .................................................................................................. 9 REAL ESTATE MARKET CONDITIONS......................................................................................................... 11 Housing Market .............................................................................................................................................. 14 Industrial Market............................................................................................................................................. 15 Retail Market.................................................................................................................................................. 16 PROJECT DESCRIPTION ........................................................................................................................... 16 SUBJECT PROPERTY INFORMATION .................................................................................................. 19 SUBJECT PROPERTY DATA SUMMARY....................................................................................................... 19 PROPERTY DESCRIPTION......................................................................................................................... 29 Larger Parcel.................................................................................................................................................. 29 Site Description .............................................................................................................................................. 29 Improvement Description................................................................................................................................ 29 Personal Property Description ........................................................................................................................ 31 TITLE AND PROPERTY HISTORY................................................................................................................ 31 Existing Easements........................................................................................................................................ 32 FLOOD HAZARD INFORMATION.................................................................................................................. 32 EARTHQUAKE INFORMATION..................................................................................................................... 33 ENVIRONMENTAL ASSESSMENT................................................................................................................ 33 ZONING AND GENERAL PLAN OF THE SUBJECT PROPERTY ......................................................................... 34 HIGHEST AND BEST USE ANALYSIS........................................................................................................... 37 As if Vacant.................................................................................................................................................... 37 As Improved................................................................................................................................................... 38 VALUATION............................................................................................................................................. 39 VALUATION METHODOLOGY ..................................................................................................................... 39 FULL ACQUISITION VALUATION ................................................................................................................. 40 Sales Comparison Approach .......................................................................................................................... 40 PARTIAL ACQUISITION VALUATION ............................................................................................................ 49 Sales Comparison Approach .......................................................................................................................... 49 Property to be Acquired.................................................................................................................................. 62 #32..
- 1752 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
Value of the Area to be Acquired .................................................................................................................... 64 Site Improvements in Acquisition Area............................................................................................................ 64 Damages........................................................................................................................................................ 64 Benefits.......................................................................................................................................................... 65 Construction Contract Work (CCW) ................................................................................................................ 65 Estimated Fair Market Value – Partial Acquisition Valuation............................................................................ 65

MAPS AND EXHIBITS
WASTEWATER COLLECTION MASTER PLAN SERVICE AREAS ...................................................................... 18 ASSESSOR’S PARCEL MAP....................................................................................................................... 20 SUBJECT AERIAL PHOTOGRAPH ............................................................................................................... 21 SUBJECT PROPERTY PHOTOGRAPHS........................................................................................................ 22 ZONING MAP........................................................................................................................................... 35 GENERAL PLAN MAP ............................................................................................................................... 36 COMPARABLE IMPROVED SALE LOCATION MAP ......................................................................................... 42 COMPARABLE IMPROVED SALE DATA SHEET ............................................................................................. 43 COMPARABLE LAND SALE LOCATION MAP................................................................................................. 51 COMPARABLE LAND SALE DATA SHEETS................................................................................................... 52 COMPARABLE LAND SALE PARCEL MAPS.................................................................................................. 53 PARTIAL FEE SIMPLE ACQUISITION EXHIBIT............................................................................................... 63

ADDENDA

COMPARABLE IMPROVED SALES PARCEL MAPS

NOTICE OF DECISION TO APPRAISE

PRELIMINARY TITLE REPORT

APPRAISERS QUALIFICATIONS
#32..
- 1753 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
1 Introduction
Purpose of the Appraisal
The purpose of this appraisal is to furnish opinions of the fair market value of one partial fee simple acquisition required from the subject property under one valuation scenario and a full fee simple acquisition of the subject of this appraisal under another valuation scenario for the River Trunk Realignment Project Phase I - Pump Station.

Scope of Assignment
Brian Drake inspected the subject to determine the size, condition, and utility of the land and any impacted improvements. Descriptive data was gathered from online data resources, such as public record summary, assessor’s parcel map, aerial map, and flood map, in addition to any data provided by the Client. The City of Modesto’s website was utilized to obtain data about land use ordinances as they apply to the subject. Macro and micro-economic information was gathered from the internet and various news publications. Market participants were interviewed. Analysis of market conditions was completed, both general and specific to the market. Searches of public records, real estate listings, and sales services were employed to obtain comparable data.

Relevant property sales were researched and confirmed to the extent possible. The data and conclusions are set out in the Valuation section of this report.

The Appraisal Report conforms to Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice. The information contained in this report is specific to the needs of the Client and for the intended use stated in this report. We are not responsible for unauthorized use of this report. The intent of this report is to provide sufficient data and analysis so as to have no misleading information and a conclusion of value of high reliability.

Intended Use of the Appraisal
The intended use of the appraisal and report is to provide the City of Modesto with a basis for determining just compensation to be offered and payable to the property owner for the proposed full or partial acquisition parcel. The appraisal report is subject to administrative review by the Client.

Client and Intended User of the Appraisal
The Client and the intended user of this appraisal report is the City of Modesto.

Date of Valuation
The property in this report has been valued as of April 25, 2023, the date of the site inspection. #32..
- 1754 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
2 Property Interest Appraised
This appraisal addresses the fee simple estate in the subject property. The fee simple estate is defined as follows:
“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.” (The Dictionary of Real Estate Appraisal, Seventh Edition, published by the Appraisal Institute) Market Value Defined
(California Code of Civil Procedure, Section 1263.320)
“(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.”
Reasonable Exposure Time
Uniform Standards of Professional Appraisal Practice (USPAP 2020/2021 edition*: Definitions) defines exposure time as follows:
“EXPOSURE TIME: 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.”
Exposure time is presumed to be a reasonably adequate and sufficient period of time with adequate effort necessary to result in a sale fulfilling the definition of value. It is presumed to be a period immediately preceding the effective date of value. However, based on the definition of market value under the Code of Civil Procedure cited above, developing an opinion of exposure time is not required. An opinion of exposure time has not been developed for this appraisal. *USPAP’s 2020-21 edition is effective through December 31, 2023 #32..
- 1755 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
3 Certification of Appraisers
We hereby certify that, to the best of our knowledge and belief:

We have personally inspected the property that is the subject of this report.

The statements of fact contained in the appraisal report are true and correct, and the information upon which the opinions expressed therein are based is correct; subject to the limiting conditions therein set forth.

We understand that such appraisal may be used in connection with the proposed acquisition of all or part of subject property to be acquired by the City of Modesto; that such appraisal has been made in conformity with the appropriate State laws and regulations, policies, and procedures applicable to the appraisal of right of way for such purposes; and that to the best of our knowledge, no portion of the value assigned to such property consists of items which are non-compensable under the established law of the State of California.

Neither our employment nor our compensation for completing this assignment is in any way contingent upon the values reported herein. Our compensation is not contingent upon the developing or reporting of predetermined values or direction in value that favors the cause of the client, the amounts of the value opinions, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of this appraisal.

We have not revealed the findings and results of such appraisal to anyone other than the proper officials of the acquiring agency and we will not do so until so authorized by said officials, or until we are required to do so by due process of law, or until we are released from this obligation by having publicly testified as to such findings.

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

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

The owner or representative for the owner has been given an opportunity to accompany us during the inspection of the subject property.

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

The reported analyses, opinions, and conclusions are limited only by the reported Assumptions and Limiting Conditions, and are the Appraisers’ own personal, impartial, unbiased professional analyses, opinions, and conclusions.

Any decrease or increase in the fair market value of the subject real property prior to the date of valuation caused by the project or improvements for which the subject property or a portion there #32..
- 1756 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
4 of is acquired, or by the likelihood that the property would be acquired for such project or improvements, other than due to physical deterioration within the reasonable control of the owner, has been disregarded in appraising the subject property.

The reported analyses, opinions, and conclusions were developed, and this report, to the best of our knowledge and belief, has been prepared in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which includes the Uniform Standards of Professional Appraisal Practice (USPAP).

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

As of the date of this report, Matt Schock has completed the Standards and Ethics Education Requirement for Practicing Affiliates of the Appraisal Institute. Brian Drake is not a member of the Appraisal Institute.

Daniel Gando aided with confirmation of comparable data. Joe Castellanos aided with the property inspection and the confirmation of comparable data. No one else provided significant real property assistance to the persons signing this certification.

The opinions of fair market value for the proposed acquisition of the subject property and a portion there of as of the date of valuation is set forth in the Summary of Salient Facts and Conclusions and is based upon our independent appraisal and the exercise of professional judgment.

We hereby certify that our opinion of the market value of the property rights appraised as described in this report is included herein and that our opinions and conclusions were made subject to the Assumptions and Limiting Conditions in this report and without collusion, coercion or direction from anyone as to value.

May 26, 2023
Date Brian Drake, R/W-AC
State Certified General Appraiser
CA License No. AG031568
May 26, 2023
Date Matthew Schock, R/W-AC
State Certified General Appraiser
CA License No. AG043887
#32..
- 1757 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
5 Assumptions and Limiting Conditions
The following Assumptions and Limiting Conditions have been relied upon and used in making this appraisal and estimating the respective values required by the purpose of the appraisal and its intended use.
• No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable, unless otherwise stated in this report. • The property is appraised free and clear of any or all liens and encumbrances, unless otherwise stated in this report.
• Responsible ownership and competent property management are assumed, unless otherwise stated in this report.
• The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.
• Sketches, plat maps, or photographs contained in this report are included to assist the reader in visualizing properties and we have made no survey of the property. • No responsibility is assumed for discovery of hidden or non-apparent conditions of the property, subsoil, or the structures that render it more or less valuable. Encroachment of real property improvements is assumed to not exist. No responsibility is assumed for arranging for engineering studies or a survey, which may be required to discover these conditions.
• It is assumed that the subject is in full compliance with all applicable Federal, State, and local environmental regulations and laws, unless otherwise stated in this report. • It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in this report.
• It is assumed that all required licenses, certificates of occupancy, or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been, or can be, obtained or renewed for any use on which the value conclusions contained in this report are based.
• We are not soil experts. The existing soil and substructure have been assumed adequate for existing or proposed uses unless contrary information is provided and contained in this report. It is advisable to have a soil analysis and report completed by a qualified soil engineer, or other qualified expert, so that any interested party will become knowledgeable as to the important soil information including seismic data, soil contaminants, type of fill, if any, or other relevant matters.
• Unless otherwise stated in this report, it is assumed that there are no hazardous or toxic substances in the soil comprising the subject land.
#32..
- 1758 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
6 • Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities Act. The presence of architectural and communications barriers that are structural in nature and would restrict access by disabled individuals may adversely affect the property’s values, marketability, or utility.
• The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used.
• Possession of this report, or a copy thereof, does not carry with it the right of publication.

It may not be used for any purpose by any person other than the party to whom it is addressed without our written prior consent, and in any event, only with proper written qualification and only in its entirety.
• The delivery and/or possession of this report does not require that we attend or give testimony at any meeting, public hearing, pretrial conference, deposition or court trial unless there is a written agreement between us and the party possessing or relying on this report or requesting such services.
• Neither all nor any part of the contents of this report (especially any conclusions as to value, our identity, or the firm with which we are connected) shall be disseminated to the public through advertising, public relations, news sales, or other media.

Project Assumptions and Limiting Conditions
• A preliminary title report for the subject property was reviewed, and is displayed in the Addenda. We relied on information contained in the report including the ownership, legal description of the subject property, and title exceptions. • We relied on exhibits prepared by and obtained from the Client, which are integral to this appraisal under the Partial Acquisition Valuation and provide the size and location of the area to be acquired.
• The Jurisdictional Exception Rule of the Uniform Standards of Professional Appraisal Practice (USPAP) is invoked where the USPAP requirements conflict with federal or state laws relating to appraisals for the acquisition of real property by public agencies. The exceptions include the disregard of the proposed public project, which is included as a hypothetical condition within this report. Disregarding the proposed public project as required by California Code of Civil Procedure Section 1263.330 is contrary to Standards Rule 1-2(e) because the effects of the public project and proposed acquisition (Partial Acquisition Valuation) on the subject’s property value are being ignored. In addition, Evidence Code Section 822 excludes using comparable data involving acquisitions by public agencies having the power of eminent domain, listings and offers, assessed values and appraising any property or property interest other than that being valued. This may #32..
- 1759 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
7 conflict with Standards Rule 1-4, which requires the appraiser to collect, verify and analyze all information necessary for credible assignment results and further specifies that the appraiser analyze such comparable sales data as are available to indicate a value conclusion.
• This appraisal assumes that any utilities which may be affected will either be maintained or relocated for the Partial Acquisition Valuation.

Hypothetical Conditions
Uniform Standards of Professional Appraisal Practice (USPAP 2020/2021 edition*: Definitions) defines hypothetical condition as follows:
“HYPOTHETICAL CONDITION: 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.

Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.”
The following hypothetical condition(s) is used for this appraisal and may affect the assignment results:

The analysis of the subject of this appraisal (only the before condition analysis in the Partial Acquisition Valuation) is made under the hypothetical condition that the project and steps leading up to the project do not exist.

Extraordinary Assumptions
Uniform Standards of Professional Appraisal Practice (USPAP 2020/2021 edition*: Definitions) defines extraordinary assumptions as follows:
“EXTRAORDINARY ASSUMPTION: 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.

Comment: Uncertain information might include physical, legal, or economic characteristics of the subject property; or conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.” #32..
- 1760 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
8 The following extraordinary assumption(s) is used for this appraisal and may affect the assignment results:

None
#32..
- 1761 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
9 General Information
Region, City and Neighborhood Data
The subject is located in the Central Valley, which
dominates the central portion of California,
stretching roughly 400 miles in a north-south
direction and spanning an average of about 50
miles wide. The Central Valley has a long history
of being one of the most productive agricultural
regions. With more than 250 different crops grown
using fewer than 1% of U.S. farmland, the Central
Valley supplies 8% of the Nation’s agricultural
output (by value) and produces one-quarter of the
Nation's food, including 40% of all fruits, nuts, and
other table foods.

The Central Valley is generally divided into two
parts, with the northern one-third referred to as the
Sacramento Valley and the southern two-thirds as
the San Joaquin Valley, encompassing all or parts
of 19 counties. Stanislaus County, the region the
subject is located in, is at the heart of the San
Joaquin Valley, bordered by the counties of San
Joaquin, Calaveras, Tuolumne, Mariposa, Merced,
Santa Clara, and Alameda. Stanislaus County was
formed in 1854 from part of Tuolumne County
shortly after California became a state in 1850.

Stanislaus County encompasses 1,515 square
miles and is home to about 549,466 people as of January 2022, according to the California Department of Finance.

There are nine incorporated cities in Stanislaus County and four times as many census designated places and unincorporated communities. With 217,880 people, the City of Modesto is the largest municipality by a wide margin and serves as the County Seat. The next largest city is Ceres, with a population of 48,386, which shares portions of its northern and western boundaries with Modesto.

Modesto’s past dates back prior to its incorporation in 1884 when the railroad came to the area, and the advent of the rail line drew more and more people. The City’s growth in recent decades has bolstered its position as the hub of Stanislaus County.

More than 722,000 acres of farmland in Stanislaus County places Modesto in one of the prime agricultural regions in the country, and is among the top counties across the U.S. for agricultural production. In total, Stanislaus County hosts hundreds of major industrial plants focused on food processing and related industries. The world’s leading wine producer, E&J Gallo Winery, opened in Modesto in 1933 and is one of the City’s largest employers with approximately 6,700 #32..
- 1762 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
10 employees. Foster Farms, the largest poultry producer in the western U.S., is one of several food processors in Modesto. Others include Del Monte Foods, Frito-Lay, and Nestle USA.

Outside of the agricultural industry, an increasing number of manufacturers are locating in Modesto’s business parks, and with a current workforce of 92,400, the city employs nearly 40% of the County’s wage and salary workers. The list below identifies the top ten employers for the city.

Modesto serves as a regional retail center, drawing people from throughout the northern San Joaquin Valley. More than 40 shopping centers are located in the city, including Vintage Faire Mall, offering a variety of services with over 115 shops and restaurants. The City’s downtown district, with its mix of historic buildings and newer establishments fronting along pedestrianfriendly streets, is a destination for shopping, dining, entertainment and culture, and has seen much in the way of revitalization in recent years.

