Staff Report - Waiver of City Code Section 4.04.020.C for the Agreements Pertaining to the City of Sacramento Railyards Community Facilities District No. 2018-01 (Improvements) Special Tax Bonds, Series 2022 (Two-Thirds Vote Required) and Authorize the Issuance of the City of Sacramento Railyards Community Facilities District No. 2018-01 (Improvements) Special Tax Bonds, Series 2022 and Related Actions — Sacramento City Council, August 23, 2022 (part 3 of 4)

The Central Shops have a value that is specific to their parcels. The office, retail and multi -family land use are benchmark values and not specific to any parcel. The next step is to assign specific land values to the subject parcels using the benchma rk land values and applying lot specific adjustments . For consistency purposes we have converted the benchmark land values into a price per square foot of land area as follows:

The cumulative composite benchmark value is $202,123,920. Excluding the Central Shops, the average benchmark value for retail/multi-family/office is $75.26 per SF, rounded to $75.00 per SF.

The benchmark value of $ 75.00 per square foot is used for all lots except for the Central Shops , Lot 17 (parking garage ) and a Mixed -income set -aside land dedication. The net land area excluding these parcels is 53.412 acres. The cumulative retail value of the lots as shown on the following pages totals $179,927,967 or $76.04 per square foot. This is higher than the benchmark value of $ 75.00 per SF as adjustments were made for various factors. Deducting the land value of the future Mixed -Income land dedication indicated aggregate retail value of $ 176,927,967.

Land Use Acres Unit of
Comparison Sales Comparison Land Residual 60%/40%
Weight Conclusion
Office & Retail 18.75 $/Buildable Area $20.00 $15.79 $18.32 $18.00 Multi-Family 30.422 $/Unit $30,000 $25,631 $28,252 $28,000 Hotel 7.33 $/Unit $20,000 $24,162 $21,665 $22,000
Paint Shop 1.82 $ Building $4,600,000
Remaining Central Shops 7.55 $ Building $12,300,000
Land Value Conclusions - DRV
Land Use Acres Buildable
Area/Units Unit of Comparison Conclusion Conclusion Value Per SF of Land
Office & Retail 18.75 3,267,000 Buildable SF Area $18.00 $58,806,000 $72.00 Multi-Family 30.422 3,651 Units $28,000 $102,217,920 $77.13 Hotel 7.33 1,100 Units $22,000 $24,200,000 $75.79
Central Shops 9.37 247,832 $16,900,000 $41.41
Average/Blended 65.872 $202,123,920
$70.44
Excluding Central Shops $75.26
$75.00
Value Per SF of Land
Composite Benchmark Land Value Conclusions per Land SF
Rounded Value Excluding Central Shops
Category Land Acres Value Per SF
Office, Retail, Residential & Hotel - West of 7th Street 54.087 $179,163,914 $76.04 Less: Mixed-Income Housing Dedication 0.675 -$2,235,947 $76.04 Total 53.412 $176,927,967 $76.04
Aggregate Retail Value
LAND VALUE CONCLUSIONS – DRV – WEST OF 7TH STREET 195
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Lot # Acres Comment Composite
Benchmark Value Location Density Encumbrance Total Adj. Indicated Value per SF Total Value
3 a 0.94 $75.00 0% 0% 0% 0% $75.00 $3,070,980
3 b 0.91 $75.00 0% 0% 0% 0% $75.00 $2,972,970
3 c 0.79 $75.00 0% 0% 0% 0% $75.00 $2,580,930
3 d 0.76 $75.00 0% 0% 0% 0% $75.00 $2,482,920
4 a 0.83 $75.00 0% 0% 0% 0% $75.00 $2,711,610
4 b 0.94 $75.00 0% 0% 0% 0% $75.00 $3,070,980
4 c 0.8 $75.00 0% 0% 0% 0% $75.00 $2,613,600
4 d 0.93 $75.00 0% 0% 0% 0% $75.00 $3,038,310
5 0.66 $75.00 0% 0% 0% 0% $75.00 $2,156,220
6 a 1.11 $75.00 0% 0% 0% 0% $75.00 $3,626,370
6 b 1.13 $75.00 0% 0% 0% 0% $75.00 $3,691,710
6 c 1.01 $75.00 0% 0% 0% 0% $75.00 $3,299,670
6 d 1.03 $75.00 0% 0% 0% 0% $75.00 $3,365,010
7 a 0.92 $75.00 0% 0% 0% 0% $75.00 $3,005,640
7 b 0.85 $75.00 0% 0% 0% 0% $75.00 $2,776,950
7 c 0.35 $75.00 0% 0% 0% 0% $75.00 $1,143,450
7 d 0.77 $75.00 0% 0% 0% 0% $75.00 $2,515,590
8 a 0.76 $75.00 -20% 0% 0% -20% $60.00 $1,986,336
8 b 1.17 $75.00 0% 0% 0% 0% $75.00 $3,822,390
8 c 0.87 $75.00 -20% 0% 0% -20% $60.00 $2,273,832
9 a 0.85 $75.00 0% 0% 0% 0% $75.00 $2,776,950
9 b 0.83 $75.00 0% 0% 0% 0% $75.00 $2,711,610
9 c 0.24 $75.00 0% 0% 0% 0% $75.00 $784,080
12 a 0.94 Foundry Office $75.00 0% 0% 0% 0% $75.00 $3,070,980 12 b 0.81 Foundry Office $75.00 0% 0% 0% 0% $75.00 $2,646,270 15 a 0.77 Planned Hotel $75.00 0% 0% 0% 0% $75.00 $2,515,590 15 b 0.67 $75.00 0% 0% 0% 0% $75.00 $2,188,890
15 c 0.76 Planned Hotel $75.00 0% 0% 0% 0% $75.00 $2,482,920 15 d 0.65 $75.00 0% 0% 0% 0% $75.00 $2,123,550
LAND VALUE CONCLUSIONS – DRV – WEST OF 7TH STREET 196
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Lot # Acres Comment Composite Benchmark
Value Location Density Encumbrance Total Adj. Indicated Value per SF Total Value 33 c 1.06 $75.00 -10% -75% 0% -85% $11.25 $519,453
33 d 1.03 $75.00 -10% -75% 0% -85% $11.25 $504,752
35 3.14 $75.00 20% 0% 0% 20% $90.00 $12,310,056
40 1.86 $75.00 0% 0% -20% -20% $60.00 $4,861,296
43 a 1.26 $75.00 30% 20% 0% 50% $112.50 $6,174,630
43 b 1.34 $75.00 30% 20% 0% 50% $112.50 $6,566,670
44 1.65 $75.00 30% 20% 0% 50% $112.50 $8,085,825
46 b 0.722 $75.00 20% -20% 0% 0% $75.00 $2,358,774
47 a 1.58 $75.00 0% 0% 0% 0% $75.00 $5,161,860
47 b 1.61 $75.00 0% 0% 0% 0% $75.00 $5,259,870
57 b 0.45 $75.00 0% 0% 0% 0% $75.00 $1,470,150
57 c 0.74 $75.00 0% 0% 0% 0% $75.00 $2,417,580
57 d 0.72 $75.00 0% 0% 0% 0% $75.00 $2,352,240
57 e 0.74 $75.00 0% 0% 0% 0% $75.00 $2,417,580
58 b 0.87 $75.00 0% 0% 0% 0% $75.00 $2,842,290
58 c 0.91 $75.00 0% 0% 0% 0% $75.00 $2,972,970
59 a 0.63 $75.00 0% 0% 0% 0% $75.00 $2,058,210
59 b 0.65 $75.00 0% 0% 0% 0% $75.00 $2,123,550
59 c 0.61 $75.00 0% 0% 0% 0% $75.00 $1,992,870
59 d 0.64 $75.00 0% 0% 0% 0% $75.00 $2,090,880
70 a 1.08 $75.00 0% 0% 0% 0% $75.00 $3,528,360
70 b 1.06 $75.00 0% 0% 0% 0% $75.00 $3,463,020
70 d 1.36 $75.00 0% 0% 0% 0% $75.00 $4,443,120
71 1.82 $75.00 0% 0% 0% 0% $75.00 $5,945,940
73 a 1.34 $75.00 0% 0% 0% 0% $75.00 $4,377,780
73 b 1.57 $75.00 0% 0% 0% 0% $75.00 $5,129,190
458 N 0.11 $75.00 0% 0% -100% -100% $0.00 $0
464 N 0.09 $75.00 0% 0% -100% -100% $0.00 $0
468 N 0.07 $75.00 0% 0% 0% 0% $75.00 $228,690

54.762 $76.04 $179,163,914
Less: Mixed Income Site 0.675
Total 54.087
LAND VALUE CONCLUSIONS – DRV – WEST OF 7TH STREET 197
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Kaiser Site East of 7th- Excluded in this Analysis
AJ Apartments Not Part of Property
Open Space/Parks Central Shops
Average Location Above Average Location
Below Average Location
LAND VALUE CONCLUSIONS – DRV – WEST OF 7TH STREET 198
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Adjustments to Composite Benchmark Values

Inferior Locations: Lots 8a, 8c, 33c, 33d, 50, 51a, and 52 (a-e) have inferior locations to the benchmark site and are adjusted down by -10% to -50%.

Superior Locations: Lots 43a, 43b and 44 have superior locations to the benchmark site and are adjusted up 30%. Lots 35 and 46B are adjusted up 20% for their superior location.

Density: Lots 43a, 43b and 44 are expected to have higher densities and are adjusted up by 20%. Lot 46B is expected to have a lower density due to its shape.

Encumbrance: Lot 40 have setbacks or park dedication and is adjusted down by -20%. Lots 33c, and 33d are located under the freeway and can only be used for parking purposes. A downward adjustm ent of - 75% is applied to these lots. Lot 46A is the expected to be the next affordable multi -family project and the land is expected to be sold to the developer at a $100 cost. A 100% deduction is applied to this lot. 458 and 464 North B Street will be dedicated for 5th Street extension and are adjusted down by 100%.

Excluded in the lot valuation on the following pages is the AJ, Kaiser sites and properties East of 7th Street as these are valued separately.

No value is assigned to the open space or park sites as these are not revenue generating parcels.

Lot 17 is planned to be constructed with a parking garage. We have analyzed this property separately, so the land value and land acreage are excluded from the retail value estimates.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 199 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL SUBDIVISION DEVELOPMENT METHOD – DRV
OWNERSHIP - WEST OF 7 TH STREET
In the valuation of the subject property, we also utilize the subdivision development method . When analyzing a subdivision, the income approach (yield capitalization) to value is commonly referred to as the “Subdivision Development Method.” This technique utilizes discounted cash flow (DCF) analysis to extract the price that an investor/developer can afford to pay for land or finished lots, and still satisfy a profitability requirement to the land developer. The subdivision development method is a “ finished lot down” analysis that deducts anticipated lot development and carrying costs over a projected absorption period. As a discounted cash flow analysis, there are four components (revenue, absorption, expenses, and discount rate). The steps required to complete this analysis are as follows:

• Estimate the reven ue from the sale of finished lots, with consideration to appreciation/inflation factors, if any;
• Estimate an appropriate absorption rate for the sale of lots; • Estimate all expenses associated with the sell-off of lots, including holding and selling costs, as well as direct and indirect construction costs (with consideration for inflationary expense trending); • Estimate the appropriate profit rate/discount rate for the type of project under consideration and discount the net cash flows to arrive at a value indication.

The DCF model allows for a complete analysis of the subject’s financial performance throughout the projection period. In the following analysis, we have attempted to model the anticipated revenues and expenses for the project based on assumptions derived from the market.

The four components of the discounted cash flow analysis are discussed on the following pages.

LO T AND BUI LD IN G SA LE REVENUE
Revenue is generated from the sale of vacant lots and the Central Shop buildings. DRV has 64 buildable lots west of 7th Street with a total land area of 54.087 acres, excluding Central Shops and Lot 17 (parking garage). In addition, there are five historic Central Shop buildings totaling 247,832 square feet of building area. In the prior section, we estimated the value of the DRV lots and the Central Shops. The cumulative retail value of the lots and Central Shop buildings are summarized below:

Category Land Acres Value Per SF
Office, Retail, Residential & Hotel - West of 7th Street 54.087 $179,163,914 $76.04 Less: Mixed-Income Housing Dedication 0.675 -$2,235,947 $76.04 Total 53.412 $176,927,967 $76.04
Aggregate Retail Value
Category Retail Value Value Per SF
Central Shops 247,832 $16,900,000 $68.19
Building Area
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 200 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

LO T SA LE A B SOR PT I ON
We have reviewed the Strategic Market Absorption Analysis report dated May 17 , 2022, prepared by RCLCO to assist in determining the absorption estimate for the subject lots . Our review of this report indicates it was well prepared and contained sufficient analysis for the absorption and achievable rent pricing of future buildings. We deem this a reliable third -party report and have considered their conclusions in arriving at the lot absorption estimate of the Railyards. RCLCO cited critical assumptions in their analysis. These assumptions are summarized as follows:

➢ The Developer of The Railyards would offer a best-in-class, master-planned product, which would establish a strong sense of place at the development;

➢ The developer of the Railyards would pursue an adaptive reuse strategy for the historical Central Shops buildings, which serves to establish a unique, mixed-use environment at the southern edge of the site;

➢ The Live Nation venue will deliver as is currently planned;

➢ While current development plans for The Railyards include an MLS stadium and a Kaiser campus, the plans for these uses remain up in the air at this time, and it is possible that one or both will not deliver as currently shown. In place of these uses, the “Baseline” forecast thus assumes a mix of market -driven uses, based on the Land Use Variant section of the Sacramento Railyards Specific Plan Update ;

➢ While the MLS Stadium and/or Kaiser campus may not deliver as planned, The Railyards will still attract one or more anchor users, such as a corporate campus, government building, hospital, or entertainment venue, over the lifecycle of the development. This assumption reflects that, as a large, mixed -use development, The Railyards is likely to become an increasingly attractive location for such users as it begins to deliver, even if one is not identified at present time;

➢ Investment into on -site infrastructural projects, such as the parking garage on Lot 17, will be made in accordance with the current development timeline;

➢ The Sacramento Valley Station will develop into a multi-modal transportation hub for the region;

➢ Investment into future infrastructure projects such as the planned I Street Bridge replacement, will be made necessary over time assuming funding is available;

➢ Achievable demand and pricing at The Railyards are likely to fluctuate on a year-by-year basis. While RCLCO considered the downturn and subsequent recovery from the COVID -19 pandemic as part of this analysis, RCLCO did not include a forecast of future downturns and recoveries as part of its projections, which are instead intended to represent averages for use over the long-term.

Source: Strategic Market Absorption Analysis report prepared by RCLCO dated May 17, 2022

Model Forecast Scenarios

RCLCO developed three forecasts. These are briefly summarized below:

Baseline Forecast: On page 12 r eport RCLCO outlines some of the specific assumptions regarding the Baseline Forecast. They state that the Railyards would capture a significant share of demand for real estate in the region. The Baseline forecast assumes a conservative assumption that the MLS stadium and Kaiser campus will not come to fruition, though an anchor use may still emerge overtime. Under these SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 201 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL assumptions they believe that the Railyards would have sufficient demand to support the space in the Updated Railyards Finance Plan over the next 25 years.

Upside Forecast: This forecast is based under the assumption that the growth trajectory could be available to the project if the Kaiser campus were to deliver as planned, and/or if additional anchor us es (e.g., a smaller sports stadium) were to open during the initial phases of development. In this case, The Railyards is likely to emerge as a greater focal point of urban growth in the Downtown Area. The “Upside” forecast assumed that The Railyards would capture at least its “fair share” of demand for real estate, and that it would incite additional demand for hotel given the number of other visitors who might not have otherwise come to the Downtown Area, generally, or The Railyards, specifically. Under these assumptions they believe that the Railyards would have sufficient demand to support the space in the Updated Railyards Finance Plan approximately two to four years earlier than the Base Plan.

Downside Forecast: This forecast is based under the assumption that Kaiser and the MLS stadium does not come into fruition , but also that other elements of the development program do not mater ialize as quickly as would be expected. In particular, structured parking was one example of an element that RCLCO considered; in the event that one or more of the planned garages do not deliver in time to support the market-driven uses at the Railyards, there is a risk that development at the project would take place at a slower pace. In this scenario RCLCO project ed it would take two years longer to build -out than it would be under the Baseline Forecast.

Analysis of RCLCO’s Baseline Model

As reported above, RCLCO projects sufficient demand to support the total amount of residential, commercial and hospitality development in the Railyards over the next 2 5 years. This was based on inventory of 6, 745 housing units, 6.0 million square feet of commercial space and 1,100 hotel rooms.

RCLCO projects demand based on finished building units. Below are their demand conclusions.

As stated earlier our review of the RCLCO report indicates it was well prepared and contained sufficient analysis for the absorption and achievable rent pricing of future buildings. We consider the following factors in evaluating their Baseline model:

➢ They apply reasonable assumptions in their modeling forecast. In regard to the absence of Kaiser or the MLS stadium, they assumed that the Railyards would attract one of more anchor users over the lifecycle of development.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 202 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL ➢ Extensive and reliable market data was utilized in their modeling.

➢ Market capture rates used in the modeling appears reasonable and market base supported.

➢ Methodology used to calculate their demand estimates was appropriate and consistent with those commonly used by analysts to project demand.

We deem this a reliable third -party report and have determined the Baseline and Downside models are credible opinions of a demand forecast.

Analysis of RCLCO’s Upside Model

This forecast is based under the assumption the growth trajectory could be available to the project if the Kaiser campus were to deliver as planned, and/or if additional anchor uses (e.g., a smaller sports stadium) were to open during the initial phases of development. RCLCO projected a two -year earlier demand assumption that the Baseline Plan. Their upside demand table is shown on page 13 of their report.

A two-year earlier absorption as compared to the Base line Plan is a reasonable time -period for a more optimistic projection. While we accept RCLCO’s calculations under their Upside model , the underlying premise that the Kaiser campus and a smaller stadium is an optimistic assumption that most market participants would not assume. We give this scenario no weight.

Analysis of RCLCO’s Downside Model

This forecast is based under the assumption that Kaiser and the MLS stadium does not come into fruition and if other trends or changes do not occur as currently predicted. RCLCO projected it wou ld take two years longer to build-out than it would be under the Baseline Forecast

Under their specific assumption, a two-year longer absorption as compared to the Baseline Plan is a reasonable time -period for a more pessimistic projection. RCLCO’s absorption projection under their Downside model is reasonable under their stated premise.

This project is deemed a conservative absorption outcome. However, in light of changing market conditions, including U.S. and worldwide GDP growth decline due to the Ukraine conflict, higher inflation, higher interest rates and greater discussions of a possible near-term recession, we believe the downside model deserves some weight.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 203 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Conclusion of the Three Scenarios

A review and analyses of the three scenarios indicate Baseline Scenario w as credible and reasonable results under its specific assumption. While the Baseline Scenario is deemed a reasonable projection, the model is slightly aggressive for the commercial and hotel forecasts. The Residential forecast under their Baseline is deemed reasonable as this property type is in greatest demand in downtown Sacramento.

The Upside Scenario is given no weight as it is believed to have a too optimistic underlying assumption.

The Downside Scenario is a conservative model but deemed highly credible in light of the recent changes in the economy.

In the Downside Scenario, there was an assumption that there could be delays in the structured parking garage on Lot 17 that would have a negative impact on absorption and buildout of the Railyards. We also consider the more conservative absorption being reasonable considering the recent changes in the economy. For these reasons, we believe the Downside Case deserves weight in our valuation modeling for the commercial and hotel land uses.

Based on the analysis above we give weight to RCLCO’s Baseline and Downside Forecast. An average of the two scenarios will be utilized to estimate the subject lot absorption for the commercial and hotel. The Baseline conclusions are utilized for the residential.

Quantifying Building Demand For Land Area Usage

The demand totals per year would be satisfied by delivering an equal amount of supply on or slightly before the year total. So, delivery of satisfactory amount of finished supply would likely occur 6-12 months earlier to accommodate future demand. Construction, planning, and entitlement time is usually 2-3 years for delivery of finished product. Acquisition of land to accommodate future supply is therefore estimated to proceed supply by three years.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 204 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL The next step in the absorption analysis is to incorporate RCLCO’s demand schedule and the pre - completion timing (planning, entitlement, construction period) into a model that projects the necessary land area to accommodate the future demand.

Earlier in the report we estimated DRV’s land area to accommodate the buildout of the existing entitlements. In our analysis we will estimate absorption on the following building areas and corresponding land size. These are summarized as follows:

Category Units
Land
Acres Overall Density
Residential 3,651 Units 30.422 120 units per acre
Office & Retail 3,267,000 SF of Bldg. 18.75 4.0 FAR
Hotel 1,100 Rooms 7.33 150 units per acre
Central Shops 247,832 SF of Bldg. 9.37 0.61 FAR
Total 65.872
The land size above includes Lot 17 (1.74 acres) and the Mixed -Income dedication lot ( 0.675 acres).

Excluding these non-revenue lots, the net land area is 63.457 acres including the Central Shops. Further excluding the land area of the shops, the net land area to be sold is 54.087 acres.

Net Acres to be Absorbed

Another assumption of RCLCO is that Live Nation would be delivered in 2023-2024 (page 5 of their report).

Live Nations will be a big draw to the Railyards and our absorption modeling has factored in this property component in the earlier absorption periods of our model. RCLCO shows demand in building components.

Our absorption converts the estimated building demand into land area.

Residential Land Absorption: RCLCO has four components under this property type - rental apartments, affordable rental apartments, owner-occupied condominium units and owner-occupied townhomes.

For their Baseline Scenario they report a de mand in year 1 of 400 units and growing to a cumulative demand of 6, 745 units in 2 1 years, averaging 321 units per year. A 3-year advance land acquisition is reasonable for each year demand. For years 1-4 a gradual absorption estimate is made to catch up with future years demand. Beginning in year 5, the land absorption will be 3 years in advance of demand. We initially deduct the AJ project unit count from the land needed as this project is a component of the supply demand but not part of the DRV ownership. The total absorption period for the residential property west of 7th Street is 11 years.

Category Land Acres West of 7th Adjustment Adjusted Acres Comments Residential 30.422 -0.675 29.747 Mixed-Use Dedication
Office & Retail 18.75 -1.74 17.01 Lot 17
Hotel 7.33 0 7.33
Historic Shops 9.37 0 9.37
Net Acres to Be Absorbed 65.872 -2.415 63.457
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 205 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Railyards Mixed-Income Housing As it Relates to Absorption

The subject residential development will need to comply with the Railyards Mixed -Income Housing Strategy. To comply with this ordinance, the developer would likely dedicate land to a qualified non - profit at no costs. This is similar to the Wong Center where DRV is selling this land at effectively no cost.

As discussed earlier, the following are the most probable date for future land dedication:

Year 10 – Yr. 2031: 81 units to be set-aside

For the land dedication, we have reduced the residential land sale inventory by 0.675 acres, which is the estimated land area to accommodate the 81 units needed to satisfy this requirement. This shows up in year 10 of our absorption analysis.

Office & Retail Land Absorption: RCLCO has combined office and retail for the commercial demand study.

For their Baseline Scenario they report a demand in year 1 of 411,000 SF and growing to a cumulative demand of 6,017,000 SF in 26 years averaging 231,423 SF per year. For their Downside Scenario they report a demand in year 1 of 208,000 SF and growing to a cumulative demand of 6,030,000 SF in 28 years averaging 215,357 SF per year. We utilize an average of the two models in our forecast. A 3-year advance land acquisition is reasonable for each year demand. For years 1-4 a gradual absorption estimate is made to catch up with future years demand. Beginning in year 5, the land absorption will be 3 years in advance of demand. The total absorption period for office and retail property west of 7th Street is 14 years.

Hotel Land Absorption: For their Baseline Scenario RCLCO estimates it will take 19 years for total demand to satisfy the subject’s 1,100 room entitlement total. They report a forecast in year 4 of 130 rooms growing to a cumulative demand of 1,085 rooms in year 19 and averaging 57 room demand per year. For their Downside Scenario RCLCO estimates it will take 22 years for total demand to satisfy the subject’s 1,100 room entitlement total. They report a forecast in year 8 of 155 rooms growing to a cumula tive demand of 1,085 rooms in year 22 and averaging 49 room demand per year. We utilize an average of the two models in our forecast. A 3-year advance land acquisition is reasonable for each year demand. For years 1-4 a gradual absorption estimate is made to catch up with future years demand. Beginning in year 5, the land absorption will be 3 years in advance of demand. The total absorption period hotel property west of 7th Street is 16 years.

Central Shops: The Central Shop s total 247,832 square feet of building area. This site contain s five buildings, and all would likely be sold to one buyer, possibly in several phases. DRV estimates they will commence construction on one of the Central Shops beginning in 2023 . The entitlement and design milestones within the lease commenced in February 2022 with an estimated building permit issuance in early 2023. In order to stay on schedule with the Live Nation lease, it is anticipated that the Paint Shop building would be sold in year 1 to keep up with the entitlement and design schedule current taking place.

With the most probable buyer of the remainder of the shop buildings being the same buyer as the Paint Shop, it is logical they would want ownership soon thereafter for overall planning and design purposes.

We estimate the remainder of the shop buildings to be sold in year 2.

The absorption estimates were based on the supply demands as estimated from RCLCO’s Market Study.

The land acres to be absorbed are not reflective of DRV’s business model, which explained earlier has an approach of constructing their own projects on the subject land. We believe the absorption estimates should be market driven as opposed to the business plan of the current owner. Shown on the following page is our absorption estimates for DRV owned land.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 206 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Absorption Conclusion

Blue Lines are from RCLLC report
Green Lines are BBG’s estimates
[1] Cumulative Demand and Annual Supply Needed is from the RCLCO baseline estimates. [2] Land Area Needed is derived by dividing RCLCO’s annual supply by BBG’s estimated density for each land use. [3] Land Absorption is derived by using the Land Acres Needed three years in advance. For the initial years Land Absorption is 1 to 2 years in advance.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 207 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL CAPI TA L I MPR OVE MEN T S – SU BDI VI SI O N HORI Z ON TA L CO S TS DRV provided development costs and schedule for necessary infrastructure. These improvements are for all horizontal costs for the full built out of the horizontal costs. Th e Parking Garage Costs for Lot 17 are shown separately in this this analysis. Information of the itemized costs were previously shown in the Site Analysis section of this report. As stated earlier we believe the reported developer costs are within a reasonable range of the Updated Railyards Finance Plan.

The construction cost schedule is reflective as of June 2022. The only project under construction on the DRV property is the Drainage Pump Station. The construction cost of this project is $34,000,000. The project is under construction with $18.17 million completed. The sources used to fund the $18.17 million in storm drain improvements are shown below:

For analysis purposes, we have elected to show the net remaining cost of the storm drain after a deduction of the remaining CFD reimbursements. An analysis shown later indicate s an expected CFD net bond proceeds of $20,450,000. The initial $10.57 million that DRV funded for this improvement will get reimbursed first from the bond proceeds. The remaining bond proceeds of $9.8 million has been credited as an offset for the remaining cost of the storm drain as shown below.

Except for the Drainage Pump Station all of the costs are curren t date estimates with all soft cost and contingencies included. The Drainage Pump Station is based on a contract.

Shown on the following page is the construction timing of the capital improvements the property west of 7th Street. These costs do not include any inflation factors. The timing of the construction projects is predicated on the development of the lots impacted. It is anticipated that construction timing will change over time as the build-out of the Railyards will likely be different from the developer’s current estimates.

The only construction project under construction is the drainage pump station. There has been a pause for some of the construction projects initially planned in 2021 and 2022. Given the start delays for some of the 2021 projects, we have pushed out the construction cost schedule from 2022 to 2024 by averaging the developer’s 2021-2023 reported costs.

OPA $6.3 million
AHSC $1.3 million
DRV Equity $10.57 million
Funding/Spent To-Date $18.17 million
Storm Drain Expenditure Sources
Original Cost $34,000,000
Less: Funding/Spent To-Date $18,170,000
Less: Remaining CFD Funds ($20,450,000 - $10,570,000) $9,880,000 Net Remaining Cost $5,950,000
Storm Drain Remaining Cost
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 208 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Description
Drainage Pump Station - Remaining Cost (net of Remaining Proceeds) 5,950,000 - - - - - - - - - - - - Berm Replacement Contour & 7th Street Gate (Flood wall/gate) 767,433 767,433 767,433 - - - - - - - - - - N B Street 7th Street to 8th Street - - - - - - - - - - N B Street 8th to 10th - - - - - - - - - - - - - S Park 6th to 7th 953,650 953,650 953,650 - - - - - - - - - - 6th Street Railyards to NB 2,350,817 2,350,817 2,350,817 - - - - - - - - - - Railyards Blvd 7th Street to 10th Street - - - - - - - - - - South Park Paseo (Public) - - - - - - - - - - South Park Paseo (Private) - - - - - - - - - - 7 Street pump station - - - - - - - - - - 10th Street To Boundary - - - - - - - - - - Dos Rios Road Striping - - - - - - - - - - East RT Station 1,305,225 1,305,225 1,305,225 - - - - - - - - - - 7Th Street Widening (NOTA 7th Street) 2,027,417 2,027,417 2,027,417 - - - - - - - - - - 6th Street Buffered Bike Lane and Bike Lane Easement 639,700 639,700 639,700 - - - - - - - - - - 7Th Street Water Line - - - 183,133 219,760 219,760 219,760 24,687 - - - - Camille & Stevens 5th to 6th (NOTA I-C) - 1,771,667 1,771,667 1,771,667 - - - - - - - - 5th Street Railyards to N B street (roadway/finish) - 769,333 769,333 769,333 - - - - - - - - - Stanford and Stevens Private Streets - - 2,248,000 2,248,000 2,248,000 - - - - - - - - Stanford Bercut to Camille - - - 512,571 768,857 768,857 768,857 320,357 - - - - Stanford Intersection Relocation at railyards - - 274,083 274,083 274,083 - - - - - - - - Lot 21b (east) - - 1,536,883 1,536,883 1,536,883 - - - - - - - - Camille Bercut to 5th - - 3,150,667 3,150,667 3,150,667 - - - - - - - - Intermodal Tunnel Entrance - - 1,100,000 1,100,000 1,100,000 - - - - - - - - Judah Street - - - 360,263 432,316 432,316 432,316 396,289 - - - - Lot 21a - - - 456,433 684,649 684,649 684,649 285,270 - - - - Lot 21c - 933,900 933,900 933,900 - - - - - - - - Huntington Street - - - 294,694 442,041 442,041 442,041 184,184 - - - - Trunk Sewer 7 Street To The End Of 10 Street. - - - 8th Street - - -
Shift Lanes Railyards - - - Lot 1 Under I-5 experience - - - 400,855 481,026 481,026 481,026 440,941 - - - - Lot 31Under I-5 experience - - - 584,749 701,699 701,699 701,699 643,224 - - - - Lot 33a Under I-5 experience - - - 199,471 239,365 239,365 239,365 219,418 - - - - Lot 33b Under I-5 experience - - - 319,699 383,639 383,639 383,639 351,669 - - - - Lot 60 Vista Connector to 4Way - - - 47,159 56,591 56,591 56,591 51,875 - - - - Vista Park - - - 1,797,795 2,157,354 2,157,354 2,157,354 1,977,575 - - - - Park Lot 58A - - - 206,002 247,202 247,202 247,202 226,602 - - - - Park Lot 57A - - - 61,851 74,221 74,221 74,221 68,036 - - - - Park Lot 68 - - - 222,708 267,250 267,250 267,250 244,979 - - - - Park Lot 70 - - - 43,026 51,631 51,631 51,631 47,329 - - - - N B Street 6th to 7th - - - 475,693 570,832 570,832 212,044 - - - - N B Street 5th to 6th - - - 609,456 731,347 731,347 731,347 670,402 - - - - South Park 5th to 6th - - - 628,781 754,537 754,537 895,023 895,023 - - - - South Park Storm Drain 5th to 6th - 174,417 174,417 174,417 - - - - - - - - - Lot 32 Plaza (State Parks Museum) - - - 743,049 1,114,574 1,114,574 1,114,574 464,406 - - - - Lot 30 (State Parks Museum ERE Portion) - - - - - - - - 1,140,613 1,140,613 1,140,614 Railyards Blvd 10 Street to 12 Street
Lot 34 Riverfront Park - - - - - - - - 246,308 246,308 246,308 Lot 35 Sac River Connection - - - - - - - - 1,265,183 1,265,183 1,265,183 - Lot 21b (west) - - - 322,188 483,282 483,282 483,282 201,367 - - - - Lot 21b (interior plaza and South) - - - 724,922 1,087,384 1,087,384 1,087,384 453,077 - - - - Lot 53- open space along RY Blvd from 10th to 12th
Bercut from Camille to End - - - - - - - 801,000 801,000 801,000 - Extension Of 10th Street
Drain Line SOTA - - - - - - - - 1,370,300 1,370,300 1,370,300 - Total 13,994,242 10,759,659 20,003,192 11,958,950 18,438,031 11,949,557 11,949,557 11,731,255 8,166,710 4,823,404 4,823,404 4,823,405 - Sacramento Railyards Infrastructure Schedule and Budget - West of 7th Street

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 209 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

FUNDI N G A ND REI MBUR SEME NT S SOURCE S
As reported earlier the development of the Railyards has and will continue to be partially funded from various public sources. DRV reported $149.6 million in public funding sources has been secured or identified to help pay for the various infrastructure costs. These identified sources are discussed below.

Natural Resource Grant: The State of California revised their budget under Natural Resources portion to include $30 million for infrastructure in the Railyards. DRV reports this grant is fully approved by the State and there is 100% certainty of receiving. The actual recipient of this grant is the City of Sacramento, who will transfer the grant funds over to DRV or to a successor owner to help fund certain projects. Below are some of the identified projects in the Railyards that are earmarked for this grant. DRV shows reimbursement of $30,025,393. They report these funds would be paid on a pay as you go basis with the approved projects.

According to the City of Sacramento, $750,000 from this source will be utilized for city resources. The City reports these funds are not in hand but have existing agreements and consider their certainty very high. The remaining net reimbursements are $29,275,393. We have recognized 100% of the remaining grant in our analysis.

Housing and Community Development Grant (HCD): The Railyards received a $15.3 million grant from HCD in the Affordable Housing and Sustainable Communities Grant and Loan program (AHSC) and $3 million from Transit and Intercity Rail Capital Program (TIRCP). The remaining balance of these grants totals $18,097,506 according to the developer.

The actual recipient of the AHSC grant is LDK Ventures, who is the parent company of DRV. Housing and Community Development, the agency in charge of this grant pays out a draw request to LDK Ventures and then they immediately transfer the funds to DRV. We make an extraordinary assumption that proceeds

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 210 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL received from LDK Ventures for this grant would be assignable to DRV or a prospective buyer of the property.

These grants will be used to support infrastructure around the Railyards affordable housing sites. They report these funds would be paid on a pay as you go basis with the approved projects.

The recipient of the TIRCP grant is the City of Sacramento, who will transfer the grant funds over to DRV or to a successor owner to help fund certain projects. These grants will be used to support infrastructure around the Railyards affordable housing sites. They report these funds would be paid on a pay as you go basis with the approved projects.

Approximately $1,300,000 of these grants has been used to fund the storm drain. The net remaining reimbursement for the combined HCD and TIRCP grants is $16,797,506. The City reports these funds are in hand and consider their certainty very high. We have recognized the remaining grant in our analysis.

The City of Sacramento was recently awarded a new $49.865 million TIRCP grant. This funds an additional $4.66 million of infrastructure costs for the Railyards. This additional grant was announced after the appraisal date of value and has not been considered.

