Appraisal Report — Riverside City Council, April 26, 2022

APPRAISAL REPORT

CITY OF RIVERSIDE
COMMUNITY FACILITIES DISTRICT NO. 2015-2
(Pomelo)

City of Riverside, Riverside County, California
(Appraisers’ File No. 2022-1250)

Prepared For
City of Riverside
3900 Main Street, 6th Floor
Riverside, CA 92522

Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780

KITTY SIINO & ASSOCIATES, INC.

REAL ESTATE APPRAISERS & CONSULTANTS

March 10, 2022

Heidi Schrader, Debt Manager
City of Riverside
3900 Main Street, 6th Floor
Riverside, CA 92522

Reference: Appraisal Report
City of Riverside Community Facilities District No. 2015-2 (Pomelo) East side of Crest Avenue along both sides of Jurupa Avenue, Riverside

Dear Ms. Schrader:

At the request and authorization of the City of Riverside, we have completed an Appraisal Report for The City of Riverside Community Facilities District No. 2015-2 (Pomelo) (“Riverside CFD No. 2015-2”) which consists of the residential neighborhood known as Pomelo in the City of Riverside. Pomelo consists of 108 proposed single-family detached homes with 69 closed to individual homeowners to date. The remaining 39 lots are builder-owned and range from completed model homes to homes under construction to generally finished lots/pads.

The valuation method s used in this report are the Sales Comparison Approach , a Discounted Cash Flow Analysis along with a Mass Appraisal Technique as defined within this report. The fee simple estate of the subject property has been valued subject to the Riverside CFD No. 2015 -2 special tax lien. This report is written with the special assumption that the subject property is enhanced by the improvements and/or fee credits to be funded by the special tax bonds of Riverside CFD No. 2015 -2. As a result of our investigation, the concluded minimum market value for the subject property is:

Pomelo:

Meritage Homes Ownership Value $ 12,789,749
Individually Owned Homes Minimum Market Value $ 43,440,401

Aggregate Value for Riverside CFD No. 2015-2 $ 56,230,150

The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of December 15, 2021.

115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] Ms. Schrader
City of Riverside
March 10, 2022
Page Two

Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2020) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report.

This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.

Respectfully submitted,

KITTY SIINO & ASSOCIATES, INC.

Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)

TABLE OF CONTENTS

Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Riverside CFD No. 2015-2 ...................................................................... iv 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 ........................................................................................................ 5 Regional Area Map.......................................................................................................... 7 County of Riverside Area Description ............................................................................. 8 City of Riverside Area Map ............................................................................................ 18 City of Riverside Area Description ................................................................................. 19 Immediate Surroundings ............................................................................................... 23 Community Facilities District No. 2015-2 (Pomelo) ....................................................... 25 Subject Property Description ......................................................................................... 27 Inland Empire Housing Market ...................................................................................... 35 Highest and Best Use Analysis ..................................................................................... 46 Valuation Analysis and Conclusions ............................................................................. 50 Appraisal Report Summary ........................................................................................... 65 Appraiser’s Certification ............................................................................................... 66

ADDENDA
Riverside CFD No. 2015-2 Boundary Map
Tract Map No. 28987
Department of Toxic Substances Control Completion Certificate Airport Land Use Commission Documentation
Discounted Cash Flow Analysis
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page i

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 Riverside CFD No. 2015-2.

4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.

5. The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy.

6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.

7. It is assumed that there are no hidden or unapparent conditions of either property, subsoil or structures that would render them more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report.

9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.

10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

11. Any sketch or photograph included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps , photographs and exhibits found in this report are provided for reader reference _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page ii
purposes only. No guarantee regarding accuracy is expressed or implied unless 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 conc erns that would slow or thwart development of the subject properties and that the soils are adequate to support the highest and best use conclusions.

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 Riverside CFD No. 2015-2 special tax bonds.

HYPOTHETICAL CONDITION

1. It is assumed that all improvements and benefits to the subject properties, which are to be funded by the City of Riverside CFD No. 2015-2 Special Tax Bond proceeds are completed and in place.

EXTRAORDINARY ASSUMPTION

1. It is assumed that the sales information and remaining development costs as reported by the builder as discussed in the report are correct. While we have reviewed the costs and they appear reasonable, we are not experts in the field of construction estimation and are relying on the costs received in the valuation analysis.

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 lien of the City of Riverside CFD No. 2015-2 Special Tax Bonds.

THE SUBJECT PROPERTY

The subject property consists of 108 proposed single-family homes being developed into the community known as Pomelo by Meritage Homes, in the northwestern portion of the City of Riverside (“City”). Pomelo is located along both the north and south side of Jurupa Avenue, west of Biscayne Avenue. Pomelo is currently being marketed with home sizes ranging from 1,910 to 2,948 square feet on minimum 7,200 square foot lots. The community is encompassed by Tract Map 28987 which divides the subject property into 108 single family detached lots . The ownership and condition of the lands are detailed below.

Description
No.

Lots

Ownership

Condition/Status
Pomelo – Tract 28987
Lots 32 – 43; 51 - 77; and 80-109 69 Individuals Completed Houses / Closed Lots 1-2 2 Meritage Model Homes (not released)
Lots 11, 13-19; 28-31 and 44-45 14 Meritage 95%+ complete (all in escrow) Lots 7-10; 20-27 and 46-48 15 Meritage Homes under const (8 in escrow) Lots 3-6; 49-50 and 78-79 8 Meritage Finished lots (Not released) Total Pomelo 108

INTENDED USE OF THE REPORT

It is the appraiser’s understanding that the client, the City of Riverside , will utilize this report in disclosure documents related to the sale of the special tax bonds of City of Riverside CFD No. 2015 -2. 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 each individually owned property or the entire developer owned property in a bulk sale, is less than six months.

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 wit h the exception of building permit and plan check fees.”

1 The Appraisal of Real Estate, 13th Edition
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 3
Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:

“The base market value of a new home. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home.

The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options or premiums.”

Mass Appraisal Technique
The term “Mass Appraisal” as used in this report is defined as:
“The process of valuing a universe of properti es as of a given date using standard methodology employing common data and allowing for statistical testing”
2 In the case at hand, the statistical testing included reviewing all original builder sales and reviewing the Multiple Listing Service (“MLS”) for any re -sales and/or current listings of each plan type. In addition, we have determined the actual range of sales prices for each plan type which will be utilized in the valuation process. The search of the MLS resulted in one re-sale and one current re-sale listing within the subject property.

Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis”

The Hypothetical Condition within this report is that the subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by Riverside CFD No. 2015-2.

2 USPAP 2018-2019 Edition
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 4
Extraordinary Assumptions
The term “Extraordinary Assumption” is defined by USPAP as:
“An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions”

There is one Extraordinary Assumption within this report which is that the sales information and the cost information as received from Meritage Homes are true and accurate. We have reviewed the sales information and the costs and they appear reasonable; however, we are not experts in the field of cost estimating. It should be noted that these costs were relied upon for the value conclusion and, if the remaining costs differ, it may change the value conclusion.

PROPERTY RIGHTS APPRAISED

The property rights being appraised are of a fee simple estate interest, subject to easements of record and subject to Riverside CFD No. 2015 -2. The definition of “fee simple estate” is defined as:
“absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”
3 EFFECTIVE DATE OF VALUE

The subject property is valued as of December 15, 2021.

DATE OF REPORT

The date of this report is January 31, 2022.

3 The Appraisal of Real Estate, 13th Edition
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 5

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, Riverside CFD No. 2015-2, which encompasses the community known as Pomelo by Meritage Homes located in the City of Riverside. Pomelo totals 108 proposed single-family detached homes which are in various stages of construction. This appraisal will be presented in the following format:
• County of Riverside Description
• City of Riverside Description
• Immediate Surroundings Description
• Brief Description of Riverside CFD No. 2015-2
• Subject Property Description
• Inland Empire Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analysis and Conclusion
• Appraisal Report Summary

In valuing the subject propert y, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sales prices of the comparables based on the elements of comparison. The Sales Comparison Approach may be used to value improved properties, vacant land or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparables is available.” 4 In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject that have recently been sold, are listed for sale or are under contract.

Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. In addition, we have utilized a mass appraisal technique which included reviewing all builder sales and searching the MLS for any re-sales and/or listings.

4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 6
The due diligence of this appraisal report included the following:

1. Compiled demographic information and related that data to the subject propert y to perform a feasibility/demand analysis.

2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro- and macro- economic outlook within Riverside County and the City of Riverside/Jurupa Valley area.

3. Inspected the subject propert y between November 20, 20 21 and December 15, 2021.

4. Had the site flown by an aerial photographer on December 17, 2021.

5. Interviewed r epresentatives from Meritage Homes in order to obtain project information.

6. Reviewed the Exchange Agreement from 2003 on the subject property.

7. Reviewed a preliminary title report on the subject property.

8. Reviewed soils and environmental reports prepared on the subject property.

9. Searched the area for relevant comparable residential land sales , inspected and verified each sale with a buyer or seller or broker familiar with the transaction.

10. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable project.

11. Reviewed the sales brochure and website for Pomelo.

12. Reviewed developer sales information on each home.

13. Reviewed Multiple Listing Service information to determine if there are any re-sales, pending sales or re-listings of existing homes.

REGIONAL AREA MAP

COUNTY OF RIVERSIDE AREA DESCRIPTION

Location
The subject property is located in the northwestern portion of Riverside County (the “County”) four miles south of the 60 Freeway and mid-way between the 91 Freeway and Interstate 15 (“I-15”) in the City of Riverside (“City”).

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 just south of the Santa Ana River, midway between the 91 Freeway and I-15 along both sides of Jurupa Avenue, about one-half mile west of Van Buren Boulevard in Riverside. I- 15 travels in a northerly/southerly direction about 4.5 miles west of the subject and provides access to Barstow and Nevada to the north and San Diego to the south. The 91 Freeway is generally in a southwest to northeast direction about 4.5 miles east of the subject and provides access into Los Angeles to the west and to the San Bernardino mountains to the north when it merges with Interstate 215 (“I-215”) I-215. The 60 Freeway runs in an east -west direction approximately four miles north of the subject providing access into Los Angeles County to the west and merges with Interstate 10 to the east which provides access across California and into Arizona.

The County is served by Amtrak and Metrolink as well as several rail /freight lines. The Ontario International Airport provides regional air service and is located approximately 10 _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 9
miles northwest of the subject property while the Orange County Airport is located approximately 25 miles southwest and the Los Angeles International Airport is located about 55 miles west. In addition, the County has extensive t rucking corridors along the previously referred to interstates, highways and state freeways.

Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2021 County population (latest available information) was 2.454 million. This represents a one- year increase of 0.6 percent. This compares to an average annual growth rate over the past ten years of about 1.0 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 2.821 million by 2030, indicating an average annual increase of approximately 1.45 percent over the next ten years. The current growth of 0.6 percent is lower than the previous ten- year annual average of about 1.0 percent likely due to the COVID pandemic, 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 pandemic. Original predictions were for deaths due to the virus overwhelming hospitals and staff. While the U.S. has lost over 700,000 lives due to COVID, 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. Unfortunately, new variants have emerged which have increased rates once again; however , thus far not to the extent of last winter with hospitalizations of vaccinated people significantly lower. 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 _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 10
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 34.8 percent in March 2020 (based on the Dow Jones Industrial Average, “DJIA”); however, as of December 17, 2021, the DJIA has shown an increase of 20.3 percent over the previous high in February 2020. The Federal Government attempted to curtail the job losses and hardships with the approval of the Coronavirus Aid, Relief and Economic Security (CARES) Act which was signed into law on March 27, 2020. The CARES Act appropriated over two-trillion dollars to people and businesses that were financially stunted by the COVID -19 pandemic. On April 9, 2020 the Federal Reserve took additional act ion to provide up to $2.3 trillion in loans to support the economy. Additionally, on April 23, 2020, Congress passed an additional $484 billion in relief for small businesses and hospitals. Over the summer of 2020 some business openings occurred. However, in the fall and winter of 2020 the pandemic surged and businesses shut down once again. In December 2020, the Federal G overnment passed an additional $900 billion in stimulus that included jobless benefits and additional dollars for vaccine distribution. I n March 2021 the new National Administration approved the American Rescue Plan Act which appropriated an additional $1.9 trillion in help to our nation for vaccine distribution and more economic relief for the pandemic. It appears these stimuli totaling $5.6 trillion in COVID relief to date have helped shore up the U.S. economy; however, due to the significant amount of new money, inflation is occurring.

