San Marcos City Council
June 27, 2023

ATTACHMENT B-8

FISCAL AND ECONOMIC ANALYSIS

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100, Bayview Circle Suite 100
Newport Beach, CA 92660
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($50,000)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$326,514
($47,068)
$279,446
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
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($200,000)
($150,000)
($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$253,483
($198,490)
$54,993
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
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PROJECT SUMMARY

CITY OF SAN MARCOS

MERITAGE HOMES GRAN VISTA

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 $59,662 18.3% $117,257 46.3%
UNSECURED PROPERTY TAX $5,966 1.8% $3,225 1.3%
PROPERTY TRANSFER TAX $1,083 0.3% $4,293 1.7%
PROPERTY TAX IN-LIEU OF VEHICLE LICENSE FEE $23,905 7.3% $49,798 19.6% DIRECT AND INDIRECT SALES TAX $225,881 69.2% $22,089 8.7% FRANCHISE FEES $2,595 0.8% $10,943 4.3%
LICENSES AND PERMITS $841 0.3% $3,545 1.4%
FINES AND FORFEITURES $179 0.1% $756 0.3%
CFD REVENUE $6,403 2.0% $41,577 16.4%
TOTAL RECURRING GENERAL FUND REVENUES $326,514 100.0% $253,483 100.0% RECURRING GENERAL FUND EXPENDITURES2 AMOUNT % OF TOTAL AMOUNT % OF TOTAL PUBLIC WORKS $5,675 12.057% $23,932 12.057%
DEVELOPMENT SERVICES $4,397 9.342% $18,544 9.343%
PUBLIC SAFETY $23,505 49.938% $99,122 49.938%
PARKS AND RECREATION $1,142 2.426% $4,815 2.426%
OTHER FINANCING USES $77 0.164% $325 0.164%
GENERAL GOVERNMENT $12,272 26.073% $51,752 26.073%
TOTAL RECURRING GENERAL FUND EXPENDITURES $47,068 100.0% $198,490 100.0%

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
$279,446

6.94 $54,993

1.28 APPROVED PLAN PROPOSED PLAN
EXHIBIT 1

CITY OF SAN MARCOS

FISCAL IMPACT SUMMARY

APPROVED PLAN PROPOSED PLAN

MERITAGE HOMES GRAN VISTA

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 7.60 2.11 92,000 $428 $39,376,000 3.91 120 170,520 $458 $650,500 $78,060,000 NON-RESIDENTIAL 2.11 92,000 $39,376,000
COMMERICAL RETAIL GAS STATION 0.07 3,000 $1,969 $5,907,000 COMMERCIAL GROCERY STORE 1.52 66,000 $405 $26,730,000
COMMERCIAL OFFICE 0.53 23,000 $293 $6,739,000
RESIDENTIAL 3.91 120 170,520 $458 $78,060,000
TOWNHOMES 3.91 120 170,520 $458 $650,500 $78,060,000

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. *All figures subject to rounding
Updated Zonda Table 3/30/23
EXHIBIT 2

CITY OF SAN MARCOS

PROJECT SUMMARY

APPROVED PLAN

MERITAGE HOMES GRAN VISTA

PROPOSED PLAN

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

MERITAGE HOMES GRAN VISTA

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 92,000 140 70 170,520 120 2.46 295 0 295

NON-RESIDENTIAL
COMMERICAL RETAIL GAS STATION 3,000 840 4 2
COMMERCIAL GROCERY STORE 66,000 938 70 35
COMMERCIAL OFFICE 23,000 347 66 33
NON-RESIDENTIAL SUBTOTAL 92,000 140 70

RESIDENTIAL
TOWNHOMES 170,520 120 2.46 295 0 295
RESIDENTIAL SUBTOTAL 295 295
NOTES
1 Source: Zonda Research.
2 Source: Commercial Buildings Energy Consumption Survey (CBECS), 2016. *All figures subject to rounding

APPROVED PLAN PROPOSED PLAN
EXHIBIT 4

CITY OF SAN MARCOS

MERITAGE HOMES GRAN VISTA

PROJECT DEMOGRAPHICS

DRAFT

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN

ALL PROPERTY TAXES
SECURED PROPERTY TAXES $59,662 $117,257
UNSECURED PROPERTY TAXES $5,966 $3,225
PROPERTY TRANSFER TAXES $1,083 $4,293
PROPERTY TAX IN-LIEU OF VLF $23,905 $49,798
GRAND TOTAL ALL PROPERTY TAXES $90,616 $174,573

RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $0 $117,257
UNSECURED PROPERTY TAXES $0 $3,225
PROPERTY TRANSFER TAXES $0 $4,293
PROPERTY TAX IN-LIEU OF VLF $0 $49,798
TOTAL RESIDENTIAL PROPERTY TAXES $0 $174,573

NON-RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $59,662 $0
UNSECURED PROPERTY TAXES $5,966 $0
PROPERTY TRANSFER TAXES $1,083 $0
PROPERTY TAX IN-LIEU OF VLF $23,905 $0
TOTAL NON-RESIDENTIAL PROPERTY TAXES $90,616 $0

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN

GRAND TOTAL
ESTIMATED BUILDOUT VALUE $39,376,000 $78,060,000
ESTIMATED EXEMPTIONS $0 ($672,000)
ESTIMATED ASSESSED VALUE $39,376,000 $77,388,000
ESTIMATED SECURED PROPERTY TAXES $59,662 $117,257

RESIDENTIAL
ESTIMATED BUILDOUT VALUE $0 $78,060,000
ESTIMATED EXEMPTIONS $0 ($672,000)
HOMEOWNER'S EXEMPTION (ANNUALLY) [1] $7,000
PERCENT OF SALE UNITS TAKING HOMEOWNER'S EXEMPTION80%
ESTIMATED ASSESSED VALUE $0 $77,388,000
ESTIMATED SECURED PROPERTY TAXES $0 $117,257

NON-RESIDENTIAL
ESTIMATED BUILDOUT VALUE $39,376,000 $0
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $39,376,000 $0
ESTIMATED SECURED PROPERTY TAXES $59,662 $0

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $5,966 $3,225

RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $0 $3,225
UNSECURED TAXES AS A % OF SECURED2 2.75%

NON-RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $5,966 $0
UNSECURED TAXES AS A % OF SECURED2 10.00%
[1] Per the City of San Marcos Housing Needs Assessment 2019 only 9% of City's of housing stock is made up of condominiums/townhouses and mobile homes DTA estimates that 80% of these units will be owner occupied

UNSECURED PROPERTY TAX CALCULATION

MERITAGE HOMES GRAN VISTA

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 $1,083 $4,293

RESIDENTIAL
ESTIMATED PROPERTY TRANSFER TAXES $0 $4,293
ESTIMATED BUILDOUT VALUE $0 $78,060,000
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 $1,083
ESTIMATED BUILDOUT VALUE $39,376,000
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 $23,905 $49,798

RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $0 $49,798
ESTIMATED BUILDOUT VALUE $0 $78,060,000
ESTIMATED EXISTING ASSESSED VALUE $0 $3,663,169
PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67

NON-RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $23,905 $0
ESTIMATED BUILDOUT VALUE $39,376,000 $0
ESTIMATED EXISTING ASSESSED VALUE $3,663,169 $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

MERITAGE HOMES GRAN VISTA

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 8.832%
FIRE DISTRICT3,4 6.320%
TOTAL 15.152%
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) 131115. 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

MERITAGE HOMES GRAN VISTA

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. ]

DRAFT

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $225,881 $22,089

RESIDENTIAL SALES TAXES

DIRECT SALES TAX NA NA

INDIRECT SALES TAX - TAXABLE RESIDENT PURCHASES
RESIDENTIAL $0 $22,089
TOTAL RESIDENTIAL SALES TAXES $0 $22,089

NON-RESIDENTIAL SALES TAXES
DIRECT SALES TAX1
COMMERICAL RETAIL GAS STATION $12,600 NA
COMMERCIAL GROCERY STORE $211,200 NA

COMMERCIAL OFFICE
INDIRECT SALES TAX - TAXABLE EMPLOYEE PURCHASES $2,081 $0 TOTAL NON-RESIDENTIAL SALES TAXES $225,881 $0
TAXABLE SALES PER SF1
COMMERICAL RETAIL GAS STATION $525.00 $0.00
COMMERCIAL GROCERY STORE $400.00 $0.00

COMMERCIAL OFFICE
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

MERITAGE HOMES GRAN VISTA

DRAFT

DISPOSABLE INCOME PER HOUSEHOLD
ESTIMATED AVERAGE HOUSEHOLD INCOME (ASSUMES 3:1 INCOME TO HOUSEHOLD PAYMENT RATIO) 1 RESIDENTIAL $131,142

MORTGAGE ASSUMPTIONS

RESIDENTIAL
AVERAGE PROJECTED SALES PRICE PER UNIT $650,500
AVERAGE MORTGAGE (20% DOWN PAYMENT) $520,400
ANNUAL MORTGAGE PAYMENT (4.5% FOR 30 YEARS) $31,641
ADDITIONAL ANNUAL PROPERTY TAXES & HOA $12,073
RETAIL TAXABLE EXPENDITURES (AS A % OF DISPOSABLE INCOME) RESIDENTIAL 28.0727%
EMPLOYEES (ANNUAL SPENDING PER EMPLOYEE)2 $5,945
RESIDENTIAL (ANNUAL SPENDING PER HOUSEHOLD) $18,408
2 Based on typical DTA baseline assumptions.

NON-RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS
EXHIBIT 6 - CONTINUED

CITY OF SAN MARCOS

MERITAGE HOMES GRAN VISTA

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 (13115) 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 1.348582%
NOTES
1 Estimate, subject to change.
2 Estimate, subject to change.
* All figures subject to rounding
EXHIBIT 6 - CONTINUED

CITY OF SAN MARCOS

MERITAGE HOMES GRAN VISTA

ESTIMATED SALES TAX REVENUES (CASE STUDY)

SAMPLE PROPERTY TAX BILL

CITY INDIRECT SALES TAX ASSUMPTIONS

DRAFT

RESIDENTIAL APPROVED PROPOSED

LAND USE TYPE COMMERCIAL OFFICE UNITS PLAN PLAN
TOTAL CFD SPECIAL TAXES $6,403 $41,577
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 120 $21,605
CFD 2001-01 (FIRE) 120 $19,972
TOTAL RESIDENTIAL CFD SPECIAL TAXES $41,577
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 1.58 0.53 $3,327 $0
CFD 2001-01 (FIRE) 1.58 0.53 $3,076 $0
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $6,403 $0

RESIDENTIAL APPROVED PROPOSED

LAND USE TYPE COMMERCIAL OFFICE UNITS PLAN PLAN
TOTAL CFD SPECIAL TAXES $36,522 $72,205
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 120 $29,712
CFD 98-02 (ZONE F)2, 3 120 NA
CFD 2011-012, 4 120 $42,493
TOTAL RESIDENTIAL CFD SPECIAL TAXES $72,205
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 1.58 0.53 $2,334 $0
CFD 98-02 (ZONE F)2, 3 1.58 0.53 NA NA
CFD 2011-012, 5 69,000 23,000 $34,187 $0
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $36,522 $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
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
5 "Retail" Rate, per building square foot
*All figures subject to rounding
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

MERITAGE HOMES GRAN VISTA

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

ACRES / SQ. FT.

