Consequently, neither the absence of, nor the establishment of, design criteria with respect to any particular condition means that the applicable governmental agency has evaluated the condition and has established design criteria in the situations in which the criteria are needed to preserve value, or has established the criteria at levels that will preserve value. To the contrary, the City expects that one or more of such conditions may occur and may result in damage to improvements of varying seriousness; that the damage may entail significant repair or replacement costs; and that repair or replacement may never occur because of the cost, because repair or replacement will not facilitate habitability or other use, or because other considerations preclude repair or replacement. Under any of these circumstances, the actual value of the parcels might depreciate or disappear, notwithstanding the establishment of design criteria for any such condition.
In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The property within Improvement Area No. 1 is not located in an Alquist Priolo Earthquake Study Zone and is not located within one-half mile of an active earthquake fault.
In December 2020 and January 2023, significant rainstorms caused flooding in certain parts of the County. The area within Delta Shores (including Improvement Area No. 1) did not experience flooding and was not impacted by the flooding which occurred in other parts of the County.
In recent years, wildfires have caused extensive damage throughout the State. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires which occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. Additionally, property located adjacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property. Improvement Area No. 1 is not located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a high fire hazard severity zone.
Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator
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is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming the owner, will become obligated to remedy the condition just as is the seller.
Further, it is possible that liabilities may arise in the future with respect to any of the parcels resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency and the willingness or ability of the owner of any parcel to pay the Special Tax installments.
The value of the Taxable Property within Improvement Area No. 1, as set forth in the various tables in this Official Statement, does not reflect the presence of any hazardous substance or the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the property. The Developer has represented to the City that it is not aware of any hazardous substance condition of the property within Improvement Area No. 1. The City has not independently determined whether any owner (or operator) of any of the parcels within Improvement Area No. 1 has such a current liability with respect to any such parcel; nor is the City aware of any owner (or operator) who has such a liability. However, it is possible that such liabilities do currently exist and that the City is not aware of them.
Proximity to Wastewater Treatment Plant
Improvement Area No. 1 is located approximately 1.5 miles from the property on which the Sacramento Regional County Sanitation District’s Regional Wastewater Treatment Plant (the “Treatment Plant”) is located. The Treatment Plant provides secondary wastewater treatment and disposal of substantially all wastewater generated by sewer systems of the cities of Sacramento and Folsom and the Sacramento Area Sewer District. Given the proximity of the Treatment Plant, there is a heightened potential for the property in Improvement Area No. 1 to be impacted by unintended discharge, spillage or overflow events occurring at the Treatment Plant. Such events could result in nuisance (e.g. odors) and potentially property damage. Such events could have a negative impact on property value in Improvement Area No. 1.
Payment of the Special Tax is not a Personal Obligation of the Property Owners An owner of Taxable Property is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the Taxable Property. If the value of the parcel of Taxable Property is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the City has no recourse against the property owner.
Property Values
The value of the property within Improvement Area No. 1 is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of the Special Tax, the City’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Tax. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Tax. See “IMPROVEMENT AREA NO. 1 — Value-to-Lien Ratios.”
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The Appraisal Report does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives, an economic downturn, any potential limitations on development occurring due to time delays, an inability of any landowner to obtain any needed development approval or permit, the presence of hazardous substances or other adverse soil conditions within Improvement Area No. 1, the listing of endangered species or the determination that habitat for endangered or threatened species exists within Improvement Area No. 1, or other similar situations.
Prospective purchasers of the Bonds should not assume that the land within Improvement Area No. 1 could be sold for the amount stated in the Appraisal Report at a foreclosure sale as a result of delinquencies in the Special Tax. In arriving at the estimate of market value by ownership, the Appraiser assumes that any sale will be sold in a competitive market after a reasonable exposure time; the Appraiser also assumes that neither the buyer or seller is under duress, which is not always true in a foreclosure sale. See APPENDIX B — “APPRAISAL REPORT” for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser’s assumptions to be untrue could result in a reduction of the value of the land within Improvement Area No. 1 below that estimated by the Appraiser.
The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value.
No assurance can be given that any bid will be received for a parcel with delinquencies in the Special Tax offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquencies in the Special Tax. See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Covenants of the City — Foreclosure of Special Tax Liens.” Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax may be affected by whether the owner (1) was given due notice of the Special Tax authorization when the owner purchased the parcel; (2) was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate, and the risk of such a levy: and (3) has the ability at the time of such a levy to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special Tax to be recorded in the Office of the Recorder for the County against each parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within Improvement Area No. 1 or lending of money thereon.
The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a special tax under the Act of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6(b) requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.
Special Tax Collections
Under provisions of the Act, the Special Tax, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties within Improvement Area No. 1 on
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the regular ad valorem property tax bills sent to owners of such properties by the County Tax Collector. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.
See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Covenants of the City — Foreclosure of Special Tax Liens” for a discussion of the provisions which apply, and procedures which the City is obligated to follow under the Indenture, in the event of delinquencies in the payment of the Special Tax. See “— Bankruptcy and Foreclosure” for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and assessment and limitations on the City’s ability to foreclosure on the lien of the Special Tax in certain circumstances.
FDIC/Federal Government Interests in Properties
General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to the Special Tax within Improvement Area No. 1 but does not pay taxes and assessments levied on the parcel (including the Special Tax), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of delinquencies in the payment of the Special Tax, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Tax and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Tax within Improvement Area No. 1, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.
FDIC. If any financial institution making any loan which is secured by real property within Improvement Area No. 1 is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid amounts of the Special Tax may be limited. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will
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pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.
The Policy Statement states that the FDIC generally will not pay non-ad valorem property taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. The special taxes imposed under the Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from special taxes under the Act.
The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of the Special Tax on a parcel within Improvement Area No. 1 in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Tax to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Bond Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Bonds.
Bankruptcy and Foreclosure
Bankruptcy, insolvency and other laws generally affecting creditors’ rights could adversely impact the interests of owners of the Bonds. The payment of property owners’ taxes and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. See “SOURCES OF PAYMENT FOR THE BONDS— Special Tax—Foreclosure Covenant.” In addition, the prosecution of a foreclosure could be delayed due to many reasons, including crowded local court calendars or lengthy procedural delays.
Although a bankruptcy proceeding would not cause the Special Tax to become extinguished, the amount of any Special Tax lien could be modified if the value of the property falls below the value of the lien.
If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in prosecuting Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of delinquent Special Tax installments and the possibility of delinquent Special Tax installments not being paid in full.
On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property.
Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be “administrative expenses” of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes.
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The Bankruptcy Reform Act of 1994 (the “Bankruptcy Reform Act”) included a provision which excepts from the Bankruptcy Code’s automatic stay provisions, “the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state if such tax comes due after the filing of the petition [by a debtor in bankruptcy court].” This amendment effectively makes the Glasply holding inoperative as it relates to ad valorem real property taxes. However, it is possible that the original rationale of the Glasply ruling could still result in the treatment of post-petition special taxes as “administrative expenses,” rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings.
According to the court’s ruling, as administrative expenses, post-petition taxes would be paid, assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad valorem property taxes.
The Act provides that the Special Tax is secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem property taxes. No case law exists with respect to how a bankruptcy court would treat the lien for the Special Tax levied after the filing of a petition in bankruptcy court. Glasply is controlling precedent on bankruptcy courts in the State. If the Glasply precedent was applied to the levy of the Special Tax, the amount of the Special Tax received from parcels whose owners declare bankruptcy could be reduced.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture or in the event interest on the Bonds becomes included in gross income for federal income tax purposes. Pursuant to the Indenture, the Trustee is given the right for the equal benefit and protection of all Holders of the Bonds similarly situated to pursue certain remedies described in APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Events of Default and Remedies.”
Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Indenture with respect to compliance with certain provisions of the Internal Revenue Code of 1986, as amended. Should such an event of taxability occur, the Bonds are not subject to early redemption as a result of such event and will remain outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture.
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the City has committed to provide certain statutorily required financial and operating information, there can be no assurance that such information will be available to Holders on a timely basis. See “CONTINUING DISCLOSURE.” Any failure to provide annual financial information, if required, does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects
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connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.
Proposition 218
An initiative measure commonly referred to as the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the California Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.” The provisions of the Initiative as they may relate to community facilities district are subject to interpretation by the courts. The Initiative could potentially impact the Special Tax available to the City to pay the principal of and interest on the Bonds as described below.
Among other things, Section 3 of Article XIIIC states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:
“Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution.” Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Tax if such reduction would interfere with the timely retirement of the Bonds.
It may be possible, however, for voters or the City Council to reduce the Special Tax in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of the Special Tax that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Tax in amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance can be given with respect to the levy of the Special Tax for Expenses.
The interpretation and application of Article XIII C and Article XIII D will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See “SPECIAL RISK FACTORS — Limitations on Remedies.” Litigation with Respect to Community Facilities Districts Shapiro. The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro (2014) 228 Cal.App.4th 756 (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (“San Diego”). The CCFD is a financing district much like a community facilities district established under the
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provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.
The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district.
Horizon. The Sacramento County Superior Court issued a ruling in Horizon Capital Investments, LLC v. City of Sacramento et al. (Case No. 34-2017-80002661) which as described below, involved an election to approve the levy of a special tax within a community facilities district (“CFD”) formed under the Act.
In 2017, the City initiated proceedings to form a CFD to finance certain costs to operate and maintain a streetcar line. As permitted by the Act, the proposed district included non-contiguous parcels of non- residential property. Because there were fewer than 12 registered voters residing within the territory of the proposed CFD, the City Council submitted the special tax proposed to be levied within the proposed CFD to the owners of land within the proposed CFD, as required by Section 53326(c) of the Act. The proposed special tax received the requisite two-thirds vote in the landowner election.
Petitioners Horizon Capital Investments, LLC et al. filed a writ of mandate and complaint for reverse validation and declaratory relief. Petitioners argued, and the superior court agreed in its final ruling, that under section 4(a) of article XIII A of the California Constitution (which provides that “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district [sic], may impose special taxes on such district…”) the phrase “qualified electors” means the registered voters of the entire City and not just the owners of the property within the boundaries of the proposed CFD. Citing the San Diego Decision, the ruling states that the phrase “qualified electors of the district” refers to the registered voters of the entity imposing the special tax, which in this case was the City. Because the vote within the proposed CFD was by landowners only and not by all registered voters in the City, the final ruling states that the special tax is invalid.
The superior court’s final ruling is not binding upon other courts within the State and does not directly apply to the District, the Special Tax, or the Bonds. Although the City disagrees with the final ruling on a number of grounds, the City decided not to appeal.
The Special Tax Election in Improvement Area No. 1. With respect to the San Diego Decision, the facts of such case show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The elections held in Improvement Area No. 1 had less than 12 registered voters at the time of the election to authorize the Special Tax. In the San Diego Decision, the court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the court’s holding in the San Diego Decision does not apply to the Special Tax election in Improvement Area No. 1. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. The petitioners in Horizon filed the writ of mandate within 30 days of the landowner election. Landowners in Improvement Area No. 1 approved the Special Tax to be levied in accordance with the Amended Rate and Method on February 1, 2022. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings, and
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court decisions, the City believes that no successful challenge to the Special Tax being levied in accordance with the Amended Rate and Method may now be brought. In connection with the issuance of the Bonds, Bond Counsel expects to deliver its opinion in the proposed form attached hereto as Appendix D.
Ballot Initiatives
Articles XIII A, XIII B, XIII C and XIII D were adopted pursuant to measures qualified for the ballot pursuant to California’s constitutional initiative process and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities. On March 6, 1995, in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The adoption of any such initiative or legislation might place limitations on the ability of the State, the City, or local districts to increase revenues or to increase appropriations or on the ability of the Developer and KB Home within Improvement Area No. 1 to complete the remaining proposed development within Improvement Area No. 1.
Limitations on Remedies
Remedies available to the owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of interest on the Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The Bonds are not subject to acceleration. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners.
Potential Early Redemption of Bonds from Prepayments or Bond Proceeds Property owners within Improvement Area No. 1, including the Developer, KB Home, Meritage and any future individual property owner, are permitted to prepay their Special Tax obligation at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping community facilities district. Such prepayments will result in a redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of the prepayment. The resulting redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption “THE BONDS—Redemption— Extraordinary Redemption from Special Tax Prepayments.”
Cybersecurity
The City relies on computers and technology to conduct its operations. The City and its departments face cyber threats from time to time, including but not limited to hacking, viruses, malware, and other attacks on computers and other sensitive digital networks and systems. No assurances can be given that the City’s security and operational control measures will guard against all cyber threats and attacks. The results of any attack on the City’s computer and information-technology systems could adversely affect the City’s operations and damage its digital networks and systems, and potential losses from such attacks, as well as the costs of defending against future attacks, could be substantial. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of Special Tax and the Trustee. No assurance can be given that the City
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and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
CONTINUING DISCLOSURE
City Continuing Disclosure
The City will execute a continuing disclosure certificate (the “Continuing Disclosure Certificate”) for the benefit of the Holders and Beneficial Owners of the Bonds to provide certain financial information and operating data relating to Improvement Area No. 1 and the District and to provide notices of the occurrence of certain enumerated events (the “Listed Events”). The City, as the initial dissemination agent under the Continuing Disclosure Certificate, will file the City Reports and notices of Listed Events with EMMA. The specific nature of the information to be included in the City Reports and the notices of Listed Events is set forth in APPENDIX G — “FORM OF CONTINUING DISCLOSURE CERTIFICATE OF THE CITY.” The City will sign and deliver to the Underwriter the Continuing Disclosure Certificate to assist the Underwriter in complying with the Rule. The City will file the City Reports with EMMA no later than nine months after the end of the City’s fiscal year, which is currently June 30. The first Annual Report that will be due on March 31, 2025 will consist of this Official Statement and the City’s audited financial statements.
The City has previously entered into a number of continuing disclosure undertakings under the Rule in connection with the issuance of long-term obligations and has provided annual financial information and event notices in accordance with those undertakings. Certain continuing disclosure filings during the past five years were made after the required filing date, such as the City’s annual reports for one of the past five fiscal years with respect to a certain prior issue, and certain required information supplementing the City’s annual reports for certain prior issues (including the actuarial valuation reports for the Sacramento City Employees’ Retirement System and the City’s Public Employees’ Retirement System plans for two prior issues). The City did not file notices of late filings in the past five years. On two occasions, the City filed annual reports with tables determined later not to be entirely accurate. The City subsequently filed corrected tables.
The City believes it has established processes to ensure that in the future it will make its continuing disclosure filings as required.
The City is required to file certain financial statements with the City Reports. This requirement has been included in the Continuing Disclosure Certificate solely to satisfy the requirements of the Rule. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the City other than as described in this Official Statement. See “SOURCES OF PAYMENT FOR THE BONDS” and “SPECIAL RISK FACTORS.” The list of significant events the City has agreed to report includes items that have absolutely no application whatsoever to the Bonds. These items have been included in the list solely to satisfy the requirements of the Rule. Thus, any implication from the inclusion of these items in the list to the contrary notwithstanding, there are no credit enhancements applicable to the Bonds and there are no credit or liquidity providers with respect to the Bonds.
Developers Continuing Disclosure
To provide updated information with respect to the development within Improvement Area No. 1, the Developer, KB Home and Meritage will each execute a Continuing Disclosure Certificate (the “Developer Continuing Disclosure Certificates”), and will covenant to provide Developer Reports semiannually not later than June 15 and December 15 of each year beginning June 15, 2025, until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Certificate. Each of the Developer Reports will contain updates regarding the respective entity’s development within Improvement Area No. 1 as outlined in Section 4 of each of the Developer Continuing Disclosure Certificates attached as Appendix H. In addition to the Developer Reports, the Developer, KB Home and Meritage will agree to provide notices of certain events set forth in their respective Developer Continuing Disclosure Certificate.
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TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX D hereto.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The City has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants.
Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds.
Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
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Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts.
Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the requirements of the Code.
Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the Beneficial Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process.
Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the City or the Beneficial Owners to incur significant expense.
Payments on the Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate Beneficial Owner of Bonds may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.
LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City. A complete copy of the proposed form of
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Bond Counsel opinion is attached hereto as Appendix D. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the City by the Office of the City Attorney.
Stradling Yocca Carlson & Rauth LLP, is serving as Disclosure Counsel to the City.
ABSENCE OF LITIGATION
In connection with the issuance of the Bonds, the Office of the City Attorney will deliver an opinion to the effect that, to its actual knowledge as of the date of delivery of the Bonds, the City has not been served with process in, and has not been overtly threatened with, any action, suit, proceeding, inquiry or investigation before or by any court, public board or body (a) that contests in any way the completeness or accuracy of this Official Statement; (b) that seeks to contest the validity of the Special Tax or to restrain or enjoin the collection of the Special Tax; (c) in which an unfavorable decision, ruling or finding is likely to have a material adverse effect on the City’s ability to complete the transactions contemplated by the Bonds, the Indenture or this Official Statement; or (d) in which an unfavorable decision, ruling or finding is likely to have a material adverse effect on the validity or enforceability of the Bonds or the Indenture.
MUNICIPAL ADVISOR
The City has retained Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”), as municipal advisor in connection with the issuance and sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement or any of the other legal documents, and further the Municipal Advisor does not assume any responsibility for the information, covenants and representations with respect to the federal income tax status of the Bonds, or the possible impact of any current, pending or future actions taken by any legislative or judicial bodies or rating agencies.
NO RATING
The City has not made and does not contemplate applying to any rating agency for the assignment of a rating to the Bonds.
UNDERWRITING
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated. The Underwriter has agreed to purchase the Bonds at a price of $___________, being $__________ aggregate principal amount thereof, [plus/less] a [net] original issue [premium/discount] of $__________ and less Underwriter’s discount of $__________. The purchase contract relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the purchase contract, the approval of certain legal matters by counsel and certain other conditions.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering price may be changed from time to time by the Underwriter.
FINANCIAL INTERESTS
The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel, the Trustee and Underwriter’s Counsel are contingent upon the issuance and delivery of the Bonds. The fees being paid to the Appraiser, Municipal Advisor, and to the Special Tax Consultant are not contingent upon the issuance and
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delivery of the Bonds. From time to time, Bond Counsel and Disclosure Counsel represent the Underwriter on matters unrelated to the Bonds.
PENDING LEGISLATION
The City is not aware of any significant pending legislation which would have material adverse consequences on the Bonds or the ability of the City to pay the principal of and interest on the Bonds when due.
ADDITIONAL INFORMATION
So far as any statements made in this Official Statement involve matters of opinion, assumptions, projections, anticipated events or estimates, whether or not expressly stated, they are set forth as such and not as presentations of fact, and actual results may differ substantially from those set forth therein. Neither this Official Statement nor any statement that may have been made orally or in writing is to be construed as a contract with the Holders of the Bonds.
The summaries of certain provisions of the Bonds, statutes and other documents or agreements referred to in this Official Statement do not purport to be complete, and reference is made to each of them for a complete statement of their provisions. Copies are available for review by making requests to the City.
The appendices are an integral part of this Official Statement and must be read together with all other parts of this Official Statement.
The distribution of this Official Statement has been authorized by the City.
CITY OF SACRAMENTO
By:
City Treasurer
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APPENDIX A
AMENDED AND RESTATED
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
The following sets forth the Amended and Restated Rate and Method of Apportionment for the levy and collection of Special Taxes of Improvement Area No. 1 of City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento. An Annual Special Tax shall be levied on and collected in Improvement Area No. 1 each Fiscal Year, in an amount determined through the application of the Amended and Restated Rate and Method of Apportionment described below. All of the real property in Improvement Area No. 1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.
A Special Tax as hereinafter defined shall be levied on each Assessor’s Parcel of Taxable Property within Improvement Area No. 1 of the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California and collected each Fiscal Year commencing no earlier than Fiscal Year 2021-2022 in an amount determined through the application of the procedures described below. All of the real property within Improvement Area No. 1, unless exempted by law or the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meaning:
“Acre or Acreage” means the land area of an Assessor’s Parcel as shown on County records, such as on an Assessor’s Parcel Map and/or in the Assessor’s Data, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel or calculated using available spatial data and GIS, all as determined by the CFD Administrator. The square footage of an Assessor’s Parcel is equal to the Acreage of such parcel multiplied by 43,560. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. “Accessory Dwelling Unit” means a secondary residential unit of limited size, as defined in California Government Code Section 65852.2 and/or meeting the criteria outlined in Sacramento City Code Section 17.228.105, as may be amended from time-to-time. “Administrative Expenses” means the actual or reasonably estimated costs directly related to the administration of Improvement Area No. 1 including, but not limited to, the following: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Tax (whether by the County, the City, or otherwise); the costs of remitting the Special Tax to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, Improvement Area No. 1, or any designee thereof of complying with arbitrage rebate requirements or responding to questions from the IRS pertaining to any Bonds or any audit of any Bonds by the IRS; the costs to the City, Improvement Area No. 1, or any designee thereof of providing continuing disclosure regarding the Bonds pursuant to applicable state or federal securities law; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Tax; the costs of the City, Improvement Area No. 1, or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City, or Improvement Area No. 1 for any other administrative
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purposes, including, but not limited to, attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of any delinquent installment of the Special Tax. “Airspace Parcel” means a property with an assigned Assessor’s Parcel number that constitutes vertical space on an underlying land Parcel.
“Assessor’s Data” means the property characteristic data compiled and maintained by the County Assessor for each Assessor’s Parcel, including, but not limited to, Assessor’s Parcel Number, Use Code, and Units.
“Assessor’s Parcel” or “Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel number.
“Assessor’s Parcel Map” means an official map of the County Assessor designating parcels by an Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.1.a., or the Special Tax for each Land Use Class of Final Subdivision Property, as determined in accordance with Section C.1.b. “Authorized Facilities” means the public facilities authorized to be financed, in whole or in part, by Bonds or Special Tax revenue dedicated to Pay-As-You-Go Expenditures for Improvement Area No. 1.
“Backup Special Tax” means the Backup Special Tax amount set forth in Section C.1.c. “Bonds” means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred for Improvement Area No. 1 under the Act to fund the Authorized Facilities. “Bond Year” means a one-year period beginning on September 2nd in each year and ending on September 1st in the following year, unless defined differently in the applicable Indenture. “Boundary Map” means that map recorded with the County Recorder’s office on August 23, 2019, in Book 129 at Page 9 as Document Number 201908230413.
“CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Tax. “CFD” means Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California.
“City” means the City of Sacramento.
“Council” means the City Council of the City, acting as legislative body with respect to the CFD as contemplated by the Act.
“County” means the County of Sacramento.
“County Assessor” means the County of Sacramento, Office of the Assessor. “Developed Property” means all Assessor’s Parcels of Taxable Property for which a building permit has been issued prior to June 1st preceding the Fiscal Year in which the Special Tax is being levied.
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“Exempt Property” means all Assessor’s Parcels that are exempt from the Special Tax pursuant to Section E.
“Expected Revenue” means the expected Special Tax revenue from Developed Property within Improvement Area No. 1, as shown on the attached Exhibit 1. “Expected Units” means the expected number of Units on Developed Property within Improvement Area No. 1, as shown on the attached Exhibit 1.
“Final Subdivision” means a subdivision of property created by recordation of a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code Section 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property. “Final Subdivision Property” means, in any Fiscal Year, all property for which a Final Subdivision was recorded prior to June 1st of the preceding Fiscal Year and which has not yet become Developed Property.
“Fiscal Year” means the period starting July 1 and ending on the following June 30th• “GIS”, or geographic information system, means a system designed to capture, store, manipulate, analyze, manage, and present spatial or geographic data. “High-Density Residential Property” means, in any Fiscal Year, all Assessor’s Parcels of Developed Property with a density of 15 or greater Units per Acre. The assignment of the High-Density Residential Property Land Use Class to an Assessor’s Parcel shall be based upon reference to Exhibit 2 to this RMA showing the Villages within Improvement Area No. 1 designated as “HDR” or similar. “Improvement Area” means any of the three improvement areas shown on the Boundary Map of the CFD.
“Improvement Area No. 1” means Improvement Area No. 1 of the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California.
“Indenture” means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Table 1 and Table 2. “Low-Density Residential Property” means, in any Fiscal Year, all Assessor’s Parcels of Developed Property with a density of 7 or fewer Units per Acre. The assignment of the Low-Density Residential Property Land Use Class to an Assessor’s Parcel shall be based upon reference to Exhibit 2 to this RMA showing the Villages within Improvement Area No. 1 designated as “LDR” or similar. “Maximum Special Tax” means the maximum annual Special Tax, determined in accordance with the provisions of Section C, which may be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property.
“Medium-Density Residential Property” means, in any Fiscal Year, all Assessor’s Parcels of Developed Property with a density of 8-14 Units per Acre. The assignment of the Medium-Density
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Residential Property Land Use Class to an Assessor’s Parcel shall be based upon reference to Exhibit 2 to this RMA showing the Villages within Improvement Area No. 1 designated as “MDR” or similar. “Minimum Taxable Acreage” means 80.59 Acres for Improvement Area No. 1. “Mixed-Use Residential Property” means, in any Fiscal Year, all Assessor’s Parcels of Developed Property containing structures that have a mixture of residential and non-residential uses. The non-residential portions of the Parcel are not subject to the Special Tax. The assignment of the Mixed-Use Residential Property to an Assessor’s Parcel shall be based upon reference to Exhibit 2 to this RMA showing the Villages within Improvement Area No. 1 designated as “MU” or similar. “Non-Residential Property” means, in any Fiscal Year, all Assessor’s Parcels of Developed Property not classified as Low-Density Residential Property, Medium-Density Residential Property, High-Density Residential Property, or Mixed-Use Residential Property. “Open Space Property” means property within the boundaries of Improvement Area No. 1 which (a) has been designated with specific boundaries and Acreage on a Final Subdivision map as open space, a park, detention basin, or wetland restoration, (b) is classified by the County Assessor as open space, a park, detention basin, or wetland restoration, (c) has been irrevocably offered for dedication as open space, a park, detention basin, or wetland restoration to the federal government, the State of California, the County, the City, or any other public agency or nonprofit holding a conservation easement, or (d) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space, a park, detention basin, or wetland restoration. “Outstanding Bonds” mean all Bonds, which remain outstanding as defined in the Indenture pursuant to which such Bonds were issued.
