The initial public offering prices stated on the inside cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Series 2022 Bonds to certain dealers, dealer banks, banks acting as agents and others at prices lower than said public offering prices .
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Miscellaneous
Any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, are intended as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract or agreement between the Community Facilities District or the Underwriter and the purchasers or the owners of any of the Series 2022 Bonds.
The execution and delivery of this Official Statement by the Community Facilities District has been duly authorized by the City Council of the City, acting as the legislative body of the Community Facilities District.
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CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT), CITY OF
RANCHO MIRAGE
By: _______ _ _____ _
City Manager
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APPENDIX A
RA TE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
A Special Tax shall be levied on all Taxable Property within the boundaries of the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) ("CFO No. 4C") and collected each Fiscal Year commencing in Fiscal Year 2021-22, in an amount determined by the CFO Administrator through the application of the procedures described below. All of the real property within CFO No. 4C, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.
Section 1. Definitions. The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable Final Map. An Acre means 43,560 square feet of land. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs related to the administration of CFO No. 4C including, but not limited to: the costs of preparing and computing the Special Tax (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City, the County or otherwise); the costs ofremitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFO No. 4C, or any designee thereof complying with arbitrage rebate requirements, including without limitation rebate liability costs and periodic rebate calculations; the costs to the City, CFO No. 4C, or any designee thereof complying with disclosure or reporting requirements of the City or CFO No. 4C, associated with applicable federal and State laws; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs to the City, CFO No. 4C, or any designee thereof related to an appeal of the Special Tax; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFO No. 4C for any other administrative purposes of CFO No. 4C, including attorney's fees and other costs related to commencing and pursuing any foreclosure of delinquent Special Taxes.
"Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a Building Permit on or prior to the May 1st preceding the Fiscal Year in which the Special Tax is being levied.
"Assessor" means the Assessor of the County of Riverside. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel Number.
"Assessor's Parcel Map" means an official map of the Assessor designating parcels by Assessor's Parcel Number.
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"Assessor's Parcel Number" means the number assigned to an Assessor's Parcel by the County for purposes of identification.
"Assigned Special Tax" means the Special Tax of that name described in Section 3.A below. "Backup Special Tax" means the Special Tax of that name described in Section 3.B below. "Bonds" means any bonds or other Debt of CFO No. 4C, whether in one or more series, secured by the levy of Special Taxes.
"Building Permit" means a building permit for construction of a Residential Unit within CFO No. 4C issued by the City.
"Building Square Footage" means all of the square footage of usable area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, or similar area. The determination of Building Square Footage shall be made by reference to the Building Permit(s) issued for such Assessor's Parcel and/or by reference to appropriate records kept by the City. "Calendar Year" means the period commencing January 1st of any year and ending the following Decem her 31.
"CFO Administrator" means an authorized representative of the City, or designee thereof, responsible for determining the Special Tax Requirement, for preparing the Special Tax roll and/or calculating the Backup Special Tax.
"CFO No. 4C" means the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project)
"City" means the City of Rancho Mirage, California.
"Council" means the City Council of the City acting as the legislative body of CFO No. 4C under the Act.
"County" means the County of Riverside, California.
"Debt" means any binding obligation to pay or repay a sum of money, including obligations in the form of bonds, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts. "Debt Service" means for each Fiscal Year, the total amount of principal and interest payable on any Outstanding Bonds during the Calendar Year commencing on January 1st of such Fiscal Year. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Provisional Property, for which a Building Permit was issued prior to May 1st of the previous Fiscal Year. An Assessor's Parcel classified as Developed Property but for which the Building Permit that caused such Assessor's Parcel to be classified as Developed Property has been cancelled and/or voided prior to the Fiscal Year for which Special Taxes are being levied shall be reclassified as Approved Property, provided that the levy of the Special Tax after such reclassification shall not be less than 1.1 times the annual Debt Service less Administrative Expenses on all Outstanding Bonds. If Bonds have not been issued, an Assessor's Parcel classified as Developed Property for which such a Building Permit has been cancelled and/or voided shall be reclassified as Approved Property.
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"Exempt Property" means for each Fiscal Year, all Assessor's Parcels designated as being exempt from Special Taxes pursuant to Section 8 below.
"Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285 that creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting on July 1 and ending the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same.
"Land Use Class" means any of the classes listed in Table 1 under Section 3 below. "Lot" means a parcel created by a Final Map on which one or more Residential Units can be constructed.
"Maximum Special Tax" means for each Assessor's Parcel, the maximum Special Tax, determined in accordance with Sections 3.C and 3.D below, which may be levied in a given Fiscal Year on such Assessor's Parcel of Taxable Property.
"Multi-Family Property" means all Assessor's Parcels of Residential Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Residential Units available for rental by the general public, not for sale to an end user, and under common management.
"Non-Residential Property" means all Assessor's Parcels for which a building permit has been issued prior to May 1st of the previous Fiscal Year for the purpose of constructing one or more non residential units or facilities.
"Outstanding Bonds" means all Bonds, which are deemed to be outstanding under the Indenture. "Prepayment Amount" means the amount required to prepay the Special Tax Obligation in full for an Assessor's Parcel as described in Section 6.A below. "Property Owner Association Property" means any Assessor's Parcel within the boundaries of CFD No. 4C owned in fee by a property owner association, including any master or sub-association. "Proportionately" or "Proportionate" means for Developed Property, that the ratio of the actual Special Tax levy to the applicable Assigned Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property. For Approved Property or Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Approved Property or Undeveloped Property. "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section 4 below. "Provisional Property" means all Assessor's Parcels of Public Property, Property Owner Association Property, Non-Residential Property or property that would otherwise be classified as Exempt Property pursuant to the provisions of Section 8, but cannot be classified as Exempt Property because to A-3
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do so would reduce the Acreage of all Taxable Property below the required minimum Acreage as set forth in Section 8.
"Public Property" means any property within the boundaries of CFO No. 4C, which is owned by, or irrevocably offered for dedication to the federal government, the State of California, the County, the City or any other public agency; provided however that any property owned by a public agency and leased to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use.
"Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing one or more Residential Units. "Residential Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units. "Single Family Property" means all Assessor's Parcels of Residential Property not classified as Multi-Family Property.
"Special Tax" means any special tax levied within CFO No. 4C pursuant to the Act and this Rate and Method of Apportionment of Special Tax.
"Special Tax Obligation" means the total obligation of an Assessor's Parcel of Taxable Property to pay the Special Tax for the remaining life of CFO No. 4C. "Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay regularly scheduled Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property, Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as determined by the CFO Administrator pursuant to the Indenture. "State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFO No. 4C, which are not exempt from the levy of the Special Tax pursuant to law or Section 8 below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Approved Property or Provisional Property.
Section 2. Land Use Classification. Each Fiscal Year, beginning with Fiscal Year 2021- 22, each Assessor's Parcel within CFO No. 4C shall be classified as Taxable Property or Exempt Property. In addition, all Taxable Property shall further be classified as Developed Property, Approved Property, Undeveloped Property or Provisional Property, and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment of Special Tax determined pursuant to Sections 3 and 4 below. Furthermore, each Assessor's Parcel of Developed A-4
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Property shall be classified according to its applicable Land Use Class based on its Building Square Footage .
Section 3. Special Tax Rates .
(a) Assigned Special Tax for Developed Property. The Assigned Special Tax applicable to an Assessor's Parcel classified as Developed Property commencing in Fiscal Year 2021-22 shall be determined pursuant to Table 1 below .
Land Use
Class
2 3
4 5
6 7
8 9
Table 1
Assigned Special Tax Rates
Land Use Building
Type Square Footage
Single Family Property > 2,550
Single Family Property 2,401 - 2,550
Single Family Property 2,251 - 2,400
Single Family Property 2, I 01 - 2,250
Single Family Property 1,951-2,100
Single Family Property 1,801 - 1,950
Single Family Property 1,651 - 1,800
Single Family Property 1,501 - 1,650
Single Family Property ~ 1,500
Multi-Family Property NIA
Assigned
Special Tax
$1,723 per
Residential Unit
$1,602 per
Residential Unit
$1 ,494 per
Residential Unit
$1,351 per
Residential Unit
$1,238 per
Residential Unit
$1,113 per
Residential Unit
$1,019 per
Residential Unit
$920 per
Residential Unit
$799 per
Residential Unit
$8,308 per Acre
(b) Backup Special Tax for Developed Property. The Backup Special Tax for Developed Property commencing in Fiscal Year 2021-22 shall be $8,308 per Acre.
For the purpose of calculating the Backup Special Tax, the land area applicable to Multi-Family Property shall be computed from the Acreage of the Lot on which the Multi-Family Property is located, with the Acreage for such Lot allocated equally among all of the Multi-Family Property located or to be located on such Lot.
(c) Maximum Special Tax for Developed Property . The Maximum Special Tax for Developed Property shall be the greater of the Assigned Special Tax for Developed Property or the Backup Special Tax for Developed Property.
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(d) Maximum Special Tax for Provisional Property, Approved Property and Undeveloped Property. The Maximum Special Tax for Provisional Property , Approved Property, and Undeveloped Property commencing in Fiscal Year 2021 -22 shall be $8,308 per Acre.
Section 4. Method of Apportionment. For each Fiscal Year, commencing Fiscal Year 2021-22, the CFD Administrator shall levy the Special Tax on all Taxable Property in accordance with the following steps:
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to I 00% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement;
If additional monies are needed to satisfy the Special Tax Requirement after Step I has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property in an amount up to 100% of the Maximum Special Tax for Approved Property;
If additional monies are needed to satisfy the Special Tax Requirement after Step 2 has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property;
If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax amount determined in Step I shall be increased Proportionately on each Assessor ' s Parcel of Developed Property in an amount up to I 00% of the Maximum Special Tax for Developed Property.
If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed , then the Special Tax shall be levied Proportionately on each Assessor ' s Parcel of Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property.
Notwithstanding the above, under no circumstances will the Special Tax levied in any Fiscal Year against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor ' s Parcel within CFD No. 4C by more than ten percent (10%) above what would have been levied in the absence of such delinquencies or defaults.
Section 5. Collection of Special Taxes. Collection of the Special Tax shall be made by the County in the same manner as ordinary ad valorem property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien priority in the case of delinquency as ad valorem taxes; provided, however , that the Council may provide for (i) other means of collecting the Special Tax, including direct billings thereof to the property owners; and (ii) judicial foreclosure of delinquent Special Taxes.
Section 6. Prepayment of Special Tax Obligation .
(a) Prepayment in Full. Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the City as permitted under Government Code Section 53344 .
The following definitions apply to this Section 6:
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"CFO Public Facilities Costs" means $7,000,000 or such lower number as (i) shall be determined by the CFO Administrator as sufficient to acquire or construct the facilities to be financed under the Act and financing program for CFO No. 4C, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds (except refunding bonds). "Construction Fund" means the fund (regardless of its name) established pursuant to the Indenture to hold funds, which are currently available for expenditure to acquire or construct the facilities or pay fees authorized to be funded by CFO No. 4C.
"Future Facilities Costs" means the CFO Public Facilities Costs minus (i) costs previously paid from the Construction Fund to acquire or construct the facilities, (ii) monies currently on deposit in the Construction Fund, and (iii) monies currently on deposit in an escrow or other designated fund that are expected to be available to finance CFO Public Facilities Costs. "Outstanding Bonds" means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year excluding Bonds to be redeemed at a later date with proceeds of prior Special Tax prepayments . "Previously Issued Bonds" means all Bonds that have been issued prior to the date of prepayment.
The Special Tax Obligation applicable to an Assessor' s Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property that has been included in a Final Map may be prepaid and the obligation to pay the Special Tax for such Assessor's Parcel permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor ' s Parcel eligible to prepay the Special Tax Obligation shall provide the CFO Administrator with written notice of intent to prepay, and designate or identify the company or agency that will be acting as the escrow agent, if any. The CFO Administrator shall provide the owner with a statement of the Prepayment Amount for such Assessor' s Parcel within thirty (30) days of the request, and may charge a reasonable fee for providing this service. Prepayment must be made at least 60 days prior to any redemption date for the CFO No. 4C Bonds to be redeemed with the proceeds of such prepaid Special Taxes, unless a shorter period is acceptable to the Trustee and the City.
The Prepayment Amount shall be calculated for each applicable Assessor's Parcel or group of Assessor's Parcels as follows (capitalized terms are defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Equals: Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as follows:
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1. Confirm that no Special Tax delinquencies apply to such Parcel.
2. For an Assessor's Parcel of Developed Property, compute the Maximum Special Tax for the Assessor's Parcel as though all Assessor's Parcels of Taxable A-7
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Property within CFO No. 4C have been built out. For an Assessor's Parcel of Approved Property or Undeveloped Property for which a Building Permit has been issued, compute the Maximum Special Tax for the Parcel as though it was already designated as Developed Property, based upon the Building Permit which has been issued for the Assessor's Parcel. For an Assessor's Parcel of Approved Property or Undeveloped Property for which a Building Permit has not been issued, Provisional Property to be prepaid, compute the Maximum Special Tax for the Assessor ' s Parcel.
3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the estimated total amount of Special Taxes that could be levied at build out of all Assessor's Parcels of Taxable Property based on the applicable Maximum Special Tax for all such Assessor's Parcels of Taxable Property not including any Parcels for which the Special Tax obligation has been previously prepaid.
4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with the Prepayment Amount (the "Bond Redemption Amount") .
5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium").
6. Determine the Future Facilities Costs .
7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to paragraph 6 to determine the portion of the Future Facilities Costs applicable to the Assessor's Parcel (the "Future Facilities Amount").
8. Determine the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds on which Bonds can be redeemed from Special Tax prepayments.
9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid.
10. Determine the amount the CFO Administrator reasonably expects to derive from the investment of the Bond Redemption Amount and the Redemption Premium from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the Prepayment Amount.
11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount derived pursuant to paragraph 10 (the "Defeasance Amount").
12. Verify the administrative fees and expenses associated with the prepayment, including the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Special Tax obligation for the Assessor 's Parcel and the redemption of Outstanding Bonds (the "Administrative Fees and Expenses").
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13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of:
(a) the expected reduction in the reserve requirement (as defined in the Indenture) , if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 3 by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit").
15. The amount to prepay the Special Tax Obligation is equal to the sum of the Bond Redemption Amount, the Redemption Premium , the Future Facilities Amount, the Defeasance Amount and the Administrative Fees and Expenses, less the Reserve Fund Credit and the Capitalized Interest Credit.
16. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium , and Defeasance Amount shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make Debt Service payments. The Future Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and Expenses shall be retained by the CFO.
The Prepayment Amount may be sufficient to redeem an amount other than a $5,000 increment of CFO No. 4C Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to redeem CFO No. 4C Bonds to be used with the next prepayment of CFO No. 4C Bonds.
The CFO Administrator will confirm that all previously levied Special Taxes have been paid in full. With respect to any Assessor ' s Parcel for which the Special Tax Obligation is prepaid in full, once the CFO Administrator has confirmed that all previously levied Special Taxes have been paid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor ' s Parcel, and the obligation of the owner of such Assessor's Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes less Administrative Expenses that may be levied on Taxable Property, respectively , after the proposed prepayment is at least 1.1 times the Debt Service on all Outstanding Bonds in each Fiscal Year.
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(b) Partial Prepayment. The Special Tax on an Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property that has been included in a Final Map may be partially prepaid. The amount of the prepayment shall be calculated as in Section 6.A.; except that a partial prepayment shall be calculated according to the following formula:
pp= (PE-A) X F+A
These terms have the following meaning:
pp
PE =
F =
A =
the partial prepayment
the Prepayment Amount calculated according to Section 6.A the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax Obligation
the Prepayment Administrative Fees and Expenses from Section 6.A The owner of any Assessor's Parcel who desires such partial prepayment shall notify the CFO Administrator of (i) such owner's intent to partially prepay the Special Tax Obligation, (ii) the percentage by which the Special Tax Obligation shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if any. The CFO Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax Obligation for an Assessor's Parcel within sixty (60) days of the request and may charge a reasonable fee for providing this service.
With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section 6.A., and (ii) indicate in the records of CFO No. 4C that there has been a partial prepayment of the Special Tax Obligation and that a portion of the Special Tax with respect to such Assessor' s Parcel, equal to the outstanding percentage (1.00 - F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel.
Notwithstanding the foregoing, no partial prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes less Administrative Expenses that may be levied on Taxable Property, respectively, after the proposed partial prepayment is at least 1.1 times the Debt Service on all Outstanding Bonds in each Fiscal Year.
Section 7. Term of Special Tax. The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement for a period not to exceed forty-five ( 45) Fiscal Years commencing with Fiscal Year 2021-22, provided however that the Special Tax will cease to be levied in an earlier Fiscal Year if the CFO Administrator has determined that all required interest and principal payments on CFO No. 4C bonds have been paid.
Section 8. Exemptions. The CFO Administrator shall classify as Exempt Property (i) Assessor's Parcels of Public Property, (ii) Assessor's Parcels of Property Owner Association Property, or (iii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, and (v) Assessor's Parcels classified as Non-Residential Property as determined reasonably by the CFO Administrator, provided that no such classification would reduce the sum of all Taxable Property in CFO No. 4C to less than 56.1 Acres. Assessor' s Parcels which cannot be classified as Exempt Property because such classification would reduce the sum of all Taxable Property A-10
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in CFO No. 4C to less than 56.1 Acres shall be classified as Provisional Property and will continue to be subject to the CFO No. 4C Special Taxes accordingly. Tax exempt status for the purpose of this paragraph will be assigned by the CFO Administrator in the chronological order in which property becomes eligible for classification as Exempt Property, except for Non-Residential Property, which will be assigned tax exempt status only after all other eligible property types have been classified as Exempt Property.
If the use of an Assessor' s Parcel of Exempt Property changes so that such Assessor's Parcel is no longer classified as one of the uses set forth in the first paragraph of Section 8 above that would make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property.
Section 9. Appeals . Any landowner who pays the Special Tax and claims the amount of the Special Tax levied on his or her Assessor's Parcel is in error shall first consult with the CFO Administrator regarding such error not later than thirty-six (36) months after first having paid the first installment of the Special Tax that is disputed. If following such consultation, the CFO Administrator determines that an error has occurred, then the CFO Administrator shall take any of the following actions, in order of priority, in order to correct the error:
(i) Amend the Special Tax levy on the landowner's Assessor's Parcel(s) for the current Fiscal Year prior to the payment date,
(ii) Require the CFO to reimburse the landowner for the amount of the overpayment to the extent of available CFO funds, or
(iii) Grant a credit against, eliminate or reduce the future Special Taxes on the landowner's Assessor's Parcel(s) in the amount of the overpayment.
If following such consultation and action by the CFO Administrator the landowner believes such error still exists, such person may file a written notice of appeal with the Council. Upon the receipt of such notice, the Council or designee may establish such procedures as deemed necessary to undertake the review of any such appeal. If the Council or designee determines an error still exists, the CFO Administrator shall take any of the actions described as (i), (ii) and (iii) above, in order of priority, in order to correct the error.
The Council or designee thereof shall interpret this Rate and Method of Apportionment of Special Tax for purposes of clarifying any ambiguities and make determinations relative to the administration of the Special Tax and any landowner appeals. The decision of the Council or designee shall be final.
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APPENDIXB
APPRAISAL REPORT
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APPRAISAL REPORT
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) Tract Nos. 36809-5 and 36809
City of Rancho Mirage, Riverside County, California
(Appraisers ' File No. 2022-1264)
Prepared For
CITY OF RANCHO MIRAGE
69-825 Highway 111
Rancho Mirage, CA 92270
Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780
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KITTY SIINO & ASSOCIATES, INC.
REAL ESTATE APPRAISERS & CONSULTANTS
August 8, 2022
Kofi Antobam, CPA, CFE, CIA, Director of Administrative Services
CITY OF RANCHO MIRAGE
69-825 Highway 111
Rancho Mirage, CA 92270
Reference: Appraisal Report
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project Tract Nos 36809 and 36809-5)
N/S Dinah Shore Drive, W/O Bob Hope Drive
Rancho Mirage, Riverside County, California
Dear Mr. Antobam:
At the request and authorization of the City of Rancho Mirage, we have completed an Appraisal Report for City of Rancho Mirage Community Facilities District No. 4C ("CFO No. 4C") which consists of the Tract Map Nos. 36809 and 36809-5 of Del Webb at Rancho Mirage. The property is being developed as an age qualified master planned community located in the City of Rancho Mirage in the Coachella Valley in Riverside County. The master developer of Del Webb at Rancho Mirage is Pulte Home Company ("Pulte"}, a related entity to Del Webb. The entire community of Del Webb at Rancho Mirage is currently planned for 1,029 homes; however, the subject of this appraisal is the third and final phase of development, which consists of 378 proposed homes. The first phase of 344 homes is generally built and closed out with the exception of the model homes and the final build-out near the models. The second phase of 307 homes is closed out with the subject 378 proposed homes being the third and final phase.
The subject property is being built into three neighborhoods by Del Webb known as The Classic Series, The Encore Series and The Retreat Series with a total of ten different home floorplans. Out of the 378 proposed homes, 186 homes have closed to individuals and an additional 103 are sold, however not yet closed. The subject homes range from completed, individual-owned homes to homes under construction to generally finished lots.
The valuation methods used in this report are the Sales Comparison Approach, a Land Residual Analysis, a Discounted Cash Flow Analysis along with a mass appraisal technique for the existing homes as defined within this report. The fee simple estate of the subject property has been valued subject to the CFO No. 4C special tax lien. This report is written with the hypothetical condition that the subject property is enhanced by the improvements and/or fee credits to be funded by the Special Tax Bonds of CFO No. 4C.
115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 - Fax, E-Mail: [email protected] 12-213
Kofi Antobam
City of Rancho Mirage
August 8, 2022
Page Two
As a result of our investigation, the concluded minimum market value for the subject property is:
Del Webb at Rancho Mirage {Tracts 36809-5 and 36809)
Pulte Owned (Five Houses)
Pulte Owned (187 Lots)
Individual Owners (186 Houses)
Aggregate Total for CFO No. 4C
$ 2,699,903
$ 31,526,032
$ 112,584,592
$ 146,810,527
The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser's Certification and as of July 1, 2022.
Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser's files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice ("USPAP" January 2020) and with the Appraisal Standards of the California Debt and Investment Advisory Commission ("CDIAC"). The appraiser is not responsible for unauthorized use of this report.
This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.
Respectfully submitted,
KITTY SIINO & ASSOCIATES, INC.
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Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)
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TABLE OF CONTENTS
Assumptions and Limiting Conditions ...................... ................................ .. ....................... i Extraordinary Assumption ........... .. ............. ..................................................................... iii Hypothetical Condition ............. ................. .......................................... ............................ iii Aerial Photo of CFO No. 4A, 4B and 4C ................................................ .......................... iv Aerial Photo of CFO No. 4C ............................. .................................. .. ...................... ..... v Purpose of the Appraisal ............................................ ................ .................................... 1 The Subject Property ..................... ................. ................................................... ............. 1 Intended Use of the Report .............. .. ................ .......................... .. ................................. 1 Definitions . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . .. . .. . . . . .. .. . . . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . .. . .. . .. . . . .. . . . . . .. . .. . . .. . .. . . . . . . 2 Property Rights Appraised ......... ....... ............................. .. .................................... ........ .. 4 Effective Date of Value.. .................... ............................................... ........................ .. .. .. 4 Date of Report.. ... ..... .. ............. .. .... ........................ .. .......................................... ............. 4 Scope of Appraisal ................................................................... ..................................... 4 Regional Area Map ................... ................ .................................... ............................ .. ..... 8 County of Riverside Area Description ............. ................... ......... .. .. ............................ .... 9 Coachella Valley Description ... .......................................... .... ..................... ................... 19 City of Rancho Mirage ...... ................. ....... ................... .......... ...................... .... .............. 24 Section 24 Specific Plan ...................... ....................... ............................ ...................... . 29 City of Rancho Mirage Community Facilities District No. 4C .................. ....................... 32 Subject Property Description ......................................................................................... 34 Riverside County Housing Market ............... ....................... ..................... ...................... 42 Highest and Best Use Analysis ................ ... ...... ........................... .. ... ...... .. ... ................. 55 Valuation Analyses and Conclusions ......................................................... ................. .. 60 Appraisal Report Summary ....... ............ ................... ..... ............................... ................. 85 Appraiser's Certification ............................ .............. ......................... ............................ 86
ADDENDA
CFO No. 4C Boundary Map
Tract Map Nos. 36809 and 36809-5
Discounted Cash Flow Analysis
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser's Qualifications
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ASSUMPTIONS AND LIMITING CONDITIONS
1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser's files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.
2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.
3. It is assumed that the subject property is subject to the special tax lien of CFO No. 4C.
4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.
5. The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy.
6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.
7. It is assumed that there are no hidden or unapparent conditions of either property, subsoil or structures that would render them more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.
8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report.
9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.
10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 11 . Any sketch or photograph included in this report may show approximate dimensions and is included only to assist the reader . in visualizing the property. Maps, photographs and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless Appraisal Report
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otherwise stated in this report. No survey has been made for the purpose of this report.
12. It is assumed that the utilization of the land and improvements (if any) are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.
13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea-formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process.
14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.
15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings, if any, must not be used in conjunction with any other appraisal and are invalid if so used.
16. The Americans with Disabilities Act ("ADA") became effective on January 26, 1992 and have been updated several times since then. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.
17. It is assumed there are no environmental concerns that would slow or thwart development of the subject property and that the soils are adequate to support the highest and best use conclusions.
Appraisal Report
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18. Possession of this report, or a copy thereof, does not carry with it the right of publication . It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document for the CFO No. 4C Special Tax Bonds.
EXTRAORDINARY ASSUMPTION
1. It is assumed that the cost and sales information provided by Pulte is true and accurate. We have reviewed the sales information and checked samples against public record and it appears to be correct, however we have not reviewed actual escrow documents on each sale. We have reviewed and analyzed the summarized costs as received and they appear reasonable. However, we do not have expertise in cost estimating and if the actual remaining costs differ, it will affect the value of the property .
HYPOTHETICAL CONDITION
1. It is assumed that all improvements and benefits to the subject property, which are to be funded by the CFO No. 4C Special Tax Bond proceeds, are completed and in place or have accrued to the subject property .
Appraisal Report
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PURPOSE OF THE APPRAISAL
The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the special tax lien of the CFO No. 4C Special Tax Bonds.