Owner Participation Agreement (OPA): This is an in -place tax increment agreement that originally was administered by Sacramento Redevelopment Agency. The Agency had originally entered into an Infrastructure Owner Participation Agreement with S. Thomas Enterprises of Sacramento LLC, the previous owner of the Sacramento Railyards. In 2012 the Agency was dissolved and Redevelopment Agency Successor Agency (RASA) and became a party to the OPA, as the Successor. The OPA was assigned to the current owner, Downtown Railyards Ventures (DRV) by the prior landowner. The initial OPA was the first agreement to implement under this program and encompassed construction of infrastructure (i.e., streets and utilities), parking lots, and rehabilitation of the historic Central Shops buildings. The original Gross OPA funds were $60 million with Net OPA Funds of $36,480,000. DRV reported funds of $8,359,390 in their budget and reported more updated current available funds was around $6 million. The City of Sacramento reported remaining funds of $6,359,390 in early 2021 before the start of the storm drain project. Approximately $6,300,000 have been used to fund part of the storm drain. We recognize no reimbursement of the remaining funds from this source as we show them as a credit toward the payment of the Storm Drain.

Enhanced Infrastructure Financing District (EIFD): This tax increment district was originated in 2019 to help reimburse the developer for infrastructure east of 7th Street as part of the MLS stadium development. This DCF addresses only property west of 7th Street and any EIFD reimbursements would be for the valuation of land east of 7th Street shown later in the report. For presentation purposes, we have elected to show this reimbursement discussion within this section.

Tax increment funds are created in this district when vertical improvements are constructed east of 7 th Street. The developer reported total of $40.7 million of EIFD funds for improvements east of 7th Street as well as an additional $27.2 million loan from the City of Sacramento loan that is tied to future EIFD funds.

The loan will have a capitalized interest for three years, 20-year amortization at higher of 2% or 100 bp over Pool A rate. This loan is an advance of EIFD Tax Increment proceeds. The EIFD is the administering agency of the tax increment revenues. The map below shows the infrastructure of this EIFD. The $27.2 million in City Loan is contingent on MLS m aterializing. Because MLS is a speculative event today, we have not recognized $27.2 million as reimbursement.

City of Sacramento staff indicate that the $40.7 million in EIFD funds is based on preliminary discussions with the City to expand the EIFD boundary. At the present time the City has not committed moving forward with SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 211 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL any EIFD expansion. We make a deduction of this $40.7 million from DRV’s reimbursement budget in our analysis as it is still speculative and relates to land east of 7th Street.

Courthouse Fee: According to the city of Sacramento there is a reimbursement of $2,000,000 from this source. The City reports these funds are adopted by resolution and are in hand and are available to the developer to fund infrastructure. We have recognized 100% of this reimbursement.

Railyards Community Facilities District No. 2018-01: The Underwriter of the Railyards CFD is Stifel, Nicolaus & Company. Based on their knowledge of the municipal bond market, they believe they can price the bonds between a 2.0:1 to 2.5:1 value to lien. Using the market value of the bond district, this would yield net proceeds between $18,099,890 and $22,803,754. This is based on the interest rate being 50 basis points higher at estimated bond pricing date of e nd of July 2022. Stifle feels a mid -point of $20,451,822 is a reasonable estimate. This would be effectively a 2.25 :1 value to lien. Based on their knowledge of the bond market, we have utilized net bond proceeds of $20,450,000.

The City and DRV entered into an Acquisition and Shortfall Agreement that DRV will construct the facilities to be acquired with the proceeds of the Bonds pursuant to certain requirements contained in the Acquisition Agreement. Under this agreement, a portion of the proceeds of the Bonds will be applied to finance the costs of construction of the storm drain improvements. A portion of the proceeds from the sale of the bonds will be deposited in the Acquisition and Construction Fund and used to pay for the costs of facilities authorized to be financed for the District in accordance with the terms of the Indenture and the Acquisition Agreement.

The Appraisal Standards for Land Secured Financing, published by the California Debt and Investment Advisory Commission (CDIAC) addresses Infrastructure Financed through Special Taxes and Assessments.

Specifically, it states “If improvements are financed through special taxes and assessments levied on the property in the development, the appraiser should address the process of funding these improvements from the proceeds of the CFD or assessment district bonds and list them as a limiting condition of the appraisal report. In other words, the value of the land should take into consideration the funding for the

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 212 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL improvements that are financed by improvement bonds paid from special taxes or assessments levied on the property.”

As discussed earlier, we have treated the CFD reimbursements separate from the other reimbursements.

These reimbursements have been shown as a deduction of the remaining cost of the storm drain. As such, the estimated total CFD reimbursements of $20,450,000 are removed from this category.

Storm Water Grant: Not included in the developer’s budget is a possible grant from State Water Resources Control Board. This Grant is from Proposition 1 which authorized $7.545 billion in general obligation bonds for water project. The Railyards is on a short list of being recipient of a $10 million grant to help fund the storm drain project. This grant has not been modeled in the DCF due to its uncertainty.

Park Impact Fees: Under the URFP the City collects park impact fees. Park fee revenues generated by payment of the Neighborhood and Community Parks component of the PIF will be available to fund Railyards park facilities. City staff indicated that some park improvements costs would be eligible for reimbursement from Park Impact Fees with the remainder coming from Railyards Plan Area Impact fees. These reimbursements would either be from a fee credit method or direct reimbursement under a pay as you go.

Below are the estimated park costs which we have added as a reimbursement under the Park Impact Fees and/or Railyards Plan Area Impact fees. The City reports these funds are not in ha nd and are contingent upon the performance of the developer. As we have modeled the cost of the parks in our model. We have treated these funds to be realized.

Railyards Plan Area Impact Fees: The URFP contemplated creating a new plan area fee to help fund infrastructure costs in the Railyards. This fee plan has since been implemented but is under review for possible revisions. The Railyards Impact Fee Program could be used to fund the cost of infrastructure and Public Facilities that are not already funded by existing impact fee programs or other sources of revenues.

To the extent the Master Developer constructs facilities included in the Railyards Impact Fee Program and subject to a credit and reimbursement agreement between the Master Developer and the City, the Master Developer will be eligible for credits against Railyards Impact Fee payments due. These credits could then be transferred to other parties or successors in ownership as individual Railyards development projects proceed. Presently there is no agreement in place to use Railyard Plan Area Fees other than for the park costs cited above. We recognize no further reimbursement for this source.

Type Description 6/10/2021 Estimate
Public Parks Lot 1 Under I-5 freeway 2,284,874
Public Parks Lot 31Under I-5 freeway 3,333,071
Public Parks Lot 33a Under I-5 freeway 1,136,982
Public Parks Lot 33b Under I-5 freeway 1,822,286
Public Parks Lot 60 Vista Connector to 4Way 268,809
Public Parks Vista Park 10,247,433
Public Parks Park Lot 58A 1,174,209
Public Parks Park Lot 57A 352,550
Public Parks Park Lot 68 1,269,436
Public Parks Park Lot 70 245,249
Public Parks Lot 30 (State Parks Museum ERE Portion) 3,421,840 Public Parks Lot 34 Riverfront Park 738,924
Public Parks Lot 35 Sac River Connection 3,795,549
Total Park Costs 30,091,214

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 213 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL MLS/DRV Fund Sources: The developer reported funding sources from these entities/groups. We removed these reimbursements in our model.

CO NC LUS I ON O F REI M B URSEME NT S
The developer has modeled $159.2 million in reimbursements from various sources to fund the remaining $172.2 million in projects (east and west of 7th Street) to be constructed. They recognize that future grants, impact, and plan area fees are probable sources for payment of infrastructure projects but has not modeled them into their budgets at this time. They ultimately believe that 100% of the project’s approximate $172.2 million in infrastructure cost will be funded from existing or future sources to be found.

Most of the developer’s recognized reimbursements are believed to be of high certainty of collection. The source with the highest risk of uncertainty is EIFD funds, as this is predicated on vertical improvements east of 7th Street. With DRV having ownership of the Railyards for approximately 6 years, their pace of finding funding sources has been good. The infrastructure development time period under the DRV’s budget is 12 years. It is conceivable that DRV or a buyer of the project would find other funding sources to reduce the shortfall. It is also reasonable to believe that some recognized reimbursements in the budget will not come into fruition and some projects will be delayed as a result.

As additional support reimbursements we have reviewed the Updated Railyards Financing Plan (“URFP”) dated June 2022. This table lists all the known remaining construction projects in 2022 for the Railyards and likely sources to fund the projects. Shown on the following page is Table 5-1 from the Updated Railyards Financing Plan.

Economic & Planning Systems, Inc. (EPS) prepared the URFP dated June 2022. This document was subsequently approved by the Sacramento City Council. Given the plan was likely vetted by a number of City departments, private individual and various companies contributing to the report we believe it deserves consideration. A summary of remaining costs and un-funded projects indicates the following:

• $369 million in remaining construction cost to be completed . This amount includes substantial projects to be constructed by the public and/or paid from city fee programs well. As presented earlier (page 70), the adjusted amount of infrastructure from this schedule was $176 million as compared to $172 million from DRV’s reported cost estimate.

• Developer net funded cost of $ 52.6 million. This is compared to our estimate of $94.2 million ($172.2 million cost - $78.2 million reimbursements).

The information from the URFP generally supports the developer’s opinion that most of construction infrastructure would be funded from various funding sources. We believe a buyer of the property would likely only recognize existing in-place funding sources and treat possible higher or lower reimbursements as a risk factor in developing our concluded discount rate.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 214 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 215 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Based on our analysis and discussion with city staff, we utilized the developer reported funding sources in our model with the following adjustments applied:

Funding Source Developer's Estimate Appraiser's Adjustment Reason for Deduction Certainty of Receiving Final Reimbursement Utilized Natural Resource Grant $30,025,393 -$750,000 City Resouces for $750,000 Very High $29,275,393 HCD & TIRCP Grant $18,097,506 -$1,300,000 Amount used for Storm drain Very High $16,797,506 OPA $8,359,390 -$8,359,390 No funds remaining $0
EIFD $40,689,898 -$40,689,898 Preliminary, not approved by city $0 City Loan $27,208,667 -$27,208,667 Based on MLS, too speculative $0 Courthouse Fee $2,000,000 $0 Very High $2,000,000
MLS $1,784,550 -$1,784,550 Based on MLS, too speculative $0 DRV $31,056,227 -$31,056,227 Developer Funds $0
Park/Railyards Fees $0 $30,091,214 Contingent on Performance $30,091,214 CFD $20,450,000 -$20,450,000 Used to Off-set storm drain costs $0 Total $179,671,631 $101,507,518 $78,164,113
Summary of Reimbursement Adjustments
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 216 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Description Estimate Funding
Source Grant CFD EIFD Courthouse
Fee City loan State Grant OPA MLS DRV Total
Drainage Pump Station (in and out of water) 34,000,000 CFD 20,450,000 - 2,000,000 - - 8,359,390 - - 30,809,390 Berm Replacement Contour & 7th Street Gate (Flood wall/gate) 2,302,300 State Grant - - - - - 1,599,650 - - 1,599,650 N B Street 7th Street to 8th Street 2,277,900 State Grant - - - - - 2,277,900 - - 2,277,900 N B Street 8th to 10th 2,427,400 State Grant - - - - - 2,427,400 - - 2,427,400 S Park 6th to 7th 2,860,950 State Grant - - - - - 2,636,700 - - 2,636,700 6th Street Railyards to NB 7,052,450 City Loan - - - - 5,288,350 - - - 5,288,350 Railyards Blvd 7th Street to 10th Street 6,624,400 City Loan - - - - 6,624,400 - - - 6,624,400 South Park Paseo (Public) 313,950 City Loan - - - - 313,950 - - - 313,950 South Park Paseo (Private) 1,814,450 MLS - - - - - - - - - 7 Street pump station 553,150 City Loan - - - - 553,150 - - - 553,150 10th Street To Boundary 2,672,100 City Loan - - - - 2,672,100 - - - 2,672,100 Dos Rios Road Striping 254,500 City Loan - - - - 254,500 - - - 254,500 East RT Station 3,915,675 EIFD 2,706,165 - 253,935 - - - - - 2,960,100 7Th Street Widening (NOTA 7th Street) 6,082,250 City Loan 3,687,683 - - - 1,811,517 - - - 5,499,200 6th Street Buffered Bike Lane and Bike Lane Easement 1,919,100 Grant 1,581,864 - - - - - - - 1,581,864 7Th Street Water Line 867,100 State Grant - - - - - 1,043,859 - - 1,043,859 Camille & Stevens 5th to 6th (NOTA I-C) 5,315,000 EIFD 2,274,497 - 2,367,003 - - - - - 4,641,500 5th Street Railyards to N B street (roadway/finish) 2,308,000 State Grant - - - - - 2,308,000 - - 2,308,000 Stanford and Stevens Private Streets -Public funding TBD 6,744,000 DRV - - - - - - - - - Stanford Bercut to Camille 3,139,500 DRV - - - - - - - - - Stanford Intersection Relocation at railyards 822,250 State Grant - - - - - 822,250 - - 822,250 Lot 21b (east) 4,610,650 DRV - - - - - - - - - Camille Bercut to 5th 9,452,000 State Grant 4,847,297 - - - - 5,086,734 - - 9,934,031 Intermodal Tunnel Entrance 3,300,000 EIFD 3,000,000 - 300,000 - - - - - 3,300,000 Judah Street 2,053,500 State Grant - - - - - 2,053,500 - - 2,053,500 Lot 21a 2,795,650 DRV - - - - - - - - - Lot 21c 2,801,700 DRV - - - - - - - - - Huntington Street 1,805,000 City Loan - - - - 1,805,000 - - - 1,805,000 Trunk Sewer 7 Street To The End Of 10 Street. 1,166,100 City Loan - - - - 1,166,100 - - - 1,166,100 8th Street 5,288,350 City Loan - - - - 5,288,350 - - - 5,288,350 Shift Lanes Railyards 852,150 EIFD - - 852,150 - - - - - 852,150 Lot 1 Under I-5 experience 2,284,874 EIFD - - 2,284,874 - - - - - 2,284,874 Lot 31Under I-5 experience 3,333,071 EIFD - - 3,333,071 - - - - - 3,333,071 Lot 33a Under I-5 experience 1,136,982 EIFD - - 1,136,982 - - - - - 1,136,982 Lot 33b Under I-5 experience 1,822,286 EIFD - - 1,822,286 - - - - - 1,822,286 Lot 60 Vista Connector to 4Way 268,809 EIFD - - 268,809 - - - - - 268,809 Vista Park 10,247,433 EIFD - - 10,247,433 - - - - - 10,247,433 Park Lot 58A 1,174,209 EIFD - - 1,174,209 - - - - - 1,174,209 Park Lot 57A 352,550 EIFD - - 352,550 - - - - - 352,550 Park Lot 68 1,269,436 EIFD - - 1,269,436 - - - - - 1,269,436 Park Lot 70 245,249 EIFD - - 245,249 - - - - - 245,249 N B Street 6th to 7th 1,829,400 State Grant - - - - - 2,711,450 - - 2,711,450 N B Street 5th to 6th 3,473,900 State Grant - - - - - 3,473,900 - - 3,473,900 South Park 5th to 6th 3,927,900 State Grant - - - - - 3,584,050 - - 3,584,050 South Park Storm Drain 5th to 6th 523,250 EIFD - - 523,250 - - - - - 523,250 Lot 32 Plaza (State Parks Museum) 4,551,177 DRV - - - - - - - - - Lot 30 (State Parks Museum ERE Portion) 3,421,840 EIFD - - 3,421,840 - - - - - 3,421,840 Railyards Blvd 10 Street to 12 Street 3,025,400 EIFD - - 3,025,400 - - - - - 3,025,400 Lot 34 Riverfront Park 738,924 EIFD - - 738,924 - - - - - 738,924 Lot 35 Sac River Connection 3,795,549 EIFD - - 3,795,549 - - - - - 3,795,549 Lot 21b (west) 1,973,400 DRV - - - - - - - - - Lot 21b (interior plaza and South) 4,440,150 DRV - - - - - - - - - Lot 53- open space along RY Blvd from 10th to 12th 167,347 EIFD - - 167,347 - - - - - 167,347 Bercut from Camille to End 2,403,000 CFD - - - - - - - - - Extension Of 10th Street 1,446,200 City Loan - - - - - - - - Drain Line SOTA 4,110,900 EIFD - - 3,109,600 - 1,431,250 - - - 4,540,850 Construction Completed & Bond Proceeds for Pump Station (34,000,000) Cost Adjustment (3,177,040)
HCD Adjustment (1,300,000) 1,877,031
OPA Adjustment (8,359,390) (8,359,390)
EIFD Adjustment (40,689,898) (40,689,898)
Grant Adjustment (750,000) (750,000)
CFD Adjustment (20,450,000) (20,450,000)
City Loan Adjustment (27,208,667) (27,208,667)
Park Fee Adjustment 30,091,214 30,091,214
Appraiser's Adjusted Amount 16,797,506 - 30,091,214 2,000,000 - 29,275,393 - - - 78,164,104 Sacramento Railyards Reimbursement Schedule and Budget
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 217 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

EXPEN SES (S E LL IN G AND HOL DI NG C OS T S)
The holding and selling costs typically associated with a development where lot construction is complete are summarized as follows:

MARKETING AND SALES COMMISSIONS
Sales commissions, closing costs and warranty expenses typically are paid at a lot closing. We estimate previously estimated sales commissions at 3.00% of gross revenue.

GENERAL ADMINISTRATION & OVERHEAD COSTS
This category includes all salaries for internal professionals (construction supervisors, support staff, etc.) and office overhead and supplies. Total G&A expenses are estimated to be 3% of lot sale revenue.

REAL ESTATE TAXES
The subject’s taxes are estimated based on the current tax rate of around 1.1167% applied to the estimated market value. Taxes have been applied to the remaining unclosed lots each year based on the final value estimate. Taxes are appreciated 2% every year. Current direct assessments are $0.04 per square foot for DRV owned land. We also apply this tax on unsold land.

The CFD taxes are based on a maximum tax of $0.435 per square foot of land. We apply this amount to unsold lots. We deduct one year of CFD taxes as they intend to be capitalized in the bond sale.

CHANGES IN CONSTRUCTION COSTS
The best source for determining changes is the CPI Index for the San Francisco Area. Below is a CPI index graph for the past several years.

Since 2011 the annual CPI index rose from 233.39 to 3 20.195 for year 20 21. This indicates an average annual increase of 3.7% over this ten-year period. From February 2021 to February 2022, the CPI increase was 5.2% Developers have reported above average increases in raw material prices over the last 12

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 218 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL months. As the market adjusts, we expect lower increases over the next 12-24 months. According to PwC 4Q 2021 report, investors are using an average expense increase of 3.4% for development expenses.

Given the long duration of the sell-out, we have utilized a 3% annual increase in expenses.

PRICE CHANGES
Land values regionwide have been increasing almost every year since coming out of the recession in 2012.

An analysis of land sale data in the Sacramento MSA show average land sale appreciation prices of 4.5% annually or 6.5% median increase over the past 20 years based on land sale data from Costar. The chart below breaks out the year in period of cycle. These indicate the following land price trends:

Our analysis period is 18 years. We estimate the Sacramento region will continue to be in an expansion period for at least the next several years. No foreseeable recession is forecast over the short term. For the duration of the sell-out period we believed there will be cycle changes where land prices will increase and decrease. Market participants generally forecast appreciation at lower end of estimates for long absorption periods. According to PwC 4Q 2021 report, investors are using an average increase of 4.0% in their lot pricing models. For the Railyards, there is a high probability that land prices will escalate higher as more properties are developed. While this is a high probability, we have not modeled this additional land price appreciation, but rather considered this upside potential in the discount rate. Based on review of land price trends, we estimate an annual increase of 3% annually.

Year Cycle Avg. Annual Price Appreciation
2000 - 2006 Expansion Period 16.1%
2007-2011 Recession -16.2%
2012-Current Expansion Period 9.2%
Period # of Transactions Sales Volume Average Sale Price Land Acres Average Acres Median Price Per Land SF % Chng. 2021 YTD 270 $630,311,560 $2,583,244 9,635.6 36.5 $5.97 13.1% 2020 304 $792,228,918 $3,023,774 6,738.8 22.3 $5.28 -10.5% 2019 496 $976,368,484 $2,352,695 11,423.1 23.3 $5.90 20.2% 2018 469 $659,182,610 $1,851,637 7,983.4 17.2 $4.91 -7.5% 2017 415 $564,855,860 $1,934,438 7,987.5 19.4 $5.31 -30.5% 2016 397 $397,509,045 $1,445,487 4,848.0 12.3 $7.64 32.6% 2015 333 $442,944,706 $1,807,938 6,769.2 20.3 $5.76 25.2% 2014 233 $266,903,850 $1,482,799 2,956.1 12.7 $4.60 27.1% 2013 238 $275,014,839 $1,502,813 7,234.6 30.4 $3.62 12.8% Average 9.2%
2012 232 $170,142,554 $1,394,611 14,643.6 63.1 $3.21 -10.1% 2011 126 $108,859,193 $1,395,631 3,142.6 24.9 $3.57 -9.2% 2010 127 $180,637,016 $1,963,446 4,793.5 37.7 $3.93 -41.2% 2009 111 $97,620,254 $1,251,542 1,848.7 16.7 $6.68 -41.0% 2008 136 $223,442,260 $2,256,993 2,703.2 20.0 $11.33 6.1% 2007 210 $319,770,779 $2,036,757 3,846.2 18.8 $10.68 -1.9% Average -16.2%
2006 140 $326,707,507 $2,840,935 3,037.2 22.5 $10.89 44.2% 2005 168 $362,019,079 $2,220,976 2,310.7 13.8 $7.55 42.7% 2004 222 $418,361,178 $1,945,866 14,950.4 68.9 $5.29 15.3% 2003 307 $463,268,375 $1,523,909 3,908.3 12.7 $4.59 8.3% 2002 245 $341,782,230 $1,406,511 5,498.7 22.4 $4.24 6.5% 2001 152 $194,942,559 $1,291,010 7,008.5 46.4 $3.98 -20.2% 2000 164 $162,423,597 $990,388 1,917.7 11.9 $4.99 16.1% Land Sale Price Trends - Sacramento MSA
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 219 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

DI SC OUN T RATE /D EVE L OPER PR OF IT
The final element in the discounted cash flow analysis is the discount rate that is applied to the individual cash flows. Discount rates applied typically in one of two ways: (1) an overall discount rate (IRR) inclusive of profit and the cost of funds of money; or (2) a bifurcated discount rate that is net of profit and represents the cost of funds of money only. The latter may be applied with a profit net of debt only, where the discount rate represents the cost of debt only, or it may be applied with a profit net of debt and equity, where the discount rate represents the blended cost of debt and equity.

In this analysis we utilize a n overall discount rate. One of the best source s for determining appropriate discount rate is investor surveys. We have considered the PwC Real Estate Investor Survey and Realty Rates and BBG surveys for determination of the discount rate.

PUBLISHED SURVEYS
Survey Rate Comment
PwC Real Estate Investor Survey
4th Quarter 2021
10% - 30%, with an average of 16.8% Up 120 basis points from 2nd Quarter

Realty Rates
4th Quarter 2021

15.80%- 32.7%, 22.88% average California/Pacific Islands Region Subdivisions/PUDs, -100 units

The specific investor responses from the PwC Survey are shown on the following page. The subject is expected to have a discount rate toward the upper end of the range.

The five developer responses from PwC had discount rates indicators from 10% to 30%. We examine the four developer responses that invest in commercial property.

Private Investment Company: This company invests in retail projects from one to 15 acres. Their preferred absorption period is 1 to 5 years with properties concentrated in Texas. They reported a discount rate of 17%.

Developer 1: This company invests in industrial and commercial projects from 5 to 250 acres. Their preferred absorption period is over 20 years with properties concentrated in the Midwest. They reported a discount rate range from 10% - 20%, with a mid-point of 15%.

Developer 2: This company invests in office, industrial and R&D projects from 1 to 400 acres. Their preferred absorption period is over 1 -5 years with properties concentrated in Arizona, California, and Washington. They reported a discount rate range from 10% - 14%, with a mid-point of 12%.

Developer 3: This company invests in industrial projects with value of land under development between $225 to $250 million. Their preferred absorption period is over 1-5 years with properties concentrated in Texas. They reported a discount rate range from 12% - 30%, with a midpoint of 21%.

The four investment/developer survey responses have mid-point discount rates ranging from 12% to 21% with an average of 16.25% and a median of 16%.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 220 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 221 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Rates of Return from Developments

Discount rates can also be derived from actual or projected results from other projects. This method has significant weaknesses as it simply reports the returns of investment as opposed to what buyers and sellers expect or want to achieve. According to The Appraisal of Real Estate, 14th Edition, “Historical yield rates derived from comparable sales may be relevant, but they reflect past, not future, benefits in the mind of the investor and may not be reliable indicators of the current required yield. Therefore, the estimation of yield rates for discounting cash flows should focus on the prospective or forecast yield rates anticipated by typical buyers and sellers of comparable investments.”

Case Study 1: A major California developer invested in a +100-acre residential project in Northern California.

Going into the project, the developer was anticipating returns above 10%. Their actual returns are in ±6% range. This case study is a good example on why achieved rates of returns are poor indicators for selecting a discount rate.

Case Study 2: In San Fransisco, Pier 70 is a 69-acre tract of land that is planned for redevelopment. In May 2018 the City of San Francisco entered into a development agreement (DA) with FC Pier 70 LLC (Forest City) for 28 acres of the project. The goal of the agreement was to allow the developer to build up to 1,070 condo units and 2.25 million square feet of office space. The infrastructure costs alone were $222 million. As part of the agreement, the developer was guaranteed an 18 percent return on its investment. Without knowing all of the details of this financial arrangement, this Case Study deserves minimal weight.

Factors Considered in Discount Rate

The following are some of the factors considered in selecting a discount rate for the Railyards.

Some discussions points regarding these factors are detailed as follows.

Sacramento Competitiveness: Sacramento is enjoying in-migration of population from the Bay Area. Some Bay area firms have opened offices in Sacramento. These trends are expected to continue due to the affordability factors as compared to the Bay area region.

Some Positive Factors (reduces discount rate) Some Negative Factors (increases discount rate) Sacramento is increasing in competitiveness from real estate prespective 64 acres to sell & or develop Live Nation has signed a long-term lease at the Railyards Kaiser's unknown development timing Urban location with CBD Influence 16-year absorption period likely to go through development cycles Central Shops highly desirable & linkage to Intermodal Most construction cost are developer estimates with no bid/contracts Substantial Amount of Infrastructure Completed Limited buyer pool for bulk acquisition Almost all entitlements completed Feasibility of vertical development marginal Several sources of funds to reduce remaining infrastructure costs Will compete with Midtown and CBD where numerous other projects planned Unidentified Fund Sources likely to be realized in the future Parking Garage on Lot 17 a critical infrastruture analyzed separtely will be difficult to finance.

Good demand for buildout as reported by RCLCO & Others Interest rate increases, inflation and recession fears Above average land price appreciation as project matures Factors in Selection of Discount Rate
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 222 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Live Nation: The executed lease with Live Nation is a significant b oost for the Railyards. Liam Thorton, Executive Vice -President, Development with Live Nation Entertainment reported their presence will provide momentum for development to be increased. Case Studies provided by CBRE provide evidence of the boost from other venue areas across the country.

Good Demand For Buildout: RCLCO market study demonstrated good demand for space for the Railyards.

This was the same sentiment provided by interviews with DRV real estate brokers, Marriott representatives and Mr. Thorton with Live Nation.

Unidentified Funding Sources: We have identified 58% of the funding sources to pay for the $136 million in remaining infrastructure. DRV expects future funding sources to pay for all of the infrastructure. While we did not model any of the expected future funding , there will be future funding that will pay for the infrastructure. As such, the reimbursements are a low indicator, thus supporting a downward risk element in the cash flow.

Land Price Appreciation: As the Railyard is developed out, there will likely be moderate land price appreciations. In the DCF w e modeled a 3% annual appreciation, whereas there are opinions from participants that higher increases could be achieved.

Kaiser’s Development Timing: Kaiser’s initial plan and announcement to develop a hospital at the Railyards was met with optimism. They have been silent on their current plans and almost no entitlement work has been submitted to the City of Sacramento. It is possible they could delay or cancel their development plans, which could have negative consequences for the build-out of the project. In RCLCO’s Baseline forecast, they however believe the Railyards will still attract one or more anchor users over the lifecycle of the development. The negative (Kaiser’s possible delay/possible cancellation) and the positives (other likely anchors) have been considered in arriving at the discount rate.

16-Year Absorption Period: The long-term absorption period will likely go through real estate cycles which would likely include a recession period. The DCF has not modeled any down cycle and as such this is a negative factor for the cash flow.

Feasibility Issues: As with most urban development there are feasibility issues for development of properties. These could be demand driven due to Covid, increasing construction costs, rents not achievable or a combination of these. Developers often make land purchase decisions even when there exist feasibility issues. Most recently, a Nashville development firm purchased 201 N Street in downtown Sacramento for $150 per square foot and plan to develop a 225-unit 28-story apartment tower and office building of 80,000 square feet on the site. Feasibility of this project is certainly an issue as no similar project in downtown Sacramento has been developed after paying a similar land price. What usually happens is that developer’s will find ways to make projects feasible before construction commences. These could be waiting for rent growth to occur, pre-leasing, cost engineering, change in project scope, etc. While the Railyard will face feasibility issues, it is a development risk that most other properties encounter in downtown Sacramento.

Parking Garage on Lot 17: A structured parking g arage is planned for Lot 17. This structure will be a necessary and critical infrastructure need for the Foundry, the Central Shops, the two planned hotels and other nearby developments. The parking garage will be the responsibility of the developer of the subdivision. As such, we have modeled the construction costs, revenue, and eventual sale of the parking garage in a separate DCF model. The parking structure will be the replacement of a temporary gravel surface par king lot that will be constructed for the Live Nation lease. Under existing and pending SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 223 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL entitlements, DRV can only use the surface lots up until 2029. Earlier, we estimate a negative value associated with the development of the garage. The development risk for the garage has been accounted in the analysis. The negative value of -$6,200,000 will be deducted in period 0 of the cash flow.

Bifurcated Discount Rate Analysis

A Bifurcated Discount is an alternative method in arriving or testing a discount rate. Under this method, the cash flow is discounted: 1) at a cost of funds which usually represents a blend of debt and equity; and 2) line -item deduction for profit which is usually a percentage of the retail proceeds.

The cost of funds is a combination of debt cost and equity return. For a 50% loan at 4.0% interest /50% equity at 12%, the cost of funds is 8.0%. An 8% cost of funds is within the range other market participants utilize in these types of analysis.

For the line-item profit deduction, it varies by property type, risk level and time period for sell-out. A typical residential builder in the Sacramento area has been underwriting land development deals at 8 -10% developer profit. The subject being a mixed use, urban project, above average development risk and 20- year sell -out period warrants a substantially higher profit deduction. Urban, ground up mixed use developments are the closest comparison to the Railyards. Generally, developers command between 15%- 20% profit requirements above all costs.

As a test of reasonableness to a blended discount rate, we have performed calculation under the bifurcated discount rate analysis as discussed above. The following are the approximate profit indications for the subject analysis under a 20-year sell-out period:

18% Discount Rate = 8% cost of funds and 26.7% profit
19% Discount Rate = 8% cost of funds and 28.0% profit
20% Discount Rate = 8% cost of funds and 29.2% profit
21% Discount Rate = 8% cost of funds and 30.3% profit
22% Discount Rate = 8% cost of funds and 31.3% profit

We believe a discount rate of 20% is appropriate for the subject. Th is discount rate indicates a profit of

29.2% of retail value are deducted to arrive at a residual land value estimate. This is a high profit deduction, but one considered reasonable given the risk and long sell-out period.

DI SC OUN T RATE C ONC L USI O N
We considered several different sources for purposes of deriving the discount rate. These are summarized as follows:

National Investor Survey from PwC Survey: The four investment/developer survey responses had mid-point discount rates ranging from 12% to 21% with an average of 16.25% and a median of 16%. The subject having above average risks warrants a discount rate higher than the central indicators of these respondents.

Market Participant Interviews: We conducted interviews with market participants regarding appropriate discount rates. The results of the market participant interviews ranged from 6.5% to 20% . The two respondents with significant experience with discount rates for land sell-out analyses reported a range from 15% to 20%. While these participants do not know all of the issues of the Railyards, most are knowledgeable local market participants who generally understand the risks for the subject.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 224 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Case Study 2: This is Sacramento’s Pier 70 development consisting of 69 acres planned for redevelopment.

This case has some of the same development risks as the subject. The developer was guaranteed an 18 percent return on its investment for its involvement. Minimal weight is given to this Case Study.

Bifurcated Discount Rate Analysis: A test using discount rates from 18%-22%, resulted in profit levels from

26.2% to 31.0%. The discount rate in the middle of the range at 20% resulted in a profit level of 28.8%. The analysis concluded profit deductions was reasonable supporting a 20% discount rate.

The subject warrants a discount rate at the upper end of the range of these sources. After considering all known factors we conclude to a discount rate of 20%.

ADJUS T MEN T T O FI NA L CAS H F L OW
In the next section we analyze the Lot 17 parking garage. This analysis indicated a negative value of $6,200,000. As reported earlier, we make a deduction of this amount in period 0 of the cash flow.

SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 225 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

AS-IS MARKET VALUATION - DRV - WEST OF 7TH STREET
Period Ending Jun-23 Jun-22 Jun-23 Jun-24 Jun-25 Jun-26 Jun-27 Jun-28 Jun-29 Yr Yr Yr. Yr Yr Yr Yr Yr
ABSORPTION ESTIMATES 12 mos/period 1 2 3 4 5 6 7 8
Office & Retail - West of 7th Street 17.01 2.37 0.97 1.31 1.69 0.91 1.01 1.07 1.21 Residential - West of 7th Street 29.07 2.70 2.29 4.75 5.00 2.58 2.71 1.95 2.79 Central Shops 247,832.00 61,025.00 186,807.00 0.00 0.00 0.00 0.00 0.00 0.00 Hotel 7.33 0.00 0.00 0.48 1.02 0.63 0.70 0.77 0.77
Total Lots Sold (excludes Lot 17 & Mixed-use Income land dedication): 62.79 9.76 7.95 6.54 7.71 4.13 4.42 3.78 4.77 Total Period Inventory Beginning: - 62.79 53.03 45.08 38.54 30.84 26.70 22.29 18.50 Remaining Acres

LOT VALUE ESTIMATES
Office, Retail Hotel & Residential - West of 7th Street $76.04 $78.33 $80.68 $83.10 $85.59 $88.16 $90.80 $93.53 Central Shops $68.19 $70.24 $72.34 $74.51 $76.75 $79.05 $81.42 $83.87

TOTAL LOT REVENUE
Office, Retail Hotel & Residential - West of 7th Street $206,455,972 $16,805,284 $11,114,289 $22,981,039 $27,893,870 $15,400,043 $16,963,427 $14,964,645 $19,423,014 Central Shops $4,600,000 $12,300,000 $0 $0 $0 $0 $0 $0
TOTAL REVENUE $223,355,972 $21,405,284 $23,414,289 $22,981,039 $27,893,870 $15,400,043 $16,963,427 $14,964,645 $19,423,014

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $6,700,679 $642,159 $702,429 $689,431 $836,816 $462,001 $508,903 $448,939 $582,690 MARKETING/COMMISSIONS 3.0% $6,700,679 $642,159 $702,429 $689,431 $836,816 $462,001 $508,903 $448,939 $582,690 AD VALOREM $2,945,009 $514,260 $443,013 $384,001 $334,612 $272,758 $240,594 $204,446 $172,770 RAILYARDS MAINTENANCE CFD No. 2014-04 $5,643,479 $977,282 $798,734 $653,333 $705,119 $564,133 $488,562 $407,745 $338,526 RAILYARDS CFD No. 2018-1 $6,813,242 $1,189,733 $1,024,905 $888,383 $774,120 $631,023 $556,612 $472,984 $399,702 CAPITALIZED CFD INTEREST ($2,214,638) ($1,189,733) ($1,024,905) $0 $0 $0 $0 $0 $0 HORIZONTAL CONSTRUCTION COSTS $150,941,207 $13,994,242 $11,082,448 $21,203,383 $13,035,256 $20,650,595 $13,741,990 $14,100,477 $14,194,819 REIMBURSEMENTS ($78,164,113) ($7,258,571) ($9,949,151) ($12,382,526) ($7,155,862) ($11,046,679) ($7,810,811) ($7,810,811) ($7,810,811) TOTAL EXPENSES $99,365,544 $9,511,529 $3,779,901 $12,125,437 $9,366,876 $11,995,833 $8,234,753 $8,272,718 $8,460,387 NET INCOME $123,990,428 $11,893,755 $19,634,387 $10,855,602 $18,526,994 $3,404,210 $8,728,674 $6,691,927 $10,962,627 PRESENT VALUE FACTOR 20.0% 0.83333 0.69444 0.57870 0.48225 0.40188 0.33490 0.27908 0.23257 DISCOUNTED CASH FLOW at 20% $52,251,715 $9,911,462 $13,634,991 $6,282,177 $8,934,700 $1,368,076 $2,923,215 $1,867,594 $2,549,557 LESS: PARKING GARAGE OBLIGATION $6,200,000
INDICATED VALUE $46,051,715
ROUNDED $46,000,000
Discount Rate Value Conclusion Indicated Profit Ratio

18.0% $49,686,807 26.70%

19.0% $47,813,901 28.00%

20.0% $46,051,715 29.20%

21.0% $44,391,369 30.30%

22.0% $42,824,836 31.30%
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 226 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

AS-IS MARKET VALUATION - DRV - WEST OF 7TH STREET
Period Ending Jun-23 Jun-30 Jun-31 Jun-32 Jun-33 Jun-34 Jun-35 Jun-36 Jun-37 Yr Yr Yr Yr Yr Yr Yr Yr
ABSORPTION ESTIMATES 12 mos/period 9 10 11 12 13 14 15 16 Office & Retail - West of 7th Street 17.01 1.27 1.33 1.47 1.53 0.88 0.00 0.00 0.00 Residential - West of 7th Street 29.07 2.75 1.54 0.00 0.00 0.00 0.00 0.00 0.00 Central Shops 247,832.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Hotel 7.33 0.33 0.33 0.33 0.37 0.33 0.40 0.37 0.50
Total Lots Sold (excludes Lot 17 & Mixed-use Income land dedication): 62.79 4.35 3.20 1.80 1.89 1.21 0.40 0.37 0.50 Total Period Inventory Beginning: - 13.74 9.38 6.18 4.38 2.48 1.27 0.87 0.50 Remaining Acres

LOT VALUE ESTIMATES
Office, Retail Hotel & Residential - West of 7th Street $96.33 $99.22 $102.20 $105.26 $108.42 $111.67 $115.02 $118.48 Central Shops $86.38 $88.97 $91.64 $94.39 $97.22 $100.14 $103.15 $106.24

TOTAL LOT REVENUE
Office, Retail Hotel & Residential - West of 7th Street $206,455,972 $18,261,471 $13,837,467 $8,029,755 $8,687,892 $5,730,394 $1,945,815 $1,837,174 $2,580,394 Central Shops $0 $0 $0 $0 $0 $0 $0 $0
TOTAL REVENUE $223,355,972 $18,261,471 $13,837,467 $8,029,755 $8,687,892 $5,730,394 $1,945,815 $1,837,174 $2,580,394

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $6,700,679 $547,844 $415,124 $240,893 $260,637 $171,912 $58,374 $55,115 $77,412 MARKETING/COMMISSIONS 3.0% $6,700,679 $547,844 $415,124 $240,893 $260,637 $171,912 $58,374 $55,115 $77,412 AD VALOREM $2,945,009 $130,505 $90,695 $60,765 $43,754 $25,228 $13,113 $9,128 $5,366 RAILYARDS MAINTENANCE CFD No. 2014-04 $5,643,479 $251,302 $171,683 $113,109 $80,110 $45,445 $23,247 $15,929 $9,221 RAILYARDS CFD No. 2018-1 $6,813,242 $301,921 $209,821 $140,579 $101,224 $58,365 $30,337 $21,117 $12,415 CAPITALIZED CFD INTEREST ($2,214,638) $0 $0 $0 $0 $0 $0 $0 $0 HORIZONTAL CONSTRUCTION COSTS $150,941,207 $10,126,720 $6,125,723 $6,270,425 $6,415,129 $0 $0 $0 $0 REIMBURSEMENTS ($78,164,113) ($6,938,890) $0 $0 $0 $0 $0 $0 $0 TOTAL EXPENSES $99,365,544 $4,967,247 $7,428,170 $7,066,664 $7,161,490 $472,862 $183,447 $156,405 $181,826 NET INCOME $123,990,428 $13,294,224 $6,409,297 $963,091 $1,526,401 $5,257,532 $1,762,368 $1,680,769 $2,398,568 PRESENT VALUE FACTOR 20.0% 0.19381 0.16151 0.13459 0.11216 0.09346 0.07789 0.06491 0.05409 DISCOUNTED CASH FLOW at 20% $52,251,715 $2,576,510 $1,035,137 $129,621 $171,196 $491,389 $137,265 $109,091 $129,733 LESS: PARKING GARAGE OBLIGATION $6,200,000
INDICATED VALUE $46,051,715
ROUNDED $46,000,000
Discount Rate Value Conclusion Indicated Profit Ratio

18.0% $49,686,807 26.70%

19.0% $47,813,901 28.00%

20.0% $46,051,715 29.20%

21.0% $44,391,369 30.30%

22.0% $42,824,836 31.30%
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 227 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

18.00% $124,222,988 $11,934,348 $19,669,357 $10,885,913 $18,553,406 $3,425,741 $8,747,666 $6,708,065 $10,976,265 Cash Flow with Revised Taxes 19.00% $124,103,212 $11,913,433 $19,651,339 $10,870,296 $18,539,798 $3,414,648 $8,737,881 $6,699,750 $10,969,238

20.00% $123,990,516 $11,893,755 $19,634,387 $10,855,602 $18,526,994 $3,404,210 $8,728,674 $6,691,927 $10,962,627

21.00% $123,884,334 $11,875,214 $19,618,415 $10,841,757 $18,514,930 $3,394,376 $8,720,000 $6,684,556 $10,956,398

22.00% $123,784,151 $11,857,720 $19,603,345 $10,828,695 $18,503,547 $3,385,098 $8,711,816 $6,677,601 $10,950,521 PV Factors Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

18.0% 0.84746 0.71818 0.60863 0.51579 0.43711 0.37043 0.31393 0.26604

19.0% 0.84034 0.70616 0.59342 0.49867 0.41905 0.35214 0.29592 0.24867

20.0% 0.83333 0.69444 0.57870 0.48225 0.40188 0.33490 0.27908 0.23257

21.0% 0.82645 0.68301 0.56447 0.46651 0.38554 0.31863 0.26333 0.21763

22.0% 0.81967 0.67186 0.55071 0.45140 0.37000 0.30328 0.24859 0.20376 Present Values Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 revised's PV 18.00% $49,686,807 $10,113,854 $14,126,226 $6,625,503 $9,569,641 $1,497,423 $3,240,411 $2,105,830 $2,920,105

19.00% $47,813,901 $10,011,288 $13,877,085 $6,450,606 $9,245,218 $1,430,906 $3,076,978 $1,982,576 $2,727,726

20.00% $46,051,718 $9,911,462 $13,634,991 $6,282,177 $8,934,700 $1,368,076 $2,923,215 $1,867,594 $2,549,557

21.00% $44,391,369 $9,814,226 $13,399,641 $6,119,889 $8,637,351 $1,308,679 $2,778,461 $1,760,252 $2,384,431

22.00% $42,824,836 $9,719,443 $13,170,751 $5,963,437 $8,352,484 $1,252,484 $2,642,103 $1,659,975 $2,231,291 Cash Flows with Revised Taxes
Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

18.00% $124,222,988 $13,304,525 $6,416,456 $967,888 $1,529,855 $5,259,524 $1,763,403 $1,681,490 $2,398,992 Cash Flow with Revised Taxes 19.00% $124,103,212 $13,299,218 $6,412,767 $965,417 $1,528,076 $5,258,498 $1,762,870 $1,681,118 $2,398,773

20.00% $123,990,516 $13,294,224 $6,409,297 $963,091 $1,526,401 $5,257,532 $1,762,368 $1,680,769 $2,398,568

21.00% $123,884,334 $13,289,519 $6,406,027 $960,901 $1,524,824 $5,256,623 $1,761,895 $1,680,440 $2,398,375

22.00% $123,784,151 $13,285,079 $6,402,942 $958,834 $1,523,335 $5,255,764 $1,761,449 $1,680,129 $2,398,192 PV Factors Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

18.0% 0.22546 0.19106 0.16192 0.13722 0.11629 0.09855 0.08352 0.07078

19.0% 0.20897 0.17560 0.14757 0.12400 0.10421 0.08757 0.07359 0.06184

20.0% 0.19381 0.16151 0.13459 0.11216 0.09346 0.07789 0.06491 0.05409

21.0% 0.17986 0.14864 0.12285 0.10153 0.08391 0.06934 0.05731 0.04736

22.0% 0.16702 0.13690 0.11221 0.09198 0.07539 0.06180 0.05065 0.04152 Present Values Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 revised's PV 18.00% $49,686,807 $2,999,586 $1,225,957 $156,719 $209,926 $611,618 $173,782 $140,431 $169,792

19.00% $47,813,901 $2,779,095 $1,126,097 $142,462 $189,488 $547,963 $154,370 $123,707 $148,333

20.00% $46,051,718 $2,576,510 $1,035,137 $129,621 $171,196 $491,389 $137,265 $109,091 $129,733

21.00% $44,391,369 $2,390,237 $952,215 $118,043 $154,809 $441,059 $122,176 $96,304 $113,593

22.00% $42,824,836 $2,218,838 $876,559 $107,593 $140,113 $396,240 $108,851 $85,103 $99,570 Cash Flows with Revised Taxes
SUBDIVISION DEVELOPMENT METHOD – DRV OWNERSHIP- WEST OF 7TH STREET 228 RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL CO NC LUS I ON O F SU BDIV IS I ON MET H OD – DRV OWNERSH IP – WE ST O F 7 TH STREET A discounted cash flow using RCLCO Baseline Absorption estimate was conducted. The indicated value at 20% was $46,051,715. Based on this analysis, we conclude to a value of $46,000,000 or $16.64 per square foot of land for the DRV owned property.

As a check of reasonableness we have reviewed the following sales:

Large Land Sale 1: Township 9 sold in November 2020. This property is located south of the Railyards and is regarded as having an inferior location. The property contained 39 net acres as compared to the subject’s

55.49 acres. The sale price of Township 9 was $ 54,000,000 or $31.79 per square foot of net land area .

Despite its inferior location, it is reasonable that Township 9 sale price on a per square foot basis is higher than the DRV land due to its smaller size and lower remaining infrastructure costs.

Large Land Sale 2: The Centene Site locate in North Natomas sold in September 2018 for $28.2 million or $9.56 per square foot. This 67.74-acre site was purchased for development of a 1.25 million square foot office project. The Centene Site rates far inferior in location and achievable densities, and superior in the respect that infrastructure development costs are much lower than the Railyards.

Large Land Sale 3: In October 2021, UC Davis purchased a 34.5-acre net acre site at Highway 50 and Bidwell in Folsom. The purchase price was $30,100,000 or $20.00 per square foot. U.C. Davis plans to develop a medical office building and a small hospital. The sale is inferior in location, but superior in terms of its lower infrastructure burden.

Upon review of these Large Land Sales, we believe the DRV indicated value of the 63.457 acres is reasonable.

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LOT 17 PARKING GARAGE
A structured 1,421 space parking garage is proposed for Lot 17. This structure will benefit the proposed developments including the Foundry, the Central Shops, the two Marriott Hotels and other nearby developments. Under existing and pending entitlements, DRV can use the temporary 1,000 space gravel surface lots up until 2029 . DRV is seeking to extend the surface parking for Live Nations from 2029 to December 31, 2030 under the Conditional Use Permit. The parking garage is critical infrastructure for the build-out of the Railyards. Because the initial Railyard projects will be dependent on this garage, the development of this garage is considered the responsibility of the developer of the subdivision. As such, we have valued the proposed parking garage and estimated the construction cost for the development.

The result of this analysis is to determine the positive or negative value associated with the development of this critical infrastructure.

PRO PO SE D GA R AG E

Clark Pacific is the general contractor for the garage. They will design and build the garage. Preliminary drawings and a site plan are shown on the following pages. Full construction drawings and specifications were not available. Information for the garage was from the preliminary drawings and developer provided information. Some of the building attributes are as follows:

Site: 1.74 acres located at the southeast corner of 5th Street and Steven Street (proposed).

No. Stories: Ground level with 8 stories

No Parking Spaces: 1,421 spaces

Gross Building Area: 425,310 square feet

Construction Type: Concrete modular, with partial walls, concrete with little trim. Detailed specifications of the improvements were not made available. We make an extraordinary assumption that the improvements will be similar in construction and quality as what was provided.

Construction Class: B

Site Coverage: 76%

Vehicle Ingress/Egress: The site’s sloping terrain will allow entrances/exit points off the ground floor and 3rd floor.

Pedestrian: There is a planned pedestrian exit on the ground floor that allows pedestrian to exit and walk under 5th Street to the Paint Shop. There will be stairs at each corner of the garage. Two corners will have elevators.

Sprinklers: Assumed to have sprinklers.

Plumbing: Minimal
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RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Lighting: Adequate lighting assumed

Functionality: The design is standard for parking garage. The overall functionality is average.

Lot 17 Parking Garage 231
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Prospective View – 5th Street & Stevens Street

Lot 17 Parking Garage 232
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Prospective View – 6th Street & Railroad

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RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

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Lot 17 Parking Garage 235
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HIG HE ST AN D BE ST USE AS I F IM PRO VE D
The highest and best use as if improved is for operation as a parking garage to serve existing and future projects within and outside of the Railyards.

PAR KI NG G AR AG E S TU DY
To assist in understanding the demand characteristics of the proposed garage, we have reviewed a Parking Garage Projection study. While this study is confidential, certain elements and conclusions can be shared.

The study was originally prepared in December 2021 to assist in a possible bond financing of the construction of the ga rage by the City of Sacramento. The study was then updated in March 2022 and again in June 2022. No independent review was performed on this study. The parking garage study focused on the following areas:

• The Demand Drivers both within and outside of the Railyards. The main three categories for the demand were monthly parking, transient parking, and Event Parking.

• The estimated revenue and expenses of the garage for the period of 2027 to 2031. Revenue rates were not increased for this study and most expenses were trended up 2% annually.

The authors of the report are knowledgeable market participants who are in the parking garage business in downtown Sacramento. They are competent professio nals which have a good understanding of the downtown parking garage/lot market. The authors conducted several interviews with DRV and BBG.

The parking garage study is one source of information that will be considered in arriving at our conclusions of the potential income and expenses for the subject proposed parking garage. This information will be shown later in this analysis.

DE M AN D D RI VE RS
The proposed Lot 17 will be a unique parking garage in the respect it will serve parking for multiple future projects within the Railyards, various entertainments venues within and outside of the Railyards and serve as daily and transient parking for various office properties outside of the Railyards. These are addressed as follows:

Traditional Daily and Transient Parking - Within the Railyards

The following are the near-term Railyard projects that are expected to utilized lot 17 parking garage.

Lot 48: This property is under construction with 345 multi -family units and retail. The project will have 276 parking spaces indicating a parking ratio of 0.80 spaces per 1,000. The project will be under -parked and overflow parking will likely be to Lot 17 which is 1-2 blocks away.

Lot 3: This property is planned for the Telegrapher, a 340-unit multi-family project. It will have a parking ratio of 0.80 spaces per unit. Planned construction date is Spring 2023 and a 2-year construction time.

Lot 46a: The Wong Center is planned for construction in 2022. It will contain 150 units with a parking ratio of 0.58 spaces per unit. The project will be under -parked and overflow parking will likely be to Lot 17 which is 1 block away.

LOT 17 PARKING GARAGE 236
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Lots 12a and 12b: The Foundry, a proposed office project of 289,674 SF is planned for construction. The project will have no on-site parking and Lot 17 is expected to accommodate most of the parking demand for this project.

Lots 15a and 15c: Two Marriott hotels are planned for these lots. The estimated start date is 2024 with a completion of 2026. Lot 17 will serve most of the parking demand for these two hotels.

Live Nation: The Paint Shop Building of 61,025 SF will consist of Live Nation (47,373 SF) and office and retail uses. The 1,000-space temporary parking for Live Nation will be replaced with structured parking on Lot 17. Live Nation will have night and weekend events that is expected to create high demand for Lot 17. Live Nation is expected to be completed in 2024.

Other Central Shop Buildings: There are 4 other central shop buildings totaling 247,832 SF of buildings area. These buildings are not planned for several years, and Lot 17 is expected to serve the primary parking until future Railyards garages are developed.

Central Shop Plaza: The future open space area of the Central Shops is anticipated to have entertainment and public events. The scope, size and timing of these events are unknown at this time.

Railyard Museum: The State of California owns two Centra l Shop buildings that are expected to be renovated for a new museum. These buildings total over 100,000 SF. Parking for this project is anticipated to be Old Sacramento and Lot 17. The time frame of this project is unknown.

Traditional Daily and Transient Parking - Outside the Railyards

The following are the near -term projects outside of the Railyards that are expected to utilized lot 17 parking garage.

New Courthouse: The 538,000 SF courthouse (under construction) will have limited on -site parking for employees. This property is two blocks from Lot 17 and is expected to demand high number of spaces for the Lot 17 garage.

Kaiser 501 J: This building is located 5 -6 blocks from Lot 17. Kaiser will be relocating their employees from another location to this 198,000 SF building.

344 N 7th Street – 1,250,000 SF: Known as the Richards Boulevard Office Complex (RBOC), this project is under construction and will have approximately 1,420 on -site parking spaces. The project is expected to be c ompleted in March 2024. The typical employee parking demand is 3,000 parking spaces for this project. The project is expected to have 4,650 employees. The EIR of this project cited the Railyard’s proposed parking garage as a source for their off-site parking demands.

Sacramento Valley Station: This is the adjacent intermodal that is substantially under-parked.

Events: There are various events held in downtown Sacramento and Discovery Park that are anticipated to utilize Lot 17 Parking Garage.

Further details on the quantity of the demand for space is shown in the revenue forecast section of this analysis.

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RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

CO NS TR UC T IO N CO S T & T IM ING

Clark Pacific is the general contractor for the garage. They will design and build the garage. DRV reported a start construction date in 2024 with an 1 8-month completion date. The entitlement process for the garage has not started and the design phase and financing efforts are still preliminary.

Karlo Felix, Senior Planner for the City of Sacrament o reported the garage will require a conditional use permit reviewed at the director -level by the Zoning Administrator. The improvements will also require SPDR review by the director -level by the Design Director. The CUP and SPDR will be requested under a single application and would be considered at a joint director hearing (with both the Zoning Administrator and Design Director). Mr. Felix reported a six-month process from application to a director hearing. This is predicated on quality of the application, complexity of proposal and responsiveness of applicant.

The delivery of the garage is expected to align up with the completion of the Telegrapher (Lot 3), the Marriott Hotels (15a and 15c), Foundry (Lot 12a and 12b). The developer of each of these projects have planned construction completions ranging from 2025 to 2026. The market study prepared by RCLCO had absorption with projects ranging from 2025 to 2029 for the different product types. With absence of any entitlement work in process, no financing in place and early stages of design of the projects, we believe a timing a further out than the developer’s projection is appropriate. Considering these factors, our estimate of the construction timing is as follows:

Design Start Date: Beginning 2023
Entitlement Process: Beginning 2024
Construction Start Date: Early 2025
Construction Complete: Toward the end of 2026

DRV reported a construction cost estimate of $53,858,000 on based on costs provided by Clark Construction. This estimate is current cost, which includes soft cost, design work and a 10% contingency.

This cost is $37,901 per space.

As additional source of cost we have reviewed construction costs from other parking garages around the county and considered cost data from Marchall Valuation. Below is a summary of these sources.

Year No. Total Cost
Property City Built Spaces per Space
814 Branch St Houston, TX 2022-2023 1,408 $40,761
1709 Jackson St Dallas, TX 2019 332 $37,600
400 Route 38 Moorestown, NJ Budget -2022 672 $34,337
2101 Capitol Ave Sacramento, CA 2017 412 $37,398
MVS Cost Analysis Sacramento, CA -- 1,421 $33,929

COST COMPARABLES
LOT 17 PARKING GARAGE 238
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

As evidenced from the secondary sources, Clark Pacific’s estimated cost of the garage is reasonable, and we conclude to this cost estimate.

MVS Type: Parking Structure
Construction Class: B
Quality: Average
Section Page: 14 / 34
Unit: SF
Unit Cost: $67.50
Sprinklers: $1.85
Other Adjustment: $0.00
Suttotal: $69.35
Multipliers
Current Cost: 1.070
Local Cost: 1.240
Story/Height: 1.025
Floor Area/Perimeter: 0.877
Total Multiplier 1.193
Final Unit Cost $82.71
Structure Size (SF) 425,310
Building Base Cost $35,178,797
Estimated Indirect Costs @ 30% $10,553,639
Estimated Site Work @ 5% $1,758,940
Total Cost $47,491,376
Rounded $47,500,000
Total Cost Per SF $111.68
Total Cost Per Space 1,421 $33,929

MARSHALL VALUATION SERVICE - COST ANALYSIS
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RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

VAL UA TIO N MO DE L
The valuation model for Lot 17 will be a residual analysis using a Discounted Cash Flow. The result of this analysis is to determine the positive or negative land value associated with the development of the garage.

The major milestones of the DCF are as follows:

Years 1-3 (2022-2024): Planning, design, financing, and entitlement of the garage.

Years 4-5 (2025-2026): Construction of the garage over an 18-month period.

Years 6-7 (2026-2028): Construction complete with operations underway, and stabilization achieved at end of year 7.

The following are the major inputs for the discounted cash flow:

1. Estimate the holding costs for years 1-3

2. Estimate the Construction Cost of the garage. We estimate the garage to start construction in early 2025 with a completion of late 2026.

3. Estimate the Income from operations of the garage for years 5-7

4. Estimate the resale of the garage at the end of year 7.

5. Estimate an appropriate discount rate for the development of the garage.

LOT 17 PARKING GARAGE 240
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Holding Period Costs
For years 1-3 the property will be in planning, design, entitlement stage. During this period there will be no income. The holding period costs will include real estate taxes, CFD taxes and general and administrative costs.

G&A: We estimate an annual c ost of $100,000 annually for years 1 -4. Years 6 -7 G&A expenses are not shown as they are included in the net operating revenue of the completed parking garage.

Taxes: This includes all taxes including ad valorem, CFD taxes and other direct charges. F or years 1 and 2 there will be capitalized CFD interest as an off-setting cost. For years 6-7 taxes are not shown separately as they are included in the net operating revenue of the completed parking garage.

Entitlement Cost: We estimate a cost of $125,000 for entitlement work during years 2 and 3.

Design Cost: We estimate design cost of 2.5% of construction budget for year 2 and 3.

Construction Cost

The construction cost of garage was previously estimated to be $53,858,000. In our model, the pa rking garage is estimated to start construction in early 2025 and be completed in September 2026. We have reviewed Marshall Valuation Service to estimate the cost increase factor from today until start of construction. Cost increases for a three-year look back for Class B Construction is 25.0% or 8.3% annually for Western U.S. A longer-term look-back over a 10-year period indicates a 48% increase or 4.8% annually.

Considering Clark’s has a contingency factor, we apply a slightly lower cost escalat or of 15% or 5.0% annually.

We estimate the following construction budget.

Current Cost $53,858,000
Construction Start Date Apr-25
Construction End Date Sep-26
Construction Timing 18 months
Cost Escalator for 3.0 Years 15.0%
Adjusted Cost $61,936,700
Estimated Construction Cost
Period Beginning July-22 July-23 July-24 July-25 July-26 July-27 Total % of Cost 0.0% 2.5% 2.5% 47.5% 47.5% 0.0% 100.0%
Construction/Design Cost $0 $1,548,418 $1,548,418 $29,419,933 $29,419,933 $0 $61,936,700 Entitlement Cost $0 $125,000 $125,000 $0 $0 $0 $250,000 Construction Cost - Lot 17 Parking Garage
LOT 17 PARKING GARAGE 241
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Valuation of the Stabilized Garage

We have considered the Cost Approach and Income Approach in estimating the resale of the Garage In Year 8. These are shown as follows.

Cost Approach Conclusion

Below is our estimate of the value of the parking garage today from the Cost Approach. To the estimated construction cost, we add entitlement cost of $250,000, profit of 15% and land value of $5,684,580 ($75/SF).

The estimated date of stabilization of the garage is estimated to be July 2029, which is seven years out.

Using a 3% annual appreciation, we estimate a prospective stabilized value from the Cost Approach as follows:

Replacement Cost New (RCN) Area (SF) $/space Subtotal Total Cost Building Improvements 1,421 37,901 $53,858,000
Entitlement Work $250,000
Subtotal Replacement Cost New (RCN) $54,108,000
Plus Entrepreneurial Profit (% of RCN) 15% $8,116,200
Total Replacement Cost New (RCN) $62,224,200
per square foot $0.00
Less Accrued Depreciation
Physical
Curable (Deferred Maintenance) $0
Incurable
Total Incurable Physical Depreciation 0.0% $0
Functional Obsolescence 0.0% $0
External Obsolescence 0.0% $0
Total 0.0% $0
Depreciated Value of the Improvements $62,224,200
Plus Land Value $5,684,580
Indicated Value by Cost Approach $67,908,780
Rounded to nearest $10,000 $67,910,000
per space 47,790.29$

COST APPROACH SUMMARY
Yr.1 Yr. 2 Yr.3 Yr.4 Yr.5 Yr.6 Yr.7
Period Beginning July-22 July-23 July-24 July-25 July-26 July-27 July-28 Value From Cost Approach $67,910,000
Annual Appreciation 0% 3% 3% 3% 3% 3% 3%
Appreciated Value From Cost $69,947,300 $72,045,719 $74,207,091 $76,433,303$78,726,302 $81,088,091 Prospective Value at Stablization - Cost Approach
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RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

INC O M E APP RO AC H
The Income Approach will be used to estimate the value of the garage in the year of stabilization. We estimate end of year 7 or July 2029 to be the year of stabilization. The following is our analysis.

RE VE N UE AN D E XPE N SE S

The parking lot consultant modeled income and expenses beginning in year 202 7. For year 202 7 they reported the garage open for 3 months. Exact details of this model are confidential, but high -level elements of their pro-forma are reported for this analysis. The pro-forma reported in detail the following elements:

Estimated Parking Demand: The reported demand for the garage will be from Kaiser at 501 J location, Central Shops, Live Nation, residential projects likely to be constructed at the Railyards, the Marriott Hotels, the new Courthouse (employee & jury overflow), displaced parkers from nearby parking lots being developed, transient and events. The subject garage will be unique in the respect it would have the demand of up to 3 possible turnovers in a given 24 -hour period (i.e. office users in the am, lunch users midday, entertainment users and residential users in the evening). This unique factor creates considerably greater feasibility as compared to a normal stand-alone parking garage in the downtown area where there are usually 1 -2 possible turnovers. The parking pro -forma by the consultant indicated the following demand:

For year 2027, the parking garage expert reported only 3 months. The Revenue per Parked Space actually declines slightly over the model period. As such, we consider this a conversative pro -forma for gr oss revenue over the analyzed period.

Revenue and Expenses: The provided pro-forma had detailed analysis of individual line-item estimates for the various revenue and expenses. The level of detail in the report is what would be expected for a comprehensive analysis of the revenue and expenses. While the details of the revenue and expenses are confidential, the final net earnings per parking space are shared. Below is their estimate of net operating income before debt service:

Year 2027 2028 2029 2030 2031
Monthly Demand (annual) 2,373 9,792 9,912 10,212 10,332 Transient Demand (annual) 12,179 52,317 62,717 72,996 76,716 Event Totals (annual) 38,328 139,812 139,812 139,812 139,812 Combined 52,880 201,921 212,441 223,020 226,860
Revenue $1,714,385 $5,861,205 $6,067,745 $6,295,860 $6,335,400 Revenue Per Parked Space $32.42 $29.03 $28.56 $28.23 $27.93 Parking Demand By Category
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RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

As a primary source for estimating the subject’s net operating income we have considered revenue estimates from various garages in the CBD and Midtown areas of Sacramento. This information is collected from actual profit and loss statements which we have in our possession. The information is masked to protect confidential nature of the information. Below is a summary of these garages:

The net revenue parking garage comparables range from $1,420 to $2,740 per space. These are net operating incomes with all expenses accounted. This information is from 2019 before the pandemic, so it represents normal operations not impacted by Covid. The first three revenue comparables benefit from office space monthly and transient as well as event parking revenue. These are most comparable to the subject property. The average of these three properties is $2,314 per space. These properties have superior locations as compared to the subject and are a slightly high indications. Based on this data, we conclude to a net operating income of $2,200 per space. This estimate is for an assumed stabilized subject parking garage today. We apply the following trend to estimate future net revenue for the subject from the Revenue Comparables:

Year 2027 2028 2029 2030 2031
Net Income -$397,753 $3,251,041 $3,412,583 $3,590,474 $3,583,914 Combined 52,880 201,921 212,441 223,020 226,860
Net Income Per Parked Space -$7.52 $16.10 $16.06 $16.10 $15.80 Net Revenue Per Subject Space -$280 $2,288 $2,402 $2,527 $2,522 Net Operating Income
No. Net Revenue Net Revenue
Property City Spaces Per Space Adjusted For Taxes & Insurance Type of Revenue Hotel Garage in CBD Sacramento over 800 $2,824 $2,040 Net Income Office Building Garage - Capitol Mall Sacramento around 800 $3,877 $2,740 Net Income Before Taxes Office Building Garage - Capitol Mall Sacramento around 700 $3,079 $2,164 Net Income Before Taxes Stand Alone Garage - Midtown Sacramento around 400 $1,420 $1,420 Net Income Average $2,091
Median $2,102

REVENUE COMPARABLES - CONFIDENTIAL DATA
Yr.1 Yr. 2 Yr.3 Yr.4 Yr.5 Yr.6 Yr.7 Yr.8
Period Beginning July-22 July-23 July-24 July-25 July-26 July-27 July-28 July-29 Net Revenue as if Stabilized Today $2,200
Annual Appreciation 0% 3% 3% 3% 3% 3% 3% 3%
Appreciated Revenue Conclusion per space $2,266 $2,334 $2,404 $2,476 $2,550 $2,627 $2,706 Net Revenue Per Space at Stabilization - Income Approach LOT 17 PARKING GARAGE 244
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Both the parking garag e consultant and the Revenue Comparables are deemed reliable. For Year 5 we utilized 25% of the Revenue Comparable source as it is assumed to be in operation for only 3 months similar to what the consultant concluded. We give weight to both sources and conclude to the following net revenue estimates:

Resale of the Garage

The Lot 17 Parking Garage is estimated to be stabilized in end of year 7 (middle 2029). At that point, the developer would likely sell the garage. Given several developments within the Railyards would be dependent on this garage, we make an extraordinary assumption that long -term leases and licenses would be in place prior to a sale of the garage.

The most reliable valuation method is an Income Capitalization Approach. To arrive at an estimated value, we have researched sales of other parking garages to determine appropriate capitalization rates. The following is a summary of capitalization for garages.

The subject’s parking garage being located in an urban location, new construction and multiple sources of demand revenue deserves a capitalization at or below the central indicators above. The sale comparables have older ages which tends to increase capitalization rates. Also, the older sales from 2017 -2019 are from different investment time period when capitalization rates were higher. The most rent sales in 2021 and pending have rates from 4.0% to 5.0% and average 4.4%. These sale have ages from 5 years to 33 years. Based on the data considered, a capitalization rate of 4.25% is concluded for the subject. For the sale of the property at year end 7 (middle 2029), we utilize year 8 income estimate as this is the basis an investor which analyze the property. Below is our value estimate of the garage in middle 2029:

Yr.5 Yr. 6 Yr.7 Yr.8
Period Beginning July-26 July-27 July-28 July-28
Consultant Estimate -$280 $2,288 $2,402 $2,527
Revenue Comparables $619 $2,550 $2,627 $2,706
Average of Sources $170 $2,419 $2,515 $2,616
Appraiser Conclusion per Space $600 $2,400 $2,500 $2,600 Net Revenue per Year $852,600 $3,410,400 $3,552,500 $3,694,600 Net Revenue Per Space Conclusions - Income Approach
Address City State Built No. Spaces Type Sale Date Sale Price Price/Space NOI/Space Cap Rate 315 Cumberland Ave Portland ME 1998 595 All garage Pending $21,500,000 $36,134 $1,445 4.00% 237 20th Street Miami FL 2002 225 Garage with some retail Mar-22 $19,600,000 $87,111 $3,555 4.08% 460 W 5th St San Pedro CA 1989 320 All garage Nov-21 $9,604,000 $30,013 $1,384 4.61% 138-35 39th St Flushing NY 2017 500 All garage Sep-21 $16,000,000 $32,000 $1,600 5.00% 6200 W 98th St Los Angeles CA 2011 1,200 All garage Sep-19 $85,150,000 $70,958 $4,790 6.75% 144-148 5th Ave Nashville TN 1967 305 All garage Aug-19 $17,000,000 $55,738 $2,675 4.80% 10 Necco St Boston MA 1999 641 All garage Mar-19 $81,100,000 $126,521 $4,808 3.80% 200-350 Deaderick St Nashville TN 1975 1,070 All garage Sep-18 $54,000,000 $50,467 $2,877 5.70% 1140 Bethel St Honolulu HI 1958 308 Garage with some retail Jun-18 $20,400,000 $66,234 $3,047 4.60% 601-611 2nd Ave Seattle WA 1927 451 Garage with some retail Dec-17 $30,750,000 $68,182 $3,409 5.00% Minimum: $30,013 $1,384 3.80%
Maximum: $126,521 $4,808 6.75%
Average: $62,336 $2,959 4.83%
Median: $60,986 $2,962 4.71%

CAPITALIZATION RATE COMPARABLES - PARKING GARAGE
LOT 17 PARKING GARAGE 245
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

As a secondary check on value, the capitalized value of $83,000,000 seven years in the future results in a value of $58,391 per space. This is supported from the sales which have an average price of $62,336 per space. The sale data central indicators have slightly greater average NOI’s per space ($2,959/space) as compared to the subject $2,600/space.

DISC O UN T R ATE
We have reviewed the PwC Real Estate Investor Survey for determination of the discount rate. This survey does not include parking garages, so the most similar property uses are analyzed. These are as follows:

Parking garages generally have less risk than office buildings and similar risk as compared to apartments.

They generally have reliable steady cash flow, have minimal capital expenses and lower management. These are the reasons that capitalization rates and yield rates for garages are lower than most property types.

The spread in the discount rate and capitalization rate can be used to reconcile to a discount rate. Using our previous capitalization estimate of 4.25% and adding 175-basis point adjustment (average of difference from office and multi-family) indicates a discount rate of 6.00%. This is for a stabilized real estate investment and not a real estate development model which is the scope of this analysis. A profit component needs to be added to reward development of this project. Keeping in mind the garage is a necessary development component of the master developer of the subdivision, a profit level would expect to be toward the lower end of the range of other real estate developments. Profit would be a motivating factor for the garage development but there are more important objectives for the completion of the garage.

Considering some profit component, a discount rate of 8.5% is concluded. A comparison of the values using a 6.0% discount rate to an 8.5% discount rate indicates a profit of $8.8 million. This profit is 14.2% of the estimated future construction costs and considered reasonable for this asset type, associated risk, and development objective for the Railyard build-out.

There will be a negative cash flow for year 1 -5 of the development model. These cash flows need to be discounted at a safe discount rate. Safe yield rates on investments including yields on 5 -year bonds are around 2.5%. We utilize this safe rate for the negative cash flow.

Estimated Net Earnings $3,694,600
Less: Tax Increase Due to Sale $168,217
Net Income $3,526,383
Capitalization Rate 4.25%
Sale Price $82,973,718
Rounded $83,000,000
Resale Calculation - Year 2029
PwC Average Discount Rate Average Capitalization Rate Difference National CBD Office 6.93% 5.70% 1.23%
National Apartment Market 4.45% 6.72% 2.27%
Average 5.69% 6.21% 1.75%
PwC Discount Rates - 2Q 2022
LOT 17 PARKING GARAGE 246
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Shown on the following page is the discounted cash flow for the Lot 17 parking garage This model indicated a negative value of $6,190,922, Rounded to -$6,200,000. This negative value will be applied in Period 0 of the primary subdivision cash flow (shown later) to arrive at a total value of the DRV property.

