Tax Zone 1 = $318,961 Expected Residential Lot
Count in Tax Zone 1 for Single Family
Property
Tax Zone 2 = $962,038 Expected Residential Lot
Count in Tax Zone 2 for Single Family
Property
Tax Zone 3 = $257,356 Expected Residential Lot
Count in Tax Zone 3 for Single Family
Property
If any portion of a Final Subdivision Map, or any area expected by CFD No. 56 to become Final Mapped Property – such as the area within TTM 18913-4, TTM 20298, TTM 20316, or any oth er Tentative Tract Map – changes any time after the City has issued Bonds, causing an adjustment to the number of Designated Buildable Lots, then the Backup Special Tax A for all Designated Buildable Lots of Single Family Property subject to the change shall be calculated according to the following steps:
Step 1: Determine the total Backup Special Tax A that could have been collected from Designated Buildable Lots of Single Family Property within the applicable Tax Zone, prior to the Final Subdivision Map o r expected Final Mapped
Property change.
Step 2: Divide the amount determined in Step 1 by the number of Designated Buildable Lots of Single Family Property that exists in the applicable Tax Zone after the Final
Subdivision Map or expected Final Mapped Pro perty
change.
Step 3: Apply the amount determined in Step 2 as the Backup Special Tax A per Unit for Single Family Property in the applicable Tax Zone.
The Backup Special Tax A for an Assessor’s Parcel shall not change once an Assessor’s Parcel is classified as Developed Property. 670
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b. Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property, and Undeveloped Property
The Maximum Special Tax A for Final Mapped Property, Taxable Public Property, Taxable Property Owner Association Property, and Undeveloped Property shall be $48,482 per Acre in Tax Zone 1, $76,571 per Acre in Tax Zone 2, and $125,970 per Acre in Tax Zone 3, and shall not be subject to increase or reduction and, therefore, shall remain the same in every Fiscal Year.
2. Special Tax B
The Maximum Special Tax B for each Assessor’s Parcel classified as Developed Property in Tax Zone 2 shall be determined by reference to Table 4 below.
TABLE 4
TAX ZONE 2
MAXIMUM SPECIAL TAX B – DEVELOPED PROPERTY
Land Use Class Maximum Special Tax B
Fiscal Year 2022-23
Residential Property
Single Family Detached Dwelling Unit $1,623.20 per Unit Multiple Family Dwelling Unit $1,406.69 per Unit
Gated Community Attached Dwelling Unit $1,179.66 per Unit Non-Residential Property
$0.296000 per Sq. Ft.
On January 1 of each Fiscal Year, commencing January 1, 2023, the Maximum Special Tax B to be applied in the next Fiscal Year shall be subject to an automatic increase at a rate equal to
4.0% of the amount in effect for the prior Fiscal Year.
3. Multiple Land Use Classes on an Assessor’s Parcel
In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax A levied on such Assessor’s Par cel shall be the sum of the Maximum Special Tax A for all Units of Single Family Property and Acres of Other Residential Property and Non -Residential Property (based on the pro rata share of Square Footage between Other Residential Property and Non-Residential Property, according to the applicable building permits, Final Subdivision Map, parcel map, condominium plan, or other recorded County map) located on that Assessor’s Parcel. The Maximum Special Tax B levied on such Assessor’s Parcel in Tax Zone 2 shall be the sum of the Maximum Special Tax B for all Units of Residential Property and all Square Footage of Non -Residential Property (based on the applicable building permits, Final Subdivision Map, parcel map, condominium plan, or other recorded County map) located on that Assessor’s Parcel in Tax Zone 2.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax A
Each Fiscal Year, beginning with Fiscal Year 2022 -23, the CFD Administrator shall determine the Special Tax A Requirement for such Fiscal Year. The Special Tax A shall then be levied as follows:
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First: If needed to satisfy the Special Tax A Requirement, Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Developed Property up to 100% of the applicable Assigned Special Tax A;
Second: If additional monies are needed to satisfy the Special Tax A Requirement after the first step has been completed, then Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Final Mapped Property up to 100% of the Maximum Special Tax A for Final Mapped Property; Third: If additional monies are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, then Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Undevel oped Property up to 100% of the Maximum Special Tax A for Undeveloped Property;
Fourth: If additional monies are needed to satisfy the Special Tax A Requirement after the first three steps have been completed, then the levy of Special Tax A on each Assess or’s Parcel of Developed Property whose Maximum Special Tax A is determined through the application of the Backup Special Tax A shall be increased Proportionately from the Assigned Special Tax A up to the Maximum Special Tax A for each such Assessor’s Parcel;
Fifth: If additional monies are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, then Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Taxable Property Owner Association Property up to the Maximum Special Tax A for Taxable Property Owner Association Property;
Sixth: If additional monies are needed to satisfy the Special Tax A Requirement after the first five steps have been completed, then Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Taxable Public Property up to the Maximum Special Tax A for Taxable Public Property.
Notwithstanding the above, under no circumstances shall Special Tax A levied in any Fiscal Year on any Assessor’s Parcel of Single Family Property or Other Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of delinquency or default by the owner or owners of any other Assessor’s Parcel or Assessor’s Parcels within CFD No. 56 by more than ten percent above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.
2. Special Tax B
Each Fiscal Year, beginning with Fiscal Year 2022 -23, the CFD Administrator shall determine the Special Tax B Requirement. The Special Tax B shall then be levied Proportionate ly on each Assessor’s Parcel of Developed Property in Tax Zone 2 up to 100% of the applicable Maximum Special Tax B for such Assessor’s Parcel, until the Special Tax B Requirement is satisfied. However, the Special Tax B levied in any Fiscal Year shall not increase by more than 4.0% of the amount of the Special Tax B levied in the prior Fiscal Year.
E. EXEMPTIONS
In Tax Zone 1, no Special Tax shall be levied on up to 3.18 Acres of Property Owner Association Property. In Tax Zone 2, no Special Tax shall be levied on up to 19.08 Acres of Public Property and up to 1.32 Acres of Property Owner Association Property. In Tax Zone 3, no Special Tax shall be levied on up to 0.52 Acres of Public Property and up to 3.20 Acres of Property Owner Association Property. Tax-exempt status in each Tax Zone will be assigned by the CFD Administrator in the chronological order in which property becomes Public Property or Property Owner Association Property.
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Property Owner Association Property or Public Property that is not ex empt from the Special Tax A under this section shall be subject to the levy of Special Tax A and shall be taxed Proportionately as part of the fifth or sixth step, respectively, in Section D above, up to 100% of the applicable Maximum Special Tax A for Tax able Property Owner Association Property and Taxable Public Property. No Special Tax A shall be levied in any Fiscal Year on Assessor’s Parcels that have fully prepaid the Special Tax A obligation pursuant to the formula set forth in Section H.
No Special Tax shall be levied on Lower Income Household Welfare Exemption Property; provided, however, that if, in any Fiscal Year, applicable law does not require that Lower Income Household Welfare Exemption Property be exempt from some portion, or all, of the Special Tax, such portion, or all, of the Special Tax shall be levied on such property in accordance with this Rate and Method of Apportionment based on the Land Use Class to which the Assessor’s Parcel is assigned.
F. APPEALS
Any property owner may file a w ritten appeal of the Special Tax with CFD No. 56 claiming that the amount or application of the Special Tax is not correct. The appeal must be filed not later than one calendar year after having paid the Special Tax that is disputed, and the appellant mus t be current in all payments of Special Taxes. In addition, during the term of the appeal process, all Special Taxes levied must be paid on or before the payment date established when the levy was made.
The appeal must specify the reasons why the appellan t claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination.
If the property owner disagrees with the CFD Administrato r’s decision relative to the appeal, the owner may then file a written appeal with the City Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the City Council requires the Special Tax to be modified or changed in favor of the property owner, then the CFD Administrator shall determine if sufficient Special Tax revenue is available to make a cash refund . If a cash refund cannot be made, then an adjustmen t shall be made to credit future Special Tax levy(ies).
This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to filing any legal action by such owner.
G. MANNER OF COLLECTION
The Special Taxes shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the Special Taxes may be collected in such other manner as the City Council shall determine, including direct billing of affected property owners.
H. PREPAYMENT OF SPECIAL TAX A
The following definitions apply to this Section H:
“CFD Public Facilities” means $20,384,000 for each Prepayment Period, or such lower number as determined by the City Council to be sufficient to fund the Facilities and Se rvices to be provided by CFD No. 56.
“Expenditures Fund” means funds or accounts, regardless of their names, that are established to hold moneys that are available to acquire or construct Facilities and to fund Services. 673
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“Future Facilities Costs” means the CFD Public Facilities minus (i) Facilities and Services costs previously paid from the Expenditures Fund during the Prepayment Period in which the prepayment is being made, (ii) moneys currently on deposit in the Expenditures Fund from deposits made during the Prepayment Period in which the prepayment is being made, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance Facilities costs. In no event shall the amount of Future Facilities Costs be less than zero.
“Prepayment Period” means one of three periods of time during which a Special Tax prepayment may be made.
“Prepayment Period 1” means July 1, 2022, through June 30, 2056. “Prepayment Period 2” means July 1, 2056, through June 30, 2089. “Prepayment Period 3” means July 1, 2089, through June 30, 2123.
Only Special Tax A may be prepaid; Special Tax B shall continue to be levied on an annual basis on all Developed Property in Tax Zone 2 of CFD No. 56.
1. Prepayment in Full
The obligation of an Assessor’s Parcel to pay the Special Tax A may be prepaid as described herein, provided that a prepayment may be made only for Assessor’s Parcels for which a building permit for new construction was issued aft er January 1, 2021, and only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment.
An owner of an Assessor’s Parcel intending to prepay the Special Tax A obligation shall provide the CFD Administrator w ith written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor’s Parcel. The CFD Administrator may charge a fee for providing this service . Prepayment in any six month period must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture.
The Special Tax A Prepa yment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Total Prepayment Amount
As of the proposed date of prepayment, the Special Tax A Prepayment Amount (defined below) shall be calculated by the CFD Administrator as follows:
Paragraph No.
1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel, and determine the Prepayment Period for the proposed prepayment.
2. Compute the Assigned Special Tax A and Backup Special Tax A for the Assessor’s Parcel to be prepaid based on the Developed Property Special Tax A which is, or c ould be, charged in 674
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the current Fiscal Year. For Assessor’s Parcels of Final Mapped Property (for which a building permit has been issued but which is not yet classified as Developed Property) to be prepaid, compute the Assigned Special Tax A and Backup S pecial Tax A for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor’s Parcel.
3. (a) Divide the Assigned Special Tax A computed pursuant to Paragraph 2 by the total estimated Assigned Special Tax A for CFD No. 56 based on the Developed Property Special Tax A which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 56, excluding any Assessor’s Parcels which have been prepaid, and
(b) Divide the Backup Special Tax A computed pursuant to Paragraph 2 by the estimated total Backup Special Tax A at buildout of CFD No. 56, excluding any Assessor’s Parcels which have been prepaid.
4. Multiply the larger quotient computed pursuant to Paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
5. Multiply the Bond Redemption Amount computed pursuant to Paragraph 4 by th e applicable redemption premium (e.g., the redemption price minus 100%), if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
6. Compute the Future Facilities Costs for the applicable Prepayment Period.
7. Multiply the larger quotien t computed pursuant to Paragraph 3(a) or 3(b) by the amount determined pursuant to Paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the “Future Facilities Amount”).
8. Compute the amount needed to pay interest on the Bond Redempt ion Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.
9. Determine the Special Tax A levied on the Assessor’s Parcel in the current Fiscal Year which has not yet been paid.
10. Add the amounts computed pursuant to Paragraphs 8 and 9 to determine the “Defeasance Amount”.
11. Verify the administrative fees and expenses of CFD No. 56, including the costs to compute the prepayment, the costs to invest the prepayment proceeds, the costs to redeem Bonds, and the costs to record any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”).
12. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the “Reserve Fund Cr edit”). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement on the prepayment date or the redemption date.
13. The Special Tax A prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 4 , 5, 7, 10, and 11, less the amount computed pursuant to Paragraph 12 (the “Prepayment Amount”).
14. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 4, 5, 10, and 12 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to 675
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Paragraph 7 shall be deposited into the Expenditures Fund. The amount computed pursuant to Paragraph 11 shall be retained by CFD No. 56.
The Special Tax A Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000, or integral multiple thereof, will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year’s Special Tax A levy as determined under Paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year’s Speci al Tax A levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid during Prepayment Period 3, the CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate that Special Tax A has been prepaid and that the obligation of such Assessor’s Parcel to pay Special Tax A shall cease.
With respect to Special Tax A for any Assessor’s Parcel that is prepaid during Prepayment Period 1 or Prepayment Period 2, the obligation of such Assessor’s Parcel to pay Special Tax A shall be tolled, or suspended, through the end of such Prepayment Period, but shall resume in the first Fiscal Year of the subsequent Prepayment Period. The CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate that Special Tax A has been satisfied for the remainder of the applicable Prepayment Period but has not been permanently satisfied and the obligation to pay Special Tax A will resume in the first Fiscal Year of the Prepayment Period following the Prepayment Period in which the prepayment was made. Once the obligation of an Assessor’s Parcel to pay Special Tax A resumes, Special Tax A for the then applicable Prepayment Period may be prepaid.
Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless the amount of Maximum Special Tax A that may be levied on Taxable Property within CFD No. 56 (after excluding
37.13 Acres of Public Property and 11.66 acres of Property Owner Association Property) both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.
2. Prepayment in Part
The Special Tax A on an Assessor’s Parcel for which a building permit for new construction was issued after January 1, 2021, may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1, except that a partial prepayment shall be calculated by the CFD Administrator according to the following formula:
PP = (PF – AE) x % + AE.
The terms above have the following meaning:
PP = the partial prepayment
PF = the Prepayment Amount (full prepayment) for Special Tax A calculated according to Section H.1
AE = the Administrative Fees and Expenses determined pursuant to paragraph 11 above % = the percentage by which the owner of the Assessor’s Parcel(s) is partially prepaying Special Tax A
The Special Tax A partial prepayment amount must be sufficient to redeem at least a $5,000 increment of Bonds.
The owner of any Assessor’s Parcel who desires such prepayment shall notify the CFD Administrator of such owner’s intent to partially prepay Special Tax A and the percentage by which Special Tax A shall be prepaid. The CFD Administrator shall provide the owner wi th a statement of the amount 676
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required for the partial prepayment of Special Tax A for an Assessor’s Parcel within thirty (30) days of the request and may charge a fee for providing this service. With respect to any Assessor’s Parcel that is partially prep aid, the CFD Administrator shall (i) distribute the remitted prepayment funds according to Section H.1, and (ii) indicate in the records of CFD No. 56 that there has been a partial prepayment of Special Tax A and that a portion of Special Tax A with respec t to such Assessor’s Parcel, equal to the outstanding percentage (100% - “%”, as defined above) of the Maximum Special Tax A, shall continue to be levied on such Assessor’s Parcel pursuant to Section D during the Prepayment Period in which the partial prepayment is made.
For partial prepayments made during Prepayment Period 1 or Prepayment Period 2, the full amount of Special Tax A shall resume in the first Fiscal Year of the Prepayment Period following the Prepayment Period in which the partial prepayment was made. Once the obligation of an Assessor’s Parcel to pay Special Tax A resumes, Special Tax A for the then applicable Prepayment Period may be prepaid.
I. TERM OF SPECIAL TAX
The Fiscal Year after which no further Special Tax A shall be levied or coll ected is Fiscal Year 2122- 2123, except that Special Tax A that was lawfully levied in or before such Fiscal Year and that remains delinquent may be collected in subsequent years. Special Tax B shall continue to be levied indefinitely on an annual basis on all Developed Property in Tax Zone 2 of CFD No. 56.
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EXHIBIT A
CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 1 OF 4)
CITY OF ONTARIO AND CFD NO. 56 CERTIFICATE
1. Pursuant to Section C.1 of the Rate and Method of Apportionment of Special Tax (the “Rate and Method”) for City of Ontario Community Facilities District No. 56 (Parkside/La Avenida) (“CFD No. 56”), the Assigned Special Tax A and the Backup Special Tax A for Developed Property within CFD No. 56 has been modified.
a. The information in Tables 1, 2, and 3 relating to Assigned Special Tax A for Developed Property within CFD No. 56, as stated in Section C.1.a.2 of the Rate and Method of Apportionment, has been modified as follows:
TABLE 1
TAX ZONE 1
ASSIGNED SPECIAL TAX A – DEVELOPED PROPERTY
Land
Use
Class
Description
Residential
Floor Area
(Square
Footage)
Assigned
Special Tax A
1 Single Family Property < 1,801 $[ ] per Unit
2 Single Family Property 1,801 – 1,900 $[ ] per Unit 3 Single Family Property 1,901 – 2,000 $[ ] per Unit 4 Single Family Property 2,001 – 2,100 $[ ] per Unit 5 Single Family Property 2,101 – 2,200 $[ ] per Unit 6 Single Family Property 2,201 – 2,300 $[ ] per Unit 7 Single Family Property 2,301 – 2,400 $[ ] per Unit 8 Single Family Property 2,401 – 2,500 $[ ] per Unit 9 Single Family Property > 2,500 $[ ] per Unit
10 Other Residential Property $[ ] per Acre
11 Non-Residential Property $[ ] per Acre
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EXHIBIT A
CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 2 OF 4)
TABLE 2
TAX ZONE 2
ASSIGNED SPECIAL TAX A – DEVELOPED PROPERTY
Land
Use
Class
Description
Residential
Floor Area
(Square
Footage)
Assigned
Special Tax A
12 Single Family Property < 901 $[ ] per Unit
13 Single Family Property 901 – 1,000 $[ ] per Unit 14 Single Family Property 1,001 – 1,100 $[ ] per Unit 15 Single Family Property 1,101 – 1,200 $[ ] per Unit 16 Single Family Property 1,201 – 1,300 $[ ] per Unit 17 Single Family Property 1,301 – 1,400 $[ ] per Unit 18 Single Family Property 1,401 – 1,500 $[ ] per Unit 19 Single Family Property 1,501 – 1,600 $[ ] per Unit 20 Single Family Property 1,601 – 1,700 $[ ] per Unit 21 Single Family Property 1,701 – 1,800 $[ ] per Unit 22 Single Family Property 1,801 – 1,900 $[ ] per Unit 23 Single Family Property 1,901 – 2,000 $[ ] per Unit 24 Single Family Property > 2,000 $[ ] per Unit
25 Other Residential Property $[ ] per Acre
26 Non-Residential Property $[ ] per Acre
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EXHIBIT A
CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 3 OF 4)
TABLE 3
TAX ZONE 3
ASSIGNED SPECIAL TAX A – DEVELOPED PROPERTY
Land
Use
Class
Description
Residential
Floor Area
(Square
Footage)
Assigned
Special Tax A
27 Single Family Detached Property < 1,101 $[ ] per Unit 28 Single Family Detached Property 1,101 – 1,300 $[ ] per Unit 29 Single Family Detached Property 1,301 – 1,500 $[ ] per Unit 30 Single Family Detached Property 1,501 – 1,700 $[ ] per Unit 31 Single Family Detached Property 1,701 – 1,900 $[ ] per Unit 32 Single Family Detached Property 1,901 – 2,100 $[ ] per Unit 33 Single Family Detached Property > 2,100 $[ ] per Unit 34 Single Family Attached Property < 1,301 $[ ] per Unit 35 Single Family Attached Property 1,301 – 1,500 $[ ] per Unit 36 Single Family Attached Property 1,501 – 1,700 $[ ] per Unit 37 Single Family Attached Property 1,701 – 1,900 $[ ] per Unit 38 Single Family Attached Property > 1,900 $[ ] per Unit 39 Other Residential Property $[ ] per Acre
40 Non-Residential Property $[ ] per Acre
b. The Backup Special Tax for Developed Property, as stated in Section C.1.a.3, shall be modified as follows:
The Backup Special Tax A shall be $[___] per Unit for Single Family Property in Tax Zone 1, $[___] in Tax Zone 2, and $[___] in Tax Zone 3.
However, if the Expected Residential Lot Coun t does not equal 106 for Single Family Property in Tax Zone 1, 303 in Tax Zone 2, and 73 in Tax Zone 3, and the City has not issued Bonds, then the Backup Special Tax A for Designated Buildable Lots of Single Family Property in each Tax Zone shall be calculated according to the following formulas:
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EXHIBIT A
CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 4 OF 4)
Tax Zone 1 = $[_____] Expected Residential Lot
Count in Tax Zone 1 for Single Family
Property
Tax Zone 2 = $[_____] Expected Residential Lot
Count in Tax Zone 2 for Single Family
Property
Tax Zone 3 = $[_____] Expected Residential Lot
Count in Tax Zone 3 for Single Family
Property
2. The Special Tax A for Developed Property may only be modified prior to the first issuance of CFD No. 56 Bonds.
3. Upon execution of this certificate by CFD No. 56, CFD No. 56 sha ll cause an amended notice of Special Tax lien for CFD No. 56 to be recorded reflecting the modifications set forth herein.
Capitalized undefined terms used herein have the meanings ascribed thereto in the Rate and Method. The modifications set forth in t his Certificate have been calculated by the CFD Administrator in accordance with the Rate and Method.
GOODWIN CONSULTING GROUP, INC.
CFD ADMINISTRATOR
By:_________________________________ Date:______________________
The undersigned acknowledges receipt of this Certificate and of the modification of the Assigned Special Tax A and Backup Special Tax A for Developed Property as set forth in this Certificate.
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT NO. 56
(PARKSIDE/LA AVENIDA)
By:_________________________________ Date:______________________
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APPENDIX B
APPRAISAL REPORT
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APPENDIX C
PRICE POINT STUDIES
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
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APPENDIX E
GENERAL INFORMATION CONCERNING THE CITY OF ONTARIO
This appendix sets forth general information about the City of Ontario (the “City”) including information with respect to its finances. The following information concerning the City, the County of San Bernardino (the “County”) and the State are included only for general background purposes regarding the area encompassing the District. The Series 2023 Bonds are special, limited obligations of the District, payable, as provided in the Indenture, solely from Net Special Tax Revenues and the other assets pledged therefor thereunder. Neither the faith and credit nor the taxing power of the District (except to the limited extent set forth in the Indenture), the City or the State of California (the “State”), or any political subdivision thereof, is pledged to the payment of the Series 2023 Bonds.
The City is located in western San Bernardino County, 35 miles inland from downtown Los Angeles and encompasses 50 square miles. Located in the western part of the Inland Empire region, it lies just east of the Los Angeles county line and is part of the Greater L os Angeles Area. The City is home to the LA/Ontario International Airport which is the 11th busiest cargo airport in the United States. Ontario handles the mass of freight traffic between the ports of Los Angeles and Long Beach and the rest of the country.
Government
The City was incorporated as a general law city in 1891, and is governed by a Mayor and four council members elected at large to serve four -year terms. The City operates under the Council - Manager form of government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments of the City.
The population growth in the City, County and State is shown on the following chart.
POPULATION ESTIMATES
City of Ontario, County of San Bernardino and State of California 2014-2023
Year(1) City of Ontario County of San Bernardino State of California 2014 167,885 2,094,951 38,556,731
2015 169,153 2,112,187 38,865,532
2016 169,491 2,122,579 39,103,587
2017 172,858 2,139,520 39,352,398
2018 175,083 2,150,017 39,519,535
2019 178,606 2,165,876 39,605,361
2020 180,788 2,175,424 39,648,938
2021 176,206 2,179,007 39,286,510
2022 178,682 2,180,777 39,078,674
2023 180,717 2,182,056 38,940,231
(1) January 1 data.
Source: State of California, Department of Finance, E -4 Population Estimates for Cities, Counties and State, 2014 -2020, with 2010 Benchmark; E-4 Population Estimates for Cities, Counties and State, 2021-2023, with 2020 Benchmark 686
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Employment
The following table summarizes the labor force, employment and unemployment figures for the years 2017 through 2022 for the City, the County, the State and the United States.
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT RATE
City of Ontario, San Bernardino County, State of California and United States 2017 through 2022(1)
Year and Area Labor Force Employment(2) Unemployment(3) Unemployment
Rate (%)
2017
City of Ontario 84,400 80,700 3,700 4.4%
San Bernardino County 942,000 895,300 46,800 5.0
State of California 19,185,400 18,258,100 927,300 4.8
United States 160,320,000 153,337,000 6,982,000 4.4
2018
City of Ontario 87,600 84,000 3,200 3.6%
San Bernardino County 955,100 915,800 39,200 4.1
State of California 19,289,500 18,469,900 819,600 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019
City of Ontario 90,300 87,200 3,100 3.4%
San Bernardino County 967,100 929,800 37,400 3.9
State of California 19,413,200 18,617,900 795,300 4.1
United States 163,539,000 157,538,000 6,001,000 3.7
2020
City of Ontario 89,800 81,600 8,200 9.1%
San Bernardino County 974,700 880,900 93,800 9.6
State of California 18,971,600 17,047,600 1,924,000 10.1 United States 160,742,000 147,795,000 12,947,000 8.1
2021
City of Ontario 91,300 85,100 6,200 6.8%
San Bernardino County 992,200 918,600 73,600 7.4
State of California 18,9734200 17,586,300 1,387,100 7.3 United States 161,204,000 152,581,000 8,623,000 5.3
2022
City of Ontario 93,000 89,600 3,400 3.7%
San Bernardino County 1,008,500 967,200 41,300 4.1
State of California 19,252,000 18,440,900 811,100 4.2
United States 164,287,000 158,291,000 5,996,000 3.6
Note: Data is not seasonally adjusted.
(1) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates compute d from rounded figures in this table.
Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. March 2022 Benchmark.
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Listed below are the major employers in the City for Fiscal Year 2020 -21 and in the County for Fiscal Year 2020-21.
PRINCIPAL EMPLOYERS
City of Ontario
Fiscal Year 2020-21
Employer Number of Employees
United Parcel Services (UPS) 5,000 to 9,999
Workforce Personnel, Inc. 5,000 to 9,999
Ontario Montclair School District 1,000 to 4,999
Chaffey Joint Union High School District 1,000 to 4,999 QVC Ontario LLC 500 to 999
Home Depot 500 to 999
AutoZone 500 to 999
FedEx 500 to 999
Cardenas Market LLC 500 to 999
Uline Inc 250 to 499
Walmart Associates, Inc. 250 to 499
Gold Star Foods Inc. 250 to 499
Cardinal Health 250 to 499
Toyota Motor Sales USA, Inc. 250 to 299
Ventura Foods, LLC 250 to 499
Mag Instrument Inc. 250 to 499
Staples Contract Commercial 250 to 499
Citizens Business Bank 250 to 499
Starbucks 250 to 499
Carmax Auto 250 to 499
Source: City of Ontario Annual Comprehensive Financial Report for the year ending June 30, 2022. (*Information for 2022 was not yet available.)
PRINCIPAL EMPLOYERS
San Bernardino County
Fiscal Year 2021-22
Rank Name of Business
Approximate No. of
San Bernardino
County
Employees(1) Type of Business
1 County of San Bernardino 5,000-9,999 Public Administration 2 Amazon 5,000-9,999 Electronic Commerce
3 Loma Linda University Medical Center 5,000-9,999 Medical Center 4 Stater Brothers 1,000-5,000 Grocery Store
5 Burlington Distribution Corp. 1,000-5,000 Retail
6 Environmental Systems Research 1,000-5,000 Software
7 FedEx Ground 1,000-5,000 Package Delivery
8 Inland Empire Health Plan 1,000-5,000 Insurance
9 San Antonio Community Hospital 1,000-5,000 Medical Center 10 San Manuel Resort & Casino 1,000-5,000 Casino
(1) Due to confidentiality of reporting number of employees, ranges have been provided.
Source: San Bernardino County Annual Comprehensive Financial Report for the year ending June 30, 2022. 688
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Industries
Residents of the City find employment throughout the Riverside -San Bernardino-Ontario Labor Market Area. This labor market area, as defined for reporting purposes by the Californ ia Employment Development Department, has boundaries coterminous with those of Riverside and San Bernardino Counties. The following table sets forth certain employment data for the Riverside - San Bernardino-Ontario Metropolitan Statistical Area and the County for the period from 2018 through 2022.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2018 2019 2020 2021 2022
Civilian Labor Force 2,045,200 2,075,200 2,095,800 2,125,300 2,160,600 Civilian Employment 1,957,500 1,991,200 1,888,900 1,968,700 2,071,200 Civilian Unemployment 87,700 84,000 206,900 156,600 89,400 Civilian Unemployment Rate 4.3% 4.0% 9.9% 7.4% 4.1%
Total Farm 1,521,100 1,568,100 1,509,900 1,588,800 1,674,200 Total Nonfarm 14,500 15,400 14,100 13,700 13,900
Total Private 1,506,600 1,552,700 1,495,800 1,575,100 1,660,300 Goods Producing 1,249,400 1,291,500 1,247,800 1,333,100 1,410,900 Mining & Logging 206,800 209,700 202,200 207,700 216,400 Construction 1,200 1,200 1,300 1,400 1,600
Manufacturing 105,200 107,200 104,900 110,100 115,200
Service Providing 100,400 101,300 96,000 96,100 99,600
Trade, Transportation & Utilities 1,299,800 1,343,100 1,293,700 1,367,400 1,443,900 Wholesale Trade 379,400 395,100 406,900 443,200 464,500 Retail Trade 66,100 67,700 65,600 67,400 69,700
Transportation, Warehousing & Utilities 181,200 180,700 168,800 177,000 180,600 Information 132,100 146,600 172,500 198,800 214,200
Financial Activities 11,400 11,500 9,600 9,700 10,200
Professional & Business Services 44,600 45,000 44,100 45,200 46,800 Educational & Health Services 151,400 157,900 154,800 169,400 179,100 Leisure & Hospitality 239,500 250,300 248,800 254,300 266,400 Other Services 170,600 175,900 141,300 160,200 179,600
Government 45,800 46,200 40,200 43,600 47,900
Total, All Industries 257,200 261,200 248,000 242,000 249,400
Note: Does not include proprietors, self -employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix E.
Source: State of California, Employment Development Department, March 2022 Benchmark. 689
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Personal Income
The following tables show the personal income and per capita personal income for the City, County, State of California and United States from 2015 through 2022.
