San Marcos City Council
February 28, 2023

ATTACHMENT H

FISCAL AND ECONOMIC ANALYSIS

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100, Bayview Circle Suite 100
Newport Beach, CA 92660
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($20,000)
($10,000)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$57,858
($12,144)
$45,714
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
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($100,000)
($80,000)
($60,000)
($40,000)
($20,000)
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$80,804
($82,979)
($2,175)
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
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PROJECT SUMMARY

CITY OF SAN MARCOS

SANTA FE FLORES

FISCAL IMPACT SUMMARY

FISCAL IMPACT ANALYSIS

CITY BUDGET SUMMARY

DEMOGRAPHICS

CASE STUDY REVENUES

CASE STUDY EXPENDITURES

MULTIPLIER REVENUES

MULTIPLIER EXPENDITURES

DRAFT
RECURRING GENERAL FUND REVENUES1 AMOUNT % OF TOTAL AMOUNT % OF TOTAL SECURED PROPERTY TAX $17,837 30.8% $39,286 48.6%
UNSECURED PROPERTY TAX $1,784 3.1% $1,080 1.3%
PROPERTY TRANSFER TAX $297 0.5% $1,306 1.6%
PROPERTY TAX IN-LIEU OF VEHICLE LICENSE FEE $6,651 11.5% $15,330 19.0% DIRECT AND INDIRECT SALES TAX $28,752 49.7% $0 0.0%
FRANCHISE FEES $681 1.2% $4,651 5.8%
LICENSES AND PERMITS $220 0.4% $1,506 1.9%
FINES AND FORFEITURES $47 0.1% $321 0.4%
CFD REVENUE $1,590 2.7% $17,324 21.4%
TOTAL RECURRING GENERAL FUND REVENUES $57,858 100.0% $80,804 100.0% RECURRING GENERAL FUND EXPENDITURES2 AMOUNT % OF TOTAL AMOUNT % OF TOTAL PUBLIC WORKS $1,488 12.253% $10,168 12.254%
DEVELOPMENT SERVICES $1,006 8.284% $6,872 8.282%
PUBLIC SAFETY $6,164 50.758% $42,119 50.759%
PARKS AND RECREATION $300 2.470% $2,047 2.467%
OTHER FINANCING USES $20 0.165% $138 0.166%
GENERAL GOVERNMENT $3,166 26.070% $21,635 26.073%
TOTAL RECURRING GENERAL FUND EXPENDITURES $12,144 100.0% $82,979 100.0%

NET FISCAL IMPACT

TOTAL ANNUAL RECURRING GENERAL FUND SURPLUS/(DEFICIT)

TOTAL ANNUAL REVENUE/EXPENDITURE RATIO
NOTES:
1 Please see Exhibits 5-7 and 9 for the derivation of these calculations. 2 Please see Exhibits 8 and 10 for the derivation of these calculations. *All figures subject to rounding

APPROVED PLAN PROPOSED PLAN
EXHIBIT 1

CITY OF SAN MARCOS

FISCAL IMPACT SUMMARY

APPROVED PLAN PROPOSED PLAN

SANTA FE FLORES

APPROVED PLAN PROPOSED PLAN
$45,714

4.76 $2,175

0.97

DRAFT

TOTAL BUILDING BUILDING TOTAL BUILDING BUILDING ESTIMATED TOTAL

GROSS SPACE SPACE ESTIMATED ESTIMATED SPACE SPACE ESTIMATED AVERAGE ESTIMATED LAND USE TYPE ACRES ACRES1 SF1 VALUE/BSF2 VALUE2 ACRES1 UNITS1 SF1 VALUE/BSF VALUATION2,3 VALUE2 GRAND TOTAL 2.50 0.78 33,947 $318 $10,783,230 0.84 50 36,393 $458 $475,000 $23,750,000 NON-RESIDENTIAL 0.78 33,947 $10,783,230
COMMERCIAL RETAIL 0.27 11,757 $300 $3,527,100
LIGHT INDUSTRIAL 0.51 22,190 $327 $7,256,130
RESIDENTIAL 0.84 50 36,393 $458 $475,000 $23,750,000
APARTMENTS 0.84 50 36,393 $458 $475,000 $23,750,000
Non - Residential Assumptions Building Space BSF$ Estimated Value NOTES
1 Source: City of San Marcos.
2 Source: Zonda Research, "Pricing and Absorption Study: Hall Land Company Study, San Marcos, CA. 3 "Estimated average sale price" refers to the Estimated closing price per Zonda assumptions. 4 All Totals subject to rounding
EXHIBIT 2

CITY OF SAN MARCOS

PROJECT SUMMARY
APPROVED PLAN 4

SANTA FE FLORES
PROPOSED PLAN 4

DRAFT
POPULATION, HOUSEHOLDS, AND EMPLOYMENT (2022)
POPULATION1 93,585
EMPLOYMENT2 42,600
TOTAL PERSONS SERVED3 114,885
HOUSEHOLDS 1 19,659
MFR AVERAGE HOUSEHOLD SIZE1 2.46
NOTES
1 California Department of Finance, Housing and Population Information, January 1, 2022. 2 Source: Calif. Employment Development Dept. January 2022 EXHIBIT 3

CITY OF SAN MARCOS

SANTA FE FLORES

CITY DEMOGRAPHICS
3 Assumes City population plus 50% of employees.

DRAFT

SF PERSONS

PER DIRECT PERSONS PER DIRECT PERSONS
LAND USE TYPE BSF EMPLOYEE2 EMPLOYEES SERVED BSF UNITS HOUSEHOLD1 RESIDENTS EMPLOYEES SERVED GRAND TOTAL 33,947 35 18 36,393 50 2.46 123 0 123

NON-RESIDENTIAL
COMMERCIAL RETAIL 11,757 678 17 9
LIGHT INDUSTRIAL 22,190 1,232 18 9
NON-RESIDENTIAL SUBTOTAL 33,947 35 18

RESIDENTIAL
APARTMENTS 36,393 50 2.46 123 0 123
RESIDENTIAL SUBTOTAL 36,393 50 123 123
NOTES
1 Source: Zonda Research.
2 Source: Commercial Buildings Energy Consumption Survey (CBECS), 2018. *All figures subject to rounding

PROPOSED PLAN
EXHIBIT 4

CITY OF SAN MARCOS

SANTA FE FLORES

PROJECT DEMOGRAPHICS

APPROVED PLAN

DRAFT

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN

ALL PROPERTY TAXES
SECURED PROPERTY TAXES $17,837 $39,286
UNSECURED PROPERTY TAXES $1,784 $1,080
PROPERTY TRANSFER TAXES $297 $1,306
PROPERTY TAX IN-LIEU OF VLF $6,651 $15,330
GRAND TOTAL ALL PROPERTY TAXES $26,568 $57,002

RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $0 $39,286
UNSECURED PROPERTY TAXES $0 $1,080
PROPERTY TRANSFER TAXES $0 $1,306
PROPERTY TAX IN-LIEU OF VLF $0 $15,330
TOTAL RESIDENTIAL PROPERTY TAXES $0 $57,002

NON-RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $17,837 $0
UNSECURED PROPERTY TAXES $1,784 $0
PROPERTY TRANSFER TAXES $297 $0
PROPERTY TAX IN-LIEU OF VLF $6,651 $0
TOTAL NON-RESIDENTIAL PROPERTY TAXES $26,568 $0

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN

GRAND TOTAL
ESTIMATED BUILDOUT VALUE $10,783,230 $23,750,000
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $10,783,230 $23,750,000
ESTIMATED SECURED PROPERTY TAXES $17,837 $39,286

RESIDENTIAL
ESTIMATED BUILDOUT VALUE $0 $23,750,000
ESTIMATED EXEMPTIONS $0 $0
HOMEOWNER'S EXEMPTION (ANNUALLY) $7,000
PERCENT OF SALE UNITS TAKING HOMEOWNER'S EXEMPTION0%
ESTIMATED ASSESSED VALUE $0 $23,750,000
ESTIMATED SECURED PROPERTY TAXES $0 $39,286

NON-RESIDENTIAL
ESTIMATED BUILDOUT VALUE $10,783,230 $0
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $10,783,230 $0
ESTIMATED SECURED PROPERTY TAXES $17,837 $0

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $1,784 $1,080

RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $0 $1,080
UNSECURED TAXES AS A % OF SECURED2 2.75%

NON-RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $1,784 $0
UNSECURED TAXES AS A % OF SECURED 10.00%

UNSECURED PROPERTY TAX CALCULATION

SANTA FE FLORES

PROPERTY TAX SUMMARY
EXHIBIT 5

CITY OF SAN MARCOS

ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)

SECURED PROPERTY TAX CALCULATION

DRAFT

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $297 $1,306

RESIDENTIAL
ESTIMATED PROPERTY TRANSFER TAXES $0 $1,306
ESTIMATED BUILDOUT VALUE $0 $23,750,000
TRANSFER TAX AS A % OF ASSESSED VALUE 0.11%
PROPERTY TRANSFER TAX PASSED THROUGH TO CITY OF SAN MARCOS50.00% RESIDENTIAL PROPERTY TURNOVER RATE 10.00%

NON-RESIDENTIAL
ESTIMATED PROPERTY TRANSFER TAXES $297
ESTIMATED BUILDOUT VALUE $10,783,230
TRANSFER TAX AS A % OF ASSESSED VALUE 0.11%
PROPERTY TRANSFER TAX PASSED THROUGH TO CITY OF SAN MARCOS50.00% NON-RESIDENTIAL PROPERTY TURNOVER RATE 5.00%

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $6,651 $15,330

RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $0 $15,330
ESTIMATED BUILDOUT VALUE $0 $23,750,000
ESTIMATED EXISTING ASSESSED VALUE $0 $846,768
PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67

NON-RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $6,651 $0
ESTIMATED BUILDOUT VALUE $10,783,230 $0
ESTIMATED EXISTING ASSESSED VALUE $846,768 $0
PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67

PROPERTY TAX IN-LIEU OF VEHICLE LICENSE FEE CALCULATION

PROPERTY TRANSFER TAX CALCULATION
EXHIBIT 5 - CONTINUED

CITY OF SAN MARCOS

SANTA FE FLORES

ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)

DRAFT
PROPERTY TAX ALLOCATION (AS A PORTION OF THE 1% GENERAL PROPERTY TAX LEVY) CITY OF SAN MARCOS3,4 9.591%
FIRE DISTRICT3,4 6.950%
TOTAL 16.541%
PROPERTY TRANSFER TAX RATE AND ALLOCATION5
TRANSFER TAX AS A % OF ASSESSED VALUE 0.11%
PROPERTY TRANSFER TAX PASSED THROUGH TO CITY OF SAN MARCOS 50.00%

PROPERTY TAX IN-LIEU OF VLF ASSUMPTIONS
TOTAL CITY OF SAN MARCOS GROSS ASSESSED VALUE6 $7,756,621,947 TOTAL CITY PROPERTY TAX IN-LIEU VLF REVENUES6 $5,191,930 PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67 NOTES
1 Estimate, subject to change.
2 Based on typical DTA baseline assumptions.
3 Based on "General Fund" levy for Tax Rate Area (TRA) 13203. Data provided by the County of San Diego Auditor-Controller's Office. 4 Based on the average of the rates for TRA 13115.
5 Source: California Revenue & Taxation Code §11901, et seq.; San Marcos Municipal Code §3.12.020.

PROPERTY TAX AND PROPERTY TRANSFER TAX RATES AND ASSUMPTIONS EXHIBIT 5 - CONTINUED

CITY OF SAN MARCOS

SANTA FE FLORES

ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)
6 Source: State Controller's Office Division of Accounting and Reporting, Revenue and Taxation Code Section 97.70 (c)(1)(B)(i) - Vehicle License Fee Adjustment Amounts. ]

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APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $28,752 $0

RESIDENTIAL SALES TAXES

DIRECT SALES TAX NA NA

INDIRECT SALES TAX - TAXABLE RESIDENT PURCHASES
APARTMENTS $0 $0
TOTAL RESIDENTIAL SALES TAXES $0 $0

NON-RESIDENTIAL SALES TAXES
DIRECT SALES TAX1
COMMERCIAL RETAIL $28,217 NA
LIGHT INDUSTRIAL $0 NA
INDIRECT SALES TAX - TAXABLE EMPLOYEE PURCHASES $535 $0 TOTAL NON-RESIDENTIAL SALES TAXES $28,752 $0
TAXABLE SALES PER SF1
COMMERCIAL RETAIL $300.00 $0.00
LIGHT INDUSTRIAL $0.00 $0.00
DISPLACED TAXABLE SALES2 20% 20%
1 Based on typical DTA baseline assumptions.
2 Based on typical DTA baseline assumptions.

EXHIBIT 6

CITY OF SAN MARCOS

ESTIMATED SALES TAX REVENUES (CASE STUDY)

DIRECT SALES TAX ASSUMPTIONS

SALES TAX SUMMARY

SANTA FE FLORES

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RESIDENTIAL SALES TAX ASSUMPTIONS (RENT)
DISPOSABLE INCOME PER HOUSEHOLD $86,408
RETAIL TAXABLE EXPENDITURES (AS A % OF DISPOSABLE INCOME) 31.254% EMPLOYEES (ANNUAL SPENDING PER EMPLOYEE)2 $5,945
RESIDENTIAL (ANNUAL SPENDING PER HOUSEHOLD) $13,503
1 Based on typical DTA baseline assumptions.

NON-RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS
EXHIBIT 6 - CONTINUED

CITY OF SAN MARCOS

SANTA FE FLORES

ESTIMATED SALES TAX REVENUES (CASE STUDY)

RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS

DRAFT
SALES TAX % TO CITY1 1.00%
CITY RETAIL TAXABLE PURCHASE CAPTURE RATE2 50%
FY 2022-23 AD VALOREM PROPERTY TAX RATE (13203) 1.12602% PROPOSED SCHOOL CFD 0.00000%
CITY CFD SPECIAL TAXES $948.18

OTHER DIRECT ASSESSMENTS
VECTOR CONTROL $7.92
CWA WATER AVAILABILITY $10.00
MOSQUITO SURVEILLANCE $2.28
MWD WATER STANDBY CHARGE $11.50
SEWER SERVICE CHARGE $467.88
TOTAL ETR 1.430812%
NOTES
1 Estimate, subject to change.
2 Estimate, subject to change.
* All figures subject to rounding
EXHIBIT 6 - CONTINUED

CITY OF SAN MARCOS

SANTA FE FLORES

ESTIMATED SALES TAX REVENUES (CASE STUDY)

SAMPLE PROPERTY TAX BILL

CITY INDIRECT SALES TAX ASSUMPTIONS

DRAFT

RESIDENTIAL APPROVED PROPOSED

LAND USE TYPE COMMERCIAL INDUSTRIAL OFFICE UNITS PLAN PLAN TOTAL CFD SPECIAL TAXES $1,590 $17,324
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 50 $9,002
CFD 2001-01 (FIRE) 50 $8,322
TOTAL RESIDENTIAL CFD SPECIAL TAXES $17,324
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 0.27 0.51 0.00 $826 $0
CFD 2001-01 (FIRE) 0.27 0.51 0.00 $764 $0
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $1,590 $0

RESIDENTIAL APPROVED PROPOSED

LAND USE TYPE COMMERCIAL INDUSTRIAL OFFICE UNITS PLAN PLAN TOTAL CFD SPECIAL TAXES $23,016 $30,086
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 50 $12,380
CFD 98-02 (ZONE F)2, 3 50 NA
CFD 2011-012, 4 50 $17,706
TOTAL RESIDENTIAL CFD SPECIAL TAXES $30,086
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 0.27 0.51 0.00 $673 $0
CFD 98-02 (ZONE F)2, 3 0.27 0.51 0.00 NA NA
CFD 2011-012, 5 11,757 22,190 0 $22,343 $0
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $23,016 $0

LAND USE PER ACRE PER SF PER UNIT
RESIDENTIAL1
CFD 98-01 IA 1 $180.04
CFD 2001-01 (FIRE) $166.43
CFD 98-02 (ZONES A - E)2 $247.60
CFD 98-02 (ZONE F)2, 3 NA
CFD 2011-012, 4 $354.11
COMMERCIAL 1
CFD 98-01 IA 1 $1,260.31
CFD 2001-01 (FIRE) $1,165.03
CFD 98-02 (ZONES A - E)2 $1,105.32
CFD 98-02 (ZONE F)2, 3 N/A
CFD 2011-012, 5 $0.3716
OFFICE 1
CFD 98-01 IA 1 $2,520.62
CFD 2001-01 (FIRE) $2,330.07
CFD 98-02 (ZONES A - E)2 $1,105.32
CFD 98-02 (ZONE F)2, 3 NA
CFD 2011-012, 5 $0.3716
INDUSTRIAL 1
CFD 98-01 IA 1 $954.24
CFD 2001-01 (FIRE) $882.10
CFD 98-02 (ZONES A - E)2 $735.96
CFD 98-02 (ZONE F)2, 3 NA
CFD 2011-012, 5 $0.8100
NOTES
1 Source: City of San Marcos. Assumes Senior Residential property is charged as Commercial property under the RMA. Subject to confirmation by the City. 2 Special assessments collected from the CFD are deposited into Special Funds, not the General Fund. Therefore, these CFD revenues are excluded from this analysis. 3 No special tax rate for Zone F has been established for the project. 4 "Townhome" Rate, per dwelling unit
FY 2022-23 SPECIAL TAX RATE
EXHIBIT 7

CITY OF SAN MARCOS

ESTIMATED CFD SPECIAL TAX REVENUES (CASE STUDY)

CFD SPECIAL TAX SUMMARY - GENERAL FUND IMPACTS

CFD SPECIAL TAX RATE ASSUMPTIONS

SANTA FE FLORES

CFD SPECIAL TAX SUMMARY - NON-GENERAL FUND IMPACTS (EXCLUDED FROM ANALYSIS) ACRES / SQ. FT.

ACRES / SQ. FT.

DRAFT
EXHIBIT 7

CITY OF SAN MARCOS

ESTIMATED CFD SPECIAL TAX REVENUES (CASE STUDY)

SANTA FE FLORES
5 "Retail" Rate, per building square foot
*All figures subject to rounding

DRAFT

APPROVED PROPOSED

PLAN PLAN
ESTIMATED RECURRING GENERAL GOVERNMENT OVERHEAD EXPENDITURES1 $3,166 $21,635 TOTAL RECURRING CITY GENERAL FUND EXPENDITURES (EXCLUDING GENERAL GOVERNMENT OVERHEAD)2 $56,935,367 TOTAL RECURRING CITY GENERAL GOVERNMENT OVERHEAD3 $20,080,196 TOTAL RECURRING GENERAL FUND EXPENDITURES $77,015,563
RECURRING CITY GENERAL GOVERNMENT OVERHEAD (% OF TOTAL RECURRING GENERAL FUND EXPENDITURES)3 35.27% MARGINAL INCREASE IN GENERAL GOVERNMENT COSTS 100%
NOTES
1 Based on total recurring project general fund expenditures (excluding general government overhead) from Exhibit 12. 2 Based on City of San Marcos Operating Budget, Fiscal Year 2022-23. *All figures subject to rounding
3 General Government Overhead Expenditures defined as costs for City Council, Administration, Housing and Neighborhood Services, City Attorney, City Clerk, Human Resources/Risk Management, Finance/Information Systems, and Real Property Services.