FY 2022-23 SPECIAL TAX RATE

DRAFT

APPROVED PROPOSED

PLAN PLAN
ESTIMATED RECURRING GENERAL GOVERNMENT OVERHEAD EXPENDITURES1 $12,272 $51,752 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

MERITAGE HOMES GRAN VISTA

DRAFT

APPROVED PROPOSED

REVENUE CATEGORY PLAN PLAN
FRANCHISE FEES $2,595 $10,943
LICENSES AND PERMITS $841 $3,545
FINES AND FORFEITURES $179 $756
TOTAL ESTIMATED MULTIPLIER REVENUES $3,615 $15,244
REVENUE CATEGORY MULTIPLIER1 BASIS

SALES TAX NA CASE STUDY

PROPERTY TAX NA CASE STUDY
FRANCHISE FEES $37.07 PERSONS SERVED
LICENSES AND PERMITS $12.01 PERSONS SERVED
FINES AND FORFEITURES $2.56 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

MERITAGE HOMES GRAN VISTA

DRAFT

APPROVED PROPOSED

EXPENDITURE CATEGORY PLAN PLAN
PUBLIC WORKS $5,675 $23,932
DEVELOPMENT SERVICES $4,397 $18,544
PUBLIC SAFETY $23,505 $99,122
PARKS AND RECREATION $1,142 $4,815
OTHER FINANCING USES $77 $325
TOTAL MULTIPLIER EXPENDITURES $34,796 $146,738
EXPENDITURE CATEGORY MULTIPLIER1 BASIS
PUBLIC WORKS $81.07 PERSONS SERVED
DEVELOPMENT SERVICES $62.82 PERSONS SERVED
PUBLIC SAFETY $335.78 PERSONS SERVED
PARKS AND RECREATION $16.31 PERSONS SERVED
OTHER FINANCING USES $1.10 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

MERITAGE HOMES GRAN VISTA

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% $37.07 LICENSES AND PERMITS $1,379,350 RECURRING PERSONS SERVED 0% $12.01 FINES AND FORFEITURES $293,800 RECURRING PERSONS SERVED 0% $2.56 TOTAL INCLUDED GENERAL FUND REVENUES $62,255,560 $51.64 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

MERITAGE HOMES GRAN VISTA

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% $81.07 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) 0%
$9,179,545 PERSONS SERVED 0% $81.07

DEVELOPMENT SERVICES
ADMINISTRATION $1,494,468 ($122,656) RECURRING PERSONS SERVED 0% $11.94 PLANNING $1,484,910 ($121,872) RECURRING PERSONS SERVED 0% $11.86 BUILDING $1,491,629 ($122,423) RECURRING PERSONS SERVED 0% $11.92 ENGINEERING $2,386,017 ($195,829) RECURRING PERSONS SERVED 0% $19.06 WATERSHED PROGRAM MANAGEMENT $923,403 RECURRING PERSONS SERVED 0% $8.04 TOTAL DEVELOPMENT SERVICES $7,780,427 ($728,914)
$7,051,513 PERSONS SERVED 0% $62.82

PUBLIC SAFETY
FIRE DEPARTMENT $20,086,339 ($2,257,584) RECURRING PERSONS SERVED 0% $155.19 LAW ENFORCEMENT $23,374,137 ($2,627,113) RECURRING PERSONS SERVED 0% $180.59 TOTAL PUBLIC SAFETY $43,460,476 ($5,575,806)
$37,884,670 PERSONS SERVED 0% $335.78

PARKS AND RECREATION
COMMUNITY SERVICES $4,135,137 ($2,260,952) RECURRING PERSONS SERVED 0% $16.31 TOTAL PARKS AND RECREATION $4,135,137 ($2,580,842)
$1,554,295 PERSONS SERVED 0% $16.31

OTHER FINANCING USES
ANNUAL REPLACEMENT/REHAB TRANSFERS $1,265,345 RECURRING PERSONS SERVED 90% $1.10 TOTAL OTHER FINANCING SOURCES $1,265,345 $0
$1,265,345 PERSONS SERVED 90% $1.10
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 Ratio

26.07%
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

MERITAGE HOMES GRAN VISTA

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

DRAFT

$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000

DRAFT

DRAFT

$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
$180,000,000
$200,000,000
DRAFT

DRAFT

CITY OF SAN MARCOS

MERITAGE HOMES GRAN VISTA

ECONOMIC IMPACT ANALYSIS - (APPROVED PLAN)

RECURRING JOBS

RECURRING IMPACTS

ONE-TIME JOBS

ONE TIME IMPACTS

JOB HOUSING BALANCE

SUMMARY

DRAFT
EXHIBIT 1A

MERITAGE HOMES GRAN VISTA

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
COMMERICAL RETAIL GAS STATION 1.19 3,000
COMMERCIAL GROCERY STORE 1.07 66,000
COMMERCIAL OFFICE 2.88 23,000
92,000

RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES COMMERICAL RETAIL GAS STATION 4 0 1 5
COMMERCIAL GROCERY STORE 70 5 10 85
COMMERCIAL OFFICE 66 16 15 97
TOTAL RECURRING EMPLOYMENT 140 21 26 187
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

MERITAGE HOMES GRAN VISTA

RECURRING ECONOMIC IMPACTS - APPROVED PLAN

ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR. - $0 28.07% $0
-
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 COMMERICAL RETAIL GAS STATION $87,628 $350,513
COMMERCIAL GROCERY STORE $75,348 $5,274,372
COMMERCIAL OFFICE $127,446 $8,411,413

RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT COMMERICAL RETAIL GAS STATION $350,513 $54,644 $113,843 $519,000 COMMERCIAL GROCERY STORE $5,274,372 $801,697 $1,283,403 $7,359,472 COMMERCIAL OFFICE $8,411,413 $172,510 $2,285,840 $10,869,763 TOTAL RECURRING OUTPUT $14,036,299 $1,028,851 $3,683,086 $18,748,235 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.

DRAFT
EXHIBIT 3A

MERITAGE HOMES GRAN VISTA

ONE-TIME EMPLOYMENT -APPROVED PLAN

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

COMMERICAL RETAIL GAS STATION 3,000
COMMERCIAL GROCERY STORE 66,000
COMMERCIAL OFFICE 23,000
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES COMMERICAL RETAIL GAS STATION 33 6 8 47
COMMERCIAL GROCERY STORE 149 25 37 211
COMMERCIAL OFFICE 149 25 37 211
TOTAL ONE-TIME EMPLOYEES 331 56 82 469
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

MERITAGE HOMES GRAN VISTA

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.

COMMERICAL RETAIL GAS STATION $5,020,950 $1,674
COMMERCIAL GROCERY STORE $22,720,500 $344
COMMERCIAL OFFICE $5,728,150 $249
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT COMMERICAL RETAIL GAS STATION $5,020,950 $941,606 $1,101,706 $7,064,262 COMMERCIAL GROCERY STORE $22,720,500 $4,260,898 $4,985,374 $31,966,772 COMMERCIAL OFFICE $5,728,150 $6,368,751 $1,256,881 $13,353,782 TOTAL ONE-TIME OUTPUT $33,469,600 $11,571,255 $7,343,962 $52,384,816 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

MERITAGE HOMES GRAN VISTA

JOBS-HOUSING BALANCE - APPROVED PLAN

ASSUMPTIONS
I. EXISTING DEMOGRAPHICS

CITY OF SAN MARCOS
HOUSING UNITS 1 32,000
EMPLOYEES 2 41,400
II. JOB IMPACTS 3

CITY OF SAN MARCOS
DIRECT IMPACT 140
ADDITIONAL INDIRECT 21
ADDITIONAL INDUCED 26
TOTAL 187
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 41,587 PERCENTAGE INCREASE 0.45%

JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE

CITY OF SAN MARCOS
EXISTING 1.29
EXISTING WITH PROJECT 1.30
PERCENTAGE INCREASE 0.45%
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

MERITAGE HOMES GRAN VISTA

SUMMARY - APPROVED PLAN

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

COMMERICAL RETAIL GAS STATION 1.19 3,000
COMMERCIAL GROCERY STORE 1.07 66,000
COMMERCIAL OFFICE 2.88 23,000

ECONOMIC IMPACTS CONCLUSIONS

RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 140 47 187
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $14,036,299 $4,711,937 $18,748,235

ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 331 138 469
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $33,469,600 $18,915,216 $52,384,816

OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.29375 1.29959 0.45%

DRAFT

DRAFT

CITY OF SAN MARCOS

MERITAGE HOMES GRAN VISTA

ECONOMIC IMPACT ANALYSIS - (PROPOSED PLAN)

RECURRING JOBS

RECURRING IMPACTS

ONE-TIME JOBS

ONE TIME IMPACTS

JOB HOUSING BALANCE

SUMMARY

DRAFT
EXHIBIT 1b

NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN

RECURRING EMPLOYMENT - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS

LAND USE CATEGORY UNITS
TOWNHOMES 120
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 TOWNHOMES 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

NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN

RECURRING ECONOMIC IMPACTS - PROPOSED PLAN

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

TOWNHOMES $131,142 28.07% $2,208,930
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 TOWNHOMES $2,208,930.0 $481,018.5 $79,143.7 $2,769,092.1 TOTAL RECURRING OUTPUT $2,208,930 $481,018 $79,144 $2,769,092 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.

DRAFT
EXHIBIT 3b

NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN

ONE-TIME EMPLOYMENT - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
TOWNHOIMES 120
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 TOWNHOIMES 118 44 33 195
TOTAL ONE-TIME EMPLOYEES 118 44 33 195
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

NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN

ONE-TIME IMPACTS - PROPOSED PLAN

ASSUMPTIONS

ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS SQ. FT. PER DWELLING UNIT COST PER UNIT TOWNHOMES 120 1125 to 1689 $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 TOWNHOMES $21,000,000 $5,651,859 $4,438,267 $31,090,126 TOTAL ONE-TIME OUTPUT $21,000,000 $5,651,859 $4,438,267 $31,090,126 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

NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN

JOBS-HOUSING BALANCE - PROPOSED PLAN

ASSUMPTIONS
I. EXISTING DEMOGRAPHICS

CITY OF SAN MARCOS
HOUSING UNITS 1 32,000
EMPLOYEES 2 41,400
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 32,120 PERCENTAGE INCREASE 0.38%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 41,400 PERCENTAGE INCREASE 0.00%

JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE

CITY OF SAN MARCOS
EXISTING 1.29
EXISTING WITH PROJECT 1.29
PERCENTAGE INCREASE -0.37%
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

NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN

SUMMARY - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
MIXED USE RESIDENTIAL 120
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 $2,208,930 $560,162 $2,769,092

ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 118 77 195
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $21,000,000 $10,090,126 $31,090,126

OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.294 1.289 -0.37%

DRAFT

DRAFT

MERITAGE GRAN VISTA
SP21-0003
General Plan Amendment & Rezone
DTA and City of San Marcos
San Marcos, California
July 2022
Key Findings 4
Site Plan Analysis 9
Price Recommendations 14
Competitive For-Sale Market Analysis 17
Commercial Price Assessment 25
Location Analysis 29
Land Use & Zoning Analysis 38
Commercial Retail & Office Market Trends 48
Retail Demand Outlook 67
Demographic Overview 75
Economic Overview 83
Appendix 90
3 Meritage Gran Vista SP21-0003 – 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 Specific Plan, Multi-Family Site Development Plan, and Tentative Subdivision Map for a 120-unit residential condominium development on 7.6 acres on APN 219-121-16-00. The project includes a General Plan Amendment and Rezone from Commercial (C) to Specific Plan Area (SPA). The project (SP21-0003) is located at the northwest corner of Las Posas and Mission Rd, behind the existing CVS commercial building on the corner. 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 attached residential townhomes and retail commercial market trends in the San Marcos area and greater San Diego County. These findings will be used to identify how the proposed amendment will contribute to an increased tax base, economic development, and employment opportunities. Zonda will provide conclusions based on July 2022 data.

Note: This report was completed following the global COVID-19 pandemic, during an aggressive Fed tightening schedule. The recommendations contained herein reflect the most recent data available, but are subject to change as the market evolves.

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.

Additional support was provided as needed.

KEY CONTACTS
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 4 Key Findings
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 5 Opportunity Summary
Key Findings
As part of our Subject due diligence, we assessed the existing land use (Commercial, or “C”) and proposed rezone land use (Specific Plan Area, “SPA,” For Sale Residential Medium-High Density) using a S.W.O.T analysis. The main advantage of the existing use is that the site is in a high-traffic area and commercial is consistent with surrounding land uses. Drive thru commercial retail performance remains relatively strong in the right areas and should be attractive to commuters. However, the rezone to SPA for-sale residential would introduce sorely needed homes at an attractive price point, fulfilling a deep demand pool of homebuyers looking to move to or purchase in San Marcos.

