San Marcos City Council
March 26, 2024

ATTACHMENT G

FISCAL & ECONOMIC IMPACT ANALYSIS

($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
$200,000 $155,667
($92,858)
$62,809
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact
($250,000)
($200,000)
($150,000)
($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$206,155
($204,938)
$1,217
Total Recurring General Fund
Revenues
Total Recurring General Fund
Expenditures
Net Fiscal Impact

PROJECT SUMMARY

CITY OF SAN MARCOS

CAPALINA APARTMENTS

FISCAL IMPACT SUMMARY

FISCAL IMPACT ANALYSIS

CITY BUDGET SUMMARY

DEMOGRAPHICS

CASE STUDY REVENUES

CASE STUDY EXPENDITURES

MULTIPLIER REVENUES

MULTIPLIER EXPENDITURES

RECURRING GENERAL FUND REVENUES1 AMOUNT % OF TOTAL AMOUNT % OF TOTAL SECURED PROPERTY TAX $87,027 55.9% $88,907 43.1%
UNSECURED PROPERTY TAX $4,351 2.8% $2,486 1.2%
PROPERTY TRANSFER TAX $790 0.5% $3,178 1.5%
PROPERTY TAX IN-LIEU OF VEHICLE LICENSE FEE $18,049 11.6% $37,703 18.3% DIRECT AND INDIRECT SALES TAX $27,983 18.0% $17,325 8.4% FRANCHISE FEES $4,945 3.2% $10,913 5.3%
LICENSES AND PERMITS $1,601 1.0% $3,534 1.7%
FINES AND FORFEITURES $342 0.2% $754 0.4%
CFD REVENUE $10,579 6.8% $41,356 20.1%
TOTAL RECURRING GENERAL FUND REVENUES $155,667 100.0% $206,155 100.0% RECURRING GENERAL FUND EXPENDITURES2 AMOUNT % OF TOTAL AMOUNT % OF TOTAL PUBLIC WORKS $13,163 14.175% $29,051 14.176%
DEVELOPMENT SERVICES $8,378 9.022% $18,490 9.022%
PUBLIC SAFETY $44,783 48.227% $98,836 48.227%
PARKS AND RECREATION $2,176 2.343% $4,803 2.344%
OTHER FINANCING USES $147 0.158% $325 0.159%
GENERAL GOVERNMENT $24,211 26.073% $53,433 26.073%
TOTAL RECURRING GENERAL FUND EXPENDITURES $92,858 100.0% $204,938 100.0% NET FISCAL IMPACT 3
TOTAL ANNUAL RECURRING GENERAL FUND SURPLUS/(DEFICIT) 3

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. 3 Assumes both residential and non-residential development is at full capacity. *All figures subject to rounding

APPROVED PLAN PROPOSED PLAN
$62,809

1.68 $1,217

1.01 APPROVED PLAN PROPOSED PLAN
EXHIBIT 1

CITY OF SAN MARCOS

FISCAL IMPACT SUMMARY

APPROVED PLAN PROPOSED PLAN

CAPALINA APARTMENTS

TOTAL GROSS ACRES BUILDING BUILDING ESTIMATED TOTAL BUILDING BUILDING ESTIMATED ESTIMATED TOTAL BUILDING BUILDING ESTIMATED TOTAL BUILDING BUILDING ESTIMATED ESTIMATED TOTAL

SPACE SPACE VALUE ESTIMATED SPACE SPACE VALUE AVERAGE ESTIMATED SPACE SPACE VALUE ESTIMATED SPACE SPACE VALUE AVERAGE ESTIMATED LAND USE TYPE ACRES1 SF1 BSF VALUE2 ACRES1 UNITS1 SF1 BSF VALUATION 2,3 VALUE2 ACRES1 SF1 BSF VALUE2 ACRES1 UNITS1 SF1 BSF VALUATION2,3 VALUE2 GRAND TOTAL 2.51 2.30 100,000 $287 $28,720,000 0.00 0 0 $0 $0 $0 0.04 1,600 $374 $597,750 2.36 119 102,860 $559 $497,689 $57,485,000 NON-RESIDENTIAL 2.30 100,000 $28,720,000
GROUND FLOOR RETAIL 0.23 10,000 $397 $3,970,000
COMMERCIAL OFFICE + PARKING2.07 90,000 $275 $24,750,000

RESIDENTIAL
NON-RESIDENTIAL 0.04 1,600 $597,750
GROWN FLOOR OFFICE COWORK 0.02 950 $400 $380,000
LEASING OFFICE 0.01 650 $335 $217,750
RESIDENTIAL 2.36 119 102,860 $57,485,000
APARTMENTS 2.26 113 98,370 $580 $505,000 $51,005,000
APARTMENTS AFFORDABLE 0.10 6 4,490 $481 $360,000 $6,480,000 NOTES
1 Source: City of San Marcos.
2 Source: Zonda Research
3 "Estimated average sale price" refers to the Estimated closing price per Zonda assumptions. 4 Source: Zonda Research, "Capalina Apartments 2023".
* Totals may not sum due to rounding
EXHIBIT 2