While some 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 November 2021 National unemployment rate at 3.9 percent (California Department of Finance). At the beginning of 2021, California was a hot spot with COVID cases surging and Southern California was put under another stay-at-home order. However, since then the vaccine roll -out was quicker than anticipated and cases had declined substantially.

California “reopened” June 15, 2021. However, since then variants have caused concern with hospital cas es increasing for unvaccinated people and mandates once again _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 11
occurring. While the news in mid-2021 had been positive with the vaccination roll-out, the new variants and the winter surge have caused the State of California to institute a new indoor mask mandate for the next month, signaling the end of COVID is not yet here.

At the most recent forecast from the Congressional Budget Office ( July 1, 2021) they doubled their forecast for fiscal 2021 from 3.7 percent (projected in February 2021) to 7.4 percent economic growth. This was after the International Monetary Fund raised its projection for the GDP to grow 7 percent, up from their previous estimate of 6.4 percent.

The most recent forecast by the CBO includes a GDP growth projection of 3.1 percent in 2022 and 1.1 percent in 2023. It should be noted that these projections were as of the beginning of July, prior to the introductions of new variants of COVID.

Prior to the COVID-19 pandemic, the nation was experiencing a strong economy. 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 5.4 percent (as of November 2021 per the Employment Development Department). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during the COVID pandemic of 14.9 percent; however, this represents an increase from February 2020’s 4.0 percent, prior to the pandemic outbreak. As of November 2021, Riverside’s unemployment rate was 5.4 percent and San Bernardino’s unemployment rate was 5.5 percent. The current unemployment rate for the MSA of 5 .4 percent is the same as the California rate at 5.4 percent and significantly higher than the November 2021 National rate of 3.9 percent. Below is a table comparing Riverside County’s unemployment r ate to the unemployment rates of the surrounding counties as of November 2021.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 12
Jurisdiction As of Unemployment Rate*
Los Angeles County 11/21 7.1%
Riverside County 11/21 5.4%
San Bernardino County 11/21 5.5%
Orange County 11/21 4.1%
San Diego County 11/21 4.6%
Source: State of California E.D.D.; *Not Seasonally Adjusted

Over the past 25 years, the Riverside County 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 Riverside County 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 th e 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, beginning in May 2020 builders began looking for land and entering escrow on land purchases with residential land currently moving at a brisk pace. The exceptional activity in new home sales is thought to be due to several factors, including a tight re-sale 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 0 - 0.25 percent at the beginning of the pandemic, the Federal Reser ve Board (“Board”) began quantitative easing by buying 80 billion in Treasury Bonds and 40 billion in Mortgage- backed Securities each month. This has also helped shore up the national economy. At the latest board meeting at the beginning of November, the Board decided that the quantitative easing will begin to slowly taper beginning in mid-November. However, in December the _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 13
Chairman of the Board stated due to the high rate of inflation, the tapering may be quicker than originally planned.

During the Great Recession, the Federal Government attempted to correct the struggling economy by implementing several economic stimulus packages. The Board kept interest rates below historical averages, dropping rates to near zero in December 2008 until December 2015, when the Board began raising interest rates until December 2018 when the ninth increase appeared to affect the economy with home sales slowing and stock market volatility. Since then, interest rates dropped three times until the COVID pandemic when the Board dropped the rate 50 basis points due to the stock market reaction to the COVID pandemic and then again on March 16, 2020 when they dropped the rate another 100 basis points to the historical ly low level of 0 - 0.25 percent. Since the March decreases, the Board has left rates unchanged. The Board had previously mentioned that rates could stay low until 2023, however , once inflation began, it is thought that interest rates would begin to increase in 2022 . 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 .25 percent in December 2008. The current historically low rates have spurred home sales with the Inland Empire, which was identified as one of the tightest housing markets in the nation in October 2020. At the last meeting of the Federal Reserve Board on November 3, 2021, they elected to keep the rate at the 0-0.25 percent level. On December 15, 2021 the Federal Reserve chairman met with the Senate Banking Committee and due , to the inflation that is occurring, an accelerated timetable for Rate hikes is anticipated to occur with three R ate hikes now projected in 2022. This has caused some economists to warn of a possible recession by 2023.

The latest UCLA Anderson Forecast (“Forecast”) was issued September 29, 2021 and is less optimistic than the last two quarterly reports which projected robust growth. However, the Forecast acknowledges the historical reality that economic recoveries are never smooth. The September Forecast states the belief that previously projected blockbuster growth for both the U.S. and California has been tempered by the new COVID variants, slowing vaccin ation rates, consumer caution and supply constraints. The National Forecast states that the recovery heading into the final quarter of the year should be good _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 14
and solid rather than the previous blockbuster and spectacular growth predictions. Since June, vaccination rates have plateaued and the variant s spread quickly in both the U.S. and around the world. As a result, global supply chains continue to battle disruptions. Per the Forecast, the U.S. economy is down 5.3 million payroll jobs from its pre-COVID peak.

The current forecast is less optimistic with a 5.6 percent growth in 2021 (down from predicted 7.1 growth rate in June), followed by GDP growth of 4.1 percent in 2022 and

3.1 in 2023. This represents a shifting of growth into the future rather than in the next year or two.

The Forecast for California is still under the shadow of the COVID pandemic. While the Forecast assumes COVID variants will create less serious economic impact, the memory of the variants are spooking consumers creating a slower return of consumption behavior that previously predicted. In California the COVID recession and recovery has hit lower income Californians disproportionately exacerbating inequality in the State. The California Forecast still predicts the state recovery to eventually outpace the U.S. recovery; however, due to the stricter public health interventions, the State’s recovery has been delayed. The Forecast predicts the transition to new ways of work and new ways of social interaction will disproportionately benef it California through its technology sectors. The leisure and hospitality sector (generally lower income workers) will be the last to recover due to the depth of its decline. The Forecast predicts the recovery will occur considerably faster in high-income technical services and faster in residential construction due to the State’s shortage of housing relative to demand.

Per the California Forecast, California’s unemployment rate for the third quarter of this year is expected to average 7.2 percent (currently 5.4 percent), with the anticipated average for 2021, 2022 and 2023 being 7.6 percent, 5.6 percent and 4.4 percent, respectively. In spite of the pandemic, the continued demand for a limited housing stock, coupled with low interest rates, has led to a relatively rapid return of home building. They are forecasting 123,000 new housing units in California in 2021, growing to 139,000 new units in 2023.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 15
According to John Husing’s most recent Inland Empire Economic Report dated October 2021, the Inland Empir e, along with the State and the Nation, is going through a most unusual year. The pandemic downturn was severe and second only to the Great Depression. However, Husing states that the combination of 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 recoveri ng 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 even 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 new work-from-home factor has made non- homeowners realize they can afford a house further outside of the economic areas while they work and buying a home in a more affordable, suburban area makes sense if they don’t have to drive to the office each day. The need for home offices combined with the overall stress on social distancing has incentivized city dwellers to move out of denser urban areas into more suburban neighborhoods with more space.

The minimal existing home inventory, coupled with these factors has put pressure on pricing with new homes prices in the Inland Empire increasing well over 10 percent year- over-year. This will be discussed further in the Inland Empire Housing Market section later within this report.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 16
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. This is especially important for the Inland communities as it represents much of the growth in development of West Coast distribution centers an d warehouses linked to supply-chain nodes in the Pacific Rim. The chart below shows TEU activity at the Ports of Los Angeles and 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 November 2021, year to date TEU’s were running over 18 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 which has created supply-chain issues.
.

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 Supervisors enact ordinances and resolutions, adopt the annual budget, approve contracts and appropriate funds, determine land use zoning for unincorporated areas, and appoint certain County officers and members of various boards and commissions. The Board of Supervisors is elected from five different districts within the County.

Education
The Alvord Unified School District (“AUSD”) serves the subject area. AUSD operates 13 elementary schools, four middle schools, three high schools and two continuation High

4.0 5.0

6.0 7.0

8.0 9.0

10.0 11.0
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 TEU's (millions)
Year
Port of Long Beach TEUs
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 17
Schools. The subject is served by Terrace Elementary School (0.5 mile south), Loma Vista Middle School (1.75 mil es southwest and Norte Vista High School (0.5 miles southwest). 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 college is Riverside City College about five miles east of the subject, near the 91 Freeway.

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 20 months 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 low interest rates. Current concerns in the Inland Empire Housing Market include the duration of the pandemic along with supply chai n disruption. 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. _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 18

CITY OF RIVERSIDE DESCRIPTION

The subject property is located in the northwestern portion of the City of Riverside (“City”),

4.5 miles west of the 91 freeway ; 4.75 miles east of I -15 and 4.0 miles south of the 60 Freeway. The City incorporated on October 11, 1883 and is located 50 miles east of Los Angeles and 100 miles north of San Diego. Riverside is the 12th largest city in California by population, 6 th in Southern California and the largest geographical city in Riverside County with a present land area of approximately 81 square miles. Originally an agricultural (citrus) center, the City has evolved into a commercial and governmental center as the City is the County seat. Riverside is surrounded by the cities of Norco and Corona to the west, Jurupa Valley and unincorporated Riverside County to the north, the City of Moreno Valley and unincorporated areas of Riverside County to the east and unincorporated areas to the south. The City is made up of several neighborhoods with the subject being located in the neighborhood of Arlanza, which is bounded by the Santa Ana River Wildlife area to the north, La Sierra Acres to the west, La Sierra to the southwest, Arlington and Ramona to the southeast and the Airport neighborhood to the east.

Population
The City has an estimated population of 324,302 per the California Department of Finance as of January 1, 2021 which is a decrease of 1.4 percent from the previous year’s estimate of 328,766. The decrease is thought to be partially due to irregularities affecting the population count during the COVID pandemic . The following chart depicts population growth in the City.

Year

Population
Avg. Annual
% Increase
1960 84,332 ---
1970 140,089 5.2%
1980 170,876 2.0%
1990 209,700 2.1%
2000 262,744 2.3%
2010 303,871 1.5%
2020 328,766 0.8%
2021 324,302 -1.4%
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 20
The slowdown in the past twenty years is due to the essential build-out of the City coupled with the Great Recession. When averaging the past 11 years, the average growth rate of 0.6 percent compares to the of County average annual growth rate over the past ten years of 1.0 percent . The higher County rate is due to the better availability of land for development outside of the City limits.

Housing
Per John Husing’s Third Quarter 2021 Economic Report, the City has an existing home median price of $567,688 which represents an increase of 9.7 percent year -over-year and a new home median price of $694,055 which represents an increase of 11.0 percent year-over-year. This compares to third quarter 2021 County median pricing of $540,750 for an existing home and $529,250 for a new home. The higher existing median home price in the County is due to smaller and attached homes being built and sold in 2021 as compared to larger homes on larger lots in the existing home cat egory. The City of Riverside is generally built-out with limited open spaces to be developed. New homes will be on in-fill lots (such as the subject) or in redevelopment areas.

Economy
The economy and labor force for Riverside have changed with growth. Historically hailed as the citrus capital of the world, Riverside has evolved into the business and industrial center of the Inland Empire. There are well over 100 manufacturing firms in the community. Leading group classes or products are aerospace and electronic components; mobile homes and RVs; printing, publishing and foam products.

Additionally, the City offers an impressive choice of industrial sites and buildings.