General Plan Amendment Las Posas Rd. & W. Mission Rd.

Plan Element SWOT Proposed
Internal factors
Strengths
Original Commercial GP & Zoning designation High traffic area will draw retail clientele drawn to the CVS on the corner Consistent with surrounding land uses, inline retail is a better fit for this area than mixed use office and retail Proximity to Palomar College provides constant traffic around the site Drive thru could prove lucrative if the site can support it Proposed Residential For-Sale Townhome Designation Extreme market demand and supply shortage of for-sale residential townhomes For-sale scenario has a developer to translate potential City revenue into actual dollars, whereas the commercial land use alternative did not
Weaknesses
Original Commercial GP & Zoning designation Retail space still redefining after negative effects of COVID-19 - secondary inline spaces have high vacancy High demand drive thru's cause traffic congestion at peak hours.

Optimum corner already occupied by CVS.

Proposed Residential For-Sale Townhome Designation Could negatively impact traffic at this high-ADT intersection during peak hours External Factors
Opportunities
Original Commercial GP & Zoning designation Synergy and foot traffic from CVS on the corner.

Drive thru could prove lucrative if the site can support it Proposed Residential For-Sale Townhome Designation Walkable to and compatible with neighborhood retail Anticipated future upside in pricing tralsates to higher revenue for the City.

Threats
Original Commercial GP & Zoning designation Drive-thru gas station and mart planned for caddy corner site could create retail glut at this location.

Changing face of retail is causing high vacancy rates and putting downward pressure on rents Further rent correction could occur at secondary commercial retail locations.

Proposed Residential For-Sale Townhome Designation Possible for-sale attached market cooling after several consecutive years of double digit growth Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 6 Opportunity Summary
Key Findings
As part of our due diligence for the Subject, we assessed the existing and proposed mix of land uses for the 7.6-acre Subject parcel using a S.W.O.T analysis (see the following page).

The main advantages of the rezone and revised land use designation are as follows:
• The planned 120-unit condo development will bring much needed supply to a supply-constrained market with high demand. • The planned for-sale scenario allows a developer to translate potential City revenue into actual dollars, untrue for the original planned commercial use.
• The site is incredibly walkable and fits with the existing surrounding land uses. • The anticipated increase in pricing in the future translates to increased revenue for the City.

The original zoning land use designation for the Subject is Commercial (C). The proposed site plan for a commercial retail property includes a retail grocery store, gas station, and office space. Retail grocery would comprise roughly 66,000 square feet, with 3,000 square feet for gas station and 23,000 square feet of office space, which could provide the following challenges and barriers to development:
• COVID-19 changed the retail space landscape and many spaces still have high vacancy. • Potential for high traffic congestion, especially at peak hours. • The site sits behind an existing CVS meaning the optimum location is no longer available. • There is an existing commercial site across Las Posas Rd. and a planned commercial site across Mission Rod which could overwhelm the area with retail.
• Office space is currently experienced higher than average vacancy rates. On the plus side, since this report was competed, vacancy rates have dropped off from 14% to 12.1%, and asking lease rates have risen slightly.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 7 The Subject site is a 7.6-acre property at the northwest corner of W. Mission Rd. and N. Las Posas Rd, previously slated for Commercial (the “Original” project), and now planned for 120 for-sale condominiums (the “Proposed” project). Please see the following pages for site plans of both alternatives.

The proposed use entails 120 townhomes ranging from 1,125 square feet to 1,689 square feet. These two- to three-bedroom units have potential base prices ranging from $579,000 to $689,000. These are three-story four- to ten-plex units which will be developed by Meritage Homes. Zonda estimated $300 per month in HOA dues based on the industry standard for attached comparables. The City of San Marcos all in property tax rate of 1.25% assumes no CFD or Mello Roos.

The original commercial zoning of the site comprises 331,000 square feet. This includes 66,000 square feet of retail grocery, 3,000 square feet of gas station, and 23,000 square feet of office space, plus over 100,000 square feet of parking and landscaping.

The project includes a General Plan Amendment (GPA) and Rezone (R) to modify the General Plan and Zoning designation of the property from Commercial (C) to Specific Plan Area (SPA). The change is being requested to allow for the construction of 120 for-sale condominium units.

Proposed and Original Use
Key Findings
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 7.6 acres under two scenarios:
• Original: Commercial retail property with over 90,000 square feet of grocery, gas station, and office space. This is the “original use” under the current San Marcos land use and zoning.
• Proposed: 120 unit for-sale condominium development which entails rezoning to Specific Plan Area (SPA) Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 8 Our valuation of the Subject includes both the NOI cap rate approach and a comparison of recent sales transactions, and focused specifically on the land uses set forth on the previous page. 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 yields between $76.4 and $78.0 million for the SPA (120 for-sale townhomes) and between $39.1 million and $39. 4 million for the Commercial land use originally proposed.

Methodology and Price Assessment Conclusions
Key Findings
Type
Building
Square
Feet 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
For-Sale Townhomes (120) 1,421 170,520 $2.82 $33.78 $4,000 per month For Sale Total 1,421 170,520 $2.82 $33.78 $5,760,166 -30% ($1,728,050) $4,032,116 -5.0% ($288,008) $3,744,108 4.90% $76,410,360 $53,772 Commercial Retail Gas Station 3,000 3,000 $6.90 $82.80 $248,400 -2% ($4,968) $243,432 0.0% $0 $243,432 4.54% $5,361,938 $1,787 Commercial Retail Grocery Store 66,000 66,000 $2.50 $30.00 $1,980,000 -24% ($475,200) $1,504,800 -7.5% ($148,500) $1,356,300 5.02% $27,017,928 $409 Commercial Office 23,000 23,000 $2.50 $30.00 $690,000 -24% ($165,600) $524,400 -12.0% ($82,800) $441,600 6.50% $6,793,846 $295 Commercial Total 92,000 69,000 $2,228,400 ($480,168) $1,748,232 ($148,500) $1,599,732 $39,173,713 *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 GLA (SF) $/SF $/Unit Total Total Total
For-Sale Townhomes (120) 1,421 170,520 $458 $650,500 $78,060,000 For Sale Total 1,421 170,520 $458 $78,060,000 $458
Commercial Retail Gas Station 3,000 3,000 $1,969 $5,907,000 $1,969 Commercial Retail Grocery Store 66,000 66,000 $405 $26,730,000 $405 Commercial Office 23,000 23,000 $293 $6,739,000 $293
Commercial Total 92,000 92,000 $2,374 $39,376,000 $2,832 Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
Zonda assumptions are supported by our market research as follows:
• A vacancy rate of 0% for the gas station, 7.5% for the retail grocery, and 12% for the office.
• Operating expenses for the gas station is estimated at 2%, with 24% for retail grocery and office, and roughly 30% for townhomes for lease. • Cap Rates are roughly 4.5% for gas stations, 5% for retail grocery, and

6.5% for commercial office. Residential townhomes for lease have a cap rate of just under 5
• Monthly lease rates per square foot are $2.50 for retail grocery and office, and $6.90 for the gas station. The townhomes should lease for $4,000 per month on average, or $2.82 per square foot.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 9 Site Plan Analysis
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 10 Proposed Site Plan
Site Plan Analysis
See p. 13 for a
detailed rendering
The Proposed plan for the 7.6-acre site includes the construction of a 120 for-sale condominiums. These will be in a townhome formation and will range from 1,125 square feet to 1,689 square feet in size. Each unit will be three levels, have 2 or 3 bedrooms, 2.5 to 3 bathrooms and a 2-car garage (the 1,350 square foot unit will have a 2-car tandem garage). Base prices will range from $579,000 to $689,000 with an anticipated HOA of $300 per month and a projected 1.25% property tax rate.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 11 Proposed Architectural Floorplans
Site Plan Analysis
Level 1
Level 2
Level 3

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 12 Proposed Architectural Elevations
Site Plan Analysis

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 13 Possible Layout of Original Land Use
Site Plan Analysis
The layout of the 7.6-acre site as commercial could entail a gas station, retail grocery shop, and office space.

Lot coverage in square feet could be as follows:

Lot total – 100% 331,000 sf
Building – 28% 92,000 sf

71.7% Retail Grocery 66,000 sf

3.3% Inline 3,000 sf
25% Office 23,000 sf
Parking – 32% 105,950 sf
Loading – 1.0% 3,000 sf
Landscaping – 13% 43,000 sf
Zonda based our assessment calculations on these square footages.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 14 Price Recommendations
as Proposed Townhomes
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 15 Proposed Use Revenue Summary
Price Recommendations as Proposed Townhomes
▬ Incentives ▬▬ Typical Spending ▬ Estimated Existing Total # of Est % of Average Base Price Options / Lot Closing Closing Sales Rate Ref Project/Subdivision Type Configuration Units Total Units Unit Size Price Reduction Upgrades Premiums Price $/SF Value A Gran Vista Townhomes Attached 3-Story 120 100% 1,421 $637,500 -$5,000 $15,000 $3,000 $650,500 $458 $78,060,000 Community SummaryCommunity Summary 120 100% 1,421 $637,500 -$5,000 $15,000 $3,000 $650,500 $458 $78,060,000 $575,000
$595,000
$615,000
$635,000
$655,000
$675,000
$695,000
$715,000
1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800
Estimated Closing Price
Unit Size
Gran Vista (Townhomes) - Attached 3-Story, 4.0 sls per mo Zonda’s recommended total prices average $650,500 ($458 per square foot) for the proposed 120 townhomes, with an expected total revenue of $78,060,000 based on these prices. Our July 2022 base pricing is $637,500 per unit, and all-in pricing factors in incentives of $5,000 towards closing costs, options and upgrades spending of $15,000 per home, and unit premiums of $3,000 per unit.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 16 Proposed Use Revenue Detail
Price Recommendations as Proposed Townhomes
Zonda’s recommended base prices for the townhomes range from $579,000 to $689,000. Monthly HOA and base property tax rate were estimated at $300 per month, and 1.25%, setting monthly payments between $4,480 and $5,270 with a 5.5% mortgage interest rate and a 5% down payment. Qualifying income is between $150,000 and $180,000. These proposed base prices are consistent and competitive with the actively selling local attached new home market.

Mo. Incentives ▬ Typical Spending ▬ Estimated Est. ▬ Pymt Impacting ▬ 95.0% 35.0% Subject Property Size Sales Base Closing Options / Lot Closing Closing Mo. Base Addl 5.5% Qualifying Product Details Mix (SF) Bd/Ba Level Pkg Pace Price Costs Upgrades Premiums Price $/SF HOA Tax Taxes Mo.Pmt. Income A GRAN VISTA │ MERITAGE │ │ SAN MARCOS
Product: Townhomes 30 1,125 2/2.5 3 2 4.0 $579,000 -$5,000 $15,000 $3,000 $592,000 $526 $300 1.25% 0.0% $4,485 $153,766 Configuration: Attached 3-Story 45 1,350 3/3 3 2T $625,000 -$5,000 $15,000 $3,000 $638,000 $473 $300 1.25% 0.0% $4,810 $164,915 Lot Dimension: 4-10 Plex 45 1,689 3+OF/3 3 2 $689,000 -$5,000 $15,000 $3,000 $702,000 $416 $300 1.25% 0.0% $5,262 $180,426 Total Units: 120
120 1,421 4.0 $637,500 -$5,000 $15,000 $3,000 $650,500 $458 $300 1.25% 0.0% $4,898 $167,945 Zonda used these values in our assessment of potential price as the proposed land use scenario. Our positioning rational versus the competitive for-sale residential market is explained in the following section.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 17 Competitive For-Sale
Market Analysis
18 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Competitive Project Location Summary
Competitive For-Sale Market Analysis
Zonda considered comparable townhome communities proximate to Gran Vista, located in San Marcos, Vista and Escondido. Silverado, Mission Villas 2, Jade at Sunrise, and Eclipse are all townhome communities while Reflection at Canopy Grove is a detached condo community. Their locations in relation to Gran Vista are shown below.