THE SUBJECT PROPERTY
The subject property is encompassed by CFO No. 4C and is proposed for 378 single family detached residences within the City of Rancho Mirage located just south of lnterstate-10 at Bob Hope Drive. The subject property is considered the third phase which consists of approximately one-third of the master planned community of Del Webb at Rancho Mirage, an age qualified master plan. The entire community is proposed for 1,029 homes. The first phase consisted of 344 homes and is known as Tract Nos. 36809-1 and 36809-2. The second phase consisted of 307 homes and is known as Tract Nos. 36809-3 and 36809-4. The third phase is the subject property and consists of 378 proposed homes: Lots 1 through 192 of Tract 36809-5 and Lots 1 through 186 of Tract 36809 (no dash). The subject property's current ownership and development status is detailed below.
No.
Description Lots Ownership Condition/Status
Del Webb at Rancho Mirage
Lots 1-160, 162, 164, 165, 168-170, 172- 186 Individuals Completed Houses / Closed 176 and 178-192 ofTract 36809-5 Lots 161, 163, 166, 171 and 177 ofTract 5 Pulte Homes over 95% complete 36809-5 (all in escrow)
Lots 1-27, 127-164, 181-186 ofTract 36809 72 Pulte Homes U/C (70 In escrow) and Lot 167 of Tract 36809-5
Lots 28-126, 165-180 of Tract 36809 115 Pulte Finished Lots (28 In escrow) Total Lots 378
INTENDED USE OF THE REPORT
It is the appraiser's understanding that the client, the City of Rancho Mirage, will utilize this report in disclosure documents related to the sale of the Special Tax Bonds of CFO Appraisal Report
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No. 4C. This report may be included in the Official Statement or similar document to be distributed in connection with the marketing and offering of the bonds. It is the appraiser's understanding that there are no other intended uses of this report.
DEFINITIONS
Market Value
The term "Market Value" as used in this report is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. "1
Inherent in the Market Value definition is exposure time or the time the subject property would have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions, the exposure time for the builder's ownership in a bulk sale or a single individually-owned house is less than one year.
Bulk Value
Bulk Value is defined as:
The value of a group of Jots, parcels, or homes to a single entity, on a specified date, under the terms and conditions of the definition of market value.
1 The Appraisal of Real Estate, 13th Edition
Appraisal Report
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Discounted Cash Flow (DCF} Analysis
A Discounted Cash Flow Analysis is:
The procedure in which a discount rate is applied to a set of projected income streams and a reversion. The analysis specifies the quantity, variability, timing, and duration of the income streams as well as the quantity and timing of the reversion and discounts each to its present value at a specified yield rate.
Finished Lot
The term "Finished Lot" is defined as:
"A parcel which has legal entitlements created by a recorded subdivision map, whose physical characteristics are a fine graded level pad per lot with infrastructure contiguous to each individual lot, asphalt paved roads and the necessary utilities. This term assumes the payment of all applicable development fees with the exception of building permit and plan check fees."
Hypothetical Condition
The Term "Hypothetical Condition" is defined by USPAP as:
''That which is contrary to what exists but is supposed for the purpose of the analysis"
The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by CFO No. 4C.
Extraordinary Assumptions
The term "extraordinary assumption" is defined by USPAP as:
"An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusion" The Extraordinary Assumption used in this report is that the reported remaining land development costs and the sales information as received from Pulte are true and accurate. We have reviewed sample closings on public record and it appears the sales information is correct; however, we have not reviewed escrow documents on each sale .
We have reviewed the costs and they appear reasonable; however, details were not received, just summarized amounts. We are not experts in the field of cost estimating Appraisal Report
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and it should be noted that these costs were relied upon in the valuation of the subject property and if the costs change, the values could change.
PROPERTY RIGHTS APPRAISED
The property rights being appraised are of a fee simple estate interest, subject to easements of record and subject to the CFO No. 4C special tax lien. The definition of "fee simple estate" is defined as:
"absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. "2
EFFECTIVE DATE OF VALUE
The subject property is valued as of July 1, 2022.
DATE OF REPORT
The date of this report is August 8, 2022.
SCOPE OF APPRAISAL
As previously stated, the purpose of this appraisal is to report the appraiser's best estimate of the market value for the subject property, CFO No. 4C, which encompasses approximately one-third of the master planned community known as Del Webb at Rancho Mirage in Riverside County. The subject property includes a total of 378 proposed homes anticipated to be developed into ten home plans currently being built out by Del Webb, a 55+ building entity related to Pulte Homes. This valuation is for the property in its "as is" condition assuming the improvements to be funded by the bonds of CFO No. 4C are in place or have accrued to the property. As of the date of value, 186 homes have closed to individuals. In addition, there five production homes over 95 percent complete owned by the builder (all in escrow and due to close upon completion), 2 The Appraisal of Real Estate, 13th Edition
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72 homes under construction (under 95% complete with 70 in escrow) and 115 remaining lots in a generally physically finished condition (28 in escrow). This appraisal will be presented in the following format:
• County of Riverside Description
• Coachella Valley Description
• Section 24 Specific Plan Description
• Brief Description of CFO No. 4C
• Subject Property Description
• Riverside County Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analyses and Conclusions
• Appraisal Report Summary
In valuing the subject property, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach . The Sales Comparison Approach to value is defined as:
" ... a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sales prices of the comparables based on the elements of comparison. The Sales Comparison Approach may be used to value improved properties, vacant land or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparables is available. "3
In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject . that have recently been sold, are listed for sale or are under contract. Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. In addition to the Sales Comparison Approach a Discounted Cash Flow Analysis will be utilized along with a Mass Appraisal Technique .
The due diligence of this appraisal report included the following:
1. Compiled demographic information and related that data to the subject property to perform a feasibility/demand analysis.
3 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 Appraisal Report
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2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro and macro-economic outlook within Riverside County and the Coachella Valley area.
3. Toured and inspected the subject property between May 15 and July 1, 2022.
4. Had the site flown by an aerial photographer on June 26, 2022.
5. Interviewed representatives from the master developer in order to obtain project information.
6. Reviewed the Section 24 Specific Plan which covers the property and additional lands.
7. Reviewed land development cost information in order to ascertain the remaining costs to complete the development of the lands to true finished lots.
8. Reviewed mapping on the subject property.
9. Reviewed a title report on a portion of the subject property.
10. Reviewed a Draft and Final Environmental Impact Statement, Phase I and Limited Phase II Environmental Site Assessment for the Section 24 Specific Plan, which covers the entire specific plan.
11 . Reviewed sales brochures and marketing information on the subject property.
12. Reviewed actual sales information from the builder on all closed homes and current escrows.
13. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable neighborhood.
14. Searched the area for relevant comparable residential land sales and interviewed representatives regarding the transactions when available.
15. Searched the area for 55+ age qualified master planned communities and inspected the most comparable along with interviewing representatives from each community.
16. Reviewed the CFO Report for the City of Rancho Mirage CFO No. 4C (Del Webb Project) as prepared by Willdan Financial Services.
Appraisal Report
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17. Reviewed Multiple Listing Service ("MLS") information on re-sales and current listings of existing homes within the first phase (CFO No. 4A), the second phase (CFO No. 48), and the third phase (CFO No. 4C, subject) of Del Webb at Rancho Mirage.
18. Inspected the subject property for any for-sale or property listing signs that may not be listed on the MLS yet.
Appraisal Report
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City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates, Inc.
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COUNTY OF RIVERSIDE AREA DESCRIPTION
Location
The subject property is located in the central portion of Riverside County (the "County") in the area known as the Coachella Valley which includes the cities of: Palm Springs, Desert Hot Springs, Cathedral City, Rancho Mirage, Palm Desert, Thousand Palms, Indian Wells, Indio, La Quinta, Coachella and Thermal along with unincorporated areas of Sky Valley, Happy Valley, Sun City and Bermuda Dunes. More specifically, Del Webb at Rancho Mirage is located in the northern portion of the City of Rancho Mirage, just south of Interstate 10 ("1-10") at Bob Hope Drive. The County encompasses approximately 7,300 square miles, and includes large expanses of undeveloped deserts, valleys, canyons and mountains. The County is a major beneficiary of outward urban pressure from Orange and Los Angeles Counties as well as growth from San Diego County to the south. Although located at the periphery of most urban activity in Southern California, Riverside County, particularly the western area, has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties and belong to the same Metropolitan Statistical Area ("MSA"). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.
Transportation
The subject property is situated south approximately one mile south of Interstate 10 ("1- 1 O") at Bob Hope Drive. 1-10 travels in an easterly/westerly direction and provides access to Santa Monica/Los Angeles to the west and across California into Arizona to the east and ultimately across the southern portion of the United States. Other major freeways and Interstates in the County include Interstates 15 and 215 (1-15 and 1-215) both providing generally northerly/southerly direction and State Routes 91 and 60, both generally providing east/west access.
The County is served by Amtrak and Metrolink as well as several rail freight lines. The Palm Springs International Airport provides regional air service and is located Appraisal Report
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approximately six miles west of the subject with surrounding larger airports being Los Angeles International Airport (115 miles west), Ontario International Airport (70 miles northwest), San Diego International Airport (90 miles southwest) and Orange County International Airport (80 miles west). In addition , the County has extensive trucking corridors with 1-10 being a major trucking corridor across the country.
Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2022 County population was 2.436 million, representing a one-year increase of 0.5 percent. This compares to an average annual growth rate over the past twelve years of about 0.9 percent, and an average annual growth rate of approximately
2.5 percent for the previous eighteen-year period. Current State projections for Riverside County suggest the population is anticipated to reach approximately 2.728 million by 2030, indicating an average annual increase of approximately 1.49 percent over the next eight years. The current growth of 0.5 percent is lower than the previous twelve-year annual average of about 0.9 percent likely due to the COVID pandemic disruption, and significantly lower than the previous 18-year average (2.5 percent) likely due to the Great Recession. The future growth is predicted assuming a more stable market than was seen prior to the Great Recession.
Economy
Beginning February 20, 2020, the U.S. began experiencing an unprecedented economic disruption due to the COVID-19 pandemic. Original predictions were for deaths due to the virus overwhelming hospitals and staff. While the U.S. has lost over 1,000,000 lives due to COVID-19, except for a few exceptions , hospitals have, thus far, had the capacity to treat the patients. January 2021 was the deadliest month in the U.S.; however, cases then declined rapidly as vaccination rates rose. The summer of 2021 began new variants of the disease which increased rates once again; however, not to the extent of the previous winter with hospitalizations of vaccinated people significantly lower. By summer 2022 most mandates have been rescinded, and the COVID pandemic appears to be Appraisal Report
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transitioning to an endemic. The fall out has been the supply chain disruption along with the prevalent inflation.
The Federal, State, County and City Governments ("Governments") originally shut down non-essential businesses and areas where social gatherings occur in March 2020 in order to slow the spread of the virus. This created a strain on small and large businesses alike. Restaurants and hotels were hit hard and travel reduced drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment the first few months of the pandemic. This disruption originally caused extreme volatility in the stock market with an overall drop of 37 percent to 19,174 in March 2020 (based on the Dow Jones Industrial Average "DJIA") however, in early January 2022 the DJIA hit an all-time high of 36,799. On February 24, 2022 Russia began invading Ukraine which caused volatility in world economics and, more recently, U.S. inflation is hitting historical highs resulting in the Federal Reserve Board raising interest rates; both factors which have caused the DJIA to drop 17 percent to 30,517 as of June 13, 2022.
In 2020 and 2021 the Federal Government attempted to curtail the job losses and hardships with the approval of the several acts including the Coronavirus Aid, Relief and Economic Security (CARES) Act (March 27, 2020), the Federal Reserve providing $2.3 trillion in loans (April 9, 2020) and the American Rescue Plan Act (March 2021) and several smaller acts to provide relief during the pandemic. It appears these stimuli totaling $5.6 trillion in COVID relief helped shore up the U.S. economy; however, due to the significant amount of new money introduced into the economy, inflation increased.
Inflation is occurring in the United States at a rate not seen for 40 years. As of the end of May 2022, inflation was running at over eight percent from the previous year. Whether it's from supply chain issues or from the addition of money entering the economy, it is hitting Americans hard. The Russian invasion of Ukraine is creating significant volatility in gas prices which, along with seasonal gas fluctuations, has further increased the rate of inflation. The Federal Reserve Board announced the beginning of several increases Appraisal Report
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in the Federal Reserve Rate. Thus far there have been three increases: the first March 17, 2022 for one-quarter percent, the second May 4, 2022 for one-half percent, and most recently the steepest hike of three-quarters percent on June 16, 2022. The Board has stated there will be further increases in order to slow down inflation. These increases are creating further volatility in the stock market.
While jobs have come back, job losses were huge with the Nation's unemployment rate going from 3.5 percent in February 2020 to 14.4 percent in April 2020 with the April 2022 National unemployment rate at 3.3 percent (per the State of California's Employment Development Department ("EDD") May 20, 2022 Release). The Nation's gross domestic product (GDP) rate of growth was 5.7 percent in 2021, which is the largest annual increase since 1984. It should be noted the rate is compared to the 2020 year which included the stopped economy due to the introduction of COVID. The current growth rate for the US Economy is estimated at 2.3 percent for 2022 and 2.1 percent for 2023. This compares to a national GDP growth of 2.3 percent in 2019, prior to the pandemic.
As with the rest of the nation, the Inland Empire experienced a strong multi-year recession, now referred to as the Great Recession, between 2006 and 2012. The MSA, which had strong employment over the ten previous years saw unemployment rates increase significantly between December 2006 and early 2010, at which time a leveling off occurred followed by continued employment growth (generally since July 2011) until the pandemic hit.
The unemployment rate for the MSA was estimated at 3.8 percent (as of April 2022 per the EDD). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during the COVID pandemic of 14.9 percent. For the first time in since the pandemic, the MSA unemployment rate also represents a decrease from February 2020's 4.0 percent, prior to the pandemic outbreak.
As of April 2022, Both Riverside and San Bernardino counties each had an unemployment rate of 3.8 percent. The current unemployment rate for the MSA of 3.8 percent is similar to the California rate at 3.8 percent, and slightly higher than the April Appraisal Report
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2022 national rate of 3.3 percent. Below is a table comparing Riverside County's unemployment rate to the unemployment rates of the surrounding counties as of April 2022.
Jurisdiction As of Unemployment Rate*
Los Angeles County 4/22 4.7%
Riverside County 4/22 3.8%
San Bernardino County 4/22 3.8%
Orange County 4/22 2.7%
San Diego County 4/22 3.0%
Source: State of California E.D.D.; *Not Seasonally Adjusted While unemployment rates have been decreasing, there is an anomaly where, in the overall nation, unemployment is at 3.3 percent, but there are an estimated 2.1 million workers that never came back to work after the pandemic . These jobs were typically lower paying jobs and it is now believed these workers made a choice not to come back, rather than a lack of jobs available. Employers are having trouble filling lower paying jobs throughout the Nation, causing pay increases in order to entice employees to these jobs.
Over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking prices back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire's housing market seeing an improvement beginning in mid-2012 . While coastal Southern California housing enjoyed significant increases between 2012 and 2015, the Inland Empire bounced back slower with overall Riverside County finally passing the previous median home price peak in early 2020 (prior to the pandemic). Contrary to homebuilder's original thoughts of a slowdown due to the pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year. In addition, since May 2020 there has been a significant increase in residential builder land purchases in the Inland Empire.
While land purchases essentially stopped in February, March and April 2020. Beginning in May 2020 builders began looking for land and entering escrow on land purchases with residential land moving at a brisk pace since the second half of 2020. Most recently Appraisal Report
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builders are attempting to renegotiate residential land escrows as rates have risen in the past two months which are anticipated to slow new home sales. The exceptional activity in new home sales since May 2020 is thought to be due to several factors, including: a tight resale supply of homes; historically low interest rates; millennials finally buying homes; and, the work from home factor during the pandemic, which is allowing residents to live in more suburban areas without long commutes. Along with dropping the interest rate to O - 0.25 percent at the beginning of the pandemic, the Federal Reserve Board ("Board") began quantitative easing by buying 80 billion in Treasury Bonds and 40 billion in Mortgage-Backed Securities each month. These measures helped shore up the national economy during the pandemic.
During the Great Recession, the Federal Government attempted to correct the struggling economy by implementing several economic stimulus packages. The Federal Reserve Board ("Board") kept interest rates below historical averages, dropping rates to near zero in December 2008 and keeping rates low until recently. Along with dropping the interest rate at the beginning of the pandemic, the Board began quantitative easing by buying 80 billion in Treasury Bonds and 40 billion in mortgage-backed securities each month which also helped shore up the national economy. In November 2021 the Board began tapering off the quantitative easing due to the beginning of inflation and has now begun raising rates in an attempt to curb inflation. The interest rate increases will affect new-home buyers in the Inland Empire. The Federal Interest Rate ("Rate") in the US averaged 5.69 percent from 1971 to 2019 reaching an all-time high of 20 percent in March 1980 and the previous low of 0.25 percent in December 2008 along with the early 2021 low of 0.25 percent. The recent historically low rates had spurred home sales within the Inland Empire, which was identified as one of the tightest housing markets in the nation in October 2020.
The latest UCLA Anderson Forecast ("Forecast") was issued June 1, 2022 and while they are not forecasting a recession, they state economic slowdowns both in California and the Nation are expected. The national forecast states that what had seemed like transitory inflation has become persistent which makes it more challenging for the Fed Appraisal Report
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to rein in. The Forecast expects the Federal Reserve Board will significantly increase interest rates this year which will slow consumer demand, especially for housing and related consumer durables along with business investments. The slowdown in both consumer spending and business investment should bring demand back in line with supply, and help alleviate some of the current supply chain constraints and shortages.
The Forecast states they do not expect the Federal Reserve Board to be able to bring core inflation down to its two percent target until 2024. They expect the depth of the economic slowdown and the highest risk of a recession to occur in the middle of 2023 (although they do not expect a recession, they note that it is a possibility). The national forecast for inflation is for 7.4 percent year-over-year by the end of 2022 and falling to
2.2 percent by the end of 2023. They do anticipate unemployment to rise in 2023 as interest rates increase and the economy slows.
The forecast for California says that while the pandemic continues to be a major factor influencing the economy, it is no longer the sole influence. Higher energy prices as well as uncertainty on Wall Street, in addition to continuing pandemic-related supply chain interruptions, are all contributing to the slowdown. Based on these factors, the California forecast has shifted downward from the March 2022 forecast and while they are not forecasting a recession, they are showing a shallower growth trend than was projected in March. They are predicting real personal income to decline by 4.5 percent in 2022 and then grow by 2.4 percent in 2023 (as a function of the transfers from the stimulus packages expiring), and to grow by 2.9 percent in 2024.
The positives for California include: the record surplus general fund, anticipated solid gains in employment based on broad based hiring in retail, healthcare, social services and technology, and increases in defense spending along with the continued demand for tech. Both the tech and the logistics industries have been growing disproportionately due to the increased demand during the pandemic. The California forecast concludes that in spite of the slowing economy, the continued demand for limited housing stock leads to a forecast of relatively rapid return of homebuilding. They anticipate 124,000 new units in 2022 growing to 143,000 by 2024.
Appraisal Report
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According to John Husing's most recent Inland Empire Economic Report dated October 2021, the Inland Empire, along with the State and the Nation, is going through a most unusual time. The pandemic downturn was severe and second only to the Great Depression. However, Husing states that the Federal and state legislation efforts combined with the impact of vaccinations has created the opportunity for most of what was lost to be regained. Within the Inland Empire at the end of 2020, Husing notes that the economy was down an average of 65,600 jobs, but his 2021 forecast sees the Inland Empire recovering the majority of these jobs. Affecting the growth is the unexpected occurrence of the disruption of the supply chain, as families used the funds allocated for COVID by the government to buy goods, which increased demand. This has impacted the Inland Empire due to its concentration of trucking firms, e-commerce operations, warehouses, distribution and wholesale trade firms in the area. One benefit of this disruption is the logistics employment statistics which have soared in the Inland Empire, adding 21,100 jobs in 2020 and an estimated additional 25,300 jobs in 2021.
As mentioned in the UCLA California Forecast, one bright spot in the COVID economy has been sales of new homes. While existing homeowners were reluctant to put their houses on the market during COVID, new home sales in the Inland Empire soared.
Among other factors, historically low interest rates appear to have finally brought the millennial generation to the new home market. In addition, the work-from-home factor made non-homeowners realize they can afford a house further outside of the economic areas while they work, and that buying a home in a more affordable, suburban area made sense if they didn't have to drive to the office each day. The need for home offices combined with the overall stress on social distancing incentivized city dwellers to move out of denser urban areas into more suburban neighborhoods with more space. The minimal existing home inventory, coupled with the work from home factor and low rates put pressure on pricing with new homes prices in the Inland Empire increasing well over 1 O percent year-over-year for the past two years. This will be discussed further in the Riverside County Housing Market section later within this report.
Appraisal Report
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As a final indicator of overall economic activity for the region we have reviewed the rise or fall of TEUs (Twenty-foot Equivalent Units - i.e., containers) being processed in the local ports (Los Angeles and Long Beach). This is especially important for the Inland communities as it represents much of the growth in development of West Coast distribution centers and warehouses in the Inland Empire linked to supply-chain nodes in the Pacific Rim. The chart below shows TEU activity at the Ports of Long Beach.
Generally, there has been increases since 2009 with the exception of a slight dip in 2016 and again in 2019 which ended with a 5.6 percent downturn. As of May 2022, the port is running 3.5 percent above the previous year. The ports are a big part of the recovery with both the Port of Long Beach and the Port of Los Angeles backed up significantly due to the economic disruption of COVID and subsequent supply-chain issues. While it has been improving, there is still ample evidence of supply chain challenges.
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Government
A Board of Supervisors oversees the County as the governing body of the County, certain County special districts, and the County Housing Authority. The Board enacts ordinances and resolutions, adopts the annual budget, approves contracts and appropriates funds, determines land use zoning for unincorporated areas, and appoints certain County officers and members of various boards and commissions. The Board of Supervisors is elected from five different districts within the County.
Appraisal Report
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Education
The Palm Springs Unified School District serves the subject area. The Palm Springs Unified School District operates fifteen elementary schools, five middle schools and four high schools as well as three alternative schools. Higher education is available within an hour's drive at the University of California campuses at Riverside and Irvine or California State University campuses in San Bernardino, San Marcos, Fullerton and Pomona along with several additional private colleges. The closest community colleges include College of the Desert, Mt. San Jacinto Community College, Copper Mountain Community College, Crafton Hills College, Moreno Valley College and Riverside City College, all within 50 miles of the subject area.
Conclusion
Population in the County has increased over the past 30 years with predictions for continued population growth. The nation's economy stalled during the Great Recession due to the housing downturn, unemployment and the credit crisis. The housing market saw a resurgence beginning the second half of 2012 with sales and prices rising since then. While the economy was slowing slightly in late 2019, the COVID pandemic brought the economy to a halt in March 2020. The one bright spot over the past two years has been the new home market, which has been extremely strong in the Inland Empire. The region's affordability coupled with the rising prices in the coastal market and the need for new housing set up a potential boom in the Inland Empire. This appears to be occurring in part due to residents leaving urban areas for more suburban areas due to COVID factors, coupled with historically low interest rates. Current concerns in the Inland Empire housing market include possible variants of the virus, the high prices of homes, rising interest rates, inflation, supply chain issues, and more recently the Russian invasion of Ukraine, which are all creating volatility in financial markets. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles and San Diego Counties with some anticipated bumpy roads ahead.
Appraisal Report
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COACHELLA VALL EY DESCRIPTION
General Area and Information
The subject property is located in the City of Rancho Mirage in the central portion of the Coachella Valley, which has some varying definitions but generally contains the cities of:
Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, La Quinta, Indio, Coachella and Desert Hot Springs, along with some unincorporated areas. Below is a map depicting the Coachella Valley with Rancho Mirage depicted in green and the red star identifying the approximate location of the subject property.
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The Coachella Valley came to be when the construction of U.S. Route 99 northward through Coachella and Indio and westward toward Los Angeles (generally along the present route of 1-10) helped bring agriculture, commerce and tourism to the area in 1926. In the early 1930's the construction of State Highway 111 along the base of the San Jacinto Mountain Range ran diagonally through the valley connecting the various communities. The surrounding mountains and location help create a desert atmosphere Appraisal Report
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which brings sunshine and warm temperatures throughout most of the year. In the 1950s and 1960s the area was popular with Hollywood celebrities with big names such as Frank Sinatra, Bob Hope, Dinah Shore, Elvis Presley, Lucille Ball and Desi Arnaz all having winter homes in the Coachella Valley due to the warm weather.
The Coachella Valley is approximately 45 miles long and about 15 miles wide along most of its length bounded to the west by the San Jacinto Mountains , the Santa Rosa Mountains on the south and the Little San Bernardino Mountains to the east. The Salton Sea basin is at the southeast end of the Coachella Valley with the Salton Sea located about 30 miles southeast of the subject property . While the Coachella Valley appears to be a cohesive area, the varying cities each have wide ranges of income and demographic make-up.
Population and Housing
Due to the Coachella Valley being in an area containing several cities along with unincorporated areas, annual information is not always available or consistent. Per the 201 O Census, the nine cities within the Coachella Valley had a total population of 346,518 people while the January 2022 (most recent information available) population estimate was at 370,416 per the Department of Finance. This suggests an average annual increase of about 0.57 percent average over the past 12 years. Looking specifically at the past year, the Coachella Valley population stayed virtually the same (increased by only 16 people) from January 2021 to January 2022, much less drastic than the County of Riverside's 0.5 percent growth rate from 2021 to 2022. In addition to the above population is an additional 130,000 seasonal residents known as snowbirds who arrive to stay during the winter months. Snowbirds generally are retired and journey from colder areas in the U.S. and Canada. Visitors and tourists in the Coachella Valley typically account for 3.5 million people annually however the COVID pandemic did affect the area's tourism. Fewer than 10 percent of the population in the Coachella Valley were born and raised in the area. Within the Coachella Valley 39.6 percent of the single family detached homes are owned by absentee owners while over 72 percent of the attached product are owned by absentee owners. The City of Rancho Mirage has some differing Appraisal Report
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numbers with 51 .5 percent of the single-family detached homes remotely owned and
68.2 of the attached homes being second residences.
Prior to the Great Recession housing was booming in the Coachella Valley with tens of thousands of residential lots mapped. Many began construction prior to the housing collapse. To date, most developments which were "broken" or went back to the bank/lender during the recession and are located within the greater Palm Springs area, are now being developed . After the Great Recession land values were at times negative when looking at the costs of construction and development fees for a residential lot in the Coachella Valley. This varies significantly from city to city within the Coachella Valley depending on supply and demand. Rancho Mirage has one of the better addresses within the Coachella Valley with Indio, Coachella and the southern portion having a lower median income and higher poverty level. This is shown in the land development within Rancho Mirage with two master planned communities (the subject third phase within the Section 24 Specific Plan and Section 31 which is located about 1.3 miles southeast of the subject) either under construction or in the planning stages.
