Rancho Cucamonga City Council
July 17, 2024

Resolution No. FD 2024-xxx - Page 2 of 3
PASSED, APPROVED AND ADOPTED this ______ day of _____________, 2024.

Resolution No. FD 2024-xxx - Page 3 of 3
EXHIBIT “A”

CERTIFICATE OF ELECTION OFFICIAL

AND STATEMENT OF VOTES CAST

STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )SS

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT )

THE UNDERSIGNED, AS ELECTION OFFICIAL OF THE RANCHO CUCAMONGA FIRE

PROTECTION DISTRICT, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, DO HEREBY CERTIFY that pursuant to the provisions of Section 53326 of the Government Code and the Elections Code of the State of California, I did canvass the returns of the votes cast at the:

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 88-1
ANNEXATION NO. 88-24-1

SPECIAL ELECTION
In said Fire Protection District held on July 17, 2024.

I FURTHER CERTIFY that this Statement of Votes Cast shows the whole number of votes cast in said District, and the whole number of votes cast for the Measure in said District, and the totals of the respective columns and the totals as shown for the Measure are full, true and correct.

I. TOTAL NUMBER OF VOTES CAST:

II. TOTAL NUMBER OF VOTES FOR FOR

AND AGAINST PROPOSITION A

AGAINST
WITNESS my hand and official Seal this _____ day of ______________, 2024.

Election Official
Rancho Cucamonga Fire Protection District
State of California

DATE:July 17, 2024
TO:Mayor and Members of the City Council
FROM:John R. Gillison, City Manager
INITIATED BY:Matt Burris, AICP, LEED AP, Deputy City Manager – Community & Economic Development
Matt Marquez, Planning & Economic Development Director
SUBJECT:Presentation from Empire Economics Inc. on the City’s Annual Employment and Housing Trends Study and Analysis of the Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities. This Item is Not a Project as Defined by the California Environmental Quality Act (CEQA) and is Therefore Exempt from CEQA Review. (CITY)
RECOMMENDATION:

Staff recommends that the City Council receive a presentation from Dr. Joe Janczyk of Empire Economics Inc. on the City’s Annual Employment and Housing Trends Study and Analysis of the Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities.

BACKGROUND:

Over the years the City has worked with Empire Economics to develop an annual forecast of Rancho Cucamonga’s economic and housing growth and conditions. Additionally, different supplemental analyses are prepared on an as needed basis. Factors impacting the City’s economy and housing market change regularly, and there is a need to understand the reasons behind these changes and the impacts they have on the community.

On February 15, 2023, the City Council approved a professional services agreement with Empire Economics for the main purpose of continuing to prepare these annual studies. The agreement approved by Council covers a three-year period. This year, Empire was tasked with not only producing an Employment and Housing Trends Study, but also an analysis of Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities. The Empire team has completed their work and will now be presenting their findings to the City Council.

ANALYSIS:

As the City continues to grow and evolve, understanding changes to its economy and housing market remain key for future planning efforts. Listed below are the information categories covered in this year’s Employment and Housing Trends Study, along with key information or findings for each category:

1. Overview of the Federal Reserve Board’s (FRB) Inflation Policy: The study’s forecasting is based on the impacts of the FRB goal for inflation of 2%. Near term restrictive policies will/have resulted in significantly higher mortgage rates as well as slightly higher unemployment rates. Additionally, stabilization policies once desired inflation rate is attained will result in lower financial interest rates. Therefore, although the short-term impacts of federal policies will adversely impact employment as well as the housing market, the eventual result will generally be lower interest rates that will allow for the economy and housing market to recover.

2. Expected Impacts on the Economy/Employment: The City’s economy has recovered from the impacts of the Covid 19 pandemic. Certain sectors performed better than others as the economy has evolved and reshaped itself. Among the relatively strong sectors, administrative and support services is performing at a much higher rate than pre-Covid 19 conditions. The Administrative and Support services category now makes up approximately 38% of the jobs in the City. Alternatively, the manufacturing sector has been weaker than pre-Covid 19 levels. Policies at the federal level will continue to impact the City’s economy over the next several years and cause even more restructuring. It is anticipated that the real estate and finance sectors will be impacted due higher mortgage and interest rates overall. Additionally, employment growth was roughly 4,100 in 2021 and 5,200 in 2022, which was a new peak level. In 2023, employment was estimated to have increased by 500 jobs, a more moderate growth rate. It is anticipated that future employment growth between 2024 and 2030 will rise gradually by 1,800 jobs a year on average.

3. Expected Impacts on the Housing Market: Near term policies at the Federal level have significantly increased mortgage rates and this recent surge has significantly increased mortgage payments. For example, with a 30-year fixed rate for a mortgage loan of $800,000:
•For a 2.9% mortgage rate, the mortgage interest on the loan would be about $400,000.
•For a mortgage rate of 7.7% (recent peak level), mortgage interest on the loan exceeds $1,200,000.

While homeowners have recently purchased or refinanced their mortgage loans at historically low rates, they have become reluctant to purchase another home with a much higher new mortgage rate. Many who are trying to purchase new homes will likely have a much higher mortgage rate than their existing homes and will also need to find a buyer for their current home who will be able to afford a higher mortgage rate. Eventually, when inflation lowers, mortgage rates will decline, and a more normal housing market should return.

4. Market Conditions for Apartment Units: The housing stock in Rancho Cucamonga has recently undergone a significant shift from primarily for-sale homes to multi-family apartment rentals. Apartment rents surged in 2021 by 20%, but have since moderated to a rate of about 4%. Average rents in the City are now around $2,700/month which is approximately $300 more than San Bernardino County. The new active and forthcoming apartments have a sufficient supply to support absorption of about 500 units annually during the foreseeable future.

5. Current State of Warehouse/Distribution Market in Rancho Cucamonga: The current vacancy rate is roughly 3.5% for the City and 4.87% for the Inland Empire. A year ago, the City’s vacancy rate was at 1.6%. The current lease rate amounts to $1.75 per square foot in the City, which is approximately $0.30 higher than the rest of the Inland Empire.

As discussed earlier in this report, in previous years the City has asked Empire Economics to conduct additional or supplemental analysis of other items impacting the local economy. This year, staff requested they prepare an analysis of the Brightline West High Speed Rail Economic Impacts and Potential Nearby Development Opportunities.

Based on extensive international research, it was determined that High Speed Rail (HSR) can and will likely promote extensive two-way tourism. It is estimated that annually 560,000 riders from Las Vegas will utilize Brightline West (BLW) to visit Southern California. Of these, 60,000 may decide to use accommodations near Cucamonga Station as a launching point for tourism activities in Southern California. Service and offerings at Cucamonga Station need to be carefully orchestrated to capture the benefits of the Brightline West service, as being a node or gateway to Southern California will be crucial to attracting Las Vegas residents.

Brightline is gaining valuable experience from the service they provide in Florida. There are opportunities in Rancho Cucamonga to entice passengers to ride the train while providing some essential amenities like restaurants, micro-stores, art exhibits, live music, coffee shops and more.

Tourism facilities could also be developed, along with an enhanced transit accessibility, while the demand for new hotel accommodations is expected to increase with the roughly 6 million passengers that are expected to travel on Brightline West annually.

BLW is expected to have several direct impacts on employment. Approximately 1,900 construction jobs will be created starting in Mid/Late-2024 and continuing through the latter part of 2028. For operations purposes, 275 jobs would be created, mostly in administrative and support services. Following a decline in 2020, employment in the City increased by 4,100 jobs in 2021 and by 6,800 in 2022 to exceed pre-Covid levels. In 2023, employment is estimated to have increased by roughly 500 jobs, representing a moderate growth rate. With the BLW project, employment in the City is expected to rise by 13,000 from 2023 to 2028.

Empire Economics identified eleven international high speed rail projects that are recreation oriented. Of these, six were regarded as being the most comparable to BLW. These include stations along the TGV line in France with Disneyland Paris being a major destination, the Shinkansen line in Japan where the Mount Fuji area is a major destination, as well as others in London, Madrid, Rome, and China. There are roughly 10 million tourists traveling annually between the TGV Paris Station and the station for Disneyland Paris. Disneyland Paris funded one-third of the $126.5 million euros needed to build the station and they acknowledge that at least 60% of their guests use high speed rail. Additionally, when comparing the estimated ridership of 6 million for BLW to other major domestic rail stations, Cucamonga Station would rank third in total ridership behind New York’s Penn Station (8 million) and Washington Union Station (3.3 million).

An algorithm was formulated to estimate the number of visitors that would utilize BLW and stay overnight in the City. As stated earlier in this report, over 60,000 people are estimated to travel from Las Vegas and stay overnight in Rancho Cucamonga. Based on this number the City envisions the demand for two to three new hotels as well as these visitors supporting local restaurants and retail locations in the vicinity of Cucamonga Station and throughout the City.

Findings from a study on how property values were impacted by Brightline service in Florida were

published in July of 2023. For each of the stations in Florida, changes in property values were analyzed before, as well as after public announcement of future train service, beginning of construction on rail lines, and opening of the stations. The overall results reflected an approximate 9% premium for property values that were located closest to each of the stations.

In conclusion, BLW is expected to begin operations with as many as 6 million passengers between Cucamonga Station and Las Vegas annually. Roughly 60,000 visitors from Las Vegas are expected to utilize BLW for access to tourism activities in Southern California. The City has a sizeable opportunity to capitalize on this increase in visitors and develop new hospitality uses and amenities. Property values around Cucamonga Station are expected to increase with the implementation of the BLW project and new jobs will also be created as a result of the project.

Cucamonga Station will service more riders than many other major rail stations in the Country making it a major draw for the City and the region.

FISCAL IMPACT:

There is no fiscal impact associated with this presentation to the City Council. The cost for the annual forecast and supplemental analysis was budgeted for in Fiscal Year 2023-2024.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s Core Values of “Intentionally embracing and anticipating the future”, and “Equitable prosperity for all” by ensuring that Rancho Cucamonga’s vibrant economy ensures prosperity and opportunities now and in the future.

ATTACHMENTS (2):

Attachment 1 – Employment and Housing Trends Study
Attachment 2 – Employment and Housing Trends Study - Addendum Attachment 3 – Brightline West Hight Speed Rail Economic Impacts and Potential Nearby Development Opportunities

CITY OF RANCHO CUCAMONGA

ANNUAL ECONOMIC AND HOUSING STUDY
*** DRAFT ***

UNIQUE ABERRATIONS FROM
FEDERAL RESERVE’S GOAL OF 2% INFLATION

STRONG EMPLOYMENT GROWTH BUT LOWER INFLATION

HIGHER MORTGAGE RATES BUT HOUSING APPRECIATION

NEW FOR-SALE HOMES MINIMAL BUT NEW APARTMENTS ROBUST

WAREHOUSE/DISTRIBUTION SOFTENING BUT STRONG IN CITY

PREPARED BY
EMPIRE ECONOMICS, INC.

JOSEPH T. JANCZYK, PH.D.

FEBRUARY 20, 2024
(REVISED: JUNE 20, 2024; NEW RESIDENTIAL AND APARTMENT PROJECTS) 1 Attachment 1

EXECUTIVE SUMMARY - PAGE 1

OVERVIEW
EMPIRE ECONOMICS (EMPIRE) ANNUAL STUDY PROVIDES A FORECAST OF RANCHO CUCAMONGA’S (RC) EMPLOYMENT AND HOUSING CONDITIONS, WHICH INCORPORATES THE IMPACTS OF THE FEDERAL RESERVE BOARD (FRB/FED) GOAL OF ATTAINING A 2.0% INFLATION RATE.

EMPIRE COMPILED PRIMARY DATA SPECIFICALLY FOR RANCHO CUCAMONGA WHICH INCLUDES EMPLOYMENT BY FIRMS IN THE CITY , NEW APARTMENT PROJECTS AND NEW WAREHOUSE/DISTRIBUTION FACILITIES.

FEDERAL RESERVE BOARD POLICIES
THE FRB TARGET OF 2.0% INFLATION UTILIZES THE CORE PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX (PCE-PI) THIS REACHED A PEAK LEVEL OF 7.1% IN JUNE 2022, AND HAS DECLINED TO 2.6% IN DECEMBER 2023.

ALTHOUGH FINANCIAL MARKETS ARE EXPECTING THE FED TO CUT RATES, THE FED PERSPECTIVE AS OF JANUARY 31, 2024 IS CAUTIONARY:
“THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY TOWARD 2 PERCENT” EMPLOYMENT: RECENT TRENDS AND FORECASTS
THE CITY’S AGGREGATE LEVEL OF EMPLOYMENT IS ALMOST +10% ABOVE ITS PRE-COVID LEVELS AND ITS UNEMPLOYMENT RATE IS ONL Y 3.7%.

ABOUT 38% OF JOBS ARE IN ADMINISTRATIVE/SUPPORT SERVICE , GOVERNMENT AND RESTAURANT/HOTELS.

COMPARING 2023-EST. TO. 2019: THE STRONGEST SECTOR WAS ADMINISTRATIVE/SUPPORT +1,443 WHILE THE WEAKEST WAS MANUFACTURING -1,320.

A VERAGE SALARY LEVELS OVER THE PAST YEAR ROSE MOST FOR TRANSPORTATION/WAREHOUSE (+13%) AND MANAGEMENT SERVICES (+12%) .

EMPLOYMENT IS FORECASTED TO RISE MODERATEL Y DURING 2024-2030 BY ~1,830 JOBS/ YR./A VG. FROM 79,413 IN 2023 TO ABOUT 92,216 IN 2030.

THE PRIMARY DRIVERS ARE THE ADMINISTRATIVE AND SUPPORT SERVICES AS WELL AS TRANSPORTATION AND WAREHOUSING (2,800 NEW JOBS) COMPARING EMPLOYMENT DATA FROM FIRMS AND HOUSEHOLDS, ABOUT A NET OF 18.5% OF THE CITY’S RESIDENTS COMMUTE TO JOBS ELSEWHERE 2

EXECUTIVE SUMMARY – PAGE 2

FED POLICIES CAUSED SIGNIFICANT FLUCTUATION IN MORTGAGE RATES FED POLICIES TO STIMULATE THE COVID-19 ECONOMY REDUCED MORTGAGE RATES TO 2.8% IN DEC. 2020 AND REMAINED AT/BELOW 3.2% TO DEC. 2021.

THEN, DUE TO FED POLICIES TO REDUCE INFLATION, MORTGAGE RATES ROSE TO A PEAK LEVEL OF 7.7% IN OCTOBER 2023, BUT RECENTL Y FELL TO 6.7%.

THE MAJORITY OF HOMEOWNERS PURCHASED/REFINANCED THEIR MORTGAGE LOANS AT HISTORICALLY LOW RATES DURING MID-2020 TO LATTER 2021.

MORTGAGE RATE FLUCTUATIONS CREATED SUBSTANTIAL IMPACTS ON THE HOUSING MARKET CHANGES IN ANNUAL HOUSING PAYMENTS (MORTGAGE PRINCIPAL, INTEREST RATES AND PROPERTY TAXES) DEMONSTRATE THESE IMPACTS. 2019-2021: LOWER RATES OFFSET HOUSING APPRECIATION, PAYMENTS OF $40,000/YR. 2022-23: HIGHER PRICES AND HIGHER MORTGAGE RATES DROVE PAYMENTS HIGHER WITH PEAK PAYMENTS OF $60,000/YR.

MOST HOMEOWNERS PURCHASED/REFINANCED MORTGAGE LOANS AT HISTORICALLY LOW RATES ARE STAYING IN THEIR HOMES THEY ARE RELUCTANT TO MOVE SINCE THEIR NEW MORTGAGES WOULD HA VE A SIGNIFICANTLY HIGHER INTEREST RATE.

AN ESTIMATED 68% OF HOMEOWNERS HA VE RATES AT/BELOW 4.0%, SIGNIFICANTLY LESS THAN THE CURRENT RATE OF 6.7%.

THE MARKET FOR EXISTING HOMES IS EXPERIENCING EXCESS DEMAND THAT IS DRIVING HOME PRICES HIGHER.

THE LEVEL OF DEMAND HAS BEEN REDUCED SOMEWHAT DUE TO HIGH MORTGAGE RATES BUT THE LEVEL OF SUPPL Y HAS BEEN REDUCED EVEN MORESO.

FOR RC, DURING JANUARY 2015 TO DECEMBER 2021, SALES OF DETACHED HOMES AMOUNTED TO ABOUT 120-140 PER MONTH, BUT SINCE JANUARY 2022 SALES DECLINED TO 75/MO., A DECLINE OF ALMOST 50%.

AS THE FED CUTS RATE AND MORTGAGE RATES WILL DECLINE, HOMEOWNERS WILL START TO SELL THEIR HOMES AND PURCHASE OTHER HOMES.

FOR ANNUAL PAYMENTS TO RETURN TO 2019-2021 LEVELS BY DECEMBER 2025, PRICES NEED TO DECLINE BY -11% AND MORTGAGES RATES DECLINE TO 4.5%.

NEW HOME SALES PEAKED IN 2021 AND PROJECTS CLOSED OUT IN E A R LY 2022; THERE ARE CURRENTL Y NO NEW HOME PROJECTS ON THE MARKET. 3

EXECUTIVE SUMMARY – PAGE 3

MARKET CONDITIONS FOR APARTMENTS AND NEW APARTMENT PROJECTS RC’S EXISTING APARTMENT MARKET RENTS INCREASED FROM $1,727 IN 2015 TO $2,707 RECENTL Y , + 57%; SOME 5.1% ANNUALL Y .

SINCE APRIL 2023, EXISTING APARTMENTS RENTS INCREASED ONL Y SOME 2 TO 3% ANNUALIZED.

FOR A PROJECT OFFERING NEW APARTMENTS, RENTS DECLINED BY SOME -8.8% DURING THE PAST YEAR.

THE CHARACTERISTICS OF RC’S TEN APARTMENT PROJECTS WITH 3,580 PLANNED UNITS ARE AS FOLLOWS:

CURRENTLY ACTIVE: 3 PROJECTS WITH 1,191 PLANNED UNITS OF WHICH 528 HAVE BEEN LEASED UNDER CONSTRUCTION: 4 PROJECTS WITH 1,186 UNITS
FUTURE - STILL IN THE PLANNING PROCESS: 3 PROJECTS WITH 1,203 UNITS THE LIVING AREAS RANGE FROM 938 SQ.FT/A VG. FOR WESTBURY TO A HIGH OF 1,082 SQ.FT../A VG. FOR THE HOMECOMING.