The labor forc e is divided generally between the manufacturing, retail, services, and construction trades; however, the construction trade slowed considerably along with the housing market slowdown during the Great Recession. There are abundant skilled and semi-skilled workers in the local labor pool with a variety of skills. The past two years has seen a resurgence of the construction trade due to new homebuyers taking advantage of the low interest rates while wanting to get out of the more urban areas. The City houses the County seat which creates a financial and professional center offering the support of _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 21
numerous legal, accounting, brokerage, architectural, engineering and technology firms as well as banking institutions. Businesses in the City also benefit from the exceptional freeway system, rail access, high -speed fiberoptic telecommunications, city -owned electrical and water systems, and a corporate jet and general aviation airport.

The 20 21 estimated average median household income is $73,552 as compared to $73,260 for the County, $ 75,235 for the State and $79,900 for the U.S. The City of Riverside’s major employers include the County of Riverside, University of California Riverside, March Air Force Reserve, Kaiser Permanente, Riverside Unified School District, the City of Riverside.

Transportation
Riverside is well served by the California freeway system, being bisected by the 91 Freeway and 60 Freeways and by Interstates 10 and 15. The 91 Freeway connects Riverside to Orange County on the southwest and to San Bernardino County on the northeast. The SR-91 is one of the area’s busiest freeways with a substantial amount of congestion in the westbound direction during the morning hours and in the eastbound direction during the evening hours. This is due to the n umber of commuters living in Riverside County and employed in Orange and Los Angeles Counties. Two toll roads (the SR-91 express lane and SR-241) opened during the latter half of the 1990s that help alleviate the traffic congestion. I-15 connects Riverside to San Diego County to the south and San Bernardino County to the north. I-10 connects Riverside to Los Angeles County to the west, while I-215 skirts the eastern edge of the City and generally parallels I -15 to the east.

The City is served by the Met rolink Rail with northwest routes to Los Angeles Union Station, passing through Riverside County, Orange County and into Los Angeles, along with southern routes to Oceanside which pass through Riverside County, Orange County and into San Diego County. At both Union Station and Oceanside, you can transfer to Amtrak which has routes throughout the United States. The Burlington-Santa Fe and the Union Pacific Railroads along with over 20 daily truck carriers serve Riverside. Ontario _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 22
International Airport is 19 miles to the northwest and is served by most major airlines. The Riverside Municipal Airport serves general aviation and is located eight miles from the subject.

Conclusion
In summary, the future growth of Riverside should parallel that of the County, albeit at a lower rate due to the limited availability of land for development within the City limits. The location of the City with easy access due to the freeways and interstates, along with being the County seat has established Riverside as a continuing and prospering City for the future.
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 23

IMMEDIATE SURROUNDINGS

The subject property is located along both sides of Jurupa Avenue at the northern most portion of the Arlanza neighborhood of Riverside. Arlanza is generally bounded by the Airport and Ramona neighborhoods and generally Van Buren Boulevard on the east; the La Sierra and Arlington neighborhoods to the south; the La Sierra Acres neighborhood and generally Tyler Street to the west and the Santa Ana River (also the City limits) to the north. Arlanza contains a mix of nearly every type of land use found in the City from semi- rural homesites to high density apartments, industrial development along Arlington Avenue and commercial uses along Van Buren Boulevard.

The subject property is bounded by the Santa A na River to the north and existing residential land use t o the east, south and west. The site was originally a sewage treatment plan for a U.S. Army camp. The treatment plant was decommissioned in 1965 and the site was slated for an agricultural park in 1980 when it was owned by the City.

However, as development of surrounding lands occurred, Rutland Park was built diagonally southeast of the subject across Jurupa Avenue and the Agricultural Park was no longer needed.

We have reviewed the Exchange, Disposition and Development Agreement (“Agreement”) between the City of Riverside, Friends of the Riverside Airport LLC (previous owners of the subject property), the Van Buren Golf Center LLC and Riverside Gateway Plaza dated May 23, 2003. The Agreement allows for residential development on the subject site which is known in the Agreement as the Ag Parcel. At that time the City also approved Tentative Tract Map No. 28987 on the site which allowed for 113 single family detached lots.

The Riverside Airport is one mile southeast of the subject site. It is the appraiser’ s understanding that the Airport Land Use Commission has approved the subject development. The subject property is on a knoll above the Santa Ana River with a wash along with west side, allowing for views from some of the homes.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 24
Access from the 91 Freew ay is via either Central Avenue or Arlington Avenue or Tyler Street. Schools are close by with Terrace Elementary School and Norte Vista High School within 0.5 miles of the subject property and Loma vista Middle School within about two miles.

Shopping is available within 1.5 miles at Arlington Plaza and Van Buren Plaza, both at the intersection of Cypress and Van Buren Boulevard located 1.25 miles southeast of the subject and at a Stater Bros anchored center at Arlington and Tyler Street , located 0.75 miles southwest of the subject site.

We have reviewed the Community Facilities District Report for the City of Riverside CFD No. 2015-2 (Pomelo) prepared by Webb Municipal Finance dated December 2020 (“CFD Report”). The CFD Report provides a description of the Proposed Development, a brief description of the Facilities/Improvements and Services for CFD No. 201 5-2, a brief description of the facilities to be funded, a brief description of the boundaries and an estimate of the cost of financing the bonds used to pay for the facilities. The CFD Report refers to Resolution Number 23635 which was adopted October 27, 2020 by the City of Riverside which ordered the CFD Report.

The proposed development per the CFD Report is 108 units within Tract 28987 ranging from 1,910 to 2,948 square feet and containing approximately 31.45 gross acres located in the City of Riverside, west of Van Buren Boulevard, between Crest Avenue and Rutland Avenue.

The Facilities include the construction, purchase, modification, expansion, rehabilitation and /or improvement of water and wastewater, drainage, flood and storm protection facilities, signage, streets and roadways, traffic signals, street lighting, and parks and recreation facilities (the “Facilities”) and all appurtenances and appurtenant work in connection with the foregoing Facilities, and incidental expenses to be incurred in connection with the Facilities. The Services which may be funded with proceeds of the special tax include: Maintenance of parks, parkways, park lighting, sidewalks, signage, landscaping in public areas, easements or right of way and open space; flood and storm protection services; the operation of storm drainage systems; maintenance of streets and roadways and traffic signals; graffiti and debris removal from public improvements; public safety services including police, fire protection and fire suppression; and, maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City of Riverside. In addition to payment of the cost and expense of the foregoing services, proceeds of the Special Tax B may be expended to pay “Administrative Expenses” as said term is defined in the Rate and _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 26
Method of Apportionment and to establish an operating reserve for costs of services as determined by the Administrator.

Incidental Expenses to be paid from bond proceeds and/or Special Taxes include: all costs associated with the creation of CFD No. 2015- 2, the issuance of bonds, the determination of the amount of Special Taxes to be levied, costs otherwise incurred in order to carry out the authorized purposes of CFD No. 2015- 2, including legal fees, fees of consultants, engineering, planning, designing and the annual administration cost of CFD 2015-2.

Per the CFD Report, t he cost estimate including incidental expenses to be financed through the issuance of CFD No. 2015- 2 Bonds is estimated to be approximately $4,290,000 (fiscal year 2020/21 dollars) with a project fund of $3,535,056.

Per the latest Sources and Uses (dated February 24, 2022) the current estimated bond par amount is $5,125,000 with a premium of $259,363 . The project fund deposit is $4,725,021 with capitalized interest of $84,146 and the debt service reserve fund of $328,200. The underwriter’s discount and cost of issuance is $246,996 for a total bond uses amount of $5,384,363 (all amounts subject to change). _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 27

SUBJECT PROPERTY DESCRIPTION

The subject property consists of the community known as Pomelo by Meritage Homes.

The properties are shown on the below site plans and described in detail below.

Location: Both sides of Jurupa Avenue, generally west of Biscayne Avenue, Riverside, California
Legal Property
Description: Lots 1 thru 11 and 13 thru 109 of Tract Map No. 28987, City of Riverside, County of Riverside, State of California.

Property Owner: Lots 32-43, 51-77 and 80-109 of Tract Map No. 28987 are owned by individual homeowners. Lots 1- 11, 13-31, 44-50 and 78-79 of Tract Map No. 28987 are owned by Meritage Homes of California Inc.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 28
Assessors
Parcel Nos.: 155-470-01 thru 11 and 13 thru 39; 155-471-01 thru 18; 155-480-01 thru 10; 155- 481-01 thru 12; 155- 482-01 thru 26; and, 155- 483-01 thru 04.

Property Taxes: We have reviewed the property tax bill for APN 155- 470-02 which houses one of the model homes. Per the tax invoice, the house is assessed for fiscal year 2021- 22 at $443,517 and has an overall property tax bill of $8,846.70 which includes $4,435.16 for the general purpose, $744.14 for Debt ($15.52 for MWD West, $640.93 for Alvord Unified School, $65.20 for Riverside City C ommunity College and $22.49 for City of Riverside. The invoice has $3,667.40 for Special Assessments including $3,282.00 for Riverside CFD No. 2015-2 (subject CFD ), $9.22 for MWD Standby West, $3.74 for stormwater/clean water, $10 for Riverside Stormwater, $31.44 for Riverside Lighting District, $19.00 for Riverside Library and $312 for the Riverside CFD 2015-2 services component. The overall effective tax rate equates to approximately 1.99 percent based on the fiscal year 2021-22 assessed value. This is a typical effective tax rate for new homes within a Community Facilities District.

Three-Year
Sales History: Meritage Homes of California, Inc. purchased the 108 subject lots in four take-downs. The first occurred on June 29, 2020 and was for 35 lots; the second was September 30, 2020 and included eleven lots; the third was April 23, 2021 and included 42 lots and the fourth and final takedown was October 5, 2021 and included 20 lots. The purchase amount on each transaction has been retained in our files for confidentiality purposes. Homeowners have closed escrow on 69 of the completed homes between December 18, 2020 and
December 15, 2021. As of December 15, 2021, t here are an additional 22 homes in escrow which are due to close upon home completion.

Size and Shape: The subject parcel is irregular in shape and contains a n estimated

47.54 gross acres per the dimensions on Tract Map No. 28987.

Zoning: On July 8, 2003, the City Council approved a General Plan Amendment (Planning Case P030086) to apply Medium Density Residential General Plan land use on the subject site as well as a Rezoning (Planning Case P03- 0042) to establish R -1-7000 zoning on the subject site.

Entitlements: Tentative Tract Map 28987 was approved via Planning Case P03- 0041, also on July 8, 2003. The map was caught up in litigation and environmental issues which appeared to be resolved in 2014 (City Council Memorandum June 24, 2014) and was recorded July 8, 2014. Tract Map 28987 subdivided approximately 47.54 vacant _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 29
gross acres into 113 single- family residential lot s. However, Lot 12 was vacated for a future internal street and lots 110- 113 have been annexed into a future tract, leaving 108 lots wi thin the subject property.

Topography: The site is generally level at Jurupa Avenue; however, the site sits on a knoll above the Santa Ana River. In addition, there is a wash along the west side of the subject site creating a ravine between the homes and Crest Avenue. There is an engineered drainage system within the subject property with drainage going into an underground street system with curbs and gutters.

Soils Condition: We have received a geotechnical report to review prepared by SID Geotechnical of Riverside, dated December 4, 2002. The report is a Preliminary Soils Investigation Report for Tentative Tract Map 28987. The report concluded that the proposed development was feasible if their recommendations were adhered to during construction. In addition, we have received an Update Letter prepared by Exploration Company, Inc. dated October 3, 2013 which updated several soils reports (2002 SID Report; Soils Exploration 2006 Reports, and 2013 Adkan Rough Grading Report) which states in general, the conclusions and recommendations stated in the 2002 Report remain pertinent in 2013.

It is an assumption of this report that the soils are adequate to support the highest and best use conclusion. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Seismic
Information: The subject property is not located in a designated Earthquake Study Zone (Alquist-Priolo Earthquake Fault Zone) as determined by the State of California and there are no known active faults crossing the site.