Jade at
Sunrise
Mission
Villas 2
Reflection
Canopy GroveSilverado
Eclipse

19 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Total Price Positioning vs Competitive Market
Competitive For-Sale Market Analysis
Proposed total pricing is sandwiched in between Mission Villas 2 which is also in the 92069 zip code of North San Marcos, and Eclipse in South Escondido. Reflection at Canopy is a detached condo and therefore higher priced, as is Silverado which is two story. Mission Villas 2 is located closer to the epicenter of the North City, and therefore higher priced than the Subject. Conversely, Jade at Sunrise is located in a challenging area of San Marcos, and therefore represents the lowest end of this attached Submarket. $550,000
$575,000
$600,000
$625,000
$650,000
$675,000
$700,000
$725,000
$750,000
$775,000
$800,000
$825,000
$850,000
1,000 1,250 1,500 1,750 2,000
Estimated Closing Price (000s)
Unit Size
Gran Vista (Townhomes) - Attached 3-Story, 4.0 sls per mo Jade at Sunrise - 3-story Row sq ft, Lennar, 9.1/9.1 sls per mo.

Mission Villas 2 - 3-story BTB sq ft, KB Home, 5.6/8.7 sls per mo.

Reflecton Canopy Grove - 6-pak SFD sq ft, Lennar, 4.7/1.0 sls per mo.

Silverado - 2-Story Row sq ft, KB Home, 4.8/5.3 sls per mo.

Eclipse - 3-story Row sq ft, California West, 6.5/7.7 sls per mo.

20 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Total Price Positioning vs Monthly Payment
Competitive For-Sale Market Analysis
The Subject is appropriately positioned towards the lower end of new home monthly payments within a 2.5-mile radius of the competitive market. The Zonda assumed an HOA fee of roughly $300 at the Subject, along with a total property tax rate of 1.25%, but we have not confirmed this with Meritage Homes. These numbers could be significantly higher, and we took this into consideration in our positioning, which leaves room for an increase in the actuals. $4,250
$4,500
$4,750
$5,000
$5,250
$5,500
$5,750
$6,000
$6,250
1,000 1,250 1,500 1,750 2,000
Estimated Monthly Payment
Unit Size
Gran Vista (Townhomes) - Attached 3-Story, 4.0 sls per mo Jade at Sunrise - 3-story Row sq ft, Lennar, 9.1/9.1 sls per mo.

Mission Villas 2 - 3-story BTB sq ft, KB Home, 5.6/8.7 sls per mo.

Reflecton Canopy Grove - 6-pak SFD sq ft, Lennar, 4.7/1.0 sls per mo.

Silverado - 2-Story Row sq ft, KB Home, 4.8/5.3 sls per mo.

Eclipse - 3-story Row sq ft, California West, 6.5/7.7 sls per mo.

21 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Recommended Sales Pace
Competitive For-Sale Market Analysis
Our elasticity of demand analysis indicates an elastic relationship between price and absorption, with smaller lower priced units selling at a higher pace than more expensive unit sizes. The Zonda projected sales pace recommendations are on the conservative side in today’s market where between 5 and 6 units per month is the new norm. Absorption of 4 homes per month accounts for future market fluctuation.

Source: Zonda, Independent Sales Offices

0.0 1.0

2.0 3.0

4.0 5.0

6.0 7.0

8.0 9.0

10.0 $600,000 $620,000 $640,000 $660,000 $680,000 $700,000 $720,000 $740,000 $760,000 $780,000 $800,000 Sales Pace
Estimated Closing Price (000s)
Estimated Sales Pace - Subject CMA - Overall Sales Pace CMA - L3M Sales Pace

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 22 Competitive For-Sale Market Detail
Competitive For-Sale Market Analysis
▬ Incentives ▬ ▬ Typical Spending ▬ Estimated Est. ▬ Pymt Impacting ▬ 95.0% 35.0% Project Size Base Price Options/ Options / Lot Closing Closing Closing $/ Mo. Base Addl 5.5% Qualifying Project Detail (SF) Bd/Ba Level Pkg Price Reduction Upgrades Upgrades Premiums Price $/SF Incentive HOA Tax Taxes Mo.Pmt. Income 1 Jade at Sunrise │ Lennar │ San Marcos │ Townhomes - 3-story Row │ Expected Sell-Out By 02/23 at 9.08 per mo.

Total Units/Remaining: 92 / 67 1,231 2/2.5 3 2 $555,900 $0 $0 $16,677 $2,780 $575,357 $467 $0 $356 1.2% 0.4% $4,532 $155,368 Contracts: 25 1,501 3/3 3 2 $606,900 $0 $0 $18,207 $3,035 $628,142 $418 $0 $356 1.2% 0.3% $4,899 $167,968 Sales Pace Overall: 9.1 1,858 3/3.5 3 2 $649,900 $0 $0 $19,497 $3,250 $672,647 $362 $0 $356 1.2% 0.3% $5,209 $178,592 Sales Pace L3M: 9.1 1,911 4/3.5 - - $674,900 $0 $0 $20,247 $3,375 $698,522 $366 $0 $356 1.2% 0.3% $5,389 $184,769 1,687 $632,500 $0 $0 $18,975 $3,163 $654,638 $395 $0 $356 1.2% 0.3% $5,084 $174,293 2 Mission Villas 2 │ KB Home │ San Marcos │ Townhomes - 3-story BTB │ Expected Sell-Out By 10/22 at 5.57 per mo.

Total Units/Remaining: 67 / 17 1,105 2/2.5 3 2 $647,990 $0 $0 $19,440 $3,240 $670,670 $607 -$4,000 $337 1.1% 0.1% $5,068 $173,751 Contracts: 50 1,331 3/2.5 3 2 $741,990 $0 $0 $22,260 $3,710 $767,960 $577 -$4,000 $337 1.1% 0.1% $5,742 $196,864 Sales Pace Overall: 5.6 1,685 3/3.5 3 2 $797,990 $0 $0 $23,940 $3,990 $825,920 $490 -$4,000 $337 1.1% 0.1% $6,143 $210,633 Sales Pace L3M: 8.7 - - - - - - - - - - - - - - - - -
1,374 $729,323 $0 $0 $21,880 $3,647 $754,850 $558 -$4,000 $337 1.1% 0.1% $5,651 $193,749 3 Reflecton Canopy Grove │ Lennar │ Escondido │ Detached Condos - 6-pak SFD │ Expected Sell-Out By 07/22 at 4.67 per mo.

Total Units/Remaining: 108 / 4 1,412 3/2.5 2 2 $695,900 $0 $0 $20,877 $3,480 $720,257 $510 -$3,000 $299 1.2% 0.4% $5,529 $189,577 Contracts: 104 1,577 3/2.5 2 2 $709,990 $0 $0 $21,300 $3,550 $734,840 $466 -$3,000 $299 1.2% 0.4% $5,631 $193,054 Sales Pace Overall: 4.7 1,681 3/2.5 2 2 $707,900 $0 $0 $21,237 $3,540 $732,677 $436 -$3,000 $299 1.2% 0.4% $5,616 $192,538 Sales Pace L3M: 1.0 - - - - - - - - - - - - - - - - -
1,557 $704,597 $0 $0 $21,138 $3,523 $729,258 $471 -$3,000 $299 1.2% 0.4% $5,592 $191,723 4 Silverado │ KB Home │ Vista/San Marcos │ Townhomes - 2-Story Row │ Expected Sell-Out By 02/23 at 4.85 per mo.

Total Units/Remaining: 62 / 38 1,679 3/2.5 2 2 $732,060 $0 $0 $21,962 $3,660 $757,682 $451 $0 $300 1.2% 0.0% $5,600 $192,017 Contracts: 24 1,908 3/2.5 2 2 $786,845 $0 $0 $23,605 $3,934 $814,385 $427 $0 $300 1.2% 0.0% $5,997 $205,617 Sales Pace Overall: 4.8 1,918 3/2.5 2 2 $785,320 $0 $0 $23,560 $3,927 $812,806 $424 $0 $300 1.2% 0.0% $5,986 $205,238 Sales Pace L3M: 5.3 - - - - - - - - - - - - - - - - -
1,835 $768,075 $0 $0 $23,042 $3,840 $794,958 $434 $0 $300 1.2% 0.0% $5,861 $200,957 5 Eclipse │ California West │ Escondido │ Townhomes - 3-story Row │ Expected Sell-Out By 04/23 at 6.53 per mo.

Total Units/Remaining: 113 / 61 1,140 2/2.5 3 2 $551,900 $0 $500 $16,557 $2,760 $570,717 $501 -$3,000 $274 1.2% 0.6% $4,542 $155,739 Contracts: 52 1,290 2/2.5 3 2 $582,900 $0 $500 $17,487 $2,915 $602,802 $467 -$3,000 $274 1.2% 0.6% $4,782 $163,966 Sales Pace Overall: 6.5 1,534 4/3.5 3 2 $647,900 $0 $500 $19,437 $3,240 $670,077 $437 -$3,000 $274 1.2% 0.6% $5,285 $181,217 Sales Pace L3M: 7.7 1,568 3/2.5 3 2 $634,900 $0 $500 $19,047 $3,175 $656,622 $419 -$3,000 $274 1.2% 0.6% $5,185 $177,767 1,383 $604,400 $0 $500 $18,132 $3,022 $625,054 $456 -$3,000 $274 1.2% 0.6% $4,949 $169,672 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 23 Silverado – KB Home, San Marcos/Vista 92078
2-story row-town
Jade at Sunrise – Lennar, San Marcos 92078
3-story row-town
For-Sale Attached Competitors Located in San Marcos (92069, 92078) Competitive For-Sale Market Analysis
Mission Villas 2 – KB Home, San Marcos 92069
3-story B2B towns
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 24 Reflection Canopy Grove – Lennar, Escondido 92026
6-pack single-family detached condos
Eclipse – California West Homes, Escondido 92025
3-story row-town
For-Sale Competitors Located in Escondido (92025, 92026) Competitive For-Sale Market Analysis
The five afore-mentioned for-sale competitive communities were used to establish a potential value for the proposed land use as townhomes. The following section details the competitive trade market area used to establish value as the original land use designation.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 25 Commercial Price Assessment
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 26 Grocery store and shopping center sales in San Diego fetch between $405 and $541 per square foot. Zonda used the sole comparable located in San Marcos, priced at $405 per square foot, in our assessment of possible land value for the original grocery store use component. We used the blended average cap rate of roughly 5.02%.

Original Use: Grocery Store Sale
Commercial Price Assessment
Property Name
No. Address Acres Status Total SF Sale Date Year Built Cap Rate Leasable SF Sale Price Price/ SF Price/Acre NOI 1 Gelson's Market @ La Costa Plaza 6.4 Sale 50,529 4/3/2018 2003 3.70% 50,529 $21,900,000 $433 $3,421,875 $810,300 7660 El Camino Real
Carlsbad, CA
2 Walgreens 1.64 Listing 14,380 2007 4.75% 14,380 $7,785,000 $541 $4,746,951 $369,788 3507 Cannon Rd
Oceanside, CA
3 Shopping Center 0.87 Sale 13,022 1/24/2022 2004 13,022 $5,276,500 $405 $6,064,943 711 Center Dr
San Marcos, CA
4 Oceanside Town & Country 4.82 Listing 43,321 1992 6.60% 43,321 $19,800,000 $457 $4,107,888 $1,306,800 3925 Mission Ave
Oceanside, CA
Min: 13,022 43193 1992 3.70% 13,022 $5,276,500 $405 $3,421,875 Max: 50,529 44585 2007 6.60% 50,529 $21,900,000 $541 $6,064,943 Median 28,851 43889 2003.5 4.75% 28,851 $13,792,500 $445 $4,427,419 Average: 30,313 43889.00 2002 5.02% 30,313 $13,690,375 $459 $4,585,414 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 27 Original Use: Grocery Store & Gas Station Lease,
Commercial Price Assessment
Zonda only found one grocery store lease in Escondido which is asking $2.00 per square foot per month ($24 per square foot per year).

This was used to help determine the rental price for the grocery store component, though this store is significantly older suggesting a grocery store at the Subject would likely fetch a premium to this, estimated at roughly 25%. Zonda therefore used a lease rate of $2.50 per square foot for the grocery store component.