CITY OF SAN MARCOS

PROJECT SUMMARY

CAPALINA APARTMENTS

PROPOSED PLANAPPROVED PLAN

POPULATION, HOUSEHOLDS, AND EMPLOYMENT (2023)
POPULATION1 94,530 94,530
EMPLOYMENT2 41,800 41,800
TOTAL PERSONS SERVED3 115,430 115,430
HOUSEHOLDS 1 19,713 19,713
MFR AVERAGE HOUSEHOLD SIZE1 2.46 2.46
NOTES
1 California Department of Finance, Housing and Population Information, January 1, 2023. 2 Source: Calif. Employment Development Dept. January 2023 EXHIBIT 3

CITY OF SAN MARCOS

CAPALINA APARTMENTS

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

SF PERSONS SF PERSONS

PER DIRECT PERSONS PER DIRECT PERSONS PER DIRECT PERSONS PER DIRECT PERSONS LAND USE TYPE BSF EMPLOYEE2 EMPLOYEES SERVED BSF UNITS HOUSEHOLD1RESIDENTS EMPLOYEES SERVED BSF EMPLOYEE2 EMPLOYEES SERVED BSF UNITS HOUSEHOLD1 RESIDENTS EMPLOYEES SERVED GRAND TOTAL 100,000 267 134 0 0 0 0 0 0 1,600 694 5 3 102,860 119 2.46 293 0 293 NON-RESIDENTIAL 100,000 267 134
GROUND FLOOR RETAIL 10,000 1,221 8 4
COMMERCIAL OFFICE + PARKING 90,000 347 259 130

RESIDENTIAL 0 0 0 0 0 0
NON-RESIDENTIAL 1,600 5 3
GROWN FLOOR OFFICE COWORK 950 347 3 2
LEASING OFFICE 650 347 2 1
RESIDENTIAL 102,860 119 293 0 293
APARTMENTS 98,370 113 2.46 278 0 278
APARTMENTS AFFORDABLE 4,490 6 2.46 15 0 15
NOTES
1 Source: Zonda Research.
2 Source: Commercial Buildings Energy Consumption Survey (CBECS), 2018. *All figures subject to rounding
EXHIBIT 4

CITY OF SAN MARCOS

CAPALINA APARTMENTS

PROJECT DEMOGRAPHICS

APPROVED PLAN PROPOSED PLAN

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN

ALL PROPERTY TAXES
SECURED PROPERTY TAXES $87,027 $88,907
UNSECURED PROPERTY TAXES $4,351 $2,486
PROPERTY TRANSFER TAXES $790 $3,178
PROPERTY TAX IN-LIEU OF VLF $18,049 $37,703
GRAND TOTAL ALL PROPERTY TAXES $110,217 $132,273

RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $43,514 $88,001
UNSECURED PROPERTY TAXES $0 $2,395
PROPERTY TRANSFER TAXES $0 $3,162
PROPERTY TAX IN-LIEU OF VLF $0 $37,321
TOTAL RESIDENTIAL PROPERTY TAXES $43,514 $130,879

NON-RESIDENTIAL PROPERTY TAXES
SECURED PROPERTY TAXES $43,514 $906
UNSECURED PROPERTY TAXES $4,351 $91
PROPERTY TRANSFER TAXES $790 $16
PROPERTY TAX IN-LIEU OF VLF $18,049 $382
TOTAL NON-RESIDENTIAL PROPERTY TAXES $66,704 $1,395

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN

GRAND TOTAL
ESTIMATED BUILDOUT VALUE $28,720,000 $58,082,750
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $28,720,000 $58,082,750
ESTIMATED SECURED PROPERTY TAXES $43,514 $88,001

RESIDENTIAL
ESTIMATED BUILDOUT VALUE $0 $57,485,000
ESTIMATED EXEMPTIONS $0 $0
HOMEOWNER'S EXEMPTION (ANNUALLY) 1 $7,000
PERCENT OF SALE UNITS TAKING HOMEOWNER'S EXEMPTION1 0%
ESTIMATED ASSESSED VALUE $0 $57,485,000
ESTIMATED SECURED PROPERTY TAXES $0 $87,095

NON-RESIDENTIAL
ESTIMATED BUILDOUT VALUE $28,720,000 $597,750
ESTIMATED EXEMPTIONS $0 $0
ESTIMATED ASSESSED VALUE $28,720,000 $597,750
ESTIMATED SECURED PROPERTY TAXES $43,514 $906

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $4,351 $2,486

RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $0 $2,395
UNSECURED TAXES AS A % OF SECURED 2.75%

NON-RESIDENTIAL
ESTIMATED UNSECURED PROPERTY TAXES $4,351 $91
UNSECURED TAXES AS A % OF SECURED 10.00%

UNSECURED PROPERTY TAX CALCULATION

CAPALINA APARTMENTS

PROPERTY TAX SUMMARY
EXHIBIT 5

CITY OF SAN MARCOS

ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)