Environmental
Concerns: We have reviewed Phase I, Phase II and Phase III Response Plan Implementation Reports prepared by TRC of Irvine, California, dated June 2010, March 2014 and May 2018 respectively. The reports are in response to the need to remove and dispose of s oils which contained primarily polychlorinated biphenyls (PCBs) that were a result of the site being a sewage treatment Plant from 1947 until 1965. The three reports state what activities (generally soil removals) were completed on the site in order to rem ove the PCBs over the three-phase process over the eight-year period. The Phase III Report states, based on their finding, TRC recommends no further investigation or clean-up be required on the site.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 30
We have also reviewed a Certificate of Completion, California Land Reuse and Revitalization Act Agreement for the site prepared by the California Department of Toxic Substances Control (DTSC). This letter states the DTSC found all response actions were satisfactorily completed as of April 1, 2014.

It is a n assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Flood Information: Per FEMA M ap No. 060 65C0705G dated August 28, 2008, the property is shown as in Zone X, areas determined to be outside of the 0.2 percent annual chance floodplain.

Easements and
Encumbrances: We have reviewed two title reports which were received on a portion of the subject property. The first is Order Number 5860939- 3 dated March 26, 2021 and covers Lots 11, 13, 13- 19, 28-45 and 51-66 of Tract Map 28987. The exceptions are as follows:

Item Nos. 11, 1A, 2, 2A and 3 all refer to property taxes and special assessments including the subject Riverside CFD No. 2015- 2. Item Nos. 4, 5 and 6 refer to easements for avigation (air – right of flight), construction and maintenance of electric energy and for a sewer.

Item No. 7 refers to the S ubdivision Improvement Agreement recorded on the site. Item No. 8 pert ains to an option in favor or Meritage Homes (at time of report the property was owned by the seller) and Item No. 9 refers to any statutory lien for labor or materials arising by reason of work of improvement now in progress or recently completed as disclosed by an inspection.

The second report is Order No. 5860939-4 and is dated July 25, 2021 and covers Lots 4- 10, 20- 27 and 46- 50 of Tract N o. 28987. The exceptions are as follows:

Item Nos. 1 -4 refer to property taxes and special assessments including the subject Riverside CFD No. 2015-2. Item 5, 6 and 7 refer to easements for a storm drain, construction and maintenance of electric energy and avigation (right of flight). Item No. 8 pert ains to the Subdivision Improvement Agreement recorded on the property.

Item No. 9 refers to the option in favor of Meritage Homes (at time of report the property was owned by the seller) and Item No. 10 to any statutory lien for labor or materials arising by reason of work of improvement now in progress or recently completed as disclosed by an inspection.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 31
While the exceptions appear typical, i t is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than Riverside CFD No. 201 5-2. The appraisers are not title experts and it is recommended that any concerns relating to title should be addressed to the appropriate experts.

Other Hazards: The subject property is located about one mile northwest of the Riverside Municipal Airport, a city owned airport that is the 24 th
busiest airport (out of 224 airports) in the country with FAA contract towers. The Airport is an education hub providing the Inland Empire and surrounding counties with the largest selection of educational programs in flight, mechanical and aviation degree programs. The airport/City leases 140 hangars to pilots in the area. According to the current Riverside Municipal Airport Compatibility Factors Map, the subject property is located within Zone C which allows for residential densities ranging from 0.4 to 2.0 dwelling units per acre. The subject has a slightly higher density of 2.27 dwelling units per acre.

According to the previous property owner, the project was approved prior to the current Compatibility Factors Map and was consistent with the 1998 Compatibility Plan which was the controlling document at time of the project approval in 2003. In 2007 the Airport Land Use Commission (“ALUC”) was asked to reconsider the inconsistency determination on the adjacent tract map (Tract 31541) and did give notice that the pri or inconsistency determination to the adjacent project should be treated as withdrawn due to the existence of a previous development agreement. The letter from the ALUC to the City Planning Director dated July 12, 2007, states that the ALUC has significant concerns regarding the density of the adjacent project in light of its location relative to aircraft traffic patterns of the Riverside Municipal Airport and states the project will expose its residents to an unacceptable level of safety hazards and noise . A notice is required to be given to each homebuyer in the adjacent Tract Map 31541. The appraiser is not an expert in such matters and refers the reader to the Addenda of this report for copies of the staff report , notice given to homebuyers of adjacent property and Airport Land Use Commission Riverside County letter. It is an assumption of this appraisal that the location of the airport does not harm the subject site. This is evidenced by the sales and closings of homes within the subject and suggested by the existence of residences surrounding the subject site.

Per the California Fire Hazard Safety Zone Map, the subject property is located within a Local Responsibility Area (LRA) and is not designated in a Fire Hazard Safety Zone.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 32
Utilities: All nor mal utilities are available to serve the subject site by the following companies:

Electrical: City of Riverside Public Utilities
Natural Gas: So. Cal Gas Company
Sewer: City of Riverside Public Works
Water: City of Riverside Public Utilities
Cable/Internet: A T & T
Schools: Alvord Unified School District

Streets/Access: Access to the subject property is via the 91 Freeway to Central or Arlington Avenues, exit west four miles on Central to Van Buren, north about 0.25 miles to Jurupa and west about 0.5 miles to the subject property. From Arlington Avenue exit west to Tyler Street, north to Jurupa Avenue and east 0.25 miles to the subject property.

91 Freeway is an northeast/southwest freeway providing access from the County of Los Angeles to the west through Orange County and through Riverside into San Bernardino County where it combines with Interstate 215 north of the subject property.

Central Avenue has on/off ramps at the 91 Freeway and provides east west access through the subject area of the City of Riverside.

Central is a commercial corridor and terminates at Van Buren Boulevard about 0.5 miles south of the subject.

Arlington Avenue in Riverside is a main east/west arterial with on/off ramps from the 91 Freeway. East of the 91 Freeway Arlington provides access into the Victoria area of Riverside. Arlington Avenue also is the main access to the Riverside Airport.

Jurupa Avenue is an east/west access street through commercial, industrial and residential areas. To the west Jurupa begins at Tyler Street (about 0.5 miles west of the subject) while to the east it merges into Olivewood about five miles east of the subject.

Internal streets within the subject property ha ve a Dodger Baseball theme with Clemente Court, Drysdale Street, Mantle Street, Lasorda Court and DiMaggio Street.

Current Condition: The subject property has been graded and developed into 108 single-family lots. Streets are all completed with utilities stubbed to each lot. There are 85 lots with homes over 95 percent complete including 69 individual owned homes, two models (not yet released) and 14 production homes (all in escrow) . The re are 15 additional homes under construction ( under 95 percent complete with eight in escrow) and eight remaining finished lots (not yet released). _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 33

Cost to Complete: Residential lands in the area are typically sold on a “finished lot” basis. That is, builders pay a finished lot price less the remaining development costs that will need to be expended to arrive at a “finished lot”. Per Meritage Homes, the remaining land development costs and fees for Pomelo are $1,087,960. These include remaining land developmen t fees and hard costs . The remaining land development costs are associated with all of the builder -owned properties or with 39 lots (two models, 14 homes over 95 percent complete, 15 homes under construction and eight remaining lots) resulting in an average amount per lot of $ 27,896.41 ($1,087,960 / 39). The costs as reported by the builder appear to be reasonable ; however, we are not experts in the field of cost estimating. It is an Extraordinary Assumption of this report that the remaining costs are true and accurate.

Improvement
Description: Riverside CFD No. 2015-2, known as Pomelo, is proposed for a total of 108 single-family detached homes being built out by Meritage Homes. Meritage Homes opened Pomelo for sale in August 2020 and has sold 91 homes to date. The sales rate suggests an average rate of 5. 7 homes per month. The homes have Spanish and California Cottage influenced architectural styles. Home exteriors include concrete tile roofs, attached two-car garages, sectional roll- up garage doors and exterior lighting. Interiors include indoor laundry rooms, walk in closets , tankless water heaters , raised panel doors and LED downlights. Gourmet kitchens with islands include solid stone countertops and backsplashes, stainless steel appliances and maple cabinetry. Meritage Homes also advertises their homes as Energy Star Certified which delivers significant savings on utility bills compared to older homes and the Meritage Connected Home Automation Suite which includes an advanced thermostat, smart door locks, smart garage door openers and USB outlets. Pomelo has four plans, one single-story and three two-story.

We have reviewed sales information from the builder which included 91 homes sales between September 4, 2020 and December 15, 2021. Per Meritage Homes , actual sales prices ranged from $507,715 to $697,140. These prices include upgrades, options and premiums along with concessions offered by the builder. At grand opening in August 2020, base pricing for Pomelo was $4 75,000 to $535,000 while current base pric ing ranges from $594,000 to $650,000. Per our review of the Multiple Listing Service there has been one re-sale of a home in Pomelo and there is one current listing of a re-sale. Out of the total 108 proposed houses, 69 have closed escrow to individuals, there are two model homes owned by the builder ( not yet released) , 14 production homes over 95 percent complete ( all in escrow), 15 houses under construction which are _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 34
under 95 percent complete ( eight in escrow) and eight remaining finished lots.

Plan

Room
Count

Floors/
Parking

Sq.

Ft.

Completed
Ind.

Owned
95% Complete
Bldr.

Owned
1 4 / 2 1 / 2 1,910 13 3
2 4 / 3 2 / 2 2,320 14 3*
3 4 / 3 2 / 2 2,771 19 5
4 5 / 3 2 / 2 2,948 23 5*
Total 69 16
*One of each of these plans is a model home. In addition to the above shown houses, there are 15 homes under construction and 8 finished lots. _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 35

RIVERSIDE COUNTY HOUSING MARKET

In analyzing the area’s housing market, population growth and economic conditions need to first be considered.

Population
The County population grew at a 0.6 percent increase over the past year and an average of 1.0 percent the previous ten years. This compares to an approximate 2.5 percent average annual increase prior to the Great Recession. The slowdown in population growth this past year is partially due to the COVID pandemic while the slowdown over the past ten years is primarily due to the sluggish national economy after the Great Recession; however, this slowdown is similar to other Southern California counties during this time period. County predictions are for the County to grow at an average annual rate of 1.4 percent over the next ten years. This equates to an increase of approximatel y 35,000 residents per year, suggesting the need for about 10,000 homes per year within the County. The large scale COVID -19 influence is still unknown on the County’s population growth. New home sales in the County are recently higher than the coastal communities due to affordability, the work from home factor and millennials finally entering the housing market which may increase County population growth.

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 between 2004 and 2009 was considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equity. After essentially remaining flat for a few years, housing prices began to increas e in late 2012 through January 2020. Once the COVID pandemic hit in March 2020, the housing market seemed to slow down significantly in March but by May 2020 new homes were once again going _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 36
under contract with new homes selling at above average absorption rates from May 2020 into December 2021 in the region.

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 unemployment rate for the County was 5.4 percent (per the November 2021 Employment Development Department “EDD” report), lower than the high of 15.1 percent in July 2010. The November 2021 County rate was the same as the California unemployment rate, but was higher than the November 2021 National rate of

3.9 percent. The pre-COVID unemployment rate in February 2020 for the County was 4.1 percent. According to CNN Business, as of the beginning of November 2021 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 ends, the Nation will get back to the previous highs, it is now looking like there may be some changes in the post-COVID economy. These changes include many companies switching to work-from-home for their employees whenever possible, on- line shopping will be 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 75 percent 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.

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 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 _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 37
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.

Thus far into the COVID recession, new home sales have been one of the brightest spots in the local and National economies . While new home sales slowed in March an d 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 they 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 N ation (OC Register October 10, 2020) based on the supply. The supply of homes in the Inland Empire is still constrained and as of the end of March 2021 was 40 percent below one year-ago levels. This has put pressure on prices to rise. As of mid-November, over 91 percent of new home builders in the Nation were stating pricing has increased over the past month. However, there are signs that a price ceiling may be being reached. Per Metrostudy’s survey of homebuilders, their largest concerns relate to (1) availability of materials; (2) cost of materials and land increasing; (3) affordability for buyers; (4) labor shortages; and, (5) delay on government services.

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, despite historically low mortgage rates. The Board had kept interest rates below historical averages , dropping rates to zero in December 2008.