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 Supermarket Supermarket 2001 6.7 84,184 14,700 82.5% 17.5% $2.00 NNN 1509-1529 E Valley Pkwy
Escondido, CA Total 14,700 82.5% 17.5% $2.00
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 Arco AM/PM only 2,000 2,000 100.0% 0.0% $6.00 NNN
San Diego Total 2,000 0.0% 100% $6.00
Zonda only found one gas station lease for $6.00 per square foot per month ($72 per square foot per year). Zonda therefore estimated a lease rate for brand new gas station space at a premium of 15%, for a total rate of $6.90 per square foot at the Subject.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 28 The weighted average sale price of $1,969 per square foot for neighborhood gas station listings and sales is used as a likely sale price for the gas station component of the original scenario. There were no sales comparables located in San Marcos. Zonda used the median cap rate of 4.54%.

Original Use: Gas Station
Commercial Price Assessment
Property Name
No. Address Acres Status Total SF Sale Date Year Built Cap Rate Leasable SF Sale Price Price/ SF Price/Acre NOI 1 Arco Gas Stn & Store 0.52 Sale 2417 9/20/2021 1986 5.25% 2,417 $6,400,000 $2,648 $12,307,692 $336,000 1990 Oceanside Blvd
Oceanside, CA
2 Arco AM/PM + Gas Station Sale 2500 2/17/2029 2,500 $4,600,000 $1,840 Hesperia
3 76/Circle K 0.96 Sale 4084 7/30/2021 2004 6.60% 4,084 $9,600,000 $2,351 $10,000,143 $633,600 7602 El Camino Real
Carlsbad, CA
4 Arco AM/PM only 0.67 Listing 2500 2012 2,500 $2,695,000 $1,078 $4,022,388 27698 Clinton Keith
Murrieta, CA
5 US Gain Clean Fuel 0.46 1067 2012 3.50% 1,067 $1,335,000 $1,251 $2,902,174 $46,725 1601 E 1st St
Santa Ana, CA
6 7-11 Gas Stn. & Store 0.97 Listing 2836 1995 3.82% 2,836 $7,500,000 $2,645 $7,731,959 $286,500 202 N Mt Vernon Ave
Colton, CA
Min: 1,067 44407 1986 3.50% 1,067 $1,335,000 $1,078 $2,902,174 $286,500 Max: 4,084 47166 2012 6.60% 4,084 $9,600,000 $2,648 $12,307,692 $336,000 Median 2,500 44459 2004 4.54% 2,500 $5,500,000 $2,095 $7,731,959 $311,250 Average: 2,567 45344.00 2002 4.79% 2,567 $5,355,000 $1,969 $7,392,871 $311,250 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 29 Location Analysis
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 30 Current Site Photos
Location Analysis
Current site from intersection
of Las Posas Rd. and Palm
Road/Mission Pointe Ln
CVS southeast of the site on
the northwest corner of Las
Posas Rd. and Mission Rd
Drive thru car wash and gas
station on the northeast corner
of Las Posas Rd. and Mission
Rd.

Vacant site on the
southwest corner
of Las Posas Rd.
and Mission Rd.
31 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos The Subject is a 7.6-acre vacant site located surrounded by high traffic industrial, residential and public institutional zones. Rezoning the site from Commercial (C) to Specific Plan Area (SPA) would be consistent with the surrounding land uses, and the proposed 120 for-sale townhomes are consistent with other recently built communities in North San Marcos such as Caprice & Setina by D.R. Horton and Mission Villas by KB Home.

Source: City of San Marcos – Creek District Specific Plan Aerial Location Map
Location Analysis
Marc San Marcos
Apartments
Palomar Station
Apartments
Santa Fe Hills
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 32 Employees by Zip Code Drive Time Map
Location Analysis
Collectively there are 35,599 employees in the two San Marcos zip codes, with 17,043 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

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 33 Local Resident Commute Patterns
Location Analysis
The City of San Marcos accounts for almost 13% of employment for local residents, underscoring the viability of a for-sale community along one of the busiest thoroughfares in the City. 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 (46%) of local residents travel less than 10 miles to work, with an 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.

34 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos General Location:
• The Subject is ideally located for a for-sale development owing to the close proximity of supporting commercial uses in the immediate area.
• The Subject is located behind a CVS on the high visibility northwest corner of N Las Posas Rd. and W Mission Rd. The ingress & egress point will be along along N Las Posas Rd. going south and W Mission Rd. going west. • The site is proximate to the Palomar College Breeze Bus stops which provides access west to Oceanside and east to Escondido.

Existing Site Conditions and Zoning:

The Subject parcel is currently vacant disturbed vegetation with Commercial (C) zoning. The site is located less than one mile northeast of State Route 78 (SR 78) which will feed customers toward the site. • Existing Improvements:
– Concrete sidewalk runs along N Las Posas Rd.
– Bike lane runs along both N Las Posas Rd and W Mission Rd. – Train tracks run along the south side of W Mission Rd. – The median along N Las Posas Rd will prevent northbound traffic from being able to turn into the site. – There is a new CVS directly south of the site on the northwest corner of N Las Posas Rd and W Misison Rd. – There is a gas station, food mart, and drive thru car wash on the northeast corner of Las Posas Rd. and Mission Rd. – There is a planned gas station, food mart, and drive thru car wash on the southwest corner of Las Posas Rd. and Mission Rd. • Topography: The site slopes slightly from the north edge down to the south edge, as it is in line with the street which is also at a slight slope. The site is otherwise relatively flat, with only existing disturbed vegetation Source: City of San Marcos
Current Site Conditions
Location Analysis
35 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Power Inn Apartments│ Virtua Opportunity Zone Fund I, LLC │ 35 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 less than
one mile east 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.
36 Meritage Gran Vista SP21-0003 – 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 less than one mile to the west along Mission Road.

Source: North County Transit District
Sprinter Transit Map
Location Analysis
37 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Subject Close-Up

1.5-mile
Source: ESRI
The high surface street traffic counts in the City of San Marcos on W Mission Rd. and N Posas Rd. will positively impact the success of the site as both a retail center or for-sale condos. The average daily traffic count along W. Mission Rd. in a 1.5-mile radius ranges from 14,000 to 30,000, which is very high, and conducive to the proposed site plans. Once the University District and Creek District Specific Plans come to fruition, it will likely help increase traffic counts throughout San Marcos.

Average Daily Traffic Count
Location Analysis

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 38 Land Use & Zoning Analysis
39 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 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 the proposed rezone for the Subject is to Specific Plan Area (SPA).

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

40 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos The applicant is seeking a General Plan
Amendment and a Rezone for the site
which currently falls under the
Commercial (C) land use. Under the
Commercial land use the Subject 7.6-acre
property at northwest corner of W. Mission
Rd. and N. Las Posas Rd. could support
potential development of 66,000 sf of retail
grocery store space, 3,000 sf of gas station
space, and 23,000 sf of office space.

Rezoning the land to Specific Plan Area
(SPA) would support the proposed 120-unit
condo development.

Land Use Map Detail & Alternative Plan
Location, Land Use & Zoning Analysis
Source: City of San Marcos
41 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: City of San Marcos
According to the zoning maps from the City of San Marcos, the Subject is zoned for Commercial (C). Under the current zoning, site can be used as the following: recreation, education, and public assembly space; retail; office, professional, and business support space; service uses; commercial bakery; recycling facilities; transportation, communication, and utility space.

Zoning Map Detail
Location, Land Use & Zoning Analysis

42 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: City of San Marcos Zoning Ordinance
Permitted C Zone Uses
Land Use Sub Uses
Residential
N/A
Recreation. Educational, Public Assembly
Restaurant - Sit Down
Take Out
Drive-thru
Catering and Bakery
Bar/Club
Recreation Facility
Lodging/Hotel
Office, Professional, Business Support Services
Banking and Finance
Office
Medical Offices and Facilities
Internet Services
Government
Utilities
Transport
Service Uses
Services
Food Market
Merchandise Sales
Parking
Communication and Internet Sales
Permitted Uses Under the “SPA” and “C” 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. For the particular Subject parcel, the desired change for the land use is to 120 residential for-sale condos. Below are the development standards for multifamily residential properties and permitted land uses for Commercial zones.

43 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Given the proposed land development plan for 120 condominiums, the site would fall under the medium-density multifamily land uses. R-3-6 refers to high-density multifamily attached homes at a density of 20 to 30 du/ac while R-3-10 refers to medium-density multifamily at a density of 12.1 to 20 du/ac. The site is 7.6 acres resulting in 15.8 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

44 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: City of San Marcos
Residential Land Uses
Location, Land Use & Zoning Analysis

45 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 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

46 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: City of San Marcos
Permitted Commercial Land Uses
Location, Land Use & Zoning Analysis

47 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Title Rate
COUNTY-PROPOSITION 13 1.00000
PALOMAR HEALTH 2005A - DEBT SERVICE 0.02100
UNIF BOND SAN MARCOS SFID #1-6/04/96, 2004-1 REF 0.01223 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010A 0.00761 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010B 0.00189 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010C 0.01305 UNIF BOND SAN MARCOS-PROP K 11/02/2010, 2017 REF 0.01325 UNIF BOND SAN MARCOS-PROP K 11/02/2010, SER 2010D 0.01842 PALOMAR COMMUNITY COLL PROP M 11/07/06, SER 2006B 0.00371 PALOMAR COMMUNITY COLL PROP M 11/07/06, 2015 REF 0.00642 PALOMAR COMMUNITY COLL PROP M 11/07/06, SER 2006C 0.00712 PALOMAR COMMUNITY COLL PROP M 11/07/06, SER 2017D 0.00365 PALOMAR COMMUNITY COLL PROP M 11/07/06, 2017 REF 0.00000 MWD D/S REMAINDER OF SDCWA 15019999 0.00350
Total Tax Rate: 1.11185
Source: SanGIS, http://www2.sdcounty.ca.gov/pts/trasearch.asp The Subject parcel is assigned to the tax rate area (TRA) 13115. An analysis of the base tax rate and additional tax obligations brings the total tax rate to 1.11185%. 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
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 48 Commercial Retail &
Office Market Overview
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 49 Retail Demand Notably Picks Up
Net absorption in Q1 2022 was 195,946 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 $2.18 per square foot per month with all center types, except power centers, increasing or staying the same over Q4 2021.

San Diego County Commercial Retail Summary
Commercial Retail & Office Market Overview
Source: Voit
We chose exclusively retail as the original commercial land use scenario. However, the original commercial land use designation could also involve office development and we therefore included San Diego commercial office trends on the following pages.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 50 Office Demand Notably Picks Up Year Over Year
Net absorption in Q1 2022 was 130,122 square feet, an increase year and year over year in San Diego County, but a decrease from Q4 2021. This marks the fourth consecutive quarter of growth for office tenants.

Vacancy Above 12%
The vacancy rate in Q1 2022 increased over Q4 2021 but is down 66 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 increased to $3.06 per square foot per month, a 4.8% increase over Q1 2021. This is now the highest average asking rate of all time, partially due to new construction driving prices up and the high inflation environment. This has also led to landlords decreasing concessions.

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

51 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Retail Trends by Product Type
Commercial Retail & Office Market Overview
An uptick in new commercial retail deal activity combined with limited move-outs dropped the availability rate to 4.76% in San Diego and vacancy dropped to 4.83%. The average asking rate climbed to $2.18 NNN as more spaces hit the market, an 8% decrease from last year. Leasing activity remains steady from 4Q 2021 but is up 60% from last year. General retail is the most viable in terms of vacancy.