RENTS RANGE FROM $2,819/A VG. PER MONTH FOR WESTBURY TO $3,161/A VG. PER MONTH FOR HOMECOMING.

FOR ALL OF THE NEW APARTMENT PROJECTS, RENTS INCREASE AS THE SIZE OF LIVING AREA INCREASES.

FURTHERMORE, FOR UNITS WITH SIMILAR SIZES OF LIVING AREA, THE RENTS AMONG THE V ARIOUS PROJECTS TEND TO BE GENERALLY SIMILAR.

THE REMAINING 3,052 UNITS ARE EXPECTED TO BE LEASED DURING 2024 TO 2029+, BASED UPON A SUSTAINABLE TARGETED LEASE-UP OF 500/YR./A VG.

SHOULD EXCESS UNITS ENTER THE MARKETPLACE, RENTS WOULD NEED TO BE LOWERED TO MAINTAIN ABSORPTION.

MARKET CONDITIONS FOR WAREHOUSE/DISTRIBUTION FACILITIES FOR RC, THE CURRENT V ACANCY RATE AMOUNTS TO 3.5%, SOMEWHAT HIGHER THAN THE YEAR AGO RATE OF 1.6%.

THE CURRENT ASKING LEASE RATE AMOUNTS TO $1.75/SQ.FT WHILE A YEAR AGO RC WAS $1.50/SQ.FT.

THIS CAN BE ATTRIBUTED TO THE NEW BUILDINGS THAT HA VE SOME 2.6 MILLION SQ.FT. 12434- 4TH STREET BUILDINGS WITH 2,000,000 SQ.FT. RECENTL Y LEASED! THE NAPA/ETIWANDA WITH 651,000 SQ.FT. HAS BEEN BUILT AND IS BEING LEASED. 4

TABLE OF CONTENTS
PREVIEW: KEY QUESTIONS FOR RANCHO CUCAMONGA……….………..............................................6 EMPIRICAL FOUNDATION: DATA COMPILED SPECIFICALLY FOR RANCHO CUCAMONGA.......7 I. OVERVIEW OF THE FEDERAL RESERVE BOARD (FRB) GOAL OF 2% INFLATION…………........8

II. EXPECTED IMPACTS ON THE ECONOMY/EMPLOYMENT………………………………………….12 III. EXPECTED IMPACTS ON THE HOUSING MARKET……………………………………………….….21 IV . MARKET CONDITIONS FOR APARTMENT UNITS……………………………………………….......33 V . CURRENT STATE OF WAREHOUSE/DISTRIBUTION MARKET IN RANCHO CUCAMONGA…...44 CREDENTIAL/QUALIFICATIONS OF EMPIRE ECONOMICS…………….……………….……….……..46 5

PREVIEW: KEY QUESTIONS FOR RANCHO CUCAMONGA
FEDERAL RESERVE GOALS AND STRONG ECONOMIC GROWTH:
• HOW MUCH LONGER WILL IT TAKE THE FEDERAL RESERVE BOARD TO ATTAIN ITS GOAL OF 2% INFLATION? • WILL RECENT STRONG EMPLOYMENT GROWTH KEEP INFLATION HIGHER THAN THE 2% GOAL? • WHEN WILL THE FEDERAL RESERVE BOARD START TO REDUCE INTEREST RATES? HOUSING PAYMENT, INVENTORY AND PRICE OUTLOOK:
• HOW HA VE ANNUAL HOUSING PAYMENTS FOR NEW HOMEOWNERS CHANGED SINCE 2018? • HOW IS HOUSING INVENTORY IMPACTED BY EXISTING HOMEOWNERS NOT MOVING DUE TO HIGHER INTEREST RATES? • HOW MUCH MIGHT PRICES / MORTGAGE RATES NEED TO DECLINE FOR THE MARKET TO RETURN TO NORMAL BY END OF 2025? LOCAL HOUSING TYPE SHIFT AND ABSORPTION:
• THE HOUSING MARKET HAS SHIFTED FROM NEW FOR-SALE PROJECTS TO NEW MULTIFAMILY APARTMENT RENTALS • HOW LONG WILL IT TAKE THE FORTHCOMING NEW APARTMENT UNITS TO BE ABSORBED IN THE MARKETPLACE? WAREHOUSE/DISTRIBUTION FACILITIES: RECENT MARKET CONDITIONS AND NEW ABSORPTION:
 WHY IS RANCHO CUCAMONGA EXPERIENCING STRONG ABSORPTION, DESPITE THE OVERALL MARKET MODERATING? 6

EMPIRICAL FOUNDATION: SPECIFIC DATA FOR RANCHO CUCAMONGA *PRIMARY DATA COMPILED BY EMPIRE ECONOMICS SPECIFICALLY FOR THE CITY*

EMPLOYMENT AND PAYROLL DATA SPECIFICALLY FOR THE CITY
EMPLOYMENT BY FIRMS LOCATED IN THE CITY – INCLUDES CITY HOUSEHOLDS AND THOSE COMMUTING INTO THE CITY EMPLOYMENT FOR HOUSEHOLDS RESIDING IN THE CITY – EITHER FOR FIRMS IN THE CITY OR ELSEWHERE

TOTAL EMPLOYMENT, RECENT TRENDS AND PATTERNS

FOR EACH ECONOMIC SECTOR, PAYROLL LEVELS AND RECENT EMPLOYMENT CHANGES

MARKET SURVEYS OF APARTMENT PROJECTS IN THE CITY
ACTIVE-LEASING, UNDER CONSTRUCTION, GRADING AND PLANNING DEPARTMENT – APPROV AL STATUS

FOR ACTIVE-LEASING, RENT LEVELS AND LEASING STATUS

SITE VISITS FOR WAREHOUSE/DISTRIBUTION PROJECTS

CURRENT DEVELOPMENT CONDITION OF THE PROPERTIES
STATUS OF DEVELOPMENT APPROV ALS – CITY PLANNING DEPARTMENT 7

I. OVERVIEW OF THE FEDERAL RESERVE BOARD (FRB) GOAL OF 2% INFLATION

EMPIRE ECONOMICS (EMPIRE) ANNUAL ECONOMIC AND HOUSING MARKET STUDY FOR FORECASTING RANCHO CUCAMONGA’S EMPLOYMENT AND HOUSING IS BASED UPON THE IMPACTS OF THE FEDERAL RESERVE BOARD (FRB/FED) GOAL OF 2% INFLATION.

TO IDENTIFY AND QUANTIFY THE IMPACTS OF THE FED’S POLICIES, EMPIRE COMPILED PRIMARY DATA SPECIFICALLY FOR RANCHO

CUCAMONGA (RC) WHICH INCLUDES EMPLOYMENT BY SECTOR AS WELL AS THE MARKETS FOR NEW APARTMENTS AND NEW W AREHOUSE/DISTRIBUTION FACILITIES.

EMPIRE FORMULATED A MACROECONOMIC MODEL SPECIFICALLY FOR RANCHO CUCAMONGA TO FORECAST THE EMPLOYMENT- HOUSING IMPACTS FROM THE FED’S POLICY OF ATTAINING/APPROACHING A 2% INFLATION RATE

NEAR-TERM FED RESTRICTIVE POLICIES HA VE/WILL RESULT IN SIGNIFICANTLY HIGHER MORTGAGE/FINANCIAL RATES AS WELL AS A SLIGHTLY HIGHER UNEMPLOYMENT RATE.

INTERMEDIATE-TERM FED STABILIZATION POLICIES ONCE THE 2% INFLATION RATE IS ATTAINED/APPROACHED WILL RESULT IN LOWER FINANCIAL INTEREST RATES.

JANUARY 31, 2024 THE FED’S OPEN MARKET COMMITTEE STATEMENT:
“THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY TOWARD 2 PERCENT”

THEREFORE, ALTHOUGH THE SHORT RUN IMPACTS OF THE FED POLICY HA VE SOME ADVERSE EMPLOYMENT IMPACTS AS WELL AS SIGNIFICANT IMPACTS ON THE HOUSING MARKET, THE EVENTUAL RETURN TO AN INFLATION RATE OF 2% WILL RESULT IN GENERALLY LOWER INTEREST RATES THAT WILL ENABLE THE ECONOMY AND HOUSING MARKET TO RECOVER. 8

• CONSUMER PRICE INDEX (CPI) MEASURES THE CHANGE IN THE PRICE OF A FIXED BASKET OF GOODS AND SERVICES DECLINED FROM A PEAK OF 9.1% IN JUNE 2022 TO 3.4% IN DECEMBER 2023. • THE FRB TARGET OF 2.0% INFLATION UTILIZES THE CORE PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX (PCE-PI) WHICH CAPTURES A CHANGING BASKET OF GOODS AND SERVICES, REFLECTING CONSUMER BEHA VIOR TO PRICE CHANGES.

DECLINED FROM A PEAK OF 7.1% IN JUNE 2022 TO 2.6% IN DECEMBER 2023.

RECENT TRENDS/PATTERNS FOR INFLATION RATES

1.9%

5.3%

7.5%

8.5%

9.1%

8.2%

7.1%

6.4%

5.0%

4.0%

3.0%

3.7%

3.2% 3.4%

2.1%

4.7%

6.1%

6.8%

7.1%

6.6%

5.9%

5.5%

4.4%

4.0% 3.2%

3.4%

2.9% 2.6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2021-Q1
2021-Q2
2021-Q3
2021-Q4
2022-Jan.
2022-Feb.
2022-Mar.
2022-Apr.
2022-May
2022-June
2022-July
2022-Aug.
2022-Sept.
2022-Oct.
2022-Nov.
2022-Dec.
2023- Jan.
2023-Feb.
2023-Mar.
2023-Apr.
2023-May.
2023-June
2023-July
2023-Aug.
2023-Sept.
2023-Oct.
2023-Nov.
2023-Dec.

INFLATION INDEX - YEAR OVER YEAR

CHANGE BY QUARTER AND MONTHLY

COMPARISON OF INFLATION RATES

INFLATION IS LOWER THAN ITS JUNE PEAK
AND IS NEARING IT'S 2% TARGET

CPI - INFLATION RATE (MOST FAMILIAR) PCE-PI INFLATION RATE (FED) 9

CURRENT FRB MONETARY POLICIES EXPECTED TO REDUCE
CORE INFLATION TO THE 2% GOAL BY 2026
SOURCE: FEDERAL OPEN MARKET COMMITTEE,
ECONOMIC PROJECTIONS, DECEMBER 13, 2023
TABLE 1 MEDIAN

2.1%

4.1%

4.7%

5.9%

6.8%

7.1%

6.6%

5.5%

4.0%

3.2% 3.4%

2.6%2.4%2.2%2.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2021-Q1
2021-Q2
2021-Q3
2021-Q4
2022-Jan.
2022-Feb.
2022-Mar.
2022-Apr.
2022-May
2022-June
2022-July
2022-Aug.
2022-Sept.
2022-Oct.
2022-Nov.
2022-Dec.
2023- Jan.
2023-Feb.
2023-Mar.
2023-Apr.
2023-May.
2023-June
2023-July
2023-Aug.
2023-Sept.
2023-Oct.
2023-Nov.
2023-Dec.
2024
2025
2026

INFLATION MEASUEES - YEAR OVER YEAR CHANGE BY

QUARTER, MONTHLY, AND FOREACSTED

INFLATION - PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX

AND CORE PCE FED FORECAST
DECLINED BUT STILL HIGHER THAN THE FED'S TARGET OF 2.0%

PCE-PI INFLATION RATE (FED) FED FORECAST PROBABLE - CORE PCE INFLATION RECENT
TRENDS
MAY

POSSIBLY
RESULT
IN 2.0%
SOONER
10

FEDERAL FUNDS RATE IS CURRENTLY ABOUT 5.3%
UNEMPLOYMENT RATE EXPECTED TO PEAK AT ABOUT 4.1% DURING 2024– 2026 SOURCE: FEDERAL OPEN MARKET COMMITTEE,
ECONOMIC PROJECTIONS, DECEMBER 13, 2023
TABLE 1 MEDIAN
RATE CUTS EXPECTED BUT SPECIFIC TIMING DEPENDS ON MORE EVIDENCE OF INFLATION APPROACHING 2%

4.4%

5.4%

4.6%

3.6%

2.9%

2.5%
0%
1%
2%
3%
4%
5%
6%

FEDERAL FUNDS RATE FORECAST SCENARIOS

HIGHER FED FUND RATE INCREASES MORTGAGE RATES

PROBABLE - FED RATE

3.6%

3.8%

4.1% 4.1% 4.1% 4.1%
0%
1%
2%
3%
4%
5%
6%

FEDERAL FUNDS RATES AND UNEMPLOYMENT FORECAST SCENARIOS

HIGHER UNEMPLOYMENT RATE REDUCES HOUSING DEMAND
PROBABLE UNEMPLOY %
IN JAN 2023 AND
APRIL 2023,

UNEMPLOYMENT

RATE REACHED A
LOW OF 3.4%
JANUARY 31, 2024 THE FED’S OPEN MARKET COMMITTEE STATEMENT:
“THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY TOWARD 2 PERCENT” 11

II. EXPECTED IMPACTS ON THE ECONOMY/EMPLOYMENT
THE CITY’S ECONOMY HAS RECENTLY RECOVERED FROM THE IMPACTS OF COVID, AND THIS HAS RESULTED IN A RESTRUCTURING OF THE ECONOMIC SECTORS:

AMONG THE RELATIVELY STRONG SECTORS, ADMINISTRATIVE/SUPPORT IS MUCH HIGHER THAN PRE-COVID

AMONG THE RELATIVELY WEAK SECTORS, MANUFACTURING IS MUCH LOWER THAN PRE-COVID THE FED’S POLICIES WILL HA VE ANOTHER RESTRUCTURING IMPACT DURING THE NEXT SEVERAL YEARS, WITH THE SECTORS THAT WERE THE MOST IMPACTED, SUCH AS:

REAL ESTATE DUE TO SIGNIFICANTLY HIGHER MORTGAGE RATES, BUT MORTGAGES RATES WILL DECLINE

FINANCE DUE TO HIGHER INTEREST RATES OVERALL, BUT OVERALL RATES ARE EXPECTED TO DECREASE ACCORDINGLY, BASED UPON THE COMPOSITION OF THE CITY’S ECONOMIC BASE, EMPIRE IDENTIFIES THE DEGREE TO WHICH SPECIFIC SECTORS WILL BE IMPACTED AS WELL AS THE AGGREGATE LEVELS OF EMPLOYMENT:

POTENTIAL CHANGES IN THE LEVELS OF EMPLOYMENT BY SECTORS

FORECASTS OF AGGREGATE EMPLOYMENT CHANGES, ANNUALLY
12

RECENT EMPLOYMENT TRENDS BY V ARIOUS GEOGRAPHIC AREAS
• SINCE MARCH 2020, COVID-19 HAS DRAMATICALLY IMPACTED THE ECONOMY/EMPLOYMENT IN UNIQUE WAY S • APRIL 2020: EMPLOYMENT DECLINED SIGNIFICANTLY, BY -18% FOR THE CITY • STARTING IN MAY OF 2020, EMPLOYMENT HAD A RECOVERY , SURPASSING ITS PRE-COVID LEVELS IN NOVEMBER 2021 • AS OF DECEMBER 2023, THE CITY IS ALMOST +10% ABOVE ITS PRE-COVID LEVELS • THE CITY'S EMPLOYMENT RECOVERY HAS BEEN SIMILAR TO RIV-SB BUT STRONGER THAN CALIFORNIA 80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
104%
106%
108%
110%
Jan.-Feb. 2020
20-Apr
20-Jun
20-Aug
20-Oct
20-Dec
21-Feb
21-Apr
21-Jun
21-Aug
21-Oct
Dec-21
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
% TOTAL NONFARM EMPLOYMENT VS.