Economy
The Coachella Valley is responsible for over 95 percent of the dates grown in the nation; the largest crop produced in the Coachella Valley. While most date groves were taken over by development by the 1990s, there are still many date groves in the "East Area" of the Coachella Valley south of Indio and east of La Quinta. Other agricultural products grown in the Coachella Valley include fruits and vegetables, especially table grapes, citrus fruits, onions, leeks and peppers, also grown in the East Area which has an underground aquifer to sustain a year-round green environment. Other businesses include wind farming due to the Coachella Valley's northwest entrance being the second windiest place in the country.
The main income producer in the area is tourism with the weather being the main draw to the area. With 350 sunny days per year and the warmest winters in the U.S., vacationers are drawn to the Coachella Valley. There are over 125 golf courses, making Appraisal Report
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it one of the world's premier golf destinations and the most popular golf vacation destination in California. Unfortunately, due to COVID hitting travel and tourism the hardest of any industry, the Coachella Valley saw significant changes. According to the Coachella Valley Economic Partnership (CVEP) per a report in October 2020, the Coachella Valley economy was reeling since the cancellation of several of the region's biggest events in 2020 and 2021. These events typically fuel the region's small businesses through the slower summer months. The events returned in 2022, and the Coachella Valley's tourism industry has picked back up. Indian tribes have ownership to much of the land in the Coachella Valley which has created casinos, resort hotels and spas. In addition, the Palm Springs Aerial Tramway takes visitors from the valley floor to San Jacinto Peak at 8,516 feet above sea level. There are several small industrial areas within most cities with mom-and-pop owned businesses however there are minimal large manufacturing plants in the Coachella Valley.
There are several annual activities which draw tourists to the Coachella Valley, including the Palm Springs International Film Festival in January, Modernism Week in February, the Riverside County Fair and National Date Festival in February, the BNP Pariba Open (a world renown tennis tournament) in March, the Coachella Music Festival and Stagecoach, a Country Music festival in April. The Coachella Music Festival attracts over 125,000 attendees while Stagecoach is known as the largest country music festival in the County and attracts over 75,000 fans. While the Film Festival and Modernism Week, the Fair and Date Festival all occurred in February of 2020, the BNP Pariba Open, Coachella and Stagecoach all were cancelled in 2020 and 2021. Coachella and Stagecoach both returned in 2022, significantly boosting the tourism industry in the Coachella Valley after the pandemic tourism recession.
Summary
Over the past 90 years the Coachella Valley has transitioned from a rural ranching and farming area to being a tourist destination and a winter home for snowbirds from all over the Country. The Coachella Valley has minimal commercial areas besides service commercial, agricultural and wind farming with tourism being their largest economy. The COVID pandemic hit the tourism sector hard, however it has started to bounce back and Appraisal Report
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tourism has been on the rise since the earlier pandemic days. Fortunately, Rancho Mirage is a second home haven with over 50 percent of the single family detached homeowners being absentee owners. While there is little land development within the Coachella Valley, Rancho Mirage is home to one new master plan currently building out (the subject property) and one new master plan beginning construction (Section 31 ). The weather, location and access make the Coachella Valley a popular weekend destination for residents from other areas in Southern California.
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CITY OF RANCHO MIRAGE DESCRIPTION
General Area
The subject property is located within the City of Rancho Mirage ("City") in the central part of the Coachella Valley in the central portion of Riverside County. Rancho Mirage is surrounded by Cathedral City to the west, beyond which is Palm Springs; 1-10, unincorporated lands and Thousand Palms to the north; and Palm Desert to the east beyond which is Indian Wells and La Quinta. South of Rancho Mirage are the Santa Rosa and San Jacinto Mountains. Rancho Mirage covers approximately 24 square miles and incorporated in 1973. The area is predominantly a retirement area due to the amount of sunshine, its warm climate and the resort lifestyle. The City is shown below with the red star representing the approximate location of the subject property.
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Location
Rancho Mirage is located 110 miles east of Los Angeles, 110 miles northeast of San Diego and 270 miles west of Phoenix. The City is easily accessed from both 1-10 and Highway 111. The north/south main arterials are Bob Hope Drive and Monterey Avenue, both with on/off ramps to 1-10 and main signalized intersections at Highway 111.
Monterey Avenue also generally serves as the eastern border of the City. The main easUwest arterials in the City include Dinah Shore Drive, Gerald Ford Drive, Frank Sinatra Drive and Country Club Drive with Highway 111 generally in a northwesUsoutheast direction.
Population
According to the Department of Finance, the January 2022 population (latest available) of the City is 16,804 which reflects an increase of 0.9 percent since January 2021, greater than the County's growth during that period of 0.5 percent. This is thought to be due to the subject project which has brought new homes to the City, thus bringing new residents. The median age within the City is 62. 7 years, significantly older than the median age of the Coachella Valley which is estimated at 40.3 years. Rancho Mirage is seen as a retirement destination with a country club atmosphere with many residents having their second home in the City along with retirees from surrounding Southern California cities. Due to the high sales rate of the new Del Webb community (subject property}, the growth is anticipated to continue to be higher than the overall County for the next year.
Housing
According to Realtor.com, a nationwide housing statistic reporting company, Rancho Mirage has an April 2022 (most recent data) median home list price of $920,400 which represents a 29.6 percent increase in the past year. Per Realtor.com, Rancho Mirage is the most expensive city (with the highest median home price) in all of Riverside County.
There are over 14,400 housing units in the city limits. While there have been few residential land purchases being developed in the Coachella Valley over the past few Appraisal Report
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years, there are several new home communities currently selling homes. Broken projects which were begun prior to the Great Recession and sat vacant for many years, are now being developed . The subject, Del Webb at Rancho Mirage, is one of the few new homes communities which purchased the lands after the recession, developed the homes and is selling at an excellent absorption rate. Del Webb at Rancho Mirage is also the only new home community now selling within the City of Rancho Mirage. There is a new Specific Plan known as Section 31 which received approval in late 2019 for up to 1,932 residential units and a resort hotel surrounding the Grand Oasis Crystal Lagoon, a sandy beach with a swimmable blue lagoon. Section 31 has begun construction with Disney planning one of their new master-planned communities called "Storyliving" within Section 31 . Disney will work with DMB Development for the first community, which is anticipated to be called Catino, and will offer a range of home types including estates, single-family homes and condos, including at least one area expressly for ages 55+.The project is now grading .
Cultural
Rancho Mirage is the home of Sunnylands, a place of history, hospitality and diplomacy in the California desert. In 1966, Walter Annenberg, a publisher and philanthropist , developed 200 acres into his winter home in Rancho Mirage which he named Sunnylands. For over 40 years the Annenberg's welcomed political, business, educational and entertainment leaders into their home including seven U.S. Presidents, the British Royal Family and Hollywood icons like Bob Hope, Frank Sinatra, Jimmy Stewart and Ginger Rogers among others. In 2001 they chose to preserve Sunnylands and placed it into the Annenberg Trust which strives to bring together leaders of the globe in a neutral location. President Obama was the most recent president to visit Sunnylands where he met on separate occasions with Chinese President Xi Jinping and King Abdullah II of Jordan.
Economy
Rancho Mirage is noted for its country clubs, resort hotels and a state of the art medical health care facilities. Due to the City's location and strong demographics, it has attracted App raisal Report
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its share of financial institutions, professional services and stores. Rancho Mirage is home to four world-class destination resorts including the Agua Caliente Casino-Resort Spa, the Omni Rancho Las Palmas Resort and Spa, the Westin Mission Hills Resort and Spa (across Bob Hope Drive from the subject property) and the Ritz-Carlton Rancho Mirage which re-opened in 2014 after a $500 million renovation. The Eisenhower Medical Center is underway with their $200 Million Capital Campaign to upgrade their orthopedic and general surgery, cariology, oncology, medical technology and outpatient clinics in order to meet the needs of the community. As with the rest of Southern California, the City of Rancho Mirage has been hit hard by the COVID Pandemic; the Eisenhower Health positivity rate (as of June 23, 2022) is 22.5 percent while the overall Coachella Valley positivity rate is 13.1 percent, and Riverside County is 11.4 percent.
The closest shopping center to the subject property is the Rancho Mirage Marketplace at Bob Hope Drive and Gerald Ford Drive which is anchored by a Gelsen's Market, Chevron Gas Station and a Chase Bank. Regional shopping is available at the Monterey Marketplace, anchored by the Home Depot, Regal Cinemas and several national restaurants, The River Mall, an upscale shopping and entertainment center with upscale national chain restaurants and Rancho Las Palmas Shopping Center anchored by CVS, Wells Fargo, ln-N-Out Burger and Hobby Lobby. There is also an Albertson's anchored neighborhood shopping center located at the southwest corner of Country Club Drive and Monterey Avenue. The City hosts the top Bentley and one of the top Rolls Royce automobile dealerships in the U.S. along with Audi, Jaguar, Land Rover, Austin Martin and Ferrari dealerships.
The five top employers in the City include Eisenhower Medical Center, Agua Caliente Casino Resort Spa, Omni Rancho Las Palmas Resort and Spa, Westin Mission Hills Resort and Villas, and the Ritz Carlton Rancho Mirage & Spa. According to its website, the City's approach to development focuses on a fast track, streamlined permit process, quality city services, carefully planned infrastructure and an entrepreneurial "can-do" attitude towards development.
Appraisal Report
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Summary
Rancho Mirage is an upscale retirement community which offers a resort lifestyle, a great climate and plenty of sunshine. The City has excellent access from 1-10 and Highway 111 with good circulation. It houses one of the premier hospitals in the Coachella Valley.
There are four would class resorts within the city along with Sunnylands, at times known as the Western Whitehouse. The subject Del Webb at Rancho Mirage began selling in 2018 and has attracted over 900 new homebuyers to the City, a remarkable draw to a new community in the Coachella Valley. The City's climate, location and friendly business atmosphere will help it to be a growth community in the coming years.
Appraisal Report
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SECTION 24 SPECIFIC PLAN
The Agua Caliente Band of Cahuilla Indians Section 24 Specific Plan ("Section 24 SP") covers the subject property and additional lands. The subject property is known as a portion of Planning Area 8 within the Section 24 SP. Below is a map with the subject property outlined in dotted black line, being generally the northeastern one-third of the entire Planning Area 8. It should be noted that the entire Section 24 SP is discussed in this section while the subject is only a portion of the specific plan.
Land Use Lege nd:
- Mixed Use Core (MXD CORE) - 25 Ac.
- Resort Flex (RESORT) - 81 Ac .
Reta il (RETAIL) - 52 Ac.
c:::=J Multi-Fami ly Resident ial (MFR) - 58 Ac.
c:::=J Single Fam ily Residential (SFR) - 313 Ac .
Public Roadways R/W - 48 Ac.
-- Spec ific Plan Boundary- 577 Ac. (Gross)
Not~: All land acreage numbers
Included on flg'.ure 6. and
Table ,1 are approxlrn~te.
Appraisal Report
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The Section 24 SP is bounded to the north by Ramon Road beyond which are undeveloped lands and 1-10; to the east by Bob Hope Drive beyond which is the Agua Caliente Casino and Resort/Spa and vacant lands; to the south by Dinah Shore Drive beyond which is the Westin Mission Hills Golf Resort, Spa and Villas; and to the west by Los Alamos Road beyond which is the Gary Player Signature Golf Course. The entire specific plan is proposed to be developed into a master planned, mixed-land use community with a higher density mix of retail, entertainment, office hotel and residential land uses within the areas fronting Bob Hope Drive and Ramon Road, in combination with a lower density Active Adult Community on Dinah Shore Drive. The total land area within Section 24 SP is over 500 acres with Planning Area 8 (the Active Adult Community) encompassing 313 acres. The approved land use entitlements as are shown below.
Planning Land Use Acres # of Lots
Area
1A Resort Flex 25 N/A
18 MF Residential 10 180
2A Mixed Use Core 25 N/A
28 MF Residential 11 180
3 Retail 27 NIA
4 Resort Flex 37 N/A
5 MF Residential 18 486
6A Resort Flex 19 N/A
68 MF Residential 9 180
7A Retail 25 N/A
78 MF Residential 10 180
8 SF Residential 313 1,200
NIA Right of Way 48 N/A
Totals 577 2,406
Access to the Section 24 SP is considered to be excellent with the 1-10 offramp at Bob Hope Drive about 1,000 feet north of the property. Planning Area 8, which includes the subject property and additional lands, has been graded into a blue-top condition with streets cut in and lots terraced. The subject portion of Planning Area 8 has been developed into 378 single family detached lots, generally finished, along with open space lands with access trails throughout the community. At time of inception the Section 24 Appraisal Report
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SP was controlled by the Agua Caliente Band of Cahuilla Indians and located in an unincorporated area. Per Pulte Home representatives, there are no remaining tribal rights associated with all of Planning Area 8 while the remainder of the Specific Plan is still tribal owned. A portion of Planning Area 4 near the corner of Bob Hope Drive and Ramon Road is a recently completed service station associated with the Agua Caliente Casino which is located across Bob Hope Drive.
Per the City of Rancho Mirage Notice of Determination recorded September 15, 2015, Planning Area 8 was annexed into the City along with the approval of development of an age-restricted residential community of up to 1,200 residential dwelling units. At the same time, Tentative Tract Map 36809 and Development Agreement DA 160001 were approved by the City allowing for 1,025 single family detached lots. Since the Tentative Tract Map's approval in 2013, all six final maps have been recorded and the total allowed number of units has increased to 1,029. This is typical as final mapping can slightly change the number of lots once engineering is completed.
The subject property includes generally the northeastern portion of Planning Area 8 proposed for 378 single family detached homes which is just about half built out. Del Webb (Pulte's Adult Active brand) is building out three neighborhoods, all for 55+ years of age, consisting of a total of ten home plans within the subject property. The home plans range from 1,438 to 2,726 square feet with current base pricing between $548,990 to $842,990. The clubhouse, which is known as The Outlook, is complete and is located within the first phase of development. The Outlook includes the clubhouse, a putting green, an event lawn, both a covered and an outdoor pool, an in-ground spa, pickleball courts, tennis courts and bocce ball courts. Inside the Clubhouse is a great room/bar, a ballroom, a billiards room, a golf simulator room, a multi-purpose room, a fitness gym and an aerobics room along with ancillary buildings including a kitchen and bathrooms.
There are also several outdoor gathering areas to visit, BBQ and eat.
Appraisal Report
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CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C In April 2021 Willdan Financial Services prepared a CFO Report for City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project). Per the CFO Report, the City of Rancho Mirage City Council approved Resolution 2021-14, the Intention to Form City of Rancho Mirage CFO No. 4C, and called for a public hearing on matters related to the CFO No. 4C including the formation, the levy of special taxes and the need to incur bonded indebtedness secured by the special taxes. We have reviewed the CFO Report which states the authorized facilities to be financed by the special bonds associated with CFO No. 4C include:
City Improvements:
• Street facilities, including but not limited to, major arterials, highways, intersections, access ramps, roadways, sidewalk, curb, gutters, striping, lighting, traffic signalization, signage, landscaping of public streets, incidental expenses, and rights-of-way and appurtenant facilities, including fees to finance such facilities.
• Storm control facilities, including, but not limited to, storm drains, channels, detention, headwalls, riprap pads, retention and/or catch basins, incidental expenses, and appurtenant facilities, including fees to finance such facilities; • Dry utility facilities, including but not limited to electrical lines, undergrounding, pole relation, incidental expenses, and appurtenant facilities, including fees to finance such facilities; and
• City public benefit fees, including but not limited to traffic signals fees, bus shelter fees, City Hall / Corporate Yard fees, fire fees, park fees, and other required capital facilities' fees.
Coachella Valley Water District ("CVWD") Improvements:
• Sewer improvements, sanitary sewers, including, but not limited to, lift stations, treatment plants, force mains, pump stations, transmission and main lines, valves, incidental expenses, and appurtenant facilities, including fees to finance such facilities; ·
• Domestic water facilities, including but not limited to, reservoirs, well sites, pump stations, transmission lines, distribution facilities, main lines, valves, fire hydrants, incidental expenses, and appurtenant facilities, including fees to finance such facilities: and
Appraisal Report
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• Coachella Valley Water District connection and capacity fees, including but not limited to sewer treatments and connection fees, water supply fees, water meter fees, water connection fees, and any other capital facilities fees which are part of these fee programs and capital improvement programs.'
At time of the preparation of the CFO No. 4C Report, it was estimated that the bond issuance of CFO No. 4C will be in the range of $7.28 million with approximately $6.38 million in net bond proceeds with the balance providing for a reserve fund, capitalized interest, initial administration expenses, district formation and bond issuance costs (all amounts are subject to change). It should be noted that the proceeds of CFO No. 4C will be used to supplement the net proceeds of the $6.53 million bond issuance of CFO No. 4A and $5.975 million bond issuance of CFO No. 4B to fund public facilities as described above. The estimated cost of such facilities is approximately $25 million; however, the proceeds from the three aforementioned CFDs are not anticipated to generate sufficient funds to finance all of the costs. Any facilities cost not covered by CFO bond proceeds and special taxes will remain the responsibility of the developer pursuant to the project conditions of approval, the project development agreement or other applicable governing documents.
Per the latest sources and uses (dated July 8, 2022) the project fund deposit is estimated to be approximately $5,899,885 with the Debt Service Reserve Fund totaling $423,681 along with delivery date expenses of $313,943 to a total amount of $6,637,508 (all amounts subject to change). The overall tax rate for the subject property is estimated to be in the 1.5 percent range.
Appraisal Report
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SUBJECT PROPERTY DESCRIPTION
The subject property consists of the northeastern portion of the master-planned community known as Del Webb at Rancho Mirage which is proposed for 378 age qualified single-family detached homes. The master developer of the project is Del Webb, a related entity to Pulte Home Company , LLC.
Location:
Legal Property
Description:
Property Owner:
Assessors
Parcel Nos.:
Three-Year
Sales History:
Size and Shape:
Appraisal Report
Generally, east of Los Alamos Road, north of Dinah Shore Drive, south of Ramon Road and west of Bob Hope Drive, specifically northeast of Del Webb Way and north of Cabernet, within the master planned community known as Del Webb at Rancho Mirage, Rancho Mirage.
Lots 1-186 of Tract Map No. 36809 and Lots 1-192 of Tract Map 36809-5, City of Rancho Mirage, County of Riverside.
Pulte Home Company, LLC, a Michigan limited liability company, successor by the conversion of Pulte Home Corporation, a Michigan corporation as to Lots 161, 163, 166, 167, 171 and 177 of Tract 36809-5, and 1-186 of Tract 36809. Individuals as to Lots 1-160, 162, 164, 165, 168-170, 172-176 and 178-192 of Tract 36809-5. 673-890-015 through -078; 673-980-001 through -050; 673-990-001 through -078; 685-370-001 through -029; 685-380-001 through - 058; 685-390-001 through -051; 685-400-001 through -048.
The subject property and additional lands were purchased by Pulte Holding Company , LLC (an entity related to Del Webb) from sec Rancho Mirage Holdings LP. The lands were raw and undeveloped at the time of purchase. The Option Agreement was dated February 15, 2013, and Pulte closed on the lands on November 30, 2018. In addition to the above land sale, 186 completed homes have closed to individual homebuyers with close dates ranging from October 11, 2021 through June 30, 2022.
The subject property is irregular in shape. Per recorded tract maps the size is shown below.
Tract# # Lots Gross Acres
36809 186 52.672
36809-5 192 49.818
Total 378 102.49
The overall density of the gross acreage equates to 3.69 dwelling units per acre.
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Zoning:
Entitlements:
Home Owner's
Association:
Topography:
Soils Condition:
Seismic
Information:
Appraisal Report
Per the City of Rancho Mirage's General Plan the subject is shown as R-M (Residential Medium Density which allows for up to 4.0 dwelling units per acre). Per the current zoning map the property is shown as Section 24 Specific Plan. Per the Section 24 Specific Plan, the property and additional lands are known as Planning Area 8 which consists of a total of 313 acres with up to 1,200 dwelling units allowed.
The subject property is entitled by virtue of the Section 24 Specific Plan and is known as a portion of Planning Area 8. In addition to the Specific Plan approvals, Tract Map 36809 was recorded April 15, 2021 and divides a portion of the subject lands into 186 numbered lots with a minimum lot size of 5,500 square feet. Tract Map 36809-5 was recorded September 10, 2020 and covers the remaining of the subject property, dividing the land into 192 numbered lots also with a minimum lot size of 5,500 square feet.
The HOA Fee within Del Webb at Rancho Mirage is estimated to be $400 per month at build out per homeowner. The HOA fees include the gated community entrance, the social center with pools, spa, outdoor and indoor entertaining areas and all common area landscaping and upkeep within the community.
The subject property and the surrounding lands slated for the entire master planned community were generally flat, desert sandy lands, at street grade of the surrounding streets with some internal slopes.
The subject property has been developed into 378 single-family detached lots. The lots are generally level with drainage into an engineered street storm drain system.
We have reviewed a "Soils/Geology Review Section 24 Specific Plan - Rancho Mirage Area Riverside County, California" which included the subject and additional lands and was prepared by Leighton and Associates, Inc. of Palm Desert, dated May 15, 2014.
The report concludes that the proposed improvements are feasible from a geotechnical standpoint, provided Leighton and Associate's recommendations are incorporated during site grading and development.
It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations in the soils reports were adhered to during construction. This is evidenced by construction of homes on the site and City inspectors on site during construction.
The subject property is not located within an Alquist Priolo Earthquake study zone.
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Environmental
Concerns : We have reviewed a Draft Environmental Impact Statement on the subject and additional lands dated November 2014, prepared by · Meridian Consultants LLC of Westlake Village, California; as well as a Phase I and Limited Phase II Environmental Site Assessment dated March 15, 2013 by Leighton and Associates, Inc. of Palm Desert; and an Addendum Letter to the ESA dated June 23, 2014.
The report states that historically the site was vacant, undeveloped land. Some soil stockpiles and construction debris were noted at time of the report. Soil sampling was completed and chemicals of potential concern were not identified. The report concludes that the site assessment revealed no evidence of recognized environmental conditions in connection with the property; that the soil stockpiles were suitable for reuse on the site; and, that construction debris should be disposed of in accordance with regulatory guidelines.
The Addendum letter incorporates additional lands associated with the subject site, and concluded that there were no changes to the conclusions and recommendations of the Phase I and Phase II ESA.
It is an assumption of this appraisal that the subject property is free and clear of any environmental issues which would slow or thwart development of the site and that all recommendations contained in any such reports were adhered to.
Flood Information: The subject property is located within FEMA Map 06065C1595G dated August 28, 2008. The site is shown as Zone X which is outside of any flood zone area.
Easements and
Encumbrances:
Appraisal Report
We have reviewed two Preliminary Title Reports prepared by First American Title Company on the lots owned by Pulte within Tract 36809 dated April 30, 2021, and Tract 36809-5 dated April 9, 2021.
The exceptions are as follows:
For Tract 36809 - Order Number NHSC-6229072 (jd) Items 1 thru 4 refer to property taxes and assessments including CFO No. 1 (Fire and Police). Item No. 5 is in regards to a resolution executed by the Riverside County Board of Supervisors establishing the Coachella Valley Soil Conservation District recorded in 1956 on the property.
Item Nos. 6, 18, 20, 23 and 24 refer to easements, including a grant of easement recorded September 20, 1977 which is not identified in the title report. Item No. 7 is in regards to an Antenuptial Agreement recorded in 1984. Item No. 8 refers to a Resolution of the Board of Directors of Coachella Valley Water District. Item No. 9 refers to the Memorandum of Property Agreement and Assignment of Property Agreement recorded in 2013 (when property went under option).
Item Nos. 10 and 13 pertain to water system and sanitation system agreements. Item No. 11 refers to the Water Quality Management Plan. Item No. 12 is in regards to a Pre-Annexation and Statutory City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates , Inc. Page 36
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Appraisal Report
Development Agreement recorded in 2017 on the property. Item No. 14 is in regards to the CC & Rs recorded on the property. Item No. 15 pertains to the Master Dispute Resolution for Del Webb at Rancho Mirage recorded in 2018. Item No. 16 pertains to a right of first refusal recorded in 2019 on the property. Item No. 17 pertains to a Deed of Trust recorded on the property in 2019. Item No. 19 refers to a Certificate of Compliance recorded in 2019 on the property . Item No. 21 refers to the Covenants Running with the Land document recorded in 2019. Item No. 22 pertains to the matters shown on Tract Map No. 36809. Item No. 25 pertains to an examination of the records of the Department of Interior, Bureau of Indian Affairs in regards to the subject site. Item No. 26 refers to water rights. Item No. 27 refers to the rights of the public to the portion of land lying within any street or road. Item No. 28 refers to the rights of parties in possession.
For Tract 36809-5 - Order Number NHSC-6150573 (jd) Items 1 thru 4 refer to property taxes and assessments including CFO No. 1 (Fire and Police). Item No. 5 is in regards to a resolution executed by the Riverside County Board of Supervisors establishing the Coachella Valley Soil Conservation District recorded in 1956 on the property.
Item Nos. 6 and 25-30 refer to easements, including a grant of easement recorded September 20, 1977 which is not identified in the title report. Item No. 7 is in regards to an Antenuptial Agreement recorded in 1984. Item No. 8 refers to a Resolution of the Board of Directors of Coachella Valley Water District. Item No. 9 refers to the Memorandum of Property Agreement and Assignment of Property Agreement recorded in 2013 (when property went under option).
Item Nos. 10 and 17 pertain to water system and sanitation system agreements. Item No. 11 refers to the Water Quality Management Plan. Item No. 12 is in regards to a Pre-Annexation and Statutory Development Agreement recorded in 2017 on the property. Item No. 13 refers to a deed of trust recorded in 2017. Item Nos. 14 and 20 refer to right of first refusals on the property recorded in 2017 and 2019. Item No. 15 refers to a covenant requiring notification of default, foreclosure or bankruptcy on the site. Item No. 16 refers to a maintenance covenant for required landscaping and integrated architectural features. Item No. 18 is in regards to the CC & Rs recorded on the property. Item No. 19 pertains to the Master Dispute Resolution for Del Webb at Rancho Mirage recorded in 2018. Item No. 21 pertains to a Deed of Trust recorded on the property in 2019.