“Pay-As-You-Go Expenditure” means Special Tax revenue which is used or set aside for Authorized Facilities, including for Authorized Facilities to be constructed or acquired by the CFD. Pay-As-You- Go Expenditures may be included in the Special Tax Requirement until all Authorized Facilities have been constructed or acquired.
“Property Owner Association Property” means any property within the boundaries of Improvement Area No. 1 which is (a) owned by a property owner association or (b) designated with specific boundaries and Acreage on a Final Subdivision map as property owner association property. As used in this definition, a property owner association includes any master or sub-association. “Proportionately” means for Developed Property that the ratio of the Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal for all Assessor’s Parcels of Developed Property within Improvement Area No. 1. For Final Subdivision Property, Taxable Contingent Property, Tentative Map Property, or Undeveloped Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor’s Parcels of Final Subdivision Property, Taxable Contingent Property, Tentative Map Property, or Undeveloped Property within Improvement Area No. 1. “Public Property” means any property within the boundaries of Improvement Area No. 1 which (a) is owned by a public agency, (b) has been irrevocably offered for dedication to a public agency, or (c) is designated with specific boundaries and Acreage on a Final Subdivision map as property which will be owned by a public agency. For purposes of this definition, a public agency includes the federal government, the State, the County, the City or any other public agency, including school districts and public utilities.
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“RMA” means this Amended and Restated Rate and Method of Apportionment of Special Tax, which may be amended from time-to-time.
“Special Tax” means the annual special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement. “Special Tax Requirement” means that amount of Special Tax revenue required in any Fiscal Year for Improvement Area No. 1 to: (i) pay Administrative Expenses; (ii) pay annual debt service on all Outstanding Bonds due in the Bond Year beginning in such Fiscal Year; (iii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture, to the extent not included in a computation of the Special Tax Requirement for a previous Fiscal Year; (v) to the extent permitted by the Act, pay for reasonably anticipated delinquent installments of the Special Tax based on the delinquency rate for the Special Tax levied in the previous Fiscal Year; and (vi) account for Pay-As-You-Go Expenditures for the Authorized Facilities; less (vii) a credit for funds available to reduce the annual Special Tax levy as determined by the CFD Administrator pursuant to the Indenture. “State” means the State of California.
“Taxable Contingent Property” means any Assessor’s Parcel of Non-Residential Property, Open Space Property, Property Owner Association Property, Public Property, or other property that would otherwise be classified as Exempt Property pursuant to the provisions of Section E, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property located within Improvement Area No. 1 below the Minimum Taxable Acreage for Improvement Area No. 1.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of Improvement Area No. 1 that are not exempt from the Special Tax pursuant to law or Section E below. “Tentative Map” means a map that is made for the purpose of showing the design of a proposed subdivision, including the individual lots that are expected within the subdivision, as well as the conditions pertaining thereto. A Tentative Map is not based on a detailed survey of the property within the map and is not recorded with the County recorder’s office to create legal lots. “Tentative Map Property” means, in any Fiscal Year, all Parcels which are included within a Tentative Map that was approved prior to June 1 of the prior Fiscal Year. “Trustee” means the financial institution appointed pursuant to an Indenture to act as the trustee, fiscal agent, or paying agent or a combination thereof to administer a series of Bonds for and on behalf of Improvement Area No. 1 and the City under such Indenture. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Subdivision Property, Taxable Contingent Property, or Tentative Map Property.
“Unit” means an individual residential living space. The number of Units assigned to each Assessor’s Parcel may be determined by (i) referencing Assessor’s Data, (ii) site surveys and physical unit counts, and/or (iii) reviewing City building permit data. An Accessory Dwelling Unit shall not be considered a Unit for the purposes of the Special Tax.
“Use Code” means the six-digit use code assigned by the County Assessor to each Assessor’s Parcel.
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“Village” means an area, as shown on Exhibit 2 to the RMA, proposed for residential development for Low-Density Residential Property, Medium-Density Residential Property, High-Density Residential Property, or Mixed-Use Residential Property.
“Welfare Exempt Property” means any Parcel within the boundaries of Improvement Area No. 1 that is exempt from the Special Tax pursuant to Section 53340 (c) of the Act because the Parcel has received a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code.
During any time that Bonds are outstanding, property that was not classified as Welfare Exempt Property prior to the issuance of Bonds and was subject to the Special Tax prior to receiving the welfare exemption may no longer be categorized as Welfare Exempt Property regardless of whether the Assessor’s Parcel has been granted a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code by the County.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor’s Parcels of Taxable Property within Improvement Area No. 1 shall be (a) classified as Developed Property, Final Subdivision Property, Taxable Contingent Property, Tentative Map Property, or Undeveloped Property and (b) shall be subject to the levy of the annual Special Tax determined pursuant to Section C below.
C. MAXIMUM SPECIAL TAX RATE
1. Developed Property and Final Subdivision Property
The Maximum Special Tax for each Assessor’s Parcel of Developed Property and Final Subdivision Property shall be the greater of (1) the Assigned Special Tax described in Section C.1.a and C.1.b or (2) the Backup Special Tax computed pursuant to Section C.1.c.
a. Assigned Special Tax for Developed Property
The Assigned Special Tax for each Assessor’s Parcel of Developed Property is shown in Table 1.
TABLE 1
Assigned Special Tax for Developed Property
(Fiscal Year 2021-2022)
Land Use
Class Description
Assigned
Special Tax
1 Low-Density Residential Property $2,168 per Unit
2 Medium-Density Residential Property $1,745 per Unit
3 High-Density Residential Property $250 per Unit
4 Mixed-Use Residential Property $250 per Unit
5 Non-Residential Property $0
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b. Assigned Special Tax for Final Subdivision Property
The Assigned Special Tax for each Assessor’s Parcel of Final Subdivision Property is shown in Table 2.
TABLE 2
Assigned Special Tax for Final Subdivision Property
(Fiscal Year 2021-2022)
Land Use
Class Description
Assigned
Special Tax
1 Low-Density Residential Property $2,168 per Parcel
2 Medium-Density Residential Property $1,745 per Parcel 3 High-Density Residential Property $250 per Unit 1
4 Mixed-Use Residential Property $250 per Unit 1
5 Non-Residential Property $0
1 Per Unit expected on each Parcel of Final Subdivision Property.
c. Backup Special Tax (Fiscal Year 2021-2022)
The Backup Special Tax per Village for each Assessor’s Parcel of Developed Property and Final Subdivision Property, is calculated as follows:
Backup Special Tax Expected Revenue / Units on Developed Property and/or Units expected on Final Subdivision Property
For each Village, by reference to Exhibit 1, should the number of Units be less than the Expected Units when all Assessor’s Parcels are classified as Developed Property, the Backup Special Tax per Unit shall be adjusted so that the Backup Special Tax per Unit is sufficient to generate the Expected Revenue in any Fiscal Year. The CFD Administrator shall update Exhibit 1 with the revised Units and Expected Revenue to be derived from each Village.
Notwithstanding the foregoing, once an Assessor’s Parcel is used for private residential purposes (as determined by the Act), the Backup Special Tax for the Assessor’s Parcel cannot be increased because of future reductions in the number of Units on other Assessor’s Parcels.
The increases to the Backup Special Tax pursuant to Section C.1.e below would still apply to such Assessor’s Parcel.
d. Changes to Land Use Class
Prior to a bond sale, if a Land Use Class change is proposed or identified that will result in a change in the Expected Revenues, no action will be needed pursuant to this Section. Each Fiscal Year, the CFD Administrator shall update Exhibit 1 to show the revised Units and Expected Revenues if a Land Use Class change has been approved.
After a Bond sale, if a Land Use Class change is proposed or identified, the following must be applied:
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If the revenues calculated are higher than those reflected in Exhibit 1 or less than those calculated in Exhibit 1, but the reduction in Expected Revenues does not reduce debt service coverage below the required 110% debt service coverage, no further action is needed, and the CFD Administrator shall update Exhibit 1 to show the revised Expected Revenues.
If the revenues calculated are less than those reflected in Exhibit 1, and the CFD Administrator determines that the reduction in Expected Revenues would reduce debt service coverage below the required 110% debt service coverage the Special Tax levied on the Parcel subject to a Land Use Class change will need to be paid and one of the following shall occur:
(i) The landowner requesting the Land Use Class change may make a prepayment in an amount that will ensure that the reduced Expected Revenues are sufficient to meet the required 110% debt service coverage or (ii) If a prepayment is not selected, the Assigned Special Tax on the Parcel or Parcels subject to the Land Use Class change shall be increased proportionately until the Expected Revenues are sufficient to maintain the required 110% debt service coverage. Notwithstanding the foregoing, once an Assessor’s Parcel is used for private residential purposes (as determined pursuant to the Act), the Maximum Special Tax for the Assessor’s Parcel cannot be increased because of future Land Use Class changes for other Assessor’s Parcels.
e. Increase in the Assigned Special Tax and Backup Special Tax
On each July 1, commencing on July 1, 2022, the Assigned Special Tax and the Backup Special Tax for Developed Property and Final Subdivision Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
2. Taxable Contingent Property, Tentative Map Property, and Undeveloped Property
a. Maximum Special Tax
The Maximum Special Tax for each Assessor’s Parcel of Taxable Contingent Property, Tentative Map Property, and Undeveloped Property shall be $9,705 per Acre In Fiscal Year 2021-2022.
b. Increase in the Maximum Special Tax
On each July 1, commencing on July 1, 2022, the Maximum Special Tax for Taxable Contingent Property, Tentative Map Property, and Undeveloped Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing no earlier than Fiscal Year 2021-2022 and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement, and shall levy the Special Tax until the amount of the Special Tax equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property at a rate up to 100% of the greater of the applicable Assigned Special Tax or the applicable Backup Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on all Final Subdivision Property at a
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rate up to 100% of the greater of the applicable Assigned Special Tax or the applicable Backup Special Tax for Final Subdivision Property.
Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied Proportionately on all Tentative Map Property at a rate up to 100% of the Maximum Special Tax for Tentative Map Property.
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on all Undeveloped Property at a rate up to 100% of the Maximum Special Tax for Undeveloped Property Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on all Taxable Contingent Property at a rate up to 100% of the Maximum Special Tax for Taxable Contingent Property.
Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor’s Parcel of Developed Property used for private residential purposes (as determined pursuant to the Act) in any Fiscal Year be increased as a consequence of the delinquency or default in the payment of the Special Tax by the owner or owners of any other Taxable Property by more than ten percent above the amount that would have been levied against such Assessor’s Parcel in such Fiscal Year had there been no delinquencies or defaults.
E. EXEMPTIONS
1. No Special Tax shall be levied on up to 20.10 Acres of Non-Residential Property, Open Space Property, Property Owner Association Property, and Public Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Non- Residential Property, Open Space Property, Property Owner Association Property, or Public Property.
2. For the following property types in excess of the 20.10 Acres exempted above, Non-Residential Property, Open Space Property, Property Owner Association Property, or Public Property that is not exempt from the Special Tax under this section, or pursuant to the Act, shall be classified as Taxable Contingent Property. Taxable Contingent Property shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Contingent Property.
3. No Special Tax shall be levied on Welfare Exempt Property. If a Parcel is no longer eligible to be classified as Welfare Exempt Property that would make such Assessor’s Parcel eligible to continue to be classified as Exempt Property, such Assessor’s Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property. Any property that is granted a welfare exemption when any Bonds are outstanding and was subject to the Special Tax prior to receiving the welfare exemption shall not be considered Welfare Exempt Property.
4. The Special Tax for any Developed Property, which would change classification to Public Property upon its transfer or dedication to a public agency, shall continue to be subject to the levy of the Special Tax as Developed Property.
5. If the use of an Assessor’s Parcel changes so that such Assessor’s Parcel is no longer eligible to be classified as one of the uses set forth in Section E.1. above that would make such Assessor’s Parcel eligible to continue to be classified as Exempt Property, such Assessor’s
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Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property.
6. If an Assessor’s Parcel designated as Low-Density Residential Property, Medium-Density Residential Property, High-Density Residential Property, or Mixed-Use Residential Property changes to Non-Residential Property, the Special Tax shall continue to be levied on such Non- Residential Property as if the Assessor’s Parcel was still classified as Low-Density Residential Property, Medium-Density Residential Property, High-Density Residential Property, or Mixed-Use Residential Property.
F. SPECIAL TAX APPEALS
Any property owner may file a written appeal of the Special Tax with the CFD Administrator claiming that the amount or application of the Special Tax is not correct. The appeal must be filed not later than one calendar year after having paid the Special Tax that is disputed, and the appellant must be current in all payments of the Special Tax. In addition, during the term of the appeal process, any Special Tax levied must be paid on or before the payment date established when the levy was made.
The appeal must specify the reasons why the appellant claims the amount of the Special Tax is not correct. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination.
If the property owner disagrees with the CFD Administrator’s decision relative to the appeal, the owner may then file a written appeal with the Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the Council requires the Special Tax to be modified or changed in favor of the property owner, no cash refund shall be made for the prior years’ Special Tax, but an adjustment shall be made to credit future Special Tax levies.
G. INTERPRETATIONS
The City may, by resolution or ordinance, interpret, clarify and/or revise this RMA to correct any inconsistency, vagueness, or ambiguity as it relates to the Special Tax, method of apportionment, classification of Parcels, or any definition used herein, as long as such correction does not materially affect the levy and collection of the Special Tax. In addition, the interpretation and application of any section of this document shall be at the City’s discretion.
H. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the CFD Administrator may, at the sole discretion of the City, directly bill the Special Tax, may collect the Special Tax at a different time or in a different manner as necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor’s Parcels of Taxable Property that are delinquent in the payment of the Special Tax.
I. PREPAYMENT OF SPECIAL TAX OBLIGATION
The following definitions apply to this Section I:
“CFD Public Facilities” means those public facilities authorized to be financed by Improvement Area No.1.
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“CFD Public Facilities Costs” means either $10,772,449 in costs for completed facilities/land dedications in 2021 dollars; plus $2,404,252 in costs for pending facilities/land dedications in 2021 dollars, which shall increase by the Construction Cost Index on July 1, 2022, and on each July 1 thereafter, or such lower number as shall be determined either by (a) the CFD Administrator as sufficient to finance the CFD Public Facilities, or (b) the Council concurrently with a covenant that it will not issue any more Bonds to be secured by Special Taxes levied under this RMA. “Construction Cost Index” means the annual percentage change in the Engineering News-Record Construction Cost Index for the City of San Francisco, measured as of June in the previous Fiscal Year. In the event this index ceases to be published, the Construction Cost Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of San Francisco. “Construction Fund” means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. “Future Facilities Costs” means the CFD Public Facilities Costs minus the portion of the CFD Public Facilities Costs previously funded from (a) proceeds of all previously issued Bonds, (b) interest earnings on the Construction Fund actually earned prior to the date of prepayment and (c) proceeds of the Special Tax dedicated to Pay-As-You-Go Expenditures. In no case, shall the Future Facilities Costs be less than zero.
“Outstanding Bonds” means all previously issued Bonds which will remain outstanding after the first principal payment date following the then current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax obligations.
1. Prepayment in Full
The Special Tax obligation of an Assessor’s Parcel of Developed Property, Final Subdivision Property, Taxable Contingent Property, Tentative Map Property, or Undeveloped Property may be prepaid and permanently satisfied as described herein; provided that there are no delinquent installments of the Special Tax with respect to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 45 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor’s Parcel.
Prepayment must be made not less than 75 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. The CFD Administrator may charge a fee for providing this service.
The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Future Facilities Amount
plus Redemption Premium
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
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As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:
Step Number:
1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
2. For Assessor’s Parcels of Developed Property other than Non-Residential Property, compute the Assigned Special Tax and Backup Special Tax. For Assessor’s Parcels of Final Subdivision Property, Tentative Map Property, and Undeveloped Property to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the number of Expected Units to be developed on that Assessor’s Parcel.
3. a. Divide the Assigned Special Tax computed pursuant to Step 2 by the total estimated Assigned Special Tax for Improvement Area No. 1 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all Expected Units through buildout of Improvement Area No. 1, excluding any Assessor’s Parcels which have prepaid the Special Tax obligation in full pursuant to Section I.1.
b. Divide the Backup Special Tax computed pursuant to Step 2 by the total estimated Backup Special Tax for Improvement Area No. 1 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all Expected Units through buildout of Improvement Area No. 1, excluding any Assessor’s Parcels which have prepaid the Special Tax obligation in full pursuant to Section I.1.
4. Multiply the larger quotient computed pursuant to Step 3.a or 3.b by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
5. Compute the current Future Facilities Costs.
6. Multiply the larger quotient computed pursuant to Step 3.a or 3.b by the total Future Facilities Costs to compute the amount of the Future Facilities Amount to be retired and prepaid (the “Future Facilities Amount”).
7. Multiply the Bond Redemption Amount computed pursuant to Step 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
8. Compute the amount needed to pay interest on the Bond Redemption Amount on the earliest redemption date for the Outstanding Bonds.
9. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment.
10. Subtract the amount computed pursuant to Step 9 from the amount computed pursuant to Step 8 (the “Defeasance Amount”).
11. Verify the administrative fees and expenses, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming the
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Outstanding Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”).
12. A reserve fund credit (the “Reserve Fund Credit’’) shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero.
13. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to Steps 3.a or 3.b by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the “Capitalized Interest Credit”).
14. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 4, 6, 7, 10 and 11, less the amount computed pursuant to Steps 12 and 13 (the “Prepayment Amount”).
15. From the Prepayment Amount, the amounts computed pursuant to Steps 4, 7, 10, and 13 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds and make debt service payments. The amount computed pursuant to Step 6 shall be deposited into the Construction Fund. The amount computed pursuant to Step 11 shall be retained by the City for the payment of Administrative Fees and Expenses.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment amount that is not $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments.
Any current-year Special Tax that has been placed on the County tax roll will remain on the tax roll.
Notwithstanding the foregoing, no prepayment will be allowed unless the amount of the Maximum Special Taxes that may be levied on Taxable Property both prior to and after the proposed prepayment is at least 1.1 times the annual debt service on all Outstanding Bonds in each succeeding Bond Year.
2. Prepayment in Part
The Special Tax obligation of an Assessor’s Parcel of Developed Property, Final Subdivision Property, Tentative Map Property, or Undeveloped Property for which a building permit has been issued may be partially prepaid in increments of 25%, 50%, or 75% of the Prepayment Amount calculated according to Section I.1, minus Administrative Fees and Expenses calculated according to Section I.1.
A partial prepayment can only occur once per Assessor’s Parcel. The amount of the prepayment shall be calculated as in Section I.1; except that a partial prepayment shall be calculated according to the following formula:
PP= ((PE -A) x F) + A
These terms have the following meaning:
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PP = the Partial Prepayment Amount
PE = the Prepayment Amount calculated according to Section I.1 A = the Administrative Fees and Expenses calculated according to Section I.1 F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Special Tax obligation.
The owner of an Assessor’s Parcel who desires to partially prepay the Special Tax obligation shall notify the CFD Administrator of (I) such owner’s intent to partially prepay the Special Tax obligation, (ii) the amount of partial prepayment expressed in increments of 25%, 50%, or 75% of the Prepayment Amount calculated according to Section I.1, minus Administrative Fees and Expenses calculated according to Section I.1, and (iii) the company or agency that will be acting as the escrow agent, if applicable. Partial prepayment must be made not less than 75 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such partial prepayment may be given to the Trustee pursuant to the Indenture. The CFD Administrator may charge a fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the CFD Administrator shall (i) distribute the funds remitted to it according to Step 15 of Section I.1, and (ii) indicate in the records of Improvement Area No. 1 that there has been a partial prepayment of the Special Tax obligation and that a portion of the Special Tax obligation equal to the outstanding percentage (1.00 - F) of the remaining Special Tax obligation shall continue to be authorized to be levied on such Assessor’s Parcel pursuant to Section D.
Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Maximum Special Taxes that may be levied on Taxable Property both prior to and after the proposed partial prepayment is at least 1.1 times the annual debt service on all Outstanding Bonds in each succeeding Bond year.
J. TERM OF SPECIAL TAX
The Special Tax shall be levied commencing in Fiscal Year 2021-2022 to the extent necessary to fully satisfy the Special Tax Requirement and shall not be levied after the 2065-2066 Fiscal Year
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EXHIBIT 1
EXPECTED UNITS/REVENUE PER VILLAGE FOR DEVELOPED PROPERTY (FISCAL YEAR 2021-22)
Land Use Class Village 1 Expected Units 2 Expected Revenue 3 1 LDR-1 81 $175,608
1 LDR-2 157 340,376
2 MDR-1 110 191,950
2 MDR-2 34 59,330
3 HDR-1 59 14,750
1 As shown on Exhibit 2 to this RMA.
2 There is a total of 441 Expected Units within Improvement Area No. 1. 3 The total Expected Revenue within Improvement Area No. 1 is $782,014, stated in Fiscal Year 2021-2022 dollars. On each July 1, commencing on July 1, 2022, the Expected Revenue shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year
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EXHIBIT 2
MAP OF VILLAGES WITHIN IMPROVEMENT AREA NO. 1
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APPENDIX B
APPRAISAL REPORT
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APPENDIX C
APPRAISAL REVIEW REPORT
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APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
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APPENDIX E
GENERAL INFORMATION ABOUT THE CITY OF SACRAMENTO AND THE
COUNTY OF SACRAMENTO
The following information is included only for the purpose of supplying general information regarding the City of Sacramento (the “City”) and the County of Sacramento (the “County”). This information is provided only for general informational purposes and provides prospective investors limited information about the City and the County and their economic base. The Bonds are not a debt of the County or the State or any of its political subdivisions, and the County, and the State and its political subdivisions are not liable therefor.
The Bonds are special limited obligations of the City payable solely from the Net Special Tax Revenues (as defined in the Official Statement) and other amounts as set forth in the Indenture.
General
The City is located at the confluence of the Sacramento and American Rivers in the south-central portion of the Sacramento Valley, a part of the State’s Central Valley. Although the City is approximately 75 air miles northeast of San Francisco, its temperature range is more extreme than that of most Northern California coastal cities, ranging from a daily average of 45 degrees Fahrenheit in January to 85 degrees Fahrenheit in July. Average elevation of the City is 30 feet above sea level.
Population
The following table lists population figures for the City, the County and the State as of January 1 for 2020 through 2024.
CITY AND COUNTY OF SACRAMENTO
Population Estimates
Calendar
Year
City of
Sacramento
County of
Sacramento
State of
California
2020 513,626 1,553,157 39,648,938
2021 518,067 1,580,120 39,327,868
2022 516,529 1,572,254 39,114,785
2023 519,466 1,576,639 39,061,058
2024 520,407 1,578,938 39,128,162
Source: State Department of Finance estimates (as of January 1).
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Industry and Employment
The unemployment rate in the Sacramento—Arden-Arcade—Roseville, CA Metropolitan Statistical Area (“Sacramento MSA”), which includes Sacramento, Placer, El Dorado, and Yolo Counties, was 4.3% in 2023. The table below provides information about employment rates and employment by industry type for the Sacramento MSA for calendar years 2019 through 2023. As of September 2024, the unemployment rate in the Sacramento MSA was 4.7%.
SACRAMENTO MSA
Civilian Labor Force, Employment and Unemployment
Calendar Years 2019 through 2023
Annual Averages
2019 2020 2021 2022 2023
Civilian Labor Force (1) 1,100,800 1,091,700 1,099,300 1,112,100 1,129,200 Employment 1,060,300 994,000 1,028,800 1,069,700 1,080,500 Unemployment 40,500 97,700 70,500 42,400 48,600
Unemployment Rate 3.7% 9.0% 6.4% 3.8% 4.3%
Wage and Salary Employment (2)
Agriculture 8,700 8,300 9,000 8,600 9,100
Natural Resources and Mining 500 600 700 500 500
Construction 69,400 70,200 74,100 77,100 74,700
Manufacturing 36,800 36,100 37,500 40,600 40,500
Wholesale Trade 28,600 26,500 26,400 28,300 28,500
Retail Trade 100,500 95,200 101,100 100,300 99,000
Transportation, Warehousing and
Utilities
32,200 34,300 37,100 40,800 41,600
Information 11,900 10,200 10,000 10,500 9,900
Finance and Insurance 35,200 34,800 34,300 33,000 30,500 Real Estate and Rental and Leasing 17,300 16,900 17,400 18,800 18,400 Professional and Business Services 137,400 132,500 136,700 139,700 134,400 Educational and Health Services 166,600 164,000 168,400 175,600 188,700 Leisure and Hospitality 109,600 83,900 92,900 108,700 112,500 Other Services 35,400 31,000 32,600 36,100 38,300
Federal Government 14,200 14,800 14,500 14,400 14,500
State Government 121,900 121,700 126,800 129,800 134,400 Local Government 105,300 98,900 98,000 102,700 107,400 Total, All Industries 1,031,400 979,700 1,017,200 1,065,400 1,083,000
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
Source: State of California Employment Development Department.
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Major Employers
The following table shows the largest employers located in the County as of fiscal year 2023.
COUNTY OF SACRAMENTO
PRINCIPAL EMPLOYERS
As of June 30, 2023
Rank Name of Company
Number of
Employees
Percentage
of Total City
Employment
1. UC Davis Health System 16,075 2.30%
2. Kaiser Permanente 10,934 1.56
3. Sutter/California Health Services 9,350 1.33
4. Dignity/Mercy Healthcare 7,353 1.05
5. Intel Corporation 5,000 0.71
6. Raley’s Inc./Bel Air 2,756 0.39
7. Siemens Mobility Inc. 2,500 0.36
8. Safeway 1,874 0.27
9. Golden 1 Credit Union 1,776 0.25
10. Pacific Gas and Electric Co. 1,370 0.20
Source: County of Sacramento Annual Comprehensive Financial Report for the year ending June 30, 2023.