Modesto is served by the Union Pacific and Burlington Northern Railroads, which have main lines passing through the city, providing freight service to the San Joaquin Valley and beyond, while Amtrak provides passenger train service. The Modesto City-County Airport offers general aviation, accommodating approximately 200 aircraft, but currently has no commercial passenger flights. Public transit systems that serve Modesto and county residents include Modesto Area Express (MAX) and Stanislaus Regional Transit (StaRT).

Modesto is intersected by State Route 99 (SR-99), running north to south the length of the Central Valley, and SR-132 is along the City’s east–west axis, which connects to Interstate 5 (I-5), the State’s major north-south highway, and I-580, providing access to the San Francisco Bay Area.

SR-108 heads east from Modesto into the Sierra foothills where there are lakes and recreational areas, the “Mother Lode” of California’s Gold Country and Yosemite National Park. #32..
- 1763 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
11 The Stanislaus River runs roughly parallel to the northern boundary of Modesto’s urban area, and the Tuolumne River extends along the southern edge of the city. Tuolumne River Regional Park (TRRP) extends along seven miles of the Tuolumne River from the Mitchell Street Bridge west to the Carpenter Road Bridge in Stanislaus County, consisting of over five-hundred acres of parkland. Five major areas make up the TRRP, including the Legion Park/Airport Area, the Gateway Parcel, Mancini Park, the Dryden Park Golf Course and the Carpenter Road Area.

The subject is on the southern edge of Modesto’s approximately 710-acre downtown and just north of the TRRP. This area of the downtown is improved with older industrial buildings and large vacant lots that have been fenced and are being used for outside storage that do or did make use of the active rail line that passes through the area. No major changes appear to have occurred to this area of the downtown since the 1950-60s. The subject fronts on 9th Street, which serves as a “main street” for the downtown and connects Modesto with Ceres to the south of the TRRP that mostly divides the two cities. The subject also has frontage along B Street that connects with SR99 a relatively short distance to the west after becoming Tuolumne Boulevard.

Real Estate Market Conditions
Until just recently, the world had been dealing with the spread of the coronavirus, COVID-19, a global pandemic that lasted for several years. In the initial stages of the outbreak in the early part 2020, the economy experienced a significant downturn, with most major markets declining by as much as 20%. Most COVID-19 related restrictions were lifted in mid-2021 throughout the state, with approximately half of Californians vaccinated at that time, but the progression of COVID-19 continued with the emergence of multiple variants. However, at present, health experts consider COVID-19 to be no longer a public health emergency, despite their warning that it remains a threat.

COVID-19’s toll on the nation’s economy became emphatically clearer with the Bureau of Economic Analysis’s (BEA) estimate of real gross domestic product (GDP) for the second quarter 2020, which decreased at an annual rate of 31.4%, after a decline of 5.0% in the first quarter 2020. Real gross domestic product (GDP) is a comprehensive measure of economic activity and the most popular indicator of the nation's overall economic health. According to the Commerce Department, the most devastating three-month collapse on record in the second quarter 2020 #32..
- 1764 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
12 wiped away nearly five years of growth as consumers cut back spending, businesses pared investments, and it would have been even more severe without trillions of dollars in government aid to households and businesses. The attempt to freeze the economy and defeat the virus had not produced the rapid rebound that many envisioned, and a surge in coronavirus cases and deaths across the country in the second quarter of 2020 led to a renewed pullback in economic activity, reflecting consumer unease and renewed shutdowns. Fortunately, a recovery started in the following quarter. According to the BEA’s third estimate, third quarter (Q3) 2020 GDP increased at an annual rate of 33.4%, the largest single quarter of economic growth on record.

This rebound recovered two-thirds of the economic output lost due to the pandemic during the first half of the year and brought the economy back to only 3.5 percentage points below its prepandemic level (see graph displayed previously).

To start 2021, widespread vaccinations and government spending helped bring the U.S. closer to where it was before the COVID-19 pandemic struck, the Commerce Department reported. The increase in GDP in the first half of 2021 reflected the continued economic recovery influenced by the reopening of establishments, and the unending government response related to the COVID19 pandemic. Despite a resurgence of COVID-19 cases, the U.S. economy grew more-thanexpected to end 2021, influenced by sizeable boosts in inventories and consumer spending. GDP contracted for the first half of 2022, where Q1 2022 was the first decline recorded since the major losses of Q2 2020. Losses experienced in the first half of 2022 were recovered in the second half, with an increase at an annual rate of 2.9% in Q3 2022 and 2.6% in Q4 2022, followed by a lesser increase of 1.1% for 1Q 2023, according to BEA’s “advance” estimate. The GDP for 1Q 2023 reflected increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The Conference Board Consumer Confidence Index (CCI) decreased in April 2023 from the previous month. The CCI is a barometer of the health of the U.S. economy from the perspective #32..
- 1765 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
13 of the consumer. The index is based on consumer’s perceptions of current business and employment conditions, as well as their expectations for six months regarding business conditions, employment conditions, and income. The CCI now stands at 101.3, down from 104.0 in March, whereas 100 is the benchmark. “While consumers’ relatively favorable assessment of the current business environment improved somewhat in April, their expectations fell and remain below the level which often signals a recession looming in the short-term,” said Ataman Ozyildirim, Senior Director, Economics at The Conference Board. “Consumers became more pessimistic about the outlook for both business conditions and labor markets. Compared to last month, fewer households expect business conditions to improve and more expect worsening of conditions in the next six months. They also expect fewer jobs to be available over the short term.” The unemployment rate is the most frequently cited indicator of labor market health. For April 2023, the national unemployment rate changed little from the previous month, which has been the trend over the past year, and now stands at 3.4% (see graphic displayed below). Nonfarm payroll employment rose by 253,000 jobs, according to the U.S. Bureau of Labor Statistics (BLS).

The unemployment rate had been on a downward trajectory through about March 2022 after having spiked to 14.7%, when 870,000 jobs were lost in March 2020, followed by a record 20.5 million in April 2020, with much of the U.S. in self-imposed shutdown mode to prevent the spread of Covid-19. The job losses in those two months were by far the largest decline since the government began tracking the data in 1939, and amount to layoffs so severe, they more than doubled the 8.7 million jobs lost during the Great Recession and nearly wiped out the 22.8 million jobs gained over 10 years since the 2008 financial crisis. The last time American joblessness was that severe was the Great Depression, when the unemployment rate peaked at 24.9% in 1933, according to historical annual estimates from the BLS.

For April 2023, employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance. With the unemployment rate at 3.4% and unemployed persons at 5.7 million, April 2023 unemployment is at levels seen just prior to COVID19 (3.5% and 5.7 million, respectively, in February 2020). The unemployment rate in Stanislaus County was 6.2% (not seasonally adjusted) for April 2023, which compares with an unemployment rate of 4.5% for California for the same period. #32..
- 1766 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
14 Global stock markets initially suffered dramatic falls due to the COVID-19 pandemic. The Dow Jones Industrial Average (DJIA), one of the most closely watched U.S. benchmark indices tracking targeted stock market activity, reported its largest-ever single day decline of almost 3,000 points on March 16, 2020, beating its previous record of 2,300 points that was set only four days earlier. It had increased steadily since the end of the “Great Recession” to record-high levels but fell sharply in the latter part of February 2020 after mounting coronavirus fears. Since the dips in February and March of 2020, the DJIA was on an upward trajectory through 2021, setting numerous all-time highs since the later part of 2020. The trajectory has fluctuated throughout 2022 and into 2023; however, the index is still at a level well above the losses seen in the initial stages of COVID-19. The rises and falls in 2022 and into 2023 can be attributed to inflation, interest rate fluctuation, and fears of recession.

Housing Market
Generally, housing is seen as one of the sectors to rise or fall as economic conditions improve or degrade. The California housing market ended 2020 on a high note, with the statewide median home price reaching record highs. That same momentum was carried forward in 2021, and in April, the median home price throughout the state reached above the $800,000 mark for the first time, according to the data released by the California Association of Realtors. While median home prices are an imperfect measure of the current value of any individual home, they do provide important information regarding the overall health of residential real estate markets. For April 2023, the median sales price of existing single-family homes statewide was $815,340, up 3.0% from March and a decline of 7.8% from a year earlier. The number of sales of existing homes declined by 4.7% and 36.1%, respectively, for all of California over the same time period.

The tight inventory and high demand fueling California’s high home prices has begun to taper through 2022 and into 2023, partially the result of increased interest rates. According to Freddie Mac, the 30-year mortgage rate averaged 6.39% as of May 18, 2023, compared to a low of 2.65% #32..
- 1767 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
15 and 0.7 points as of January 7, 2021; however, homebuyers are adjusting to current rates and pursuing homeownership.

For April 2023, the median listing home price in Stanislaus County was $470,000, flat year-overyear, based on properties listed for sale on Realtor.com, while the median home sold price was $440,000. The median listing home price in Modesto was $430,000, trending down -2.3% yearover-year, which is the same as the median home sold price, indicating that homes are generally selling for about the same as their listing prices. On average, homes in Modesto sell after 48 days on the market.

Industrial Market
The first quarter of 2023 ended with a healthy mix of warehouse and manufacturing leasing activity, according to JLL in their Industrial Insight Report - Q1 2023. Serving as Northern California’s most attractive region for logistics and distribution companies due to its affordability and major distribution networks, the Central Valley saw one million square feet of positive absorption in Q1 2023. The vacancy rate for the Central Valley industrial market increased slightly to 6.8%, though strong market fundamentals are reported to continue. Asking rents remained stable quarter-over-quarter with an 11.3% increase year-over-year and currently stand at an average of $0.69 per square foot per month across all industrial product types. Comparatively, the vacancy rate for the Modesto/Ceres submarket to end Q1 2023 was 1.2% and the average asking rate, $0.64 per square foot per month.
#32..
- 1768 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
16 JLL’s industrial report for the Central Valley indicates that six industrial buildings were delivered in Q1 2023 totaling 3.1 million square feet, of which 24% was preleased. The steady supply of new buildings in the Central Valley over the last several years has established a robust inventory and leasing activity remains strong as the region continues to attract a diverse range of tenants that desire modern features which are scarce in the Bay Area industrial markets. A decline in vacancy and continued increase in rents are anticipated, according to JLL, but construction starts have come to at a halt, and with little demand to construct, industrial land values throughout the Central Valley are expected to remain stable or slightly decrease.

Retail Market
According to CoStar analytics, retail
vacancies in the Modesto metro,
which comprises all of Stanislaus
County, were roughly in line with the
five-year average during the first
quarter of 2023 (1Q23), reported to
be 4.3%. Net absorption was 31,000
square feet over the past 12 months
and positive in both 2022 and 2021.

Demand for large retail space was
reported as been strong to start
2023, with a half dozen transactions
of 10,000 square feet or more
signing in 1Q23. Asking rents were
up 3.7% over the past year, and now
stand at $1.64 per square foot per
month triple net. Retail development
remains sparse as only 68,500
square feet is underway, equating to 0.3% of total market inventory, but consistent with construction activities over the last 10 years, which total only 650,000 square feet; the Modesto retail market primarily serves the local population, making it a slow-growth but relatively stable economic environment. Modesto set a 15-year high in 2022 for total sales volume with $333 million from 120 transactions, with a significant percentage occurring in the fourth quarter, and well ahead of the five-year average of $185 million due to several large deals. Looking ahead, Costar forecasts these large deals will be slow to return, with activity concentrated around smaller properties as the result of the increasing cost of capital limiting both buying power and investment returns.

Project Description
Modesto’s 2007 Wastewater Collection System Master Plan was updated in 2016, and part of the update included an evaluation of the hydraulic capacity of the sewer collection system and recommended projects to correct current capacity deficiencies as well as projects to serve future users.
#32..
- 1769 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
17 The major projects recommended for Area 3 (the existing wastewater collection system was divided among ten sewer service tributary areas – see following exhibit) include the River Trunk Realignment and the River Trunk Pump Station. The Master Plan recommended improvements to the River Trunk to eliminate hydraulic capacity constraints. In 2015, the City completed a Preliminary Design Report for improvements to bypass the capacity constraints in the River Trunk and eliminate the inverted siphons at the Dry Creek crossing near the Gallo property. To do this, the project will add a new alignment for the gravity flow section of the River Trunk and a new River Trunk pump station.

The River Trunk pump station (see above) is proposed as the first of a larger three-phased project to be located within the right of way to the south of the subject property (Morton Boulevard) and to include a portion of the subject, approximately 21,309 square feet (outlined in red on the above exhibit), under the Partial Acquisition Valuation scenario. #32..
- 1770 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
18 Wastewater Collection Master Plan Service Areas
#32..
- 1771 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
19 Subject Property Information
Subject Property Data Summary
Assessor's Parcel Number: 103-006-002
Property Location/Address: 131 9th Street, Modesto, CA
Owner: Stanislaus Distributing Co, Inc. (Varni Brothers Corporation)
Owned Since: For more than 5 years
Occupied By: Tenant (Liz Andrews Furniture)
Site Area: 1.38 acres or approximately 60,112 square feet; surplus land area of 29,500 square feet
Principal Improvements: 14,615 square foot concrete block building with an approximately 2,350 square foot storage mezzanine
(Appraiser Estimate) constructed in 1945 (Public
Records); floor area ratio of 0.24, or 0.48 excluding
surplus land area
Flood Hazard Information: Flood Zone X, Map No. 06099C0338F, dated August 24, 2021
Earthquake Information: Not located in an Earthquake Fault Zone Environmental Assessment: Not provided. This appraisal assumes that no environmental remediation would be required.

Zoning: M-1 – Light Industrial
General Plan: Downtown
Highest and Best Use:

As Vacant Development of a commercial/industrial use or uses that take advantage of the subject’s high traffic location
As Improved Continue the current quasi-retail use
#32..
- 1772 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
20 Assessor’s Parcel Map

SUBJECT
#32..
- 1773 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
21 Subject Aerial Photograph

SUBJECT
219.75 ft
#32..
- 1774 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
22 Subject Property Photographs
View of the front (northwest) elevation of the building, as seen from the subject parking lot View of the northeast elevation of the building, as seen from 9th Street #32..
- 1775 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
23 Subject Property Photographs
View of the southeast and northeast elevations of the building, as seen from 9th Street View of the unused surplus land area along the southern portion of the site and area of the proposed partial acquisition, as seen from 9th Street
#32..
- 1776 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
24 Subject Property Photographs
View of the southern elevation of the building, unused surplus land area, and area of the proposed partial acquisition, as seen from S. Morton Blvd View of the fenced, unused surplus land area and area of the proposed partial acquisition, as seen from B Street
#32..
- 1777 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
25 Subject Property Photographs
View of the site in front of the northwest elevation of the building partially used for parking, as seen from the northwest portion of the parcel
View of the ground floor space within the subject building #32..
- 1778 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
26 Subject Property Photographs
View of partitioned space on the ground floor of the subject building View of the storage mezzanine within the subject building #32..
- 1779 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
27 Subject Property Photographs
View of the ground floor below the storage mezzanine within the subject building View of B Street facing northeast, as seen from in front of the subject property #32..
- 1780 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
28 Subject Property Photographs
View of B Street facing southwest, as seen from in front of the subject property View of 9th Street facing southeast, as seen from in front of the subject property #32..
- 1781 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
29 Property Description
Larger Parcel
There are three criteria, or tests, for determining the larger parcel. These are: unity of ownership; contiguity; and unity of use. The proposed acquisition is a portion of Assessor’s Parcel Number (APN) 103-006-002. The highest and best use is for commercial development (see Highest and Best Use Analysis), which would make entire use of the entire site. Abutting parcels to APN 103- 006-002 are under different ownership. It has been concluded that APN 103-006-002 comprises a single economic unit and constitutes the larger parcel or “subject property.” Site Description
The subject property is situated at the southwest corner of the signalized intersection of 9th Street and B Street in the downtown area of the City of Modesto, in Stanislaus County (see Region, City and Neighborhood Data). The street address for the subject is 131 9th Street. 9th Street is a thoroughfare that extends from the intersection of SR-99 and N. Carpenter Road to the north of Modesto’s downtown to the intersection of SR-99 and E. Hatch Road in Ceres to the south after traveling a distance of about five miles. The public right of way is on all sides of the subject site, which includes S. Morton Boulevard; however, this street is unimproved at this location. The average daily traffic count along 9th Street to the south of the subject’s location is approximately 16,500. On average, nearly 22,000 vehicles per day pass by the subject along B Street, connecting SR-99, which is roughly one half of a mile to the west, with 9th Street.