Subsequently, t here had been eight subsequent 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 _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 38
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 Boar d reduced the Federal Rate one- half percent. Then on March 16, 2020 they reduced the rate an additional one percent to the current 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 December 30, 2021 was 3. 11 percent, which is below the previous low of 3.3 percent which occurred in January 2013, however higher than the most recent low of 2.65 percent on January 7, 2021. Mortgage applications have been spiking due to these low rates.

Most economists are predicting that, once the economy gets back to full speed, the lower interest rates will help the housing market bounce back with some now stating that the housing market has more of a V -shaped recovery while the overall economy which is following more of a U-shape or swoosh-shape. With the variants of COVID surging again, it looks like this pandemic economic disruption will be longer than originally forecast, however this does not seem to be affecting the new home market in the Inland Empire.

While existing home listings slowed during the pa ndemic in California, new home sales have been substantially increasing.

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 appears to be fueling inflation with the May through November 2021 National inflation rates all above 5.0 percent compared to a 1.2 percent average in 2020. 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 begun tapering off their purchase of bonds. Since June 2020, in order to help stabilize the economy, the Board has purchased $80 billion in Treasury Bonds and $40 billion in Mortgage Securities each month. At the November Board meeting, the decision was to reduce the bond purchases to $70 billion in Treasury Bonds and $35 billion in Mortgage securities per month. The monthly purchase of $40 billion in mortgage-backed securities since June 2020 has fueled the already active home buying and refinancing markets . _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 39
While there hasn’t been another Federal Reserve Board Meeting, at the Senate Banking Committee meeting December 15, 2021, the Federal Reserve Chairman stated that, due to inflation, they may have to taper off the bond buying more quickly than anticipated and may accelerate the timetable for interest rate increases. Board increases in interest rates could affect mortgage rates, thereby affecting new homebuyers’ willingness and/or ability to pay the current high prices for new homes in the Inland Empire.

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 Ontario, Eastvale, Jurupa Valley, Corona and Riverside in the subject’s area.

The increase in housing prices since 2012 coupled with the limited availability of supply made land development feasible once again for homebuilders. It is thought that the increase in regulations, which has significantly increased the time of process ing entitlements, has limited the master developers ’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to builders, there are few currently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to record (such as the subject property) or a public builder buying a larger piece of land but develops the land for its own use. Land sales slowly grew from 2012 up to a peak in 2017 with 2018 and 2019 showing lower land transactions. Since then, residential land sales have eclipsed the 2017 peak as builders are trying to keep up with the demand for new homes. With new housing appearing to be one of the strongest sectors in the COVID economy, there appears to be a rebound in new-home starts. It is possible that the rush to build by the new-home builders in the Inland Empire may create a slower 2022/2023 in residential land sales. That is, residential land is selling exceptionally well thus far into 2021 but that may be pulling future demand forward creating a softening in the land market in the future.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 40
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 December 12, 2021 Ryness Report (a real-estate reporting company), the average year to date sales are five percent higher than the previous year however, when reviewing December 2019 to December 2021 (prior to pandemic and since the pandemic), sales increased 37 percent.

This increase is partially slowed due to the limited available supply which was not meeting demand, thus put pressure on pricing along with historically low interest rat es. As rates go down, purchasing power becomes larger, which gives new -home buying a boost. A t the beginning of the fall season, it ap peared sales were seeing a slight slow -down with some builders dropping pricing in order to keep absorption up. The slowdo wn in September suggested that a peak in pricing may have been reached. H owever, it is still too early to tell , as sales typically slow down in the fall after the spring/summer home selling season. November reports have been strong, possibly from predictions of rates rising in 2022 meaning homebuyers are entering the market now. 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. H owever, new home projects have decreased since that time to 192 new home projects per the December 12, 2021 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. Below is a graph showing Riverside County new home sales (both attached and detached SFR) between 2002 and 2020. T his compares with Riverside County’s population growth suggesting the need for about 10,000 new residential units per year _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 41
while 2020 reflects 8,867 new home sales in the County. This suggests that supply of new homes is still not meeting demand.

Source: John Husing Quarterly Reports / Zonda

New single -family home prices (combines both attached and detached) in the Inland Empire have 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 $ 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 our search for the most comparable actively selling new home communities, we searched the subject’s city of Riverside as well as neighboring city of Jurupa Valley. Our search for comparable new home projects within the competitive market area resulted in six new home projects including the subject, with overall base pricing ranging from 17,544
20,113
22,935
24,467
15,575
9,824
4,947
4,346
3,575
3,233
3,639
4,449
4,500
4,899
5,178
4,928
5,379
6,002
8,867
0 5,000
10,000
15,000
20,000
25,000
30,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
No. of Sales
Year
New Home Sales in Riverside County
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 42
$572,350 to $8 60,000. The subject’s current base pricing ranges from $59 4,000 to $650,000 with all plans within the range of the competition.

Existing Homes Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in the Inland Empire. According to the California Association of Realtors’ most recent data, within overall Southern California, the median price paid for an existing single-family home in November 2021 ($750,000) is the same as the previous month , however up 14.0 percent year -over-year from $ 657,820 in November 2020. Existing home sales in Southern California overall were down 3.8% percent year-over-year as of November 2021. While it looks like a decrease, sales are substantially up from 2019 sales. Low interest rates have been allowing existing home owners to move up. The overall Southern California numbers com pare to Riverside County with $586,900 as the median price paid for an existing home in the County in November 2021, up 1.2 percent since October 2021, and up 19.8 percent on a year-over-year basis ($490,000). Sales of existing homes in the County were dow n 6.8 percent year-over-year. The decrease in sales is mainly due to less inventory of existing homes. Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.

Southern California Existing Home Sales
County Nov. 2021 Oct. 2021
Nov.
2020
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $769,500 $848,970 $673,310 -9.4% 14.3% 1.8% Orange $1,150,000 $1,120,000 $930,000 2.7% 23.7% -12.7% Riverside $586,900 $580,000 $490,000 1.2% 19.8% -6.8%
San Bernardino $440,000 $445,000 $380,250 -1.1% 15.7% 0.5% San Diego $847,750 $850,000 $740,000 -0.3% 14.6% -6.6%
Ventura $858,500 $830,000 $760,000 3.4% 13.0% -1.0%
Southern Calif. $750,000 $750,000 $657,820 0.0% 14.0% -3.8% Source: California Association of Realtors

Based on November 2021 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 $182,600 as compared to Los Angeles County, $260,850 as compared to San Diego County, $271,600 as compared to Ventura County and $563,100 as compared _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 43
to Orange County. That is, in November 2021, the median priced home in Riverside County was $563,100 less (49 percent less) than the median priced home in Orange County ($1,150,000). However, San Bernardino County has a $146,900 price advantage over Riverside County. Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the current work -from-home concept, the Inland Empire is enjoying this growth as a suburban bedroom community for the employment areas of Orange and Los Angeles Counties.

In a separate attempt to capture the amount of increase in home prices, the resale activity of existing homes in the subject’s immediate area (per Redfin.com) has been reviewed.

The number of sales and sale prices of existing homes within market areas of the subject are shown in the table below.

Community
Name
Location
To
Subject

No. Home
Sold
Nov. 2021
Price
Median

Price %
Change
from Nov.
2020
Riverside Subject 346 $580,000 20.8%
Norco West 36 $751,000 25.2%
Jurupa Valley Northwest 84 $580,000 9.4%
Grand Terrace9 North 13 $501,000 8.9%
Highgrove North 9 $640,000 26.7%
Moreno Valley East 202 $509,000 25.7%
Woodcrest South 16 $742,000 20.7%
Corona Southwest 239 $740,000 26.5%
Source: Redfin Housing Market Trends November 2021

The median home price of a detached resale home in the City of Riverside in November 2021 was $580,000, which is in the mid to low-end range of the resale detached home prices (generally from $500,000 to $750,000) in the subject area. The above price fluctuations from year-to-year relate to the California Department of Real Estate’s overall Riverside County detached home resale price increase of 19.8 percent year over year from November 2020 to November 2021. The subject base pricing of $594 ,000 to $650,000 is within the range of the surrounding homes in the market area, but higher than the median price of the resale homes in the market area. T his is typical as new homes typically sell at a premium over existing homes.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 44
According to the Ryness Report dated December 12, 2021, there are currently 16 new home projects in the subject’s immediate market area (northwest Riverside submarket), which includes the cities of Riverside, Corona and Jurupa Valley , with Riverside having six of the new communities (including three in Spring Mountain Ranch which have recently sold out and the subject ), Corona having five of the new communities ( one nearing sell-out) and Jurupa Valley having four new communities selling homes.

Pomelo - Sales and Pricing
The subject property consists of Riverside CFD No. 2015- 2 which includes 108 homes being marketed as Pomelo. Pomelo opened in August 2020 and has sold 91 homes through December 15, 2021 suggesting an overall average sales rate of 5.7 sales per month. This sales rate is considered to be excellent. Per the December 12, 2021 Ryness Report the average sales rate in the Inland Empire year to date is 4.63 homes per month while the average sales rate for the same period of 20 20 was 4.42 homes per month.

Since June, 2020 the new home market has seen renewed optimism in the Inland Empire as more recent sales rates have increased, but supply is slowing absorption as new home neighborhoods sell-out or have temporary sold out because construction can’t keep up with demand. While the COVID-19 pandemic has caused a significant disruption to the U.S. economy and the existing home market, it does not seem to have affected the new home housing market in the same way. Furthermore, according to the Inland Empire sales rates, the s ubject property has been performing well above the averages for the region.

Within Pomelo, pricing has substantially increased since opening. Base prices increased from $115,000 to $137,000 per plan since opening prices , representing an increase of

21.5 to 2 7.9 percent in the past 16 months. While t hese are considered to be very significant increases in pricing, such increases correspond with Riverside County’s overall price increases over the last year.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 45
Summary
The Inland Empire as a whole as well as Riverside County specifically have seen a substantial increase in pricing since 2012 with most areas, including the subject, in the past 20 months showing astronomical increases. While existing home sales were originally down when COVID began in spring and early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hit ting all-time lows. In the past 20 months the Inland Empire market has seen new home sales rates much stronger than the previous several years. The subject community is performing well above the Inland Empire average, resulting in strong sales rates. This is due to limited new homes offered in the area along with the subject’s pricing and average absorptions being in-line with the actively selling projects and the comparable communities.

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 20 months. Sales rates in the immediate vicinity of the subject are generally at or above the overall average in the subject market area. Prices of new homes in the area have had significant increases of over 20 percent in some communities. Despite uncertainty hitting the market at the beginning of the COVID outbreak, most observers agree that the Inland Empire housing market is positive and healthy population growth is occurring in the County. It is believed that as population continues to increase, housing growth will also continue.

HIGHEST AND BEST USE ANALYSIS

The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:

"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”5

Proper application of this analysis requires the subject properties 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 47.54 gross acres that are irregular in shape and located in the northwestern portion of the City of Riverside along the south side of the Santa Ana River at Jurupa and Biscayne Avenues. The site was originally expected to be an agricultural park . H owever, after a land exchange between the City, the Friends of Riverside Airport LLC (previous owners of subject property), Van Buren Golf Center and Riverside Gateway Plaza in 2003, the site was approved for residential development. The site sits on a knoll above the Santa Ana River. Surrounding land uses include residential

5 The Appraisal of Real Estate, 11th Edition
_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 47
to the east, south and west and the Santa Ana River to the north. Van Buren Boulevard, a main commercial arterial, is located about 0.25 miles to the east beyond which is an industrial area and the Riverside Municipal Airport.

The subject site was graded for development into 108 residential lots. We have reviewed several environmental and soils reports on the subject site. All reports conclude that the site was feasible from a geotechnical standpoint if all mitigation measures recommended within all reports are adhered to during construction. The site is being developed with new homes. There were previous environmental issues with the subject site which have been mitigated with a certificate of completion being issued by the Department of Toxic Substances Control. It is an assumption of this report that the soils are adequate to support the highest and best use, that there are no remaining environmental issues which would slow or thwart development of the property . This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction.

An engineered drainage system appears to have been designed into a street drainage system for the tract. All standard utilities are available to serve the subject property. The site has average access via the 91 Freeway with on/off ramps at Central Avenue or Arlington Avenue about five miles east of the subject site or via Tyler Street about four miles south.