EXHIBIT 8

CITY OF SAN MARCOS

ESTIMATED GENERAL GOVERNMENT EXPENDITURES (CASE STUDY)

GENERAL GOVERNMENT ASSUMPTIONS

GENERAL GOVERNMENT EXPENDITURES CALCULATION

SANTA FE FLORES

DRAFT

APPROVED PROPOSED

REVENUE CATEGORY PLAN PLAN
FRANCHISE FEES $681 $4,651
LICENSES AND PERMITS $220 $1,506
FINES AND FORFEITURES $47 $321
TOTAL ESTIMATED MULTIPLIER REVENUES $948 $6,478
REVENUE CATEGORY MULTIPLIER1 BASIS

SALES TAX NA CASE STUDY

PROPERTY TAX NA CASE STUDY
FRANCHISE FEES $37.81 PERSONS SERVED
LICENSES AND PERMITS $12.24 PERSONS SERVED
FINES AND FORFEITURES $2.61 PERSONS SERVED
NOTES
1 Based on City of San Marcos Operating Budget, Fiscal Year 2022-23 *All figures subject to rounding

MULTIPLIER BASED REVENUE ASSUMPTIONS
EXHIBIT 9

CITY OF SAN MARCOS

ESTIMATED MULTIPLIER BASED GENERAL FUND REVENUES

MULTIPLIER BASED GENERAL FUND REVENUE SUMMARY

SANTA FE FLORES

DRAFT

APPROVED PROPOSED

EXPENDITURE CATEGORY PLAN PLAN
PUBLIC WORKS $1,488 $10,168
DEVELOPMENT SERVICES $1,006 $6,872
PUBLIC SAFETY $6,164 $42,119
PARKS AND RECREATION $300 $2,047
OTHER FINANCING USES $20 $138
TOTAL MULTIPLIER EXPENDITURES $8,978 $61,344
EXPENDITURE CATEGORY MULTIPLIER1 BASIS
PUBLIC WORKS $82.67 PERSONS SERVED
DEVELOPMENT SERVICES $55.87 PERSONS SERVED
PUBLIC SAFETY $342.43 PERSONS SERVED
PARKS AND RECREATION $16.64 PERSONS SERVED
OTHER FINANCING USES $1.12 PERSONS SERVED
NOTES
1 Based on City of San Marcos Operating Budget, Fiscal Year 2022-23 *All figures subject to rounding

MULTIPLIER BASED EXPENDITURE ASSUMPTIONS
EXHIBIT 10

CITY OF SAN MARCOS

ESTIMATED MULTIPLIER BASED GENERAL FUND EXPENDITURES

MULTIPLIER BASED GENERAL FUND EXPENDITURE SUMMARY

SANTA FE FLORES

DRAFT

TOTAL REVENUE PROJECTION
REVENUE CATEGORY REVENUES TYPE METHOD DISCOUNT 1 MULTIPLIER

REVENUES INCLUDED IN FISCAL IMPACT ANALYSIS
SALES TAX $21,889,400 RECURRING CASE STUDY NA NA
PROPERTY TAX $27,358,117 RECURRING CASE STUDY NA NA
SPECIAL TAXES/ASSESSMENTS $6,337,000 RECURRING CASE STUDY NA NA TRANSIENT OCCUPANCY TAX $738,866 RECURRING CASE STUDY 0% NA FRANCHISE FEES $4,259,027 RECURRING PERSONS SERVED 0% $37.81 LICENSES AND PERMITS $1,379,350 RECURRING PERSONS SERVED 0% $12.24 FINES AND FORFEITURES $293,800 RECURRING PERSONS SERVED 0% $2.61 TOTAL INCLUDED GENERAL FUND REVENUES $62,255,560 $52.66 CHARGES FOR SERVICES 3
DEDUCTED FROM GENERAL GOV'T CHARGES $1,511,735 NA NA NA NA DEDUCTED FROM PUBLIC WORKS $1,079,532 NA NA NA NA
DEDUCTED FROM DEVELOPMENT SERVICES $728,914 NA NA NA NA DEDUCTED FROM PUBLIC SAFETY: BUILDING REGULATION CHARGES $5,575,806 NA NA NA NA DEDUCTED FROM PARKS AND RECREATION $2,580,842 NA NA NA NA TOTAL CHARGES FOR SERVICES $11,476,830

REVENUES EXCLUDED FROM FISCAL IMPACT ANALYSIS
USE OF MONEY AND PROPERTY 4 $1,791,000 NA NA NA NA
MISCELLANEOUS REVENUES $214,560 NA NA NA NA
OTHER FINANCING SOURCES $6,479,300 NA NA NA NA
INTERGOVERNMENTAL REVENUES $7,194,643 NA NA NA NA
DEVELOPER FEES $11,500 NA NA NA NA
TOTAL EXCLUDED GENERAL FUND REVENUES $15,691,003
TOTAL GENERAL FUND REVENUES + CHARGES FOR SERVICES $89,423,393 TOTAL RECURRING GENERAL FUND REVENUES $62,255,560
NOTES
1 Certain revenues may not be be expected to increase one-to-one with the new development. 2 Source: FY 2022-23 Budget.
3 All Charges for Services are deducted from expenditures on Exhibit 12. 4 Interest income is modeled on a case study basis on Exhibit 8. *All figures subject to rounding
EXHIBIT 11

CITY OF SAN MARCOS
FY 2022-23 GENERAL FUND REVENUE SUMMARY

SANTA FE FLORES

DRAFT

CHARGES FOR

TOTAL SERVICES EXPENDITURE PROJECTION
EXPENDITURE CATEGORY EXPENDITURES ADJUSTMENT TYPE METHOD1 DISCOUNT2 MULTIPLIER

EXPENDITURES INCLUDED IN FISCAL IMPACT ANALYSIS

GENERAL GOVERNMENT EXPENDITURES
CITY COUNCIL $283,294 RECURRING CASE STUDY NA NA
ADMINISTRATION $10,266,224 RECURRING CASE STUDY NA NA
ECONOMIC DEVELOPMENT $335,896 RECURRING CASE STUDY NA NA CITY ATTORNEY $940,000 RECURRING CASE STUDY NA NA
CITY CLERK $1,165,490 RECURRING CASE STUDY NA NA
HUMAN RESOURCES/ RISK MANAGEMENT $4,096,247 RECURRING CASE STUDY NA NA FINANCE/ INFORMATION SYSTEMS $4,363,173 RECURRING CASE STUDY NA NA REAL PROPERTY SERVICES` $141,607 RECURRING CASE STUDY NA NA TOTAL GENERAL GOVERNMENT EXPENDITURES $21,591,931 ($1,511,735) $20,080,196 $0.00

PUBLIC WORKS
OPERATIONS $10,259,077 ($945,726) RECURRING PERSONS SERVED 0% $82.67 ENGINEERING $0 $0 RECURRING PERSONS SERVED 0% $0.00
STORMWATER PROGRAM MANAGEMENT $0 $0 RECURRING PERSONS SERVED 0% $0.00 TOTAL PUBLIC WORKS $10,259,077 ($1,079,532) RECURRING PERSONS SERVED 0% $9,179,545 PERSONS SERVED 0% $82.67

DEVELOPMENT SERVICES
ADMINISTRATION $1,494,468 ($122,656) RECURRING PERSONS SERVED 0% $12.18 PLANNING $1,484,910 ($121,872) RECURRING PERSONS SERVED 0% $12.10 BUILDING $1,491,629 ($122,423) RECURRING PERSONS SERVED 0% $12.15 ENGINEERING $2,386,017 ($195,829) RECURRING PERSONS SERVED 0% $19.44 $923,403
TOTAL DEVELOPMENT SERVICES $7,780,427 ($728,914)
$7,051,513 PERSONS SERVED 0% $55.87

PUBLIC SAFETY
FIRE DEPARTMENT $20,086,339 ($2,257,584) RECURRING PERSONS SERVED 0% $158.26 LAW ENFORCEMENT $23,374,137 ($2,627,113) RECURRING PERSONS SERVED 0% $184.17 TOTAL PUBLIC SAFETY $43,460,476 ($5,575,806)
$37,884,670 PERSONS SERVED 0% $342.43

PARKS AND RECREATION
COMMUNITY SERVICES $4,135,137 ($2,260,952) RECURRING PERSONS SERVED 0% $16.64 TOTAL PARKS AND RECREATION $4,135,137 ($2,580,842)
$1,554,295 PERSONS SERVED 0% $16.64

OTHER FINANCING USES
ANNUAL REPLACEMENT/REHAB TRANSFERS $1,265,345 RECURRING PERSONS SERVED 90% $1.12 TOTAL OTHER FINANCING SOURCES $1,265,345 $0
$1,265,345 PERSONS SERVED 90% $1.12
TOTAL INCLUDED EXPENDITURES $88,492,393 $77,015,563

EXPENDITURES EXCLUDED FROM FISCAL IMPACT ANALYSIS
TRANSFERS OUT $931,000 NA NA NA NA
TOTAL EXCLUDED GENERAL FUND EXPENDITURES $931,000
TOTAL GENERAL FUND EXPENDITURES $89,423,393 $77,015,563 NOTES
1 Persons Served method assumes City population plus 50% of employees. 2 Certain expenditures may not be expected to increase one-to-one with the new development. *All figures subject to rounding
EXHIBIT 12

CITY OF SAN MARCOS
FY 2022-23 GENERAL FUND EXPENDITURE SUMMARY

SANTA FE FLORES

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

CITY OF SAN MARCOS

SANTA FE FLORES

ECONOMIC IMPACT ANALYSIS - (APPROVED PLAN)

RECURRING JOBS

RECURRING IMPACTS

ONE-TIME JOBS

ONE TIME IMPACTS

JOB HOUSING BALANCE

SUMMARY

DRAFT
EXHIBIT 1A

SANTA FE FLORES

RECURRING EMPLOYMENT - APPROVED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS

LAND USE CATEGORY UNITS
- 0
- 0
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
COMMERCIAL RETAIL 1.48 11,757
LIGHT INDUSTRIAL 0.81 22,190
33,947

RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES COMMERCIAL RETAIL 17 1 2 20
LIGHT INDUSTRIAL 18 4 4 26
TOTAL RECURRING EMPLOYMENT 35 5 6 46
NOTES:
* All figures subject to rounding
4 Source: San Marcos City IMPLAN multipliers.
1 Source: City of San Marcos.
2 Commercial Buildings Energy Consumption Survey (CBECS), 2012. 3 Based on multiplying Category SF by Employees/1,000 SF metric.

DRAFT
EXHIBIT 2A

SANTA FE FLORES

RECURRING ECONOMIC IMPACTS - APPROVED PLAN

ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR. - $0 0.00% $0
-
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 COMMERCIAL RETAIL $67,385 $1,145,553
0 $0 $0
LIGHT INDUSTRIAL $155,876 $2,805,761

RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT COMMERCIAL RETAIL $1,145,553 $213,149 $308,571 $1,667,273 LIGHT INDUSTRIAL $2,805,761 $639,619 $583,457 $4,028,837 TOTAL RECURRING OUTPUT $3,951,314 $852,768 $892,028 $5,696,110 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.

DRAFT
EXHIBIT 3A

SANTA FE FLORES

ONE-TIME EMPLOYMENT -APPROVED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
-
- 0
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.

COMMERCIAL RETAIL 11,757
LIGHT INDUSTRIAL 22,190
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES COMMERCIAL RETAIL 20 3 5 28
LIGHT INDUSTRIAL 43 5 10 58
TOTAL ONE-TIME EMPLOYEES 63 8 15 86
NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).

DRAFT
EXHIBIT 4A

SANTA FE FLORES

ONE-TIME IMPACTS - APPROVED PLAN

ASSUMPTIONS

ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS COST PER SQ. FT. COST PER UNIT - 0
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS IMPROVEMENT VALUE1 CONSTRUCTION COST PER SQ. FT.

COMMERCIAL RETAIL $2,998,035 $255
LIGHT INDUSTRIAL $6,167,711 $278
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT COMMERCIAL RETAIL $2,998,035 $562,238 $657,834 $4,218,107 LIGHT INDUSTRIAL $6,167,711 $5,442,908 $1,414,588 $13,025,207 TOTAL ONE-TIME OUTPUT $9,165,746 $6,005,146 $2,072,423 $17,243,314 NOTES:
1 Assumes that improvement value is approximately 85% of total valuation. 2 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures). * All figures subject to rounding

DRAFT
EXHIBIT 5A

SANTA FE FLORES

JOBS-HOUSING BALANCE - APPROVED PLAN

ASSUMPTIONS
I. EXISTING DEMOGRAPHICS

CITY OF SAN MARCOS
HOUSING UNITS 1 32,000
EMPLOYEES 2 42,600
II. JOB IMPACTS 3

CITY OF SAN MARCOS
DIRECT IMPACT 35
ADDITIONAL INDIRECT 5
ADDITIONAL INDUCED 6
TOTAL 46
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 32,000 PERCENTAGE INCREASE 0.00%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 42,646 PERCENTAGE INCREASE 0.11%

JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE

CITY OF SAN MARCOS
EXISTING 1.33
EXISTING WITH PROJECT 1.33
PERCENTAGE INCREASE 0.11%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2022). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.

DRAFT
EXHIBIT 6A

SANTA FE FLORES

SUMMARY - APPROVED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
-
- 0
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT.

COMMERCIAL RETAIL 1.48 11,757
LIGHT INDUSTRIAL 0.81 22,190

ECONOMIC IMPACTS CONCLUSIONS

RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 35 11 46
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $3,951,314 $1,744,796 $5,696,110

ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 63 23 86
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $9,165,746 $8,077,569 $17,243,314

OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.33125 1.33269 0.11%

DRAFT

DRAFT

CITY OF SAN MARCOS

SANTA FE FLORES

ECONOMIC IMPACT ANALYSIS - (PROPOSED PLAN)

RECURRING JOBS

RECURRING IMPACTS

ONE-TIME JOBS

ONE TIME IMPACTS

JOB HOUSING BALANCE

SUMMARY

DRAFT
EXHIBIT 1b

SANTA FE FLORES

RECURRING EMPLOYMENT - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS

LAND USE CATEGORY UNITS
APARTMENTS 50
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
0 RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES APARTMENTS 0 0 0 0
TOTAL RECURRING EMPLOYMENT 0 0 0 0
NOTES:
* All figures subject to rounding
1 Source: City of San Marcos.
2 Commercial Buildings Energy Consumption Survey (CBECS), 2012. 3 Based on multiplying Category SF by Employees/1,000 SF metric. 4 Source: San Marcos City IMPLAN multipliers.

DRAFT
EXHIBIT 2b

SANTA FE FLORES

RECURRING ECONOMIC IMPACTS - PROPOSED PLAN

ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR.

APARTMENTS $86,408 31.25% $675,152
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1

RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT APARTMENTS $675,151.5 $147,021.6 $24,190.0 $846,363.1
TOTAL RECURRING OUTPUT $675,152 $147,022 $24,190 $846,363 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.

DRAFT
EXHIBIT 3b

SANTA FE FLORES

ONE-TIME EMPLOYMENT - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
APARTMENTS 50
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.
-
-
-
-
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES APARTMENTS 49 18 14 81
TOTAL ONE-TIME EMPLOYEES 49 18 14 81
NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).

DRAFT
EXHIBIT 4b

SANTA FE FLORES

ONE-TIME IMPACTS - PROPOSED PLAN

ASSUMPTIONS

ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS SQ. FT. PER DWELLING UNIT COST PER UNIT APARTMENTS 50 NA $175,000
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS IMPROVEMENT VALUE1CONSTRUCTION COST PER SQ. FT.

III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT APARTMENTS $8,750,000 $2,354,941 $1,849,278 $12,954,219 TOTAL ONE-TIME OUTPUT $8,750,000 $2,354,941 $1,849,278 $12,954,219 NOTES:
1 Assumes that improvement value is approximately 85% of total valuation. 2 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures). * All figures subject to rounding

DRAFT
EXHIBIT 5b

SANTA FE FLORES

JOBS-HOUSING BALANCE - PROPOSED PLAN

ASSUMPTIONS
I. EXISTING DEMOGRAPHICS

CITY OF SAN MARCOS
HOUSING UNITS 1 32,000
EMPLOYEES 2 42,600
II. JOB IMPACTS 3

CITY OF SAN MARCOS
DIRECT IMPACT 0
ADDITIONAL INDIRECT 0
ADDITIONAL INDUCED 0
TOTAL 0
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 32,050 PERCENTAGE INCREASE 0.16%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 42,600 PERCENTAGE INCREASE 0.00%

JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE

CITY OF SAN MARCOS
EXISTING 1.33
EXISTING WITH PROJECT 1.33
PERCENTAGE INCREASE -0.16%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2022). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.

DRAFT
EXHIBIT 6b

SANTA FE FLORES

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
MIXED USE RESIDENTIAL 50
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT. - - -
- - -
- - -
- - -

ECONOMIC IMPACTS CONCLUSIONS

RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 0 0 0
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $675,152 $171,212 $846,363

ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 49 32 81
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $8,750,000 $4,204,219 $12,954,219

OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.331 1.329 -0.16%

DRAFT

DRAFT
Santa Fe Flores SP21-0008
San Marcos, California
DTA and City of San Marcos
July 2022
Key Findings 4
Site Plan Analysis 7
Rent Recommendations 16
Competitive For-Rent Market Analysis 20
Price Assessment 25
Location Analysis 33
Land Use & Zoning Analysis 42
Commercial Retail Market Trends 54
Commercial Office Market Trends 71
Industrial Market Trends 74
Retail Demand Outlook 81
Demographic Overview 89
Economic Overview 97
Appendix 104
3 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Background/Objectives, Key Contacts & Limiting Conditions

BACKGROUND & OBJECTIVES
Zonda Advisory has been retained by DTA in conjunction with the City of San Marcos to conduct a comparative analysis from an economic, and market perspective for the approval of a General Plan Amendment (GPA) and Rezone (R) to modify the designation of a 2.5-acre property (APN: 217-161- 19-00 and APN: 217-161-18-00) located at the northwest corner of S. Santa Fe Avenue and Las Flores Drive from Commercial (C) and Light Industrial (L-I) to Multi-Family Residential (R-3-10). The change is being requested to allow for the construction of a 50-unit apartment building and 107 parking spaces.

The project is referred to as SP21-0008 by the city of San Marcos. This analysis will include valuation of existing and proposed building types uses and evaluate the current and foreseeable market demand for such uses. Our analysis will include Commercial Retail and Industrial market trends in the San Marcos area and greater San Diego County. These findings will be used to assess the current land use inventory and identify how the proposed amendment will contribute to an increased tax base, economic development, and employment opportunities. Zonda will provide conclusions relevant to the proposed General Plan Amendment land uses based on July 2022 data.

Note: This report was completed during the ongoing global health crisis created by the COVID-19 outbreak. Our research and conclusions are based upon the best information available to us at the time of publication.

Client is responsible for representations about the development plans, marketing expectations and for disclosure of any significant information that might affect the ultimate realization of the projected results. There will usually be differences between projected and actual results because events and circumstances frequently do not occur as expected, and the difference may be material. We have no responsibility to update our report for events and circumstances occurring after the date of our report. Payment of any and all of our fees and expenses is not in any way contingent upon any factor other than our providing services related to this report.

LIMITING CONDITIONS
The following key team members participated on this analysis:

Tim Sullivan, Senior Managing Principal, oversees our Advisory practice. With over 38 years of experience, Mr. Sullivan is an expert in residential and mixed-use feasibility studies, strategic planning and product development, and regularly conducts market analyses around the United States and internationally.

Alexis Wilmot, Manager - Advisory, managed the engagement on a day-to-day basis. Ms. Wilmot has 18 years of experience evaluating for-sale , apartment and retail land uses in the real estate industry. She regularly analyzes residential and mixed-use developments around the country, with a specific focus on the Southern California market, and North Inland County in particular.

Stephannie Zarate, Manager, managed the research for this assignment. Ms. Zarate has over two years of experience in residential real estate. She has worked on feasibility reports and portfolio projects throughout the United States including for-sale, master planned communities, multifamily, and built-to-rent (BTR).

Additional support was provided as needed.

KEY CONTACTS
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 4 Key Findings
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 5 Opportunity Summary
Key Findings
As part of our due diligence for the Subject, we compared the existing land use (Commercial and Light-Industrial, referred to hereafter as the “Original”) and “Proposed” rezone land use (Multifamily) using a S.W.O.T analysis. The main advantage of the rezone over the existing use is that the site can provide new rental product to San Marcos, which currently does not have new Multifamily product. The area east and north of the Subject is mainly residential, but none are Multifamily apartment buildings. This will provide an opportunity, especially as the San Diego market has seen double digit growth for rentals and higher demand.