PRE-COVID LEVELS (JAN.-FEB. 2020)
NONFARM EMPLOYMENT % BY MONTH VS. PRE-COVID (JAN.-FEB
2020) BASELINE: RANCHO CUCAMONGA, CALIFORNIA, AND RIV-SB Rancho Cucamonga Riverside-San Bernardino MSA California Empire Economics

PRECIPITOUS

DECLINE

RECOVERING

NEW HIGHS
13

UNEMPLOYMENT RATES: HISTORICALLY AND RECENTLY

UNEMPLOYMENT RATES BY GEOGRAPHIES
(DEC. 2023)
• RANCHO CUCAMONGA HAD AN UNEMPLOYMENT RATE (3.7%)
BELOW THAT OF SAN BERNARDINO COUNTY (5.0%)
BUT SLIGHTLY ABOVE THAT OF THE UNITED STATES (3.5%)
• THE CITY’S RELATIVELY LOW UNEMPLOYMENT RATE

REDUCES THE SUPPLY OF ITS A V AILABLE WORKERS

RANCHO CUCAMONGA MONTHLY UNEMPLOYMENT RATES
(JANUARY 2010 – DECEMBER 2023)
• CITY’S RATE DECLINED FROM 10% IN 2010 TO 2.6% IN DEC. 2019 • COVID-19 CAUSED THE RATE TO RISE TO 12.9% IN MAY 2020 • AS THE ECONOMY RECOVERED, THE RATE WAS 2.6% IN MAY 2022 • MOST RECENTLY, THE RATE WAS 3.7% IN DEC. 2023

3.7%

5.0%

3.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%
Rancho Cucamonga San Bernardino County United States

RECENT UNEMPLOYMENT RATES - RANCHO CUCAMONGA,

SAN BERNARDINO COUNTY AND UNITED STATES
(DEC. 2023 - PRELIMINARY)

10.1%

2.6%

12.9%

2.6%

3.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%
2010-Jan
2010-Jul
2011-Jan
2011-Jul
2012-Jan
2012-Jul
2013-Jan
2013-Jul
2014-Jan
2014-Jul
2015-Jan
2015-Jul
2016-Jan
2016-Jul
2017-Jan
2017-Jul
2018-Jan
2018-Jul
2019-Jan
2019-Jul
2020-Jan
2020-Jul
2021-Jan
2021-Jul
2022-Jan
2022-July
2023-Jan
2023-July
CITY OF RANCHO CUCAMONGA: MONTHLY UNEMPLOYMENT RATE
(JANUARY 2010 - DECEMBER 2023)
Dec.
2019
May
2020
May
2010
Dec.
2023
May
2022
14

COMPOSITION OF RANCHO CUCAMONGA EMPLOYMENT BY SECTOR (2023-EST.) • ABOUT 38% OF JOBS ARE IN ADMINISTRATIVE SUPPORT SERVICES, GOVERNMENT AND RESTAURANT/HOTELS • ABOUT 20% OF JOBS ARE IN RETAIL TRADE AND MANUFACTURING Administrative-Support
Services, 13.1%
Restaurants/Hotels,

12.2%
Government, 12.4%
Retail Trade, 9.9%Manufacturing, 9.9%
Health Care, 8.7%
Construction, 7.2%
Wholesale Trade, 6.4%
Professional Services, 5.0%
Transportation/Warehouse, 4.1%
Finance & Insurance, 3.6%
Real Estate, 2.4%
Other Services, 2.6%
Educational Services, 1.1% Arts, Entertainment, 0.7%
Management Services, 0.4%
Information, 0.4%
RANCHO CUCAMONGA: SHARES OF EMPLOYMENT BY ECONOMIC
SECTORS IN 2023-EST. (SECTOR EMPLOYMENT / TOTAL EMPLOYMENT) 15

RANCHO CUCAMONGA EMPLOYMENT BY SECTORS: COVID RESTRUCTURING IMPACTS (2023-EST. VS. 2019 PRE-COVID)
• SECTOR WITH BIGGEST JOB ADDITIONS FOR 2023-EST. VS. 2019: ADMINISTRATIVE SUPPORT +1,443 • SECTOR WITH BIGGEST JOB LOSES FOR 2023-EST. VS. 2019: MANUFACTURING -1,320 1,443
837
645
638
90 -203
-245
-254
-1,320
990
640
354
198
9 -89
-392
-416
-2,000 -1,500 -1,000 -500 0 500 1,000 1,500 2,000
CORE SECTORS (+1,631)
Administrative-Support Services
Wholesale Trade
Restaurants/Hotels
Professional Services
Information
Transportation/Warehouse
Construction
Management Services
Manufacturing
SUPPORT SECTORS (+1,294)
Government
Health Care
Real Estate
Educational Services
Arts, Entertainment
Other Services
Finance & Insurance
Retail Trade
RANCHO CUCAMONGA: CHANGE IN LEVELS OF EMPLOYMENT
FROM 2019 TO 2023-EST. BY ECONOMIC SECTOR
16

RANCHO CUCAMONGA EMPLOYMENT BY SECTORS (2023-EST. VS. 2022 SALARIES) • OVERALL A VERAGE SALARY FOR 2023: 0.4% INCREASE FROM 2023-EST. VS. 2022 • SECTORS WITH HIGHEST GROWTH IN WAGE : TRANSPORTATION/W AREHOUSE, MANAGEMENT SERVICES, AND RESTAURANTS/HOTELS • SECTORS WITH HIGHEST DECLINES IN WAGE: ART AND ENTERTAINMENT, CONSTRUCTION, AND INFORMATION

0.4%

12.7%

12.3%

6.8%

4.8%

2.1%
-0.9%
-2.2%
-7.2%
-8.7%

6.3%

5.2%

4.8%

4.7%

1.8%

0.2%
-1.9%-31.9%
-35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15%
Overall - Avg.

CORE SECTORS
Transportation/Warehouse
Management Services
Restaurants/Hotels
Administrative-Support Services
Wholesale Trade
Manufacturing
Professional Services
Information
Construction

SUPPORT SECTORS
Educational Services
Retail Trade
Government
Finance & Insurance
Real Estate
Other Services
Health Care
Arts, Entertainment
RANCHO CUCAMONGA: AVERAGE PAYROLL CHANGE PER EMPLOYEE BY ECONOMIC SECTOR IN 2023-EST. VS. 2022
% PAYROLL CHANGE: 2023-EST. VS. 2022
17

RANCHO CUCAMONGA VS. CALIFORNIA: EMPLOYMENT RECOVERY BY SECTORS OVERALL, RANCHO CUCAMONGA AGGREGATE TOTAL NONFARM EMPLOYMENT IS ABOVE PRE-COVID-19 LEVELS DEC. 2023
RANCHO

CUCAMONGA

SECTORS
AHEAD

OF CALIFORNIA
• INFORMATION
• EDUCATION
• PROFESSIONAL
• ADMINISTRATIVE
• GOVERNMENT
• ACCOMMODATION

AND FOOD SERVICE
• WHOLESALE TRADE
• REAL ESTATE
• RETAIL TRADE
DEC. 2023
RANCHO

CUCAMONGA

SECTORS
BEHIND

CALIFORNIA
• HEALTHCARE
• TRANSPORTATION AND

WAREHOUSING
• CONSTRUCTION
• ARTS, ENTERTAINMENT,

RECREATION
• OTHER SERVICES
• MANUFACTURING
• FINANCE / INSURANCE
• MANAGEMENT

WAREHOUSE/DISTRIBUTION

EMPLOYMENT WILL INCREASE
SIGNIFICANTLY IN 2024 DUE TO

NEW FACILITIES
25% 22% 19%
15% 13% 11% 10% 9% 8% 8% 7% 5% 4% 3%
-4% -5%
-22%
-34%-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%

CALIFORNIA AND ORANGE COUNTY EMPLOYMENT RECOVERY - SECTORS DEC 2023 EMPLOYMENT LEVEL VS. PRE-COVID (JAN.-FEB. 2020) RANCHO CUCAMONGA (DEC. 2023 vs. JAN.-FEB. 2020)
CALIFORNIA (DEC. 2023 vs. JAN.-FEB. 2020)RED- RANCHO CUCAMONGA GREEN – CALIFORNIA 18

RANCHO CUCAMONGA - RECENT AND FORECASTED AGGREGATE LEVELS OF EMPLOYMENT (2000-2023-EST. RECENT & 2024-2030 FORECAST) *WITHOUT HIGH SPEED RAIL* • FOLLOWING THE DECLINE IN 2020, EMPLOYMENT INCREASED BY ~4,100 IN 2021 AND BY ~6,800 IN 2022 TO EXCEED ITS PRE-COVID LEVEL • IN 2023-EST., EMPLOYMENT IS ESTIMATED TO HA VE INCREASED BY ~500 JOBS, A MORE MODERATE GROWTH RATE. • FOR 2024-2030, BASELINE FORECAST IS FOR EMPLOYMENT TO RISE GRADUALLY BY ~1,830 JOBS / YR./A VG. TO ~92,200 IN 2030. • THE PRIMARY DRIVERS ARE THE ADMINISTRATIVE SUPPORT SERVICES AS WELL AS TRANSPORTATION/W AREHOUSING (2,800 NEW JOBS) 36,830
41,124
45,503
52,496
56,545
60,591
65,139
64,358
62,974
59,054
58,210
61,188
63,884
66,188
71,253
73,262
75,159
75,383
75,611
74,445
68,040
72,122
78,901
79,413
81,943
84,011
85,898
87,322
88,847
90,477
92,216
0 20,000
40,000
60,000
80,000
100,000
120,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF

EMPLOYMENT BY FIRMS LOCATED IN THE CITY
*BASELINE - WITHOUT HIGH SPEED RAIL*
19

LOCATION OF EMPLOYMENT VS. AFFORDABILITY OF HOUSING
*WITHOUT HIGH SPEED RAIL*
• RANCHO CUCAMONGA’S HOUSEHOLDS WITH JOBS (BLUE LINE) EXCEED THE NUMBER OF JOBS BY FIRMS IN THE CITY (GREEN LINE) • ABOUT 18,000 (NET) CITY RESIDENTS COMMUTE TO JOBS OUTSIDE THE CITY , TYPICALLY AT HIGHER SALARIES THAT ENABLE THEM TO AFFORD HOUSING IN THE CITY .
• THE GAP IS EXPECTED TO DECREASE TO ~13,000 BY 2030 (THIS EXCLUDES THE HIGH SPEED RAIL EMPLOYMENT) . 73,575
85,816
77,411
93,100
87,900
97,000
102,220 105,460
36,830
65,139 58,210
74,445
68,040
79,413
87,322
92,216
0 20,000
40,000
60,000
80,000
100,000
120,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA:

EMPLOYMENT BY FIRMS AND HOUSEHOLDS
*BASELINE - WITHOUT HIGH SPEED RAIL*
Working Households Residing in Rancho Cucamonga
Firms - Employees Located in Rancho Cucamonga
20

III. EXPECTED IMPACTS ON THE HOUSING MARKET
NEAR-TERM: RESTRICTIVE FED POLICIES HA VE SIGNIFICANTLY INCREASED MORTGAGE RATES.

RECENT SURGES IN MORTGAGE RATES HA VE SUBSTANTIALLY INCREASED MORTGAGE PAYMENTS FOR HOME PURCHASERS.

FOR EXAMPLE, WITH A 30 YEAR FIXED RATE FOR A MORTGAGE LOAN AMOUNT OF $800,000:

FOR A 2.9% MORTGAGE RATE, THE MORTGAGE INTEREST ON THE LOAN WOULD BE ABOUT $400,000.

FOR A MORTGAGE RATE OF 7.7% (RECENT PEAK LEVEL), MORTGAGE INTEREST ON THE LOAN EXCEEDS $1,200,000.

THE MAJORITY OF HOMEOWNERS THAT HA VE PURCHASED/REFINANCED THEIR MORTGAGE LOANS AT HISTORICALLY LOW RATES ARE NOW RELUCTANT TO PURCHASE ANOTHER HOME WITH A MUCH HIGHER NEW MORTGAGE RATE.

PURCHASERS OF HOMES WILL LIKELY HA VE A MUCH HIGHER MORTGAGE RATE.

FURTHERMORE, MOVE-UP PURCHASERS WILL ALSO NEED TO FIND A BUYER FOR THEIR CURRENT HOME THAT CAN AFFORD A HIGHER MORTGAGE RATE.

EVENTUALLY AS INFLATION RETURNS TO 2% AND MORTGAGE RATES DECLINE, THE MARKET FOR HOME SALES WILL RECOVER.

FINANCIAL MARKETS WILL REACT POSITIVELY TO THE FED BEING ON A SUSTAINED PATH TO SUCCESSFULLY ACCOMPLISH THE 2% INFLATION TARGET.

SUCH LOWER INFLATION RATES, IN TURN, SHOULD RESULT IN LOWER MORTGAGE RATES.

THE HOUSING MARKET WILL RECOVER AND EVENTUALLY RETURN TO A NORMAL LEVEL OF SALES. 21

CONSUMER SENTIMENT (JAN. 2013 – JAN. 2024)
• CONSUMER SENTIMENT W AS BETWEEN ~75 AND 100 FROM 2013 THROUGH 2019 • SENTIMENT FELL FROM JANUARY 2020 AT 101 TO A RECENT MINIMUM OF 50 IN JUNE 2022 • SINCE THEN SENTIMENT HAS RISEN TO 79 AS OF JAN. 2024 (PRELIMINARY) 101
50 79
0 20
40 60
80 100
120
2013-01-01
2013-07-01
2014-01-01
2014-07-01
2015-01-01
2015-07-01
2016-01-01
2016-07-01
2017-01-01
2017-07-01
2018-01-01
2018-07-01
2019-01-01
2019-07-01
2020-01-01
2020-07-01
2021-01-03
2021-07-08
2022-01-10
2022-07-01
2023-01-01
2023-07-01
Jan. 2024 (Prelim)
UNITED STATES CONSUMER SENTIMENT INDEX (JAN. 2020 = 100) 22

TRENDS/PATTERNS FOR U.S. MORTGAGE RATES SINCE 2018
• MORTGAGE RATES ARE A SECONDARY DRIVER OF HOUSING DEMAND; EMPLOYMENT GROWTH IS TYPICALLY THE PRIMARY DRIVER.

• MORTGAGE RATES IN NOVEMBER 2018 HAD A PRIOR PEAK OF 4.9%. • RATES THEN DECLINED TO THEIR LOWEST LEVEL OF 2.8% IN DECEMBER 2020, DUE TO FED POLICIES TO STIMULATE THE ECONOMY . • RATES REMAINED AT HISTORICALLY LOW LEVELS, BELOW 3.2%, THROUGH DECEMBER 2021. • DUE TO FED POLICIES TO REDUCE INFLATION, MORTGAGE RATES ROSE TO 7.7% IN OCTOBER 2023, BUT RECENTLY FELL TO 6.7%.

4.9%

3.7%

2.8%

3.2%

6.9%

7.7%

6.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
January 2018
April 2018
July 2018
October 2018
January 2019
April 2019
July 2019
October 2019
January 2020
April 2020
July 2020
October 2020
January 2021
April 2021
July 2021
October 2021
January 2022
April 2022
July 2022
October 2022
January 2023
April 2023
July 2023
Oct-23
Jan. 2024
30-YEAR FIXED MORTGAGE RATES
UNITED STATES: 30-YEAR FIXED MORTGAGE RATES
(JAN. 2018 - JAN 2024 BY MONTH)
23

3.00%

3.25%

3.50%

3.75%

4.00%

4.25%

4.50%

4.75%

5.00%

5.25%

5.50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013Q1
2013Q3
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q1
2018Q3
2019Q1
2019Q3
2020Q1
2020Q3
2021Q1
2021Q3
2022Q1
2022Q3
2023Q1
2023Q3

AVERAGE INTEREST RATE AT TIME OF ORIGINATION
(FOR ALL CALIFORNIA MORTGAGES) ----- *LINE*

CURRENT CONTRACT INTEREST RATE
(FOR ALL CALIFORNIA MORTGAGES) ---- *SHADING*

CALIFORNIA CURRENT CONTRACT INTEREST RATE FOR ALL
MORTAGES BY PERCENT GROUP BY QUARTER (2013Q1 - 2023Q3)
Below 3% 3-4% 4-5% 5-6% Above 6% Average Interest Rate
OUTSTANDING RESIDENTIAL MORTGAGE STATISTICS (2013Q1 – 2023Q3) FROM 2013Q1 TO 2023 Q3, FOR CALIFORNIA HOMEOWNERS CHANGES IN MORTGAGE RATE SHARES

MORTGAGE RATES OF 6.0% OR LESS, ROSE TO 73% TO 92%
MORTGAGE RATES OF 5.0% OR LESS, ROSE FROM 49% TO 85%
MORTGAGE RATES OF 4.0% OR LESS, ROSE FROM 23% TO 68%
MORTGAGE RATE OF 3.0% OR LESS, ROSE FROM 3% TO 30%
85%
68%
30%
92%
73%
49%
23%
3%
24

RANCHO CUCAMONGA – ANNUAL HOUSING PAYMENTS BY MONTH (JAN. 2018 – DEC. 2025 FORECAST)

ANNUAL HOUSING PAYMENTS REPRESENT THE SUM OF MORTGAGE PRINCIPAL, MORTGAGE INTEREST RATES AND PROPERTY TAXES 2019-2021:

LOWER RATES OFFSET

HOUSING APPRECIATION,
PAYMENTS OF $40,000/YR.
2022-23:

HIGHER PRICES AND

HIGHER MORTGAGE

RATES DROVE PAYMENTS

HIGHER WITH

PEAK PAYMENTS OF
$60,000/YR.

ANNUAL HOUSING

PAYMENT LEVELS
2024-2025:

FOR PAYMENTS TO

RETURN TO THEIR
2019-2022 LEVELS
OF $40,000/YR.,

HOUSING PRICES

WOULD NEED TO
DECLINE BY -11%
** AND **

MORTGAGE RATES

WOULD NEED TO
DECLINE TO 4.5%
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
1/1/2018
5/1/2018
9/1/2018
1/1/2019
5/1/2019
9/1/2019
1/1/2020
5/1/2020
9/1/2020
1/1/2021
5/1/2021
9/1/2021
1/1/2022
5/1/2022
9/1/2022
1/1/2023
5/1/2023
9/1/2023
1/1/2024
5/1/2024
9/1/2024
1/1/2025
5/1/2025
9/1/2025
ANNUAL HOUSING PAYMENT AMOUNTS (IN 2024 $)
RANCHO CUCAMONGA (JAN. '18 - DEC. '25-F) - ESTIMATED ANNUAL HOUSING PAYMENT COMPONENTS (MORTGAGE INTEREST + MORTGAGE PRINCIPAL +

PROPERTY TAXES)

PROPERTY TAX MORTG-PRINCIPAL MORTG-INTEREST

MORTGAGE INTEREST RATES

MORTGAGE PRINCIPAL (HOUSING PRICE APPRECIATION)

PROPERTY TAXES (HOUSING PRICE APPRECIATION) EMPIRE ECONOMICS ~$40K
+ ~50%
DEC.
2021
DEC.
2023
DEC.
2025
~$60K
~$40K
DEC 2023 TO DEC. 2025 PRICES -11%
WITH MORTGAGE RATES TO 4.5%
25

RANCHO CUCAMONGA – SHARE OF ANNUAL HOUSING PAYMENTS BY MONTH (JAN. 2018 – DEC. 2025F) ANNUAL HOUSING PAYMENTS = MORTGAGE PRINCIPAL + MORTGAGE INTEREST + PROPERTY TAXES FOR THE FIRST YEAR • JAN. 2018: MORTGAGE INTEREST PAYMENT SHARE MADE UP ABOUT 34% OF THE TOTAL ANNUAL HOUSING PAYMENT • JAN. 2018 TO DEC. 2020: MORTGAGE INTEREST PAYMENT SHARE DECLINED TO 28%: RATES FELL AND PRINCIPAL SHARE ROSE WITH PRICES • DEC. 2020 TO DEC. 2023: MORTGAGE INTEREST RATE SHARE ROSE TO 49% AS MORTGAGE RATES ROSE • PURCHASERS OF HOMES AT CURRENT RATES HA VE ALMOST TWICE AS MUCH MORTGAGE INTEREST THAN AT THE LOW RATES 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1/1/2018
5/1/2018
9/1/2018
1/1/2019
5/1/2019
9/1/2019
1/1/2020
5/1/2020
9/1/2020
1/1/2021
5/1/2021
9/1/2021
1/1/2022
5/1/2022
9/1/2022
1/1/2023
5/1/2023
9/1/2023
1/1/2024
5/1/2024
9/1/2024
1/1/2025
5/1/2025
9/1/2025
ANNUAL HOUSING PA YMENT SHARES (IN 2023 $)
RANCHO CUCAMONGA (JAN. '18 - DEC. '25-F) - ESTIMATED ANNUAL HOUSING PAYMENT COMPONENTS (MORTGAGE INTEREST + MORTGAGE PRINCIPAL +

PROPERTY TAXES)

PROPERTY TAX MORTG-PRINCIPAL MORTG-INTEREST

MORTGAGE PRINCIPAL (HOUSING PRICE APPRECIATION)

PROPERTY TAXES (HOUSING PRICE APPRECIATION) EMPIRE ECONOMICS JAN.
2018
DEC
2023
DEC.
2025

MORTGAGE INTEREST RATES
34%
DEC
2021
45%
20%
28%
50%
22%
49%
35%
16%
37%
44%
20%
DEC 2023 TO DEC. 2025 PRICES -11%
WITH MORTGAGE RATES TO 4.5%
26

RANCHO CUCAMONGA – MORTGAGE INTEREST PAYMENTS (JAN. 2020– DEC. 2025F) FOR A ~$800,000 HOUSE PURCHASE, HOUSEHOLDS THAT USED A 3% MORTGAGE RATE IN 2021 HA VE MORTGAGE INTEREST RATE PAYMENTS OF ABOUT $11,500 A YEAR IF SUCH A HOUSEHOLD WERE TO PURCHASE A SIMILAR PRICE HOME IN JANUARY 2024, WITH A 6.7% MORTGAGE RATE.