PERSONAL INCOME(1)
City of Ontario, County of San Bernardino, State of California, and United States 2015-2022
Year
City of
Ontario
County of
San Bernardino California United States
2015 3,224,189 74,773,589 2,125,430,300 15,681,233,000
2016 3,159,733 77,868,801 2,218,457,800 16,092,713,000
2017 3,444,006 80,514,585 2,318,280,900 16,837,337,000
2018 3,474,794 83,915,091 2,431,773,900 17,687,054,000
2019 3,826,610 89,559,909 2,567,425,600 18,575,467,000
2020 4,114,067 99,313,293 2,790,523,500 19,812,171,000
2021 4,566,417 108,623,799 3,006,183,900 21,288,709,000 2022 4,392,483 n/a 3,018,471,100 21,804,787,500
Note: Dollars in Thousands.
Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Ontario Annual Comprehensive Financial Report for the year ending June 30, 2022.
PER CAPITA PERSONAL INCOME(1)(2)
City of Ontario, County of San Bernardino, State of California, and United States 2015-2022
Year
City of
Ontario
County of
San Bernardino California United States
2015 19,068 35,423 54,546 48,875
2016 18,601 36,618 56,560 49,613
2017 19,761 37,537 58,804 51,550
2018 19,761 38,849 61,508 53,786
2019 21,129 41,253 64,919 56,250
2020 22,237 45,499 70,643 59,763
2021 24,682 49,493 76,800 64,117
2022 24,682 n/a 77,339 65,423
(1) Per capita personal income is the total personal income divided by the total mid -year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation).
Source: City of Ontario Comprehensive Annual Financial Report for the year ending June 30, 2022, Bureau of Economic Analysis for County, State and U.S.
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Assessed Valuation
The table below sets forth the City’s assessed valuation of property for Fiscal Years 2013 -14 through 2021-22.
ASSESSED VALUATION OF TAXABLE PROPERTY
City of Ontario
Fiscal Years 2013-14 to 2021-22
(Dollars in Thousands)
Fiscal Year
Ended June 30
Secured
Value
Unsecured
Value Less Exemptions
Total Assessed
and Estimated
Full Value
2014 $2,465,751 $1,758,596 $(110,182) $14,114,165
2015 12,413,859 2,552,384 (108,252) 14,857,991
2016 13,124,582 2,611,079 (105,864) 15,629,797
2017 13,781,901 2,543,614 (109,080) 16,216,435
2018 14,844,332 2,624,317 (108,915) 17,359,734
2019 16,575,762 2,814,842 (108,701) 19,281,903
2020 18,181,749 2,910,729 (110,654) 20,981,823
2021 19,529,581 3,147,303 (111,223) 22,565,661
2022 21,666,906 3,257,643 (112,096) 24,812,452
Source: City of Ontario Annual Comprehensive Financial Report for the year ending June 30, 2022.
Tax Levy and Tax Collection
Below is a chart which indicates the tax levy and collection records for the City from the 2012-13 through 2021-22 Fiscal Years.
PROPERTY TAX LEVIES AND COLLECTIONS
City of Ontario
Fiscal Years 2012-13 to 2021-22
Fiscal Year
Percent of Levy
Collected
Total Tax
Collections to Tax
Levy to Date(1)
2013 100.86 $24,282,466
2014 101.90 25,330,619
2015 101.87 26,352,321
2016 101.39 27,777,778
2017 100.94 28,866,121
2018 101.46 30,921,494
2019 100.69 34,087,147
2020 99.67 36,753,080
2021 100.08 39,756,925
2022 101.01 44,111,852
(1) Beginning with the City’s Comprehensive Annual Financial Report for the year ending June 30, 2019, the City did not include in its reported property tax collections pass -through payments related to the former Ontario Redevelopment Agency or Redevelopment Property Tax Trust Fund residual payments. The historical property tax collection amounts have been adjusted to reflect this change.
Source: City of Ontario Annual Comprehensive Financial Report for the year ending June 30, 2022.
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Largest Taxpayers
The principal property taxpayers in the City for Fiscal Year 2021-22 are as follows:
PRINCIPAL PROPERTY TAXPAYERS
City of Ontario
Fiscal Year 2021-22
Taxpayer Assessed Valuation
% of Total
Assessed
Valuation
United Parcel Service Co $ 709,439,327 2.19%
Prologis 690,196,633 2.13
Ontario Mills LP 421,371,045 1.41
Watson Land Company 365,371,221 0.86
Costco Wholesale Corporation 326,162,037 0.54
Vineyard Industrial I LLC 296,324,795 0.99
Palmer Ontario Properties LP 240,101,984 0.52
Bre Jupiter WCA LLC 215,206,680 0.51
Colony Commerce Ontario West LP 203,437,590 0.51
Ontario Land Ventures 200,968,925 0.48
TOTAL: $ 3,668,580,237 10.14%
Source: City of Ontario Annual Comprehensive Financial Report for the year ending June 30, 2022.
Building Activity
In addition to annual building permit valuations, the numbers of permits for new dwelling units issued each year from 2018 through 2022 are shown in the following tables for both the County and the City.
BUILDING PERMIT VALUATIONS
San Bernardino County
2018-2022
2018 2019 2020 2021 2022
Valuation ($000’s)
Residential $ 1,455,281 $ 1,450,638 $ 1,139,459 $ 1,475,978 $ 1,463,811 Non-Residential 1,080,130 1,377,100 1,064,696 1,165,646 2,083,951 Total $ 2,535,411 $ 2,827,738 $ 2,204,155 $ 2,641,624 $ 3,547,772
Units
Single Family 3,311 4,182 3,631 4,376 3,701
Multiple Family 1,775 1,884 910 2,636 2,852
Total 5,086 6,066 4,541 7,012 6,553
Note: Totals may not add to sum because of rounding.
Source: Construction Industry Research Board.
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BUILDING PERMIT VALUATIONS
City of Ontario
2018-2022
2018 2019 2020 2021 2022
Valuation ($000’s)
Residential $ 517,399 $ 322,837 $ 114,159 $ 163,586 $ 126,844 Non-Residential 185,202 268,019 125,537 294,623 246,686 Total $ 702,600 $ 590,856 $ 239,696 $ 458,209 $ 373,530
Units
Single Family 1,056 1,091 472 531 382
Multiple Family 273 322 74 659 325
Total 1,329 1,413 546 1,190 707
Note: Totals may not add to sum because of rounding.
Source: Construction Industry Research Board.
Taxable Sales
The table below presents taxable sales for the years 2015 through 2022 for the City.
TAXABLE SALES
City of Ontario
2015 through 2022
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2015 4,867 4,279,949(1) 7,580 7,174,748(1)
2016 4,875 4,634,312 7,658 8,124,276
2017 4,974 4,775,352 7,888 7,670,947
2018 5,194 4,850,172 8,435 7,939,125
2019 5,306 4,953,629 8,830 8,186,154
2020 5,692 4,416,993 9,543 7,584,137
2021 5,386 5,798,203 9,138 9,565,256
2022 5,646 6,819,091 9,632 10,826,861
Source: Taxable Sales in California, California Department of Tax and Fee Administration. 693
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The table below presents taxable sales for the years 2015 through 2022 for the County.
TAXABLE SALES
San Bernardino County
2015 through 2022
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2015 37,696 23,384,548(1) 56,128 35,580,276(1)
2016 38,370 24,477,003 57,629 37,216,551
2017 39,067 25,603,171 58,956 38,399,373
2018 39,837 26,905,784 61,838 40,554,024
2019 40,964 27,585,905 64,771 41,768,748
2020 44,330 28,745,277 71,145 43,265,512
2021 40,801 38,345,912 66,585 55,378,097
2022 41,690 40,003,128 68,480 59,745,218
Source: Taxable Sales in California, California Department of Tax and Fee Administration.
Transportation
Because Ontario is a major hub for passengers and freight, the City is also served by several major freeways. Interstate 10 and the Pomona Freeway (State Route 60) run east -west through the City. Interstate 10 is north of the Ontario airport while the Pomona freeway is south of the airport. Interstate 15 runs in the north-south directions at the easte rn side of the City. State Route 83, also known as Euclid Avenue, also runs in the north-south direction at the western side of the City.
The City maintains an Amtrak station which is served by the Sunset Limited and Texas Eagle lines.
Ontario also has a Metrolink station off of Haven Avenue. It connects Ontario with much of the Greater Los Angeles area, Orange County and the San Fernando Valley. Public bus transportation is provided by Omnitrans.
Rail service is provided by Burlington Northern Santa Fe and Union Pacific.
The Ontario International Airport is a medium -hub, full-service airport, which offers more than 70 daily flights to cities in the U.S., Mexico and Taiwan and is served by AeroMexico, Alaska Airlines, American Airlines, China Airlines, Delta Air Lines, Frontier, JetBlue, Southwest Airlines, United Airlines/United Express and Volaris. The airport’s service area includes a population of approximately six million in San Bernardino and Riverside counties, and portions of Orange and Los Ange les counties. The Ontario International Airport was previously operated by the Department of Airports of the City of Los Angeles (the “Department”). Following protracted litigation among the Department, the City of Ontario and the Ontario International A irport Authority, a joint powers authority was formed by the City of Ontario and the County of San Bernardino (the “Airport Authority”). The Airport Authority assumed ownership and control of the management and operation of the Ontario International Airport on November 1, 2016.
With approximately 570,000 square feet and 26 passenger gates within two terminals, Ontario International Airport is the Western States Regional Terminal for United Parcel Service. In 2022 approximately
5.7 million passengers used the airport and cargo shipments increased 9% from the pre -pandemic 2019. Over the first six months of 2022, total passenger volume was nearly 3 million, 12.4% greater than the first half of 2022.
The passenger count included 2.8 million domestic travelers and 176,000 international passengers, increases of
9.5% and 94.4%, respectively. Ontario also ranks among the fastest recovering airports in the U.S. after the severe disruption in global air travel during the early months of the pandemic. 694
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APPENDIX F
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIX G
FORM OF DISTRICT
CONTINUING DISCLOSURE AGREEMENT
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APPENDIX H
FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT
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APPENDIX I
INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY
AND ITS BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC’s book -entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the co mpleteness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2023 Bonds, payment of principal, premium, if any, accreted value and interest on the Series 2023 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Series 2023 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on inform ation provided by DTC to the District which the District believes to be reliable, but the District and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Series 2023 Bonds. The Series 2023 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC’s partnership nom inee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for each annual maturity of the Series 2023 Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post tra de settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movem ent of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Series 2023 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2023 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) i s in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2023 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Series 2023 Bonds representing their ownership interests in Series 2023 Bonds , except in the event that use of the boo k-entry system for the Series 2023 Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bond s with DTC and their registration in the name of Cede & Co. or such other 698
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DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2023 Bonds ; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2023 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customer s.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Series 2023 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2023 Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Series 2023 Bond documents. For example, Beneficial Owners of Series 2023 Bonds may wish to ascertain that the nominee holding the Series 2023 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Series 2023 Bonds within a maturity are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2023 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2023 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Series 2023 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulat ory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Series 2023 Bond Owner shall give notice to elect to have its Series 2023 Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Series 2023 Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2023 Bonds , on DTC’s records, to the Trustee. The requirement for physical delivery of Series 2023 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2023 Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Series 2023 Bonds to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the Series 2023 Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.
The District may decide to discontinue use of the s ystem of book -entry only transfers through DTC (or a successor securities depository). In that event, Series 2023 Bonds will be printed and delivered to DTC.
THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR THE SERIES 2023 BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC.
ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE
VALIDITY OF SUFFICIENCY O F THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE SERIES 2023 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. 699
APPRAISAL REPORT
CITY OF ONTARIO
COMMUNITY FACILITIES DISTRICT No. 56
(Parkside/La Avenida)
City of Ontario, San Bernardino County, California
(Appraisers’ File No. 2023-1272)
Prepared For
City of Ontario
303 East B Street
Ontario, California 92764
Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780
700
KITTY SIINO & ASSOCIATES, INC.
REAL ESTATE APPRAISERS & CONSULTANTS
October 4, 2023
Cecilia House, Revenue Manager
City of Ontario
303 East B Street
Ontario, CA 92764
Reference: Appraisal Report
City of Ontario CFD No. 56 (Parkside/La Avenida)
Cambridge Court by Woodside Homes; NUVO Parkside by New Home Company; Fairhaven at Park Place by Lennar; and Lot 1 of Tract No. 20316 Ontario Ranch, City of Ontario, County of San Bernardino
Dear Ms. House:
At the request and authorization of the City of Ontario, we have completed an Appraisal Report for the City of Ontario Community Facilities District No. 56 (Parkside/La Avenida) (“Ontario CFD No. 56”) which consists of three residential communities and one vacant parcel in the area known as Ontario Ranch in the City of Ontario. The subject lands are non-contiguous and are separated into three different zones, per the CFD H earing Report and Boundary Map. Zone 1 is located at the northeast corner of La Avenida Drive and Manitoba Place and consists of the neighborhood known as Cambridge Court by Woodside 05S LP (“Woodside”). Zone 2 is located at the northwest corner of Eucalyptus Avenue and Archibald Avenue and consists of the neighborhood known as NUVO Parkside (“NUVO”) being marketed by the New Home Company (“NHC”), as well as a vacant parcel of land known as Lot 1 of Tract No. 20316 owned by SC Ontario Development Company LLC, a related entity to Lewis Companies (“Lewis”). Zone 3 is located at the southwest corner of Merrill Avenue and Remington Avenue and consists of Fairhaven at Park Place (“Fairhaven”) being marketed by Lennar Homes of California, LLC (“Lennar”). The subject lands also fall into three different Specific Plans: Zone 1 (Cambridge C ourt) falls within The Avenue Specific Plan; Zone 2 (NUVO Parkside and Lot 1 of Tract No. 20316 ) falls within the Parkside Specific Plan; and Zone 3 (Fairhaven at Park Place) falls within the Subarea 29 Specific Plan.
The subject lands that are actively under development by homebuilders are proposed for 482 single-family homes spread across three neighborhoods: Cambridge Court (Zone 1) includes 106 proposed homes arranged in a conventional single family detached style with some motor courts; NUVO Parkside (portion of Zone 2) includes 303 proposed single family homes spread across four different product lines, all of which are detached but range in style from motor court clusters to ally load; and lastly Fairhaven at Park Place (Zone 3) includes 73 proposed single family detached homes arranged in motor courts. The homes within the three communities range from completed homes closed to individuals to homes under construction to finished lots . The three communities within the subject are currently selling with model homes open. The final portion of the subject lands is
Lot 1 of Tract 20316 (remainder of Zone 2) , which has entitlements for 236 units per the Parkside Specific Plan and is in a superpad condition.
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Cecilia House
City of Ontario
October 4, 2023
Page Two
The valuation methods used in this report include the Sales Comparison Approach along with a Mass Appraisal Technique as defined within this report. The fee simple estate of the subject property has been valued subject to the Ontario CFD No. 56 special tax lien. This report is written with the hypothetical condition that the improvements and benefits to the subject property to be funded by the 2023 special tax bonds of Ontario CFD No. 56 are completed and in place.
As a result of our investigation, the concluded minimum market value for the subject property is shown below.
Zone 1
Woodside Ownership (15 houses and 29 lots) $ 15,968,576 Individual Owners - (62 houses) 42,310,045 Subtotal Zone 1 $ 58,278,621
Zone 2
NHC Ownership (30 houses and 61 lots) $ 27,590,606
Arroyo Cap II-1 Ownership (51 lots) 12,254,366
Individual Owners (161 houses) 85,937,430
Lewis Ownership (Lot 1 of Tract 20316) 24,156,660
Subtotal Zone 2 $149,939,062
Zone 3
Lennar Ownership (23 houses and 49 lots) $ 17,781,838
Individuals (1 home) 550,525
Subtotal Zone 3 $ 18,332,363
Aggregate Total for CFD No. 56 $226,550,046
The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of August 7, 2023.
Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2020) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report.
This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.
Respectfully submitted,
KITTY SIINO & ASSOCIATES, INC.
Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)
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TABLE OF CONTENTS
Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photos of Ontario CFD No. 56 ....................................................................... iv - vii Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................. 4 Definitions ...................................................................................................................... 4 Property Rights Appraised ............................................................................................. 6 Effective Date of Value ................................................................................................... 7 Date of Report ................................................................................................................ 7 Scope of Appraisal ........................................................................................................ 7 Regional Area Map.......................................................................................................... 9 County of San Bernardino Area Description ................................................................. 10 City of Ontario/Ontario Ranch Description .................................................................... 18 City of Ontario Community Facilities District No. 56 ..................................................... 24 Subject Property Descriptions ....................................................................................... 27 Inland Empire Housing Market ...................................................................................... 55 Highest and Best Use Analysis ..................................................................................... 66 Valuation Analysis and Conclusions ............................................................................. 73 Appraisal Report Summary ......................................................................................... 112 Appraiser’s Certification ............................................................................................. 114
ADDENDA
Ontario CFD No. 56 Boundary Maps
Tract Map Nos. 20298, 20316, 20389
Discounted Cash Flow Analyses
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications
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ASSUMPTIONS AND LIMITING CONDITIONS
1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.
2. No responsibility is assume d for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.
3. It is assumed that the subject propert ies are subject to the special tax lien of Ontario CFD No. 56.
4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.
5. The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy.
6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.
7. It is assumed that there are no hidden or unapparent conditions of either property, subsoil or structures that would render them more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.
8. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report.
9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in this appraisal report.
10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.
11. Any sketch or photograph included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps , photographs, and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless 704
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otherwise stated in thi s report. No survey has been made for the purpose of this report.
12. It is assumed that the utilization of the land and improvements (if any) are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.
13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea- formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.
14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.
15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings , if any, must not be used in conjunction with any other appraisal and are invalid if so used.
16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992 and have been updated several times since then. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property.
Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.
17. It is assumed there are no environmental concerns that would slow or thwart development of the subject propert ies and that the soils are adequate to support the highest and best use conclusions.
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18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document for the Ontario CFD No. 56 special tax bonds
19. It is assumed that there are no conditions of approval or hindrances which could slow or thwart the obtaining of occupancy permits on the 482 subject residential units. This is the case per the builders; however , we were unable to verify via the various conditions of approval.
HYPOTHETICAL CONDITION
1. It is assumed that all improvements and benefits to the subject properties, which are to be funded by the City of Ontario CFD No. 56 Special Tax Bond Proceeds are completed and in place.
EXTRAORDINARY ASSUMPTION
1. It is assumed that the sales information and remaining development costs/fees as reported by the builder s and summarized in the report are correct. We have not reviewed escrow documents on each home sale however, per our review the sales as reported by the builder appear to be reasonable. While we have reviewed the costs and they appear reasonable, we are not experts in the field of construction cost estimation and are relying on the costs received in the valuation analysis. If the actual land development costs differ, the final values may change.
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PURPOSE OF THE APPRAISAL
The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the proposed lien along with the benefits from the Ontario CFD No. 56 Special Tax Bonds.
THE SUBJECT PROPERTY
The subject property consists of a vacant parcel along with 482 proposed single family detached homes being developed as a portion of the Avenue, Parkside, and Subarea 29 Specific Plans, in the area known as Ontario Ranch in the City of Ontario (“City”). The subject is encompassed by Tract Map Nos. 20298, 20316 and 20389, and while the three tracts are noncontiguous , they are all generally located north of the San Bernardino/Riverside County line, west of Haven Avenue, east of the Cucamonga Channel, and south of Shaefer Avenue. Cambridge Court (Tract No. 20298) is being built and sold by Woodside Homes and includes 106 proposed homes arranged in a conventional single-family detached style with some motor courts . Tract 20316 includes both NUVO Parkside and a remainder vacant parcel. NUVO Parkside is being built and sold by New Home Company and includes 303 pr oposed single-family homes spread across four different product lines, all of which are detached but range in style from motor court clusters to ally load. The New Home Company has utilized an off -sheet balance partner, known as Arroyo Cap II-1, LLC (“Arroyo Capital”), who purchased the lands from the developer and has been selling phases of NUVO lots in takedowns to the New Home Company. The New Home Company has taken down the majority of the lots, however Arroyo Capital still owns several, ranging in cons truction status from finished lots to homes under construction. The remainder vacant parcel refers to Lot 1 of Tract 20316 which is owned by Lewis (the master developer of Parkside). It is in a generally superpad condition and has entitlements per the Park side Specific Plan for 236 units. Lastly, Fairhaven at Park Place (Tract No. 20389) is being built and sold by Lennar and includes 73 proposed single family detached homes arranged in motor courts. Within Cambridge Court, 62 of the total 106 proposed homes are completed and closed to individuals. Within NUVO Parkside, 161 of the total 303 homes are completed and closed to individuals. And 711
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within Fairhaven, 1 of the total 73 proposed homes is completed and closed to individuals.
Overall, across all three communities within NUVO Parkside, Cambridge Court and Fairhaven, 224 of the 482 homes have been completed and closed to individuals. The remaining lots vary in status from complete or nearly complete homes to homes under construction, to finished lots and the vacant, mass graded lot. The ownership and condition of the lands are detailed on the following page.
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Description No.
Lots Owner Product / Condition / Status
Zone 1: Cambridge Court by Woodside (Tract No. 20298)
Lots 28-31, 42-99 of Tract 20298 62 Individuals Completed Homes Lots 37-39 of Tract 20298 3 Woodside Model Homes
Lots 13-24 of Tract 20298 12 Woodside Over 95% Complete (12 in Escrow)
Lots 1-12, 25-27, 100-106 of Tract 20298 22 Woodside Under Construction (19 in Escrow)
Lots 32-36, 40-41 of Tract 20298 7 Woodside Finished Lots (0 in Escrow) Subtotal – Cambridge Court 106
Zone 2: NUVO Parkside - New Home Company (Lots 2-4 of Tract No. 20316) & Lot 1 of Tract No. 20316
Units 1-16 of Lot 3; Units 1-2, 4-50, 59-98,
107-122, 149-188 of Lot 4 of Tract 20316 161 Individuals Completed Homes Units 51-54, 144-145, 147--148 of Lot 4
of Tract 20316 8 New Home
Company Model Homes (0 in Escrow)
Units 17-24 of Lot 3; Units 3, 99-102, 123-
130, 146 of Lot 4 of Tract 20316 22 New Home
Company
Over 95% Complete (21 in
Escrow)
Units 1-6, 17 of Lot 2; Units 25-42 of Lot
3; Units 103-106, 189-220 of Lot 4 of
Tract 20316
61 New Home
Company Under Construction (32 in
Escrow)
Units 55-58 of Lot 4 of Tract 20316 4 Arroyo
Cap II-1 Finished Lots (0 in Escrow)
Units 7-16, 18-21 of Lot 2; Units 139-143
of Lot 4 of Tract 20316 19 Arroyo
Cap II-1
Under Construction (0 in
Escrow)
Units 22-41 of Lot 2; Units 131-138 of Lot
4 of Tract 20316 28 Arroyo
Cap II-1 Finished Lots (0 in Escrow)
Subtotal – NUVO Parkside 303
Lot 1 of Tract 20316 N/A Lewis Superpad Condition
Zone 3: Fairhaven at Park Place by Lennar (Tract No. 20389) Lot 63 of Tract 20389 1 Individuals Completed Homes
Lots 1-4 of Tract 20389 4 Lennar Model Homes
Lots 5, 55-62, 64-73 of Tract 20389 19 Lennar Over 95% Complete (18 in Escrow)
Lots 9-16, 37-54 of Tract 20389 26 Lennar Under Construction (14 in Escrow)
Lots 6-8, 17-36 of Tract 20389 23 Lennar Finished Lots (0 in Escrow) Subtotal – Fairhaven at Park Place 73
TOTAL CFD No. 56 482
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INTENDED USE OF THE REPORT
It is the appraiser’s understanding that the client, the City of Ontario, will utilize this report in disclosure documents related to the sale of the Ontario CFD No. 56 Special Tax Bonds.
This report may be included in the Official Statement or similar document to be distributed in connection with the marketing and offering of the bonds. It is the appraiser ’s understanding that there are no other intended uses of this report.
DEFINITIONS
Market Value
The term “Market Value” as used in this report is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledg eably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”
1 Inherent in the Market Value definition is exposure time or the time the subject property would have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions , the exposure time for each individually owned property or each builder -owned ownership in a bulk sale, is estimated at less than one year.
1 The Appraisal of Real Estate, 13th Edition
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Finished Lot or Pad
The term “Finished Lot or Finished Pad” is defined as:
“A parcel which has legal entitlements created by a recorded subdivision map or condominium map, whose physical characteristics are a fine graded level pad or lot with infrastructure contiguous to each individual lot, asphalt paved roads and the necessary utilities. This term assumes the payment of all applicable development fees with the exception of building permit and plan check fees.”
Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:
“The base market value of a new home less current concessions. That is, most buyers purchase some upgrades , options and/or lot premiums when purchasing a new home. The sales price for the new home typically includes the base price for the plan, plus any upgrades , options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options, or premiums.”
Mass Appraisal Technique
The term “Mass Appraisal” as used in this report is defined as:
“The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”
2 In the case at hand, the statistical testing included reviewing all original builder sales and reviewing the Multiple Listing Service (“MLS”) for any re -sales and/or current listings of each plan type. In addition, we have determined the actual range of sales prices for each plan type which will be utilized in the valuation process. The search of the MLS resulted in no resales and no current resale listings within the subject properties.
Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
2 USPAP 2018-2019 Edition
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“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis”
The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds to be issued by and is subject to the lien of Ontario CFD No. 56.
Extraordinary Assumptions
The term “Extraordinary Assumption” is defined by USPAP as:
“An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions”
There is one Extraordinary Assumption within this report which is that the sales information and the cost information as received from each builder are true and accurate.
We have not reviewed actual escrow documents on the sales of the new homes but we have reviewed each sale as reported by the builder and the sale prices appear reasonable. In addition, w e have reviewed the remaining land development costs/fees and they appear reasonable; however, we are not experts in the field of cost estimating.
It should be noted that these costs were relied upon for the value conclusion and, if the remaining land development costs differ, it may change the value conclusions.
PROPERTY RIGHTS APPRAISED
The property rights being appraised are of a fee simple estate interest, subject to easements of record and subject to Ontario CFD No. 56. The definition of “fee simple estate” is defined as:
“absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”
3 3 The Appraisal of Real Estate, 13th Edition
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EFFECTIVE DATE OF VALUE
The subject property is valued as of August 7, 2023.
DATE OF REPORT
The date of this report is October 4, 2023.
SCOPE OF APPRAISAL
As previously stated, the purpose of this appraisal is to report the appraiser ’s best estimate of the market value for the subject property, Ontario CFD No. 56, which is known as the communities of Cambridge Court, NUVO Parkside, and Fairhaven at Park Place, as well as a vacant parcel adjacent to NUVO Parkside. There are a total of 482 proposed homes along with a vacant mass graded parcel within the subject boundary. This appraisal will be presented in the following format:
• County of San Bernardino Area Description
• City of Ontario/Ontario Ranch Description
• Brief Description of Ontario CFD No. 56
• Subject Property Descriptions
• Inland Empire Housing Market Analysis
• Highest and Best Use Analyses
• Valuation Procedures, Analyses and Conclusions
• Appraisal Report Summary
In valuing the subject propert y, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sales prices of the comparables based on the elements of comparison. The Sales Comparison Approach may be used to value improved properties, vacant land or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparables is available.” 4 4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 717
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In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject that have recently been sold, are listed for sale or are under contract.
Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. In addition, we have utilized a mass appraisal technique which included reviewing all builder sales and searching the MLS for any resales and/or resale listings.
The due diligence of this appraisal report included the following:
1. Compiled demographic information and related that data to the subject propert y to perform a feasibility/demand analysis.
2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro- and macro- economic outlook within San Bernardino County and the Ontario area.
3. Inspected the subject property between July 1, 2023, and August 28, 2023.
4. Had the site flown by an aerial photographer on July 29, 2023.
5. Interviewed representatives from each of the Builders and/or their consultants to obtain community information.
6. Reviewed a preliminary title report on portions of the majority of the subject properties.
7. Searched the area for relevant comparable residential land sales , inspected and verified each sale with a buyer or seller or broker familiar with the transaction.
8. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable project.
9. Reviewed the sales brochures and websites for the subject communities.
10. Reviewed developer sales information on each home within the communities.
11. Reviewed Multiple Listing Service information to determine if there are any resales, pending resales or listings of resale homes.
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REGIONAL AREA MAP
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COUNTY OF SAN BERNARDINO AREA DESCRIPTION
Location
The subject property is located in the southwestern portion of San Bernardino County, in the southern portion of the City of Ontario within the area known as Ontario Ranch. More specifically, the subject properties are generally located north of the San Bernardino/Riverside County line, west of Haven Avenue (and west of Interstate 15 (“I- 15”)), east of the Cucamonga Channel, and south of Shaefer Avenue (and south of State Route 60 (“SR-60”)).
San Bernardino County (the “County”) is the largest county in the United States by area, containing over 20,100 square miles, and includes large expanses of undeveloped deserts, valleys, canyons, and mountains with mountains and deserts comprising about 90 percent of the acreage. The County is a major beneficiary of outward urban pressure from Los Angeles, Orange, and Riverside Counties. Although located at the periphery of most urban activity in Southern California, the southwestern portion of San Bernardino County has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.
Transportation
The subject properties are situated approximately 1.5 to 2.5 miles west of I-15, 2.0 to 3.5 miles south of SR -60, approximately 4.5 to 6.0 miles south of Interstate 10 (“I-10”), and about seven miles north of State Route 91 (“SR -91”). The I-15 is the nearest interstate providing access to the subject via either the Limonite Avenue or the Cantu Galleano Ranch Road on/off ramps. Cantu Galleano Ranch Road becomes Ontario Ranch Road at the City limits at Hamner Avenue. I -15 travels in a northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. I -10 begins from the west in Los Angeles and provides access into Arizona to the east. In the vicinity of the subject, SR-60 provides additional east/west access about three miles north 720
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of the subject, and less than three miles south of I -10, beginning in downtown Los Angeles, providing access throughout Riverside and San Bernardino counties, and ending in Beaumont. There is additional direct access to the subject from SR -60 via Haven Avenue or Milliken Avenue which becomes Hamner Avenue near the subject area.
The County is served by Amtrak and Metrolink as well as several rail -freight lines. The Ontario International Airport provides regional international air service and is located approximately 4.5 miles northwest of the subject property. San Bernardino International Airport is located approximately 20 miles northeast of the subject. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways, and state freeways.
Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2023 (latest available) County population was 2.182 million. This represents a one-year increase of 0.1 percent. This compares to an average annual growth rate over the past 20 years of 2.1 percent. Current projections for San Bernardino County per the California Department of Finance suggest the population is anticipated to reach approximately 2.32 million by 2030, indicating an average annual increase of approximately 0.90 percent over the next seven years. The current near zero growth rate is lower than the previous 20- year annual average of 2.1 percent, likely due to the disruption of the COVID pandemic. The future growth of 0.90 percent annually was predicted assuming a more stable market than was seen prior to the Great Recession, however, doesn’t take into effect the COVID pandemic.