Lot 17 Parking Garage 247
PAGE 247

LAND RESIDUAL - LOT 17 PARKING GARAGE
Period Beginning Jul-22 Jul-23 Jul-24 Jul-25 Jul-26 Jul-27 Jul-28 Yr Yr Yr. Yr Yr Yr Yr
TOTAL LOT REVENUE 1 2 3 4 5 6 7
Parking Garage Net Income $0 $0 $0 $0 $852,600 $3,410,400 $3,552,500 Parking Garage Sale $0 $0 $0 $0 $0 $0 $83,000,000
TOTAL REVENUE $90,815,500 $0 $0 $0 $0 $852,600 $3,410,400 $86,552,500

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $475,000 $100,000 $100,000 $100,000 $100,000 $75,000 $0 $0 COMMISSIONS 2.0% $0 $0 $0 $0 $0 $0 $1,660,000
AD VALOREM $584,739 $2,009 $2,049 $2,090 $330,623 $247,967 $0 $0 RAILYARDS MAINTENANCE CFD No. 2014-04 $151,210 $31,834 $31,834 $31,834 $31,834 $23,875 $0 $0 RAILYARDS CFD No. 2018-1 $156,610 $32,971 $32,971 $32,971 $32,971 $24,728 $0 $0 CAPITALIZED CFD INTEREST ($65,941) ($32,971) ($32,971) $0 $0 $0 $0 $0 ENTITLEMENT COST $250,000 $0 $125,000 $125,000 $0 $0 $0 $0 PARKING GARAGE COSTS $61,936,702 $0 $1,548,418 $1,548,418 $29,419,933 $29,419,933 $0 $0 TOTAL EXPENSES $63,488,320 $133,843 $1,807,301 $1,840,313 $29,915,360 $29,791,503 $0 $1,660,000 NET INCOME $25,667,180 ($133,843) ($1,807,301) ($1,840,313) ($29,915,360) ($28,938,903) $3,410,400 $84,892,500 PRESENT VALUE FACTOR 8.5% 0.92166 0.84946 0.78291 0.72157 0.66505 0.61295 0.56493 SAFE DISCOUNT RATE 2.5% 0.97561 0.95181 0.92860 0.90595 0.88385 0.86230 0.84127 DISCOUNTED CASH FLOW ($6,190,922) ($130,578) ($1,720,215) ($1,708,913) ($27,101,840) ($25,577,774) $2,090,388 $47,958,010 Rounded ($6,200,000)
VALUATION OF DRV PROPERTY EAST OF 7TH STREET248
PAGE 248
VALUATION OF DRV PROPERTY EAST OF 7 TH STREET
The property east of 7 th Street has a highest and best use to hold for future de velopment. Considering the extended sell-out period of the land west of 7th Street, the land east of 7th most likely has a long hold period. The valuation of the property will consider the estimated hold period before development.

The Alta Survey indi cates the gross acres of 42.285 acres. Deducting the right -of-way for 7 th street and Lot 51B, the adjusted gross acres is 36.135 acres, rounded to 36.0 acres. As discussed in the highest and best use some of the possible future use of the property cou ld be a large user office campus, mixed-use subdivision with office and residential uses or possibly a future sports stadium. These potential uses could utilize the existing tentative map or develop a revised map to accommodate their plan.

The zoning fo r the land East of 7 th is 32.51 acres zoned C -3 SPD and 3.49 acres zoned C -2 SPD. These zonings are briefly summarized below:

C-3 SPD: The C-3 SPD land use designation allows residential densities up to 450 units per acre, and non- residential development between a Floor Area Ratio (FAR) of 3.0 and 15.0. A sports complex is allowable as a conditional use in the C-3 SPD.

C-2 SPD. The C-2 SPD land use designation allows residential densities up to 60 units per acre, and non - residential and mixed-use development up to an FAR of 2.0 with a maximum height of 120’.

As discussed earlier, the Railyards Specific Plan allows great flexibility between office, retail, and residential uses. Under the Land Use Model previously presented earlier we estimate the following possible land use allocation:

The valuation of this property is best accomplished from a Sales Comparison Approach with a Discounted Cash Flow to account for the estimated holding period.

The first step of this valuation process is to estimate the value of the property assuming it were a near term development. We have researched the region to locate commercial and multi-family land sales most similar to the property that were purchased for near -term development. Below is a summary of the comparable sales selected.

Density Land Area Achievable Density
Residential - C-2 60 upa 3.49 209
Residential - C-3 120 upa 16.81 2017
Residential Total 2,226
Office/Retail 4.0 FAR 8.99 1,566,417
Land Use Allocation - East of 7th Street
VALUATION OF DRV PROPERTY EAST OF 7TH STREET 249
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

VALUATION OF DRV PROPERTY EAST OF 7TH STREET250
PAGE 250

SUMMARY OF PRIMARY LAND SALES - EAST OF 7TH STREET
No. Property / Location
Date of
Sale
Transaction
Status
Site Size
(Ac)
Site Size
(SF) Zoning Property Use Sale Price
Price
per Acre
Price
per SF
1 UC Davis Health Site - Folsom Ranch
SWC E St Bidwell & Highway 50
Folsom, CA
10/19/2021 Closed 34.55 1,504,998 RC, Regional
Commercial Commercial $30,100,000 $871,201 $20.00
2 Township 9
Richards Blvd
Sacramento, CA
11/17/2020 Closed 54.98 2,394,929

RMX-SPD,
Residential
Mixed-Use
Multi-Family $54,000,000 $982,175 $22.55
3 Kaiser Site - Delta Shores
8401 Center Parkway
Sacramento, CA
11/12/2020 Closed 29.28 1,275,437 C-2, Commercial Commercial $18,203,000 $621,687 $14.27 4 Dignity Health Site - Folsom
350 Placerville Road
Folsom, CA
06/05/2020 Closed 28.30 1,232,748 CC, Commercial Commercial $22,024,000 $778,233 $17.87 5 1401 Arden Way
1401 Arden Way
Sacramento, CA
12/01/2018 Closed 21.90 953,964 C-2, General
Commercial Multi-Family $16,500,000 $753,425 $17.30
6 Centene Site
4201 East Commerce Way
Sacramento, CA
09/13/2018 Closed 67.74 2,950,754
EC-50-PUD,
Employment
Center
Office $28,212,500 $416,482 $9.56
Subj.

Railyards
300 6th Street
Sacramento, California
— — 36.00 1,568,160 Office & Multi-
family
VALUATION OF DRV PROPERTY EAST OF 7TH STREET251
PAGE 251

Sale 1 Comments: UC Davis Health acquired this 34.55 - acre commercial site at the southwest quadrant of E Bidwell Street and Highway 50 within Folsom Ranch. Initial plans call for an outpatient medical office building and future plans include a micro -hospital, an ambulator y surgery center and a hotel. The site was initially placed in-contract in February 2021, approximately eight months prior to closing. The site will be encumbered by a future Mello -Roos bond that is expected have a principal balance near $1.00 per SF of la nd area. This bond is not recognized in the reported sale price of $20 per SF.

Sale 2 Comments: Sale reflects the two-phase acquisition of the Township 9 (T9) project (excludes the existing Cannery Place Apartments), situated between Richards Blvd and the American River between N 5th and N 7th Streets. Gross site area is 55 -acres; net (developable) site area is 39 -acres exclusive of parks and land in American River Parkway. The acquisition was a two-phase takedown with the initial transfer on 11/17/20 at $43,600,000 and the second on 1/29/21 at $10,400,000. The overall project was entitled for up to 2,981 residential units (180 units had been built). The buyer plans a total of 2,303 residential units. Phase A (central portion of project) is planned for 936 multifamily units. Phase B (norther portion of project) is planned for 825 multifamily units. Phase C (south portion along Richards Blvd) is planned for 542 micro units/hotel.

Sale 3 Comments: November 2020 sale of 29.28-acre
commercial site on the north side of Cosumnes River Blvd, immediately east of Interstate 5 and directly north of the Delta Shores Shopping Center (anchored by Walmart, Dicks Sporting Goods, Hobby Lobby, etc.). The site was previously approved for approximately 300,000 square feet of retail space. Actual sale price was $17,243,000 ($13.52/SF); however buyer
assumed an estimated $960,000 (±$0.75/SF) in bond debt.

VALUATION OF DRV PROPERTY EAST OF 7TH STREET 252
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Sale 4 Comments: June 2020 sale of 28.30-acre
commercial site on the east side of E Bidwell Street,
immediately south of Highway 50. The site is part of a
larger 240 -acre project known as the Folsom Ranch
Corporate Campus. The buyer (Dignity Health) initially
plans to build a 3-story 65,000 SF medica l office that will include outpatient surgery, urgent care, imaging, and
primary care. Dignity plans to start construction in early 2022. Actual sale price was $20,914,000 ($16.97/SF);
however buyer assumed an estimated $1.11MM
(±$0.90/SF) in bond debt.

Sale 5 Comments: The property is a C -2 zoned site
located adjacent to the Arden Fair Mall. The property
included twelve different parcels totaling 25.1 gross acres.

The property was purchased for development of a 731-unit apartments complex in two phases (Ph I - 405 units, Ph II - 326 units). The net acreage is 21.9 acres. All off -site infrastructure is complete.

Sale 6 Comments: Hines acquired this site for near
term development (build-to-suit) of a major office park for Centene Corporation. The site was fully entitled for the proposed use at closing. The overall Centene HQ project is ultimately planned to include five 4 -story office buildings totaling 1.25 million square feet (and a 17,160 SF childcare center). The initial phase of the project consists of two office buildings totaling 520,000 square feet. The
developer broke ground on the project in October 2018.

There are no bonds encumbering the property. The gross
site area is 75.82 acres; however, the usabl e area (net of open space buffer along I-5) is 67.74 acres. The usable area is used for analysis purposes.

VALUATION OF DRV PROPERTY EAST OF 7TH STREET 253
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL DISCUSSION OF ADJUSTMENTS – LAND EAST OF 7 TH STREET

PRO PERT Y RI GH TS C ONV EYED
This adjustment accounts for any impact that the property rights transferred to the buyer may have on sale price. For leased fee properties, the length of leases in place and the relationship of market to contract rent could impact value. Some properties m ay have stronger appeal to an owner -user or an investor, resulting in a premium or discount associated with fee simple property rights.

All of the comparables were considered similar to the subject and no adjustments were required for this category.

FINA NC IA L TERM S /B ON DS
This category accounts for differences in financing terms associated with the transaction. In addition we consider an bonds associated with the property.

All of the sales were cash transactions, so there are no adjustments for financing.

A few of the comparable sales were encumbered with bonds. Sale 1 will be encumbered with bonds of approximately $1.00 per square foot. This sale is adjusted up by this amount. Sales 3 and 4 had bonds.

The bond debt of these sales is already reflected in the adjusted sale price.

The subject property also has bonds. We make an adjustment for the subject outstanding bonds at the conclusion of the land valuation.

CO NDI TI O NS OF SA LE
Adjustments for conditions of sale typically reflect various motivations of the buyer and/or sell er. This may include such factors as seller distress (short sale, REO, auction) or buyer motivation (assemblage, etc.). In some situations, the conditions of sale may significantly affect transaction prices. Properties that are listed for sale may require adjustments herein to account for any disparity between asking prices and the achievable sale price anticipated.

All of the comparables were considered similar to the subject and no adjustments were required for this category.

EXPEND ITURE S I MMED IA TEL Y A FTER SA LE
In order to arrive at the effective sale price, the actual sale price of each comparable is adjusted to account for any expenditures planned by the buyer immediately after sale, such as capital expenditures, cost to cure deferred maintenance, or lease-up costs.

The c omparables were considered similar to the subject and no adjustments were required for this category.

VALUATION OF DRV PROPERTY EAST OF 7TH STREET 254
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

MAR KET CO ND IT IO N S
The sales included in this analysis transacted between September 2018 to October 2021. Sales 5 and 6 that sold in 2018 were adjusted upward by 5% each as market conditions and land prices are higher today.

The remaining sales occurred in 2020 and 2021. These sale dates are reflective of current market conditions and no adjustments were necessary for market conditions.

PROPERTY ADJUSTMENTS

LO CA TI ON
The appeal of a property’s location to users of and/or investors in a particular property type can influence value significantly. This factor broadly considers the impact of demographics, geographical attributes, access to transportation networks and local land use trends on pricing. Comparisons of location can often be derived, or even quantified, by examining rent, vacancy, capitalization rate, and land value trends in the subject and directly competitive areas.

The subject’s Railyard location being adjacent to the Central Business District of Sacramento is considered a positive attributes. Within the Railyards it is considered inferior to the land west of 7 th Street. This is attributed to being further away from the Central Shops and its infrastructure schedule which shows it to be likely one of the last areas in the Railyards to be developed.

In terms of its location to the comparable sales it rates different to the comparable sales, which are suburban in nature. We consider each sale as follows:

Sale 1: Highly identified site along Highway 50 in Folsom. This site is considered one of the best suburban commercial highway locations in the region. We rate this sale superior in location and adjust it down by 10%.

Sale 2: This property is located in Township 9, just south of the Railyards. The comparable is rated similar in location.

Sale 3: This is a suburban location in South Sacramento within Delta Shores development. The area is inferior to the downtown/Railyards location. An upward location of 15% is applied to this sale.

Sale 4: This commercial site is located on the east side of E Bidwell Street, immediately south of Highway

50. Similar to Sale 1, it is a highly rated suburban location. The sale rates slightly superior to the subject and is adjusted down by 5%.

Sale 5: This is a former hotel site located adjacent to Arden Fair Mall. It has a good centrally located site and is rated similar to the subject in terms of location.

Sale 6: This is a suburban location in North Natomas. The area is inferior to the downtown/Railyards location. An upward location of 10% is applied to this sale.

VALUATION OF DRV PROPERTY EAST OF 7TH STREET 255
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

SI TE SIZE
The subject has an adjusted size of 36.0 gross acres. The comparable sizes range from 21.90 to 67.74 gross acres. Sales 1, 3 & 4 have land sizes that are similar to the subject and deserve no adjustment.

Sales 2 and 6 are larger and warranted upward adjus5tment of 5% and 10%, respectively. Sale 5 is marginally smaller and was adjusted down by 5%

ZO NIN G / IN TEN DED USE

The value of vacant land is largely contingent upon its potential use. This factor considers the uses permitted by the applicable development standards, per the subject’s zoning designation. The maximum density to which a property can be developed typically impacts total value positively; however, depending upon property type, location, and type of construction higher permitted densities can have an inverse relationship to pricing on a per-unit or per-square-foot basis.

The subject is zoned and entitled f or multi-family, commercial an office uses. The sales have generally similar lands use zoning. The subject overall land density is substantially greater than the comparable sales. While this is generally a superior attribute, it results in higher build ing development cost due to structured parking requirements and the fact that greater height building s are more expensive to construct. Given these issues, the comparable sales deserve no adjustment for differences in achievable densities.

UT IL IT IE S/I N FRA S TRUCT URE
The subject property fronts 7th Street and North B Street. 7 th Street is planned to be widened with new curbs, gutters, sidewalks, streetlights, and utilities along the subject boundary. This work is part of the infrastructure plans fo r West of 7 th Street which is being funded with the $30 million Natural Resource Grant. The large size of the subject will likely need to be resubdivided which will involve interior public streets. This plan could be the same as the existing tentative map or something different. The development cost for any interior improvements could be funded from future grants, funds similar to what has occurred in the land West of 7th Street. While these are not secured at this point, it reasonable to assume that funds to pay some or all of the interior infrastructure obligation would be forthcoming in the future.

The comparable sales all have perimeter streets and utilities similar to what the subject property will eventually benefit from. All of the comparable sales would likely have lower interior infrastructure obligations. These sales however are not likely to have the future benefit of grants and other public funds to pay for the infrastructure. So from an overall cost obligation, the developer of the subject is not likely to incur any greater net infrastructure than most of the comparable sales. The exception is comparable 2, which is a subdivided property with most road and utility infrastructure in-place for multiple lots. This ready to go project is deemed to have superior development timing as a result of the improvements completed. We rate Sale 2 superior in respect to this characteristic and adjust it down by 15%.

SHA PE /C O NF IGUR AT I ON
The subject is an irregular shaped parcel with street frontage only along its western boundary. The shape could create some less than functional areas of development. The comparable sales are considered slightly superior to the subject in respect to shape. Each comparable sale is adjusted down by 5% for their superior shape and configuration.

VALUATION OF DRV PROPERTY EAST OF 7TH STREET 256
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

ACCES S /VI SI BI L IT Y
The subject has extensive frontage along 7 th Street. Future access point is anticipated to be along 12th Street. The comparable sales have superior access as most front multiple roads. Each comparable sale is adjusted down by 5% for their slightly superior access.

ENVIR ON MEN TA L I S SUE S
The comparable land sales were not known to have any environmental issues. Based on the estimated higher development costs at the Railyards for environmental issues, we adjust the comparable sales down by 5%.

COMPARABLE LAND SALE ADJUSTMENTS (PRIMARY)
Subject Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6
Property / Location Railyards
300 6th Street
Sacramento,
California
UC Davis Health
Site - Fols om
Ranch
SWC E St Bidwell &
Highway 50
Fols om, CA
Towns hip 9
Richards Blvd
Sacramento, CA
Kais er Site - Delta
Shores
8401 Center
Parkway
Sacramento, CA
Dignity Health Site
- Fols om
350 Placerville
Road
Fols om, CA
1401 Arden Way
1401 Arden Way
Sacramento, CA
Centene Site
4201 Eas t
Commerce Way
Sacramento, CA
Transaction Status ----- Clos ed Clos ed Clos ed Clos ed Clos ed Clos ed Date of Sale ----- 10/19/2021 11/17/2020 11/12/2020 06/05/2020 12/01/2018 09/13/2018 Site Size (Acres) 36.000 34.55 54.98 29.28 28.30 21.90 67.74 Sale Price ----- $30,100,000 $54,000,000 $18,203,000 $22,024,000 $16,500,000 $28,212,500 Zoning , RC, Regional
Commercial

RMX-SPD,
Res idential Mixed-
Us e
C-2, Commercial CC, Commercial C-2, General
Commercial
EC-50-PUD,
Employment
Center
Property Use Other Commercial Multi-Family Commercial Commercial Multi-Family Office Unadjusted Price per SF (Net) ----- $20.00 $22.55 $14.27 $17.87 $17.30 $9.56 Transactional Adjustments
Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjus tment -$ -$ -$ -$ -$ -$ Financing/Bonds 1.00$ -$ Included in Sale price Included in Sale price Adjus tment -$ -$ -$ -$ -$ -$ Terms /Conditions of Sale
Adjus tment -$ -$ -$ -$ -$ -$ Expenditures After Sale
Adjus tment -$ -$ -$ -$ -$ -$ Market Conditions Jul-22 10/19/2021 11/17/2020 11/12/2020 06/05/2020 12/01/2018 09/13/2018 Adjus tment 0% 0% 0% 0% 5% 5%
Total Transactional Adjustments $1.00 $0.00 $0.75 $0.90 5% 5% Adjusted Price per SF (Net) $21.00 $22.55 $14.27 $17.87 $18.16 $10.04 Property Adjustments
Superior Similar Inferior Superior Similar Inferior
Location -10% 0% 15% -5% 0% 10%

36.00 34.55 54.98 29.28 28.30 21.90 67.74
Gross Site Size (Ac) 0% 5% 0% 0% -5% 10%
Regional
Commercial
Residential Mixed-
Use
Commercial Commercial General Commercial Employment Center Zoning / Intended Use 0% 0% 0% 0% 0% 0%
Sl. Superior Sl. Superior Sl. Superior Sl. Superior Sl. Superior Sl. Superior Shape / Configuration -5% -5% -5% -5% -5% -5%
Access / Visibility 0% 0% 0% 0% 0% 0%
Similar Superior Similar Similar Similar Similar
Utilities / Infrastructure 0% -15% 0% 0% 0% 0%
Sl. Superior Sl. Superior Sl. Superior Sl. Superior Sl. Superior Sl. Superior Access / Visibility -5% -5% -5% -5% -5% -5%
Environmemntal -5% -5% -5% -5% -5% -5%
Total Property Adjustments -25% -25% 0% -20% -20% 5%
Indication for Subject $15.75 $16.91 $14.27 $14.30 $14.53 $10.54

SALES SUMMARY UNADJUSTED ADJUSTED
Minimum $9.56 $10.54
Maximum $22.55 $16.91
Average $16.92 $14.38
VALUATION OF DRV PROPERTY EAST OF 7TH STREET 257
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL CONCLUSION OF LAND VALUE – ASSUMING NEAR TER M DEVELOPMENT After adjustments, the comparable land sales reflect a range of unencumbered prices from $10.54 to $16.91 per square foot. The average of the sales is $14.38 per square foot, as if unencumbered by bonds.

Sale 6 is an outlier with the remaining sales ranging from $14.27 to $16.91 per square foot and an average of $15.15 per square foot, unencumbered. Based on analysis of the comparable sales, we estimate a value of $15.00 per square foot unencumbered, assuming if were available for near-term development.

Analysis on Value For Hold For Future Development

As discussed earlier, the land East of 7th Street would likely be developed after much of the property west of 7th Street is sold and developed. For the land west of 7th we estimate that the last lots sold are in year 11 for multi-family, year 13 for office/retail and year 16 for hotel. More than likely there would be overlap of lot development and sales between the two areas. Assuming multi -lot/buyers scenario, a land development schedule could start in years 10-12. There however is a possibility that a larger user such as office campus for large user or stadium buyer could develop sooner. DRV is still in discussion with the Sacramento Republic FC for a possible sports soccer stadium and they continue to be positive that a large office campus user could be a possibility. Considering these different possibilities, we believe the east 7th Street land has a hold period from 8-12 years.

Most of the comparable sales were purchased for near term development. Even with these intentions there is planning, entitlement and design times after acquisition. Under many scenarios, development is usually not started for 3-5 years after acquisition.

The subject has a longer estimate hold period as compared to the sales. Reducing the subject’s estimated 8 to 12-year hold from an approximate 3 to 5 -year average hold of most land acquisitions, indicated an excessive hold period of 5 to 7 years. To assist in the valuation of the current value, we have incorporated a discounted cash flow for the estimated exce ss hold period as compared to the comparable sales. The inputs to the DCF are:

Excess Hold Period: We utilize an excess hold period of 7 years as compared to the comparables.

Holding Costs: These include Ad Valorem taxes, CFD taxes, and general and administrative costs.

Land Value Appreciation: We utilize an annual appreciation of 3% annually.

Future Sale Proceeds: The future sale proceeds are estimated based on the appreciated unencumbered land value. The current estimated bond debt ($0.435, 30 years, PV 5%) is estimated to $6.69 per square foot. At the end of year 7, the estimated bond de bt is estimated to be $5.10 per square foot. This is calculated as follows:

Current Unencumbered Land Value per SF $15.00
Plus: Land Appreciation for 7 years per SF $2.91
Future Unencumbered Land Value per SF $17.91
Less: Estimated Bond Debt at end of Yr. 7 per SF $5.88 Estimated Unencumbered Value in Yr. 7 $12.03
Estimated Future Encumbered Value
VALUATION OF DRV PROPERTY EAST OF 7TH STREET 258
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Discount Rate: The discount rate relates to estimated debt and equity carrying cost. We estimate a 10% discount rate is appropriate for the positive cash flow. The first 6 years of the DCF will have a negative cash flow. We estimate a safe discount rate of 2.5%.

Shown on the next page is the discounted cash flow for the excessive hold period of the land east of 7th Street.

VALUATION OF DRV PROPERTY EAST OF 7TH STREET259
PAGE 259

DCF - Land East of 7th
Period Beginning Jul-22 Jul-23 Jul-24 Jul-25 Jul-26 Jul-27 Jul-28 Yr Yr Yr. Yr Yr Yr Yr
TOTAL LOT REVENUE 1 2 3 4 5 6 7
Unencumbered Land Value per SF $15.00 $15.45 $15.91 $16.39 $16.88 $17.39 $17.91 Less: Estimatee Bond Debt - at Yr. End $6.59 $6.49 $6.38 $6.26 $6.14 $6.02 $5.88 Indicated Encumbered Land Value per SF at Yr. End $8.41 $8.96 $9.53 $10.13 $10.74 $11.37 $12.03 TOTAL REVENUE $18,866,215 $0 $0 $0 $0 $0 $0 $18,866,195

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE $1,149,369 $150,000 $154,500 $159,135 $163,909 $168,826 $173,891 $179,108 AD VALOREM $498,112 $67,002 $68,342 $69,709 $71,103 $72,525 $73,976 $75,455 RAILYARDS MAINTENANCE CFD No. 2014-04 $0 $0 $0 $0 $0 $0 $0 $0 RAILYARDS CFD No. 2018-1 $3,883,705 $554,815 $554,815 $554,815 $554,815 $554,815 $554,815 $554,815 CAPITALIZED CFD INTEREST ($1,109,630) ($554,815) ($554,815) $0 $0 $0 $0 $0 ENTITLEMENT COST $0 $0 $0 $0 $0 $0 $0 $0
PARKING GARAGE COSTS $0 $0 $0 $0 $0 $0 $0 $0
TOTAL EXPENSES $4,421,556 $217,002 $222,842 $783,659 $789,827 $796,166 $802,682 $809,378 NET INCOME $14,444,658 ($217,002) ($222,842) ($783,659) ($789,827) ($796,166) ($802,682) $18,056,817 PRESENT VALUE FACTOR 10.0% 0.90909 0.82645 0.75131 0.68301 0.62092 0.56447 0.51316 SAFE DISCOUNT RATE 2.5% 0.97561 0.95181 0.92860 0.90595 0.88385 0.86230 0.84127 DISCOUNTED CASH FLOW $6,003,102 ($211,709) ($212,104) ($727,705) ($715,544) ($703,695) ($692,150) $9,266,002 Rounded $6,000,000
VALUATION OF DRV PROPERTY EAST OF 7TH STREET260
PAGE 260
VALUATION OF DRV PROPERTY EAST OF 7 TH STREET
The discounted cash flow indicated an as is value of $6,000,000 for the 36 gross acres east of 7 th Street.

This DCF assumed an excessive hold period for 7 years with no development.

As additional support for the value indication we have performed two land residual models assuming buildout of the land east of 7 th Street. In these scenarios we assumed that some infrastructure costs would be funded with grants, future CFD proceeds or other public funds similar to what has occurred in the land west of 7th Street. The two scenarios are:

Sell Lot 52 a-e (14.62 acres) to a User in Year 6: Under this scenario the property is developed under the current tentative map and its future developed state would be sold to a large user for 14.62 acres (Lot 52 a-e) with the balance sold to multiple buyers. We estimate a current land value of $36.00 per square foot for Lot 52, which is 20% lower than the land value conclusion of the Kaiser site. A 6-year period sale is a reasonable time period considering the progress that has occurred in the Railyards. The balance of the property would benefit from larger user, so an absorption period of years 7 -15 is estimated for the remainder 14.66 acres. Construction cost in year 5 and 6 are partially funded with public funds. We utilize a reimbursement of $27,208,666 that has already been earmarked for the site assuming an MLS.

The other inputs include typical holding and sell -off costs. A discount rate of 20% for positive cash flow and 2.5% for negative cash flow were utilized. As shown on the following page the indicated value under this scenario is $9,400,000. This scenario is considered slightly optimistic projection as it assumes a buyer for a large tract of urban land which is not as common in the downtown market.

Sell Entire Property to multiple -buyers with an 18 Year sell -off: Under this scenario the property is developed under the current land tentative map and its absorption commences in year 8 after much of the land west of 7 th street land is sold off. The current retail land value of the assumed finished lots is shown on the following pages. Construction commences in year 6 and end in year 13 and the cost are assumed to be partially paid with future public funds. The other inputs include typical holding and sell- off costs. A discount rate of 20% for positive cash flow and 2.5% for negative cash flow were utilized. As shown in the following pages the indicated value under this scenario is $ 1,800,000. This scenario is considered a pessimistic projection as it assumes no upside potential for a possible large user acquisition.

The two DCF scenarios can be considered benchmark low and high value indications for the land east of 7th Street. Our indicated $6,000,000 value from the Hold DCF Land is near the middle of the two scenarios.

Based on our analysis, we estimate the land east of 7 th Street has a contributory value of $6,000,000 for the DRV property.

Valuation of DRV Property East of 7th Street 261
PAGE 261
V

MARKET VALUATION - EAST OF 7TH - FINISHED LOT MODEL - LARGE USER ACQUISTION FOR LOT 52 IN YR 6 Period Ending Jul-23 Jul-22 Jul-23 Jul-24 Jul-25 Jul-26 Jul-27 Jul-28 Yr Yr Yr. Yr Yr Yr Yr
ABSORPTION ESTIMATES 12 mos/period 1 2 3 4 5 6 7
Office & Retail - East of 7th Street 14.66 0.00 0.00 0.00 0.00 0.00 0.00 1.63 Lot 52 a-e 14.62 0.00 0.00 0.00 0.00 0.00 14.62 0.00
Total Period Inventory Beginning: - 29.28 29.28 29.28 29.28 29.28 29.28 14.66 Remaining Acres 29.3 29.3 29.3 29.3 29.3 29.3 14.7

LOT VALUE ESTIMATES
Office, Retail Hotel & Residential - East of 7th Street $64.46 $66.39 $68.39 $70.44 $72.55 $74.73 $76.97 Lot 52 a-e $36.00 $37.08 $38.19 $39.34 $40.52 $41.73 $42.99

TOTAL LOT REVENUE
Office, Retail Hotel & Residential - East of 7th Street $0 $0 $0 $0 $0 $0 $5,461,262 Lot 52 $26,578,096
TOTAL REVENUE $82,059,636 $0 $0 $0 $0 $0 $26,578,096 $5,461,262

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $2,698,592 $150,000 $154,500 $159,135 $163,909 $168,826 $173,891 $179,108 MARKETING/COMMISSIONS 3.0% $2,461,789 $0 $0 $0 $0 $0 $797,343 $163,838 AD VALOREM $916,741 $104,970 $107,069 $109,211 $111,395 $113,623 $115,895 $59,187 RAILYARDS MAINTENANCE CFD No. 2014-04 $1,102,631 $0 $0 $0 $0 $0 $0 $0 RAILYARDS CFD No. 2018-1 $4,748,688 $554,815 $554,815 $554,815 $554,815 $554,815 $554,815 $277,786 CAPITALIZED CFD INTEREST ($1,109,630) ($554,815) ($554,815) $0 $0 $0 $0 $0 HORIZONTAL CONSTRUCTION COSTS $32,782,654 $0 $0 $0 $0 $16,174,702 $16,607,953 $0 REIMBURSEMENTS ($27,208,666) $0 $0 $0 $0 ($13,604,333) ($13,604,333) $0 TOTAL EXPENSES $16,392,799 $254,970 $261,569 $823,161 $830,119 $3,407,633 $4,645,564 $679,919 NET INCOME $65,666,837 ($254,970) ($261,569) ($823,161) ($830,119) ($3,407,633) $21,932,532 $4,781,343 PRESENT VALUE FACTOR 20.0% 0.83333 0.69444 0.57870 0.48225 0.40188 0.33490 0.27908 Safe Rate 2.5% 0.97561 0.95181 0.92860 0.90595 0.88385 0.86230 0.84127 DISCOUNTED CASH FLOW at 20% $9,370,411 ($248,751) ($248,965) ($764,386) ($752,047) ($3,011,851) $7,345,161 $1,334,385 INDICATED VALUE $9,370,411
ROUNDED $9,400,000
N F D RV PROPERTY EAST OF 7TH STREET 262
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL N F

D RV PROPERTY EAST OF 7 TH STREET
MARKET VALUATION - EAST OF 7TH - FINISHED LOT MODEL - LARGE USER ACQUISTION FOR LOT 52 IN YR 6 Period Ending Jul-23 Jul-29 Jul-30 Jul-31 Jul-32 Jul-33 Jul-34 Jul-35 Jul-36 Yr Yr Yr Yr Yr Yr Yr Yr
ABSORPTION ESTIMATES 12 mos/period 8 9 10 11 12 13 14 15 Office & Retail - East of 7th Street 14.66 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 Lot 52 a-e 14.62 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Period Inventory Beginning: - 13.03 11.40 9.77 8.14 6.52 4.89 3.26 1.63 Remaining Acres 13.0 11.4 9.8 8.1 6.5 4.9 3.3 1.6

LOT VALUE ESTIMATES
Office, Retail Hotel & Residential - East of 7th Street $79.28 $81.66 $84.11 $86.63 $89.23 $91.90 $94.66 $97.50 Lot 52 a-e $44.28 $45.60 $46.97

TOTAL LOT REVENUE
Office, Retail Hotel & Residential - East of 7th Street $5,625,100 $5,793,853 $5,967,668 $6,146,698 $6,331,099 $6,521,032 $6,716,663 $6,918,163 Lot 52
TOTAL REVENUE $82,059,636 $5,625,100 $5,793,853 $5,967,668 $6,146,698 $6,331,099 $6,521,032 $6,716,663 $6,918,163

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $2,698,592 $184,481 $190,016 $195,716 $184,401 $189,933 $195,631 $201,500 $207,545 MARKETING/COMMISSIONS 3.0% $2,461,789 $168,753 $173,816 $179,030 $184,401 $189,933 $195,631 $201,500 $207,545 AD VALOREM $916,741 $53,663 $47,894 $48,852 $14,994 $11,995 $8,996 $5,998 $2,999 RAILYARDS MAINTENANCE CFD No. 2014-04 $1,102,631 $238,407 $208,606 $208,606 $149,004 $119,203 $89,403 $59,602 $29,801 RAILYARDS CFD No. 2018-1 $4,748,688 $246,921 $216,056 $216,056 $154,326 $123,461 $92,595 $61,730 $30,865 CAPITALIZED CFD INTEREST ($1,109,630) $0 $0 $0 $0 $0 $0 $0 $0 HORIZONTAL CONSTRUCTION COSTS $32,782,654 $0 $0 $0 $0 $0 $0 $0 $0 REIMBURSEMENTS ($27,208,666) $0 $0 $0 $0 $0 $0 $0 $0
TOTAL EXPENSES $16,392,799 $892,225 $836,388 $848,260 $687,126 $634,525 $582,256 $530,329 $478,755 NET INCOME $65,666,837 $4,732,875 $4,957,465 $5,119,408 $5,459,573 $5,696,574 $5,938,776 $6,186,334 $6,439,409 PRESENT VALUE FACTOR 20.0% 0.23257 0.19381 0.16151 0.13459 0.11216 0.09346 0.07789 0.06491 Safe Rate 2.5% 0.82075 0.80073 0.78120 0.76214 0.74356 0.72542 0.70773 0.69047 DISCOUNTED CASH FLOW at 20% $9,370,411 $1,100,715 $960,790 $826,813 $734,793 $638,909 $555,061 $481,832 $417,953 INDICATED VALUE $9,370,411
ROUNDED $9,400,000
Valuation of DRV Property East of 7th Street 263
PAGE 263

Lot # Acres Composite Benchmark
Value Location Density Encumbrance Total Adj. Indicated Value per SF Total Value 49 a 0.94 $75.00 0% 0% 0% 0% $75.00 $3,070,980
49 b 2.68 $75.00 0% 0% 0% 0% $75.00 $8,755,560
50 1.52 $75.00 -25% 0% 0% -25% $56.25 $3,724,380
51 a 3.36 $75.00 -50% 0% 0% -50% $37.50 $5,488,560
52 a 2.99 $45.00 -20% 0% 0% -20% $36.00 $4,688,798
52 b 2.27 $45.00 -20% 0% 0% -20% $36.00 $3,559,723
52 c 2.24 $45.00 -20% 0% 0% -20% $36.00 $3,512,678
52 d 4.21 $45.00 -20% 0% 0% -20% $36.00 $6,601,954
52 e 2.91 $45.00 -20% 0% 0% -20% $36.00 $4,563,346
56 a 0.56 $75.00 0% 0% 0% 0% $75.00 $1,829,520
56 b 0.73 $75.00 0% 0% 0% 0% $75.00 $2,384,910
56 c 0.73 $75.00 0% 0% 0% 0% $75.00 $2,384,910
56 d 0.87 $75.00 0% 0% 0% 0% $75.00 $2,842,290
69 a 0.72 $75.00 0% 0% 0% 0% $75.00 $2,352,240
69 b 1.11 $75.00 0% 0% 0% 0% $75.00 $3,626,370
69 c 0.58 $75.00 0% 0% 0% 0% $75.00 $1,894,860
69 d 0.86 $75.00 0% 0% 0% 0% $75.00 $2,809,620