Based on our physical analysis of the subject site, the size and access make the subject property physically suited for numerous types of development; however, the grading that has occurred on the site suggests residential development.

Legality of Use
The subject property is located within the City of Riverside in the County of Riverside .

Per the City approvals the subject property has a General Plan designation of Medium Density Residential land use and a zoning designation of R-1-7000 which allows for 7,200 square foot minimum lots. The subject property is also covered by Tract Map No. 28987 which subdivided the site into 113 residential lots. However five of such lots have been vacated, one for a future street into a new phase off-site of the subject property, and four _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 48
which are being incorporated into the adjacent tract map which is in the process of being finalized, leaving 108 single family detached residential lots.

Based on the legality of use analysis, the type of development for which the subject properties 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. The most profitable use of subject site would possibly be residential per the above analyses. As discussed under the Inland Empire Housing Market section earlier within this report, the market has been on an upswing for almost a decade with strong increases in sales and pricing, with the past 20 months showing exceptional pricing increases. The fact that the subject property is located in the City of Riverside, which is essentially built-out with little residential land available for development and the excellent sales rates of new-home projects in the area, suggest that residential lands in the immediate area are feasible to develop. The past year has seen very strong absorption of new homes in the Inland Empire. The COVID pandemic does not appear to have negatively affected new home sales in the Inland Empire, but rather appears to have increased absorption and pricing of new homes in the area.

Based on the above analysis, the highest and best use for the subject property appears to be for single- family residential development with homes at the correct price points.

This coincides with the previous conclusions.

Based on the above analysis, in our opinion, the highest and best use for the subject property appears to be for residential land use consistent with the builder’s current plans.

Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands. _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 49
Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as if vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property is for residential land use.

Highest and Best Use – “As Improved”
The subject property consists of Pomelo, proposed for 108 homes within Riverside CFD 2015-2. Pomelo is being developed by Meritage Homes and consists of 108 proposed homes ranging from 1,910 to 2,948 square feet with current base pricing from $594,000 to $650,000. The current base prices reflect increases from approximately 21.5 to 27.9 percent from the base prices at project opening in August 2020 . The sales rate within Pomelo has averaged 5.7 sales per month since opening. The sales rate within Pomelo is considered to be excellent. All of the homes are well designed and appear to be of good quality workmanship. It appears that the homes within Pomelo have been well received and the neighborhood is selling at the correct price points for t he area. Based on the above information, it is concluded that the highest and best use for the subject property , is for the continued use, as improved.

VALUATION ANALYSIS AND CONCLUSIONS

The Sales Comparison Approach will be used to value the subject propert y. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For single-family lots, the lots are typically sold on a finished lot basis. That is, the sales price is determined by a finished lot value and then the remaining costs to develop the property to a finished lot condition are taken into account in the sales price. Therefore, in determining a current market value for th e lands, the current condition of the lots will be considered. In the case of the existing home valuations , a single new -home sale is the unit of comparison. O ur search will include all new home projects within the subject’s immediate and surrounding market area to find comparable new homes for sale. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home.

The valuation will be presented as follows. First, a discussion of the single-family lot sales will be given. Each of the comparable market data (on a finished lot basis) will be detailed along with a comparison dis cussion of their relationship to the subject propert y. The remaining construction costs, if any, will be taken into consideration. This analysis will be followed by a finished lot value conclusion. Houses which are under construction (under 95 percent c omplete) will be valued on the basis of a finished lot rather than attribute value to a partially complete improvement. In the case of the completed (over 95 percent complete) builder owned models and production units, the homes will be valued using the Sales Comparison Approach to value to conclude on a retail value for each plan. This will be followed by a Discounted Cash Flow (“DCF”) Analysis due to the single ownership.

The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining development costs (if any), the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with sell ing off the homes along with the time value of money during the estimated absorption period. In the case _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 51
of the individually owned homes, the concluded base value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. In addition, the local MLS was searched for any re- sales within the subject property. All of the value conclusions will take into considerati on improvements funded by the City of Riverside CFD No. 2015- 2 special tax bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.

Market Data Discussion – Detached Residential Lots

Within Pomelo there are 15 lots with houses under construction (under 95 percent complete) and eight remaining finished lots. In this appraisal, we will consider a house under construction (under 95 percent complete) as a finished lot rather than attribute value to a partially complete improvement; therefore, we will value 23 remaining lots. Our analysis will conclude on a finished lot value, taking into consideration the remaining costs to develop the lots to a true, finished lot condition.

We have searched the area and found the nine transactions summarized in the Addenda to be most comparable to the subject property. The sales are reported both on a purchase price basis (when available) and on a finished lot basis (when available). The actual purchase price is typically less, depending on the condition of the land (lots) at the time the property was acquired. Although some sales refer to “finished lots”, they are typically physically finished lots with some fees remaining to be paid in order to be considered true finished lots. 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 Nos. 1 and 7 refer to two adjacent sales to KB Home for their Madeira and Madiera II projects located in the Woodcrest Area of Riverside at the southwest corner of Lurin Avenue and Wood Road, about ten miles southeast of the subject property . KB Home purchased the first site (Land Sale No. 7) in November 2019 from the Lee Family Trust for $4,750,000 based on a reported finished lot of $186,000. The lands closed in an _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 52
unimproved condition with an approved tentative tract map. The second sale (Land Sale No. 1) is adjacent to the west of Land Sale No. 7 and was purchased in October 2021 for $3,174,500 which equates to $77,427 per unimproved lot based on a reported finished lot price of $199,000. Both transactions closed in an unimproved condition with an approved tentative tract map. Both maps have 5,000 square foot minimum lots. KB Home is currently marketing their Madeira community with hom e sizes from 1,627 to 2,882 square feet and base pricing from $607,990 to $697,990. In comparison to the subject property this location is considered to be slightly superior (in the Woodcrest community in Riverside), but the lot sizes are inferior (5,000 square feet compared to the subject’s 7,200 minimum square feet ). In addition, when comparing Data No. 7 to the subject property’s current value, the date of sale lags considerable price appreciation (sold in November 2019). When pairing the two sales, a seven percent increase is suggested for date of sale between November 2019 and October 2021.

Land Sale No. 2 regards Century Communities’ purchase in July 2021 of 215 lots located northwest of State Route 60 and Rubidoux Road in Jurupa Valley, about four miles north of the subject site. The property is known as “ Emerald Ridge South” . The property includes 118 townhomes (12 du/acre) and 97 small lots with a minimum lot size of 3,500 square feet. The lands were sold in an unimproved condition with final engineering in process and maps ready to record. The 215 lots/pads sols for the total price of $13,920,000 or $64,744 per unimproved unit based on a reported blended finished lot/unit price of $165,000. In comparison to the subject property these lots are significantly smaller and the transaction includes some townhome units which are also considered significantly inferior to the subject 7,200 minimum square foot lots.

Land Sale No. 3 refers to a sale adjacent to the master plan of Spring Mountain Ranch, located in unincorporated Riverside County about 10 miles northeast of the subject site.

Spring Mountain Ranch had been supplying lots to builders over the past few years. The subject purchase refers to Pulte Homes purchasing 138 single family detached lots from Shopoff Realty Investments in February 2021 for $5,932,500, or $42,989 per unimproved lot based on a reported finished lot price of $167,500. The lands were purchased in an _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 53
unimproved condition with final engineering in process and a tentative map approved. In comparison to the subject property this site is considered to be slightly inferior in location (further out for commuters to Orange and Los Angeles Counties or downtown Riverside) and slightly inferior due to the 5,000 square foot minimum lot size compared to the subject’s 7,200 square foot minimum lots.

Land Sale No. 4 refers to the purchase of a portion of Spring Mountain Ranch, known as Springbrook Estates, located at the west end of the large master planned community, about nine miles from the subject site. The lands were sold by Equity Residential which appears to be an off-balance sheet investor for KB Home. Due to the investment aspect of Equity Residenti al, this transaction was sold to KB Home in October 2020 at market rates per brokers involved in the transaction. The property consists of 176 lots of minimum 4,000 square feet, 277 lots of 5,000 minimum square feet and 184 lots of 5,500 minimum square feet. The land s sold for $51,000,000 or $80,063 per unimproved lot based on a blended finished lot price of $170,000. In comparison to the subject property , this transaction is considered to be similar in location but superior , as it is within a master planned community with amenities . However, when compared to the subject this transaction is considered inferior due to the lot sizes and inferior due to the number of lots included in the transaction. Typically , builders purchase from 50 – 200 lots in a transaction; thus, this sale of over 600 lots is considered to be a bulk transaction with a discount warranted due to the risk and time associated with building and selling off over 600 homes.

Land Sale No. 5 refers to Richmond American Homes purchasing 107 lots from Lansing Companies in June 2020. The lots are minimum 5,000 square feet and are located along the north side of the Santa Ana River about 1.25 miles northwest of the subject site.

Richmond American purchased the lands for $6,623,500, or $61,902 per unimproved lot based on a reported finished lot price of $163,000. The lands closed in an unimproved condition with final engineering in process and maps ready to record. Richmond American is now marketing the site as their Bridlepath community, with home sizes from 2,280 to 2,610 square feet and pricing from $707,990 to $645,990. In comparison to the subject _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 54
property this transaction is considered to be slightly superior in location, slightly inferior in lot size and inferior in date of sale, due to the fact that this transaction closed 18 months ago, prior to a significant amount of appreciation in the marketplace.

Land Sale No 6 pertains to the Century Communities’ purchase of an in-fill site in Jurupa Valley about three miles north of the subject property at the northeast corner of Pyrite Street and Jurupa Road. Century Communities purchased the 25 lots in February 2020 from Mark Michael Development for $3,600,000 or $144,000 per physically fin ished lot based on a true finished lot reported price of $175,000. The lands closed in a physically finished condition with fees remaining to be paid. The lots have a minimum lot size of 7,200 square feet, similar to the subject property. Century Communiti es has sold out of their Sage community on the site. The surrounding area is considered to be similar in both lot size and in the surrounding area when compared to the subject. In comparison to the subject this transaction is considered to be inferior due to the date of sale, almost two years ago which was prior to the significant amount of appreciation in the marketplace.

Land Sale No. 8 refers to the sale of 34 lots located southwest of Streeter Avenue and Rochester Street in the City of Riverside about three miles east of the subject. R.C. Hobbs purchased the property from the Kim Family in October 2019 for $2,000,000 or $58,824 per unimproved lot based on a reported finished lot price of $179,000. The lands were in an unimproved condition at time of sale with an approved tentative tract map. R.C. Hobbs built out their Camden Collection neighborhood and has sold out. The lots have a minimum lot size of 4,000 square feet. In comparison to the subject property, this location is considered to be slightly superior, however this the lot size is inferior (4,000 square feet as compared to 7,200 square feet). In addition, this transaction is considered to be significantly inferior due to the date of sale, over two years ago.

Land Sale No. 9 refers to the Lennar purchase of 432 lots from Richland Communities in March 2019. The lands are known as Shadow Rock and are located northeast of Pacific Avenue and La Canada Drive in Jurupa Valley , near Land Sale No. 2, about four miles _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 55
north of the subject property. The 432 lots included 104 lots with a 4,700 square foot minimum size, 165 lots with a 5,000 square foot minimum size and 163 lots with a 6,000 square foot minimum size. The site was purchased for $26,173,000, or $60,586 per unimproved lot based on a reported blended finished lot price of $185,000. Lennar is marketing their Discovery, Adventure and Exploration at S hadow Rock communities on the property with home sizes ranging from 1,547 to 4,122 square feet with prices ranging from $572,350 to $860,000. In comparison to the subject property this location is considered to be similar, but the lot sizes are slightly smaller (inferior) and the date of sale is significantly inferior.

The chart on below summarizes the considerations used in adjusting the market data to the subject property.

Data
No.