The subject is in the southern portion of the downtown, just north of the Tuolumne River Regional Park, where industrial uses are prevalent, consisting of open storage yards or large warehouses in the immediate vicinity of the subject that predate the 1950s. The Union Pacific rail line is less than a quarter of a mile to the west, and a spur runs along B Street. The Tuolumne River open space occupies a large swath of land to the south of the subject, separating a continuation of this industrialized area from the subject’s environs. A relatively short distance to the north, uses are more commercial oriented and located in storefront buildings on small parcels arranged in blocks in a grid like pattern. The new courthouse is currently under construction a few blocks to the northwest.

A summary of the public record reviewed for the subject property indicates a site area of 60,112 square feet or approximately 1.38 acres. The subject has a nearly triangular shape (see Subject Aerial Photograph) and is flat, level and at street grade. The street frontage combines for about 634 feet using the dimensions shown on the Assessor’s Parcel Map (excludes S. Morton Boulevard since it is unimproved). There are no curbs gutters or sidewalks, which is typical for this area of the downtown. All public utilities are at the street.

Improvement Description
The subject property is improved with a single-story, concrete block building (see Subject Property Photographs) measuring 14,615 square feet (see Subject Aerial Photograph), with an approximately 2,350 square foot storage mezzanine. According to public records, the building #32..
- 1782 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
30 was constructed in 1945. The floor area ratio is 0.24, or 0.48 (14,615 ÷ 60,112 less 29,500, or 30,612) excluding the surplus land area (see following).

There are two partition walls within the building extending floor to ceiling, but there is only one main entrance on the northwest elevation, accessed from a partially paved parking lot, and the structure is currently demised for a single user. Access can also be gained from several 8.5 foot by 10-foot- or 16-foot-wide wooden manual crank doors which are set at grade with the slightly raised concrete slab foundation, functioning similar to dock-high doors.

With the exception of the space below the storage mezzanine, the building is open to an uninsulated roof deck and wooden trusses that are supported by wood columns and load bearing partition walls. Florescent lights attached to wood cross members illuminate the space, in addition to several large windows located just below ceiling height, which is at 22 feet. The clear height in the storage mezzanine is as much as 13 feet; below the roof trusses, the clear height is reduced to 8 feet, and 16 feet in the ground floor area.

The exterior block walls, which were recently painted, are exposed to the interior and partially painted or covered in gypsum board that has been painted. The storage mezzanine is completely enclosed, accessed by an interior wooden staircase, and has a similar finish to the main part of the building. There is no elevator. The flooring of the storage mezzanine consists of wood planks.

There is a two-fixture restroom on the ground floor that has been made ADA compliant as part of recent upgrades to the building, which also included a handicap accessible ramp from the parking lot to the front entrance, consisting of double pedestrian doors. Part of the parking lot was paved with asphalt and striped where handicap accessible stalls were added as part of the upgrades, but the parking lot is otherwise covered in deteriorated asphalt or loose, sparce gravel, and parking spaces undesignated.

The electrical panel shows a capacity of 200 amps, 120-277 volts. No fire sprinklers were present.

No heating or cooling was observed. There is a large exhaust fan in one of the partitioned spaces, but it was not in use at the time of the inspection, and it is not known if it is functioning.

The condition of the building is commensurate with its actual age, 78 years, and judged to be in fair condition, based on observations at the time of inspection. Several deferred maintenance items were noted, from those that require immediate attention, such as a leaky roof, cracked windows, and exposed electrical wires and non-working light fixtures, to worn-out, weathered surfaces; an extensive amount of mold was seen growing on sheetrock below the storage mezzanine. Only staining could be seen on the underside of the roof and on structural members from water intrusion, and the integrity of the building seemed sound.

In addition to the building, there is a 20 foot by 30 foot open-walled shade structure in the parking lot area, consisting of a steel frame and metal corrugated roof at a height of 14 feet.

The southern portion of the site consists of an unimproved surplus land area of approximately 29,500 square feet that has been secured with six-foot-tall chain link fencing and 14-foot-wide manual slide gate. The proposed partial acquisition is located within this area. #32..
- 1783 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
31 Personal Property Description
The tenant occupying the property (excluding the surplus land area), Liz Andrews Furniture (see Title and Property History), had many home furnishings being displayed as well as excess inventory being stored within the building on the site. A small retail counter and associated items used for the business were also observed.

Title and Property History
A preliminary title report for the subject property was provided for use in this assignment and is included in the Addenda. The report was prepared by Cypress Title Corporation and dated December 20, 2022. According to the report reviewed, the subject's fee ownership is vested in:

According to owner representation, the entity identified on title no longer exists, and Varni Brothers Corporation is the assumed ownership.

The subject property has been in the Varni Family for many years. A tenant, Liz Andrews Furniture, is currently occupying the subject building and portion of the site and has done so for about 15 years, according to the owner. The subject is currently in contract to be purchased by the tenant for $2,000,000 (see Full Acquisition Valuation). The tenant approached the seller directly in the later part of 2022. There is no purchase option in the current lease agreement. The buyer is seeking conventional financing for a portion of the purchase price and terms will be cash to the seller. The owner indicated that escrow was set to close, but that the Client's interest in possible acquisition of the property has delayed the closing at the request of the tenant's lender.

The owner stated that they previously had received an offer of $2.1 Million from a developer proposing a gas station and minimart, but it was not pursued.

The rental rate for the Liz Andrews Furniture space is currently at $3,432 per month and is set to expire at the end of 2024. A copy of the lease agreement has not been provided. There is an annual bump of 3%, which will increase the rent to $3,535 per month starting January 1, 2024.

The landlord is responsible for property taxes and insurance, and the tenant is responsible for all other operating expenses, including repairs and maintenance; however, the owner said they paid roughly $200,000 towards recent ADA compliant upgrades.

The surplus land area (see Property Description) not being leased by Liz Andrews Furniture is currently offered for rent at a rate of $3,000 per month, and it had been rented for $2,700 per month in the past.

The building located on the subject was originally constructed for industrial use in the mid-1940s.

Prior uses of the site are not known.
#32..
- 1784 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
32 Existing Easements
The preliminary title report identifies the following recorded easements encumbering the subject property, as taken from the exception list.

The subject appears to have been part of a larger property at the time the existing easements in Exceptions 8-10 were recorded. The locations of these existing easements could not be readily identified in review of the recorded documents and this appraisal assumes that if the subject property is encumbered with these existing easements that they would not adversely affect the utility or marketability when put to its highest and best use, which is the current use.

Flood Hazard Information
The subject property is in a mapped area designated to be in Flood Zone X by the Federal Emergency Management Agency (FEMA). Flood Zone “X” is defined as areas of minimal flood hazard, usually depicted on FEMA Flood Insurance Rate Maps as above the 500-year flood level.

The FEMA Flood Zone Map Panel is 06099C0338F and the effective date is August 24, 2021. A copy of the Flood Insurance Rate Map is included on the following page. #32..
- 1785 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
33 Earthquake Information
All properties in California are subject to some degree of seismic risk. The Alquist-Priolo special Studies Zone Act of 1972 was enacted by the State of California to regulate development near active earthquake faults. The Act required the State Geologist to delineate “special studies zones” along known active faults in California. Cities and counties affected by the identified zones must limit certain development projects within the zones unless geologic investigation demonstrates that the sites are not threatened by surface displacement from future faulting.

According to the California Department of Conservation, California Geological Survey, the subject property is not located in an Earthquake Fault Zone as designated under the Alquist-Priolo Earthquake Fault Zoning Act. Related development limitations, therefore, do not apply.

Environmental Assessment
An environmental assessment regarding the subject property has not been provided for use in this assignment. It is not shown as a current cleanup site with either the California Department of Toxic Substances Control (EnviroStor) or the California State Water Resources Control Board (GeoTracker). This appraisal assumes that no environmental remediation would be required. #32..
- 1786 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
34 Zoning and General Plan of the Subject Property
Zoning General Plan Current Use
M-1 – Light Industrial Downtown Quasi-Retail
Utilization of the subject real property is regulated by the Modesto Code of Ordinances. The laws that govern the use of the land is Title 10 – Zoning Regulations and the City’s General Plan.

The zoning category for the subject is M-1 – Light Industrial. The M-1 Zone is intended to accommodate light industrial, assembly, storage, warehouse and similar uses in terms of industrial activity, all of which may be located relatively near residential areas without causing adverse impacts. Various uses allowed in the Commercial Zoning Districts are also permitted, including the subject’s current use.

Development standards that must be adhered to within the M-1 Zone were reviewed. With the exception of a minimum front and street side setback of 10 feet, there are no significant building and site standards that apply to the subject.

The General Plan land use designation for the subject is Downtown. The General Plan states that Downtown Modesto should be the focal point of community life and the social, cultural, business, governmental and entertainment center of Stanislaus County. Housing is to be an integral part of Downtown Modesto, complemented by a tree-lined environment and modern transportation systems. Vertical mixed-use development is allowed, and is encouraged within the Downtown.

Residential and non-residential development shall conform to the standards, regulations and criteria contained within the City of Modesto’s Downtown Zoning District regulations and/or other zoning code regulations that apply within the Downtown. The applicable guiding intensity is a Floor Area Ratio (FAR) between 1.0 and 14.0 of the gross acreage.

The subject does not meet the required setback requirements and is non-conforming in this regard, but otherwise appears to conform to all other aspects of the applicable zoning ordinance, and the use is consistent with the policies and goals of the General Plan.

Sections of the zoning and General Plan maps, delineating the land use designations in the vicinity of the subject, are included on the following pages. #32..
- 1787 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
35 Zoning Map

SUBJECT
#32..
- 1788 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
36 General Plan Map

SUBJECT
#32..
- 1789 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
37 Highest and Best Use Analysis
The following definition of the term “Highest and Best Use” provides a reasonable basis for analyzing the subject property:

The reasonable, probable and legal use of vacant land or improved properties which is physically possible, appropriately supported, financially feasible, and results in the highest value.

Inherent in this definition are the following four criteria:

Legally Permissible: What uses are permitted, given existing deed and lease restrictions, zoning, building codes, historic controls, and environmental regulations?
Physically Possible: What uses of the site are possible, given the physical characteristics as revealed in the site analysis?
Financially Feasible: Which possible and permissible uses will produce positive net income from the development of the site after paying operating expenses and other financial obligations?
Maximally Productive: Which financially feasible use will provide the highest value or rate of return on investment?
The primary purpose of the highest and best use analysis is to identify the most productive, competitive use to which the property can be put. This analysis is done in two parts. The first part considers the possible uses of the site as if vacant. The second part evaluates the improvements to determine if they represent the highest and best use or if they should be modified.

Another purpose of the highest and best use analysis is to assist in defining the scope of the appraisal. In investigating the highest and best use, items that affect value such as accrued depreciation and functional and external obsolescence are identified. Also, by defining the highest and best use the selection of the comparable sales is narrowed, as they typically have the same or similar highest and best use.

Based on the four tests of legally permissible, physically possible, financially feasible, and maximally productive, the highest and best use of the subject as if vacant and as improved has been analyzed.

As if Vacant
The subject zoning allows for a wide variety of industrial and commercial uses (see Zoning and General Plan of the Subject Property). Size and shape would be the most limiting factors in the development of the site, but the physical characteristics lends itself to accommodate many of the uses that are legally permitted (see Property Description). The most probable use is one that could take advantage of the above average exposure/visibility with an extensive amount street frontage, given its corner location, and high traffic counts. As discussed in a prior section of this #32..
- 1790 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
38 report (see Real Estate Market Conditions) and will be shown in the following analysis, the demand for industrial/commercial product exists in the local market, and this type of construction has been occurring throughout the region, demonstrating that these use types are financially feasible. When considering the subject’s location in an older industrialized section of the city, but included in the downtown area and near the commercial core, the construction of a flex-type building that could be used for a variety of purposes, including a quasi-retail use, seems to be the likely use and highest and best use of the subject (as if vacant).

As Improved
The subject is improved with a warehouse being used for quasi-retail use (see Improvement Description) and has been for many years. The building is older and several items of deferred maintenance were noted at the time of inspection; however, the tenant occupying the building and portion of the site is in contract to purchase the property and continue the current use, which is determined to be the highest and best use of the subject (as improved). #32..
- 1791 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
39 Valuation
Valuation Methodology
There are three generally recognized approaches considered in the valuation of real property.

These are the cost approach, sales comparison approach, and income approach. The type and age of the property and the quantity and quality of the available data affect the applicability of each approach in a specific appraisal situation.

The Cost Approach estimates, through support sources, the cost of constructing the subject improvements. Accrued depreciation from all causes is estimated and deducted from the estimates of cost new of the improvements. The market value of the land is added to this depreciated cost estimate to indicate the value of the subject property by the cost approach. The Land Value Estimate in the valuation process is usually a separate step, which is generally accomplished through the application of the sales comparison approach. The land value conclusion is then incorporated into the cost approach.

The Sales Comparison Approach involves a search for recent sales of properties similar to the subject. The prices paid for these properties provide the basis for estimating the value of the subject by comparison. Adjustments are made for the differences in the properties as they compare to the subject. A correlation of the data provides a value estimate for the subject. This is the most used, and considered the most reliable, approach to estimating the value of land.

The Income Approach looks at the relationship between a property's income producing ability and the value buyers and sellers assign to the income. An estimate is made of the market rent to indicate an annual gross income. Estimated fixed and variable operating expenses are deducted from the annual gross income to provide an annual net operating income. An indicated value of the subject is derived through direct capitalization of the indicated net income by a market derived overall rate or through the use of the discounted cash flow technique.

Reconciliation involves consideration of the relevance and influence of each approach in relation to the actions of typical users and investors of properties and particularly the subject property.

The three indications of value are discussed and reconciled into a final conclusion of market value.

The City of Modesto has requested an appraisal of the current fair market value of a full fee simple acquisition of the subject property under one valuation scenario and one partial fee simple acquisition under another valuation scenario.

The subject is improved with an older single-tenant industrial building rented on a short-term basis (see Title and Property History) that is currently in contract to be purchased by a long-term tenant, Liz Andrews Furniture. Due to the lack of recent rental data, in what is determined to be a predominantly owner-user market for this product type (industrial properties being used for quasiretail use), the income approach has not been applied in estimating the fair market value of the improved property (Full Acquisition Valuation). Given the age of the subject improvements and the difficulty in estimating depreciation of older properties, the cost approach has not been utilized either. Therefore, only the sales comparison approach has been used for this estimate of market value. In the sales comparison approach, searches of public records, real estate listings and sales #32..
- 1792 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
40 services were employed to obtain data. Relevant property sales were researched and confirmed to the extent possible. The conclusion of value for the sales comparison approach is determined following appropriate adjustments to properties that have sold and are similar to the subject, considering the unit prices paid in the market for this type of property. The concluded unit value has been used to value the improved property.

A modified cost approach has been used to value site improvements that will be affected as a result of the project. The income approach was not utilized because sellers, buyers, and our peers in this market rarely rely on this approach when offering, purchasing, or valuing properties similar to the subject that consists of land only.

The fair market value of a full fee simple acquisition of the subject property has been estimated first (Full Acquisition Valuation), followed by the Partial Acquisition Valuation.