Economy
The U.S. economy is experiencing challenging times due to reactions from the COVID recession. These economic challenges include significant inflation, increasing interest rates, banks’ instability and reaching an agreement on the debt ceiling. During COVID , the Federal, State, County and City Governments (“Governments”) originally shut down 721
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non-essential businesses and areas where social gatherings occur in order to slow the spread of the virus. This created a strain on small and large businesses alike. Restaurants and hotels were hit hard and travel reduced drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment the first few months of the pandemic. The Governments attempted to curtail the job losses and hardships with the approval of over $5.6 trillion in COVID relief to our nation. In addition, the Federal Reserve Board (“Board”) reduced interest rates and started quantitative easing by buying bonds. This legislation helped shore up the U. S. economy; however, due to the significant amount of new money introduced into the economy, inflation began occurring at a rate not seen for 40 years. As of June 2023, the national inflation rate was at a two year low at 2.97 percent; down from February 2023’s 6.0 percent and from the peak in June 2022 of 9.1 percent. This compares to a 1.24 annual percent rate for 2020 and an average of 1.74 percent annual rate for the previous ten years. Whether it is a result of the Russian/Ukraine war, supply chain iss ues due to COVID or from the additional money entering the economy, inflation is hitting Americans hard.
In an effort to curb inflation, the Federal Reserve Board (“Board”) began raising interest rates. Since March 2022, there have been eleven interest r ate increases rising the Federal Reserve Rate (“FRR”) from 0.25 – 0.50 percent to 5. 25 – 5.50 percent. While these increases appeared to help slow inflation, the quick, significant increases have strained bank balance sheets. Three major banks failed in early 2023 with the government taking unprecedented action to help shore them up. At the June meeting the Board paused the increases; however, at the July meeting, they raised it another 0.25 percent increase. Additional increases are now expected later in the year. In addition to causing bank instability, the FRR increases over the past 15 months increased a typical 30- year fixed mortgage rate from 2.98 percent as of November 10, 2021, to a peak of 7.08 percent as of November 10, 2022, then dropped to an average around 6.5 percent until the past month with the August 17, 2023, rate at 7.09 percent (per Federal Reserve Economic Data-St. Louis). This steep increase over the past 15 months has significantly affected the real estate market.
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The COVID disruption to the economy also caused extreme volatility in the stock market with the Dow Jones Industrial Average (“DJIA”) dropping from 29,398 in February 2020 to 19,174 in March 2020, a drop of 37 percent. The Government interventions resulted in a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing up to an all-time high of 36,799 in January 2022. In February 2022, Russia began invading Ukraine which caused volatility in world economics followed by U.S. inflation, interest rate increases and instability in the U.S. due to the debt ceiling being reached. All of these factors caused a drop in the DJIA of approximately four percent from January 2022 to August 2 , 2023 ( 35,283). The nation’s debt limit can only be increased through government approvals. The current partisanship in our government caused a stand-off in increasing the debit limit which was in danger of being reached, and the stock market’s volatility throughout May due to this stand-off was evident. However, a deal was reached in early June (before the deadline), and the stock market has shown less volatility. Current concerns include the Federal Reserve decisions on interest rate increases.
The significant increase in mortgage rates over the past year is just one part of the puzzle affecting the impact of new housing on the broader economy. Additional risks include homebuilders trying to find balanced inventory levels, supply chain issues, both wage and price increases, and persistent inflation. Over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking pric es back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire housing market seeing an improvement beginning in mid- 2012. Contrary to homebuilder’s original t houghts of a slowdown due to the COVID pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year and continued extremely strong throughout 2021 and the fi rst half of 2022. This exceptional activity in new home sales was the one bright spot in the COVID recession and is thought to be due to several factors, including: a tight supply of resale homes; historically low interest rates; millennials finally buying homes; and the work from home factor which began during the pandemic and allowed residents to live in more 723
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suburban areas without long commutes. As rates began increasing in early 2022, there was a significant slowdown in sales and softening of prices within the Inland Empire, with year-over-year decreases in sales as of July 2023 of more than 10 percent. The high mortgage rates have significantly slowed existing homeowners from moving. The limited availability of existing homes on the market has resulted in new homes capturing a much larger share of the total home sales; however, new home sales are also down year-over- year.
While most jobs have come back, job losses were significant during the COVID recession as the Nation’s unemployment rate went from 3. 5 percent in February 2020 to 14.4 percent in April 2020, with the Ju ly 2023 National unemployment rate at 3. 8 percent (Employment Development Department, not seasonally adjusted). The Congressional Budget Office (“CBO”) Forecast for the U.S. Economy (publ ished February 2023) predicted real GDP growth will come to a halt in 2023 then will average 2.4 percent from 2024 to 2027 and then 1.8 percent between 2028 to 2033. The CBO states they expect unemployment rates to rise through early 2024 reflecting the sl owdown in economic growth. In summation, the CBO projects for 2023: stagnant output, rising unemployment, gradually slowing inflation, and interest rates to remain at or above their current levels.
They believe that in 2023, non-interest spending will substantially exceed revenues with rising interest rates driving up the cost of borrowing which results in the government debt steadily increasing. Over the long term, they suggest changes in fiscal policy to address the rising costs of interest and mitigate other adverse consequences of high and rising debt.
The unemployment rate for the MSA was estimated at 4.9 percent (as of Ju ly 2023 per the Employment Development Department). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during COVID of 14.9 percent. As of Ju ly 2023, San Bernardino County’s unemployment rate was 4. 8 and Riverside County had a 5.0 percent unemployment rate. The current unemployment rate for the MSA of 4.9 percent is slightly higher than the California rate at 4.8 percent and higher than the July 2023 National rate of 3.8 percent. Below is a table 724
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comparing San Bernardino County’s unemployment rate to the unemployment rates of the surrounding counties as of July 2023.
Jurisdiction As of Unemployment Rate*
Los Angeles County July-2023 4.8%
Riverside County July-2023 5.0%
San Bernardino County July-2023 4.8%
Orange County July-2023 3.6%
San Diego County July-2023 3.9%
Source: State of California E.D.D.; *Not Seasonally Adjusted
The latest UCLA Anderson Forecast (“Forecast”) was issued June 7 , 2023, and stated that the potential action by the Federal Reserve will determine whether the nation continues to grow or experiences a mild, short-lived recession in 2023. They believe the economy is at a recession- related fork in the road with one path leading to continued economic growth (although slower than the recent 2.4 percent growth rate) and the other would lead to a mild short -lived recession. Whether the economy slips into recession or not will depend largely on inflation stickiness and the additional action the Federal Reserve takes to bring down inflation. The Forecast states that if the Federal Reserve moderates its aggressive tightening, quarterly economic growth for the second quarter to grow at 2.6 percent and around 1.0 percent quarterly growth for the second half of 2023.
If the Federal Reserve keeps aggressively tightening, a mild recession will occur with the economy contracting beginning in the third quarter 2023 and deepening in the fourth quarter 2023 and the first quarter 2024 followed by the beginning of a slow rebound. The Forecast states under both scenarios, inflation will still be elevated but will be more persistent in the recession scenario requiring tighter monetary policy. They believe both outcomes will include persistent inflation with the no-recession scenario resulting in lower inflation and thus, more moderate monetary policy.
The UCLA Forecast for California is more positive than the overall Nation due to a strong demand for defense goods, labor saving equipment and software. In the no- recession scenario unemployment rate averages by year are estimated at 4.1 percent for 2023, 4.0 percent for 2024 and 4.0 percent for 2025. In the recession scenario, unemployment rate averages are expected to be 4.4 percent for 2023, 4.8 percent for 2024 and 4.6 percent 725
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for 2025. Under both scenarios the California Forecast projects housing permits to grow to at least 157,000 in 2025 despite the higher interest rates. The fact that the California housing market is not overbuilt will offset the decrease in the housing market. Overall, the Forecast believes that California will have a more moderate slowing or, in the case of a recession, a milder downturn than the U.S. overall.
As a final indicator of overall economic activity for the region, we have reviewed the rise and fall of TEUs (Twenty-foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the Inland communities, as it represents much of the growth in development of west coast distribution centers and warehouses in the Inland Empire linked to supply -chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. Generally, there have been increases since 2009 with the exception of a slight dip in 2016 and again in 2019 which ended with a 5.6 percent downturn. The 2022 calendar year saw a decrease of 2.6 percent from the previous year.
June 2023 was running 28.5 percent below June of 2022 (597,076 versus 835,412 total TEUs). It should be noted that Spring 2022 was a time when the back-up at the ports was still occurring due to supply chain issues. Per the Orange County Register (“Lack of product demand hurts drivers,” October 31, 2022) consumer demand cooled in mid-2022 leaving fewer TEUs needing to be driven from the ports. They are stating shipments have slowed due to American demand finally waning after the pandemic coupled with some major retailers bypassing the California ports for East Coast ports to avoid a possible upheaval by West Coast dockworkers as they negotiate a new contract. It appears that the slowdown in work for the dray operators (drivers who ship containers in and out of the ports) may be resulting from a slowdown in overall TEU demand.
4.0 5.0
6.0 7.0
8.0 9.0
10.0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 TEU's (millions)
Year
Port of Long Beach TEUs
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Education
The subject area is served by the Mountain View Elementary School District and Chaffey Joint Union High School District. The subject is assigned to Park View Elementary, Grace Yokley Middle School, and Colony High School. Mountain View Elementary School District operates a total of five schools (four elementary schools and one middle school) and Chaffey Joint Union High School District operates 12 schools serving students above middle school age. Community Colleges are available near the subject at Chaffey College in Rancho Cucamonga ( 11 miles north), at Chaffey College’s Chino campus (five miles west of the subject in Chino), and San Bernardino Valley College (18 miles northeast).
Higher education is available approximately 20 miles to the northeast at Cal ifornia State at San Bernardino, about 1 5 miles east is University of California at Riverside, 11 miles northwest in the private Claremont Colleges area which include Claremont McKenna College, Pitzer College, Harvey Mudd College, Pomona College, and Scripps College, and 14 miles to the northwest at Cal Poly Pomona.
Conclusion
Population in the County has increased over the past 20 years with predictions for continued population growth. The Nation’s economy has been slowing after the Board increased the F RR by over five percent to fight historical inflation which began during COVID. One bright spot during COVID was housing: the region’s relative affordability and low interest rates, coupled with the rising prices in the coastal market and the demand for housing, set up a new housing boom. This was followed by a significant drop in sales due to increasing mortgage rates and existing homeowners being unwilling to give up their low-rate mortgages. Current concerns for the Inland Empire economy include stubborn inflation, the high prices of homes, higher interest rates, supply chain issues, recent bank failures along with the Russian invasion of Ukraine, which are all creating volatility in both local and global financial markets. A possible light recession is forecast for later this year.
What effect the recent bank failures will have on the economy is unknown at this time. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land, and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles, and San Diego Counties. 727
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CITY OF ONTARIO / ONTARIO RANCH DESCRIPTION
General Area
The subject property is located in the southern portion of the City of Ontario near the western boundary of San Bernardino County. The City is about 35 miles east of downtown Los Angeles and encompasses approximately 50 square miles of land area. Ontario was established in 1882 by Canadian engineers George and William Chaffey and Charles Frankish. The settlement was originally named Ontario M odel Colony after the province in Ontario, Canada where the settlers were from. The subject is located in the area known as the Ontario Ranch (formerly the New Model Colony) which includes approximately 8,200 acres that was formerly a portion of the San Bernardino Agricultural Preserve and was annexed by the City of Ontario in 1999. The Ontario Ranch is generally bounded by Riverside Drive to the north, Milliken Avenue/Hamner Avenue to the east, the Riverside County line and Merrill Avenue to the south, and Euclid Avenue to the west. The area was predominantly dairy farms and agricultural lands until the early 2000s when it began transitioning into residential land use. The Great Recession stopped development in the Ontario Ranch until 2012 when land sales and development began once again. Between the second half of 2020 into 2022, Ontario Ranch benefited from the significant increase in new homes sales due to the COVID pandemic factors. Residential land sales slowed from mid-2022 to mid-2023 with land transactions occurring once again.
On the following page is a map showing the Ontario Ranch area in the City of Ontario. The map shows the amount of land available for future development in the community. The 8,200 acres of the Ontario Ranch is proposed for over 30,000 new residential units. As a result of the Ontario Ranch, the City is planning on adding 150,000 new residents over the next 20 years which will make it one of the 50 largest cities in the U.S. The map identifies three of the original larger master plans known as Park Place, New Haven, and West Haven. The subjects are located within The Avenue Specific Plan (Zone 1, southwest of West Haven), Parkside Specific Plan (Zone 2, northwest of Park Place) and the Subarea 29 Specific Plan (Zone 3, east of Park Place which is also within Subarea 29). The subject’s locations are identified by the red stars below.
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The Ontario Ranch (highlighted) and Surrounding Area
Population
The City of Ontario had a January 2023 estimated population of 1 80,717 which reflects an increase of 1. 1 percent from the year before (per Department of Finance); however, during this time period the majority of cities in the County had a declining population with the overall County showing a slight 0.1 percent increase . Between 2010 and 2020 the City grew at an average annual growth of 1.43 percent. The more recent population increase is mostly due to the new development within the Ontario Ranch which is Zone 1
Zone 2
Zone 3
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essentially the last remaining undeveloped residential land within the City. The population is anticipated to continue to increase at a faster rate than the overall County due to the new residential development currently underway in Ontario Ranch ; however, with the recent rise in interest rates, the population growth rate may be tempered. Below is a map from the City of Ontario’s website showing the various specific plans within the Ontario Ranch. As mentioned, the subject properties are located within The Avenue Specific Plan (red); Parkside Specific Plan (Green) and Subarea 29 Specific Plan (pink).
Within the Ontario Ranch, out of the total 8,200 acres, 4,026 acres are approved within the above 18 specific plans (per latest update on City website). Within the approved 4,026 acres are ; 10,455 single family residences , 10,659 multi-family residences, 1.63 million square feet of commercial, 16.35 million square feet of industrial and 3.88 million square feet of business park. There is an additional 314 acres and 574 single family units in process for approval along with 4.42 million square feet of industrial space and nearly 920,000 square feet of business park. There are ten residential specific plans currently with approvals which include Grand Park, The Avenue (includes Zone 1 of subject property), Parkside (includes Zone 2 of subject property), Subarea 29 (includes Zone 3 730
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of subject property ), Rich Haven, Parkside, Esperanza, West Haven, Edenglen, Armstrong Ranch and Countryside. In addition, there are approvals for the Colony Commerce Center West, the West Ontario Commerce Center, the Colony Commerce Center East, the Merrill Commerce Center, the Ontario Ranch Business Park, and South Ontario Logistics Center. There is one amendment to a specific plan in process, which is in Subarea 29, which includes 574 single family units over 125 acres. There are currently six specific plans marketing houses: The Avenue (includes Cambridge Court, Zone 1), Parkside (includes NUVO Parkside and Vacant Land Parcel. Zone 2), Subarea 29 (includes Fairhaven, Zone 3), Esperanza, West Haven, and Countryside. Esperanza includes Lennar’s Esperanza age qualified community of Vivir as well as Sunset Ranch with three active communities: Belmont; Moonstone; and Torrey, all by KB Home.
Subarea 29 has Lennar’s Fairhaven (subject Zone 3) . The Avenue has one new home project currently selling: Cambridge Court by Woodside (subject Zone 1). Rich Haven has four new home projects currently selling: Oleander by Shea; Neuhouse by Landsea; and Indigo and Citrus by Brookfield. NUVO (which includes Bryant, Grant, Hyde, and Lincoln) is within Parkside and is being built -out by The New Home Company ( subject Zone 2).
Lastly, Countryside currently has two new home communities, Shady Tree at Country Lane, and Whispering Wind at County Lane, both by Lennar. Park Place was developed by Lewis Community Developers and Stratham Communities in a partnership, previously had over ten new home neighborhoods selling by five different homebuilders, but all have closed out as the original Park Place is built-out.
Ontario Ranch Parkway has on/off ramps from the I -15 about 0.25 miles west of the entrance to Ontario Ranch. Ontario Ranch Parkway is known as Cantu-Galleano Ranch Road in Riverside County. The County line generally runs along Hamner Avenue at Ontario Ranch Parkway with the west side of Hamner Avenue in San Bernardino County and the east side of Hamner Avenue in the panhandle of the City of Eastvale in Riverside County.
Transportation
The City is served by three major freeways. State Route 60 and Interstate 10 traverse the City in an east west direction while Interstate 15 runs in a north- south direction just east 731
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of the City, in the Ontario Ranch area and through the City north of I -10. The Ontario International Airport is located about five miles north of the subject. Ontario International is the 15th busiest airport in the country measured by cargo carried. It is a major hub for freight and is surrounded by one of the largest warehousing/distribution districts in California. This industrial area is divided between the cities of Ontario, Rancho Cucamonga, Jurupa Valley, Fontana and Eastvale
Economy
While the early economy of Ontario was more dairy and agricultural influenced, in the 1970s thru 1990s the development of industrial buildings surrounding the airport fueled the area. This industrial area became built -out leaving little land for development remaining in the late 1990s when the annexation of the Ontario Ranch occurred. Once planning was approved, land began selling to residential home builders in the mid-2000s however the Great Recession stopped development generally from 2006 through 2012.
Over 5,000 homes have been sold in Ontario Ranch since early 2016. There were several land transactions within the Ontario Ranch in 2012 and 2013 however 2014 saw a slow down with little to no finished lot sales in the area. The year 2015 saw no finished lot sales but did include additional construction by Brookfield Homes in the area of The Avenue.
The years 2018 through 2021 saw more residential land transactions in Ontario R anch and synergy in the area began, with five land closings in 2020, four in 2021, none in 2022 and two thus far in 2023. It was recently announced that Ontario Ranch was the top selling Southern California region for the second consecutive year. The sales activity since the onset of COVID had led builders to jump on new land opportunities as pricing and sales rates were both increasing. In spring and summer of 2022 things started to turn. No new residential land t ransactions closed in Ontario Ranch in 2022 due in part to increasing interest rates and the sales absorption slow down. However, 2023 has seen numerous land transactions in the greater Ontario area go under contract, and while the majority of these land t ransactions have yet to close, new home sales are still occurring at an average to above average pace. This is thought to be due to the extremely limited supply of existing homes for sale. Historically 10 – 13 percent of total home sales are new 732
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homes; however, for the past year, new home sales are capturing 30 – 40 percent of total sales due to the limited availability of existing home sales.
Within Ontario Ranch, the New Haven Marketplace opened with a Stater Bros market, Starbucks, Chase Bank, Brew Haven Tap House, Carl’s Jr and Jersey Mike’s along with additional in-line space. Adjacent to the Ontario Ranch, immediately to the east, between I-15 and Hamner Avenue is the recently developed industrial area located within the “panhandle” of the City of Eastvale. This area currently houses Costco, an Amazon fulfillment center, and both Walmart and UPS Distribution centers.
Summary
Population in the City of Ontario had continually grown at a slower rate than other areas due to essential build-out prior to the approval of the Ontario Ranch. This past year the growth rate within the City was significantly higher than that of the Count y. Predictions are for a stronger population growth due to the transition of lands within the Ontario Ranch from agricultural uses to residential uses. There have been numerous specific plan approvals and residential land sales within Ontario Ranch in the past few years. Ontario has enjoyed strong new home sales and price increases along with the rest of the Inland Empire housing market in the last two years. The neighboring City of Eastvale is essentially built-out with Ontario Ranch in the direct line of development from the more populated coastal areas. While higher interest rates suggest a real estate slowdown, due to the population growth, the need for new homes will continue. The City, and more specifically the Ontario Ranch, are projected to continue to have positive growth into the future.
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ONTARIO COMMUNITY FACILITIES DISTRICT NO. 56 (PARKSIDE/LA AVENIDA)
We have reviewed the Formation Hearing Report (“Report”) dated December 21, 2021, prepared for Ontario CFD No. 56 by Goodwin Consulting Services. Per the Report the City Council of the City of Ontario adopted a Resolution of Intention to establish Ontario CFD No. 56 on November 16, 2021 . The Report gives the following description of authorized facilities and services.
Facilities to be Financed or Purchased – The types of facilities to be financed or purchased by Ontario CFD No. 56 are street and bridge improvements, including grading, paving curbs and gutters, sidewalks, street signalization and signage, street lights and parkway and landscaping related thereto, domestic and recycled water distribution facilities, sewer collection facilities, solid waste facilities, storm drainage facilities, park and recreation facilities and equipment, aquatic facilities and equipment, fire facilities and equipment, police facilities and equipment, library facilities and equipment, fiber optic telecommunication system facilities, general governmental office, administrative and meeting facilities, and land, rights -of-way and easements necessary for any of such facilities.
Services – Police protection services, fire protection and suppression services, ambulance and paramedic services, maintenance and lighting of parks, parkways, streets, roads and open space, flood and storm protection services and maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City.
These facilities, which are eligible for financing under the Mello- Roos Community Facilities Act of 1982, are necessary to meet increased demands placed upon the district as a result of the development of said property. In addition to the above facilities and services are incidental expenses for the cost of planning and designing public facilities to be financed, including the cost of env ironmental evaluations of those facilities; the costs associated with the creation of Ontario CFD No. 56, issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes or costs otherwise incurred in order to carry out the authorized purposes of Ontario CFD No. 56; and any other expenses incidental to the construction, completion, and inspection of the authorized work. The cost estimates include a Special Tax A (Facilities) and a Special Tax B (Services). It should be noted t hat Zone 1 and Zone 3 are located within other services CFD’s and will not be subject to Special Tax B of Ontario CFD No. 56.
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The cost estimate for the Facilities and Services as stated in the Report is shown below.
Estimated Costs including Replacement Costs $66,265,000 Incidentals:
Bond Reserve Fund $ 4,872,000
Bond discount/Issuance Costs $ 2,887,000
Capitalized Interest $ 976,000
Total Bond Amounts Needed $75,000,000
It should be noted that the above amounts assume three series of bonds over 100 years.
The assigned Special Tax A amounts for developed property within Ontario CFD No. 56 as shown in the Certificate of Modification of Special Tax A (proposed on October 3, 2023) for each zone are shown in the tables below.
Tax Zone 1
Tax Zone 2
Land
Use
Class
Description Square
Footage
Assigned
Special Tax
1 Single Family Detached Property < 1,801 $2,758 per Unit 2 Single Family Detached Property 1,801 – 1,900 $2,845 per Unit 3 Single Family Detached Property 1,901 – 2,000 $2,868 per Unit 4 Single Family Detached Property 2,001 – 2,100 $2,935 per Unit 5 Single Family Detached Property 2,101 – 2,200 $3,066 per Unit 6 Single Family Detached Property 2,201 – 2,300 $3,102 per Unit 7 Single Family Detached Property 2,301 – 2,400 $3,169 per Unit 8 Single Family Detached Property 2,401 – 2,500 $3,255 per Unit 9 Single Family Detached Property 2,500 $3,349 per Unit 10 Other Residential Property $48,482 per Acre
11 Non-Residential Property $48,482 per Acre
Land
Use
Class
Description Square
Footage
Assigned
Special Tax
12 Single Family Detached Property < 901 $2,184 per Unit 13 Single Family Detached Property 901 – 1,000 $2,371 per Unit 14 Single Family Detached Property 1,001 – 1,100 $2,542 per Unit 15 Single Family Detached Property 1,101 – 1,200 $2,693 per Unit 16 Single Family Detached Property 1,201 – 1,300 $2,924 per Unit 17 Single Family Detached Property 1,301 – 1,400 $3,175 per Unit 18 Single Family Detached Property 1,401 – 1,500 $3,283 per Unit 19 Single Family Detached Property 1,501 – 1,600 $3,340 per Unit 20 Single Family Detached Property 1,601 – 1,700 $3,436 per Unit 21 Single Family Detached Property 1,701 – 1,800 $3,561 per Unit 22 Single Family Detached Property 1,801 – 1,900 $3,778 per Unit 23 Single Family Detached Property 1,901 – 2,000 $4,055 per Unit 24 Single Family Detached Property 2,000 $4,192 per Unit 25 Other Residential Property $76,571 per Acre
26 Non-Residential Property $76,571 per Acre
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Tax Zone 3
The assigned Special Tax B amounts for developed property within Ontario CFD No. 56 Zone 2 as shown in the resolution of formation are shown in the table below.
Land Use Class Max. Special Tax B
Fiscal Year 2022-23
Single Family Detached Property $1,623.20 per Unit
Multiple Family Dwelling Unit $1,406.69 per Unit
Gated Attached Dwelling Unit $1,179.66 per Unit
Non-Residential Property $0.296 per Sq. Ft.
Per the latest Sources and Uses of Funds (dated September 26, 2023), the total uses of funds (all amounts subject to change) are anticipated to be $2,643,473 for Zone 1, $11,419,316 for Zone 2 and $2,963,390 for Zone 3 in Project Fund Deposits, $1,312,825 in Debt Service Reserve Fund and $587,625 in Cost of Issuance and Underwriter’s Discount. A copy of the Ontario CFD No. 56 boundary map is located in the Addenda for your review.
Land
Use
Class
Description Square
Footage
Assigned
Special Tax
27 Single Family Detached Property < 1,101 $2,508 per Unit 28 Single Family Detached Property 1,101 – 1,300 $2,694 per Unit 29 Single Family Detached Property 1,301 – 1,500 $3,301 per Unit 30 Single Family Detached Property 1,501 – 1,700 $3,306 per Unit 31 Single Family Detached Property 1,701 – 1,900 $3,620 per Unit 32 Single Family Detached Property 1,901 – 2,100 $4,013 per Unit 33 Single Family Detached Property 2,100 $4,357 per Unit 34 Single Family Attached Property <1,301 $2,716 per Unit 35 Single Family Attached Property 1,301 – 1,500 $2,880 per Unit 36 Single Family Attached Property 1,501 – 1,700 $3,452 per Unit 37 Single Family Attached Property 1,701 – 1,900 $3,554 per Unit 38 Single Family Attached Property 1,900 $3,885 per Unit 39 Other Residential Property $125,970 per Acre
40 Non-Residential Property $125,970 per Acre
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SUBJECT PROPERTY DESCRIPTIONS
The subject property consists of the neighborhoods known as Cambridge Court by Woodside Homes, NUVO Parkside by the New Home Company , and Fairhaven at Park Place by Lennar, in addition to Lot 1 of Tract 20316 owned by Lewis. Information specific to each community is listed below.
Cambridge Court by Woodside Homes (Zone 1 of Ontario CFD No. 56)
Location: Northeast corner of La Avenida Drive and Manitoba Place, Ontario Ranch, Ontario, California.
Legal Property
Description: Lots 1-106 of Tract Map No. 20298.
Property Owner: Individual Owners as Lots 28-31, 42-99 of Tract 20298; Woodside 05S LP as to Lots 1-27, 32-41, 100-106 of Tract 20298.
Assessors
Parcel Nos.: 0218-653-01 through -57; 0218-654-01 through -49.
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Property Taxes: We have reviewed a sample Cambridge Court home tax bill on Assessor Parcel Number 0218- 653-28. The July 2022 property tax bill totaled $7,991.78 which included $ 3,159.76 for general levy, $3,169.00 for CFD 56 Parkside Special Tax A (subject), $1,443.71 for CFD 32 Archibald/Shaefer (Services), $92.89 for Chaffey High Bond, $43.28 for Chaffey College Bond, $42.34 for the Mountainview Elementary SFID No. 1, and $40.80 in miscellaneous charges. This was based on an assesse d value of $315,976.00. A 2022
supplemental property tax bill based on a new value of $723,575.00 (and an assessed value of $407,599.00 representing the difference between the old assessed value and the new assessed value), includes $4,075.99 for the gener al levy, $119.83 for Chaffey High Bond, $55.84 for Chaffey College Bond, $54.61 for the Mountainview Elementary SFID No. 1, and $14.26 for the Metro Water Debt, for a total tax invoice of $ 4,320.53. The total of the two property tax invoices for 2022 is $12,312.31 which equates to approximately 1.7 percent of the assessed value of $723,575.00.
Three-Year
Sales History: Woodside Homes purchased Tract 20298 from Ontario Schaefer Holdings, LLC on December 23, 2020, for $13,611,196 per public record. This equates to a per lot price of $128,408 and was based off a finished lot value of $184,818 per representatives of the builder.
Woodside began selling homes at Cambridge Court in October of 2021. Individual homebuyers have closed on 62 homes between April 22, 2022, and June 6, 2023. There are 31 proposed homes in escrow which are due to close upon completion.
Size and Shape: The subject property is roughly rectangular shaped and contains an estimated 10.486 gross acres and 7.863 net acres per recorded Tract Map No. 20298.
Zoning: Per the City of Ontario’s General Plan (Land Use Plan LU -01) the site is designated as LMDR or Low Medium Density Residential, which allows for 5.1-11.0 dwelling units per acre. Per the current City of Ontario Zoning Map, the site is shown as Specific Plan – The Avenue (PSP05-003).
Specific Plan: Per The Avenue Specific Plan (dated December 2006, amended November 17, 2020) the subject site is designated as Planning Area 6B. Planning Area 6B includes 10.0 gross acres and was proposed for 106 detached lots with a density of 10.6 du/acre. The most recent amended version shows the School Site adjacent to the subject and the subject as PA 6B. The Specific Plan Land Use Map is pictured below, with Zone 1 outlined in red. The 106 proposed units is allowed per the Specific Plan and is within the allowed density for the Ontario General Plan.
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Entitlements: Tract Map No. 20298 encompasses Zone 1 of the subject property (covering all of Cambridge Court). Tract Map 20298 covers 10.486 gross acres and 7.863 net acres, was recorded on July 15, 2021 and divides Zone 1 into 106 numbered and 19 lettered lots.
The recorded tract maps allow for 106 single family detached lots with a minimum lot size of 2,700 square feet on the total 10.486 acres resulting in an overall density of 10.1 dwelling units per acre which is within the allowed zoning and general plan designation.
Topography: The topography is generally flat, and currently the subject property is at street level of the surrounding streets. The lands have been developed into single-family detached lots. Drainage appears to be within an engineered street drainage system.
Soils Condition: We have reviewed three “As -Graded Geotechnical Compaction Report” on various lots within Tract 20298. The first is dated February 22, 2021, and covers lots 46-57 and 70-93; the second is dated June 11, 2021 and covers lots 19- 45, 58-69, 94-106, and Park Site lot A; and the third is dated April 29, 2022 and covers lots 1- 18. All three reports were prepared by GeoSoils, Inc. of Lake Elsinore, California.