THIS PAYMENT WOULD BE +$29,500 A YEAR

SO THE HOUSEHOLD HAS A STRONG INCENTIVE TO STAY IN THEIR CURRENT HOME HOWEVER, AS MORTGAGE RATES DECLINE TO 4.5%, THE PAYMENT IN DEC. 2025 WOULD BE ~$17,800 A YEAR (ADJUSTED FOR INFLATION)

THEREFORE, AS MORTGAGE RATES DECLINE, THE INCENTIVES FOR HOMEOWNERS TO STAY IN THEIR CURRENT HOMES WITH HISTORICALLY LOW RATES DIMINISHES, AND SO THE SUPPLY OF HOMES FOR-SALE INCREASES. 27 $0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
1/1/2020
4/1/2020
7/1/2020
10/1/2020
1/1/2021
4/1/2021
7/1/2021
10/1/2021
1/1/2022
4/1/2022
7/1/2022
10/1/2022
1/1/2023
4/1/2023
7/1/2023
10/1/2023
1/1/2024
4/1/2024
7/1/2024
10/1/2024
1/1/2025
4/1/2025
7/1/2025
10/1/2025

MORTGAGE INTEREST PAYMENT - ANNUALLY
RANCHO CUCAMONGA (JAN. '20 - DEC. '25-F) - MORTGAGE INTEREST MORTGAGE

HOMEOWNERS WITH HISTORICALLY LOW RATES
(~$800K PRICED HOME OVER TIME)

MORTG-INTEREST MORTG-INTEREST - ABOVE HISTORICAL LOW

MORTGAGE INTEREST

PAYMENTS -

HISTORICALLY LOW
($11,500)

EMPIRE ECONOMICS

MORTGAGE

INTEREST

PAYMENTS - ABOVE
HISTORICALLY LOW $11,500/YR.
$17,800/YR.
$29,500/YR.

RANCHO CUCAMONGA HOUSING SUPPLY, DEMAND,
AND PRICE APPRECIATION (JAN. 2018 – DEC. 2023)
A. IN 2018 TO EARLY 2020, THE CITY HOUSING INVENTORY (SUPPLY/RED) WA S HIGHER THAN PENDING SALES (DEMAND/GREEN), NORMAL B. HOWEVER, BEGINNING IN 2ND QUARTER OF 2020, HOUSING DEMAND AND SUPPLY STARTED TO CONVERGE AND MET IN 2021 C. ONCE SUPPLY AND DEMAND CURVES STARTED TO CONVERGE, THIS RESULTED IN A SIGNIFICANT INCREASE IN PRICE APPRECIATION D. DURING 2022, INVENTORY EXCEEDED PENDING SALES, CLOSER TO NORMAL PATTERNS, BUT INVENTORY IS STILL LOW DUE TO HIGH RATES E. DURING 2023, WITH HIGH MORTGAGE RATES, INVENTORY DECLINED TO LEVELS ONLY SLIGHTLY ABOVE SALES 28 3%
30%
41% 46%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
0 100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2018-03-01
2018-06-01
2018-09-01
2018-12-01
2019-03-01
2019-06-01
2019-09-01
2019-12-01
2020-03-01
2020-06-01
2020-09-01
2020-12-01
2021-03-01
2021-06-01
2021-09-01
2021-12-01
2022-03-01
2022-06-01
2022-09-01
2022-12-01
2023-03-01
2023-06-01
2023-09-01
2023-12-01

RANCHO CUCAMONGA HOUSING PRICE
CHANGE SINCE JAN. 2018

RANCHO CUCAMONGA

PENDING LISTINGS AND INVENTORY

RANCHO CUCAMONGA PENDING LISTINGS AND HOUSING INVENTORY , AND CUMULATIVE LAGGED 12 MONTH HOUSING PRICE CHANGE SINCE JAN. 2018 (JANUARY 2018 - DECEMBER 2023)
Rancho Cucamonga Housing Price Change Rancho Cucamonga Housing Inventory Rancho Cucamonga Pending Sales

AFTER FIRST YEAR OF

COVID,INVENTORY

FELL CLOSER TO AND

EVEN BELOW

PENDING SALES
2020 Q2:

First Qtr. of
Significant
COVID

EB C DA

RANCHO CUCAMONGA – HOUSING INVENTORY (SUPPLY) AND PENDING LISTINGS (DEMAND) (2018 –2023) • FOR 2018-2020 (GREEN LINES) FOR-SALE HOMES/INVENTORY W AS HIGHER THAN DEMAND/SALES, NORMAL CONDITIONS • FOR 2022 (BLUE LINES) HIGHER MORTGAGE RATES > DECLINE IN DEMAND (AFFORDABILITY) AND SUPPLY (LOW INVENTORY) • FOR 2023 (RED LINES), WITH EVEN HIGHER MORTGAGE RATES, SUPPLY AND DEMAND FELL TO NEW RECENT LOW • FOR 2023, ALTHOUGH SUPPLY IS HIGHER THAN DEMAND, IT IS ONLY SLIGHTLY HIGHER, SO THE MARKET STILL HAS EXCESS DEMAND. 0 50
100
150
200
250
300
350
400
450
500

RANCHO CUCAMONGA

PENDING LISTINGS AND INVENTORY

RANCHO CUCAMONGA PENDING LISTINGS (DEMAND) AND INVENTORY (SUPPLY) BY ANNUAL AVERAGE, NOT SEASONALLY ADJUSTED (2018-2020, 2022, AND 2023) 2018-2020 DEMAND/AVG 2022 DEMAND/AVG 2023 DEMAND/AVG 2018-2020 SUPPLY/AVG 2022 SUPPLY/AVG 2023 SUPPLY/AVG
FOR 2023, BOTH DEMAND AND SUPPLY WERE

SUBSTANTIALLY LOWER THAN NORMAL
SUPPLY: 2023 AVERAGE
DEMAND: 2023 AVERAGE
29

RANCHO CUCAMONGA: EXISTING/NEW FOR-SALE HOMES RECENT SALES TRENDS • DURING JANUARY 2015 TO DECEMBER 2021, SALES OF DETACHED HOMES AMOUNTED TO ABOUT 120-140 PER MONTH, AND SALES OF ATTACHED HOMES AMOUNTED TO ABOUT 30-40 PER MONTH. • SINCE JANUARY 2022 SALES OF DETACHED HOMES DECLINED FROM 140/MO. TO 75/MO. IN DECEMBER 2023 WHILE THE SALES OF ATTACHED HOMES DECLINED FROM 40/MO. TO 20/MO. DURING THIS TIME PERIOD. • SPECIFICALLY , THE DECLINES CAN BE ATTRIBUTED TO EXISTING HOMEOWNERS NOT PUTTING THEIR HOMES

ON THE MARKET SINCE THEY HA VE HISTORICALLY LOW MORTGAGE RATES, AND SO THE INVENTORY OF EXISTING HOMES FOR-SALE WA S CONSTRAINED.
0 20
40 60
80 100
120
140
160
180
200
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23

RANCHO CUCAMONGA - EXISTING/NEW HOME SALES TRENDS

MONTHLY AND MOVING AVERAGES
DETACHED ATTACHED 30

RANCHO CUCAMONGA: EXISTING/NEW FOR-SALE HOMES RECENT PRICE CHANGES • DURING JANUARY 2015 TO DECEMBER 2023, PRICES INCREASED AS FOLLOWS:
• DETACHED HOME PRICES INCREASED FROM ABOUT $425,000 TO ABOUT $868,000; FOR A RATE OF 11.6%/YR./ AV G. OVER THE

SEVEN YEARS
• ATTACHED HOMES PRICES ROSE FROM ABOUT $290,000 TO $530,000; A TOTAL CHANGE OF 73%. FOR A RATE OF 9.3%/YR./ AV G. $0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23

RANCHO CUCAMONGA - EXISTING/NEW HOME PRICE PATTERNS

MONTHLY AND MOVING AVERAGES
DETACHED ATTACHED 31

RECENT SALES AND PRICES FOR NEW HOME PROJECTS
• THE MARKET FOR NEW FOR-SALE HOMES PEAKED IN 2021:
• SALES AMOUNTED TO 578 HOMES.
• THE V ALUE RATIO (PRICE/LIVING AREA) SURGED TO $428.
• THE REMAINING PROJECT CLOSED OUT IN E A R LY 2022.
• FOR 2023 AND ALSO CURRENTL Y , THERE ARE NO NEW HOME
• FOR-SALE PROJECTS ON THE MARKETPLACE.
214
104 112
189 197
305
272
316
63 67
295 308
578
17 $173
$142
$179
$174 $206 $217 $236 $241 $253
$287 $290
$300
$428
0 100
200
300
400
500
600
700
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

CITY OF RANCHO CUCAMONGA
NEW RESIDENTIAL PROJECTS: SALES TRENDS AND PRICE PATTERNS Sale Rate - Annually Value Ratio-Avg.
32 RANCHO CUCAMONGA: NEW FOR-SALE HOMES

RECENT PRICE PATTERNS AND SALES TRENDS
RICHLAND TRACT: FORTHCOMING NEW HOME PROJECT
SOURCE: RANCHO CUCAMONGA PLANNING DEPARTMENT
“Originally approved in 2004, a development project consisting of 151 acres of land located north of Wilson Ave. between Etiwanda Ave. and East Ave. recently received approval of grading plans.

The plans allow the developer to begin the grading of pads for 358 single- family homes and 22 new streets/roadways.

The grading work will include the excavation of the site and the exporting and importing of soils to build the pads for the single-family homes. The grading work is expected to begin early in the first quarter of 2024 and will take some months to complete.

Lot sizes will vary, with an average lot size of 11,000 square feet. Home designs have not yet been submitted to the City or approved by the City.

Designs will be subject to review and a public hearing held by the City’s Planning Commission.

Signage will be posted at the site after the application for home designs is submitted.”

IV. MARKET CONDITIONS FOR APARTMENT RENTALS

THE COMPOSITION OF THE RANCHO CUCAMONGA HOUSING MARKET HAS RECENTLY UNDERGONE A SIGNIFICANT SHIFT FROM NEW FOR-SALE HOMES TO NEW APARTMENT RENTALS.

RANCHO CUCAMONGA APARTMENT MARKET HAS EXPERIENCED ROBUST ACTIVITY , WITH THREE PROJECTS ON THE MARKET AND ANOTHER FOUR UNDER CONSTRUCTION/GRADING; FURTHERMORE, THREE MORE PROJECTS ARE IN THE PLANNING PROCESS.

APARTMENT RENTS SURGED IN 2021 BY +20%, BUT HA VE SINCE MODERATED TO A RATE OF ABOUT 4%.

WITH REGARDS TO THE HOMECOMING PROJECT, ITS RENTS DECLINED BY SOME -8.8% DURING THE PAST YEAR.

THE NEW ACTIVE AND FORTHCOMING APARTMENTS HA VE A SUFFICIENT SUPPLY TO SUPPORT ABSORPTION OF ABOUT 500 UNITS ANNUALLY DURING THE FORESEEABLE FUTURE.
33

OVERVIEW OF APARTMENT RENTAL RATE TRENDS

RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY
• RANCHO CUCAMONGA RENTS INCREASED FROM $1,727 IN EARLY 2015 TO $2,707 RECENTLY , + 57%. • WHILE SAN BERNARDINO COUNTY (SBC) RENTS INCREASED FROM AROUND $1,308 IN EARLY 2015 TO $2,402 RECENTLY , +84%. • SO RANCHO CUCAMONGA RENT LEVELS ARE HIGHER THAN SBC BUT THEIR PERCENTAGE CHANGE DURING 2015-2023 W AS LOWER.
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
$2,750
$3,000
1/1/2015
7/1/2015
1/1/2016
7/1/2016
1/1/2017
7/1/2017
1/1/2018
7/1/2018
1/1/2019
7/1/2019
1/1/2020
7/1/2020
1/1/2021
7/1/2021
1/1/2022
7/1/2022
1/1/2023
7/1/2023

RECENT APARTMENT RENTAL TRENDS - EXISTING APARTMENTS

RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY
Rancho Cucamonga San Bernardino County
34

OVERVIEW OF APARTMENT RENTAL APPRECIATION RATES

RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY
• SAN BERNARDINO COUNTY (SBC) APARTMENTS EXPERIENCED APPRECIATION OF 7.6%/A VG. ANNUALLY FROM 2016 TO 2023. • BUT FOR RANCHO CUCAMONGA (RC), APPRECIATION AMOUNTED TO 5.1%/A VG. ANNUALLY , SOMEWHAT LOWER. • IN SUMMER 2021 SBC AND RC BOTH EXPERIENCED PEAK APPRECIATION RATES OF ABOUT ~20%/yr. • HOWEVER, SINCE JANUARY 2023, BOTH SBC AND RC EXPERIENCED LOWER APPRECIATION, LESS THAN 4%/YR. • SINCE APRIL 2023, RC’S APPRECIATION RATE HAS BEEN 2-3%/YR. 0%
5%
10%
15%
20%
25%
1/1/2016
7/1/2016
1/1/2017
7/1/2017
1/1/2018
7/1/2018
1/1/2019
7/1/2019
1/1/2020
7/1/2020
1/1/2021
7/1/2021
1/1/2022
7/1/2022
1/1/2023
7/1/2023

RECENT APARTMENT RENTAL APPRECIATION - EXISTING APARTMENTS

RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY
Rancho Cucamonga San Bernardino County 35

RANCHO CUCAMONGA – NEW APARTMENT PROJECTS

APPROXIMATE LOCATIONS
A
B CE
F D
G
I
H
J<
36

CHARACTERISTICS OF THE NEW APARTMENT PROJECTS

CURRENTLY ACTIVE-LEASING, UNDER CONSTRUCTION & FUTURE
(SOURCES: CITY OF RANCHO CUCAMONGA & EMPIRE ECONOMICS) 37 PROJECT MAP CODE LOCATION PLANNED
UNITS

COMMERCIAL
SQ.FT. DESCRIPTION UNITS LEASED/

OCCUPIED

DEVELOPMENT -

PLANNING STATUS

CURRENTLY ACTIVE
Homecoming at the Resort A The Resort 867 5,000 867 Apartments with commercial component 492 Actively Leasing
La Mirage/The Core B NWC of Foothill and East 193 3,246 193 Unit Mixed Use
Development with 3,246
square feet of
Commercial
25 Started Leasing
November 2023
Westbury C West Side of East Avenue
North of Foothill 131 1,500 133 Unit Mixed Use
Project 11 Started Leasing
October 2023
1,191

UNDER CONSTRUCTION
Alta Curvee D SEC of Foothill Blvd and
Etiwanda Ave 260 2,253 260-Unit Mixed-Use
Apartments. 0 Expected Opening
Fall 2024
Haven and Arrow G SWC Haven and Arrow 248 23750
Mixed-use project with
248 units, 23,750 sf
ground floor
commercial
0 Expected Opening
2025
508
FUTURE
Alexan at Victoria Gardens H Vicinity of Victoria Gardens 385 No Commercial 0 Plan Check Not Yet Grading
Harvest at Terra Vista E NWC of Foothill Blvd and
Milliken Ave 660 20,841
660-Unit Mixed Use
Apartments with 20,841
SF of commercial
0 Entitled;
Not Yet Grading
Foothill Landing J NE of Foothill & Etiwanda 367 7300
Mixed-use project with
367 units, 7,300 sf.
commercial
0 Entitled;
Not Yet Grading
33 North F SEC of Foothill and Haven Avenue 311 16,000 311 Unit Mixed Use
Development 0 Entitled;
Not Yet Grading
Leap Development I SW Corner Carnelian &
Foothill 158 No Commercial 0 Entitled;
Not Yet Grading
1,881
TOTALS 3,580 79,890 528

RANCHO CUCAMONGA NEW APARTMENT PROJECTS

CURRENTLY ACTIVE/LEASING, UNDER CONSTRUCTION AND FUTURE

THERE ARE A TOTAL OF TEN ACTIVE/LEASING, UNDER CONSTRUCTION AND FUTURE APARTMENT PROJECTS THAT HA VE ENTITLEMENTS FOR 3,580 UNITS; OF THESE, 528 HA VE BEEN LEASED/OCCUPIED CURRENTLY ACTIVE 3 PROJECTS WITH 1,191 PLANNED UNITS OF WHICH 528 HAVE BEEN LEASED UNDER CONSTRUCTION; 2 PROJECTS WITH 508 UNITS
FUTURE: STILL IN THE PLANNING PROCESS; 5 PROJECTS WITH 1,881 UNITS 38 867
193
131
260 248
385
660
367
311
158
0 100
200
300
400
500
600
700
800
900
1000