SECURED PROPERTY TAX CALCULATION

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $790 $3,178

RESIDENTIAL
ESTIMATED PROPERTY TRANSFER TAXES $0 $3,162
ESTIMATED BUILDOUT VALUE $0 $57,485,000
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 $790 $16
ESTIMATED BUILDOUT VALUE $28,720,000 $597,750
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 $18,049 $37,703

RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $0 $37,321
ESTIMATED BUILDOUT VALUE $0 $57,485,000
ESTIMATED EXISTING ASSESSED VALUE $0 $1,728,532
PROPERTY TAX IN-LIEU OF VLF INCREASE PER $1,000 OF AV $0.67

NON-RESIDENTIAL
ESTIMATED PROPERTY TAX IN-LIEU OF VLF $18,049 $382
ESTIMATED BUILDOUT VALUE $28,720,000 $597,750
ESTIMATED EXISTING ASSESSED VALUE $1,755,420 $26,888
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

CAPALINA APARTMENTS

ESTIMATED PROPERTY TAX REVENUES (CASE STUDY)

PROPERTY TAX ALLOCATION (AS A PORTION OF THE 1% GENERAL PROPERTY TAX LEVY) CITY OF SAN MARCOS3,4 8.832%
FIRE DISTRICT3,4 6.319%
TOTAL 15.150976%
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) 131151. Data provided by the County of San Diego Auditor-Controller's Office. 4 Based on the average of the rates for TRA 13151.
5 Source: California Revenue & Taxation Code §11901, et seq.; San Marcos Municipal Code §3.12.020. *All figures subject to rounding

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

CITY OF SAN MARCOS

CAPALINA APARTMENTS

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. ]

APPROVED PROPOSED

LAND USE TYPE PLAN PLAN
GRAND TOTAL $27,983 $17,325

RESIDENTIAL SALES TAXES

DIRECT SALES TAX NA NA

INDIRECT SALES TAX - TAXABLE RESIDENT PURCHASES
APARTMENTS $0 $16,670
APARTMENTS AFFORDABLE $0 $566
TOTAL RESIDENTIAL SALES TAXES $0 $17,236

NON-RESIDENTIAL SALES TAXES
DIRECT SALES TAX1
GROUND FLOOR RETAIL $24,000 NA
COMMERCIAL OFFICE + PARKING $0 NA
GROWN FLOOR OFFICE COWORK $0 $0
LEASING OFFICE $0 $0
INDIRECT SALES TAX - TAXABLE EMPLOYEE PURCHASES $3,983 $89 TOTAL NON-RESIDENTIAL SALES TAXES $27,983 $89
TAXABLE SALES PER SF1
GROUND FLOOR RETAIL $300.00 $0.00
COMMERCIAL OFFICE + PARKING $0.00 $0.00
GROWN FLOOR OFFICE COWORK $0.00 $0.00
DISPLACED TAXABLE SALES2 20% 20%
1 Based on typical DTA baseline assumptions.
2 Based on typical DTA baseline assumptions.

EXHIBIT 6

CITY OF SAN MARCOS

ESTIMATED SALES TAX REVENUES (CASE STUDY)

DIRECT SALES TAX ASSUMPTIONS

SALES TAX SUMMARY

CAPALINA APARTMENTS

RESIDENTIAL SALES TAX ASSUMPTIONS (RENTAL)
DISPOSABLE INCOME PER HOUSEHOLD 2 $105,100
RETAIL TAXABLE EXPENDITURES (AS A % OF DISPOSABLE INCOME) 28.073%

RESIDENTIAL SALES TAX ASSUMPTIONS (AFFORDABLE HOUSING)
DISPOSABLE INCOME PER HOUSEHOLD 2 $49,650
RETAIL TAXABLE EXPENDITURES (AS A % OF DISPOSABLE INCOME) 37.97343% EMPLOYEES (ANNUAL SPENDING PER EMPLOYEE)2 $5,945
RESIDENTIAL (ANNUAL SPENDING PER HOUSEHOLD) RENTAL $14,752 RESIDENTIAL (ANNUAL SPENDING PER HOUSEHOLD) AFFORDABLE HOUSING $6,969 1 Based on typical DTA baseline assumptions.
2 San Diego Area Median Income (AMI) SD Housing and Community Development Services - Assumes a holdhold of 3 persons. 3 Based on typical DTA baseline assumptions.

RESIDENTIAL / NON-RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS 3 EXHIBIT 6 - CONTINUED

CITY OF SAN MARCOS

CAPALINA APARTMENTS

ESTIMATED SALES TAX REVENUES (CASE STUDY)

RESIDENTIAL INDIRECT SALES TAX ASSUMPTIONS

SALES TAX % TO CITY1 1.00%
CITY RETAIL TAXABLE PURCHASE CAPTURE RATE2 50%
FY 2022-23 AD VALOREM PROPERTY TAX RATE () 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 1.412706%
NOTES
1 Estimate, subject to change.
2 Estimate, subject to change.
* All figures subject to rounding
EXHIBIT 6 - CONTINUED

CITY OF SAN MARCOS

CAPALINA APARTMENTS

ESTIMATED SALES TAX REVENUES (CASE STUDY)