The three reports conclude that the building pads appear to be suitable for their intended residential use, and that the recommendations contained in the report s should be appropriately implemented during remaining grading and construction.
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It is an assumption of this report that the soil s are adequate to support the highest and best use conclusion and that all recommendations in the soil reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.
Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California (via City of Ontario) and there are no known active faults crossing the site.
Environmental
Concerns: We have reviewed a “Phase I and Limited Phase II Environmental Site Assessment” (“ESA”) for Tentative Tract 20298, prepared by GeoSoils, Inc. of Corona, California, and dated August 4, 2020. The ESA notes various findings and conclusions, including the site previously being utilized for agricultural purposes from 1938- 2012, but ultimately concluded that there was no evidence of recognized environmental c onditions in connection with the subject site.
However, we are not experts in environmental issues, and we refer the reader to the ESA if additional information is needed.
It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is suggested by construction of homes on the site and City inspectors on site during construction.
Methane
Reports: We have not reviewed any Methane Reports for the subject property.
It is an assumption of this report that there are no methane issues which would slow or thwart development of the subject property and that all mitigation measures as stated in the reports were completed.
This is evidenced by construction of homes on the site and City inspectors on site during construction.
Flood Information: Per FEMA Map No. 06071C8639J dated September 2, 2016, Zone 1 is shown as being in Zone X with “0.2% Annual Chance Flood Hazard, Areas of 1% annual chance flood with average depth less than one foot or with drainage areas of less than one square mile.” Easements and
Encumbrances: We have reviewed a Preliminary Tit le Report prepared by FNTG Builder Services, that covers Zone 1 of the subject property. Report 00112368-996-SD1-RT4 dated March 10, 2021, covers Tract Map 20298. The report notes the following exceptions:
Item Nos. A, B, C and D refer to property taxes and the Special Tax Assessment for CFD 32 (services CFD). Item No. 1 pertains to water rights. Item No. 2 pertains to a development agreement with amendments recorded on the site. Item No. 3 refers to the ri ghts of 740
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access from La Avenida Drive. Item No. 4 refers to recitals as shown on Tract Map 18419 stating the site is reserved for a Lot Z for school site purposes by the Ontario Montclair School District. This appears to be an error as the school site was moved to the adjoining property per The Avenue Specific Plan amendment dated November 17, 2020. Item Nos. 5, 6, 7, 9 and 10 were intentionally omitted. Item No. 8 pertains to an assignment of the development agreement.
While the exceptions appear typical for subject -type lands, i t is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 56 and the noted CFD No. 32. The appraisers are not title experts, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.
Utilities: All normal utilities are available to serve the subject site by the following companies:
Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: City of Ontario
Schools: Mountain View District and Chaffey Joint Union High School District
Immediate
Surroundings: Zone 1 is surrounded by existing residential homes to the north, east, and south, and a vacant parcel to the east. The vacant parcel is a future school site per the Avenue Specific Plan’s land use map.
Further north past the existing residential homes and Schaefer Avenue is a SoCal Edison easement, before more residential lands continue. Further west of Zone 1 past existing residential lands and on the west side of Archibald Street are agricultural lands. Additional agricultural lands (what appears to be dairy farms) are present southeast of Zone 1 as well, at the northwest corner of Ontario Ranch Road and Turner Avenue. The existing residential largely surrounding Zone 1 are previous phases of the Ontario Ranch master plans, including New Haven by Brookfield, and Landmark by Lennar.
Streets/Access: Access to the subject property is convenient via both SR -60 and I -
15. From SR-60, exit Archibald Avenue and head south two miles to La Avenida Drive (one street north of Ontario Ranch Road). From Archibald, head east on La Avenida Drive for one quarter mile, then north on Manitoba Place. Cambridge Court is located at the northeast corner of La Avenida Drive and Manitoba Place, with the entrance to the subject via Manitoba Place. Access from SR -60 is also convenient via the Haven Avenue offramp, two miles south to Ontario Ranch Road, and west to Broadway Avenue. Broadway Avenue turns into Manitoba Road at La Avenida Drive. From I -15, 741
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exit Ontario Ranch Road and head west just over two miles to Broadway Avenue/Manitoba Place. The Cambridge Court models are located on E. Merritt Paseo, off Manitoba Place.
SR-60 (2.0 miles north of the subject) provides east/west access from downtown Los Angeles to the city of Beaumont. The subject sits between Archibald Avenue and Haven Avenue on/offramps.
I-15 (2.1 miles east of the subject) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.
I-10 (4.5 miles north of the subject) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.
I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida.
Archibald Avenue has on/off ramps at SR -60 and provides access into north Ontario and down into Eastvale. Archibald Avenue’s northern terminus is at the Ontario International Airport, approximately 3.5 miles north of the subject.
Ontario Ranch Road has on/off ramps to I-15 and is known as Cantu- Galleano Ranch Road east of Hamner Avenue. It is the main access into the newly emerging community of Ontario Ranch. Currently Ontario Ranch Road becomes Edison Road west of Ontario Ranch.
Haven Avenue has on/off ramps at both SR-60 and I-10 and provides access to the north into Rancho Cucamonga, and south into Eastvale. Haven Avenue becomes Sumner Avenue at Edison
Avenue, just north of the San Bernardino/Riverside County line (south of Cambridge Court).
La Avenida Drive is a smaller local east/west arterial that provides access through The Avenue Specific Plan. La Avenida Drive begins at Archibald Avenue and turns into New Haven Drive 0.75 miles later, before crossing Ontario Ranch Road and terminating at Edison Avenue.
Manitoba Place/Broadway Avenue is a small local north/south neighborhood arterial that also provides access through The Avenue Specific Plan. Broadway Avenue starts at Ontario Ranch Road and heads north, where it turns into Manitoba Place at a roundabout after intersecting with La Avenida Drive. Manitoba Place terminates at a neighborhood cul-de-sac just north of Cambridge Court. La Avenida Drive begins at Archibald Avenue and turns into New Haven Drive 742
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0.75 miles later, before crossing Ontario Ranch Road and terminating at Edison Avenue.
Internal streets within Cambridge Court include E. Halton Privado, E.
Merritt Paseo, E. Duncan Paseo, S. Cranbrook Privado, Calgary Street, E. Cranbrook Paseo, E. Halton Privado and S. Halton Paseo.
Current Condition: The subject has been developed into 106 single-family detached lots containing a minimum of 3,700 square feet. Upon our inspection, 77 of the homes were over 95 percent complete including 62 individually owned homes, three model homes, and 12 additional production homes owned by the builder (all 12 in escrow). In addition, there were 22 homes under construction (less than 95 percent complete with 19 in escrow) and seven finished lots.
Cost to Complete: Residential lands in the area are typically sold on a “finished lot” basis. That is, builders pay a finished lot price less the remaining development costs that will need to be expended to arrive at a “finished lot.” Per Woodside representatives, the lots are in a finished lot condition with no remaining land development costs and all land development fees have been paid. Per our inspection the final lift of the streets had not been completed and water quality management was still underway. We have included a contingency of $150,000 for these purposes. The homeowners are not
responsible for any of the remaining costs; thus, they f all to the builder-owned property only.
There are a total of 106 proposed houses within Cambridge Court by Woodside with 62 having closed to individuals leaving 44 lots under builder ownership. Dividing the remaining costs of $150 ,000 by the 44 lots equates to $ 3,409.09 in remaining land development costs per lot. These costs will be taken into account in the valuation section, later within this report.
Homeowner’s
Association: Per builder representatives , the Cambridge Court HOA fees are $106.50 per month at buildout. It is assumed that the HOA maintains the community park, internal streets, and common area landscaping.
Improvement
Description: Cambridge Court by Woodside Homes includes three detached two- story floorplans ranging in size from 1,951 t o 2,365 square feet.
Exteriors feature Spanish, California- Ranch, and Bungalow - influenced architecture. There are three model homes, located at the E. Merritt Paseo entrance off Manitoba Place. Cambridge Court floorplans offer three to five bedrooms (with loft/bedroom variation options) and attached two bay garages. All floorplans at Cambridge Court offer open concept living with eat -in kitchens open to great rooms, second floor laundry rooms, as well as o wner’s suites with 743
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separate tub and showers, dual sinks, and walk in closets. Homes at Cambridge Court offer ceramic floors at entryways , kitchens, and bathrooms; two-panel interior doors; ceiling fan prewiring (at primary bedroom and great room); convenient “drop zones” with USB charging stations; LED lighting throughout; and gas stubs for barbeques in backyards. Homes are also equipped with video doorbells, high efficiency tankless water heaters, dual glazed- low E windows, and PEX plumbing lines. Woodside also advertises that homes include a high-quality inline kitchen water filtration system as well as an innovative solar program. Kitchens at Cambr idge Court feature GE stainless steel appliances, slab- granite countertops, kitchen islands, walk in pantries, and maple cabinetry. Sixty-two of the 106 homes in the subject property have closed to individuals with closing dates between April 22, 2022, and June 6, 2023. Actual sales prices (including premium, upgrades, options, and incentives) within the subject have ranged from $650,000 to $847,059. Current base pricing ranges from $ 706,000 to $778,500. The builder is currently advertising a “Summer Move-In Ready Event ” per their website , advertising for buyers to “receive up to $40,000 toward your new designer-curated home. ” Per the sales data provided, incentives have ranged from $0 up to $ 100,494, with an average incentive on the closed homes of $31,246. It should be noted that the incentives averaged $8,605 per house between April 2022 and October 2022 (38 homes) and $56,678 per house since October 2022 (24 homes).
Per Woodside representatives they are not offering interest rate buydowns at Cambridge Court. Our search of the MLS revealed no resales or current resale listings. Our physical search noted all homes appear to be in excellent condition. The houses which are over 95 percent complete are detailed below.
Cambridge Court by Woodside Homes
Floor Plan Bed/
Bath
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Plan 1 3 / 3 2 / 2 1,951 17 5*
Plan 2 4 / 3 2 / 2 2,043 16 7*
Plan 3 5 / 3 2 / 2 2,365 29 3*
Total 62 15
*Each asterisk designates one model home per that plan. In addition to the above there are 22 homes under construction and 7 additional finished lots.
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NUVO Parkside by The New Home Company
(Portion of Zone 2 of Ontario CFD No. 56)
Location: Northwest corner of Archibald Avenue and Eucalyptus Place, Ontario Ranch, Ontario, California.
Legal Property
Description: Lots 2-4 of Tract Map No. 20316.
Property Owner: NUVO Parkside: Individual Owners as Units 1-16 of Lot 3; Units 1-2, 4-50, 59-98, 107-122, 149-188 of Lot 4 of Tract 20316; New Home Company as to Units 1-6, 17 of Lot 2; Units 17- 42 of Lot 3; Units 3, 51-54, 99-106, 123-130, 144-148, 189-220 of Lot 4 of Tract 20316; Arroyo Cap II-1 as to Units 7-16, 18-41 of Lot 2; Units 55-58 and 131- 143 of Lot 4 of Tract 20316.
Assessors
Parcel Nos.: 0218-063-08 thru 14; 16 thru 20; 22 thru 24; 25 thru 29; 31 thru 40; 42 thru 52. 0218-073-09 thru 16; 18 thru 25; 27 thru 34; 36 thru 45; 47 thru 56; 58 thru 67; 69 thru 76; 78 thru 85 and 87 thru 94. 0218- 074-01 thru 08; 10 thru 17; 19 thru 26; 28 thru 33; 35 thru 40; 42 thru 47; 0218-983-01 thru 07; 09 thru 19; 28 thru 25; 27 thru 34; 36 thru 42; 45 thru 54 and 58 thru 59. 0218- 984-01 thru 08; 10 thru 13; 14 thru 21 and 23 thru 30. 0218-985-01 thru 06; 08 thru 15; 17 thru 24; 745
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28 thru 36; 37 thru 46; 48 thru 53; 55 thru 58; 60 thru 64 and 67 thru
74. Property Taxes: We were unable to find a sample proper ty tax bill for an improved property within NUVO Parkside that showed the site as improved with an existing house on site. This appraisal assumes the tax rate is similar to surrounding-like communities and will be under 2%.
Three-Year
Sales History: Arroyo Cap II-1, LLC purchased Lots 2-4 of Tract 20316 from Lewis on June 16, 2021, for $18,078,732 per seller . The New Home Company began taking down phases of units from Arroyo Cap II-1 in November of 2021. As of August 7, 2023, the New Home Co mpany has completed eight takedowns of units from Arroyo Cap II -1 for a total of 252 units transferred, with four proposed phases/takedowns covering the remaining 51 units left. The New Home Company began selling homes at NUVO Parkside in April of 2022. The New Home Company has closed 161 units to individual home buyers between September 29, 2022, and July 28, 2023.
Size and Shape: The subject property (consisting of Lots 2, 3 and 4) is irregular in shape, divided by internal streets (letter lots) and contains 18.423 acres per the recorded Tract Map 20316. It should be noted that internal streets and Lot A (houses the pool/clubhouse) are not included in the above net acres.
Zoning: Per the City of Ontari o’s General Plan (Land Use Plan LU -01) the site is designated as MDR or Medium Density Residential, which allows for 11.1- 25.0 dwelling units per acre. Per the current City of Ontario Zoning Map, the site is shown as Specific Plan – Parkside (PSP03-002).
Specific Plan: Per Parkside Specific Plan (dated August 2006, amended June 2020), NUVO (the subject property) which is a portion of Zone 2 is designated as Planning Areas 2, 3, 4 and 23 (pool, clubhouse lot that is also known as Lot A ). Planning Areas 2 -4 are zoned Medium Density Residential, with a density of 11.1- 25 du/acre per the Specific Plan, while Planning Area 23 is designated as Open Space.
Per the Land Use Summary table included in the Specific Plan, Planning Areas 2, 3 and 4 (developable portion of NUVO) contain
18.66 net acres. Planning Area 2 contains 3.57 gross (2.66 net) acres and allows for 41 units; Planning Area 3 contains 3.06 gross (2.38 net) acres and allows for 42 units; Planning Area 4 contains
15.50 gross (13.62 net) acres and allows for 221 units. Planning Area 23 serves as the NUVO Parkside community park/amenity area and contains 1.90 gross (1.34 net) acres. The Specific Plan Land Use Map is pictured below, with all of Zone 2 (including NUVO and the vacant parcel)outlined in red with NUVO identified by blue stars. 746
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Entitlements: Tract Map No. 20316 encompasses Zone 2 of the subject property (covering all of NUVO Parkside and the adjacent parcel, as well as two park sites that fall outside of CFD No. 56 boundary lines). Tract Map 20316 which covers 55.847 gross acres and 51.192 net acres, was recorded on March 11, 2021, and divides Zone 2 and additional lands into four numbered and nine lettered lots. The nine-lettered lots include Planning Area 21, proposed for a regional park, and not included in this analysis.
The recorded tract map and subsequent condo maps allow for 303 single family detached lots for detached condominium units within NUVO Parkside (Lots 2-4 of Tract 20316). The acreage of Lots 2- 4 is 18. 66 net acres, which suggests a density of 16. 23 du/acre for NUVO Parkside ; however, this acreage is net of streets and the clubhouse/pool area. Per the Specific Plan, the total gross acres of this area are 24.03 acres which equates to a density of 12.6 dwelling units per acre. Please note, we have reviewed the Construction 747
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Phasing Plans, but have not received or reviewed Condominium Plans (this appraisal assumes the Condominium Plans are consistent with the provided Construction Phasing Plans).
Topography: The topography is generally flat, and currently the subject property is at street level of the surrounding streets. The land has been developed into single-family detached lots. Drainage appears to be within an engineered street drainage system.
Soils Condition: We have reviewed the Final Geotechnical Report for Lot A (pool/clubhouse area) within Tract 20316 (the only soils reports received to review). The final geotechnical report for Lot A summarized their observation during rough grading and concluded that the rough grading was completed in substantial conformance with the plans and specifications and gives recommendations for construction on the site. It should be noted that the appraiser is not an expert in soil matters and if questions arise, a review of the report should be completed.
It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations in the soil reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.
Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California (via City of Ontario) and there are no known active faults crossing the site.
Environmental
Concerns: We have not received an environmental report to review. It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is suggested by construction of homes on the site and City inspectors on site during construction.
Methane
Reports: We have not reviewed any Methane Reports for the subject property.
It is an assumption in this report that there are no methane issues which would slow or thwart development of the subject property and that all mitigation measures as stated in the reports were completed.
This is evidenced by construction of homes on the site and City inspectors on site during construction.
Flood Information: Per FEMA Map No. 0671C9375H dated August 28, 2008, Zone 2 is shown as being in Zone X with “Area with Reduced Flood Risk due to Levee.”
Easements and
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Encumbrances: We have reviewed a Preliminary Title Report prepared by FNTG Builder Services, that covers a portion of Zone 2 of the subject property. Report 6637590-7 (mwhp) dated June 23, 2023, covers a portion of NUVO Parkside (portion of Lots 2- 4 of Tract Map 20316).
The report notes the following exceptions:
Item Nos. 1 through 4 pertains to property taxes including the special tax of CFD No. 56 (subject CFD). Item Nos. 5, 8, 9, 13 and 14 refer to easements for public utilities. Item No 6 is in regard to the development agreement recorded on the site. Item No. 7 pertains to the Development Impact Fee Credit Agreement. Item No. 10 refers to the Agreement Water Quality Management Plan and Stormwater BMP Transfer, access, and maintenance. Item No. 11 refers to a deed of trust recorded on the property. Item Nos. 12 and 15 pertain to CC & Rs rec orded on the site. Item No. 16 refers to a memorandum of Option Agreement. Item No. 17 is in regard to the Declaration of Dispute Resolution Procedures for NUVO Parkside.
Item No. 18 pertains to water rights and Item No. 19 refers to the rights of parties in possession. Item No. 20 states items the Title Company will need in order to issue title insurance on the site.
While the exceptions appear typical for subject -type lands, i t is an assumption in this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 56 and the noted easements. The appraisers are not title experts, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.
Utilities: All normal utilities are available to serve the subject site by the following companies:
Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: City of Ontario
Schools: Mountain View District and Chaffey Joint Union High School District
Immediate
Surroundings: Zone 2 is largely surrounded by vacant lands. To the north, is vacant (part of the Parkside Specific Plan and planned for future residential, park, and neighborhood commercial); to the east is the Cucamonga Creek Channel past which is additional vacant lands currently being utilized for farming (also included in the Parkside Specific Plan and planned for future residential and parks); to the south is a vacant parcel to the southeast and newer homes to the southwest, known as part of the Shadetree community by Landsea; to the east is Lot 1 of Tract Map 20316 (Vacant Parcel described below) then Archibald Avenue past which is vacant land which appears to be being utilized 749
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as dairy farms. Southwest of Zone 2 (west of Shadetree) are several large industrial buildings and distribution centers.
Streets/Access: Access to the subject property is convenient via both SR -60 and I -
15. From SR -60, exit Archibald Avenue and head south two and three-quarter miles to Eucalyptus Avenue. From Archibald, head west on Eucalyptus Avenue for one quarter mile, then north on Millenium Paseo. Zone 2 is located at the northwest corner of Archibald Avenue and Eucalyptus Avenue, with Lot 1 (vacant parcel) to the east of the Millenium Paseo entrance, and Lots 2- 4 (NUVO Parkside) to the north, northeast, and west of Millenium Paseo. From I-15, exit Ontario Ranch Road and head west just over two and one- half miles to Archibald Avenue, then south to Eucalyptus. The NUVO Parkside models are located on Hyde Paseo, just west of the Millenium Paseo main entrance.
SR-60 (2.6 miles north of the subject) provides east/west access from downtown Los Angeles to the city of Beaumont. The subject sits between Archibald Avenue and Haven Avenue on/offramps.
I-15 (2.7 miles east of the subject) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.
I-10 (5.1 miles north of the subject) is a major e ast/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.
I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida.
Archibald Avenue has on/off ramps at SR -60 and provides access into north Ontario and down into Eastvale. Archibald Avenue’s northern terminus is at the Ontario International Airport, approximately 3.8 miles north of the subject.
Ontario Ranch Road has on/off ramps to I-15 and is known as Cantu- Galleano Ranch Road east of Hamner Avenue. It is the main access into the newly emerging community of Ontario Ranch. Currently Ontario Ranch Road becomes Edison Road west of Ontario Ranch.
Eucalyptus Avenue is a smaller east/west arterial that beings at Chaffey College’s Chino Campus in Chino, approximately 4.5 miles west of Zone 2, and terminates at Hamner Avenue, approximately
2.3 miles east of the subject in Lennar’s Esperanza residential community.
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Internal streets within Zone 2 include: Millenium Paseo, Encanto Paseo, Hyde Paseo, Grant Paseo, Bryant Paseo, Forsyth Paseo, Stanley Paseo, Fairmont Paseo, Forbes Paseo, and Griffin Court.
Current Condition: The subject has been developed into 303 single- family detached condo lots, largely arranged in motor court configurations. Upon our inspection, 191 of the homes were over 95 percent complete including 161 individually owned homes, nine model homes, and 22 additional production homes owned by the builder (21 in escrow). In addition, there were 80 homes under construction (less than 95 percent complete and 32 in escrow) and 32 finished lots.
Cost to Complete: Residential lands in the area are typically sold on a “finished lot” basis. That is, builders pay a finished lot price less the remaining development costs that will need to be expended to arrive at a “finished lot.” Per New Home Company representatives, there are $2,800,000 in remaining land development costs and no remaining land development fees to be paid. The homeowners are not responsible for any of the remaining costs; thus, they fall to the builder-owned property only.
There are a total of 303 proposed residential units within NUVO Parkside with 161 having closed to individuals leaving 142 lots under builder or land bank ownership. Dividing the remaining costs of $2,800,000 by the 142 lots equates to $19,718.31 in remaining land development costs per lot. These costs will be taken into account in the valuation section, later within this report.
Homeowner’s
Association: Per builder representatives, the NUVO Parkside HOA fees are $197 per month at buildout. It is assumed that the HOA maintains the community park and amenity area, internal streets , and common area landscaping.
Improvement
Description: NUVO Parkside by the New Home Company includes four product lines ranging from 1,044 to 1,820 square feet, all of which are detached. Lincoln is the smallest product with two bedrooms and includes tw o stories with mostly single car garages (one plan includes a two-car garage). Hyde includes three-story floorplans with the majority having two car garages, and two to four bedrooms.
Bryant is a two -story product with three bedrooms and two car garages. Lastly, Grant is the largest product with three to four bedrooms, two- stories, and two- car garages. detached two- story floorplans ranging in size from 1,951 to 2,365 square feet. Per the New Home Company, the Hyde and Bryant products are still actively selling while the Lincoln and Grant product lines are sold out.
Exteriors feature Mediterranean, Contemporary, and Farmhouse- influenced architecture. There are a total of ten model homes left 751
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(there were a total of 15 when all four product lines were actively selling, but some have sold and closed to individual homebuyers), all located off Hyde Paseo near the Millenium Paseo grand entrance to the community. NUVO floorplans offer two four bedrooms (with lofts at select plans and with a garage/bedroom variation option at one of the Bryant floorplans ) and attached one to two bay garages. All floorplans offer open concept living with eat-in kitchens open to great rooms, second (or third) floor laundry closets, as well as owner’s suites with dual sinks and walk in closets. Homes at NUVO offer vinyl plank flooring at entry, kitchens, and bathrooms; two- panel interior doors; and LED lighting. Homes are also equipped with the “EVO Package,” which includes wi -fi garage door opener, Kwikset Halo Front Door Smart Lock, and Honeywell Smart Thermostat Kitchens at NUVO include white shaker style thermofoil cabinets, GE stainless steel appliances, single bowl stainless steel sinks with Moen pull-out faucets, and granite or quartz countertops. One hundred and sixty- one of the 303 homes in the subject property have closed to individuals with closing dates between September 29, 2022, and July 28, 2023. Actual sales prices (including premium, upgrades, options, and all incentives) within the subject have ranged from $474,990 to $698,610. Current (or most recent for closed out product) base pricing ranges from $485,000 to $636,000. Per the sales data provided, total incentives (including option, sales, and mortgage incentives) have ranged from $0 up to $100 ,840, with an average incentive on the sold homes of $24,187. Our search of the MLS revealed no resales or current resale listings. Our physical search noted all homes appear to be in excellent condition. The houses which are over 95 percent complete are detailed below.
NUVO Parkside by The New Home Company
Floor Plan Bed/
Bath
Floors/
Pkng.
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Lincoln Plan 1 (“L1”) 2 / 2.5 2 / 1 1,082 21 0
Lincoln Plan 2 (“L2”) 2 / 2.5 2 / 1 1,044 14 0
Lincoln Plan 2G (“L2G”) 2 / 2.5 2 / 2 1,046 14 1
Hyde Plan 1 (“H1”) 2 / 2.5 3 / 1 1,197 16 2*
Hyde Plan 2 (“H2”) 3 / 2.5 3 / 2 1,550 8 1*
Hyde Plan 3 (“H3”) 4 / 3.5 3 / 2 1,727 8 1*
Hyde Plan 4 (“H4”) 4 / 3.5 3 / 2 1,809 8 1*
Bryant Plan 1/1X (“B1/1X”) 3 / 2.5 2 / 2T 1,370 10 3*
Bryant Plan 2 (“B2”) 3 / 2.5 2 / 2 1,536 10 3*
Bryant Plan 3 (“B3”) 3 / 2.5 2 / 2 1,475 10 3*
Bryant Plan 4 (“B4”) 3 / 2.5 2 / 2 1,675 4 1
Bryant Plan 4X (“B4X”) 3 / 2.5 2 / 2 1,754 2 2*
Grant Plan 1 (“G1”) 3 / 2.5 2 / 2 1,596-
1,597 9 3
Grant Plan 2 (“G2”) 4 / 2.5 2 / 2 1,648 18 6
Grant Plan 3 (“G3”) 4 / 2.5 2 / 2 1,820-
1,845 9 3
Total 161 30
*Each asterisk designates one model home per that plan. “T” denotes a tandem garage. In addition to the above there are 80 homes under construction and 32 additional finished lots.
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Lot 1 of Tract 20316 - Vacant Parcel owned by Lewis
(Portion of Zone 2 of Ontario CFD No. 56)
*Blue Star represents Lot 1; Red Outline represents entire Zone 2
Location: Northwest corner of Archibald Avenue and Eucalyptus Place, Ontario Ranch, Ontario, California.
Legal Property
Description: Lot 1 of Tract Map No. 20316.
Property Owner: SC Ontario Development Company LLC, a related entity to Lewis.
Assessors
Parcel Nos.: 0218-053-05-0000.
Property Taxes: Per First American Title the 2023 property taxes for the vacant parcel are $47,049.44 based on an Assessed Value of $4,523,865 753
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City of Ontario CFD No. 56 (Parkside/La Avenida)
Kitty Siino & Associates, Inc. Page 44
Three-Year
Sales History: SC Ontario Development Company LLC has owned the parcel for more than 3 years.
Size and Shape: The subject property is irregular in shape and contains 14.603 acres per the recorded Tract Map No. 20316.
Zoning: Per the City of Ontario’s General Plan (Land Use Plan LU -01) the site is designated as MDR or Medium Density Residential, which allows for 11.1 -25.0 dwelling units per acre. Per the current City of Ontario Zoning Map, t he site is shown as Specific Plan – Parkside (PSP03-002).
Specific Plan: Per Parkside Specific Plan (dated August 2006, amended June 2020), the Vacant Parcel is designated as Planning Area 1. Planning Areas 1-4 are all zoned Medium Density Residential, with a density of 11.1-25 du/acre per the Specific Plan. Per the Land Use Summary table included in the Specific Plan, Planning Area 1 (vacant parcel) is designated for “Green Court/Lane Loaded Products 1, 2 & 4,” contains 19.97 gross (15.57 net acres (however per recorded Tract Map is actually 14.603 acres) and allows for 236 units. The Specific Plan Land Use Map is pictured above, with Zone 2 outlined in red and the blue star showing the Vacant Parcel.
Entitlements: Tract Map No. 20316 encompasses the entire Zone 2 of the subject property (covering all of NUVO Parkside and the adjacent parcel, as well as two park sites that fall outside of CFD No. 56 boundary lines).
Tract Map 20316 covers 55.847 gross acres and 51.192 net acres , was recorded on March 11, 2021, and divides Zone 2 and additional lands into four numbered and nine lettered lots. There is no further mapping on Lot 1 of Tract 20316
Topography: The topography is generally flat, and currently the subject property is at street level of the surrounding streets. The lands were mass graded with the surrounding lands (NUVO) and are fenced with natural growth. Dra inage is not yet installed on the site. Future drainage is anticipated to be within a street drainage system.
Soils Condition: We have reviewed th e Final Geotechnical Report for Lot A (pool area) within Tract 20316 (the only soils reports received to rev iew).
The final geotechnical report for Lot A summarized their observation during rough grading and concluded that the rough grading was completed in substantial conformance with the plans and specifications and gives recommendations for construction on the site. It should be noted that the appraiser is not an expert in soil matters and if questions aris e, a review of the report should be completed.
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Kitty Siino & Associates, Inc. Page 45
It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations in the soil reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.
Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California (via City of Ontario) and there are no known active faults crossing the site.
Environmental
Concerns: We have not received any environmental reports to review. It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is suggested by construction of homes on the site and City inspectors on site during construction.
Methane
Reports: We have not reviewed any Methane Reports for the subject property.
It is a n assumption of this report that there are no methane issues which would slow or thwart development of the subject property and that all mitigation measures as stated in the reports were completed.
This is evidenced by construction of homes on the site and City inspectors on site during construction.
Flood Information: Per FEMA Map No. 0671C9375H dated August 28, 2008, Zone 2 is shown as being in Zone X with “Area with Reduced Flood Risk due to Levee.”
Easements and
Encumbrances: We have not received a Preliminary Title Report on the Vacant Parcel. It is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 56.
Utilities: All normal utilities are available to s erve the subject site by the following companies:
Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: City of Ontario
Schools: Mountain View District and Chaffey Joint Union High School District
Immediate
Surroundings: Lot 1 of Zone 2 is surrounded by vacant lands to the east (across Archibald, a vacant parcel along with the community of Shade Tree by Landsea Homes to the south (beyond Eucalyptus ); NUVO Parkside to the west and northwest and a future park site to the north.