The following table shows the largest employers located in the City as of fiscal year 2023.
CITY OF SACRAMENTO
PRINCIPAL EMPLOYERS
As of June 30, 2023
Rank Name of Company
Number of
Employees
Percentage
of Total City
Employment
1. State of California 107,876 15.34%
2. UC Davis Health System 16,075 2.29
3. Sacramento County 13,252 1.88
4. Kaiser Permanente 10,934 1.56
5. U.S. Government 10,507 1.49
6. Sutter Health 9,350 1.33
7. Dignity Health 7,353 1.05
8. Intel Corporation 5,000 0.71
9. San Juan Unified School District 4,801 0.68
10. Los Rios Community College District 3,049 0.43
Source: City of Sacramento Annual Comprehensive Financial Report for the year ending June 30, 2023.
Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.
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The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.
The following table summarizes the personal income for the County of Sacramento, the State and the United States for the period 2018 through 2022.
COUNTY OF SACRAMENTO
Personal Income
2017 through 2022
Year Sacramento County California United States
2018 $78,804,776 $2,431,821,953 $17,671,054,000
2019 82,669,864 2,567,425,600 18,575,467,000
2020 90,908,707 2,790,523,500 19,812,171,000
2021 98,105,641 3,006,183,900 21,288,709,000
2022 97,517,936 3,006,647,281 21,820,248,000
Note: Dollars in Thousands.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
The following table summarizes per capita personal income for the County of Sacramento, the State and the United States for 2018-2022. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.
PER CAPITA PERSONAL INCOME
County of Sacramento, State of California and the United States 2018 Through 2022
Year Sacramento County California United States
2018 $51,187 $61,508 $53,786
2019 53,278 64,919 56,250
2020 58,307 70,647 59,765
2021 61,775 76,614 64,143
2022 61,558 77,036 65,470
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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Commercial Activity
A summary of historic taxable sales within the City for 2019-2023 is shown in the following table.
CITY OF SACRAMENTO
Taxable Transactions
(dollars in thousands)
Retail Stores Total All Outlets
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2019 10,006 $4,999,470 15,970 $7,463,634
2020 11,088 4,430,901 17,722 6,839,199
2021 10,362 5,401,724 16,793 8,118,898
2022 10,527 5,763,861 17,452 9,054,662
2023 10,371 5,683,785 17,208 8,815,975
Source: State Board of Equalization.
A summary of historic taxable sales within the County for 2019-2023 is shown in the following table.
COUNTY OF SACRAMENTO
Taxable Transactions
(dollars in thousands)
Retail Stores Total All Outlets
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2019 25,530 $18,195,302 40,858 $26,836,365
2020 28,055 18,488,106 45,361 27,173,406
2021 25,936 23,700,364 42,482 33,783,460
2022 26,589 24,679,703 44,158 36,511,260
2023 25,913 24,289,157 43,252 35,778,877
Source: State Board of Equalization.
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Building and Construction
Provided below are the building permits and valuations for the City and the County for calendar years 2019 through 2023.
CITY OF SACRAMENTO
Total Building Permit Valuations
(valuations in thousands)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $ 400,648.4 $ 254,127.0 $ 359,957.8 $ 278,041.4 $ 305,689.5 New Multi-family 176,862.7 465,623.0 284,928.5 211,378.2 199,279.2 Res. Alterations/Additions 140,240.6 174,415.1 171,615.1 151,297.8 164,471.7 Total Residential $ 717,751.7 $ 894,165.1 $ 816,501.4 $ 640,717.4 $ 669,440.4
New Commercial $ 540,144.9 $ 154,484.2 $ 152,871.0 $ 73,271.9 $ 170,884.5 New Industrial 31,485.4 31,155.0 83,171.4 11,349.9 -
New Other 427,661.2 302,114.6 55,183.7 40,926.1 139,361.0 Com. Alterations/Additions 491,148.7 230,448.0 163,431.5 177,804.2 371,033.1 Total Nonresidential $ 1,490,440.2 $ 718,201.8 $ 454,657.6 $ 303,352.1 $ 681,278.6
New Dwelling Units
Single-Family 1,552 956 1,150 952 951
Multiple Family 1,487 2,855 1,193 1,619 2,682 TOTAL 3,039 3,811 2,343 2,571 3,633
Source: Construction Industry Research Board, Building Permit Summary.
COUNTY OF SACRAMENTO
Total Building Permit Valuations
(valuations in thousands)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $ 1,108,399.8 $ 1,088,390.6 $ 1,310,379.5 $ 1,183,213.4 $ 1,408,893.4 New Multi-family 265,188.8 467,418.7 323,462.5 413,368.8 436,365.8 Res. Alterations/Additions 293,210.5 262,864.6 276,570.3 373,409.6 332,233.2 Total Residential $ 1,666,799.1 $ 1,818,673.9 $ 1,910,412.3 $ 1,969,991.8 $ 2,177,492.4
New Commercial $ 639,170.3 $ 411,058.0 $ 152,871.0 $ 203,314.1 $ 256,310.9 New Industrial 31,851.4 31,155.0 83,171.4 38,163.3 -
New Other 131,286.6 113,793.0 150,008.7 220,339.3 294,989.6 Com. Alterations/Additions 700,603.9 335,458.0 320,3447.6 432,950.0 569,570.4 Total Nonresidential $ 1,502,912.2 $ 891,464.0 $ 3,589,498.7 $ 894,766.7 $ 1,120,870.9
New Dwelling Units
Single-Family 3,981 3,588 4,205 3,832 4,181
Multiple Family 2,008 2,868 2,266 3,419 6,290 TOTAL 5,989 6,456 6,471 7,251 10,471
Source: Construction Industry Research Board, Building Permit Summary.
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Transportation
Sacramento’s strategic location and broad transportation network have contributed to the City’s economic growth. The City is traversed by the main east-west and north-south freeways serving northern and central California. Interstate 80 connects Sacramento with the San Francisco Bay Area, Reno, Nevada, and points east. U.S. 50 carries traffic from Sacramento to the Lake Tahoe area. Interstate 5 is the main north- south route through the interior of California, running from Mexico to Canada. State Route 99 parallels Interstate 5 through central California and passes through Sacramento.
The Union Pacific Railroad, a transcontinental line, has junctions in Sacramento and is connected to the Burlington Northern Santa Fe Railway via the Central California Traction Company. Passenger rail service is provided by AMTRAK. Bus lines offering intercity as well as local service include Greyhound and the Sacramento Regional Transit District. The Sacramento Regional Transit District also provides light-rail service within the City. The Port of Sacramento, located 79 nautical miles northeast of San Francisco, provides direct ocean-freight service to all major United States and world ports. Via a deep-water channel, ships can reach Sacramento from San Francisco in less than eight hours. The major rail links serving Sacramento connect with the port, and Interstate 80 and Interstate 5 are immediately adjacent to it.
Trucking services are offered through facilities of interstate common carriers operating terminals in the area and by contract carriers of general commodities. Greyhound Bus Lines also has passenger and package-service stations in the City.
Sacramento International Airport, about 12 miles northwest of the City’s downtown, is served by 13 major carriers and 1 commuter carrier. Sacramento Executive Airport, about 6 miles south of the City’s downtown, is a full-service, 540-acre facility serving general aviation and providing a wide array of facilities and services.
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APPENDIX F
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIX G
FORM OF CONTINUING DISCLOSURE CERTIFICATE OF THE CITY
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APPENDIX H
FORM OF CONTINUING DISCLOSURE CERTIFICATES OF THE DEVELOPERS
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APPENDIX I
BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the City believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC to the City which the City believes to be reliable, but the City and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts
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such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Bond Holder shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC.
THE PAYING AGENT, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY
FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE
VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
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APPENDIX J
MARKET ABSORPTION REPORT
Stradling Yocca Carlson & Rauth
Draft dated November 13, 2024
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CONTINUING DISCLOSURE CERTIFICATE
CITY OF SACRAMENTO
This Continuing-Disclosure Certificate, dated as of December 1, 2024 (this “Certificate”), is executed and delivered by the City of Sacramento, a California municipal corporation (the “Issuer”), in connection with the issuance of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (the “Bonds”). The Bonds are being issued under Resolution No. __________ adopted by the Sacramento City Council on __________, 2024, and a Master Indenture, dated as of December 1, 2024, as supplemented by a First Supplemental Indenture dated as of December 1, 2024 (collectively, the “Indenture”), each between the Issuer and Zions Bancorporation, National Association, as trustee (the “Trustee”).
The Issuer hereby covenants as follows:
1. Purpose of this Certificate. This Certificate is being executed and delivered for the benefit of the Holders and Beneficial Owners of the Bonds and to assist the Participating Underwriter in complying with the Rule.
2. Definitions. In addition to the definitions set forth in the Indenture and the Rate and Method of Apportionment, which apply to any capitalized term used in this Certificate unless otherwise defined in this section 2, the following capitalized terms have the following meanings:
“Annual Report” means any annual report that meets the criteria in section 4 and is provided by the Issuer under section 3.
“Beneficial Owner” means any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including a person holding Bond through a nominee, depository, or other intermediary); or (b) is treated as the owner of any Bond for federal income-tax purposes.
“Business Day” means any day the Issuer’s offices at 915 I Street, Sacramento, California, are open to the public.
“Dissemination Agent” initially means the Issuer, and thereafter it means any successor Dissemination Agent the Issuer designates in writing. “District” means the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California. 2 4856-1228-2684v7/022536-0033
“EMMA” means the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at emma.msrb.org, or any other repository of disclosure information the Securities and Exchange Commission may designate in the future.
“Fiscal Year” means the Issuer’s fiscal year, which begins on July 1 and ends the following June 30.
“Improvement Area No. 1” means Improvement Area No. 1 of the District.
“Listed Events” means any of the events listed in section 5(a) below.
“MSRB” means the Municipal Securities Rulemaking Board.
“Official Statement” means the Issuer’s official statement with respect to the Bonds.
“Participating Underwriter” means Stifel, Nicolaus & Company, Incorporated.
“Rate and Method of Apportionment” means the Amended and Restated Rate and Method of Apportionment of Special Tax for Improvement Area No. 1 approved by the Resolution of Formation.
“Resolution of Formation” means the Resolution adopted by the Sacramento City Council on September 24, 2019, and designated as Resolution No. 2019-0371, the Resolution of Change adopted by the Sacramento City Council on February 1, 2022, and designated as Resolution No. 2022-0036 by which the City undertook change proceedings with respect to the District and Improvement Area No. 1 of the District, and the Resolution Interpreting the Rate and Method of Apportionment adopted by the Sacramento City Council on February 7, 2023, and designated as Resolution No. 2023-0030, by which the City made certain interpretations and corrections to Exhibit 1 of the Rate and Method of Apportionment.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.
“Tax-exempt” means that interest on the Bonds is excluded from gross income for federal income-tax purposes, whether or not the interest is includable as an item of tax preferences or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax.
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3. Provision of Annual Reports.
(a) Beginning with the Fiscal Year ending June 30, 2024, the Issuer shall provide to EMMA, or shall cause the Dissemination Agent to provide to EMMA, not later than March 31 after the end of the Fiscal Year, an Annual Report that is consistent with the requirements of section 4 of this Certificate. If the Dissemination Agent is other than the Issuer, then the Issuer shall provide the Annual Report to the Dissemination Agent, in a form suitable for filing with EMMA, not later than 15 business days before the date specified in the prior sentence for providing the Annual Report to EMMA.
The Annual Report may be submitted as a single document or as separate documents composing a package and may include by reference other information as provided in section 4 of this Certificate, except that the Issuer’s audited financial statements may be submitted separately from, and later than, the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report. (b) If the Dissemination Agent is an entity other than the Issuer, then the provisions of this section 3(b) will apply. The Issuer shall provide the Annual Report to the Dissemination Agent not later than 15 Business Days before the date specified in section 3(a) for providing the Annual Report to EMMA. If the Dissemination Agent has not received a copy of the Annual Report by the 15th Business Day before the date for providing the Annual Report, then the Dissemination Agent shall contact the Issuer to determine if the Issuer will be filing the Annual Report in compliance with section 3(a). The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that the Annual Report constitutes the Annual Report required to be furnished by it under this Certificate. The Dissemination Agent may conclusively rely upon the Issuer’s certification and will have no duty or obligation to review the Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in section 3(a), then the Dissemination Agent shall send a notice in a timely manner to EMMA, in the form required by EMMA.
(d) If the Dissemination Agent is other than the Issuer, then the Dissemination Agent shall—
(1) determine each year, before the date for providing the Annual Report, the name and address of the repository if other than the MSRB through EMMA; and (2) file a report with the Issuer, promptly after receipt of the Annual Report, certifying that the Annual Report has been provided to EMMA and the date it was provided.
(e) Notwithstanding any other provision of this Certificate, all filings must be made in accordance with the EMMA system or in another manner approved under the Rule. 4 4856-1228-2684v7/022536-0033
4. Content of Annual Reports. The first Annual Report due on March 31, 2025 shall consist of the Official Statement and the Issuer’s audited financial statements as described in Section 4(a) below. Thereafter, the Annual Reports shall contain or incorporate by reference the following:
(a) Financial Statements. The Issuer’s audited financial statements for the most recent Fiscal Year then ended. If audited financial statements are not available by the time the Annual Report is required to be filed by section 3, then the Annual Report must contain unaudited financial statements, and the audited financial statements must be filed in the same manner as the Annual Report when they become available. (b) Financial and Operating Data. The Annual Report must contain or incorporate by reference the following information except to the extent the information is included in the Issuer’s audited financial statements or in a report to the California Debt and Investment Advisory Commission that has been uploaded to EMMA:
(1) Balances in each of the following funds established under the Indenture as of the close of the prior fiscal year:
(A) The Bond Redemption Fund (with a statement of the debt-service requirement to be discharged by the fund before the receipt of expected additional Special Tax revenue, i.e., the Debt Service due on the following September 1).
(B) The Bond Reserve Fund.
(2) The aggregate land assessed valuation and the aggregate improvement assessed valuation of the Taxable Property within Improvement Area No. 1 for the current Fiscal Year.
(3) A statement of the actual Special Tax collections and delinquencies for Improvement Area No. 1 for the prior Fiscal Year.
(4) An update of the information in Table 3 of the Official Statement based on the assessed valuation of the Taxable Property within Improvement Area No. 1 for the current Fiscal Year, except that the information with respect to overlapping land-secured debt need not be included.
(5) The following information (to the extent that it is no longer reported in the City’s annual filings with the California Debt and Investment Advisory Commission regarding the Bonds):
(A) The Required Bond Reserve for the prior Fiscal Year. (B) A statement as to the status of any foreclosure actions with respect to delinquent payments of the Special Tax.
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(C) A statement of any discontinuance of the County’s Teeter Plan with respect to any Taxable Parcel.
(c) Any or all of the items listed in section 4(a) or 4(b) may be included by specific reference to other documents (including official statements of debt issues of the Issuer or related public entities) that have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available through EMMA. The Issuer shall clearly identify each document included by reference.
5. Reporting of Significant Events.
(a) The Issuer shall give or cause the Dissemination Agent to give notice to the MSRB, through EMMA, not more than ten Business Days after the occurrence of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Unscheduled draws on debt-service reserves reflecting financial difficulties. (3) Unscheduled draws on credit enhancements reflecting financial difficulties. (4) Substitution of credit or liquidity providers, or their failure to perform. (5) Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds.
(6) Defeasances.
(7) Tender offers.
(8) Bankruptcy, insolvency, receivership, or similar proceedings.
Note: For the purposes of the event identified in section 5(a)(8), the event is considered to occur when any of the following occur: if a receiver, fiscal agent, or similar officer is appointed for the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer; or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority; or if an order confirming a plan of reorganization, arrangement, or liquidation is entered by a court 6 4856-1228-2684v7/022536-0033
or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer. (9) Ratings changes.
(10) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(b) Additionally, the Issuer shall give or cause the Dissemination Agent to give notice to the MSRB, through EMMA, not more than ten Business Days after the occurrence of any of the following events with respect to the Bonds, if material:
(1) Unless described in section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds.
(2) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business; the entry into a definitive agreement to undertake such an action; or the termination of a definitive agreement relating to any such actions, other than under its terms. (3) Appointment of a successor or additional fiscal agent or the change of the name of a fiscal agent.
(4) Nonpayment related defaults.
(5) Modifications to the rights of Bondholders.
(6) Bond calls.
(7) Release, substitution, or sale of property securing repayment of the Bonds. (8) Incurrence of a financial obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect Bondholders.
(c) For purposes of the events identified in section 5(a)(10) or 5(b)(8), “financial obligation” means a (1) debt obligation; (2) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (3) guarantee of (1) or (2). “Financial obligation” does not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
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(d) If the Issuer’s Fiscal Year changes, then the Issuer shall report or shall instruct the Dissemination Agent to report the change in the same manner and to the same parties as Listed Event would be reported under this section 5. (e) The undertaking set forth in this Certificate is the Issuer’s responsibility. The Dissemination Agent, if other than the Issuer, is not responsible for determining whether the Issuer’s instructions to the Dissemination Agent under this section 5 comply with the Rule.
6. Termination of Reporting Obligation. The obligations of the Issuer and the Dissemination Agent under this Certificate terminate upon the legal defeasance, prior redemption, or payment in full of all of the Bonds. If termination occurs before the final maturity of the Bonds, then the Issuer shall give notice of the termination in the same manner as for a Listed Event under section 5.
7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Certificate and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Issuer will be the initial Dissemination Agent. The Dissemination Agent may resign by providing 30-days’ advance written notice to the Issuer, with the resignation effective upon appointment of a new Dissemination Agent.
8. Amendment.
(a) The parties may amend this Certificate by written agreement of the parties without the consent of the Holders, and any provision of this Certificate may be waived, if all of the following conditions are satisfied:
(1) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature, or status of the Issuer or the type of business the Issuer conducts. (2) The undertakings in this Certificate as so amended or waived would have complied, in the opinion of a nationally recognized bond counsel, with the requirements of the Rule as of the date of this Certificate, after taking into account any amendments or interpretations of the Rule as well as any change in circumstances.
(3) The amendment or waiver either (A) is approved by the Holders of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders or (B) does not, in the determination of the Issuer, materially impair the interests of the Holders or Beneficial Owners of the Bonds.
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(b) To the extent any amendment to this Certificate results in a change in the type of financial information or operating data provided under this Certificate, the first Annual Report provided after the change must include a narrative explanation of the reasons for the amendment and the effect of the change on the type of operating data or financial information being provided.
(c) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made must present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison must include both a quantitative discussion and, to the extent reasonably feasible, a qualitative discussion of the differences in the accounting principles and the effect of the change in the accounting principles on the presentation of the financial information.
9. Additional Information. This Certificate does not prevent the Issuer (a) from disseminating any other information, using the means of dissemination set forth in this Certificate or any other means of communication; or (b) from including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that required by this Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that specifically required by this Certificate, then the Issuer will have no obligation under this Certificate to update the information or include it in any future Annual Report or notice of occurrence of a Listed Event.
10. Default. If the Issuer or the Dissemination Agent fails to comply with any provision of this Certificate, then any Holder or Beneficial Owner of the Bonds may take any necessary and appropriate actions, including seeking mandate or specific performance by court order, to cause the Issuer and the Dissemination Agent to comply with their obligations under this Certificate. A default under this Certificate will not be an Event of Default under the Indenture, and the sole remedy under this Certificate in the event of any failure of the Issuer or the Dissemination Agent to comply with this Certificate is an action to compel performance.
11. Duties, Immunities, and Liabilities of Dissemination Agent. (a) Where an entity other than the Issuer is acting as the Dissemination Agent, the Dissemination Agent will have only the duties expressly set forth in this Certificate, and the Issuer shall indemnify and save the Dissemination Agent and its officers, directors, employees, and agents harmless against all losses, expenses, and liabilities that arise out of, or in the exercise or performance of, their powers and duties under this Certificate, including reasonable attorney’s fees and other expenses of defending against any claim of liability, but excluding losses, expenses, and liabilities due to the Dissemination Agent’s negligence or willful misconduct. 9 4856-1228-2684v7/022536-0033
(b) Except as provided in section 11(a), the Issuer shall pay any Dissemination Agent (1) compensation for its services provided under this Certificate in accordance with an agreed-upon schedule of fees; and (2) all expenses, legal fees, and advances made or incurred by the Dissemination Agent in the performance of its duties under this Certificate.
(c) The Dissemination Agent has no duty or obligation to review any information the Issuer provides to it under this Certificate. The Issuer’s obligations under this section 11 will survive the Dissemination Agent’s resignation or removal and payment of the Bonds. No person has any right to commence any action against the Dissemination Agent for any remedy other than specific performance of this Certificate. The Dissemination Agent is not liable under any circumstances for monetary damages to any person for any breach under this Certificate.
12. Beneficiaries. This Certificate inures solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriter, and Holders and Beneficial Owners from time to time of the Bonds, and it creates no rights in any other person or entity.
13. Merger. Any person succeeding to all or substantially all of the Dissemination Agent’s corporate trust business will be the successor Dissemination Agent without the filing of any paper or any further act.
14. Effective Date. This Certificate is effective as of the date and year set forth above in the preamble.
CITY OF SACRAMENTO
By:
John P. Colville Jr., City Treasurer
Bay Area/Corporate Office
140 Town & Country Drive, Suite F
Danville, CA 94526
p: 925 855-4950 / f: 925 855-4951
Sacramento/Central Valley Office
111 Woodmere Road, Suite 140
Folsom, CA 95630
p: 916 357-5860 / f: 916 357-5868
AN APPRAISAL REPORT OF
Delta Shores CFD No. 2019-1 (Improvement Area 1)
SWQ of Interstate 5 and Cosumnes River Boulevard
Sacramento, California 95832
Real Estate Appraisal
and Consulting
www.smithassociatesinc.com
Bay Area/Corporate Office Sacr amen to/Central Valley Office 140 Town & Country Drive, Suite F 111 Woodmere Road, Suite 140 Danville, CA 94526 Folsom, CA 95630
Phone 925 855-4950 Phone 916 357-5860
Fax 925 855-4951 Fax 916 357-5868
November 12, 2024
Mr. Bill Sinclair
Real Property Agent
City of Sacramento, Department of Public Works
915 “I” Street, 2
nd Floor
Sacramento, CA 95814
RE: Delta Shores CFD No. 2019-1 (Improvement Area 1)
SWQ of Interstate 5 and Cosumnes River Boulevard
Sacramento, CA 95832
Dear Mr. Sinclair:
T h i s a p p r a i s a l r e p o r t f o r D e l t a S h o r e s C F D N o . 2 0 1 9 - 1 , I m p r o v e ment Area 1 (the “CFD”) is written in conformance with the requirements set forth under Standards Rul e 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Stand ards for Land Secured Financing, published by the California Debt and Investment Advisory Commis sion (2004). The CFD has been established to create a land-secured funding mechanism for authorized facilities, which may include fees paid for those facilities.
The subject property is generally located along the southwest q uadrant of Interstate 5 and Cosumnes River Boulevard in the City of Sacramento. This project area e ncompasses a total land area of 107.22 acres generally allocated among 77.46 acres for 348 lots, south of Cosumnes River Boulevard, as well as a development site of 8.851 AC, respectively, north of Cosumnes River Boulevard. The current zoning for the development site north of Cosumnes River Boulevard includes both HDR and MDR. According to City Planners, these projects can be combined as long as total units are between 95 and 167 units, or total density between 10.7 and 18.9 du/ac. These two parcels include only zoning entitlements as of the effective date of valuation. The remaining land area represents acreages for non-revenue generating land uses including Parks, Detention Basin, and Open Space.
The parcels currently identified by the Sacramento County Asses sor’s Office within the Boundary Map of Delta Shores CFD No. 2019-1, Improvement Area 1 include the following.
Mr. Bill Sinclair
City of Sacramento
Page Two
Site development is completed to this project as of the effecti ve date of valuation. In addition, home development has commenced including the completion of 5 model homes (Portion of MDR-1 and LDR-1).
Individual project descriptions are noted as follows.
MDR-1: This project represents 110 lots and is owned by KB Home. It is identified as Riva at Delta Shores with three model homes completed as of the effective date of va luation, as well as 107 lots. The nearly finished lots represent a typical size at 3,230 SF as this proj ect is identified for alley-loaded homes. This project is offering three base floor plans ranging in size from 1,795 to 2,236 square feet with base pricing from $605,000 to $648,000. Completed model homes are noted as follows.
Vertical construction has commenced for this project as of the effective date of valuation. This includes $314,324 in building permits paid as of the effective date of v aluation, as well as the completed model homes.
LDR-1: This project represents 81 lots and is owned by KB Home. It is identified as Edgewater at Delta Shores with two model homes completed as of the effective date of valuation, as well as 79 lots. The nearly finished lots for this project offer a typical size at 5 ,700 SF. This project is offering four base floor plans ranging in size from 1,685 to 2,693 square feet with base pricing from $665,990 to $755,990. This project includes 2 completed model homes summarized on the tabl e below. There are no model homes for the other 2 base floor plans.
Vertical construction has commenced for this project as of the effective date of valuation. This includes $494,639 in building permits paid as of the effective date of v aluation, as well as the completed model homes.