SAMPLE PROPERTY TAX BILL

CITY INDIRECT SALES TAX ASSUMPTIONS

APPROVED PROPOSED

LAND USE TYPE COMMERCIAL OFFICE RESIDENTIAL COMMERCIAL OFFICE RESIDENTIAL PLAN PLAN TOTAL CFD SPECIAL TAXES $10,579 $41,356
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 0 119 $0.00 $21,425
CFD 2001-01 (FIRE) 0 119 $0.00 $19,806
TOTAL RESIDENTIAL CFD SPECIAL TAXES $0 $41,230
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-01 IA 1 0.23 2.07 0.02 0.01 $5,497 $65
CFD 2001-01 (FIRE) 0.23 2.07 0.02 0.01 $5,082 $60
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $10,579 $125

APPROVED PROPOSED

LAND USE TYPE COMMERCIAL OFFICE RESIDENTIAL COMMERCIAL OFFICE RESIDENTIAL PLAN PLAN TOTAL CFD SPECIAL TAXES $39,697 $72,239
RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 0 119 $0.00 $29,464
CFD 98-02 (ZONE F)2, 3 0 119 NA NA
CFD 2011-012, 4 0 119 $0.00 $42,139
TOTAL RESIDENTIAL CFD SPECIAL TAXES $0 $71,603
NON-RESIDENTIAL CFD SPECIAL TAXES1
CFD 98-02 (ZONES A - E)2 0.23 2.07 0.02 0.01 $2,537 $41 CFD 98-02 (ZONE F)2, 3 NA NA
CFD 2011-012, 5 10,000 90,000 950 650 $37,160 $595
TOTAL NON-RESIDENTIAL CFD SPECIAL TAXES $39,697 $635

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

CAPALINA APARTMENTS
FY 2022-23 SPECIAL TAX RATE

CFD SPECIAL TAX RATE ASSUMPTIONS

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

PROPOSED ACRES / SQ FT/ UNITS

PROPOSED ACRES / SQ FT/ UNITS
APPROVED ACRES / SQ. FT.

APPROVED PROPOSED

PLAN PLAN
ESTIMATED RECURRING GENERAL GOVERNMENT OVERHEAD EXPENDITURES1 $24,211 $53,433 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

CAPALINA APARTMENTS

APPROVED PROPOSED

REVENUE CATEGORY PLAN PLAN
FRANCHISE FEES $4,945 $10,913
LICENSES AND PERMITS $1,601 $3,534
FINES AND FORFEITURES $342 $754
TOTAL ESTIMATED MULTIPLIER REVENUES $6,888 $15,201
REVENUE CATEGORY MULTIPLIER1 BASIS

SALES TAX NA CASE STUDY

PROPERTY TAX NA CASE STUDY
FRANCHISE FEES $36.90 PERSONS SERVED
LICENSES AND PERMITS $11.95 PERSONS SERVED
FINES AND FORFEITURES $2.55 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

CAPALINA APARTMENTS

APPROVED PROPOSED

EXPENDITURE CATEGORY PLAN PLAN
PUBLIC WORKS $13,163 $29,051
DEVELOPMENT SERVICES $8,378 $18,490
PUBLIC SAFETY $44,783 $98,836
PARKS AND RECREATION $2,176 $4,803
OTHER FINANCING USES $147 $325
TOTAL MULTIPLIER EXPENDITURES $68,647 $151,505
EXPENDITURE CATEGORY MULTIPLIER1 BASIS
PUBLIC WORKS $98.23 PERSONS SERVED
DEVELOPMENT SERVICES $62.52 PERSONS SERVED
PUBLIC SAFETY $334.20 PERSONS SERVED
PARKS AND RECREATION $16.24 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

CAPALINA APARTMENTS

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% $36.90 LICENSES AND PERMITS $1,379,350 RECURRING PERSONS SERVED 0% $11.95 FINES AND FORFEITURES $293,800 RECURRING PERSONS SERVED 0% $2.55 TOTAL INCLUDED GENERAL FUND REVENUES $62,255,560 $51.40 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

CAPALINA APARTMENTS

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 $1,079,532 RECURRING PERSONS SERVED 0% $98.23 ENGINEERING $0 $0 RECURRING PERSONS SERVED 0% $0.00
STORMWATER PROGRAM MANAGEMENT $0 $0 RECURRING PERSONS SERVED 0% $0.00 TOTAL PUBLIC WORKS $10,259,077 ($1,079,532) RECURRING PERSONS SERVED 0% $9,179,545 PERSONS SERVED 0% $98.23

DEVELOPMENT SERVICES
ADMINISTRATION $1,494,468 ($122,656) RECURRING PERSONS SERVED 0% $11.88 PLANNING $1,484,910 ($121,872) RECURRING PERSONS SERVED 0% $11.81 BUILDING $1,491,629 ($122,423) RECURRING PERSONS SERVED 0% $11.86 ENGINEERING $2,386,017 ($195,829) RECURRING PERSONS SERVED 0% $18.97 WATERSHED PROGRAM MANAGEMENT $923,403 RECURRING PERSONS SERVED 0% $8.00 TOTAL DEVELOPMENT SERVICES $7,780,427 ($728,914)
$7,051,513 PERSONS SERVED 0% $62.52