Shopping
Centers

40.2%
General
Retail

40.1%
Mall

9.7%
Power
Center

8.8%
Specialty
Center

1.2%
Total Inventory
Source: Voit 0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%
$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
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 54,502,504 3,170,879 5.8% 28,346 494,172 61,304 $2.05 General Retail 54,370,590 1,666,444 3.1% 123,484 353,316 129,657 $2.42 Mall 13,082,507 1,037,162 7.9% 7,464 10,394 300,000 $3.25 Power Center 11,856,068 531,806 4.5% 47,418 119,063 4,800 $2.25 Specialty Center 1,631,418 133,258 8.2% (10,766) 2,355 0 $1.41 TOTAL: 135,443,087 6,539,549 4.8% 195,946 979,300 495,761 $2.18 Vacancy
Rate
52 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Retail Inventory
Commercial Retail & Office Market Overview
Retail inventory in San Diego County increased in the second half of 2021 but decreased again in Q1 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 Square Feet (in Millions)
Source: Voit
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 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 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 % 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% 53 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Retail Lease Rates
Commercial Retail & Office Market Overview
Lease rates increase by $0.05 in Q1 2022 after dropping by $0.25 in Q4 2021. 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 Avg. Asking Lease Rate (Monthly $/ SF)
Source: Voit
Retail Lease Rates and Vacancy Rates
Lease Rates
Vacancy Rates
Lease Rates Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Lease Rate ($/ 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 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 % 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% 54 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Vacant Space & Occupancy Rate
Commercial Retail & Office 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 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 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% 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% % 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% 55 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Net Absorption
Commercial Retail & Office 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 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 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 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) % 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% 56 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Retail Space Deliveries
Commercial Retail & Office Market Overview
Retail deliveries dropped slightly in Q1 2022 after steadily climbing between Q2 and Q4 2021. 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 Square Feet
Source: Voit
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 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 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) % Change -64% 297% -46% 6% -9% -13% 226% 29% -11% -64% -63% 1056% -80% 29% 30% -18% 57 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Retail Space Under Construction
Commercial Retail & Office 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.

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 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 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) % Change -9% -4% -36% 71% -20% -11% 6% 86% 45% 5% -17% -2% -25% -8% -3% 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 Square Feet
Source: Voit
Under Construction (Square Feet)
58 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos San Diego County Retail Trends by Submarket
Commercial Retail & Office Market Overview
North County is the second largest retail Submarket in San Diego County with the highest vacancy rate of 6.4%, relatively low asking lease rate averaging $1.85, and very robust pipeline of space. The average asking rate fell to $1.85 NNN from $1.87 in Q4 2021. Leasing availability is down to 4.76% from $5.03% in Q1 2021 and 5.9% in Q1 2021 suggesting room for new retail space in the area.

Absorption (SF) Deliveries (SF) Under Avg. Asking Rent
Construction (SF) ($/ SF/ Mo.)
Central South 39,050,666 1,513,660 3.9% 128,180 289,902 329,700 $2.62 East County 19,468,181 800,123 4.1% 13,947 111,793 19,100 $1.79 I-15 Corridor 6,442,441 266,507 4.1% (3,791) 42,785 43,300 $2.55 Central North 17,793,237 1,040,645 5.9% (14,670) 130,122 12,881 $2.66 North County 33,110,789 2,119,322 6.4% 49,183 288,113 48,550 $1.85 South County 19,577,773 799,292 4.1% 23,097 116,585 42,230 $1.92 TOTAL: 135,443,087 6,539,549 4.9% 195,946 979,300 495,761 $2.18 Submarket Total SF Vacant SF Vacancy Rate
Central
South,

28.8%
I-15
Corridor,

4.8%
Central
North,

13.1%
North
County,

24.4%
South
County,

14.5%
Total Inventory
Source: Voit

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Vacancy Rate
Avg. Asking Lease Rate (Monthly $/
SF)
($/ SF/ Mo.)
59 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North County Retail Inventory
Commercial Retail & Office 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 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 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 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 % 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% 60 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North County Retail Lease Rates
Commercial Retail & Office Market Overview
Retail lease rates appear to be steady between $1.70 and $1.90 over the last two years, but this does not reflect the true situation in North County where it is a tenant’s market, and local landlords are still making deep concessions to secure leases. Vacancy rates however, as shown below, have declined for the last three quarters after increasing for over two straight years.

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 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 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) % 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%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%
$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 Vacancy Rate
Avg. Asking Lease Rate (Monthly $/ SF)
Source: Voit
Lease Rates and Vacancy
Lease Rates Vacancy Rates
61 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North County Vacant Space & Occupancy Rate
Commercial Retail & Office Market Overview
Trends for vacancy space and vacancy rates seem to be following the same path with both decreasing over the past three 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 6.4% is a 0.6% decrease year over year and a 0.1% decrease from Q4. There is still a long way to go to reach vacancy rates of less than 5% experienced before the COVID-19 pandemic.

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 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 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 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) % 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% 62 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North County Net Absorption
Commercial Retail & Office Market Overview
Net absorption in the local market has been improving after taking a beating in Q1 2021 and early 2020. The continued development of new retail space in North County is putting downward pressure on lease rates and occupancy levels. However, this data should not impact the success at the Subject.
-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 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 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 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) % 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% 63 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North County Retail Space Gross Absorption
Commercial Retail & Office Market Overview
Gross absorption in North County increased for the second quarter to almost 290,000 square feet. This is now closer 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 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 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 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 % 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% 64 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North County Retail Space Under Construction
Commercial Retail & Office Market Overview
The pipeline for North County is below average with 48,550 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 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 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 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 % 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% Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 65 North County Retail Market Trends
Commercial Retail & Office 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 6.4%. The average asking rate is currently $1.85 per square foot, with the least expensive neighborhood and strip retail centers hardest hit. ALDI’s signing of a lease for 21,687 square feet in October 2021 is still the largest, most recent lease in San Marcos while the overall 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 ($182/SF)
Retail Market Statistics by Type for Subject Submarket (1st Quarter 2022) YTD Net YTD Gross Under Quoted Quoted Rates
Type # Bldgs. Total GLA Direct SF Total SF Vac. % Absorption Absorption Const. SF Rates ($/ SF/ Mo.) General Retail 1,703 11,737,003 458,839 333,415 3.9% 18,115 72,151 8,600 $21.24 $1.77 Mall 26 2,916,678 331,823 37,443 11.4% 0 0 0 $0.00 $0.00 Power Center 111 3,185,088 177,601 202,240 5.6% 9,413 74,226 0 $0.00 $0.00 Shopping Center 973 14,902,187 1,149,846 1,247,531 7.7% 22,498 141,366 39,950 $22.68 $1.89 Specialty Center 5 369,833 1,213 1,213 0.3% (843) 370 0 $0.00 $0.00 Total 2,818 33,110,789 2,119,322 1,821,842 6.4% 49,183 288,113 48,550 $22.20 $1.85 Existing Inventory Vacancy

66 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos North Inland County and San Marcos Commercial Office Trends Commercial Retail & Office Market Overview
North County Inland Office vacancy is trending at roughly 12.6%, with rents at $2.31 per square foot. San Marcos office space is at 6.7% vacancy with rental rates averaging $2.35 per square foot. The original use for the Subject as a mixed-use site entails a mix of retail and office spaces. As such, Zonda researched the office trends for the most recent first 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.

San Diego
Construction
Pipeline
Q1 2022
Inventory
(SF)
Q1 2022
Vacancy (SF)
Q1 2022
Vacancy (%)
Q4 2021
Vacancy (%)
Current Quarter
Absorption
YTD Total
Absorption
Q1 2022 Rental
Rates FSG
Q4 2021 Rental
Rates FSG
Qtr/Qtr
Change (%)
Under
Construction
Quarter-End
Carlsbad 6,922,158 954,091 13.78% 15.38% 110,973 110,973 $2.73 $2.73 0.0% 0 Escondido 1,733,167 192,994 11.14% 12.88% 21,534 21,534 $2.07 $2.07 0.0% 75,000 Oceanside 1,542,681 111,193 7.21% 5.52% (24,765) (24,765) $2.18 $2.17 0.5% 0 San Marcos 1,469,365 98,502 6.70% 8.28% 23,152 23,152 $2.35 $2.24 4.9% 0 Vista 1,265,121 266,931 21.10% 20.60% (6,324) 6,324 $2.21 $2.15 2.8% 0 Total 12,932,492 1,623,711 12.6% 13.8% 124,570 137,218 $2.31 $2.27 1.6% 75,000 Vacancy Net Absorption Avg. Advertised Rates

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 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 Rental Rate by Submarket
Downtown Central I-15 Corridor
North County Coastal North City Southern & Eastern Areas Highway 78 Corridor
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 67 Retail Demand
Outlook
68 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: Meyers Research, ESRI
The daytime population in the 1-mile radius around
the Subject is roughly 1.2x the local resident
population (18,275 vs 15,163). This indicates that
workers are commuting to San Marcos for work and
may be interested in new housing in the area.

Area Statistics Within 1, 3 and 5-Mile Radius
Retail Demand Outlook
Average Household Income $110,856 $123,313 $135,776
$150,000 - $199,999 9.3% 10.8% 12.6%
$200,000+ 11.6% 14.6% 17.4%
$75,000 - $99,999 9.7% 12.2% 12.8%
$100,000 - $149,999 21.1% 20.7% 20.5%
$35,000 - $49,999 11.4% 8.6% 7.8%
$50,000 - $74,999 19.1% 16.3% 14.7%
$15,000 - $24,999 4.1% 5.0% 4.1%
$25,000 - $34,999 6.9% 5.7% 5.0%
Household Income Base 4,543 30,801 71,293
<$15,000 6.8% 6.1% 5.0%
2022 Households by Income
2022 31.5 35.4 37.3
2027 33.1 36.8 38.2
Median Age
2010 29.5 33.7 35.7
2022 $33,297 $40,980 $46,383
2027 $39,175 $49,090 $55,489
2027 $633,229 $702,291 $732,797
Per Capita Income
Median Home Value
2022 $583,999 $639,825 $673,852
2022 $78,602 $90,411 $100,848
2027 $103,538 $109,009 $117,923
Median Household Income
2027 Average Family Size 3.72 3.39 3.35
2022-2027 Annual Rate -0.17% 0.25% 0.22%
2022 Average Family Size 3.72 3.39 3.35
2027 Families 3,417 21,773 51,027
2022 Families 3,447 21,502 50,475
2022-2027 Annual Rate -0.19% 0.23% 0.20%
2027 Households 4,501 31,150 72,013
2027 Average Household Size 3.33 2.91 2.89
2022 Households 4,543 30,801 71,293
2022 Average Household Size 3.33 2.91 2.88
Residents 7,767 48,609 110,108
Household Summary
2022 Total Daytime Population 18,275 97,218 211,342
Workers 10,508 48,609 101,234
2027 Total Population 15,013 93,441 212,018
2022-2027 Annual Rate -0.20% 0.21% 0.22%
2022 Total Population 15,163 92,448 209,736
Population Summary
1 mile 3 miles 5 miles
69 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: Meyers Research, ESRI
The population by age indicates a high percentage (71%+) of people aged 18+, and 44% between the ages of 24 and 54. There is a diverse range of Tapestry Segments within a 1, 3 and 5-mile radius, many of whom would likely be interested in new housing in the area. 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 7,710 45,356 102,620
Females 7,453 47,092 107,116
2022 Population by Sex
85 + 0.7% 2.5% 2.5%
18 + 71.3% 76.1% 76.5%
65 - 74 5.3% 8.2% 9.0%
75 - 84 2.3% 4.6% 5.0%
45 - 54 12.2% 11.4% 11.7%
55 - 64 9.4% 10.4% 11.4%
25 - 34 17.8% 15.7% 14.7%
35 - 44 14.0% 13.5% 13.7%
10 - 14 7.9% 6.7% 6.6%
15 - 24 13.9% 13.4% 12.0%
0 - 4 8.2% 6.7% 6.5%
5 - 9 8.3% 6.9% 6.8%
2022 Population by Age
Total 15,164 92,451 209,737
1 mile 3 miles 5 miles

2. Workday Drive
(4A)
Bright Young
Professionals (8C)
Pleasantville (2B)

3. NeWest Residents
(13C)
NeWest Residents
(13C)
Bright Young
Professionals (8C)
Top 3 Tapestry Segments

1. Diverse
Convergence
Boomburbs (1C) Boomburbs (1C)
70 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos Source: Meyers Research, ESRI
The area within a 1-mile radius of the site has an above average Spending Potential Index (SPI) across most retail sectors, as do the 3- mile and 5-mile areas, indicating strong retail demand. The Health Care category has SPI ranging from 93 within a 1-mile radius up to 123 Area Consumer Spending Patterns
Retail Demand Outlook
(1.23 times the national average) at the 5-mile radius.