RANCHO CUCAMONGA NEW APARTMENT PROJECTS

CURRENT PROJECT STATUS

TOTAL UNITS LEASED

OVERVIEW OF RENTS FOR CURRENTLY ACTIVE NEW COMPARABLE APARTMENT PROJECTS

• RANCHO CUCAMONGA APARTMENTS
• THE TYPICAL/A VERAGE LIVING AREAS RANGE FROM 938 SQ.FT. FOR WESTBURY TO 1,082 SQ.F.T. FOR THE HOMECOMING • THE TYPICAL/A VERAGE RENTS RANGE FROM $2,803 PER MONTH FOR V ASARI TO $3,161 PER MONTH FOR HOMECOMING • THE TYPICAL/A VERAGE RENTS/SQ.FT. RANGE FROM $2.75 FOR THE CORE TO $3.01 FOR WESTBURY FONTANA, V ASARI VENTANA IS A NEW APARTMENT PROJECT LOCATED IN NORTH FONTANA, BY ROUTE 14 AND DUNCAN 1,082 1,057 938 1,025 967
$3,161 $2,958 $2,819 $2,979 $2,803
$2.92 $2.75 $3.01 $2.89 $2.90
-$5.00
-$4.00
-$3.00
-$2.00
-$1.00
$0.00
$1.00
$2.00
$3.00
$4.00
0 1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000

HOMECOMING THE CORE WESTBURY RANCHO

CUCAMONGA
VASARI

VENTANA

RANCHO CUCAMONGA & FONATNA NEW APARTMENT PROJECTS

OVERVIEW OF RENTS AND SQUARE FOOTAGES
LIVING AREA RENT RENT/SQ.FT. 39

$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

RANCHO CUCAMONGA NEW ACTIVE APARTMENT PROJECTS

APARTMENT UNIT SIZES AND RENTAL LEVELS

EXCLUDING LIVE-WOK UNITS
(ALSO INCLUDED VASARI IN FONTANA BUT NEARBY)

HOMECOMING CORE WESTBURY VASARI-FONTANA

RENTS FOR CURRENTLY ACTIVE NEW COMPARABLE APARTMENT PROJECTS

RELATIONSHIP OF MONTHLY RENTS AND SIZES OF LIVING AREAS

• FOR ALL OF THE NEW APARTMENT PROJECTS, RENTS INCREASE AS THE SIZE OF LIVING AREA INCREASES. • FURTHERMORE, FOR UNITS WITH SIMILAR SIZES OF LIVING AREA, THE RENTS AMONG THE V ARIOUS PROJECTS TEND TO BE GENERALLY SIMILAR. 40

RANCHO CUCAMONGA – NEW APARTMENT PROJECTS

PRODUCT MIX AND RENTS

NAME BEDROOMS

LIVING AREA
JANUARY 2024
RENTS
JANUARY 2024
HOMECOMING PLANNED 867
RANCHO CUCAMONGA LEASED 492

1 825 $2,644
1 827 $2,824
1 777 $2,679
1 819 $2,744
1 821 $2,724
1 817 $2,832
1 912 $2,879

2 1,045 $3,231
2 1,046 $3,227
2 1,092 $3,252
2 1,142 $2,999
2 1,097 $3,284
2 1,112 $3,119
2 1,336 $3,539
2 1,680 $3,874

3 1,438 $3,524
3 1,602 $4,359
OVERALL/AVG. 1,082 $3,161
$2.92

NAME BEDROOMS

LIVING AREA
JANUARY 2024
RENTS
JANUARY 2024
THE CORE PLANNED 193
RANCHO CUCAMONGA LEASED 25
1 734 $2,500
1 763 $2,350
2 1,043 $2,875
2 1,127 $2,875
2 1,280 $3,270
3 1,396 $3,559
LIVE-WORK 1,968 $4,515
LIVE-WORK 2,631 $4,200
LIVE-WORK 3,185 $5,750
OVERALL/AVG. 1,057 $2,905

EXCLUDING

LIVE-WORK
$2.75
WESTBURY PLANNED 131
RANCHO CUCAMONGA LEASED 11
1 694 $2,310
1 745 $2,340
1 765 $2,390
2 1,098 $3,070
2 1,035 $3,090
2 1,060 $3,130
2 1,167 $3,405
2 1,098 $3,485
OVERALL/AVG. 938 $2,819
$3.01
41

• MARKET DEMAND IS ESTIMATED BASED UPON THE CITY’S OVERALL EMPLOYMENT GROWTH WITH SPECIAL CONSIDERATION FOR NEWLY DEVELOPING W AREHOUSE/DISTRIBUTION FACILITIES WITH ~2,800 NEW JOBS. • ABSORPTION AMONG THE PROJECTS IS PRIORITIZED ACCORDING TO THEIR CURRENT DEVELOPMENT APPROV AL STATUS. • THE PACE OF NEW DEVELOPMENT IS EXPECTED TO OCCUR IN A SYNCHRONIZED MANNER TO MAINTAIN STABLE RENTS. • SHOULD EXCESS UNITS ENTER THE MARKETPLACE, RENTS WOULD NEED TO BE LOWERED TO MAINTAIN ABSORPTION.

ESTIMATED ABSORPTION FOR NEW APARTMENT PROJECTS

UNDER CONSTRUCTION
ALTA CURVEE-260
HA VEN/ARROW-248
FUTURE PROJECTS:

ALEXAN- VICTORIA GARDENS: 385
HARVEST TERRA VISTA: 660
FOOTHILL LANDING: 367
33 NORTH-311
LEAP DEVELOPMENT 158
42 208
284 250
125
0 0 0
0 25
68 0 0 0
0 11
90 30
0 0 0 0
0 0
50 0 0 0
0 0
127
121
0 0 0
0 0 329
500
552
0 100
200
300
400
500
600
2022 2023 2024 2025 2026 2027 2028 2029+

NUMBER OF APARTMENT RENTAL'S - ANNUALLY

RANCHO CUCAMONGA NEW APARTMENT PROJECTS

ACTIVE/LEASING, CONSTRUCTION AND FUTURE

HOMECOMING THE CORE WESTBURY
ALTA CURVEE-260 HAVEN/ARROW:248 FUTURE PROJECTS

ESTIMATED ABSORPTION SCHEDULES FOR NEW APARTMENT PROJECTS THE PACE OF NEW DEVELOPMENT IS EXPECTED TO OCCUR IN A SYNCHRONIZED MANNER TO MAINTAIN STABLE RENTS.

SHOULD EXCESS UNITS ENTER THE MARKETPLACE, RENTS WOULD NEED TO BE LOWERED TO MAINTAIN ABSORPTION. 43 HOMECOMING THE CORE WESTBURY ALTA CURVEE-260 HAVEN/ARROW:248 FUTURE PROJECTS TOTAL PLANNED UNITS 867 193 131 260 248 1,881 3,580
2022 208 N/A N/A N/A N/A N/A 208
2023 284 25 11 N/A N/A N/A 320
2024 250 100 90 60 0 0 500
2025 125 68 30 150 127 0 500
2026 0 0 0 50 121 329 500
2027 0 0 0 0 0 500 500
2028 0 0 0 0 0 500 500
2029+ 0 0 0 0 0 552 552
TOTAL 867 193 131 260 248 1,881 3,580

V. CURRENT STATE OF WAREHOUSE/DISTRIBUTION MARKET IN RANCHO CUCAMONGA

THE CHARACTERISTICS OF THE RANCHO CUCAMONGA (RC) INDUSTRIAL MARKET ARE NOW DISCUSSED, AND COMPARED TO THOSE OF THE INLAND EMPIRE (IE) AS A WHOLE.

WHILE WAREHOUSE/DISTRIBUTION (W/D) REPRESENTS THE MAJOR COMPONENT OF THE INDUSTRIAL PROPERTY DESCRIPTION, IT ALSO INCLUDES SOME MANUFACTURING AND RESEARCH DEVELOPMENT AS WELL.

HOWEVER, SINCE THE SAME INDUSTRIAL METRICS ARE UTILIZED FOR BOTH THE INLAND EMPIRE (IE) AND RANCHO CUCAMONGA (RC) GEOGRAPHIC AREAS, THEN COMPARISONS BETWEEN THEM ARE MEANINGFUL.
 THE CURRENT VACANCY RATE AMOUNTS TO 3.5% FOR RC AND 4.87% FOR IE; A YEAR AGO FOR RC WAS 1.6%  THE CURRENT ASKING LEASE RATE AMOUNTS TO $1.75/SQ.FT. FOR RC AND $1.41/SQ.FT. FOR IE; ABOUT A YEAR AGO RC WAS $1.50/SQ.FT  THE HIGHER LEASE RATE REFLECTS THE LEASE UP ON NEWLY CONSTRUCTED BUILDINGS 44 1.6%

3.5%
0%
1%
1%
2%
2%
3%
3%
4%
4%
2022 Q4 2023 Q4

IVACANCY RATE

RECENT VACANCY RATE TRENDS FOR WAREHOUSE/DISTRIBUTION

SPACE IN RANCHO CUCAMONGA
$1.50
$1.75
$1.35
$1.40
$1.45
$1.50
$1.55
$1.60
$1.65
$1.70
$1.75
$1.80
2023 Q1 2023 Q4
LEASE RATE/SQ.FT.

RECENT LEASE RATE TRENDS FOR WAREHOUSE/DISTRIBUTION

SPACE IN RANCHO CUCAMONGA

THE TOTAL NUMBER OF BUILDINGS AMOUNTS TO 749 FOR RC AND 8,851 FOR THE IE.; RC HAS A SHARE OF 8.5%  THE AMOUNT OF SPACE AMOUNTS TO 43,128,230 SQ.FT. FOR RC AND 660,295,978 SQ.FT. FOR IE; RC HAS A SHARE OF 6.5%  THE AMOUNT OF SPACE UNDER CONSTRUCTION AMOUNTS TO 761,687 FOR RC AND 27,449,208 FOR I.E: RC HAS A SHARE OF 2.7%

 THE RECENT GROSS ABSORPTION AMOUNTS TO 2,978,129 FOR RC AND 12,391,000 FOR I.E: RC HAS A SHARE OF 24%  12434- 4TH STREET WAREHOUSE/DISTRIBUTION WITH TWO BUILDINGS HAS 2,000,000 SQ.FT. THAT HAVE BEEN LEASED!  THE NAPA/ETIWANDA WAREHOUSE/DISTRIBUTION WITH 651,000 SQ.FT. HAS BEEN BUILT AND IS BEING LEASED 2,000,000
651,000
0 500,000
1,000,000
1,500,000
2,000,000
2,500,000

NEWLY LEASED BUILT-LEASING
BUILDING SQ.FT .

RECENT OCCUPANCY AND COMPLETION OF WAREHOUSE/DISTRIBUTION

SPACE IN RANCHO CUCAMONGA
45

Resume: Joseph T. Janczyk, Ph.D.

President of Empire Economics
Education: University of California, Riverside, Ph.D. in Economics, Completed in 1976 Specializations in Urban Economics, Mathematical Modeling and Econometric Analysis State University of New York at Buffalo, Bachelors, Completed in 1970 Dual Majors: Economics and Psychology

Prior Employment: California State University, Tenured Economics Professor: 1976-1985 Courses Taught: Microeconomics, Macroeconomics, Urban Economics, Regional, Computer Modeling, Econometrics, among others
Empire Economics: Chairman and President: 1986-Present •Perform Independent Real Estate Consulting Services Primarily for Land Secured Financings •Work for Public Entities including Counties, Cities, School Districts and Water Districts •Long-term Relationships with Many Clients, 25+ years
•Well Established Relationships with Numerous Professionals in the Municipal Finance Industry •Performed 500+ Studies on behalf of Public Entities for $15B+ in municipal financing oLand Secured Financings for Planned Communities, Business Parks and Retail Centers for 400+ CFDs/ADs for $7.5B bonds
Price Point Study – Establish Special Taxes that conform to public entities’ policies Market Absorption Studies - Provide timelines for phasing infrastructure Homeowner Equity Studies and Forecasts of Assessed Values Economic Forecasting Studies: Forecast Employment and Housing Demand •Socioeconomic Studies Orange County Transportation Corridors: 2 studies $2.75B bonds oDesignated as Municipal Bond Issue of the Year for 1999 oRating Agency and Bond Insurer Presentations – Trips to New York City •Mortgage Revenue Bond Issues: Lower Mortgage Rates 50+ studies for $1.7B bonds •Other Municipal Bond Issues: 35+ studies $2B+ bonds; Certificates of Participation, others •Forthcoming Bond Issues: 25+ studies for $400M+ future bond sales Industry Contributions – Regular Speaker/Panelist at Following Events:
•State Treasurer, Mr. John Chiang: Council of Economic Advisors: January 2015 – December 2018 oBi-annual meetings and published articles in the Treasurer’s Newsletter, Intersections •UCLA Municipal Bond Financing Seminars (10+ times, as Featured Speaker) •Bond Buyer Conference
•League of Cities
•Municipal Bond Industry Association
•Best Practices for Continuing Disclosure
•Appraisal Standards for Land Secured Financing by CDIAC •Meetings with Municipal Bond Funds
Dedicated to Public Sector: Certifications Provided in each Study:

Empire has not performed any consulting services for the CFD/AD property owners nor the developers/builders, during the past thirty years. •Empire will not perform any consulting services for the CFD/AD property owners nor the developers/builders, during the next five years. 46

CITY OF RANCHO CUCAMONGA

ANNUAL ECONOMIC AND HOUSING STUDY

ADDENDUM I

ADDITIONAL BACKGROUND ON RANCHO CUCAMONGA

FORECASTED EMPLOYMENT GROWTH BY SECTOR

PREPARED BY
EMPIRE ECONOMICS, INC.

JOSEPH T. JANCZYK, PH.D.

MAY 28, 2024
1 Attachment 2

Methodology
• Overall, for 2024-F to 2030-F , the total nonfarm Rancho Cucamonga employment is calculated as the sum of the 14 sectors (plus a small residual employment not captured in these). The forecast is without the high speed rail and reflects total nonfarm employees by firms located in the city • From 2018-2023-est., total nonfarm employment grew about 1.5% per year and it is expected to range per year starting from 3.2% per year and declining 1.7%-1.9% per year for 2024 / 2023-Est. to 2030-F / 2029-F.
• Most of the 14 sectors are expected to grow from 2023-Est. to 2030-F at the 2018-2023-Est. average change per year with 5 exceptions as follows:
• For the three sectors (real estate, education, and admin)with the three highest positive gross 2018-2023-Est. average annual rate change, thesewere slightly moderated --- (real estate 7%/yr. down to 4%/yr.), (education 7%/yr. down to 5%/yr.), and (admin 8%/yr. down to 6%/yr.) respectively --- to account for unusually high growth over this time period. For forecasting, this regresses the biggest outliers closer to the mean via a moreconservative approach. • For management, given its lower base amount, as it gets closer to minimum base level, it’s forecast to decline much more slowly (from -13% to -3%). This regresses the highest negative outlier closer to the mean via a moreconservative approach.

• For transportation and warehousing, the additional expected warehousing growth gross numbers were added in (an additional 2,800 jobs in total), and this was given a base rate closer to flat (-5%/yr. up to 10%/yr.).

Total Employment and Growth by Year
• Collectively, total employment is expected to rise ~12,800 from 2023-Est. to 2030-F • Forecasted total employment is the sum of the forecasted growth of the 14 primary sectors plus a small residual of the others • Overall, growth per year is expected to moderate from 3.2% in 2024-F / 2023-Est. down to a range of 1.7-1.9% for 2027-F-2030-F • Note: all forecasts are without the high speed rail and reflect total nonfarm employees by firms located in the city 74,550
75,369
68,040
72,122
78,388
79,413
81,943
84,011
85,898
87,322
88,847
90,477
92,216
0 20,000
40,000
60,000
80,000
100,000
120,000
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED

LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY
FOR 2018-2030-F

WITHOUT HIGH SPEED RAIL

1.1%
-9.7%

6.0%

8.7%

1.3%

3.2%

2.5%

2.2%

1.7%

1.7%

1.8%

1.9%
-15%
-10%
-5%
0%
5%
10%
2019 /
2018
2020 /
2019
2021 /
2020
2022 /
2021
2023-Est. /
2022
2024-F /
2023-Est.
2025-F /
2024-F
2026-F /
2025-F
2027-F /
2026-F
2028-F /
2027-F
2029-F /
2028-F
2030-F /
2029-F
CITY OF RANCHO CUCAMONGA: TOTAL EMPLOYMENT
CHANGE PER YEAR OVER PRIOR YEAR THROUGH 2030 FORECASTED

WITHOUT HIGH SPEED RAIL

Forecasted Change for the Historically Most Stable Sectors • Least volatile: From 2018-2023, nine sectors changed between -4% and +5% per year (four sectors declining and five sectors rising) • Continuance of trend expected: The growth rates for 2018-2023-Est. are expected to continue for 2023-Est.-2030-F • Collectively, these are expected to add over 3,000 jobs through 2030-F -3.7%
-3.1%
-1.7% -1.5%

1.2%

2.7% 2.8%

3.8%

4.5%
-3.7%
-3.1%
-1.7% -1.5%

1.2%

2.7% 2.8%

3.8%

4.5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Manufacturing Finance &
Insurance
Retail Trade Construction Accommod. &
Food
Health Care &
Social Assist.

Government Prof., Scientific
& Tech.

Wholesale
Trade
CITY OF RANCHO CUCAMONGA: SECTOR EMPLOYMENT CHANGE/YEAR FOR 2018 TO 2023-Est. AND 2023-Est. TO 2030-F FOR THE HISTORICALLY MORE STABLE SECTORSW/2018-23-Est. CHANGE/YR. FROM -4% TO +5%

WITHOUT HIGH SPEED RAIL
2018-2023 Est.

Avg. Change/Yr.
2023 Est.-2030-F
Avg. Change/Yr.
0 10,000
20,000
30,000
40,000
50,000
60,000
70,000
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED

LEVELS OF EMPLOYMENT BY HISTORICALLY MORE STABLE SECTORS

WITHOUT HIGH SPEED RAIL
Finance & Insurance
Professional, Scientific, Tech.

Construction
Manufacturing
Wholesale Trade
Retail Trade
Health Care & Social Assist.