Item No. 22 refers to a Certificate of Compliance recorded in 2019 on the property. Item No. 23 refers to the Covenants Running with the Land document recorded in 2019. Item No. 24 pertains to the matters shown on Tract Map No. 36809-5 . Item No. 31 pertains to an examination of the records of the Department of Interior, Bureau of Indian Affairs in regards to the subject site. Item No. 32 refers to City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates , Inc. Page 37
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Utilities:
Streets/ Access:
Appraisal Report
water rights. Item No. 33 refers to the rights of the public to the portion of land lying within any street or road. Item No. 34 refers to the rights of parties in possession.
It is an assumption of this appraisal report that all of the subject lands are free and clear of any liens and/or encumbrances other than CFO No. 4C, and that the above easements do not hinder development as proposed.
All normal utilities will serve the property by the following companies:
Electrical:
Natural Gas:
Sewer/Water:
Schools:
Southern California Edison Company
The Gas Company
Coachella Valley Water District
Palm Springs Unified School District
Access to the master plan is via 1-10 to Bob Hope Drive, south approximately one mile to Dinah Shore Drive and west about one half mile to the gated entrance of Del Webb at Rancho Mirage on the north side of Dinah Shore Drive. Access to the subject property is Dinah Shore Drive to Los Alamos Road and north to a gated entrance at Del Webb Way (main access through the master planned community). The subject lands are on the north side of Del Webb Way.
1-10 is a major east west freeway providing access from the Pacific Ocean in Los Angeles to the Atlantic Ocean in Florida. The Interstate provides access across the southern portion of the United States
Bob Hope Drive is one of two offramps from 1-10 providing the main access into Rancho Mirage, the other being Monterey Avenue. Bob Hope Drive becomes Rio del Sol north of 1-10 and terminates about two miles to the north. To the south Bob Hope Drive is one of the main north/south arterials in Rancho Mirage providing the main access to Highway 111, where it terminates.
Highway 111 is a connector highway that runs diagonally through the Coachella Valley connecting the nine cities along the foothills of the Santa Rosa Mountains.
Dinah Shore Drive is one of the main east/west arterials in Rancho Mirage beginning at Portola Road in the easterly adjacent city of Palm Desert and changing to Mesquite Avenue in downtown Palm Springs.
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Los Alamos Road is an access road which provides the eastern entrance into the Mission Hills Golf Course Community at Via Bella.
Vi Bella becomes Del Webb Way across Los Alamos Road. Los Alamos Road begins at Dinah Shore Drive and currently terminates at Ramon Road, just north of the subject.
The main entrance into Del Webb at Rancho Mirage is Del Webb Way, a divided road at the entrance gates off Dinah Shore Drive, looping through the community and exiting at the second gated entrance at Los Alamos Road. Del Webb Way is completed
throughout the community.
Internal Streets (all generally complete) within the subject property include Tannis, Vintage, Zinfandel, Chablis, Magnum, Reserve, Prosecco, Semillon, Chardonnay, Grenache, Camenere, Moscato and Cabernet.
Current Condition: The subject property has been developed into 378 single-family detached lots with the majority of the internal streets paved and utilities stubbed to each residential lot. The Clubhouse and model home complex are both complete and are within Phase I (not a part of this appraisal report). The property is being marketed as Del Webb at Rancho Mirage. Upon our inspection there are 186 closed, five completed homes (all in escrow), 72 houses under construction (70 which are in escrow) and 115 generally physically finished lots (28 in escrow).
Costs to Complete: We have reviewed costs provided by representatives of Pulte. There are minimal remaining back-bone costs of $209,091. The majority of the remaining lots are in a generally physically finished condition however there are some in-tract hard costs for items like paving, landscaping, utilities, common area, etc. to be paid which total $3,470,752 for a total of $3,679,843 in remaining hard costs. In addition, there are remaining land development fees to be paid prior to either obtaining a building permit or a certificate of occupancy for the remaining homes. The remaining development fees, net of CFO reimbursed fees are estimated at $419,954.
Appraisal Report
The individual homeowners are not liable for any of these costs; thus, the remaining hard costs will be spread among the 192 lots owned by the builder (115 lots, 72 lots under construction and five production homes over 95 percent complete). This results in an estimated $19,165.85 in remaining hard costs per lot ($3,679,843 divided by 192 lots) and $419,954 in remaining fees associated with the remaining lots. These costs will be taken into account in the valuation section, later within this report.
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Overall Tax Rate: The subject project is anticipating an overall tax rate in the 1.5 percent range. While this is a bit higher than some of the competition, it doesn't seem to be a hinderance to the sales based on the exceptional sales rate of over 18 homes per month within the project since inception in June 2018.
Description: The subject property is a portion of Del Webb at Rancho Mirage that encompasses 378 proposed single-family detached homes. The homes are being built out in three neighborhoods known as The Classic Series, The Retreat Series and The Encore Series. The neighborhoods are spread throughout the community rather than building in one area exclusively. The three neighborhoods have a total of ten home plans. The ten plans range in size from 1,438 to 2,726 square feet. Some of the plans have options to add on square footage, however we will value the base size for each plan in our analysis. In some instances, the square footage of the plan changes minimally due to the layout or the elevation of the home. In these instances, we will utilize the smallest sized plan.
Appraisal Report
All of the home exteriors include dual-glazed vinyl windows, concrete tile roofs and front yard landscaping with automatic sprinklers. The homes have minimum two-car garages with interior access, roll-up garage doors with automatic opener and concrete walks and driveway. Energy benefits include sustainable wall and ceiling insulation, Honeywell programmable WIFl-enabled thermostat control, HVAC systems, prewiring for future wireless access, tankless water heaters and solar panels (20-year lease with option to purchase and/or upgrade). Interiors include 13 x 13 tile flooring at entry, kitchen, laundry and baths, bullnose drywall, 3.25- inch baseboards throughout, LED downlights, interior laundry rooms with marble countertops, 2-panel interior doors and prewiring for ceiling fans. Kitchens include birch or maple cabinetry, Whirlpool high-end appliances, double basin sinks and marble countertops.
Bathrooms include marble countertops, clear glass enclosures in master bath and birch or maple cabinetry. All homes appear to be in excellent condition with no visible depreciation.
We have reviewed sales information from the builder which included homes closings from October 11, 2021 through June 30, 2022.
Closing prices ranged from $451,483 to $1,255,105. Per public record, within the entirety of the Del Webb master plan (including Phase 1, 2 and 3) there are six resale homes currently listed, one pending resale and 16 re-sales that have occurred within the past six months. Original base pricing at the project opening in June 2018 ranged from $344,990 to $550,990 while current base pricing ranges from $548,990 to $842,990 which reflects price increases on all plans ranging from $204,000 to $292,000 or in the 53 to 59 City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates , Inc. Page 40
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Appraisal Report
percent range over the 48-month time period. While these are exceptional price increases, they are similar to the average price increases in Riverside County over the past four years. On top of base pricing there are lot premiums (generally due to location and size). In addition, most buyers typically purchase some options and upgrades over the base price of the home. In age-restricted neighborhoods the options and upgrades are typically higher due to several factors including (1) buyers bringing equity from a previous home sale, (2) more established homebuyers and (3) homebuyers anticipating they will stay in the home throughout their retirement.
Below is a table showing the detail of the ten home plans. he ~od~s are loc ted ~~R!« Pha e t~~1te n t ~~rud es1 ence oun ar m . d i/3'Wi1s a wn p~e!r. In wn Classic Series
1 (Gateway) 2/2 1 / 2 1,438 18 0
2 (Solitude) 2/2 1 / 2 1,657 16 0
3 (Expedition) 2-3 / 2 1 / 2 1,770 14 0
Retreat Series
4 (Sanctuary) 2/2 1 / 2 1,832 36 1
5 (Haven) 2-3 / 2 1 / 2+ 1,858 13 0
6 (Preserve) 2-3 / 2 1 / 2+ 2,008 26 0
7 (Refuge) 2-3 / 2.5 1 / 2+ 2,187 24 1
Encore Series
8 (Serenity) 2-3 / 2 1 / 2+ 2,329 16 0
9 (Journey) 2-3 / 2.5 1 / 2+ 2,504 13 2
10 (Voyage) 3 / 2.5 1 / 2+ 2,726 10 1
Totals 186 5
addition to the above detailed houses there are 72 houses under construction and 115 finished lots within CFO No. 4C.
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RIVERSIDE COUNTY/ RANCHO MIRAGE HOUSING MARKET
In analyzing the County and City's housing market, population growth and economic conditions need to first be considered .
Population
The County population grew at a 0.5 percent increase between January 2021 and January 2022 (per the Department of Finance) . This compares to an average annual growth rate over the past ten years of about 0.9 percent, and an average annual growth rate of approximately 2.5 percent for the previous eighteen-year period. The slowdown in population growth is primarily due to the sluggish national economy, and is similar to other Southern California counties during this time period. Predictions are for the County to grow at an average annual rate of 1.49 percent over the next eight years. This equates to an increase of approximately 36,000 residents per year suggesting the need for about 10,000 homes per year within the County . The COVID-19 influence is still unknown on the County's population growth. New home sales in some cities in the County in 2020 and 2021 were higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market. These factors may increase actual County population growth in 2022.
The City population grew at a 0.9 percent increase over the past year which is higher growth than the overall County which is directly due to the subject project. This equates to an increase of 155 residents, from 16,650 in January 2021 to 16,804 in January 2022 (latest statistics available from the Department of Finance).
Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than in other areas of Southern California. The rise and then fall of housing prices in the Inland Empire bet~een 2004 and 2009 was considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equity. After essentially Appraisal Report
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remaining flat for a few years, housing prices began to increase in late 2012 through January 2020. Once the COVID pandemic hit in March 2020 the housing market seemed to slow down significantly early on, but by May 2020, new homes were going under contract and selling at above average absorption rates from May 2020 through May 2022 in the region. Per Realtor.com the May 2020 Inland Empire home listings are up 52 percent year0over-year from May 2021.
Economic growth in the Inland Empire was strong between 2002 and 2007. Job losses occurred between 2007 and 2009, with a leveling out in 2010, a slight upturn in 2011, and general increases since that time until the economic shutdown due to COVID which created a new recession. The most recent unemployment rate for the County is 3.8 percent (per the April 2022 Employment Development Department "EDD" report), lower than the high of 15.1 percent in July 2010. The April 2022 County rate is the same as the California unemployment rate (3.8 percent), but was higher than the April 2022 national rate of 3.3 percent. The pre-COVID unemployment rate in February 2020 for the County was 4.0 percent. According to CNN Business, as of January 2022 the U.S. economy is operating at 91 percent of where it was in early March 2020, prior to the pandemic. While it was thought once the COVID pandemic ended, the Nation would get back to the previous highs; however, it is now looking like there may be some more permanent changes in the post-COVID economy. These changes include: many companies switching to a modified work-from-home for their employees whenever possible; on-line shopping is a larger factor in retail; people moving out of urban areas to suburban areas; on-line academia rising; and many now believing that the travel and leisure industry may never get back to the old "normal" as restaurants closed, hotels are currently at less than normal capacity and airline revenues are down significantly. The closing of businesses appears to have had a ripple effect on trade, as materials and consumer goods are hard to obtain which is creating long lead times for many orders and now inflation creating significantly higher costs for all.
The housing market has played a large role in the past two recessions. The housing market was a significant factor in strengthening the impact of the Great Recession. Due Appraisal Report
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to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives such as sub-prime and non-conventional mortgages to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up due to the problems in the sub prime and non-conventional mortgage markets. In March 2007, the Federal Government initiated efforts to stop or limit sub-prime mortgages. Unfortunately, the damage had already been done with sub-prime mortgages playing a role in the 2008 shake out of Wall Street and contributing significantly to the U.S. economic downturn. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid-2012 when home prices began a steady climb.
Throughout the COVID recession, new home sales were one of the brightest spots in both the local and national economies. While new home sales slowed in March and April 2020 due to the COVID pandemic, prices did not appear to change in the County. Some builders increased concessions in March 2020, but by May concessions were back to where they were prior to COVID, and prices have increased significantly since. The Inland Empire was documented as the tightest housing market in the Nation (OC Register October 2020) based on the low supply. The supply of homes in the Inland Empire is still constrained and as of the end of March 2022 was 24 percent below one year-ago levels. This has put pressure on prices to rise. As of mid-March 2022, over 97 percent of new home builders in the Nation were stating pricing has increased from January 2022 to February 2022. Per Metrostudy's survey of homebuilders, their largest concerns relate to (1) increasing interest rates leading to affordability for buyers; (2) availability of materials; (3) cost of materials and land increasing; (4) labor shortages; and (5) delay on government services.
The fall out of the shut-downs from the COVID pandemic are still affecting the economy.
As previously discussed, the Federal Government approved $5.6 trillion in COVID relief in order to keep the economy stable. This amount of money entering the system appeared to fuel inflation with the 2021 national inflation rate at 4. 7 percent compared to Appraisal Report
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a 1.2 percent average in 2020. Thus far, 2022 has experienced high rates of inflation with May showing an 8.6 percent annual rate. High inflation is one of the factors that the Federal Reserve Board watches in order to determine both bond purchases and fluctuations in the interest rate. Due to the recent inflation, the Board has tapered off their purchase of bonds and has begun to raise the Federal Reserve Rate.
Home loan mortgage rates have been and are still playing a large part in the robust housing market. The Board held mortgage rates at all-time lows after the Great Recession in an attempt to assist the housing market. Low rates appeared to help for quite a while. However, first-time buyers are now having a hard time entering the housing market due to rising prices and rising interest rates. The Board had kept interest rates below historical averages, dropping rates to zero in December 2008. Subsequently, there had been eight one-quarter point increases with the December 2018 increase bringing the Federal Rate to 2.25-2.5 percent which appeared to have a negative impact on home sales. In 2019 the Board reduced the rate one-quarter percent three times in an effort to spur the economy. This appeared to help as housing sales began to increase in early 2020, prior to COVID. On March 3, 2020, due to the COVID pandemic economic disruption, the Board reduced the Federal Rate one-half percent. Then on March 16, 2020 they reduced the rate an additional one percent to the Federal Rate of 0.00 - 0 .25 percent, the lowest rate in history. The quoted average U .S. rate for a 30-year fixed mortgage per FRED (Federal Reserve Economic Data) as of June 16, 2022 was 5.78 percent, which is higher than the April and May 2022 averages, and significantly higher than the most recent low of 2.65 percent on January 7, 2021. Mortgage applications had been spiking due to these low rates, and the fear that they were going to start to slowly ticking up, which we are seeing occur in real time. In March 2022 the Federal Reserve Board increased the rate 0.25 percent, followed by a 0.50 percent increase in May and a historical 0.75 percent increase in June. The Board has stated they anticipate several additional increases this year. The Federal Reserve Rate increases are supposed to help slow the high inflation rate in our country.
Appraisal Report
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Residential Land Development
While there had been little land development going on in most of the Inland Empire during the years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas such Corona, Eastvale, Ontario Ranch, Riverside and Jurupa Valley in West Riverside County and Murrieta, Lake Elsinore, Menifee and Temecula in Southern Riverside County. The increase in housing prices since 2012 coupled with the limited availability of supply made land development feasible once again for homebuilders however the Coachella Valley was slower to come back with few new master planned communities. It is thought that the increase in regulations, which has significantly increased the time of processing entitlements, has limited the master developers in California. While prior to the recession it was not unusual to see numerous large master planned communities selling lots to builders, there are few currently available in the subject area. This is partially due to financing for land development which has been difficult to obtain. The majority of land sales over the past few years include single tracts of land with maps ready to record or a public builder buying a larger piece of land but develops the land for its own use, such as the subject Del Webb at Rancho Mirage. It should be noted however, that within the Coachella Valley, residential land development came back slower than in other areas in the County. Due to the number of broken projects during the recession, partially completed lots were finally traded beginning in 2017 with public-owned homebuilders coming to the desert area once again. Most of the residential land transactions in the past few years include builders joint venturing with equity companies who purchased the broken projects out of bankruptcy or public builders purchasing these lands. One exception is the subject property which was entitled after the Great Recession. While new home sales in the Inland Empire have sold exceptionally well over the past two years, the recent price increases coupled with the higher interest rates, may bring a slowdown in home sales.
With new housing one of the strongest sectors in the coronavirus economy, it appears this resulted in new-home starts. Builders increased prices due to the heavy demand for new homes in the Inland Empire which resulted in brisk residential land sales since the later-half of 2020. However, there is talk that the rush to build by the new-home builders Appraisal Report
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may create a slower second half of 2022 and 2023 in new home sales. That is, residential land has been selling exceptionally well since late 2020, but that may be pulling future demand forward creating a softening in the land market in the future. Adding to this possible slowdown, are the current worries of inflation and the high interest rates .
The Coachella Valley differs from the remainder of the County due to the high amount of remotely owned homes. Within the Coachella Valley 39.6 percent of detached homes are remotely owned and in Rancho Mirage 51.5 percent of detached homes are remotely owned. Condominium ownership has even higher remote ownership with 72.5 percent of the condos in the Coachella Valley remotely owned and 68.2 percent of the condos in Rancho Mirage remotely owned. Thus, the Coachella Valley and in particular Rancho Mirage have a significant amount of second homeowners. Our review of new home projects in the area resulted in about 25 new home projects in the Coachella Valley/Greater Palm Springs area however only 11 are considered to be comparable to the subject, that is that the buyers of the subject property, may consider these other new projects when looking for their new home. Within Rancho Mirage, Del Webb is the only tract home new project currently selling.
New Home Sales and Pricing
We have researched new single-family homes within the subject real estate market in order to reflect residential trends. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. In reviewing new home sales in the Inland Empire market area, per the June 26, 2022 Ryness Report, the year-to-date average sales rate (4. 78 sales per month) is slightly lower from the same time period of the previous year (5.13 sales per month). Previously, the average year to date sales rates for 2022 were higher than those of 2021, however it appears new home sales rates are starting to level off, likely due to the increase in mortgage interest rates. Furthermore, when taking into account two calendar years and reviewing December 2019 year to date sales rates to that of December 2021 (prior to pandemic and since the pandemic), sales prices increased 37 percent. This increase is partially slowed due to the limited available supply which was not meeting demand, thus Appraisal Report
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put pressure on pricing along with historically low interest rates. As rates go down, purchasing power becomes larger, which gives new-home buying a boost. However, the flip side is as rates rise, purchasing power becomes lower. When comparing the June 26, 2022 Inland Empire Ryness Report to one year prior, there are four additional projects (189 in June 2021 and 193 in June 2022) and sales are slightly lower year-to date than the previous year, however when reviewing the current week average sales rate compared to the average weekly sales rate of one year ago, sales are down 48 percent (from 4.78 sales per month average during the third week of June last year to
2.52 sales this past month). This does not appear to be due to limited inventory as there are additional projects, but rather due to the increase in interest rates and higher pricing.
Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, inspections, interior designers and landscapers, all contributing to the area economy.
The years 2018, 2019 and early 2020, saw a significant increase in new homes projects in the Inland Empire. Due to the high number of land sales in 2017, new homes projects increased 84 percent in the Inland Empire from 131 new home projects in January 2018 to 242 new home projects in February 2020. However, new home projects have decreased since that time to 193 new home projects in the Inland Empire per the June 26, 2022 Ryness Report. While this is a significant increase in number of new home projects since 2018, the number of new home sales is still running over 50 percent below the average of 2002 through 2006. New home sales in overall Riverside County for the 3rd quarter of 2021 were 1,956 (for the quarter) while new home sales for the 3rd quarter of 2020 were 1,481, representing an increase of 32.1 percent (latest data per Husing).
The 1,956 new home sales for the quarter would equate to 7,824 new home sales for the year, which relate to the aforementioned needed homes based on estimated population growth of about 10,000 new homes per year. This suggests new home supply is not keeping up with the demand due to population growth.
New single-family home prices (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire Appraisal Report
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changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current new home median price is a record high of $535,419 per John Husing's Third Quarter 2021 (latest available) information.
This reflects an increase of over 99 percent from the bottom of the cycle and an increase of 22.5 percent over its previous peak. New home sale prices fluctuate based on the land value more than the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basis do not fluctuate as much as land values. However, there have been inflationary increases in construction costs adding to the increased cost of building a home.
Within the Coachella Valley similar statistics have occurred. Between 2000 and 2005 there were an average of 81 new home projects with an average annual sales per project of 54 homes. Between 2006 and 2008 the average number of new home projects increased to 131 (planned and began construction prior to the recession), with an average annual sales per project of 17 homes. Between 2009 and 2018 the average new home projects totaled 46, each with an average of 17 home sales per year. Per Ryness Report, as of June 26, 2022 there are 21 new home projects in the Coachella Valley with 487 new homes sales year to date, suggesting a monthly rate of about 81 homes per month spread across all the new home communities in the Coachella Valley, or "Desert Riverside" submarket. These statistics provided by Ryness do not include the subject property . The subject is experiencing a sales rate of over 18 homes per month which equates to over 200 sales per year which would make a significant difference in the new home sales rate in the Coachella Valley.
New single-family home prices (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current new home median price is a record high of $445,500 per John Husing's third quarter 2020 information (latest quarterly report distributed). This reflects an increase of over 65 percent from the bottom of the cycle and an increase of 1.9 percent over its previous peak. It is important to note that building trends changed to building smaller, more economical homes since pre-Great Recession, Appraisal Report
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so this increase likely demonstrates an even higher increase when looking at a price per square foot basis. New home sale prices fluctuate based on the land value more than the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basis do not fluctuate as much as land values, however there have been inflationary increases in construction costs adding to this increase.
Sales in age qualified neighborhoods are good when the housing market is good however when the housing market hits a downturn, active adult communities typically fare worse than others because there are more discretionary buyers. When the COVID pandemic hit, age qualified neighborhood sales essentially came to a halt as homeowners stopped looking for new homes. It is a lifestyle choice to move into an active adult community which is easier in an increasing market when the old house can be sold however, when the market is flat or decreasing and houses aren't selling, there's no incentive pushing the buyer to move. For most new home projects in the Inland Empire, sales began in earnest in April/May and this appears to be what happened in Del Webb at Rancho Mirage. In 2020 there were eight closings of homes in the first quarter while the remainder of 2020 had 139 closings.
Our search for comparable new home projects within the competitive market area resulted in five competitive age qualified neighborhoods, three of which are part of large master planned communities (including the subject), and six additional non-age-qualified neighborhoods in the immediate area. The age qualified neighborhoods have a price point range from $437,990 to $842,990, with the subject's largest floorplan composing the high end of the price range. The non-age-qualified neighborhoods have a price point range of $550,115 to $1,275,000, but it should be noted several of these communities (those that make up the top end of the price range) include private pools and/or spas in the price of the home.
Existing Home Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in Riverside County . According to the California Association of Realtors' Appraisal Report
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most recent data, within overall Southern California, the median price paid for an existing single-family home in May 2022 ($841,920) reflects an increase of only 0.5 percent from the previous month, but up 11.9 percent year-over-year from $752,250 in May 2021.
Existing home sales in Southern California overall were down 14.3 percent year-over year as of May 2022. The decrease in sales appears to be a combination of low inventory, higher pricing and higher interest rates. The overall Southern California numbers compare to Riverside County with $650,000 as the median price paid for an existing home in the County in May 2022, up 3.2 percent since April 2022, and up 16.1 percent on a year-over-year basis ($560,000). Sales of existing homes in the County were down 13.1 percent year-over-year. Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.
Southern California Existing Home Sales
Price MTM Price YTY Sales YTY
County May 2022 April 2022 May 2021 % Change % Change % Change Los Angeles $798,720 $801,680 $725,680 -0.4% 10.1% -11 .2% Orange $1,295,000 $1,325,000 $1,100,000 -2.3% 17.7% -22.6% Riverside $650,000 $630,000 $560,000 3.2% 16.1% -13.1%
San Bernardino $491,000 $495,000 $410,000 -0.8% 19.8% -14.0% San Diego $970,000 $975,000 $851,000 -0.5% 14.0% -13.9% Ventura $915,000 $955,000 $851,000 -0.5% 14.0% -13.9%
Southern Calif. $841,920 $837,500 $752,250 0.5% 11.9% -17.3% Source: California Association of Realtors
Based on May 2022 median existing homes prices, in comparison to the majority of the surrounding counties, Riverside County has a definite price advantage. The "Riverside County Advantage" (price difference between Riverside and surrounding counties) is $148,720 as compared to Los Angeles County, $265,000 as compared to Ventura County, $320,000 as compared to San Diego County and $645,000 as compared to Orange County. That is, in May 2022, the median priced home in Riverside County was $645,000 less, or about one-half the median priced home in Orange County ($1,295,000). However, San Bernardino County has a $159,000 price advantage over Riverside County. Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the work-from-home concept, the suburban areas have been seeing more growth which put pressure on home prices in the Inland Empire. It's important to note that May of 2022 was the first month where the majority of Appraisal Report
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Southern California counties showed median price decreases from the previous month.
Most counties were seeing substantial month to month median price increases over the past two years, and the widespread decrease could be a sign that the market is starting to turn and the pricing run up is coming to end. Riverside County was the only Southern California county to show an increase of median sold price from April to May 2022.
In a separate attempt to capture the increase in home prices in the subject's immediate region, the resale activity of existing homes in the subject area (per Corelogic) has been reviewed. The number of sales and sale prices of existing homes within market areas in the immediate area of the subject are shown in the table below.
Border Sales of May 2022 May 2022 Price%
Community ZIP to SFD Homes Price Median Median Change from Name Code Subject May 2022 SFR $/SF May 2021
Rancho Mirage 92270 Subiect 62 $1 235 000 $463 36.8%
Cathedral Citv 92234 West 59 $573,000 $337 27.6%
Thousand Palms 92276 North 4 $398,000 $308 24.2%
Desert Hot Springs 92241 North 9 $430,000 $298 230.8%
Palm Desert 92211 East 62 $615,000 $330 23.6%
Palm Desert 92260 Southeast 52 $1,050,000 $438 36.0%
Palm Springs 92264 Southwest 26 $1,325,000 $751 9.8%
Source : CoreLogic Southern California Home Resale Activity May 2022, most recent release The median home price of a detached resale home in the subject's zip code is $1,235,000, which is considered very high for the Coachella Valley region. The subject's ZIP code represents the most expensive value in the surrounding area, with the exception of Palm Springs. While the subject and Palm Springs appear to be the outliers, it's important to note that the lower end of the median price in the surrounding area, specifically, Thousand Palms and Desert Hot Springs, are much more rural areas with a small sample size of transactions to pull from. Even with this, it's noteworthy that all the surround ing area median home prices have increased, most of them significantly, over the past year. The above price fluctuations from year-to-year relate to the Corelogic's overall Riverside County detached home resale price increase of 16.1 percent year-over year from May 2021 to May 2022.