Location
Date of
Sale
Lot Size

Finished
Lot Price

Comparison to Subject
1 Riverside
(Woodcrest) 10/21 5,000 $199,000 Superior – Location
Inferior – Lot Size
2 Jurupa Valley 7/21 3,500 / Att $165,000 Inferior - Density & Lot Size 3 Uninc Riverside 2/21 5,000 $167,500 Inferior – Location and Lot Size 4 Uninc. Riverside 10/20 4,000 –
5,500 $170,000
Superior – Master Plan
Inferior – Lot Size and Date of
Sale
5 Jurupa Valley 6/20 5,000 $163,000
Superior – Location
Inferior – Lot Size and Date of
Sale
6 Jurupa Valley 2/20 7,200 $175,000 Inferior – date of sale 7 Riverside 11/19 5,000 $186,000
Superior - Location
Inferior – Lot Size and Date of
Sale
8 Riverside 10/19 4,000 $179,000
Superior – Location
Inferior – Lot Size and Date of
Sale
9 Jurupa Valley 3/19 4,000 –
6,000 $185,000 Inferior – Lot size and Date of Sale

The market data has an overall finished lot range from $163,000 to $ 199,000. All transactions are located within existing or planned community facilities districts with similar overall effective tax rates when compared to the subject site. Land Sale Nos. 4 thru 9 all closed over a year ago which is prior to a substantial amount of appreciation in the subject marketplace. When pairing Data Nos. 1 and 7 which are adjacent to each other, it is suggested that there was an increase of seven percent between November _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 56
2019 and October 2021. This is smaller than the actual appreciation which occurred on homes during this time which was closer to 25 percent. The majority of the sales consist of smaller lots than the subject property. When pairing Data Nos. 5 and 6 it is suggested there is a $12,000 difference between a 5,000 square foot lot and a 7,200 square foot lot, all other considerations being equal. However, the smaller lots are in a superior location which would make the difference greater. The most recent sale in the area refers to Data No. 1 which sold for $199,000 on a finished basis, but the location is slightly superior and the lot size is smaller which is considered inferior . In addition to the above land transactions, we have received information on the sale of the lands adjoining the subject to the immediate east. Meritage Homes is in escrow to purchase the lands once the map has been finalized which is anticipated to occur in the next few months . This transaction is not yet a closed escrow (considered to be superior) and is superior due to the fact that the first phase of Pomelo has had extremely good absorption rates which creates a known market for the second phase. We have talked with Meritage Homes , and while we have knowledge of the purchase price, as it is currently in escrow, we have retained the amount in our files for confidentiality purposes. We have, however, considered it in our analysis.

Based on the market data as discussed above , along with our knowledge on this new transaction in escrow, we have concluded that the subject lots have a finished lot value of $245,000.

Pomelo Land Valuation
Within Pomelo there are 69 individually owned homes and 39 builder-owned lots. The builder-owned property includes two model homes, 14 homes over 95 percent complete (all in escrow), 15 homes under construction (under 95 percent with eight in escrow) and eight remaining lots. This valuation is for the lots. In this analysis we will value the homes under construction (under 95 percent com plete) as a finished lot rather than attribute value to a partially complete improvement, thus this valuation is for 23 remaining lots. As discussed under the property description section earlier within this report, per the builder there are remaining cost s and fees of $1,087,960 or $27,896.41 per lot for the 39 lots owned by Meritage. The concluded “as is” value for the 23 Pomelo lots is shown below.

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 57
Lot Value Conclusion – Pomelo
23 Finished Lots x $245,000 $ 5,635,000
Less: Remaining Costs ($27,896.41 x 23) (641,617) As Is Value for Lots $ 4,993,383

House Valuation Analysis – Pomelo
Within Pomelo there are 69 individually owned homes, two models and 14 production homes over 95 percent complete owned by the builder. We have searched the local Multiple Listing Service and inspected the property and there has been one re-sale of a Plan 4 and there is one current re -sale listing of a Plan 4 . Below is a summ ary of the various floor plans . Our search resulted in seven new home communities (including Pomelo) which are considered in our analysis. A listing of the improved residential comparable properties is located in the Addenda of this report.

Plan

Room
Count

Floors/
Parking

Sq.

Ft.

Completed
Ind.

Owned
95% Complete
Bldr.

The most appropriate new home comparable data for Pomelo Plan 1 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 1 4 / 2 1 / 2 1,910 --
1 2 4 / 3 2 / 2 2,320 $270.26
2 1 3 / 2 1 / 2 1,547 $369.97
3 1 3 / 2 1 / 2 1,627 $370.61
4 1 3 / 2 1 / 2 1,792 $343.06
5 1 3 / 2 1 / 2 2,140 $327.10
6 1 3 / 2.5 1 / 2 2,280 $309.21

Due to the limited new home projects in Riverside, we have expanded our search to include new home communities in the adjacent Jurupa Valley. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, stories, lot size, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 58
count, garage space and other amenities. The comparable new home sales have base prices ranging from $270.26 to $370.61 per square foot. The lowest price per square foot is for the Plan 2 within Pomelo which is a larger and two story home which would typically sell for a lower price per square foot. There has been significant appreciation in the subject market in the past few months due to the demand for new homes in the Inland Empire. The current base asking price for Pomelo Plan 1 is $310.99 per square foot. There have been 13 closings of Pomelo Plan 1 homes with actual sales prices from $265.82 to $312.43 per square foot. There are five current escrows of Pomelo Plan 1 with a sales price range of $319.85 to $337.65 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted the reported sales prices include premiums and options purchased by the buyer as well as any concessions given by the builder.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 1 has a base current market value of $310.00 per square foot.

This calculates as follows:
1,910 sf x $310.00 = $592,100

The most appropriate new home comparable data for Pomelo Plan 2 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 2 4 / 3 2 / 2 2,320 --
1 1 4 / 2 1 / 2 1,910 $310.99
1 3 4 / 3 2 / 2 2,771 $229.88
2 4 4 / 3 2 / 2 2,064 $303.62
3 2 4 / 3 2 / 2 2,227 $288.28
3 3 5 / 3 2 / 2 2,528 $263.05
4 3 4 / 3 2 / 2 2,590 $263.31
7 4 4 / 3 2 / 2 2,173 $299.54

Due to the limited new home projects in Riverside, we have expanded our search to include new home communities in the adjacent Jurupa Valley. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, stories, lot size, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The comparable new home sales have base _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 59
prices ranging from $229.88 to $310.99 per square foot with the highest per square foot price being the smallest (and single-story) home and the lowest per square foot price being for the largest home. This is typical due to the economies of scale that can be obtained during construction. There has been significant appreciation in the subject market in the past few months due to the demand for new homes in the Inland Empire. The current base asking price for Pomelo Plan 2 is $270.26 per square foot. There have been 14 closings of Pomelo Plan 2 with actual sales prices from $224.67 to $269.95 per square foot. There are three current escrows of Pomelo Plan 2 with a sales price range of $276.29 to $283.62 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted the reported sales prices include premiums and options purchased by the buyer as well as any concessions given by the builder.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 2 has a base current market value of $270.00 per square foot.

This calculates as follows:
2,320 sf x $270.00 = $626,400

The most appropriate new home comparable data for Pomelo Plan 3 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 3 4 / 3 2 / 2 2,771 --
1 2 4 / 3 2 / 2 2,320 $270.26
1 4 5 / 3 2 / 2 2,948 $220.49
3 3 5 / 3 2 / 2 2,528 $263.05
3 4 5 / 3 2 / 2 2,882 $240.45
4 3 4 / 3 2 / 2 2,590 $263.31
7 4 4 / 3 2 / 2 2,173 $299.54

There has been significant appreciation in the subject market in the past few months due to the demand for new homes in the Inland Empire. The current base asking price for Pomelo Plan 3 is $229.88 per square foot. There have been 19 closings of Pomelo Plan 3 with actual sales prices from $202.30 to $230.53 per square foot. There are seven current escrows of Pomelo Plan 3 with a sales price range of $230.31 to $248.35 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted the reported sales prices include premiums and options purchased by the buyer as well as any concessions given by the builder.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 3 has a base current market value of $229.00 per square foot.

This calculates as follows:
2,771 sf x $229.00 = $634,559

The most appropriate new home comparable data for Pomelo Plan 4 are:

Data Plan Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj 4 5 / 3 2 / 2 2,948 --
1 2 4 / 3 2 / 2 2,320 $270.26
1 3 4 / 3 2 / 2 2,771 $229.88
3 3 5 / 3 2 / 2 2,528 $263.05
3 4 5 / 3 2 / 2 2,882 $240.45
4 3 4 / 3 2 / 2 2,590 $263.31
7 4 4 / 3 2 / 2 2,173 $299.54

Due to the limited new home projects in Riverside, we have expanded our search to include new home communities in the adjacent Jurupa Valley. All are of similar quality, design and appeal. Adjustments were considered (when applicable) for location, stories, lot size, view potential, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The comparable new home sales have base prices ranging from $229.88 to $299.54 per square foot with generally the higher per square foot prices being the smaller homes and the lowest per square foot price being for the larger homes. This is typical due to the economies of scale that can be obtained d uring construction. There has been significant appreciation in the subject market in the past few _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 61
months due to the demand for new homes in the Inland Empire. The current base asking price for Pomelo Plan 4 is $220.49 per square foot. There have been 23 closings of Pomelo Plan 4 with actual sales prices from $192.44 to $226.32 per square foot. There are seven current escrows of Pomelo Plan 4 with a sales price range of $223.13 to $236.48 per square foot. The escrow sales prices versus the closed sales prices shows the recent appreciation in the subject marketplace. It should be noted the reported sales prices include premiums and options purchased by the buyer as well as any concessions given by the builder. We have also reviewed the local MLS and noted one re-sale of a Plan 4 and one current listing of a re-sale. The re-sale sold for $239.14; however, the sales price included a paid off solar system and custom plantation shutters and the home had a view of city lights and mountains from the master bedroom. The current listing has a listing price of $247.25 per square foot.

The current listing is under contract, but we were unable to obtain the actual sales price due to the confidential nature of the escrow.

All homes appear to be in excellent condition with little to no physical depreciation visible. It has been concluded that Plan 4 has a base current market value of $220.00 per square foot.

This calculates as follows:
2,948 sf x $220.00 = $648,560

Builder Owned Retail Value

Within the subject property there are 16 builder-owned homes over 95 percent complete including two model homes. Per interviews with builders, upgrades and landscape/hardscape of over $100,000 are installed in subject -like model homes .

However, builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar -for-dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $50,000 premium has been included with each of the model homes. The retail base value conclusions for the builder -owned homes are calculated as follows:

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 62
Plan 1 (3 x $592,100) $ 1,776,300
Plan 2 (3 x $626,400) 1,879,200
Plan 3 (5 x $634,559) 3,172,795
Plan 4 (5 x $648,560) 3,242,800
Model Upgrades (2 x $50,000) 100,000
Total Builder-owned $10,171,095
Absorption Period
In order to arrive at an absorption period for Pomelo, the absorption rates for the subject and surrounding developments have been reviewed. As discussed under the Highest and Best Use section earlier within this report, there is an average sales rate for Pomelo of 5.7 houses per month which is considered to be excellent. The remaining competitive new homes used in our analysis and summarized in the Addenda have an absorption rate range of 4.9 to 20 sales per month. Out of the subject 16 builder-owned homes, 14 are in escrow as the models have not been released for sale yet. We have concluded that the subject 16 homes will be absorbed over a two-month period.

Remaining Costs
As discussed under the remaining costs section earlier within this report there are $27,896.41 in remaining land development costs associated with each lot. For the 16 builder-owned homes, this equates to $446 ,343 in remaining costs. We are assuming that the costs will be spread evenly over the two months absorption period in our analysis.

Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten perc ent 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 this analysis.

Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales _________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 63
proceeds. During the Great Recession this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.

Discount Rate
In selecting a discount rate, the following was completed:

1. Interviews with merchant builders in the Riverside 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.); and

3. The quality, construction, historical sales and product on the subject property.

The homes within the subject property appear to be well constructed and have been selling at a good absorption rate. There is minimal remaining development associated with the project. Even with the COVID pandemic, new home sales are continuing at a very good rate.