MINIMUM DENSITY
PROJECT ORIENTATION OWNERSHIP LOT SIZE(SF) # LOTS AC (UNITS/AC) MDR-1 South of CRB KB Home 2,975 SF 110 17.87 6.2
LDR-1 South of CRB KB Home 5,000 SF 81 17.38 4.7
LDR-2 (Por.) South of CRB Meritage Homes 6,500 SF 77 42.21 1.8 LDR-2 (Por.) South of CRB M&H Realty 6,500 SF 80
HDR North of CRB M&H Realty N/A N/A 3.378 15-27
MDR North of CRB M&H Realty N/A N/A 5.473 8-14
Inc. Above
SOUTH OF CRB
NORTH OF CRB
LOT # APN DESIGN BEDS/BATHS GLA
323 053-0220-103 Two-Story 4 Beds / 3 Baths 1,795 SF
324 053-0220-104 Two-Story 4 Beds / 2.5 Baths 2,102 SF
325 053-0220-105 Two-Story 5 Beds / 3 Baths 2,236 SF
LOT # APN DESIGN BEDS/BATHS GLA
226 053-0230-065 Two-Story 5 Beds / 3 Baths 2,693 SF
227 053-0230-066 One Story 3 Beds / 2 Baths 1,685 SF
Mr. Bill Sinclair
City of Sacramento
Page Three
LDR-2: This project represents 157 lo ts and includes two ownerships. There are 77 lots owned by Meritage Homes. This represents the first takedown of lots as t here is a purchase agreement for the remaining 80 lots in this project, which were still owned by M& H R e a l t y a s o f t h e e f f e c t i v e d a t e o f valuation. The remaining two takedowns are scheduled for November 7, 2024 (27 Finished Lots) and April 7, 2025 (53 Finished Lots). The nearly finished lots in this project offer a typical size at 6,825 square feet.
There were no model homes, or vertical improvements underway as of the effective date of valuation.
This project includes larger lots capable of achieving a premiu m in the current market climate.
Furthermore, Lots 38..56 are oriented along the southern portio n of the project with rear yard frontage to the existing Bartley Cavanaugh Golf Course offering golf cou rse views and shade from mature trees along the edge of the golf course property.
HDR & MDR: These two components are owned by M&H Realty. They include tw o development sites including a 3.378 Net AC HDR site with densities from 15 to 27 units per acre, as well as a 5.473 Net AC MDR site with densities from 8-14 units per acre. These proper ties reflect vacant land with only zoning level entitlements. However, according to City Planners, both properties would be required to produce a minimum number of units, or 95 units up to a maximum of 167 units. Development within the total density allowance would constitute a legally, permissible land use if the two properties were combined.
The purpose of this report is to provide an opinion of market value based on the hypothetical condition t h a t a s o f t h e e f f e c t i v e d a t e o f v a l u a t i o n , t h e B o n d s h a d j u s t been sold and the properties were encumbered by CFD Bonds supported by Special Taxes as described herein. The market value estimate accounts for the impact of the lien of the Special Tax securing the Bonds.
The intended use of this report is for bond underwriting purpos es. The Client is the City of Sacramento.
The intended users are the City of Sacramento, its associated finance team and potential bond investors.
The appraisal is not intended for any other use or user. No party or parties other than the City of Sacramento and its associated finance team may use or rely on the information, opinions, and conclusions contained in this report.
Mr. Bill Sinclair
City of Sacramento
Page Four
Based on the analysis described in the attached report, in conn ection with the Assumptions and Limiting Conditions, and the Hypothetical Conditions, as of September 25 , 2024, the effective date of valuation, my opinion of value is as follows.
VALUE AGGREGATE MARKET VALUE
Hypothetical Market Value (KB HOME)
-MDR-1 – 107 Residential Lots
-Lot 323 – 1,795 SF Home** (Model Home)
-Lot 324 – 2,102 SF Home** (Model Home)
-Lot 325 – 2,236 SF Home** (Model Home)
$20,670,000
$455,000
$505,000
$520,000
BULK VALUE (MDR-1) $22,150,000
Hypothetical Market Value (KB HOME)
-LDR-1 – 79 Residential Lots
-Lot 226 – 2,693 SF Home** (Model Home)
-Lot 227 – 1,685 SF Home** (Model Home)
$19,530,000
$620,000
$486,000
BULK VALUE (LDR-1) $20,636,000
Hypothetical Market Value (MERITAGE HOMES)
-Portion of LDR-2 – 77 Lots
$19,700,000
Hypothetical Market Value (M&H REALTY)
-Portion of LDR-2 – 80 Lots
$19,615,000
BULK VALUE (LDR-2) $39,315,000
Hypothetical Market Value (M&H REALTY)
North of CRB
-8.851 AC MDR/HDR Site
$6,550,000
AGGREGATE, OR CUMULATIVE VALUE
OF APPRAISED PROPERTIES
$88,651,000
** Reflects the value for the finished lot and improvements (based on costs) at the time of permit issuance.
The value noted above is presented in conjunction with the Hypothetical Condition that as of the effective date of valuation, the Bonds had just been sold and the properties were encumbered by CFD Bonds supported by Special Taxes as described herein. The market value estimates account for the impact of the lien of the Special Tax securing the Bonds.
Please feel free to call if there are any questions regarding this assignment.
Respectfully submitted,
SMITH & ASSOCIATES, INC.
John E. Carrothers, MAI
State Certified General Real Estate Appraiser
California AG014187, Exp. 04/11/2025
SUBJECT PHOTOGRAPHS
View East on N. Side of Cosumnes River Blvd. View West on N . side of Consumes River Blvd.
Overall View of Project Area North of Cosumnes River Boulevard
SUBJECT PHOTOGRAPHS
View East along CRB View West along CRB
Overall View South of Project (S. of CRB)
SUBJECT PHOTOGRAPHS
View of MDR-1 View of MDR-1
View of MDR-1 Lots
SUBJECT PHOTOGRAPHS
View of MDR-1 View of MDR-1
View of LDR-1 Lots
SUBJECT PHOTOGRAPHS
View of LDR-1 View of LDR-1
Typical Street Scene
SUBJECT PHOTOGRAPHS
View of LDR-2 View of LDR-2
LDR-2 Lots adjacent to Bartley Cavanaugh Golf Course
SUBJECT PHOTOGRAPHS
Views of Golf Course Lots (LDR-2) Views of Golf Course Lots (LDR-2)
Views of Golf Course Lots (LDR-2)
SUBJECT PHOTOGRAPHS
Riva Model Home – Lot 325 (2, 236 SF) Riva Model Home – Lot 3 24 (2,102 SF)
Riva Model Home – Lot 323 (1, 795 SF) Edgewater Model Home – Lot 227 (1,685 SF)
Edgewater Model Home – Lot 226 (2,693 SF)
SUBJECT PHOTOGRAPHS
Aerial View North of Subject Property (South of CRB)
Aerial View South of Subject Property (South of CRB)
TABLE OF CONTENTS
Summary of Salient Facts ................................................................................................................. 1 Extraordinary Assumptions and Hypothetical Conditions ............................................................... 5
PART 1 – INTRODUCTION
Identification of the Subject Property ................................................................................ 6 Scope of Work ................................................................................................................... 10 Property Rights Appraised ................................................................................................ 10 Purpose, Intended Use and Intended User of the Appraisal ............................................ 11 Definition of Market Value ............................................................................................... 11 Ownership and History of the Property ............................................................................ 12
PART 2 – LOCATION AND PROPERTY DESCRIPTIONS
Regional Description ......................................................................................................... 14 Area Description ............................................................................................................... 22 Site Description ................................................................................................................. 30 Improvement Description ................................................................................................. 67
PART 3 – MARKET ANALYSIS AND HIGHEST AND BEST USE
Market Analysis – For Sale Residential ............................................................................. 78 Highest and Best Use ...................................................................................................... 118
PART 4 – METHODOLOGY AND VALUATION
Methodology ................................................................................................................... 121 Revenue Projections – Finished Lots
Sales Compariso n Approach .............................................................................. 123 Income Approach .............................................. ................................................. 133 Reconciliation – Income Approach ............................. ....................................... 147 Reconciliation – Finished Lot Values ......................... ......................................... 147 Valuation of Each Ownership Interest ............................................................................ 148 Analysis of HDR/MDR Site ............................................................................................... 152
ADDENDA
Preliminary Title Report
Summary of Infrastructure Costs
Market Absorption Study (Prepared by John Burns)
Permits Issued as of Effective Date of Valuation
2024 ULOP Report
Smith & Associates, Inc.
SUMMARY OF SALIENT FACTS
Property Type: Delta Shores CFD No. 2019-1 (Improvement Area 1)
Property Address/Location: The subject property is generally located along the SWQ of Interstate 5 and Cosumnes River Boulevard. It is in the City o f Sacramento and Zip Code 95832.
APN/Legal Description: The parcels currently identified by the Sacramento County Assessor’s Office as numerous parcels. The following table shows revenue generating parcels for the subject property. Non- revenue generating parcels are identified in the site descripti on of this report.
PROJECT AREA # LOTS APNs LEGAL
MDR-1
KB Home
110 053-0220-019..128 Lots 239..348, Delta Shores West
R.M. Book 452, Page 2, December 19, 2023
LDR-1
KB Home
81 053-0220-001..018
053-0230-015..077
Lots 158..238, Delta Shores West
R.M. Book 452, Page 2, December 19, 2023
LDR-2
Meritage Homes
77 053-0250-001..004,
053-0250-047..092,
053-0240-001..008,
053-0240-045..051
053-0230-001..004
Lots 1..4, 47..100, 115..122, 137..147, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
LDR-2
M&H Realty
80 053-0250-005..046,
053-0240-009..022,
053-0240-031..044,
053-0230-005..014
Lots 5..46, 101..114, 123..136, 148..157, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
HDR & MDR SITE
M&H Realty
3.378 AC
5.473 AC
119-0010-026, 060
(Portion)
Refer to Legal Description
Site Description: This project area encompasses a total land area of 107.22 acres generally allocated among 77.46 acres for 348 lots, south of Cosumnes River Boulevard, as well as development sites of 3.378 AC (HDR) and 5.473 AC (MDR), respectively, north of Cosumnes River Boulevard. These two parcels include only underlying zoning as of the effective date of valuation. The remaining la nd area represents acreages for non-revenue generating land uses including Parks, Detention Basin, and Open Space.
The parcels currently identified by the Sacramento County Assessor’s Office within the Boundary Map of Delta Shores CFD No. 2019-1, Improvement Area 1 include the following.
Smith & Associates, Inc.
SUMMARY OF SALIENT FACTS (Continued)
Site development is nearly completed for this project as of the effective date of valuation. In addition, home development has commenced including the completion of 5 model homes (Portion of MDR-1 and LDR-1). Individual project descriptions are noted as follows.
MDR-1: This project represents 110 lots and is owned by KB Home. It is identified as Riva at Delta Shores with three mod el homes completed as of the effective date of valuation, as well as 107 lots. The nearly finished lots represent a typical size at 3,230 SF as this project is identified for alley-loaded homes. This project is offering three base floor plans ranging in size from 1,795 t o 2,236 square feet with base pricing from $605,000 to $648,000.
Completed model homes are noted as follows.
This includes $314,324 in building permits paid as of the effective date of valuation, as well as the completed model homes.
LDR-1: This project represents 81 lots and is owned by KB Home.
I t i s i d e n t i f i e d a s E d g e w a t e r a t D e l t a S h o r e s w i t h t w o m o d e l homes completed as of the effective date of valuation, as well as 79 lots. The nearly finished lots for this project offer a typical size at 5,700 SF. This project is offering four base floor plans ra nging in size from 1,685 to 2,693 square feet with base pricing from $665,990 to $755,990. This project includes 2 completed model homes summarized on the table below. There are no model homes for the other 2 base floor plans.
MINIMUM DENSITY
PROJECT ORIENTATION OWNERSHIP LOT SIZE(SF) # LOTS AC (UNITS/AC) MDR-1 South of CRB KB Home 2,975 SF 110 17.87 6.2
LDR-1 South of CRB KB Home 5,000 SF 81 17.38 4.7
LDR-2 (Por.) South of CRB Meritage Homes 6,500 SF 77 42.21 1.8 LDR-2 (Por.) South of CRB M&H Realty 6,500 SF 80
HDR North of CRB M&H Realty N/A N/A 3.378 15-27
MDR North of CRB M&H Realty N/A N/A 5.473 8-14
Inc. Above
SOUTH OF CRB
NORTH OF CRB
LOT # APN DESIGN BEDS/BATHS GLA
323 053-0220-103 Two-Story 4 Beds / 3 Baths 1,795 SF
324 053-0220-104 Two-Story 4 Beds / 2.5 Baths 2,102 SF
325 053-0220-105 Two-Story 5 Beds / 3 Baths 2,236 SF
LOT # APN DESIGN BEDS/BATHS GLA
226 053-0230-065 Two-Story 5 Beds / 3 Baths 2,693 SF
227 053-0230-066 One Story 3 Beds / 2 Baths 1,685 SF
Smith & Associates, Inc.
SUMMARY OF SALIENT FACTS (Continued)
Vertical construction has commenced for this project as of the effective date of valuation. This includes $494,639 in buildin g permits paid as of the effective date of valuation, as well as the completed model homes.
LDR-2: This project represents 157 lots and includes two ownerships. There are 77 lots owned by Meritage Homes. This represents the first takedown of lots as there is a purchase agreement for the remaining 80 lo ts in this project, which were still owned by M&H Realty as of the effective date of valuation .
The remaining two takedowns are scheduled for November 7, 2024 (27 Finished Lots) and April 7, 2025 (53 Finished Lots). The finished lots in this project offer a typical size at 6,825 square feet. There were no model homes, or vertical improvements underway of the effective date of valuation. This project includes larger lots capable of achieving a premium in the current market climate. Furthermore, Lots 38..56 are oriented along the southern portion of the project with rear yard frontage to the existing Bartley Cavanaugh Golf Course offering golf course views and shade from mature trees along the edge of the golf course property.
HDR & MDR: These two components are owned by M&H Realty.
They include two development sites including a 3.378 Net AC HDR site with densities from 15 to 27 units per acre, as well a s a
5.473 Net AC MDR site with densiti es from 8-14 units per acre.
These properties reflect vacant land with only zoning level entitlements. However, according to City Planners, both properties would be required to produce a minimum number of units, or 95 units up to a maximum of 167 units. Development within the total density allowance would constitute a legally, permissible land use if the two properties were combined.
Flood Zone: According to the Federal Emergency Management Agency Flood Insurance Rate Maps (FIRM), Community-Panel Number 060266- 0285F & 0305F, with an effective date of August 12, 2021, the subject property is identified in Zone X. It is identified as areas of
0.2% annual chance flood; areas of 1% annual chance flood with a v e r a g e d e p t h s o f l e s s t h a n 1 f o o t o r w i t h d r a i n a g e a r e a s l e s s t h a n 1 s q u a r e m i l e , a n d a r e a s p r o t e c t e d b y l e v e e s f r o m 1 % annual chance flood. The 1% annual chance flood (100-year flood), also known as the base flood, is the flood that has a 1 % chance of being equaled or exceeded in any given year. Flood insurance is not required.
Smith & Associates, Inc.
SUMMARY OF SALIENT FACTS (Continued)
Unusual Seismic Hazards: Special Publication 42 (Interim Revision 2007), Fault Rupture Hazard Zones in California, prepared by the California
Department of Conservation, California Geological Survey, describes active faults and fault zones pursuant to the Alquist - P r i o l o E a r t h q u a k e F a u l t Z o n i n g A c t . A c c o r d i n g t o S p e c i a l Publication 42, the subject property is not within or near an Alquist-Priolo special study zone.
Fire Hazard Risk: T h e s u b j e c t d o e s n o t a p p e a r t o b e l o c a t e d w i t h i n a M e d i u m , High, or Very High Fire Hazard Severity Zone.
Highest and Best Use: The legally permissible uses of the subject are limited to the land uses as currently approved. The Highest and Best use is for near- term single-family residential development.
Effective Date(s) of Valuation: September 25, 2024
VALUE CONCLUSION:
VALUE AGGREGATE MARKET VALUE
Hypothetical Market Value (KB HOME)
-MDR-1 – 107 Residential Lots
-Lot 323 – 1,795 SF Home** (Model Home)
-Lot 324 – 2,102 SF Home** (Model Home)
-Lot 325 – 2,236 SF Home** (Model Home)
$20,670,000
$455,000
$505,000
$520,000
BULK VALUE (MDR-1) $22,150,000
Hypothetical Market Value (KB HOME)
-LDR-1 – 79 Residential Lots
-Lot 226 – 2,693 SF Home** (Model Home)
-Lot 227 – 1,685 SF Home** (Model Home)
$19,530,000
$620,000
$486,000
BULK VALUE (LDR-1) $20,636,000
Hypothetical Market Value (MERITAGE HOMES)
-Portion of LDR-2 – 77 Lots
$19,700,000
Hypothetical Market Value (M&H REALTY)
-Portion of LDR-2 – 80 Lots
$19,615,000
BULK VALUE (LDR-2) $39,315,000
Hypothetical Market Value (M&H REALTY)
North of CRB
-8.851 AC MDR/HDR Site
$6,550,000
AGGREGATE, OR CUMULATIVE VALUE
OF APPRAISED PROPERTIES
$88,651,000
** Reflects the value for the finished lot and improvements (based on costs) at the time of permit issuance.
The value noted above is presented in conjunction with the Hypothetical Condition that as of the effective date of valuation, the Bonds had just been sold and the properties were encumbered by CFD Bonds supported by Special Taxes as described herein. The market value estimates account for the impact of the lien of the Special Tax securing the Bonds.
Smith & Associates, Inc.
EXTRAORDINARY ASSUMPTIONS
An assumption, directly related to a specific assignment, as of the effective date of the assignment results, could alter the appraiser’s opinions or conclusions if found to be false. 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. Extraordinary Assumptions specific to this assignment include the following:
1. According to the City of Sacramento, the master developer will receive reimbursement from Delta Shores CFD No. 2019-1 (Improvement Area 1) in the amount not to exceed $11,862,073.
According to the City of Sacramento, bonding capacity is limite d t o a 3 : 1 v a l u e - t o - l i e n o n t h e aggregate of the value of IA-1.
2. This appraisal assumes completion of the remaining flood protec tion projects, as stated in the ULOP report (included in the addenda of this report), within th e timelines stipulated within the ULOP report and that no suspension of development approvals wil l be necessary. Alternatively, if deadlines are not met, the City will seek and be granted legislative extensions by the Central Valley Flood Protection Board and development will continue for the subject project.
HYPOTHETICAL CONDITIONS
A condition, as directly related to a specific assignment, is c ontrary to what is known by the appraiser to exist on the effective date of the assignment results but used for the purpose of the analysis. Hypothetical conditions are contrary to known facts about physical, legal, o r economic characteristics of the subject property; or about conditions or trends; or about the integrity of data used in an analysis. Hypothetical Conditions specific to this assignment include the following:
1. The opinion of market value as of the effective date of valuation is based on the hypothetical condition that Bonds for Delta Shores CFD No. 2019-1 (Improveme nt Area 1) had just been sold and the properties were encumbered by CFD Bonds supported by Sp ecial Taxes as descried herein. The opinion of market value accounts for the impact of the lien of the Special Tax securing the bond.
It is clearly noted that the use of Extraordinary Assumptions a nd Hypothetical Conditions might affect the assignment results.
Smith & Associates, Inc.
PART 1 – INTRODUCTION
IDENTIFICATION OF THE SUBJECT PROPERTY
The subject properties reflect the parcels identified within De lta Shores CFD No. 2019-1 (Improvement Area 1). It is generally located along the SWQ of Interstate 5 and Cosumnes River Boulevard. It is in the City of Sacramento and Zip Code 95832. An illustrative map of these properties is as follows.
The parcels currently identified by the Sacramento County Assessor’s Office for this project include several parcels. The following table shows revenue generating parcels for the subject property. Non-revenue generating parcels are identified in the site description of this report.
Smith & Associates, Inc.
PROJECT AREA # LOTS APNs LEGAL
MDR-1
KB Home
110 053-0220-019..128 Lots 239..348, Delta Shores West
R.M. Book 452, Page 2, December 19, 2023
LDR-1
KB Home
81 053-0220-001..018
053-0230-015..077
Lots 158..238, Delta Shores West
R.M. Book 452, Page 2, December 19, 2023
LDR-2
Meritage Homes
77 053-0250-001..004,
053-0250-047..092,
053-0240-001..008,
053-0240-045..051
053-0230-001..004
Lots 1..4, 47..100, 115..122, 137..147, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
LDR-2
M&H Realty
80 053-0250-005..046,
053-0240-009..022,
053-0240-031..044,
053-0230-005..014
Lots 5..46, 101..114, 123..136, 148..157, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
HDR & MDR SITE
M&H Realty
3.378 AC
5.473 AC
119-0010-026, 060
(Portion)
Refer to Legal Description
The legal description was identified in the Preliminary Title Report prepared by First American Title Company, dated February 9, 2024. This description is lengthy, and a copy of this report is included in the addenda of this report. It is noted that the total land areas identified for the MDR and HDR Sites, north of Cosumnes River Boulevard were derived from the Master Parcel M a p f o r D e l t a S h o r e s P h a s e 3 , recorded July 31, 2024 (Document # 20240731/0501).
Delta Shores is a 782 acre master-planned community, located in the southwestern section of Sacramento, California. The comm unity is entitled up to 1.3 mi llion square feet of regional retail uses, 5,222 residential units, approxim ately 144 acres of open space, a n d m i x e d - u s e t o w n c e n t e r o f approximately 20 acres. The initial Master Subdivision subdivided the development into sixty-four master parcels. The commercial component of the project (referencing t he entire larger Delta Shores project) includes a village commercial center, and a neighborhood-serving mixed-use town center. Amenities such as open space, recreation, pedestrian/bicycle paths, and a community center have been incorporated into the land use plan.
Since 2009 the project has received various entitlements. These include approval of the Delta Shores PUD, Certification of the Delta Shores Environmental Impact Report, approval of the Delta Shores Development Agreement, various cost sharing agreements, several mitigation measures, and various tentative and final maps. In 2019 Economic & Planning Systems, Inc. (EPS) prepared and updated their Finance Plan to a d d r e s s i n f r a s t r u c t u r e a n d f a c i l i t y f u n d i n g s t r a t e g y f o r D e l t a Shores and to implement funding and reimbursement mechanisms. The Finance Plan includes use of exis ting and new fee programs, implementation of a land-secured financing district, and uses of other funding mechanisms. The appraisal of the subject is to assist in the land-secured financing of the finance plan.
The area north of the project site and east of I-5, known as th e Meadowview neighborhood, has been developed with single family residential units over the last 60 years. Bordering the project site on the northeast is the federally-owned Sacramento Job Corps facility, a portion of which (102 acres) was acquired by the City of Sacramento for potential future uses ei t h e r a f u l l s i t e s p o r t s c o m p l e x , s p o r t s complex mixed with affordable hou sing, homeless services, and 1 0 0 % a f f o r d a b l e r e s i d e n t i a l h o u s i n g .
These land uses are anticipate d to go to council in Fall 2024 f or decisions on the types of land uses.
Neighborhood input in ongoing. At minimum, the site would take at least six years to develop after the Council provides direction. No funding sources have been identified for this project.
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To the south of the Job Corps facility, east of the project sit e, is vacant privately-owned land zoned for residential uses. In November 2021 Taylor Builders announced a proposal for 1,159 residential units on this 140.7-acre site known as Stone Beetland. They acquired this site in February 2024 for $11,250,000.
In addition, Taylor Builders will purchase the remaining land area for Improvement Area-3. This land area represents approximately 186 +/- AC and is identified for the development of approximately 1,825 +/- units comprised of 450 LDR units, 820 MDR units, 124 HDR units (market rate) and 423 HDR units with affordable requirements. The purchase price for this transaction is confidential and the appraiser has reviewed this document. With this acquisition, Taylor Builders will become the master developer for the remainder of Delta Shores.
These two transactions are pivot a l f o r t h e c o m p l e t i o n o f D e l t a Shores. However, each of these transactions reflect vacant land holdings for future developmen t. While they reflect future supply elements for this immediate area, the reality is that developme nt is far behind the subject project with 348 nearly completed, finished lots and ongoing development of homes. Any future competition to the subject property, would be toward the end of the home sales process with minimal impact to the overall demand for the subject projects.
The southern portion of the project site is just north of the c ity-owned Bartley Cavanaugh Golf Course.
The Town of Freeport, which is within an unincorporated area of Sacramento County, borders the western boundary of the project site.
Improvement Area 1 is one of three improvement areas within the Delta Shores CFD and is located west of Interstate 5. It is configured east of Freeport Boulevard, generally north and south of Cosumnes River Boulevard. Site development is completed for all 348 lots loca ted south of Cosumnes River Boulevard, whereas the two parcels north of Cosumnes River Boulevard are v acant land with zoning entitlements only. An aerial depiction is identified as follows.
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AERIAL MAP
HDR & MDR SITES
348 LOTS
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SCOPE OF WORK
This appraisal report is prepared in conjunction with the 2024 Uniform Standards of Professional Appraisal Practice as well as the Appraisal Standards for Land Secured Fi nancing published by the California Debt and Investment Advisory Commission (2004). Elements inherent with this process include the following:
1. Review of all documents provided to determine the purpose, intended use, and intended user of the appraisal report. Identify the appraisal problem and appropria te approaches to value necessary to provide credible results.
2. Complete a physical inspection of each of the properties from an exterior basis. This occurred on June 19, 2024, July 15, 2024, and September 25, 2024. The later date is identified as the effective date of valuation.
3. Research of the neighborhood, city and county factors was based on neighborhood analysis, information from local government sources, and data sources uti lized by Smith & Associates, Inc.
Through the research of this element along with meetings with c ity officials, the properties can be accurately described, and a market analysis conducted for each property type.
4. In developing the approaches to value, market data was used and verified. Data sources included in- house data files, brokers and agents, property owners, and other knowledgeable market participants.
Further data is generated from the City of Sacramento as to the debt for all existing properties in the analysis.
5. Review and analyze all pertinent data to determine the subject’ s highest and best use. Steps 1-4 noted above were considered with particular emphasis placed on current market conditions and trends.
6. A s s e m b l e a n d a n a l y z e t h e d a t a o u t l i n e d a b o v e a n d o p i n i o n s o f v alue formulated. The sales comparison approach and the extraction method will be utilized to develop the individual value for finished lots for each product type. The sales comparison approach was utilized to develop an opinion of value for the two acreage components. Once all of the values were identified, the overall value in its entirety is presented and identified as the Aggregate Value for this project.