29.28 $50.25 $64,090,699
RETAIL VALUE OF LAND EAST OF 7TH WITH LOT 52 A-E SELLING TO SINGLE-BUYER Valuation of DRV Property East of 7th Street 264
PAGE 264
L ON

MARKET VALUATION - EAST OF 7TH - FINISHED LOT MODEL - MULTIPLE BUYER ACQUISTION OVER 18 YEARS Period Ending Jul-23 Jul-22 Jul-23 Jul-24 Jul-25 Jul-26 Jul-27 Jul-28 Jul-29 Jul-30 Yr Yr Yr. Yr Yr Yr Yr Yr Yr
ABSORPTION ESTIMATES 12 mos/period 1 2 3 4 5 6 7 8 9
Office & Retail - East of 7th Street 8.99 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.30 0.32 Residential - East of 7th Street 20.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.70 0.69 Total Lots Sold (excludes Lot 17, Wong & Mixed-use Income land dedication): 29.29 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 1.01 Total Period Inventory Beginning: - 29.29 29.29 29.29 29.29 29.29 29.29 29.29 28.29 27.28 Remaining Acres 29.3 29.3 29.3 29.3 29.3 29.3 29.3 28.3 27.3

LOT VALUE ESTIMATES
Office, Retail Hotel & Residential - East of 7th Street $62.23 $64.10 $66.02 $68.00 $70.04 $72.15 $74.31 $76.54 $78.84 Office, Retail Hotel & Residential - West of 7th Street $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Central Shops $68.19 $70.24 $72.34 $74.51 $76.75 $79.05 $81.42 $83.87 $86.38

TOTAL LOT REVENUE
Office, Retail Hotel & Residential - East of 7th Street $0 $0 $0 $0 $0 $0 $0 $3,334,060 $3,468,423 Office, Retail Hotel & Residential - West of 7th Street $0 $0 $0 $0 $0 $0 $0 $0 $0 Central Shops $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL REVENUE $119,430,530 $0 $0 $0 $0 $0 $0 $0 $3,334,060 $3,468,423

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $4,732,285 $150,000 $154,500 $159,135 $163,909 $168,826 $173,891 $179,108 $100,022 $104,053 MARKETING/COMMISSIONS 3.0% $3,582,916 $0 $0 $0 $0 $0 $0 $0 $100,022 $104,053 AD VALOREM $306,600 $19,550 $19,941 $20,340 $20,747 $21,162 $21,585 $22,016 $21,690 $21,334 RAILYARDS MAINTENANCE CFD No. 2014-04 $4,666,008 $0 $0 $0 $0 $0 $535,866 $535,866 $517,571 $499,093 RAILYARDS CFD No. 2018-1 $7,607,673 $555,004 $555,004 $555,004 $555,004 $555,004 $555,004 $555,004 $536,056 $516,918 CAPITALIZED CFD INTEREST ($1,110,009) ($555,004) ($555,004) $0 $0 $0 $0 $0 $0 $0 HORIZONTAL CONSTRUCTION COSTS $34,732,070 $0 $0 $0 $0 $0 $9,138,973 $9,412,663 $9,651,968 $222,456 REIMBURSEMENTS ($27,208,666) $0 $0 $0 $0 $0 ($9,138,973) ($9,412,663) ($8,657,029) TOTAL EXPENSES $27,308,878 $169,550 $174,441 $734,479 $739,660 $744,992 $1,286,347 $1,291,995 $2,270,300 $1,467,906 NET INCOME $92,121,652 ($169,550) ($174,441) ($734,479) ($739,660) ($744,992) ($1,286,347) ($1,291,995) $1,063,760 $2,000,516 PRESENT VALUE FACTOR 20.0% 0.83333 0.69444 0.57870 0.48225 0.40188 0.33490 0.27908 0.23257 0.19381 Safe Rate 2.5% 0.97561 0.95181 0.92860 0.90595 0.88385 0.86230 0.84127 0.82075 0.80073 DISCOUNTED CASH FLOW at 20% $1,758,617 ($165,415) ($166,035) ($682,037) ($670,096) ($658,465) ($1,109,213) ($1,086,911) $247,397 $387,713 INDICATED VALUE $1,758,617
ROUNDED $1,800,000
OF DRV PROPERTY EAST OF 7TH STREET 265
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL OF

DRV PROPERTY EAST OF 7 TH STREET

MARKET VALUATION - EAST OF 7TH - FINISHED LOT MODEL - MULTIPLE BUYER ACQUISTION OVER 18 YEARS Period Ending Jul-23 Jul-31 Jul-32 Jul-33 Jul-34 Jul-35 Jul-36 Jul-37 Jul-38 Jul-39 Yr Yr Yr Yr Yr Yr Yr Yr Yr
ABSORPTION ESTIMATES 12 mos/period 10 11 12 13 14 15 16 17 18 Office & Retail - East of 7th Street 8.99 0.33 0.37 0.38 0.41 0.73 1.70 1.67 1.64 1.14 Residential - East of 7th Street 20.30 0.69 0.47 0.70 2.79 2.75 2.79 2.79 2.88 3.05 Total Lots Sold (excludes Lot 17, Wong & Mixed-use Income land dedication): 29.29 1.02 0.84 1.08 3.20 3.48 4.49 4.46 4.52 4.19 Total Period Inventory Beginning: - 26.26 25.42 24.34 21.14 17.66 13.17 8.71 4.19 0.00 Remaining Acres 26.3 25.4 24.3 21.1 17.7 13.2 8.7 4.2 0.0

LOT VALUE ESTIMATES
Office, Retail Hotel & Residential - East of 7th Street $81.20 $83.64 $86.15 $88.73 $91.39 $94.13 $96.96 $99.87 $102.86 Office, Retail Hotel & Residential - West of 7th Street $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Central Shops $88.97 $91.64 $94.39 $97.22 $100.14 $103.15 $106.24 $109.43 $112.71

TOTAL LOT REVENUE
Office, Retail Hotel & Residential - East of 7th Street $3,607,846 $3,060,303 $4,052,715 $12,368,286 $13,854,026 $18,411,125 $18,836,754 $19,662,868 $18,774,124 Office, Retail Hotel & Residential - West of 7th Street $0 $0 $0 $0 $0 $0 $0 $0 $0 Central Shops $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL REVENUE $119,430,530 $3,607,846 $3,060,303 $4,052,715 $12,368,286 $13,854,026 $18,411,125 $18,836,754 $19,662,868 $18,774,124

EXPENSES AND CASH FLOWS
GENERAL AND ADMINISTRATIVE 3.0% $4,732,285 $108,235 $91,809 $121,581 $371,049 $415,621 $552,334 $565,103 $589,886 $563,224 MARKETING/COMMISSIONS 3.0% $3,582,916 $108,235 $91,809 $121,581 $371,049 $415,621 $552,334 $565,103 $589,886 $563,224 AD VALOREM $306,600 $20,947 $20,683 $20,200 $17,895 $15,248 $11,599 $7,824 $3,839 $0 RAILYARDS MAINTENANCE CFD No. 2014-04 $4,666,008 $480,432 $465,064 $445,305 $386,761 $323,093 $240,948 $159,351 $76,657 $0 RAILYARDS CFD No. 2018-1 $7,607,673 $497,590 $481,673 $461,209 $400,573 $334,632 $249,553 $165,042 $79,395 $0 CAPITALIZED CFD INTEREST ($1,110,009) $0 $0 $0 $0 $0 $0 $0 $0 $0 HORIZONTAL CONSTRUCTION COSTS $34,732,070 $1,703,285 $1,529,735 $1,565,037 $1,507,952 $0 $0 $0 $0 $0 REIMBURSEMENTS ($27,208,666) $0 $0 $0 $0 $0
TOTAL EXPENSES $27,308,878 $2,918,725 $2,680,773 $2,734,914 $3,055,279 $1,504,215 $1,606,767 $1,462,423 $1,339,663 $1,126,447 NET INCOME $92,121,652 $689,121 $379,529 $1,317,801 $9,313,007 $12,349,811 $16,804,358 $17,374,331 $18,323,205 $17,647,677 PRESENT VALUE FACTOR 20.0% 0.16151 0.13459 0.11216 0.09346 0.07789 0.06491 0.05409 0.04507 0.03756 Safe Rate 2.5% 0.78120 0.76214 0.74356 0.72542 0.70773 0.69047 0.67362 0.65720 0.64117 DISCOUNTED CASH FLOW at 20% $1,758,617 $111,297 $51,080 $147,800 $870,430 $961,884 $1,090,695 $939,741 $825,886 $662,865 INDICATED VALUE $1,758,617
ROUNDED $1,800,000
Valuation of DRV Property East of 7th Street 266
PAGE 266

Lot # Acres Composite Benchmark
Value Location Density Encumbrance Total Adj. Indicated Value per SF Total Value 49 a 0.94 $75.00 0% 0% 0% 0% $75.00 $3,070,980
49 b 2.68 $75.00 0% 0% 0% 0% $75.00 $8,755,560
50 1.52 $75.00 -25% 0% 0% -25% $56.25 $3,724,380
51 a 3.36 $75.00 -50% 0% 0% -50% $37.50 $5,488,560
52 a 2.99 $75.00 -20% 0% 0% -20% $60.00 $7,814,664
52 b 2.27 $75.00 -20% 0% 0% -20% $60.00 $5,932,872
52 c 2.24 $75.00 -20% 0% 0% -20% $60.00 $5,854,464
52 d 4.21 $75.00 -20% 0% 0% -20% $60.00 $11,003,256
52 e 2.91 $75.00 -20% 0% 0% -20% $60.00 $7,605,576
56 a 0.56 $75.00 0% 0% 0% 0% $75.00 $1,829,520
56 b 0.73 $75.00 0% 0% 0% 0% $75.00 $2,384,910
56 c 0.73 $75.00 0% 0% 0% 0% $75.00 $2,384,910
56 d 0.87 $75.00 0% 0% 0% 0% $75.00 $2,842,290
69 a 0.72 $75.00 0% 0% 0% 0% $75.00 $2,352,240
69 b 1.11 $75.00 0% 0% 0% 0% $75.00 $3,626,370
69 c 0.58 $75.00 0% 0% 0% 0% $75.00 $1,894,860
69 d 0.86 $75.00 0% 0% 0% 0% $75.00 $2,809,620

29.28 $62.23 $79,375,032
RETAIL VALUE OF LAND EAST OF 7TH ASSUMING 18-YEAR SELL OFF FINAL VALUATION OF DRV PROPERTY 267
PAGE 267

FINAL VALUATION OF DRV PROPERTY
The DRV was valued with separate analysis of East and West of 7th Street. These properties were valued under assumed ownership. The total value of the DRV property is sum of the two components, as shown below.

DRV Property West of 7th Street $46,000,000
DRV Property West of 7th Street $6,000,000
Total Value $52,000,000
Final Value of DRV Property
KAISER FOUNDATION HOSPITAL SITE 268
PAGE 268

KAISER FOUNDATION HOSPITAL SITE
Kaiser Foundation Hospital (“Kaiser”) is the owner of eight parcels totaling 17.407 gross acres. The site is located along the north side of Railyards Boulevard between Bercut Drive and 5 th Street. All streets surrounding the property are in place and all utilities serve the property. DRV sold the site to Kaiser Foundation Hospital on January 24, 2019, for $33,370,000. Kaiser purchased the site to develop a hospital.

DRV delivered a finished site to Kaiser. DRV’s cost to construct the off-site infrastructure for the site was $17,562,830.

KAISER FOUNDATION HOSPITAL SITE 269
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL A sales comparison approach will be used to value the Kaiser Site. Below are the comparable sales map and details.

COMPARABLE LAND SALES MAP - KAISER SITE

KAISER FOUNDATION HOSPITAL SITE 270
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Sale 1 Comments: The property is fully entitled
for a 286-unit mixed-use multi-family property.

The anticipated completion date is 2023. The
proposed five-story property will include retail
along the entire length of the buildings
Riverfront Street frontage and residential
stoops along Ballpark Drive and State Street.

The buyer was Chicago based developer. The
estimated gross building area is 314,600 SF.

Sale 5 Comments: This property is the 5th
phase of The Mill at Broadway. The land was in
an opportunity zone. The buyer plans to
develop 444 one - and two -bedroom
apartments a complex known as Broadway
Apartments. Development will be completed
in two phases the first phas e will be 360 units.

There is a warehouse on the property that will
be incorporated into the project as leasing
office and covered parking. The estimated
building area is 464,000 SF.

KAISER FOUNDATION HOSPITAL SITE 271
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Sale 1 4 Comments: Sale reflects the two -phase
acquisition of the Township 9 (T9) project
(excludes the existing Cannery Place Apartments),
situated between Richards Blvd and the American
River between N 5th and N 7th Streets. Gross site
area is 55 -acres; net developable site area is 39 -
acres exclusive of parks and land in American River
Parkway. The acquisition was a two -phase
takedown with the initial transfer on 11/17/20 at
$43,600,000 and the second on 1/29/21 at
$10,400,000. The overall project was entitled for
up to 2,981 residential units (180 un its had been
built). The buyer plans a total of 2,303 residential
units. Phase A (central portion of project) is
planned for 936 multifamily units. Phase B
(norther portion of project) is planned for 825
multifamily units. Phase C (south portion along
Richards Blvd) is planned for 542 micro
units/hotel.

Sale 1 5 Comments: On January 24, 2019 the

17.407 acres of commercial land part of The
Railyards development was sold for $33,370,000.

The buyer was Kaiser Permanente which paid cash
for the acquisition. The new Kaiser Permanente
Medical Center at the Railyards will replace the
current hospital located less than 10 miles away at
2025 Morse Ave. in Sacramento County. The
propoerty is proposed for a 1,168,003 square foot
hospital and medical campus. The seller delivered
a finished site to the buyer. The seller's cost to
construct the off -site infrastruc ture was
$17,562,830.

KAISER FOUNDATION HOSPITAL SITE 272
PAGE 272

Property / Location
Date of
Sale
Transaction
Status
Site Size
(Ac) Zoning
Est
FAR
Buildable
Area (SF) Sale Price
Price
per Acre
Price
per SF
Price per
Buildable SF
1 805 Riverfront Street
805 Riverfront Street
West Sacramento, CA
12/04/2020 Closed 4.41 WF, 1.35 259,335 $10,050,000 $2,278,907 $52.32 $38.75 5 Broadway Apartments
2570 3rd
Sacramento, CA
10/11/2019 Closed 7.07 R4 & C-2, 1.85 569,743 $20,500,000 $2,899,578 $66.57 $35.98 14 Township 9
Richards Blvd
Sacramento, CA
11/17/2020 Closed 39.10

RMX-SPD,
Residential
Mixed-Use

1.64 2,792,953 $54,000,000 $1,381,217 $31.71 $19.33
15 Kaiser Permanente Development
242 North 5th Street
Sacramento, CA
01/24/2019 Closed 17.407 H 1.85 1,200,000 $33,370,000 $1,917,045 $44.00 $27.81 Kaiser Permanente Development
242 North 5th Street
Sacramento, CA

17.407 1.85 1,200,000 —

COMPARABLES - KAISER SITE
KAISER FOUNDATION HOSPITAL SITE 273
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL DISCUSSION OF ADJUSTMENTS – KAISER SITE LAND SALES

All of the comparables were considered similar to the subject and no adjustments were required for this category.

FINA NC IA L TERM S
This category accounts for differences in financing terms associated with the transaction. Financing arrangements that may require an adjustment include mortgage assumptions (at favorable interest rates), seller buydowns, installment sales, wrap-around loans, or any other atypical financing arrangements that do not represent cash-equivalent terms.

All of the comparables were considered similar to the subject and no adjustments were required for this category.

CO NDI TI O NS OF SA LE
Adjustments for conditions of sale typically reflect various motivations of the buyer and/or seller. This may include such factors as seller distress (short sale, REO, auction) or buyer motivation (assemblage, etc.). In some situations, the conditions of sale may significantly affect transaction prices. Properties that are listed for sale may require adjustments herein to account for any disparity between asking prices and the achievable sale price anticipated.

All of the comparables were considered similar to the subject and no adjustments were required for this category.

EXPEND ITURE S I MMED IA TEL Y A FTER SA LE
In order to arrive at the effective sale price, the actual sale price of each comparable is adjusted to account for any expenditures planned by the buyer immedi ately after sale, such as capital expenditures, cost to cure deferred maintenance, or lease-up costs.

All of the comparables were considered similar to the subject and no adjustments were required for this category.

MAR KET CO ND IT IO N S
The sales included in this analysis transacted between January 2019 to December 2020. Market conditions were positive and improving during this time period. We apply an upward adjustment of 3% annually to account for increasing land values.

KAISER FOUNDATION HOSPITAL SITE 274
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PROPERTY ADJUSTMENTS

The Kaiser Site has a good location within the Railyards. Sale 1 is located in West Sacramento overlooking the Sacramento River and considered to have a slightly superior location to the Kaiser site. A downward adjustment of -10% was applied to this sale. Sale 5 located along Broadway als o has a slightly superior location and is adjusted down slightly. Sale 1 4 is located in Township 9, which is one -half mile north of the Railyards in a more industrial area. This sale rates inferior in location and is adjusted up by 15%. Sale 15 is the sale of the Kaiser site in 2019.

SI TE SIZE
The Kaiser site is 17.407 acres. Sales 1 and 5 are smaller in size and are adjusted down by 10% each. Sale 14 is substantially larger in size and warrants an upward adjustment of 15%.

ZO NIN G / IN TEN DED USE
The value of vacant land is largely contingent upon its potential use. This factor considers the uses permitted by the applicable development standards, per the subject’s zoning designation. The maximum density to which a property can be developed typically impacts total value positively; however, depending upon property type, location, and type of construction higher permitted densities can have an inverse relationship to pricing on a per-unit or per-square-foot basis.

The subject is zoned H, which is a hospital zoning. The alternative use under the variant plan is for office, retail, and residential use for an overall density of 1.85 FAR. Sale 1 has a lower FAR and is adjusted up slightly. The other sales have similar FAR’s and no adjustments are applied.

INFRA S TRUCTURE C OS T S
This section considers the building fees and estimated bond debt for the Railyards as compared to the comparable sales. The following information are estimates from EPS regarding these cost burdens.

Railyards Central City River District Bridge District
(1st Tier)
City/County Fees $13.71 $15.93 $14.92 $8.07
Plan Area Fees $7.32 $3.83 $6.37 $4.85
Bond Debt of Special Taxes $1.38 $0.01 $0.06 $9.29
Total Infrastructure Cost per SF $22.41 $19.77 $21.35 $22.21 Source: EPS 8/6/2021
Infrastructure Cost Burden - Office - Per Sf of Bldg. Area KAISER FOUNDATION HOSPITAL SITE 275
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Railyard infrastructure burden is higher than the Central City and similar to the Bridge District. The adjustment for this characteristic is based on the difference in fees from the Railyards to the comparable sales. Sales 1 and 15 are similar. Small downward adjustments are applied to Sales 5 and 14.

SHA PE /C O NF IGUR AT I ON
The comparable sales are similar in respect to subject. No adjustments are necessary.

ACCES S /VI SI BI L IT Y
The comparable sales are similar in respect to subject. No adjustments are necessary.

UT IL IT IE S/I N FRA S TRUCT URE /O FF -SI TE O B LI GA TI ON S The subject site being analyzed is for a finished lot with all off-site improvements in-place. The comparable sales were also finished sites with little or no off -site obligations on the buyers. The comparable sales and the subject are similar in respect to these characteristics.

ENVIR ON MEN TA L I S SUE S
Comparable land sales 1, 5 and 1 4 were not known to have any environmental issues. Based on the estimated higher development costs at the Railyards for environmental issues, we adjust the se comparable sales down by 5%.

OPP ORTU NI TY ZO NE
The subject is located in an Opportunity Zone. This zone provides tax benefits when improvements are constructed. All of the sales are also located in an Opportunity Zone.

KAISER FOUNDATION HOSPITAL SITE 276
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

COMPARABLE LAND SALE ADJUSTMENTS
Subject Comp 1 Comp 5 Comp 14 Comp 15
Property / Location Kais er Site 805 Riverfront
Street
805 Riverfront
Street
Wes t Sacramento,
CA
Broadway
Apartments
2570 3rd
Sacramento, CA
Towns hip 9
Richards Blvd
Sacramento, CA
Kais er Permanente
Development
242 North 5th
Street
Sacramento, CA
Transaction Status ----- Clos ed Clos ed Clos ed Clos ed Date of Sale ----- 12/04/2020 10/11/2019 11/17/2020 01/24/2019 Site Size (Acres) 17.407 4.41 7.07 39.10 17.407
Buildable SF
Sale Price ----- $10,050,000 $20,500,000 $54,000,000 $33,370,000 Zoning , WF, RMX-SPD,
Res idential Mixed-
Us e
H
Unadjusted Price per SF (Net) ----- $52.32 $66.57 $31.71 $44.00 Transactional Adjustments
Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Adjus tment -$ -$ -$ -$ Financing
Adjus tment -$ -$ -$ -$ Terms /Conditions of Sale
Adjus tment -$ -$ -$ -$ Expenditures After Sale
Adjus tment -$ -$ -$ -$ Market Conditions May-22 12/04/2020 10/11/2019 11/17/2020 01/24/2019 Adjus tment 3% 7% 3% 9%
Total Transactional Adjustments 3% 7% 3% 9%
Adjusted Price per SF (Net) $53.89 $71.22 $32.66 $47.96 Property Adjustments
Location -10% -10% 15% 0%

17.407 4.41 7.07 39.10 17.407
Net Site Size (Ac) -10% -10% 15% 0%
Zoning / Intended Use/FAR 5% 0% 0% 0%
$22.41 $22.21 $19.77 $21.35 $22.41
Infrastructure Cost Burden 0% -2% -2% 0%
CFD Burden 0% -9% 0% 0%
Shape / Configuration 0% 0% 0% 0%
Access / Visibility 0% 0% 0% 0%
Utilities / Infrastructure 0% 0% 0% 0%
Environmental -5% -5% -5% 0%
Total Property Adjustments -20% -36% 23% 0%
Indication for Subject $43.00 $45.40 $40.25 $47.96
KAISER FOUNDATION HOSPITAL SITE 277
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL CONCLUSION OF LAND VALUE – KAISER SITE LAND VALUE
After adjustments, the comparable land sales reflect a range from $4 0.25 to $47.96 per square foot of land area. The average of the sales is $44.15 per land foot area and the median is $44.20 per square foot.

We place slightly more weight on the adjusted sales price of the Kaiser land sale and conclude to a land value of $45.00 per square foot. Below is our estimate of the land value for this ownership:

SALES SUMMARY UNADJUSTED ADJUSTED
Minimum $31.71 $40.25
Maximum $66.57 $47.96
Median $48.16 $44.20
Average $48.65 $44.15
Kaiser Permanente Property Value
Indicated Value per SF $45.00
Net Site Area (SF) x 758,249
Indicated Value $34,121,205
Rounded to nearest $100,000 $34,100,000
Per SF $44.97

VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 278
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL VALUATION OF RAILYARDS SACRAM ENTO 695, LP - THE AJ Sacramento 695, LP (“The AJ”) is the owner of one parcel totaling 2.88 acres. The site is located at the southwest corner of 7th Street and Railyards Boulevard. All streets surrounding the property are in place and all utilities serve the property. The site is zoned C -3 SPD land use designation allow s residential densities up to 450 units per acre, and non residential development between a Floor Area Ratio (FAR) of

3.0 and 15.0.

Sacramento 695, LP is a joint venture between DRV and USA Properties Fund. The land was contributed to the partnership for $100. USA Properties Fund is a local based developer that has extensive experience in both market-rate and affordable housing development.

The site is under development with a 6-story, mixed-use multifamily over street retail building. There will be a total of 345 residential dwelling units and 5,996 square feet of ground floor retail space. There will also be a 5 -story parking garage with a total of 276 parking spaces. The property will include 69 -units restricted to 50% AMI levels for Sacramento County. The total gross building area will 439,216 SF and the net rentable area is 238,025 SF.

The project received a grant of $15,211,696 from the Affordable Housing and Sustainable Communities Program which is handled from the State of California Department . The AHSC funds are conditioned on not fewer than 61 affordable housing units at 50% AMI. The project was also awarded 4 % federal tax credits totaling $30,921,250. The tax credits have been sold and are assumed to not be transferrable to a buyer of the property.

The following is the unit mix of the project.

The project commenced construction in August 2020. Below is a summary of the construction budget, amounts funded and remaining cost as of July 2022.

The estimated completion date in end of March 2023. The remaining construction costs have inflation factors and contingency included.

Floorplan Size No. Units
Studio 535 48
1Bd/1Ba-Small 610 171
1Bd/1Ba-Large 704 67
2Bd/2Ba-Small 971 14
2Bd/2Ba-Large 1,044 45
Total/Average 689 345
Total Amount Funded Remaining Cost
Total Cost $126,866,650 $74,243,230 $52,623,420
Construction Cost Summary
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 279
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PRO JEC T E LEVA TI O NS

VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 280
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PRO PERT Y PH OT O GRA PH

VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 281
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PLAT MAP

AERIAL MAP

VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 282
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

VALUATION OF THE AJ PROPERTY
The AJ has been under construction since August 2020. Approximately $74.2 million has been expended on construction cost from a budget of $127 million. Both the budget and construction costs to-date have been verified from the developer’s lender. The estimated date of completion of the project is March 2023.

The valuation of the AJ assumes a sale of the property as of the effective date of value. In its current state it is a partially constructed project. Selling a property in the middle of construction is rare in the marketplace. We consider the following information in developing a value of a partially completed project:

• There exists strong demand for new Class A apartments. It is believed there would be multiple potential buyers seeking to acquire the AJ, even in its partially completed status.

• The developer of the AJ has a contract with a General Contractor for development of the property. The contractor is well informed on the project and has sub -contractors in place for completion of the project. Under a change of ownership, it would be highly probable the contractor would be retained to complete the project.

• Sales of partially completed projects are sometimes viewed as distressed or having a seller under duress. In the case of the AJ, there are no known factors that would suggest any unusual motivating factors that would approach a distressed sale situation. In fact , the opposite is true as all facets involving the AJ are positive. These include a construction contract in place, project on time for completion in 9 months, high demand of the asset type and a market that continues improve over time.

Under an assumed sale of the property it would be likely that the general contractor would continue to stay on for completion of the project . The transaction could involve some warranties by the seller to complete and it is even possible that some of the seller’s proceeds could be held in escrow and contingent on completion.

We have details of a recent sale of a partially completed apartment project. The Eisley, a 405-unit project located at 1567 Bartlett Lane in Sacramento sold in June 2021. The project was in the middle of construction with $37.1 million in remaining construction to be completed. The sale had a $150 million purchase price and remaining construction costs were deducted from the sellers proceeds. The buyer funded the entire $150 million in purchase with the remaining construction cost s held in the lender’s reserve account and to be disbursed as construction was completed. The buyer was an investment group out of New York which had completed $7 billion in acquisition over the past 5 years. The seller was a local developer who was under no duress. The buyer of the property was responsible for the remaining construction costs as well as lease -up of the project. There was no reported deduction for the risk of purchasing a partially completed project.

Another example of a part ially completed project selling during construction is the Arroyo Apartments located in Walnut Creek , California. The property is a 100 -unit apartment that was under construction and sold in June 2015 for $52,500,000. The buyer of the property was Northwestern Mutual Life Insurance Company. The seller was Hall Equities Group, who was under no duress to sell. The buyer was responsible for the cost to complete the project, which occurred one year after acquisition.

VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 283
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL In the valuation of the AJ we believe the discount to the purchase price would solely be for the outstanding construction cost, unearned profit and some additional contingencies. It would be highly unlikely the seller would agree to any further discount considering the positive factors of the project.

The valuation of The AJ will be estimated from two approaches to value. These are a Property Residual Discounted Cash Flow and a Build-up Method.

Property Residual: This approach estimates the value using a Discounted Cash flow model.

The major milestones of the AJ development are as follows:

Quarters 1-3: Construction continues
Quarters 4-9: Lease-up of Units
Quarter 9: Stabilized occupancy achieved & Sale of Property

The first step in the valuation will be to estimate the restricted and non -restricted net operating income and stabilized value of the project. We start with the estimate of potential gross income.

The rent for the restricted rents is estimated as follows:

For the unrestricted rents we surveyed competitive projects in Midtown, West Sacramento, and the CBD.

Shown on the following page are asking rents for Class A projects. The following is our estimate of market rents for the apartment units upon completion in 2022.

Unit Type
No.

Units
Income
Restriction Gross Rent
Utility
Allowance
Net Restricted
Rent
Studio 9 50% AMI $793 $63 $730
1-Bedroom 48 50% AMI $850 $70 $780
2-Bedroom 12 50% AMI $1,020 $89 $931
Totals/Averages 69
Rents for projects placed in service on or after April 1, 2021 Source: Novogradac Rent Calculator

LIHTC RENTAL SUMMARY
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 284
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

The ground floor commercial space will be the first retail space delivered in the Railyards. We estimate it will command a rent toward the upper end of the range from similar spaces in Midtown and Downtown.

An estimate of $4.00 per square foot is estimated.

The project will have 276 parking spaces, of which 6 are property reserved, six are for the commercial spaces and 260 spaces can be leased. We estimate a monthly parking rate of $ 150 for the 260 rentable spaces. Other income that will be generated includes expense reimbursements and other income.

Type Size No. Rent Rent/SF Annual
Studio 534 39 $1,900 $3.56 $889,200
Studio - Restricted 534 9 $730 $1.37 $78,840
1/1 612 123 $2,100 $3.43 $3,099,600
1/1 - Restricted 612 48 $780 $1.27 $449,280
1/1 706 67 $2,400 $3.40 $1,929,600
2/2 971 2 $2,900 $2.99 $69,600
2/2 - Restricted 971 12 $931 $0.96 $134,064
2/2' 1,041 45 $3,000 $2.88 $1,620,000
Total 345 $1,998 $34.75 $8,270,184
Potential Gross Income - Restricted
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 285
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Studios: The rent comparables have an average rent of $1,985 or $3.83 per square foot.

One Bedrooms: The rent comparables have an average rent of $2,394 or $3.43 per square foot.

Two Bedrooms: The rent comparables have an average rent of $3,014 or $3.00 per square foot.

Property Name; Survey Date; Year Built; Unit Type/ Unit Size No. Address Total Units
Occupancy
Stories Floorplan (SF) Rent/SF
1 800 J Lofts 2/3/2022 2006 Low High Average Average
800 J Street 225 7 Stories Studio 547 $1,950 $1,950 $1,950 $3.56 Sacramento, CA N/A 1Bd/1Ba 851 $2,155 $2,225 $2,190 $2.57 2Bd/2Ba 943 $2,360 $2,495 $2,428 $2.57
2 1801 L 2/3/2022 2006 Low High Average Average
1801 L Street 176 4 Stories Studio 420 $1,950 $2,000 $1,975 $4.70 Sacramento, CA 95% 1Bd/1Ba 836 $2,661 $2,661 $2,661 $3.18 2Bd/2Ba 1,111 $3,882 $3,882 $3,882 $3.49
3 LINQ Midtown 2/3/2022 2010 Low High Average Average
3111 S Street 275 4 Stories Studio 616 $1,845 $1,964 $1,905 $3.09 Sacramento, CA 1Bd/1Ba 739 $2,100 $2,187 $2,144 $2.90
1Bd/1Ba 823 $2,010 $2,274 $2,142 $2.60
2Bd/2Ba 1,064 $2,350 $2,647 $2,499 $2.35
2Bd/2Ba 1,171 $2,624 $2,810 $2,717 $2.32
4 The Press 2/3/2022 2020 Low High Average Average
1714 21st Street 277 5 Stories Studio 426 $1,935 $1,935 $1,935 $4.54 Sacramento, CA 96% 1Bd/1Ba 645 $2,390 $2,464 $2,427 $3.76 2Bd/1Ba 850 $2,960 $3,185 $3,073 $3.61
5 19J Apartments 2/3/2022 2021 Low High Average Average 1828 J Street 175 Studio 440 $1,935 $1,935 $1,935 $4.40 Sacramento, CA N/A 1Bd/1Ba 622 $2,875 $2,875 $2,875 $4.62 6 H16 2/3/2022 2020 Low High Average Average
731 16th Street 95 5 Stories
Sacramento, CA 91% Studio 569 $2,124 $2,124 $2,124 $3.73 1Bd/1Ba 657 $2,225 $2,225 $2,225 $3.39
2Bd/1Ba 948 $2,805 $2,805 $2,805 $2.96
7 Capital Yards 2/3/2022 2001 Low High Average Average
1501 16th Street 69 4 Stories Studio 595 $2,041 $2,041 $2,041 $3.43 Sacramento, CA N/A 1Bd/1Ba 725 $2,240 $2,240 $2,240 $3.09 (916) 551-1494; Shelby 2Bd/2Ba 903 $2,940 $2,940 $2,940 $3.26 2Ba/2Ba 1,104 $3,060 $3,060 $3,060 $2.77
8 Q 19 2/3/2022 2018 Low High Average Average
1907 Q Street 68 4 Stories Studio 519 $2,016 $2,016 $2,016 $3.88 Sacramento, CA 94% Studio 603 $1,995 $1,955 $1,975 $3.28 916-936-8691; Jennifer 2Bd/1Ba 969 $3,069 $3,195 $3,132 $3.23 Comments: Redevelopment project located at 16th and K Streets. Lofts are located on the 2nd-4th floors. Finishout includes expansize windows, polished concrete flooring, exposed ceiling beams, good quality cabinetry, sealed concrete countertops and 11-12 foot ceilings. Project is 100% occupied as of date of survey.

APARTMENT RENT SURVEY (DOWNTOWN/MIDTOWN)
Rent/Month
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 286
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL A 5% stabilized vacancy rate is utilized. Below are the projects we considered in arriving at property expenses.