Appraisal Report
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Within the City of Rancho Mirage, the subject is the only actively selling tract new home community. We expanded our search to include neighboring Palm Desert and Palm Springs, as well as the age restricted master plans in Indio. While there are a good number of communities selling in the Coachella Valley (approximately 25), the subject's single-story floorplans and age restricted unique lifestyle sets it apart. According to the Ryness Report dated June 26, 2022, there are currently 21 new home projects in the Desert Riverside submarket (includes all cities within the Coachella Valley). It's important to note that there are several more communities currently selling in the Coachella Valley (or "Desert Riverside") submarket, however they do not participate in Ryness (the subject is included in that they do not report to Ryness). The average absorption rate within the 21 projects (that report to Ryness) in the subject's Desert Riverside submarket is 4.87 sales per month (year to date average}, which is considered to be a very good absorption rate.
Del Webb at Rancho Mirage Sales and Pricing
Del Webb at Rancho Mirage has ten home plans available for sale ranging in size from 1,438 to 2,726 square feet with current base pricing generally from $548,990 to $842,990 . The homes are age qualified and the sales office opened in June 2018. Within the entire Del Webb at Rancho Mirage, there is a total of 1,029 proposed homes with 905 sold to date (803 which have closed to individuals) suggesting an average sales rate of 18.5 homes per month, an exceptional sales rate for a new home project in the Inland Empire. In addition to the exceptional sales rate, Del Webb has had base price increases across all plans ranging from $204,000 to $292,000 since opening in June 2018. The exceptional sales rate is thought to be due to several factors including the Del Webb brand, the product, the amenities within the project, the original pricing, the historically low interest rates, the location and accessibility of the project and the address of Rancho Mirage.
Summary
Riverside County has seen a substantial increase in pricing since 2012 with some areas, including the Desert submarket, showing astronomical increases over the past two Appraisal Report
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years. While existing home sales were originally down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all-time lows. The latest statistics are suggesting a slowdown in sales may be occurring . The subject community is performing above the Inland Empire average, resulting in strong sales rates. This is due to demand still above supply of new homes offered in the subject area along with the subject's pricing being in-line with the actively selling comparable communities. While the Coachella Valley struggled to come back since the Great Recession, the past few years of land purchases and planned development show the market has come back.
There is little new home product in the City of Rancho Mirage creating little competition for the subject project.
The year 2020 began poised for huge growth, but the COVID pandemic temporarily shook the existing home market. The COVID pandemic actually had a positive impact on the new home market, which became a preferred option with new home sales growing over the past two years. The sales rate within the subject project is higher than all other projects in the Coachella Valley, including other age qualified neighborhoods . Prices of new homes in the overall County have had significant increases of over 10 percent year over-year with the subject increasing prices in the 53 to 59 percent range over the past four years. Despite uncertainty hitting the market due to rising interest rates and inflation, most observers agree that the Riverside County housing market is positive and healthy population growth is occurring in the County. It is believed that as the population continues to increase, housing growth will also continue. While the inflationary economy and the increase in interest rates will have an effect on Inland Empire home sales, most believe the age restricted market will continue to be strong while rates are still historically low.
Appraisal Report
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HIGHEST AND BEST USE ANALYSIS
The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:
"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest va/ue"4
Proper application of this analysis requires the subject property to first be considered "As If Vacant" in order to identify the "ideal" improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the "ideal" improvements to determine if the use should be continued, altered or demolished preparatory to redevelopment of the site with a more productive or ideal use. "As If Vacant"
In the following analysis, we have considered the sites probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.
Physically Possible Uses
The subject property consists of approximately 102.49 gross acres of irregularly shaped land located one mile south of 1-10 and 0.25 miles west of Bob Hope Drive in the City of Rancho Mirage in the area known as the Coachella Valley in eastern Riverside County, California . The subject property is bounded by: the existing Phase I and 2 of the project to the south, beyond which is Dinah Shore Drive and the Westin Mission Hills Golf Resort and Spa; undeveloped desert land to the east (beyond which is Bob Hope Drive); undeveloped desert land to the north (beyond which is Ramon Road and 1-1 0); and, Los 4 The Appraisal of Real Estate, 11
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Alamos Road to the west (beyond which is the Mission Hills Golf Course residential community). There is a recently built Agua Caliente Gas Station at the southwest corner of Bob Hope Drive and Ramon Road. The surrounding uses include golf courses, residences, a golf resort and spa, undeveloped desert lands and the Agua Caliente Resort Casino, located one quarter mile northeast of the subject site at the northeast corner of Bob Hope Drive and Ramon Road. The site was generally level at surrounding street grade of Los Alamos Road and Dinah Shore Drive. The subject 102.49 gross acres has been developed into 378 single family detached lots with surrounding infrastructure in place. The internal streets are generally physically complete with utilities stubbed to each lot. The subject CFO No. 4C which is also known as the third and final phase of Del Webb at Rancho Mirage, does not include the model complex or the Outlook Clubhouse which is located in the first phase (also known as CFO No. 4A). The Outlook is completed and open for all residents within Del Webb and includes a high-end social club with indoor and outdoor meeting areas, tennis and pickleball courts, bocce ball courts, a putting green, an event lawn and pool area.
We have reviewed a Draft Environmental Impact Statement, Phase I and Limited Phase II Environmental Assessment on the subject site and surrounding lands, as well as a soils report. The studies reviewed concluded the property was suitable for residential development. It is an assumption of this appraisal that the soils are adequate to support the highest and best use conclusion and that there are no environmental issues which would slow or thwart development of the site. This is evidenced by County approvals along with County inspectors on site during construction and certificates of occupancy being obtained on homes within the site. An engineered drainage system has been designed into a street drainage system to alleviate any potential flooding problems and to control project water runoff. The site has good access from 1-10 via Bob Hope Drive to Dinah Shore Drive to Los Alamos Road.
Based on the physical analysis, the size, access and topography make the subject property physically suited for numerous types of development; however, the grading and development that has occurred on the site suggests single-family residential use.
Appraisal Report
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Legality of Use
The subject property is located within the City of Rancho Mirage, the controlling entity to regulate land use. Per the City's General Plan, the subject is shown as R-M (Residential Medium Density allowing for up to 4.0 dwelling units per acre. Per the current zoning map the subject property is shown as being within the Section 24 Specific Plan and is defined as Planning Area 8. Per the Specific Plan, Planning Area 8 is identified as 313 acres with up to 1,200 dwelling units. The subject property is a portion of Planning Area
8. Additionally, Tract Map Nos. 36809 and 36809-5 have been recorded on the subject property subdividing the property into 378 single-family detached lots with a minimum lot size of 5,500 square feet and allowing for internal streets and open space areas. The approved mapping is consistent with the approved Specific Plan that has been approved on the property and is consistent with the general plan. Based on the legality of use analysis, the type of development for which the subject property can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses.
Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Riverside County Housing Market section earlier within this report, the Coachella Valley has had some turbulent times since the Great Recession, however appears to have come back with some master planned communities now underway or in the planning stages. The majority of the residential land sales within the Coachella Valley are still leftover broken projects from prior to the Great Recession. While these broken projects have previously sold for less than the cost of improvements, the recent transactions are suggesting land development is once again feasible. Each community within the Coachella Valley has its own attractions and Rancho Mirage is known for the exclusive golf clubs and upscale neighborhoods. There have been two large residential land sales within Rancho Mirage within the past five years, the subject land purchase and the purchase of Section 31, a proposed master planned community about two miles south of the subject property, both of which occurred several years ago. In addition, there are Appraisal Report
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three smaller subdivision land sales within the City that occurred in 2021, all of which are included in the Land Sales Summary chart in the Addendum .
Within CFO No. 4C, out of a total of 378 proposed homes 289 have been sold to date with 186 of the homes closed to individuals. There have been minimal new homes offered in the City of Rancho Mirage within the past year with the exception of Del Webb at Rancho Mirage (subject property). While there are two other age restricted master planned communities in the Coachella Valley, they are not experiencing the same absorption rates as the subject. It is believed this is due to the convenient location of Del Webb at Rancho Mirage, the design of the project, along with the Del Webb "brand" that pulls age qualified buyers. Shea's Trilogy at the Polo Club and K. Hovnanian's Four Season's at Terra Lago are also experiencing good sales rates, however not as high as Del Webb. Population growth is still occurring in the area and will continue to create the need for full-time housing along with the second home buyers.
Based on the above analysis, the highest and best use for the subject property appears to be for single-family residential development.
Maximum Productivity
The current housing market is giving some mixed messages. While population is still growing, there were minimal new home projects opening in the Coachella Valley with only one, the subject, in Rancho Mirage. The 55+ communities with good branding have been well received in the Valley. The competition of age restricted new homes in the Valley suggests the market is strong, however the location and brand appear to have a strong effect on the absorption rate. The age qualified market appears to sell at a premium as some empty nesters downsize from larger family homes, thus have equity for the purchase or it is a discretionary purchase of a second home. Based on the current active projects in the area, coupled with population growth projected in the subject marketplace, it is our opinion that the subject property is feasible for residential development.
Appraisal Report
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Highest and Best Use Conclusion - "As Vacant"
The final determinant of highest and best use, as vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations) . Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property "As Vacant" is for residential development.
Highest and Best Use - "As Improved"
The subject property consists of the third phase of Del Webb at Rancho Mirage, a master planned community proposed for 1,029 detached, age-qualified homes. The first phase is sold out (total of 344 proposed homes) with the exception of the models and final build out (34 total lots) which have not yet been released. The second phase of 307 proposed homes is also sold and closed out. The third phase (the subject) contains 378 proposed homes and has sold 289 and closed 186. The homes are all single-story with a size range from 1,438 to 2,728 square feet. The project opened for sale in June 2018 with 905 home sales to date suggesting an average rate of 18.5 sales per month which is exceptional for any project in the Inland Empire. The other two age restricted master planned communities within the Coachella Valley have very good absorption rates of 6. 7 homes per month (Trilogy at the Polo Club) and 6.3 sales per month (Four Seasons at Tera Lago). Within Del Webb at Rancho Mirage, they have increased base pricing over $200,000 per plan since the Grand Opening in June 2018.
All of the subject homes appear to be in excellent condition with no physical depreciation of structures visually apparent. The sales rate within the subject neighborhood suggests there is demand for new, age restricted homes in the current market. All of the homes are of good design and appear to be of good quality workmanship . Based on the overall sales rate within Del Webb at Rancho Mirage, it is our conclusion that the highest and best use for the subject property is for the continued use, as improved.
Appraisal Report
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VALUATION ANALYSES AND CONCLUSIONS
The Sales Comparison Approach is typically the primary approach used to value residential lands which have been developed into finished lots. This approach compares similar properties that have recently sold or are in escrow to the subject parcels. After a lull in land sales due to the Great Recession, residential land sales in the Coachella Valley have returned to the homebuilding market. In determining the value for the property, a unit of comparison needs to be addressed. For detached single-family lots, the lots are typically sold on a finished lot basis with the condition of the land taken into consideration. That is, the sales price is determined by a finished lot value, then the remaining costs to develop the property to a true finished lot condition are taken into consideration. Therefore, in determining a current market value for the lands, the current condition of the lots will be considered.
In the case of valuing the completed houses, the Sales Comparison Approach will be used. Our search for comparables will include all new home projects within the immediate area along with age restricted communities in the Coachella Valley which are considered to be most similar. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price.
In the case of the completed (over 95 percent complete) builder-owned models and production homes, the homes will be valued using the Sales Comparison Approach to value to conclude on a retail base value for each plan, followed by a Discounted Cash Flow ("DCF") Analysis due to the single ownership. The DCF will consider the retail market value of the completed homes, remaining development costs (if any}, the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. In determining the concluded base value, new home sales in the area will be Appraisal Report
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reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. A review of the re-sales of all homes within the entire Del Webb at Rancho Mirage project will also be completed. Any re-sales, pending re sales or current re-sale listings will be taken into consideration in the analysis. In the case of the individually owned homes, the concluded base value will be used for each plan and a mass appraisal technique will be used All of the value conclusions will assume that the improvements funded by the CFO No. 4C, Special Tax Bonds are completed and in place and that the property is subject to the Special Tax Lien.
The valuation will be presented as follows: First, a discussion of the residential land sales will be given. Each of the transactions will be detailed along with a comparison discussion of their relationship to the subject property. In addition, we will review large land transactions and historical costs of development. Following the land value conclusions, the valuation for each home plan will be given, followed by a discounted cash flow analysis for the builder-owned existing homes and the reported minimum market value for the individually owned homes.
Market Data Discussion - Residential Lots
We have searched the area and found the eight land transactions discussed below and summarized in the Addenda, to be most comparable to the subject property. Although some sales refer to "finished lots", they are typically physically finished lots with some land development fees remaining to be paid in order to be considered true finished lots.
Our search revealed only one land sale of an age qualified community; thus, all types of residential land sales were reviewed. Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject lands.
Land Sale No. 1 pertains to the November 2021 purchase of 82 lots with a minimum lot size of 9,000 square feet located in Rancho Mirage about one mile southeast of the subject property. Branson Homes purchased the property from RM38 JV LLC for $4,750,000 or $57,927 per lot. We have not been able to obtain the finishing costs for the 82 lots, thus we are placing less emphasis on this transaction. We have included it Appraisal Report
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due to its proximity to the subject to show that residential lands are selling in the community. The location and topography are very near to Land Sales No. 4 which has estimated finishing costs of about $100,000 per lot, however the lots are larger in size.
Land Sale No. 2 pertains to the purchase of 52 lots within the master planned community of Escena, which is generally located in Palm Springs, about four miles northwest of the subject site. Escena is located at the southeast corner of Vista Chino and Gene Autry Trail, near the Palm Springs airport with a small portion of the master plan (this sale) located in Cathedral city. While this site is located in Cathedral City, the master plan is associated with Palm Springs which carries a higher price point. Escena is a golf club community near the Palm Springs airport with residential lands surrounding the golf course, a clubhouse and some commercial pads. The 52 lots have a minimum lot size of 7,200 square feet and were purchased for $5,200,000 or $100,000 per lot with an estimated finished lot price of $200,000. The property was purchased in a blue-topped condition with a recorded map in place. The buyer is planning a build-to-rent project on the site. In comparison to the subject property, while these lots are superior in lot size, the location is considered to be inferior due to the airport proximity and city location. That is, the median home price in Palm Springs is $668,250 while the median home price in Rancho Mirage is $906,000 (both per Redfin Market Trends with over 100 homes sold in each location in the past month).
Land Sale No. 3 refers to the purchase of an expired Tract Map for 115 lots in an unimproved condition. The lands are located less than a mile northwest of the subject at the northwest corner of Ramon Road at Rattler. The property is known as Rancho Bella and was previously mapped for 115 single family detached lots with a minimum lot size of 8,000 square feet. Ramon & Rattler Partners, LLC purchased the stie in September 2021 for $5,500,000 or $47,826 per unit. Again, we were unable to obtain finishing costs for this property but have included it due to the proximity of the subject to show the market for residential lands.
Appraisal Report
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Land Sale No. 4 refers to the purchase of 18 single family detached lots located near Land Sale No. 1, along both sides of Ginger Rodgers Road, west of Josefina in Rancho Mirage, about one mile southeast of the subject site. Desert Estate Builders purchased the property from RM 18 LLC for $1,750,000 or $97,222 per lot based on a reported finished lot cost of $274,000 . The lands were in an unimproved at time of sale and have been developed into finished lots. The lots have a minimum lot size of 16,000 square feet. At time of purchase the tract map had been recorded. In comparison to the subject property this lots are significantly larger in size which is considered superior; however, they are not associated with a master plan with significant amenities such as the subject property which is considered to be inferior.
Land Sale No. 5 refers to the May 2021 purchase of 71 out of a total of 132 lots within the 55+ age qualified neighborhood known as Domani in Palm Desert about eight miles southeast of the subject property . Pulte Homes purchased the 71 lots in a blue topped condition with recorded mapping in place. Domani was originally constructed by the Rilington Group who developed a clubhouse, pool and about 70 homes which were sold between 2017 and 2019. Rilington Group doesn't have the name recognition for the over 55 age qualified group as Del Webb (Pulte), Trilogy (Shea) or Four Season's (K Hovnanian) does which makes it hard to compete with the national brands. Rilington decided not to develop the remainder of the lots. The lots are located north of 1-1 O along north of 40th Avenue and west of Adams Street in the City of Palm Desert. The 70 lots were purchased for $4,174,000 or $58,789 per lot. We have been asked by the buyer to keep the finished lot price confidential in our files however have considered this sale in our analysis. Pulte is now marketing Renata at Domani, a 55+ age qualified community with home sizes from 1,579 to 1,865 square feet with pricing from $461,990 to $491,990.
In comparison to the subject this transaction is significantly inferior in location (Palm Desert versus Rancho Mirage), significantly inferior amenities (smaller pool and minimal clubhouse) and surroundings (north of 1-10). In addition, this project had to overcome the marketing from the broken project previously on the site.
Appraisal Report
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Land Sale No. 6 pertains to the Lennar purchase of 67 lots known as Dolce located along the north side of Gerald Ford drive, east of Monterey Avenue about two miles southeast of the subject property. Lennar purchased the 67 lots with a minimum lot size of 4,500 square feet in May 2021 for $8,451,000 or $126,135 per lot based on a reported finished lot price of $177,000. Lennar is now selling their Castello at Dolce and Ventana at Dolce neighborhoods with home sizes from 1,650 to 2,050 square feet and base pricing from $550,000 to $625,000. In comparison to the subject, this transaction is considered slightly inferior in location (Palm Desert versus Rancho Mirage address) and significantly inferior in amenities. While Dolce has a swimming pool and clubhouse, it is minimal in comparison to the subject's amenities.
Land Sale No. 7 refers to the latest sale within the master planned community known as Miralon in Palm Springs about eight miles northwest of the subject. Miralon was proposed as a golf course community and was graded prior to the Great Recession and then stopped development for about 10 years. Freehold Communities reconfigured the 31 0 acres with olive groves rather than the golf course, known as an agri-hood, which will be capable of generating olive oil. Freehold (Avalon 1150 LLC) is the master developer and has finished developing the lands, planted the groves and is now selling lots to builders. Land Sale No. 7 closed in early 2021 to Gallery Homes with a phase of nine lots closing January 13, 2021 for $1,458,000 or $162,000 per lot based on an estimated finished lot price of $195,000. The lots have a minimum lot size of 6,300 square feet and closed in a generally finished condition with development fees remaining. Gallery Homes is marketing Gallery at Miralon, which is proposed for a total of 50 homes with sizing estimated from 2,350 to 3,059 square feet and pricing in the $900,000s. Each home includes a private courtyard entry and a pool. The Gallery lots are the largest lots sold thus far within Mira Ion at 6,300 square feet. In comparison to the subject property this sale is considered to be inferior in location.
Land Sale No. 8 refers to the Toll Brothers purchase of a previous tract within the Escena project in Palm Springs (see Land Sale No. 2) about four miles northwest of the subject. Toll Brothers purchased the 90 lots (minimum 7,200 square feet) in January Appraisal Report
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2021 for $10,425,455 or $115,838 based on a finished lot price estimated at $188,000.
Toll Brothers is selling their Toll Brothers Escena with home sizes from 2,500 square feet beginning at $1,350,000 . The amenities at Escena are similar to the amenities at Del Webb however include a golf course. In comparison to the subject property these lots are considered superior in lot size however inferior in airport proximity and city location.
The following chart summarizes the considerations used in adjusting the market data to the subject property.
Data Date of Lot Size Finished
No. Location Sale Lot Price Comparison to Subject
1 Rancho Mirage 11/21 9,000 N/A Inferior - Amenities
Included due to Proximity
Cathedral City Superior - Lot Size
2 10/21 7,200 $200,000 Inferior- Proximity to Airport and /Palm Springs Location 3 Rancho Mirage 9/21 8,000 N/A Included due to Proximity 4 Rancho Mirage 5/21 16,000 $274,000 Superior - Lot size Inferior - Amenities
5 Palm Desert 5/21 4,500 Confidential Inferior - Location, Amenities, Former Broken Project
6 Palm Desert 4/21 4,500 $177,000 Inferior - Location and Amenities 7 Palm Springs 1/21 6,300 $195,000 Inferior - Location
Superior - Lot Size
8 Palm Springs 1/21 7,200 $188,000 Inferior - Proximity to Airport and Location
The above land sales have a finished lot range from $177,000 to 4274,000 with the highest prices finished lots being significantly larger in size (16,000 square feet compared to the subject's 5,500 minimum. We have also reviewed the land sale of the final 27 lots within Villa Portofino, located about 3.5 miles southeast of the subject in Palm Desert at Country Club Drive and Portola Avenue. The 27 lots include 15 attached pads and 12 detached lots that are in-fill lots within a retire community which stopped construction during the Great Recession. The lots were sold based on a reported finished lot price of $150,000 for the attached pads and $200,000 for the detached lots. In addition, we have information on a current escrow of 40 additional lots within Escena.
While we were unable to obtain actual finished lot prices due to the confidential nature Appraisal Report
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of the escrow, we know there are 40 lots with a minimum lot size of 5,000 square feet in escrow. Finally, we have reviewed the sale of 236 lots within University Park, located about 3.5 miles east of the subject at 1-10 and Cook Street. Woodbridge Pacific purchased the varying sized lots based on reported finished lot prices ranging from $188,000 for the 3,200 square foot lots to $245,000 for the 4,950 square foot lots. This transaction is not considered to be arms-length as the lots are purchased based on a home closing basis. We have included it to show additional activity in the subject marketplace .
The above market data is considered to be good and plentiful. We have considered the varying factors and concluded the subject lots have a current finished lot value of $190,000 .
Lot Value Conclusion
The subject lots are located within a highly successful age qualified community with the highest absorption rate in the area. Based on the land sales in the area and taking into consideration the profit participation agreement, we have concluded that the subject lots have a current finished lot value of $190,000. We are valuing a home under construction (under 95 percent complete) as a finished lot rather than attribute value to a partially complete improvement. The subject property includes 115 partially finished lots and 72 homes which are in varying stages of construction, but all under 95 percent complete.
Therefore, we are valuing 187 lots within this section. As previously discussed, there are additional hard costs associated with the remaining builder owned property which equate to $19,165.85 per lot (or $3,584,014 for the 187 lots) plus $419,954 in remaining fees associated with the remaining lots. The valuation for the 187 builder-owned lots is calculated as follows:
187 Lots x $190,000
Less: Remaining Hard Costs
Remaining Land Development Fees
As Is value for Pulte Owned Lots
Appraisal Report
$35,530,000
($3,584,014)
(419,954)
$31,526,032
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Pulte Homes Ownership - Houses Valuation
We have searched the area in order to find comparable new home projects. Our search resulted in two additional age qualified master planned neighborhoods, similar to the subject property, which include Four Seasons at Tera Lago and Trilogy at the Polo Club.
We found an additional two age qualified neighborhoods that were not a part of a master plan: Crestwood at Villa Portofino (closest age qualified community to the subject) and Renata at Domani. It appears the branded age qualified master planned neighborhoods sell homes at a faster rate than those not in a master plan.
Four Seasons is located about 13 miles southeast of the subject, also north of 1-10 with the nearest offramp being Golf Center Parkway in Indio. Four Seasons is being developed by K. Hovnanian within the Tera Lago project which was started prior to the great recession . While driving into the project, you pass several undeveloped areas suggesting this was a "broken project", along with the Tera Lago Golf Course, a public golf course . Once within the Four Seasons gated community, the atmosphere is similar to the subject Del Webb at Rancho Mirage with open space, trails, golf cart trails and an executive pool and clubhouse known as The Lodge. Four Seasons opened for sale in May 2014, has an overall tax rate in the 1.35 percent range and has experienced an average sales rate of 6.3 sales per month.
Trilogy at the Polo Club is located about 15 miles southeast of the subject, about five miles south of 1-10 between Jackson and Monroe Street along the north side of Avenue 52 in Indio. Trilogy is being developed by Shea Homes and has an impressive entrance, open space areas, trails and executive clubhouse known as the Polo Club. Trilogy has an overall tax rate in the 1. 75 percent range and an average sales rate of 6. 7 homes per month since opening in February 2014. Once you are inside the gate, the Trilogy project is considered similar to Del Webb at Rancho Mirage, however Trilogy is located further out from the Los Angeles and Orange County basin, which is considered to be slightly inferior due to the longer commute.
Appraisal Report
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In addition to the four age restricted projects, we have included in our market data six new home projects within near proximity to the subject, three of which are located in Palm Desert and three of which are located in Palm Springs. A listing of these comparable new homes projects is located in the Addenda.
The subject property contains 378 single family detached lots, 186 which have completed homes and have closed to individuals, five production homes over 95 percent complete (all in escrow), and 187 remaining lots (72 with homes under construction and 97 in escrow). The 187 lots have been valued above. The individually owned homes will be valued later within this report. This section will value the homes over 95 percent complete which are owned by Pulte. There are ten plans. A valuation for each plan will follow.
Due to the single ownership of multiple houses by Pulte Homes, a Discounted Cash Flow ("DCF") analysis is needed in order to arrive at a bulk value for the homes. First, a retail value for each plan will be concluded, followed by a DCF for the builder which will take into consideration the absorption time to sell off the builder owned houses, the costs associated with selling off the homes and any remaining development costs to be paid by the builder within each neighborhood . The resulting revenue will be discounted using an appropriate rate to determine the builder-owned bulk value.
Below is a summary of the floor plans within Del Webb at Rancho Mirage. As previously stated, a listing of the improved residential comparable properties is located in the Addenda of this report.
Room Floors/ Sq.
Residence Count Parkina Ft.
Classic Series
1 (Gateway) 2/2 1 / 2 1,438
2 (Solitude) 2/2 1 / 2 1,657
3 (Expedition) 2-3 / 2 1 / 2 1,770
Retreat Series
4 (Sanctuary) 2/2 1 / 2 1,832
5 (Haven) 2-3 / 2 1 / 2+ 1,858
6 (Preserve) 2-3 / 2 1 / 2+ 2,008
7 (RefuQe) 2-3 / 2.5 1 / 2+ 2,187
Appraisal Report
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Ind. Bldr.
Own Own
18 0
16 0
14 0
36 1
13 0
26 0
24 1
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Encore Series
8 (Serenity) 2-3 / 2 1 / 2+ 2,329 16 0
9 (Journev) 2-3 I 2.5 1 / 2+ 2,504 13 2
10 (Vovaoe) 3 / 2.5 1 / 2+ 2,726 10 1
Totals 186 5
The most appropriate new home comparable data for Plan 1 (Gateway) are shown below.