7. Review the report for content and compliance with 2024 USPAP, California Debt and Investment Advisory Commission (2004) and client requirements.
8. Preparation of an appraisal report with information presented t o the client that is adequate to allow for an understanding of the appraisal process and the opinion o f v a l u e . T h e d e p t h o f d i s c u s s i o n contained in this report is specific to the needs of the client and for the intended use.
PROPERTY RIGHTS APPRAISED
The property rights appraised reflect the Fee Simple Interest. A definition of the individual property rights appraised is included in the Glossary contained in the Addenda of this appraisal report.
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PURPOSE, INTENDED USE AND INTENDED USER OF THE APPRAISAL
The purpose of this report is to provide an opinion of market value based on the hypothetical condition t h a t a s o f t h e e f f e c t i v e d a t e o f v a l u a t i o n , t h e B o n d s h a d j u s t been sold and the properties were encumbered by CFD Bonds supported by Special Taxes as described herein. The market value estimate accounts for the impact of the lien of the Special Tax securing the Bonds.
The intended use of this report is for bond underwriting purpos es. The Client is the City of Sacramento.
The intended users are the City of Sacramento and its associate d finance team. The appraisal is not i n t e n d e d f o r a n y o t h e r u s e o r u s e r . N o p a r t y o r p a r t i e s o t h e r t h a n t h e C i t y o f S a c r a m e n t o a n d i t s associated finance team may use or rely on the information, opi nions, and conclusions contained in this report.
Two definitions cited in the Appraisal Standards for Land Secur ed Financing published by the California Debt and Investment Advisory Commission (2004) are illustrated below as they are pertinent in the analysis of this property.
Retail Value is defined as the price an end user, namely a homeowner or business owner, would pay for a home or completed buildings under the conditions requisite to a fair sale.
Bulk Sale Value is the most probable price, in a competitive market, for the sa le of all parcels with a tract or development project, to a single purchaser or to multiple buyers, discounted to present value. The bulk sale value reflects the necessary time to sell the land (the absorption period), the cost of developing the land, and the developer’s profit from the project.
DEFINITION OF MARKET VALUE
The following definition of market value is used by agencies th at regulate federally insured financial institutions in the United States.
The most probable price that a property should bring in a compe t i t i v e a n d o p e n m a r k e t u n d e r a l l conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgably, 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:
a. Buyer and seller are typically motivated;
b. B o t h p a r t i e s a r e w e l l i n f o r m e d o r w e l l a d v i s e d , a n d a c t i n g i n what they consider their best interests;
c. A reasonable time is allowed for exposure in the open market; d. Payment is made in terms of cash in U.S. dollars or financial a rrangements comparable thereto; and
e. The price reflects the normal consideration by the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
“12 CFR, Part 34, Subpart C-Appraisals, 34.42(h)”
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OWNERSHIP AND HISTORY OF THE PROPERTY
Title to the subject property is vested to several ownerships.
MDR-1 and LDR-1 are currently ow ned by KB Home Sacramento, Inc. , a California Corporation. These components reflect 110 and 81 lots , respectively. This project was originally placed under contract on January 19, 2022 from M&H Realty Partners, VI, LP. This agree ment stipulated acquisition of the entire project (348 Anticipated Lots) fo r a total purchase price of $3 3,000,000, or $94,828 per lot. Under the terms of this agreement, the buyer (KB Home) would be responsible for all site development costs to a finished lot condition.
This agreement between the two parties was modified on April 21, 2022, and ultimately closed escrow on April 29, 2022. The total purchase price based on review of th e First Amendment to this contract was $12,484,436. It is noted that this buyer acquired the entire p arcel, subject to a holdback agreement for the sellers retained land identified as LDR-2 or 157 lots. Essentially it included the transfer of MDR-1 and LDR-1, or 191 paper lots. The purchase price equates to $65,36 4 per lot excluding the 157 lots (LDR-2) u l t i m a t e l y t o b e r e t a i n e d b y M & H R e a l t y P a r t n e r s V I , L P . E s s e ntially, according to this contract and discussion with the developer noted that KB Home opted to purch ase only MDR-1 and LDR-1 for a total of 191 lots rather than all 348 anticipated lots noted for the entire project.
KB Home deeded back to M&H Realty Partners VI, LP the 157 lots (LDR-2) on April 12, 2024 (Doc # 2024- 0412/0295). There was no consideration for this transaction. Since the time of this acquisition of this property on April 29, 2022, the physical nature of this project has changed as the site was developed from vacant land to 191 lots (including 5 model homes and vertical homes under construction).
LDR-2 currently has two ownerships tied to a purchase and sales agreement. According to the PSA dated March 22, 2024, M&H Realty Partners VI, LP, entered into an agr eement to sell the 157 finished lots to Meritage Homes, of California Inc. This contract identified 3 takedowns of the finished lots in increments of 77 lots, 27 lots, and 53 lots. This PSA identified a contract price of $260,000 per finished lot scheduled as follows.
77 Lots - April 19, 2024 - $20,020,000
27 Lots - October 15, 2024 or 197 days following the 77 lot closing - $7,020,000 53 Lots – March 13, 2025 or 149 days following the 27 lot closing - $13,780,000
Collectively, the contract price for 157 finished lots is $40,820,000.
The 1
st Amendment to this contract was dated April 8, 2024. This agre ement extended the contingency period to the original agreement with no changes in the terms or the price.
The 2nd Amendment to this contract was dated April 11, 2024. This agreement extended the contingency period to the original agreement with no changes in the terms o r the price. The contingency period was extended to April 16, 2024.
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The 3rd Amendment to this contract was dated April 16, 2024. This agreement extended the contingency period to the original agreement. The contingency period was extended to April 19 2024. In addition, the closing periods were extended and were noted as follows.
77 Lots - April 24, 2024 - $20,020,000
27 Lots – November 7, 2024 or 197 days following the 77 lot closing - $7,020,000 53 Lots – April 7, 2025 or 149 days following the 27 lot closing - $13,780,000
No other changes were noted.
The 4
th Amendment to this contract was dated June 18, 2024. This agreement extended the closing date for the 77 finished lots to July 8, 2024.
The 5
th Amendment to this contract was dated July 5, 2024. This agree ment created a holdback agreement for the remaining site improvements. This was identif ied at $952,190 for the Cal Trans/Freeport Boulevard offsite work, as well as $505,275.85 for the Meadowview Turn Pocket.
The 77 lots closed escrow on July 9, 2024. The costs for the remaining site improvement were held back in the escrow account. The scheduled closings for the 27 lots and 53 lots remained unchanged from the 3rd amendment.
As such, the overall ownership for LDR-2 includes 77 lots owned by Meritage Homes and 80 Lots owned by M&H Realty Partners VI, LP. The following table shows the current ownership.
PROJECT AREA # LOTS APNs LEGAL
LDR-2
Meritage Homes
77 053-0250-001..004,
053-0250-047..092,
053-0240-001..008,
053-0240-045..051
053-0230-001..004
Lots 1..4, 47..100, 115..122, 137..147, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
LDR-2
M&H Realty
80 053-0250-005..046,
053-0240-009..022,
053-0240-031..044,
053-0230-005..014
Lots 5..46, 101..114, 123..136, 148..157, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
This most recent transaction is compared to the conclusions of value identified later in this report.
APNs 119-0010-060, 026 are currently under the ownership of M&H Realty Partners VI, L.P., a California limited partnership. This represents the land area for the HD R and MDR components located north of Cosumnes River Boulevard. According to the landowner, ultimate ly there are plans to merge these two parcels and rezone the HDR site to MDR. According to Marcus A dams, with the City of Sacramento, this constitutes an allowable land use as long as each project is developed to the minimum density. As such, development under the current zoning can allow between 95 and 167 units. Upon review of Sacramento County public records, there have been no transfers of ownership of these parcels in the past three years.
I t w a s i d e n t i f i e d t h a t t h e d e v e l o p e r o f t h i s p r o j e c t w a s i n t h e process of selling these two parcels.
However, no asking prices or documentation with respect to the asking price was provided for these two properties.
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PART 2 – LOCATION AND PROPERTY DESCRIPTIONS
REGIONAL DESCRIPTION
The Sacramento region is comprised of four counties, which incl ude Sacramento, El Dorado, Placer and Yolo Counties. The region encompasses approximately 5,361 squar e m i l e s f r o m t h e S a c r am e n t o R i v e r Delta to the Sierra Nevada Mountain Range. At the center of this region is the City and County of Sacramento that includes approximately 1,105 square miles near the middle of the 400-mile long central valley. The region is the north-central part of California, approximately 382 miles north of Los Angeles, 273 miles south of the Oregon border, and 85 miles northeast of San Francisco.
Geography, Climate, & Seismic Conditions
The topography of the region ran ges from relatively flat land a long the valley floor to steep mountain terrain. Elevations range from 15 feet below sea level near th e Sacramento/San Joaquin River Delta to 10,000 feet above sea level at the summit of the Sierra Nevada Mountains. The American River and the Sacramento River are the two major waterways in the region. Th e American River flows from the east and travels west along the southern portion of the Sacramento M etropolitan Statistical Area (MSA) and joins the Sacramento River just north of Old Sacramento. The Sacramento River flows from the north and heads south along the west side of the area and marks the western boundary of the region.
The climate of Sacramento is warm and dry in the summer with an average daytime temperature of 91°F, and a cool 58°F at night. During winter months, temperatures range from 36°F to 61°F. Due to the Sierra Nevada Mountains, the region has adequate water supply during s ummer months and is shielded from snowstorms in the winter. During the rainy season, November through April, an accumulation of 17 to 18 inches is the norm. Besides the relatively mild climate, the area is known for its stable seismic conditions.
According to information published by the California Department of Mines and Geology, in accordance with the Alquist-Priolo Special Studies Zone Act of 1972, there are no areas within the Sacramento region identified as a special fault-hazard zone. Unlike the Bay Area and Los Angeles, Sacramento and adjoining cities rank among the lowest in the state for the probability o f a major earthquake. This factor has attributed to job growth and expansion into the area.
Transportation
The region's strategic location in Northern California makes it easy to access other Western cities. The m e t r o p o l i t a n a r e a i n c l u d e s f o u r m a j o r f r e e w a y s , w h i c h c o n v e r g e i n S a c r a m e n t o , i n c l u d i n g t w o o f t h e nation's most vital interstate routes. Interstate 5 runs from Canada to Mexico, and Interstate 80 stretches from the Atlantic Ocean in New York City to the Pacific Ocean in San Francisco. They link up in Sacramento with State Highway 99, which parallels Interstate 5 throughout the length of California, and US Highway 50, which connects the capital with Lake Tahoe, and extends to the east coast.
By rail, intercity commuter rail service is throughout the region, with the hub of freight operations located in Roseville. In 1998, Union Pacific made its western headquarters in Roseville. The Roseville headquarters serves the western United States. Rail service is available ne ar the subject location, however, there are no spurs identified within the immediate vicinity for heavier distribution users.
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Sacramento International Airport is served by several commercia l airlines. The 30-year-old airport is located just off Interstate 5, about a 15 minute drive northwes t of downtown. The total number of p asse n g e rs h as d rast ic ally in c re ase d sin c e th e arrival of S ou t hwest Airlines in 1991 and its discounted fares. Passenger travel peaked in 2007 with 10.7 million passengers but declined to 8.9 million passengers in 2009. A large construction o ccurred at Sacramento Internati onal Airport with the modernization of Terminal B. This project broke ground in June 2008 and was comp leted in 2011. Sacramento County officials reduced the budget to $1.08 billion from $1.3 billion by eliminating plans for a parking garage and hotel. The project includes an automatic train system and a new central terminal building and concourse that will be more than 670,000 square feet, or three times the size of the current Terminal B.
Furthermore, a new $1.3 billion expansion project recently comm enced which will include construction of a $140 million pedestrian walkway that will connect Terminal B to Concourse B. Additional projects include expansion to both Terminal A and Concourse B, which wil l add gates and amenities, a new Terminal B parking garage; and a consolidated ground transporta tion center that will centralize taxi, rideshare, and off-site shuttle providers into a single area that is walkable from both terminals.
Sacramento is linked to the Pac ific Ocean by a 42-mile deep-wat er ship channel into San Francisco Bay.
The inland Port of West Sacramento is located 79 nautical miles n o r t h e a s t o f S a n F r a n c i s c o , a n d i s centered in one of the richest agricultural and industrial regions in the world.
Population
The Sacramento region experienced growth over the past twelve y ears from 2,149,126 in 2010 to the current 2024 estimate (State of California Department of Finance) of 2,402,031. The following table represents the total population increase in the Sacramento regi on based on census figures, as well as estimates compiled by the State of California Department of Finance.
COUNTY
2010
(CENSUS)
2020
(CENSUS)
2023
POPULATION
(ESTIMATES)
2024
POPULATION
(ESTIMATES)
% CHANGE
2023-2024
Yolo 200,848 216,403 220,454 221,666 0.5%
El Dorado 181,058 191,185 188,067 188,583 0.3%
Placer 348,432 404,739 410,085 412,844 0.7%
Sacramento 1,418,788 1,585,055 1,576,639 1,578,938 0.1% Total Region 2,149,126 2,397,382 2,395,245 2,402,031 0.2% State of California 37,253,956 39,538,223 39,061,058 39,128,162 0 .2% Source: State of California Department of Finance
There is continued population growth in the region, albeit at s lower rates than identified in the earlier part of the decade. The region has increased by approximately 252,905 residents since the 2010 census or total population growth of 11. 8% over this time frame. This is slightly higher than the entire State of California showing a total growth rate of 5.1% over the same period. In addition, population growth was slight for the region over the past year represented by the 0.2% increase noted above the levels identified in the 2024 projections. It is worth noting that total population increased by 67,104 residents in California according to these most recent projections.
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Local Economy/Job Formation
The unemployment rate in the Sacramento-Roseville-Arden-Arcade MSA was 4.7 percent in September 2024, down from a revised 4.4 percent in August 2024, and above the year-ago estimate of 4.4 percent.
This compares with an unadjusted unemployment rate of 5.3 perce nt for California and 3.9 percent for the nation during the same period. The unemployment rate was 4. 3 percent in El Dorado County, 4.2 percent in Placer County, 4.9 percent in Sacramento County, and 4.9 percent in Yolo County. The total labor force for the region is currently identified at 1,142,700 workers, with 1,088,900 currently employed.
The following table illustrates historic employment for the entire region since 2000. It is noted that these numbers vary slightly compared to the previous numbers as they are not seasonally adjusted.
YEAR LABOR FORCE EMPLOYMENT UNEMPLOYMENT RATE
2024 YTD 1,142,700 1,088,900 53,700 4.7%
2023 1,132,100 1,080,000 52,100 4.6%
2022 1,124,500 1,082,500 42,000 3.7%
2021 1,102,400 1,055,000 47,400 4.3%
2020 1,096,900 1,010,500 86,400 7.9%
2019 1,104,600 1,069,600 35,000 3.2%
2018 1,111,000 1,071,600 39,300 3.5%
2017 1,088,700 1,037,900 50,800 4.7%
2016 1,073,600 1,017,300 56,300 5.2%
2015 1,060,200 998,100 62,100 5.9%
2014 1,050,800 976,100 74,700 7.1%
2013 1,049,100 958,200 90,900 8.7%
2012 1,049,500 941,300 108,200 10.3%
2011 1,045,200 921,300 123,600 11.8%
2010 1,049,800 920,100 129,700 12.4%
2009 1,051,200 937,100 114,200 10.9%
2008 1,045,300 971,000 74,200 7.1%
2007 1,036,200 981,000 55,200 5.3%
2006 1,022,800 974,900 47,900 4.7%
2005 1,012,000 962,600 49,400 4.9%
2004 998,300 943,700 54,700 5.5%
2003 983,700 927,200 56,400 5.7%
2002 965,000 911,900 53,100 5.5%
2001 935,300 893,400 41,900 4.5%
2000 910,000 871,000 39,000 4.3%
Source: State of California Employment Development Department. Information through September 2024.
Historic changes in the unemployment rate are depicted on the following chart.
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The information above identifies changes in the employment market in the Sacramento region, especially noted over the past year. As of September 2024, the total civilian employment was identified at 1,088,900 jobs. Between March 2020 and Ap ril 2020, total job losses were approximately 153,000 jobs. Since this time, jobs were re-absorbed back into the workforce.
Housing
The Sacramento housing market is stabilizing after periods of a n inflationary environment and rising interest rates in the past two years. With interest rates rema ining flat in the past 9-12 months, home prices started to increase. With recent reductions in interest rates, pricing will likely increase. The table below shows the median home pricing for the four-county region according to the California Association of Realtors, including comparisons from the past two years.
AREA
ALL HOMES
MEDIAN PRICE
AUG 2022
MEDIAN PRICE
AUG 2023
MEDIAN PRICE
AUG 2024 %Δ 22-24
%Δ 23-24
Yolo $631,000 $622,500 $620,960 -1.6% -0.2%
El Dorado $627,000 $657,000 $650,000 3.7% -1.1%
Placer $649,000 $669,000 $675,000 4.0% 0.9%
Sacramento $535,000 $535,000 $559,000 4.5% 4.5%
CALIFORNIA $834,740 $859,670 $888,740 6.5% 3.4%
Home prices in the Sacramento Region have mostly improved since August 2022. Changes over the past 12 months reflect changes in pricing from (1.1%) to 4.5%. This information is showing increasing pricing at higher overall interest rates than compared to 2022 and into 2023.
Monthly changes in pricing over the past year for these countie s, as well as California on an overall basis as derived from the California Association of Realtors are note d below. Home prices are shown in terms of median price.
MON-YR. CA EL DORADO PLACER SACRAMENTO YOLO
July-23 $832,340 $650,000 $660,000 $547,000 $625,000
August-23 $859,800 $657,000 $669,000 $535,000 $622,500
September-23 $843,340 $685,000 $665,000 $545,000 $608,640 October-23 $840,360 $660,000 $685,000 $550,000 $629,900 November-23 $822,200 $650,000 $659,000 $522,290 $620,000 December-23 $819,740 $660,000 $633,020 $535,000 $630,000 January-24 $788,940 $650,000 $620,000 $515,000 $600,360 February-24 $806,490 $647,500 $650,000 $530,000 $918,940 March-24 $854,490 $677,000 $659,000 $530,000 $635,830
April-24 $904,910 $757,000 $671,740 $548,580 $615,000
May-24 $908,040 $699,000 $675,000 $555,000 $653,980
June-24 $900,720 $709,000 $685,000 $560,000 $649,500
July-24 $886,560 $695,000 $670,000 $560,000 $610,000
August-24 $888,740 $650,000 $675,000 $559,000 $620,960
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Pricing characteristics are note d above since August 2023 Over all pricing dropped in the latter half of 2023, but indicators for 2024 show increasing pricing.
Current levels of inventory are stable. The following table shows the total number of homes sold in each county according to Metrolist since 2018. Home prices are shown in terms of median price.
COUNTY 2018 2019 2020 2021 2022 2023 2024 ACTIVE*
Sacramento 19,112 18,410 18,155 19,344 15,142 11,317 8,729 2,143 Placer 6,174 6,213 6,805 7,006 5,615 4,618 3,661 1,032 El Dorado 2,815 2,616 3,381 3,329 2,502 1,893 1,446 670 Yolo 1,757 1,783 1,799 2,076 1,589 1,298 1,039 278
Totals 29,858 29,022 30,140 31,755 24,848 19,126 14,875 4,123 COUNTY 2018 2019 2020 2021 2022 2023 2024 ACTIVE
Sacramento $354,500 $366,975 $410,000 $480,304 $520,000 $510,000 $530,000 $575,000 Placer $470,000 $489,500 $520,000 $625,000 $669,447 $642,375 $650 ,000 $721,450 El Dorado $497,500 $495,000 $525,000 $621,000 $650,000 $630,000 $659,000 $732,500 Yolo $429,000 $449,000 $475,000 $550,000 $600,000 $599,000 $614,17 3 $649,500 MEDIAN SF 2018 2019 2020 2021 2022 2023 2024 ACTIVE
Sacramento 1,523 1,542 1,561 1,539 1,532 1,557 1,575 1,683 Placer 2,000 2,004 2,021 2,020 2,010 2,040 1,996 2,244 El Dorado 2,048 2,085 2,088 2,096 2,034 2,050 2,022 2,200 Yolo 1,590 1,640 1,685 1,607 1,633 1,726 1,710 1,902
MEDIAN $/SF 2018 2019 2020 2021 2022 2023 2024 ACTIVE
Sacramento $232.76 $237.99 $262.65 $312.09 $334.67 $327.55 $333.60 $332.25 Placer $235.00 $244.26 $257.30 $309.41 $342.72 $314.89 $342.98 $3 42.66 El Dorado $242.92 $237.41 $251.44 $296.28 $324.71 $307.32 $326.70 $333.99 Yolo $269.81 $273.78 $281.90 $342.25 $364.49 $347.05 $356.61 $363. 20 Source: Metrolist, *Active & 2024 information processed as of September 25, 2024
According to this information, pricing is trending upward. The following table shows changes for each individual county, as well as total inventory of homes.
COUNTY
2023 PRICING 2024 PRICING % CHANGE
ACTIVE
INVENTORY
SALES RATE/
TOTAL INVENTORY
Sacramento $510,000 $530,000 3.9% 2,143 998/Mo. – 2.1 Months Placer $642,375 $650,000 1.2% 1,032 418/Mo. – 2.5 Months El Dorado $630,000 $659,000 4.6% 670 156/Mo. – 4.1 Months Yolo $596,050 $614,173 1.6% 278 119/Mo. – 2.3 Months
Totals 4,123 1,700/Mo. – 2.4 Months
Source: Metrolist,*Active information processed as of September 25, 2024
The median home price is trending upward in most counties. Sac ramento County is 3.9% above the annualized average for 2023. Inventory levels in the resale market are stable with 4, 123 homes on the market as of September 25, 2024, representing approximately 2.4 months of inventory.
The average price of a new home ranges from $513,560 (Yuba County) to $930,555 (El Dorado County) in the Sacramento region. According to the Gregory Group (New Hous ing Trends), 2 nd Quarter 2024, the
historic average pricing for the Sacramento region is identifie d on the following table. It is clearly noted that this level of pricing is based on gross pricing, prior to incentives.
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COUNTY 2Q 2022 2Q 2023 2Q 2024 %Δ 22-24 %Δ 23-24
El Dorado County $925,316 $986,100 $930,555 0.6% -5.6%
Placer County $731,952 $755,823 $805,069 10.0% 6.5%
Sacramento County $734,765 $690,152 $686,964 -6.5% -0.5% Sutter County $462,262 $579,565 $606,209 31.1% 4.6%
Yolo County $671,035 $649,916 $675,377 0.6% 3.9%
Yuba County $516,926 $488,575 $513,560 -0.7% 5.1%
REGIONWIDE $725,889 $710,853 $724,717 -0.2% 2.0%
Pricing changes from 2022 to 2024 (2 nd Quarter), as well as changes over the past year are identified on the table above. This information shows that pricing has decreased in the entire region by 0.2% since the 2 nd Quarter of 2022. Year-over-year regionwide changes increased by 2.0%. This shows pricing is nearing levels experienced in 2nd quarter 2022, when interest rates were lower. Information fro m Sutter County is influenced by the lack of residential projects.
There were between 7,790 and 8,099 sales identified in the regi on from 2020 to 2021. The new home market escalated during Covid-19 and low interest rates. These levels dropped in 2022 to 5,568 sales due to rising inflation and increases in interest rates. Home buyers adjusted to these interest rates and 2023 produced 7,019 total sales. Sales for 2024 are identified at 4,363 sales based on total sales through the first half of 2024. These elements are identified as follows.
COUNTY 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 El Dorado County 183 351 559 637 328 259 417 358 228 271 161 Placer County 1,048 1,503 1,643 1,866 1,676 1,592 2,300 2,958 2,170 2,571 1,336 Sacramento County 1,258 1,793 2,327 2,540 2,674 3,220 3,885 3,859 2, 557 3,351 2,219 Sutter County 8 13 27 92 109 92 452 102 53 33 36
Yolo County 169 199 409 464 278 505 312 432 196 434 342 Yuba County 73 127 122 54 169 328 424 390 364 359 269
REGIONWIDE 2,739 3,986 5,087 5,653 5,234 5,996 7,790 8,099 5,568 7,019 4,363 Source: The Gregory Group, 2nd Quarter 2024
The subject property is located in the Sacramento County market area. New home sales dropped 33.7% in 2022 as compared to levels identified in 2021. Total sales in 2023 were 31.1% above levels in 2022 and in 2024, 2,219 new homes were sold in Sacramento County. This is approximately 66.2% of the total sales noted in 2023, however, 2024 information is based on the first two quarters. By way of comparison, 1,690 new homes were sold in the first half of 2023, and year-to-date sales are 31.3% higher in 2024.
Leisure Activities
For leisure activities, Sacramento's best asset is its location. The city makes a good base camp to sample the sights of Northern Californi a. San Francisco, Lake Tahoe, Yosemite National Park, the Napa Valley, Monterey Bay, and historic towns of the gold rush era are all w ithin a few hours by car. In Sacramento itself there are the Kings of the National Basketball Association, professional opera and ballet companies, a symphony orchestra and the West's oldest public art museum. R ecently, it was announced that the Oakland A’s will play the 2025 season in Sutter Health Park in West Sacramento. Mild weather makes most outdoor sports available year-round, including tennis, gol f, boating and bicycling. With picturesque Gold Rush-era towns dotting the foothills east of Sacramento, a nd with the majestic Sierra Nevada beckoning skiers, backpackers, boaters, and anglers, it is easy to understand the Sacramento appeal to tourists. About 20 percent of Sacramento’s visitors came to tow n while vacationing, 17 percent were
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visiting friends and relatives, and 20 percent were passing thr ough. The construction and subsequent opening of the Golden One Center in Downtown Sacramento in 2016 has had a positive impact on tourism in the region.