Due to these factors, coupled with the amount of product remaining, a ten percent discount rate is considered appropriate for this analysis.

Discounted Cash Flow Summary
The discounted revenue for Pomelo (see DCF Analysis in Addenda) for the builder owned homes, collectively, is $7,796,366.

Meritage Homes Ownership Valuation Total – Pomelo

Meritage Homes owns 16 homes over 95 percent complete ( 14 production homes and two models), 15 homes which are under construction (under 95 percent complete) and eight remaining lots within Riverside CFD No. 2015- 2. The homes under construction (under 95 percent) have been valued as a finished lot rather than attribute value to a partially complete improvement. The final value conclusion for the builder owned property is shown below.
23 Lots $4,993,383
16 Houses 7,796,366
Total Meritage Homes Owned Property $12,789,749

_________________________________________________________________________________________________________ Appraisal Report
City of Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 64
Individual Owners Value Conclusion
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 addition upgrades, options or pay some premiums for the lot. The concluded values are shown below:

Plan 1 (13 x $592,100) $ 7,697,300
Plan 2 (14 x $626,400) 8,769,600
Plan 3 (19 x $634,559) 12,056,621
Plan 4 (23 x $648,560) 14,916,880
Total Individually Owned $43,440,401

In an additional review, we have reviewed the builder sales prices for the homes within Pomelo. Sales occurred between August 2020 and December 15, 2021. The builder’s reported closing prices for the individually owned homes total $ 40,523,635. The concluded current minimum market value of $ 43,440,401 equates to 7.2 percent high er than the actual sales prices . The builder’s reported prices include premiums, upgrades and purchased options, as well as the concessions given by the builder , which typically would result in a higher price than the concluded base value of the homes. However, the subject market has had significant price appreciation since its opening. Within Pomelo the base prices increased from 21.5 to 27.9 percent , or between $115,000 to $137,000 for each plan. Based on the above information and analysis, along with our familiarity with the market, it is our conclusion that the builder sales prices further substantiate the concluded minimum market value for the individually owned homes.

APPRAISAL REPORT SUMMARY

The appraisal assignment was to value the subject property within Riverside CFD No. 2015-2 which encompasses the 108 proposed homes within the Pomelo project by Meritage Homes located in the City of Riverside. The community has been well received in the marketplace with an excellent absorption rate and substantial price increases across all plans. The majority of homes that are released are in escrow. As of December 15, 2021, individuals have purchased and closed on 69 of the homes with an additional 22 in escrow which are due to close upon completion. Pomelo has enjoyed an excellent sales rate of 5.7 homes per month, well above the regional average. All structures appear to be in excellent condition with no visible depreciation. We have reviewed builder sales and reviewed the local MLS for current listings or re-sales and found one re-sale and one current re-sale listing.

The subject properties were valued utilizing the Sales Comparison Approach to value, a Discounted Cash Flow Analysis and utilized a M ass Appraisal Technique for the individually owned homes . A minimum value was determined by concluding at a base value for the individually owned homes. The valuation took into account the improvements/benefits to be funded by the special tax Riverside CFD No. 2015- 2 bond proceeds along with the Riverside CFD No. 2015 -2 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:

Pomelo:

Meritage Homes Ownership Value $ 12,789,749
Individually Owned Homes Minimum Market Value $ 43,440,401

Aggregate Value for Riverside CFD No. 2015-2 $ 56,230,150

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 Riverside CFD No. 2015-2 (Pomelo)
Kitty Siino & Associates, Inc. Page 66
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 t he 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, i n conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.

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

12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.

Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)

ADDENDA

RIVERSIDE CFD NO. 2015-2

BOUNDARY MAP

TRACT MAP No. 28987

DEPARTMENT OF TOXIC SUBSTANCES CONTROL

CERTIFICATE OF COMPLETION

AIRPORT LAND USE COMMISSION DOCUMENTATION

DISCOUNTED CASH FLOW ANALYSIS

Pomelo Builder Ownership Discounted Cash Flow Analysis

MONTH Months MONTH 1 MONTH 2 TOTAL
2 INCOME:

Retail Sales

10,171,095 $5,085,548 $5,085,548 $10,171,095

TOTAL INCOME $5,085,548 $5,085,548 $10,171,095

EXPENSES:

Remaining Costs ($223,171) ($223,172) ($446,343)
Marketing & Carrying Expenses 8% ($406,844) ($406,844) ($813,688) Profit 10% ($508,555) ($508,555) ($1,017,110)

TOTAL EXPENSES ($1,138,570) ($1,138,571) ($2,277,140)

NET CASH FLOW $3,946,978 $3,946,977 $7,893,955
Discount Factor 10% 0.9917 0.9835

DISCOUNTED CASH FLOW $3,914,358 $3,882,007 $7,796,366

CUMULATIVE DISCOUNTED $3,914,358 $7,796,366 $7,796,366

CASH FLOW

FINISHED LOT LAND SALES MAP
& SUMMARY CHART

FINISHED LOT LAND SALES SUMMARY CHART

Data
No.

Location / APN / Buyer / Seller

Sales
Date

# Lots

Lot Size

Sales Price /
Price per Lot

Est. Finished
Lot Price

Comments

1 Madeira II, SW of Lurin Avenue &
Wood Road, Riverside / 266-100-
025 /KB Home / Diversified Pacific

10 / 21

41 5,000

$3,174,500 /
$77,427

$199,000
Closed in unimproved condition with an
approved tentative tract map.

2 Emerald Ridge South, NW of State
Route 60 & Rubidoux Road, Jurupa
Valley / 178-191-01, 02, 04 & 15 /
Century Communities / Signature
Builder

07 / 21

215

12 du/ac
3,500

$13,920,000 /
$64,744

$165,000
(blended)
Closed in unimproved condition with
final engineering in process.

Emerald Ridge South consists of two
product lines:
• 118 townhomes, 12 du/ac
• 97 lots, 3,500 sf ($200,000 FLV)

3 Box Springs, SEC of Pigeon Pass
Road & High Grove Dump Road,
Riverside (Unincorporated) / 257-
180-003, 011, 013 & 015 / Pulte
Homes / Shopoff Realty
Investments

02 / 21

138

5,000

$5,932,500 /
$42,989

$167,500
Closed in unimproved condition with
final engineering in process.

4 Springbrook Estates, SWC of West
Spring Street & Mt Vernon Avenue,
Riverside (Unincorporated) / 255-
13-various / KB Home / Equity
Residential (holding investment co)

10 / 20

637

4,000
5,000
5,500

$51,000,000 /
$80,063

$170,000
(blended)
Closed in unimproved condition with an
approved final map.

Springbrook Estates consists of three
product lines:
• 176 lots, 4,000 sf
• 277 lots, 5,000 sf
• 184 lots, 5,500 sf

5 Bridle Path at Paradise Knolls, SWC
Limonite Avenue & Downey Street,
Jurupa Valley / 162-230-07 /
Richmond American Homes /
Lansing Companies

06 / 20

107

5,000

$6,623,500 /
$61,902

$163,000
Closed in unimproved condition with
final engineering in process.

6 Sage, NEC of Jurupa Road & Pyrite
Street, Jurupa Valley / 166-040-
various / Century Communities /
Mark Michael Development

02 / 20

25 7,200

$3,600,000 /
$144,000

$175,000
Closed in finished condition with an
approved final map.

7 Madeira, SWC & SEC of Lurin
Avenue & Wood Road, Riverside /
266-100-010 /KB Home / Lee
Family Trust

11 / 19

90 5,000

$4,750,000 /
$52,778

$186,000
Closed in unimproved condition with an
approved tentative tract map.

Data
No.

Location / APN / Buyer / Seller

Sales
Date

# Lots

Lot Size

Sales Price /
Price per Lot

Est. Finished
Lot Price

Comments

8 Camden Collection, SW of Streeter
Avenue & Rochester Street,
Riverside / 190-263-various / R.C.

Hobbs Company / Kim Family

10 / 19

34 4,000

$2,000,000 /
$58,824

$179,000
Closed in unimproved condition with an
approved tentative tract map.

9 Shadow Rock, NE of Pacific Avenue
& La Canada Drive, Jurupa Valley /
N/A / Lennar / Richland
Communities

03 / 19

432

4,700
5,000
6,000

$26,173,000 /
$60,586

$185,000
(blended)
Closed in unimproved condition with an
approved tentative tract map. Closed in
two phases with 398 lots purchased in
March 2019 and 32 lots purchased in
June 2019.

Shadow Rock consists of three product
lines:
• Discovery, 104 lots, 4,700 sf
• Adventure, 165 lots, 5,000 sf
• Exploration, 163 lots, 6,000 sf

IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART

IMPROVED RESIDENTIAL SALES SUMMARY CHART

Data
No.

Project Name
Location/Developer

Plan

Room
Count

Size (SF)

Floors/
Parking

Lot Size/
Absorption

Base
Sales Price

Price/SF

1 Pomelo / NE of Jurupa Avenue
& Crest Avenue, Riverside /
Meritage Homes (Subject)
1 2
3 4
4 / 2
4 / 3
4 / 3
5 / 3
1,910
2,320
2,771
2,948
1 / 2
2 / 2
2 / 2
2 / 2

7,200 / 5.6
$594,000
$627,000
$637,000
$650,000
$310.99
$270.26
$229.88
$220.49

2 Discovery at Shadow Rock / NE
of Pacific Avenue & La Canada
Drive, Jurupa Valley / Lennar
1 2
3 4
3 / 2
3 / 2.5
3 / 2.5
4 / 3
1,547
1,705
1,843
2,064
1 / 2
2 / 2
2 / 2
2 / 2

4,700 / 5.1
$572,350
$595,585
$623,590
$626,675
$369.97
$349.32
$338.36
$303.62

3 Madeira / SWC & SEC of Lurin
Avenue & Wood Road, Riverside
/ KB Home
1 2
3 4
3 / 2
4 / 3
5 / 3
5 / 3
1,627
2,227
2,528
2,882
1 / 2
2 / 2
2 / 2
2 / 2

5,000 / 20.4
$602,990
$641,990
$664,990
$692,990
$370.61
$288.28
$263.05
$240.45

4 Adventure at Shadow Rock / NE
of Pacific Avenue & La Canada
Drive, Jurupa Valley / Lennar
1 2
3 3 / 2
4 / 3
4 / 3
1,792
2,203
2,590
1 / 2
2 / 2
2 / 2

5,000 / 4.9
$614,765
$639,595
$681,960
$343.06
$290.33
$263.31

5 Exploration at Shadow Rock /
NE of Pacific Avenue & La
Canada Drive, Jurupa Valley /
Lennar
1 2
3 4
3 / 2
4 / 2.5
5 / 3.5
6 / 4.5
2,140
2,809
3,325
4,122
1 / 2
2 / 3
2 / 2
2 / 3

6,000 / 6.0
$700,000
$718,900
$806,000
$860,000
$327.10
$255.93
$242.41
$208.64

6 Bridle Path at Paradise Knolls /
SWC Limonite Avenue &
Downey Street, Jurupa Valley /
Richmond American Homes
1 2
3 3 / 2.5
3 / 2.5
3 / 2.5
2,280
2,490
2,610

1 / 2
1 / 2
1 / 2

5,000 / 9.6
$704,990
$742,990
$730,990
$309.21
$298.39
$280.07

7 Collette Crossings, Vermillion
Court and La Sierra Avenue,
Riverside / National Core
1 2
3 4
3 / 2
4 / 2.5
3 / 2.5
4 / 3
1,807
1,911
1,898
2,173
1 / 2
2 / 2
2 / 2
2 / 2

3,400 / N/A
N/A
$599,900
$617,900
$650,900
N/A
$313.92
$325.55
$299.54

APPRAISER’S QUALIFICATIONS

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 clas ses 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 ac counting 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.

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 and 2019

Speaker, Mello- Roos & Special Assessment Financing, UCLA Extension Publi c Policy Program, February 2009 and March 2011

Riverside City CouncilApril 26, 2022

Riverside City Council
April 26, 2022