Data Plan Rm. Ct. Firs/Pkg. Sq.Ft. Price/SF
Subi. 1 (Gateway) 2/2 1 / 2 1,438 --
1 2 (Solitude) 2/2 1 / 2 1,657 $346.40
2 TH-1 (Aviano) 2 / 2.5 1 / 2 1,553 $304.57
3 1 (Brownstone) 2/2 1 / 2 1,579 $292.58
4 1 (Affirm) 2/2 1 / 2 1,622 $311.95
5 1 (Black Hill) 2/2 1 / 2 1,559 $280.94
5 2 (Collaqe) 2/2 1 / 2+ 1,600 $285.62
7 1 3/2 1 / 2 1,547 $355.60
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with "TH" represent the attached homes, and those plans with "SF" represent the detached homes. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $280.94 to $355.60 per square foot. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location.
The asking base price for the subject Plan 1 is currently $381.77 per square foot. Within CFO No. 4C there have been 18 closings of Plan 1 with actual sales prices ranging from $317.44 to $432.41 per square foot. There are currently four escrows of Plan 1 with estimated sales prices ranging from $368.38 to $430.46. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, Appraisal Report
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premiums or options considered. All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 4B). Our search revealed two current re-sale listings and four re-sales of Plan 1.
The current listings have an asking price range of $463.53 to $513.91 per square foot which is 31 - 57 percent higher than their original purchase price. The closed sales have a price range of $416.55 to $591 .10 per square foot. All sold for at least 38 percent more than their original price. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 1 has a base current market value of $350.00 per square foot. This calculates as follows:
1,438 Sf X $350.00 = $503,300
The most appropriate new home comparable data for Plan 2 (Solitude) are shown below.
Data Plan Rm. Ct. Firs/Pkg. Sq.Ft. Price/SF
Subi. 2 (Solitude) 2/2 1 / 2 1,657 --
1 1 (Gateway) 2/2 1 / 2 1,438 $381 .77
1 3 (Expedition) 2-3 / 2 1 / 2 1,770 $336.72
2 TH-1 (Aviano) 2 / 2.5 1 / 2 1,553 $304.57
2 TH-2 (Castelina) 2 / 2.5 1 / 2 1,765 $292.08
3 1 (Brownstone) 2/2 1 / 2 1,579 $292.58
3 2 (Silvercreek) 2/2 1 / 2 1,732 $275.40
4 1 (Affirm) 2/2 1 / 2 1,622 $311.95
5 1 (Black Hill) 2/2 1 / 2 1,559 $280.94
5 2 (Collage) 2/2 1 / 2+ 1,600 $285 .62
5 3 (Fan Hill) 2/2 1 / 2 1,706 $261.42
6 1 2/2 1 / 2 1,757 $366.92
7 1 3/2 1 / 2 1,547 $355.60
7 2 3/2 1 / 2 1,792 $330.48
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with "TH" represent the attached homes, and those plans with "SF" represent the detached homes. All houses appear to be of similar quality, design and appeal. Adjustments were Appraisal Report
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considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $261.42 to $381.77 per square foot. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location.
The asking base price for the subject Plan 2 is currently $346.40 per square foot. Within CFO No. 4C there have been 16 closings of Plan 2 with actual sales prices ranging from $272.47 to $389.88 per square foot. There are currently five escrows of Plan 2 with estimated sales prices ranging from $372.44 to $439. 70. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered. All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 48). Our search did not reveal any re-sales of Plan 2. It has been concluded that Plan 2 has a base current market value of $330.00 per square foot. This calculates as follows:
1,657 Sf X $330.00 = $546,810
The most appropriate new home comparable data for Plan 3 (Expedition) are shown below.
Data Plan Rm. Ct. Firs/Pkg. Sq. Ft. Price/SF
Subi. 3 (Expedition) 2-3 / 2 1 / 2 1,770 --
1 2 (Solitude) 2/2 1 / 2 1,657 $346.40
1 4 (Sanctuary) 2/2 1 / 2 1,832 $350.98
2 TH-2 (Castelina) 2 / 2.5 1 / 2 1,765 $292.08
3 2 (Silvercreek) 2/2 1 / 2 1,732 $275.40
4 1 (Affirm) 2/2 1 / 2 1,622 $311.95
4 2 (Connect) 3/2 1 / 2 1,847 $283.16
5 3 (Fan Hill) 2/2 1 / 2 1,706 $261.42
6 1 2/2 1 / 2 1,757 $366.92
7 2 3/2 1 / 2 1,792 $330.48
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 Appraisal Report
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square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with "TH" represent the attached homes, and those plans with "SF" represent the detached homes. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood . The comparable new home base prices range from $261.42 to $366.92 per square foot. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location.
The asking base price for the subject Plan 3 is currently $336. 72 per square foot. Within CFO No. 4C there have been 14 closings of Plan 3 with actual sales prices ranging from $295.96 to $372. 70 per square foot. There are currently five escrows of Plan 3 with estimated sales prices ranging from $314.04 to $383.62. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered . All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 4B). Our search revealed one current re-sale listing and one re-sale of Plan 3.
The current listing has an asking price of $479.66 per square foot which is an increase of 65 percent from the original purchase in 2018. The closed re-sale has a price of $516.95 per square foot. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 3 has a base current market value of $315.00 per square foot. This calculates as follows:
1,770 sf X $315.00 = $557,550
The most appropriate new home comparable data for Plan 4 (Sanctuary) are shown below.
Data Plan Rm. Ct. Firs/Pkg.
Subj. 4 (Sanctuary) 2/2 1 / 2
1 3 (Expedition) 2-3 / 2 1 / 2
1 5 (Haven) 2-3 / 2 1 / 2+
Appraisal Report
City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates, Inc.
Sq.Ft. Price/SF
1,832 --
1,770 $336.72
1,858 $348.76
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2 SF-1 (Cantera) 2 / 2.5 1 / 2 1,864 $272.35
3 3 (Bellwood) 2/2 1 / 2 1,865 $263.80
4 2 (Connect) 3/2 1 / 2 1,847 $283.16
5 4 (Fox Canyon) 2/2 1 / 2 1,884 $281.31
7 3 4/2 1 / 2 1,879 $327.52
9 1 3 / 3.5 1 / 2 1,894 $445.04
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with 'TH" represent the attached homes, and those plans with "SF" represent the detached homes. Data No. 9, 1 O and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $263.80 to $445.04 per square foot with the highest price per square foot including a private pool or spa. The asking base price for the subject Plan 4 is currently $350.98 per square foot. Within CFO No. 4C there have been 36 closings of Plan 4 with actual sales prices ranging from $333.47 to $454.76 per square foot. There are currently 15 escrows of Plan 4 with estimated sales prices ranging from $326.68 to $479.32. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered. All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 4B). Our search revealed two current re-sale listings and two re-sales of Plan 4. The current listings have an asking price range of $463.43 to $491.26 per square foot while the closed re-sales ranged from $439.96 to $447.60 per square foot. All resales were over 50 percent higher than the original purchases. It should be noted that some re-sellers have added value to their homes Appraisal Report
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including hardscape, landscape and pools. It has been concluded that Plan 4 has a base current market value of $310.00 per square foot. This calculates as follows:
1,832 Sf X $310.00 = $567,920
The most appropriate new home comparable data for Plan 5 (Haven) are shown below.
Data Plan Rm. Ct. Firs/Pkg. Sq.Ft. Price/SF
Subi. 5 (Haven) 2-3 / 2 1 / 2+ 1,858 --
1 4 (Sanctuary) 2/2 1 / 2 1,832 $350.98
1 6 (Preserve) 2-3 / 2 1 / 2+ 2,008 $333.66
2 SF-1 (Cantera) 2 / 2.5 1 / 2 1,864 $272.35
3 3 (Bellwood) 2/2 1 / 2 1,865 $263.80
4 2 (Connect) 3/2 1 / 2 1,847 $283.16
4 3 (Reunion) 2/2 1 / 2 1,928 $274.37
5 4 (Fox Canyon) 2/2 1 / 2 1,884 $281.31
6 2 2 / 2.5 1 / 2 1,930 $352.45
7 3 4/2 1 / 2 1,879 $327 .52
9 1 3 / 3.5 1 / 2 1,894 $445.04
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with ''TH" represent the attached homes, and those plans with "SF" represent the detached homes. Data No. 9, 10 and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $263.80 to $445.04 per square foot with the highest price per square foot including a private pool or spa. The asking base price for the subject Plan 5 is currently $348. 76 per square foot. Within CFO No. 4C there have been 13 closings of Plan 5 with actual sales prices ranging from $321.73 to $434.35 per square foot. There are currently 14 escrows of Plan 5 with estimated sales prices ranging from $376.66 to $510.86. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price Appraisal Report
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of the home with no upgrades, premiums or options considered. All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 48). Our search revealed one current re-sale listing and four re-sales of Plan 5. The current listing has an asking price of $476.32 while the closed re-sales ranged from $462.33 to $497.85 per square foot. All resales were over 50 percent higher than the original purchases. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 5 has a base current market value of $308.00 per square foot. This calculates as follows:
1,858 Sf X $308.00 = $572,264
The most appropriate new home comparable data for Plan 6 (Preserve) are shown below.
Data Plan Rm. Ct. Firs/Pkg. SQ. Ft. Price/SF
Subi. 6 (Preserve) 2-3 / 2 1 / 2+ 2,008 --
1 5 (Haven) 2-3 / 2 1 / 2+ 1,858 $348.76
1 7 (Refuge) 2-3 / 2.5 1 / 2+ 2,187 $315.95
2 TH-3 (Granada) 212.5 1 / 2 1,926 $272.06
4 4 (Excite) 2 / 2.5 1 / 2 2,039 $284.45
5 5 (Indio Hills) 2/2 1 / 2+ 2,018 $236 .37
6 3 2 / 2.5 1 / 2 1,950 $352.14
8 1 3/2 1 / 2 1,992 $370.43
9 2 3 / 3.5 1 / 2 2,084 $413.58
10 1 312.5 1 / 2 2,029 $436.18
Data No. 1 refers to the most simil.ar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities .
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with "TH" represent the attached homes, and those plans with "SF" represent the detached homes. Data No. 9, 10 and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, Appraisal Report
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sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $236.37 to $436.18 per square foot with the highest price per square foot including a private pool or spa. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location. The asking base price for the subject Plan 6 is currently $333.66 per square foot. Within CFO No. 4C there have been 26 closings of Plan 6 with actual sales prices ranging from $291.74 to $418.97 per square foot. There are currently 18 escrows of Plan 6 with estimated sales prices ranging from $365.28 to $460.29. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered.
All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 48). Our search revealed no current re-sale listings and two re-sales of Plan 6. The re-sales had a price range from $435.24 to $472.61 per square foot. All resales were at minimum 35 percent higher than the original purchases. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 6 has a base current market value of $300.00 per square foot. This calculates as follows:
2,008 sf X $300.00 = $602,400
The most appropriate new home comparable data for Plan 7 (Refuge) are shown below.
Data Plan Rm. Ct. Firs/Pkg.
Subi. 7 (Refuqe) 2-3 / 2.5 1 / 2+
1 6 (Preserve) 2-3 / 2 1 / 2+
1 8 (Serenity) 2-3 / 2 1 / 2+
2 SF-2 (Celano) 3 / 3.5 1 / 2
4 5 (Proclaim) 3 / 2.5 1 / 2
5 6 (Mecca Hills) 2 / 2.5 1 / 2
9 3 3 / 3.5 1 / 2
10 2 3 I 2.5 1 / 2
10 5 3 I 2.5 1 / 2
Appraisal Report
City of Rancho Mirage CFD No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates, Inc.
Sq.Ft. Price/SF
2,187 --
2,008 $333.66
2,329 $339.63
2,249 $230.07
2,141 $280.24
2,166 $228.53
2,210 $375.52
2,100 $371.43
2,241 $437.30
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Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities .
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with "TH" represent the attached homes, and those plans with "SF" represent the detached homes. Data No. 9, 10 and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $228.53 to $437.30 per square foot with the highest price per square foot including a private pool or spa. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location. The asking base price for the subject Plan 7 is currently $315.95 per square foot. Within CFO No. 4C there have been 24 closings of Plan 7 with actual sales prices ranging from $311. 77 to $409.97 per square foot. There are currently 15 escrows of Plan 7 with estimated sales prices ranging from $323.47 to $437.45. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered.
All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 48). Our search revealed one pending re-sale and one re-sale of Plan 7. The pending resale has an asking price of $502.97 per square foot while the re-sale sold for $537.27 per square foot. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 7 has a base current market value of $290.00 per square foot. This calculates as follows:
2,187 Sf X $290.00 = $634,230
The most appropriate new home comparable data for Plan 8 (Serenity) are shown below.
Appraisal Report
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Data Plan Rm. Ct. Firs/Pkg. Sq.Ft. Price/SF
Subj. 8 (Serenity) 2-3 / 2 1 / 2+ 2,329 --
1 7 (RefuQe) 2-3 / 2.5 1 / 2+ 2,187 $315.95
1 9 (Journey) 2-3 / 2.5 1 / 2+ 2,504 $325 .87
2 SF-3 (Milano) 2 / 2.5 1 / 2 2,341 $226.98
4 6 (Liberty) 3/3 1 / 2 2,367 $267.00
5 8 (Painted Canyon) 3 / 2.5 1 / 3 2,491 $240.23
6 4 3/3 2/2 2,318 $301.97
6 5 3 / 3.5 2/2 2,419 $282.22
8 2 3 / 2.5 2/2 2,453 $313.05
10 3 3 / 2.5 1 / 2 2,248 $435.94
11 1 3 / 3.5 1 / 2 2,330 $407.73
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 2, which is age restricted, features some floorplans that are detached on 6,000 square foot lots (similar to the subject), and some floorplans that attached at the garage, but still feature private backyards and live like a detached home. The floorplans marked with "TH" represent the attached homes, and those plans with "SF" represent the detached homes. Data No. 9, 10 and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $226.98 to $435.94 per square foot with the highest price per square foot including a private pool or spa. The asking base price for the subject Plan 8 is currently $339.63 per square foot. Within CFO No. 4C there have been 16 closings of Plan 8 with actual sales prices ranging from $334.08 to $472.05 per square foot. There are currently seven escrows of Plan 8 with estimated sales prices ranging from $392. 79 to $468.12. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered. All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO Appraisal Report
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No. 4A) and the second phase (CFO No. 48). Our search revealed two re-sales of Plan 8.
The re-sales had a sales price range of $483.04 to $579.80 per square foot. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 8 has a base current market value of $295.00 per square foot. This calculates as follows:
2,329 sfx $295.00 = $687,055
The most appropriate new home comparable data for Plan 9 (Journey) are shown below.
Data Plan Rm. Ct. Firs/Pkg. Sq.Ft. Price/SF
Subj. 9 (Journey) 2-3 / 2.5 1 / 2+ 2,504 --
1 8 (Serenity) 2-3 / 2 1 / 2+ 2,329 $339.63
1 10 (VoyaQe) 3 / 2.5 1 / 2+ 2,726 $309.24
5 9 (Pinyan Flats) 2 / 2.5 1 / 2+ 2,519 $238.36
6 5 3 / 3.5 2/2 2,419 $282.22
8 2 3 / 2.5 2/2 2,453 $313.05
11 2 3 / 3.5 1 / 2 2,443 $404.83
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities.
Data No. 9, 10 and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFO taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood. The comparable new home base prices range from $238.36 to $413.18 per square foot with the highest price per square foot including a private pool or spa. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location. The asking base price for the subject Plan 9 is currently $325.87 per square foot. Within CFO No. 4C there have been 13 closings of Plan 9 with actual sales prices ranging from $308.16 to $454.07 per square foot. There are currently seven escrows of Plan 9 with estimated sales prices ranging from $350.15 to $500.52. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered. All homes Appraisal Report
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appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFD No. 4A) and the second phase (CFD No. 4B). Our search revealed one current resale listing of a Plan 9. The re-sale listing has an asking price of $498.80 per square foot which reflects a 60 percent increase over the original purchase in 2018. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 9 has a base current market value of $290.00 per square foot. This calculates as follows:
2,504 Sf X $290.00 = $726,160
The most appropriate new home comparable data for Plan 10 (Voyage) are shown below.
Data Plan Rm. Ct. Firs/Pkg. Sq.Ft. Price/SF
Subj. 10 (Voyage) 3 / 2.5 1 / 2+ 2,726 --
1 9 (Journey) 2-3 / 2.5 1 / 2+ 2,504 $325.87
5 9 (Pinyan Flats) 2 / 2.5 1 / 2+ 2,519 $238.36
6 6 3 / 3.5 2/2 2,723 $283.87
8 3 4 / 3.5 2/2 2,735 $293.93
8 4 3 / 3.5 2/2 2,925 $282.36
10 4 3 / 3.5 2/2 2,809 $409.40
11 3 3 / 3.5 1 / 2 2,626 $413.18
Data No. 1 refers to the most similar plan within the subject project. Data Nos. 2, 3, 4 and 5 are age restricted communities while the remaining are non-age restricted communities .
Data No. 9, 10 and 11 all include either a private pool or spa in the price of the home. All houses appear to be of similar quality, design and appeal. Adjustments were considered (when applicable) for location, master plan amenities, HOA amount, lot size, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities associated with each neighborhood . The comparable new home base prices range from $238.36 to $413.18 per square foot with the highest price per square foot including a private pool or spa. The lowest price per square foot refers to the age qualified neighborhood north of 1-10 in an inferior location. The asking base price for the subject Plan 10 is currently $309.24 per square foot. Within CFD No. 4C there have been ten closings of Plan 10 with actual sales prices ranging from $316.55 to $463.01 per Appraisal Report
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square foot. There are currently eight escrows of Plan 10 with estimated sales prices ranging from $360 .20 to $490.71. It should be noted that most homebuyers purchase some upgrades, premiums and options which increase the sales price. Our concluded price is based on the base price of the home with no upgrades, premiums or options considered.
All homes appear to be in excellent condition with no depreciation visible. In addition, we have reviewed re-sale home prices within all of Del Webb at Rancho Mirage including both the first phase (CFO No. 4A) and the second phase (CFO No. 48). Our search revealed one closed resale of a Plan 10. The re-sale closed at $494.86 per square foot, substantially more than the original sales price. It should be noted that some re-sellers have added value to their homes including hardscape, landscape and pools. It has been concluded that Plan 10 has a base current market value of $285.00 per square foot. This calculates as follows :
2,726 sf X $285.00 = $776,910
Builder Owned Retail Value
Within the builder-owned property there are 5 production homes over 95 percent complete, all which are in escrow and due to close upon completion. The model homes are located off site within Phase I and are not a part of this appraisal. The retail base value conclusions for the builder-owned homes are calculated as follows:
Plan 1 (0 x $503,300)
Plan 2 (0 x $546,810)
Plan 3 (0 x $557,550)
Plan 4 (1 x $567,920)
Plan 5 (0 x $572,264)
Plan 6 (0 x $602,400)
Plan 7 (1 x $634,230)
Plan 8 (0 x $687,055)
Plan 9 (2 x $726, 160)
Plan 10 (1 x $776,910)
Total Retail Value
Absorption Period
$ 0
0 0
567,920
0 0
634,230
0 1,452,320
776,910
$ 3,431,380
In order to arrive at an absorption period for the builder owned homes within Del Webb at Rancho Mirage, the absorption rates for the subject project along with comparable projects have been reviewed. The average monthly sales rate in the subject project has been over Appraisal Report
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18 sales per month which is exceptional. This is much higher than the competing projects which have absorption rates from a low of 1. 7 sales per month to 6. 7 sales per month. The lowest end of the absorption range is for a smaller project that got shut down on construction due to COVID. They didn't release new homes for over eight months. All five of the builder-owned homes have been released and all are in escrow and anticipated to close upon completion. We have concluded that the five, builder-owned homes will be absorbed over a one-month time period at the concluded prices.
Remaining Costs
As discussed under the property description section, there are $19,165 .85 per lot in remaining hard costs or $95,829 in remaining hard costs associated with the five builder owned homes. For purposes of this analysis, we are assuming that the remaining costs will be spent over the absorption period which is estimated at one month.
Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Six percent has been estimated for marketing expenses and two percent for general and administrative costs for a total of eight percent in expenses for the subject neighborhood's analyses.
Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject property. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession, this range was lowered considerably to six to eight percent with some builders drastically lowering their profit margins in order to maintain their work force. As the market improved, so did the profits. This appears to be occurring once again as prices have increased in the past year. A ten percent profit is considered appropriate in the analysis for the subject neighborhood.
Appraisal Report
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Discount Rate
In selecting a discount rate, the following was completed:
1. Interviews with merchant builders in the Riverside County market area
2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)
3. The quality, construction, historical sales and product on the subject property
4. Discussed the project with equity investors and master plan community developers The sales rate of homes within Del Webb at Rancho Mirage has been exceptional with an average of over 18 homes sold per month since the project opened in June, 2018. Based on the above factors, an eight percent discount rate is considered appropriate for the subject neighborhoods.
Discounted Cash Flow Summary
The discounted revenue (see DCF Analysis in Addenda) for the builder owned homes resulted in the value of $2,699,903.
Pulte Homes Ownership Final Valuation
Pulte Homes owns five production homes over 95 percent complete , 72 houses under construction (70 in escrow) and 115 generally physically finished lots. The homes under construction (under 95 percent complete) have been valued on the basis of a finished lot rather than give value to a partially completed improvement, therefore, 187 lots were valued. The final value conclusion for the Pulte Homes owned property is shown below. 187 lots owned by Pulte Homes
Five Pulte-Owned Houses
Total Pulte Homes Ownership Valuation
Individual Owners Value Conclusion
$31,526,032
$ 2,699,903
$34,225,935
In determining the value for the individually owned homes, we have considered the concluded base price value for the homes which is considered a minimum market value.
This is due to homebuyers typically purchasing some upgrades and options or paying Appraisal Report
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premiums for the lot and in some cases views. Within Del Webb at Rancho Mirage there are 186 individually owned homes. The concluded values are shown below:
Plan 1 (18 x $503,300)
Plan 2 (16 x $546,810)
Plan 3 (14 x $557,550)
Plan 4 (36 x $567,920)
Plan 5 (13 x $572,264)
Plan 6 (26 x $602,400)
Plan 7 (24 x $634,230)
Plan 8 (16 x $687,055)
Plan 9 (13 x $726,160)
Plan 10 (10 x $776,910)
Total Individual Owned Value
$ 9,059,400
8,748,960
7,805,700
20,445,120
7,439,432
15,662,400
15,221,520
10,992,880
9,440,080
7,769,100
$112,584,592
In an additional analysis, we have reviewed the actual builder sales prices for the 186 home closings within Del Webb at Rancho Mirage. Closings occurred within the subject property (CFO No. 4C) between October 11, 2021 and June 30, 2022. The builder reported closing prices for the 186 individually owned homes totals $136,250,261. The actual sales prices include any upgrades, premiums or options purchased by the homeowner while our concluded value is for the base value of the homes. The concluded individually owned minimum market value is about 17 percent below the actual sales prices. This difference is due to the options and upgrades that are purchased in an age qualified new home. They are typically larger than non-age qualified homes as the homebuyers are usually moving with equity from a previous home and are planning on staying in the home for a long time, thus want more executive-type upgrades or are using discretionary income for a second home. The upgrades, premiums and options on the 186 individually-owned homes have averaged over $125,000 per house which equates to 15 - 23 percent depending on the plan. Taking into consideration the above information, the actual sales prices further substantiate the concluded minimum market values for the individually owned homes.
Appraisal Report
City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates, Inc. Page 84
12-304
APPRAISAL REPORT SUMMARY
The appraisal assignment was to value the subject property within CFD No. 4C which includes the third phase of Del Webb at Rancho Mirage, a 55+ age qualified master planned community located in the City of Rancho Mirage in the Coachella Valley in Riverside County. The master developer is Pulte, a related entity to Del Webb. The entire community is planned for 1,029 homes. The first phase of the community included 344 homes and with the exception of the model complex and final build-out, is closed out.
The second phase of the community included 307 homes and is also sold and closed out. The subject of this appraisal is the third phase of development consisting of 378 proposed homes. Out of the total 378 proposed homes, 186 are completed and have closed escrow to individual homebuyers and an additional 103 proposed homes are sold and due to close upon completion. The lots range from houses under construction to finished lots.
The subject property was valued utilizing the Sales Comparison Approach to value and a Mass Appraisal Technique. In the case of multiple builder-owned properties, a Discounted Cash Flow was also utilized in the valuation process. The valuation took into consideration the improvements/benefits to be funded by Special Tax CFD No. 4C Bond Proceeds along with the CFD No. 4C special tax lien. The concluded aggregate value for the subject property, subject to their respective special tax lien, is:
CFD No. 4C - (Portion of) Del Webb at Rancho Mirage
Pulte Owned (Five Houses)
Pulte Owned (187 Lots)
Individual Owners (186 Houses)
Aggregate Total for CFD No. 4C
$ 2,699,903
$ 31,526,032
$ 112,584,592
$ 146,810,527
The above values are stated as of said date of value and subject to the attached Assumptions and Limiting Conditions and Appraiser's Certification.
Appraisal Report
City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates , Inc. Page 85
12-305
APPRAISER'S CERTIFICATION
The appraiser certifies that to the best of his knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased, professional analyses, opinions and conclusions.
3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.
4. The appraiser's compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.
5. This appraisal was not based on a requested minimum valuation, a specific valuation or the approval of a loan.
6. The analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
7. Kitty Siino has made a personal inspection of the property that is the subject of this report.
8. Kitty Siino has not performed any appraisal services on the subject property in the past three years.
9. No other appraisers have provided significant professional assistance to the persons signing this report.
10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal lnstitute's Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.
11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.
f( s~
Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
Appraisal Report
City of Rancho Mirage CFO No. 4C (Del Webb Project Tract Nos. 36809 & 36809-5) Kitty Siino & Associates, Inc. Page 86
12-306
ADDENDA
12-307
CFD NO. 4C BOUNDARY MAP
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SEE
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2 FOR
EASEMENT
NOTES
SEE
SHEETS
4 THAOUOH
12 FOR
OET
ALEO
LOT
DIMEN8ION8
(l)
N>K:ATES
stEET
Nl.l.&:R
J.N.
20.11 12-312
DISCOUNTED CASH FLOW ANALYSIS
12-313
Builder-Owned
Houses
Disc.