The projected real estate taxes are based on the stabilized value using the current tax rate plus any direct assessments. These taxes are estimated as follows:

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5
Name Mid-Rise /
Mixed-Use
Residential&
Retail (No
BMR)
High-Rise
Tower &
Garden /
Mixed-Use
Residential&
Retail (No
BMR)
Mid-Rise /
Mixed-Use
Residential&
Retail (20%
BMR)
Mid-Rise /
Mixed-Use
Residential&
Retail (30%
BMR)
Mid-Rise /
Mixed-Use
Residential&
Retail (No
BMR)
City Sacramento Sacramento Sacramento Sacramento Sacramento State CA CA CA CA CA
Year Built 2010 1961/R. 2007 2006 Proposed Proposed
Number of Units 275 409 225 150 436
Operating Data Type Actual Actual Actual Complete
Proforma
Complete
Proforma
2018 2018 2014 2021 2021
Effective Gross Income $28,161 $18,936 $19,242 $33,731 $31,762 Real Estate Taxes $3,227 $2,721 $2,053 $2,484 $4,202
Insurance $959 $109 $236 $368 $175
Utilities $1,277 $1,461 $1,124 $644 $1,185
Repairs/Maintenance $958 $1,055 $1,711 $1,288 $1,005
Payroll/Benefits $2,149 $1,291 $951 $1,472 $1,550
Advertising & Marketing $252 $206 $289 $0 $175
General/Administrative $385 $294 $307 $0 $185
Management $558 $821 $925 $444 $1,420
Replacement Reserves $0 $210 $0 $300 $200
Apartment Allowance $230 $200 $153 $0 $206
Total Expenses $9,996 $8,368 $7,749 $7,000 $10,303

PER UNIT
Comp Data

COMPARABLE EXPENSE DATA
Unrestricted Restricted
Stabilzed Value $160,771,268 $145,563,831
Exemption $0 $29,112,766
Adjusted Taxable Value $160,771,268 $116,451,065
Tax Rate 1.116700% 1.116700%
Base Taxes $1,795,333 $1,300,409
Plus: Direct Assessments $48,447 $48,447
Total Real Estate Taxes $1,843,780 $1,348,856
Real Estate Tax Estimate - Current Date of Value
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 287
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

Parcel Size 2.88 125,453
No. Units 345
Units NRA 238,025
Retail 5,996
Parking 276
Apt/Retail GBA 346,186
Parking GBA 93,030
Total GBA 439,216
Overall FAR 3.50
Pro-Forma
Income Units $/Unit /Mo. Unrestricted Restricted
Potential Apartment Income 345 2.90$ 9,440,400$ 8,270,184$ Potential Retail Income 5,996 4.00$ 287,808$ 287,808$ Parking Income 260 150.00$ 468,000$ 468,000$ Expense Reimbursement 345 125.00$ 517,500$ 408,000$ Retail Expense Reimbursement 5,996 12.00$ 71,952$ 71,952$ Other Income 345 100.00$ 414,000$ 414,000$ Total Potential Income 11,199,660$ 9,919,944$ Less V/C Loss 5% (559,983)$ (495,997)$ Effective Gross Income 10,639,677$ 9,423,947$ Less Operating Expenses Per Unit
Real Estate Taxes 1,843,780$ $1,348,856
Insurance $350 120,750$ 120,750$
Utilities $1,000 345,000$ 345,000$
Repairs/Maintenance $800 276,000$ 276,000$ Payroll/Benefits $1,000 345,000$ 345,000$ Advertising & Marketing $100 34,500$ 34,500$ General/Administrative $100 34,500$ 34,500$ Management 3.0% 319,190$ 282,718$
Replacement Reserves $250 86,250$ 86,250$ Total Expenses 3,404,970$ 2,873,574$
Net Operating Income 7,234,707$ 6,550,372$ Estimated Stabilized Net Operating Income
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 288
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL The next step is to estimate the net operating income during lease -up and year of stabilization. The property’s 69 low -income units will be leased -up near completion of construction. The remaining 276 units are estimated to be leased -up over a six -quarter period. Below is our estimate of the cash flow during lease-up and stabilization.

The next step is to estimate an appropriate capitalization rate. The following is information considered for the capitalization rate.

Capitalization rates for Class A multi -family properties have been trending down over the past several years. Market participates believe a new Class A project in Sacramento MSA would command a rate between 4.0% to 4.5%. We believe the appropriate capitalization rate for the AJ is 4.5%. Below is our estimate of the value after achieving stabilized occupancy in quarter 9.

The indicated value of $155,500,000 in two years is $450,724 per unit. This price per unit is within the range of similar quality projects as summarized in the chart above.

Quarter 1 2 3 4 5 6 7 8 9
Stabilized Income $2,479,986 $2,504,786 $2,529,834 $2,555,132 $2,580,683 $2,606,490 $2,632,555 $2,658,881 $2,685,469 Quarterly Appreciation 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% Occupancy 0.0% 0.0% 0.0% 20.0% 40.0% 60.0% 70.0% 90.0% 100.0% Estimated Income $0 $0 $0 $511,026 $1,032,273 $1,563,894 $1,842,789 $2,392,993 $2,685,469 Stabilized Expenses $718,394 $725,578 $732,833 $740,162 $747,563 $755,039 $762,589 $770,215 $777,917 Appreciation 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Estimated Expenses % 0.0% 0.0% 0.0% 50.0% 75.0% 100.0% 100.0% 100.0% 100.0% Estimated Expenses $ $0 $0 $0 $370,081 $560,672 $755,039 $762,589 $770,215 $777,917 Net Operating Income $0 $0 $0 $140,946 $471,601 $808,855 $1,080,199 $1,622,777 $1,907,552 Estimated Income & Expenses
Property
Date of
Sale Yr Built Price/Unit Price/SF
Capitalization
Rate
16 Powerhouse, Sacramento Mar-18 2015 $650,000 $615.81 4.63% 1430 Q Street Mar-22 2021 $761,333 $598.15 4.70%
Evia Midtown, Sacramento Jan-17 2016 $449,153 $541.56 4.91% Lake Pointe Apartments Sep-21 2004 $311,638 $290.63 4.00% Q 19, Sacramnento Apr-19 2018 $394,118 $606.54 4.66%
The Press Sep-20 2020 $425,993 $588.19 N/A
Stabilized Income $10,741,878
Less: Vacancy @ 5% $537,094
Less: Expenses $3,111,669
Less: Increases in Taxes due to a Sale $96,845
Adjusted Net Operating Income $6,996,270
Capitalization Rate 4.5%
Estimated Value $155,472,659
Rounded $155,500,000
Estimated Value in Qtr. 9
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 289
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Remaining Construction Cost
The reported remaining constr uction cost is $ 52,651,076, which includes contingency . We make a n additional contingency deduction of 1 5% of remaining costs and a deduction of 20% profit of the remaining construction costs. These costs are spread out evenly over the first three quarters.

Discount Rate
We have reviewed the PwC Real Estate Investor Survey for determination of the discount rate. This survey indicated the following discount rate:

The spread in the discount rate and capitalization rate can be used to reconcile to a discount rate. Using our previous capitalization estimate of 4.5% and adding 225-basis point adjustment (average of difference from office and multi-family) indicates a discount rate of 6.75%. This is for a stabilized real estate investment and not a real estate development model which is the scope of this analysis. A profit component needs to be added to reward development of this project. Considering some profit component, a discount rate of

8.5% is concluded.

There will be a negative cash flow for quarters 1-3 of the development model. These cash flows need to be discounted at a safe discount rate. Safe yield rates on investments including yields on 5-year bonds are around 2.5%. We utilize this safe rate for the negative cash flow.

Shown on the followin g page is our estimate of value using this method. The indicated value is $64,000,000.

PwC Average Discount Rate Average Capitalization Rate Difference National Apartment Market 6.72% 4.45% 2.27%
PwC Discount Rates - 2Q 2022
VALUATION OF RAILYARDS SACRAMENTO 695, LP - THE AJ 290
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PROPERTY RESIDUAL - AJ
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5 Qtr 6 Qtr 7 Qtr 8 Qtr 9
Status 0.00 Under Construction Under Construction Under Construction Complete Lease-up Lease-up Lease-up Lease-up Stabilized TOTAL LOT REVENUE 0 2 3 4 5 6 7 8 $9
Income $0 $0 $0 $511,026 $1,032,273 $1,563,894 $1,842,789 $2,392,993 $2,685,469 Expenses $370,081 $560,672 $755,039 $762,589 $770,215 $777,917 Net Operating Income $140,946 $471,601 $808,855 $1,080,199 $1,622,777 $1,907,552 Building Sale $0 $0 $0 $0 $0 $0 $0 $0 $155,500,000
TOTAL REVENUE $164,995,317 $0 $0 $0 $140,946 $471,601 $808,855 $1,080,199 $1,622,777 $160,870,939

EXPENSES AND CASH FLOWS
COMMISSIONS 2.0% $0 $0 $0 $0 $0 $0 $0 $0 $3,110,000
HARD & SOFT CONSTRUCTION COSTS $52,623,420 $17,541,140 $17,541,140 $17,541,140 $0 $0 $0 $0 $0 $0 CONTINGENCY 15% $7,893,513 $2,631,171 $2,631,171 $2,631,171 $0 $0 $0 $0 $0 $0 UNEARNED PROFIT 20% $10,524,684 $3,508,228 $3,508,228 $3,508,228 $0 $0 $0 $0 $0 $0 TOTAL EXPENSES $71,041,617 $23,680,539 $23,680,539 $23,680,539 $0 $0 $0 $0 $0 $3,110,000 NET INCOME $90,843,700 ($23,680,539) ($23,680,539) ($23,680,539) $140,946 $471,601 $808,855 $1,080,199 $1,622,777 $157,760,939 PRESENT VALUE FACTOR 8.5% 0.97919 0.95882 0.93887 0.91933 0.90020 0.88147 0.86313 0.84517 0.82758 SAFE DISCOUNT RATE 2.5% 0.99379 0.98762 0.98148 0.97539 0.96933 0.96331 0.95732 0.95138 0.94547 DISCOUNTED CASH FLOW $63,968,419 ($23,533,455) ($23,387,284) ($23,242,022) $129,576 $424,536 $712,982 $932,351 $1,371,521 $130,560,215 Rounded $64,000,000
291
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL Build-Up Method
This approach is the summation of the land value, plus construction costs expended, less the encumbrance due to the affordable units.

A Benchmark land value of $ 28,000 per unit was estimated earlier in the report for multi -family properties. We believe this is a reliable value estimate for the AJ site assuming no restrictions . The property however has a value detriment due to the affordable units. The value detriment is based on the net operating difference of the two scenarios and capitalized at the property capitalization rate of

4.5%. Shown below is the estimated property value detriment due the rent restrictions.

The land value of the AJ site assuming no rent restrictions is estimated to be $9,660,000 or $28,000 per unit. The encumbered land value due to restrictions is calculated as follows:

LAND VALUE - THE AJ
Unencumbered Land Value $ 9,660,000
Less: Value Detriment $ (15,207,437)
Indicated Land Value $ (5,547,437)
Improvements Completed: The developer has expended $ 74,243,230 on improvements as of the effective date of value. We believe these contribute an equal amount to the value of the property.

Below is the estimate of value using the Build-up Method.

The Residual Method accounted for lease -up costs for absorption of the units. The Build-up Method however only recognizes the cost-to-date and the underlying negative land value. Lease-up costs under this method is not appropriate.

Unrestricted NOI Restricted NOI
Income
Loss Cap Rate
Value
Detriment
$7,234,707 $6,550,372 $684,335 4.50% $15,207,436

PROPERTY VALUE DETRIMENT DUE TO RENT RESTRICTIONS
Land Value - As Encumbered By Rent Restrictions (5,547,437)$ Plus: Improvements & Soft Cost Funded 74,243,230$
Indicated As Is Value 68,695,793$
Rounded 68,700,000$

AS IS PROPERTY VALUE ESTIMATE - THE AJ

BUILD-UP METHOD
292
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL As Is Market Value Conclusion - The AJ
The two approaches to value indicated similar results. We give each approach equal weight and arrive at the following value conclusion.

Build-Up Method 68,700,000$
Residual Method $64,000,000
Average of Both Methods 66,350,000$
Indicated Value 66,000,000$

AS IS PROPERTY VALUE ESTIMATE - THE AJ
VALUATION OF WONG CENTER AT THE RAILYARD, L.P. 293
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL VALUATION OF WONG CENTER AT THE RAILYARD , L.P.

Wong Center at the Railyard (“Wong Center”) is the owner of one assessor parcel totaling 2.658 acres.

The site is located at the northwest corner of 7th Street and F Street. All streets surrounding the property are in place and all utilities serve the property. The site is zoned C -3 SPD land use designation allow s residential densities up to 450 units per acre, and nonresidential development between a Floor Area Ratio (FAR) of 3.0 and 15.0.

Wong Center is a proposed 150 -unit affordable senior housing project that will be developed by Mutual Housing California. The land was sold to the developer for $100 in June 2022 with the requirement that the developer construct an affordable housing project with 100% of the units restricted to 40%, 50% and 60% area median income restrictions.

The 150-unit senior development will have 134 one-bedroom and 16 two-bedroom units, which includes one exempt management unit. The project will be a single, four -story building that is wood framed construction with stucco exteriors. The exteriors include v arying accents with extensive trim and multi - color painting scheme. Each apartment will contain luxury vinyl plank flooring, central heating and air, and energy efficient appliances.

Amenities will include 4,000 square feet of multi-purpose community spaces including a community room with shared kitchen, meeting room, and offices. Three outdoor community spaces will include numerous seating and socializing areas, bocce court, dog park, barbecue, and gardening plots. The remaining open space areas will have lush landscaping to add to and tie into the aesthetic quality and consistency across the community.

The developer has just commenced site work for the development. In May 2021 the City of Sacramento committed $3,500,000 of General Funds and Measure U Fu nds for the project as a 5 5-year loan at 3% interest rate. In addition, they approved a bond issuance not to exceed $35 million for the acquisition, construction, and permanent financing of the project. In addition, the project received tax credits having an equity value of $21,309,071. Other benefits included impact fee waivers from the City of Sacramento and a $12.8 million soft loan from Wong Center Foundation. The loans are not residual receipts and are fully repayable.

The following is the unit mix and maximum rent restrictions of the project.

Type Size No.
1 Bedroom - 40% AMI 580 27
1 Bedroom - 50% AMI 580 81
1 Bedroom -60% AMI 580 27
2 Bedroom -40% AMI 755 3
2 Bedroom - 50% AMI 755 8
2 Bedroom - 60% AMI 755 3
Mgr 1
Total 150
Unit Mix & Maximum Income Restrictions
VALUATION OF WONG CENTER AT THE RAILYARD, L.P. 294
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PRO JEC T E LEVA TI O N

PRO PERT Y PH OT O GRA PH

VALUATION OF WONG CENTER AT THE RAILYARD, L.P. 295
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

SURVEY MAP

The Wong Parcel was carved out of an already irregular shaped assessor parcel. The irregular shape of the Wong Parcel is of adequate shape for development of the proposed 150 units. The remnant parcel from this lot line adjustment is deemed sufficient size, shape and frontage for development.

AERIAL MAP

VALUATION OF WONG CENTER AT THE RAILYARD, L.P. 296
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

VALUATION OF THE WONG CENTER PROPERTY
The property is vacant land and usually a sales comparison approach is typically applied for valuation purposes. The rent restrictions on the project however warrant a land residual valuation method.

The first step in the valuation is to estimate the restricted net operating income and stabilized value of the project. We start with the estimate of potential gross income.

The rent for the restricted rents is estimated as follows:

The following i s our estimate of potential gross income for the apartment units under the current rent restrictions.

Potential Gross Income - Restricted
Type Size No. Max Rent Annual

1 Bedroom - 40% AMI 580 27 $690 $223,560
1 Bedroom - 50% AMI 580 81 $880 $855,360
1 Bedroom -60% AMI 580 27 $1,061 $343,764
2 Bedroom -40% AMI 755 3 $823 $29,628
2 Bedroom - 50% AMI 755 8 $1,051 $100,896
2 Bedroom - 60% AMI 755 3 $1,279 $46,044
Mgr. 1 $0 $0
Total 150 $888 $1,599,252

A 5% stabilized vacancy rate is utilized. For the operating expenses, we consider the expense comparables from the AJ valuation section presented earlier.

Unit Type No. Units
Income
Restriction
Gross
Rent
Utility
Allowance
Net Restricted
Rent
1-Bedroom 27 40% AMI $760 $70 $690
2-Bedroom 3 40% AMI $912 $89 $823
1-Bedroom 81 50% AMI $950 $70 $880
2-Bedroom 8 50% AMI $1,140 $89 $1,051
1-Bedroom 27 60% AMI $1,140 $79 $1,061
2-Bedroom 3 60% AMI $1,368 $89 $1,279
2-Bedroom 1 Mgr. Unit $0
Totals/Averages 150
Rents for projects placed in service on or after April 1, 2021 Source: Novogradac Rent Calculator

LIHTC RENTAL SUMMARY
VALUATION OF WONG CENTER AT THE RAILYARD, L.P. 297
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL The next step is to estimate an appropriate capitalization rate. Similar to the AJ Valuation, a capitalization rate of 4.5% is considered appropriate.

Construction Cost: We have reviewed various public documents regarding the Wong Center to estimate the construction cost. Based on these sources as well Marshall Valuation, we estimate a construction cost of $375,000 per unit.

Shown below is our estimate of value using this method. The indicated value is a negative $14,600,000.

The non-profit developer is expected to make up the short fall from various soft loans. Based on this analysis, the Wong Center Property has a $0 value estimate. This estimate corresponds to the recent purchase of the property at $100.

Pro-Forma
Income Units $/Unit /Mo. Restricted
Potential Apartment Income 150 1,599,252$
Parking Income 87 150.00$ 156,600$
Other Income 150 100.00$ 180,000$
Total Potential Income 1,935,852$
Less V/C Loss 5% (96,793)$
Effective Gross Income 1,839,059$
Less Operating Expenses Per Unit
Real Estate Taxes - Direct Charges Only $98,994
Insurance $350 52,500$
Utilities $800 120,000$
Repairs/Maintenance $600 90,000$
Payroll/Benefits $1,000 150,000$
Advertising & Marketing $0 -$
General/Administrative $300 45,000$
Management 3.0% 55,172$
Replacement Reserves $250 37,500$
Total Expenses $649,166
Net Operating Income 1,189,894$
Capitalization Rate 4.50%
Market Value As Stabilized 26,442,080$
Value per Unit 176,281$
Rounded 26,000,000$
Hard Costs
Estimated Construction Cost @ $375,000/unit 56,250,000$ Less: Tax Credits 21,309,071$
Less: Profit 10.0% of total cost 5,625,000$
Residual As Is Market Value (14,565,929)$
Rounded -$14,600,000
Land Residual Analysis - Wong
RECONCILIATION AND FINAL VALUE 298
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

RECONCILIATION AND FINAL VALUE

FINAL OPINION (S) OF VALUE
Based on the inspection of the property and the investigation and the analysis undertaken, we have developed the following value opinion(s) as of July 1, 2022.

Ownership Description Value by Ownership
Downtown Railyard Venture, LLC 95.152 Taxable Acres with Five Central Shop Buildings $52,000,000 Kaiser Foundation Hospital 17.14 Taxable Acres $34,100,000 Sacramento 695, L.P. 2.88 Taxable Acres with Building Improvements $66,000,000 Wong Center at the Railyard, L.P. 2.658 Taxable Acres $0 Total $152,100,000

VALUATION

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS

1. We relied on land development costs and fees provided by the Master Developer and the Finance Plan. The budgeted site costs and fees appear reasonable relative to costs at other projects in the area (and costs of comparables analyzed). It is an extraordinary assumption that the costs and fees are reasonably true and correct. Any substantial changes in costs and fees could have an effect on the value conclusions and the feasibility of development. We assume that competent and professional engineering has been completed and that the cost estimates were prepared by a qualified, professional service.

2. As of the date of value, the Bonds have not been sold. Under Appraisal Standards for Land-Secured Financing, as published by Debt and Investment Advisory Commission (CDIAC), improvements financed through special taxes and assessments levied on the property should consider funding of these improvements from the proceeds of the CFD. Therefore, it is an extraordinary assumption that the bond proceeds will be used to partially fund the construction cost of the storm drain project currently under construction.

3. The City of Sacramento is the beneficiary of several State of California grants and other public funding sources that are earmarked for construction of certain improvements in the Railyards. These include Natural Resource Grant, Transit and Intercity Rail Capital Program (TIRCP), Owner Participation Agreement and Enhanced Infrastructure Financing District. It is an extraordinary assumption of this appraisal that a buyer of the DRV owned property would be the recipients of these grants/funds to partially offset infrastructure construction costs.

4. LDK Ventures, the parent company of DRV is the recipient of a $15.3 million AHSC grant that will fund certain infrastructure at the Railyards. Housing and Community Development, the agency in charge of this grant pays out a draw request to LDK Ventures for approved expenditures and then LDK Ventures transfers the funds to DRV. We make an extraordinary assumption that the AHSC grant proceeds provided to LDK Ventures would be assignable to DRV or a prospective buyer of the property.

5. The City of Sacramento is out of compliance with the HCD Grant requiring the delivery of the number of affordable housing units by a certain time which has already passed. The State of California has been silent to this issue as the AJ (an affordable project) is under construction and moving forward to satisfy this issue. There are no formal agreements in place to forgive this non-compliance. It is an extraordinary assumption that the non-compliance will not jeopardize these funds being received.

Extraordinary Assumptions: The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is 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.

RECONCILIATION AND FINAL VALUE 299
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

MARKETING TIME AND EXPOSURE TIME
Financing for large commercial land is limited, which has reduced the pool of potential buyers for this property type. However, the subject has significant appeal given its location. Therefore, we do not believe the limited availability of financing has any negative impact on the marketability of the subject, and we believe it would sell within 12 months at the appraised market value. The exposure time is also estimated at twelve months; however; it could be slightly longer than the marketing time depending on any improvement in the market.

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS

6. A structured 1,421 space parking garage is proposed for Lot 17. This structure will benefit the Foundry, the Central Shops, the two Marriott Hotels and other nearby developments. The initial projects in the Railyard will be dependent on this garage. We consider development of this garage the responsibility of the developer of the subdivision. We have valued the proposed parking garage and estimated the construction cost for the development. The extraordinary assumptions related to this development include: a) the quality and design will be similar to what was provided from the preliminary plans, b) the timing of the development of the garage is consistent to the schedule estimated, c) the construction cost are consistent with estimates provided and d) the eventual sale of the garage assumes the developer would execute parking leases running with title to accommodate those projects that are dependent of the garage.

7. Sacramento 695, L.P. is under construction with a 345-unit apartment project known as the AJ. We make an extraordinary assumption that a buyer of this property would continue to use the existing contractor to complete the project. We also assume the construction of the project would experience no construction defect issues or encounter material delays due to construction supply shortages.

1. As of the date of value, the CFD Bonds had not been sold. The market value estimated herein is based on the hypothetical condition that, as of the date of inspection, the Bonds had just been sold and the property was encumbered by Special Taxes, as described herein. The value accounts for the impact of the lien of the Special Tax securing the Bonds.

Hypothetical Conditions: The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is 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 purpose of analysis.

CERTIFICATION 300
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

CERTIFICATION

I certify that, to the best of my 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, impartial, and unbiased professional analyses, opinions, and conclusions.

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

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

5. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

6. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

7. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.

8. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the state of California.

9. The reported analyses, opinions, and Value Indications were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute.

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

11. As of the date of this report, Scott Beebe, MAI, has completed the continuing education program for Designated Members of the Appraisal Institute.

12. Scott Beebe, MAI, has made a personal inspection of the property that is the subject of this report.

13. No one provided significant real property appraisal assistance to the person signing this certification.

14. Scott Beebe, MAI, has provided services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment.

Scott Beebe, MAI
California Certified General Appraiser
No. AG 015266
Ph: (925) 588-7641
Email: [email protected]
STANDARD ASSUMPTIONS AND LIMITING CONDITIONS 301
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

STANDARD ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report has been made with the following general assumptions:
1) Notwithstanding that Appraiser may comment on, analyze or assume certain conditions in the appraisal, BBG, Inc. shall have no monetary liability or responsibility for alleged claims or damages pertaining to: (a) title defects, liens or encumbrances affecting the property; (b) the property’s compliance with local, state or federal zoning, planning, building, disability access and environmental laws, regulations and standards; (c) building permits a nd planning approvals for improvements on the property; (d) structural or mechanical soundness or safety; (e) contamination, mold, pollution, storage tanks, animal infestations or other hazardous conditions affecting the property; and (f) other conditions and matters for which licensed real estate appraisers are not customarily deemed to have professional expertise. Accordingly:

a) The Appraiser has not conducted any engineering or architectural surveys in connection with this appraisal assignment. Information reported pertaining to dimensions, sizes, and areas is either based on measurements taken by the Appraiser or the Appraiser’s staff or was obtained or taken from referenced sources and is considered reliable. The Appraiser and BBG, Inc. shall not be monetarily liable or responsible for or assume the costs of preparation or arrangement of geotechnical engineering, architectural, or other types of studies, surveys, or inspections that require the expertise of a qualified professional.

b) Unless otherwise sta ted in the report, only the real property is considered, so no consideration is given to the value of personal property or equipment located on the premises or the costs of moving or relocating such personal property or equipment. Further, unless otherwise stated, it is assumed that there are no subsurface oil, gas or other mineral deposits or subsurface rights of value involved in this appraisal, whether they are gas, liquid, or solid.

Further, unless otherwise stated, it is assumed that there are no right s associated with extraction or exploration of such elements considered. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred. c) Any legal description or plats reported in the appraisal are assumed to be accurate. Any sketches, surveys, plats, photographs, drawings or other exhibits are included only to assist the intended user to better understand and visualize the subject property, the environs, and the competitive data. BBG, Inc. has made no survey of the property and assumes no monetary liability or responsibility in connection with such matters.

d) Title is assumed to be good and marketable, and in fee simple, unless otherwise stated in the report. The property is considered t o be free and clear of existing liens, easements, restrictions, and encumbrances, except as stated. Further, BBG, Inc. assumes there are no private deed restrictions affecting the property which would limit the use of the subject property in any way.

e) The appraisal report is based on the premise that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in the STANDARD ASSUMPTIONS AND LIMITING CONDITIONS 302
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL appraisal report; additionally, that all applicable zoning, building, and use regulations and restrictions of all types have been complied with unless otherwise stated in the appraisal report. Further, it is assumed that all required licenses, consents, permits, or other legislative or administrative authority, local, state, fe deral and/or private entity or organization have been or can be obtained or renewed for any use considered in the value opinion. Moreover, unless otherwise stated herein, it is assumed that there are no encroachments or violations of any zoning or other re gulations affecting the subject property, that the utilization of the land and improvements is within the boundaries or property lines of the property described, and that there are no trespasses or encroachments.

f) The American Disabilities Act (ADA) became effective January 26, 1992. The Appraiser has not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a compliance survey of the p roperty and a detailed analysis of the requirements of the ADA would reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative impact upon the value of the property. Since the Appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the value of the property.

g) No monetary liability or responsibility is assumed for conformity to specific governmental requirements, such as fire, building, safety, earthquake, or occupancy codes, except where specific professional or governmental inspections have been completed and reported in the appraisal report.

h) It is assumed the subject property is not adversely affected by the potential of floods; unless otherwise stated herein. Further, it is assumed all water and sewer facilities (existing and proposed) are or will be in good working order and are or will be of sufficient size to adequately serve any proposed buildings.

i) Unless otherwise stated within the appraisal report, the depiction of the physical condition of the improvements described therein is based on visual inspection. No monetary liability or responsibility is assumed for (a) the soundness o f structural members since no engineering tests were conducted; (b) the condition of mechanical equipment, plumbing, or electrical components, as complete tests were not made; and (c) hidden, unapparent or masked property conditions or characteristics that were not clearly apparent during the Appraiser’s inspection.

j) If building improvements are present on the site, it is assumed that no significant evidence of termite damage or infestation was observed during physical inspection, unless so stated in the appraisal report. Further, unless so stated in the appraisal report, no termite inspection report was available. No monetary liability or responsibility is assumed for hidden damages or infestation.

STANDARD ASSUMPTIONS AND LIMITING CONDITIONS 303
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL k) Unless subsoil opinions based upon engineering core borings were furnished, it is assumed there are no subsoil defects present, which would impair development of the land to its maximum permitted use or would render it more or less valuable. No monetary liability or responsibility is assumed for such conditions or for engineering which may be required to discover them.

l) BBG, Inc. is not an expert in determining the presence or absence of hazardous substances, defined as all hazardous or toxic materials, wastes, pollutants or contaminants (including, but not limited to, asbestos, PCB, UFFI, or other raw materials or chemicals) used in construction or otherwise present on the property. BBG, Inc. assumes no monetary liability or responsibility for the studies or analyses which would be required to determine the presence or absence of such substances or for loss as a result of the presence of such substances.

Appraiser is not qualified to detect such substances. The Client is urged to retain an expert in this field; however, Client retains such expert at Client’s own discretion, and any costs and/or expenses associated with such retention are the responsibility of Client.

m) BBG, Inc. is not an expert in determining the habitat for protected or endangered species, including, but not limited to, animal or plant life (such as bald eagles, gophers, tortoises, etc.) that may be present on the property. BBG, Inc. assumes no monetary liability or responsibility for the studies or analyses which would be required to determine the presence or absence of such species or for loss as a result of the presence of such species. The Appraiser hereby reserves the right to alter, amend, revise, or rescind any of the value opinions contained within the appraisal repot based upon any subsequent endangered species impact studies, research, and investigation that may be provided. However, it is assumed that no environmental impact studies were either requested or made in conjunction with this analysis, unless otherwise stated within the appraisal report.

2) If the Client instructions to the Appr aiser were to inspect only the exterior of the improvements in the appraisal process, the physical attributes of the property were observed from the street(s) as of the inspection date of the appraisal. Physical characteristics of the property were obtaine d from tax assessment records, available plans, if any, descriptive information, and interviewing the client and other knowledgeable persons. It is assumed the interior of the subject property is consistent with the exterior conditions as observed and that other information relied upon is accurate.

3) If provided, the estimated insurable value is included at the request of the Client and has not been performed by a qualified insurance agent or risk management underwriter. This cost estimate should not be solely relied upon for insurable value purposes. The Appraiser is not familiar with the definition of insurable value from the insurance provider, the local governmental underwriting regulations, or the types of insurance coverage available. These factors can impact cost estimates and are beyond the scope of the intended use of this appraisal. The Appraiser is not a cost expert in cost estimating for insurance purposes.

STANDARD ASSUMPTIONS AND LIMITING CONDITIONS 304
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL 4) The dollar amount of any value opinion herein rendered is based upon the purchasing power and price of the United States Dollar as of the effective date of value. This appraisal is based on market conditions existing as of the date of this appraisal.

5) The value opinions reported herein apply to the entire property. Any proration or division of the total into fractional interests will invalidate the value opinions, unless such proration or division of interests is set forth in the report. Any division of the land and improvement values stated herein is applicable only under the program of utilizati on shown. These separate valuations are invalidated by any other application.

6) Any projections of income and expenses, including the reversion at time of resale, are not predictions of the future. Rather, they are BBG, Inc.’s best estimate of current market thinking of what future trends will be. No warranty or representation is made that such projections will materialize. The real estate market is constantly fluctuating and changing. It is not the task of an appraiser to estimate the conditions of a future real estate market, but rather to reflect what the investment community envisions for the future in terms of expectations of growth in rental rates, expenses, and supply and demand. The forecasts, projections, or operating estimates contained herein are b ased on current market conditions, anticipated short -term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions.

7) The Appraiser assumes no monetary liability or responsibility for any changes in economic or physical conditions which occur following the effective date of value within this report that would influence or potentially affect the analyses, opinions, or conclusions in the report. Any subsequent changes are beyond the scope of the report.

8) Any proposed or incomplete improvements included in the appraisal report are assumed to be satisfactorily completed in a workmanlike manner or will be thus completed within a reasonable length of time according to plans and specifications submitted.

9) If the appraisal report has been prepared in a so-called “public non-disclosure” state, real estate sales prices and other data, such as rents, prices, and financing, are not a matter of public record.

If this is such a “non -disclosure” state, although extensive effort has been expended to verify pertinent data with buyers, sellers, brokers, lenders, lessors, lessees, and other sources considered reliable, it has not always been possible to independently verify all significant facts. In these instances, the Appraiser may have relied on verification obtained and reported by appraisers outside of our office. Also, as necessary, assumptions and adjustments have been made based on comparisons and analyses using data in the report and on interviews with market participants. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.

10) Although the Appraiser has made, insofar as is practical, every effort to verify as factual and true all information and data set forth in this report, no responsibility is assumed for the accuracy of any information furnished the Appraiser either by the Client or others. If for any reason, future STANDARD ASSUMPTIONS AND LIMITING CONDITIONS 305
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL investigations should prove any data to be in substantial vari ance with that presented in this report, the Appraiser reserves the right to alter or change any or all analyses, opinions, or conclusions and/or opinions of value.

11) The right is reserved by the Appraiser to make adjustments to the analyses, opinions, and conclusions set forth in the appraisal report as may be required by consideration of additional or more reliable data that may become available. No change of this report shall be made by anyone other than the Appraiser. The Appraiser shall have no monetary liability or responsibility for any unauthorized change(s) to the report.

12) The submission of the appraisal report constitutes completion of the services authorized and agreed upon. Such appraisal report is submitted on the condition the Client will provid e reasonable notice and customary compensation, including expert witness fees, relating to any subsequent required attendance at conferences, depositions, or judicial or administrative proceedings. In the event the Appraiser is subpoenaed for either an app earance or a request to produce documents, a best effort will be made to notify the Client immediately. The Client has the sole responsibility for obtaining a protective order, providing legal instruction not to appear with the appraisal report and related work files, and will answer all questions pertaining to the assignment, the preparation of the report, and the reasoning used to formulate the opinion of value. Unless paid in whole or in part by the party issuing the subpoena or by another party of interest in the matter, the Client is responsible for all unpaid fees resulting from the appearance or production of documents regardless of who orders the work.

ADDENDA 306
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

ADDENDA
Glossary ................................................................................................................................................................. A Land Sale Comparables .......................................................................................................................................... B Project Information ............................................................................................................................................... C Appraiser Qualifications and Licenses ................................................................................................................... D ❖

VALUATION ADVISORY ASSESSMENT ZONING

SERVICES
Valuation
+ Single Asset Valuation
+ Portfolio Valuation
+ Institutional Asset Valuation
+ Appraisal Review
+ Appraisal Management
+ Lease and Cost Analysis
+ Insurance Valuation
+ Arbitration & Consulting
+ Feasibility Studies
+ Highest and Best Use Studies
+ Evaluation
+ Investment analysis
+ Tax appeals
+ Litigation Support
Advisory
+ ASC 805 Business combinations
+ ASC 840 Leases
+ Purchase Price Allocations
+ Portfolio Valuations for reporting net
asset values (NAV)
+ Public and non-traded REIT valuations
+ Valuations for litigation and
litigation support
+ Sale-leaseback valuation analysis
+ Valuations for bankruptcy/fresh
start accounting
+ Cost segregation analysis
Assessment
+ Environmental due diligence
+ Property condition consulting
+ Small loan services
+ Energy consulting
+ Environmental consulting
+ Zoning

BBG OVERVIEW
BBG is one of the nation’s largest real estate due diligence firms with more than 35 offices across the country serving more than 2,700 clients. We deliver best-in-class valuation, advisory and assessment services with a singular focus of meeting our clients’ needs.

Our professional team offers broad industry expertise and deep market knowledge to help clients meet their objectives throughout the real estate life cycle.

BBG clients include commercial real estate professionals, investors, lenders, attorneys, accountants and corporations.

THE BBG DIFFERENCE
National Footprint. BBG is one of only two national firms offering in-house valuation and environmental and property condition assessment services for all commercial property types.

Customer-focused Growth. BBG is one of the largest national due diligence firms because we deliver best-in-class work product and provide excellent customer care.

Qualified Team. Over 50 percent of BBG appraisers are MAI designated and offer deep industry expertise gained through real-world experience.

Unbiased Independence. By focusing exclusively on
due diligence services, BBG guarantees an independent
perspective free from potential conflicts of interest.

Innovative Technology. BBG has made significant analytics and IT investments to continually improve our data and
report quality.

Third-party reports by a true third party.

ADDENDA A
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

GLOSSARY

Glossary Page 1
Assessed Value: The value of a property according to the tax rolls in ad valorem taxation; may be higher or lower than market value, or based on an assessment ratio that is a percentage of market value. 1 Asset:

1. Generally, something that can be converted to cash or other economic equivalent

2. Any owned property that has economic value, including financial assets (cash or bonds), business interests, intangible assets (copyrights and trademarks), and physical assets (real and personal property).