Accommodation & Food
Government

Forecasted Change for Sectors for the Historically Larger Changing Sectors The five sectors with the historically largest annual changes (-13% to -5% or +7-8% from 2018-2023-Est.) had customized forecasts:
• Management: Expected to have more moderate declines as reaches closer to a "floor“ minimum (just ~300 in 2023-Est.) • Transportation and Warehouse: Additional growth of +2,800 jobs forecasted on top of a structurally positive shift in base growth • Real estate, education, and administrative: highest growth sectors expected to conservatively regress closer to the mean • Collectively, these five sectors are expected to add over 9,000 jobs through 2030-F -13%
-5%
7% 7% 8%
-3%
10%
4% 5% 6%
-15%
-10%
-5%
0%
5%
10%
15%
Management of
Companies
Transportation &
Warehousing
Real Estate,
Rental, Leasing
Educational
Services
Administrative &
Support
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY

FIRMS LOCATED IN THE CITY FOR THE HISTORICALLY LARGEST CHANGING SECTORS W/2018-23-Est. CHANGE/YR. OF -5% OR MORE OR INCREASES OF 5%+

WITHOUT HIGH SPEED RAIL
2018-2023 Est.

Avg. Change/Yr.
2023 Est.-2030-F
Avg. Change/Yr.
0 5,000
10,000
15,000
20,000
25,000
30,000
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED

LEVELS OF EMPLOYMENT BY HISTORICALLY LARGEST CHANGING SECTORS

WITHOUT HIGH SPEED RAIL
Management of
Companies
Educational Services
Real Estate, Rental,
Leasing
Transportation &
Warehousing
Administrative &
Support

Prior and Forecast Sector Growth Composition Change
2018 to 2030-F:
(+) Highest share gains:
- Administrative and
support services (+8%)
- Transportation and
warehousing (+2%)
- Wholesale (+2%)
(-) Greatest share losses:
- Manufacturing (-6%)
- Retail trade (-4%)
- Construction (-3%)
- Finance and Insurance (-2%)
Note: Changes rounded to nearest %
13% 10% 7%
13%
13%
12%
12% 13%
13%
12% 10%
8%
10% 14%
18%
8% 7%
6%
8% 9%
9%
6% 4% 7%
6% 7% 8%
5% 4% 3%
4% 5% 6%
2% 2% 3%1% <1% <1%1% 1% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2018
2023-
Est.
2030-F
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED

LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY
SECTOR NONFARM SHARE FOR 2018, 2023-Est., AND 2030-F

WITHOUT HIGH SPEED RAIL
Educational Services
Management of Companies
Real Estate, Rental, Leasing
Professional, Scientific, Tech.

Finance & Insurance
Wholesale Trade
Transportation & Warehousing
Health Care & Social Assist.

Construction
Administrative & Support
Retail Trade
Government
Accommodation & Food
Manufacturing

1 PREPARED
BY
EMPIRE ECONOMICS, INC.

JOSEPH T. JANCZYK, PH.D.

FEBRUARY 26, 2024
(REVISED RIDERSHIP NUMBERS: MAY 28, 2024)

BRIGHTLINE WEST HIGH SPEED RAIL

ECONOMIC IMPACTS
AND

POTENTIAL NEARBY DEVELOPMENT OPPORTUNITIES
Attachment 3

TABLE OF CONTENTS
INTRODUCTION……………………………………………………………………………………………………………………….........................................3 KEY CONCEPT #1 OVERVIEW OF POTENTIAL OPPORTUNITIES FOR RANCHO CUCAMONGA FROM BW-HSR KEY CONCEPT #2 CRITICAL COMPONENTS: ESSENTIALS, ENTICEMENT, AND EXPANSION KEY CONCEPT #3 CRITICAL QUESTIONS TO BE RESEARCHED/ANSWERED PART I
ECONOMIC-EMPLOYMENT IMPACTS OF BRIGHTLINE WEST HIGH SPEED RAIL…………………….………….................................................8 CONSTRUCTION PHASE 2024-2028
OPERATION OF THE STATION 2028+

PART II

POTENTIAL DEVELOPMENT OPPORTUNITIES AT THE RANCHO CUCAMONGA STATION FROM LAS VEGAS VISITORS COMING TO SOUTHERN CALIFORNIA FOR TOURISM ACTIVITIES………………………………………………………………………….……..14 A. OVERVIEW OF INTERNATIONAL HIGH-SPEED RAIL AND THEIR RECREATIONAL DESTINATIONS..

B. CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL – FLORIDA C. OVERVIEW OF DOMESTIC RAIL WITH RECREATIONAL DESTINATIONS D. EXAMPLE OF AN AIRPORT TERMINAL OFFERING EXTENSIVE AMENITIES: PORTLAND AIRPORT E. SUMMARY OF KEY POTENTIAL COMPONENTS OF THE RC-STATION F. RC STATION AREA – CURRENTLY LACK OF AMENITIES REQUIRES NEW DEVELOPMENT AND/OR SHUTTLE SERVICE G. RANCHO CUCAMONGA AS A GATEW AY TO SOUTHERN CALIFORNIA ATTRACTIONS H. POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS COMING TO THE BW-HSR STATION FOR TOURISM I. ECONOMIC BENEFITS OF RAIL – POTENTIAL REAL ESTATE PREMIUMS

PART III
CONCLUSIONS AND RECOMMENDATIONS……………………………………………………………………………………………………...............…33 SUPPLEMENTAL REMARKS POTENTIAL OTHER SOURCES OF DEMAND FOR BW-HSR RC-STATION………………………………......…..34 APPENDIX A: INTERNATIONAL HIGH SPEED RAIL EXAMPLES…………………………………………………………………………………….....35 APPENDIX B: DOMESTIC RAIL STATION EXAMPLES.……………………………………………………………………………………………….......45 2

INTRODUCTION
KEY CONCEPT #1 OVERVIEW OF POTENTIAL OPPORTUNITIES FOR RANCHO CUCAMONGA

FROM BRIGHTLINE WEST HIGH SPEED RAIL
3 There are significant short-term employment/economic benefits for Rancho Cucamonga (RC) from construction of the Brightline West High Speed Rail (BW-HSR).

However, the long-term benefit for RC is the potential for being not only a launching point for Southern California (SC) visitorsgoing to Las V egas (LV) but furthermore a receiving point for LV visitors coming to SC for tourism activities which will ramp over time.

Based on extensive international research, High Speed Rail (HSR) can and will likely promote two-way tourism. • Empire Economics (Empire) estimates that there may be some 560,000 annually that use BW-HSR from LV to the RC-Station to visit Southern California. • Of these, an estimated 60,500 annually may decide to use accommodations near the RC-Station as the launching point base for their SC tourism activities.

The RC-Station and its tourism aspects need to be carefully orchestrated to capture the benefits of the BW-HSR. • Given that tourists from Las V egas will also be flowing to SC through the RC-Station, the City can now start to formulate a strategic plan to identify relevant types of developments in the vicinity of the station.
• The RC-Station is not in a traditional urban area or in close proximity to RC’s existing restaurants, lodging, retail, etc. • So, the relevant types of development need to be constructed and/or connected with the existing RC’s amenities. It may take time for demand to ramp-up.

• Current land uses in the area may have to be rethought/rezoned to best capture this new asset for RC. • Typical amenities such as a hotel, parking, lounge and some retail are key to success as well as connecting to other retail in the area, perhaps by a shuttle. • Being seen as a “node” or gateway to the Southern California area will be crucial to attracting residents from LV coming to SC for tourism, using the HSR. • Many cities in the Inland Empire, Orange County and Los Angeles areas should have a vested interest in using RC as a hub for tourists/visitors from LV .

The success of such a strategic plan is based upon some critical fundamental conditions:
• Brightline West HSR starting at a projected level of some 6M passenger trips annually. (Each trip means a person traveling from a departure station to their destination station.) • HSR prices being competitive with alternative modes of transportation such as air, car and bus. • Furthermore, travelers in addition to the direct travel costs, are also likely to consider BW-HSR offering an exciting mode of transit! • Relevant products/services being promoted and providing positive consumer experiences.

4 PASSENGER TOURISM OCCURS IN BOTH DIRECTIONS

SOUTHERN CALIFORNIA VISITORS TO LAS VEGAS- MAJORITY

ALSO LAS VEGAS VISITORS TO SOUTHERN CALIFORNIA

5 ESSENTIALS: BRIGHTLINE HAS EXPERTISE FROM BRIGHTLINE FLORIDA HIGH SPEED RAIL (BF-HSR) • Basic operations: staff, ticketing kiosks, ticketing office, seats, arrival time with/without baggage, restrooms, elevator and vending machines. Technology/Financial: ATM, Wi-Fi, QSR
• Amenities: metropolitan lounge, convenience store, coffee shops, bar, and cultural events. • Connections: Transportation hub - connections to other rail as well as car rental, Uber and shuttles. • BW-HSR coach design is expected to include white and blue interiors, roomy seating and WiFi. • Although BW-HSR will compete with alternative modes of transportation, the BW-HSR module has appeal as an exciting adventure.

ENTICEMENT: PASSENGERS ENJOY SPENDING TIME AT STATION AND EXCITED ABOUT TRIP TO LV Collaboration Between Brightline and Rancho Cucamonga via amenities at Station and accessible via Shuttle • Restaurants: local eateries, wine tasting, fast food, coffee shops, brew pubs, and sit down restaurants • Potential amenities: shopping at micro-store, kiosks, art exhibits, fitness area quiet spaces, and spa services. • Cultural Options: such as short movies, craft fairs, art exhibits, thematic events, live music, etc.

EXPANSION: RANCHO CUCAMONGA: VISITORS FROM LAS VEGAS – DEVELOP TOURISM FACILITIES • Enhanced Transit Hub: Accessibility to Amtrack, Uber, bus, and car rentals. Visitor Information Center. • Initially - During the BW-HSR ramp-up process: Shuttle access to nearby hotels, restaurants and shopping • Passengers 6M-Threshold Future Nearby Development: Hotel accommodations Sit-down restaurants Shopping BW-HSR expects to start with 6,000,000 passengers - estimate about 60,500 visitors to SC from LV to start and then ramp-up.

KEY CONCEPT #2
CRITICAL COMPONENTS: ESSENTIALS, ENTICEMENT, AND RIDERSHIP EXPANSION

6 KEY CONCEPT #2
CRITICAL COMPONENTS: RIDERSHIP EXPANSION DETAILS
PLEASE NOTE THAT THE CITY OF RC PROVIDED WITH ANNUAL RIDESHIP NUMBERS (MILLON) FROM BRIGHTLINE. • IN YR. 1, TRAFFIC IS EXPECTED TO START AT 6M IN TERMS OF RIDERSHIP WITH 1/3 OF THE TRAINS RUNNING. • IN YR. 4, TRAFFIC IS EXPECTED TO BE 8M IN TERMS OF RIDERSHIP WITH 2/3 OF THE TRAINS RUNNING. • IN YR. 8, TRAFFIC IS EXPECTED TO BE 8.9M IN TERMS OF RIDERSHIP WITH MOST OF THE TRAINS ANTICIPATED NEEDED. • STARTING IN YR. 11, CAPACITY WILL INCREASED.

PLEASE NOTE THESE ESTIMATED TRAFFIC FIGURES ARE RELATIVELY HIGH ANNUAL RIDERSHIP COUNTS FOR US BASED RAIL SERVICE.

KEY CONCEPTS #3:

CRITICAL QUESTIONS TO BE RESEARCHED/ANSWERED
7 Below are some of they key questions that Empire addressed in relation to BW-HSR and the City of RC:
 How will the BW-HSR construction and operation phases impact the City’s employment growth?  What insights does international HSR, domestic rail, Brightline Florida, and other transportation hubs provide for BW-HSR?  What types of RC-Station amenities can be supported by LV tourism visitors, including hotels, restaurants, and retail among others?

 How can the RC-Station serve as a launching point for LV visitors going to various tourist destinations in Southern California?  How many LV visitors that come to the RC-Station are likely utilize RC as their embarkation point for SC tourism?  How would such ancillary developments impact property values in the vicinity of the RC-Station?  Finally, what is a hypothetical timeline for the development of nearby amenities, based upon BW-HSR passenger ramp-up? Initially: During the BW-HSR ramp-up process, shuttles.

Future: When passengers 6M-threshold attained, then nearby development.

Caveats and Limiting Conditions
 Empire Economics (Empire), in the process of performing this research has made best efforts to collaborate with the City to compile information on the BW-HSR economic/employment impacts as well as the specific features of the RC-Station.  However, since such information is limited at this time, Empire utilized plausible but conservative assumptions; these are subject to revision as more information becomes available and will change over time as HSR usage becomes more commonplace.

8 PART I

ECONOMIC-EMPLOYMENT IMPACTS OF BRIGHTLINE WEST HIGH SPEED RAIL

CONSTRUCTION AND OPERATION
LOOKING FORWARD, THE HIGH SPEED RAIL IS EXPECTED TO HA VE SEVERAL DIRECT IMPACTS ON EMPLOYMENT:
#1) CONSTRUCTION WORKERS
- APPROXIMATELY 1,900 JOBS
- UNION LABOR: HIGHER PAYING JOBS IN CONSTRUCTION SECTOR - TIMING: “TEMPORARY” POSITIONS STARTING IN MID-2024 AND CONTINUING THROUGH LATTER 2028 #2) OPERATIONS WORKERS
- APPROXIMATELY 275 JOBS
- LOWER COST LABOR: ADMINISTRATIVE AND SUPPORT SERVICES - TIMING: PERMANENT POSITIONS STARTING IN 2029 AND CONTINUING THEREAFTER FURTHERMORE, THE HIGH SPEED RAIL IS EXPECTED TO HA VE INDIRECT IMPACTS ON EMPLOYMENT:
#3) SUPPORT SERVICE JOBS WILL BE GENERATED
- THESE ARE SECTORS IN WHICH JOBS ARE ADDED TO SUPPORT CORE SECTORS ABOVE - THESE ARE A MULTIPLIER EFFECT – FOR EVERY 1 CORE JOB ADDED, ABOUT AN ADDITIONAL 0.7 SUPPORT JOBS - MULTIPLE EFFECT of 0.7 IS BASED ON 2023 RATIO OF SUPPORT (~32K) TO CORE (~47K) SECTOR JOBS - THESE POSITIONS WILL BE SPREAD ACROSS V ARIOUS SUPPORT SECTORS, EDUCATION AND HEALTHCARE CRITICAL LONG-TERM INSIGHT:

THE NEAR TERM BW-HSR CONSTRUCTION/SUPPORT SECTOR JOBS DURING 2024-LATTER 2028 ARE TEMPORARY THE OPERATIONAL/SUPPORT JOBS ARE EXPECTED TO START IN 2029 AND CONTINUE THEREAFTER THE RC-STATION AMENITY RELATED JOBS WHEN THE 6M PASSENGER THRESHOLD IS ATTAINED, CONTINUES THEREAFTER

RANCHO CUCAMONGA - RECENT AND FORECASTED AGGREGATE LEVELS OF EMPLOYMENT (2000-2023-EST. RECENT & 2024-2030 FORECAST) *WITH HIGH SPEED RAIL* • FOLLOWING THE DECLINE IN 2020, EMPLOYMENT INCREASED BY ~4,100 IN 2021 AND BY ~6,800 IN 2022 TO EXCEED ITS PRE-COVID LEVEL • IN 2023, EMPLOYMENT IS ESTIMATED TO HA VE INCREASED BY ~500 JOBS, A MORE MODERATE GROWTH RATE • WITH HSR, EMPLOYMENT IN THE CITY OF RC IS EXPECTED TO RISE BY ~13,000 FROM 2023-EST. TO 2028 TO REACH ~92,000 IN 2028 AND ~92,700 IN 2030
9 36,830
41,124
45,503
52,496
56,545
60,591
65,139
64,358
62,974
59,054
58,210
61,188
63,884
66,188
71,253
73,262
75,159
75,383
75,611
74,445
68,040
72,122
78,901
79,413
83,562
87,250
89,138
90,561
92,086
90,946
92,685
0 20,000
40,000
60,000
80,000
100,000
120,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED

LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY
*WITH HIGH SPEED RAIL*

10 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT CHANGE BY YEAR (2000 – 2030 FORECASTED)
• HISTORICALLY , EMPLOYMENT HAS GONE THROUGH MAJOR CYCLES BASED ON MACROECONOMIC CONDITIONS • MAJORITY OF YEARS HA VE HAD GROWTH ACROSS THREE MAJOR TIME PERIODS: 2001-2006, 2011-2016, AND 2021-2023 • SEVERAL TIME PERIODS WITH SLOW DOWNS HA VE OCCURRED AS WELL: 2007-2010 AND 2019-2020 4,294
4,379
6,993
4,049
4,046
4,548
-781
-1,384
-3,920
-844
2,978
2,696
2,304
5,065
2,009
1,897
224
228
-1,166
-6,405
4,100
6,779
512
4,150
3,688
1,888
1,424
1,525
-1,140
1,739
-8,000
-6,000
-4,000
-2,000
0 2,000
4,000
6,000
8,000
10,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023-Est.
2024-F
2025-F
2026-F
2027-F
2028-F
2029-F
2030-F
CITY OF RANCHO CUCAMONGA:

ANNUAL CHANGE IN EMPLOYMENT BY FIRMS LOCATED IN THE CITY *WITH HIGH SPEED RAIL*

11 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT BY TYPE (2023-EST. RECENT TO 2030 FORECAST)
• HIGH SPEED RAIL PROVIDES DIRECT AND INDIRECT GROWTH:
• TEMPORARY FOR CONSTRUCTION POSITIONS – 1,900 TOTAL (STARTING IN 2024 AND ENDING IN 2028) • SUSTAINING LONG TERM OPERATIONS HIGH SPEED RAIL ADMIN/SUPPORT SERVICES – 275 TOTAL STARTING IN 2029 • FURTHER GROWTH: HIGH SPEED GENERATES OTHER SUPPORT SECTOR JOBS AT A MULTIPLER OF AN ADDITIONAL 0.7 PER RAIL JOB • ACCELERATING EMPLOYMENT GROWTH INITIALLY BASED ON HISTORICAL RATIO OF SUPPORT/CORE SECTORS • BUT THEN LOSS OF TEMPORARY JOBS MODERATES EMPLOYMENT IN LATER 2029, THEN BASELINE GROWTH BASED CONTINUES 75,000
79,000
83,000
87,000
91,000
95,000
2023-Est. 2024-F 2025-F 2026-F 2027-F 2028-F 2029-F 2030-F CITY OF RANCHO CUCAMONGA: ANNUAL CHANGE IN EMPLOYMENT BY