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City of Ontario CFD No. 56 (Parkside/La Avenida)
Kitty Siino & Associates, Inc. Page 46
Streets/Access: Access to the subject property is convenient via both SR -60 and I -
15. From SR -60, exit Archibald Avenue and head south two and three-quarter miles to Eucalyptus Avenue. From Archibald, head west on Eucalyptus Avenue for one quarter mile, then north on Millenium Paseo. Zone 2 is located at the northwest corner of Archibald Avenue and Eucalyptus Avenue, with Lot 1 (vacant parcel) to the east of the Millenium Paseo entrance, and Lots 2- 4 (NUVO Parkside) to the north, northeast, and west of Millenium Paseo. From I-15, exit Ontario Ranch Road and head west just over two and one- half miles to Archibald Avenue, then south to Eucalyptus. The NUVO Parkside models are located on Hyde Paseo, just west of the Millenium Paseo main entrance.
SR-60 (2.6 miles north of the subject) provides east/west access from downtown Los Angeles to the city of Beaumont. The subject sits between the Archibald Avenue and Haven Avenue on/offramps.
I-15 (2.7 miles east of the subject) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.
I-10 (5.1 miles north of the subject) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.
I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida.
Archibald Avenue has on/off ramps at SR -60 and provides access into north Ontario and down into Eastvale. Archibald Avenue’s northern terminus is at the Ontario International Airport, approximately 3.8 miles north of the subject.
Ontario Ranch Road has on/off ramps to I-15 and is known as Cantu- Galleano Ranch Road east of Hamner Avenue. It is the main access into the newly emerging community of Ontario Ranch. Currently Ontario Ranch Road becomes Edison Road west of Ontario Ranch.
Eucalyptus Avenue is a smaller east/west arterial that beings at Chaffey College’s Chino Campus in Chino, approximately 4.5 miles west of Zone 2, and terminates at Hamner Avenue, approximately
2.3 miles east of the subject in Lennar’s Esperanza residential community.
Current Condition: The subject has been mass graded into a generally superp ad condition with utilities in surrounding streets. There is natural growth on the site which will need to be scraped prior to development.
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Kitty Siino & Associates, Inc. Page 47
Cost to Complete: Residential lands in the area are typically sold on a “finished lot” basis. That is, builders pay a finished lot price less the remaining development costs that will need to be expended to arrive at a “finished lot.” Per Lewis representatives, the land development costs for the site are estimated at $11,000,000 while the land development fees are est imated at $7,800,000 for a total land development estimate of $18,800,000. Note: the appraiser is not an expert in cost estimating and is relying on these costs as provided by Lewis. It is an extraordinary assumption of this report that the reported costs are true and accurate.
The subject lots have not been mapped at this time. We have added a contingency of $1, 500 per lot for soft costs of mapping for a total of $350,000 along with a time period estimate of 18 months to get the map processed through the City of Ontario.
Fairhaven at Park Place by Lennar
(Zone 3 of Ontario CFD No. 56)
Location: Southwest corner of Merrill Avenue and Remington Avenue, Ontario Ranch, Ontario, California.
Legal Property
Description: Units 1 -73 of Modules 1- 8 of Lot 1 of Tract Map No. 20389 and subsequent Condominium Plan.
Property Owner: Individual Owner as Lot 63 of Tract 20389 ; Lennar Homes of California, LLC as to Lots 1-62 and 64-73 of Tract 20389.
Assessors
Parcel Nos.: 1073-411-02-0000 thru 1073-411-74-0000.
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Kitty Siino & Associates, Inc. Page 48
Property Taxes: We were not able to review a sample Fairhaven at Park Place tax bill. Per the San Bernardino County Tax Collector’s website, the parcels have not been subdivided at this time. Per Lennar’s website, the approximate tax rate at Fairhaven is expected to be 1.8 percent.
It is an assumption of this report that the overall tax rate is under 2.0 percent.
Three-Year
Sales History: Lennar Homes of California, LLC (“Lennar”) purchased Tract 20389 from SL Ontario Development Company, LLC (dba “Lewis”) on August 12, 2021, for $7,076,287 per public record. This equivalates to a per lot price of $96,935.44 and was based off a finished lot value of $200,000 per representatives of the builder. Lennar began selling homes at Fairhaven in January of 2023. An Individual homebuyer has closed on one home between the project opening and the date of value, August 7, 2023, with an additional 32 proposed homes in escrow which are due to close upon completion.
Size and Shape: The subject property is roughly triangular shaped and contains an estimated 6.51 gross acres and 3.64 net acres per recorded Tract Map No. 20389 with the difference being internal streets and setback areas.
Zoning: Per the City of Ontario’s General Plan (Land Use Plan LU -01) the site is designated as LDR or Low Density Residential, which allows for 2.1 to 5.0 dwelling units per acre. Per the current City of Ontario Zoning Map, the site is shown as Specific Plan – Subarea 29 (PSP03-003).
Specific Plan: Per the Subarea 29 Specific Plan (dated October 2006, amended April 2015), Zone 3 is designated as Planning A rea 27 and is designated as “Cluster Homes (7- 14 du/acre).” Per the Land Use Summary table included in the Specific Plan, Planning Area 27 is planned for 47 cluster homes with a minimum size of 2,100 square foot lots. We received a copy of the 2021 Amendm ent (not located on City web site) that shows the total dwelling units for Planning Area 27 changed to 73. The Specific Plan Land Use Map is pictured on the following page, with Zone 3 outlined in yellow.
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Kitty Siino & Associates, Inc. Page 49
Entitlements: Tract Map No. 20389 encompasses Zone 3 of the subject property (covering all of Fairhaven at Park Place). Tract Map 20389 covers
6.51 gross acres and 3.64 net acres , with the difference being internal streets and setback areas. It was recorded on October 11, 2022, and divides Zone 3 into one numbered lot . A Condominium Plan recorded April 3, 2023, divides the one lot into eight numbered Modules, and the eight modules are further divided into 73 units.
The recorded tract map and condominium map allow for 73 units on the total 6.51 acres resulting in an overall density of 11.2 dwelling units per acre which is within the Specific Plan’s Planning Area 27 density range of 7-14 du/acre.
Topography: The topography is generally flat, and currently the subject property is at street level of the surrounding streets. The land has been developed into single-family detached lots. Drainage appears to be within an engineered street drainage system.
Soils Condition: We have reviewed the Geotechnical Report of Observation and Testing during rough grading of Tract 18913- 5 (Planning Area 27 – the subject property ). The report was prepared by Leighton and Associates, Inc., and dated August 28, 2019. The report summarizes the geotechnical conditions and provides recommendations for the construction. The report concluded that it is their opinion that rough grading was performed in general accordance with the
recommendations presented in the geotechnical reports and their field recommendations. They state that post grading methane testing 759
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Kitty Siino & Associates, Inc. Page 50
should be completed and that additional geotechnical services should be provided as construction within the tract proceeds. We did not receive any later geotechnical reports to review.
It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations in the soil reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.
Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California (via City of Ontario) and there are no known active faults crossing the site.
Environmental
Concerns: We have reviewed both the Draft Environmental Impact Report and the Final Environmental Impact Report for all of Subarea 29 which includes Zone 3. There were no known areas of controversy which came to light as a result of the process of preparing the Draft EIR. not received any environmental reports to review. There was one unresolved issue which included the transition of Edison Avenue to Cantu Galleano Ranch Road which has since been resolved. The Final EIR was approved in October 2006. Please note that the appraiser is not an expert in environmental issues, and we refer the reader to the EIR and subsequent environmental reports if additional information is needed.
It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is suggested by construction of homes on the site and City inspectors on site during construction.
Methane
Reports: We have reviewed a Preliminary Methane survey for Subarea 29 which includes the subject Zone 3. The report concluded that based on the analytical results, the methane does not appear to pose a risk of accumulation to hazardous levels at the site. Howev er, they recommend post grading methane testing in certain areas which were within, or adjacent to, former dairy stockyards and pond areas.
We did not receive any further methane reports to review. It is an assumption of this report that there are no methane issues which would slow or thwart development of the subject property and that all mitigation measures as stated in the reports were completed. This is evidenced by construction of homes on the site and City inspectors on site during construction.
Flood Information: Per FEMA Map No. 06071C9375H dated August 28, 2008, Zone 3 is shown as being in Zone X, with the western half of the site showing 760
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“Area with Reduced Flood Risk due to Levee,” and the eastern half of the site showing “Area determined to be outside the 0.2% annual chance floodplain.”
Easements and
Encumbrances: We have reviewed a Preliminary Title Report prepared by Lennar Title, that covers Zone 3 of the subject property. Report 192002- 001357 dated July 5, 2022, covers Tract Map 20389. The report notes the following exceptions:
Item Nos. 1 through 6 pertains to property taxes and special assessments including CFD No. 23 which is for Park Place Services.
Item No. 7 states that matters, rights, or boundary discrepancies that may exist or be disclosed by a record of survey which was completed. Item Nos. 8, 9 and 21 refer to easements for public utilities and drainage purposes. Item No. 10 is in regard to a development agreement. Item Nos. 11 through 16 have been intentionally deleted. Item No. 17 is in regard to a memorandum of agreement between Lennar homes and SL Ontario Development Company (seller of property to Lennar). Item No. 18 states there is a deed of trust on the property with no amount shown. Item No. 19 relates to CC & Rs recorded on the site. Item No. 20 is in regard to Ontario CFD No. 56. Item No. 22 states no known matter otherwise appropriate to be shown have been deleted from the report.
While the exceptions appear typical for subject -type lands, i t is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than CFD No. 56 and the services CFD . The appraisers are not title experts, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.
Utilities: All normal utilities are available to serve the subject site by the following companies:
Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: City of Ontario
Schools: Mountain View District and Chaffey Joint Union High School District
Immediate
Surroundings: Zone 3 is surrounded by existing residential homes to the north, east, and south, and SoCal Edison easement to the east, beyond which is additional existing homes . The SoCal Easement runs
northeast/southwest and continues above and below Fairhaven.
There is a drainage channel adjacent to the south side of Zone 3.
The existing homes to the north of Zone 3 (on the other side of Merrill Avenue) is Lennar’s Parklane community, which was recently built but is now sold and closed out. Southeast of Fairhaven is Orchard 761
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Kitty Siino & Associates, Inc. Page 52
Park, a large public park in Eastvale featuring softball fields, volleyball c ourts, a skatepark, large grass fields, and barbeque areas, walking paths and play structures. Remington Avenue (adjacent south of Zone 3) serves as the county boundary line between San Bernardino County (north) and Riverside County (south). The boundary l ine continues up Bellegrave Avenue east of Fairhaven. Northeast of Zone 3 on the northeast corner of Bellegrave and Sumner Avenue are agricultural lands.
Streets/Access: Access to the subject property is convenient via both SR -60 and I -
15. From SR-60, exit Haven Avenue and head south just over three miles (Haven turns into Sumner) to Bellegrave Avenue/Merrill Avenue. Head west on Merrill Avenue and Fairhaven is located immediately south, with two entrances from Merrill Avenue via Ferguson Privado or Cantona Paseo. From I-15, exit Ontario Ranch Road and head west 1.5 miles to Haven/Sumner Avenue, then south
1.25 miles to Merrill Avenue. Access from I -15 is also convenient from the Limonite Avenue exit in Eastvale, west 1.5 miles to Sumner Avenue, and north one-half mile to Merrill Avenue. The Fairhaven models are located near Merrill Avenue at the Ferguson Privado entrance.
SR-60 (3.3 miles north of Fairhaven) provides east/west access from downtown Los Angeles to the city of Beaumont.
I-15 (1.8 miles east of Fairhaven) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.
I-10 (5.9 miles north of Fairhaven ) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.
I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida.
Ontario Ranch Road has on/off ramps to I-15 and is known as Cantu- Galleano Ranch Road east of Hamner Avenue. It is the main access into the newly emerging community of Ontario Ranch. Currently Ontario Ranch Road becomes Edison Road west of Ontario Ranch.
Haven Avenue has on/off ramps at both SR-60 and I-10 and provides access to the north into Rancho Cucamonga, and south into Eastvale. Haven Avenue becomes Sumner Avenue at Edison
Avenue, just north of the San Bernardino/Riverside County line (north of Fairhaven).
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Kitty Siino & Associates, Inc. Page 53
Bellegrave Avenue/Merrill Avenue is a northeasterly/southwesterly arterial that does not provide freeway access but runs from Riverside to Sumner Avenue where it forks into Merrill Avenue to the north and Remington Avenue to the south (which Fairhaven falls between).
Limonite Avenue has on/off ramps to I -15 and is a major east/west arterial throughout Eastvale, Jurupa Valley, and Riverside.
Internal streets within Fairhaven include: Cantona Paseo and Ferguson Privado.
Current Condition: The subject has been developed into 73 single-family condominiums, with the majority being detached but a few share a garage wall in a duplex formation. Upon our inspection, 24 of the homes were over 95 percent complete including one individually owned home, f our model homes, and 1 9 additional production homes owned by the builder ( 18 in escrow). In addition, there were 26 homes under construction (less than 95 percent complete and 14 in escrow) and 23 finished lots.
Cost to Complete: Residential lands in the area are typically sold on a “finished lot” basis. That is, builders pay a finished lot price less the remaining development costs that will need to be expended to arrive at a “finished lot.” Per Lennar representatives, there is $2,814,715 in remaining land development costs, including fees. The homeowners are not responsible for any of the remaining costs; thus, they fall to the builder-owned property only.
There are a total of 73 proposed residential units within the subject property and one has closed to an individual leaving 72 lots under builder ownership. Dividing the remaining costs of $2,814,715 by the 72 lots equates to $39,093.26 in remaining land development costs per lot. These costs will be taken into account in the valuation section, later within this report.
Homeowner’s
Association: Per builder representatives, the Fairhaven HOA fees are $221 per month at buildout. This includes $84 per month for the Fairhaven DSA, and $137 per month for the Park Place Master HOA. It is assumed that the HOA maintains the internal streets, comm on area landscaping, as well as the master Park Place amenities located north of Zone 3.
Improvement
Description: Fairhaven at Park Place by Lennar includes four two- and three-story floorplans ranging in size from 1,450 to 1,805 square feet. The majority of the homes are detached; however, some Plan 2 homes are configured at the end of motorcourts where they share a garage wall in a duplex formation. Exteriors feature Spanish Colonial, 763
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Andalusian, and Farmhouse architecture. There are four model homes, one of which is being utilized as the sales office, located on the Ferguson Privado entrance off of Merrill Avenue. Fairhaven floorplans offer three to four bedrooms (with lofts), and attached two bay garages. All floorplans at Fairhaven offer open concept living with eat-in kitchens open to great rooms, second (third) floor laundry rooms, as well as owner’s suites with water closets, dual sinks, and walk in closets. Lennar advertises their “ Everything’s Included” option program, and includes Daltile ceramic floors at entryways, Shaw vinyl flooring at kitchens, dining rooms, laundry, and bathrooms; bullnose corners throughout; upgraded slat-style stair rail system; two-panel interior doors; ceiling fan prewiring (at all bedrooms, great room, and loft); RG-6 coaxial cable outlets in great room, owner’s suite, and loft; and LED downlights at select locations.
Homes are also equipped with Honeywell smart thermostats , high efficiency tankless water heaters, dual glazed- low E windows, and Boral cool roof tiles. Kitchens at Fairhaven feature GE stainless steel appliances, slab-granite, or quartz countertops with a choice of color, kitchen islands, walk in pantries, and a choice of white or grey thermofoil shaker panel cabinetry . One of the 73 homes in Zone 3 has closed to individuals with a closing date of August 7, 2023. Actual sales prices (including premium, upgrades, options, and incentives) within Zone 3 have ranged from $499,760 to $610,930. Current base pricing ranges from $590,990 to $629,990. Per the sales data provided, incentives have ranged from $0 up to $58,371 , with an average incentive on the sold homes of $37,803. Our search of the MLS revealed no resales or c urrent resale listings. Our physical search noted all homes appear to be in excellent condition. The houses which are over 95 percent complete are detailed below.
Fairhaven at Park Place by Lennar
Floor Plan Bed/
Bath
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Plan 1 3 / 2.5 2 / 2 1,450 0 5*
Plan 2 3 / 2.5 2 / 2 1,638 0 9*
Plan 3 3 / 3.5 3 / 2 1,785 0 4*
Plan 4 4 / 3 2 / 2 1,805 1 5*
Total 1 23
*Each asterisk designates one model home per that plan. In addition to the above there are 26 homes under construction and 23 additional finished lots.
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THE INLAND EMPIRE HOUSING MARKET
In analyzing the area’s housing market, population growth and economic conditions need to first be considered.
Population
The San Bernardino County population showed minimal 0. 1 percent growth between January 2022 and January 2023, and an average of about two percent the previous 20 years. The stagnant growth during this time is thought to be due to the disruption during COVID. Prior to the COVID pandemic, predictions were for the County to grow at an average annual rate of 0.75 percent over the next eight years. This equates to an increase of approximately 20,000 residents per year suggesting the need for about 7,000 homes per year within the County. The COVID influence is still unknown on the County’s population growth. Ontario population growth was significantly higher at 1.1 percent over the past year. New home sales in most cities in the County from 2020 were higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market. These factors may increase actual County population growth in 2023. This has been offset by minimal existing home sales resulting in less overall home sales over the past year as compared to one year ago and also as compared to 2019, before COVID.
Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than that of other Southern California regions. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 was considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equity. After essentially remaining flat for a few years, housing prices began to increase in late 2012 through January 2020. Once the COVID pandemic hit in March 2020, the economy entered what is now known as the COVID Recession. The housing market slowed down significantly early on, but by May 2020, new homes were going under contract and selling 765
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at well above average absorption rates from May 2020 through Spring of 2022 in the region. Since May 2022, the new home market has seen a shake-up due to the increasing interest rates, the high prices of homes, and the high rate of inflation which is shaking consumer confidence , however this is partially offset by the extremely limited resale housing market which is fueling new home sales.
Economic growth in the Inland Empire was strong generally between 2015 (after the Great Recession), and until the economic shutdown due to COVID. The second half of 2020 and all of 2021 saw economic growth, however the first two quarters of 2022 saw GDP shrinking while the third and fourth quarters saw minimal growth with 2022’s growth at 2.6 percent. The most recent unemployment rate for the County is 4.9 percent (per the July 2023 EDD report – most recent published), slightly higher than the County’s pre- COVID unemployment rate in February 2020 of 3.7 percen t. While unemployment rates are near historical lows, the inflation factor is significantly affecting the economy.
The housing market played a large role in the past two recessions. In the Great Recession, due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives, such as sub- prime and non- conventional mortgages, to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up because of the problems in the sub-prime and non-conventional mortgage markets, which played a role in the 2008 upheaval of Wall Street and contributed significantly to the U.S. economic downturn of the Great Recession. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid- 2012 when home prices began a steady climb.
During the COVID recession, new home sales were one of the brightest spots in both the local and national economies. While new home sales slowed in March and April 2020 due to the onset of the COVID pandemic, both sales and prices increased significantly throughout COVID until spring/summer 2022 when interest rate increases began affecting 766
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the home-buying market. The rising interest rates alone did not seem to slow sales in Spring 2022. However, a combination of increasing home prices and falling consumer confidence, added to the significant interest rate increases slowed new home sales significantly in late 2022 and the beginning of 2023 and builders began lowering prices and offering incentives. During the summer of 2023 the Board paused the rate increases which appears to have brought buyers back with new home sales picking up once again and some builders slowly increasing base prices.
Per the Zonda National Economic and Housing Market Update in July 2023, the rate of growth of new home sales is off from 2021/2022 highs but up from pre- pandemic numbers, suggesting a healthy market. Per their survey of over 300 new -home builders nationally, the builders are stating sales are continuing but report they had to adjust pricing and incentives to “find the marke t.” In the January 2023 survey, 50 percent of builders surveyed were lowering their prices and the remaining 50 percent stated their pricing was flat. In July, the survey resulted in 54 percent of the builders stating they are raising their prices and 46 percent of builders stating they were keeping prices flat or decreasing pricing. This is a very different dynamic which is partly due to seasonality, partly due to builder’s readjusting concessions (interest rate buy-downs), and partly due to price changes. The larger public homebuilders are typically offering significant interest rate buy -downs in order to keep absorption rates steady, which is reportedly costing between $30,000 to $100,000 in incentives. The builders are attempting to find the “sweet spot” in incentives. Per Zonda a combination of price cuts of between 10- 15 percent combined with a rate buy down obtained the best results in the marketplace in early 2023.
While builders have been able to minimally increase base pricing, incentives appear t o still be very relevant in the current market.
Home loan mortgage rates have been and are still playing a huge part in the housing market. The Board held mortgage rates at all -time lows after the Great Recession and again after the COVID Recession in an attempt to assist the housing market’s recovery.
Low rates helped home sales during this time. However, first-time buyers are now having a hard time entering the housing market due to rising prices and rising interest rates. Per 767
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FRED, the average 30-year fixed mortgage has gone from 2.65 percent in January 2021 to 7.08 percent as in October 2022, with a decrease to 6.09 percent in February 2023 however increasing since then with current rates at 7.23 percent as of August 24, 2023.
Mortgage applications had been spiking in late 2020 and 2021 due to the low rates and the fear rates were going to start ticking up, which began happening in March 2022. The Board has increased the rate eleven times in the past 1 8 months, which increased the FRR from 0-0.25 percent to 5.25-5.50 percent. While the Board paused the increases in June, in late July there was the last increase of 0.25 percent with most economists agreeing there may be another increase later in the year. The FRR increases are supposed to help slow the high inflation rate in the Nation, which appears to be occurring as the latest reports are showing inflation in June 2023 at 3. 0 percent, down from a high of 9.1 percent in June 2022; however, July inflation came in slightly higher at 3.3 percent.
The Board has other considerations including employment numbers, wage growth and consumer confidence to balance along with inflation.
While new home builders slowed production as sales slowed in 2022, the spring of 2023 brought optimism to builders once again. S ales were up month- over-month as buyers adjusted to higher mortgage rates and existing home inventory is at all-time lows. Existing homeowners that are locked into a 3 percent mortgage are not moving due to the current 6+ percent rates. This is creating a supply issue for existing homes. New home sales are benefiting from this supply issue as in some cases, the only option for homebuyers are new homes. Per Zonda, historically, new homes capture 10 to 13 percent of all home sales; however, due to the limited supply of existing homes currently on the market, new homes are capturing well over 30 percent of all home sales in the Inland Empire.
Residential Land Development
While there had been little land development going on in most of the Inland Empire during the Great Recession years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas of the Inland Empire. The increase in housing prices since 2012 combined with the limited availability of supply made land development feasible once again for homebuilders. It is thought that the increase in regulations, which has 768
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significantly increased the timeline for processing entitlements, has limited the master developers’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to various builders (such as Park Place within Subarea 29) , there are few cur rently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to record (such as Woodside’s Cambridge Court and Lennar’s Fairhaven) or a public builder buying a larger piece of land but develops the land for its own use, such as NUVO by The New Home Company.
Land sales in the Inland Empire slowly grew from 2012 up to a peak in 2017, with 2018 and 2019 showing lower land transactions. Once home sales exploded in May 2020, land sales followed with a significant number of residential land sales to builders in the Inland Empire during the second half of 2020 and throughout 2021. In late 2021 and early 2022, prior to the F RR increases, builders were paying significantly more for residential land that was ready to develop as demand was up and supply was shrinking. The beginning of 2022 continued with strong residential land sales until May, when sales began to fall sharply. According to Zonda’s survey of builders regarding residential land purchases, as of January 2023 only 2 percent of builders surveyed were “full steam ahead,” and almost 40 percent were pausing transactions or bidding lower on land transactions. As of July 2023, these percentages have changed drastically with 35 percent stating they are going “full steam ahead” and 41 percent moving “cautiously forward.” The increase in optimism from new home builders outlook since January is partially due to the extreme slowdown of existing home inventory which is fueling new home sales.
New Home Sales and Pricing
We have researched new single- family homes within the subject’s market in order to reflect residential trends. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss exi sting home sales. In reviewing new home sales in the Inland Empire market area , per the August 13 , 2023 Ryness Report, the year-to-date average sales rate ( 3.98 sales per month) is 3.0 percent lower than the same time period of the previous year (4.12 sales per month). Surprisingly, even 769
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with the increases in pricing and mortgage rates, sales of new homes are occurring at a very good pace; however, this is partially due to the extreme l imited supply of existing homes which is creating more demand for new homes. New home sales rates started to level off in late Spring 2022, likely due to the increase in mortgage interest rates. As rates go down, purchasing power becomes larger, which gives new -home buying a boost.
However, the flip side is that as interest rates rise, purchasing power becomes lower and therefore fewer people purchase new homes. Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, inspections, interior designers, and landscapers, all contributing to the area economy.
When comparing the August 13, 2023, Inland Empire Ryness Report to one year prior, there are 25 additional projects (215 in August 2022 and 240 in August 2023) and sales are about three percent lower year-to-date than the previous year. This does not appear to be due to limited inventory as there are additional projects, but rather because of an actual slowdown in sales activity likely due to the increase in interest rates. It should be noted that current sales rates are being compared to t he shifting market of Spring/Summer of 2022. When comparing August 202 3 to August 2021, sales had decreased almost 18 percent (from 4.85 sales per month in August 2021 to 3.98 sales per month in 2023) over the past two years.
New single -family home pricing (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current Inland Empire median new home price is $565,500 which is down from a record high of $646,000 in July 2022 per Zonda’s latest market report (Riverside-San Bernardino-Ontario, CA CBSA August 2023). This reflects an increase of over 100 percent from the bottom of the cycle and an increase of more than 29 percent over its peak during the Great Recession, however a decrease from the 2022 peak of 12.4 percent. In reality, this decrease is actually larger as builders are buying down interest rates which costs the builder at times, up to $100,000, however, the amount 770
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is not reflected in the recorded sales price. New home sale prices fluctuate based on the land value and competition more than on the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basi s typically do not fluctuate as much as land values; however, there have been inflationary increases in construction costs adding to this increase.
We have reviewed Empire Economics’ Price Point Review Studies for each Zone within Ontario CFD No. 56 (Parkside / La Avenida) dated July 31, 2023, and revised August 11, 2023. Empire Economics did an original Price Point Study for each Zone in July 2021 in order to determine their market prices for the various plans within each Zone. The “Review Study” is to ascertain if the prices have increased or decreased since the original Study.
The Empire Economics Price Point Review Study for Zone 1 concluded that, for all plans, the current market price conclusions of the homes were, on average, 3.2 percent higher than the original market price conclusions in 2021 . The Empire Economics Price Point Review Study for Zone 2, as revised September 13, 2023, concluded that for the 2-story homes the current market price conclusions were 0.36 percent higher; however, for the 3-story homes the current market price conclusions were 1.25 percent lower than the original market price conclusions in 2021. The Empire Economics Price Point Review Study for Zone 3 concluded with an average decrease of 1.8 percent between July 2021 and July 2023 with the plans having a range from an increase in price of 4.4 percent to a decrease in price of 5.6 percent.
Within our search for the most comparable actively selling new home communiti es, we searched the subject’s city of Ontario, which currently features a multitude of actively selling new home communities. We found 14 communities (including the subject communities) comparable to the subject three communities. The comparables have base prices ranging from $ 485,000 to $ 982,000, while the subject base prices range from $485,000 to $636,000, which falls at the lower end of the range of comparable new homes in the area. According to the Ryness Report dated August 13, 2023, there are current ly 27 new home projects in the subject’s Southwest San Bernardino submarket, with the City of Ontario housing 21 of them (including four of the subject’s six). 771
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Existing Homes Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in the Inland Empire. According to the California Association of Realtors’ most recent data, within overall Southern California, the median price paid for an existing single-family home in July 2023 ($830,000) reflects an increase of 2.7 percent from the previous year ($808,000 in July 2022) and a 1.8 percent increase from the previous month ($815,000 in June 2023). Existing home sales in Southern California overall were down 14 percent year -over-year as of July 2023. The overall Southern California numbers compare to San Bernardino County with $485,000 as the median price paid for an existing home in the County in July 2023, down 1.0 percent from the previous year ($490,000 in July 2022) and an increase of 3.2 percent from the previous month ($470 ,000 in June 2023). Sales of existing homes in the County were down 23.5 percent year-over-year due to limited inventory, higher mortgage rates and high home prices. The slower sales rates in the existing home sales market are reflective of homeowners not ready to sell due to the changing market. Historically, the new home market captures 10- 13 percent of the overall home sal es; however, in the past year, new home sales are capturing over 30 percent of total home sales. Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.
Southern California Existing Home Sales
County July 2023 June 2023 July 2022
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $851,540 $832,210 $846,320 2.3% 0.6% -16.2% Orange $1,300,000 $1,260,000 $1,231,000 3.2% 5.6% -11.0% Riverside $615,000 $628,000 $625,000 -2.1% -1.6% -15.6% San Bernardino $485,000 $470,000 $490,000 3.2% -1.0% -23.5% San Diego $969,000 $958,250 $930,000 1.1% 4.2% -4.9%
Ventura $920,000 $927,500 $920,000 -0.8% 0.0% -19.4%
Southern Calif. $830,000 $815,000 $808,000 1.8% 2.7% -14.0% Source: California Association of Realtors
Based on July 2023 median existing homes prices, in comparison to all of the surrounding counties, San Bernardino County has a definite price advantage. The “San Bernardino County Advantage” (price difference between San Bernardino and surrounding counties) is $130,000 as compared to Riverside County, $36 6,540 as compared to Los Angeles County, $435,000 as compared to Ventura County, $484,000 as compared to San Diego 772
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County and $815,000 as compared to Orange County. That is, in Ju ly 2023, the median priced home in San Bernardino County was $825,000 less than the median priced home in Orange County ($1, 300,000). Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the current work -from-home concept, the suburban areas have seen more growth which put pressure on home prices in the Inland Empire. It’s worth noting that June of 2022 was the first month where the majority of Southern California counties showed median price decreases from the previous month and May 2023 showed median prices beginning to rise suggesting that pricing may have hit bottom; however, this is also due to minimal inventory/supply which is upsetting the balance in the housing market.
In a separate attempt to capture the amount of increase in home prices, the sale activity of both new and existing homes in the subject’s immediate area (per Redfin.com) has been reviewed. The number of sales and sale prices of homes within market areas of the subject are shown in the table below.