Full Acquisition Valuation
Sales Comparison Approach
A search was made for improved commercial / industrial properties that transacted over the past few years throughout the greater Modesto area, with emphasis on those that have above average exposure/visibility, like the subject. The following table displays a summary of the selected sales reflecting the actions of buyers and sellers in the marketplace and judged to be the most representative of an indicator of value for the property under analysis. The comparable sales were researched, inspected, and verified to the extent possible. A location map and comparable data sheets, including photographs for each comparable sale, are presented on the following pages, and assessor’s parcel maps are included in the Addenda. #32..
- 1793 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
41 Sales Data Summary
Address Sales Price
No. City, State
APN COE Year Built Improvements General Plan
I-01 131 9th Street
(Subject) Modesto, CA
103-006-002 1945 Downtown $136.85
I-02 1120 McHenry Ave
Modesto, CA
112-001-002, -031 08/12/22 1966 Commercial $175.75
I-03 1518 9th Street
Modesto, CA
105-047-007, -012 06/17/22 1930 Downtown $150.00
524 Kansas Ave
Modesto, CA
029-015-025 03/18/22 Industrial $134.26
I-05 1430 10th Street
Modesto, CA
105-033-016 04/06/22 1947 Downtown $106.67
Subject 131 9th Street DOV
Modesto, CA 04/25/23
103-006-002 1945 Downtown
Sq. Ft. (Building) FAR Zoning
14,615 0.24 M-1
Concrete block building with a ±2,350
square foot storage mezzanine
Concrete block building with a ±2,350 SF
storage mezzanine
$/Sq. Ft.
(Building)
Free-Standing Building w/Open
Showroom, Breakroom, Conference
Room, ADA Restrooms, and Sprinklered
Commercial building (See Datasheet
Comments)
UGD (C-1) $750,000
$2,000,000
$2,000,000
UGD (C-1) $1,000,000
P-D
Industrial building (See Datasheet
Comments); two detached structures,
600 square feet
Sale
Sale
Sale
Type of
Transaction
Sale
Pending Sale
Pending (See
Comments)
9,375
M-2 $1,450,000

0.34 1950 (See Industrial building with 50% build-out
Comments)
11,380

0.34 5,000
10,800

0.32 0.38
14,615 0.24 M-1
I-04
#32..
- 1794 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
42 Comparable Improved Sale Location Map

#32..
- 1795 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
43 Comparable Improved Sale Data Sheet
I-01
Property Type Industrial - Improved
Type of Transaction Pending Sale
COE Pending (See Comments)
Sales Contract Date
Sales Price $2,000,000
$/Sq. Ft. (Building)
Address 131 9th Street
City, State Modesto, CA
Zip 95351
APN 103-006-002
Buyer
Seller
Document #
Terms
Sq. Ft. (Building)
Improvements
Year Built
Parcel Size (Sq. Ft.)
Parking Spaces
Zoning
General Plan
Verified By
Comments
Diane Wirowek - Seller
See Comments
This is the sale of a property improved with a concrete block building included in an older industrialized section of the southern part of downtown Modesto. The site is at the southwest corner of a lighted intersection that receives high traffic counts. The buyer is the current tenant occupying a portion of the site and building dba Liz Andrews Furniture, which has done so for approximately 15 years, according to the seller. The lease rate is currently $3,432 per month with 3% annual increases and is set to expire at the end of 2024. The landlord pays for property taxes and insurance. The seller indicated that the rental rate is below market. There was no option to purchase. The tenant approached the seller directly. The buyer is seeking conventional financing for a portion of the purchase price and terms will be cash to the seller. The seller indicated that escrow was set to close, but that the City of Modesto's interest in possible acquisition of the property has delayed the closing at the request of the buyer's lender. The seller indicated that they also received an offer of $2.1 Million from a developer proposing a gas station and minimart, but it was not pursued. ADA compliant upgrades were recently added, but the improvements are in fair condition. The interior is essentially open warehouse being used as a showroom. There are designated handicap stalls, but otherwise the parking lot is not striped. A 20 foot by 30 foot open-walled shade structure is located in the parking lot. Approximately 29,500 square feet of the site not being leased by the tenant is being offered for rent at $3,000 per month; it had been rented for $2,700 per month in the past.

Subject Sale
See Comments
Stanislaus Distributing Co, Inc. (Varni Brothers Corporation) In Contract
Cash to Seller (See Comments)
14,615
Concrete block building with a ±2,350 SF storage mezzanine $136.85
M-1
Downtown
60,112
December 2022
1945
#32..
- 1796 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
44 Comparable Improved Sale Data Sheet
I-02
Property Type Retail - Single Tenant
Type of Transaction Sale
COE 08/12/22
Sales Contract Date
Sales Price $2,000,000
$/Sq. Ft. (Building)
Address 1120 McHenry Ave
City, State Modesto, CA
Zip 95350
APN 112-001-002, -031
Buyer
Seller
Document #
Terms
Sq. Ft. (Building)
Improvements
Year Built
Parcel Size (Sq. Ft.)
Parking Spaces
Zoning
General Plan
Verified By
Comments
21 P-D
Commercial
The property fronts on a commercial corridor, and adjacent to retail uses. It is at a signalized corner and the traffic counts on McHenry Avenue are ±37,000 ADT, according to a marketing flyer. The seller provided a credit of $10,000 towards repairs. The buyer will occupy the property for their mattress business. The property is comprised of two lots, and the smaller of the two is vacant. It was not discovered if the vacant lot could be developed independently under the P-D zoning, or why it is undeveloped. It appears that the property had been marketed for lease prior to it being offered for sale, with an asking lease rate of $1.85 per square foot per month, modified gross, according to a marketing flyer.

Lorie Diaz-Liddicoat - Listing Agent
35,282
6-8 Month Escrow

BMC LLC
Antone F. and Saundra J. Ott
2022-0055201
1966
11,380
Free-Standing Building w/Open Showroom, Breakroom, Conference Room, ADA Restrooms, and Sprinklered
$175.75
Conventional Loan; 30% Down Payment
#32..
- 1797 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
45 Comparable Improved Sale Data Sheet
I-03
Property Type Retail - Single Tenant
Type of Transaction Sale
COE 06/17/22
Sales Contract Date
Sales Price $750,000
$/Sq. Ft. (Building)
Address 1518 9th Street
City, State Modesto, CA
Zip 95354
APN 105-047-007, -012
Buyer
Seller
Document #
Terms
Sq. Ft. (Building)
Improvements
Year Built
Parcel Size (Sq. Ft.)
Parking Spaces
Zoning
General Plan
Verified By
Comments The property is in the northern part of downtown Modesto, adjacent to Kansas Avenue (CA132) with access to CA-99. According to the seller, a longtime tenant purchased the property and had approached the seller directly. There is a partial basement and partial second story, but the purchase price was based on the area of the lower floor, which was confirmed to be 5,000 square feet. The second floor had never been used by the tenant because it was said to be unsafe, and remainder of the building in fair condition at the time of sale. The seller indicated that the partial second story consisted of three apartment units.

The buyer continued the use of the property for his contractor business. The buyer had obtained a conventional loan for $600,000 of the purchase price and also a $125,000 line of credit from the same lender. Subsequent to the sale, the buyer has performed various renovations.

Diane Wirowek - Seller
5,000
Commercial building (See Datasheet Comments)
$150.00
UGD (C-1)
Downtown
12,989
1930
Conventional Loan (See Comments)
Limited
Scott C. and Jacqulyn N. Conway
Varni Brothers , LLC
2022-0044136
See Comments
#32..
- 1798 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
46 Comparable Improved Sale Data Sheet
I-04
Property Type Industrial - Improved
Type of Transaction Sale
COE 03/18/22
Sales Contract Date
Sales Price $1,450,000
$/Sq. Ft. (Building)
Address 524 Kansas Ave
City, State Modesto, CA
Zip 95351
APN 029-015-025
Buyer
Seller
Document #
Terms
Sq. Ft. (Building)
Improvements
Year Built
Parcel Size (Sq. Ft.)
Parking Spaces
Zoning
General Plan
Verified By
Comments
Stanislaus County Office of Education
The is the sale of an industrial property located in an industrial section of Modesto to the northwest of the downtown at the interchange of Kansas Avenue and CA-99 and with visibility from the freeway, as well as from CA-132. The property had been occupied by the seller, Stanislaus County Office of Education. The buyer will occupy the property for their flooring business. According to a marketing flyer, the improvements had been renovated in 2016, and about 50% is warehouse and production space and the balance office build-out.

The flooring company planned to use the building as a retail showroom and distribution center. The property was listed for sale around January 1st and the agent reported five offers within the first week of the listing, and it sold for $50,000 above the asking price of $1,400,000. The building was vandalized shortly before the sale and the seller paid for new paint, HVAC system, upgraded electrical, and new flooring. The agent reported that there was very little that the buyer needed to do to the building after the purchase. The seller was not ready to vacate at the time of the sale, which is the reason for the 90 day escrow. After the 90 day escrow period, the seller had a one month rent back for $1. The rentback condition was openly relayed to the interested parties and did not impact the sale price.

The listing broker was not aware of the financing details but did say there was nothing unusual.

Thomas Solomon - Listing Agent
2022-0020216
35 90-Day Escrow
10,800
Industrial building with 50% build-out
$134.26
M-2
Industrial
32,187
1950 (See Comments)
Conventional Loan; 15.17% Down Payment
Swan Flooring Group, Inc.
#32..
- 1799 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
47 Comparable Improved Sale Data Sheet
I-05
Property Type Industrial - Improved
Type of Transaction Sale
COE 04/06/22
Sales Contract Date
Sales Price $1,000,000
$/Sq. Ft. (Building)
Address 1430 10th Street
City, State Modesto, CA
Zip 95354
APN 105-033-016
Buyer
Seller
Document #
Terms
Sq. Ft. (Building)
Improvements
Year Built
Parcel Size (Sq. Ft.)
Parking Spaces
Zoning
General Plan
Verified By
Comments
Suite 2:10 LLC
CrossPoint Community Church of Modesto
2022-0025262
75-Day Escrow
9,375
Industrial building (See Datasheet Comments); two detached structures, 600 square feet $106.67
UGD (C-1)
Downtown
27,878
1947
Conventional Loan; 30.0% Down Payment
28 The property is in the northern part of downtown Modesto, one block from Kansas Avenue (CA132) with access to CA-99. In addition to 10th Street, there is frontage on O Street as well as access from an 20' wide alleyway. The property was marketed for about 8 months and sold for significantly less than the list price of $1,200,000, but was considered to be a market price; the listing broker indicated that it was listed high to see what they could get for the unique building.

There was a lot of interest in the property but the condition of the improvements discouraged many potential buyers. The building was poorly maintained and needed new roof, electrical upgrade, paint, and parking lot needed to be resurfaced, but the seller provided no concessions or credits. The smaller out buildings also needed some work and contributed minimal value. The seller had previously occupied the property, and the buyer will be an owner-user, using the property for a rental car business and showroom for classic cars (involved in a car club), but may also lease out a portion of the yard space and out buildings and/or a portion of the warehouse.

There were other offers. The listing broker believed they could have got the $1.2M from a Caliber Collision type of business; however, they found out that the city would likely not allow this type of use. Another potential buyer considered modifying the building into a small hotel. From marketing flyer: The interior build-out consists of a reception area, multiple offices, breakroom, shop space, storage area (on two floors), and showroom. Two restrooms are non-ADA. The building is not sprinklered. The two detached buildings have power and water. There is a small shed. The parking lot/outside storage area is fenced. Power to the building: 3 phase 30 amp panel and single phase 100 amp service.

Randy Brekke - Listing Agent
#32..
- 1800 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
48 Sales Data Analysis
Adjustments are made to the comparable sale prices for the differences in the properties as they compare to the subject. The comparable data has been adjusted for inferior and superior characteristics. For Example: where a comparable had an inferior characteristic, a positive (+) adjustment to the comparable was made. Where the comparable had a superior characteristic, a negative (-) adjustment was made to the comparable. Adjustments were made sequentially for property rights conveyed, financing terms, conditions of sale, expenditures incurred by the buyer immediately after the sale, and market conditions at the time of sale. Adjustments for location characteristics, physical characteristics, use and non-realty components of value are subsequently added and applied. None of the comparables used are known to have included nonrealty components of value.

A summary of the adjustments made to the comparable sales for the various factors affecting value, as compared to the subject, is included in the table below, followed by a discussion that expands upon the adjustments made in greater detail. Bold and/or larger font reflects a more significant adjustment.

No adjustments were determined to be warranted for the transactional elements of comparison, including changes in market conditions (see Real Estate Market Conditions).

The subject (I-01) is on the corner of two major streets in the downtown area of Modesto, but on the fringe and in an older industrial section (see Property Description). I-03 and I-05 are also located in the downtown; however, I-05 is an area that sees much lower traffic counts, warranting an upward adjustment. I-02 and I-04 are also in high traffic locations, but I-02 is an area of retail synergy, and a downward adjustment has been applied for the superior locational appeal.

A downward adjustment is determined to be warranted for I-03 for its much smaller building size based on the law of diminishing returns, which dictates that smaller commercial / industrial buildings transact at a higher unit price and vice versa. The other comparables are judged to be in a similar size class, therefore no adjustments have been applied.

Comparable I-01 I-02 I-03 I-04 I-05
Address 131 9th Street 1120 McHenry Ave 1518 9th Street 524 Kansas Ave 1430 10th Street City, State Modesto, CA Modesto, CA Modesto, CA Modesto, CA Modesto, CA Sale Date Pending Aug-22 Jun-22 Mar-22 Apr-22
Sales Price $2,000,000 $2,000,000 $750,000 $1,450,000 $1,000,000 Sq. Ft. (Building) 14,615 11,380 5,000 10,800 9,375
Sales Price / Bldg. Sq. Ft. $136.85 $175.75 $150.00 $134.26 $106.67 Property Rights Conveyed Ø Ø Ø Ø Ø
Financing Terms Ø Ø Ø Ø Ø
Conditions of Sale Ø Ø Ø Ø Ø
Expenditures After Purchase Ø Ø Ø Ø Ø
Market Conditions (Time) Ø Ø Ø Ø Ø
Locational Appeal / Access / Exposure/Visibility Ø Negative Ø Ø Positive Building Size Ø Ø Negative Ø Ø
Age / Condition / Quality of Improvements Ø Negative Ø Negative Ø Land Area / FAR / Parking Ratio Ø Positive Positive Positive Positive Use / Zoning Ø Ø Ø Ø Ø
Net Adjustment Similar Negative Negative Similar Positive #32..
- 1801 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
49 The subject building was constructed in the 1940s, has received minimal updating (see Improvement Description), and is judged to be in fair condition. Downward adjustments have been applied to I-02 and I-04 for their superior quality and condition of improvements. I-01 (subject pending sale), I-03, and I-05 were judged to rate similar for this factor (see Datasheets).

I-02 through I-05 have a higher FAR compared to the subject, and upward adjustments are determined to be warranted.

Sales Comparison Approach – Improved Value Conclusion
The unadjusted selling prices of the comparable sales range from $106.67 to $175.75 per square foot of building. After adjustments, the comparable sales indicate a value for the subject property similar to that of I-01, the pending sale of the subject, and I-04, with no overall net adjustment.

Placing more emphasis on I-01, and based on the prior analysis and discussion, the estimated fair market value for the subject property, utilizing the sales comparison approach, is concluded to be $136.85 per square foot of building (subject pending unit selling price).

Partial Acquisition Valuation
Sales Comparison Approach
A search was made for comparable land sales that transacted over the past several years in the greater Modesto area, with emphasis on industrial or commercially zoned parcels fronting on a major throughfare that receives high traffic counts. The following table displays a summary of the selected sales reflecting the actions of buyers and sellers in the marketplace and judged to be most representative of current market conditions. A location map, comparable data sheets, including photographs for each comparable land sale, and assessor’s parcel maps are presented on the following pages.