3. In general business usage, something owned by a business and reflected in the owner’s balance sheet.1
Asset: A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. 2 Capital Expenditure: Investments of cash (or the creation of liability) to acquire or improve an asset, e.g., land, buildings, building additions, site improvements, machinery, equipment; as distinguished from cash outflows for expense items that are normally considered part of the current period’s operations. 1
Cash Equivalency : An analytical process in which the sale price of a transaction with nonmarket financing or financing with unusual conditions or incentives is converted into a price expressed in terms of cash.1 Client: The party or parties who engage an appraiser (by employment or contract) in a specific assignment (USPAP).1
Condominium Ownership: A form of fee ownership of separate units or portions of multiunit buildings that provides for formal filing and recording of a divided interest in real property.3
Cost Approach : A set of procedures through which a value indication is derived for the fee simple interest in a property by estimating the current cost to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive, deducting depreciation from the total cost, and adding the estimated land value. Adjustments may then be made to the indicated fee simple value of the subject property to reflect the value of the property interest being appraised. 1
Credible: Worthy of belief. Credible assignment results require support, by relevant evidence and logic, to the degree necessary for the intended use. (USPAP, 2010-2011 ed).1
Deferred Maintenance: Needed repairs or replacement of items that should have taken place during the course of normal maintenance. 1 Disposition Value: The most probable price that a specified interest in real property should bring under the following conditions: 1) Consummation of a sale within a future exposure time specified by the client. 2) The property is subjected to market conditions prevailing as of the date of valuation. 3) Both the buyer and seller are acting prudently and knowledgeably. 4) The seller is under compulsion to sell. 5) The buyer is typically motivated. 6) Both parties are acting in what they consider to be their best interests. 7) An adequate marketing effort will be made during the exposure time specified by the client. 8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9) The price represents the normal consideration of the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. This definition can also be modified to provide for valuation with specified financing terms. 1 Economic Life: The period over which improvements to real property contribute to property value. 1
Effective Date: 1) The date on which the analyses, opinions, and advice in an appraisal, review, or consulting service apply. 2) In a lease document, the date upon which the lease goes into effect.1
Effective Gross Income Multiplier (EGIM): The ratio between the sale price (or value) of a property and its effective gross income. 1 Effective Rent: The rental rate net of financial concessions such as periods of no rent during the lease term and above- or below -market tenant improvements (TIs). 1
Exposure Time: 1) The time a property remains on the market. 2) The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based on an analysis of past events assuming a competitive and open market. 1 Extraordinary Assumptions: An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. (USPAP, 2010-2011 ed). 1
Fair Share: That portion of total market supply accounted for by a subject property. For example, a 100-key hotel in 1,000-key market has a fair share of 10%. 1
Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (FASB). 1
Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.2
Fee Simple Estate: 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. 1
Floor Area Ratio (FAR): The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called land-to-building ratio. 1
Going-Concern Value: 1) The market value of all tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. 2) The value of an operating business enterprise. Goodwill may be separately measured but is an integral component of going-concern value when it exists and is recognizable. 1
Gross Building Area (GBA): The total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above-grade area. This includes mezzanines and basements if and when typically included in the region.1
Highest and Best Use:The reasonably probable and legal use of vacant land or an improved property, that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property-specific with respect to the user and timing of the use – that is adequately supported and results in the highest present value.1 Hypothetical Condition: That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property, such as market conditions or trends; or about the integrity of data used in an analysis. (USPAP, 2010-2011 ed.) 1
Income Capitalization Approach: A set of procedures through which an appraiser derives a value indication for an income-producing property by converting its anticipated benefits (cash flows and reversion) into property value. This conversion can be accomplished in two ways. One year's income expectancy can be capitalized at a market-derived capitalization rate or at a capitalization rate that reflects a specified income pattern, return on investment, and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate. 1
Glossary Page 2
Inspection: Personal observation of the exterior and/or interior of the real property that is the subject of an assignment. The purpose of an appraiser’s inspection is to identify the property characteristics that are relevant to the assignment, such as amenities, general physical condition, and functional utility. 1
Insurable Value: A type value for insurance purposes. 1 Intangible Assets: Assets that manifest themselves by their economic properties; they do not have physical substance; they grant rights and privileges to their owner; and usually generate income for their owner. Intangible Assets can be categorized as arising from: Rights; Relationships; Grouped Intangibles; or Intellectual Property. In general, the accounting profession limits recognition of individual intangible assets to those that are: commonly recognizable; have a statutory or contractual remaining life; and/or must be individually transferrable and separable from the business. An identifiable non-monetary asset without physical substance. 1
Intangible property: Nonphysical assets, including but not limited to franchises, trademarks, patents, copy-rights, goodwill, equities, securities, and contracts as distinguished from physical assets such as facilities and equipment. (USPAP, 2010-2011 ed.). 1
Intended Use: The manner in which the intended user expect to employee the information contained in a report. 1
Intended User: 1) The client and any other party as identified, by name or type, as users of the appraisal, appraisal review, or appraisal consulting report by the appraiser on the basis of communication with the client at the time of the assignment. (USPAP, 2010-2011 ed.) 2) A party who the appraiser intends will employ the information contained in a report. 1`
Internal Rate of Return (“IRR”):The annualized yield rate or rate of return on capital that is generated or capable of being generalized within an investment of portfolio over a period of ownership. Alternatively, the indicated return of capital associated with a projected or pro forma income stream. The discount rate that equates the present value of the net cash flows of a project with the present value of the capital investment. It is the rate at which the Net Present Value (NPV) equals zero. The IRR reflects both the return on invested capital and the return of the original investment, which are basic considerations of potential investors. Therefore, deriving the IRR from analysis of market transactions of similar properties having comparable income patterns is a proper method for developing market discount rates for use in valuations to arrive at Market Value. Used in discounted cash flow analysis to find the implied or expected rate of return of the project, the IRR is the rate of return which gives a zero net present value (NPV). See also equity yield rate (YE); financial management rate of return (FMRR); modified internal rate of return (MIRR); yield rate (Y). 1
Investment Value: The value of a property interest to a particular investor or class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market.1 Leasehold Interest: The tenant’s possessory interest created by a lease. See also negative leasehold; positive leasehold.1
Leased Fee Interest: A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord relationship (i.e., a lease). 1
Liquidation Value: The most probable price that a specified interest in real property should bring under the following conditions: 1) Consummation of a sale within a short time period; 2) The property is subjected to market conditions prevailing as of the date of valuation; 3) Both the buyer and seller are acting prudently and knowledgeably; 4) The seller is under extreme compulsion to sell; 5) The buyer is typically motivated. 6) Both parties are acting in what they consider to be their best interests. 7) A normal marketing effort is not possible due to the brief exposure time 8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9) 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. This definition can also be modified to provide for valuation with specified financing terms. 1 Load Factor: A measure of the relationship of common area to useable area and therefore the quality and efficiency of building area layout, with higher load factors indicating a higher percentage of common area to overall rentable space than lower load factors; calculated by subtracting the amount of usable area from the rentable area and then dividing the difference by the usable area:1 Load Factor =
(Rentable Area – Useable Area)
Usable Area
Market Value. The major focus of most real property appraisal assignments.

Both economic and legal definitions of market value have been developed and refined.*

1. The most widely accepted components of market value are incorporated in the following definition: The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming that neither is under duress.

2. Market value is described in the Uniform Standards of Professional Appraisal Practice (USPAP) as follows: A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. (USPSP, 2010-2011 ed.) USPAP also requires that certain items be included in every appraisal report. Among these items, the following are directly related to the definition of market value:
- Identifications of the specific property rights to be appraised. - Statement of the effective date of the value opinion. - Specification as to whether cash, terms equivalent to cash, or other precisely described financing terms are assumed as the basis of the appraisal.
- If the appraisal is conditioned upon financing or other terms, specification as to whether the financing or terms are at, below, or above market interest rates and/or contain unusual conditions or incentives. The terms of above- or below-market interest rates and/or other special incentives must be clearly set forth; their contribution to, or negative influence on, value must be described and estimated; and the market data supporting the opinion of value must be described and explained.

3. The following definition of market value is used by agencies that regulate federally insured financial institutions in the United States: The most probable price that 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 and 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:
- Buyer and seller are typically motivated;
- Bother parties are well informed or well advised, and acting in what they consider their best interests;
- A reasonable time is allowed for exposure in the open market; - Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
- 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. (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994)

4. The International Valuation Standards Council defines market value for the purpose of international standards as follows: The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. (International Valuation Standards, 8th ed., 2007) Glossary Page 3

5. Market value is the amount in cash, or in terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal. (Uniform Standards for Federal Land Acquisitions) 1 Market Value "As If Complete" On The Appraisal Date:

Market value as if complete on the effective date of the appraisal is an estimate of the market value of a property with all construction, conversion, or rehabilitation hypothetically completed, or under other specified hypothetical conditions as of the date of the appraisal. With regard to properties wherein anticipated market conditions indicate that stabilized occupancy is not likely as of the date of completion, this estimate of value should reflect the market value of the property as if complete and prepared for occupancy by tenants.

Market Value "As Is" On The Appraisal Date: Value As Is -The value of specific ownership rights to an identified parcel of real estate as of the effective date of the appraisal; relates to what physically exists and is legally permissible and excludes all assumptions concerning hypothetical market conditions or possible rezoning. See also effective date; prospective value opinion.

Market Value of the Total Assets of the Business: The market value of the total assets of the business is the market value of all of the tangible and intangible assets of a business as if sold in aggregate as a going concern. This assumes that the business is expected to continue operations well into the future. 4
Marketing Time: An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of The Appraisal Foundation and Statement on Appraisal Standards No. 6, “Reasonable Exposure Time in Real Property Market Value Opinions” address the determination of reasonable exposure and marketing time.). 3 Net Lease: A lease in which the landlord passes on all expenses to the tenant.

Also called modified gross lease, single net lease. See also lease. 1 Net Rentable Area (NRA): 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. 5 Penetration Ratio (Rate): The rate at which stores obtain sales from within a trade area or sector relative to the number of potential sales generated; usually applied to existing facilities. Also called: penetration factor.1 Prospective opinion of value. A value opinion effective as of a specified future date. The term does not define a type of value. Instead it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. 1
Reconciliation: The process of reducing a range of value indications into an appropriate conclusion for that analysis, e.g., the derivation of a value indication from the adjusted prices of two or more comparable sales in the sales comparison.1
Reliable Measurement: [The IAS/IFRS framework requires that] neither an asset nor a liability is recognized in the financial statements unless it has a cost or value that can be measured reliably.2
Remaining Economic Life: The estimated period during which improvements will continue to represent the highest and best use of the property; an estimate of the number of years remaining in the economic life of the structure or structural components as of the date of the appraisal; used in the economic age-life method of estimating depreciation.1
Replacement Cost: The estimated cost to construct, at current prices as of the effective appraisal date, a substitute for the building being appraised, using modern materials and current standards, design, and layout. 1 Retrospective Value Opinion: A value opinion effective as of a specified historical date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific prior date. Values as of a historical date is frequently sought in connection with property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation. Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion”.1
Sales Comparison Approach: The process of deriving a value indication for the subject property by comparing market information for similar properties with the property being appraised, identifying appropriate units of comparison, and making quantitative comparisons with or quantitative adjustments to the sales price (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements of comparison. 1 Scope of Work: The type and extent of research and analysis in an assignment. (USPAP, 2010-2011 ed.). 1
Stabilized value : A value opinion that excludes from consideration any abnormal relationship between supply and demand such as is experienced in boom periods when cost and sale price may exceed the long-term value, or during periods of depression, when cost and sale price may fall short of long-term value. It is also a value opinion that excludes from consideration any transitory condition that may cause excessive construction costs, e.g., a premium paid due to a temporary shortage of supply.

Substitution: The principle of substitution states that when several similar or commensurate commodities, goods, services are available, the one with the lowest price will attract the greatest demand and widest distribution. This is the primary principle upon which the cost and sales comparison approaches are based. 3
Total Assets of a Business: Total assets of a business is defined by the Appraisal Institute as “the tangible property (real property and personal property, including inventory and furniture, fixtures and equipment) and intangible property (cash, workforce, contracts, name, patents, copyrights, and other residual intangible assets, to include capitalized economic profit).” Use Value:

In real estate appraisal, the value a specific property has for a specific use; may be the highest and best use of the property or some other use specified as a condition of the appraisal. 1
1Appraisal Institute, The Dictionary of Real Estate Appraisal,5th ed. (Chicago:

Appraisal Institute 2010). 2Appraisal Institute, International Financial Reporting Standards for Real Property Appraiser, IFRS Website, www.ifrs-ebooks.com/index.html. 3Appraisal Institute, The Appraisal of Real Estate, 13th ed. (Chicago: Appraisal Institute 2008). 4 This definition is taken from “Allocation of Business Assets Into Tangible and Intangible Components:

A New Lexicon,” Journal of Real Estate Appraisal, January 2002, Volume LXX, Number 1. This terminology is to replace former phrases such as: value of the going concern. 5Financial Publishing Company, The Real Estate Dictionary, 7
th
ed.

ADDENDA B
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

LAND SALE COMPARABLES
1 2

Land Sale Comparable #1
805 Riverfront Street
805 Riverfront Street
West Sacramento, CA 95691
Yolo County
BBG Property #440313

Property Data
Property Type/Use Land

Lat/Long 38.576804 / -121.5168
Parcel ID # 058-320-086 Census Tract 0102.01
Opportunity Zone No Frontage
Gross Land Area 192,100 SF

4.41 Acres
Net Land Area 192,100 SF

4.41 Acres
Utilities All available to site. Terrain / Topography Level Comments

Sale Transaction Data for BBG Event #584673 on 12/4/2020 Net Area Gross Area Transaction Date 12/4/2020 Consideration $10,050,000 Price PSF $52.32 $52.32 Sale Status Closed Adjustments $0 Price Per Acre $2,278,912 $2,278,912 Months on Market Cash Equivalent Price $10,050,000
Property Rights Fee Simple
Grantor Bruce Unger
Grantee CA Ventures, LLC
Comments The property is fully entitled for a 286-unit mixed-use multi-family property. The anticipated completion date is 2023. The proposed five-story property will include retail along the entire length of the buildings Riverfront Street frontage and residential stoops along Ballpark Drive and State Street. The buyer was Chicago based developer. The estimated gross building area is 314,600 SF.

Verification 7/8/2021
Other

3 Land Sale Comparable #2
1901 Broadway
1901 Broadway
Sacramento, CA 95818
Sacramento County
BBG Property #291137

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.561000 / -121.4877
Parcel ID # 010-0213-008 Census Tract
Opportunity Zone No Frontage
Gross Land Area 55,321 SF

1.27 Acres
Net Land Area 55,321 SF

1.27 Acres
Utilities All available to site. Terrain / Topography
Comments

Sale Transaction Data for BBG Event #401899 on 9/23/2020 Net Area Gross Area Transaction Date 9/23/2020 Consideration $5,740,000 Price PSF $103.76 $103.76 Sale Status Closed Adjustments $0 Price Per Acre $4,519,685 $4,519,685 Months on Market Cash Equivalent Price $5,740,000
Property Rights Fee Simple
Grantor Sutter Capital Group
Grantee EAH Housing
Comments Project was entitled at closing for 140 affordable housing units within two 5-story buildings with 3,500 SF of ground floor commercial space (buyer had started processing entitlements in early 2020 and originally submitted plans for a 150 units). The actual sale price of $5,600,000 is adjusted upward for estimated demolition costs ($140,000 based on $5/SF) of existing vacant office building (28,415 SF). The estimated gross building area of the proposed development is 157,500 SF

Verification 11/30/2020
Cushman Wakefield, CoStar and Public Record

4 Land Sale
Comparable #3
12th & Q
1208-1220 Q Street
Sacramento, CA
95811
Sacramento County
BBG Property
#299017

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.571310 / -121.4938
Parcel ID # 006-0282-005 thru 009 Census Tract
Opportunity Zone No Frontage
Gross Land Area 22,500 SF

0.52 Acres
Net Land Area 22,500 SF

0.52 Acres
Utilities Terrain / Topography
Comments

Sale Transaction Data for BBG Event #414085 on 8/17/2020 Net Area Gross Area Transaction Date 8/17/2020 Consideration $3,000,000 Price PSF $133.33 $133.33 Sale Status Closed Adjustments $0 Price Per Acre $5,769,231 $5,769,231 Months on Market Cash Equivalent Price $3,000,000
Property Rights Fee Simple
Grantor Porter Sacramento Real Estate Holdings II, LLC
Grantee 1208 Q Street, LLC
Record Info 20200817-1656
Comments August 2020 sale of five contiguous lots totaling 22,500 SF (150' x 150') located on the south side of Q Street, midblock between 12th and 13th Streets. The westerly 60% of the site was improved with a surface parking lot and an (1931 built) shop/warehouse building. The site was entitled for a 51-unit project by the prior owner and the buyer (Portland based Urban Development Partners) plans to develop the 51-unit apartment project, consisting of primarily studio and one-bedroom units. The buyer may keep the existing shop building and incorporate into project as parking garage (consistent with existing entitlements). The building of the proposed project is 37,003 SF.

Verification 12/1/2020
CoStar, Public Records, SBJ Article

5 Land Sale
Comparable #4
700 16th Street
700 16th Street
Sacramento, CA
95814
Sacramento
County
BBG Property
#229510

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.580800 / -
121.4849
Parcel ID # 002-0172-024-000 Census Tract
Gross Land Area 51,200 SF

1.18 Acres
Net Land Area 51,200 SF

1.18 Acres
Utilities Terrain / Topography
Comments

Sale Transaction Data for BBG Event #401904 on 10/7/2019 Net Area Gross Area Transaction Date 10/7/2019 Consideration $7,500,000 Price PSF $146.48 $146.48 Sale Status Closed Adjustments $0 Price Per Acre $6,355,932 $6,355,932 Months on Market Cash Equivalent Price $7,500,000
Property Rights Fee Simple
Grantor Phoenix Enterprises, Inc. (SKK Development)
Grantee Mansion Apartments Owner, LLC
Record Info
Comments This is the second transaction of a double escrow. Sotiris Kolokotronis, owner of the property, formed a new partnership and contributed the property at a price of $7,500,000 (in the initial transaction on the same day the property was acquired for $6,500,000 when SKK bought out Grupe's interest). The partnership plans to develop a 5- story, 190-unit apartment project on the property. Mr. Kolokotronis reported the $7.5M contribution price as being close to market value for the land. The estimated building area is 121,600 SF.

Verification 11/29/2020
Appraisal files - Sotiris Kolokotronis, owner of the property

6 Land Sale Comparable
#5
Broadway
Apartments
2570 3rd
Sacramento, CA
95818
Sacramento County
BBG Property
#223154

Property Data
Property Type/Use Land
Subdivision
Lat/Long 38.564400 / -121.5116
Parcel ID # 009-0223-007, 009-0223-012, 009-0223-
013, 009-0223-016, 009-0270-009, 009-
0270-015, 009-0270-017, 009-0270-025,
009-0270-026, 009-0270-029, 009-0450-
003, 009-0450-005
Census Tract
Opportunity Zone No Frontage
Gross Land Area 307,969 SF

7.07 Acres
Net Land Area 307,969 SF

7.07 Acres
Utilities All available to site. Terrain / Topography Level Comments

Sale Transaction Data for BBG Event #584681 on 10/11/2019 Net Area Gross Area Transaction Date 10/11/2019 Consideration $20,500,000 Price PSF $66.57 $66.57 Sale Status Closed Adjustments $0 Price Per Acre $2,899,576 $2,899,576 Months on Market Cash Equivalent Price $20,500,000
Property Rights Fee Simple
Grantor Northwest Land Park LLC
Grantee 29sc Mill IV Property Owner
Record Info
Comments This property is the 5th phase of The Mill at Broadway. The land was in an opportunity zone. The buyer plans to develop 444 one- and two-bedroom apartments a complex known as Broadway Apartments. Development will be completed in two phases the first phase will be 360 units. There is a warehouse on the property that will be incorporated into the project as leasing office and covered parking. The estimated building area is 464,000 SF.

Verification 7/8/2021
Other

7 Land Sale
Comparable #6
SEC S & 15th Land
1500-1522 S Street
Sacramento, CA
95811
Sacramento County
BBG Property
#110601

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.568280 / -121.4907
Parcel ID # 009-0092-003 thru -008 Census Tract
Opportunity Zone No Frontage
Gross Land Area 32,000 SF

0.73 Acres
Net Land Area 32,000 SF

0.73 Acres
Utilities Terrain / Topography
Comments

Sale Transaction Data for BBG Event #201476 on 7/1/2019 Net Area Gross Area Transaction Date 7/1/2019 Consideration $5,150,000 Price PSF $160.94 $160.94 Sale Status Closed Adjustments $0 Price Per Acre $7,054,795 $7,054,795 Months on Market Cash Equivalent Price $5,150,000
Property Rights Fee Simple
Grantor Sutter Capital Group
Grantee Anthem Properties
Comments Property consists of five contiguous C-2 zoned parcels along the south side of S Street, east of 15th Street. The seller had secured entitlements for a 5-story project with 123 apartment units and up to 12,800 SF of ground floor retail for a total building area of 151,630 SF; however, the buyer reportedly intends to pursue their own development plan for the site to include residential and commercial uses. Estimated demolition costs of $50,000 are added to the purchase price ($5,100,000) to arrive at the effective price $5,150,000.

Verification 2/14/2020
BBG file #0120000047

8 Land Sale
Comparable #7
NEC 16th & J
1611 J Street
Sacramento, CA
95814
Sacramento
County
BBG Property
#299014

Property Data
Property Type/Use Land
Other
Lat/Long 38.578320 / -121.4848
Parcel ID # 006-0064-011 & 012 Census Tract
Opportunity Zone No Frontage
Gross Land Area 18,400 SF

0.42 Acres
Net Land Area 18,400 SF

0.42 Acres
Utilities Terrain / Topography
Comments

Sale Transaction Data for BBG Event #414083 on Net Area Gross Area Transaction Date 1/28/2022 Consideration $3,700,000 Price PSF $201.09 $201.09 Sale Status Closed Adjustments $0 Price Per Acre $8,809,524 $8,809,524 Months on Market Cash Equivalent Price $3,700,000
Property Rights Fee Simple
Grantor R. Lehe
Grantee Confidential
Record Info
Comments Closed sale of C-2 zoned site at hard corner (NEC) of 16th and J Streets in Midtown. The property is presently improved as a surface parking lot. The site is located across the street from Memorial Auditorium and immediately west of Lucca (restaurant). The property is planned for a 5-story, 68,918 square foot, mixed use apartment building with 73 dwelling units.

Verification 4/7/2022
K. Partington, Cushman Wakefield

9 Land Sale Comparable #8
21st & J
2101 J Street
Sacramento, CA 95816-4709
Sacramento County
BBG Property #545135

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.576519 / -121.4782
Parcel ID # 007-0022-028 Census Tract 0014.00
Opportunity Zone No
Gross Land Area 12,800 SF

0.29 Acres
Net Land Area 12,800 SF

0.29 Acres
Utilities All available to site. Terrain / Topography Level Zoning C-2 SPD
General Commercial

Sale Transaction Data for BBG Event #702796 on 1/21/2022 Net Area Gross Area Transaction Date 1/21/2022 Consideration $2,550,000 Price PSF $199.22 $199.22 Sale Status Closed Adjustments $50,000 Price Per Acre $8,793,103 $8,793,103 Cash Equivalent Price $2,600,000
Property Rights Fee Simple
Grantor Colony Plaza Center, LLC
Grantee 2101 J Street Partners, LLC
Record Info 220120-1162
Comments Site is located at the NEC of 21st and J Streets in Midtown. The buyer reportedly intends to demolish the existing structure (former "House of Fashion Bridal" building - 10,000 SF, built 1970) and development the site with multifamily over ground floor retail. The site did not have specific entitlements in place for the proposed use at the time of sale. Estimated demolition costs of $50,000 are added to the sale price ($2,500,000) to arrive at the effective price of $2,550,000. Based on other nearby projects, we estimate a density of 50 units and 51,200 SF of building area.

Verification 3/11/2022
CoStar, Public Records, Listing Brochure

10 Land Sale Comparable
#9
Cathedral Square Site
1018 J Street
Sacramento, CA
95814-2802
Sacramento County
BBG Property #337063

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.579805 / -121.4929
Parcel ID # 006-0103-007, 006-0103-008, 006-
0103-009, 006-0103-015
Census Tract 0011.01
Opportunity Zone No Frontage
Gross Land Area 28,800 SF

0.66 Acres
Net Land Area 28,800 SF

0.66 Acres
Utilities All to site Terrain / Topography Level
Comments
Sale Transaction Data for BBG Event #419790 on 9/11/2018 Net Area Gross Area Transaction Date 9/11/2018 Consideration $5,250,000 Price PSF $182.29 $182.29 Sale Status Closed Adjustments $0 Price Per Acre $7,954,545 $7,954,545 Months on Market Cash Equivalent Price $5,250,000
Property Rights Fee Simple
Grantor St. Anton Investors, LLC & Eleventh & J Devco, LLC Grantee Anthem Properties
Record Info
Comments Downtown development site at the southwest corner of 11th and J Streets. The property was acquired by Canada based Anthem Properties, who is known for developing high-rise residential projects. The site has entitlements in place (recently extended through 7/12/19) for a 25-story mixed-use condominium tower (242 residential condos over 12,000 SF of ground floor retail). Per a news article (SBJ 9/17/18) the buyers ultimate plan for the site was "still being determined" as of the acquisition date; however, a buyer representative reported that "the project will definitely be mostly residential, with the possibility of first-floor office or retail space, or even an events center given its proximity to the state Capitol." The four parcels are improved with vacant two-story buildings totaling approximately 45,000 SF. Demolition costs estimated at $250,000. The actual sale price of $5,000,000 is adjusted upward by this amount to arrive at the effective price. The buildable area of the project is 190,500 SF.

Verification 4/3/2021
CoStar and Public Records

11 Land Sale Comparable #10
601 Capitol Mall
601 Capitol Mall
Sacramento, CA 95814
Sacramento County
BBG Property #388818

Property Data
Property Type/Use Land
Other
Lat/Long 38.578680 / -121.4998
Parcel ID # 006-0151-020 Census Tract
Opportunity Zone No Frontage
Gross Land Area 38,972 SF

0.89 Acres
Net Land Area 38,972 SF

0.89 Acres
Utilities Terrain / Topography
Sale Transaction Data for BBG Event #513050 on 4/6/2018 Net Area Gross Area Transaction Date 4/6/2018 Consideration $7,000,000 Price PSF $179.62 $179.62 Sale Status Closed Adjustments $0 Price Per Acre $7,865,169 $7,865,169 Months on Market Cash Equivalent Price $7,000,000
Property Rights Fee Simple
Grantor 601 CM, LLC (David Taylor Interests)
Grantee SRI Eleven 601 Capitol Mall, LLC (Shorenstein)
Record Info 201804061377
Comments Prime development site situated on the east side of 6th Street between Capitol Mall and L Street, directly south of the new Golden One Center. The site is well positioned for future development of a high-density mixed-use residential tower, hotel, retail or office project. The project has an active entitlement for a 38-story tower of 262 condominium units above parking and 14,000 SF of retail space (formerly known as Aura); entitlements were originally secured in 2005 and in 2016 the City approved and extension through February 2022. The site is presently developed with a surface parking lot (50 stalls). The property was originally placed in contract in November 2017.

Prior to closing, the city of Sacramento approved a request by the buyer to change conditions requiring a high-rise to allowing a mid-rise residential and retail project on the site. Months after closing, the buyer announced plans for an 8-story project. The buildable area of the project is 311,776 SF.

Verification 11/28/2017
Confidential

12 Land Sale
Comparable #11
Thompson Diggs
Parking
1801 3rd Street
Sacramento, CA
95811
Sacramento County
BBG Property
#20506

Property Data
Property Type/Use Land
Specialty
Lat/Long 38.573230 / -121.5061
Parcel ID # 009-0051-006 Census Tract
Opportunity Zone No Frontage
Gross Land Area 108,800 SF

2.50 Acres
Net Land Area 108,800 SF

2.50 Acres
Utilities Terrain / Topography
Comments

Sale Transaction Data for BBG Event #49038 on 1/3/2018 Net Area Gross Area Transaction Date 1/3/2018 Consideration $12,800,000 Price PSF $117.65 $117.65 Sale Status Closed Adjustments $0 Price Per Acre $5,120,000 $5,120,000 Months on Market Cash Equivalent Price $12,800,000
Property Rights Fee Simple
Grantor CalPERS
Grantee 1801 3rd Street Owner, LLC
Record Info
Comments This property was previously owned and managed by CalPERS. This transfer reflects CalPERS bringing in a managing partner (CIM) under a management contract for several properties in the area. The properties are now held in a fund structure and the managing partner has a minor ownership interest. CalPERS commissioned independent appraisals prior to the transfer which established the transfer prices. The estimated FAR is 4.0.

Verification 9/26/2019
BBG File #0119002191

13 Sale Comparable
#12

831 L Street
Sacramento, CA
95814
Sacramento
County
BBG Property
#20296

Property Data
Property Type/Use Office
General Purpose
Lat/Long 38.578840 / -121.4960
Parcel ID # 006-0098-020 Number of Buildings 0
Opportunity Zone No Census Tract
Site Size (Gross) 0 SF (0.00 acres) Site Size (Net) 0 SF (0.00 acres) Utilities
Terrain/Topography
Comments

Sale Transaction Data for BBG Event #48822 on 1/13/2017 PSF (GBA) PSF (Rentable) Per Unit Transaction Date 1/13/2017 Consideration $5,000,000 $100.00 $100.00 N/A Sale Status Closed Adjustments $250,000 $5.00 $5.00 N/A Occupancy at TOS 0% Cash Equivalent Price $5,250,000 $105.00 $105.00 N/A Days on Market
Property Rights Fee Simple
Grantor Cordano Enterprises, LLC
Grantee 831 L Street, LLC
Comments The property is situated at the northwest corner of 9th and L Streets within the CBD. The site contains 27,200 SF and is zoned C-3-SPD, which can accommodate a variety of dense commercial uses. The site was improved with a 50,000 SF building (built 1965) that has two levels (ground floor and basement), each containing 25,000 SF and a rooftop parking deck (±50 spaces). The building was vacant and the time of sale and the buyer has not yet announce d plans for adaptive re-use or new development on the site. Demolition costs estimated at $250,000. The actual sale price of $5,000,000 is adjusted upward by this amount to arrive at the effective price. The estimated FAR is 8.0 Verification
Buyer

14 Land Sale
Comparable #13
Courthouse Site
501 H Street
Sacramento, CA
95814
Sacramento
County
BBG Property
#231100

Property Data
Property Type/Use Land
Other
Lat/Long 38.584160 / -121.4975
Parcel ID # 002-0010-060 Census Tract
Gross Land Area 105,415 SF

2.42 Acres
Net Land Area 105,415 SF

2.42 Acres
Utilities Terrain / Topography
Comments

Sale Transaction Data for BBG Event #585141 on 10/3/2014 Net Area Gross Area Transaction Date 10/3/2014 Consideration $10,000,000 Price PSF $94.86 $94.86 Sale Status Closed Adjustments $0 Price Per Acre $4,132,231 $4,132,231 Months on Market Cash Equivalent Price $10,000,000
Property Rights Fee Simple
Grantor Inland American Real Estate Trust, Inc.

Grantee Judicial Council of California
Record Info
Comments Comments: The property represents the city block at the southeast corner of The Railyards Specific Plan, bound by H Street to the south, G Street to the north, 5th Street to the west and 6th Street to the east. The property was selected as the "preferred site" for the new Sacramento Criminal Courthouse in April 2011. Over a dozen sites were investigated and this site was selected and put under contract in mid-2012. In January 2013, the Judicial Council had indefinitely delayed the project due to the state's fiscal crisis and continuing cuts in court construction funds. In the state's Fiscal Year 2014-2015 Budget, the Legislature allocated $40 million in one-time cash for court construction projects and $27 million was appropriated for architectural design of the new criminal courthouse for Sacramento.

The legislation was approved October 2014 and the state then closed escrow on this site. The proposed courthouse would contain approximately 405,000 SF (16 stories) and would provide 44 courtrooms as well as parking. Funds for construction of this $390 million project had yet to be legislated at closing.

Verification 7/11/2021
Buyer

15 Land Sale Comparable #14
Township 9
Richards Blvd
Sacramento, CA 95811
Sacramento County
BBG Property #222944

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.595873 / -121.4911
Parcel ID # 001-020-056 thru 058, 060 thru 064,
and 067 thru 070
Census Tract 0053.01
Opportunity Zone Yes Frontage
Gross Land Area 2,394,753 SF

54.98 Acres
Net Land Area 1,703,020 SF

39.10 Acres
Utilities Typical utilities and municipal
services available to site.

Terrain / Topography
Comments Remainder of Township 9 PUD (excludes existing Cannery Place Apartments - 180 units, built 2014)

Sale Transaction Data for BBG Event #584776 on 11/17/2020 Net Area Gross Area Transaction Date 11/17/2020 Consideration $54,000,000 Price PSF $31.71 $22.55 Sale Status Closed Adjustments $0 Price Per Acre $1,381,074 $982,175 Months on Market Cash Equivalent Price $54,000,000
Property Rights Fee Simple
Grantor Township Nine Ave, LLC
Grantee 29th Street Capital
Record Info
Comments Sale reflects the two -phase acquisition of the Township 9 (T9) project (excludes the existing Cannery Place Apartments), situated between Richards Blvd and the American River between N 5th and N 7th Streets. Gross site area is 55 -acres; net (developable) site area is 39 -acres e xclusive of parks and land in American River Parkway. The acquisition was a two-phase takedown with the initial transfer on 11/17/20 at $43,600,000 and the second on 1/29/21 at $10,400,000. The overall project was entitled for up to 2,981 residential units (180 units had been built). The buyer plans a total of 2,303 residential units. Phase A (central portion of project) is planned for 936 multifamily units. Phase B (norther portion of project) is planned for 825 multifamily units. Phase C (south portion al ong Richards Blvd) is planned for 542 micro units/hotel.

Verification 7/6/2021
Buyer Representative

16 Land Sale Comparable #15
Kaiser Permanente Development
242 North 5th Street
Sacramento, CA 94571
Sacramento County
BBG Property #290570

Property Data
Property Type/Use Land Lat/Long 38.595305 / -121.4955
Parcel ID # Census Tract 0053.01
Gross Land Area 758,380 SF

17.41 Acres
Net Land Area 758,380 SF

17.41 Acres
Utilities All available Terrain / Topography Level
Comments

Sale Transaction Data for BBG Event #291145 on 1/24/2019 Net Area Gross Area Transaction Date 1/24/2019 Consideration $33,370,000 Price PSF $44.00 $44.00 Sale Status Closed Adjustments $0 Price Per Acre $1,916,715 $1,916,715 Months on Market Cash Equivalent Price $33,370,000
Property Rights Fee Simple
Grantor Downtown Railyards Venture LLC
Grantee Kaiser Permanente
Comments On January 24, 2019 the 17.41 acres of commercial land part of The Railyards development was sold for $33,370,000.

The buyer was Kaiser Permanente which paid cash for the acquisition. The new Kaiser Permanente Medical Center at the Railyards will replace the current hospital located less than 10 miles away at 2025 Morse Ave. in Sacramento. The proposed 1,168,003 square foot property is set to break ground in 2022. and open in 2024/2025. The seller delivered a finished site to the buyer. The seller's cost to construct the off-site infrastructure was $20,879,000.

Verification 11/26/2020
Seller

1 Land Sales For East of 7th Street

2 3

Land Sale Comparable #1
UC Davis Health Site - Folsom Ranch
SWC E St Bidwell & Highway 50
Folsom, CA 95630-8747
Sacramento County
BBG Property #551307

Property Data
Property Type/Use Land
Commercial
Lat/Long 38.641159 / -121.1162
Parcel ID # Portion of 072-3190-030 Census Tract 0085.08 Opportunity Zone No
Gross Land Area 1,504,998 SF

34.55 Acres
Net Land Area 1,504,998 SF

34.55 Acres
Utilities All available to site. Terrain / Topography Generally level Zoning RC
Regional Commercial

Sale Transaction Data for BBG Event #710169 on 10/19/2021 Net Area Gross Area Transaction Date 10/19/2021 Consideration $30,100,000 Price PSF $20.00 $20.00 Sale Status Closed Adjustments $0 Price Per Acre $871,201 $871,201 Cash Equivalent Price $30,100,000
Property Rights Fee Simple
Grantor Enclave at Folsom Ranch
Grantee The Regents of the University of California
Comments UC Davis Health acquired this 34.55-acre commercial site at the southwest quadrant of E Bidwell Street and Highway 50 within Folsom Ranch. Initial plans call for an outpatient medical office building and future plans include a micro- hospital, an ambulatory surgery center and a hotel. The site was initially placed in-contract in February 2021, approximately eight months prior to closing. The site will be encumbered by a future Mello-Roos bond that is expected have a principal balance near $1.00 per SF of land area. This bond is not recognized in the reported sale price of $20 per SF.