Community
Name
Location
To
Subject
No. of
Sales
July 2023
Price
Median
Price %
Change
from July
2022
Ontario Ranch Subject 83 $681,000 -11.7%
Ontario North 80 $632,500 0.4%
Eastvale South 31 $920,000 4.6%
Mira Loma East N/A $675,000 -9.4%
Jurupa Valley Northeast 58 $660,000 1.5%
Chino Southwest 47 $715,000 0.4%
Rancho Cucamonga Northwest 93 $725,000 0.7%
Source: Redfin Housing Market Trends July 2023
The median home price of a detached home in Ontario Ranch in July 2023 was $681,000 per Redfin, which is in the lower-end of the range of the resale detached home prices in the subject area. The lowest prices in the range relate to the older section of Ontario while the highest end of the range relates to Eastvale. It should be noted that the decrease in pricing within Ontario Ranch is due more to smaller homes being sold (higher density and lower square foot product) when compared to a year ago. In addition, the peak of the Ontario Ranch median sale price was August 2022 when the median price reached $780,000 which reflected a 19.1 percent increase year-over-year. The above year-to-year price fluctuations relate to the California Association of Realtors overall San Bernardino 773
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County detached home resale price decrease of 1.0 percent year-over-year from July 2022 to July 2023.
Subject Communities - Sales and Pricing
Zone 1 is comprised of Cambridge Court by Woodside and includes 106 single family detached homes on 2,700 square foot lots with marketed sizes from 1,951 to 2,365 square feet. Cambridge Court began sales in October 2021, with opening base pricing ranging from $655,000 to $700,000. Current base pricing at Cambridge Park ranges from $706,000 to $778,500 which is 7.8 to 11.2 percent higher than opening base prices.
Specifically, Plan 1 increased 7.8 percent; Plan 2 incr eased 10.1 percent and Plan 3 increased 11.2 percent. The overall sales rate within Cambridge Court has been 4.2 sales per month. It should be noted that within Cambridge Court there are additional mortgage incentives for closing costs which average $5,000 per the builder which are not reflected in the sales pric es. In addition, according to Woodside, they are not offering mortgage buydowns. However, it should be noted that the average concession has increased substantially since October 2022.
The portion of Zone 2 that is actively selling is comprised of NUVO Parkside which includes Lincoln, Hyde, Bryant, and Grant. NUVO by New Home Company includes 303 proposed single family detached homes on condo lots. Lincoln and Bryant are sold and closed out while Hyde and Grant are still selling. The home sizes within all projects range from 1,082 to 1,820 square feet. NUVO began sales in April 2022 , with opening base pricing ranging from $536,000 to $702,000. Current base pricing at NUVO ranges from $485,000 to $636,000 (includes the two sold out project’s final base pricing) which is 2.9 to 17.2 percent lower than opening base prices. Specifically, the two currently selling projects range from 9.2 to 17.2 percent lower than opening base pricing. They have sold 214 homes within the four projects at NUVO suggesting an overall sales rate between the four communities of 13.4 homes per month while individually the communities have sold between 3.7 to 3.8 sales per month. It appears NUVO’s original pricing was above the market and prices had to be adjusted downward to meet the market, which has resulted in recent good sales rates within the project. It should be noted that within NUVO there 774
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are additional mortgage incentives which include rate buydowns which are not reflected in the sales prices. Within NUVO these range from $0 to $25,000.
Zone 3 is comprised of Fairhaven at Park Place by Lennar and includes 76 proposed single family (generally) detached homes on condo lots in a cluster format with marketed sizes from 1, 450 to 1,805 square feet. One plan has a shared wall in the garage.
Fairhaven began sales at the end of January 2023, with opening base pricing ranging from $542,990 to $572,990. Current base pricing at Fairhaven ranges from $590,990 to $629,990 which is 6.6 to 10.8 percent higher than opening base prices. Specifically, Plan 1 increased 8.8 percent; Plan 2 increased 10.8 percent, Plan 3 increased 6.6 percent and Plan 4 increased 9.9 percent. Fairhaven has sold 33 homes to date suggesting an overall sales rate of 4.7 homes per month. It should be noted that within Fairhaven for the 32 sales there are mortgage incentives (not included in public record sales prices) which average $37,803 per home.
Summary
The Inland Empire had seen substantial increases in pricing since 2012 with most areas, including the subject, showing astronomical increases from mid-2020 through early 2022.
While existing home sales were originally down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all -time lows. The latest statistics indicate a slowdown in sales as interest rates have risen substantially. The Ontario Ranch new-home submarket is performing in line with the Inland Empire market as a whole. The subject market area saw an increase in pricing consistent with most of Southern California throughout 2020 and 2021 and appeared to be continuing in the beginning of 2022. The past year has seen sales slow and prices lowering; however, the past couple months have seen new home builders’ optimism return as new home absorption has generally increased. Despite uncertainty hitting the market due to rising interest rates and inflation, most observers agree that the Inland Empire housing market is healthy and population growth is still estimated to occur in the area. It is believed that as the population continues to increase, housing growth will also continue, despite a slowdown.
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HIGHEST AND BEST USE ANALYSIS
The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:
"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”5
Proper application of this analysis requires the subject pro perties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size, and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered, or demolished preparatory to redevelopment of the site with a more productive or ideal use.
“As If Vacant”
In the following analysis, we have considered the sites probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.
Physically Possible Uses
The subject property consists of four different properties, two contiguous and two non- contiguous. The first, which is known as Zone 1 which is being built out as Cambridge Court, consists of 10.486 gross and 7.863 net acres. The parcel is generally rectangular in shape and is located at the northeast corner of E. La Avenida Drive and S. Manitoba Place in the Ontario Ranch area of the City of Ontario. The site’s original topography was generally level at street grade to surrounding streets. Cambridge Court is bounded by existing houses to the north, west and south and by a vacant parcel zoned for residential
5 The Appraisal of Real Estate, 11th Edition
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use to the east. The neighborhood has been t ransitioning from dairies and farmlands to the new master planned community of Ontario Ranch. The site has been graded for development into 106 single-family detached lots with a minimum lot size of 2,700 square feet. We have reviewed a soils report on the site, as well as environmental reports for the project. All reports reviewed conclude that development of the site is feasible, however mitigation measures recommended within such reports should be adhered to during construction. The site is still under development with homes ranging in construction status from finished lots to homes under construction, to completed homes and models. It is an assumption of this report that the soils are adequate to support the highest and best use, that there are no environmental issues which would slow or thwart development of the property. This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction. An engineered drainage system appears to have been designed i nto a street drainage system for the site . All standard utilities are available to serve the subject property. The site has good access via I -15 to Ontario Ranch Road to Broadway Avenue and north to E. La Avenida Drive.
The second, which is known as a portion of Zone 2 which is being built out as NUVO , consists of 19.744 gross acres (including pool area however not including internal streets) and 18.433 net acres per Tract Map 20316. The parcel is irregular in shape and is located at the northwest corner of Eucalyptus Avenue and Millenium Paseo in the Ontario Ranch area of the City of Ontario. The site’s original topography was generally level at street grade to surrounding streets. NUVO is bounded by vacant lands (proposed for a large community park beyond which will be future homes); a vacant parcel to the east (a portion of the subject known as Lot 1 of Tract 20316 – Vacant Parcel); existing homes in the community known as Shadetree by Landsea Homes to the south and vacant lands to the west. The neighborhood has been transitioning from dairies and farmlands to the new master planned community of Ontario Ranch. The site has been graded for development into 303 single-family detached condominium lots in various configurations including alley-loaded and cluster. We have reviewed a soils report on the pool area for the site (Lot A); however no environmental reports. The soils report reviewed concludes that development of the site is feasible, however mitigation measures recommended in such 777
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report should be adhered to during construction. The site is still under development with homes ranging in construction status from finished lots to homes under construction, to completed homes and models. It is an assumption of this report that the soils are adequate to support the highest and best use, that there are no environmental issues which would slow or thwart development of the property. This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction. An engineered drainage system appears to have been designed into a street drainage system for the site. All standard utilities are available to serve the subject property. The site has good access via I-15 to Ontario Ranch Road to Archibald Avenue, south to Eucalyptus Avenue and east to Millenium Paseo.
The third parcel, which is also known as a portion of Zone 2 is known as Lot 1 of Tract 20316 and is located at the northwest corner of Archibald and Eucalyptus Avenues in the area of Ontario Ranch within the City of Ontario. The site was mass graded when the remainder of Zone 2 was developed. Per Tract Map 20316, Lot 1 encompasses 14.603 acres. It is generally level at street grade of the surrounding streets of Archibald Avenue and Eucalyptus Avenue. We have not received any soils or environmental reports to review on this site. It is an assumption of this report that the soils are adequate to support the highest and best use and that there are no environmental issues which would slow or thwart development of the property. This is evidenced by existing homes on the adjoining site (NUVO) which were recently built with City inspectors on site during construction. No drainage system was noted on the stie. It is the appraiser ’s understanding that all standard utilities are available to serve this property. The site has good access via I -15 to Ontario Ranch Road to Archibald Avenue, south to Eucalyptus Avenue.
The fourth and final parcel, which is known as Zone 3 , is being built out as Fairhaven at Park Place by Lennar Homes and consists of 6.51 gross and 3.64 net acres. The parcel is generally triangular in shape and is located on the south side of Merrill Avenue at Ferguson Privado in the Ontario Ranch area of the City of Ontario. The site’s original topography was generally level at street grade to surrounding streets. Fairhaven is bounded by existing homes to the north, east and south and high intensity Edison wires 778
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to the west, beyond which are existing homes. The neighborhood has been transitioning from dairies and farmlands to the new master planned community of Ontario Ranch. The site has been graded for development into 73 single-family generally detached condominium lots (with one plan sharing a wall in the garage) in a cluster configuration.
We have reviewed a soils report on the rough grading of the site which concluded that development of the site is feasible, however mitigation measures recommended in such report should be adhered to during construction. The site is still under development with homes ranging in construction status from finished lots to homes under construction, to completed homes and models. We reviewed both the draft and final EIR for the site, along with a Methane Report. The methane report concluded further testing should be done after grading. It is an assumption of this report that the soils are adequate to support the highest and best use, that there are no environmental issues which would slow or thwart development of the property. This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction. An engineered drainage system appears to have been designed into a street drainage system for the site. All standard utilities are available to serve the subject property. The site has good access via I-15 to Ontario Ranch Road, south on Hamner Avenue to Bellegrave Avenue and west to the subject site.
Based on the physical analysis, the size and access make the subject propert ies physically suited for numerous types of development; however, the grading that has occurred on three of the sites suggests residential development.
Legality of Use
All of the subject properties are located within the City of Ontario in the County of San Bernardino. Per the City General Plan, Zones 1 and 2 are shown as LMDR (low to medium density residential) allowing for 5.1 to 11.0 dwelling units per acre and Zone 3 is shown as LDR ( low density residential). Per the current zoning map, all of the sites are shown SP for Specific Plan. Zone 1 is located within The Avenue Specific Plan and is shown as Planning Area 6B which is designated for 106 proposed residential units. Tract Map 20298 was recorded on the site July 15, 2021, and subdivided the site into 106 numbered lots and 19 lettered lots. Zone 2 is located within the Parkside Specific Plan 779
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with NUVO designated for up to 304 dwelling units (mapped approved for 303) and Lot 1 designated for 236 dwelling units. Tract Map 20316 was recorded on Lots 2, 3 and 4 and with the condominium maps, allows for 303 residential units. Lot 1 within Zone 2 has no mapping completed at this time. Zone 3 is located within the Subarea 29 Specific Plan as Planning Area 27 and is designated for 73 units per an amendment to the Specific Plan.
It appears a General Plan Amendment was also completed. Tract Map 20389 divided the site into one lot and several lettered lots, and a condominium site plan was approved allowing for 73 residential units. The approved tract maps appear to be consistent with the approved specific plans.
Based on the legality of use analysis, the type of development for which the subject properties can be utilized is narrowed to residential use. Thi s is consistent with the findings of the physically possible uses.
Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Inland Empire Housing Market section earlier within this report, the market showed strong increases in both sales and pricing in 2020, 2021 and the beginning of 2022. The second half of 2022 and the beginning of 2023 reflected a slowdown in sales and a softening in prices as interest rates have risen substantially. The slowdown in the second half of 2022 resulted in builder’s either pausing on escrows or dropping escrows resulting in few actual residential land sale closings in the past twelve months. However, builders are once again entering escrows and moving forward on older escrows as new home buyers are continuing to purchase homes, even with the higher mortgage rates. Within Ontario CFD No. 56, out of 482 mapped units, there have been 340 home sales to date including 212 home closings. All structures appear to be in excellent condition with no physical depreciation apparent. Within the new home market in the Ontario area, we found fourteen projects (including subject projects) to be comparable to the subject’s product lines. Homebuilding had not been able to keep up with the demand in 2020 and 2021 due to several factors including historically low interest rates, millennials joining the home buying market and the work from home factor which all add to the demand. While the market softened in the second half of 2022, the Inland Empire is still seeing demand and 780
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new homes are still selling. Our search for land sales found seven land sales in the market area that we consider to be comparable. Population growth is still occurring in the area and will continue to create the need for housing. Based on the above analysis, the highest and best use for each of the subject properties appears to be for single-family residential development at the right price points.
Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands.
Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as if vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property is for residential land use.
Highest and Best Use – “As Improved”
The subject property consists of three existing projects within Ontario Ranch. The first is known as Cambridge Court by Woodside with 106 proposed homes which began selling in October 2021. They have sold 93 homes, reflecting a sales rate of 4.2 sales per month.
The second project, NUVO Parkside, includes four communities. They have sold 214 homes since beginning sales in April 2022 reflecting a total sales rate of 13.7 homes per month or between 3.7 and 3.8 sales per month per community. The third project, Fairhaven at Park Place began sales in January 2023 and has sold 33 homes to date reflecting a sales rate of 4.7 homes per month. Base prices at Cambridge Court and Fairhaven have increased since grand opening from 6.6 to 11.2 percent per floorplan .
NUVO plans have had decreases since opening as the builder sought to find the market, which they did as the sales rates have been considered good. In addition, most builders are offering mortgage incentives including closing costs and interest rate buy downs. This is typical for the Inland Empire in today’s market. The sales absorption rates within all communities are considered to be good to very good. As discussed under the Inland Empire Housing Market section, within the Inland Empire, the year-to-date average sales 781
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per project is 3.98 homes per month with the subject communities ranging from 3.7 to 4.7 sales per month. The subject communities are enjoying an overall sales rate either similar or higher than the overall averages in the area.
In addition, we have reviewed Empire Economics Price Point Review Studies for all three Zones within Ontario CFD No. 56 along with an update for Zone 2. The reports reviewed the Original Price Point Studies prepared in July 2021 and concluded that between July 2021 and July 2023 there were price reductions from 1.9 to 1.25 percent (for three plans within Fairhaven and for the 3-story plans within NUVO) with the remai nder of the plans have prices higher from 0.36 to 4.4 percent.
All of the homes are of good design and appear to be of good quality workmanship. It appears that Cambridge Court, NUVO, and Fairhaven are all being well received, and the neighborhoods are now selling at the correct price points for the area. Based on the above information, it is concluded that the highest and best use for the subject property, is for the continued use, as improved.
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VALUATION ANALYSIS AND CONCLUSIONS
The Sales Comparison Approach will be used to value the subject propert ies. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For detached residential lands, they are typically sold on the basis of a finished lot. That is, the sales price is determined by the finished lot value and then the remaining costs to develop the property to a finished condition are taken into account in the sales price.
Therefore, in determining a current market value for the lands, the current condition of the lots will be considered. In the case of the existing home valuations , a single new -home sale is the unit of comparison. Our search will include all comparable new home projects within the subject’s immediate and surrounding market area to find comparable new homes for sale. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home.
In the case of the completed ( over 95 percent complete) builder -owned models and production houses, the homes will be valued using the Sales Comparison Approach to conclude on a retail value for each plan, followed by a Discounted Cash Flow (“DCF”) Analysis due to the single ownership. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining development costs (if any), the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. A home under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement. In the case of individually owned homes, the concluded base value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing.
All of the value conclusions will take into consideration improvements and/or benefits to 783
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be funded by the Ontario CFD No. 56 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.
Market Data Discussion – Residential Lots
Within overall Ontario CFD 56, there is a V acant Parcel with entitlements for up to 236 units, 62 lots in a generally physically finished condition, 128 houses under construction (under 95 percent complete), 15 builder owned model homes, 53 houses over 95 percent complete and 224 completed houses which are individually owned. For the residential lots, we will value each ownership which are detailed as follows.
Zone 1 includes seven generally finished lots and 22 houses under construction within Cambridge Court by Woodside. A house under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement, thus 29 lots will be valued in Zone 1 under Woodside ownership.
Zone 2 includes a vacant parcel with entitlements for 236 residential units with no mapping at this time along with the NUVO project. NUVO includes 32 generally finished lots, all owned by Arroyo Cap II -1. In addition, there are 80 homes under construction (under 95 percent complete) with New Home Company owning 61 and Arroyo Cap II -1 owning 19. As a house under construction (under 95 percent complete) will be valued as a lot, 6 1 lots will be valued under the New Home Company ownership and 51 will be valued under the Arroyo Cap II-1 ownership.
Zone 3 includes 23 generally finished lots and 26 homes under construction within Fairhaven by Lennar. As we are valuing a home under construction (under 95 percent complete) as a lot, 49 lots will be valued under the Lennar Ownership.
We have searched the area and found the seven transactions summarized below (listed in the Addenda) to be most comparable to the subject property. The sales are reported both on a purchase price basis and on a finished lot basis. Although some sales refer to “finished lots,” they are typically physically finished lots with some fees remaining to be 784
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paid in order to be considered truly finished lots. At times land sales are for small -lot or attached product or refer to a “blended price” for these two products. Our search included the areas of Ontario, Corona, and Chino. Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject lands.
Land Sale No. 1 refers to a current escrow in the City of Ontario, however not within Ontario Ranch. The seller has asked us to keep the information confidential as it is not yet a closed sale. The buyer is a familiar Southern California builder. The site contains an estimated 3.3 acres with entitlements for 84 units which equates to 25.45 dwelling units per acre. The sales price is reportedly $8,600,000 or $102,381 per unit based on an estimated finished lot/pad price of $198,651. In comparison to the subject properties, this sale has a much higher density which suggests that the per unit or finished lot /pad price is inferior to the subject properties with densities ranging from 10 to 12 units per acre for the existing projects and an estimated 16 dwelling units per acre on the Vacant Parcel. In addition, this is not yet a closed sale, thus less emphasis is placed on this transaction, however it has been included to show activity in the market and set the upper limit for a parcel with higher density.
Land Sale No. 2 pertains to the latest closing in Ontario Ranch located east of Twinkle Avenue northwest of Haven Avenue within two miles of each of the subject sites . Land Sea purchased the site mapped for 144 lots in June 2023 from a related entity to Richland.
The parcel has mapping complete, however was in an unimproved condition at time of sale. The site totals 9.19 acres per brokers familiar with the transaction which suggests a density of 15.6 dwelling units per acre. The proposed product is for 12 unit attached condominiums in a courthouse courtyard configuration. The property sold for $16,924,000 or $117,528 per unit based on a reported $235,000 finished lot/pad price. In comparison to the subject properties, this site has a higher density than the existing products which makes it inferior, however a density similar to the Vacant Parcel within Zone 2.
Land Sale Nos 3, 4 and 5 all refer to sales within The Preserve, a master planned community located in Chino, about two miles southwest of Ontario Ranch. The Preserve 785
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is one of the only master plans developed by a land developer (Lewis) that is supplying lots for new-home builders. Several builders are currently active in The Preserve including Lennar, Richmond American, Beazer and KB Home. Land Sale No. 3 is in regard to Lennar purchasing land for 56 units for the extension of their successful project known as Voyage, within the Discovery Park area of The Preserve. In July 2022 Lennar purchased the 56 lots for $16,629,500 or $296,955 per unit based on a reported finished lot price of $350,000. The property has a reported density of 12 dwelling units per acre. Lennar’s Voyage product includes detached homes 1,800 – 2,020 square feet selling for $720,000 to $760,000. Land Sale No. 4 pertains to Richmond American Homes purchasing 56 units to continue their successful project known as Parklin, also within the Discovery Park area of The Preserve. In July 2022 Richmond American Homes purchased the lands from Lewis for $16,694,304 or for $302,934 per lot based on a reported fini shed lot price of $340,000. The lots were in a partially finished condition at the time of closing. The property has an overall density of about 11 dwelling units per acre. Richmond American is selling their Parklin community with detached homes in a cluster format with homes sized from 1,940 to 2,460 square feet with pricing from $765,000 to $830,000. Land Sale No. 5 refers to a townhome community being built and marketed by Beazer Homes known as Zinnia at The Preserve, north of Pine Avenue off Meadowhouse Avenue. The site had mapping for 149 attached townhomes with an overall density of 14 dwelling units per acre.
Beazer purchased the site in June 2022 from Lewis for $19,952,500 or $133,909 per lot based on a finished lot/pad price of $205,000. The lots were in a partially finished condition at the time of closing. Beazer is s elling townhomes sized from 1,790 to 2,076 square feet with pricing from $600,000 to $630,000. In comparison to the subject property, The Preserve has been developed by a master dev eloper who completed amenities including pools, large neighborhood parks and social areas for the residents.
Ontario Ranch is being developed by various builders/developers and while some have more elaborate amenities, Zones 1 and 2 have either small, int erior parks or a pool/clubhouse (NUVO). Thus, The Preserve is slightly superior to most of the Ontario Ranch in amenities. These three sales all occurred in mid- 2022 at the end of the appreciating market, making the date of sale on these three closings superior to the current market of today. In comparing the densities, Land Sale Nos. 3 and 4 are 786
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considered to be similar to the subject’s active communities, while Data No. 5 at 14 dwelling units per acre is considered more similar to the Vacant Parcel’s density of 16 dwelling units per acre.
Land Sale No. 6 refers to the most recent closing within the master planned community known as Bedford, located in South Corona, about 13 miles south of the subject properties. The location is considered to be similar as both have very good access from I-15. Taylor Morrison purchased an estimated 91 conventional lots with a minimum lot size of 3,800 square feet based on a finished lot value of $360,000. The lots were in a partially finished condition at the time of closing. The site closed in May 2022, however, was negotiated about one year prior. When compared to the subject property this site is considered to be superior in amenities as Bedford has several pools and a large social club for the overall community.
Land Sale No. 7 refers to the July 2021 purchase of a parcel of land within two miles of the subject properties at the southeast corner of Edison Avenue and Mill Creek Avenue in Ontario Ranch. KB Home purchased the lands fr om Richland Communities who had entitled the property for 432 dwelling units. The product includes mapping for 149 cluster detached units, 174 townhomes and 145 courtyard townhomes. The overall density of the project is 10 dwelling units per acre. The site had dirt access at time of purchase with no paved surrounding streets. Per public record, KB Home paid $36,297,016 or $84,021 per unit based on a reported blended finished lot price of $239,000. In comparison to the subject property, this site is considered inferior due to the majority of the proposed homes being attached and inferior due to the site closing over two years ago, prior to a substantial amount of appreciation in the subject marketplace.
The chart on the following page summarizes the considerations used in adjusting the market data to the subject property.
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Data
No. Location
Date of
Sale
Lot Size /
Density
Finished
Lot Price Comparison to Subject
1 Ontario Escrow 25 du/ac $198,651 Inferior – Density and location 2 Ontario Ranch 6/23 15.6
du/ac $235,000 Inferior – Density
3 Chino 7/22 12 du/ac $350,000 Superior – Amenities & Date of Sale
4 Chino 7/22 10 du/ac $340,000 Superior – Amenities & Date of Sale
5 Chino 6/22 14 du/ac $205,000
Inferior – Density (to existing
communities)
Superior – Date of Sale
6 Corona 5/22 3,800 $360,000 Superior – Density & Date of Sale 7 Ontario Ranch 7/21 10 du/ac $239,000
Inferior – Attached product for
majority of the site and Date of
Sale
.
The market data has an overall, unadjusted, finished lot range from $19 8,651 to $360,000. The lowest prices at $19 8,651 refers to significantly higher density at 25 dwelling units per acre versus the subject community’s densities which range from 10 – 12 dwelling units per acre or the Vacant Parcel’s 16 dwelling units per acre. Data Nos. 2 and 6 relate to sales with a density in the 14 – 16 dwelling unit per acre range and have a sales price range from $205,000 to $235,000 per unit. These products are attached.
The remainder of the market data ranges from $239,000 to $360,000 on a finished lot basis. Data Nos. 3, 4 and 6 are all located within master planned communiti es with superior amenities and closed in mid- 2022 which was prior to when the increase in mortgage rates began affecting new home sales. Data No. 7 sold two years ago, prior to significant appreciation in the marketplace. The subject real estate market showed significant appreciation between mid- 2020 and mid- 2022, slowed and showed depreciation for six to eight months and now has seemed to stabilize with slight increases seen in the past couple months.
Based on the market data, which is considered to be good, and taking into account the varying factors in the transactions along with the current residential land market, we have concluded that the subject lots within Zone 1 (2,700 square foot conventional lots with an overall density of 10 dwelling units per acre) have a finished lot value of $280,000. Within the NUVO portion of Zone 2 (overall 12.6 dwelling units per acre) we have concluded at a finished lot value of $260,000. Within the Vacant Parcel portion of Zone 2 (16 dwelling 788
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units per acre) we have concluded on a finished pad/lot value of $200,000. Within Zone 3 (overall 11 dwelling units per acre, however irregular shaped lot, and rears to Edison high wires), we have concluded at a finished lot value of $220,000. However, the lots are not yet in a true finished condition. As discussed earlier within each of the property description sections, there are remaining costs to bring the sites to a true finished lo t condition which will be taken into account below.
Zone 1 - Builder-Owned Lot Value Conclusion
As discussed above, Zone 1 which encompasses Cambridge Court by Woodside Homes includes 29 lots as the homes under construction are being valued on the basis of a finished lot rather than attributing value to a partially complete improvement. Per Woodside representatives the lots are in a finished condition and all fees have been paid, however, we have added a contingency for the final cap on the street and the water quality management as discussed under the property description section above. The lot value conclusion is as follows:
29 Lots in a Finished Condition (29 x $280,000) $ 8,120,000 Less: Land Development Costs (29 x $3,409.09) ( 98,864) Current value of Builder-Owned Lots $ 8,021,136
NUVO Portion of Zone 2 - Builder-Owned Lot Value Conclusion As discussed above, the portion of Zone 2 which encompasses NUVO by New Home Company includes 61 lots owned by New Home Company and 51 lots owned by Arroyo Cap II-1. These numbers include the homes under construction which are being valued on the basis of a finished lot rather than attributing value to a partially complete improvement. Per New Hom e Company representatives there are remaining costs of $19,718.31 per lot to get to a true finished lot including land development fees. The lot value conclusions are as follows:
New Home Company Ownership
61 Lots in a Finished Condition (61 x $260,000) $15,860,000 Less: Land Development Costs (61 x $19,718.31) ( 1,202,817) Current value of Builder-Owned Lots $14,657,183
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Arroyo Cap II-1 Ownership
51 Lots in a Finished Condition (51 x $260,000) $13,260,000 Less: Land Development Costs (51 x $19,718.31) ( 1,005,634) Current value of Builder-Owned Lots $12,254,366
Vacant Lot Portion of Zone 2 - Builder-Owned Lot Value Conclusion As discussed above, the Vacant Lot portion of Zone 2 has an overall density of 16 dwelling units per acre and has entitlements for up to 236 units on the site per the Specific Plan.
It is the appraiser’s understanding that there has been no mapping done on the property at this time. The remaining costs per Lewis’s representatives are estimated at $18,800,000 which includes $11,000,000 for the land development costs and $7,800,000 for the estimated land development fees. We have estimated an additional $350,000 for the planning and mapping process. All of the market data have approved mapping while this parcel does not. We have estimated a time period of eighteen months to plan and approve mapping on the Vacant Parcel along with an annual discount of ten percent due to the approval risk, market risk and the time value of money during this period. As concluded above, the value for the finished lot is $200,000. The parcel value conclusions are as follows:
Lewis Ownership
236 proposed lots/pads in a Finished Condition $47,200,000 Less: Land Development Costs & Fees (18,800,000)
Planning and Mapping Costs (350,000)
Subtotal $28,050,000
Present Value Factor (10%, 18 months) x0.8612
Current value of Lewis-Owned Vacant Parcel $24,156,660
Zone 3 - Builder-Owned Lot Value Conclusion
As discussed above, Zone 3 encompasses Fairhaven at Park Place by Lennar and includes 49 lots owned by Lennar including the homes under construction which are being valued on the basis of a finished lot rather than attributing value to a partially complete improvement. Per Lennar representatives there are remaining costs of $39,093.26 per 790
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lot to get to a true finished lot including land development fees. The lot value conclusions are as follows:
49 Lots in a Finished Condition (49 x $220,000) $10,780,000 Less: Land Development Costs (49 x $39,093.26) ( 1,915,570) Current value of Lennar Builder-Owned Lots $ 8,864,430
Retail House Valuation Analysis – Zone 1 - Cambridge Court by Woodside Homes
Cambridge Court is proposed for 106 detached homes with 62 completed and closed to individuals. The builder owns three model homes and 12 homes over 95 percent complete for a total of 15 homes. The homes under construction and the remaining lots were valued above. This section will value the builder -owned homes, followed by a value for the individually-owned homes using a mass appraisal technique. We have searched the local Multiple Listing Service (“MLS”) and inspected the property and there has not been any resales or current resale listings within Cambridge Court . Below is a summary of the various floor plans. A listing of the improved residential comparable properties is located in the Addenda of this report. All improved residential comparable properties are located within the subject City of Ontario or the neighboring City of Chino.
Cambridge Court by Woodside Homes
Floor Plan Bed/
Bath
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Plan 1 3 / 3 2 / 2 1,951 17 5*
Plan 2 4 / 3 2 / 2 2,043 16 7*
Plan 3 5 / 3 2 / 2 2,365 29 3*
Total 62 15
*Each asterisk designates one model home per that plan. In addition to the above there are 22 homes under construction and 7 additional finished lots.