Full Acquisition Valuation
Fee Simple Interest: (Improved Property) $136.85 × 14,615 = $2,000,000 Unit Value
($/Sq. Ft.)
Building Area
(Sq. Ft.)
Indicated
Value
(Rounded)
#32..
- 1802 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
50 Sales Data Summary
Address
No. City, State
APN
L-01 4621 Glass Court
Modesto (Unincorp.), CA Sale 1.16 P-I $497,500
046-011-047 50,530 $9.85
L-02 E. Glenn Avenue
Modesto, CA
L-03 1320 Yosemite Blvd
Modesto, CA
L-04 715 H St
Modesto, CA
131 9th Street DOV
Modesto, CA 04/25/23
103-006-002

1.38 $13.49
$733,000
06/21/22 57,934 $12.65
$235,000
C-2
Downtown
$9.26
Planned Industrial (County) /
Business Park (Modesto)
M-2
Industrial
Type of
Transaction
Parcel Size
(Acres)
(Sq. Ft.)
Zoning
COE General Plan
$1,900,000
Sales Price
$/Sq. Ft. (Land)
01/06/23
035-025-014
104-005-004
Commercial
TD
Sale 4.71
Sale 1.33
Sale 0.40
11/16/22 205,168
10/04/19 17,424
086-038-001 through -
005
Subject
M-1
60,112 Downtown
#32..
- 1803 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
51 Comparable Land Sale Location Map
#32..
- 1804 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
52 Comparable Land Sale Data Sheets
L-01
Property Type Industrial - Land
Type of Transaction Sale
COE 01/06/23
Sales Contract Date
Sales Price $497,500
$/Sq. Ft. (Land)
Address 4621 Glass Court
City, State Modesto (Unincorp.), CA
Zip 95356
APN
Buyer
Seller
Document #
Terms
Parcel Size (Acres)
Parcel Size (Sq. Ft.)
Approx. Dimensions
Improvements
Utilities
Zoning
General Plan
Entitlements
Verified By
Comments This is the sale of an industrial lot in a cul-de-sac in a business park in unincorporated Stanislaus County, just to the north of Modesto. The subdivision occurred in the late 1990s and early 2000s when much of the development occurred. No improvement bonds were assumed by the buyer. The marketing period was about 6 months. The list price was $599,000 or $11.85/SF. Storm water run-off would need to be collected on-site, but it appears that shared drainage may be possible with adjoining lots. The property sold with plans, but it is not known what this may have contributed to the purchase price, since the intended use of the buyer is unknown. Multiple attempts made to reach the parties involved in the transaction were unsuccessful, and the sale details were confirmed with public records and other informational sources, including a marketing brochure.

See Comments
None
See Comments

ERJ, LLC
John Edward Vargas
2023-0000471
All Cash

1.16 50,530
$9.85
Slightly irregular; 58 feet of frontage
All to Site
Not Discovered
P-I
Planned Industrial (County) / Business Park (Modesto)
046-011-047
#32..
- 1805 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
53 Comparable Land Sale Parcel Maps
#32..
- 1806 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
54 Comparable Land Sale Data Sheets
L-02
Property Type Industrial - Land
Type of Transaction Sale
COE 11/16/22
Sales Contract Date
Sales Price $1,900,000
$/Sq. Ft. (Land)
Address E. Glenn Avenue
City, State Modesto, CA
Zip 95350
APN 086-038-001 through -005
Buyer
Seller
Document #
Terms
Parcel Size (Acres) 4.71
Parcel Size (Sq. Ft.)
Approx. Dimensions
Improvements
Utilities
Zoning
General Plan
Entitlements
Verified By
Comments This is the sale of five parcels that sold together, four of which are just over one half acre.

The property is in an industrialized area in the southern part of Modesto. There are retail uses that abut the site. The asking price was $2.1M or $10.24/SF. The marketing period was about 8 months. The seller owns the adjacent parcel improved for outside storage of recreational vehicles that was developed in 2021. There is a 10-foot-wide PUE along the frontage. At the time of sale, the buyer had plans / approvals to develop the site for their equipment / construction supply business.

Bill Johnson - Listing Agent
M-2
Industrial
None
None
All Cash
205,168
Rectangular parcels that form an L-shape; 542 feet of frontage All to Site
60-Day Escrow
Equipmentshare.com Inc
Modesto RV & Boat Storage LLC
2022-0074081
$9.26
#32..
- 1807 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
55 Comparable Land Sale Parcel Maps
#32..
- 1808 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
56 Comparable Land Sale Data Sheets
L-03
Property Type Commercial - Land
Type of Transaction Sale
COE 06/21/22
Sales Contract Date
Sales Price $733,000
$/Sq. Ft. (Land)
Address 1320 Yosemite Blvd
City, State Modesto, CA
Zip 95354
APN 035-025-014
Buyer
Seller
Document #
Terms
Parcel Size (Acres)
Parcel Size (Sq. Ft.)
Approx. Dimensions
Improvements
Utilities
Zoning
General Plan
Entitlements
Verified By
Comments This is the sale of a commercial lot on the south side of Yosemite Boulevard (SR-132) in Modesto. Traffic counts along this stretch of SR-132 is 24,200 ADT (2021). The lot was created in 2019 as part of a 4-lot subdivision. There is a 40-foot wide access and PUE along the western portion of the property, shared by the three other parcels. Additionally, there are 40-foot-wide reciprocal easements on the adjacent properties, which would allow access to this property from South Santa Cruz Avenue, and the west 25 feet of this parcel is improved with Ruffino Avenue (extends to the center of the street); encumbered area is approximately 5,125 square feet or 0.178 acre. The 1.33 acres indicated in public records is a gross area. According to the buyer, the property was purchased with plans for a commercial center, potentially with a drive-thru carwash use. The buyer owns the 1.49-acre parcel to the south and purchased for assemblage. Any particular motivation on behalf of the buyer was not discovered.

Raja Singh - Buyer
Not Discovered

1.33 57,934
$12.65
Generally Rectangular
All to Site
C-2
Commercial
None
Conventional Loan; 47.48% Down Payment
Yosemite Car Wash, Inc.

RGR Ventures, LLC
2022-0044644
6-Month Escrow
#32..
- 1809 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
57 Comparable Land Sale Parcel Maps
#32..
- 1810 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
58 Comparable Land Sale Data Sheets
L-04
Property Type Commercial - Land
Type of Transaction Sale
COE 10/04/19
Sales Contract Date
Sales Price $235,000
$/Sq. Ft. (Land)
Address 715 H St
City, State Modesto, CA
Zip 95354
APN 104-005-004
Buyer
Seller
Document #
Terms
Parcel Size (Acres)
Parcel Size (Sq. Ft.)
Approx. Dimensions
Improvements
Utilities
Zoning
General Plan
Entitlements
Verified By
Comments This is the sale of a commercial lot located on the southwest corner of H and 8th streets in the downtown area of Modesto. The former Crescent Supply building that had occupied the site had been severely damaged by two fires, one that occurred while in escrow. The listing agent was unaware of what the buyer plans to do with the property, but a published news article indicates that it was initially intended to be redeveloped for affordable housing, but the approval process was too slow, so the former 17,000 square foot building would be rebuilt and leased to the construction company building the new superior court house a couple blocks over for storage of equipment and supplies, and after the 3.5 year lease is up, a mix of retail and office space. The property appears to have been openly marketed for only a short time. The buyer was attracted to the property because of its proximity to the new courthouse and has purchased other properties in the downtown area for rehabilitation.

Danny Price - Listing Agent
None

0.40 17,424
$13.49
Rectangular
All to Site
TD
Downtown
See Comments
Cash to Seller
Vintage Properties, LP
Joy Tamaras, Trs.
2019-0068600
30-Day Escrow
#32..
- 1811 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
59 Comparable Land Sale Parcel Maps
#32..
- 1812 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
60 Sales Data Analysis
Adjustments are made to the comparable sale prices for the differences in the properties as they compare to the subject. The comparable data has been adjusted for inferior and superior characteristics. For Example: where a comparable had an inferior characteristic, a positive (+) adjustment to the comparable was made. Where the comparable had a superior characteristic, a negative (-) adjustment was made to the comparable. Adjustments were made sequentially for property rights conveyed, financing terms, conditions of sale, expenditures incurred by the buyer immediately after the sale, and market conditions at the time of sale. Adjustments for location characteristics, physical characteristics, use and non-realty components of value are subsequently added and applied. None of the sales are known to have included non-realty components of value.

A summary of the adjustments made to the comparable sales for the various factors affecting land value, as compared to the subject, is included in the table below, followed by a discussion that expands upon the adjustments made in greater detail. Bold or larger font reflects a more significant adjustment.

The buyer of L-03 owns the parcel to the south of it that only has access to public streets through easements across adjacent parcels and assembling the two would greatly enhance the utility of the southerly parcel, necessitating a downward adjustment for the assemblage condition.

L-04 was given upward consideration for having sold at a time of inferior market conditions, supported by data presented in a previous report section (see Real Estate Market Conditions) and the opinions of market participants interviewed during the sale confirmation process.

Comparable L-01 L-02 L-03 L-04
Address
City, State Modesto (Unincorp.),
CA
Modesto, CA Modesto, CA Modesto, CA
Sale Date Jan-23 Nov-22 Jun-22 Oct-19
Sales Price $497,500 $1,900,000 $733,000 $235,000
Parcel Size (Acres) 1.16 4.71 1.33 0.40
Sales Price / Sq. Ft. $9.85 $9.26 $12.65 $13.49
Property Rights Conveyed Ø Ø Ø Ø
Financing Terms Ø Ø Ø Ø
Conditions of Sale Ø Ø Negative Ø
Expenditures After Purchase Ø Ø Ø Ø
Market Conditions (Time) Ø Ø Ø Positive
Location Positive Positive Negative Ø
Size Ø Positive Ø Negative
Site Utility / Constraints Positive Ø Positive Negative Utilities / Off-Sites Positive Ø Ø Ø
Contributory $ of Improvements Ø Ø Ø Ø
Land Use / Zoning Positive Positive Positive Ø
Net Adjustment Positive Positive Negative Negative
4621 Glass Court E. Glenn Avenue 1320 Yosemite Blvd 715 H St #32..
- 1813 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
61 The subject is included in the downtown area of Modesto, but on the fringe and in an older industrial section (see Property Description). L-01 and L-02 are also in industrial neighborhoods within the greater Modesto area, but judged to have less locational appeal when considering the subject’s downtown location, in addition to these two comparables lacking the subject’s above average exposure/visibility at the corner of two intersecting arterial streets that receive high traffic counts, warranting upward adjustments for this factor. Like the subject, L-03 fronts on a major thoroughfare, but also in an area of retail synergy and judged to rate superior to the subject for this element of comparison and a downward adjustment has been applied. L-04 is also in Modesto’s downtown in an industrial section along the rail line but closer to the core area and one block from the new courthouse that is currently under construction, which is anticipated to be just the start to a revitalization of the downtown. L-04 is judged to be in a more desirable area of the downtown, but the comparable lacks the subject’s above average exposure/visibility, despite L04 also having a corner location. Adjustments for differences in location between the subject and L-04 are concluded to be offsetting.

The subject consists of 1.38 acres (see Site Description), which is bracketed by the size of the comparables, ranging from 0.4 acre to 4.71 acres. An upward adjustment is determined to be warranted for L-02, at the upper end of the indicated range, for its larger parcel size based on the law of diminishing returns, which dictates that larger commercial lots transact at a lower unit price and vice versa. Conversely, a downward adjustment has been applied to L-04 for its much smaller size. L-01 and L-03 are judged to be in a similar size class, therefore no adjustments have been applied.

The subject site forms a triangular shape, but has an extensive amount of street frontage (see Site Description). L-01 also forms an irregular shape, but is located at the end of a cul-de-sac with limited access, warranting an upward adjustment for its inferior site utility. L-02 is a deep lot that lacks the subject’s above average access, but is comprised of multiple lots that sold together that could be developed independently despite the intended use of the buyer (see Datasheet).

Adjustments between the subject and L-02 for this factor are judged to be offsetting. L-03 has a superior rectangular shape and access from all sides of the parcel from either two public streets or reciprocal access easements. However, a portion of the site is encumbered with public street improvements, rendering that portion of the site undevelopable, as well as one of the access easements (see Datasheet) and L-03 is determined to require an overall positive adjustment for this element of comparison. A downward adjustment has been applied to L-04 for its regular shape.

Like the subject, the comparables are located in urbanized areas where public utilities are available. However, L-01 is outside the city limits and on-site water retention would be required for drainage, warranting an upward adjustment for this factor.

L-04 had been improved with a structure that was mostly destroyed by fire. The building was ultimately rebuilt by the buyer and exterior walls reused, but the buyer initially intended on clearing the site with plans for redevelopment with affordable housing, suggesting that the improvements did not contribute any value, so no adjustment is necessitated.

The subject’s zoning allows for a wide range of commercial uses, as well as industrial uses, and the General Plan permits a high FAR (see Zoning and General Plan of the Subject Property). With #32..
- 1814 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
62 the exception of L-04, the other comparables lack the flexibility of the subject’s M-1 zoning combined with the Downtown land use designation, necessitating upward adjustments.

Land Value Conclusion (Before Condition)
The unit selling prices of the comparables range from $9.26 to $13.49 on a per square foot basis.

After adjusting for the various factors considered for this type of property, as compared to the subject, the unit value range narrows to between $9.85 and $12.65 per square foot, as indicated by L-01 and L-03, respectively. The data points to a unit value conclusion for the subject underlying land that favors L-03, and well above the unit sale prices of L-01 and L-02. Based on the prior analysis and discussion, it has been concluded that the unit market value of the subject land, utilizing the sales comparison approach, is $12.00 per square foot.

The estimated fair market value of the subject underlying land, on the date of value, is indicated in the table below.

Property to be Acquired
An exhibit prepared by and obtained from the Client depicting the proposed partial fee simple acquisition is displayed following this report section. The boundaries were not identified at the site by staking, but an aerial image included as part of the exhibit serves as an aid in establishing the location of the area to be acquired. The acquisition area is a uniform width 50 feet and extends across the entire southern boundary of the subject site, adjacent to the Morton Boulevard right of way. The area proposed to be acquired is approximately 21,309 square feet, as shown on the exhibit. Sections of six-foot-tall chain link fencing will be impacted, as well as a 14-foot-wide manual slide gate (see Site Improvements in Acquisition Area).

Whole Property - Before Condition
Fee Simple Interest: Land Only $12.00 × 60,112 = $721,344 Unit Value
($/Sq. Ft.)
Land Area
(Sq. Ft.)
Indicated
Value
#32..
- 1815 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
63 Partial Fee Simple Acquisition Exhibit
#32..
- 1816 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
64 Value of the Area to be Acquired
Partial Fee Simple Acquisition
The value of the proposed partial fee simple acquisition is arrived at by applying the previously concluded unit value of the subject property (see Sales Comparison Approach) to the proposed acquisition area (see Property to be Acquired).

The estimated fair market value for the partial fee simple acquisition is calculated as follows:

Site Improvements in Acquisition Area
Site improvements located in the area of the proposed partial fee simple acquisition include sections of six-foot-tall chain link fencing and a 14-foot-wide manual slide gate (see Subject Property Photographs).

The contributory value of fencing and gate has been considered and it has been concluded that the depreciated replacement cost is equal to market value. Marshall Valuation Service (MVS), a construction cost service widely in use by appraisers, was utilized to estimate the replacement cost of the affected fencing/gate. Delivery and installation were included where applicable.

Depreciation can occur from physical deterioration, functional obsolescence and external obsolescence. The owner indicated that the fencing and gate were installed within the past few years, and judged to display above average condition, with the exception of a portion damaged from what appears to be a vehicle impact.

The depreciated value of the affected fencing/gate is shown in the table below.

Damages
Damages generally occur when the acquisition of a portion of a property results in the remaining property having less value after the acquisition and construction of the project in the manner Property Rights Appraised
Fee Simple Interest: Underlying Land Only $12.00 × 21,309 = $255,708 Estimated Fee
Simple Value
($/Sq. Ft.)
Acquisition
Area
(Sq. Ft.)
Indicated
Value
Site Improvements
6' Tall Chain Link Fencing 520 x $30.00 - 25% = $11,700 Manual Slide Gate 1 x $2,015.00 - 25% = $1,511
Total Value of Depreciated Site Improvement Acquisitions: $13,211 Count /
Ln. Ft.

Replacement Cost
New ($/Unit)
Less
Depreciation
Estimated
Value
#32..
- 1817 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
65 proposed than it had as part of the original property prior to the taking. Stated another way, after the acquisition of a portion of the property and construction of the project in the manner proposed, the value of the remaining property is less than it was as part of the entire property before the taking.