FIRMS LOCATED IN THE CITY BY TYPE
(2023-EST TO 2030-FORECAST) - *WITH HIGH SPEED RAIL*

TOTAL NONFARM - BASELINE GROWTH BASED HIGH SPEED RAIL - CONSTRUCTION

HIGH SPEED RAIL - OPERATIONS (ADMIN AND SUPPORT) HIGH SPEED RAIL - ALL SUPPORT SECTORS

THIS GRAPH DOES NOT

CURRENTLY INCLUDE

ADDITIONAL EMPLOYMENT

THA T WOULD BE

GENERA TED BY THE

DEVELOPMENT OF

RESTAURANTS, HOTELS AND

OTHER FACILITIES IN THE

VICINITY OF THE RC STA TION

12 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT BY SECTOR (2023-EST. RECENT TO 2030 FORECAST)
MOST OF RANCHO CUCAMONGA SECTORS ARE FORECASTED TO FOLLOW HISTORICAL GROWTH TRENDS. • TRANSPORTATION & W AREHOUSING IS EXPECTED TO GROW AT A FAST RATE, POTENTIALLY DOUBLING IN SIZE. • CORE SECTORS EXPECTED TO GROW ARE ADMINISTRATIVE & SUPPORT SERVICES AND ACCOMMODATION & FOOD SERVICES. • HOWEVER, MANUFACTURING AND RETAIL TRADE ARE EXPECTED TO DECLINE. -2,000
0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
CITY OF RANCHO CUCAMONGA: CHANGE IN EMPLOYMENT BY FIRMS LOCATED IN THE CITY BY SECTOR (2023-EST. TO 2030-FORECAST) *WITH HIGH SPEED RAIL*
YEAR 2023 - EST. YEAR 2030 - FORECAST 2023 TO 2030 CHANGE

13 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT BY SECTOR (2030 FORECAST VS. 2023-EST. RECENT)
• TOTAL NONFARM BASELINE GROWTH EXPECTED TO RISE / FALL BY SECTOR, INCLUDING W AREHOUSING, THAT MAKE UP AGGREGATE • SECTOR WITH BIGGEST JOB ADDITIONS 2030 VS. 2023-EST.: ADMINISTRATIVE & SUPPORT SERVICES GAINING +5,457 JOBS • SECTOR WITH BIGGEST JOB LOSES 2030 VS. 2023-EST.: MANUFACTURING LOSING -1,814 JOBS

PLEASE NOTE THAT THIS INCLUDES THE IMPACT OF AUTOMATION • CONSTRUCTION SECTOR BENEFITS FROM BW-HSR FROM 2024-2028, BUT TEMPORARY; OPERATIONS SECTOR 2029+ JOBS CONTINUE 5,457
3,183
2,101
1,821
1,415
1,167
596
826
369
110
-40
-96
-65
-538
-572
-819
-1,814
-3,000 -1,000 1,000 3,000 5,000 7,000
Administrative & Support Services
Transportation & Warehousing
Government
Wholesale Trade
Health Care & Social Assistance
Professional, Scientific & Technical Services
Real Estate & Rental & Leasing
Accommodation & Food Services
Educational Services
Information
Arts, Entertainment & Recreation
Other Services
Management of Companies & Enterprises
Finance & Insurance
Construction
Retail Trade
Manufacturing
RANCHO CUCAMONGA: CHANGE IN LEVELS OF EMPLOYMENT
FROM 2023-EST. TO 2030 FORECAST BY ECONOMIC SECTOR
*WITH HIGH SPEED RAIL*

PART II

POTENTIAL DEVELOPMENT OPPORTUNITIES AT THE RANCHO CUCAMONGA STATION

FROM LAS VEGAS VISITORS COMING TO SOUTHERN CALIFORNIA FOR TOURISM ACTIVITIES 14 A. OVERVIEW OF INTERNATIONAL HIGH-SPEED RAIL AND THEIR RECREATIONAL DESTINATIONS B. CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL – FLORIDA C. OVERVIEW OF DOMESTIC RAIL WITH RECREATIONAL DESTINATIONS D. EXAMPLE OF AN AIRPORT TERMINAL OFFERING EXTENSIVE AMENITIES: PORTLAND AIRPORT E. SUMMARY OF KEY POTENTIAL COMPONENTS OF THE RC-STATION F. RC STATION AREA – CURRENTLY LACK OF AMENITIES REQUIRES NEW DEVELOPMENT AND/OR SHUTTLE SERVICE G. RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS H. POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS COMING TO THE BW-HSR STATION FOR TOURISM I. ECONOMIC BENEFITS OF RAIL – POTENTIAL REAL ESTATE PREMIUMS

A. OVERVIEW OF INTERNATIONAL HIGH-SPEED RAIL

AND THEIR RECREATIONAL DESTINATIONS
15 EMPIRE IDENTIFIED ELEVEN INTERNATIONAL HIGH SPEED RAIL PROJECTS THAT ARE RECREATION ORIENTED.

OF THESE , SIX THAT ARE REGARDED AS BEING THE MOST COMPARABLE; THEIR CHARACTERISTICS ARE AS FOLLOWS:
(NOTE: PASSENGER FIGURES REFLECT POST-COVID LEVELS WHICH ARE 40%-60% OF PRE-COVID LEVELS AND GROWING)  THE BW-HSR;S DESTINATION IS LAS VEGAS WHICH HAS A SIGNIFICANTLY MORE RECREATIONAL AMENITIES THAN OTHER HSR DESTINATIONS.
 ABOUT 4.2 MILLION VISITORS FROM CALIFORNIA ANNUALLY WITH ANNUAL CASINO REVENUES OF $8 BILLION -ALONG WITH 150,000+ HOTEL ROOMS, AND 2,700+ RESTAURANTS.

High-speed
Rail Line Country Departure
City
Destination/
Recreation Center
Estimated
Annual
Ridership
(Millions)
Distance
(miles)
Departure Station
Amenities
Promotes
Tourism:

Departure&
Destination
Key Learning #1 Key Learning #2

1. TGV France Paris Disneyland Paris 10 28
Restaurants hotels,
historical sites, office,
space
Yes HSR boosts tourism
to Disneyland
HSR can be a node to
surrounding areas

2. Eurostar UK London Disneyland Paris 11 307
Luxury, shopping
dinning, hotels,
residential apartments
Yes Decreased air travel More consistency
in retail

3. Alta Spain Madrid Seville (historic area) 3.2 329
Restaurants, hotels,
shopping centers,
botanical garden
Yes Promotes tourism Cultural/other nearby
destinations help drive

4. Frecciarossa Italy Rome Florence (art/history) 10 171 Restaurants, shops, hotels, apartments Yes Used as a node Ticket prices have caused low adoption

5. Shinkansen Japan Tokyo Mount Fuji area 13 78 Restaurants, shopping areas, hotels, offices Yes Increased tourism
with impact in Yr. 1
Travel mix shifts over
Time

6. CHR/CR China Beijing Great Wall at Badaling 10 50
Restaurants, hotels,
retailers, residential
towers
Yes
Important that
destination be a
node/or gateway
Local tourism important
to ongoing success

16 MAP OF INTERNATIONAL HSR RAIL SYSTEMS – RECREATIONALLY ORIENTED

1. 2.

3. 4.

5. 6.

High Speed Rail Maps Europe High Speed Rail Asia

BELOW ARE THE MAPS OF THE SIX MAJOR INTERNATIONAL HSR NETWORKS THAT EMPIRE IDENTIFIED AS BEING RECREATIONALLY ORIENTED, LIKE BW-HSR.

THE STRONGEST COMPARABLES ARE #1 TGV BETWEEN PARIS TO DISNEYLAND PARIS AND #2 EUROSTAR BETWEEN LONDON AND DISNEYLAND PARIS.

NUMBERS CORRESPOND TO TABLE ON PREVIOUS PAGE

17 TGV TO DISNEYLAND PARIS
• THERE ARE POTENTIALLY 10M TOURISTS

TRA VELING BETWEEN THE TGV PARIS STATION AND

THE STATION FOR DISNEYLAND PARIS (MARNE-LA-
V ALLÉE – CHESSY)
• DISNEYLAND PARIS FUNDED ONE THIRD OF $126.5
MILLION OF EUROS NEEDED TO BUILD THE STATION.
• DISNEY ACKNOWLEDGES THAT HSR IS A POPULAR
MEANS TO REACH THE PARK AND AT LEAST 60% OF
THE GUESTS USE HSR.

CHARACTERISTICS OF MOST COMPARABLE HSR EXAMPLES

EUROSTAR LONDON TO PARIS
• THERE ARE OVER 11M PASSENGERS BETWEEN

LONDON PARIS
• IT TOOK TIME FOR THE TRAIN TRA VEL TO

REPLACE THE AIR TRA VEL, AS EXHIBITED BY
THE CHARTS BELOW:

18 B. CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL - FLORIDA SIMILARITIES: WITH REGARDS TO DOMESTIC HSR SYSTEMS ASSOCIATED WITH RECREATIONAL AREA DESTINATIONS,

BRIGHTLINE-FLORIDA (BF-HSR) IS REGARDED AS BEING A STRONG COMPARABLE TO BW-HSR WITH REGARDS TO THE FOLLOWING CHARACTERISTICS:
 DEVELOPER/OPERATOR: BOTH BF-HSR AND BW-HSR HA VE THE SAME DEVELOPER/OPERATOR, THE ONLY PRIV ATELY OWNED/OPERATED HSR IN THE UNITED STATES.
 STATIONS: BF-HSR HAS A DEPARTURE STATION IN MIAMI, WITH INTERIM STATIONS IN FORT LAUDERDALE, WEST PALM BEACH, A VENTURA AND BOCA RATON, AND THEN IN SEPTEMBER 2023 EXTENDED ITS SERVICE TO ORLANDO, DISNEY WORLD WHICH IS COMPARABLE TO SOUTHERN CA.
 DIRECT SERVICE FROM MIAMI TO ORLANDO IS A V AILABLE ON SOME OF THE TRAINS; OTHER TRAINS MAKE INTERIM STOPS.
 RAMP-UP TIMING: BF-HSR COMMENCED SERVICE IN JANUARY 2018 FROM MIAMI, FL TO PALM BEACH, FL SO IT HAS

EXPERIENCE WITH RAMP-UP AND OTHER OPERATIONAL FACTORS THAT MAY PROVIDE INSIGHT INTO BW-HSR IN TERMS OF RAMP-UP.

DIFFERENCES: HOWEVER, THERE ARE EXPECTED TO BE SOME DIFFERENCES BETWEEN BF-HSR AND BW-HSR:
 DISTANCE AND TIME: BF-HSR COVERS 235 MILES IN 3H-25M COMPARED TO BW-HSR 180 MILES IN AN ESTIMATED 2 HRS 10 MIN (BW-HSR).
 SPEED: BF-HSR HAS A SPEED OF 69 MPH WHILE BW-HSR WILL HA VE A MUCH HIGHER SPEED OF UP TO 200MPH (BW-HSR).
.

19 SOME OTHER CHARACTERISTICS OF BF-HSR THAT MAY PROVIDE SOME INSIGHT INTO BW-HSR ARE AS FOLLOWS:
 STATION
 CONSTRUCTION OF BF-HSR BEGAN IN MIAMI STATION IN MID-2014.  THE BF-HSR MIAMI STATION SPANS 9 ACRES WITH 3 MILLION SQ.FT. OF MIXED-USE DEVELOPMENT:

RESIDENTIAL, OFFICE, COMMERCIAL AND A RETAIL CONCOURSE WHICH IS UNIQUE  THE STATION SERVES AS A HUB WITH METRORAIL, METROMOVER, METROBUS AND THE CITY TROLLEY .  RURAL/URBAN: BF-HSR TRAIN TRACKS TRA VERSE URBANIZED AREAS; BY COMPARISON, BW-HSR WILL HA VE TRACK PREDOMINANTLY IN RURAL/DESERT AREAS.
 AIRPORT ACCESS: BF-HSR TERMINATES AT THE ORLANDO INTERNATIONAL AIRPORT INTERMODAL TERMINAL.  FLY VS. DRIVE: ESTIMATED TRA VEL TIMES BETWEEN MIAMI AND ORLANDO ARE AS FOLLOWS: BF-HSR TRAIN

3.5H, DRIVING W/O TRAFFIC ALSO 3.5H FLYING 3H, WITH A TWO HOUR AIRPORT ARRIV AL AND 1 HOUR FLIGHT TIME.
 RIDERSHIP: RIDERSHIP HAS INCREASED FROM 579,000 IN 2018 TO 1,230,494 IN 2021, AND THEN 2,053,893 IN 2023 (SOURCE: WIKIPEDIA) - THIS INCLUDES TRIPS BETWEEN THE SIX DIFFERENT STATIONS.  AIRPORT ACCESS: SINCE THE MIAMI TO ORLANDO ROUTE JUST OPENED RECENTLY , ANNUAL STATISTICS ARE NOT YET A V AILABLE ON DIRECT TRAINS. BF-HSR SUSPENDED OPERATION DUE TO COVID-19 FROM MARCH 2020 TO NOVEMBER 2021.

CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL - FLORIDA

Station Characteristics Recommended for
Rancho Cucamonga
Los Angeles
Union Station NY Penn Station Washington
Union Station
30TH Street
Philadelphia, PA
Chicago Union
Station
South Street
Boston
Projected/2022 Passenger Traffic 6,000,000 928,000 8,008,000 3,631,000 3,058,000 2,359,000 1,216,000

BASIC OPERATIONS
Staff Yes Yes Yes Yes Yes Yes Yes
Ticketing Kiosks Yes Yes Yes Yes Yes Yes
Ticketing Office Yes Yes Yes Yes Yes Yes
Arrival suggestion baggage -Minutes TBD 60 45 45 45 60 45 Arrival suggestion non-baggage-Minutes TBD 30 30 30 30 30 30 Restrooms Yes Yes Yes Yes Yes Yes
Elevator Yes Yes Yes Yes Yes
Vending Machine Yes Yes Yes Yes Yes Yes Yes

TECH/FINANCIAL
ATM Yes Yes Yes Yes Yes Yes Yes
Wifi Yes No Yes No Yes Yes Yes
QSR Yes Yes Yes Yes Yes Yes Yes

AMENITIES
Metropolitan Lounge Yes Yes Yes Yes Yes Yes Yes
Convince stores Yes Yes Yes Yes Yes Yes Yes
Coffee Shops Yes Yes Yes Yes Yes Yes Yes
Bar Yes Yes Yes Yes Yes Yes Yes
Cultural Events TBD No No No No No No

CONNECTIONS
Transit Hub TBD Yes Yes Yes Yes Yes Yes
20 C. OVERVIEW OF BUSY DOMESTIC RAIL STATIONS
THE 6M POTENTIAL PASSENGERS A YEAR WOULD PUT THE RC-STATION IN THE TOP 5 BUSIEST COMMUTER PASSENGER STATIONS IN THE US.
 EMPIRE ANALYZED THE TOP 6 BUSIEST PASSENGER RAIL STATIONS TO UNDERSTAND AMENITIES.  SINCE INFORMATION ON THE BW-HSR ARE NOT YET A V AILABLE, EMPIRE PROVIDES SOME PRELIMINARY FEATURES, WITH THE UNDERSTANDING THAT THESE ARE SUBJECT TO REFINEMENT/REVISION.

21 CURRENT RC TRAIN STATION POTENTIAL FUTURE

MIXED-USE DEVELOPMENT AREA

OVERVIEW OF THE CURRENT/FUTURE RC STATION RELATIVE TO A BUSY

SOUTHERN CALIFORNIA TRAIN STATION
LA’S UNION STATION
PLEASE NOTE THAT MOST BUSY TRAIN STATIONS ARE LOCATED IN DENSE URBAN AREAS:
 THE CURRENT RC-STATION IS LOCATED IN AN INDUSTRIAL AREA SIMILAR TO LA’S UNION STATION.  POTENTIAL FUTURE DEVELOPMENT AT “THE RESORT” AS WELL AS THE CURRENT COMMERCIAL BUILDINGS COULD BE USED TO SERVICE THE AREA.

Amme
22 D. EXAMPLE OF AN AIRPORT TERMINAL OFFERING EXTENSIVE AMENITIES

PORTLAND AIRPORT

SPECIFIC AMENITIES
• SEATING – COMFORTABLE SEATS WITH CHARGERS
• COMFORTABLE LOUNGE (S) – OPTION FOR TRA VELERS

WITH A LONGER LAYOVER
• NATURAL LIGHT – MODERN, OPEN AND FULL OF LIGHT
• QUALITY AND DIVERSE FOOD OPTIONS - HIGHLIGHT

LOCAL VENDORS
• PRICES CAP – PRICES ARE PERCEIVED AS REASONABLE
• CULTURAL OPTIONS SUCH AS MOVIES, LIVE MUSIC, ETC.
• EASE OF ENTRY/EXIST TO OTHER TRANSIT USESSUCH AS

METRO ESPECIALLY PUBLIC TRANSIT

PORTLAND (PDX) AIRPORT

EXAMPLES

23 E. SUMMARY OF KEY POTENTIAL COMPONENTS OF THE RC-STATION ESSENTIALS: BRIGHTLINE HAS EXPERTISE FROM BF-HSR
BASIC OPERATIONS: STAFF, TICKETING KIOSKS, TICKETING OFFICE, ARRIV AL TIME WITH/WITHOUT BAGGAGE, RESTROOMS, ELEV ATOR AND VENDING MACHINE.  TECHNOLOGY/FINANCIAL: ATM, WI-FI, QSR
 AMENITIES: METROPOLITAN LOUNGE, CONVENIENCE STORE, COFFEE SHOPS, BAR,

AND CULTURAL EVENTS
 CONNECTIONS: TRANSPORTATION HUB - CONNECTIONS TO OTHER RAIL AS WELL AS CAR RENTAL, UBER AND SHUTTLES.
 BW-HSR COACH DESIGN IS EXPECTED TO INCLUDE WHITE AND BLUE INTERIORS, ROOMY SEATING AND WIFI.
 ALTHOUGH BW-HSR WILL COMPETE WITH ALTERNATIVE MODES OF TRANSPORTATION, THE HSR MODULE HAS APPEAL AS AN EXCITING ADVENTURE.