PUBLIC SAFETY
FIRE DEPARTMENT $20,086,339 ($2,257,584) RECURRING PERSONS SERVED 0% $154.46 LAW ENFORCEMENT $23,374,137 ($2,627,113) RECURRING PERSONS SERVED 0% $179.74 TOTAL PUBLIC SAFETY $43,460,476 ($5,575,806)
$37,884,670 PERSONS SERVED 0% $334.20

PARKS AND RECREATION
COMMUNITY SERVICES $4,135,137 ($2,260,952) RECURRING PERSONS SERVED 0% $16.24 TOTAL PARKS AND RECREATION $4,135,137 ($2,580,842)
$1,554,295 PERSONS SERVED 0% $16.24

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. * Source: FY 2022-23 Budget.
*All figures subject to rounding
EXHIBIT 12

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

CAPALINA APARTMENTS

$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000

$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000

CITY OF SAN MARCOS

CAPALINA APARTMENTS

ECONOMIC IMPACT ANALYSIS - (APPROVED PLAN)

RECURRING JOBS

RECURRING IMPACTS

ONE-TIME JOBS

ONE TIME IMPACTS

JOB HOUSING BALANCE

SUMMARY

EXHIBIT 1A

CAPALINA APARTMENTS

RECURRING EMPLOYMENT - APPROVED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS

LAND USE CATEGORY UNITS
- -
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
Ground Floor Retail 0.82 10,000
Commercial Office / Parking 2.88 90,000
100,000

RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES Ground Floor Retail 8 1 1 10
Commercial Office / Parking 259 62 58 379
-
TOTAL RECURRING EMPLOYMENT 267 63 59 389
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), 2018. 3 Based on multiplying Category SF by Employees/1,000 SF metric.

EXHIBIT 2A

CAPALINA APARTMENTS

RECURRING ECONOMIC IMPACTS - APPROVED PLAN

ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR. - $0 0.00% #VALUE!
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 Ground Floor Retail $67,385 $539,084
Commercial Office / Parking $127,446 $33,008,425

RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT Ground Floor Retail $539,084 $100,305 $145,210 $784,599 Commercial Office / Parking $33,008,425 $7,102,787 $8,970,189 $49,081,401 -
TOTAL RECURRING OUTPUT $33,547,509 $7,203,093 $9,115,398 $49,866,000 NOTES:
1 Source: San Marcos City IMPLAN multipliers.

EXHIBIT 4A

CAPALINA APARTMENTS

ONE-TIME IMPACTS - APPROVED PLAN

ASSUMPTIONS

ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS COST PER SQ. FT. COST PER UNIT - - $175,000
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS IMPROVEMENT VALUE1 CONSTRUCTION COST PER SQ. FT.

Ground Floor Retail $3,374,500 $337
Commercial Office / Parking $21,037,500 $234
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT Ground Floor Retail $3,374,500 $582,522 $751,518 $4,708,541 Commercial Office / Parking $21,037,500 $3,945,276 $4,616,087 $29,598,863 -
TOTAL ONE-TIME OUTPUT $24,412,000 $4,527,798 $5,367,605 $34,307,404 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

EXHIBIT 5A

CAPALINA APARTMENTS

JOBS-HOUSING BALANCE - APPROVED PLAN

ASSUMPTIONS
I. EXISTING DEMOGRAPHICS

CITY OF SAN MARCOS
HOUSING UNITS 1 32,339
EMPLOYEES 2 41,800
II. JOB IMPACTS 3

CITY OF SAN MARCOS
DIRECT IMPACT 267
ADDITIONAL INDIRECT 63
ADDITIONAL INDUCED 59
TOTAL 389
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 32,339 PERCENTAGE INCREASE 0.00%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 42,189 PERCENTAGE INCREASE 0.93%

JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE

CITY OF SAN MARCOS
EXISTING 1.29
EXISTING WITH PROJECT 1.30
PERCENTAGE INCREASE 0.93%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2023). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.

EXHIBIT 6A

CAPALINA APARTMENTS

SUMMARY - APPROVED PLAN

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

Ground Floor Retail 0.82 10,000
Commercial Office / Parking 2.88 90,000

ECONOMIC IMPACTS CONCLUSIONS

RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 267 122 389
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $33,547,509 $16,318,491 $49,866,000

ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 161 66 227
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $24,412,000 $9,895,404 $34,307,404

OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.29256 1.30459 0.93%

EXHIBIT 3A

CAPALINA APARTMENTS

ONE-TIME EMPLOYMENT -APPROVED PLAN

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

Ground Floor Retail 10,000
Commercial Office / Parking 90,000
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES Ground Floor Retail 23 3 6 32
Commercial Office / Parking 138 23 34 195
-
TOTAL ONE-TIME EMPLOYEES 161 26 40 227
NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).