A portion of the subject’s fenced surplus land area in the southern part of the site (see Property to be Acquired) is needed for the project (see Project Description), reducing the size of the subject property at 60,112 square feet (see Site Description) by 21,309 square feet and creating a 38,803 (60,112 - 21,309) square foot remainder. The acquisition area is not being used to support the subject improvements and is currently being marketed for lease for use as outside storage, which it previously had been used for in the past (see Title and Property History). The remainder of the surplus land area not needed for the project could be used to support the subject improvements.

The FAR excluding the surplus land area in the before condition is 0.48, which is generally considered to be above what is typical for quasi retail use because parking can be deficient, as in the case of the subject. Including the remainder of the surplus land area in the after condition with the portion of the site currently being used to support the subject improvements would result in a 0.38 FAR, which is more in line with industrial properties being utilized for retail use, which includes the improved comparable sales analyzed previously ranging from 0.32 to 0.38 FAR (see Full Acquisition Valuation). Therefore, it has been judged that the overall utility of the subject remainder, in comparison with the before condition, is similar, and the highest and best use remains the same.

The remainder of the fencing securing the surplus land area will no longer be needed and the depreciated value of the fencing has been included as a severance damage, as shown in the table below.

Benefits
No benefits were found to accrue to the subject as a result of the proposed project that would offset damages.

Construction Contract Work (CCW)
No construction contract work is anticipated.

Estimated Fair Market Value – Partial Acquisition Valuation The total estimated fair market value to be used as a basis for determining just compensation for the proposed acquisition needed from the subject property for the River Trunk Realignment Site Improvements
6' Tall Chain Link Fencing 190 x $30.00 - 25% = $4,275
Severance Damages: $4,275
Estimated
Ln. Ft. Value
Replacement Cost
New ($/Unit)
Less
Depreciation
#32..
- 1818 -
City of Modesto
River Trunk Realignment Project Phase I - Pump Station
APN: 103-006-002 – Varni Brothers Corporation
66 Project Phase I - Pump Station under the Partial Acquisition Valuation scenario is summarized as follows:

Partial Acquisition Valuation
Partial Fee Simple Acquisition: $255,708
Site Improvements: $13,211
Damages: $4,275
Benefits: + $0
Estimated Fair Market Value: $273,194
Rounded To: $273,000
#32..
- 1819 -

ADDENDA
#32..
- 1820 -

COMPARABLE IMPROVED SALES PARCEL MAPS
#32..
- 1821 -
#32..
- 1822 -
#32..
- 1823 -
#32..
- 1824 -
#32..
- 1825 -

NOTICE OF DECISION TO APPRAISE
#32..
- 1826 -
Notice of Decision to Appraise
Corporate Office
1255 Treat Blvd., Suite 815
Walnut Creek, CA 94597
925.691.8500 phone
925.691.6505 fax
www.arws.com
May 3, 2023
Stanislaus Distributing Co., Inc.
416 Hosmer Avenue
Modesto, CA 95351
Re: River Trunk Realignment Project Phase I - Pump Station Project Property Address: 131 9th Street, Modesto, CA 95351
APNs: 103-006-002
Dear Property Owner:

The City of Modesto (City) is considering acquiring certain property rights for the River Trunk Realignment Project Phase I - Pump Station Project (Project). As shown on the enclosed exhibit, a portion of your property is within the Project Area and is proposed to be acquired for the Project.

Associated Right of Way Services, Inc. (AR/WS) will be making a fair market value appraisal of your property to assist the City in its determination of the amount of probable compensation for your property for the project. I would like to contact you for the purposes of conducting an inspection of your property. You have a right to accompany me on this site visit or any representative you designate. You can reach me by phone at (925) 691-2840 or email [email protected] to arrange a mutually convenient time to visit or discuss your property. This will give you an opportunity to advise me of facts that may bear on determining the fair market value. A booklet generally explaining the rights and benefits of a property owner is included with this letter.

Please note that California law provides that, under certain circumstances, a public entity will reimburse you up to a maximum of $5,000 in reasonable costs for you to hire an independent appraiser should you disagree with the appraisal report prepared by AR/WS for the City. With this Notice of Decision to Appraise, the City is offering this conditional reimbursement to you as the property owner. The reimbursement is subject to the following:

1. You must be the owner of record of the property. Approved reimbursements are limited to one payment of up to a total of $5,000 regardless of the number of owners on title.

2. The written appraisal contract must be between you and your selected appraiser.

3. Your appraiser must be licensed with the Bureau of Real Estate Appraisers (BREA).

Reimbursement will not be made unless your appraiser shows written verification that he/she is licensed and that the license is current and in good standing at the time of the appraisal. #32..
- 1827 -
Stanislaus Distributing Co., Inc.

Notice of Decision to Appraise
May 3, 2023

Page 2 of 2 ends

4. This is a reimbursement program. You are responsible for paying your appraiser. If you wish to seek reimbursement under this program, you will be expected to provide a copy of your contract with your appraiser as well as a copy of the applicable invoice that confirms payment.

While this reimbursement program has a maximum amount of $5,000, the costs must be reasonable and justifiable. Any charges for an appraisal report in excess of $5,000 are not eligible for reimbursement.

5. The City must receive your claim for reimbursement with adequate supporting documentation no later than sixty (60) days after your appraisal has been completed. If your appraiser does not complete the appraisal you have ordered, there will be no reimbursement (Written verification from the appraiser that the appraisal was completed and delivered and payment in full received will be required). This reimbursement is not payable for partial appraisal completion or appraisal consultation. It is a one-time payment of up to a maximum of $5,000 of reasonable costs regardless of changes which may occur during the course of planning, design or engineering for the project. A copy of the completed appraisal report may be submitted as evidence for reimbursement but this is not required.

The appraisal of real property in connection with planned acquisition for a public project can be a complex effort. If you do plan to retain your own appraiser, you are encouraged to interview professionals who are experienced in this particular specialized area of appraisal. Some sources to consult for more information about appraisers and appraisals related to proposed government acquisitions for public projects are:
• Bureau of Real Estate Appraisers
• International Right of Way Association
• Appraisal Institute of California
www.brea.ca.gov
www.irwaonline.org
www.appraisalinstitute.org
If the City is still contemplating acquiring your property after completion of the appraisal, then you will be contacted by an acquisition representative from AR/WS to make an offer to purchase in an amount determined to be just compensation, and in no event less than the value reported in the approved appraisal.

Sincerely,
Brian Drake, R/W-AC
State Certified General Appraiser
CA License No. 031568
Enclosures
cc: Peter J. Kambel, P.E.
#32..
- 1828 -
Corporate Office
1255 Treat Blvd., Suite 815
Walnut Creek, CA 94597
925.691.8500 phone
925.691.6505 fax
www.arws.com
April 3, 2023
Varni Brothers Corporation
400 Hosmer Avenue
Modesto, CA 95351
Re: River Trunk Realignment Project Phase I - Pump Station Project Property Address: 131 9th Street, Modesto, CA 95351
APNs: 103-006-002
Dear Property Owner:

1. You must be the owner of record of the property. Approved reimbursements are limited to one payment of up to a total of $5,000 regardless of the number of owners on title.

2. The written appraisal contract must be between you and your selected appraiser.

3. Your appraiser must be licensed with the Bureau of Real Estate Appraisers (BREA).

Reimbursement will not be made unless your appraiser shows written verification that he/she is licensed and that the license is current and in good standing at the time of the appraisal.

Notice of Decision to Appraise
#32..
- 1829 -
Varni Brothers Corporation
Notice of Decision to Appraise
April 3, 2023

Page 2 of 2 ends

The appraisal of real property in connection with planned acquisition for a public project can be a complex effort. If you do plan to retain your own appraiser, you are encouraged to interview professionals who are experienced in this particular specialized area of appraisal. Some sources to consult for more information about appraisers and appraisals related to proposed government acquisitions for public projects are:
• Bureau of Real Estate Appraisers www.brea.ca.gov
• International Right of Way Association www.irwaonline.org • Appraisal Institute of California www.appraisalinstitute.org If the City is still contemplating acquiring your property after completion of the appraisal, then you will be contacted by an acquisition representative from AR/WS to make an offer to purchase in an amount determined to be just compensation, and in no event less than the value reported in the approved appraisal.

Sincerely,
Brian Drake, R/W-AC
State Certified General Appraiser
CA License No. 031568
Enclosures
cc: Peter J. Kambel, P.E.
#32..
- 1830 -

PRELIMINARY TITLE REPORT
#32..
- 1831 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 1
Cypress Title Corporation
Cypress Title Corporation
Cypress Title Corporation
1600 N. Carpenter Rd. Suite A-2
Modesto, CA 95351
PH: 209.375.8299 FX: 209.342.9027
. .
.

CA
.

Escrow Officer: DEBBI JOHNSON
Email: [email protected]
Assistant:

Email:

Owner: Varni Bros.

Property: 131 9TH STREET
MODESTO, CA 95351
#32..
- 1832 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 2
Cypress Title Corporation

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.

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. #32..
- 1833 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 3
Cypress Title Corporation
Dated as of Tuesday, December 20, 2022 at 7:30 A.M.

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

ALTA/CLTA Homeowner's Policy of Title Insurance (2010), if applicable, or CLTA/ALTA Standard Owner's Policy 1990; and/or ALTA Loan Policy (2006).

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:

STANISLAUS DISTRIBUTING CO, INC. A CORPORATION
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/or assessments for the fiscal year 2022 - 2023, a lien, but not yet due or payable.

2. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Section 75, et seq. of the Revenue and Taxation Code of the State of California.

3. Assessments that may be levied by the Irrigation District. Further information on said assessments may be obtained by contacting said district.

4. WATER RIGHTS, CLAIMS OR TITLE TO WATER, WHETHER OR NOT SHOWN BY THE PUBLIC RECORDS.

5. THE FACT THAT SAID PROPERTY LIES WITHIN THE REDEVELOPMENT PROJECT AREA, AS DISCLOSED BY MESNE. DOCUMENTS OF RECORD, ONE OF WHICH:

Recorded: 01/24/2008, Instrument No. 2008-7172 of Official Records #32..
- 1834 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 4
Cypress Title Corporation

6. RIGHTS OF THE PUBLIC OVER THAT PORTION OF SAID LAND LYING WITHIN ANY STREET, ROAD, ALLEY OR HIGHWAY.

7. Easements, recitals, setbacks, and other matters affecting said land for the purposes stated thereon, and incidental purposes therein, as said land is shown in the legal description herein. Recorded 12/21/1942, Book 15 of Maps.

8. Easements affecting those portions of said land and for the purposes stated herein and incidental purposes as provided in an instrument,
In favor of: CITY OF MODESTO
For: WATER MAINS
Recorded: 09/30/1916, Book 230 Page 538 of Deeds
Affects: as described therein

9. Easements affecting those portions of said land and for the purposes stated herein and incidental purposes as provided in an instrument,
In favor of: CITY OF MODESTO
For: WATER AND SEWER PIPES
Recorded: 01/29/1929, Book 316 Page 32 of Official Records Affects: as described therein

10. Easements affecting those portions of said land and for the purposes stated herein and incidental purposes as provided in an instrument,
In favor of: CENTRAL PACIFIC RAILWAY
For: RAILROAD
Recorded: 09/23/1929, Book 353 Page 472 of Official Records Affects: as described therein

11. Our examination of record title to the herein described land does not disclose any existing loans.

Please forward to title an executed owners affidavit with reference to any existing encumbrances to reconfirm our findings.

12. RIGHTS OR CLAIMS OF PARTIES IN POSSESSION

13. Any facts, rights, interests or claims which would be disclosed by a correct ALTA/ACSM Survey and/or inspection of said land.
#32..
- 1835 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 5
Cypress Title Corporation

REQUIREMENTS
PRIOR TO THE ISSUANCE OF ANY POLICY OF TITLE INSURANCE, THE COMPANY WILL REQUIRE:

1. The requirement that the owners affidavit be executed and upon review further requirements may be requested prior to the issuance of any policy of insurance.

2. The requirement that underwriting approval be obtained if any policy of title insurance is requested other than a standard owners policy.

3. The requirement that High Liability approval be obtained prior to the close and issuance of any policy of title insurance. The High Liability process must be completed according to the Policy Underwriter’s requirements.

4. SHOULD THIS REPORT BE USED TO FACILITATE YOUR TRANSACTION, WE MUST BE PROVIDED WITH THE FOLLOWING PRIOR TO THE ISSUANCE OF THE POLICY:

A. A CERTIFICATE OF GOOD STANDING OF RECENT DATE ISSUED BY THE SECRETARY OF STATE OF THE CORPORATION’S STATE OF DOMICILE.

B. A CERTIFICATE COPY OF A RESOLUTION OF THE BOARD OF DIRECTORS AUTHORIZING THE

CONTEMPLATED TRANSACTION AND DESIGNATING WHICH CORPORATE OFFICERS SHALL HAVE THE POWER TO EXECUTE ON BEHALF OF THE CORPORATION.

C. REQUIREMENTS WHICH THE COMPANY MAY IMPOSE FOLLOWING ITS REVIEW OF THE ABOVE MATERIAL AND OTHER INFORMATION WHICH THE COMPANY MAY REQUIRE. #32..
- 1836 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 6
Cypress Title Corporation

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. This report is preparatory to the issuance of an ALTA Loan Policy. We have no knowledge of any fact which would preclude the issuance of the policy with CLTA endorsement forms 100 and 116 and if applicable, 115 and 116.2 attached.

When issued, the CLTA endorsement form 116 or 116.2, if applicable will reference a(n) COMMERCIAL PROPERTY known as 131 9TH STREET, MODESTO, CA, 95351

2. General and special taxes and/or assessments for the fiscal year 2022 - 2023, as follows:

Assessor’s Parcel No.: 103-006
TRA: 002-173
1 st Installment: $1,173.28 PAID 11/07/2022
2 nd Installment: $1,173.28 PAID 11/07/2022

3. The current vesting was derived from the following documents:

A deed was recorded 01/06/1969 as Document No. 417 Official Records, Dated: 12/05/1968
Grantor: NORTHERN CALIFORNIA COMPANY, A CALIFORNIA CORPORATION Grantee: STANISLAUS DISTRIBUTING CO, INC. A CORPORATION

4. There are no conveyances affecting said land within two (2) years of the date of this report, except the following:

None.

5. The map attached, if any, may or may not be a survey of the land depicted hereon. Cypress Title Corporation, and its underwriters, 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. #32..
- 1837 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 7
Cypress Title Corporation

LEGAL DESCRIPTION

REAL PROPERTY IN THE CITY OF MODESTO, COUNTY OF STANISLAUS, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:

All that portion of Block U of the CITY OF MODESTO, as per Map filed December 21, 1942 in Vol, 15 of Maps, stanislaus County Records, described as follows, to wit:

Beginning at a point where the Southwesterly line of Ninth Street intersects the Southeasterly line of "B" Street, City of Modesto, Thence Southwesterly along the Southeasterly line of "B" Street, to the Northeasterly line of Eighth Street, produced a diatance of 290 feet; thence Southeasterly along the Northeasterly line of Eighth Street; produced a distance of 70.2 feet thence East a distance of 399.0 feet to a point in the Southwesterly line of Ninth street, that is a distant Southeasterly thereon 343.5 feet from the Southeasterly line of "B" Street; thence Northwesterly alone the said Southwesterly line of Ninth street, having a bearing of North 43 degrees, 29' 30" West, a distance or 343.5 feet to the point of beginning.

APN: 103-006-002
#32..
- 1838 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 8
Cypress Title Corporation

Entire map, if any additional pages
#32..
- 1839 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 9
Cypress Title Corporation
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.

If you have any questions about the effect of this new law, please contact your local Cypress Office for more details. #32..
- 1840 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 10
Cypress Title Corporation

EXHIBIT A

LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE)

1. CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY - 1990

SCHEDULE B EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:

1. Taxes or assessments which 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. Proceedings by a public agency which may result in taxes or assessments, or notice 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 which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof.

3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are 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.

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 which arise by reason of:

1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.

2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge.

3. Defects, liens, encumbrances, adverse claims or other matters:
(a) whether or not recorded in the public records at Date of Policy, but 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; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy.