General Plan Amendment S. Santa Fe Avenue & N. Las Flores Drive Plan Element SWOT Proposed
Internal factors
Strengths
Original Commercial & Industrial Zoning designation Light Industrial and Neighborhood Retail are consistent with land uses immediately adjacent to the Subject Industrial flex has performed historically well over the past five years and presents a viable opportunity for Commercial development
Industrial market was the least impacted Commercial sector during the pandemic Proposed Residential For-Rent Apartment Building Proximity to Palomar College can attract students, recent graduates, and professionals Limited new apartment supply in San Marcos creates an opportunity for the Subject Comparable apartments have occupancies above 95%
Consistent with residential land use east and south of the Subject Weaknesses
Original Commercial & Industrial Zoning designation Slower corner in San Marcos may not attract tenants or consumers Commerical zone is not ideal for office spaces or big store retail clothing and accessories (see retail leakage on page 84)
Liquor store next door may negatively affect new commercial business Proposed Residential For-Rent Apartment Building Could negatively impact traffic during peak hours with one main road leading to residential neighborhood north of Subject
External Factors
Opportunities
Original Commercial & Industrial Zoning designation Industrial zone can expand with what is already west of the Subject Commercial zone can provide additional service for residents in the immediate area Proposed Residential For-Rent Apartment Building No immediate competition; most apartment buildings in the area are older With anticipated for-sale slow downs, rents are projected to stay strong Threats
Original Commercial & Industrial Zoning designation Commercial zone can only fit small retail similar to the gas station and parking adjacent to the Subject Commercial and industrial leases and sales are much lower compared to multifamily Further rent correction could occur at secondary commercial retail and industrial locations.

Aside from the liquor store, commercial zone is inconsistent with surrounding land uses Proposed Residential For-Rent Apartment Building Housing market uncertainity in the coming years S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 6 Original vs Proposed Zoning & Land Use Comparison
Key Findings
The main advantages of the Proposed Use rezone and land use designation are:
• The planned Multifamily development will bring new apartment product to an area that is undersupplied, with very low vacancy. • Palomar Station, Marc San Marcos, Block C and Breeze Hill apartments all have occupancy rates above 95%, with Palomar Station having the highest occupancy at 99.2%. This bodes well for new apartments entering the market. • In spite of almost full occupancy, apartment rents have increased 14% in the Vista-San Marcos Submarket and 16% in San Diego County, with extremely limited supply putting upward pressure on rents. • Palomar College Station is less than a mile and could attract student renters at the Subject apartments.

The Original Use calls for Commercial and Industrial zoning (see map below), consistent with adjacent uses. The Commercial zone southwest of the Subject is a liquor store with some parking spaces. Northwest of the Subject is an Industrial warehouse. In the absence of a site plan and estimated building envelope for the Original Use, Zonda made the following observations during our field work analysis:
• Zonda used the liquor store to the west of the Subject as an example of development potential for the Subject Commercial parcel (Original Use). We concluded that this southern portion of the site would likely be too small to support office space, and therefore assumed retail space at this location based on the adjacent liquor store lot coverage and FAR.
• Santa Fe Hills Business Center at 1.03 acres is located immediately west of the Subject and includes Blue Fire Brewing, San Marcos Fit Body Boot Camp, Simba International, and Code Red Headsets. We modeled the Subject Original Use Industrial Flex development opportunity along similar lines in terms of lot coverage, possible building size and lease rate.

Industrial zones were the least impacted during the pandemic due to people shopping online raising the demand for warehouse space. Neighborhood Serving Commercial and Industrial Flex spaces in the Subject area are achieving lower lease rates than multifamily development, making the Proposed Use a more viable development alternative for the Subject site.

Santa Fe Hills
Business Center
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 7 The Subject site is a 2.5-acre property at the northwest corner of S. Santa Fe Ave. and Los Flores Drive, previously slated for Commercial and Light Industrial use (the “Original” project), and now planned for a 50-unit residential apartment building and 107 parking spaces (the “Proposed” project). The project includes a General Plan Amendment (GPA) and Rezone (R) to modify the General Plan and Zoning designation of the property (APN 219-122-03-00) to Multi-Family Residential (R-3-10). The change is being requested to allow for the construction of a 50-unit apartment building and 107 parking spaces on the Subject Property.

As part of our due diligence, Zonda researched the lease rates, cap rates, net operating income and sales prices for possible development of the Subject space on 2.5 acres under two Uses:

Original: Designated Commercial (C) and Light-Industrial (L-I) zone. This is the “original use” planned at the Subject site under the current zoning designation.

Proposed: A change in Land Use Designation and Rezone to Multi-Family Residential (R-3-10) for the development of a 50-unit apartment complex and 107 parking spaces. As Proposed, the multifamily apartments will have three different floorplans including a studio, 22 one- bedroom plans, and 27 two-bedroom plans. Of the two-bedroom plans, five (10%) will be designated as affordable units. The apartment complex will consist of three- and four-story type III on grade with a rooftop amenity.

Proposed and Original Use
Key Findings
Type
Building
Square
Feet
Net
Acreage GLA (SF)
Est.

Monthly
Lease Rate
Est.

Annual
Lease Rate
Gross Receipts Operating
Expense %
Operating
Expenses Net Operating
Income
Vacancy
Rate Vacancy
Total Est.

Annual
Revenues
Cap Rate
(%) Total Value $/SF
Multifamily Apartments (50) p.u. 728 728 $3.98 $47.81 $143,412 Apartment Total 36,393 2.23 36,393 $3.98 $47.81 $1,739,877 -30% ($521,963) $1,217,914 -5.0% ($86,994) $1,130,920 4.90% $23,079,995 $634 Industrial Flex 21,345 1.46 21,345 $1.55 $18.60 $397,012 -8% ($31,761) $365,251 -2.0% ($7,940) $357,311 5.20% $6,871,369 $322 Commercial Retail Strip Center 3,624 0.77 3,624 $2.55 $30.60 $110,883 -24% ($26,612) $84,271 -10.0% ($11,088) $73,183 6.75% $1,084,191 $299 Commercial Total 24,968 2.23 24,968 $507,896 ($58,373) $449,523 ($19,029) $430,494 $7,955,560 *Assumes all real estate property taxes, insurance, management fees (on or off-site), repairs and maintenance, and utilities are paid by tenant under a Triple Net lease.

Type SF/Unit # Units GLA (SF) $/SF $/Unit Total
Multifamily Apartments (50) p.u. 728 50 36,393 $458 $475,000 $23,750,000 For Sale Total 36,393 50 36,393 $458 $23,750,000
Industrial Flex 21,345 1 21,345 $327 $6,979,735
Commercial Retail Strip Center 3,624 1 3,624 $300 $1,087,090 Commercial Total 24,968 2 24,968 $627 $8,066,825
Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 8 Site Plan Analysis
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 9 Aerial of Surrounding Uses
Site Plan Analysis
Surrounding uses include a liquor store with parking spaces in the southwestern portion adjacent to the Subject, an Industrial facility north of the Subject, and some Industrial Flex space west of the Subject. The Subject is currently a vacant lot on the northwest corner of S. Santa Fe Ave. and N. Las Flores Dr.

Santa Fe Hills
Business Center
ABENA
warehouse
Las Flores Village
TH rentals
Rancho Santalina
neighborhood
Baja Designs
Residential
Mobile Home
Community
Industrial Flex
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 10 LI (Light Industrial) C (Neighborhood Strip Retail)
2892 S. Sante Fe FAR/Lot Subject Min/Max 2966 S Sante Fe FAR/Lot Subject Min/Max Acreage SF Coverage Acreage SF FAR Acreage SF Coverage Acreage SF FAR

1.03 3,013 0.07 1.46 4,531 Min 0.66 2,187 0.08 0.77 2,552 Min

0.6 38,159 Mix 0.14 4,696 Max
21,345 Avg 3,624 Avg
Type
Building
Square
Feet
Net
Acreage GLA (SF)
Industrial Flex 21,345 1.46 21,345
Commercial Retail Strip Center 3,624 0.77 3,624
Commercial Total 24,968 2.23 24,968
Original Site Plan
Site Plan Analysis
The original plan for this site is zoned as Commercial (C) and Light-Industrial (L-I). There are no specific plans provided for the current zoning of the Subject site. Based on the current surrounding land usage, Zonda used the Santa Fe Hills Business Center (LI) and the liquor store (C) next to the Subject to evaluate what the site under current Commercial and Industrial zoning can achieve.

We analyzed the FAR (Floor Area Ratio) of the select comparable sites, and compared this to allowable maximum and minimum guidelines.

Both parcels appear to be currently developed well below FAR limits. We therefore used the average square footage between the select comparables and what is allowable to determine a possible building size for the Retail and Light Industrial portions of the Subject if developed as intended or Original Use. We adjusted the Max FAR on the Commercial of 0.7 which assumes a 5-story building to one story (0.14).

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 11 Proposed Site Plan
Site Plan Analysis
The Proposed site plan includes the construction of a 50-unit apartment building and 107 parking spaces. The apartment will include a studio, 22 one-bedroom plans, 22 two-bedroom plans, and five affordable 2-bedroom plans. Floorplan details and parking are on the following page.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 12 Floorplans Detail
Site Plan Analysis
The details for the floorplans are shown below.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 13 Proposed Project Plans (Cont’d)
Site Plan Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 14 Proposed Project Plans (Cont’d)
Site Plan Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 15 Proposed Project Plans (Cont’d)
Site Plan Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 16 Rent Recommendations
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 17 Proposed Use Summary
Rent Recommendations
Zonda’s recommended rents average $2,850 ($3.97 per square foot) for the proposed 45 market rate apartment units. We researched comparable communities and average rents in the San Marcos region to recommend target rents. The Client plans to allocated 10% of units (five two-bedroom units) as affordable. See page 19 for details on our assumptions for the low income unit rents.

Building # of Est % of Average Base Average Rent Base Net Effective Average Net Effective Project Type Stories Units Total Units Unit Size Rent $/SF Rent $/SF Conc. Net Base $/SF Avg. Rent $/SF Subject Property (Market Rate) Stacked Flats Four-Story 45 90% 718 $2,850 $3.97 $2,850 $3.97 $0.00 $2,850 $3.97 $2,850 $3.97 Subject Property (Affordable) Stacked Flats Four-Story 5 10% 820 $1,756 $2.14 $1,756 $2.14 $0.00 $1,756 $2.14 $1,756 $2.14 50 100% 728 $2,741 $3.79 $2,741 $3.79 $0.00 $2,741 $3.79 $2,741 $3.79Community Summary $1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,900
$3,100
$3,300
500 550 600 650 700 750 800 850
Average Rent
Unit Size (Square Feet)
Subject Property (Market Rate) (Four-
Story) DTA
Subject Property (Affordable) (Four-Story)
DTA
Source: Meyers LLC
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 18 Proposed Use Detail
Rent Recommendations
Zonda’s recommended rents for apartment units range from $2,468 to $3,034. We did not program premiums or concessions, and these should be evaluated when the project comes to market. These proposed rents are consistent with the actively leasing competitive apartment communities.

Zonda used these values in our assessment of potential price as the Proposed land use scenario. Our positioning rational versus the competitive for-rent residential market is explained in the following section.

Property Name Base Est. Avg. Rent Net. Eff. Net. Eff.

Location Client/Developer Orig. Size Pkg Monthly Avg. Monthly Conc. Base Avg Product Details Lease Summary Mix SF Bed Bath Level Pkg Typ Rent $/SF Prem. Rent $/SF Direct Indirect Total Rent $/SF Rent $/SF Subject Property (Market Rate) DTA 1 525 0 1.0 1 1 O $2,468 $4.70 $0 $2,468 $4.70 $0 $0 $0 $2,468 $4.70 $2,468 $4.70 Location: San Marcos 22 624 1 1.0 1 1 O $2,683 $4.30 $0 $2,683 $4.30 $0 $0 $0 $2,683 $4.30 $2,683 $4.30 Product: Stacked Flats Total Units: 45 22 820 2 2.0 1 1 O $3,034 $3.70 $0 $3,034 $3.70 $0 $0 $0 $3,034 $3.70 $3,034 $3.70 Building Stories: Four-Story Est Market Entry: Jan - 2019 Parking (Included):Open
718 $2,850 $3.97 $0 $2,850 $3.97 $0 $0 $0 $2,850 $3.97 $2,850 $3.97 Subject Property (Affordable) DTA 5 820 2 1.0 1 1 O $1,756 $2.14 $0 $1,756 $2.14 $0 $0 $0 $1,756 $2.14 $1,756 $2.14 Location: San Marcos
Product: Stacked Flats Total Units: 5
Building Stories: Four-Story Est Market Entry: Jan - 2019 Parking (Included):Carport
820 $1,756 $2.14 $0 $1,756 $2.14 $0 $0 $0 $1,756 $2.14 $1,756 $2.14Summary Statistics:

Summary Statistics:

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 19 Zonda priced the Subject’s two-bedroom affordable units at $1,756 based on the affordable guidelines in San Diego County. We programed rents for the affordable apartments at 60% of AMI, resulting in $1,756 for the two-bedroom units. Rents are shown for 30%, 60%, 80%, and 140% of AMI. Changes in percent of AMI from 60% will result in different rents than those Zonda programmed in this analysis.

Proposed Use Detail
Rent Recommendations
Source: Novogradac
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 20 Competitive For-Rent
Market Analysis
21 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Competitive Project Location Summary
Competitive For-Rent Market Analysis
Zonda considered comparable apartment communities proximate to the Subject, located in San Marcos and Vista. All apartments were built after 2014, with Breeze Hill being the newest built in 2019. Block C located south of the Highway 78 is considered the upper end of this Submarket.

Marc San Marcos
Palomar Station
Breeze Hill
Block C
Management Company/ Lease Mo. Unit Size Range Rent Range Rent/SF Avg. Eff. Rent Range Eff. Rent/SF # Community/Project Builder Story Total Occ. Up Turns Min Max Avg Min Max Avg Min Max Avg Conc. Min Max Avg Min Avg Avg Traditional Apartment Competitors 272 644 1,254 938 $2,466 $3,422 $2,985 $2.75 $4.23 $3.48 $0 $2,466 $3,422 $2,985 $2.75 $4.21 $3.48 1 Marc San Marcos MG Properties Three 416 97.3% - - 650 1,357 990 $2,479 $3,732 $3,208 $2.75 $3.81 $3.34 $0 $2,479 $3,732 $3,208 $2.75 $3.81 $3.34 2 Block C MG Properties Five 198 97.4% - - 348 1,049 661 $2,270 $3,611 $2,892 $3.40 $6.84 $5.05 $0 $2,270 $3,611 $2,892 $3.40 $6.84 $5.05 3 Palomar Station Greystar Three 386 99.2% - - 829 1,298 1,064 $2,643 $2,993 $2,824 $2.31 $3.22 $2.75 $0 $2,643 $2,993 $2,824 $2.31 $3.20 $2.75 4 Breeze Hill Sunrise Three 88 95.5% - - 471 1,036 765 $2,070 $3,419 $2,843 $3.27 $4.71 $3.79 $0 $2,070 $3,419 $2,843 $3.27 $4.55 $3.79 22 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Total Rent Positioning vs Competitive Market
Competitive For-Rent Market Analysis
Proposed total rents are positioned consistently with Phase II of Marc San Marcos, just above Breeze Hill, and at a significant premium to the older Palomar Station (built 2014). This positioning adjusts for the perceived premium for new construction at the Subject, with the exception of Block C which has a more desirable location in North City. $2,000
$2,200
$2,400
$2,600
$2,800
$3,000
$3,200
$3,400
$3,600
$3,800
300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 Average Rent/ Monthly Payment
Unit Size (Square Feet)
Subject Property (Market Rate) (Four-Story) DTA
Marc San Marcos - 2017, Three-Story, 97.3% Occ.

Block C - 2016, Five-Story, 97.4% Occ.

Palomar Station - 2014, Three-Story, 99.2% Occ.

Breeze Hill - 2019, Three-Story, 95.5% Occ.

Source: Zonda Advisory; Individual Community Management Offices 23 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Competitive For-Sale Market Detail
Competitive For-Rent Market Analysis
Traditional Apartment Competitors Floorplan Summary
Project Size Pkg Current Rents Current Rent $/SF Rent Concessions Net Effective Net Effective $/SF Project Detail Mix SF Bed Bath Level Pkg Type Low - High Avg. Low - High Avg. Direct Indirect Total Low - High Avg. Low - High Avg. 1 MARC SAN MARCOS │ MG PROPERTIES │ SAN MARCOS │ THREE-STORY │ YEAR BUILT - 2017

% Leased/Occupancy: 97.3/97.3 1 650 0 1.0 1 1 O $2,479 - $2,479 $2,479 $3.81 - $3.81 $3.81 $0 $0 $0 $2,479 - $2,479 $2,479 $3.81 - $3.81 $3.81 Total Units/Leased: 416/405 1 749 1 1.0 1 1 O $2,857 - $2,857 $2,857 $3.81 - $3.81 $3.81 $0 $0 $0 $2,857 - $2,857 $2,857 $3.81 - $3.81 $3.81 Available Units: 11 1 974 2 2.0 1 1 O $3,365 - $3,365 $3,365 $3.45 - $3.45 $3.45 $0 $0 $0 $3,365 - $3,365 $3,365 $3.45 - $3.45 $3.45 Turnover/Monthly: - 1 1,053 2 2.0 1 1 O $3,385 - $3,385 $3,385 $3.21 - $3.21 $3.21 $0 $0 $0 $3,385 - $3,385 $3,385 $3.21 - $3.21 $3.21 Lease-Up Rate: - 1 1,155 2 3.0 2 1 O $3,432 - $3,432 $3,432 $2.97 - $2.97 $2.97 $0 $0 $0 $3,432 - $3,432 $3,432 $2.97 - $2.97 $2.97 1 1,357 2 2.0 2 1 O $3,732 - $3,732 $3,732 $2.75 - $2.75 $2.75 $0 $0 $0 $3,732 - $3,732 $3,732 $2.75 - $2.75 $2.75 6 990 $2,479 - $3,732 $3,208 $2.75 - $3.81 $3.24 $0 $0 $0 $2,479 - $3,732 $3,208 $2.75 - $3.81 $3.24 2 BLOCK C │ MG PROPERTIES │ SAN MARCOS │ FIVE-STORY │ YEAR BUILT - 2016 % Leased/Occupancy: 97.4/97.4 1 348 0 1.0 1 1 O $2,381 - $2,381 $2,381 $6.84 - $6.84 $6.84 $0 $0 $0 $2,381 - $2,381 $2,381 $6.84 - $6.84 $6.84 Total Units/Leased: 198/193 1 350 0 1.0 1 1 O $2,270 - $2,270 $2,270 $6.49 - $6.49 $6.49 $0 $0 $0 $2,270 - $2,270 $2,270 $6.49 - $6.49 $6.49 Available Units: 5 1 536 1 1.0 1 1 O $2,674 - $2,721 $2,698 $4.99 - $5.08 $5.03 $0 $0 $0 $2,674 - $2,721 $2,698 $4.99 - $5.08 $5.03 Turnover/Monthly: - 1 1,022 2 2.0 1 1 O $3,523 - $3,523 $3,523 $3.45 - $3.45 $3.45 $0 $0 $0 $3,523 - $3,523 $3,523 $3.45 - $3.45 $3.45 Lease-Up Rate: - 1 1,049 2 2.5 1 1 O $3,563 - $3,611 $3,587 $3.40 - $3.44 $3.42 $0 $0 $0 $3,563 - $3,611 $3,587 $3.40 - $3.44 $3.42 5 661 $2,270 - $3,611 $2,892 $3.40 - $6.84 $4.37 $0 $0 $0 $2,270 - $3,611 $2,892 $3.40 - $6.84 $4.37 3 PALOMAR STA TION │ GREYSTAR │ SAN MARCOS │ THREE-STORY │ YEAR BUILT - 2014 % Leased/Occupancy: 99.2/99.2 1 829 1 1.0 1 1 O $2,643 - $2,668 $2,656 $3.19 - $3.22 $3.20 $0 $0 $0 $2,643 - $2,668 $2,656 $3.19 - $3.22 $3.20 Total Units/Leased: 386/383 1 1,298 2 2.5 1 1 O $2,993 - $2,993 $2,993 $2.31 - $2.31 $2.31 $0 $0 $0 $2,993 - $2,993 $2,993 $2.31 - $2.31 $2.31 Available Units: 3
Turnover/Monthly: -
Lease-Up Rate: -
2 1,064 $2,643 - $2,993 $2,824 $2.31 - $3.22 $2.66 $0 $0 $0 $2,643 - $2,993 $2,824 $2.31 - $3.22 $2.66 4 BREEZE HILL │ SUNRISE │ VISTA │ THREE-STORY │ YEAR BUILT - 2019 % Leased/Occupancy: 95.5/95.5 1 471 0 1.0 1 1 O $2,070 - $2,220 $2,145 $4.39 - $4.71 $4.55 $0 $0 $0 $2,070 - $2,220 $2,145 $4.39 - $4.71 $4.55 Total Units/Leased: 88/84 1 645 0 1.0 1 1 O $2,525 - $2,525 $2,525 $3.91 - $3.91 $3.91 $0 $0 $0 $2,525 - $2,525 $2,525 $3.91 - $3.91 $3.91 Available Units: 4 1 661 1 1.0 1 1 O $2,625 - $2,825 $2,725 $3.97 - $4.27 $4.12 $0 $0 $0 $2,625 - $2,825 $2,725 $3.97 - $4.27 $4.12 Turnover/Monthly: - 1 682 1 1.0 1 1 O $2,575 - $2,775 $2,675 $3.78 - $4.07 $3.92 $0 $0 $0 $2,575 - $2,775 $2,675 $3.78 - $4.07 $3.92 Lease-Up Rate: - 1 700 1 1.0 1 1 O $2,770 - $2,820 $2,795 $3.96 - $4.03 $3.99 $0 $0 $0 $2,770 - $2,820 $2,795 $3.96 - $4.03 $3.99 1 741 2 2.0 1 1 O $2,694 - $2,744 $2,719 $3.64 - $3.70 $3.67 $0 $0 $0 $2,694 - $2,744 $2,719 $3.64 - $3.70 $3.67 1 851 2 2.0 1 1 O $2,889 - $3,089 $2,989 $3.39 - $3.63 $3.51 $0 $0 $0 $2,889 - $3,089 $2,989 $3.39 - $3.63 $3.51 1 876 2 2.0 1 1 O $3,094 - $3,309 $3,202 $3.53 - $3.78 $3.65 $0 $0 $0 $3,094 - $3,309 $3,202 $3.53 - $3.78 $3.65 1 984 2 2.0 1 1 O $3,218 - $3,263 $3,241 $3.27 - $3.32 $3.29 $0 $0 $0 $3,218 - $3,263 $3,241 $3.27 - $3.32 $3.29 1 1,036 2 2.0 1 1 O $3,419 - $3,419 $3,419 $3.30 - $3.30 $3.30 $0 $0 $0 $3,419 - $3,419 $3,419 $3.30 - $3.30 $3.30 10 765 $2,070 - $3,419 $2,843 $3.27 - $4.71 $3.72 $0 $0 $0 $2,070 - $3,419 $2,843 $3.27 - $4.71 $3.72 24 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Palomar StationMarc San Marcos
Traditional Apartment Comparables
Competitive For-Rent Market Analysis
Block C
Breeze Hill

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 25 Price Assessment
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 26 Our valuation of the Subject includes both the NOI cap rate approach and a comparison of recent sales transactions and focused specifically the original land use. Sales truncations were researched both by price per square foot and price per unit where applicable, and the resulting average was used. Zonda assumptions are supported by extensive market research and interviews with local retail brokers including VOIT, REIS, HVS, CBRE, Lee & Associates, Cushman and Wakefield, and Colliers. The resulting price assessment cross-referencing both methods is around $8.0 million.