CITY OF SAN MARCOS

CAPALINA APARTMENTS

ECONOMIC IMPACT ANALYSIS - (PROPOSED PLAN)

RECURRING JOBS

RECURRING IMPACTS

ONE-TIME JOBS

ONE TIME IMPACTS

JOB HOUSING BALANCE

SUMMARY
EXHIBIT 1b

CAPALINA APARTNEMTS

RECURRING EMPLOYMENT - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS

LAND USE CATEGORY UNITS
Apartments 113
Apartments Affordable 6
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
Ground Floor Office Cowork 2.88 950
Leasing Office 2.88 650
1,600

RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES Apartments 0 0 0 0
Apartments Affordable 0 0 0 0
Ground Floor Office Cowork 3 1 1 5
Leasing Office 2 0 0 2
TOTAL RECURRING EMPLOYMENT 5 1 1 7
NOTES:
* All figures subject to rounding
1 Source: City of San Marcos.
2 Commercial Buildings Energy Consumption Survey (CBECS), 2018. 3 Based on multiplying Category SF by Employees/1,000 SF metric. 4 Source: San Marcos City IMPLAN multipliers.

EXHIBIT 2b

CAPALINA APARTNEMTS

RECURRING ECONOMIC IMPACTS - PROPOSED PLAN

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

Apartments $105,100 28.07% $1,667,001
Apartments Affordable $49,650 37.97% $56,561
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 Ground Floor Office Cowork $127,446 $382,337
Leasing Office $127,446

RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT Apartments $1,667,001 $363,008 $59,727 $2,089,736
Apartments Affordable $56,561 $12,317 $2,027 $70,905
Ground Floor Office Cowork $382,337 $82,272 $103,902 $568,510 Leasing Office $254,891 $479,104 $450,584 $1,184,579
TOTAL RECURRING OUTPUT $2,360,791 $936,700 $616,239 $3,913,730 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.

EXHIBIT 3b

CAPALINA APARTNEMTS

ONE-TIME EMPLOYMENT - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
Apartments 113
Apartments Affordable 6
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.

Ground Floor Office Cowork 950
Leasing Office 650
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES Apartments 111 41 31 183
Apartments Affordable 6 2 2 10
Ground Floor Office Cowork 2 0 1 3
Leasing Office 1 0 0 2
TOTAL ONE-TIME EMPLOYEES 120 44 33 198
NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).

EXHIBIT 4b

CAPALINA APARTNEMTS

ONE-TIME IMPACTS - PROPOSED PLAN

ASSUMPTIONS

ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS SQ. FT. PER DWELLING UNIT COST PER UNIT Apartments 113 550 to 2706 $175,000
Apartments Affordable 6 550 to 2706 $175,000
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS IMPROVEMENT VALUE1 CONSTRUCTION COST PER SQ. FT.

Ground Floor Office Cowork $323,000 $340
Leasing Office $185,088 $285
III. PUBLIC FACILITIES TOTAL COST

PROJECT INFRASTRUCTURE NA

ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT Apartments $19,775,000 $5,322,167 $4,179,368 $29,276,535 Apartments Affordable $1,050,000 $282,593 $221,913 $1,554,506 Ground Floor Office Cowork $323,000 $60,574 $70,873 $454,447 Leasing Office $185,088 $205,787 $301,112 $691,986
TOTAL ONE-TIME OUTPUT $21,333,088 $5,871,121 $4,773,267 $31,977,475 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

EXHIBIT 5b

CAPALINA APARTNEMTS

JOBS-HOUSING BALANCE - PROPOSED PLAN

ASSUMPTIONS
I. EXISTING DEMOGRAPHICS

CITY OF SAN MARCOS
HOUSING UNITS 1 32,339
EMPLOYEES 2 41,800
II. JOB IMPACTS 3

CITY OF SAN MARCOS
DIRECT IMPACT 5
ADDITIONAL INDIRECT 1
ADDITIONAL INDUCED 1
TOTAL 7
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 32,458 PERCENTAGE INCREASE 0.37%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 41,807 PERCENTAGE INCREASE 0.02%

JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE

CITY OF SAN MARCOS
EXISTING 1.29
EXISTING WITH PROJECT 1.29
PERCENTAGE INCREASE -0.35%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2023). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.

EXHIBIT 6B

CAPALINA APARTNEMTS

SUMMARY - PROPOSED PLAN

ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
Apartments 113
Apartments Affordable 6
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT.