Conclusion
The Sacramento region enjoys a favorable location, central within California and the West Coast. All forms of transportation are well developed and easily accessible. The work force is relatively stable, educational facilities are abundant, and the generally favorable government attitude allows the area to be attractive to both individuals and corporations. Currently, economic cond itions are still influenced by the inflationary economy.
Inflation was at a 40-year high in 2022, and rising interest rates are the main vehicle used to combat rising inflation in all sectors. This impacted the housing market wit h slower levels of sales and pricing starting to reverse course after two years of high levels of appreciation. While new home sales are showing higher levels of pricing, the rising interest rates will compress affo rdability ratios and pricing will have to adjust to levels to stimulate sales. Recently, rates were lowered in September 2024.
According to the most recent m eeting September 18, 2024 by the Federal Reserve, recent indicators suggest that economic activity ha s continued to expand at a sol id pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee’s 2 percent long-term objective but remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee has gained greater confidence that in flation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.
The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3 /4 to 5 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee is strongly committed to supporting maximum employment and returning inflat i o n t o i t s 2 p e r c e n t l o n g - t e r m objective.
In assessing the appropriate stan c e o f m o n e t a r y p o l i c y , t h e C o m m i t t e e w i l l c o n t i n u e t o m o n i t o r t h e implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks em erge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
As relates to housing, higher interest rates increase the cost of housing by making the mortgage payment greater than at lower interest rates. The Federal Reserve has determined that it needs to act to stem the rise of inflation and has increased interest rates identified as follows.
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Interest rates have remained stable in the past twelve months. It is noted that the table depicted above is based on quarterly changes. As such, the most recent rate cut is not depicted in this table. In the recent September meeting, the Federal Funds Rate was lowered to reflect 4.75% to 5.00%. Currently, new homes are selling with builder incentives, in which the builder buys down the interest rate for the first few years, then the rate adjusts to market. Buyers are purchasing homes with these concessions in the anticipation of refinancing their mortgages when rates are lower. Still, recent reductions in the Federal Funds rate will likely flow to the housing market with lower interest rates and having positive impact on demand.
REGIONAL MAP
FEDERAL FUNDS
DATE EFFECTIVE RATE
January 1, 2022 0.08%
April 1, 2022 0.33%
July 1, 2022 1.68%
October 1, 2022 3.08%
January 1, 2023 4.33%
April 1, 2023 4.83%
July 1, 2023 5.12%
October 1, 2023 5.33%
January 1, 2024 5.33%
April 1, 2024 5.33%
July 1, 2024 5.33%
SUBJECT
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AREA DESCRIPTION
The subject property is located in the southern portion of the City of Sacramento. It is located along the w e s t e r n s i d e o f I n t e r s t a t e 5 , e a s t o f F r e e p o r t B o u l e v a r d , a n d n o r t h a n d s o u t h o f C o s u m n e s R i v e r Boulevard in the South Sacramento submarket. This location is s outhwest of the Pocket area neighborhood, south of the Meadowview neighborhood, and north o f the Laguna neighborhood.
Meadowview, located northeast of the subject is an older neighb orhood of fair quality commercial and residential uses. These residential uses typically have below average property values. Laguna, one mile to the south, is a 20-year-old suburban area of Sacramento and features good quality homes and commercial properties. To the west is Freeport, an unincorpora ted town having older commercial and residential properties.
P r i m a r y h i g h w a y a c c e s s t o t h e a r e a i s v i a I n t e r s t a t e 5 . T h e m ain east-west corridors in the area are Meadowview/Mack Road, Cosumnes River Boulevard, and Laguna Boul evard. These roads connect to both Interstate 5 and State Highw ay 99. Franklin Boulevard, Ce nter Parkway, and Highway 99 are the major north-south arteries. Already well served by Regional Tra nsit (RT) bus service, the subject neighborhood recently became home to a light rail station. The new light-rail South Line is now transporting thousands to downtown and the northern and eastern portions of Sacramento County.
The next phase of expansion for this project extends into the adjacent community of Elk Grove.
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The neighborhood can generally be described as a mature mixed-u se area, which encompasses all types of land uses. It is situated approximately 10 miles south of downtown Sacramento and is easily accessible via Interstate 5 and Highway 99. Given the proximity to these major freeways, access to the neighborhood is considered good/excellent.
The South Sacramento community includes a wide variety of housing types, including single and multiple family developments, independent and assisted senior housing de velopments. Home ownership in this neighborhood is approximately 50 percent and the quality and co ndition of the homes is fair to average relative to other areas of Sacra mento. Multi-family uses in the neighborhood account for about 5-10 percent of the land uses. Most are 50 or more units in size. Th e median age of the apartment complexes is 30 years. The apartment projects include both market rate units and those with subsidized rents. The overall multi-family occupancy of the neighborhood is roughly 97%.
The immediate subject neighborhood has not experienced any larg e scale residential development for many years; however, this trend is changing over the coming yea rs as the residential portions of Delta Shores are built-out with homes. As previously noted, Delta Shor e s i s a m i x e d - u s e m a s t e r p l a n n e d community containing 782 acres. The project has entitlements for up to 1.3 million feet of regional retail uses, 5,222 residential units, two new elementary schools, as well as parks, extensive open space, and wetlands. Recently Taylor builders will become the master developer for Delta Shores. The remaining land area, Improvement Area 3, re presents approximately 186 +/- AC for the development of approximately 1,825 +/-units comprised of 450 LDR units, 820 MD R units, 124 HDR units (market rate) and 423 HDR units with affordable requirements. The purchase pr ice for this transaction is confidential and the appraiser has reviewed this document.
Additionally, a planned ±141 acre development known as Stone Be e t lan d is loc at e d ju st east of De lt a Shores. The developer, Taylor Builders, recently announced that they are planning about 1,159 residential units. The project is located on the north side of Cosumnes Riv er Boulevard east of 24th Street (future road) and immediately west of the Morrison Creek light rail sta tion. The project is envisioned to include transit oriented villages as part of the overall development. T hey acquired this site in February 2024 for $11,250,000.
These two transactions are pivot a l f o r t h e c o m p l e t i o n o f D e l t a Shores. However, each of these transactions reflect vacant land holdings for future developmen t. While they reflect future supply elements for this immediate area, the reality is that developme nt is far behind the subject project with 348 lots and ongoing development of homes. Any future competition to the subject property, would be toward the end of the home sales process with minimal impact to the overall demand for the subject projects.
Most of the existing retail/commercial properties are located a t the major arterials of the neighborhood such a I-5 and Cosumnes River Boulevard, Laguna Boulevard, Flor in Road, Fruitridge Road, Mack Road, Calvine Road, Freeport Boulevard and Franklin Boulevard. These uses primarily cater to the surrounding residents. In addition, the community is served by two hospital s, several medical facilities, and the Cosumnes River Community College.
Large commercial shopping developments include Delta Shores, wi th Florin Towne Centre and the Southgate Shopping Center located in the northern portion of the area. Delta Shores is a regional shopping center located at I-5 and Cosumnes River Boulevard. The center contains over 900,000 SF of retail and is anchored by Walmart Supercenter, RC Willey, At Home Floor & Décor, Regal Theater, Hobby Lobby, Dick’s Sporting Goods, Ross, Old Navy, and Ulta Beauty and includes many other smaller national retailers.
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It was identified in Costar Properties that this center sold on July 15, 2022 for $122,500,000. It was reported to include just under 400,000 square feet and a transaction unit price near $315 per square foot.
In that the subject property is across the freeway from this center, the overall location is well served with respect to retail uses.
Land uses to the south of this project include the Bartley Cavanaugh Golf Course. This is a public golf course named after a former city manager in the City of Sacramento and is the newest facility of the city’s golf courses opened in 1995.
It is noted that Kaiser acquired a 29-acre site and the northea st quadrant of Interstate 5 and Cosumnes River Boulevard (within Delta Shores). This could add a job ba se to the region and could ultimately be walkable to residents. However, there are no development plans filed for these parcels as of the effective date of valuation.
Relevant land uses within this neighborhood are delineated on the following page.
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Subject
Delta Shores
Retail
Delta Shores
IA-2
Sacramento
Regional
Wastewater Plant
City of Sacramento
Housing/Sports Complex
Stone Beetland
Project
Kaiser Site
Bartley Cavanaugh
Golf Course
Delta Shores
IA-3
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As noted by the previous exhibit, there are additional land use s near the subject property. They are identified as follows.
Delta Shores Residential – This references land uses identified as Improvement Area No. 2 of the Delta Shores Community Facilities District. Land uses are mostly a m ix of medium density residential and high density residential uses. Residential projects have commenced in this project and most likely competition for this project comes from othe r areas of the community. Impr ovement Area 2 is currently undergoing site development with 4 individual villages and a minimum lot size range from 1,612 to 4,250 square feet.
A summary of these villages is as follows.
PROJECT LOT SIZE
(SF)
# Of LOTS UNITS
SOLD
UNSOLD
INVENTORY
UNOFFERED
INVENTORY
Coronado 4,250 SF 87 45 10 32
Avalon 1,612 SF 102 0 0 102
Balboa 1,750 SF 96 0 0 96
Catalina 3,116 SF 136 34 8 94
TOTALS 421 79 18 324
Initial development within this project area is identified at 421 lots. All of these villages are designated as MDR project with lots ranging in size from 1,612 to 4,250 square feet.
In addition, this project includes six (6) parcels identified f or the development of high density uses with overall density ranges from approximately 22 to 27 units per acre. Overall, there are 1,152 units identified for this use.
I A - 3 i s j u s t n o r t h o f t h i s a r e a , a n d r e p r e s e n t s a p p r o x i m a t e l y 186 +/- AC for the development of approximately 1,825 +/-units comprised of 450 LDR units, 820 MD R units, 124 HDR units (market rate) and 423 HDR units with affordable requirements. It was vacant as of the effective date of valuation.
Sacramento Regional Wastewater Treatment Plant – A notable large-scale land use within the immediate area is the Sacramento Regional Wastewater Treatment Plant (SRWTP), situated southeast of Delta Shores along the eastern side of Interstate 5. It includes approxima tely 2,150 acres of buffer land (open space) surrounding this facility to minimize odor impacts on surroundi ng residential areas. It is approximately
1.5 miles southeast of the subject property shown as follows.
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The SRWTP has been successful with odor control and has had few “odor events” over the past five years.
Information relating to odor events at the facility is summarized as follows.
Subject
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As this facility is surrounded by buffer lands and the operator s successful track record with minimizing odor impacts on the surrounding areas, the proximity of this facility is not expected to have a measurable impact on the subject project, especially with the overall location along the western side of Interstate 5.
City of Sacramento Site
On January 21, 2022, the City of Sacramento announced the acquisition of an undeveloped 102-acre property in south Sacramento. This site is ultimately noted f or affordable housing, a youth sports park, or other civic amenities. Potential future uses include either a full site sports complex, sports complex mixed with affordable housing, homeless services, or affordable residential housing. These land uses are anticipated to go to council in Fall 2024 for decisions on the types of land uses. Neighborhood input in ongoing. At minimum, the site would take at least six years to develop after the Council provides direction.
No funding sources have been identified for this project.
The following exhibit references the proximity of this facility to the subject property.
Stone Beetland Project
A conceptual project identified as the Stone Beetland project c ould provide future competition for the subject property. This project shows development plans for approximately 1,159 units on 140.7 AC. The project is located on the north side of Cosumnes River Boulevar d east of 24th Street (future road) and immediately west of the Morrison Creek light rail station. The project is envisioned to include transit oriented villages as part of the overall development. Taylor Bu ilders acquired this site in February 2024 for $11,250,000.
Subject
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It is possible that this project could overlap with the subject property. However, no site development activity was identified as of the effective date of valuation as the subject property is ahead of this project in terms of lot delivery.
Conclusion
The subject property represents a larger development site in South Sacramento, located north and south of Cosumnes River Boulevard, west of Interstate 5. The additio nal larger land uses in this neighborhood w e r e d e s c r i b e d i n t h i s s e c t i o n a n d t h e o v e r a l l l o c a t i o n a l o n g t h e w e s t e r n s i d e o f I n t e r s t a t e 5 i s advantageous. While there are some atypical land uses in this neighborhood, Sacramento Wastewater Treatment Plant & City of Sacramento Facility / Sports Park, they are distant from the subject especially with Interstate 5 as a buffer. It is well located in terms of the proximity to downtown Sacramento and retail uses are across the freeway in the Delta Shores retail center. Overall, the immediate area is carefully planned to facilitate long term growth. The subject is a desir ed development site for South Sacramento, as we ll as the ove rall re g ion as a wh ole . T h e ove rall rat in g of this region is growing with a favorable outlook into the foreseeable future.
Site development is nearly completed for this project and home development has commenced.
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SITE DESCRIPTION
Location
The subject properties reflect the parcels identified within De lta Shores CFD No. 2019-1, Improvement Area 1. It is located along the western side of Interstate 5, east of Freeport Boulevard, and along the n o r t h e r n a n d s o u t h e r n s i d e o f C o s u m n e s R i v e r B o u l e v a r d . T h e o verall boundary map is identified as follows.
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HDR & MDR SITES
348 LOTS
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APN/Legal Description
The subject properties are identified by the Sacramento County Assessor as numerous parcels. Final maps are recorded for the finished lot components south of Cosumnes River Boulevard and construction has commenced on vertical improvements. The following table shows r evenue generating parcels for the subject property.
PROJECT AREA # LOTS APNs LEGAL
MDR-1
KB Home
110 053-0220-019..128 Lots 239..348, Delta Shores West
R.M. Book 452, Page 2, December 19, 2023
LDR-1
KB Home
81 053-0220-001..018
053-0230-015..077
Lots 158..238, Delta Shores West
R.M. Book 452, Page 2, December 19, 2023
LDR-2
Meritage Homes
77 053-0250-001..004,
053-0250-047..092,
053-0240-001..008,
053-0240-045..051
053-0230-001..004
Lots 1..4, 47..100, 115..122, 137..147, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
LDR-2
M&H Realty
80 053-0250-005..046,
053-0240-009..022,
053-0240-031..044,
053-0230-005..014
Lots 5..46, 101..114, 123..136, 148..157, Delta Shores West R.M. Book 452, Page 2, December 19, 2023
HDR & MDR SITE
M&H Realty
3.378 AC
5.473 AC
119-0010-026, 060
(Portion)
Refer to Legal Description
The overall descriptions are based on those identified in the p reliminary title report prepared by First American Title Company dated Feb ruary 9, 2024. It is noted tha t the total land areas identified for the MDR and HDR Sites, north of Cosumnes River Boulevard were deriv ed from the Master Parcel Map for Delta Shores Phase 3, recorded July 31, 2024 (Document #20240731/0501). A copy of this report is included in the addenda of this report.
The current assessor’s parcel maps are noted as follows.
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MDR-1
LOTS 239..348
LDR-1
LOTS 200..213,
216..219
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LDR-1
LOTS 158..199, 214, 215,
220..238
LDR-2
LOTS 144..157
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LDR-2
LOTS 93..143
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LDR-2
LOTS 1..92
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HDR & MDR SITES
(PORTION)
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This description includes all of the parcels within the boundar ies of the Delta Shores CFD No. 2019-1, Improvement Area 1, as depicted on the prior pages. In addition, there are non-revenue parcels included in the district. While the preliminary title report only identified the residential lots in the legal description, they are summarized as follows.
APN LAND AREA (AC) USE
053-0220-129 0.62 Park
053-0220-130 0.33 Park
053-0220-131 1.42 Park / Sound Wall Buffer/Separated Bike Trail 053-0220-132 0.26 Private Alley
052-0220-133 0.09 Private Alley
052-0220-134 0.17 Private Alley
052-0220-135 0.22 Private Alley
052-0220-136 0.25 Private Alley
052-0220-134 0.29 Private Alley
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APN LAND AREA (AC) USE
053-0230-078 0.12 Park / Sound Wall Buffer
053-0220-079 0.65 Park
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APN LAND AREA (AC) USE
053-0240-052 5.88 Park
053-0240-053 2.57 Detention Basin
053-0240-054 0.03 Utility Box
053-0240-055 0.23 Landscape Median
053-0240-056 0.19 Landscape Median
APN LAND AREA (AC) USE
053-0250-096 5.88 Landscape
053-0250-094 2.57 Buffer to Adjacent Parcels
053-0250-095 0.03 Golf Course Buffer/Storm Drain
053-0250-096 0.23 Park
053-0250-097 0.19 Park / Sound Wall Buffer
Lot Size (AC)
The total acreage for the properties included in this analysis equates to 107.22 acres. This includes 77.46 ac re s ide n t ifie d for th e 348 lot s, as we ll as d e ve lop m e nt sit e s of 3.378 AC (HDR) and 5.473 AC (LDR), respectively, north of Cosumnes River Boulevard. These two parc els include only zoning entitlements as o f t h e e f f e c t i v e d a t e o f v a l u a t i o n . T h e r e m a i n i n g l a n d a r e a r epresents acreages for non-revenue generating land uses including Parks, Detention Basin, and Open Space.
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Proposed Development
The land uses for this project are allocated based on lot sizing delineated for each individual project. This project represents 348 residential lots allocated among the parcels described in prior sections.
MDR-1 – This project includes 110 lots on 17.87 AC demonstrating an overall density of 6.2 units per acre.
Lot sizes range from 2,975 to 7,760 square feet, with a typical size identified at 3,230 square feet, which is lower than the average lot size at 3,683 square feet. The following table reflects the individual lot sizes for this project.
These lots have been developed to a finished lot condition. L ots 323..325 have been developed with model homes.
LDR-1 – This project includes 81 lots on 17.38 AC demonstrating an o verall density of 4.7 units per acre.
Lot sizes range from 5,000 to 9,970 square feet, with a typical size identified at 5,700 square feet, which is lower than the average lot size at 5,869 square feet. The following table reflects the individual lot sizes for this project.
LOT # APN LOT SIZE (SF) STATUS LOT # APN LOT SIZE (SF) STATUS LOT # APN L OT SIZE (SF) STATUS 239 053-0220-019 4,573 F-Lot 276 053-0220-056 3,431 F-Lot 313 053-0220-093 5,495 F-Lot 240 053-0220-020 3,705 F-Lot 277 053-0220-057 3,431 F-Lot 314 053-0220-094 4,452 F-Lot 241 053-0220-021 3,967 F-Lot 278 053-0220-058 3,431 F-Lot 315 053-0220-095 4,421 F-Lot 242 053-0220-022 4,075 F-Lot 279 053-0220-059 3,431 F-Lot 316 053-0220-096 3,588 F-Lot 243 053-0220-023 4,168 F-Lot 280 053-0220-060 3,677 F-Lot 317 053-0220-097 4,009 F-Lot 244 053-0220-024 3,705 F-Lot 281 053-0220-061 5,488 F-Lot 318 053-0220-098 3,230 F-Lot 245 053-0220-025 2,975 F-Lot 282 053-0220-062 2,975 F-Lot 319 053-0220-099 3,230 F-Lot 246 053-0220-026 3,161 F-Lot 283 053-0220-063 2,975 F-Lot 320 053-0220-100 3,230 F-Lot 247 053-0220-027 3,258 F-Lot 284 053-0220-064 3,644 F-Lot 321 053-0220-101 4,081 F-Lot 248 053-0220-028 3,258 F-Lot 285 053-0220-065 3,294 F-Lot 322 053-0220-102 3,826 Parking Lot 249 053-0220-029 3,090 F-Lot 286 053-0220-066 3,294 F-Lot 323 053-0220-103 3,305 1,795 SF M 250 053-0220-030 3,561 F-Lot 287 053-0220-067 3,931 F-Lot 324 053-0220-104 3,305 2,102 SF M 251 053-0220-031 4,297 F-Lot 288 053-0220-068 3,697 F-Lot 325 053-0220-105 3,305 2,236 SF M 252 053-0220-032 3,314 F-Lot 289 053-0220-069 3,111 F-Lot 326 053-0220-106 3,305 F-Lot 253 053-0220-033 3,314 F-Lot 290 053-0220-070 3,111 F-Lot 327 053-0220-107 3,305 F-Lot 254 053-0220-034 3,314 F-Lot 291 053-0220-071 3,111 F-Lot 328 053-0220-108 3,305 F-Lot 255 053-0220-035 3,314 F-Lot 292 053-0220-072 3,697 F-Lot 329 053-0220-109 3,305 F-Lot 256 053-0220-036 3,314 F-Lot 293 053-0220-073 3,880 F-Lot 330 053-0220-110 3,781 F-Lot 257 053-0220-037 3,270 F-Lot 294 053-0220-074 3,294 F-Lot 331 053-0220-111 3,731 F-Lot 258 053-0220-038 3,896 F-Lot 295 053-0220-075 3,294 F-Lot 332 053-0220-112 3,215 F-Lot 259 053-0220-039 4,506 F-Lot 296 053-0220-076 4,476 F-Lot 333 053-0220-113 3,215 F-Lot 260 053-0220-040 3,357 F-Lot 297 053-0220-077 7,760 F-Lot 334 053-0220-114 3,215 F-Lot 261 053-0220-041 3,364 F-Lot 298 053-0220-078 4,573 F-Lot 335 053-0220-115 3,679 F-Lot 262 053-0220-042 3,364 F-Lot 299 053-0220-079 4,165 F-Lot 336 053-0220-116 3,634 F-Lot 263 053-0220-043 3,586 F-Lot 300 053-0220-080 3,778 F-Lot 337 053-0220-117 3,427 F-Lot 264 053-0220-044 4,465 F-Lot 301 053-0220-081 4,317 F-Lot 338 053-0220-118 3,427 F-Lot 265 053-0220-045 3,812 F-Lot 302 053-0220-082 3,816 F-Lot 339 053-0220-119 3,427 F-Lot 266 053-0220-046 3,103 F-Lot 303 053-0220-083 3,230 F-Lot 340 053-0220-120 3,427 F-Lot 267 053-0220-047 3,103 F-Lot 304 053-0220-084 3,230 F-Lot 341 053-0220-121 3,427 F-Lot 268 053-0220-048 3,103 F-Lot 305 053-0220-085 3,230 F-Lot 342 053-0220-122 3,427 F-Lot 269 053-0220-049 3,103 F-Lot 306 053-0220-086 3,230 F-Lot 343 053-0220-123 3,427 F-Lot 270 053-0220-050 4,402 F-Lot 307 053-0220-087 3,230 F-Lot 344 053-0220-124 3,427 F-Lot 271 053-0220-051 4,714 F-Lot 308 053-0220-088 5,450 F-Lot 345 053-0220-125 3,097 F-Lot 272 053-0220-052 3,204 F-Lot 309 053-0220-089 4,603 F-Lot 346 053-0220-126 3,074 F-Lot 273 053-0220-053 3,021 F-Lot 310 053-0220-090 4,681 F-Lot 347 053-0220-127 3,077 F-Lot 274 053-0220-054 3,334 F-Lot 311 053-0220-091 5,070 F-Lot 348 053-0220-128 3,288 F-Lot 275 053-0220-055 3,431 F-Lot 312 053-0220-092 6,437 F-Lot
Smith & Associates, Inc.
These lots have been developed to a finished lot condition. Lo ts 226..227 have been developed with model homes.
LDR-2 – This project includes 157 lots on 42.21 AC demonstrating an overall density of 3.7 units per acre.
Lot sizes range from 6,500 to 10,831 square feet, with a typical size identified at 6,825 square feet, which is lower than the average lot size at 7,694 square feet. The following table reflects the individual lot sizes for this project.
LOT # APN LOT SIZE (SF) STATUS LOT # APN LOT SIZE (SF) STATUS LOT # APN L OT SIZE (SF) STATUS 158 053-0230-015 5,775 F-Lot 185 053-0230-042 5,426 F-Lot 212 053-0220-013 5,000 F-Lot 159 053-0230-016 5,775 F-Lot 186 053-0230-043 7,043 F-Lot 213 053-0220-014 5,000 F-Lot 160 053-0230-017 5,775 F-Lot 187 053-0230-044 6,544 F-Lot 214 053-0230-057 5,000 F-Lot 161 053-0230-018 5,775 F-Lot 188 053-0230-045 5,700 F-Lot 215 053-0230-058 5,698 F-Lot 162 053-0230-019 5,775 F-Lot 189 053-0230-046 5,700 F-Lot 216 053-0220-015 7,717 F-Lot 163 053-0230-020 5,775 F-Lot 190 053-0230-047 5,700 F-Lot 217 053-0220-016 6,505 F-Lot 164 053-0230-021 6,809 F-Lot 191 053-0230-048 5,700 F-Lot 218 053-0220-017 6,956 F-Lot 165 053-0230-022 5,959 F-Lot 192 053-0230-049 5,700 F-Lot 219 053-0220-018 5,000 F-Lot 166 053-0230-023 5,408 F-Lot 193 053-0230-050 7,633 F-Lot 220 053-0230-059 5,000 F-Lot 167 053-0230-024 5,716 F-Lot 194 053-0230-051 5,354 F-Lot 221 053-0230-060 5,698 F-Lot 168 053-0230-025 5,872 F-Lot 195 053-0230-052 5,508 F-Lot 222 053-0230-061 6,595 F-Lot 169 053-0230-026 5,596 F-Lot 196 053-0230-053 5,508 F-Lot 223 053-0230-062 5,700 F-Lot 170 053-0230-027 5,238 F-Lot 197 053-0230-054 5,506 F-Lot 224 053-0230-063 5,700 F-Lot 171 053-0230-028 5,201 F-Lot 198 053-0230-055 5,505 F-Lot 225 053-0230-064 5,700 F-Lot 172 053-0230-029 5,426 F-Lot 199 053-0230-056 5,504 F-Lot 226 053-0230-065 5,700 2,683 SF M 173 053-0230-030 6,080 F-Lot 200 053-0220-001 5,503 F-Lot 227 053-0230-066 5,775 1,685 SF M 174 053-0230-031 5,000 F-Lot 201 053-0220-002 5,502 F-Lot 228 053-0230-067 7,044 F-Lot 175 053-0230-032 5,000 F-Lot 202 053-0220-003 5,601 F-Lot 229 053-0230-068 7,092 F-Lot 176 053-0230-033 6,620 F-Lot 203 053-0220-004 6,557 F-Lot 230 053-0230-069 5,509 F-Lot 177 053-0230-034 5,811 F-Lot 204 053-0220-005 7,755 F-Lot 231 053-0230-070 5,602 F-Lot 178 053-0230-035 5,246 F-Lot 205 053-0220-006 9,970 F-Lot 232 053-0230-071 5,291 F-Lot 179 053-0230-036 5,375 F-Lot 206 053-0220-007 6,577 F-Lot 233 053-0230-072 5,375 F-Lot 180 053-0230-037 5,375 F-Lot 207 053-0220-008 7,432 F-Lot 234 053-0230-073 5,375 F-Lot 181 053-0230-038 5,375 F-Lot 208 053-0220-009 5,950 F-Lot 235 053-0230-074 5,375 F-Lot 182 053-0230-039 5,423 F-Lot 209 053-0220-010 6,578 F-Lot 236 053-0230-075 5,375 F-Lot 183 053-0230-040 5,660 F-Lot 210 053-0220-011 6,873 F-Lot 237 053-0230-076 5,059 F-Lot 184 053-0230-041 5,417 F-Lot 211 053-0220-012 5,000 F-Lot 238 053-0230-077 5,937 F-Lot
Smith & Associates, Inc.