The most appropriate new home comparable data for Cambridge Court Plan 1 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 1 3 / 3 2 / 2 1,951 --
1 2 4 / 3 2 / 2 2,043 $352.91
3 H4 4 / 3.5 3 / 2 1,809 $339.97
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 4 4 / 3 2 / 2 1,805 $349.02
7 2 3 / 2.5 2 / 2 1,800 $354.72
7 3 4 / 3 2 / 2 2,067 $333.70
9 1 4 / 3 2 / 2 2,053 $351.00
10 3 4 / 3 2 / 2 1,955 $365.73
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The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $333.70 to $365.73 per square foot. The current base asking price for Cambridge Court Plan 1 is $361.87 per square foot. There have been 17 closings of Cambridge Court Plan 1 with actual sales prices from $333.16 to $385.24 per square foot. There are 12 current escrows of Cambridge Court Plan 1 with an estimated sales price range of $345.21 to $372.98 per square foot however the escrow prices do not include the options, premiums, upgrades, or concessions. Per Woodside representatives they are not offering interest buy-downs at this time however are providing up to $5,000 in closing costs which are not reflected in the sales prices. Since October, Woodside has been giving concessions which average over $50,000 which are not included in the reported escrow prices along with the premiums and options which average around $30,000. It should be noted that the reported sales prices include upgrades, premiums, and options along with some concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Cambridge Court Plan 1 has a base current market value of $335.00 per square foot. This calculates as follows:
1,951 sf x $335.00 = $653,585
The most appropriate new home comparable data for Cambridge Court Plan 2 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 2 4 / 3 2 / 2 2,043 --
1 1 3 / 3 2 / 2 1,951 $361.87
7 3 4 / 3 2 / 2 2,067 $333.70
8 3 4 / 3 2 / 2 2,133 $382.09
9 1 4 / 3 2 / 2 2,053 $351.00
10 3 4 / 3 2 / 2 1,955 $365.73
11 1 3 / 2.5 2 / 2 2,127 $408.08
13 3X 3 / 2.5 3 / 2 2,091 $363.46
14 2 3 / 2.5 2 / 2 2,096 $348.75
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for 792
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location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $333.70 to $408.08 per square foot. The current base asking price for Cambridge Court Plan 2 is $352.91 per square foot. There have been 16 closings of Cambridge Court Plan 2 with actual sales prices from $318.16 to $355.30 per square foot. There are ten current escrows of Cambridge Court Plan 2 with an estimated sales price range of $335.29 to $365.87 per square foot. Per Woodside representatives they are not offering interest buy-downs at this time however are providing up to $5,000 in closing costs which are not reflected in the sales prices. Since October Woodside has been giving concessions which average over $50,000 per home which are not included in the reported escrow prices along with the premiums and options which average around $30,000. It should be noted that the reported sales prices include upgrades, premiums, and options along with some concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Cambridge Court Plan 2 has a base current market value of $325.00 per square foot. This calculates as follows:
2,043 sf x $325.00 = $663,975
The most appropriate new home comparable data for Cambridge Court Plan 3 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
1 (Subj.) 3 5 / 3 2 / 2 2,365 --
1 2 4 / 3 2 / 2 2,043 $352.91
7 4 5 / 3 2 / 2 2,202 $320.30
8 4 4 / 3 2 / 2 2,173 $379.66
9 3 4 / 3 2 / 2 2,229 $335.47
9 4 4 / 3.5 2 / 2 2,528 $307.47
11 2 3 / 2.5 2 / 2 2,403 $376.61
14 4 3 / 2.5 2 / 2 2,296 $381.53
14 5 4 / 2.5 2 / 2 2,352 $329.93
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $307.47 to $381.53 per square foot. The current 793
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base asking price for Cambridge Court Plan 3 is $329.18 per square foot. There have been 29 closings of Cambridge Court Plan 3 with actual sales prices from $295.98 to $358.16 per square foot. There are nine current escrows of Cambridge Court Plan 3 with an estimated sales price range of $314.45 to $341.91 per square foot. Per Woodside representatives they are not offering interest rate buy-downs at this time however are providing up to $5,000 in closing costs which are not reflected in the sales prices. Since October Woodside has been giving concessions which average over $50,000 per home which are not included in t he reported escrow prices along with the premiums and options which average around $30,000. It should be noted that the reported sales prices include upgrades, premiums, and options along with some concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Cambridge Court Plan 3 has a base current market value of $ 300.00 per square foot. This calculates as follows:
2,365 sf x $300.00 = $709,500
Builder Owned Retail Value – Cambridge Court
Within the subject property there are twelve production homes and three models over 95 percent complete owned by Woodside Homes. Per interviews with builders, upgrades, and landscape/hardscape of over $100,000 are installed in subject -like model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar -for-dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $40,000 premium has been included with each of the model homes. As concluded above, the retail base value conclusions for the builder- owned homes within Cambridge Court are calculated as follows:
Plan 1 (5 x $653,585) $ 3,267,925
Plan 2 (7 x $663,975) 4,647,825
Plan 3 (3 x $709,500) 2,128,500
Model Upgrades (3 x $40,000) 120,000
Retail Value - Woodside Owned Homes $10,164,250
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Absorption Period
In order to arrive at an absorption period for the 15 builder-owned homes within Cambridge Court, the absorption rates for the subject and surrounding developments have been reviewed. As discussed under the Highest and Best Use section earlier within this report, there is an average sales rate for Cambridge Court of 4.2 sales per month. The Improved Residential Market Data which are considered competition have sales rates from 3.2 to 7.0 sales per month. We have concluded that the subject 15 homes, 12 of which are currently in escrow, will be absorbed over a three-month period taking into consideration the absorption rate and the current escrows, along with current market conditions and the rising interest rates.
Remaining Costs
As discussed under t he remaining development costs section earlier within this report there are $3,409.09 in remaining land development costs associated with each lot. For the 15 builder-owned homes, this equates to $ 51,136 in remaining costs. We are assuming that the costs will be spread evenly over the three- month absorption period in our analysis.
Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc . Due to the rapidly changing market with increasing interest rates, an eight percent allowance has been estimated for marketing expenses and two percent for general and administrative costs for a total of ten percent in expenses for this analysis.
Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession this range was lowered considerably to six to 10 795
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percent with some builders drastically lowering their profit potential in order to maintain their workforce. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.
Discount Rate
In selecting a discount rate, the following was completed:
1. Interviews with merchant builders in the Ontario Ranch area
2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)
3. The quality, construction, historical sales, and product on the subject property
The homes within the subject property appear to be well constructed and have been selling at good absorption rates. There is minimal remaining development associated with the project. While COVID appeared to boost new home sales, the higher interest rates and current inflation may be slowing sales. Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.
Discounted Cash Flow Summary
The discounted revenue for the builder -owned homes in Cambridge Court by Woodside Homes (see DCF Analysis in Addenda) is $7,947,440.
Zone 1 - Woodside Ownership Valuation Total – Cambridge Court
Woodside Homes owns 15 homes over 95 percent complete including three models along with and 29 lots either with houses under construction (under 95 percent complete) or in a finished lot condition within Ontario CFD No. 56. The homes under construction (under 95 percent) have been valued as a finished lot/pad rather than attribute value to a partially complete improvement. The final value conclusion for the builder owned property is shown below.
29 Lots Valuation $ 8,021,136 Houses (15 Including three models) 7,947,440 Total Woodside Owned Property $ 15,968,576
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Individual Owners Value Conclusion – Cambridge Court
In determining the value for the individually owned homes within Cambridge Court, we have considered the concluded base price value for the homes, which is considered a minimum market value. This is due to homebuyers typically purchasing some additional upgrades, options or paying some premiums for the home. The concluded values are shown below:
Cambridge Court (Zone 1):
Plan 1 (17 x $653,585) $ 11,110,945
Plan 2 (16 x $663,975) 10,623,600
Plan 3 (29 x $709,500) 20,575,500
Total Individual Ownership Value $ 42,310,045
In an additional review, we have reviewed the builder sales prices for the homes within Cambridge Court, where 62 closings occurred between April 2022 and August 2023. The builders’ reported closing prices for the individually owned homes total $44,300,500 . It should be noted that the average concession per buyer between April 2022 and October 2022 (38 houses) was $8, 605 while the average concession per buyer since October 2022 (24 houses) was $56,678. The concluded current minimum market value of $42,310,045 equates to 4.5 percent less than the actual sales prices. The builder’s reported prices include premiums, upgrades and purchased options as well as took into consideration some of the concessions given by the builder. Base pricing within Cambridge Court has increased 6.5 to 11 percent based on the plan. Based on the above information and analysis along with our familiarity with the market, it is our conclusion that the original builder’s sales prices further substantiate the concluded minimum market value for the individually owned homes.
Retail House Valuation Analysis – Portion of Zone 2 - NUVO by New Home Co.
NUVO is proposed for 303 detached homes with 161 completed and closed to individuals.
The New Home Company owns eight model homes and 22 homes over 95 percent complete for a total of 30 houses. The homes under construction and the remaining lots were valued above. This section will value the builder-owned homes, followed by a value for the individually owned homes using a mass appraisal technique. We have searched 797
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the local Multiple Listing Service (“MLS”) and inspected the property and there have not been any resales or current resale listings within NUVO. Below is a summary of the various floor plans. A listing of the improved residential comparable properties is located in the Addenda of this report. All improved residential comparable properties are located within the subject City of Ontario or the neighboring City of Chino.
NUVO Parkside by The New Home Company
Floor Plan Bed/
Bath
Floors/
Pkng.
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Lincoln Plan 1 (“L1”) 2 / 2.5 2 / 1 1,082 21 0
Lincoln Plan 2 (“L2”) 2 / 2.5 2 / 1 1,044 14 0
Lincoln Plan 2G (“L2G”) 2 / 2.5 2 / 2 1,046 14 1
Hyde Plan 1 (“H1”) 2 / 2.5 3 / 1 1,197 16 2*
Hyde Plan 2 (“H2”) 3 / 2.5 3 / 2 1,550 8 1*
Hyde Plan 3 (“H3”) 4 / 3.5 3 / 2 1,727 8 1*
Hyde Plan 4 (“H4”) 4 / 3.5 3 / 2 1,809 8 1*
Bryant Plan 1/1X (“B1/1X”) 3 / 2.5 2 / 2T 1,370 10 3*
Bryant Plan 2 (“B2”) 3 / 2.5 2 / 2 1,536 10 3*
Bryant Plan 3 (“B3”) 3 / 2.5 2 / 2 1,475 10 3*
Bryant Plan 4 (“B4”) 3 / 2.5 2 / 2 1,675 4 1
Bryant Plan 4X (“B4X”) 3 / 2.5 2 / 2 1,754 2 2*
Grant Plan 1 (“G1”) 3 / 2.5 2 / 2 1,596-
1,597 9 3
Grant Plan 2 (“G2”) 4 / 2.5 2 / 2 1,648 18 6
Grant Plan 3 (“G3”) 4 / 2.5 2 / 2 1,820-
1,845 9 3
Total 161 30
*Each asterisk designates one model home per that plan. “T” denotes a tandem garage. In addition to the above there are 80 homes under construction and 32 additional finished lots.
The most appropriate new home comparable data for Lincoln at NUVO Parkside Plan L1 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
2 (Subj.) L1 2 / 2.5 2 / 1 1,082 --
2 L2 2 / 2.5 2 / 1 1,044 $465.52
2 L2G 2 / 2.5 2 / 2 1,046 $480.88
3 H1 2 / 2.5 3 / 1 1,197 $417.71
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
6 1 3 / 2.5 2 / 2 1,450 $407.58
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
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The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $407.58 to $480.88 per square foot. The final base asking price for Lincoln at NUVO Parkside Plan L1 was $448.24 per square foot in May 2023. There have been 21 closings of Lincoln at NUVO Parkside Plan L1 with actual sales prices from $438.99 to $506.46 per square foot. It should be noted this range includes a model home that closed, which makes up the high end of the range at $506.46 per square foot. The highest production (non-model) home to close was priced at $470.27 per square foot. There are no current escrows of Lincoln at NUVO Parkside Plan L1. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Lincoln at NUVO Parkside Plan L1 has a base current market value of $435.00 per square foot. This calculates as follows:
1,082 sf x $435.00 = $470,670
The most appropriate new home comparable data for Lincoln at NUVO Parkside Plan L2 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
2 (Subj.) L2 2 / 2.5 2 / 1 1,044 --
2 L1 2 / 2.5 2 / 1 1,082 $448.24
2 L2G 2 / 2.5 2 / 2 1,046 $480.88
3 H1 2 / 2.5 3 / 1 1,197 $417.71
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
6 1 3 / 2.5 2 / 2 1,450 $407.58
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $407.58 to $480.88 per square foot. The final base asking price for Lincoln at NUVO Parkside Plan L2 was $465.52 per square foot in May 2023. There have been 14 closings of Lincoln at NUVO Parkside Plan L2 with actual 799
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sales prices from $456.89 to $493.61 per square foot. There are no current escrows of Lincoln at NUVO Parkside Plan L2. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Lincoln at NUVO Parkside Plan L2 has a b ase current market value of $455.00 per square foot. This calculates as follows:
1,044 sf x $455.00 = $475,020
The most appropriate new home comparable data for Lincoln at NUVO Parkside Plan L2G is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
2 (Subj.) L2G 2 / 2.5 2 / 2 1,046 --
2 L2 2 / 2.5 2 / 1 1,044 $465.52
2 L1 2 / 2.5 2 / 1 1,082 $448.24
3 H1 2 / 2.5 3 / 1 1,197 $417.71
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
6 1 3 / 2.5 2 / 2 1,450 $407.58
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $407.58 to $465.52 per square foot. The final base asking price for Lincoln at NUVO Parkside Plan L2G was $480.88 per square foot in May 2023. There have been 14 closings of Lincoln at NUVO Parkside Plan L2G with actual sales prices from $479.91 to $543.01 per square foot. It should be noted this range includes a model home that closed, which makes up the high end of the range at $543.01 per square foot. The highest production (non-model) home to close was priced at $511.46 per square foot. There is one current escrow of Lincoln at NUVO Parkside Plan L2G with an estimated sales price of $507.49 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been 800
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concluded that Lincoln at NUVO Pa rkside Plan L2G has a base current market value of $470.00 per square foot. This calculates as follows:
1,046 sf x $470.00 = $491,620
The most appropriate new home comparable data for Hyde at NUVO Parkside Plan H1 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
3 (Subj.) H1 2 / 2.5 3 / 1 1,197 --
2 L1 2 / 2.5 2 / 1 1,082 $448.24
2 L2 2 / 2.5 2 / 1 1,044 $465.52
2 L2G 2 / 2.5 2 / 2 1,046 $480.88
3 H2 3 / 2.5 3 / 2 1,550 $354.19
3 H3 4 / 3.5 3 / 2 1,727 $344.53
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
6 1 3 / 2.5 2 / 2 1,450 $407.58
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. Hyde is a new product offered in Ontario Ranch with three stories rather than two. The comparable new home sales have base prices ranging from $344.53 to $480.88 per square foot. The current base asking price for Hyde at NUVO Parkside Plan H1 is $417.71 per square foot. There have been 16 closings of Hyde at NUVO Parkside Plan H1 with actual sales prices from $409.35 to $447.13 per square foot. There are four current escrows of Hyde at NUVO Parkside Plan H1 with an estimated sales price range of $416.87 to $435.77 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Hyde at NUVO Parkside Plan H1 has a base current market value of $400.00 per square foot. This calculates as follows:
1,197 sf x $400.00 = $478,800
The most appropriate new home comparable data for Hyde at NUVO Parkside Plan H2 is:
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Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
3 (Subj.) H2 3 / 2.5 3 / 2 1,550 --
3 H1 2 / 2.5 3 / 1 1,197 $417.71
3 H3 4 / 2.5 3 / 2 1,727 $344.53
3 H4 4 / 2.5 3 / 2 1,809 $339.97
4 B2 3 / 2.5 2 / 2 1,536 $384.77
5 G1 3 / 2.5 2 / 2 1,596 $352.13
6 2 3 / 2.5 2 / 2 1,638 $381.56
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
13 1 3 / 2 2 / 2 1,550 $451.61
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $339.97 to $451.61 per square foot. The current base asking price for Hyde at NUVO Parkside Plan H2 is $354.19 per square foot. There have been eight closings of Hyde at NUVO Parkside Plan H2 with actual sales prices from $337.32 to $386.28 per square foot. There are four current escrows of Hyde at NUVO Parkside Plan H2 with an estimated sales price range of $348.38 to $366.45 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Hyde at NUVO Parkside Plan H2 has a base current market value of $ 340.00 per square foot. This calculates as follows:
1,550 sf x $340.00 = $527,000
The most appropriate new home comparable data for Hyde at NUVO Parkside Plan H3 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
3 (Subj.) H3 4 / 3.5 3 / 2 1,727 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
3 H4 4 / 3.5 3 / 2 1,809 $339.97
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 3 3 / 3.5 3 / 2 1,785 $342.29
10 2 3 / 2.5 2 / 2 1,684 $397.27
802
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City of Ontario CFD No. 56 (Parkside/La Avenida)
Kitty Siino & Associates, Inc. Page 93
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $338.46 to $397.27 per square foot. The current base asking price for Hyde at NUVO Parkside Plan H3 is $344.53 per square foot. There have been eight closings of Hyde at NUVO Parkside Plan H3 with actual sales prices from $327.15 to $361.51 per square foot. There are four current escrows of Hyde at NUVO Parkside Plan H3 with an estimated sales price range of $347.42 to $357.26 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Hyde at NUVO Parkside Plan H 3 has a base current market value of $ 330.00 per square foot. This calculates as follows:
1,727 sf x $330.00 = $569,910
The most appropriate new home comparable data for Hyde at NUVO Parkside Plan H4 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
3 (Subj.) H4 4 / 3.5 3 / 2 1,809 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
3 H3 4 / 3.5 3 / 2 1,727 $344.53
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 3 3 / 3.5 3 / 2 1,785 $342.29
6 4 4 / 3 2 / 2 1,805 $349.02
7 2 3 / 2.5 2 / 2 1,800 $354.72
10 3 4 / 3 2 / 2 1,955 $365.73
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $338.46 to $365.73 per square foot. The current base asking price for Hyde at NUVO Parkside Plan H4 is $339.97 per square foot. There have been eight closings of Hyde at NUVO Parkside Plan H4 with actual sales prices from 803
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$320.61 to $367.22 per square foot. There are five current escrows of Hyde at NUVO Parkside Plan H4 with an estimated sales price range of $337.20 to $352.12 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Hyde at NUVO Parkside Plan H 4 has a base current market value of $ 320.00 per square foot. This calculates as follows:
1,809 sf x $320.00 = $578,880
The most appropriate new home comparable data for Bryant at NUVO Parkside Plan B1/1X is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
4 (Subj.) B1/1X 3 / 2.5 2 / 2T 1,370 --
4 B2 3 / 2.5 2 / 2 1,536 $384.77
3 H1 2 / 2.5 3 / 1 1,197 $417.71
3 H2 3 / 2.5 3 / 2 1,550 $354.19
4 B3 3 / 2.5 2 / 2 1,475 $412.20
5 G1 3 / 2.5 2 / 2 1,596 $352.13
6 1 3 / 2.5 2 / 2 1,450 $407.58
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. It should be noted that The New Home Company advertises a Bryant Plan 1 and 1X, but they have the same square footage and general features, so they have been valued together here. The comparable new home sales have base prices ranging from $352.13 to $441.64 per square foot. The current base asking price for Bryant at NUVO Parkside Plan B1/1X is $418.25 per square foot. There have been ten closings of Bryant at NUVO Parkside Plan B1/1X with actual sales prices from $396.71 to $452.85 per square foot. There are five current escrows of Bryant at NUVO Parkside Plan B1/1X with an estimated sales price range of $399.26 to $418.97 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Bryant 804
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at NUVO Parkside Plan B1/1X has a base current market value of $395.00 per square foot.
This calculates as follows:
1,370 sf x $395.00 = $541,150
The most appropriate new home comparable data for Bryant at NUVO Parkside Plan B2 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
4 (Subj.) B2 3 / 2.5 2 / 2 1,536 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
4 B3 3 / 2.5 2 / 2 1,475 $412.20
5 G1 3 / 2.5 2 / 2 1,596 $352.13
6 1 3 / 2.5 2 / 2 1,450 $407.58
6 2 3 / 2.5 2 / 2 1,638 $381.56
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $352.13 to $441.64 per square foot. The current base asking price for Bryant at NUVO Parkside Plan B2 is $384.77 per square foot. There have been ten closings of Bryant at NUVO Parkside Plan B2 with actual sales prices from $372.34 to $ 395.33 per square foot. There are six current escrows of Bryant at NUVO Parkside Plan B2 with an estimated sales price range of $381.18 to $398.97 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Bryant at NUVO Parkside Plan B2 has a base current market value of $37 0.00 per square foot. This calculates as follows:
1,536 sf x $370.00 = $568,320
The most appropriate new home comparable data for Bryant at NUVO Parkside Plan B3 is:
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Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
4 (Subj.) B3 3 / 2.5 2 / 2 1,475 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
4 B2 3 / 2.5 2 / 2 1,536 $384.77
6 1 3 / 2.5 2 / 2 1,450 $407.58
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
13 1 3 / 2 2 / 2 1,550 $451.61
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $354.19 to $451.61 per square foot. The current base asking price for Bryant at NUVO Parkside Plan B3 is $412.20 per square foot. There have been ten closings of Bryant at NUVO Parkside Plan B3 with actual sales prices from $389.82 to $410.10 per square foot. There are six current escrows of Bryant at NUVO Parkside Plan B3 with an estimated sales price range of $410.29 to $428.81 per square foot. It should be not ed that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Bryant at NUVO Parkside Plan B3 has a base current market value of $390 .00 per square foot. This calculates as follows:
1,475 sf x $390.00 = $575,250
The most appropriate new home comparable data for Bryant at NUVO Parkside Plan B4 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
3 (Subj.) B4 3 / 2.5 2 / 2 1,675 --
3 H3 4 / 3.5 3 / 2 1,727 $344.53
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G2 4 / 2.5 2 / 2 1,648 $347.09
6 2 3 / 2.5 2 / 2 1,638 $381.56
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 2 3 / 2.5 2 / 2 1,684 $397.27
12 2 3 / 2.5 2 / 2 1,660 $400.60
12 3 3 / 3.5 3 / 2 1,780 $365.72
806
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Kitty Siino & Associates, Inc. Page 97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $344.53 to $400.60 per square foot. The current base asking price for Bryant at NUVO Parkside Plan B4 is $379.70 per square foot. There have been four closings of Bryant at NUVO Parkside Plan B4 with actual sales prices from $356.71 to $379.70 per square foot. There is one current escrow of Bryant at NUVO Parkside Plan B4 with an estimated sales price of $379.30 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Bryant at NUVO Parkside Plan B4 has a base current market value of $350.00 per square foot. This calculates as follows:
1,675 sf x $350.00 = $586,250
The most appropriate new home comparable data for Bryant at NUVO Parkside Plan B4X is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
3 (Subj.) B4X 3 / 2.5 2 / 2 1,754 --
3 H3 4 / 3.5 3 / 2 1,727 $344.53
3 H4 4 / 3.5 3 / 2 1,809 $339.97
4 B4 3 / 2.5 2 / 2 1,675 $379.70
5 G2 4 / 2.5 2 / 2 1,648 $347.09
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 3 3 / 3.5 3 / 2 1,785 $342.29
7 2 3 / 2.5 2 / 2 1,800 $354.72
10 2 3 / 2.5 2 / 2 1,684 $397.27
12 3 3 / 3.5 3 / 2 1,780 $365.72
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $338.46 to $397.27 per square foot. The current base asking price for Bryant at NUVO Parkside Plan B4X is $362.60 per square foot. There have been two closings of Bryant at NUVO Parkside Plan B4X with actual sales prices from 807
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$354.23 to $364.36 per square foot. There is one current escrow of Bryant at NUVO Parkside Plan B4X with an estimated sales price of $380.37 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Bryant at NUVO Parkside Plan B4X has a base current market value of $345.00 per square foot. This calculates as follows:
1,754 sf x $345.00 = $605,130
The most appropriate new home comparable data for Grant at NUVO Parkside Plan G1 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
5 (Subj.) G1 3 / 2.5 2 / 2 1,596 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
4 B2 3 / 2.5 2 / 2 1,536 $384.77
5 G2 4 / 2.5 2 / 2 1,648 $347.09
6 2 3 / 2.5 2 / 2 1,638 $381.56
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 2 3 / 2.5 2 / 2 1,684 $397.27
12 2 3 / 2.5 2 / 2 1,660 $400.60
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $347.09 to $400.60 per square foot. The final base asking price for Grant at NUVO Parkside Plan G1 was $352.13 per square foot in May 2023. It should be noted that some Grant G1 floorplans show a total of 1,597 square feet, while others show 1,596 square feet, likely due to exterior elevation differences. The characteristics of the floorplan are the same, and thus the more conservative size has been valued. There have been nine closings of Grant at NUVO Parkside Plan G1 with actual sales prices from $351.28 to $401.06 per square foot. It should be noted this range includes a model home that closed at $394.17 per square foot. There are four current escrows of Grant at NUVO Parkside Plan G1 with an estimated sales price range of $364.34 to $388.03 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value 808
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relates to a base price for the plan less concessions. It has been concluded that Grant at NUVO Parkside Plan G1 has a base current market value of $355.00 per square foot. This calculates as follows:
1,596 sf x $355.00 = $566,580
The most appropriate new home comparable data for Grant at NUVO Parkside Plan G2 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
5 (Subj.) G2 4 / 2.5 2 / 2 1,648 --
3 H3 4 / 3.5 3 / 2 1,727 $344.53
4 B4 3 / 2.5 2 / 2 1,675 $379.70
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G1 3 / 2.5 2 / 2 1,596 $352.13
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 2 3 / 2.5 2 / 2 1,638 $381.56
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 2 3 / 2.5 2 / 2 1,684 $397.27
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $338.46 to $397.27 per square foot. The final base asking price for Grant at NUVO Parkside Plan G2 was $347.09 per square foot in May 2023. There have been 18 closings of Grant at NUVO Parkside Plan G2 with actual sales prices from $337.99 to $415.42 per square foot. It’s important to note that these closings include two model homes. It should be noted this range inc ludes two model homes that closed, which were priced at $372.57 and $386.22 per square foot. There are eight current escrows of Grant at NUVO Parkside Plan G2 with an estimated sales price range of $358.61 to $375.98 per square foot. It should be noted tha t the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan. It has been concluded that Grant at NUVO Parkside Plan G2 has a base current market value of $350.00 per square foot. This calculates as follows:
1,648 sf x $350.00 = $576,800
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The most appropriate new home comparable data for Grant at NUVO Parkside Plan G3 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
5 (Subj.) G3 4 / 2.5 2 / 2 1,820 --
3 H3 4 / 3.5 3 / 2 1,727 $344.53
3 H4 4 / 3.5 3 / 2 1,809 $339.97
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G2 4 / 2.5 2 / 2 1,648 $347.09
6 4 4 / 3 2 / 2 1,805 $349.02
7 2 3 / 2.5 2 / 2 1,800 $354.72
8 1 3 / 2.5 2 / 2 1,862 $410.85
10 3 4 / 3 2 / 2 1,955 $365.73
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $339.97 to $410.85 per square foot. The final base asking price for Grant at NUVO Parkside Plan G3 was $338.46 per square foot in May 2023. It should be noted that some Grant G3 floorplans show a total of 1,820 square feet, while others show 1,826 and others 1,845 square feet, likely due to exterior elevation differences. The characteristics of the floorplan are the same, and thus the most conservative size has b een valued. There have been nine closings of Grant at NUVO Parkside Plan G3 with actual sales prices from $329.26 to $383.85 per square foot. There are four current escrows of Grant at NUVO Parkside Plan G3 with an estimated sales price range of $350.49 to $356.65 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan. It has been concluded that Grant at NUVO Parkside Plan G3 has a base current market value of $340.00 per square foot. This calculates as follows:
1,820 sf x $340.00 = $618,800
Builder Owned Retail Value – NUVO
Within NUVO there are a total of 30 production homes including eight models over 95 percent complete, owned by the builder. Per interviews with builders, upgrades, options, and landscape/hardscape of over $100,000 are installed in subject -like model homes, 810
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however, the builders generally consider this a mark eting cost and do not anticipate recovering this investment on a dollar -for-dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $40,000 premium has been included with each of the model homes. As concluded above, the retail base value conclusions for the builder- owned homes within Parkside/La Avenida are calculated as follows:
NUVO Parkside (Partial Zone 2):
Plan L1 (0 x $470,670) $ 0
Plan L2 (0 x $475,020) 0
Plan L2G (1 x $491,620) 491,620
Plan H1 (2 x $478,800) 957,600
Plan H2 (1 x $527,000) 527,000
Plan H3 (1 x $569,910) 569,910
Plan H4 (1 x $578,880) 578,880
Plan B1/1X (3 x $541,150) 1,623,450
Plan B2 (3 x $568,320) 1,704,960
Plan B3 (3 x $575,250) 1,725,750
Plan B4 (1 x $586,250) 586,250
Plan B4X (2 x $605,130) 1,210,260
Plan G1 (3 x $566,580) 1,699,740
Plan G2 (6 x $576,800) 3,460,800
Plan G3 (3 x $618,800) 1,856,400
Model Upgrades (8 x $40,000) 320,000
Retail Value of Builder-Owned Homes $17,312,620
Absorption Period
In order to arrive at an absorption period for NUVO, the absorption rates for the subject and surrounding developments have been reviewed. As discussed under the Highest and Best Use section earlier within this report, there is an average sales rate for the entirety of NUVO of 13.4 sales per month per project which is considered a good sales rate during the time.
Each project has enjoyed at or above average sales rates, with Grant and Bryant 3.7 sales per month average absorption and Lincoln and Hyde have sales rates of 3.8 homes per month. The Improved Residential Market Data which are considered competition have sales rates from 3.2 to 7.0 sales per month. We have concluded that the subject’s 30 homes, the majority of which are in escrow , will be absorbed over a five-month period taking into consideration the absorption rate and the current escrows, along with current market conditions and the rising interest rates.
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Remaining Costs
As discussed under the remaining development costs section earlier within this report there is $19,718.31 in remaining land development costs associated with each lot. For the 30 builder-owned homes, this equates to $ 591,549 in remaining costs. We are assuming that the costs will be spread evenly over the five -month absorption period in our analysis.
Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten per cent depending on varying factors such as absorption period, intensity of marketing, etc. Due to the rapidly changing market with increasing interest rates, an eight percent allowance has been estimated for marketing expenses and two percent for general and administrative costs for a total of ten percent in expenses for this analysis.
Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their workforce. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.
Discount Rate
In selecting a discount rate, the following was completed:
1. Interviews with merchant builders in the Ontario Ranch area
2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)
3. The quality, construction, historical sales, and product on the subject property
The homes within the subject property appear to be well constructed and have been selling 812
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at good absorption rates. There is minimal remaining development associated with the project. Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.
Discounted Cash Flow Summary
The discounted revenue for the builder-owned homes in NUVO Parkside by the New Home Company (see DCF Analysis in Addenda) is $12,933,423.
Zone 2 – New Home Company Valuation Total – NUVO Parkside
New Home Company owns 42 homes over 95 percent complete including nine models along with and 61 lots either with houses under construction (under 95 percent complete) or in a finished lot condition within Ontario CFD No. 56. The homes under construction (under 95 percent) have been valued as a finished lot/pad rather than attribute value to a partially complete improvement. The final value conclusion for the builder owned property is shown below.