Ground Floor Office Cowork 2.88 950

ECONOMIC IMPACTS CONCLUSIONS

RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 5 2 7
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $2,360,791 $1,552,939 $3,913,730

ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 120 78 198
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $21,333,088 $10,644,387 $31,977,475

OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.293 1.288 -0.35%

Capalina Apartments
San Marcos, California
DTA and City of San Marcos
July 2023

Key Findings 4
Site Plan Analysis 8
Apartment Rent Recommendations 14
Competitive For-Rent Market Analysis 18
Multifamily Market Overview 23
Commercial Price Assessment 28
Commercial Office Market Overview 37
Commercial Retail Market Overview 40
Retail Demand Outlook 48
Location Analysis 56
Land Use & Zoning Analysis 63
Demographic Overview 71
Economic Overview 79
Appendix 86
3 Capalina Apartments – DTA and City of San Marcos
Zonda Advisory has been retained by DTA in conjunction with the City of San Marcos to conduct a comparative analysis from an economic, and market perspective for the approval of a General Plan Amendment (GPA), Rezone (R), and Conditional Use Permit (CUP) to modify the General Plan and Zoning designation of a 2.51-acre site from Mixed-Use-3 (Office/Commercial) to Mixed-Use-2 (Residential/Commercial). The Subject is located on the north side of Capalina Rd, San Marcos, California, 92069, and entails a general plan Amendment (GPA22-0003), Rezone (R22-0003), and Site Development Plan (SDP22-0007). The change is being requested to allow for the construction of a residential/commercial development entailing 119 apartments and 4,000 square feet of commercial space on the subject property. This analysis will include valuation of existing and proposed building types uses and evaluate the current and foreseeable market demand for such uses. Our analysis will include Commercial Retail Office market trends in the San Marcos area and greater San Diego County. These findings will be used to assess the current land use inventory and identify how the proposed amendment will contribute to an increased tax base, economic development, and employment opportunities. Zonda will provide conclusions relevant to the proposed General Plan Amendment land uses based on July 2023 data.

Note: Our research and conclusions are based upon the best information available to us at the time of publication. At the time of this report, the Fed has increased the discount rate. Interest rates are relatively high at above 6%, impacting the market. We recommend consistently monitoring the market for resulting market shifts.

Background/Objectives, Key Contacts & Limiting Conditions

BACKGROUND & OBJECTIVES
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
Capalina Apartments – DTA and City of San Marcos
4 Key Findings
Capalina Apartments – DTA and City of San Marcos
5 Opportunity Summary
Key Findings
As part of our due diligence for the Subject, we compared the existing land use (Mixed Use-3 Commercial and Retail, referred to hereafter as the “Original”) and “Proposed” rezone land use (Residential Multifamily Mixed Use-2) using a S.W.O.T analysis. The main advantage of the rezone over the existing use is that the site can provide new rental product to San Marcos, which has not seen any new Multifamily product built since 2019.

Plan Element SWOT
Internal Factors
Strengths
Original M-U-3 Zoning Site is right-sized for a small Biotech/Life Sciences campus, which is one of the only office sectors still performing well in today's market.

Subject has visibility from the 78 Freeway
Retail is consistent with surrounding uses.

Site access via both Capalina Rd and W Mission Blvd makes retail accessible to patrons, and provides much needed office parking space.

Proposed M-U-2 Zoning Proximity to Grand Plaza nearby retail, services, and food supports apartment tenancy at this location.

Site access via Capalina Rd and W Mission Blvd affords optimum traffic flow for residents entering and leaving the apartment complex.

Comparable apartments in the Submarket have healthy occupancy rates above 94.5%.

Weaknesses
Original M-U-3 Zoning The current plan zoning does not maximize the tax revenue potential of the area.

Office uses are not found in the vicinty, which is geared more towards Light Industrial, Retail and Residential.

Other nearby mixed use commercial spaces are vacant, and are converting to residential Proposed M-U-2 Zoning High density product with higher bedroom count may result in tight floor plans.

External Factors
Opportunities
Original M-U-3 Zoning None identified
Proposed M-U-2 Zoning A reduction in traffic generation from the MU-3 zoning estimated at 4,000 trips per day down to roughly 874 trips per day for the proposed use.

Limited new apartment supply in San Marcos.

The proposed plan maximizes tax revenue potential at the site.

Higher interest rates are driving households to look for affordability and apartments provide housing for those priced out of purchasing The need for more income-restricted housing units in the city of San Marcos is very high Threats
Original M-U-3 Zoning High office vacancy and several unused spaces limit potential revenue.

Medical office sector has slowed over the past twelve months, and seems to be a less attractive investment for commerical developers.

Proposed M-U-2 Zoning There is some general uncertainty in the housing market with rising interest rates inpacting price growth, which in turn is affecting rent growth.

Apartment occupancy has softened slightly, and demand in San Marcos hit a 4-year low in Q2 2022.

Capalina Apartments
Capalina Apartments – DTA and City of San Marcos
6 Original vs Proposed Zoning & Land Use Comparison
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 2.51 acres under two uses:

Original: Mixed-Use-3 (MU-3) for a mix of commercial retail and office space, envisioned as ground floor neighborhood supportive retail with office suites on the ground floor and upper level(s) in a two- or three-story building configuration. Zonda researched complementary specific uses between these two commercial designations, concluding that 10,000 square feet of small-suite service-oriented retail and quick-service restaurant spaces would best support 90,000 square feet of planned office space.

Proposed: A change in Land Use Designation and Rezone to Mixed-Use-2 (MU-2) with Multi-Family Residential Apartments, and a small ground floor Commercial Retail and Office Co-work space. The development of a 119-unit apartment complex and 147 parking spaces would provide roughly 5% (6 units) designated as Very Low-Income affordable units. The apartment will offer full-scale recreational amenities.