4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable "doing business" laws of the state in which the land is situated.

5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law.

6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by their policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws.

2. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B - 1970

SCHEDULE OF EXCLUSIONS FROM COVERAGE

1. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions of area of the land, or the effect of any violation of any such law, ordinance or governmental regulation.

2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy.
#32..
- 1841 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 11
Cypress Title Corporation

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 and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy.

3. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B - 1970

WITH REGIONAL EXCEPTIONS
When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 2 above are used and the following exceptions to coverage appear in the policy.

SCHEDULE B
This policy does not insure against loss or damage by reason of the matters shown in parts one and two following:

1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real G property or by the public records.

2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof.

3. Easements, claims of easement or encumbrances which are not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.

5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water.

6. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records.

4. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1970
WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE SCHEDULE OF EXCLUSIONS FROM COVERAGE

1. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions or area of the land, or the effect of any violation of any such law ordinance or governmental regulation.

2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy.

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 and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder, (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent insurance is afforded herein as to any statutory lien for labor or material or to the extent insurance is afforded herein as to assessments for street improvements under construction or completed at Date of Policy).

4. Unenforceability of the lien of the insured mortgage because of failure of the insured at Date of Policy or of any subsequent owner of the indebtedness to comply with applicable "doing business" laws of the state in which the land is situated.

5. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1970

WITH REGIONAL EXCEPTIONS
When the American Land Title Association Lenders Policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy, the exclusions set forth in paragraph 4 above are used and the following exceptions to coverage appear in the policy.

SCHEDULE B
This policy does not insure against loss or damage by reason of the matters shown in parts one and two following:

1. Taxes or assessments which 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.

3. Easements, claims of easement or encumbrances which are not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.
#32..
- 1842 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 12
Cypress Title Corporation

5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water.

6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records.

6. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992
WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE 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 which arise by reason of:

1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy; (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.

3. Defects, liens, encumbrances, adverse claims, or other matters:
(a) whether or not recorded in the public records at Date of Policy, but 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 (except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services, labor or material or the extent insurance is afforded herein as to assessments for street improvements under construction or completed at date of policy); or
(e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage.

4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable "doing business" laws of the state in which the land is situated.

6. Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance.

7. Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on:
(i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure:
(a) to timely record the instrument of transfer; or
(b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor.

7. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992

WITH REGIONAL EXCEPTIONS
When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 6 above are used and the following exceptions to coverage appear in the policy.

SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:

1. Taxes or assessments which 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.

Page Number: 13
Cypress Title Corporation

3. Easements, claims of easement or encumbrances which are not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.

5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water.

6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records.

8. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY – 1992

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; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy.

4. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on:
(i) the transaction creating the estate or interest insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the transaction creating the estate or interest insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure:
(a) to timely record the instrument of transfer; or
(b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor.

9. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992

WITH REGIONAL EXCEPTIONS
When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 8 above are used and the following exceptions to coverage appear in the policy.

SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:

1. Taxes or assessments which 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.

3. Easements, claims of easement or encumbrances which are not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records.

5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. #32..
- 1844 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 14
Cypress Title Corporation

6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records.

10. PROTECTION OWNER'S POLICY
CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 2008
ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 2008
Covered Risks 16 (Subdivision Law Violation). 18 (Building Permit). 19 (Zoning) and 21 (Encroachment of boundary walls or fences) are subject to Deductible Amounts and Maximum Dollar Limits of Liability

EXCLUSIONS
In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from:

1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning:
a. building b. zoning
c. land use d. improvements on the land
e. land division f. environmental protection
This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27.

2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15.

3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17.

4. Risks:
a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the policy Date; c. that result in no loss to You; or
d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28.

5. Failure to pay value for Your Title.

6. Lack of a right:
a. to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and b. in streets, alleys, or waterways that touch the Land.

This Exclusion does not limit the coverage described in Covered Risk 11 or 21

LIMITATIONS ON COVERED RISKS
Your insurance for the following Covered Risks is limited on the Owner’s Coverage Statement as follows: 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 or $5,000.00 (whichever is less) $10,000.00 Covered Risk 18: 1% of Policy Amount or $5,000.00 (whichever is less) $25,000.00 Covered Risk 19: 1% of Policy Amount or $5,000.00 (whichever is less) $25,000.00 Covered Risk 21: 1% of Policy Amount or $2,500.00 (whichever is less) $5,000.00

11. THIRD GENERATION LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (1/01/08)

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 which 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, 6, 13(c), 13(d), 14 or

16. (b)Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16.

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 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or
(e) resulting in loss or damage which would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing business laws of the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured #32..
- 1845 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 15
Cypress Title Corporation
Mortgage and is based upon usury, or any consumer credit protection or truth-in-lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26.

6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11.

7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25.

8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6.

12. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 2006

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:
(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 11, 13, or 14); or
(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.

4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing- business laws of the state where the Land is situated.

5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law.

6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors? rights laws, that the transaction creating the lien of the Insured Mortgage, is
(a) a fraudulent conveyance or fraudulent transfer, or
(b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy.

7. 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 Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b).

13. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 2006

WITH REGIONAL EXCEPTIONS
When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 13 above are used and the following exceptions to coverage appear in the policy.

SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:

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.

14. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 2006

1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, Prohibiting, or relating to
#32..
- 1846 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 16
Cypress Title Corporation
(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 Risks 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.

15. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 2006

WITH REGIONAL EXCEPTIONS
When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 15 above are used and the following exceptions to coverage appear in the policy.

SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of:

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

Page Number: 17
Cypress Title Corporation
Cypress Title Corporation

FACTS WHAT DOES CYPRESS TITLE CORPORATION DO WITH YOUR PERSONAL INFORMATION?
Why? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

What? The types of personal information we collect and share depend on the product or service you have with us. This information can include:
 Social Security number and account balances
 Payment history and credit card or other debt
 Checking account information and wire transfer instructions When you are no longer our customer, we continue to share your information as described in this notice.

How? All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons CYPRESS TITLE CORPORATION chooses to share; and whether you can limit this sharing.

Reasons we can share your personal
information
Does CYPRESS
TITLE

CORPORATION
share?
Can you limit this sharing?
For our everyday business purposes – such as to
process your transactions, maintain your account(s),
respond to court orders and legal investigations, or
report to credit bureaus
Yes No
For our marketing purposes- to offer our products and
services to you
Yes No
For joint marketing with other financial companies No We don’t share For our affiliates’ everyday business purposesinformation about your transactions and experiencesYes No For our affiliates’ everyday business purposesinformation about your creditworthinessNo We don’t share For our affiliates to market to you No We don’t share
For nonaffiliates to market to you No We don’t share
Questions? Call (888) 485-3791
#32..
- 1848 -
Order Number: 3710522-02453
Escrow Number:

Page Number: 18
Cypress Title Corporation

Page 2 ends

Who we are
Who is providing this notice? CYPRESS TITLE CORPORATION What we do
How does CYPRESS TITLE
CORPORATION protect my personal
information?
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

How does CYPRESS TITLE
CORPORATION collect my personal
information?
We collect your personal information, for example, when you  Apply for insurance or pay insurance premiums
 Provide your mortgage information or show your driver’s license  Give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing? Federal law gives you the right to limit only  Sharing for affiliates’ everyday business purposes –
information about your creditworthiness
 Affiliates from using your information to market to you  Sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing.

Definitions
Affiliates Companies related by common ownership or control. They can be financial and nonfinancial companies.
 Our affiliates include companies that are owned in whole or in part by Realogy Holdings Corp., such as Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®,
Coldwell Banker Commercial®, The Corcoran Group®, ERA®, Sotheby's International Realty®, ZipRealty®, NRT LLC, Cartus and Title Resource Group.

Nonaffiliates Companies not related by common ownership or control. They can be financial and nonfinancial companies.
 CYPRESS TITLE CORPORATION does not share with
nonaffiliates so they can market to you.

Joint Marketing A formal agreement between nonaffiliated financial companies that together market financial products or service to you.
 CYPRESS TITLE CORPORATION does not share with
nonaffiliated financial companies for joint marketing purposes. #32..
- 1849 -
Exhibit A

REAL PROPERTY IN THE CITY OF MODESTO, COUNTY OF STANISLAUS, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:

All that portion of Block U of the CITY OF MODESTO, as per Map filed December 21, 1942 in Vol, 15 of Maps, stanislaus County Records, described as follows, to wit:

APN: 103-006-002
#32..
- 1850 -

APPRAISERS QUALIFICATIONS
#32..
- 1851 -

BRIAN DRAKE, R/W-AC
Industry experience since 2004
Current Responsibilities
Brian C. Drake joined Associated Right of Way Services, Inc., in 2011, with 7 years professional appraisal and valuation experience, and currently serves as Real Estate Appraiser. The scope of Mr.

Drake’s work includes complex appraisals on improved and unimproved properties for public improvement projects, as well as valuations for full and partial acquisitions of residential, commercial, industrial, and agricultural properties for transportation and utility improvement projects. Mr. Drake’s work is performed in conformance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act, Uniform Standards of Professional Appraisal Practice, Caltrans standards, and state and federal guidelines.

Prior Experience
Prior to joining the AR/WS team, Mr. Drake was a Real Estate Appraiser at The Schmidt-Prescott Group (San Jose, CA), where he appraised proposed and existing commercial, industrial, agricultural, and residential property. His experience includes appraising offices, medical offices, surgery centers, selfstorage facilities, warehouses, R&D facilities, retail strip and shopping centers, auto dealerships, restaurants, fast food restaurants, commercial condominiums, apartment complexes, and single-family and multi-family dwellings. Mr. Drake prepared appraisal reports for commercial, retail, industrial and residential properties throughout the greater Bay Area and Central Valley. His assignments also included the preparation of rent surveys for commercial, retail and industrial properties. Mr. Drake gained knowledge in various agricultural specific markets in the counties of Alameda, Contra Costa, Merced, Santa Clara, San Benito, San Joaquin and Stanislaus during his career as an appraiser. Valuation of property rights included fee simple, leased fee, leasehold, and ground rent. His clients included lenders, attorneys, accountants, corporations, municipalities, and individuals for eminent domain, estate planning, mortgage lending, litigation support, partnership disputes, taxation, gifting, investment, purchase, and sale.

Education
San Francisco State University, BA, Broadcast Communications Mr. Drake has taken several courses in matters of real property appraisal through the Appraisal Institute and IRWA to broaden his scope of knowledge and provide higher levels of service.

State of California Certified General Real Estate Appraiser No. AG031568 Member, International Right of Way Association (IRWA)
R/W-AC, Appraisal Certified, International Right of Way Association #32..
- 1852 -
BRIAN C. DRAKE, R/W-AC
Related Course Work:

The Appraisal Institute
Effective Appraisal Writing; Appraisal Principals; Basic Appraisal Procedures; Uniform Standards of Professional Appraisal Practice; Basic Income Capitalization; General Applications; Report Writing and Valuation Analysis; Business Practices & Ethics; Advanced Income Capitalization; Condemnation Appraising: Principals and Applications; Supervisory Appraiser/Trainee Appraiser Course; Eminent Domain and Condemnation; and USPAP Continuing Education International Right of Way Association (IRWA)
Ethics and the Right of Way Profession; The Valuation of Partial Acquisitions; Easement Valuation; Principals of Real Estate Engineering; Property Descriptions; Standards of Practice for the Right of Way Professional; Environmental Due Diligence and Liability; Non-Residential Relocation Assistance; Principles of Real Estate Negotiation; and Reviewing Appraisals in Eminent Domain National Highway Institute (US Department of Transportation) Real Estate Acquisition Under the Uniform Act
Other
Real Estate Principles; Real Estate Practice; Legal Aspects of Real Estate #32..
- 1853 -

MATTHEW SCHOCK, RWA, R/W-AC
Industry experience since 2007
Current Responsibilities
Matthew Schock joined Associated Right of Way Services, Inc., in 2007 and currently serves as a Real Estate Appraiser completing appraisal assignments for full and partial acquisition assignments on improved and unimproved properties for public improvement projects. Mr. Schock utilizes his technical skills to organize large scale projects, providing appraisal coordination and quality control. Work is performed in conformance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act, Uniform Standards of Professional Appraisal Practice, Caltrans standards, and state and federal guidelines.

Prior Experience
Prior to joining the AR/WS team, Mr. Schock worked as a Legal Process Clerk for the Yolo County District Attorney, where he performed a broad range of support and clerical services. Mr. Schock prepared daily criminal court calendars for deputy district attorneys; discovered police reports to defense attorneys, victims, and external agencies; and updated the computer database with information from criminal files.

Education
University of California, Davis, BA, Economics; BA, Political Science Mr. Schock continues his education for state licensing, and in matters of real property appraisal, acquisition, relocation, engineering, and law through the Appraisal Institute, the International Right of Way Association, and other professional organizations to broaden his scope of knowledge and provide higher levels of service.

State of California Certified General Real Estate Appraiser No. AG043887 State of California Real Estate Salesperson License No. 01915887 Practicing Affiliate Member, Appraisal Institute
Member, International Right of Way Association
RWA, Right of Way Agent, International Right of Way Association R/W-AC, Appraisal Certified, International Right of Way Association #32..
- 1854 -

MATTHEW SCHOCK, RWA, R/W-AC
Related Course Work:

The Appraisal Institute
Basic Appraisal Procedures; General Appraiser Sales Comparison Approach; General Appraiser Income Approach I; General Appraiser Income Approach II; Valuation of Partial Interests; General Appraiser Market Analysis and Highest and Best Use; General Appraiser Report Writing and Case Studies; General Appraiser Site Valuation and Cost Approach; Vineyard Valuation:

Wines and Vines; Business Practices and Ethics; Spring Litigation Conference; Eminent Domain & Condemnation
IRWA
Principles of Land Acquisition; Easement Valuation; Ethics and the Right of Way Profession; The Valuation of Partial Acquisitions; Legal Aspects of Easements; Property Descriptions; Appraisal Concepts for the Negotiator; Environmental Due Diligence and Liability; Non-Residential Relocation Assistance; Reviewing Appraisals in Eminent Domain; Standards of Practice for the Right of Way Professional
College
Public Microeconomics; Public Finance; Intermediate Microeconomic Theory; Intermediate Macroeconomic Theory; Analysis of Economic Data
McKissock
National USPAP Update Equivalent Continuing Education; The Nuts and Bolts of Green Building for Appraisers; Land and Site Valuation; Construction Details and Trends; Appraising Apartments: The Basics; Appraising and Analyzing Office Buildings for Mortgage Underwriting; Even Odder – More Oddball Appraisals; Supervisor-Trainee Course for California; Laws and Regulations for California Appraisers; Fundamentals of the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA)
Other
75-Hour Appraisal Qualifying Course for State Licensure; Uniform Standards of Professional Appraisal Practice; Residential Market Analysis and Highest and Best Use; Residential Report Writing and Case Studies; Residential Site Valuation and Cost Approach; Real Estate Acquisition Under the Uniform Act: An Overview; Real Estate Principles; Real Estate Practice; FHWA Program Management Essentials; FTA Real Estate Requirements #32..
- 1855 -

S S S S S S S
10' OFFSET
TYP 10' 20' 30' 50' EX.6"S
EX.6"W
EX.18"SD
EX.6"S
EX.4"S
EX.24"S
EX.36"S
EX.16"S
EX.6"S
EX.18"W CITY OF MODESTO ROW BIOFILTER AND BIOFILTER FAN FLOW METER VAULT ELECTRICAL BUILDING RIVER TRUNK PUMP STATION GENERATOR AND TRANSFORMER B STREET 9TH STREET 131 P:\12 Sanitary Sewers\Current CIPs\12D-00549 River Trunk Ph 1 - Pump Station (100646)\PLANS\DWG\0646_Pump Station Layout.dwg pking 8/4/22 8:26 CITY OF MODESTO UTILITIES DEPARTMENT PO BOX 642 1010 10TH STREET MODESTO, CA 95353 PROJECT SITE ADDRESS: DRAWN BY: CHECKED BY: DATE: SCALE: EXHIBIT: PROJECT: INTERSECTION OF B STREET AND 9TH STREET MODESTO, CA 95351 RIVER TRUNK REALIGNMENT PROJECT PHASE 1 - PUMP STATION PSKCCC 8/4/2022 1"=50' SK-1 #32.. - 1856 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

July 11, 2023
Date: July 5, 2023
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Brandon Gillespie, Chief of Police
SUBJECT: Amendment of Modesto Municipal Code to Repeal Article 18, “Regulation of Cruising”
CONTACT: Steven Stanfield, Police Lieutenant, [email protected], 209-572-9612 DESCRIPTION:

Consider an Ordinance amending the Modesto Municipal Code to Repeal Article 18, “Regulation of Cruising,” in its entirety, from Chapter 2, “Vehicles and Traffic Regulations,” of Title 3, “Public Safety,” relating to the City’s cruising ban. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

This item is related to the 2020-2025 Strategic Plan goal of improving community safety and quality of life through a combination of prevention and intervention efforts that address safety and its underlying issues.