ENTICEMENT: PASSENGERS ENJOY SPENDING TIME AT STATION

AND EXCITED ABOUT TRIP TO LV

COLLABORATION BETWEEN BRIGHTLINE AND RANCHO CUCAMONGA  RESTAURANTS: LOCAL EATERIES, WINE TASTING, FAST FOOD, COFFEE SHOPS,

BREW PUBS, AND SIT DOWN RESTAURANTS
 POTENTIAL AMENITIES: SHOPPING AT MICRO-STORE, KIOSKS, ART EXHIBITS, FITNESS AREA AND QUIET SPACES.
 CULTURAL OPTIONS SUCH AS SHORT MOVIES, CRAFT FAIRS, ART EXHIBITS, THEMATIC EVENTS, LIVE MUSIC, ETC.

F. RC STATION AREA – CURRENTLY LACK OF AMENITIES

REQUIRES NEW DEVELOPMENT AND/OR SHUTTLE SERVICE

RETAILRESTAURANTS
HOTELS
24 CURRENTLY RANCHO CUCAMONGA’S RESTAURANTS, RETAIL AND HOTELS ARE NOT IN THE VICINITY OF THE BW-HSR RC STATION.
• SHUTTLE OPTION: EXISTING RESTAURANTS, RETAIL AND HOTELS COULD BE LEVERAGED. • DEVELOPMENT OPTION: FORMULATE A STRATEGY TO ACCOMMODATE NEW RESTAURANTS, RETAIL AND HOTELS

AROUND THE BW-HSR STATION
STAR – APPROXIMATE LOCATION OF RC TRAIN STATION TROLLEY STOPS

F. RC STATION AREA – FUTURE VISION FOR THE STATION PER THE CITY OF RC 25 THE CITY OF RC WEBSITE HAS OUTLINED THE CHANGES THEY WILL MAKE TO HA VE THE CURRENT RC STATION BECOME A LARGE TRANSIT HUB FOR THE INLAND EMPIRE AND GREATER SOUTHERN CALIFORNIA, INCLUDING THE FOLLOWING:
• BECOME A MUTLIMODAL HUB FOR TRANSPORTATION WHICH WILL CONNECT AIR, BUS, LOCAL PASSENGER AND HIGH SPEED RAIL IN A SEAMLESS EXPERIENCE THAT WILL ALLOW EACH USE TO INTERACT WITH EACH OTHER. • EFFORT TO BECOME A GREEN TRANSPORTATION HUB INCLUDING A ZERO EMISSIONS TUNNEL BETWEEN THE HSR AND THE AIRPORT WHICH OPENS UP THE ONTARIO AIRPORT AS A GATEW AY TO SOUTHERN CALIFORNIA. • A FULL REMODEL OF THE STATION INCLUDING HIGH DENSITY PARKING AND INTERMODAL ACCESS. • CONNECTION TO THE “HART DISTRICT” WHICH WILL BE A MULTI-USE DEVELOPMENT.

HART DISTRICT
Located within the new HART District, Cucamonga Station will be a true multi-modal transit center, home to:

Metrolink San Bernardino Line – East/west passenger rail travel between Los Angeles, San Bernardino and now Redlands through the new Arrow Line service Omnitrans commuter bus transit services
*Omnitrans West Valley Connector Bus Rapid Transit (BRT) and Bus Service – A 19- mile, 21 station BRT system will connect major employment and activity centers between Pomona and Rancho Cucamonga, complementing existing bus services Omnitrans currently offering ONT Connect Shuttle service to Ontario International Airport (ONT) – ONT between Cucamonga Station, 7 days per week, future SBCTA/ONT plans in development to build *4-mile underground tunnel for vehicle transit direct to terminals
Taxis and Ride-share Services – Will continue to be offered at Cucamonga Station Bicycle Accessibility – The City’s 6th Street bicycle track will connect to Cucamonga Station
*Brightline West – High-speed rail between Rancho Cucamonga, the High Desert, Las Vegas, a 2-hour trip with speeds up to 200 miles per hour *Future Cucamonga Station connectivity

EXAMPLES OF CITIES WITH FREE TROLLEY SERVICES
26 THERE ARE QUITE A FEW CITIES IN THE US WITH FREE “TROLLEY”/SHUTTLE SERVICE FOR TOURISM:
• BIG BEAR, CA
• A VILA BEACH TO PISMO BEACH, CA
• MONTEREY BAY , CA
• LAGUNA BEACH, CA
• MIAMI, FL
• CHARLESTON, SC
• SAN CLEMENTE, CA

Theme Park
Beaches
Cultural
Mountains
Desert
550K
523K
350K
18K
487K

RC IS CENTRALLY LOCATED WITHIN THE INLAND EMPIRE AND IN CLOSE PROXIMITY TO LA, OC AND LESS SO THE DESERTS/SAN DIEGO.
 BEING LOCATED BY THE I-15 IS CRUCIAL AS THE MAIN ARTERY/ROAD FROM LAS VEGAS.  BELOW ARE THE CURRENT DISTRIBUTIONS OF TOURISTS FROM LAS VEGAS TO V ARIOUS DESTINATIONS. 27 G. RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS STAR – APPROXIMATE LOCATION OF RC TRAIN STATION

RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS 28 39 MILES TO DOWNTOWN LA

THE BW-HSR RC STATION HAS A FA VORABLE LOCATION FOR LAS VEGAS VISITORS COMING TO SOUTHERN CALIFORNIA FOR TOURISM.
 TOURISTS COULD UTILIZE AMTRACK, BUSSES AND RENTAL CARS TO PRIMARY ACCESS DOWNTOWN LA AND ANAHEIM – DISNEYLAND.

6.0M

1.9M
560K 302K

4.1M

1.4M
258K
0 1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000

1. Total
Domestic
vistors --> So
Cal
Remove
Visitors not
from LV
(67.8%)

2. LV Visitors -
-> So CA
(32.2%)
Remove sc
vistors not to
IE (90.7%)

3. Estimated
number of LV
vistors to IE
Remove IE
vistors not
Using Rail

4. Visitors
from LV to IE
Using BW-
HSR

ESTIMATED NUMBER OF VISITORS FROM LAS VEGAS

TRAVELING TO THE INLAND EMPIRE
(BASED UPON PLAUSIBLE BUT CONSERVATIVE ASSUMPTIONS)
H. ESTIMATE OF POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS

COMING TO THE BW-HSR STATION FOR TOURISM

HYPOTHETICAL SCENARIO

THERE IS NOT CURRENTLY A V AILABLE DATA THAT PROVIDES AN ESTIMATE OF THE NUMBER OF VISITORS FROM

LAS VEGAS (LV) THAT WILL LIKELY COME TO THE INLAND EMPIRE AND THEN UTILIZE THE RC-HSR STATION AS AN EMBARKATION POINT FOR THEIR TOURISM ACTIVITIES.
 ACCORDINGLY , EMPIRE FORMULATED AN ALGORITHM TO ESTIMATE THE NUMBER OF SUCH LV VISITORS TO THE RC-STATION, SOME 302,263 ANNUALLY .
29 ORIGINS OF VISITORS COMING TO THE INLAND EMPIRE

ESTIMATE OF POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS

THAT WOULD SPEND THE NIGHT IN THE CITY OF RC
EMPIRE FORMULATED AN ALGORITHM TO ESTIMATE THE NUMBER VISITORS THAT WOULD SPEND THE NIGHT IN RC.

30  NUMBER OF LV VISITORS TO THE RC-STATION: 302,263  SHARE OF LV VISITORS STAYING IN RC IS ESTIMATED
AT 20%
ANNUALLY……………………………….. 60,453
DAILY NEW VISITORS ………………….…...166
DAILY WITH OVERLAPS………………….....497
(BASED UPON PEOPLE BEING IN RC FOR 3

NIGHTS)
NUMBER OF HOTEL ROOMS ………………..199
(BASED UPON 2.5 PEOPLE PER HOTEL ROOM)
*THESE ARE A VERAGES – DAILY AMOUNT WILL

V ARY DEPENDING UPON SEASONALITY AND WEEKENDS

VS WEEKDAYS
 USING AN ESTIMATE STAY OF 3 NIGHTS, THE NUMBER
OF VISITORS WOULD BE 497/DAY THAT WOULD USE

RANCHO CUCAMONGA AS THEIR BASE FOR THEIR SC
TOURIST ACTIVITIES.
 THESE PEOPLE WOULD OCCUPY 199 HOTEL
ROOMS/A VG. PER DAY AND ALSO SUPPORT

RESTAURANTS AND RETAIL IN THE VICINITY OF THE
RC-STATION.
199
497
166
60,453
302,263
241,811
0% 20% 40% 60% 80% 100%
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Hotel Room Equivalents 2.5 per room
Total Number - With Overlaps
Visitors from LV Staying in RC: 3 Night Trip
Visitors from LV Staying in RC: New Daily
Visitors from LV Staying in RC: Annually
Visitors from LV Not Staying in RC: Annually
Visitors from LV to IE Using BW-HSR
% Southern California Visitors Captured
Annual Vistors

ESTIMATED NUMBER OF HOUSEHOLDS FROM LAS VEGAS

USING RC AS THEIR BASE FOR SC TOURISM ACTIVITIES
(BASED UPON PLAUSIBLE BUT CONSERVATIVE ASSUMPTIONS
Would capture 1% of the 6M
visitors to Southern California

I. ECONOMIC BENEFITS OF RAIL – POTENTIAL REAL ESTATE PREMIUMS 31 THE UNIVERSITY OF FLORIDA COLLEGE OF BUSINESS BERGSTROM REAL ESTATE

CENTER PERFORMED AN ANALYSIS OF HOW PROPERTY V ALUES WERE

IMPACTED BY THE BF-HSR AND THEIR RESULTS WERE PUBLISHED IN JULY 2023.

FOR EACH OF THE BF-HSR STATIONS, CHANGES IN PROPERTY V ALUES WERE

ANALYZED BEFORE AS WELL AS AFTER EACH OF THE FOLLOWING EVENTS 1-PUBLIC ANNOUNCEMENT
2-BEGINNING OF CONSTRUCTION
3-OPENING OF THE STATION
FURTHERMORE, THESE PROPERTY V ALUE CHANGES WERE THEN COMPARED:

PROPERTIES CLOSEST TO THE STATION

PROPERTIES FURTHEST FROM THE STATION

THEN THE DIFFERENCES IN THE CHANGES IN THE PROPERTY V ALUES FOR

EACH OF THE THREE EVENTS WERE COMPARED FOR PROPERTIES THAT WERE

CLOSEST RELATIVE TO THOSE THAT WERE FURTHEST FROM THE
BRIGHTLINE STATIONS.

ALTHOUGH THE PRICE CHANGES BETWEEN THE CLOSEST VERSUS THE FURTHEST

PROPERTIES WERE DIFFERENT FOR EACH OF THE THREE EVENTS, THE OVERALL RESULTS REFLECTED ABOUT A 9% PREMIUM FOR THE RESIDENTIAL PROPERTY

VALUES THAT WERE LOCATED CLOSEST TO EACH OF THE BRIGHTLINE STATIONS, AS COMPARED TO THOSE PROPERTIES THAT WERE FURTHEST.
.

RECOMMENDED AMENITY LIST FOR INCOMING PASSENGERS FROM LAS VEGAS

RC-STATION IS LIKELY TO CAPTURE A PORTION OF THE LV VISITORS WHO USE THE CITY AS THEIR BASE FOR LAUNCHING DAILY TRIPS.
 AMENITIES NEED TO BE DESIGNED OR LV TOURISTS HA VING A PLACE TO STAY FOR A FEW NIGHTS WHILE THEY ARE IN THE SC AREA.
 EMPIRE RECOMMENDS CERTAIN AMENITIES AT THE RC-STATION AND OTHER AMENITIES BE LEVERAGED NEARBY VIA SHUTTLE.
32 J. CONCLUSIONS ON TOURISM POTENTIAL FOR THE RC HSR STATION

STATION AND NEARBY AMENITIES

PROMOTE TOURISM

THE CITY OF RC NEEDS TO WORK WITH THE BOARDS OF TOURISM

FOR NEARBY CITIES AND ATTRACTIONS IN ADVANCE OF THE BW- HSR OPENING.

CROSS PROMOTING TOURISM AND RC AS A PLACE TO STAY FOR SC,

IF USING BW-HSR SHOULD BE A PRIORITY TO CAPTURE ANY
TOURISM TRAFFIC.

AMMENITY

RC STATION

INTERIOR

RC SHUTTLE

ELSEWHERE

RC STATION
NEARBY

DEVELOPMENT
AREA

PARKING YES NO YES

LUGGAGE STORAGE YES NO YES

UBER DROP OFF YES YES YES

TRANSIT CONNECTION YES NO NO

INFO CENTER YES NO NO

LOUNGE YES NO YES

BAR YES YES YES

CONVENIENCE STORE YES YES YES
HOTEL No YES YES

RESTAURANT YES YES YES

PART IV

CONCLUSIONS AND RECOMMENDATIONS
33 1- KEY CONCLUSIONS
THE BW-HSR IS EXPECTED TO START WITH 6,000,000 PASSENGER TRIPS BETWEEN THE RC-HSR STATION AND LAS VEGAS ANNUALLY.

FURTHERMORE, SOME HOUSEHOLDS THAT RESIDE IN LV ARE EXPECTED TO USE THE BW-HSR FOR THEIR TOURISM ACTIVITIES IN SC.

EMPIRE UTILIZED PLAUSIBLE BUT CONSERV ATIVE ASSUMPTIONS TO ESTIMATE THE NUMBER OF SOME 60,500 ANNUALLY WOULD STAY IN RC.

ACCORDING RC MAY WA N T TO ESTABLISH/PROMOTE ITSELF AS A GATEWAY FOR TOURISM FOR VISITORS COMING FROM LV BY PLANNING FOR DEVELOPMENT THAT WOULD PROVIDE SUCH VISITORS WITH RELATED AMENITIES SUCH AS HOTELS, RESTAURANTS, RETAIL, AMONG OTHERS. 2- HYPOTHETICAL TIMELINE – SUBJECT TO REVISIONS DEPENDING UPON CONDITIONS BEING FULFILLED 2024: DEVELOP A CONCEPTUAL STRATEGIC PLAN FOR ACCOMMODATING VISITORS FROM LAS VEGAS FOR SC TOURISM ACTIVITIES.

PART A: PLAN THE CHARACTERISTICS OF THE BW-HSR RC-STATION PART B: PLAN FOR NEARBY DEVELOPMENT: HOTEL, RESTAURANTS, AND RETAIL INCLUDING A LOCAL SHUTTLE AS TRAFFIC RAMPS UP PART C: WORK ON FORMING AN ALLIANCE TO USE THE BW- HSR COMING TO RC AS A DESTINATION STATION 2028: BW-HSR PASSENGER SERVICE COMMENCES BUT NEED TIME TO RAMP-UP TIME TO 6M PASSENGER TRIPS ANNUALLY PHASE 1: OFFER SHUTTLE SERVICE TO NEARBY HOTELS AS WELL AS RESTAURANTS AND RETAIL 2030? ONCE BENCHMARK OF 6M PASSENGER TRIPS IS ATTAINED, THEN PROCEED WITH A STRATEGIC DEVELOPMENT PLAN.

PHASE 2: RC-STATION NEARBY DEVELOPMENTS: RESTAURANTS, HOTEL AND RETAIL THE SUCCESS OF SUCH A STRATEGIC PLAN IS BASED UPON SOME CRITICAL FUNDAMENTAL CONDITIONS:

BRIGHTLINE WEST HSR ATTAINING ITS PROJECTED LEVEL OF SOME 6M PASSENGER TRIPS ANNUALLY .

HSR PRICES BEING COMPETITIVE WITH ALTERNATIVE MODES OF TRANSPORTATION SUCH AS AIR, CAR AND BUS.

RELEV ANT PRODUCTS/SERVICES BEING PROMOTED AND PROVIDING POSITIVE CONSUMER EXPERIENCES.

SUPPLEMENTAL REMARKS

POTENTIAL OTHER SOURCES OF DEMAND FOR BW-HSR RC-STATION 34 PRIMARY DEMAND FOR BW-HSR AND RC-STATION AMENITIES: RESIDENTS FROM LV COMING TO SC FOR TOURISM THE PRIMARY PURPOSE OF THE TRIP IS TO COME FROM LV TO SC FOR TOURISM.

THESE PASSENGERS WILL UTILIZE THE BW-HSR FOR A ROUND TRIP. * THE ANALYSIS OF THE PRIMARY DEMAND CAN BE PERFORMED USING PLAUSIBLE/CONSERV ATIVE ASSUMPTIONS, SINCE THERE IS A SUFFICIENT AMOUNT OF DATA A V AILABLE.

SECONDARY DEMAND FOR BW-HSR AND RC-STATION AMENITIES: LV VISITORS THEN COMING TO SC FOR TOURISM THE PRIMARY PURPOSE OF THE TRIP IS TO COME TO LV – BUT SOME MAY ALSO WANT TO VISIT SC FOR TOURISM.

THESE PASSENGERS WILL MOST LIKELY USE BW-HSR FROM LV TO RC-STATION BUT THEN PERHAPS FLY BACK FROM SC.

EMPIRE CATEGORIZED THE LV VISITORS INTO THREE CATEGORIES, AS FOLLOWS:
#1 VISITORS TO LV FROM THE THROUGHOUT THE UNITED STATES EXCLUDING SC:

ESTIMATED FOR 2023: 37,500,000.
#2 VISITORS THAT COME FOR CONVENTIONS: ESTIMATED FOR 2023: 6,000,000 THE BW-HSR MAY INDUCE SOME OF THESE TO ENJOY SOME OF THE SC TOURIST ACTIVITIES.

#3 INTERNATIONAL VISITORS: ESTIMATED FOR 2023: 4,700,000

VISITORS FROM EUROPE AND ASIA WILL BE COMFORTABLE WITH THE BW-HSR, DUE TO THE PRESENCE OF HSR IN THEIR COUNTRIES.

FOR THE SECONDARY DEMAND, THE A V AILABILITY OF DATA ARE COMPLEX SINCE IT INVOLVES TRACKING WHAT SHARE OF VISITORS COMING TO LV AS THEIR MAIN DESTINATION WOULD THEN MAKE A SECOND TRIP ON BW-HSR TO SC.

THIS MAY BE A SUBSTANTIAL POTENTIAL OPPORTUNITY FOR RC THAT COULD BE RESEARCHED AT THE APPROPRIATE TIME.