Methodology and Price Assessment Conclusions – Original Use Price Assessment
Zonda assumptions are supported by our market
research and interviews with local retail brokers
including CBRE, Lee & Associates, Cushman and
Wakefield, and Colliers, and include the following:
• A vacancy rate of 2% for Light Industrial.
• A vacancy rate of 10% for Commercial
Neighborhood Retail strip centers.
• Operating expenses for the Light Industrial space
of 8%.
• Operating expenses for Commercial
Neighborhood Retail strip center of 24%.
• Cap Rates are currently between 6.5% and 7.0%
for Commercial Neighborhood Strip Retail.
• Industrial space rates are between 4.5% and 5.0%.
• Monthly lease rates per square foot are $1.55 for
Light Industrial and $2.55 for Commercial
Neighborhood In-line Retail.

Type
Building
Square
Feet Acreage GLA (SF)
Est.

Monthly
Lease Rate
Est.

Annual
Lease Rate
Gross Receipts Operating
Expense %
Operating
Expenses
Net
Operating
Income
Vacancy
Rate Vacancy
Total Est.

Annual
Revenues
Cap Rate
(%) Total Value $/SF
Industrial Flex 5,380 1.84 5,380 $1.55 $18.60 $100,068 -8% ($8,005) $92,063 -2.0% ($2,001) $90,061 4.75% $1,896,025 $352 Commercial Retail Strip Center 2,650 0.66 2,650 $2.55 $30.60 $81,090 -24% ($19,462) $61,628 -10.0% ($8,109) $53,519 6.75% $792,880 $299 Commercial Total 8,030 2.50 8,030 $181,158 ($27,467) $153,691 ($10,110) $143,581 $2,688,905 *Assumes all real estate property taxes, insurance, management fees (on or off-site), repairs and maintenance, and utilities are paid by tenant under a Triple Net lease.

Net Operating Income / Cap Rate Valuation Approach
Type SF/Unit # Units GLA (SF) $/SF $/Unit Total
Industrial Flex 5,380 1 5,380 $350 $1,883,000
Commercial Retail Strip Center 2,650 1 2,650 $300 $795,000 Commercial Total 8,030 2 8,030 $650 $2,678,000
Sales Transaction Valuation Approach
Industrial Flex 21,345 1.46 21,345 $1.55 $18.60 $397,012 -8% ($31,761) $365,251 -2.0% ($7,940) $357,311 5.20% $6,871,369 $322 Commercial Retail Strip Center 3,624 0.77 3,624 $2.55 $30.60 $110,883 -24% ($26,612) $84,271 -10.0% ($11,088) $73,183 6.75% $1,084,191 $299 Commercial Total 24,968 2.23 24,968 $507,896 ($58,373) $449,523 ($19,029) $430,494 $7,955,560 Industrial Flex 21,345 1 21,345 $327 $6,979,735
Commercial Retail Strip Center 3,624 1 3,624 $300 $1,087,090 Commercial Total 24,968 2 24,968 $627 $8,066,825
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 27 Our valuation of the Subject includes both the NOI cap rate approach and a comparison of recent sales transactions and focused specifically the proposed land uses. Sales truncations were researched both by price per square foot and price per unit where applicable, and the resulting average was used. Zonda assumptions are supported by extensive market research and interviews with local retail brokers including VOIT, REIS, HVS, CBRE, Lee & Associates, Cushman and Wakefield, and Colliers. The resulting price assessment cross-referencing both methods is roughly $23.4 million.

Methodology and Price Assessment Conclusions – Proposed Use Price Assessment
Zonda assumptions are supported by our market
research and interviews with local retail brokers
including CBRE, Lee & Associates, Cushman and
Wakefield, and Colliers, and include the following:
• A vacancy rate of 5% for multifamily apartments.
• Operating expenses for multifamily apartments are
estimated at 30%.
• Market Cap Rates are between 4% and 5.5%
• We assumed lease rates of $3.98 per square feet
based on Zonda’s recommended average rents as
shown in the previous section of this report.

Type
Building
Square
Feet Acreage GLA (SF)
Est.

Monthly
Lease Rate
Est.

Annual
Lease Rate
Gross Receipts Operating
Expense %
Operating
Expenses
Net
Operating
Income
Vacancy
Rate Vacancy
Total Est.

Annual
Revenues
Cap Rate
(%) Total Value $/SF
Multifamily Apartments (50) p.u. 728 728 $3.98 $47.81 $147,515 Apartment Total 36,393 2.50 36,393 $3.98 $47.81 $1,739,877 -30% ($521,963) $1,217,914 -5.0% ($86,994) $1,130,920 4.90% $23,079,995 $634 Net Operating Income / Cap Rate Valuation Approach
*Assumes all real estate property taxes, insurance, management fees (on or off-site), repairs and maintenance, and utilities are paid by tenant under a Triple Net lease.

Type SF/Unit # Units GLA (SF) $/SF $/Unit Total
Multifamily Apartments (50) p.u. 728 50 36,393 $458 $475,000 $23,750,000 For Sale Total 36,393 50 36,393 $458 $23,750,000
Sales Transaction Valuation Approach
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 28 The following neighborhood retail listings and sales were used to help determine a likely sale price for the retail component. Zonda priced the Subject Neighborhood Retail at $300 per square foot, slightly below the Submarket average shown below, to adjust for Subject location in the least desirable part of San Marcos, close to the Bosstick Blvd. Industrial Park. The highest sales prices were for retail locations in Vista and Oceanside while the lowest sales prices were in San Marcos. Cap rates indicated in the table below are outdated, and Zonda therefore used current rates of between 6.5% and 7.0% as provided by interviews with local brokers.

Original Use: Commercial Neighborhood Retail Sales
Price Assessment
Property Name
No. Address Class Zoning Total SF Acreage Year Built Cap Rate Leasable SF Sale Price Price/ SF Price/Acre A Old SM Restuarant Row B Rtl Strip center 43937 4.77 1977 43,937 $7,700,000 $175 $1,614,256 1020 W San Marcos Blvd
San Marcos, 92078
Vista Terrace Marketplace B Rtl Strip center 15808 3.91 1980/2018 5.37% 15,808 $10,585,000 $670 $2,705,777 B 1060-1310 E Vista Way
Vista, 92083
Town Center North C Rtl Strip center 43750 3.72 1995 4.50% 43,750 $24,500,000 $560 $6,586,022 C 815 College Blvd
Oceanside, 92057
San Marcos Village C Rtl Strip center 96606 5.92 1975 4.50% 96,606 $19,250,000 $199 $3,251,689 D 155 Rancho Santa Fe Rd
San Marcos, 92078
E Old SM Restuarant Row B Rtl Strip center 12858 4.12 1977 12,858 $4,125,000 $321 $1,001,214 1080 W San Marcos Blvd
San Marcos, 92078
F Old SM Restuarant Row B Rtl Strip center 6682 1.00 1977 6,682 $1,290,907 $193 $1,290,907 1000 W San Marcos Blvd
San Marcos, 92078
G Old SM Restuarant Row B Rtl Strip center 16896 2.53 1977 16,896 $4,120,200 $244 $1,628,538 1080 W San Marcos Blvd
San Marcos, 92078
Min: 6,682 1 1975 4.50% 6,682 $1,290,907 $175 $1,001,214 Max: 96,606 5.92 1995 5.37% 96,606 $24,500,000 $670 $6,586,022 Median 16,896 3.912 1977 4.50% 16,896 $7,700,000 $244 $1,628,538 Average: 33,791 3.71 1980 4.79% 33,791 $10,224,444 $337 $2,582,629 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 29 The following retail leases were used to
determine a likely lease rate for the retail
component. All of the listed sales below
are for older properties, with Campus
Pointe being the newest and closest to
North City, asking $3.25 per square foot.

Zonda priced the inline retail space
similarly to the CMA median at $2.55, and
assumed a vacancy rate of 10%.

Original Use: Commercial Retail Leases
Price Assessment
Building Name Total Building Occupancy Vacancy Asking Lease Rate No. Address Class Type Built Acreage Leasable SF Available Space Rate (%) Rate (%) (Per SF Per Mo.) Terms 1 Sycamore Terrace C 2006 2.19 10,543 898 $3.67 NNN
Sycamore & Lobelia Ave 898 $3.67
Vista, 92083 Total 898 91.5% 9% $3.67
2 Galleria Vera Cruz C Inline Retail 1987 1.58 23,320 1,315 $1.90 NNN 1001 San Marcos Blvd
San Marcos, 92078 Total 1,315 94.4% 6% $1.90
3 Vons C Medical Office 1988 0.64 6,100 3,110 $2.50 NNN 671 S. Rancho Santa Fe Rd
San Marcos, 92078 Total 3,110 49.0% 51% $2.50
4 Park Place North C MU 2006 0.55 4,795 2,147 $2.55 NNN 950 Boardwalk 1,324 $2.55
San Marcos, CA 92078 1,324 $2.55
Total 4,795 0.0% 100.0% $2.55
5 ALDI - Rancho S.M. Village C Inline Retail 1988 0.64 21,687 3,110 $2.50 NNN 621-701 S. Rancho Santa Fe Rd
San Marcos, 92078 Total 3,110 85.7% 14% $2.50
6 Campus Pointe A Inline Retail 2010 0.55 4,795 1,103 $3.25 NNN 801 S Twin Oaks Valley Rd
San Marcos, CA 92078
Total 1,103 77.0% 23.0% $3.25
7 Creekside Marketplace C Inline Retail 1988 0.64 6,100 3,110 $2.50 NNN 640 Grand Ave
San Marcos, 92078 Total 3,110 49.0% 51% $2.50
8 West Vista Plaza B Inline Retail 1982 0.55 14,206 2,400 $3.50 NNN 567-575 W Vista Way 1,032 $2.50
Vista, CA 92083
Total 3,432 75.8% 24.2% $3.20
9 Arroyo Verde A Drive Thru 2022 4.85 27,200 5,000 $4.50 NNN NEC Oceanside & Rancho Del Oro Inline Retail 22,200 $3.25 Oceanside, 92056 Total 27,200 0.0% 100% $4.50
10 Creekside at Promenade A MU Retail 2018 0.55 11,003 1,405 $1.85 NNN 6 Creekside Drive
San Marcos, CA 92078
Total 1,405 87.2% 12.8% $1.85
11 Galleria Vera Cruz C Inline Retail 1987 1.58 23,320 1,315 $1.90 NNN 1001 San Marcos Blvd
San Marcos, 92078 Total 1,315 94.4% 6% $1.90
Min 4,795 1,315 0.0% 5.6% $1.85
Max 23,320 4,795 94.4% 100.0% $4.50
Median 6,100 1,736 49.0% 51.0% $2.55
Average 11,405 2,305 47.8% 52.2% $2.79
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 30 The following neighborhood Industrial listings and sales were used to help determine a likely sale price for the Industrial component.

Zonda priced the Subject neighborhood retail at the $327 per square foot average. The highest sales prices were for Industrial locations in Carlsbad while the lowest sales prices were in San Marcos. Zonda only found one transactional cap rate in our research of sales and listings, and therefore used the current rate of around 5.2% as provided by the latest industry trend reports.

Original Use: Industrial Sales
Price Assessment
Property Name
No. Address Buyer Class Lessee Acreage Year Built Type Square Feet Sale Price Price/ SF Cap Rate Sale Date A 2349 La Mirada - B - 12.69 2006 Industrial 14,732 $3,950,000 $268 - Lisitng Vista, 92091 14,732
B 2598 Fortune Way - B - 1.70 1991 Industrial 1,741 $550,000 $316 - Listing San Marcos, 92078 1,741
C 475 E Carmel St - B - 1.00 1985 Industrial 8,744 $2,360,880 $270 - Listing San Marcos, 92078 8,744
D 1205-1225 Park center Dr., Vista BentalGreenOak - - - - Industrial (multiple buildings) 614,020 $205,500,000 $335 - Q2 2022 2281 Las Palmas Dr., Carlsbad 614,020
120 Mata Wat., San Marcos
E 2349 La Mirada Dr - B - 12.65 2006 Industrial 14,907 $4,950,000 $332 - Listing Vista, CA 92081 14,907
F 2600 Temple Heights Dr - B - 1.10 1986 Industrial 13,248 $4,756,000 $359 - Listing Oceanside, CA 13,248
G 1946 Kellogg Ave - B - 0.79 1998 Industrial Flex 9,987 $3,645,255 $365 - Listing Carlsbad, 92008 9,987
H 2221 Las Palmas Drive - - - - 1981 6,902 $2,300,000 $333 - Listing Carlsbad, 92011 6,902
I Collisions Plus Auto Body - C - 2.00 1994 Industrial 3,475 $1,265,000 $364 5.51% Listing 240 N Andreasen Dr 3,475
Escondido, 92029
Min 1,741 $550,000 $268 --
Max 614,020 $205,500,000 $365 --
Median 9,987 $3,645,255 $333 --
Average 76,417 $23,100,214 $327 --
Industrial Office/Warehouse
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 31 The following Industrial leases were used to determine a likely lease rate for the Industrial component. All leases listed below are around the same asking price per year between $16 to $20. The Industrial building west of the Subject is leasing at $1.55. Zonda priced the Light Industrial space at $1.55 per square foot, which is in line with the average for the CMA of $1.52 per square foot. We assumed a vacancy rate of 2.0%.

Original Use: Industrial Leases
Price Assessment
Building Name Total Building Occupancy Asking Lease Rate Asking Lease Rate No. Address Tenant Class Built Leasable SF Rate (%) (Per SF Per Year) (Per SF Per Year) 1 2892 S Sante Fe, Ste 108 Listing - 2005 4,251 4,251 $18.60 $1.55 San Marcos, 92079 Total 4,251 - $18.60 $1.55
2 2317 Cherimoya Dr Listing - 1980 9,038 6,000 $16.56 $1.38 Vista, CA 92081 Total 6,000 - $16.56 $1.38
3 Business Park Pointe Listing B 1989 29,477 1,345 $18.00 $1.50 1185 Park Center Dr Total 1,345 - $18.00 $1.50
Vista, CA 92081
4 120 N Pacific St Listing B 1980 13,243 1,200 $20.04 $1.67 San Marcos, 92069 Total 1,200 - $20.04 $1.67
5 1265 Stone Dr Listing - 1984 7,860 7,860 $18.00 $1.50 San Marcos, 92078 Total 7,860 - $18.00 $1.50
6 1358 La Mirada Dr Lisitng - 1980 6,938 6,938 $18.24 $1.52 San Marcos, 92078 Total 6,938 - $18.24 $1.52
7 Vista Progress Center - 1989 4,080 $18.60 $1.55
2820-2834 La Mirada Listing 11,386 $17.40 $1.45
Vista, 92081 81,167 22,914 $18.60 $1.55
Total 38,380 - $18.20 $1.52
8 La Costa Meadows Business Center B 1979 1,000 $18.00 $1.50 1635-1665 S Rancho Santa Fe Rd Listing 2,699 $18.00 $1.50 San Marcos, 92078 25,882 3,044 $18.00 $1.50
Total 6,743 - $18.00 $1.50
9 2225 Barham Dr Listing - 1978 8,424 1,440 $18.00 $1.50 Escondido, 92029 2,376 $18.60 $1.55
Total 1,440 - $18.00 $1.53
Min 6,932 1,000 -- $16.56 $1.38
Max 81,167 38,380 -- $20.04 $1.67
Median -- 4,251 -- $18.00 $1.50
Average 22,754 8,240 -- $18.18 $1.52
Available Space
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 32 The following Multifamily sales were used to help determine a likely sale price for the Multifamily component. Zonda priced the Subject Multifamily building at $458 per square foot average. Cap rates were not available for most apartment buildings, but Zonda used 4.90% per the Submarket average.

Proposed Use: Multifamily Sales
Price Assessment
Property Name Total
No. Address Type Zoning Acreage List Price Sale Date Year Built # Units Square Feet Total SF Sale Price Sale $/SF Sale $/Unit Cap Rate NOI 1 Solana at Grand Class B Apt 21.67 $167,500,000 11/24/2021 1986 519 780 404,820 $167,500,000 $414 $322,736 1501 E Grand Ave
Escondido, 92025
2 The Dylan Class B Apt 9.22 $74,100,000 1973 208 1,187 246,896 $74,100,000 $300 $356,250 550 Los Arbolitos Blvd
Oceanside, CA 92058
3 Palomar Station Class A Apt 14.82 $195,000,000 10/11/2021 2014 386 959 424,100 $195,000,000 $460 $505,181 4.71% $9,184,500 1257 Armorlite Drive
San Marcos, 92069
4 Sunterra Class B Apt 4.96 $97,500,000 2/16/2022 1978 240 911 218,640 $97,500,000 $446 $406,250 3851 Sherbourne Ave
Oceanside, 92056
5 Sofi Ocean Hills Class A Apt 24.15 $196,000,000 1987 404 858 346,632 $196,000,000 $565 $485,149 3500 Windrift Way
Oceanside, 92056
Min: 1973 208 780 218,640 $74,100,000 $300 $322,736 - - Max: 2014 519 1,187 424,100 $196,000,000 $565 $505,181 - - Median 1986 386 911 346,632 $167,500,000 $446 $406,250 4.7% $9,184,500 Average: 1988 351 939 328,218 $146,020,000 $437 $415,113 4.7% $9,184,500 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 33 Location Analysis
34 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Current and Future Site Renderings and Photos
Location Analysis
Current site from liquor store
parking lot looking northeast
Industrial space adjacent to the
northern part of the Subject
Current parcel zoned as Industrial
from N. Las Flores Drive
Commercial zoned parcel next to
liquor store and parking lot
35 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos The Subject is a 2.5-acre vacant site surrounded by Industrial, Commercial, and Residential zones. Rezoning the site from Commercial and Industrial to Multifamily would be consistent with the surrounding land uses, but it will bring new product to the market. The Residential area mainly consists of sold-out neighborhoods and rental low-income townhomes, with no apartments in the immediate area. The location is close to services, walking trails, and a short drive from food and services.