Verification 4/2/2022
Confidential

4 Land Sale Comparable #2
Township 9
Richards Blvd
Sacramento, CA 95811
Sacramento County
BBG Property #222944

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.598380 / -121.4916
Parcel ID # 001-020-056 thru 058, 060 thru 064,
and 067 thru 070
Census Tract 0053.01
Opportunity Zone Yes
Gross Land Area 2,394,753 SF

54.98 Acres
Net Land Area 1,703,020 SF

39.10 Acres
Utilities Typical utilities and municipal
services available to site.

Terrain / Topography
Zoning RMX-SPD
Residential Mixed-Use
Comments Remainder of Township 9 PUD (excludes existing Cannery Place Apartments - 180 units, built 2014)

5 Sale Transaction Data for BBG Event #584776 on 11/17/2020 Net Area Gross Area Transaction Date 11/17/2020 Consideration $54,000,000 Price PSF $31.71 $22.55 Sale Status Closed Adjustments $0 Price Per Acre $1,381,074 $982,175 Cash Equivalent Price $54,000,000
Property Rights Fee Simple
Grantor Township Nine Ave, LLC
Grantee 29th Street Capital
Comments Sale reflects the two-phase acquisition of the Township 9 (T9) project (excludes the existing Cannery Place Apartments), situated between Richards Blvd and the American River between N 5th and N 7th Streets. Gross site area is 55-acres; net (developable) site area is 39-acres exclusive of parks and land in American River Parkway. The acquisition was a two-phase takedown with the initial transfer on 11/17/20 at $43,600,000 and the second on 1/29/21 at $10,400,000. The overall project was entitled for up to 2,981 residential units (180 units had been built).

The buyer plans a total of 2,303 residential units. Phase A (central portion of project) is planned for 936 multifamily units. Phase B (norther portion of project) is planned for 825 multifamily units. Phase C (south portion along Richards Blvd) is planned for 542 micro units/hotel.

Verification 7/6/2021
Buyer Representative

6 Land Sale Comparable #3
Kaiser Site - Delta Shores
8401 Center Parkway
Sacramento, CA 95823
Sacramento County
BBG Property #454972

Property Data
Property Type/Use Land
Commercial
Lat/Long 38.467880 / -121.4938
Parcel ID # 053-0180-029 Census Tract 0096.01
Opportunity Zone No
Gross Land Area 1,275,437 SF

29.28 Acres
Net Land Area 1,275,437 SF

29.28 Acres
Utilities Terrain / Topography
Zoning C-2
Commercial

Sale Transaction Data for BBG Event #595315 on 11/12/2020 Net Area Gross Area Transaction Date 11/12/2020 Consideration $18,203,000 Price PSF $14.27 $14.27 Sale Status Closed Adjustments $0 Price Per Acre $621,687 $621,687 Cash Equivalent Price $18,203,000
Property Rights Fee Simple
Grantor M/H Realty Partners VI, LLC
Grantee Kaiser Foundation Health Plan
Comments November 2020 sale of 29.28-acre commercial site on the north side of Cosumnes River Blvd, immediately east of Interstate 5 and directly north of the Delta Shores Shopping Center (anchored by Walmart, Dicks Sporting Goods, Hobby Lobby, etc.). The site was previously approved for approximately 300,000 square feet of retail space. Actual sale price was $17,243,000 ($13.52/SF); however buyer assumed an estimated $960,000 (±$0.75/SF) in bond debt.

7 Land Sale Comparable #4
Dignity Health Site - Folsom
350 Placerville Road
Folsom, CA 95630
Sacramento County
BBG Property #454969

Property Data
Property Type/Use Land
Commercial
Lat/Long 38.636111 / -121.1488
Parcel ID # 072-3190-047 Census Tract 0085.08
Opportunity Zone No
Gross Land Area 1,232,748 SF

28.30 Acres
Net Land Area 1,232,748 SF

28.30 Acres
Utilities Terrain / Topography
Zoning CC
Commercial

Sale Transaction Data for BBG Event #595312 on 6/5/2020 Net Area Gross Area Transaction Date 6/5/2020 Consideration $22,024,000 Price PSF $17.87 $17.87 Sale Status Closed Adjustments $0 Price Per Acre $778,233 $778,233 Cash Equivalent Price $22,024,000
Property Rights Fee Simple
Grantor Enclave at Folsom Ranch
Grantee Dignity Health
Comments June 2020 sale of 28.30-acre commercial site on the east side of E Bidwell Street, immediately south of Highway 50.

The site is part of a larger 240-acre project known as the Folsom Ranch Corporate Campus. The buyer (Dignity Health) initially plans to build a 3-story 65,000 SF medical office that will include outpatient surgery, urgent care, imaging and primary care. Dignity plans to start construction in early 2022. Actual sale price was $20,914,000 ($16.97/SF); however buyer assumed an estimated $1.11MM (±$0.90/SF) in bond debt.

8 Land Sale Comparable #5
1401 Arden Way
1401 Arden Way
Sacramento, CA 95815-4002
Sacramento County
BBG Property #290562

Property Data
Property Type/Use Land
Multi-Family
Lat/Long 38.605034 / -121.4319
Parcel ID # 277-0160-multiple & 277-0261-
multiple
Census Tract 0055.02
Opportunity Zone No
Gross Land Area 1,093,356 SF

25.10 Acres
Net Land Area 953,964 SF

21.90 Acres
Utilities All Terrain / Topography
Zoning C-2
General Commercial

Sale Transaction Data for BBG Event #288003 on 12/1/2018 Net Area Gross Area Transaction Date 12/1/2018 Consideration $16,500,000 Price PSF $17.30 $15.09 Sale Status Closed Adjustments $0 Price Per Acre $753,425 $657,371 Cash Equivalent Price $16,500,000
Property Rights Fee Simple
Grantor Fulcrum Capital Corporation
Grantee SKK Developments
Comments The property is a C-2 zoned site located adjacent to the Arden Fair Mall. The property included twelve different parcels totaling 25.1 gross acres. The property was purchased for development of a 731-unit apartments complex in two phases (Ph I - 405 units, Ph II - 326 units). The net acreage is 21.9 acres. All off-site infrastructure is complete.

Verification 11/27/2020
Seller

9 Land Sale Comparable #6
Centene Site
4201 East Commerce Way
Sacramento, CA 95834
Sacramento County
BBG Property #24203

Property Data
Property Type/Use Land
Office
Lat/Long 38.645250 / -121.5236
Parcel ID # 225-0310-038, -040 & -041 (ATOS)
Opportunity Zone No
Gross Land Area 3,302,719 SF

75.82 Acres
Net Land Area 2,950,754 SF

67.74 Acres
Utilities Terrain / Topography
Zoning EC-50-PUD
Employment Center

Sale Transaction Data for BBG Event #52759 on 9/13/2018 Net Area Gross Area Transaction Date 9/13/2018 Consideration $28,212,500 Price PSF $9.56 $8.54 Sale Status Closed Adjustments $0 Price Per Acre $416,482 $372,098 Cash Equivalent Price $28,212,500
Property Rights Fee Simple
Grantor Alleghany Properties, LLC
Grantee Natomas Development Partners, LLC (Hines)
Record Info 20180913-1087
Comments Hines acquired this site for near term development (build-to-suit) of a major office park for Centene Corporation.

The site was fully entitled for the proposed use at closing. The overall Centene HQ project is ultimately planned to include five 4-story office buildings totaling 1.25 million square feet (and a 17,160 SF childcare center). The initial phase of the project consists of two office buildings totaling 520,000 square feet. The developer broke ground on the project in October 2018. There are no bonds encumbering the property. The gross site area is 75.82 acres; however, the usable area (net of open space buffer along I-5) is 67.74 acres. The usable area is used for analysis purposes.

Verification 1/9/2019
A. Leck

ADDENDA C
RAILYARDS COMMUNITY FACILITIES DISTRICT NO. 2018-01 APPRAISAL

PROJECT INFORMATION
Fidelity National Title
1200 Concord Ave., Suite 400, Concord, CA 94520
Title Report
Downtown Railyard Venture, LLC
3140 Peacekeeper Way
McClellan, CA 95652
Attn: Jay Heckenlively
Your Ref No.:

Escrow Officer: Paul Avila
Email: [email protected]
File No.: 01005028A-KD
Escrow No.: 01005028A
-PA
Property Address: 458, 464, 468
North B Street, 246 6th Street, Sacramento, CA
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CLTA Preliminary Report Form - Modified (11.17.06)
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1 CA----SPS-1-21-01005028A

PRELIMINARY REPORT
In response to the application for a policy of title insurance referenced herein, Fidelity National Title Company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a policy or policies of title insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an exception herein or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations or Conditions of said policy forms.

The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Attachment One. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Attachment One. Copies of the policy forms should be read. They are available from the office which issued this report.

This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested.

The policy(ies) of title insurance to be issued hereunder will be policy(ies) of Fidelity National Title Insurance Company, a Florida corporation.

Please read the exceptions shown or referred to herein and the exceptions and exclusions set forth in Attachment One of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered.

It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects and encumbrances affecting title to the land.

Fidelity National Title Insurance Company
By:

Countersigned By:

Authorized Officer or Agent
President
Attest:

Secretary
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Visit Us on our Website: www.fntic.com
ISSUING OFFICE: 1200 Concord Ave., Suite 400, Concord, CA 94520 FOR SETTLEMENT INQUIRIES, CONTACT:

Fidelity National Title Company
8525 Madison Avenue, Suite 110  Fair Oaks, CA 95628
(916)646-6018  FAX (916)962-9243
Another Prompt Delivery From Fidelity National Title Company Title Department Where Local Experience And Expertise Make A Difference

PRELIMINARY REPORT
Title Officer: Kevin Davis
Email: [email protected]
Title No.: 01005028A-KD
Escrow Officer: Paul Avila
Email: [email protected]
Escrow No.: 01005028A -PA
TO:

Downtown Railyard Venture, LLC
3140 Peacekeeper Way
McClellan, CA 95652
Attn: Jay Heckenlively
Your Ref No.:

PROPERTY ADDRESS(ES):
458, 464, 468 North B Street, 246 6th Street, Sacramento, CA EFFECTIVE DATE: May 11, 2021 at 07:30 AM
The form of policy or policies of title insurance contemplated by this report is:

ALTA Owner's Policy 2006

1. THE ESTATE OR INTEREST IN THE LAND HEREINAFTER DESCRIBED OR REFERRED TO COVERED BY THIS REPORT IS:

A Fee

2. TITLE TO SAID ESTATE OR INTEREST AT THE DATE HEREOF IS VESTED IN:

Downtown Railyard Venture, LLC, a Delaware limited liability company as to Parcels 1, 2, 4, 5, 6, 7, and

8.; Sacramento 695, L.P., a California limited partnership, as to Parcel 3; and Kaiser Foundation Hospitals, a California nonprofit public benefit corporation, as to Parcel 9.

3. THE LAND REFERRED TO IN THIS REPORT IS DESCRIBED AS FOLLOWS:

SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF
EXHIBIT "A"
Legal Description
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For APN/Parcel ID(s):
002-0010-076-0000
,
002-0010-069-0000
,
002-0010-074-0000
,
001-0064-011-0000
,
001-0064-012-0000, 001-0064-013-0000, 002-0270-001-0000, 002-0270-002-0000, 002-0270-003-0000, 002-0270-004-0000, 002-0270-005-0000, 002-0270-006-0000, 002-0270-007-0000, 002-0270-008-0000, 001-0010-075-0000 and 002-0010-077-0000

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SACRAMENTO, COUNTY OF SACRAMENTO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL 1:

All that real property situated in the City of Sacramento, County of Sacramento, State of California and being a portion of Parcel 2 as described in that certain grant Deed Recorded October 17, 2018 in Book 20181017, Page 0799, Sacramento County Official Records, and being a portion of the remainder parcel as shown on the final map entitled "The Railyards Unit No. 2", filed in Book 409 of Maps, Page 1, said County Records. More particularly described as follows:

Beginning at the intersection of 7th Street and North 'B' Street as shown on record of Survey filed July 1, 2004 in Book 66 of Surveys, Page 15, Sacramento County Official Records. Said point lying on the North boundary of said Parcel 2; thence along the boundary of said Parcel 2, common with the boundary of said remainder parcel the following 22 courses:

1. Thence South 71° 36' 52" East, 616.79 feet;

2. Thence South 56° 40' 59" East, 155.27 feet;

3. Thence South 47° 19' 40" East, 75.74 feet;

4. Thence to the right along the arc of a 296.67 foot radius, non-tangent curve, concave to the Southwest, having a radial bearing of North 35° 28' 18" East, a central angle of 15° 33' 22", and an arc length of 80.55 feet;

5. Thence South 38° 58' 10" East, 61.00 feet;

6. Thence to the right along the arc of a 296.57 foot radius, tangent curve, concave to the Southwest, having a central angle of 08° 09' 56", and an arc length of 42.27 feet;

7. Thence South 30° 48' 14" East, 55.84 feet;

8. Thence to the left along the arc of a 371.79 foot radius, tangent curve, concave to the Northeast, having a central angle of 06° 34' 46" and an arc length of 42.69 feet;

9. Thence South 37° 23' 00" East, 14.72 feet;

10. Thence South 38° 59' 32" East, 10.00 feet;

11. Thence South 40° 35' 03" East, 14.72 feet;

12. Thence to the left along the arc of a 371.79 foot radius, tangent curve, concave to the Northeast, having a central angle of 06° 34' 46", and an arc length of 42.69 feet;

13. Thence South 47° 09' 49" East, 20.41 feet;

14. Thence to the left along the arc of a 372.24 foot radius, tangent curve, concave to the Northeast, having a central angle of 08° 20' 43", and an arc length of 54.22 feet;

15. Thence South 18° 25' 08" West, 37.18 feet;

16. Thence South 38° 51' 44" East, 185.20 feet;

17. Thence South 71° 36' 14" East, 609.61 feet;

18. Thence South 18° 28' 51" West, 342.82 feet to a point on the North boundary of Parcel B, as described in Document Recorded December 28, 2006, in Book 20061228, Page 1681, Sacramento County Official Records;

19. Thence along the Northerly boundary of said Parcel B, North 71° 31' 30" West, 93.07 feet;

20. thence continuing along last said boundary, to the left along the arc of a 1,370.00 foot radius tangent curve, concave to the South, having a central angle of 29° 45' 03", and an arc length of 711.37 feet;

21. Thence continuing along last said boundary, South 78° 43' 28" West, 1,371.35 feet;

22. Thence continuing along last said boundary, to the left along the arc of a 500.00 foot radius, tangent curve, concave to the South, having a central angle of 08° 32' 54", and an arc length of 74.60 feet to a point on the centerline of said 7th Street;
Title No.: 01005028A-KD
EXHIBIT "A"
Legal Description
(continued)
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Thence along said centerline of 7th Street, to the right along the arc of a 8,500.00 foot non tangent curve, having a radial bearing of North 72° 47' 18" West, a central angle of 04° 57' 30", and an arc length of 735.58 feet; thence continuing along said centerline of 7th street, North 22° 10' 12" East, 241.12 feet; thence continuing along said centerline of 7th Street, to the left along the arc of a 8,500.00 foot radius, tangent curve, having a central angle of 03° 39' 34", and an arc length of 542.89 feet; thence continuing along said centerline of 7th Street, North 18° 30' 38" East, 155.59 feet to the point of beginning.

As shown as Parcel 1 on that certain document entitled "Certificate of Compliance For Lot Line Adjustment" recorded July 19, 2019, in Book 20190719, Page 0343, of Official Records APN: 002-0010-074-0000
PARCEL 2:

All that real property situated in the City Of Sacramento, County of Sacramento, State of California and being a portion of Parcel 2 as described in that certain grant Deed Recorded October 17, 2018 in Book 20181017, Page 0799, Sacramento County Official Records, a portion of the remainder parcel as shown on the final map entitled "The Railyards Unit No. 2", filed in Book 409 of Maps, Page 1, said County Records, and all of Parcel 2 described in that certain grant deed to Downtown Railyard Venture, LLC, Recorded May 8, 2019 as Document No. 201905081264, said County Records, more particularly described as follows:

Beginning at the intersection of 7th Street and North 'B' Street as shown on record of Survey filed July 1, 2004 in Book 66 of Surveys, Page 15, Sacramento County Official Records. Said point lying on the North boundary of said Parcel 2; thence along the centerline of said 7th Street South 18° 30' 38" West, 155.59 feet; thence continuing along said centerline, to the right along the arc of a 8,500.00 foot radius, tangent curve, having a central angle of 03° 39' 34", and an arc length of 542.89 feet; thence continuing along said centerline, South 22° 10' 12" West, 241.12 feet; thence continuing along said centerline, to the left along the arc of a 8,500.00 foot tangent curve, having a central angle of 00° 51' 25", and an arc length of 127.13 feet to the Northeast corner of Parcel 1 as described in that certain Grant Deed, Recorded October 17, 2018 in Book 20181017, Page 798, said County Records and the centerline of Railyards Boulevard (130 foot wide public road), as described in that certain Document Recorded August 18, 2016, in Book 20160818, Page 1406, said County Records; thence along the Northeast boundary of said Parcel 1, common to the centerline of said Railyards Boulevard, North 71° 38' 43" West, 221.23 feet; thence continuing along last said common line, to the left along the arc of a 3,000.00 foot radius, tangent curve, having a central angle of 03° 42' 23", and an arc length of 194.06 feet to the Northwest corner of said Parcel 1 and the centerline of 6th Street; thence along the Northwest boundary of said Parcel 1 common to the centerline of 6th Street, South 18° 52' 39" West, 65.58 feet; thence leaving last said common line continuing along said Northwest boundary, South 71° 06' 45'' East, 36.50 feet; thence continuing along said Northwest boundary, South 18° 53' 15" West, 351.38 feet; thence continuing along said Northwest boundary, South 18° 58' 32" West, 15.30 feet to the Southwest corner of said Parcel 1; thence along the Southwest boundary of said Parcel 1, South 71° 33' 12" East, 371.36 feet to the Southeast corner of said Parcel 1 and the centerline of said 7th Street; thence along last said centerline, to left along the arc of a 8,500.00 foot radius, non-tangent curve, having a radial bearing of North 71° 39' 02" West, a central angle of 01° 08' 16", and an arc length of 168.80 feet to a point on the North boundary of Parcel B, as described in Document Recorded December 28, 2006 in Book 20061228, Page 1681, Sacramento County Official Records; thence along last said North boundary, to the left along the arc of a 500.00 foot radius, non tangent curve, having a radial bearing of North 19° 49' 26", a central angle of 13° 33' 01", and an arc length of 118.25 feet; thence continuing along last said North boundary, South 56° 37' 33" West, 416.15 feet; thence continuing along last said North boundary, to the right along the arc of a 825.00 foot radius, tangent curve, having a central angle of 23° 28' 09", and an arc length of 337.93 feet; thence continuing along last said North boundary, South 80° 05' 42" West, 971.66 feet to the Southeast corner of that grant Deed Recorded January 25, 2018 in Document Number 201801250774, Sacramento County Official Title No.: 01005028A-KD
EXHIBIT "A"
Legal Description
(continued)
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Records; thence along the boundary of last said grant deed the following 6 courses:

1. Thence North 09° 58' 37" West, 539.06 feet;

2. Thence to the left along the arc of a 50.50 foot radius, non-tangent curve, having a radial bearing of South 12° 00' 10" West, a central angle of 264° 14' 06", and an arc length of 232.92 feet;

3. Thence South 05° 11' 06" East, 20.00 feet;

4. Thence South 84° 48' 54" West, 26.32 feet;

5. Thence to the left along the arc of a 383.08 foot radius, tangent curve, having a central angle of 30° 48' 55", and an arc length of 206.03 feet;

6. Thence South 09° 58' 37" East, 564.92 feet to the Southwest corner of last said Grant Deed; Thence leaving last said boundary along the boundary of Parcel 2 as described in that certain Document Recorded September 30, 2015 in Book 20150930, Page 1633, Sacramento County Official Records, along the following 14 courses:

1. Thence South 74° 53' 24" West, 529.98 feet;

2. Thence to the right along the arc of a 752.97 foot radius tangent curve, having a central angle of 13° 52' 18", and an arc length of 182.30 feet;

3. Thence along a compound curve having a radius of 969.00 feet, a central angle of 15° 09' 56", and an arc length of 256.48 feet;

4. Thence North 71° 31' 56" West, 71.56 feet;

5. Thence North 13° 07' 29" East, 58.10 feet;

6. Thence North 22° 19' 56" East, 242.66 feet;

7. Thence North 01° 22' 19" East, 567.62 feet;

8. Thence North 01° 27' 19" East, 204.49 feet;

9. Thence South 88° 37' 32" East, 34.33 feet;

10. Thence to the left along the arc of a 520.00 foot radius, non-tangent curve, having a radial bearing of South 88° 37' 32" East, a central angle of 19° 37' 18", and an arc length of 178.08 feet;

11. Thence North 18° 14' 49" West, 127.28 feet;

12. Thence to the left along the arc of a 980.00 foot radius, non-tangent curve, having a radial bearing of North 74° 09' 17" East, a central angle of 02° 24' 07", and an arc length of 41.08 feet;

13. Thence North 83° 59' 26" East, 225.06 feet;

14. Thence to the left along the arc of a 200.00 foot radius, non-tangent curve, having a radial bearing of South 43° 19' 18" East, a central angle of 35° 37' 24", and an arc length of 124.35 feet; Thence leaving last said boundary along the boundary of Lot 2, Lot 4, Lot 5, Lot 6, Lot 8, Lot 7, and Lot 3 as shown on the final map entitled "The Railyards Unit No. 2", filed January 17, 2019 in Book 409 of Maps, at Page 1, Sacramento County Official Records, the following 15 courses:

1. Thence South 11° 03' 18" West, 84.46 feet;

2. Thence to the left along the arc of a 700.62 foot radius, tangent curve, having a central angle of 08° 23' 19", and an arc length of 102.58 feet;

3. Thence to the right along the arc of a 10.00 foot radius reversing curve, having a central angle of 77° 21' 54", and an arc length of 13.50 feet;

4. Thence South 09° 58' 08" East, 50.00 feet to the centerline of said Railyards Boulevard;

5. Thence along last said centerline, North 80° 01' 52" East, 1,191.72 feet;

6. Thence continuing along last said centerline, along the arc of a 3,000.00 foot radius, tangent curve, having a central angle of 13° 03' 08", and an arc length of 683.42 feet to the centerline of 5th Street as shown on last said map;

7. Thence along last said centerline, North 02° 27' 51" West, 44.17 feet;

8. Thence continuing along last said centerline, to the right along the arc of a 1,200.00 foot radius tangent curve, having a central angle of 21° 56' 49", and an arc length of 459.66 feet to the centerline of Summit Tunnel Avenue as shown on last said map;

9. Thence along last said centerline, South 83° 04' 02" West, 369.72 feet;

10. Thence continuing along last said centerline, to the right along the arc of a 1,360.50 foot radius, tangent curve, Title No.: 01005028A-KD
EXHIBIT "A"
Legal Description
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having a central angle of 06° 41' 48", and an arc length of 159.01 feet;

11. Thence continuing along last said centerline, South 89° 45' 50" West, 140.34 feet;

12. Thence continuing along last said centerline, to the right along the arc of a 560.50 foot radius tangent curve, having a central angle of 18° 54' 11", and an arc length of 184.92 feet;

13. Thence continuing along last said centerline, along the arc of a reverse curve, having a radius of 300.00 feet, a central angle of 25° 23' 05", and an arc length of 132.91 feet;

14. Thence continuing along last said centerline, south 83° 16' 56" West, 44.83 feet;

15. Thence leaving last said centerline, North 06° 43' 04" West, 45.00 feet to the boundary of last said Parcel 2; Thence along the boundary of last said Parcel 2 the following 8 courses:

1. Thence North 72° 24' 40" East, 160.74 feet;

2. Thence North 00° 22' 47" West, 347.74 feet;

3. Thence North 89° 37' 12" East, 488.40 feet;

4. Thence North 83° 24' 28" East, 808.60 feet;

5. Thence North 21° 12' 47" East, 96.89 feet;

6. Thence South 71° 36' 52" East, 470.45 feet;

7. Thence South 18° 18' 08" West, 40.00 feet;

8. Thence South 71° 36' 52" East, 443.51 feet to the point of beginning.

As shown as Parcel 2 on that certain document entitled "Certificate of Compliance For Lot Line Adjustment" recorded July 19, 2019, in Book 20190719, Page 0343, of Official Records APN: 002-0010-075-0000
PARCEL 3:

All that real property situated in the City of Sacramento, County of Sacramento, State of California and being a portion of that certain 203 161 acre parcel as shown on the map filed March 22, 1993 in Book 51 of Surveys, Page 10, Sacramento County Records and a portion of Parcel 2 as described in that certain Document Recorded September 30, 2015 in Book 20150930, Page 1633, said County Records more particularly described as follows Beginning at the most Easterly corner of 6th Street as granted to the City of Sacramento, Recorded April 26, 2012, in Book 20120426, Page 1168, Official Records of Sacramento County, thence along the boundary of said 6th Street, North 71° 06' 45" West, 36 50 feet, thence leaving said boundary, North 18° 52' 39" East, 65 58 feet to the centerline of Railyards Boulevard (103 foot wide public road), as described in that certain Document Recorded August 18, 2016, in Book 20160818, Page 1406, Official Records of Sacramento County, thence along said centerline, to the right, along the arc of a non-tangent curve, concave to the Southwest, having a radial bearing of North 14° 38' 58" East, a radius of 3000 00 feet, a central angle of 03° 42' 23", and an arc length of 194 06 feet, thence continuing along said centerline and extension thereof, South 71° 38' 43" East, 221 23 feet to the monument line of 7th Street as shown on that certain map, filed July 1, 2004, in Book 66 of Surveys, Page 15, Official Records of Sacramento County, thence along said monument line, to the left along the arc of a non-tangent curve, concave to the Southeast, having a radial bearing of North 68° 41' 13" West, a radius of 8500 00 feet, a central angle of 02° 57' 49", and an arc length of 439 65 feet, thence leaving said monument line, North 71° 33' 12" West, 371 36 feet to a point on the East boundary of said 6th Street, thence along said East boundary, North 18° 58' 32" East, 15 30 feet, thence continuing along said East boundary, North 18° 53' 15" East, 351 38 feet to the point of beginning.

As shown as Parcel 1 on that certain document entitled "Certificate of Compliance For Lot Line Adjustment" recorded October 17, 2018 in Book 20181017, Page 797, of Official Records APN: 002-0010-069-0000
Title No.: 01005028A-KD
EXHIBIT "A"
Legal Description
(continued)
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PARCEL 4:

All that real property situated in the City of Sacramento, County of Sacramento, State of California being a portion of Parcel 'A' as said parcel is shown on that parcel map filed for record in the office of the recorder of said County in Book 120 of parcel maps, at Page 10 and being all of Parcel One as described in that certain Grant Deed from IA Sacramento Holdings, LLC, a Delaware Limited Liability Company formerly known as IA Sacramento Development, LLC a Delaware Limited Liability Company to Downtown Railyard Venture, LLC, a Delaware Limited Liability Company, recorded September 30, 2015 in Book 20150930, Page 1633, Sacramento County Official Records and all of Parcel 1 as described in that Grant Deed from the City of Sacramento, a Municipal Corporation to Downtown Railyard Venture, LLC, a Delaware Limited Liability Company, recorded May 8, 2019 in Book 20190508, at Page 1264, Official Records of said County.

Excepting therefrom all that certain property described in that Grant Deed to Sacramento Municipal Utility District Recorded October 1, 2015 in Book 20151001, at Page 0936, Official Records of said County.

Further excepting therefrom the following described property:

Commencing at the centerline intersection of 7th Street and 'G' Streets, both public roads, said point being marked by a spike with a washer stamped LS7820" thence from said point of commencement along the centerline of said 'G' Street, North 71° 17' 19" West, 40.00 feet to the intersection of said centerline and the East boundary line of said Parcel 'A' and said Parcel One; thence along said East boundary line, North 18° 21' 07" East, 420.70 feet to the intersection of said East line and the centerline of 'F' Street, a public road; thence from said point of beginning and leaving said East line along said centerline, North 71° 01' 21" West, 169.92 feet; thence continuing along last said centerline and the arc of a curve to the left, concave to the South and having a radius of 5,000.00 feet, a central angle of 00° 07' 44" and an arc length of 11.25 feet; thence leaving last said centerline along a line parallel with and distant 135.00 feet East, measured at right angles, from the East right-of-way line of 6th Street, a public road, North 18° 27' 01" East, 254.89 feet; thence, North 40° 03' 39" West, 116.70 feet to a point in the North line of said Parcel One; thence along said North line the following two (2) courses and distances:
(1) North 49° 53' 46" East, 276.24 feet;
(2) North 79° 26' 16" East, 190.28 feet;
Thence leaving said line along the East line of said Parcel 'A' and said Parcel One the following three (3) courses and distances:
(1) Along the arc of a curve to the left, concave to the Southeast from a radius point which bears South 51° 02' 56" East and having a radius of 347.00 feet, a central angle of 11° 58' 21" and an arc length of 72.51 feet; (2) South 39° 38' 31" West, 34.94 feet;
(3) South 18° 21' 07" West, 542.81 feet to the point of beginning.

As shown as Parcel A on that certain document entitled "Certificate of Compliance For Lot Line Adjustment" recorded October 29, 2019, in Book 20191029, Page 0678, of Official Records APN: 002-0010-076-0000
PARCEL 5:

All that real property situated in the City of Sacramento, County of Sacramento, State of California and being a portion of Parcel 'A' as shown on that certain parcel map filed for record in the office of the recorder of said County in Book 120 of parcel maps, at Page 10 and a portion of Parcel One as described in that certain Grant Deed from Title No.: 01005028A-KD
EXHIBIT "A"
Legal Description
(continued)
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IA Sacramento Holdings, LLC, a Delaware Limited Liability Company formerly known as IA Sacramento Development, LLC a Delaware Limited Liability Company to Downtown Railyard Venture, LLC, a Delaware Limited Liability Company, Recorded September 30, 2015 in Book 20150930, Page 1633, Sacramento County Official Records, described as follows:

Commencing at the centerline intersection of 7th Street and 'G' Streets, both public roads, said point being marked by a spike with a washer stamped "LS7820" thence from said point of commencement along the centerline of said 'G' Street, North 71° 17' 19" West, 40.00 feet to the intersection of said centerline and the East boundary line of said Parcel 'A' and said Parcel One; thence along said East boundary line, North 18° 21' 07" East, 420.70 feet to the intersection of said East line and the centerline of 'F' Street, a public road; thence from said point of beginning and leaving said East line along said centerline, North 71° 01' 21" West, 169.92 feet; thence continuing along last said centerline and the arc of a curve to the left, concave to the Southwest and having a radius of 5,000.00 feet, a central angle of 00° 07' 44" and an arc length of 11.25 feet; thence leaving last said centerline along a line parallel with and distant 135.00 feet East, measured at right angles, from the East right-of-way line of 6th Street, a public road, North 18° 27' 01" East, 254.89 feet; thence, North 40° 03' 39" West, 116.70 feet to a point in the North line of said Parcel One; thence along said North line the following two (2) courses and distances:
(1) North 49° 53' 46" East, 276.24 feet;
(2) North 79° 26' 16" East, 190.28 feet;
Thence leaving said line along the East line of said Parcel 'A' and said Parcel One the following three (3) courses and distances:
(1) along the arc of a curve to the left, concave to the Southeast from a radius point which bears South 51° 02' 56" East and having a radius of 347.00 feet, a central angle of 11° 58' 21" and an arc length of 72.51 feet; (2) South 39° 38' 31" West, 34.94 feet;
(3) South 18° 21' 07" West, 542.81 feet to the point of beginning.

As shown as Parcel B on that certain document entitled "Certificate of Compliance For Lot Line Adjustment" recorded October 29, 2019, in Book 20191029, Page 0678, of Official Records APN; 002-0010-077-0000
PARCEL 6:

Beginning at a point of the Southerly line of North B Street, which point is located as follows: Commencing at the Southeast corner of that tract of land described in deed from Bank of America National Trust and Savings Association to the Merchants National Bank as recorded August 5, 1932, in Book 379 of Official Records at Page 470, which corner is also the Northeast corner of that 10 acre tract described in deed from L.M. Billings to Central Pacific Railroad Company as recorded November 7, 1892, in Book 143 of Deeds, at Page 79, Sacramento, County Records, and running thence along the Easterly line of said Bank property North 21°30' East 17.00 feet to the Southerly line of North B Street; thence along said Southerly line north 71°19' West 190.00 feet to said point of beginning; thence South 18°41' West 105.93 feet to the Southerly line of said Bank Property; thence along said Southerly line South 83°30' West 44.20 feet; thence along North 10°41' East 124.73 feet to the Southerly line of North B Street; thence South 71°19' East 40.00 feet to the point of beginning.

APN: 001-0064-011-0000
PARCEL 7:

Title No.: 01005028A-KD
EXHIBIT "A"
Legal Description
(continued)
CLTA Preliminary Report Form - Modified (11.17.06)
Printed: 06.02.21 @ 01:16 PM by
SCA0002402.doc / Updated: 07.10.19
9 CA----SPS-1-21-01005028A
All that portion of Swamp and Overflowed Lands Survey No. 926, Sacramento County Surveys located in Sections 35 and 36 in Township 9 North, Range 4 East, M.D.B.&M., described as follows:

Commencing at a point on the Southerly line of North B Street of the City of Sacramento, from which point the Southeast corner of that certain tract of land described in a Deed dated July 22, 1938, recorded August 5, 1932, in Book 397 of Official Records, at page 470, Sacramento County Records, executed by Bank of America National Trust and Savings Association to The Merchants National Bank of Sacramento, (said Southeast corner being also the Northeast corner of the ten acre tract described in a Deed recorded November 7, 1892, in Book 143 of Deeds, at Page 79, executed by L. M. Billings to the Central Pacific Railroad Company) bears South 71°19' East (measured along the Southerly line of said North B Street) 150.00 feet and South 21°30' West 170.00 feet distant; thence from said point of commencement, South 18°41' West 87.12 feet to the Southerly line of the Tract of land so conveyed to the Merchants National Bank; thence; along said Southerly line so conveyed South 83°30' West

44.20 feet; thence; North 18°41' East 105.93 feet to a point on the Southerly line of said North B Street; thence; along the Southerly line of said North B Street, South 71°19' East 40.00 feet to the point of commencement.

APN: 001-0064-012-0000
PARCEL 8:

All that portion of Swamp and Overflowed Lands Survey No. 926, Sacramento County Surveys, located in Section 35 and 36 Township 9 North, Range 4 East M.D.B.&M, described as follows:

Commencing at a point on the Southerly line of North B Street of the City of Sacramento, from which point the Southeast corner of that certain tract of land described in a Deed dated July 22, 1932, recorded August 5, 1932, in Book 397 of Official Records, at page 470, Sacramento County Records, executed by Bank of America National Trust and Savings Association to the Merchant National Bank of Sacramento (said Southeast corner being also the Northeast corner of the ten acre tract described in a Deed recorded November 7, 1892, in Book 143 of Deeds, at Page 79, Sacramento County Records, executed by L. M. Billings to Central Pacific Railroad Company) bears South 71°19' East (measured along the Southerly line of said North B Street) 110.00 feet South 21°30" West

17.00 feet distant; thence South 18°41' West 68.31 feet to the Southerly line of the tract of land so conveyed South 83°30' West 44.20 feet; thence North 18°41' East 87.12 feet to a point on the Southerly line of said north B Street; thence, along the Southerly line of said North B Street, South 71°19' East 40.00 feet to the point of commencement.

APN: 001-0064-013-0000
PARCEL NINE:

Lots 1 through 8 inclusive as shown on the map of the Railyards Unit No. 2 filed January 17, 2019, Map Book 409,

Page 1 ends

Sacramento City CouncilAugust 23, 2022

Sacramento City Council
August 23, 2022