Lots in Green are owned by Meritage Homes
These lots have been mostly developed and reflect nearly finish ed lots. No vertical improvements were completed to this property as of the effective date of valuation.
LOT # APN LOT SIZE (SF) STATUS LOT # APN LOT SIZE (SF) STATUS LOT # APN L OT SIZE (SF) STATUS 1 053-0250-001 8,644 F-Lot 54 053-0250-054 7,800 F-Lot 107 053-0240-015 10,046 F-Lot 2 053-0250-002 8,641 F-Lot 55 053-0250-055 7,800 F-Lot 108 053-0240-016 7,599 F-Lot 3 053-0250-003 8,638 F-Lot 56 053-0250-056 7,746 F-Lot 109 053-0240-017 7,498 F-Lot 4 053-0250-004 9,580 F-Lot 57 053-0250-057 8,223 F-Lot 110 053-0240-018 6,958 F-Lot 5 053-0250-005 7,559 F-Lot 58 053-0250-058 7,233 F-Lot 111 053-0240-019 6,500 F-Lot 6 053-0250-006 6,825 F-Lot 59 053-0250-059 6,825 F-Lot 112 053-0240-020 7,702 F-Lot 7 053-0250-007 9,359 F-Lot 60 053-0250-060 6,825 F-Lot 113 053-0240-021 7,922 F-Lot 8 053-0250-008 8,334 F-Lot 61 053-0250-061 6,825 F-Lot 114 053-0240-022 9,420 F-Lot 9 053-0250-009 7,200 F-Lot 62 053-0250-062 6,825 F-Lot 115 053-0240-023 10,327 F-Lot 10 053-0250-010 6,858 F-Lot 63 053-0250-063 6,825 F-Lot 116 053-0240-024 7,542 F-Lot 11 053-0250-011 6,825 F-Lot 64 053-0250-064 6,825 F-Lot 117 053-0240-025 7,542 F-Lot 12 053-0250-012 7,473 F-Lot 65 053-0250-065 7,836 F-Lot 118 053-0240-026 8,361 F-Lot 13 053-0250-013 6,825 F-Lot 66 053-0250-066 7,150 F-Lot 119 053-0240-027 9,645 F-Lot 14 053-0250-014 7,473 F-Lot 67 053-0250-067 7,836 F-Lot 120 053-0240-028 8,128 F-Lot 15 053-0250-015 6,825 F-Lot 68 053-0250-068 6,825 F-Lot 121 053-0240-029 7,547 F-Lot 16 053-0250-016 6,825 F-Lot 69 053-0250-069 6,825 F-Lot 122 053-0240-030 9,973 F-Lot 17 053-0250-017 7,090 F-Lot 70 053-0250-070 6,825 F-Lot 123 053-0240-031 7,405 F-Lot 18 053-0250-018 7,620 F-Lot 71 053-0250-071 6,825 F-Lot 124 053-0240-032 8,035 F-Lot 19 053-0250-019 8,150 F-Lot 72 053-0250-072 6,825 F-Lot 125 053-0240-033 7,855 F-Lot 20 053-0250-020 6,825 F-Lot 73 053-0250-073 6,825 F-Lot 126 053-0240-034 7,564 F-Lot 21 053-0250-021 7,561 F-Lot 74 053-0250-074 7,807 F-Lot 127 053-0240-035 7,033 F-Lot 22 053-0250-022 7,561 F-Lot 75 053-0250-075 8,132 F-Lot 128 053-0240-036 6,944 F-Lot 23 053-0250-023 6,825 F-Lot 76 053-0250-076 7,151 F-Lot 129 053-0240-037 7,954 F-Lot 24 053-0250-024 6,825 F-Lot 77 053-0250-077 6,825 F-Lot 130 053-0240-038 6,833 F-Lot 25 053-0250-025 6,825 F-Lot 78 053-0250-078 6,825 F-Lot 131 053-0240-039 8,813 F-Lot 26 053-0250-026 6,825 F-Lot 79 053-0250-079 6,825 F-Lot 132 053-0240-040 7,150 F-Lot 27 053-0250-027 6,825 F-Lot 80 053-0250-080 6,825 F-Lot 133 053-0240-041 7,150 F-Lot 28 053-0250-028 6,825 F-Lot 81 053-0250-081 6,825 F-Lot 134 053-0240-042 7,150 F-Lot 29 053-0250-029 7,473 F-Lot 82 053-0250-082 6,825 F-Lot 135 053-0240-043 7,150 F-Lot 30 053-0250-030 6,825 F-Lot 83 053-0250-083 7,111 F-Lot 136 053-0240-044 8,035 F-Lot 31 053-0250-031 7,473 F-Lot 84 053-0250-084 6,500 F-Lot 137 053-0240-045 10,114 F-Lot 32 053-0250-032 6,825 F-Lot 85 053-0250-085 7,111 F-Lot 138 053-0240-046 8,260 F-Lot 33 053-0250-033 6,825 F-Lot 86 053-0250-086 6,825 F-Lot 139 053-0240-047 8,616 F-Lot 34 053-0250-034 6,825 F-Lot 87 053-0250-087 6,825 F-Lot 140 053-0240-048 10,279 F-Lot 35 053-0250-035 6,825 F-Lot 88 053-0250-088 6,825 F-Lot 141 053-0240-049 9,023 F-Lot 36 053-0250-036 6,825 F-Lot 89 053-0250-089 6,825 F-Lot 142 053-0240-050 8,239 F-Lot 37 053-0250-037 7,561 F-Lot 90 053-0250-090 6,825 F-Lot 143 053-0240-051 8,029 F-Lot 38 053-0250-038 7,686 F-Lot 91 053-0250-091 6,825 F-Lot 144 053-0230-001 7,827 F-Lot 39 053-0250-039 7,800 F-Lot 92 053-0250-092 7,717 F-Lot 145 053-0230-002 7,862 F-Lot 40 053-0250-040 7,800 F-Lot 93 053-0240-001 7,327 F-Lot 146 053-0230-003 7,919 F-Lot 41 053-0250-041 7,800 F-Lot 94 053-0240-002 7,475 F-Lot 147 053-0230-004 7,728 F-Lot 42 053-0250-042 7,800 F-Lot 95 053-0240-003 7,475 F-Lot 148 053-0230-005 7,610 F-Lot 43 053-0250-043 7,800 F-Lot 96 053-0240-004 8,286 F-Lot 149 053-0230-006 8,811 F-Lot 44 053-0250-044 7,800 F-Lot 97 053-0240-005 8,286 F-Lot 150 053-0230-007 9,162 F-Lot 45 053-0250-045 7,800 F-Lot 98 053-0240-006 7,475 F-Lot 151 053-0230-008 8,085 F-Lot 46 053-0250-046 7,800 F-Lot 99 053-0240-007 7,475 F-Lot 152 053-0230-009 8,085 F-Lot 47 053-0250-047 7,800 F-Lot 100 053-0240-008 10,341 F-Lot 153 053-0230-010 8,085 F-Lot 48 053-0250-048 7,800 F-Lot 101 053-0240-009 8,619 F-Lot 154 053-0230-011 8,085 F-Lot 49 053-0250-049 7,800 F-Lot 102 053-0240-010 9,325 F-Lot 155 053-0230-012 9,302 F-Lot 50 053-0250-050 7,800 F-Lot 103 053-0240-011 9,061 F-Lot 156 053-0230-013 8,316 F-Lot 51 053-
0250-051 7,800 F-Lot 104 053-0240-012 8,409 F-Lot 157 053-0230-014 10,831 F-Lot 52 053-0250-052 7,800 F-Lot 105 053-0240-013 7,678 F-Lot 53 053-0250-053 7,800 F-Lot 106 053-0240-014 7,886 F-Lot
Smith & Associates, Inc.
HDR – This site includes a total area of 3.378 AC located along the northern side of Cosumnes River Boulevard. It represents a corner location at the northeast c orner of Cosumnes River Boulevard and Freeport Boulevard. Currently, this site includes zoning approvals only with an overall density range from 15-27 units per acre. It reflects vacant land with no site improvements as of the effective date of valuation.
The orientation of this parcel is noted below.
MDR – This site includes a total area of 5.473 AC located along the northern side of Cosumnes River Boulevard. It represents an interior location. Currently, thi s site includes zoning approvals only with an overall density range from 8-14 units per acre. It reflects vacant land with no site improvements as of the effective date of valuation. The orientation of this parcel is noted below.
According to Marcus Adams with the City of Sacramento Planning Department, both projects can be combined into one development site as long as the minimum densi ty is achieved. This would create a project with a density range from 95-167 units.
HDR MDR
Smith & Associates, Inc.
Utilities and Municipal Providers/Site Development Costs
Site development was underway as of the effective date of valuation. This project is served by public utilities including the following providers.
Park District: City of Sacramento
Fire Protection: City of Sacramento
School District: Sacramento City Unified School District S e w e r : C i t y o f S a c r a m e n t o
Storm Drain: City of Sacramento
W a t e r : C i t y o f S a c r a m e n t o
E l e c t r i c i t y : S M U D
G a s : P G & E
The subject property will be served by the Sacramento City Unified School District. Currently, the subject’s schools are rated below average per GreatSchools.org and below the Elk Grove new home communities.
This table is noted below.
Smith & Associates, Inc.
According to the Absorption Analysis report prepared by John Burns Real Estate Consulting (July 23, 2024), “Discussions with active new home builders in Delta Shores indi cate a combination of school strategies.
Families from nearby (e.g., Pocket) keep their kids in those schools, while some opt for charter or private schools. Some families with connections to nearby Elk Grove are able to register their children in schools there. These strategies have significantly mitigated the relati vely low ratings of the public schools that service the Subject”.
Site improvements are nearly completed as of the effective date of valuation. According to the purchase and sale agreement for this project, finished lots are defined as follows.
The term “Finished Lot” or reference to “Finished Lot condition ” shall mean that all civil and soils engineering work has been performed and paid for, all applicabl e fees have been paid, all improvements both onsite and offsite have been constructed, all work has been done and all other obligations have been fulfilled, whether on the Property, or outside the boundaries of the Property, as required:
(i) by all applicable government or quasi-governmental agencies (“Agencies”), including the conditions as established by the Agencies for their approval of the tentative and final subdivision tract map(s) covering the Property; and
(ii) In order to obtain a building permit for a single-family residence upon the payment of the ordinary building permit fee, so that each Owner is able to commence construction of its contemplated single family residences on any lot within the Pro perty, and upon the completion of construction of a residence is able to obtain a p ermanent certificate of occupancy for the single family residence constructed on the lot.
Without limiting the foregoing, a “Finished Lot” shall mean all:
(A) Grading completed in accordance with approved grading plans, in cluding the complete installation of any retaining walls (with backfill and drainage) necessary to create the building pad, with the pad certified by a civil engineer licens ed in good standing in the State with respect to elevation, with an elevation tolerance to o n e - t e n t h ( . 1 ) f o o t accuracy vertically and one-half (.5) foot accuracy horizontally of the grade set forth in the rough grading plans approved by the City or County, as appl icable, at the tops and toes of slopes, and by a soils engineer licensed and in good st anding in the State with respect to compaction, each reasonably acceptable to KB and by any required Agency, and suitable for the construction of each Owner’s product, incl u d i n g t h e c o s t o f C i v i l Consultant (engineer) fees for completing the design of the IPs /FM/Landscape plans through approval, civil land development staking and soil engin eer observation and testing;
(B) Water services installed and stubbed to the lot behind the curb , with water meter boxes set to grade, lids (traffic-rated boxes and lids shall be insta lled if water meter boxes are to be encased in concrete driveway aprons), meter setters, curb stops, and under- sidewalk water sleeves; as well as all sewer services installed and stubbed to the lot one- and-a-half (1.5) foot behind the property line with ‘S’ markings on curb to indicate the location of sewer laterals;
(C) Electricity, telephone, and cable television conduits inst alled and stubbed to the lot line behind the curb/sidewalk and capable of being energized/ connec ted for immediate service upon completion of the residence on the lot (all PG&E h ouse service
Smith & Associates, Inc.
reimbursements shall be returned to the party who initially paid the costs attributable to such reimbursable items). Gas service will not be installed to the lots;
(D) Storm drain, water system, sewer system, curb, gutter, side walk, joint trench and street pavement for public access and frontage improvements constructed and installed for the entire tract in which the lot is located;
(E) Street signs and striping installed, curbs painted red as shown in the signage and striping plans, street monuments installed and certified by the surveyor l i c e n s e d a n d i n g o o d standing in the State, and streetlights installed, numbered, an d energized, and utility billings paid in full, for the entire tract in which the lot is located;
(F) Property corners surveyed and marked, all community and str eet monumentation installed, all retaining walls installed around utility boxes and/or along property line(s) as may be required by the plans approved by the City and/or utility companies, all perimeter walls, gates and/or fencing installed (excluding Lot fences), a ll site perimeter, street frontage or median landscaping and irrigation systems required by the improvement plans and City specifications in stalled (except landscaping and irrigation contained entirely within the Lots) and all common areas and other amenit ies completed and accepted by the applicable Agency and/or homeowners’ association;
(G) Fees, exactions, and assessments paid (other than ordinary building permit fees, architectural plan check fees and fire fees) and all bonds premiums paid;
(H) Park area, open space and other public amenities required by the conditions of approval to the tentative and final maps or applicable Agencies that are necessary for construction and occupancy of residential units completed or satisfied and accepted by the applicable Agency and/or homeowners’ association;
(I) If applicable, all wetlands, endangered species and protec ted habitat mitigation required i n c o n n e c t i o n w i t h t h e r e s i d e n t i a l d e v e l o p m e n t o f t h e P r o p e r t y consistent with the Tentative Map shall have been completed and all environmental a nd biological permits and approvals, and other approvals and permits required by the City, County or other governmental authorities or otherwise required for the developm ent of the Property, including without limitation, to the extent applicable, Departm ent of Fish & Game 2081 Permit, Department of Fish and G ame Section 1602 Streambed Alte ration Agreement, Regional Water Quality Control Board Section 401 Water Quality Certification, and/or US Army Corps of Engineers Nationwide Section 404 Permit, shall have been obtained in form and content satisfactory to KB in its sole and absolute discretion, and all conditions of the Environmental Permits precedent to recording the Final Maps, including without limitation habitat or biological mitigation requirements, have been satisfied;
(J) Storm water management perm its obtained and paid and erosi on control measures in place and maintained in good condition;
(K) Remediation of any hazardous materials in connection with development of Finished Lots, including removal of any contaminated soil; and
(L) Gas is shown on the JT plans but will not be installed. The Properties will be an all-electric community.
Smith & Associates, Inc.
The developer of this project provided the overall costs for site development of this project. The following table summarizes these costs based on review of actual costs for this project as submitted by Goodfellow Brothers California LLC, dated April 2024. This reflects the most recent costs provided by the developer.
ITEM TOTAL COSTS
Total Costs (Original Costs) $36,625,600.90
Change Orders $967,835.18
Total Project Costs $37,593,436.08
Less Costs Completed ($35,286,401.66)
TOTAL REMAINING COSTS $2,307,034.42
According to these schedules, 93% of the total site development costs are completed as of the effective date of valuation. Remaining costs are noted at $2,307,034.42 and allocated among the following components.
ITEM TOTAL COSTS ITEM TOTAL COSTS
Demolition Landscape
--Clear & Grub $1,460.00 --6" Decomposed Granite $0.00
--Pavement Sawcut and Removal $33,215.00 --Stabilization $28,520.00 Erosion Control --CMU Seat Wall with Stone Veneer $0.00 --Erosion Control $32,240.00 --Sign Wall $546.00
--Offsite Street Sweeping $2,145.00 --Picnic Table (ADA) $0.00 Water --Picnic Table $0.00
--12" Waterline Pipe $438,608.99 --Bench $0.00
--12" Gate Valve $8,600.00 --Trash Receptacle $8,100.00 --Fire Hydrants $77,500.00 --Booster Pump (Private) $13,020.00 --2" Temp. Blow Off Valve $7,000.00 --Booster Pump (Public) $7,340.00 --Connect to Existing $9,600.00 --Tree 24" Box $5,721.60 Storm Drain --Tree, 15-Gallon $591.00
--6" Subdrain to Youngdahl $225,000.00 --Tree, 5-Gallon $11,927.30 Concrete --Tree, 2-Gallon $1,481.44
--Sidewalk $18,268.20 --Tree, 1-Gallon $19,428.64
--Vertical Curb & Gutter $8,090.00 --Sod $32,230.00
--Attached Sidewalk over 12" AB $11,900.00 --Bark Mulch at Planter Areas $75,285.00 --Handicapped Ramps $7,000.00 --Clear and Mulch $17,810.00 Paving --Soil Preparation $18,997.00
--4" AC $8,718.75 --Plant Maintenance $10,362.00
--Monument Well $0.00 Wall Fence
--Traffic Control $16,500.00 --6' Masonry So undwall $408,888.48 --4" AB $35,990.00 --6' High Pilaster $22,997.52
--13" AB $33,245.00 --6' Open View Metal Fence $52,687.50 --Monument Well $2,000.00
--Pavement Replacement (Water Well) $66,430.00 TOTAL COSTS $2,307,034.42 --Freeport Blvd. & Meadowview Road $505,300.00
Striping
--Stripe and Sign $9,870.00
--Sidewalk Barricade $1,820.00
--Stripe and Sign (Freeport) $10,600.00
Smith & Associates, Inc.
The allocation of these costs in cludes offsite improvements, as well as remaining in-tract improvements for the LDR-2 lots. Offsite improvements needed for this project include the following.
Cal-Trans / Freeport Boulevard – These costs are identified at $952,190 and are identified for completion by December 2024. The costs for these improvements are being held in escrow wh ich were part of the transfer of 77 lots to Meritage Homes in April 2024. They equ ate to $2,736.18 per lot based on the 348 lots south of CRB.
Meadowview Turn Pocket – These costs are identified at $505,275 and are identified for c ompletion by December 2024. The costs for these improvements are being hel d in escrow which were part of the transfer of 77 lots to Meritage Homes in April 2024. They equ ate to $1,451.94 per lot based on the 348 lots south of CRB.
The total costs identified for offsite improvements are noted at $1,457,465 or $4,188.12 per lot based on the 348 lots south of CRB.
The remaining costs are noted as $ $849,569.42 and are applicable to intract improvements retained by M&H Realty.
ITEM TOTAL COSTS
Total Remaining Costs $2,307,034.42
Less Offsite Costs ($1,457,465)
TOTAL REMAINING COSTS $849,569.42
These costs equate to $10,619.62 per lot based on the 80 lots retained by M&H Realty.
The table below shows these costs as allocated by individual ownerships of this report.
OWNERSHIP MDR-1
KB HOME
110 LOTS*
LDR-1
KB HOME
81 LOTS**
LDR-2
MERITAGE
77 LOTS
LDR-2
M&H REALTY
80 LOTS
TOTALS
Offsite Costs ($4,188.12/Lot) $460,693.20 $339,237.72 $322,485.24 $335,049.60 $1,457,465.76 Intract Costs $0 $0 $0 $849,569.42 $849,569.42
TOTAL REMAINING COSTS
ROUNDED
$460,693.20
$460,693
$339,237.72
$339,238
$322,485.24
$322,485
$1,184,619.02
$1,184,619
$2,307,035.18
$2,307,035
*Total offsite costs identified at $460,923 applied to the 107 lots, excluding model homes. **Total offsite costs identified at $339,238 applied to the 79 lots, excluding model homes.
PERMITS AND FEES
The building and impact fees were obtained from the Updated Fin a n c e P l a n , T a b l e 7 - 1 . T h e y a r e summarized as follows.
Smith & Associates, Inc.
In addition, permits have been pulled for portions of MDR-1 and LDR-1 currently owned by KB Home.
These permits were verified through the City of Sacramento and represent costs incurred for permits and fees as of the effective date of valuation. They reflect permi ts paid for the specific lots (excluding the completed model homes) and include the following.
PROJECT
# OF
PERMITS
PERMITS PAID
AS OF EFFECTIVE
DATE OF VALUATION
MDR-1 (KB Home) 21 $1,017,069
LDR-1 (KB Home) 17 $908,461
Soil Conditions
There was no soils report provided for review in preparation of this assignment. The subject property is located in an area formerly utilized for farming and grazing land. The opinions of value presented for the subject property assume that the soils are capable of supporting the existing improvements and proposed i m p r o v e m e n t s f o r t h e s u b j e c t p r o p e r t y . P l e a s e r e f e r t o t h e a s sumptions and limiting conditions for further documentation.
Nuisances and Hazards
The subject underwent an extensive environmental assessment as part of the CEQA process. In 2009 the City of Sacramento certified the environmental impact report for Delta Shores. As part of the certification and city resolution, there was an adopted a Mitigation Monitori ng Plan (MMP). The EIR, resolution and MMP identified all feasible mitigation that would reduce the im pacts of physical changes in the environment caused by the project, and identified the timing of implementation of the mitigation.
In 2021 the developer applied for a grading permit with the Cit y o f S a c r a m e n t o . T h e D e p a r t m e n t o f Utilities and the Department of Community Development concluded that “rough grading” of the project site could proceed under the various conditions to be imposed. No grading will be permitted, however, unless and until implementation of all mitigation required prior to grading. Implementation of some mitigation is through action (for example, preserving other land for foraging habitat), while in other cases it is through conditions that ensure surveys and reporting (for example, for burrowing owls).
A Delta Shores Mitigation Monito ring Plan Summary dated May 10, 2021 was provided for review. This document indicated a number of completed and on-going mitigatio ns measures being undertaken. A review of this document indicated that there are no significant mitigation issues (from a cost or timing perspective) outstanding.
CATEGORY LDR MDR HDR
Unit Size (SF) 2,500 1,800 1,000
Total Fees - Table 7-1 Finance Plan $63,892 $52,214 $34,634 Less: Credit for Sewer/Water ($2,340) ($2,340) ($1,378) NET FEES $61,552 $49,874 $33,256
Smith & Associates, Inc.
For purposes of this appraisal, it is assumed that there are no surface or sub-surface contaminants impacting the subject property. It is noted that the appraiser is not a recognized expert in this field. Please refer to the assumptions and limiting conditions for further documentation.
Easements, Encroachments & Adverse Conditions
A preliminary title report prepared by First American Title Company dated February 9, 2024, was provided for review in preparation of this assignment. This document revealed 63 exceptions to title, none of which have an adverse impact on the subject property. The following table summarizes these exceptions.
EXCEPTION ITEM COMMENTS
1-3 General Taxes General Disclosure for Property Taxes 4 N/A Intentionally Deleted
5 Taxes and Assessments Taxes for SAFA Consolidated Cap Asmt. #2 6 Special Tax Lien Notice of Special Tax Lien for
Community Facilities District No. 2014-4.
No Impact.
7 Special Tax Lien Notice of Special Tax Lien for
Community Facilities District No. 2019-1.
This document was Amended February 18, 2022.
8 Lien of Supplemental Taxes General Disclosure
9 Unpaid Utilities General Disclosure
10 Rights of Public Stonecrest Avenue & Freeport Blvd.
11 Easement for Water Drainage
And incidental Purposes
Older exception from 1915.
No impact.
12 Easement for Transmission and
Distribution of Electricity to
Great Western Power in 1920
Assigned to PG&E and new
Agreement created and recorded
In 1993. No Impact.
13-18 Easement for Transmission and
Distribution of Electricity and
Telephone to Great Western Power in 1922
No Impact.
19 Easement for Transmission and
Distribution of Electricity to
PG&E in 1946
No Impact.
20 Easement for Maintenance to SMUD in 1956 No Impact.
21 Sewer & Drainage Easement to
City of Sacramento in 1962
No Impact.
22 Drainage Easement to
State of California in 1970
No Impact.
23 Relinquishment of Abutters Rights
for ingress and egress to or from
highway
No Impact.
24 Easements for Frontage Road to
State of California in 1974
Relinquished in 1983
25 Easement for Irrigation Pipe
Recoded in 1974
No Impact, location not determined.
26 Relinquishment of Abutters Rights
for ingress and egress to or from
Interstate 5
No Impact.
Smith & Associates, Inc.
EXCEPTION ITEM COMMENTS
26-29 Relinquishment of Abutters Rights
for ingress and egress to or from
highway Recorded 1978
No Impact. Modified in 1983
30 Exception or reservation of
Minerals or mineral rights
In 1984
No Impact.