Source: City of San Marcos – Creek District Specific Plan Aerial Location Map
Location Analysis
Mariposa
Apartments
Meadow Creek
Apartments
Santa Fe Hills
36 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Employees by Zip Code Drive Time Map
Location Analysis
Collectively there are 35,794 employees in the two San Marcos zip codes, with 17,928 in the Subject zip code 92069. The greatest concentration of local residents commute to destinations along the Highway 78 Corridor, although some do travel as far as Temecula and Downtown San Diego for work.
15-minute
drive time
30-minute
drive time
45-minute
drive time

37 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Local Resident Commute Patterns
Location Analysis
The City of San Marcos accounts for almost 13% of employment for local residents, underscoring the viability of an apartment complex and parking as some renters will want to be near their employment. The greatest concentration (18.8%) of local residents commute to San Diego for work, while a further 10.7% commute to Carlsbad. Vista and Escondido are also employment centers which account for +/- 8% of resident commuter destinations. A large share (48%) of local residents travel less than 10 miles to work, with am additional 24% travelling 10 to 24 miles each way per day. It should be noted that the City of San Diego also includes Rancho Bernardo south along the I- 15, which is less than 10 miles away.

38 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos General Location:
• The Subject is ideally located for a residential development, which is consistent with the neighborhoods near the Subject. The area is lacking rental development, and the Subject will provide new product that can attract students, recent graduates, and professionals. • The ingress & egress point will be along N. Santa Fe Ave going north. • The site is near a walking trail by the Rancho Santalina neighborhood entrance.

Existing Site Conditions and Zoning:

The Subject parcel is currently a vacant dirt site with Commercial and Industrial zoning. The site is located less than one mile northwest of State Route 78 (SR 78) which will feed customers toward the site. • Existing Improvements:
– Concrete sidewalk runs along N Las Flores Drive. The street is steep and leads into a neighborhood on a higher slope than the site.
– Bike lane runs along S Santa Fe Avenue.
– Developed Industrial site is adjacent to the norther portion of the Subject. – Light rail train passes through north of the site.
– There is some Commercial next to the liquor store by the Subject. – There are residential neighborhoods north and east from the site. • Topography: The parcel zoned for Commercial use is a flat site next to a liquor store with a small parking lot. The parcel zoned for Industrial use is in a steep slope.

Source: City of San Marcos
Current Site Conditions
Location Analysis
39 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Power Inn Apartments│ Virtua Opportunity Zone Fund I, LLC │ 39 The Subject has excellent access to public transportation options including the Breeze Bus line, the Inland Rail Trail and Rail Sprinter lines.

Area Public Transit
Location Analysis
The nearest Breeze bus stop is the Palomar
College Transit Center and is located about one
mile south of the Subject along W Mission Rd.

The Sprinter Rail Line runs along Mission Rd.,
and the closest Sprinter Rail line stop is also at
the Palomar College Transit Center less than
one mile from the Subject.
40 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos The Sprinter light rail is a 22-mile rail system that connects Oceanside, Vista, San Marcos, and Escondido, serving 15 stations along the Highway 78 corridor. The nearest Sprinter stop is the Palomar College Station stop, located about one mile south along Mission Road.

Source: North County Transit District
Sprinter Transit Map
Location Analysis
41 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Subject Close-Up
Source: ESRI
The Subject is next to S Santa Fe Drive, which is the main road leading to state route 78 and all connecting roads. The average daily traffic count along S. Santa Fe Avenue in a 1.5-mile radius ranges from 15,000 to 30,000, which is very high but not a risk factor for the proposed apartment site. The traffic count along N. Las Flores Drive is about 750, due to residents in the Rancho Santalina neighborhood commuting to and from. Las Flores Drive is the only entrance to the neighborhood and only access point to the main roads. This will likely increase with the proposed apartment sites as renters move into the area.

Average Daily Traffic Count
Location Analysis

1.5 miles

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 42 Land Use & Zoning Analysis
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 43 The Subject is located in the City of San Marcos. The San Marcos General Plan is shown below with the Subject displayed as a red circle. The zoning for the site is Commercial (C) and Light Industrial (L-I). The proposed rezone for the Subject is to Multi-Family Residential (R-3-10).

Source: City of San Marcos
Land Use Map
Location, Land Use & Zoning Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 44 The applicant is seeking a General Plan
Amendment and a Rezone for the site
which currently falls under the
Commercial (C) and Light Industrial (L-I).

Under the current land use the Subject 2.5-
acre property at northwest corner of S.

Santa Fe Avenue & N. Las Flores Drive could
support potential 20,000 sf of Industrial
space in 1.46 acres and 10,000 sf of
Commercial space in 0.77 acres. Rezoning
the land to Multi-Family Residential (R-3-
10) would support the proposed 50-unit
apartment building and 107 parking spaces
on 2.5 acres.

Land Use Map Detail & Alternative Plan
Location, Land Use & Zoning Analysis
Source: City of San Marcos
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 45 Source: City of San Marcos
According to the zoning maps from the City of San Marcos, the Subject is zoned for Commercial (C) and Light Industrial (L-I). Under the current zoning, Commercial buildings must be a maximum of 5 stories, and both Commercial and Industrial have a limit of 60 feet maximum building height.

Zoning Map Detail
Location, Land Use & Zoning Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 46 Source: City of San Marcos
Zoning Ordinance
Permitted Uses Under the “C” and “L-I” Land Use Designations Location, Land Use & Zoning Analysis
Properties with the General Plan land use designation of “Commercial” can include a mix of retail, recreation/education/public assembly, office/professional/business support services, or service uses. Specific Plan Area (SPA) Zones allow Flexibility to developers regarding land development, however there are some regulations. SPA Zone Specific Plans on properties with the General Plan land use designation of “Mixed Use” shall include a mixed-use component. All other properties that are designated with a “Special Consideration” designation on the General Plan Land Use map shall include a development proposal that is consistent with the General Plan land use, which may include residential, senior residential, Commercial, or Industrial development. Below are permitted land uses for the current zoning of Commercial and Light Industrial zones.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 47 Given the proposed land development plan for a 50-unit residential apartment building and 107 parking spaces, the site would fall under the medium-density Multifamily land uses. R-3-10 refers to medium-density Multifamily at a density of 12.1 to 20 du/ac. The site is

2.5 acres resulting in 20.0 du/ac. The following charts represent the permitted uses for a residential zone in the City of San Marcos with the Multifamily land uses highlighted.

Source: City of San Marcos
Permitted Residential Land Uses
Location, Land Use & Zoning Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 48 Permitted Residential Land Uses
Location, Land Use & Zoning Analysis
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 49 The following charts represent the permitted uses for a Commercial zone in the City of San Marcos. The land uses Commercial (C), Neighborhood Commercial (NC), Office Professional (OP) and Senior Residential (SR) all fall under Commercial Zoning. The original zoning at the site is Commercial (C) highlighted below.

Source: City of San Marcos
Permitted Commercial Land Uses
Location, Land Use & Zoning Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 50 Source: City of San Marcos
Permitted Commercial Land Uses
Location, Land Use & Zoning Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 51 Source: City of San Marcos
Permitted Industrial Land Uses
Location, Land Use & Zoning Analysis
The following charts represent the permitted uses for a Light Industrial zone in the City of San Marcos. The land uses Light Industrial (L-I), Business Park (BP), Industrial (I), and Industrial-2 (I- 2) all fall under Industrial Zoning. The original zoning at the site is Light Industrial (L-I)) highlighted below.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 52 Permitted Industrial Land Uses
Location, Land Use & Zoning Analysis

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 53 Source: SanGIS, http://www2.sdcounty.ca.gov/pts/trasearch.asp The Subject parcel is assigned to the tax rate area (TRA) 013203. An analysis of the base tax rate and additional tax obligations brings the total tax rate to 1.11565%. The breakdown of the additional tax breakdowns are listed below. The TRA (13115) is shown below in yellow.

Tax Rate Area Map
Location, Land Use & Zoning Analysis
Title Rate
COUNTY-PROPOSITION 13 1.00000
PALOMAR HEALTH 2005A - DEBT SERVICE 0.03800
UNIF BOND SAN MARCOS SFID #1-6/04/96, 2004-1 REF 0.00000 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010A 0.01414 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010B 0.00306 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010C 0.00362 UNIF BOND SAN MARCOS-PROP K 11/02/2010, 2017 REF 0.02095 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010D 0.00000 UNIF BOND SAN MARCOS-PROP K 11/02/2010, 2020 REF 0.01294 PALOMAR COMMUNITY COLL PROP M 11/07/06, SER 2006B 0.00242 PALOMAR COMMUNITY COLL PROP M 11/07/06, 2015 REF 0.00387 PALOMAR COMMUNITY COLL PROP M 11/07/06, SER 2006C 0.00118 PALOMAR COMMUNITY COLL PROP M 11/07/06, SER 2017D 0.00409 PALOMAR COMMUNITY COLL PROP M 11/07/06, 2017 REF 0.00239 PALOMAR COMMUNITY COLL PROP M 11/07/06, 2020 REF 0.00549 MWD D/S REMAINDER OF SDCWA 15019999 0.00350
Total Tax Rate 1.11565
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 54 Commercial Retail Market
Overview
55 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Retail Demand Notably Picks Up
Net absorption in Q2 2022 was 149,586 square feet, an increase quarter over quarter and year over year in San Diego County. Contributors to the positive absorption were a small handful of leases ranging between 12,000 and 24,000 square feet.

Vacancy Stays Below 5%
The vacancy rate in the year’s final quarter compressed to 4.83%, the lowest it has been since the start of the COVID-19 pandemic, but still above pre-pandemic levels. Availability also decreased all center types in the overall County.

Lease Rates Gain Momentum
Lease rates increased to $2.24 per square foot per month with all center types, except power centers, increasing or staying the same over Q1 2021.

San Diego County Commercial Retail Summary
Commercial Retail Market Overview
Source: Voit

56 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Retail Trends by Product Type
Commercial Retail Market Overview
An uptick in new Commercial retail deal activity combined with limited move-outs dropped the availability rate to 4.49% in San Diego and vacancy dropped to 4.50%. The average asking rate climbed to $2.18 NNN as more spaces hit the market, an 8% decrease from last year. Leasing activity lowered from 1Q 2022 and is down 44% from last year. General retail is the most viable in terms of vacancy.

Absorption (SF) Deliveries (SF) Under Asking Rent
Type Total SF Vacant SF Construction (SF) ($/ SF/ Mo.)
Type Total SF Vacant SF Vacancy Absorption (SF) Deliveries (SF) Under Asking Rent Shopping Centers 54,322,995 2,957,025 5.4% 165,538 416,152 65,173 $2.09 General Retail 54,032,740 1,549,353 2.9% 94,436 359,300 119,452 $2.38 Mall 13,082,952 946,975 7.2% 90,187 97,651 300,000 $3.25 Power Center 11,801,952 444,272 3.8% 87,534 113,004 4,800 $2.25 Specialty Center 1,631,418 156,313 9.6% (23,055) 24,024 0 $1.64 TOTAL: 134,872,057 6,053,938 4.5% 414,640 1,010,131 489,425 $2.18 Vacancy
Rate
Shopping
Centers

40.3%
General
Retail

40.1%
Mall

9.7%
Power
Center

8.8%
Specialty
Center

1.2%
Total Inventory
Source: Voit

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Shopping
Centers
General Retail Mall Power Center Specialty
Center
Vacancy Rate
Avg. Asking Lease Rate (Mo. $/SF)
($/ SF/ Mo.) Vacancy Rate
57 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Retail Inventory
Commercial Retail Market Overview
Retail inventory in San Diego County increased in the second half of 2021 but decreased again in Q1 and Q2 2022. The adjustments over the last seven quarters have been minimal, signaling a possible recovery in the market, however, retail inventory is still nowhere near the 2018 or pre-COVID levels in San Diego.
133.00
134.00
135.00
136.00
137.00
138.00
139.00
140.00
141.00
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet (in Millions)
Retail Inventory (in Millions Square Feet)
Inventory Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Total Inventory (SF) 140,120,385 140,347,776 136,717,504 137,053,061 137,331,773 137,240,160 137,211,682 137,373,288 135,502,623 135,260,545 135,255,873 135,226,746 135,245,712 135,718,717 135,443,087 134,871,612 Inventory Change - 227,391 -3,630,272 335,557 278,712 -91,613 -28,478 161,606 -1,870,665 -242,078 -4,672 -29,127 18,966 473,005 -275,630 -571,475 % Change - 0.2% -2.6% 0.2% 0.2% -0.1% 0.0% 0.1% -1.4% -0.2% 0.0% 0.0% 0.0% 0.3% -0.2% -0.4% 58 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Retail Lease Rates
Commercial Retail Market Overview
Lease rates increased about 3% in Q2 2022 over Q1 2022. Since the beginning of COVID through Q3 2021, lease rates remained above $2.20 reflecting the situation in San Diego County where it was a tenant’s market, and landlords were making deep concessions to secure lease up. As the market shifts, it will be important to keep an eye on changes to the Commercial market. -0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%
$1.50
$1.60
$1.70
$1.80
$1.90
$2.00
$2.10
$2.20
$2.30
$2.40
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Avg. Asking Lease Rate (Monthly $/ SF)
Source: Voit
Retail Lease Rates and Vacancy Rates
Lease Rates
Vacancy Rates
Lease Rates Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Lease Rate ($/ SF/ Mo.) $2.02 $2.03 $1.90 $1.87 $1.99 $2.02 $2.04 $2.22 $2.31 $2.33 $2.38 $2.34 $2.38 $2.13 $2.18 $2.24 Lease Rate Change - $0.01 ($0.13) ($0.03) $0.12 $0.03 $0.02 $0.18 $0.09 $0.02 $0.05 ($0.04) $0.04 ($0.25) $0.05 $0.06 % Change - 0.5% -6.4% -1.6% 6.4% 1.5% 1.0% 8.8% 4.1% 0.9% 2.1% -1.7% 1.7% -10.5% 2.3% 2.8% 59 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Vacant Space & Occupancy Rate
Commercial Retail Market Overview
Vacancy rates paint a more realistic picture of the challenged retail market as occupancy fell sharply during the pandemic – the good news is that vacancy appears to be trending downwards to less than 5%. This trend is supported by available space, which dropped marginally over the past three months.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0.00 1.00

2.00 3.00

4.00 5.00

6.00 7.00

8.00 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Vacant Space (SF in Millions)
Source:Voit
Vacant Space and Vacancy Rates
Vacant Space
Vacancy Rates
Vacancy Rates Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Vacancy Rate 3.6% 3.8% 3.9% 3.8% 3.9% 3.9% 4.0% 4.2% 4.8% 4.7% 5.5% 5.5% 5.2% 4.9% 4.8% 4.5% Vac. Rate Change 0.0% 0.2% 0.1% -0.1% 0.1% 0.0% 0.2% 0.2% 0.6% -0.1% 0.8% 0.0% -0.3% -0.3% -0.1% -0.3% % Change -0.5% 5.2% 1.6% -1.5% 1.8% -1.0% 4.1% 4.5% 13.6% -1.0% 17.2% -0.7% -5.3% -5.6% -1.6% -7.0% 60 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Net Absorption
Commercial Retail Market Overview
San Diego County has started to absorb new retail space after seeing plummeting net absorption between Q1 2020 and Q1 2021. The retail market appears to be making a comeback, though it will be important to look at how retail space will function in the future, with far less in-person square footage, and increased capacity to warehouse and ship goods marketed online. -900,000
-750,000
-600,000
-450,000
-300,000
-150,000
0 150,000
300,000
450,000
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet
Source:Voit
Net Absorption (Square Feet)
Net Absorption Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Absorption (SF) 16,904 62,546 61,112 55,253 133,920 113,361 (248,317) (170,911) (574,667) 15,635 (804,198) 51,852 373,319 291,411 195,946 414,691 Net Absorption Change 247,298 45,642 (1,434) (5,859) 78,667 (20,559) (361,678) 77,406 (403,756) 590,302 (819,833) 856,050 321,467 (81,908) (95,465) 218,745 % Change - 270.0% -2.3% -9.6% 142.4% -15.4% -319.0% -31.2% 236.2% -102.7% -5243.6% -106.4% 620.0% -21.9% -32.8% 111.6% 61 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Retail Space Deliveries
Commercial Retail Market Overview
Retail deliveries increased in Q2 2022 after a decline in Q1 2022 from the past quarter. Much of the 2021 new construction deliveries came from the UTC mall where Seritage completed their redevelopment of the former Sears space, while 63% of new construction deliveries in 2022 came from ground floor retail space in residential developments. Again, it will be important to look at how people are changing their use of retail space with the increase in online shopping. Less in person square footage and more storage or warehouse space may be the trend in the future.
0 50,000
100,000
150,000
200,000
250,000
300,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet
Source: Costar
Deliveries (Square Feet)
Deliveries Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Deliveries (SF) 27,032 107,292 57,877 61,112 55,910 48,382 157,801 202,887 180,344 64,911 24,150 279,113 55,065 70,912 92,174 75,590 118,679 Deliveries Change (48,976) 80,260 (49,415) 3,235 (5,202) (7,528) 109,419 45,086 (22,543) (115,433) (40,761) 254,963 (224,048) 15,847 21,262 (16,584) 43,089 % Change -64% 297% -46% 6% -9% -13% 226% 29% -11% -64% -63% 1056% -80% 29% 30% -18% 57% 62 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Retail Space Under Construction
Commercial Retail Market Overview
The pipeline for San Diego County is trending downwards toward less new construction after a strong 2020, though it remains to be seen how successfully this new space will be integrated into the market. The County-wide retail market performance may be turning a corner, but the recovery will likely be slow, and we anticipate that the landscape of the retail market will be forever changed. 300,000 square feet of construction comes from the repositioning of Horton Plaza mall in downtown San Diego. 0 100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet
Source: Voit
Under Construction (Square Feet)
Under Construction Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Under Construction (SF) 408,003 390,692 250,462 428,406 344,018 305,773 322,923 599,653 868,742 915,356 760,514 742,530 558,208 512,444 495,761 489,425 Under Const. Change (87,670) (17,311) (140,230) 177,944 (84,388) (38,245) 17,150 276,730 269,089 46,614 (154,842) (17,984) (184,322) (45,764) (16,683) (6,336) % Change -9% -4% -36% 71% -20% -11% 6% 86% 45% 5% -17% -2% -25% -8% -3% -1% 63 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos San Diego County Retail Trends by Submarket
Commercial Retail Market Overview
North County is the second largest retail Submarket in San Diego County with the highest vacancy rate of 5.6%, relatively low asking lease rate averaging $1.86, and very robust pipeline of space. The average asking rate remains stable at +/-$1.86 NNN through Q1 and Q2 2022. Leasing availability is down to 4.5% from 5.5% in Q2 2021 suggesting room for new retail space in the area.

Absorption (SF) Deliveries (SF) Under Avg. Asking Rent
Construction (SF) ($/ SF/ Mo.)
Central South 39,029,635 1,492,949 3.8% 157,053 532,272 322,470 $2.67 East County 19,421,275 737,990 3.8% 39,047 214,903 15,000 $1.88 I-15 Corridor 6,438,861 281,661 4.4% (18,945) 55,812 19,371 $2.63 Central North 17,398,474 881,634 5.1% 129,785 347,215 8,757 $2.82 North County 33,083,358 1,853,233 5.6% 336,483 671,947 65,239 $1.86 South County 19,500,009 806,651 4.1% 5,818 211,811 58,588 $1.91 TOTAL: 134,871,612 6,054,118 4.9% 649,241 2,033,960 489,425 $2.18 Submarket Total SF Vacant SF Vacancy Rate
Central
South,

28.9%
I-15
Corridor,

4.8%
Central
North,

12.9%
North
County,

24.5%
South
County,

14.5%
Total Inventory

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Vacancy Rate
Avg. Asking Lease Rate (Monthly $/
SF)
($/ SF/ Mo.)
64 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North County Retail Inventory
Commercial Retail Market Overview
Retail inventory in North County decreased slightly after increasing for the first time in five quarters in Q4 2021. However, inventory is still nowhere near the over $34.5 million square feet reached in Q2 2020.