Spending Potential Index 100 115 124
Vehicle Maintenance & Repairs: Total $ $5,721,482 $44,673,447 $111,545,362 Average Spent $1,259.41 $1,450.39 $1,564.60
Average Spent $2,996.36 $3,386.89 $3,783.02
Spending Potential Index 104 118 132
Spending Potential Index 95 115 128
Travel: Total $ $13,612,466 $104,319,733 $269,703,095
Support Payments/Cash Contributions/Gifts $11,692,728 $96,429,512 $247,151,928 Average Spent $2,573.79 $3,130.73 $3,466.71
Average Spent $26,066.05 $27,900.48 $30,414.45
Spending Potential Index 114 122 133
Spending Potential Index 104 119 129
Shelter: Total $ $118,418,066 $859,362,575 #########
Personal Care Products & Services: Total $ $4,814,749 $37,309,498 $94,102,616 Average Spent $1,059.82 $1,211.31 $1,319.94
Average Spent $2,621.44 $2,984.42 $3,284.05
Spending Potential Index 102 116 128
Spending Potential Index 93 112 123
HH Furnishings & Equipment: Total $ $11,909,201 $91,923,014 $234,129,928 Health Care: Total $ $30,072,699 $245,009,372 $620,680,016 Average Spent $6,619.57 $7,954.59 $8,706.04
Average Spent $4,828.40 $5,200.66 $5,597.83
Spending Potential Index 112 121 130
Spending Potential Index 107 118 127
Food Away from Home: Total $ $21,935,426 $160,185,416 $399,085,759 Food at Home: Total $ $30,010,214 $224,574,557 $560,286,712 Average Spent $6,605.81 $7,291.14 $7,858.93
Average Spent $3,684.34 $4,190.73 $4,609.91
Spending Potential Index 100 114 126
Spending Potential Index 107 118 133
Entertainment/Recreation: Total $ $16,737,968 $129,078,759 $328,654,589 Education: Total $ $9,576,793 $71,067,569 $186,371,205 Average Spent $2,108.03 $2,307.31 $2,614.16
Average Spent $2,637.36 $2,873.88 $3,105.42
Spending Potential Index 109 119 129
2022 Consumer Spending
Apparel & Services: Total $ $11,981,518 $88,518,376 $221,394,665 1 mile 3 miles 5 miles
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 71 2017 Leakage/Surplus Factor by Industry Subsector2017 Leakage/Surplus Factor by Industry Subsector Food Services & Drinking Places
Nonstore Retailers
Miscellaneous Store Retailers
General Merchandise Stores
Sporting Goods, Hobby, Book, and Music Stores
Clothing and Clothing Accessories Stores
Gasoline Stations
Health & Personal Care Stores
Food & Beverage Stores
Bldg Materials, Garden Equip. & Supply Stores
Electronics & Appliance Stores
Furniture & Home Furnishings Stores
Motor Vehicle & Parts Dealers
Leakage/Surplus Factor
20100-10-20-30-40-50-60
Retail Leakage and Surplus in the CMA
Retail Demand Outlook
While the immediate 1-mile radius has negative (less than ideal) demand versus retail supply the 3- and 5-mile areas generally show positive demand. 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 as in the Subject block group) 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.

Positive
Neutral
Negative
3-Mile Radius
A summary of the leakage and
surplus by industry Subsector is
shown at right for the 3-mile
radius. Undersupplied sectors
include:
• Motor Vehicle and Auto Parts
• Health & Personal Care
• Clothing and Accessories
• Nonstore Retailers
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 72 3-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
The 3-Mile Radius from the
Subject is a feasible area in
which to measure supply and
demand. As seen on the
previous page, industry
Subsectors are given a positive
or negative measure of supply
versus demand. The five sectors
with the most leakage (demand
exceeds supply) are highlighted.
-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
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 73 1-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
The 1-Mile Radius from the
Subject is considered too
restricted of an area in which to
measure supply and demand.
-68.4 68Restaurants/Other Eating Places 7225 $10,734,796 $57,207,302 -$46,472,506 100.0 0Drinking Places - Alcoholic Beverages 7224 $235,230 $0 $235,230 -29.1 2Special Food Services 7223 $223,371 $406,395 -$183,024 -67.5 71Food Services & Drinking Places 722 $11,193,398 $57,613,697 -$46,420,299

48.3 1Direct Selling Establishments 4543 $283,044 $98,612 $184,432 100.0 0Vending Machine Operators 4542 $46,126 $0 $46,126

65.9 1Electronic Shopping & Mail-Order Houses 4541 $2,602,052 $535,688 $2,066,364

64.4 1Nonstore Retailers 454 $2,931,222 $634,301 $2,296,921 -78.3 17Other Miscellaneous Store Retailers 4539 $2,240,740 $18,368,408 -$16,127,668 -19.9 2Used Merchandise Stores 4533 $401,786 $601,993 -$200,207 -77.4 6Office Supplies, Stationery & Gift Stores 4532 $870,648 $6,829,375 -$5,958,727 -51.9 3Florists 4531 $159,718 $504,740 -$345,022
-75.5 28Miscellaneous Store Retailers 453 $3,672,893 $26,304,516 -$22,631,623 -18.6 5Other General Merchandise Stores 4529 $6,819,295 $9,935,108 -$3,115,813 -11.1 3Department Stores Excluding Leased 4521 $10,346,153 $12,918,678 -$2,572,525 -14.2 8General Merchandise Stores 452 $17,165,448 $22,853,786 -$5,688,338 -18.2 2Book, Periodical & Music Stores 4512 $444,991 $643,645 -$198,654 -19.4 6Sporting Goods/Hobby/Musical Instr 4511 $2,881,267 $4,264,663 -$1,383,396 -19.2 8Sporting Goods, Hobby, Book & Music 451 $3,326,258 $4,908,308 -$1,582,050

30.0 2Jewelry, Luggage & Leather Goods Stores 4483 $1,182,648 $636,484 $546,164 100.0 0Shoe Stores 4482 $950,431 $0 $950,431
-6.7 7Clothing Stores 4481 $5,361,332 $6,130,574 -$769,242

5.1 9Clothing & Clothing Accessories Stores 448 $7,494,411 $6,767,058 $727,353 -54.0 8Gasoline Stations 447,447 $9,028,402 $30,183,034 -$21,154,632 -12.0 10Health & Personal Care Stores 446,446 $6,767,445 $8,621,241 -$1,853,796 -41.6 3Beer, Wine & Liquor Stores 4453 $1,193,979 $2,895,091 -$1,701,112 -21.8 3Specialty Food Stores 4452 $1,176,126 $1,833,690 -$657,564 -55.4 9Grocery Stores 4451 $14,110,198 $49,125,477 -$35,015,279 -53.1 16Food & Beverage Stores 445 $16,480,304 $53,854,258 -$37,373,954 -80.2 4Lawn & Garden Equip & Supply Stores 4442 $369,461 $3,361,456 -$2,991,995 -70.9 23Bldg Material & Supplies Dealers 4441 $5,495,880 $32,300,186 -$26,804,306 -71.8 27Bldg Materials, Garden Equip. & Supply 444 $5,865,341 $35,661,642 -$29,796,301 -89.4 13Electronics & Appliance Stores 443 $3,771,759 $67,142,146 -$63,370,387 -85.2 7Home Furnishings Stores 4422 $1,803,541 $22,630,401 -$20,826,860 -92.8 23Furniture Stores 4421 $1,957,828 $52,540,405 -$50,582,577 -90.5 30Furniture & Home Furnishings Stores 442 $3,761,369 $75,170,806 -$71,409,437 -66.0 11Auto Parts, Accessories & Tire Stores 4413 $1,806,696 $8,832,651 -$7,025,955 -75.5 4Other Motor Vehicle Dealers 4412 $2,502,191 $17,893,675 -$15,391,484

82.8 2Automobile Dealers 4411 $16,265,218 $1,534,649 $14,730,569 -15.7 17Motor Vehicle & Parts Dealers 441 $20,574,106 $28,260,975 -$7,686,869 Leakage/Surpl
us
Number of
2017 Industry Group (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
-67.5 71Total Food & Drink 722 $11,193,398 $57,613,697 -$46,420,299 -56.3 176Total Retail Trade 44-45 $100,838,957 $360,362,070 -$259,523,113 -57.7 247Total Retail Trade and Food & Drink 44- $112,032,355 $417,975,767 -$305,943,412 Leakage/Surpl
us
Number of
2017 Industry Summary (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 74 5-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
The 5-Mile Radius from the
Subject is considered too broad
of an area in which to measure
supply and demand.

1.4 395Restaurants/Other Eating Places 7225 $278,813,508 $271,245,836 $7,567,672

43.5 8Drinking Places - Alcoholic Beverages 7224 $6,273,393 $2,471,208 $3,802,185

16.8 21Special Food Services 7223 $5,960,511 $4,243,379 $1,717,132

2.3 424Food Services & Drinking Places 722 $291,047,411 $277,960,423 $13,086,988 -22.6 10Direct Selling Establishments 4543 $9,455,943 $14,978,993 -$5,523,050 -82.2 6Vending Machine Operators 4542 $1,178,049 $12,082,122 -$10,904,073

57.5 14Electronic Shopping & Mail-Order Houses 4541 $67,714,620 $18,257,728 $49,456,892

26.7 30Nonstore Retailers 454 $78,348,612 $45,318,843 $33,029,769 -21.5 98Other Miscellaneous Store Retailers 4539 $59,922,915 $92,701,415 -$32,778,500

37.5 14Used Merchandise Stores 4533 $10,528,639 $4,791,304 $5,737,335 -31.3 34Office Supplies, Stationery & Gift Stores 4532 $22,790,981 $43,546,760 -$20,755,779 -47.4 24Florists 4531 $4,932,983 $13,816,783 -$8,883,800 -22.4 170Miscellaneous Store Retailers 453 $98,175,519 $154,856,262 -$56,680,743 -36.8 27Other General Merchandise Stores 4529 $176,059,389 $381,002,385 -$204,942,996

8.7 14Department Stores Excluding Leased 4521 $264,992,201 $222,638,541 $42,353,660 -15.6 41General Merchandise Stores 452 $441,051,589 $603,640,926 -$162,589,337 -11.4 15Book, Periodical & Music Stores 4512 $11,462,605 $14,405,120 -$2,942,515 -9.0 88Sporting Goods/Hobby/Musical Instr 4511 $73,207,875 $87,655,661 -$14,447,786 -9.3 103Sporting Goods, Hobby, Book & Music 451 $84,670,479 $102,060,781 -$17,390,302

70.3 14Jewelry, Luggage & Leather Goods Stores 4483 $31,880,008 $5,554,966 $26,325,042 -31.0 13Shoe Stores 4482 $23,779,792 $45,163,979 -$21,384,187

49.9 52Clothing Stores 4481 $136,675,485 $45,632,995 $91,042,490

33.2 78Clothing & Clothing Accessories Stores 448 $192,335,285 $96,351,939 $95,983,346

23.5 37Gasoline Stations 447,447 $230,470,682 $142,877,269 $87,593,413 -15.3 72Health & Personal Care Stores 446,446 $181,829,595 $247,704,627 -$65,875,032

33.1 20Beer, Wine & Liquor Stores 4453 $31,916,615 $16,028,315 $15,888,300

34.0 27Specialty Food Stores 4452 $30,027,151 $14,785,088 $15,242,063 -7.6 64Grocery Stores 4451 $362,761,351 $422,700,789 -$59,939,438 -3.3 111Food & Beverage Stores 445 $424,705,117 $453,514,193 -$28,809,076 -61.5 47Lawn & Garden Equip & Supply Stores 4442 $11,142,567 $46,718,179 -$35,575,612 -39.8 138Bldg Material & Supplies Dealers 4441 $152,331,502 $353,671,229 -$201,339,727 -42.0 185Bldg Materials, Garden Equip. & Supply 444 $163,474,069 $400,389,407 -$236,915,338 -34.7 73Electronics & Appliance Stores 443 $98,455,747 $203,054,947 -$104,599,200 -27.6 53Home Furnishings Stores 4422 $48,097,324 $84,771,667 -$36,674,343 -18.0 39Furniture Stores 4421 $51,805,671 $74,595,836 -$22,790,165 -22.9 92Furniture & Home Furnishings Stores 442 $99,902,996 $159,367,502 -$59,464,506 -8.8 61Auto Parts, Accessories & Tire Stores 4413 $47,542,952 $56,690,227 -$9,147,275 -38.6 35Other Motor Vehicle Dealers 4412 $66,773,916 $150,896,711 -$84,122,795

19.0 36Automobile Dealers 4411 $432,975,098 $294,522,038 $138,453,060

4.3 131Motor Vehicle & Parts Dealers 441 $547,291,966 $502,108,975 $45,182,991 Leakage/Surpl
us
Number of
2017 Industry Group (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap

2.3 424Total Food & Drink 722 $291,047,411 $277,960,423 $13,086,988 -8.2 1,124Total Retail Trade 44-45 $2,640,711,657 $3,111,245,673 -$470,534,016 -7.2 1,548Total Retail Trade and Food & Drink 44- $2,931,759,068 $3,389,206,096 -$457,447,028 Leakage/Surpl
us
Number of
2017 Industry Summary (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 75 Demographic Overview
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 76 20-Minute Drive Time CMA
Demographic Overview
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.