61 Lots Valuation $ 14,657,183 Houses (30 Including eight model homes) 12,933,423 Total New Home Company Owned Property $ 27,590,606
Zone 2 – Arroyo Cap II-1 Ownership – Lot 1 of Tract 20316 Arroyo Cap II-1 owns 51 lots either under construction or in a finished condition. The final value conclusion for the Arroyo Cap II-1 ownership is:
51 Lots Valuation $ 12,254,366
Individual Owners Value Conclusion – NUVO Parkside
In determining the value for the individually owned homes within NUVO Parkside, we have considered the concluded base price value for the homes, which is considered a minimum market value. This is due to homebuyers typically purchasing some additional upgrades, options or paying some premiums for the home. The concluded values are shown on the following page:
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NUVO Parkside (Partial Zone 2):
Plan L1 (21 x $470,670) $ 9,884,070
Plan L2 (14 x $475,020) 6,650,280
Plan L2G (14 x $491,620) 6,882,680
Plan H1 (16 x $478,800) 7,660,800
Plan H2 (8 x $527,000) 4,216,000
Plan H3 (8 x $569,910) 4,559,280
Plan H4 (8 x $578,880) 4,631,040
Plan B1/1X (10 x $541,150) 5,411,500
Plan B2 (10 x $568,320) 5,683,200
Plan B3 (10 x $575,250) 5,752,500
Plan B4 (4 x $586,250) 2,345,000
Plan B4X (2 x $605,130) 1,210,260
Plan G1 (9 x $566,580) 5,099,220
Plan G2 (18 x $576,800) 10,382,400
Plan G3 (9 x $618,800) 5,569,200
Total Individual Ownership Value $ 85,937,430
In an additional review, we have reviewed the builder sales prices for the homes within NUVO, where 161 closings occurred between September 2022 and August 2023. The builders’ reported closing prices for the individually owned homes total $90,262,071. The concluded current minimum market value of $85,937,430 equates to 4.8 percent less than the actual sales prices. The builder’s reported prices include premiums, upgrades and purchased options as well as taking into consideration all concessions given by the builder, including the interest rate buy-downs which are not included in the reported sales prices. Based on the above infor mation and analysis along with our familiarity with the market, it is our conclusion that the original builder’s sales prices further substantiate the concluded minimum market value for the individually owned homes.
Retail House Valuation Analysis – Zone 3 – Fairhaven at Park Place by Lennar
Fairhaven is proposed for 73 generally detached homes with one completed and closed.
Lennar owns four model homes and 19 homes over 95 percent complete for a total of 23 houses within Ontario CFD No. 56. The homes under construction and the remaining lots were valued above. This section will value the builder-owned homes, followed by a value for the individually owned homes using a mass appraisal technique. Three of the four plans are detached while the remaining plan has one garage wall attached to the adjacent 814
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garage wall. We have searched the local Multipl e Listing Service (“MLS”) and inspected the property and there have not been any resales or current resale listings within Fairhaven. Below is a summary of the various floor plans . A listing of the improved residential comparable properties is located in t he Addenda of this report. All improved residential comparable properties are located within the subject City of Ontario or the neighboring City of Chino.
Fairhaven at Park Place by Lennar
Floor Plan Bed/
Bath
Floors/
Parking
Sq. Ft.
Ind.
Owned
Bldr.
Owned
Plan 1 3 / 2.5 2 / 2 1,450 0 5*
Plan 2 3 / 2.5 2 / 2 1,638 0 9*
Plan 3 3 / 3.5 3 / 2 1,785 0 4*
Plan 4 4 / 3 2 / 2 1,805 1 5*
Total 1 23
*Each asterisk designates one model home per that plan. In addition to the above there are 26 homes under construction and 23 additional finished lots.
The most appropriate new home comparable data for Fairhaven at Park Place Plan 1 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
6 (Subj.) 1 3 / 2.5 2 / 2 1,450 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
4 B1/1X 3 / 2.5 2 / 2T 1,370 $418.25
4 B3 3 / 2.5 2 / 2 1,475 $412.20
5 G1 3 / 2.5 2 / 2 1,596 $352.13
6 2 3 / 2.5 2 / 2 1,638 $381.56
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 1 3 / 2.5 2 / 2 1,465 $441.64
12 1 3 / 2.5 2 / 2 1,470 $431.97
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $352.13 to $441.64 per square foot. The current base asking price for Fairhaven at Park Place Plan 1 is $407.58 per square foot. It should be noted that while Lennar is marketing the Fairhaven Plan 1 at 1,450 square feet, the sales information provided to the appraisal team shows the plan at 1,470 square feet. We have assumed the characteristics of the floorplan are the same, and thus the most conservative size has been valued. There have been no closings of Fairhaven at Park Place Plan 1. 815
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There are six current escrows of Fairhaven at Park Place Plan 1 with an estimated sales price range of $339.97 to $377.54 per square foot with the oldest sale being the lowest price and the subsequent sales higher prices. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Fairhaven at Park Place Plan 1 has a base current market value of $350.00 per square foot. This calculates as follows:
1,450 sf x $350.00 = $507,500
The most appropriate new home comparable data for Fairhaven at Park Place Plan 2 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
6 (Subj.) 2 3 / 2.5 2 / 2 1,638 --
3 H2 3 / 2.5 3 / 2 1,550 $354.19
3 H3 4 / 3.5 3 / 2 1,727 $344.53
4 B2 3 / 2.5 2 / 2 1,536 $384.77
4 B4 3 / 2.5 2 / 2 1,675 $379.70
5 G2 4 / 2.5 2 / 2 1,648 $347.09
6 3 3 / 3.5 3 / 2 1,785 $342.29
7 1 3 / 2.5 2 / 2 1,618 $385.82
10 2 3 / 2.5 2 / 2 1,684 $397.27
12 2 3 / 2.5 2 / 2 1,660 $400.60
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $342.29 to $400.60 per square foot. The current base asking price for Fairhaven at Park Place Plan 2 is $381.56 per square foot. There have been no closings of Fairhaven at Park Place Plan 2. There are twelve current escrows of Fairhaven at Park Place Plan 2 with an estimated sales price range of $312.53 to $372.97 per square foot with the oldest sale amount being the lowest sale and subsequent sales prices higher. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Fairhaven 816
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at Park Place Plan 2 has a base current market value of $ 330.00 per square foot. This calculates as follows:
1,638 sf x $330.00 = $540,540
The most appropriate new home comparable data for Fairhaven at Park Place Plan 3 is:
Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
6 (Subj.) 3 3 / 3.5 3 / 2 1,785 --
3 H3 4 / 3.5 3 / 2 1,727 $344.53
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 2 3 / 2.5 2 / 2 1,638 $381.56
6 4 4 / 3 2 / 2 1,805 $349.02
7 2 3 / 2.5 2 / 2 1,800 $354.72
8 1 3 / 2.5 2 / 2 1,862 $410.85
10 2 3 / 2.5 2 / 2 1,684 $397.27
12 3 3 / 3.5 3 / 2 1,780 $365.72
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $338.46 to $410.85 per square foot. The current base asking price for Fairhaven at Park Place Plan 3 is $342.29 per square foot. There have been no closings of Fairhaven at Park Place Plan 3. There are six current escrows of Fairhaven at Park Place Plan 3 with an estimated sales price range of $292.96 to $328.78 per square foot with the lowest price escrow the earliest date of sale and subsequent prices higher. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Fairhaven at Park Place Plan 3 has a base current market value of $300.00 per square foot. This calculates as follows:
1,785 sf x $300.00 = $535,500
The most appropriate new home comparable data for Fairhaven at Park Place Plan 4 is:
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Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
6 (Subj.) 4 4 / 3 2 / 2 1,805 --
3 H4 4 / 3.5 3 / 2 1,809 $339.97
4 B4X 3 / 2.5 2 / 2 1,754 $362.60
5 G3 4 / 2.5 2 / 2 1,820 $338.46
6 3 3 / 3.5 3 / 2 1,785 $342.29
7 2 3 / 2.5 2 / 2 1,800 $354.72
8 1 3 / 2.5 2 / 2 1,862 $410.85
12 3 3 / 3.5 3 / 2 1,780 $365.72
12 4 4 / 3 2 / 2 1,790 $385.47
The subject market includes comparable products located within Ontario and Chino. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, stories, lot size/density, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space, and other amenities. The comparable new home sales have base prices ranging from $338.46 to $410.85 per square foot. The current base asking price for Fairhaven at Park Place Plan 4 is $349.02 per square foot. There has been one closing of Fairhaven at Park Place Plan 4 with an actual sales price of $295.47 per square foot. There are eight current escrows of Fairhaven at Park Place Plan 4 with an estimated sales price range of $284.77 to $334.34 per square foot with the lowest price the earliest sales and subsequent sales higher. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan less concessions. It has been concluded that Fairhaven at Park Place Plan 4 has a base current market value of $305.00 per square foot. This calculates as follows:
1,805 sf x $305.00 = $550,525
Builder Owned Retail Value – Fairhaven at Park Place by Lennar Within the subject property there are a total of 19 production homes and four models over 95 percent complete owned by the builder. Per interviews with builders, upgrades, and landscape/hardscape of over $100,000 are installed in subject -like model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar -for-dollar basis. Based on historical informat ion, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $40,000 premium has been included with each of 818
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the model homes. As concluded above, the retail base value conclusions for the builder- owned homes within Fairhaven at Park Place are calculated as follows:
Fairhaven at Park Place (Zone 3):
Plan 1 (5 x $507,500) $ 2,537,500
Plan 2 (9 x $540,540) 4,864,860
Plan 3 (4 x $535,500) 2,142,000
Plan 4 (5 x $550,525) 2,752,625
Model Upgrades (4 x $40,000) 160,000
Retail Value of Builder-Owned Homes $12,456,985
Absorption Period
In order to arrive at an absorption period for Fairhaven, the absorption rates for the subject and surrounding developments have been reviewed. As discussed under the Highest and Best Use section earlier within this report, there is an average sales rate for Fairhaven of
4.7 sales per month, however only one home has closed due to the construction completion of the homes. This is considered a very good sales rate and the highest sales rate of the subject communities . The Improved Residential Market Data which are considered competition have sales rates from 3.2 to 7.0 sales per month. We have concluded that the subject’s 23 homes, 18 of which are currently in escrow, will be absorbed over a three-month period taking into consideration the absorption rate and the current escrows, along with current market conditions and the rising interest rates.
Remaining Costs
As discussed under the remaining development costs section earlier within this report there are $39,093.26 in remaining land development costs associated with each lot. For the 23 builder-owned homes, this equates to $ 899,145 in remaining costs. We are assuming that the costs will be spread evenly over the three- month absorption period in our analysis.
Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Due to the rapidly changing market with increasing interest rates, an eight percent allowance has been 819
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estimated for marketing expenses and two percent for general and administrative costs for a total of ten percent in expenses for this analysis.
Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their workforce. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.
Discount Rate
In selecting a discount rate, the following was completed:
1. Interviews with merchant builders in the Ontario Ranch area
2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)
3. The quality, construction, historical sales, and product on the subject property
The homes within the subject property appear to be well constructed and have been selling at good absorption rates. There is minimal remaining development associated with the project. While COVID appeared to boost new home sales, the higher interest rates and current inflation may be slowing sales. Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.
Discounted Cash Flow Summary
The discounted revenue for the builder-owned homes in Fairhaven at Park Place by Lennar (see DCF Analysis in Addenda) is $8,917,408.
Builder Ownership Valuation Total – Fairhaven at Park Place by Lennar
Lennar Ownership (Zone 3)
Lennar owns 23 homes over 95 percent complete and 49 homes which are either under construction or in a finished lot condition (under 95 percent complete) within Ontario CFD No. 56. The homes under construction (under 95 percent) have been valued as a finished 820
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Kitty Siino & Associates, Inc. Page 111
lot/pad rather than attribute value to a partially complete improvement. The final value conclusion for the builder owned property is shown below.
Finished Lots Valuation (49 Lots) $ 8,864,430 Houses (23 Homes) 8,917,408 Total Lennar Owned Property $ 17,781,838
Individual Owners Value Conclusion – Fairhaven at Park Place by Lennar In determining the value for the individually owned homes within Fairhaven, we have considered the concluded base price value for the homes, which is considered a minimum market value. This is due to homebuyers typically purchasing some additional upgrades, options or pay some premiums for the home. It should be noted that the only closed home was sold February, 2023 and there have been price increases since that time . The concluded values are shown below:
Fairhaven at Park Place (Zone 3):
Plan 1 (0 x $507,500) $ 0
Plan 2 (0 x $540,540) 0
Plan 3 (0 x $535,500) 0
Plan 4 (1 x $550,525) 550,525
Total Individual Ownership Value $ 550,525
In an additional review, we have reviewed the builder sales price for the home within Fairhaven that closed. The builders’ reported net closing price for the individually owned home is $533,320. It should be noted this was net of all concessions and incent ives and that the closing cost and lender incentives are not included in reported sales prices. The public record sales price of the home was $586,500. The concluded current minimum market value of $ 550,525 equates to 3.1 percent HIGHER than the actual sal es price.
Base pricing at project opening in January 2023 ranged from $542,990 to $572,990 while current base pricing is from $590,990 to $629,990 which equates to increases from 6.6 percent to 10.3 percent depending on the plan. The lender concessions hav e remained consistent since opening. The builder’s reported prices include premiums, upgrades and purchased options as well as taking into consideration the concessions given by the builder. Based on the above information and analysis along with our famili arity with the market, it is our conclusion that the original builder’s sales price further substantiates the concluded minimum market value for the individually owned homes. 821
_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 56 (Parkside/La Avenida)
Kitty Siino & Associates, Inc. Page 112
APPRAISAL REPORT SUMMARY
The appraisal assignment was to value Ontario CFD No. 56. The entirety of the CFD is known as Parkside/La Avenida and is made up of three non- contiguous Zones in the Ontario Ranch area of the City of Ontario which consist of three communities and a vacant lot. Zone 1 includes Cambridge Court by Woodside Homes; Zone 2 includes NUVO Parkside by New Home Company and a Vacant Parcel owned by Lewis; and Zone 3 includes Fairhaven at Park Place by Lennar. There are a total of 482 proposed lots which are detailed as Cambridge Court (Zone 1) by Woodside Homes (106 proposed homes covered by Tract Map 20298); NUVO Parkside (Portion of Zone 2) by the New Home Company (303 proposed single family homes covered by Tract Map 20316 and subsequent Condo Maps); a vacant parcel (Portion of Zone 2) owned by Lewis (Lot 1 of Tract Map 20316) and lastly Fairhaven at Park Place (Zone 3) by Lennar (73 proposed homes covered by Tract Map 20389 and subsequent Condo Maps). As of August 7, 2023, individuals have purchased and closed 224 of the total 482 proposed houses, and there are an additional 116 homes in escrow which are due to close upon completion.
The communities have all had average to strong sales rates. All structures appear to be in excellent condition with no visible depreciation. We have reviewed builder sales and reviewed the local MLS for current listings or resales.
The subject properties were valued utilizing the Sales Comparison Approach to value, a Discounted Cash Flow Analysis, and a Mass Appraisal Technique for the individually owned homes. A minimum value was determined by concluding at a base value for the individually owned homes. The valuation took into account the improvements/benefits to be funded by the special tax Ontario CFD No. 56 bond proceeds along with the Ontario CFD No. 56 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:
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_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 56 (Parkside/La Avenida)
Kitty Siino & Associates, Inc. Page 113
Zone 1
Woodside Ownership (15 houses and 29 lots) $ 15,968,576 Individual Owners - (62 houses) 42,310,045 Subtotal Zone 1 $ 58,278,621
Zone 2
NHC Ownership (30 houses and 61 lots) $ 27,590,606
Arroyo Cap II-1 Ownership (51 lots) 12,254,366
Individual Owners (161 houses) 85,937,430
Lewis Ownership (Lot 1 of Tract 20316) 24,156,660
Subtotal Zone 2 $149,939,062
Zone 3
Lennar Ownership (23 houses and 49 lots) $ 17,781,838
Individuals (1 home) 550,525
Subtotal Zone 3 $ 18,332,363
Aggregate Total for CFD No. 56 $ 226,550,046
The above values are stated as of said date of value and subject to the attached Assumptions and Limiting Conditions and Appraiser’s Certification.
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_________________________________________________________________________________________________________ Appraisal Report
City of Ontario CFD No. 56 (Parkside/La Avenida)
Kitty Siino & Associates, Inc. Page 114
APPRAISER’S CERTIFICATION
The appraiser certifies that to the best of his knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased, professional analyses, opinions, and conclusions.
3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.
4. The appraiser’s compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.
5. This appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of a loan.
6. Analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
7. Kitty Siino has made a personal inspection of the property that is the subject of this report.
8. Kitty Siino has not performed any appraisal services on the subject property in the past three years.
9. No other appraisers have provided significant professional assistance to the persons signing this report.
10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.
11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.
Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
824
ADDENDA
825
ONTARIO CFD NO. 56 BOUNDARY MAPS
826
827
828
829
830
TRACT MAP Nos. 20298,
20316, and 20389
831
832
833
834
DISCOUNTED CASH FLOW ANALYSES
835
Ontario CFD 56 Cambridge Court Builder-Owned Houses DCF
MONTH Months MONTH 1 MONTH 2 MONTH 3 TOTAL
3 INCOME:
Retail Sales 10,164,250 $3,388,083 $3,388,083 $3,388,083 $10,164,250
TOTAL INCOME $3,388,083 $3,388,083 $3,388,083 $10,164,250
EXPENSES:
Remaining Costs ($17,045) ($17,045) ($17,046) ($51,136) Marketing & Carrying Expenses 10% ($338,808) ($338,808) ($338,808) ($1,016,425) Profit 10% ($338,808) ($338,808) ($338,808) ($1,016,425)
TOTAL EXPENSES ($694,662) ($694,662) ($694,663) ($2,083,986)
NET CASH FLOW $2,693,422 $2,693,422 $2,693,421 $8,080,264 Discount Factor 10% 0.9917 0.9835 0.9754
DISCOUNTED CASH FLOW $2,671,162 $2,649,086 $2,627,192 $7,947,440
CUMULATIVE DISCOUNTED $2,671,162 $5,320,248 $7,947,440 $7,947,440
CASH FLOW
836
Ontario CFD 56 NUVO Builder-Owned Houses DCF
MONTH Months MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 TOTAL 5 INCOME:
Retail Sales 17,312,620 $3,462,524 $3,462,524 $3,462,524 $3,462,524 $3,462,524 $17,312,620
TOTAL INCOME $3,462,524 $3,462,524 $3,462,524 $3,462,524 $3,462,524 $17,312,620
EXPENSES:
Remaining Costs ($118,310) ($118,310) ($118,310) ($118,310) ($118,309) ($591,549) Marketing & Carrying Expenses 10% ($346,252) ($346,252) ($346,252) ($346,252) ($346,252) ($1,731,262) Profit 10% ($346,252) ($346,252) ($346,252) ($346,252) ($346,252) ($1,731,262)
TOTAL EXPENSES ($810,815) ($810,815) ($810,815) ($810,815) ($810,814) ($4,054,073)
NET CASH FLOW $2,651,709 $2,651,709 $2,651,709 $2,651,709 $2,651,710 $13,258,547 Discount Factor 10% 0.9917 0.9835 0.9754 0.9673 0.9594
DISCOUNTED CASH FLOW $2,629,794 $2,608,060 $2,586,506 $2,565,130 $2,543,932 $12,933,423
CUMULATIVE DISCOUNTED $2,629,794 $5,237,855 $7,824,361 $10,389,491 $12,933,423 $12,933,423
CASH FLOW
837
Ontario CFD 56 Fairhaven Builder-Owned Houses DCF
MONTH Months MONTH 1 MONTH 2 MONTH 3 TOTAL
3 INCOME:
Retail Sales 12,456,985 $4,152,328 $4,152,328 $4,152,328 $12,456,985
TOTAL INCOME $4,152,328 $4,152,328 $4,152,328 $12,456,985
EXPENSES:
Remaining Costs ($299,715) ($299,715) ($299,715) ($899,145) Marketing & Carrying Expenses 10% ($415,233) ($415,233) ($415,233) ($1,245,699) Profit 10% ($415,233) ($415,233) ($415,233) ($1,245,699)
TOTAL EXPENSES ($1,130,181) ($1,130,181) ($1,130,181) ($3,390,542)
NET CASH FLOW $3,022,148 $3,022,148 $3,022,148 $9,066,443 Discount Factor 10% 0.9917 0.9835 0.9754
DISCOUNTED CASH FLOW $2,997,171 $2,972,401 $2,947,836 $8,917,408
CUMULATIVE DISCOUNTED $2,997,171 $5,969,572 $8,917,408 $8,917,408
CASH FLOW
838
FINISHED LOT LAND SALES MAP
& SUMMARY CHART
839
FINISHED LOT LAND SALES MAP
840
FINISHED LOT LAND SALES SUMMARY CHART
Data
No. Location / APN / Buyer / Seller Sales
Date # Lots Lot Size Sales Price /
Price per Lot
Est.
Finished
Lot Price
Comments
1 Confidential area in Ontario Proper /
Confidential / Confidential / Lewis
Group of Companies
Current
Escrow 84 25 du/ac $8,600,000 /
$102,381 $198,651
Site is 3.3 acres in Ontario proper (not within
Ontario Ranch). Anticipated to close in August
2023
2 S/E Haven Avenue and Chino
Avenue; east of Twinkle Avenue,
Ontario Ranch / 0218-203-03+ /
Land Sea / Haven Ontario NMC 2
LLC (Richland)
June-23 144 14.5
du/ac
$16,924,000/
$117,528 $235,000 12-unit attached courtyard product. Closed in unimproved condition with mapping in place.
3 Ext. of Voyage West at the Preserve
/ Discovery Park Ave and Academy
Street, Chino / N/A / Lennar / Lewis
July-22 56 12/du/ac $16,629,500 /
$296,955 $350,000
Extension of Lennar’s successful Voyage project
located in same area. Closed in a generally F/L
condition.
4 Ext of Parklin West at the Preserve /
NWC Legacy Park and Discovery
Street / Chino / 1057-391-34+ /
Richmond American / Lewis
July-22 56 10 du/ac $16,964,304 /
$302,934 $340,000
Extension of Richmond American’s successful
Parklin project, located in same area. Closed in a
generally F/L condition
5 Zinnia at The Preserve, NE/W of
Pine Avenue & Meadowhouse
Avenue, Chino / 1057-041-13 &
1057-061-12 / Beazer Homes /
Lewis Group of Companies
June-22 149 14 du/ac $19,952,500 /
$133,909 $205,000
Closed in unimproved condition with an approved
tentative tract map. This project consists of 2/3-
story attached townhomes.
6 Bedford, PA 1, Cajalco Road and I-
15, S. Corona / 279-540-various /
Taylor Morrison / Arantine Hills
Holding LP
May-22
91 3,800
$24,131,500 /
$265,181
$360,000
Anticipated to close in a finished lot condition.
Within Master Planned Community of Bedford
with significant amenities.
7 Esperanza, SEC of Edison Avenue
& Scholar Way, Ontario / 0218-252-
08 / KB Home / Richland
Communities
July-21 432 10 du/ac
(blended)
$36,297,016 / $239,000
(blended)
Closed in unimproved condition with final
engineering in process. Esperanza consists of
149 cluster units, 174 townhomes, and 145
courtyard townhomes.
$84,021
841
IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART
842
IMPROVED RESIDENTIAL SALES MAP
843
IMPROVED RESIDENTIAL SALES SUMMARY CHART
Data
No.
Project Name
Location/Developer Plan Room
Count Floors/Parking Size
(SF)
Lot Size or
Density /
Absorption
Base Sales
Price Price/SF
1 Cambridge Court, SWC of Schaefer
Avenue and Turner Avenue, Ontario
/ Woodside Homes
1 3 / 3 2 / 2 1,951 2,700 sf lots $706,000 $361.87
2 4 / 3 2 / 2 2,043 4.2 sales/mo $721,000 $352.91
3 5 / 3 2 / 2 2,365 $778,500 $329.18
2 Lincoln at NUVO Parkside / NWC
South Archibald Avenue and
Eucalyptus Avenue, Ontario / The
New Home Company (SOLD OUT)
L1 2 / 2.5 2 / 1 1,082 Detached
Condos $485,000 $448.24
L2 2 / 2.5 2 / 1 1,044 12.6 du/acre $486,000 $465.52
L2G 2 / 2.5 2 / 2 1,046 3.8 sales/mo $503,000 $480.88 3 Hyde at NUVO Parkside / NWC
South Archibald Avenue and
Eucalyptus Avenue, Ontario / The
New Home Company
H1 2 / 2.5 3 / 1 1,197 Det. Condos $500,000 $417.71
H2 3 / 2.5 3 / 2 1,550 12.6 du/acre $549,000 $354.19
H3 4 / 3.5 3 / 2 1,727 3.8 sales/mo $595,000 $344.53
H4 4 / 3.5 3 / 2 1,809 $615,000 $339.97
4 Bryant at NUVO Parkside / NWC
South Archibald Avenue and
Eucalyptus Avenue, Ontario / The
New Home Company (SOLD OUT)
B1/1X 3 / 2.5 2 / 2T 1,370 Det Condos $573,000 $418.25 B2 3 / 2.5 2 / 2 1,536 12.6 du/acre $591,000 $384.77
B3 3 / 2.5 2 / 2 1,475 3.7sales/mo $608,000 $412.20
B4 3 / 2.5 2 / 2 1,675 $636,000 $379.70
B4X 3 / 2.5 2 / 2 1,754 $636,000 $362.60
5 Grant at NUVO Parkside / NWC
South Archibald Avenue and
Eucalyptus Avenue, Ontario / The
New Home Company
G1 3 / 2.5 2 / 2 1,596
Detached
Condos $562,000 $352.13
G2 4 / 2.5 2 / 2 1,648 12.6 du/acre $572,000 $347.09
G3 4 / 2.5 2 / 2 1,820 3.7 sales/mo $616,000 $338.46
6 Fairhaven at Park Place / SWC
Merrill Avenue and Remington
Drive, Ontario / Lennar
1 3 / 2.5 2 / 2 1,450
Detached
Condos $590,990 $407.58
2 3 / 2.5 2 / 2 1,638 11.2 du/acre $624,990 $381.56
3 3 / 3.5 3 / 2 1,785 4.7 sales/mo $610,990 $342.29
4 4 / 3 2 / 2 1,805 $629,990 $349.02
7 Country Lane - Whispering Wind /
SWC South Archibald Avenue and
Chino Avenue, Ontario / Lennar
1 3 / 2.5 2 / 2 1,618 $624,250 $385.82
2 3 / 2.5 2 / 2 1,800 3,000 sf lots $638,500 $354.72
3 4 / 3 2 / 2 2,067 5.4 sales/mo $689,750 $333.70
4 5 / 3 2 / 2 2,202 $705,300 $320.30
8 Rhoe at Neuhouse, NE Haven
Avenue and Schafer Avenue,
Ontario / Landsea
1 3 / 2.5 2 / 2 1,862 2,700 sf lot $765,000 $410.85
2 4 / 3 2 / 2 1,922 Detached $815,000 $424.04
3 4 / 3 2 / 2 2,133 Motorcourts $815,000 $382.09
4 4 / 3 2 / 2 2,173 3.5 sales/mo $825,000 $379.66
844
9 Oleander, SE of Ontario Ranch
Road and Haven Avenue, Ontario /
Shea Homes
1 4 / 3 2 / 2 2,053 2,700 sf lot $720,609 $351.00
2 4 / 3 2 / 2 2,208 Detached $743,832 $336.88
3 4 / 3 2 / 2 2,229 Motorcourts $747,771 $335.47
4 4 / 3.5 2 / 2 2,528 3.2 sales/mo $777,285 $307.47
2 2 / 2 1 / 2 1,552 3.6 sales/mo $675,990 $435.56
3 2 / 2 1 / 2 1,558 $673,900 $432.54
10 Tays Landing, SW of Campus
Avenue and East Riverside Drive,
Ontario / Meritage
1 3 / 2.5 2 / 2 1,465 3,000 sf lots $647,000 $441.64 2 3 / 2.5 2 / 2 1,684 7.0 sales/mo $669,000 $397.27
3 4 / 3 2 / 2 1,955 $715,000 $365.73
11 Driftstone at the Preserve, SW of
Pine Ave and Hellman Ave, Chino /
KB Home
1 3 / 2.5 2 / 2 2,127 3,800 sf lots $867,990 $408.08
2 3 / 2.5 2 / 2 2,403 3.8 sales/mo $904,990 $376.61
3 5 / 3 2 / 2 2,805 $982,990 $350.44
12 Gardenside at the Preserve, SEC of
Bickmore Avenue and
Meadowhouse Avenue / Richmond
American
1 3 / 2.5 2 / 2 1,470 $634,990 $431.97
2 3 / 2.5 2 / 2 1,660 4,000 sf lots $664,990 $400.60
3 3 / 3.5 3 / 2 1,780 4.1 sales/mo $650,990 $365.72
4 4 / 3 2 / 2 1,790 $689,990 $385.47
13 Delia at the Preserve, SW of
Bickmore Avenue and
Meadowhouse Avenue / TriPointe
Homes
1 3 / 2 2 / 2 1,550 $699,990 $451.61
2 4 / 3 2 / 2 1,547 3,500 sf lots $749,990 $484.80
3 3 / 2.5 2 / 2 1,657 4.8 sales/mo $744,990 $449.60
3X 3 / 2.5 3 / 2 2,091 $759,990 $363.46
14 Lotus at the Seasons, NEC of
Bickmore Avenue and Quality Way /
KB Home
1 3 / 2.5 2 / 2 1,814 $773,990 $426.68
2 3 / 2.5 2 / 2 2,096 3,000 sf lots $730,990 $348.75
3 3 / 2.5 2 / 2 2,148 3.9 sales/mo $742,990 $345.90
4 3 / 2.5 2 / 2 2,296 $875,990 $381.53
5 4 / 2.5 2 / 2 2,352 $775,990 $329.93
845
APPRAISER’S QUALIFICATIONS
846
QUALIFICATIONS OF KITTY S. SIINO, MAI
Education
Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)
Post-Graduate Study, Real Estate Development, University of California, Irvine, California
Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.
Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.
Employment
1988 - Present:
Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos and City of Moreno Valley.
1986-1988:
Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.
1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management func tions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements.
Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders.
1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments.
847
Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793)
Organizations
MAI #11145 - The Appraisal Institute
Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2022
Speaker, Mello- Roos & Special Assessment Financing, UCLA Extension Publi c Policy Program, February 2009 and March 2011
848