31.50 32.00

32.50 33.00

33.50 34.00

34.50 35.00
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet (in Millions)
Source: Voit
Retail Inventory (in Millions Square Feet)
Inventory Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Total Inventory (SF) 33,087,462 33,176,034 33,204,037 33,402,058 33,444,016 33,397,068 33,338,121 33,343,107 34,520,068 33,043,585 33,056,152 32,870,481 32,795,536 32,646,928 33,119,470 33,110,789 33,083,358 Inventory Change 1,894 88,572 28,003 198,021 41,958 -46,948 -58,947 4,986 1,176,961 -1,476,483 12,567 -185,671 -74,945 -148,608 472,542 -8,681 -27,431 % Change 0.0% 0.3% 0.1% 0.6% 0.1% -0.1% -0.2% 0.0% 3.5% -4.3% 0.0% -0.6% -0.2% -0.5% 1.4% 0.0% -0.1% 65 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North County Retail Lease Rates
Commercial Retail Market Overview
Retail lease rates appear to be steady between $1.70 and $1.90 over the last two years, and vacancy is going in the right direction with an improvement of about 1% from the previous quarter. Lease rates are now $1.86 on average for the North County Submarket, which is 20% lower than the San Diego County Market overall.

Lease Rates Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Lease Rate ($/ SF/ Mo.) $1.75 $1.71 $1.72 $1.42 $1.39 $1.40 $1.64 $1.66 $1.76 $1.79 $1.81 $1.87 $1.87 $1.91 $1.87 $1.85 $1.86 Lease Rate Change $0.22 ($0.04) $0.01 ($0.30) ($0.03) $0.01 $0.24 $0.02 $0.10 $0.03 $0.02 $0.06 $0.00 $0.04 ($0.04) ($0.02) $0.01 % Change 14.3% -2.3% 0.6% -17.4% -2.1% 0.7% 17.1% 1.2% 6.0% 1.7% 1.1% 3.3% 0.0% 2.1% -2.1% -1.1% 0.5%

6.4%

5.6%

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Vacancy Rate
Avg. Asking Lease Rate (Monthly $/ SF)
Source: Voit
Lease Rates and Vacancy Lease Rates Vacancy Rates
66 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North County Vacant Space & Occupancy Rate
Commercial Retail Market Overview
Trends for vacancy space and vacancy rates seem to be following the same path with both decreasing over the past four quarters after steadily increasing since Q1 2020. Vacant space peaked at over 2.3 million square feet in Q2 2021 as did vacancy rates of 7.2%. Current vacancy rates of 5.6% is a 1.6% decrease year over year and a 0.8% decrease from Q1. There is still a long way to go to reach vacancy rates of less than 5% experienced before the COVID-19 pandemic. Given the Proposed Uses, the Subject site will likely not be affected by typical lease market movements.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%
0 500,000
1,000,000
1,500,000
2,000,000
2,500,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Vacant Space (Square Feet)
Source: Voit
Vacant Space and Vacancy Rates
Vacant Space
Vacancy Rates
Vacancy Rates Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Vacant Space 1,553,747 1,489,495 1,582,027 1,602,460 1,589,003 1,598,746 1,502,082 1,687,798 1,766,041 1,963,907 1,998,857 2,307,225 2,355,253 2,261,464 2,155,761 2,119,322 1,853,233 Vac. Space Change - (64,252) 92,532 20,433 (13,457) 9,743 (96,664) 185,716 78,243 197,866 34,950 308,368 48,028 (93,789) (105,703) (36,439) (266,089) % Change - -4.1% 6.2% 1.3% -0.8% 0.6% -6.0% 12.4% 4.6% 11.2% 1.8% 15.4% 2.1% -4.0% -4.7% -1.7% -12.6% 67 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North County Net Absorption
Commercial Retail Market Overview
Net absorption in the local market has been improving after taking a beating in early 2021 and early 2020. The continued development of new retail space in North County is putting downward pressure occupancy levels but demand is putting upward pressure on lease rates. -350,000
-300,000
-250,000
-200,000
-150,000
-100,000
-50,000
0 50,000
100,000
150,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet
Source: Voit
Net Absorption (Square Feet)
Net Absorption Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Absorption (SF) (111,829) 139,017 26,939 43,537 18,901 18,755 120,457 (201,551) (81,243) (119,700) 12,567 (309,868) (15,060) 80,616 92,381 49,183 221,731 Net Absorption Change (78,704) 250,846 (112,078) 16,598 (24,636) (146) 101,702 (322,008) 120,308 (38,457) 132,267 (322,435) 294,808 95,676 11,765 (43,198) 172,548 % Change 237.6% 224.3% -80.6% 61.6% -56.6% 0.8% 542.3% -267.3% 59.7% -47.3% 110.5% -2565.7% 95.1% 635.3% 14.6% -46.8% 350.8% 68 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North County Retail Space Gross Absorption
Commercial Retail Market Overview
Gross absorption in North County increased for the second quarter to almost 356,000 square feet. This is now closer in line to pre- pandemic levels of absorption in the Submarket.
0 50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet
Source: Voit
Gross Absorption (Square Feet)
Gross Absorption Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Gross Absorption (SF) 241,966 439,842 221,958 365,476 246,985 281,522 365,248 181,689 159,465 148,322 251,623 184,350 289,657 215,907 239,673 288,113 355,390 Gross Absorption Change 206,885 197,876 (217,884) 143,518 (118,491) 34,537 83,726 (183,559) (22,224) (11,143) 103,301 (67,273) 105,307 (73,750) 23,766 48,440 67,277 % Change - 81.8% -49.5% 64.7% -32.4% 14.0% 29.7% -50.3% -12.2% -7.0% 69.6% -26.7% 57.1% -25.5% 11.0% 20.2% 23.4% 69 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North County Retail Space Under Construction
Commercial Retail Market Overview
The pipeline for North County is below average with 65,239 square feet of space anticipated. The uptick in retail space construction at the beginning of 2021 may point to an anticipated recovery by retail developers. However, the recovery will likely be slow as seen in the quarters following, with fundamental changes moving forward. 0 50,000
100,000
150,000
200,000
250,000
300,000
350,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Square Feet
Source: Voit
Under Construction (Square Feet)
Under Construction Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Under Construction (SF) 311,836 238,793 210,790 42,000 48,000 57,921 27,412 35,062 96,272 94,681 99,786 147,226 58,282 61,820 53,650 48,550 65,239 Under Const. Change 76,219 -73,043 -28,003 -168,790 6,000 9,921 -30,509 7,650 61,210 -1,591 5,105 47,440 -88,944 3,538 -8,170 -5,100 16,689 % Change 32.3% -23.4% -11.7% -80.1% 14.3% 20.7% -52.7% 27.9% 174.6% -1.7% 5.4% 47.5% -60.4% 6.1% -13.2% -9.5% 34.4% 70 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Retail Market Statistics by Type for Subject Submarket (2nd Quarter 2022) YTD Net YTD Gross Under Quoted Quoted Rates
Type # Bldgs. Total GLA Direct SF Total SF Vac. % Absorption Absorption Const. SF Rates ($/ SF/ Mo.) General Retail 1,691 11,800,380 430,428 342,004 3.7% 71,806 187,119 22,539 $21.36 $1.78 Mall 26 2,916,678 331,823 37,443 11.4% 0 0 0 $0.00 $0.00 Power Center 106 3,132,592 91,519 121,115 2.9% 95,495 174,314 0 $0.00 $0.00 Shopping Center 968 14,863,875 999,463 1,212,850 6.7% 168,812 308,931 42,700 $22.68 $1.89 Specialty Center 5 369,833 0 0 0.0% 370 1,583 0 $0.00 $0.00 Total 2,796 33,083,358 1,853,233 1,713,412 5.6% 336,483 671,947 65,239 $22.32 $1.86 Existing Inventory Vacancy
North County Retail Market Trends
Commercial Retail Market Overview
Retail availability, vacancy, and net absorption all decreased in North County quarter over quarter. Retail real estate had the highest percentage of business disruption from coronavirus and the government lockdowns, possibly second only to hotels. Until the affected businesses are able to fully resume operations, retail real estate will experience a continued downward pressure on market fundamentals, though there does seem to be a shift back towards normalcy in North County retail. The North County (Carlsbad, Oceanside, San Marcos, Vista, and Escondido) trends are tabled below.

Coming out of the pandemic, North County Retail has the highest vacancy rate in the County of 5.6%. We would envision the Original Use supporting neighborhood strip center retail which falls under General Retail, where the average asking rate is currently $1.78 per square foot.

Zonda has observed that the least expensive neighborhood and strip retail centers were the hardest hit retail sectors during the pandemic. ALDI’s signing of a lease for 21,687 square feet in October 2021 is still the largest, most recent lease in San Marcos, followed by Total Wine & More for

20.388 square feet in May 2022. The largest, most recent retail sale was by Miracle Day Investments, paying $55.59 million for 305,146 square feet of space at 708-775 Center Dr.
305,146 SF shopping center (Nordahl Marketplace) at 708-775 Center Drive, San Marcos sells for $55.6 million ($182/SF)

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 71 Commercial Office Market
Overview
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 72 Office Demand Notably Picks Up Year Over Year
Net absorption in Q2 2022 was 946,674 square feet, an increase year and year over year in San Diego County, and a major increase from Q1 2022. This marks the fifth consecutive quarter of growth for office tenants.

Vacancy Below 12%
The vacancy rate in Q2 2022 declined over Q1 2022 and is down 131 basis points year over year. The vacancy rate however is still above the pre- pandemic levels in the 10% range.

Lease Rates Gain Momentum
Lease rates decreased to $3.05 per square foot per month from Q1 2022 but saw a 2.7% increase over Q2 2021. This is now the highest average asking rate of all time, partially due to the high inflation environment. Landlords are pulling back on concessions in the most desirable markets due to enough tenant interest.

San Diego County Commercial Office Summary
Commercial Office Market Overview
Source: Voit

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 73 North Inland County and San Marcos Commercial Office Trends Commercial Office Market Overview
North County Inland Office vacancy is trending at roughly 11.3%, with rents at $2.31 per square foot. San Marcos office space vacancy deepened to almost 7.5% over the last quarter with rental rates averaging $2.26 per square foot, which is down 3.8% from Q1 2022. The original use for the Subject was to be used for Commercial and light Industrial zoning. As such, Zonda researched the office trends as part of the Commercial analysis for the most recent second quarter 2022 to ascertain the latest trends. The office market is primed for a rebound after a year of havoc owing to the effects of the pandemic. Volatility is still anticipated in the short term, with a forecast of better long-term prospects.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%
2014 Q4 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 Vacancy by Submarket
Downtown Central
I-15 Corridor North County Coastal
North City Southern & Eastern Areas
Highway 78 Corridor
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
2014 Q3 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 Rental Rate by Submarket
Downtown Central
I-15 Corridor North County Coastal
North City Southern & Eastern Areas
Highway 78 Corridor
San Diego
Construction
Pipeline
Q2 2022
Inventory
(SF)
Q2 2022
Vacancy (SF)
Q2 2022
Vacancy (%)
Q1 2022
Vacancy (%)
Current Quarter
Absorption
YTD Total
Absorption
Q2 2022
Rental Rates
FSG
Q1 2022
Rental Rates
FSG
Qtr/Qtr
Change (%)
Under
Construction
Quarter-End
Carlsbad 6,985,925 830,625 11.89% 13.66% 123,466 234,439 $2.76 $2.73 1.1% 0 Escondido 1,732,171 163,663 9.45% 11.14% 29,331 50,865 $2.06 $2.07 -0.5% 75,000 Oceanside 1,541,682 114,636 7.44% 7.21% (3,443) (28,208) $2.21 $2.18 1.4% 0 San Marcos 1,455,192 108,415 7.45% 6.77% (9,913) 13,239 $2.26 $2.35 -3.8% 0 Vista 1,265,121 249,007 19.68% 21.10% 17,924 11,600 $2.24 $2.21 1.4% 0 Total 12,980,091 1,466,346 11.3% 12.6% 157,365 281,935 $2.31 $2.31 -0.1% 75,000 Vacancy Net Absorption Avg. Advertised Rates
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 74 Industrial Market
Overview
75 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Office Demand Notably Picks Up Year Over Year
Net absorption in Q2 2022 was 291,044 square feet, an increase year and year over year in San Diego County, but a decrease from Q2 2021. This marks the twelfth consecutive year of to the total tenant footprint.

Vacancy Above 12%
The vacancy rate in Q2 2022 decreased over Q1 2021, and it had a decrease of more than half from Q2 2021. The vacancy rate is below the 10- year US average of 9%.

Lease Rates Gain Momentum
Lease rates increased to $1.26 per square foot per month, a 16.67% increase over Q2 2021. This is now the highest average asking rate of all time, partially due to lack of availability and the high inflation environment. Landlords are now insisting raising the rate 4% versus the typical 3% a year.

San Diego County Industrial Summary
Industrial Market Overview
Source: Voit

76 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos North Inland County and San Marcos Industrial Trends
Industrial Market Overview
North County Inland Industrial vacancy is trending at roughly 2.4%, with rents at $1.23 per square foot. San Marcos Industrial space is at

3.6% vacancy (a slight improvement over Q1) with rental rates averaging $1.24 per square foot, which is an increase of almost 12% over Q1 2022. The original use for the Subject as a mixed-use site Commercial and Industrial use. As such, Zonda researched the Industrial trends for the most recent second quarter 2022 to ascertain the latest trends. The Industrial market has reached historically low vacancies after the peak of the pandemic and in the past 10 years. Low Industrial vacancies countywide are also a result of delivery of Amazon’s build-to-suit facility in Otay Mesa in 2021.

San Diego
Construction
Pipeline
Q2 2022
Inventory
(SF)
Q2 2022
Vacancy (SF)
Q2 2022
Vacancy (%)
Q1 2022
Vacancy (%)
Current Quarter
Absorption
YTD Total
Absorption
Q2 2022
Rental Rates
FSG
Q1 2022
Rental Rates
FSG
Qtr/Qtr
Change (%)
Under
Construction
Quarter-End
Carlsbad 8,607,253 160,039 1.86% 0.90% (82,042) 24,350 $1.32 $1.24 6.5% 0 Escondido 7,564,861 153,086 2.02% 1.73% (22,531) (51,428) $1.25 $1.20 4.2% 0 Oceanside 9,314,087 97,246 1.04% 1.24% 18,657 19,140 $1.16 $1.10 5.5% 0 San Marcos 8,101,572 293,539 3.62% 3.94% 26,378 146,293 $1.24 $1.11 11.7% 0 Vista 12,989,870 388,499 2.99% 3.99% 131,264 248,023 $1.18 $1.06 11.3% 0 Total 46,577,643 1,092,409 2.35% 2.49% 71,726 386,378 $1.23 $1.14 7.8% 0 Vacancy Net Absorption Avg. Advertised Rates

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%
2014 Q4 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 Vacancy by Submarket
Central County East County North County
I-15 Corridor South County
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
2014 Q3 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 Rental Rate by Submarket
Central County East County North County I-15 Corridor South County 77 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Industrial Trends: Total Inventory
Industrial Market Overview
Industrial inventory in the San Marcos Submarket peaked in Q4 2021 and has since leveled out to similar levels as in 2016 through 2020.

Inventory in San Diego County has remained stable with a peak in Q4 2021, like the Submarket. 0 40,000,000
80,000,000
120,000,000
160,000,000
200,000,000
240,000,000
7,200,000
7,600,000
8,000,000
8,400,000
8,800,000
9,200,000
9,600,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 Total Inventory: Industrial
San Marcos Submarket San Diego County
Inventory 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 San Diego County
Total Inventory (SF) 144,192,347 144,062,071 143,251,319 144,351,448 144,441,606 143,316,075 143,935,054 142,813,795 144,197,758 144,349,295 146,111,872 163,262,631 149,835,664 149,751,958 Inventory Change 144,273 -130,276 -810,752 1,100,129 90,158 -1,125,531 618,979 -1,121,259 1,383,963 151,537 1,762,577 17,150,759 -13,426,967 -83,706 % Change 0.1% -0.1% -0.6% 0.8% 0.1% -0.8% 0.4% -0.8% 1.0% 0.1% 1.2% 11.7% -8.2% -0.1% San Marcos Submarket
Total Inventory (SF) 8,168,934 8,086,655 8,086,655 8,541,394 8,532,082 8,079,912 7,931,787 7,973,576 7,937,350 7,957,690 8,025,349 9,409,268 8,113,118 8,101,572 Inventory Change -44,716 -82,279 0 454,739 -9,312 -452,170 -148,125 41,789 -36,226 20,340 67,659 1,383,919 -1,296,150 -11,546 % Change -0.5% -1.0% 0.0% 5.6% -0.1% -5.3% -1.8% 0.5% -0.5% 0.3% 0.9% 17.2% -13.8% -0.1% 78 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Industrial Trends: Vacancy
Industrial Market Overview
San Marcos and San Diego County both had the lowest Industrial vacancy in Q2 2022 since 2010. There is more Industrial demand than construction has been able to keep up with. Landlords have been able to keep high occupancy, in some cases leasing the space before a previous tenant moves out. Low supply also means tenants have less options in where to lease and choose to stay in the same facility.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%
2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 Total Vacancy Percentage: Industrial
Inventory 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 San Diego County
Vacancy % 8.3% 8.0% 7.1% 7.1% 5.6% 3.7% 3.5% 4.3% 4.8% 4.4% 2.8% 2.6% 2.5% Vacancy (SF) 13,985,229 13,055,795 12,404,561 11,205,315 9,511,734 7,281,960 5,969,439 5,146,821 6,147,786 6,399,700 4,620,332 3,820,809 3,668,923 San Marcos Submarket
Vacancy % 7.9% 9.0% 9.2% 7.8% 6.4% 5.6% 6.6% 7.8% 8.6% 8.9% 1.7% 1.1% 0.7% Vacancy (SF) 804,584 759,782 870,217 738,604 635,787 540,509 534,288 547,506 613,545 715,861 158,076 90,056 53,470 79 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Industrial Trends: Asking Rent
Industrial Market Overview
Asking rent in both San Marcos and San Diego County is at its highest in Q2 2022 since 2010. Like vacancy, landlords are able to achieve higher asking rents due to low supply. Over the past decade, the average asking rate in the County has seen a 75% increase, and landlords have started raising rates by 4% versus the standard 3% annual increase. $0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
Rent: (Per Square Foot): Industrial
Rent 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 San Diego County
Asking Rate $0.66 $0.67 $0.66 $0.67 $0.69 $0.80 $0.86 $1.00 $1.04 $1.07 $1.13 $1.17 $1.26 Rent Change - 1.5% -1.5% 1.5% 3.0% 15.9% 7.5% 16.3% 4.0% 2.9% 5.6% 3.5% 7.7% San Marcos Submarket
Asking Rate $0.67 $0.77 $0.81 $1.02 $0.77 $0.74 $0.75 $0.91 $1.00 $1.00 $1.02 $1.11 $1.24 Rent Change - 14.9% 5.2% 25.9% -24.5% -3.9% 1.4% 21.3% 9.9% 0.0% 2.0% 8.8% 11.7% 80 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Industrial Trends: Net Absorption
Industrial Market Overview
Absorption peaked in San Marcos in 2018 and has been steady the past three quarters. San Diego County has remained positive since 2010, while San Marcos has had fluctuations and negative absorption the past 12 years. 0 500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
(100,000)
(50,000)
0 50,000
100,000
150,000
200,000
250,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 Net Absorption (Square Feet): Industrial
San Marcos (Left Axis) SD County (Right Axis)
Net Absorption 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q4 2021 Q1 2022 Q2 2022 San Diego County
New Absorption (SF) 944,625 829,459 1,386,352 1,236,148 2,417,433 2,600,146 684,863 424,886 902,960 508,370 1,390,421 2,155,197 2,086,689 913,934 San Marcos Submarket
New Absorption (SF) 97,174 (65,871) (36,336) 165,459 109,801 91,185 2,325 (26,133) 190,032 (58,120) (15,484) 53,641 48,456 37,652 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 81 Retail Demand Outlook
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 82 Source: Meyers Research, ESRI
The daytime population in the 5-mile radius
around the Subject is roughly 14x the local (1-
mile) resident population. This indicates that
demand for apartments will come not only from
local residents but people within five-miles
looking for rentals. These numbers indicate high
demand and support for the proposed project.