31 Contract for Exchange of Real Property
In 1986
No Impact.
32 Grant Deed for Transmission Facilities
In 1990
No Impact.
33 Easement for Pipeline and incidental
Purposes to SMUD in 1995
Easement Quit Claimed in 2018.
No Impact.
34 Release Agreement in 2005 No Impact.
35 Memorandum of Purchase
Agreement in 2005
Modified in 2007. No Impact.
36 Record of Survey recorded
In 2005
Modified in 2007. No Impact.
37 Memorandum of Assignment and
Agreement of Purchase in 2006
No Impact.
38 Easement for Sewer and Incidental
Purposes to Sacramento Regional
County Sanitation District
Quit Claimed in 2009. No Impact.
39 Development Agreement Recorded
In 2009
Last Modified in 2020.
40, 41 Grant of Right of Way and TCE
Easement in 2009
No Impact.
42 Easement for Overhead and
Electrical facilities to SMUD
In 2012
No Impact.
43 Public Improvement Agreement
Between owner and City
In 2016
No Impact.
44 Drainage Easement Agreement
Between owner and City
In 2013
No Impact.
45 Electrical and Communication
Facilities to SMUD in 2014
No Impact.
46 Relinquishment of Abutter’s
Rights of Ingress and Egress from
Road recorded in 2014
No Impact
47 Easement for Public Utilities to
SMUD in 2014
No Impact.
48 Waiver of any claims, damages, by
Reason of the location, construction,
landscaping, or maintenance of a
contiguous freeway or highway
recorded in 2014.
No Impact.
Smith & Associates, Inc.
EXCEPTION ITEM COMMENTS
49 Sewer and Pipeline easement
To City recorded in2014
No Impact.
50 Waiver of any claims, damages, by
Reason of the location, construction,
landscaping, or maintenance of a
contiguous freeway or highway
recorded in 2014.
No Impact.
51 Temporary easement for public use,
Construction, reconstruction,
Installation, repair, inspection,
Expansion, and maintenance of
Public rights-of-way, highways,
Roadways, services, utilities,
Landscape improvements to
City recorded in 2014.
No Impact.
52 Memorandum of Agreement
Recorded in 2015
No impact.
53-55 General Disclosures No Impact.
56 Memorandum of Agreement
With KB Home
Recorded April 29, 2022
No Impact.
57-58 SMUD Utility Lien
Recorded 2022
Amount Due $14,947.65
Notice of Utility Lien for
Community Facilities District No. 2019-1.
This Lien was Released February 7, 2023
59 Easement for Public Utilities to
SMUD in 2023
No Impact.
60 Final Map Delta Shores
West Subdivision No. P06-197
Recorded December 19, 2023
No Impact.
61 Covenants, Conditions, Restrictions easement
Recorded December 19, 2023
No Impact.
62 Master Dispute Resolution Declaration
For Delta Shores West
Recorded December 19, 2023
No. Impact.
63 Subdivision Improvement Agreement
Public Improvement No. P06-197
Recorded December 26, 2023
No Impact.
U p o n r e v i e w o f t h i s d o c u m e n t a n d t h e v a r i o u s e x c e p t i o n s , t h e p roject is subject to typical utility easements. The project includes a recorded development agreement as of the effective date of valuation.
There were no adverse easements, encroachments, or adverse conditions in connection with the subject property.
Smith & Associates, Inc.
Flood Zone
A c c o r d i n g t o t h e F e d e r a l E m e r g e n c y M a n a g e m e n t A g e n c y F l o o d I n s urance Rate Maps (FIRM), Community-Panel Number 060266-0285F & 0305F, with an effective date of August 12, 2021, the subject property is identified in Zone X. It is identified as areas of 0.2% annual chance flood; areas of 1% annual chance flood with average depths of less than 1 foot or with drainage areas less than 1 square mile, and areas protected by levees from 1% annual chance flood. The 1% annual chance flood (100-year flood), also known as the base flood, is the flood that has a 1% chance of being equaled or exceeded in any given year. Flood insurance is not required. A copy of this map is identified as follows.
In addition, on June 21, 2016, the Sacramento City Council passed a resolution accepting the Sacramento Area Flood Control Agency’s (SAFCA) Urban Level of Flood Protection (ULOP) Plan, prepared pursuant to Senate Bill 5 (SB 5) and related legislation. The ULOP Plan identifies flood improvement projects, cost estimates, anticipated funding sources, and a schedule to compl ete them by 2025, which would result in 200-year flood protection for the city.
The purpose of the ULOP annual report it to provide an addition al piece of the substantial evidence necessary to support the “adequate progress finding” in the approval of new development within a flood hazard zone. When considering development within a flood hazard zone, the City has relied on the 2016 ULOP Plan and the subsequent 2017 through 2023 ULOP annual reports as substantial pieces of evidence that SAFCA has made annual progress on the construction of a 200-year flood protection system.
The 2024 annual report was subsequently approved, but after the effective date of valuation. In order for the City of continue to rely on making the “adequate progre ss finding”, the California Government Code 65007(a)(5) further requires the city of annually report to the Central Valley Flood Protection Board on its efforts in working towards completion of the 200-year flood protection system. Accordingly, SAFCA staff and consultants prepared the 2024 ULOP: Adequate Progress Annual Report for the City to fulfill Government code requirements which document the following.
Smith & Associates, Inc.
The total project scope, schedul e, and cost of the floor protec tion system have been developed to meet 200-year flood protection.
T h a t 9 0 % o f t h e r e q u i r e d r e v e n u e s s c h e d u l e d t o b e r e c e i v e d b y that year have been appropriated and is being expended;
Critical features of the Floor Protection System are under cons truction and progressing based upon the actual expenditures of the construction budget; and The City has not been responsible for a significant delay in the completion of the system.
A s o f t h e d a t e o f t h i s r e p o r t , a l l p r o j e c t s a r e c u r r e n t . A s t he December 31, 2025 deadline for ULOP attainment draws near, it is evident that new delays to the rem aining construction activities could constrain attainment for affected portions. It appears that con struction is on track to be complete or substantially complete by end of Dec. 31, 2025 (the deadline) w ith the exception of 3 projects. These include the following.
Reaches F&G Sankey Rd to NEMDC Pumping Station. Construction underway by 2025. Magpie Creek. Construction will begin after 2025
Up to 1.7 Foot Levee and Floodwall Raise, Seepage berm and Pump S t a t i o n Improvements. Complete with 5 years.
Further, some projects have not received full funding yet. Since they will not be 100% complete, and full funding is laid out as an assumption in the ULOP, the City may have to ask for an extension from CVFPB. There is a chance City Council would not seek an exten sion given the potential financial liability from flood damage. Should such a delay arise, the affected jur isdiction or jurisdictions would need to choose whether to temporarily suspend development approvals as required by ULOP legislation, or to seek a legislative extension that may entail the assumption of some liability for future flood damage to any developments approved without ULOP.
As such, the appraisal report is prepared in conjunction with the following extraordinary assumptions.
This appraisal assumes completion of the remaining flood protection projects, as stated i n t h e U L O P r e p o r t ( i n c l u d e d i n t h e a d d e n d a o f t h i s r e p o r t ) , w ithin the timelines stipulated within the ULOP report and that no suspension of dev elopment approvals will be necessary. Alternatively, if deadlines are not met, th e City will seek and be granted legislative extensions b y the Central Valley Flood Prot ection Board and development will continue for the subject project.
As of the effective date of valuation, this element is not slow ing development in the immediate or extended market area of the subject property.
Seismic Hazard
The subject is not located within the Fault-Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone) as defined by Special Publication 42 of the California Department of Conservation, Division of Mines and Geology. The subject is not within a special study area.
Smith & Associates, Inc.
Fire Hazard
The subject is not located within a Medium, High, or Very High Fire Hazard Severity Zone. High severity zones within Sacramento County are identified in the following map.
Zoning/Entitlements
The subject property is currently vested for development of the proposed uses identified in this report. It is part of fully entitled and approved project. The major entit lements achieved include: 1) approval of D e l t a S h o r e s P U D , 2 ) c e r t i f i c a t i o n o f E n v i r o n m e n t a l I m p a c t R e p ort, 3) an approved Development Agreement, 4) adoption of the Delta Shores Financing Plan, 5) a pproval of the Mixed-Income Housing strategy, 6) approval of Large Lot Tentative Map as well as other miscellaneous approvals.
Smith & Associates, Inc.
The subject project is conforming with all applicable environmental mitigation. The final maps for the 348 residential lots was recorded December 19, 2023. These lots a re mostly finished lots with remaining offsite and intract improvements required and identified in the Site Description of this report.
The land uses identified north o f Cosumnes River Boulevard are approved for their specific use, but tentative maps have not been prepared for these land holdings.
Zoning for this project is generally identified in the following classifications, R-1 (PUD), R-1A (PUD), R-3 (PUD) and A-OS (PUD) as they pertain to the subject properties.
Smith & Associates, Inc.
R-1: The purpose of the R-1 zone is to accommodate low-density residential uses composed of single-unit detached residences and duplex dwellings on corner lots. This zone may also include recreational, religious, and educational facilities as the basic elements of a balanced neighborhood. These areas should be clearly defined and without encroachment by uses not perform ing a neighborhood function.
Applicable setbacks and requirements for this district is noted as follows.
ITEM TOTAL
Height 35 Feet
Coverage 40% of Site Area (Max)
Lot Size (SF) 5,200 SF (Min)
Width 52 Feet (Min)
Depth 100-160 Feet
Based on review of the zoning map as well as the overall project map, the R-1 zoning is only applicable for the LDR component for the subject property.
R-1A: The purpose of the R-1A zone is to permit single-unit or duplex dwellings, whether attached or detached, at a higher density than is permitted in the R-1 zone. Dwellings that have no interior side yards, such as townhouses and rowhouses, are allowed. Applicable setbacks and requirements for this district is noted as follows.
ITEM TOTAL
Height 35 Feet
Coverage 50% of Site Area (Max)
Lot Size (SF) 2,900 SF (Min)
Width 25 Feet (Min)
Depth 80-160 Feet
Based on review of the zoning map as well as the overall project map, the R-1A is applicable for the MDR Component for the subject property. The MDR-1 component is below the minimum lot size threshold but approved consistent with the PUD identification of this project. The MDR Component north of Cosumnes River Boulevard is identified for this use with density ranges from 8 to 14 units per acre.
R-3: The purpose of the R-3 zone is to accommodate traditional types of apartments. This zone is located outside the central city, serving as a buffer along major streets and near shopping centers.
ITEM TOTAL
Height 35 Feet
Coverage 50% of Site Area (Max)
Density 30 Units/AC (Max)
The HDR Component north of Cosumnes River Boulevard is identified for this use with density ranges from 15 to 27 units per acre.
A-OS: The purpose of the A-OS zone is to ensure the long-term preserv ation of agricultural and open space land. This zone is intended to prevent the premature development of land to urban uses.
The General Plan identifies the residential components for Trad itional Neighborhood Low Density Residential (3-8 du/ac), Traditional Neighborhood Medium Densit y (8-36 du/ac), and Traditional Neighborhood High Density (18-36 du/ac). Similar to the overa ll zoning, the General Plan also identifies additional land uses are beyond the boundaries of IA-1, and/or are exempt from the facilities.
Smith & Associates, Inc.
The proposed development of this project is consistent with the overall zoning and General Plan. This project includes an affordable housing component identified as the Mixed-Income Housing Strategy. In May 2020, the City of Sacramento approved the project’s Mixed Income Housing Strategy. Under this plan a land dedication of 15.89 acres located in improvement Area No . 3 has been set aside to satisfy the affordable housing requirement. Because of this dedication, bui lders in the project will be exempt from paying the housing fee of $2.95 per square foot. This fee exemp tion has been reflected in the overall building and impact fees.
The developer of the project recorded the Master Parcel Map for Delta Shores Phase 3 on July 31, 2024 (Document # 20240731/0501). The recordation of this map created 3.378 AC and 5.473 AC sites north of C o s u m n e s R i v e r B o u l e v a r d f o r d e v e l o p m e n t o f H D R a n d M D R l a n d u ses. Furthermore, according to Marcus Adams with the City of Sacramento Planning Department, t hese projects can be combined into one development project as long as the minimum density of 95 units is achieved. Overall, this land use can support 95-167 units for futur e development which reflect a conforming land use. Development of the proposed land uses described in this report reflect a legal , permissible use under the current zoning, and general plan.
Taxes and Assessments
The 2024/2025 assessed values for the subject parcels are identified as follows. The first table is for APNs 119-0110-060, 026, which reflect the sites north of CRB. As de scribed in this report, the land areas are a portion of these two parcels.
APN 119-0110-060 119-0010-026
Assessed Value (Land) $3,145,649 $100
Assessed Value (Improvements) $0 $0
Total Assessed Value $3,145,649 $100
BASE PROPERTY TAXES (1.1517%) $36,113.27 $1.15
Direct Levies
--(0168) Sacramento Area Flood Control $684.54 $66.50
--(0198) SAFCA Consolidated Capital Assessment #2 $476.36 $33.56 --(0659) Sacramento Additional Library Service Tax $75.80 $0 --(0612) Sacramento Core Library Service Tax $29.50 $0
--(0742) Maintenance Area #9 $2,336.56 $93.82
TOTAL DIRECT LEVIES $3,602.76 $193.88
TOTAL TAXES $39,716.03 $195.03
The next table reflects the assessed values for the 348 lots south of CRB. Taxes for LDR-2 are all the same as supplemental bills for the Meritage purchase were not available for review.
ITEM MDR – 1 LDR – 1 LDR – 2
Assessed Value (Land) $133,844 $177,382 $135,404
Number of Lots 110 81 157
Total Assessed Value $14,722,840 $14,367,942 $21,258,428
Smith & Associates, Inc.
The subject properties fall within Tax rate area 03-056. Base tax rates for this Tax Rate Area (2024-2025) as provided from the Sacramento County Tax Collectors office are allocated as follows.
ITEM TOTALS
Ad Valorem Taxes 1.0%
Sacto Unified GOB 0.1317%
Los Rios College GO Bond 0.02%
TOTAL TAX RATE 1.1517%
The base tax rate is 1.1517%. As noted the subject property i s located in an area with numerous direct levies. These include the following:
--(0168) Sacramento Area Flood Control - This special benefit assessment finances the Sacramento Area Flood Control Age ncy's regional flood control p lanning efforts to address the serious flood risk facing this community. Funds are used to conduct studies in coordination with the Federal and State government leading t o constructing flood control projects to reduce the flood risk. Assessments are levied on properties within the Agency's jurisdictional boundaries that benefit from improved f lood protection on the American and Sacramento Rivers, and their tributaries. Assessm ents are based on relative land value, area of parcel, and relative benefit deriv ed from flood control.
Assessments are based on relative land value, area of parcel, and relative benefit derived from flood control.
--(0198) SAFCA Consolidated Capital Assessment #2 - The Sacramento Area Flood Control Agency (SAFCA) formed this district in 2016 as authorized by th e SAFCA Act, Water Code Appendix Section 130-1 et seq. and following a Proposition 218 protest procedure election and is subject to accelerated judicial foreclosure. This Special Capital Assessment finances repayment of bonds issued to construct a series of levee and other flood control improvements in the original Consolidated Capital Assessment Di strict as well as a series of projects necessary to provide 100-year flood protection for developed areas in Sacramento's major floodplains as quickly as possible. In addit ion, annual assessments fund the local share of flood risk reduction projects on the lo wer American River and S a c r a m e n t o R i v e r a n d t h e i r t r i b u t a r i e s . A s s e s s m e n t s a r e b a s e d on property-related benefits related to depth of flooding, and damage to structures and land. Assessments are based on property-related benefits related to depth of floo ding, and damage to structures and land.
--(0659) Sacramento Addition al Library Service Tax - Revenue generated by this assessment provides for increased City Library services which w ill keep libraries open more hours, restore book and library material budgets and updat e technology in neighborhood, community, and regional libraries.
--(0612) Sacramento Core Library Service Tax - This is a parcel tax for library services in the City of Sacramento. A parcel tax for library services is im posed upon every parcel of real property in the City to assist in funding the core library services provided by the City.
Core library services include, without limitation, open hours at City libraries, library staff, acquisition of library materials and access to technology.
Smith & Associates, Inc.
--(0742) Maintenance Area 9 - This assessment finances state maintenance of levees on the east side of the Sacramento River.
--(0710) SMD 2014-4 – Delta Shores #1 - This District was formed under the Mello-Roos Community Facilities Act of 1982. This District provides fundin g for the maintenance of street landscaping, parks, open s pace, and other public improvements within the Delta Shores Development
As identified in the Finance Plan, anticipated Direct Levies for the various land use components are illustrated as follows.
Direct levies for the various components lots range from $487.00 to $805.00, per annum.
Overlapping Debt
In addition, the outstanding debt was provided for all of the p roperties in this analysis as compiled from California Municipal Statistics, Inc. This was provided for all of the properties including General Obligation Bonds which are part of the Base Tax Rate noted above. These elements, excluding the General Obligation Bonds, which are paid as part of the base tax rate are identified as follows.
TYPE LOW DENSITY MEDIUM DENSITY HIGH DENSITY
Citywide Landscape & Lighting $84.00 $84.00 $84.00
Sacramento Core Library $13.00 $13.00 $13.00
Sacramento Library Services $34.00 $34.00 $34.00
SAFCA Cap. Asmt. $137.00 $103.00 $76.00
SAFCA O&M Asmet $52.00 $52.00 $40.00
0742/Maintenance Area 9 $466.00 $366.00 $221.00
0710/SMD 2014-4, Delta Shores #1 $19.00 $19.00 $19.00
TOTALS $805.00 $671.00 $487.00
Smith & Associates, Inc.
The total outstanding debt on these properties is identified at $710,562. This total debt is nominal relative to the overall value for the property. The subject pr operty is proposed for an additional district.
It was identified that the 191 lots owned by KB Home are proposed for additional special assessments as part of the California Statewide Communities Development Authority Community Facilities District No. 2024-17 (Delta Shore West). It is clearly noted that the debt for this district was not issued as of the effective date of valuation.
The MDR-1 lots (110 Lots) are designated as Tax Zone 2 with payments identified as follows.
Smith & Associates, Inc.
The LDR-1 lots (81 Lots) are designated as Tax Zone 1 with payments identified as follows.
There are no future special assessments identified for the LDR- 2 l o t s , o r t h e M D R / H D R s i t e s n o r t h o f Cosumnes River Boulevard. This district is anticipated for the subject lots (MDR-1 & LDR-1), however, no debt was issued as of the effective date of valuation.
Delta Shores Community Facilities District No. 2019-1, Improvement Area No. 1
The total eligible facilities for this project are identified at $60,568,649. This includes all eligible facilities for the Delta Shores CFD and are not specific to IA-1. These facilities are summarized as follows.
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Smith & Associates, Inc.
Assigned special taxes for IA-1 include the following.
These charges are subject to a 2% annual increase in payments. In addition, they are based on FY 2021- 2022. Payments for the 2024-2025 tax year are identified as follows.
Low Density Residential - $2,300.70
Medium Density Residential - $1,851.81
High Density Residential - $265.30
These payments are current for the subject property and reflect 2% increase from those identified for FY 2021-2022. In addition, this project includes an HOA with identified dues at $190 per month, per unit.
Smith & Associates, Inc.
IMPROVEMENT DESCRIPTION
This project includes 5 completed model homes located in the project under the KB Home ownership. A description of these homes is as follows.
MDR-1: This project is comprised of 110 lots (alley-loaded) with a t ypical lot size of 3,230 square feet. It i s m a r k e t e d a s R i v a a t D e l t a S h o r e s w i t h t h r e e m o d e l h o m e s c o m pleted as of the effective date of valuation. These homes include options and upgrades beyond the standard, or base floor plans for this project. This project is offering three base floor plans ranging in size from 1,795 to 2,236 square feet with base pricing from $605,000 to $648,000. Completed model homes are noted as follows.
The developer of this project is currently offering a $5,000 co ncession. Standard features include the following, followed by individual plan renderings, and interior photographs.
LOT # APN DESIGN BEDS/BATHS GLA
323 053-0220-103 Two-Story 4 Beds / 3 Baths 1,795 SF
324 053-0220-104 Two-Story 4 Beds / 2.5 Baths 2,102 SF
325 053-0220-105 Two-Story 5 Beds / 3 Baths 2,236 SF
Smith & Associates, Inc.
PLAN 1795 (4 BED, 3 BATH, 1795 SF)
Smith & Associates, Inc.
PLAN 2102 (4 BED, 2.5 BATH, 2102 SF)
Smith & Associates, Inc.
PLAN 2236 (5 BED, 3 BATH, 2236 SF)
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MODEL HOME PHOTOGRAPHS (RIVA AT DELTA SHORES)
Plan 1795 Plan 1795
Plan 1795 Plan 1795
Plan 2102 Plan 2102
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MODEL HOME PHOTOGRAPHS (RIVA AT DELTA SHORES)
Plan 2102 Plan 2102
Plan 2236 Plan 2236
Plan 2236 Rear View – Plan 1795
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MODEL HOME PHOTOGRAPHS (RIVA AT DELTA SHORES)
Rear View - Plan 2102 Rear View – Plan 2236
LDR-1: This project is comprised of 81 lots with a typical lot size of 5,700 square feet. It is identified as Edgewater at Delta Shores with two model homes completed as of the effective date of valuation. These homes include options and upgrades beyond the standard, or base floor plans for this project. This project is offering four base floor plans ranging in size from 1,685 to 2,693 square feet with base pricing from $665,990 to $755,990. This project includes 2 completed model homes summarized on the table below.
There are no model homes for the other 2 base floor plans.
The developer of this project is currently offering a $5,000 co ncession. Standard features are similar to Riva at Delta Shores. The following pages show individual flo or plans for the two model homes, as well as interior photographs.
LOT # APN DESIGN BEDS/BATHS GLA
226 053-0230-065 Two-Story 5 Beds / 3 Baths 2,693 SF
227 053-0230-066 One Story 3 Beds / 2 Baths 1,685 SF
Smith & Associates, Inc.
PLAN 1685 (3 BED, 2 BATH, 1685 SF)
Smith & Associates, Inc.
PLAN 2693 (5 BED, 3 BATH, 2693 SF)
Smith & Associates, Inc.
MODEL HOME PHOTOGRAPHS (EDGEWATER AT DELTA SHORES)
Plan 1695 Plan 1695
Plan 1695 Plan 2693
Plan 2693 Plan 2693
Smith & Associates, Inc.
Conclusion
This project includes 5 completed model homes. Values for the model homes, as identified later in this report, are based on the finished lot value as well as the adde d value of the improvements based on valuation at the time of permit. These totals were derived from t h e C i t y o f S a c r a m e n t o a n d a r e summarized as follows.
RIVA AT DELTA SHORES
ITEM LOT 323
1,795 SF
LOT 324
2,102 SF
LOT 325
2,236 SF
Valuation (Per Building Permit) $267,712 $316,113 $329,842
EDGEWATER AT DELTA SHORES
ITEM LOT 226
2,693 SF
LOT 227
1,652 SF
Valuation (Per Building Permit) $381,428 $246,000
The next section of this report illustrates supply and demand characteristics for this property.
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PART 3 – MARKET ANALYSIS AND HIGHEST AND BEST USE
MARKET ANALYSIS – FOR SALE RESIDENTIAL
A market analysis is presented in conjunction with assignment. The depth of discussion is specific to the needs of the client and for the intended use. This element is p rovided for the regional and local housing market based on information provided from Claritas, California Association of Realtors, Metrolist, and The Gregory Group.
California Housing Market
According to the California Association of Realtors (C.A.R.), C alifornia home sales hit a seven-month low in August, as buyers held out despite interest rates that dippe d to the lowest level since spring. Closed escrow sales of existing, single-family detached homes in Calif ornia totaled a seasonally adjusted annualized rate of 262,050 in August, according to information collected by C.A.R. The statewide annualized sales figure represents what would be the total numb er of homes sold during 2024 if sales maintained the August pace throughout the year. It is adjusted t o a c c o u n t f o r s e a s o n a l f a c t o r s t h a t typically influence home sales.
August’s sales pace fell 6.3 percent from the 279,810 homes sol d in July and were up 2.8 percent from a year ago, when a revised 254,820 homes were sold on an annualiz ed basis. The sales pace has remained below the 300,000-threshold for 23 consecutive months, while ye ar-to-date home sales edged up 0.5 percent from the first eight months of 2023.
“Home price growth in California continued to moderate in Augus t as the market neared the end of the traditional home buying season,” said C.A.R. President Melanie Barker. “With the Federal Reserve signaling it will lower interest rates soon, mortgage rates are expected to ease well below their recent peaks. As such, housing affordability will improve in the fall, and buyers will benefit from lower costs of borrowing in the coming months.”
August’s statewide median price was essentially flat, inching u p 0.2 percent from $886,560 in July to $888,740 in August. California’s median home price was 3.4 perc ent higher than the revised $859,670 recorded in August 2023. The year-over-year gain was the 14th straight month of annual price increases, albeit the smallest since September 2023. Home prices could sof ten further in the coming months but should continue to register year-over-year growth for the rest of the year.
Sales in higher-priced market se gments continued to influence t he mix of sales, but the impact on the state-wide median price growth has been reduced in recent month s . W h i l e t h e s a l e s p a c e f o r t h e $ 1 million-and-higher price segment decelerated in August to 3.6 percent, sales in the sub-$500,000 market had a lackluster performance as well, dropping 9.0 percent belo w the year-ago level. Moderation in the median price growth could be observed in the coming months if the share of homes priced at or above $1 million continues to shrink in the fall.
“Despite a slightly better lending environment in recent weeks, closed home sales pulled back in August as buyers evaluated whether to wait for the Federal Reserve to cut rates before entering the market,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “Pending sales, along with mortgage application trends, however, suggest that housing demand has be en slowly improving in the past few weeks. If mortgage rates remain at their current low or dip further in the coming weeks, home sales should rise steadily as we move toward the end of the year.”
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