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 77 Median Household Income in the CMA
Demographic Overview
The Subject Zip code 92069 has a median income of $80,000, 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

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 78 Average Net Worth in the CMA
Demographic Overview
Average net worth in the Subject zip code
92069 is a little over $900,000, and is much
lower than neighboring San Marcos zip code
92078 at $1,230,000. 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

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 79 Population, Household Profile and Age
Demographic Overview
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 3.1 people compared with 2.8 for the CMA but smaller than 3.3 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.

Paste Paste
Paste Paste
Source: ESRI

37.3 35.0

33.6 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 (2021)

2.8 3.1

3.3 2.6

2.7 2.8

2.9 3.0

3.1 3.2

3.3 3.4
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Avg. HH. Size (2021)
694,094
96,354 51,550
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 (2021)
241,019
31,193 15,506
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 (2021)
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 80 Income, Net Worth, Occupation & Education
Demographic Overview
The City of San Marcos has slightly higher median income but sightly lower net worth than the greater CMA and a higher median income and net worth than the north San Marcos zip code 92069 which includes Santa Fe Hills and Twin Oaks. The CMA, City of San Marcos, and Zip Code 92069 all have less than 50% educational attainment and less than 65% of residents working in white-collar jobs. The south San Marcos zip code has a much higher proportion of high earning professionals than the north zip code.

Paste Paste
Paste Paste
Source: ESRI
$86K
$87K
$79K
$74,000
$76,000
$78,000
$80,000
$82,000
$84,000
$86,000
$88,000
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 HH. Income (2021)
$186K $181K
$131K
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Net Worth (2021)

47.3% 47.2%

39.6%

34.0%

36.0%

38.0%

40.0%

42.0%

44.0%

46.0%

48.0%
CMA - 20-Minute Drive Time City of San Marcos Subject Zip Code 92069 Educational Attainment - Bachelor's or Higher (2021)

64.5% 64.6%

56.0%

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 (2021)
White Collar Services Blue Collar
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 81 Demographic Tapestry Profile
Demographic Overview
CMA - 20-Minute Drive Time
Rank Cluster Lifestyle Group Household Type Diversity Index
Own vs.

Rent Preferred Housing Age HH
Size HH Income Net Worth Home Value HH %
1 2B: Pleasantville Upscale Avenues 60 83% Single Family 40.7 3.1 $119,009 $410,262 $903,294 10.4% 2 1E: Exurbanites Affluent Estates Married Couples 34 85% Single Family 48.5 2.7 $135,668 $630,441 $1,014,554 6.9% 3 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 32.3 4.1 $78,495 $148,914 $709,731 5.7% 4 13C: NeWest Residents Next Wave Married Couples w/ Kids 87 17% Multi-Unit Rentals 26.1 3.7 $39,981 $14,331 $357,406 5.5% 5 8C: Bright Young Professional Middle Ground Married Couples 66 43% Single Family; Multi-Units 31.3 2.6 $71,832 $46,511 $492,544 5.5% 6 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 32.4 3.6 $148,195 $454,168 $897,197 5.5% 7 2D: Enterprising Professional Upscale Avenues Married Couples 72 52% Multi-Units; Single Family 33.7 2.7 $108,614 $121,294 $869,763 5.3% 8 13A: International Marketplace Next Wave Married Couples w/ Kids 89 28% High Density Apts; Single Family 31.3 3.3 $57,172 $19,673 $860,872 5.2% 9 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 50.8 2.0 $49,176 $56,673 $446,820 4.6% 10 2A: Urban Chic Upscale Avenues Married Couples 47 66% Single Family 41.2 2.6 $138,067 $355,022 $1,466,201 4.1% Locally Adjusted Characteristics
City of San Marcos
Rank Cluster Lifestyle Group Household Type Diversity Index
Own vs.

Rent Preferred Housing Age HH
Size HH Income Net Worth Home Value HH %
1 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 30.4 3.8 $150,020 $442,224 $858,802 23.3% 2 8C: Bright Young Professional Middle Ground Married Couples 66 43% Single Family; Multi-Units 29.4 2.8 $72,716 $45,288 $471,466 9.9% 3 13C: NeWest Residents Next Wave Married Couples w/ Kids 87 17% Multi-Unit Rentals 24.5 3.9 $40,473 $13,954 $342,110 8.6% 4 4A: Soccer Moms Family Landscapes Married Couples 49 85% Single Family 33.2 3.5 $119,530 $345,305 $630,728 8.1% 5 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 30.3 4.4 $79,462 $144,998 $679,358 6.9% 6 13A: International Marketplace Next Wave Married Couples w/ Kids 89 28% High Density Apts; Single Family 29.4 3.6 $57,876 $19,155 $824,031 6.7% 7 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 38.2 3.4 $120,474 $399,473 $864,637 6.3% 8 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 47.6 2.2 $49,782 $55,183 $427,699 5.4% 9 9D: Senior Escapes Senior Styles Married Couples w/No Kids 43 75% SF; Mobile Homes/Seasonal 48.2 2.6 $50,321 $129,394 $295,669 5.0% 10 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 33.7 3.4 $93,897 $236,335 $483,866 4.7% Locally Adjusted Characteristics
Subject Zip Code 92069
Rank Cluster Lifestyle Group Household Type Diversity Index
Own vs.

Rent Preferred Housing 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 23.6 4.3 $36,733 $10,040 $318,166 14.8% 2 13A: International Marketplace Next Wave Married Couples w/ Kids 89 28% High Density Apts; Single Family 28.2 3.9 $52,528 $13,782 $766,358 13.4% 3 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 29.2 4.2 $136,156 $318,168 $798,694 10.2% 4 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 32.4 3.7 $85,220 $170,036 $450,000 9.5% 5 1D: Savvy Suburbanites Affluent Estates Married Couples 35 91% Single Family 38.7 3.6 $135,176 $470,589 $805,930 9.4% Source: ESRI
Locally Adjusted Characteristics
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 82 CMA Demographic Profile
Demographic Overview
The San Marcos area is characterized by a mix of lower and high income households, ranging from young to old. Top Lifestyle Groups include affluent “Boomburbs,” Young Professional Couples, low income New Wave Married Couples with Kids, Comfortable Families, above average earning Ethnic Families, and Retirees. Lifestyle Groups are shown below in order of income, with Boomburbs as the highest earners ($150,000+) and NeWest Residents as the lowest earners ($40,000).

Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 83 Economic Overview
Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 84 Population Growth – San Diego MSA
Economic Overview
Population growth in the MSA is expected to remain at similar levels to 2021 after experiencing slower than normal growth in 2019 and 2020. Positive population growth bodes well for the development of new residential units and should have a positive effect on the demand for housing in San Marcos.
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 3,367,693 3,381,168 3,390,530 3,397,121 3,403,465 Prior Year Change 37,179 35,433 39,109 31,973 25,239 15,148 12,624 4,469 4,822 12,196 12,346 13,475 9,362 6,591 6,343 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% Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 85 Residential Building Permits – San Diego MSA
Economic Overview
Building permits in the MSA are expected to continue to increase through 2024 and stay above the historical average of +/- 9,513 units through 2025. The area demand for new homes bodes well for the development of 120 new condo units. 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 12,524 13,942 13,455 12,635 11,286 Annual % Change 5.5% 45.9% -16.8% 43.8% 9.2% -3.2% -5.8% -16.5% 15.3% 0.6% 31.4% 11.3% -3.5% -6.1% -10.7% SFD Building Permits 2,197 2,565 2,487 3,222 2,351 4,056 3,489 3,019 2,900 3,275 6,010 6,992 6,726 6,357 5,790 Annual % Change -2.1% 16.8% -3.0% 29.6% -27.0% 72.5% -14.0% -13.5% -3.9% 12.9% 83.5% 16.3% -3.8% -5.5% -8.9% MF Building Permits 3,469 5,699 4,388 6,661 8,440 6,385 6,345 5,197 6,572 6,255 6,514 6,950 6,729 6,278 5,496 Annual % Change 11.0% 64.3% -23.0% 51.8% 26.7% -24.3% -0.6% -18.1% 26.5% -4.8% 4.1% 6.7% -3.2% -6.7% -12.5% Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 86 Employment – San Diego MSA
Economic Overview
After 118,000 job losses in the MSA in 2020, unemployment started to recover in 2021 and is forecast to continue to decrease through 2024. 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 1,514,093 1,544,102 1,563,961 1,576,845 1,583,623 Prior Year Change 32,667 33,400 28,733 39,900 37,783 29,675 29,917 20,875 (117,275) 51,792 76,493 30,009 19,859 12,884 6,778 Annual % Change 2.6% 2.6% 2.2% 3.0% 2.7% 2.1% 2.1% 1.4% -7.8% 3.7% 5.3% 2.0% 1.3% 0.8% 0.4% Unemployment Rate 9.3% 7.9% 6.5% 5.2% 4.7% 4.0% 3.4% 3.3% 9.3% 6.3% 4.1% 3.1% 3.0% 3.2% 3.4% Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 87 Employment by Sector – San Diego MSA
Economic Overview
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 almost 30,000 added jobs since May 2021, followed by Professional & Business Services, and Education & Health Services. Though still positive, Financial Activities, Information, and Manufacturing all saw less than 1,000 jobs added since May 2021. 149 216
16,032
1,684
7,534 6,873
29,541
934
5,206
7,232
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 (May-2022) 75,628 22,408 280,121 85,048 222,810 243,574 189,553 114,948 52,206 223,338 Current Month (May-2021) 75,479 22,192 264,089 83,363 215,275 236,701 160,012 114,014 47,000 216,107 12-Month Change 149 216 16,032 1,684 7,534 6,873 29,541 934 5,206 7,232 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 88 E/P Ratio – San Diego MSA
Economic Overview
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 6.1

2.2 1.5

1.0 0.6
-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 1,514,093 1,544,102 1,563,961 1,576,845 1,583,623 Prior Year Change 32,667 33,400 28,733 39,900 37,783 29,675 29,917 20,875 (117,275) 51,792 76,493 30,009 19,859 12,884 6,778 Building Permits 5,666 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,472 9,530 12,524 13,942 13,455 12,635 11,286 Employment/Housing 5.8 4.0 4.2 4.0 3.5 2.8 3.0 2.5 -12.4 5.4 6.1 2.2 1.5 1.0 0.6 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 89 Affordability Index – San Diego MSA
Economic Overview
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 could drop to its lowest point in 15 years in 2022. 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 66 63 60 58 57
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 66.3 63.2 59.9 58.0 56.8 Meritage Gran Vista SP21-0003 – DTA and City of San Marcos 90 Appendix
Thank you!
Zonda
435 S. Cedros Ave, Suite 304
Solana Beach, CA 92075
(858) 381-4381