Area Statistics Within 1, 3 and 5-Mile Radius
Retail Demand Outlook
Average Household Income $1 08,81 9 $1 21 ,357 $1 29,81 1 $1 50,000 - $1 99,999 7.9% 1 1 .1 % 1 2.0%
$200,000+ 1 1 .5% 1 3.5% 1 5.8%
$75,000 - $99,999 1 0.6% 1 2.9% 1 3.1 %
$1 00,000 - $1 49,999 21 .1 % 21 .3% 20.4%
$35,000 - $49,999 1 0.0% 8.5% 8.4%
$50,000 - $74,999 1 9.4% 1 6.3% 1 5.5%
$1 5,000 - $24,999 5.0% 4.9% 4.4%
$25,000 - $34,999 7.4% 5.6% 5.3%
Household Income Base 4,639 30,81 6 78,942
<$1 5,000 7.1 % 5.9% 5.1 %
2 0 2 2 House holds by Inc ome
2022 31 .8 36.4 36.4
2027 33.3 37.8 37.5
Me dia n Age
2022 $31 ,445 $40,927 $43,522
2027 $36,992 $48,822 $52,074
2027 $639,085 $675,837 $724,734
Pe r Ca pita Inc ome
Me dia n Home Va lue
2022 $588,669 $625,647 $660,939
2022 $77,033 $90,607 $95,594
2027 $1 01 ,280 $1 08,449 $1 1 2,779
Vacant Housing Units 2.9% 4.3% 3.8%
Me dia n House hold Inc ome
2027 Average Family Size 3.74 3.41 3.39
2022- 2027 Annual Rate - 0.1 7% 0.20% 0.21 %
2022 Average Family Size 3.75 3.41 3.39
2027 Families 3,597 21 ,905 56,580
2022 Families 3,627 21 ,692 55,992
2022- 2027 Annual Rate - 0.1 7% 0.1 9% 0.1 9%
2027 Households 4,600 31 ,1 1 1 79,683
2027 Average Household Size 3.45 2.93 2.93
2022 Households 4,639 30,81 6 78,942
2022 Average Household Size 3.45 2.94 2.92
Residents 8,330 47,806 1 24,352
House hold Summa ry
2022 Total Daytime Population 1 3,321 97,824 230,61 7
Workers 4,991 50,01 8 1 06,265
2027 Total Population 1 5,943 93,057 238,231
2022- 2027 Annual Rate - 0.1 8% 0.1 5% 0.20%
2022 Total Population 1 6,085 92,342 235,822
2022 Group Quarters 67 1 ,753 4,958
2020 Total Population 1 6,1 35 91 ,449 230,954
2020 Group Quarters 67 1 ,753 4,962
Popula tion Summa ry
1 mile 3 mile s 5 mile s
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 83 Source: Meyers Research, ESRI
The population by age indicates a about a third of people are aged 25-44, the primary renter ages. There is a diverse range of Tapestry Segments within a 1, 3 and 5-mile radius, and given the Proposed Use of the site, apartments would be attractive to recent graduates, college students, blue-collar professionals, and some white-collar professionals. Market Segmentation is discussed in more detail in the following section of this report.

Area Statistics Within 1, 3 and 5-Mile Radius
Retail Demand Outlook
Males 8,1 97 45,438 1 1 5,91 9
Females 7,888 46,904 1 1 9,904
2 0 2 2 Popula tion by Se x
85 + 0.8% 2.5% 2.5%
1 8 + 71 .8% 76.5% 76.1 %
65 - 74 5.7% 8.6% 8.6%
75 - 84 2.5% 4.7% 4.8%
45 - 54 1 1 .8% 1 1 .6% 1 1 .5%
55 - 64 9.7% 1 1 .1 % 1 1 .0%
25 - 34 1 8.0% 1 5.6% 1 5.3%
35 - 44 1 3.9% 1 3.5% 1 3.6%
1 0 - 1 4 7.7% 6.6% 6.7%
1 5 - 24 1 3.7% 1 2.4% 1 2.4%
0 - 4 8.2% 6.6% 6.7%
5 - 9 8.1 % 6.7% 6.9%
2 0 2 2 Popula tion by Age
Total 1 6,087 92,343 235,822
1 mile 3 mile s 5 mile s

2. Urban Villages
(7B)
NeWest Residents (1 3C) Bright Young Professionals (8C)

3. Workday Drive
(4A)
Boomburbs (1 C) Pleasantville (2B)
Top 3 Ta pe stry Se gme nts

1. NeWest
Residents
Pleasantville (2B) Boomburbs (1 C)
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 84 Source: Meyers Research, ESRI
The area within a 5-mile radius of the site has higher average Spending Potential Index (SPI) across all retail sectors than the 1-mile and 3-mile radii.

Area Consumer Spending Patterns
Retail Demand Outlook
1 mile 3 miles 5 miles
Spending Potential Index 1 00 112 119
Vehicle Maintenance & Repairs: Total $ $5,859,777 $43,603,854 $1 1 8,770,063 Average Spent $1 ,263.1 6 $1 ,41 4.97 $1 ,504.52
Average Spent $2,953.66 $3,339.96 $3,598.70
Spending Potential Index 1 03 116 1 25
Spending Potential Index 96 112 1 21
Travel: Total $ $1 3,702,007 $1 02,924,1 60 $284,088,958 Support Payments/Cash Contributions/Gifts in
Kind: Total $
$1 2,095,692 $94,01 6,056 $260,231 ,332
Average Spent $2,607.39 $3,050.88 $3,296.49
Average Spent $25,355.05 $27,481 .94 $29,245.09
Spending Potential Index 111 1 20 1 28
Spending Potential Index 1 02 116 1 24
Shelter: Total $ $1 1 7,622,058 $846,883,449 $2,308,665,573 Personal Care Products & Services: Total $ $4,833,1 98 $36,603,046 $99,745,71 1 Average Spent $1 ,041 .86 $1 ,1 87.79 $1 ,263.53
Average Spent $2,593.20 $2,932.40 $3,1 35.96
Spending Potential Index 1 01 114 1 22
Spending Potential Index 93 110 117
HH Furnishings & Equipment: Total $ $1 2,029,846 $90,364,756 $247,558,863 Health Care: Total $ $30,667,61 6 $240,669,1 41 $656,1 34,21 6 Average Spent $6,61 0.82 $7,809.88 $8,31 1 .60
Average Spent $4,735.77 $5,084.44 $5,398.25
Spending Potential Index 110 118 1 25
Spending Potential Index 1 05 116 1 22
Food Away from Home: Total $ $21 ,969,220 $1 56,682,001 $426,1 48,330 Food at Home: Total $ $30,046,01 2 $220,562,805 $597,640,21 2 Average Spent $6,476.83 $7,1 57.41 $7,570.62
Average Spent $3,633.99 $4,1 20.55 $4,404.56
Spending Potential Index 99 112 1 20
Spending Potential Index 1 03 118 1 27
Entertainment/Recreation: Total $ $1 6,858,075 $1 26,978,906 $347,704,701 Education: Total $ $9,379,835 $71 ,1 57,977 $1 95,937,1 32 Average Spent $2,021 .95 $2,309.1 2 $2,482.04
Average Spent $2,572.83 $2,81 5.08 $2,986.58
Spending Potential Index 1 07 117 1 24
2 0 2 2 Consume r Spe nding
Apparel & Services: Total $ $1 1 ,935,355 $86,749,438 $235,766,758 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 85 Retail Leakage and Surplus in the CMA
Retail Demand Outlook
Within a 1-mile radius of the Subject, there is a leakage of stores that cannot be supported in the Subject’s Commercial zone site. The Leakage/Surplus Factor presents a snapshot of retail opportunity. This is a measure of the relationship between supply and demand that ranges from +100 (total leakage) to -100 (total surplus). A positive value (indicated in green on the map below) represents 'leakage' of retail opportunity outside the trade area, which means that demand exceeds supply. A negative value represents a surplus of retail sales, a market where customers are drawn in from outside the trade area. In other words, the higher (positive not negative) ‘Retail Gap’, the better for the trade area. Aside from General Merchandise, the Subject cannot support other type of stores, and the liquor store next to the Subject meets the general store demand.

A summary of the leakage and
surplus by industry Subsector is
shown at right for the 1-mile
radius. Undersupplied sectors
include:
• Food & Beverage
• Health & Personal Care
• Clothing and Accessories
• General Merchandise
• Nonstore Retailers
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 86 -15.5 213Restaurants/Other Eating Places 7225 $111,307,975 $152,223,477 -$40,915,502

41.0 3Drinking Places - Alcoholic Beverages 7224 $2,492,084 $1,042,558 $1,449,526 -6.6 12Special Food Services 7223 $2,361,951 $2,696,291 -$334,340 -14.6 228Food Services & Drinking Places 722 $116,162,010 $155,962,326 -$39,800,316 -37.7 6Direct Selling Establishments 4543 $3,774,308 $8,333,292 -$4,558,984

43.3 1Vending Machine Operators 4542 $478,727 $189,541 $289,186

38.7 9Electronic Shopping & Mail-Order Houses 4541 $27,014,392 $11,930,031 $15,084,361

20.9 16Nonstore Retailers 454 $31,267,427 $20,452,865 $10,814,562 -40.3 56Other Miscellaneous Store Retailers 4539 $24,029,686 $56,518,238 -$32,488,552

53.0 5Used Merchandise Stores 4533 $4,188,751 $1,288,496 $2,900,255 -36.7 18Office Supplies, Stationery & Gift Stores 4532 $9,113,178 $19,674,139 -$10,560,961 -41.9 13Florists 4531 $1,914,867 $4,671,848 -$2,756,981 -35.3 92Miscellaneous Store Retailers 453 $39,246,483 $82,152,721 -$42,906,238 -38.1 13Other General Merchandise Stores 4529 $71,336,223 $159,226,861 -$87,890,638 -23.0 10Department Stores Excluding Leased Depts. 4521 $106,435,228 $169,921,422 -$63,486,194 -29.9 23General Merchandise Stores 452 $177,771,450 $329,148,283 -$151,376,833 -36.8 10Book, Periodical & Music Stores 4512 $4,609,107 $9,965,523 -$5,356,416 -23.5 45Sporting Goods/Hobby/Musical Instr Stores 4511 $29,233,195 $47,192,913 -$17,959,718 -25.6 54Sporting Goods, Hobby, Book & Music Stores 451 $33,842,302 $57,158,436 -$23,316,134

67.9 7Jewelry, Luggage & Leather Goods Stores 4483 $12,486,505 $2,385,387 $10,101,118 -56.9 5Shoe Stores 4482 $9,539,963 $34,745,310 -$25,205,347

21.8 30Clothing Stores 4481 $54,711,310 $35,130,652 $19,580,658

3.0 42Clothing & Clothing Accessories Stores 448 $76,737,778 $72,261,349 $4,476,429 -2.1 25Gasoline Stations 447,4471 $93,655,077 $97,668,555 -$4,013,478 -6.2 43Health & Personal Care Stores 446,4461 $73,179,987 $82,852,443 -$9,672,456

21.3 12Beer, Wine & Liquor Stores 4453 $12,784,731 $8,287,961 $4,496,770

7.7 19Specialty Food Stores 4452 $12,210,343 $10,469,125 $1,741,218 -13.9 37Grocery Stores 4451 $147,254,961 $194,682,246 -$47,427,285 -10.7 68Food & Beverage Stores 445 $172,250,035 $213,439,332 -$41,189,297 -73.4 27Lawn & Garden Equip & Supply Stores 4442 $4,358,268 $28,400,026 -$24,041,758 -55.0 76Bldg Material & Supplies Dealers 4441 $59,486,454 $204,666,162 -$145,179,708 -57.0 103Bldg Materials, Garden Equip. & Supply Stores 444 $63,844,722 $233,066,187 -$169,221,465 -59.9 43Electronics & Appliance Stores 443 $39,101,812 $156,133,364 -$117,031,552 -43.4 26Home Furnishings Stores 4422 $18,906,030 $47,862,450 -$28,956,420 -52.7 34Furniture Stores 4421 $20,597,138 $66,572,529 -$45,975,391 -48.7 59Furniture & Home Furnishings Stores 442 $39,503,169 $114,434,978 -$74,931,809 -15.6 32Auto Parts, Accessories & Tire Stores 4413 $19,084,487 $26,124,867 -$7,040,380 -51.2 16Other Motor Vehicle Dealers 4412 $26,539,993 $82,267,876 -$55,727,883

84.9 13Automobile Dealers 4411 $173,357,386 $14,156,275 $159,201,111

28.2 61Motor Vehicle & Parts Dealers 441 $218,981,867 $122,549,018 $96,432,849 Leakage/Surplu
s
Number of
2017 Industry Group (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
-14.6 228Total Food & Drink 722 $116,162,010 $155,962,326 -$39,800,316 -19.8 630Total Retail Trade 44-45 $1,059,382,107 $1,581,317,531 -$521,935,424 -19.3 858Total Retail Trade and Food & Drink 44-
45,722
$1,175,544,117 $1,737,279,857 -$561,735,740
Leakage/Surplu
s
Number of
2017 Industry Summary (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
1-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
The 1-Mile Radius from the
Subject is a feasible demand
area in which to measure
supply and demand. As seen on
the previous page, these
industry Subsectors are given a
positive or negative measure of
supply versus demand. The top
three industry groups with the
highest demand are highlighted.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 87 3-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
Given the Proposed Uses, it is
unlikely consumers will drive
more than three miles to a gas
station.
-13.7 193Restaurants/Other Eating Places 7225 $110,478,664 $145,410,594 -$34,931,930

30.1 4Drinking Places - Alcoholic Beverages 7224 $2,457,099 $1,319,723 $1,137,376 -6.3 12Special Food Services 7223 $2,340,581 $2,655,846 -$315,265 -12.9 209Food Services & Drinking Places 722 $115,276,344 $149,386,164 -$34,109,820 -54.7 7Direct Selling Establishments 4543 $3,377,758 $11,549,387 -$8,171,629

53.1 1Vending Machine Operators 4542 $472,995 $145,018 $327,977

41.6 7Electronic Shopping & Mail-Order Houses 4541 $26,712,023 $11,013,304 $15,698,719

14.7 15Nonstore Retailers 454 $30,562,775 $22,707,709 $7,855,066 -43.2 57Other Miscellaneous Store Retailers 4539 $23,784,058 $59,982,450 -$36,198,392

51.9 5Used Merchandise Stores 4533 $4,155,821 $1,315,955 $2,839,866 -29.6 15Office Supplies, Stationery & Gift Stores 4532 $9,020,702 $16,623,976 -$7,603,274 -50.2 13Florists 4531 $1,815,803 $5,480,989 -$3,665,186 -36.5 90Miscellaneous Store Retailers 453 $38,776,383 $83,403,370 -$44,626,987 -38.2 13Other General Merchandise Stores 4529 $70,530,666 $157,612,311 -$87,081,645 -20.9 10Department Stores Excluding Leased 4521 $105,407,618 $161,126,790 -$55,719,172 -28.9 22General Merchandise Stores 452 $175,938,284 $318,739,101 -$142,800,817 -36.8 9Book, Periodical & Music Stores 4512 $4,560,654 $9,867,423 -$5,306,769 -22.1 40Sporting Goods/Hobby/Musical Instr 4511 $29,027,071 $45,537,700 -$16,510,629 -24.5 49Sporting Goods, Hobby, Book & Music 451 $33,587,725 $55,405,123 -$21,817,398

74.0 6Jewelry, Luggage & Leather Goods Stores 4483 $12,199,410 $1,825,550 $10,373,860 -56.2 5Shoe Stores 4482 $9,510,934 $33,957,277 -$24,446,343

27.1 26Clothing Stores 4481 $54,106,488 $31,027,642 $23,078,846

6.3 37Clothing & Clothing Accessories Stores 448 $75,816,832 $66,810,469 $9,006,363 -1.4 24Gasoline Stations 447,447 $92,754,833 $95,318,355 -$2,563,522

8.1 37Health & Personal Care Stores 446,446 $71,840,098 $61,120,656 $10,719,442

22.6 11Beer, Wine & Liquor Stores 4453 $12,556,258 $7,924,236 $4,632,022

8.2 17Specialty Food Stores 4452 $12,059,728 $10,227,971 $1,831,757 -6.8 32Grocery Stores 4451 $145,339,999 $166,619,995 -$21,279,996 -4.2 61Food & Beverage Stores 445 $169,955,985 $184,772,203 -$14,816,218 -72.3 24Lawn & Garden Equip & Supply Stores 4442 $4,196,717 $26,128,597 -$21,931,880 -55.8 76Bldg Material & Supplies Dealers 4441 $58,490,340 $206,248,310 -$147,757,970 -57.5 100Bldg Materials, Garden Equip. & Supply 444 $62,687,057 $232,376,908 -$169,689,851 -60.4 41Electronics & Appliance Stores 443 $38,697,034 $156,603,331 -$117,906,297 -43.8 24Home Furnishings Stores 4422 $18,723,505 $47,856,162 -$29,132,657 -52.6 33Furniture Stores 4421 $20,497,137 $66,001,493 -$45,504,356 -48.8 57Furniture & Home Furnishings Stores 442 $39,220,642 $113,857,654 -$74,637,012 -8.6 28Auto Parts, Accessories & Tire Stores 4413 $18,769,606 $22,316,417 -$3,546,811 -52.4 17Other Motor Vehicle Dealers 4412 $26,366,660 $84,472,932 -$58,106,272

86.4 11Automobile Dealers 4411 $172,037,046 $12,546,990 $159,490,056

29.1 56Motor Vehicle & Parts Dealers 441 $217,173,312 $119,336,339 $97,836,973 Leakage/Surpl
us
Number of
2017 Industry Group (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
-12.9 209Total Food & Drink 722 $115,276,344 $149,386,164 -$34,109,820 -18.1 589Total Retail Trade 44-45 $1,047,010,962 $1,510,451,216 -$463,440,254 -17.6 798Total Retail Trade and Food & Drink 44- $1,162,287,306 $1,659,837,379 -$497,550,073 Leakage/Surpl
us
Number of
2017 Industry Summary (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 88 5-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
Given the Proposed Uses, the 5-
Mile Radius from the Subject is
considered too broad of an area
in which to measure supply and
demand.
-15.5 213Restaurants/Other Eating Places 7225 $111,307,975 $152,223,477 -$40,915,502

41.0 3Drinking Places - Alcoholic Beverages 7224 $2,492,084 $1,042,558 $1,449,526 -6.6 12Special Food Services 7223 $2,361,951 $2,696,291 -$334,340 -14.6 228Food Services & Drinking Places 722 $116,162,010 $155,962,326 -$39,800,316 -37.7 6Direct Selling Establishments 4543 $3,774,308 $8,333,292 -$4,558,984

43.3 1Vending Machine Operators 4542 $478,727 $189,541 $289,186

38.7 9Electronic Shopping & Mail-Order Houses 4541 $27,014,392 $11,930,031 $15,084,361

20.9 16Nonstore Retailers 454 $31,267,427 $20,452,865 $10,814,562 -40.3 56Other Miscellaneous Store Retailers 4539 $24,029,686 $56,518,238 -$32,488,552

53.0 5Used Merchandise Stores 4533 $4,188,751 $1,288,496 $2,900,255 -36.7 18Office Supplies, Stationery & Gift Stores 4532 $9,113,178 $19,674,139 -$10,560,961 -41.9 13Florists 4531 $1,914,867 $4,671,848 -$2,756,981 -35.3 92Miscellaneous Store Retailers 453 $39,246,483 $82,152,721 -$42,906,238 -38.1 13Other General Merchandise Stores 4529 $71,336,223 $159,226,861 -$87,890,638 -23.0 10Department Stores Excluding Leased Depts. 4521 $106,435,228 $169,921,422 -$63,486,194 -29.9 23General Merchandise Stores 452 $177,771,450 $329,148,283 -$151,376,833 -36.8 10Book, Periodical & Music Stores 4512 $4,609,107 $9,965,523 -$5,356,416 -23.5 45Sporting Goods/Hobby/Musical Instr Stores 4511 $29,233,195 $47,192,913 -$17,959,718 -25.6 54Sporting Goods, Hobby, Book & Music Stores 451 $33,842,302 $57,158,436 -$23,316,134