Cash
Flow
Anal~sis
MONTH
Months
MONTH
1 TOTAL
1 INCOME:
Retail
Sales
I
3,431,380
I $3,431,380
$3,431,380
TOTAL
INCOME
$3,431,380
$3,431,380
EXPENSES: Remaining
Costs
($95,829)
($95,829)
Marketing
&
Carrying
Expenses
I
8%
I
($274,510)
($274,510)
Profit
10%
($343,138)
($343,138)
TOTAL
EXPENSES
($713,477) ($713,477)
NET
CASH
FLOW
$2,717,903 $2,717,903
Discount
Factor
I
8%
I
0.9934
DISCOUNTED
CASH
FLOW
$2,699,903 $2,699,903
CUMULATIVE
DISCOUNTED
12.699.903
12.699.903
CASH
FLOW
12-314
RESIDENTIAL LAND SALES MAP
& SUMMARY CHART
12-315
@
Bonnie
Bell
Desert
Hot
Springs
LAND
SALES
MAP
0 Del
Webb
(Subject
)
9 1. Via
Jose
fina
9 2. Escena
52 3.
Rancho
Bella
Desert
Edge
9 4. Bellavia
Rancho
North
Palm
.
/ '
Springs
9 5.
Doman,
Wh
.tew
~ater
1 1
~
1 ~
SkyValey
96.Dolc
e
\
'--~
~~
Mi
ra
lon
!
~~,
9 7.
Gall
er
y at
'"'-
~
,~
~
9 8_ Esce
na
w
Creek
-
~
~"-
n
L...:.
_____
-:-:=-
-
1 -"'-
,.-
"
c
ache
.
\
,
'
~
';;alley
Indio
Hills
~
.
SUNRISE
:::;
,
v.
~
,,
~
""
Preserve
s
rings
.ffl
.I
~
--
VISTA
CH
IN
O"
'
.
'•1!1-""
Thousand
~allm
Trar;,,WaY
T
Palm
Spr
ings
@)
,'
-
~o~lms
Coachella
Aena
O
,_
' -~a v~-
Valley
BARISTO
•·
ft
.
I
-. ,.
"
'"
..,.,-
•
~~
at,ona
o._,
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--'imi'
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Wildlife
...
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,..::.--
-----
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@
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Biskra
Palms
I \ '.r
Pa
lm
Desert
:=-
-
-~
'\
Indio
QJ..
;
==-~-"
I ,
~•
I
I
'
--
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'l"
'f~. J'\.
.... _
"''\.
"'",
A
The
Living
Desert
~ ___
_
®
Y
zoo
and
Gardens
··----
~\
'.
Cahuilla
Hills
12-316
LAND
SALES
SUMMARY
CHART
Data
Location
/ APN
/ Buyer/
Seller
Sales
#Lots/
Lot
Sales
Price
/
Est.
Comments
No.
Date
Acres
Size/
Price
per
Lot
Finished
Density
Lot
Price
1 E/O
Via
Josefina,
S/O
Ginger
Rodgers
Purchased
with
TTM
36620
allowing
for
Road,
Rancho
Mirage
11/21
82 9,000
$4,750
,000
N/A
82 lots
in
an
unimproved
condition
.
685-100-013,
685-110-004,
005,
006,
$57
,927
007,
008
&
009
/ Palo
Verde
37 LLC
(Brenson
Homes)/
RM
38 JV
LLC
Escena
52;
E/O
Clubhouse
View
Dr
.,
Purchased
in
a
blue-topped
condition
with
2 N/O
30 th
Avenue,
Cathedral
City
/ 675-
10/21
52 7,200
$5
,200,000
I
a
recorded
map
in
place.
Build-to
-rent
520-001
+
I EMP1
LLC
/ New
Valley
PS
$100,000
$200
,000
project.
No
CFO
on
project.
LLC Rancho
Bella,
NWC
Rattler
&
Ramon
,
Purchased
with
an
expired
TTM
for
115
3 Rancho
Mirage/
670
-230
-001
/ Ramon
9/21
115
8,000
$5,500,000
I
N/A
lots
in
an
unimproved
condition.
&
Rattler
Partners
LLC
/ Ramon
Road
$47,826
Partners
LLC
Bellavia
Rancho/
Bellavia
Court
&
Purchased
in
an
unimproved
condition
4 Ginger
Rodgers
Road
, Rancho
Mirage
5/21
18 16,000
$1,750
,000
I
$274,000
with
a
recorded
Tract
Map
(35089).
No
685-350
-01
thru
012
and
685
-351-001
$97,222
CFO
on
project.
thru
016
/ Desert
Estate
Builders/
RM
18 LLC
Domani,
N/O
Ave.
40 and
W/O
Adams
Pulte
Homes
is
advertising
Renata
at
5 Street,
Palm
Desert/
748-45;
748-46
5/21
71 4,500
$4,174
,000
I
Conf.
Domoni
"coming
soon".
This
site
is
various/
Pulte/
Encore
Homes
$58,789
adjacent
to
an
earlier
Del
Webb
project.
It
was
originally
marketed
by
Rilington
Homes
. First
of
two
take-downs
of
a
total
of
132
lots.
Dolce,
NE
of
Gerald
Ford
&
Gateway
Purchased
in
a
finished
lot
condition
with
6 Drives,
Palm
Desert/
694-140-21+
I
4/21
67 4,500
$8,451,000
I
$177,000
a
recorded
map.
Lennar/
Cal
Hearthstone
Lot
Option
$126,045
Pool Gallery
at
Miralon,
Palladium
Boulevard,
Lots
within
the
master
planned
community
7 Palm
Springs/
669
-760
and
669-790
1/13/21
9 6
,300
$1,458,000
I
$195,000
of
Miralon
in
Palm
Springs
. Purchased
in
various/
Gallery
Miralon
LLC
/ Avalon
(50
$162,000
a
nearly
finished
condition
with
recorded
1150
LLC;
total)
maps.
This
is
the
first
take
-down
of
9 lots
out
of
50. Escena,
Escena
Way
east
of
Gene
Autry
Older
portion
of
Escena
which
is
now
8 Boulevard,
Palm
Springs/
691-67
and
1/21
90 7,200
$10,425,455
/
$188,000
selling
lots
again
(see
Data
No
. 2)
Up-
68 various/
Toll
Brothers/
Lennar
$$115,838
scale
golf
course
community.
12-317
IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART
12-318
er
~ I~.
North
Palm
Springs
-..;:
~
IM
PROV
ED R
ES
ID
ENTIAL
SAL
ES
MAP
Desert
Edge
Sky
Valley
0 1.
Del
W
ebb
(Subject)
9 2.
CW
. @Vill
a
Portofino
3. Renata@
Domani
--
~ '@)
~
\\ 0
~
9 4.
Trilogy@
The
Polo
Club
9 5. Four
Seasons@Terra
Lago
9 6.
Sage@
Palm
Dese
rt
< ' ,,
\
4-1 "''7:4!, I·,~~
~ ,_,
' 'L -, ' ,,
=SUNRISE
::::;,
VISTA
CHINO
1 ,,
Palm
Spr
ings
@
'
BARISTO
-
~
,,
I\
I
--
~
~~-
~-~ Cat
lie
dra
~
ty
Coachella
Valley Preserve
Thousand · ~
Im
~
-
Coachella
'A
~
ft
Valley
W
~
~ft
Natio_nal
·
~
ildltfe
...
9 7. Castello
@
Dolce
9 8. University
Park
9 9-11.
Miralon
Biskra
Palms
(ill)
'"
Ranc;:ho
~
..
;-\..
VUI
1<
:;
v
~
"
Mirag
_e
-
-
· ' .--.
"""
\:;
Palm
-Desert
=--..........-:-:_.,...._
-
~
~~o
~
"---
-
~--
--":-..'-;:
~
~
The
Living
De~ert
~===-f
"-z.
@
I
®
zoo
and
Gardens
_
,
7 '.\.
\\
'
'\,
~
Cahuilla
Hills
La
Quinta
Co
~1he
ll~
"
~
,\
\
\\
~
12-319
IMPROVED
RESIDENTIAL
SALES
SUMMARY
CHART
No.
Project
Name
Room
Floors/
Size
Lot
Size
Absorp.
Base
Sales
Price/
Location
/ Developer
Plan
Count
ParkinQ
(SF) (SF)
Sales/Mo
Price
SF
1 (Gateway)
2/2
1 / 2
1,438
$548,990
$381
.77
2 (Solitude)
2/2
1 / 2
1,657
5,500
18.5 $573,990
$346.40
3 (Expedition)
2-3 / 2
1 / 2
1,770
$595,990
$336
.72
4 (Sanctuary)
2/2
1 / 2
1,832
$642,990
$350
.98
1 Del
Webb
at
Rancho
Mirage
5 (Haven)
2-3
/ 2
1 / 2+
1,858
$647,990
$348
.76
(Subj.)
(55+
Active
Adult)
Rancho
6 (Preserve)
2-3
/ 2
1 /
2+
2,008
$669,990
$333
.66
Mirage
/ Del
Webb
7 (Refuge)
2-3 /
2.5 1
/ 2+
2,187
$690,990
$315.95
8 (Serenity)
2-3
/ 2
1 /
2+
2,329
$790
,990
$339
.63
9 (Journey)
2-3 /
2.5 1 / 2+
2,504
$815
,990
$325
.87
10 /Vovaael
3 / 2
.5 1
/ 2+
2,726
$842,990
$309.24
TH
-1
(Aviano)
2 / 2
.5
1 / 2
1,553
$472,990
$304
.57
TH
-2
(Castelina)
2 / 2
.5
1 /
2 1,765
6,000
3.2 $515,515
$292
.08
Crestwood
at
Villa
Portofino
SF
-1
(Cantera)
2 /
2.5 1 / 2
1,864
$507,662
$272
.35
2 (55+
Active
Adult)
Palm
Desert
/ Crestwood
TH-3
(Granada)
2 / 2.5
1 / 2
1,926
$523
,990
$272.06
SF-2
(Celano)
3 / 3.5
1 / 2 2
,249
$517
,432
$230
.07
SF
-3
(Milano)
2 / 2
.5
1 / 2
2,341
$531,371
$226
.98
Renata
at
Domani
(55+
Active
1 (Brownstone)
2/2
1 / 2
1,579
$461,990
$292.58
3 2
(Silvercreek)
2/2
1 / 2
1,732
6,000
4.5 $476,990
$275.40
Adult),
Palm
Desert/
Pulte
3 (Bellwood)
2/2
1 / 2
1,865
$491,990
$263.80
1 (Affirm)
2/2
1 / 2
1,622
$505
,990
$311.95
2 (Connect)
3/2
1 / 2
1,847
5,000
6.7 $522
,990
$283
.16
4 Trilogy
at
the
Polo
Club
(55+
3 (Reunion)
2/2
1 / 2
1,928
$528,990
$274
.37
Active
Adult),
Indio/
Shea
4 (Excite)
2 / 2.5 1
/ 2
2,039
$579,990
$284.45
5 (Proclaim)
3 / 2.5
1 / 2
2,141
$599
,990
$280.24
6 (Liberty)
3/3
1 /
2 2
,367
$631,990
$267.00
1 (Black
Hill)
2/2
1 / 2
1,559
$437
,990
$280.94
2 (Collage)
2/2
1 /
2+
1,600
3,500
$456,990
$285
.62
3 (Fan
Hill)
2/2
1 /
2 1,706
6.3 $445,990
$261.42
Four
Seasons
at
Terra
Lago
4 (Fox
Canyon)
2/2
1 / 2
1,884
$529,990
$281.31
5 (55+
Active
Adult)
/ Indio,
K
5 (Indio
Hills)
2/2
1 /
2+
2,018
$476
,990
$236.37
Hovnanian
6 (Mecca
Hills)
2 /
2.5 1 /
2 2
,1
66 $494
,990
$228
.53
7 (Mirage
Trail)
2 /
2.5 1 / 3
2,283
$537,705
$235
.53
8 (Painted
Canyon)
3 / 2
.5
1 / 3 2
,4
91 $598,410
$240
.23
9 (Pinvon
Flats)
2 / 2
.5
1 / 2+
2,519
$600,440
$238.36
1 2/2
1 / 2
1,757
$644,680
$366
.92
2 2
/ 2.5
1 / 2
1,930
5,500
1.7 $680
,235
$352.45
6 Sage
at
Palm
Desert,
Palm
3 2
/ 2.5
1 / 2
1,950
$686
,680
$352.14
Desert
/ Ponderosa
Homes
4 3/3
2/2
2,318
$699,970
$301
.97
5 3 /
3.5 2/2
2,419
$682,680
$282.22
6 3
/ 3.5
2/2
2,723
$772
970
$283.87
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1 3/2
1 / 2
1,547
$550
,11
5 $355
.60
7 Castello
at
Dolce
, Palm
Desert
2 3/2
1 /
2 1,792
5,000
5.4 $592,215
$330.48
/ Lennar
3 4/2
1 /
2 1,879
$615,415
$327.52
1 3/2
1 /
2 1,99
2 $737,900
$370.43
University
Park
-Esprit,
Palm
2 3
/ 2.5
2/2
2,453
4,950
2.4 $767,900
$313.05
8 Desert
I Woodbridge
Pacific
3 4
I 3.5
2 /2
2,735
$803,900
$293.93
Group
4 3
/ 3.5
2/2
2,925
$825,900
$282.36
1 3
/ 3.5
1 / 2
1,894
$842,900
$445
.04
9 Aura
at
Miralon,
Palm
Springs
2 3
/ 3.5
1 /
2 2
,084
4,500
3.2 $861
,900
$413
.58
/ PLC
Communities
3 3
/ 3.5 1 / 2 2
,210
$829
,900
$375.52
1 3
/ 2.5 1 / 2
2,029
5,775
2.6 $885,000
$436.18
2 3
/ 2.5
1 / 2 2
,100
$780
,000
$371.43
10 Flair
at
Miralon,
Palm
Springs/
5 3
/ 2.5
1 / 2 2
,241
$980
,000
$437
.30
Woodbridg
e
Pacific
3 3
/ 2.5
1 / 2
2,248
$980,000
$435.94
4 3
/ 3.5
2/2
2,809
$1,150,000
$409.40
1 3
/ 3.5
1 /
2 2,330
$950
,000
$407.73
Gallery
at
Miralon,
Palm
2 3
/ 3.5
1 /
2 2,443
6,000
3.3 $989,000
$404
.83
11 Springs/
Gallery
Homes
3 3
/ 3.5
1 /
2 2,626
$1
,085,000
$413
.1
8 4
3 / 3.5
2/2
3,215
$1,275
,000
$396
.58
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APPRAISER'S QUALIFICATIONS
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QUALIFICATIONS OF KITTY S. SIINO, MAI
Education
Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)
Post-Graduate Study, Real Estate Development, University of California, Irvine, California Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.
Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.
Employment
1988 - Present:
Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts . From 1996 to present , specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos and City of Moreno Valley .
1986-1988 :
Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.
1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management functions. Worked with analysis and budgets for Community Development Division . Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements .
Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders.
1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments .
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Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793) Organizations
MAI #11145 - The Appraisal Institute
Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and 2022
Speaker, Mello-Roos & Special Assessment Financing, UCLA Extension Public Policy Program, February 2009 and March 2011
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APPENDIXC
CITY OF RANCHO MIRAGE ECONOMIC AND
DEMOGRAPHIC INFORMATION
The following ieformation regarding the City and the surrounding area of Riverside County is presented as general background data. The Series 2022 Bonds are payable solely from, and are secured by, the Special Tax Revenues (as defined in this Official Statement), and.from amounts on deposit in the Reserve Account established under the Indenture and other accounts and funds pledged under the Indenture. The taxing power of the City of Rancho Mirage, the County of Riverside, the State of California or any political subdivision thereof is not pledged to the payment of the Series 2022 Bonds.
See the information under the caption "SECURITY FOR THE BONDS. " Further, the ieformation in this Appendix A is obtained from publicly available sources which do not yet provide current information in many cases to reflect the adverse impact of the COVID-19 pandemic, particularly with respect to employment and taxable transactions. See "SPECIAL RISK FACTORS - Iefectious Disease Outbreak" in this Official Statement for additional ieformation.
General
The City of Rancho Mirage was incorporated on August 3, 1973 and became a Charter City on December 25, 1997. The City is located in Riverside County, California, and has a boundary of approximately 24.8 square miles. The City operates under the Council-Manager form of government.
The five City Council members, including the Mayor, are elected at large to four year terms on alternate slates every two years. The Mayor, appointed every year by the City Council from among its members on a rotational basis, serves a one-year term, presides over the meetings and has one vote. The City Council appoints a City Manager, the City Attorney and the City Clerk.
Population
The population of the City has [declined approximately 2.4% from 2010 through 2022, attributable to declines reported in January 2021 and 2022]. In addition to the permanent population, another approximately 9,275 people live in the City during the winter season. The following chart shows the annual population estimates of the City for the years 2010 through 2022:
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CITY OF RANCHO MIRAGE
Annual Population Estimates
(2010-2022)
City of Percent County of
Year Rancho Mirage Change Riverside
2010· 17,218 2,189,641
2011 17,471 1.47% 2,215,620
2012 17,624 0.88 2,244,472
2013 17,696 0.41 2,268,660
2014 17,772 0.43 2,290,907
2015 17,889 0.66 2,315,547
2016 18,020 0.73 2,342,612
2017 18,180 0.89 2,374,555
2018 18,257 0.42 2,397,662
2019 18,397 0.77 2,419,057
2020 18,611 1.16 2,440,719
2021 16,650 -10.54 2,424,587
2022 16,804 0.92 2,435,525
* Census numbers for 20 IO are as of April I st. All other years are as of January 1st.
Source : State of California Department of Finance.
Largest Taxpayers
A list of the top ten property taxpayers in the City is set forth below:
Property Owner
CITY OF RANCHO MIRAGE
Top Ten Property Taxpayers
(As of June 30, 2021)
Primary
Land Use
KSL RLP Holdings/Omni Rancho Las Palmas
Cheer Land The River*
Commercial
Commercial
Commercial
[ Agricultural]
Eisenhower Medical Center Inc.
ECRM Commercial
Porcupine Properties LLC
Newage Rancho Mirage
Mission Hills Country Club Inc.
G and I IX Rancho
Indigo Properties Rancho Mirage
Chan Athena Lai Ming*
* Pending appeals on parcels .
Residential
Commercial
Commercial
Commercial
Commercial
Commercial
Taxable
Assessed
Value
$ 85,567,477
73,295,765
71,871,905
67,077 ,709
62,029,879
61,668,801
39,184,610
38,784,979
38,433,561
37,000,000
$574,914,686
Source : City of Rancho Mirage Comprehensive Annual Financial Report Year Ended June 30, 2021.
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Percent
Change
1.19%
1.30 1.08
0.98 1.08
1.17 1.36
0.97 0.89
0.90 -0.66
0.45 % of Total
Assessed
Value
0.92%
0.79 0.77
0.72 0.67
0.66 0.42
0.42 0.41
0.40 6.18%
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Assessed Valuation
The City is a non-tax municipality, in that it generally does not receive property taxes directly from property owners. The City did not have a property tax rate prior to the enactment of Proposition 13, and it legislatively is restricted from imposing one. The following is a schedule of assessed value of property in the City for the fiscal years 2011-12 through 2020-21:
CITY OF RANCHO MIRAGE
Schedule of Assessed Valuation
Fiscal Years 2011-12 through 2020-21
Year
Ended Secured Unsecured SBE Net Total
June 30 Property Property Non unitary Valuation
2012 $7,068,971,567 $122,649,654 $1,206,604 $7,192,827,825 2013 7,067,615,088 112,165,925 1,206,604 7,180,987,617
2014 7,236,675,152 101,877,646 1,206,604 7,339,759,402
2015 7,546,223,218 95,581,717 1,206,604 7,643,011,539
2016 7,828,064,961 103,642,342 1,206,604 7,932,913,907
2017 8,045,875,869 107,179,121 1,206,604 8,154,261,594
2018 8,261,389,878 108,388,709 1,206,604 8,370,985,191
2019 8,543,095,822 110,985,678 1,980,000 8,656,061,500
2020 8,863,316,087 108,972,915 1,980,000 8,974,269,002
2021 9,185,389,567 107,164,538 1,980,000 9,294,534,105
Source: City of Rancho Mirage Comprehensive Annual Financial Report Year Ended June 30, 202 l.
Commercial Activity
A summary of taxable transactions in the City is set forth below:
CITY OF RANCHO MIRAGE
Valuation of Taxable Transaction 2017-2021
(Taxable Transactions in $000's)
Retail and Food Services Total All Outlets
Number Taxable Percent Number Taxable Percent
of Permits Transactions Change of Permits Transactions Change 2017 418 354,692 619 485,927
2018 397 375,273 5.80% 631 521,186 7.26%
2019 415 393,808 4.94 670 552,846 6.07
2020 422 313,643 -20.36 699 437,220 -20.91
2021 425 423,822 35.13 699 548,515 25.46
Source: California State Board of Equalization and California Department of Tax and Fee Administration.
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Personal Income
The table below summarizes personal income and per capita personal income for the County, the State and the United States for 2016 through 2020.
*
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA AND
UNITED STATES PERSONAL INCOME
(Not adjusted for inflation)
Personal Income Per Capita Personal
Area (000's) Income*
2016
Riverside County $ 89,644,299 $37,693
California 2,218,457,774 56,667
United States 16,092,713,000 49,812
2017
Riverside County $ 93,156,635 $38,605
California 2,318,644,417 58,942
United States 16,845,028,000 51,811
2018
Riverside County $ 97,619,217 $39,955
California 2,431,821,953 61,663
United States 17,681,159,000 54,098
2019
Riverside County $ 102,037,774 $41,385
California 2,544,234,978 64,513
United States 18,402,004,000 56,047
2020
Riverside County $ 114,090,413 $45,834
California 2,763,311,977 70,192
United States 19,607,447,000 59,510
Per capita personal income was computed using Census Bureau midyear population estimates. Estimates for 2016-2020 reflect county population estimates available as of March 2021.
Source: U.S. Department of Commerce , Bureau of Economic Analysis.
Education
The Palm Springs Unified School District serves the Community Facilities District. The Palm Springs Unified School District operates fifteen elementary schools, five middle schools and four high schools as well as three alternative schools. Higher education is available within an hour's drive at the University of California campuses at Riverside and Irvine or California State University campuses in San Bernardino, San Marcos, Fullerton and Pomona along with several additional private colleges. The closest community colleges include College of the Desert, Mt. San Jacinto Community College, Copper Mountain Community College, Crafton Hills College, Moreno Valley College and Riverside City College, all within 50 miles of the Community Facilities District.
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INDUSTRY AND EMPLOYMENT
The following table summarizes the historical numbers of workers in the Riverside-San Bernardino-Ontario Metropolitan Statistical Area over the period 2017 through 2021 by industry.
RIVERSIDE -SAN BERNARDINO-ONTARIO
METROPOLITAN STATISTICAL AREA
Industry Employment and Labor Force - Annual Average
Industry 2017 2018 2019 2020 2021
Farm 14,500 14,500 15,400 14,100 13,900
Mining and Logging 1,000 1,200 1,200 1,300 1,400
Construction 97,400 105,200 107,200 104,900 109,200
Manufacturing 98,000 99,800 100,600 95,100 94,800
Wholesale Trade 63,100 66,100 67,700 65,600 67,000
Retail Trade 180,900 181,200 180,700 168,800 177,600
Transportation, Warehousing and Utilities 119,900 132,100 146,600 172,500 198,600 Information 11,600 11,400 11,500 9,400 9,600
Financial Activities 44,700 44,600 45,000 44,100 44,900 Professional and Business Services 147,300 152,000 158,700 155,400 167,300 Educational and Health Services 226,700 239,500 250,300 248,700 253,300 Leisure and Hospitality 166,300 170,600 175,900 141,300 158,900 Other Services 45,400 45,800 46,200 40,200 43,000
Government 251,000 257,200 261,200 248,000 243,600
Total All Industries0l 1,467,800 1,521,100 1,568,100 1,509,300 1,583,000 O> Data may not add due to rounding. Not seasonally adjusted.
Source : State of California Employment Development Department , Labor Market Information Division.
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The table below summarizes the labor force, employment and unemployment figures over the period 2017 through 2021 for the County and the State.
COUNTY OF RIVERSIDE AND STATE OF CALIFORNIA
Labor Force, Employment And Unemployment
Yearly Average
Unemployment
Year and Area Labor Force Employment Unemployment Rate
2017
Riverside County 1,070,900 1,014,200 56,600 5.3%
California 19,185,4 00 18,258 ,1 00 927,300 4.8
2018
Riverside County 1,090,000 1,041,300 48,700 4.5
California 19,289,500 18,468 ,100 821,400 4.3
2019
Riverside County 1,107,700 1,060,600 47,100 4.3
California 19,409,400 18,612,600 796,800 4.1
2020
Riverside County 1,117,300 1,003,600 113,700 10.2
California 18,931,100 16,996 ,700 1,934,5 00 10.2
2021
Riverside County 1,129,600 1,046,700 82,800 7.3
California 18,923,200 17,541,90 0 1,381,200 7.3
Source: California Employment Development Department. Not seasonally acijusted.
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APPENDIXD
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIXE
PROPOSED FORM OF OPINION OF BOND COUNSEL
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APPENDIXF
DTC AND THE BOOK ENTRY SYSTEM
The following information concerning The Depository Trust Company ("OTC") and DTC's book-entry system has been obtained from sources that the Community Facilities District and the Underwriter believe to be reliable. The Community Facilities District and the Underwriter undertake no responsibility for, and make no representations as to the accuracy or completeness of, such information.
NEITHER THE COMMUNITY FACILITIES DISTRICT NOR THE TRUSTEE WILL HAVE
ANY RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS, TO INDIRECT
PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (A) THE ACCURACY
OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT; (B) ANY NOTICE THAT IS PERMITTED OR REQUIRED TO BE GIVEN TO THE OWNERS OF THE SERIES 2022 BONDS UNDER THE INDENTURE; (C) THE SELECTION BY
OTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE SERIES 2022 BONDS; (D) THE PAYMENT BY OTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT TO THE OWNERS OF THE SERIES 2022 BONDS; (E) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY OTC AS THE OWNER OF SERIES 2022 BONDS; OR (F) ANY OTHER MATTER REGARDING OTC.
The Depository Trust Company, New York, New York, will act as securities depository for the Series 2022 Bonds. The Series 2022 Bonds will be issued as full-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of OTC. One full-registered Series 2022 Bond certificate will be issued for each maturity of the Series 2022 Bonds, in the aggregate principal amount of such maturity, and will be deposited with OTC or held by the Trustee.
OTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U .S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with OTC. OTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts .
This eliminates the need for physical movement of securities certificates . Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. OTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for OTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies.
DTCC is owned by the users of its regulated subsidiaries. Access to the OTC system is also available to others such as both U.S . and non-U.S . securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant , either directly or indirectly ("Indirect Participants"). OTC has a Standard & Poor's rating of "AA+ ." The OTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about OTC can be found at www.dtcc.com . The information on such website is not incorporated by reference herein.