BACKGROUND:

Modesto is the birthplace of George Lucas and the inspiration for his classic film “American Graffiti”. Released in 1973, the American Graffiti movie captured the first big weekend of cruising after school got out for the summer, which turned into the iconic “Graffiti Night” in Modesto. Graffiti Night became an annual cruising tradition in Modesto, bringing thousands of people and their cars into the city every year starting in the mid-to-late 1970s and continuing into the early 1990s.

As the notoriety of cruising in Modesto grew, so did Graffiti Night and the numbers of people who were drawn to the City from all over the United States. Starting in the mid-to-late 1980’s, this traditionally fun and celebratory weekend began to experience an increasing amount of violence, assaults, and shootings. After listening to complaints from city residents and business owners, and upon the recommendation of the Modesto Police Department, On March 27, 1990, Council approved Ordinance No. 2706, adding Article 18 “Regulation of Cruising” to the Modesto Municipal Code prohibiting cruising in specified no-cruising zones.

Under the above mentioned Article 18 of the Modesto Municipal Code, there are various provisions related to the prohibition and enforcement related to cruising, which is defined under #33..
- 1857 -
City Council, July 11, 2023
Amendment of Modesto Municipal Code to Repeal Article 18, “Regulation of Cruising”

Page 2 of 3 ends

Section 3-2.1802 as the “repetitive driving of any motor vehicle past a traffic-control point in traffic which is congested at or near the traffic control point.” Under Section 3-2.1806, the fine for a first violation is $100; a second violation within one year is subject to a fine of $200; and each additional violation within one year is subject to a fine of $250.

Over the past year cities across California, including Modesto, have engaged in dialogue with community members and organizations regarding the removal of local cruising bans that were enacted decades prior to keep communities safe.

DISCUSSION:

The City of Modesto has long celebrated its diverse community and embraces the rich and vibrant cultures that make up the City. Even though the City of Modesto enacted a cruising ban over 20 years ago, the City has consistently recognized the historical significance it had in promoting the love of classic cars and cruising. Today, Modesto still celebrates its classic car history by supporting local events like the annual Kiwanis Graffiti Parade and other classic car shows and events.

Over the past year, City staff, including Police Department officials, have met regularly with local classic car and cruising advocates to discuss the potential repeal of Article 18, “Regulation of Cruising” of the City of Modesto Municipal Code. These meaningful conversations led to the organization of two pilot cruising events in the downtown area of Modesto. Both permitted events were organized by a locally organized group, the Modesto Cruising Council, in collaboration with the Modesto Police Department. Both events were well organized, free of any violence, and the police department did not experience an increase in calls for service as a result of the events. Police Department personnel assigned to the events established strong communication and collaboration with the local cruising leaders, and only reported having to deal with minor equipment and parking violations during both events.

The primary concern of the Modesto Police Department in considering whether to support the repeal of Article 18 of the Modesto Municipal Code, has been its low staffing levels and concern with its ability to keep the community safe. Based on the success of the two pilot events, the absence of any increase in violence related to cruising in cities that have already repealed their bans, the addition of an air support asset to enhance response times to calls, and the strong relationships established with the local classic car and cruising clubs, the Modesto Police Department currently supports the repeal of Article 18, “Regulation of Cruising” of the Modesto Municipal Code.

The proposed Ordinance includes the complete repeal of Article 18, “Regulation of Cruising,” which contains the prohibition on cruising within the City. If the City Council votes to move forward with the repeal of Article 18, it would eliminate the ban on cruising and effectively make cruising legal within the City. Additionally, the current cruising ordinance has not been enforced in many years and the Modesto Police Department maintains the full enforcement power authorized by the California Vehicle Code and existing Municipal Code ordinances regulating vehicle, pedestrian, and bicycle behavior.

Further, a new State Bill (AB 436) has been introduced in the Assembly, proposing to repeal bans and regulations on car cruising. AB 436 would legalize cruising across California. The State Legislature has previously encouraged local jurisdictions to recognize the cultural significance of cruising in California. Several jurisdictions across the state have already #33..
- 1858 -
City Council, July 11, 2023
Amendment of Modesto Municipal Code to Repeal Article 18, “Regulation of Cruising”

Page 3 of 3 ends

abolished its ban on car cruising. If the Council votes to repeal Article 18 and end the prohibition on cruising, it would be ahead of the State’s proposed new law and in line with other jurisdictions in California.

FISCAL IMPACT:

The Modesto Police Department may utilize budgeted department funds to hire police officers on overtime to staff weekend cruising events as needed. These funds would come from the Police Department’s existing overtime budget and no additional impact to the City General Fund is expected at this time.

COMMITTEE RECOMMENDATION:

This item was not presented to a Council Committee.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Motion introducing and waiving the first reading of an Ordinance amending the Modesto Municipal Code to Repeal Article 18, “Regulation of Cruising,” in its entirety, from Chapter 2, “Vehicles and Traffic Regulations,” of Title 3, “Public Safety,” relating to the City’s cruising ban.

Approved by:

Brandon Gillespie, Chief of Police

Joseph P. Lopez, City Manager
Attachments:

1. Ordinance Repealing Article 18, “Regulation of Cruising” of the Modesto Municipal Code 5402048.3
#33..
- 1859 -
1 MODESTO CITY COUNCIL
ORDINANCE NO. 2023-?

ORDINANCE AMENDING THE MODESTO MUNICIPAL CODE TO REPEAL ARTICLE 18, “REGULATION OF CRUISING,” IN ITS ENTIRETY, FROM CHAPTER 2, “VEHICLES AND TRAFFIC REGULATIONS,” OF TITLE 3, “PUBLIC SAFETY,” RELATING TO THE CITY’S CRUISING BAN
WHEREAS, Modesto is the birthplace of George Lucas and the inspiration for his classic film “American Graffiti;” and
WHEREAS, released in 1973, the American Graffiti movie captured the first big weekend of cruising after school got out for the summer, which turned into the iconic “Graffiti Night” in Modesto; and
WHEREAS, Graffiti Night became an annual cruising tradition in Modesto, bringing thousands of people and their cars into the City every year starting in the mid-tolate 1970s and continuing into the early 1990s; and WHEREAS, as the notoriety of cruising in Modesto grew, so did Graffiti Night and the number of people who were drawn to the City from all over the United States; and
WHEREAS, starting in the mid-to-late 1980s, this traditionally fun and celebratory weekend began to experience an increasing amount of violence, assaults, and shootings; and
WHEREAS, on March 27, 1990, Council adopted Ordinance No. 2706, which added Article 18, “Regulation of Cruising,” to Chapter 2, “Vehicles and Traffic Regulations” of Title 3, “Public Safety” of the Modesto Municipal Code for the prohibition of “cruising” within the City; and
#33..
- 1860 -
2 WHEREAS, even though the City of Modesto enacted a cruising ban over 20 years ago, the City has consistently recognized the historical significance it had in promoting the love of classic cars and cruising; and
WHEREAS, over the past year, cities across California, including Modesto, have engaged in dialogue with community members and organizations regarding the removal of local cruising bans that were enacted decades prior to keep communities safe; and WHEREAS, these meaningful conversations led to the organization of two pilot cruising events in the downtown area of Modesto. Both permitted events were organized by a locally organized group, the Modesto Cruising Council, in collaboration with the Modesto Police Department; and
WHEREAS, both events were well organized, free of any violence, and the Police Department did not experience an increase in calls for service as a result of the events; and
WHEREAS, a new State Bill (AB 436) has also been introduced in the Assembly, proposing to repeal bans and regulations on car cruising, legalize cruising across California; and
WHEREAS, the State Legislature has previously encouraged local jurisdictions to recognize the cultural significance of cruising in California and several jurisdictions across the state have already abolished its ban on car cruising; and WHEREAS, the proposed Ordinance includes the complete repeal of the cruising ban, which contains the prohibition on cruising within the City.

NOW, THEREFORE, the Council of the City of Modesto does ordain as follows:
#33..
- 1861 -
3 SECTION 1. FINDINGS.

The City Council of the City of Modesto finds that all of the above recitals and within this Ordinance are true and correct and incorporated herein by reference.

SECTION 2. AMENDMENT- REPEAL OF CRUISING BAN.

That Article 18, “Regulation of Cruising,” from Chapter 2, “Vehicles and Traffic Regulations,” of Title 3, “Public Safety,” of the Modesto Municipal Code, is hereby repealed in its entirety.

SECTION 3. SEVERABILITY.

If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Ordinance which can be given effect without the invalid provision or application, and to this end, the provisions of this Ordinance are severable. This City Council declares that it would have adopted this Ordinance irrespective of the invalidity of any particular portion thereof and intends that the invalid portions should be severed and the balance of the Ordinance be enforced.

SECTION 4. CALIFORNIA ENVIRONMENTAL QUALITY ACT.

The proposed Ordinance is exempt from the California Environmental Quality Act (“CEQA”) under the general rule in CEQA -Guidelines section 15061(b)(3) that CEQA only applies to projects that have the potential to cause a significant effect on the environment.

SECTION 5. EFFECTIVE DATE.

This Ordinance shall go into effect and be in full force and operation from and after thirty (30) days after its final passage and adoption. #33..
- 1862 -
4 SECTION 6. PUBLICATION.

At least two (2) days prior to its final adoption, copies of this Ordinance shall be posted in at least three (3) prominent and distinct locations in the City; and a notice shall be published once in The Modesto Bee, the official newspaper of the City of Modesto, setting forth the title of this Ordinance, the date of its introduction and the places where this Ordinance is posted.

The foregoing Ordinance was introduced at a meeting of the Council of the City of Modesto held on the 11th day of July 2023 by Council Member ?, who moved its adoption, which Motion being duly seconded by Council Member ?, was upon roll call carried, and the Ordinance adopted by the following vote:

AYES: Council Members:

NOES: Council Members:

ABSENT: Council Members:

ATTEST:

DIANE NAYARES-PEREZ , City Clerk
(SEAL)
APPROVED AS TO FORM:

BY:

JOSE M. SANCHEZ, City Attorney
5402097.3
#33..
- 1863 -
5 FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the ____ day of _______, 2023, _____________ moved its final adoption, which motion being duly seconded by Councilmember ____________, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers: Name, Name, Name, Name, Name, Name, Mayor Name
NOES: Councilmembers: None
ABSENT: Councilmembers: None
APPROVED:_________________________
SUE ZWAHLEN, Mayor
ATTEST: _____________________________
DIANE NAYARES-PEREZ, City Clerk
#33..
- 1864 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

July 11, 2023
Date: June 3, 2023
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Brandon Gillespie, Chief of Police
SUBJECT: Modesto Municipal Code Amendment Adding Article 21- “Sideshows, Street Races, and Reckless Driving Exhibition”
CONTACT: Steven Stanfield, Police Lieutenant, [email protected], 209-572-9612 DESCRIPTION:

Consider an Ordinance amending the Modesto Municipal Code to add Article 21, titled “Sideshows, Street Races, and Reckless Driving Exhibition”, to Chapter 2, “Vehicles and Traffic Regulations,” to Title 3 “Public Safety”, to establish regulations and penalties related to Sideshows, Street Races, and Reckless Driving Exhibition. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

BACKGROUND:

The City of Modesto recognizes the importance of public safety and the need to keep roadways and public rights-of-way safe for all residents, businesses, and community stakeholders. The increase in illegal vehicle spectacle events known as street takeovers or sideshows, where individuals perform dangerous vehicle maneuvers on public streets, highways, and off-street parking facilities for the entertainment of spectators requires immediate attention. These sideshows are dangerous events that not only pose extreme risks to drivers and spectators, but significantly interferes with pedestrian and vehicle traffic, damages city streets, and creates a public nuisance.

Streets, highways, and off-street parking facilities within the City have been the site of continuing illegal sideshows. Participants in these sideshows accelerate to extremely high speeds and/or conduct “burnouts” while driving erratically, often in circles, without regard to other vehicular traffic, pedestrians, or property. These street takeovers and sideshows are done for entertainment and the mere presence of spectators at sideshows serves to exacerbate the occurrence of these dangerous events creating an environment for these activities that place the safety and welfare of the public and spectators themselves at risk. #34..
- 1865 -
City Council, July 11, 2023
Modesto Municipal Code Amendment Adding Article 21- “Sideshows, Street Races, and Reckless Driving Exhibition”

Page 2 of 4 ends

Street sideshows are planned and coordinated by participants and spectators using the internet, cell phones, social media, police scanners, and other electronic devices that allow them to move from one location to another to avoid detection and prosecution by local law enforcement. Street takeovers and sideshows can also damage the streets, highways, and intersections in the City, making the expenditure of public funds necessary to repair such damages.

DISCUSSION:

The Modesto Police Department (MPD) has received numerous reports of sideshow activity occurring in the city limits on both city streets and in off-street parking facilities.

Other Central Valley communities have also experienced the same activity and the MPD recognizes the need to address this problem by taking proactive measures to prevent and deter sideshows and street takeovers from occurring in the community. While existing California Vehicle Code laws have assisted in helping the MPD take enforcement action against the participants involved in illegal street takeovers and sideshows, the need for additional enforcement options have been identified to further protect the City and its residents.

The Modesto Police Department requests the City Council amend the Modesto Municipal Code to add Article 21, to Chapter 2 – Vehicles and Traffic Regulations, of Title 3 – Public Safety, titled “Sideshows, Street Races, and Reckless Driving Exhibition”, making it unlawful to engage in the following activities within the city limits, setting penalties for violations of the ordinance, and outlining the seizure and forfeiture of declared nuisance vehicles. Under the proposed ordinance it would be unlawful to:

Be a driver or passenger in a Sideshow, Street Race, or Reckless Driving Exhibition Knowingly participate as a driver at a Sideshow, Street Race, or Reckless Driving Exhibition conducted on a public street or highway or in an Off-street Parking Facility or be knowingly present as a Passenger at a Sideshow, Street Race or Reckless Driving Exhibition conducted on a public street or highway or in an Off-street Parking Facility.

Spectate at a Sideshow, Street Race, or Reckless Driving Exhibition Be knowingly present as a Spectator at a Sideshow, Street Race, or Reckless Driving Exhibition conducted on a public street or highway or in an Off-street Parking Facility, or be knowingly present as a Spectator where Preparations are being made for a Sideshow, Street Race, or Reckless Driving Exhibition conducted on a public street or highway or in an Off-street Parking Facility.

Promote, Organize, or Facilitate Spectators to gather at Sideshows, Street Races, and Reckless Driving Exhibition
It shall be unlawful for any person to knowingly encourage, promote, instigate, assist, facilitate, aide, or abet the gathering of persons as Spectators at a Sideshow, Street Race or Reckless Driving Exhibition conducted on a public street or highway, or Off-street Parking facility. It shall be unlawful for any person to knowingly encourage, promote, instigate, assist, facilitate, aide, or abet the gathering of persons as Spectators where #34..
- 1866 -
City Council, July 11, 2023
Modesto Municipal Code Amendment Adding Article 21- “Sideshows, Street Races, and Reckless Driving Exhibition”

Page 3 of 4 ends

Modesto City CouncilJuly 11, 2023

Modesto City Council
July 11, 2023