67.9 7Jewelry, Luggage & Leather Goods Stores 4483 $12,486,505 $2,385,387 $10,101,118 -56.9 5Shoe Stores 4482 $9,539,963 $34,745,310 -$25,205,347

21.8 30Clothing Stores 4481 $54,711,310 $35,130,652 $19,580,658

3.0 42Clothing & Clothing Accessories Stores 448 $76,737,778 $72,261,349 $4,476,429 -2.1 25Gasoline Stations 447,4471 $93,655,077 $97,668,555 -$4,013,478 -6.2 43Health & Personal Care Stores 446,4461 $73,179,987 $82,852,443 -$9,672,456

21.3 12Beer, Wine & Liquor Stores 4453 $12,784,731 $8,287,961 $4,496,770

7.7 19Specialty Food Stores 4452 $12,210,343 $10,469,125 $1,741,218 -13.9 37Grocery Stores 4451 $147,254,961 $194,682,246 -$47,427,285 -10.7 68Food & Beverage Stores 445 $172,250,035 $213,439,332 -$41,189,297 -73.4 27Lawn & Garden Equip & Supply Stores 4442 $4,358,268 $28,400,026 -$24,041,758 -55.0 76Bldg Material & Supplies Dealers 4441 $59,486,454 $204,666,162 -$145,179,708 -57.0 103Bldg Materials, Garden Equip. & Supply Stores 444 $63,844,722 $233,066,187 -$169,221,465 -59.9 43Electronics & Appliance Stores 443 $39,101,812 $156,133,364 -$117,031,552 -43.4 26Home Furnishings Stores 4422 $18,906,030 $47,862,450 -$28,956,420 -52.7 34Furniture Stores 4421 $20,597,138 $66,572,529 -$45,975,391 -48.7 59Furniture & Home Furnishings Stores 442 $39,503,169 $114,434,978 -$74,931,809 -15.6 32Auto Parts, Accessories & Tire Stores 4413 $19,084,487 $26,124,867 -$7,040,380 -51.2 16Other Motor Vehicle Dealers 4412 $26,539,993 $82,267,876 -$55,727,883

84.9 13Automobile Dealers 4411 $173,357,386 $14,156,275 $159,201,111

28.2 61Motor Vehicle & Parts Dealers 441 $218,981,867 $122,549,018 $96,432,849 Leakage/Surplu
s
Number of
2017 Industry Group (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
-14.6 228Total Food & Drink 722 $116,162,010 $155,962,326 -$39,800,316 -19.8 630Total Retail Trade 44-45 $1,059,382,107 $1,581,317,531 -$521,935,424 -19.3 858Total Retail Trade and Food & Drink 44-
45,722
$1,175,544,117 $1,737,279,857 -$561,735,740
Leakage/Surplu
s
Number of
2017 Industry Summary (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 89 Demographic Overview
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 90 20-Minute Drive Time CMA
Demographic Profile
The following section focuses on demographics in the competitive market area (CMA) which is defined as a 20-Minute Drive time from the Subject, and includes the areas of San Marcos, Vista, Escondido, Oceanside, Carlsbad, Rancho Bernardo and Encinitas.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 91 Median Household Income in the CMA
Demographic Profile
The Subject Zip code 92069 has a median income of $88,000, with concentrations of higher incomes in the census tracts directly north and south of the Subject. Incomes by zip code are shown on the inset map below, and at a census tract level on the larger map. 20-minute
drive time
30-minute
drive time
45-minute
drive time

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 92 Average Net Worth in the CMA
Demographic Profile
Average net worth in the Subject zip code
92069 is a little over $1,000,000 and is lower
to the neighboring San Marcos zip code
92078 at $1,460,000. Net worth is a strong
indicator of area wealth as it adjusts for
retirees who may no longer be working but
are nevertheless affluent.
20-minute
drive time
30-minute
drive time
45-minute
drive time

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 93 Population, Household Profile and Age
Demographic Profile
The City of San Marcos has a population of just under 100,000 living in 31,000 households which tend to be larger in size at 3.0 people compared with 2.8 for the CMA but smaller than 3.2 for the Subject North San Marcos zip code 92069. Median age in San Marcos overall is slightly younger than the CMA, which mirrors the 92069-zip code.

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Source: ESRI

37.7 34.8

33.8 31.0

32.0 33.0

34.0 35.0

36.0 37.0

38.0 CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Median Age (2022)

2.8 3.0

3.2 2.6

2.7 2.8

2.9 3.0

3.1 3.2
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Avg. HH. Size (2022)
707,395
96,062
49,308
0 100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
CMA - 20-Minute Drive
Time
City of San Marcos Subject Zip Code 92069
Total Population (2022)
247,409
30,943 15,497
0 50,000
100,000
150,000
200,000
250,000
300,000
CMA - 20-Minute Drive
Time
City of San Marcos Subject Zip Code 92069
Total Households (2022)
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 94 Income, Net Worth, Occupation & Education
Demographic Profile
The City of San Marcos has a higher median income and net worth than the greater CMA and the north San Marcos zip code 92069 which includes Santa Fe Hills and Twin Oaks. The CMA and City of San Marcos have about 50% attainment and the Zip Code 92069 has about 40% educational attainment. All geographies have less than 65% of residents working in white-collar jobs.

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Paste Paste
Source: ESRI
$96K
$101K
$88K
$80,000
$82,000
$84,000
$86,000
$88,000
$90,000
$92,000
$94,000
$96,000
$98,000
$100,000
$102,000
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 HH. Income (2022)
$208K
$219K
$194K
$180,000
$185,000
$190,000
$195,000
$200,000
$205,000
$210,000
$215,000
$220,000
$225,000
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Net Worth (2022)

50.8% 50.4%

42.6%

38.0%

40.0%

42.0%

44.0%

46.0%

48.0%

50.0%

52.0%
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Educational Attainment - Bachelor's or Higher (2022)

63.5% 64.0%

55.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Occupation (2022)
White Collar Services Blue Collar
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 95 Demographic Tapestry Profile
Demographic Profile
CMA - 20-Minute Drive Time
Rank Cluster Lifestyle Group Household Type Diversity Index
Ow n vs.

Rent Preferred Housing Age HH
Size HH Income Net Worth Home
Value HH % Age HH
Size HH Income Net Worth Home
Value HH %
1 2B: Pleasantville Upscale Avenues 60 83% Single Family 42.3 2.9 $89,300 $314,900 $355,600 2.1% 41.0 3.2 $117,884 $417,999 $859,686 10.6% 2 1E: Exurbanites Affluent Estates Married Couples 34 85% Single Family 50.4 2.5 $101,800 $483,900 $399,400 1.9% 48.8 2.7 $134,385 $642,330 $965,575 7.0% 3 8C: Bright Young Professionals Middle Ground Married Couples 66 43% Single Family; Multi-Units 32.6 2.4 $53,900 $35,700 $193,900 2.3% 31.6 2.6 $71,153 $47,388 $468,766 6.0% 4 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 33.6 3.8 $58,900 $114,300 $279,400 1.0% 32.6 4.1 $77,753 $151,722 $675,467 5.8% 5 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 33.7 3.2 $111,200 $348,600 $353,200 1.9% 32.7 3.6 $146,794 $462,732 $853,883 5.5% 6 13C: NeWest Residents Next Wave Married Couples w / Kids 87 17% Multi-Unit Rentals 27.2 3.3 $30,000 $11,000 $140,700 0.8% 26.4 3.7 $39,603 $14,601 $340,151 5.4% 7 2D: Enterprising Professional Upscale Avenues Married Couples 72 52% Multi-Units; Single Family 35.1 2.5 $81,500 $93,100 $342,400 1.5% 34.0 2.7 $107,587 $123,581 $827,774 5.0% 8 13A: Diverse Convergence Next Wave Married Couples w / Kids 89 28% High Density Apts; Single Family 32.6 3.0 $42,900 $15,100 $338,900 1.2% 31.6 3.4 $56,632 $20,044 $819,312 4.9% 9 2A: Urban Chic Upscale Avenues Married Couples 47 66% Single Family 42.9 2.4 $103,600 $272,500 $577,200 1.3% 41.6 2.6 $136,761 $361,717 $1,395,418 4.5% 10 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 52.8 1.9 $36,900 $43,500 $175,900 1.2% 51.2 2.1 $48,711 $57,742 $425,249 4.4% City of San Marcos
Rank Cluster Lifestyle Group Household Type Diversity Index
Ow n vs.

Rent Preferred Housing Age HH
Size HH Income Net Worth Home
Value HH % Age HH
Size HH Income Net Worth Home
Value HH %
1 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 33.7 3.2 $111,200 $348,600 $353,200 1.9% 30.1 3.8 $154,418 $487,039 $822,572 24.2% 2 8C: Bright Young Professionals Middle Ground Married Couples 66 43% Single Family; Multi-Units 32.6 2.4 $53,900 $35,700 $193,900 2.3% 29.2 2.8 $74,848 $49,877 $451,576 9.3% 3 13C: NeWest Residents Next Wave Married Couples w / Kids 87 17% Multi-Unit Rentals 27.2 3.3 $30,000 $11,000 $140,700 0.8% 24.3 3.9 $41,660 $15,368 $327,678 8.8% 4 4A: Workday Drive Family Landscapes Married Couples 49 85% Single Family 36.8 3.0 $88,600 $272,200 $259,400 3.1% 32.9 3.5 $123,035 $380,298 $604,120 8.5% 5 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 33.6 3.8 $58,900 $114,300 $279,400 1.0% 30.1 4.5 $81,792 $159,692 $650,698 6.8% 6 13A: Diverse Convergence Next Wave Married Couples w / Kids 89 28% High Density Apts; Single Family 32.6 3.0 $42,900 $15,100 $338,900 1.2% 29.2 3.6 $59,573 $21,097 $789,269 6.5% 7 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 42.3 2.9 $89,300 $314,900 $355,600 2.1% 37.8 3.4 $124,007 $439,955 $828,162 6.4% 8 9D: Senior Escapes Senior Styles Married Couples w /No Kids43 75% SF; Mobile Homes/Seasonal 53.4 2.2 $37,300 $102,000 $121,600 0.9% 47.8 2.6 $51,797 $142,507 $283,196 5.1% 9 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 52.8 1.9 $36,900 $43,500 $175,900 1.2% 47.2 2.2 $51,241 $60,775 $409,656 4.7% 10 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 37.4 2.9 $69,600 $186,300 $199,000 1.7% 33.5 3.4 $96,650 $260,285 $463,454 4.7% Subject Zip Code 92069
Rank Cluster Lifestyle Group Household Type Diversity Index
Ow n vs.

Rent Preferred Housing Age HH
Size HH Income Net Worth Home
Value HH % Age HH
Size HH Income Net Worth Home
Value HH %
1 13C: NeWest Residents Next Wave Married Couples w / Kids 87 17% Multi-Unit Rentals 27.2 3.3 $30,000 $11,000 $140,700 0.8% 23.6 4.1 $36,493 $13,588 $302,838 15.2% 2 13A: Diverse Convergence Next Wave Married Couples w / Kids 89 28% High Density Apts; Single Family 32.6 3.0 $42,900 $15,100 $338,900 1.2% 28.3 3.8 $52,185 $18,652 $729,438 12.9% 3 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 33.7 3.2 $111,200 $348,600 $353,200 1.9% 29.3 4.0 $135,268 $430,604 $760,217 9.9% 4 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 42.3 2.9 $89,300 $314,900 $355,600 2.1% 36.8 3.5 $108,628 $388,976 $765,383 9.4% 5 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 37.4 2.9 $69,600 $186,300 $199,000 1.7% 32.5 3.5 $84,664 $230,125 $428,322 9.4% Source: ESRI
National Cluster Characteristics Locally Adjusted Characteristics National Cluster Characteristics Locally Adjusted Characteristics National Cluster Characteristics Locally Adjusted Characteristics S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 96 CMA Demographic Profile
Demographic Profile
The San Marcos area is characterized by a mix of lower and high income households, ranging from families, married couples, and professionals. Top Lifestyle Groups include affluent “Boomburbs,” Young Professional Couples, low-income New Wave Married Couples with Kids, Comfortable Families, and above average earning Ethnic Families. Lifestyle Groups are shown below.

S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 97 Economic Overview
98 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Population Growth
MSA Economic Trends
Population growth in the MSA is expected to remain at similar levels to 2021 through 2023 and slow from 2023 to 2026. Positive population growth bodes well for the development of new multifamily development, especially with rent increases and limited availability. 0 5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Annual Population Growth
Source: Moody's Analytics; U.S. Census Bureau (BOC)
San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Total Population 3,174,335 3,209,768 3,248,877 3,280,850 3,306,089 3,321,237 3,333,861 3,338,330 3,343,152 3,355,347 3,367,805 3,381,616 3,391,264 3,398,071 3,404,513 Prior Year Change 37,179 35,433 39,109 31,973 25,239 15,148 12,624 4,469 4,822 12,196 12,458 13,811 9,649 6,807 6,441 Annual % Change 1.2% 1.1% 1.2% 1.0% 0.8% 0.5% 0.4% 0.1% 0.1% 0.4% 0.4% 0.4% 0.3% 0.2% 0.2% 99 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Residential Building Permits
MSA Economic Trends
Building permits in the MSA are expected to continue to increase through 2023 and stay above the historical average of +/- 9,513 units through 2026. The area demand for new homes in turn triggers demand for retail services such as the planned site. 0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Residential Building Permits
SFD Building Permits MF Building Permits Historical AverageSource: Moody's Analytics; U.S. Bureau of Labor Statistics (BLS) San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Total Building Permits 5,666 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,472 9,530 12,271 13,571 13,151 12,410 11,104 Annual % Change 5.5% 45.9% -16.8% 43.8% 9.2% -3.2% -5.8% -16.5% 15.3% 0.6% 28.8% 10.6% -3.1% -5.6% -10.5% SFD Building Permits 2,197 2,565 2,487 3,222 2,351 4,056 3,489 3,019 2,900 3,275 5,680 6,795 6,550 6,242 5,718 Annual % Change -2.1% 16.8% -3.0% 29.6% -27.0% 72.5% -14.0% -13.5% -3.9% 12.9% 73.4% 19.6% -3.6% -4.7% -8.4% MF Building Permits 3,469 5,699 4,388 6,661 8,440 6,385 6,345 5,197 6,572 6,255 6,591 6,776 6,601 6,168 5,386 Annual % Change 11.0% 64.3% -23.0% 51.8% 26.7% -24.3% -0.6% -18.1% 26.5% -4.8% 5.4% 2.8% -2.6% -6.6% -12.7% 10 0
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Employment
MSA Economic Trends
After 118,000 job losses in the MSA in 2020, unemployment started to recover in 2021 and is forecasted to grow at a lower rate through 2026. Unemployment spiked to 9.3% in 2020 and is forecast to reach pre-pandemic levels by 2023.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%
-150,000
-100,000
-50,000
0 50,000
100,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Unemployment Rate
Annual Non-Farm Employment Growth
Prior Year Change Unemployment RateSource: Moody's Analytics; U.S. Bureau of Labor Statistics (BLS) San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Non-Farm Employment 1,282,800 1,316,200 1,344,933 1,384,833 1,422,617 1,452,292 1,482,208 1,503,083 1,385,808 1,437,600 1,515,905 1,544,238 1,563,392 1,576,407 1,583,739 Prior Year Change 32,667 33,400 28,733 39,900 37,783 29,675 29,917 20,875 (117,275) 51,792 78,305 28,333 19,154 13,015 7,332 Annual % Change 2.6% 2.6% 2.2% 3.0% 2.7% 2.1% 2.1% 1.4% -7.8% 3.7% 5.4% 1.9% 1.2% 0.8% 0.5% Unemployment Rate 9.3% 7.9% 6.5% 5.2% 4.7% 4.1% 3.4% 3.3% 9.5% 6.5% 3.9% 3.1% 3.2% 3.3% 3.5% 10 1
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Employment by Sector
MSA Economic Trends
The pandemic year saw a sharp decline in most job sectors, but year over year, San Diego is seeing growth in all categories. Leisure & Hospitality, one of the hardest hit industries from the pandemic, has seen the strongest job growth with over 30,000 added jobs since July 2021, followed by Professional & Business Services, and Trade, Transportation & Utilities. Though still positive, Financial Activities, Information, and Manufacturing all saw less than 1,000 jobs added since July 2021. 363 153
15,267
1,821
4,755 5,443
30,624
770
6,349 6,641
0 5,000
10,000
15,000
20,000
25,000
30,000
35,000
Financial
Activities
Information Professional &
Business
Services
Construction &
Mining
Education &
Health Services
Government Leisure &
Hospitality
Manufacturing Other Services Trade, Transp.
and Utilities
Annual Non-Farm Employment Growth
Source: Moody's Analytics; U.S. Bureau of Labor Statistics (BLS) Category Financial
Activities Information
Professional &
Business
Services
Construction &
Mining
Education &
Health Services Government Leisure &
Hospitality Manufacturing Other Services Trade, Transp. and Utilities
Current Month (Jun-2022) 75,907 22,397 281,367 85,422 220,999 242,862 194,069 114,916 53,923 223,981 Current Month (Jun-2021) 75,544 22,244 266,100 83,601 216,244 237,419 163,445 114,147 47,574 217,340 12-Month Change 363 153 15,267 1,821 4,755 5,443 30,624 770 6,349 6,641 10 2
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos E/P Ratio
MSA Economic Trends
E/P Ratios in excess on 1.2 indicate a supply-constrained housing market with implied price growth. Moody’s Economy.com predicts an E/P ratio jump to over six in 2022 followed by decreasing ratios through 2026. The E/P ratio in the San Diego MSA has not been at what is considered equilibrium (1.2) since 2007 and has been above two since 2021 (excluding 2020 due to the COVID-19 pandemic).

0.9 0.6

1.4 1.6

2.2 1.2
-1.4
-22.4
-2.5

1.9 5.8

4.0 4.2

4.0 3.5

2.8 3.0

2.5 -12.4

5.4 6.4

2.1 1.5

1.0 0.7
-25.0
-20.0
-15.0
-10.0
-5.0

0.0 5.0

10.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F EP Ratio
Source: Moody's Analytics; U.S. Bureau of Labor Statistics (BLS) San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Non-Farm Employment 1,282,800 1,316,200 1,344,933 1,384,833 1,422,617 1,452,292 1,482,208 1,503,083 1,385,808 1,437,600 1,515,905 1,544,238 1,563,392 1,576,407 1,583,739 Prior Year Change 32,667 33,400 28,733 39,900 37,783 29,675 29,917 20,875 (117,275) 51,792 78,305 28,333 19,154 13,015 7,332 Building Permits 5,666 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,472 9,530 12,271 13,571 13,151 12,410 11,104 Employment/Housing 5.8 4.0 4.2 4.0 3.5 2.8 3.0 2.5 -12.4 5.4 6.4 2.1 1.5 1.0 0.7 10 3
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Affordability Index
MSA Economic Trends
The Affordability Index is expected to drop (ie: become less affordable) over the next five years, implying higher priced homes in reaction to lower new home building activity, high interest rates, and the current trend where existing home prices inch ever closer to new home prices. As the existing home market price rises, so new home prices are pushed up, and Moody’s Economy.com predicts that the ratio will remain at +/- 58 the next few years. Affordability in the San Diego MSA has been less than (or equal to) 100 for the last twenty years meaning it has a history of being unaffordable.
71 67
54 49 47
52 78
95 86
95 100
85 82 79 82 79
74 81 85
77 59 57 58 58 58
0 25
50 75
100
125
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Affordability Index
Source: Moody's Analytics; National Association of Realtors (NAR) San Diego-Carlsbad, CA Metropolitan Statistical Area - Moody's Analytics Five-Year Forecast Category 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F 2026F Affordability Index 100.4 85.2 81.9 78.9 81.8 79.1 73.8 81.2 84.8 77.5 59.0 56.8 57.7 58.1 57.8 S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos 104
Appendix
105
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Proposed Project Plans
Appendix

106
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Proposed Project Plans (Cont’d)
Appendix

107
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Proposed Project Plans (Cont’d)
Appendix

108
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Proposed Project Plans (Cont’d)
Appendix

109
S. Santa Fe Avenue & N. Las Flores Drive – DTA and City of San Marcos Proposed Project Plans (Cont’d)
Appendix

Thank you!
Zonda
3200 Bristol Street, Suite 640
Costa Mesa, CA 92626
(877) 966-3210