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Purchases of the Series 2022 Bonds under the OTC system must be made by or through Direct Participants, which will receive a credit for the Series 2022 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2022 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records . Beneficial Owners will not receive written confirmation from OTC of their purchase . Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction , as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction . Transfers of ownership interests in the Series 2022 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds or certificates representing their ownership interests in the Series 2022 Bonds, except in the event that use of the book-entry system for the Series 2022 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2022 Bonds deposited by Direct Participants with· OTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of OTC. The deposit of the Series 2022 Bonds with OTC and their registration in the name of Cede & Co. or such other OTC nominee do not effect any change in beneficial ownership. OTC has no knowledge of the actual Beneficial Owners of the Series 2022 Bonds; DTC ' s records reflect only the identity of the Direct Participants to whose accounts such Series 2022 Bonds are credited , which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by OTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2022 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2022 Bonds, such as redemptions, tenders, defaults , and proposed amendments to the Indenture and the Facility Lease. For example, Beneficial Owners of the Series 2022 Bonds may wish to ascertain that the nominee holding the Series 2022 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative , Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them .
While the Series 2022 Bonds are in the book -entry-only system , redemption notices will be sent to OTC. If less than all of the Series 2022 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither OTC nor Cede & Co. (nor any other OTC nominee) will consent or vote with respect to the Series 2022 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures . Under its usual procedures, OTC mails an Omnibus Proxy to the Community Facilities District, as issuer, as soon as possible after the record date . The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2022 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal of and interest payments on the Series 2022 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of OTC. DTC's practice is to credit Direct Participants ' accounts upon DTC's receipt of funds and corresponding detail information from the Community Facilities District or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name ," and will be the responsibility of such Participant and not of OTC, the Community Facilities District , or the Trustee, subject to any statutory or regulatory F-2
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requirements as may be in effect from time to time. Payment of redemption proceeds, principal and interest to Cede & Co. ( or such other nominee as may be requested by an authorized representative of OTC) is the responsibility of the Community Facilities District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of OTC and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
OTC may discontinue providing its services as depository with respect to the Series 2022 Bonds at any time by giving reasonable notice to the Community Facilities District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series 2022 Bond certificates are required to be printed and delivered.
The Community Facilities District may decide to discontinue use of the system of book-entry only transfers through OTC (or a successor securities depository). DTC's procedures provide that upon receipt of a withdrawal request from an issuer, OTC will take the following actions: (1) OTC will issue an Important Notice notifying its participants of the receipt of a withdrawal request from the issuer reminding participants that they may utilize DTC's withdrawal procedures if they wish to withdraw their securities from OTC; and (2) OTC will process withdrawal requests submitted by participants in the ordinary course of business, but will not effectuate withdrawals based upon a request from the issuer. In that event, Series 2022 Bond certificates will be printed and delivered to OTC.
The information in this Appendix F concerning OTC and DTC's book-entry system has been obtained from sources that the Community Facilities District believes to be reliable, but the Community Facilities District takes no responsibility for the accuracy thereof.
BENEFICIAL OWNERS WILL NOT RECEIVE PHYSICAL DELIVERY OF SERIES 2022
BONDS AND WILL NOT BE RECOGNIZED BY THE TRUSTEE AS OWNERS THEREOF , AND
BENEFICIAL OWNERS WILL BE PERMITTED TO EXERCISE THE RIGHTS OF OWNERS ONLY INDIRECTLY THROUGH OTC AND THE PARTICIPANTS.
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APPENDIXG
FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), dated as of _____ 1, 2022, is by and between the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District"), and Willdan Financial Services, as disclosure dissemination agent (the "Dissemination Agent" as defined below).
WITNESSETH:
WHEREAS, pursuant to the Indenture, dated as of _____ 1, 2022 (the "Indenture") by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), the Community Facilities District has issued its City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Series 2022 Bonds"), in the aggregate principal amount of$ _____ ; and WHEREAS, this Disclosure Agreement is being executed and delivered by the Community Facilities District and the Dissemination Agent for the benefit of the Owners and Beneficial Owners of the Series 2022 Bonds and in order to assist the underwriter of the Series 2022 Bonds in complying with Securities and Exchange Commission Rule l 5c2-l 2(b )( 5); NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Agreement have the meanings herein specified.
Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. "Annual Report" means any Annual Report provided by the Community Facilities District pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means the date in each year that is the first day of the month following the ninth month after the end of the Community Facilities District's fiscal year, which date, as of the date of this Disclosure Agreement, is April 1.
"Disclosure Representative" means the Director of Administrative Services of the City or his or her designee, or such other officer or employee of the City as the City shall designate in writing to the Dissemination Agent from time to time.
"Dissemination Agent" means Willdan Financial Services, acting in its capacity as Dissemination Agent hereunder, or any successor dissemination agent appointed to act as Dissemination Agent in accordance with this Disclosure Agreement.
"Financial Obligation" means (a) a debt obligation of the Community Facilities District, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the Community Facilities District, or ( c) a guarantee of (i) a debt obligation of the Community Facilities District, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term "Financial Obligation" shall not include "municipal securities" (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a "final official statement" (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule.
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"Indenture" means the Indenture, dated as of _____ 1, 2022 by and between the Community Facilities District and U.S. Bank Trust Company, National Association , as trustee, as originally executed and as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms .
"Listed Events" means any of the events listed in subsection (a) or subsection (b) of Section 4 hereof.
"MSRB" means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
"Official Statement" means the Official Statement, dated ____ , 2022, relating to the Series 2022 Bonds.
"Participating Underwriter" means the original underwriter of the Series 2022 Bonds required to comply with the Rule in connection with the offering of the Series 2022 Bonds. "Rule" means Rule 15c2-12(b )( 5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Trustee" means U.S. Bank Trust Company, National Association, as trustee under the Indenture, or any successor thereto as Trustee thereunder, substituted in its place as provided therein.
Section 2. Provision of Annual Reports . (a) · The Community Facilities District shall, or shall cause the Dissemination Agent to, provide to the MSRB an Annual Report that is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2021-22 Fiscal Year (which is due no later than April 1, 2023). The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the Community Facilities District , if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Community Facilities District's fiscal year changes , it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB. (b) Not later than 15 business days prior to the date specified in subsection (a) of this Section for the providing of the Annual Report to the MSRB, the Community Facilities District shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Dissemination Agent has not received a copy of the Annual Report , the Dissemination Agent shall contact the Community Facilities District and the Dissemination Agent to determine if the Community Facilities District is in compliance with the first sentence of this subsection (b ).
(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a) of this Section, the Dissemination Agent shall, in a timely manner , send a notice to the MSRB in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall:
(i) provide each Annual Report received by it to the MSRB, as provided herein ; and G-2
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(ii) file a report with the Community Facilities District and (if the Dissemination Agent is not the Trustee) the Trustee certifying that such Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided to the MSRB.
Section 3. Content of Annual Reports . The Community Facilities District's Annual Report shall contain or incorporate by reference the following:
(a) The Community Facilities District's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Community Facilities District's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 2 hereof , the Annual Report shall contain unaudited financial statements, in a format similar to that used for the Community Facilities District's audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available.
(b) The following information with respect to the Series 2022 Bonds:
(i) The principal amount of Series 2022 Bonds Outstanding as of the December 31 next preceding the Annual Report Date;
(ii) The principal amount of Bonds Outstanding as of the December 31 next preceding the Annual Report Date;
(iii) The principal amount of additional bonds payable on a parity with the Bonds , if any, outstanding as of the December 31 next preceding the Annual Report Date; (iv) The balance in the Reserve Fund established under the Indenture, and a statement of the Reserve Requirement, as of the December 31 next preceding the Annual Report Date; ( c) The following information with respect to the Community Facilities District:
(i) The total assessed value of all parcels within the Community Facilities District on which the special taxes of the Community Facilities District are levied as shown on the assessment roll of the Riverside County Assessor last equalized prior to the December 31 next preceding the Annual Report Date;
(ii) A five year summary of special tax collections for the Community Facilities District and delinquencies for all parcels within the Community Facilities District; (iii) An update for the Community Facilities District of the table for the Community Facilities District entitled "Value-to-Lien Stratification" in the Official Statement, including Overlapping Debt if material;
(iv) The status of foreclosure proceedings and a summary of the results of any foreclosure sales with respect to parcels within the Community Facilities District as of the December 31 next preceding the Annual Report Date;
(v) The identity of any property owner representing more than 5% of the special tax levy for the Community Facilities District delinquent in payment of such special taxes as of the December 31 next preceding the Annual Report Date ; and G-3
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(vi) A land ownership summary listing property owners responsible for more than 5% of the annual special tax of the Community Facilities District, as shown on the assessment roll of the Riverside County Assessor last equalized prior to the December 31 next preceding the Annual Report Date and a summary of any pending assessed value appeals to parcels owned by each one.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Community Facilities District or related public entities, that have been made available to the public on the MSRB's website. The Community Facilities District shall clearly identify each such other document so included by reference.
Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Community Facilities District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence of the event:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancements reflecting financial difficulties . (iv) Substitution of credit or liquidity providers, or their failure to perform. (v) Adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination oftaxability or of a Notice of Proposed Issue (IRS Form 5701 TEB). (vi) Tender offers .
(vii) Defeasances .
(viii) Rating changes.
(ix) Bankruptcy, insolvency, receivership or similar event of the Community Facilities District.
(x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties.
For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver , fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Community Facilities District, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority , or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Community Facilities District.
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(b) Pursuant to the provisions of this Section, the Community Facilities District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2022 Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:
(i) Unless described in paragraph (v) of subsection (a) of this Section, material notices or determinations by the Internal Revenue Service with respect to the tax status of the Series 2022 Bonds or other material events affecting the tax status of the Series 2022 Bonds. (ii) Modifications to rights of holders of the Series 2022 Bonds. (iii) Optional, unscheduled or contingent Series 2022 Bond calls. (iv) Release, substitution, or sale of property securing repayment of the Series 2022 Bonds.
(v) Non-payment related defaults .
(vi) The consummation of a merger, consolidation, or acquisition involving the Community Facilities District or the sale of all or substantially all of the assets of the Community Facilities District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.
(vii) Appointment of a successor or additional trustee or the change of name of a trustee.
(viii) Incurrence of a Financial Obligation , or agreement to covenants, events of default, remedies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Series 2022 Bonds.
( c) The Dissemination Agent shall, within one business day of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative and inform such person of the event.
( d) If a Listed Event described in subsection (b) of this Section occurs, the Community Facilities District shall determine if such event would be material under applicable Federal securities law. (e) If a Listed Event described in subsection (a) of this Section occurs, or if the Community Facilities District determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities law, the Community Facilities District shall, or shall cause the Dissemination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, in a timely manner not later than ten business days after the date of such occurrence. (f) Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection (b) of this Section need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected Series 2022 Bonds pursuant to the Indenture.
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Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format , accompanied . by such identifying information as is prescribed by the MSRB.
Section 6. Termination of Reporting Obligation. The Community Facilities District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2022 Bonds. If such termination occurs prior to the final maturity of the Series 2022 Bonds , the Community Facilities District shall give, or cause to be given, notice of such termination in a filing with the MSRB.
Section 7. Dissemination Agent. The Community Facilities District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days' written notice to the Community Facilities District , such resignation to become effective upon the appointment of a successor Dissemination Agent. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Community Facilities District in a timely manner and in a form suitable for filing.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Community Facilities District and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Community Facilities District; provided, however, that the Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied :
(a) if the amendment or waiver relates to the provisions of subsection (a) of Section 2 hereof, Section 3 hereof or subsection (a) or (b) of Section 4 hereof , it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity , nature or status of an obligated person with respect to the Series 2022 Bonds , or the type of business conducted ;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Series 2022 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
( c) the proposed amendment or waiver (i) is approved by Owners of the Series 2022 Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of Owners or Beneficial Owners of the Series 2022 Bonds .
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Community Facilities District shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable , a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Community Facilities District. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB , and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative G-6
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form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles .
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Community Facilities District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Agreement , in addition to that which is required by this Disclosure Agreement. If the Community Facilities District chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Agreement, the Community Facilities District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported .
Section I 0. Default. In the event of a failure of the Community Facilities District or the Dissemination Agent to comply with any provision of this Disclosure Agreement , as provided in the Indenture, the Trustee may (and, at the written direction of any Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of Outstanding Series 2022 Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee) , or any Owner or Beneficial Owner of the Series 2022 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Community Facilities District , or the Dissemination Agent , as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Community Facilities District or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.
Section 11 . Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not be responsible for the form or content of any Annual Report or notice of Listed Event.
The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement to the extent permitted by law, the Community Facilities District agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, and which are not due to its negligence or its willful misconduct. The obligations of the Community Facilities District under this Section shall survive resignation or removal of the Dissemination Agent and the termination of this Disclosure Agreement.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Community Facilities District, the Dissemination Agent , the Participating Underwriter and the Owners and Beneficial Owners from time to time of the Series 2022 Bonds, and shall create no rights in any other person or entity.
Section 13. Governing Laws. This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State of California.
Section 14. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Disclosure Agreement may be conducted by electronic means . Each party agrees and acknowledges that it is such party's intent, that if such party signs this Disclosure Agreement using an electronic signature, it is signing, adopting and accepting this Disclosure Agreement and that signing this G-7
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Disclosure Agreement using an electronic signature is the legal equivalent of having placed the undersigned officer ' s handwritten signature on this Disclosure Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Disclosure Agreement in a usable format.
Section 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
The Dissemination Agent and the Community Facilities District have caused this Disclosure Agreement to be executed , on the date first written above , by their respective officers duly authorized.
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CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: ____ ___ _ ____ _
Disclosure Representative
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent
By: ____ ____ _____ _
Authorized Representative
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Obligor:
Name oflssue:
Date of Issuance:
EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District")
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022
_ ___ ,2022
NOTICE IS HEREBY GIVEN that the Community Facilities District has not provided an Annual Report with respect to the above-named Bonds as required by the Disclosure Agreement, dated as of ----- 1, 2022, between the Community Facilities District and Willdan Financial Services, as Dissemination Agent. [The Community Facilities District has notified the Dissemination Agent that it anticipates that the Annual Report will be filed by ______ .] Dated:
cc: Disclosure Representative
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WILLDAN FINANCIAL SERVICES, as
Dissemination Agent, on behalf of the
Community Facilities District
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APPENDIXH
FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT
This Developer Continuing Disclosure Agreement (the "Disclosure Agreement") dated as of _____ 1, 2022 is executed and delivered by Pulte Home Company, LLC, a Michigan limited liability company (the "Developer"), and Willdan Financial Services, as dissemination agent (the "Dissemination Agent"), in connection with the execution and delivery by City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District") of its $ _____ City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Bonds"). The Bonds are being issued pursuant to a resolution adopted on ____ 1, 2022, by the City Council of the City of Rancho Mirage, acting as the legislative body of the District, and an Indenture, dated as of _____ 1, 2022 by and between the District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee") . The Developer and the Dissemination Agent covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Developer to assist the Underwriter in the marketing of the Bonds.
Section 2. Definitions . Unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
"Affiliate" shall mean, with respect to the Developer, any person directly (or indirectly through one or more intermediaries) that exercises managerial control over the Developer or that is under managerial control of the Developer, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to the proposed development of the Property, or to the Developer's ability to pay the applicable Special Tax obligation levied on the Property owned by it when due). "Assumption Agreement" means an agreement among a purchaser of Property within the District, or an Affiliate thereof, the Developer and the Dissemination Agent containing terms substantially similar to this Disclosure Agreement, whereby such purchaser or Affiliate agrees to provide Semi-Annual Reports and notices of significant events with respect to the portion of the Property within the District owned by such purchaser or its Affiliates.
"Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Dissemination Agent" shall mean initially Willdan Financial Services, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Developer and which has filed with the Developer and the District a written acceptance of such designation.
"District" shall mean City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project).
"EMMA" shall mean the Electronic Municipal Market Access system of the MSRB. "Equity Securities" of any Person shall mean (a) all common stock, preferred stock, participations, shares, general partnership interests or other equity interests in and of such person H-1
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(regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.
"Government Authority" shall mean any national, state or local government, any political subdivision thereof , any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial , regulatory or administrative functions of or pertaining to government.
Bonds.
"Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "MSRB" shall mean the Municipal Securities Rulemaking Board. "Official Statement" shall mean the Official Statement, dated ____ , 2022, relating to the "Person" shall mean any natural person , corporation , partnership , firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity. "Property" shall mean the parcels within the boundaries of the District subject to Special Taxes. "Repository " shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb .org.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of I 934 , as the same may be amended from time to time. "Semiannual Report" shall mean any report to be provided by the Developer on or prior to December 15 and June 15 of each year, commencing [December 15, 2022] , pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
"State" shall mean the State of California.
"Underwriter" shall mean the original underwriter of the Bonds, which ts Stifel Nicolaus & Company, Incorporated .
Section 3. Provision of Semiannual Report.
(a) Until such time as the Developer's reporting requirements terminate pursuant to Section 7 below, the Developer shall, or upon receipt of the Semiannual Report from the Developer the Dissemination Agent shall, not later than December 15 and June 15 of each year, commencing [December 15, 2022], provide to the Repository a Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If, in any year, June 15 or December 15 falls on a Saturday, Sunday or a holiday, such deadline shall be extended to the next following day that is not a Saturday , Sunday, or holiday. The Semiannual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement.
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(b) Not later than fifteen (15) calendar days prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Developer (i) shall provide the Semiannual Report to the Dissemination Agent or (ii) shall provide notification to the Dissemination Agent that the Developer is preparing, or causing to be prepared, the Semiannual Report and the date which the Semiannual Report is expected to be filed. If by such date, the Dissemination Agent has not received a copy of the Semiannual Report or notification as described in the preceding sentence, the Dissemination Agent shall notify the Developer of such failure to receive the report . (c) If the Dissemination Agent is unable to provide a Semiannual Report to the Repository by the applicable June 15th or December 15th or to verify that a Semiannual Report has been provided to the Repository by the Developer by the applicable June 15th or December 15th, the Dissemination Agent shall send a notice to the Repository in the form required by the Repository . (d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Semiannual Report the name and address of the Repository ; and
(ii) promptly after receipt of the Semiannual Report file a report with the Developer and the District certifying that the Semiannual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided to the Repository. (e) Notwithstanding any other provision of this Disclosure Agreement, any of the required filings hereunder shall be made in accordance with the MSRB's EMMA system.
Section 4. Content of Semiannual Report .
(a) The Developer 's Semiannual Report shall contain or include by reference the information which is updated through a date which shall not be more than 60 days prior to the date of the filing of the Semiannual Report relating to the following :
1. An update (if any) to the information relating to the Developer and its Affiliates under the captions in the Official Statement entitled "THE DEVELOPMENT AND THE DEVELOPER." Such updates shall include, but not be limited to, the status of construction on the property currently owned by the Developer and its Affiliates within the District (collectively , the "Landowner Improvements").
2. The number of homes conveyed by the Developer to individual homeowners in the District since the last Semiannual Report filed ( or for the first Semiannual Report since the Official Statement) and the number of homes and lots owned by the Developer or any Affiliates within the District.
3. Any significant amendments to land use entitlements that are known to the Developer with respect to the Property .
4. Status of Special Tax payments with respect to the Property .
5. An update of the number of lots within the District acquired by the Developer , if any, and the number of homes for which building permits were issued within the Property since the last Semiannual Report filed (or for the first Semiannual Report since the Official Statement).
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(b) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Developer shall clearly identify each such other document so included by reference.
Section 5 . Reporting of Significant •Events.
(a) Pursuant to the provisions of this Section 5, the Developer shall give, or cause to be given, notice of the occurrence of any of the following events, if material under clauses (b) and ( c) as soon as practicable after the Developer obtains knowledge of any of the following events:
1. Failure to pay any real property taxes, special taxes or assessments levied within the Property by the Developer or any Affiliate;
2. Material default by the Developer or any Affiliate on any loan with respect to the construction or permanent financing of the Landowner Improvements to which the Developer or any Affiliate has been provided a notice of default;
3. Payment default by the Developer or any Affiliate on any loan of the Developer or any Affiliate (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan and, in the reasonable judgment of the Developer, such payment default will adversely affect the completion of the development of parcels owned by the Developer or its Affiliates within the District, or would materially adversely affect their respective ability to pay the applicable special tax obligation on the Property owed by it when due;
4. The filing of any proceedings with respect to the Developer in which the Developer may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of its debts;
5. The filing of any proceedings with respect to an Affiliate in which the Affiliate may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, if such adjudication will adversely affect the completion of the development of parcels owned by the Developer or its Affiliates within the District, or would materially adversely affect their respective ability to pay the applicable special tax obligation on the Property owed by it when due.
6. The filing of any lawsuit against the Developer or any of its Affiliates (for which the Developer has actual notice, as through receipt of service of process) which, in the reasonable judgment of the Developer, will adversely affect the completion of the development of the Property, or litigation which if decided against the Developer, or any of its Affiliates, in the reasonable judgment of the Developer, would materially adversely affect their respective ability to pay the applicable special tax obligation on the Property owed by it when due.
7. Unless disclosed in the Official Statement or a prior Semi-Annual Report, any conveyance by the Developer of any of its Property to an entity that is not an Affiliate of the Developer, the result of which conveyance is to cause the transferee to own 76 or more, or 20% or more, of the residential lots within the District. Notwithstanding the foregoing, the Developer H-4
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shall have no obligation to provide notice of the transfer of Property from the Developer to an Affiliate of the Developer .
(b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable federal securities laws. The Dissemination Agent shall have no responsibility to determine the materiality of any of the Listed Events.
( c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Developer shall promptly (i) file a notice of such occurrence with the Dissemination Agent which shall then distribute such notice to the Repository , with a copy to the District, or (ii) file a notice of such occurrence with the Repository , with a copy to the Dissemination Agent and the District.
Section 6. Assumption of Developer ' s Obligations. If any portion of the Property owned by the Developer is conveyed to a Person such that, upon such conveyance , such Person will be the owner of 76 or more, or 20% or more, of the residential lots within the District, all of the obligations of the Developer hereunder with respect to such Property conveyed shall be assumed by such transferee. In order to effect such assumption, such transferee shall enter into an Assumption Agreement. A copy of the Assumption Agreement shall be provided to the Dissemination Agent, the Trustee , the Underwriter and the District as set forth in Section 5(a)(7) in the manner provided in 5(b) and (c). Notwithstanding the foregoing , there shall be no requirement that a transferee enter into an Assumption Agreement if the transferee is an Affiliate of the Developer .
Section 7. Termination of Reporting Obligation . The Developer 's obligations under this Disclosure Agreement shall terminate upon the earlier to occur of the following events:
(a) the legal defeasance , prior redemption or payment in full of all of the Bonds, or (b) at such time as the Developer and its Affiliates , in the aggregate , own less than 76 or 20% of the residential lots within the District, or
(c) with respect to Property conveyed to another entity, the date on which the Developer ' s obligations under this Disclosure Agreement are assumed under an Assumption Agreement.
If such termination occurs prior to the final maturity of the Bonds, the Developer shall give notice of such termination in the same manner as for a Listed Event hereunder .
Section 8. Dissemination Agent. The Developer may from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement , and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the Developer, the Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Developer pursuant to this Disclosure Agreement. The Dissemination Agent may resign by providing (i) thirty days written notice to the Developer and the Dissemination Agent and (ii) upon appointment of a new Dissemination Agent hereunder.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Developer may amend this Disclosure Agreement , and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
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(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements or a change in law;
(b) The amendment or waiver either (i) is approved by the owners of the Bonds in the same manner as provided in the Resolution with the consent of owners of the Bonds, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the District and the Dissemination Agent, materially impair the interests of the owners or Beneficial Owners of the Bonds; and ( c) the Developer, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) above to the District and the Trustee.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Developer shall describe such amendment in the next Semiannual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver.
Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication , or including any other information in any Semiannual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Developer chooses to include any information in any Semiannual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Developer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Semiannual Report or notice of occurrence of a Listed Event.
Section 11 . Default. In the event of a failure of the Developer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Underwriter or any owner or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer or the Dissemination Agent to comply with its obligations under this Disclosure Agreement. Notwithstanding the foregoing sentence, the sole remedy under this Disclosure Agreement in the event of any failure of the Developer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance .
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Developer, the Underwriter, owners of the Bonds or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon a direction from the Developer or an opinion of nationally recognized bond counsel. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent may conclusively rely upon the Semiannual Report provided to it by the Developer as constituting the Semiannual Report required of the Developer in accordance with this Disclosure Agreement and shall have no duty or obligation to review such Semiannual Report . The Dissemination Agent shall have no duty to prepare the Semiannual Report nor shall the Dissemination Agent be responsible for filing any Semiannual Report not provided to it by the Developer in a timely manner in a form suitable for filing with the Repository. Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.
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Section 13. The Developer as Independent Contractor. In performing under this Disclosure Agreement, it is understood that the Developer is an independent contractor and not an agent of the District.
Section 14. Notices. Notices should be sent in writing by electronic mail, regular mail or overnight mail to the following addresses. The following information may be conclusively relied upon until changed in writing.
Developer:
Dissemination Agent:
Underwriter:
Pulte Group
27401 Los Altos, Suite 400
Mission Viejo, CA 92691-8550
Attn: David Kenny, Vice President of Finance, Southern California with a copy to:
Pulte Group
27401 Los Altos, Suite 400
Mission Viejo , CA 92691-8550
Attn: Don Sajor, Area General Counsel & Vice President- West Area Willdan Financial Services
27368 Via Industria, Suite 200
Temecula, CA 92590
Attn: Dave Davies
Stifel Nicolas & Company, Incorporated.
One Montgomery Street, 35th Floor
San Francisco, CA 94104
Attn: Public Finance
Section 15. Beneficiaries . This Disclosure Agreement shall inure solely to the benefit of the Developer, the District, the Dissemination Agent, the Underwriter and owners of the Bonds and Beneficial Owners from time to time of the Bonds and shall create no rights in any other person or entity.
Section 16. California Law. The validity, interpretation and performance of this Disclosure Agreement shall be governed by the laws of the State of California.
Section 17. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Disclosure Agreement may be conducted by electronic means. Each party agrees and acknowledges that it is such party's intent, that if such party signs this Disclosure Agreement using an electronic signature, it is signing, adopting and accepting this Disclosure Agreement and that signing this Disclosure Agreement using an electronic signature is the legal equivalent of having placed the undersigned officer's handwritten signature on this Disclosure Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Disclosure Agreement in a usable format.
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Section 18. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
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PULTE HOME COMPANY, LLC,
a Michigan limited liability company
By: ____________ _
Vice President - Treasurer
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent
By: _____________ _
Authorized Representative