The proposed Multifamily development will bring new apartment product to an area that is undersupplied, with low vacancy. Furthermore, Palomar College Station is less than a mile and could attract student renters at the Subject apartments.

Capalina Apartments – DTA and City of San Marcos
7 Proposed and Original Use price Assessment
Key Findings
The Subject site is a 2.51-acre property located on Capalina Road and immediately south of W Mission Blvd, with frontage on both roads, north of Highway 78 in the 92069 zip code of San Marcos. The site is approved for Mixed-Use-3 which allows for a mix of retail and office uses (the “Original” project). The proposed plan is for a 119-unit residential apartment with 147 parking spaces and a small office and retail component (the “Proposed” project). The project includes a General Plan Amendment (GPA) and Rezone (R) to modify the General Plan and Zoning designation of the property (APN 219-115-33-00) to Mixed-Use-2 which allows for the development of residential, in this case in the form of Multifamily. The Original project has an estimated price assessment of roughly $27.87 to $28.72 million. The Proposed project has an estimated price assessment of between $57.47 and $58.125 million. The methodology and supporting market research for our price assessment is included in the sections that follow.

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
Multifamily Market Rate Apts (113) p.u.98,370 98,370 $3.53 $42.36 $4,166,953 -35% ($1,458,434) $2,708,520 -5.0% ($208,348) $2,500,172 4.50% $55,559,376 $565 Multifamily Affordable Apts (6) 4,490 4,490 $1.82 $21.84 $98,062 -35% ($34,322) $63,740 -1.0% ($981) $62,759 4.90% $1,280,805 $285 Leasing Office 650 650 $3.75 $45.00 $29,250 -35% ($10,238) $19,013 -13.0% ($3,803) $15,210 7.05% $215,745 $332 Ground Floor Office Cowork 950 950 $6.00 $72.00 $68,400 -40% ($27,360) $41,040 -20.0% ($13,680) $27,360 7.60% $360,000 $379 Proposed Total 104,460 104,460 $3.48 $41.76 $4,362,665 ($1,530,353) $2,832,312 ($226,811) $2,605,501 $57,415,925 $550 Ground Floor Retail 10,000 10,000 $2.69 $32.28 $322,800 -25% ($80,700) $242,100 -5.5% ($17,754) $224,346 6.55% $3,425,130 $343 Commercial Office + Parking 90,000 90,000 $2.62 $31.44 $2,829,600 -32% ($905,472) $1,924,128 -7.1% ($200,902) $1,723,226 7.05% $24,442,928 $272 Original Total 100,000 100,000 $2.63 $31.52 $322,800 ($80,700) $242,100 ($17,754) $224,346 $27,868,057 $279 *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
Multifamily Market Rate Apts (113) p.u. 871 98,370 $580 $505,000 $51,005,000 Multifamily Affordable Apts (6) 748 4,490 $481 $360,000 $6,480,000 Leasing Office 108 650 $335 $217,750
Ground Floor Office Cowork 950 950 $400 $380,000
Proposed Total 104,460 104,460 $58,082,750
Ground Floor Retail 10,000 10,000 $397 $3,970,000
Commercial Office + Parking 90,000 90,000 $275 $24,750,000 Original Total 114,460 114,460 $28,720,000
Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
Capalina Apartments – DTA and City of San Marcos
8 Site Plan Analysis
Capalina Apartments – DTA and City of San Marcos
9 Aerial of Surrounding Uses
Site Plan Analysis
Surrounding uses include a 7-11 to the east, the Mission Center Strip Shopping Center to the west, retail to the south, and single family residential to the north. The Subject is currently a vacant lot sandwiched between W Mission Road and Capalina Road.

Meadow Creek
Apartments
Demolished
Mission
Center
Shopping
Center
Palomar College
Blue Fire Brewing
Sorrento’s Pizza
& Italian
Restaurant
Vista Flores
Apartments
Mobile Home
Community
Single Family
Residential
Mobile Home
Community
Single Family
Residential
Santa Fe Hills
Single Family
Residential
Light Industrial
Light Industrial
Palomar Station
Apartments
Capalina Apartments – DTA and City of San Marcos
10 Proposed Apartment Site Plan – MU-2
Site Plan Analysis
The ground floor of the building fronting Capalina Road will offer a fitness retail space of 1,250 square feet and a coworking office space of 950 square feet. The additional common space (leasing office, trash, mail and restrooms) is set aside for apartment management. There are 142 parking spaces for the residents and 5 spaces for the commercial land use.

Capalina Apartments – DTA and City of San Marcos
11 Proposed Commercial Component Site Plan
Site Plan Analysis
The Proposed plan includes the construction of a mixed use commercial component accompanying the 119-unit apartment. The apartment includes 11 studios, 53 one-bedroom plans, 47 two bedrooms and eight three bedrooms. An estimated 5% (6 units) are to be set aside as affordable targeted to very low-income households earning between 30% and 50% of AMI. Open space consists of a 1,250 square foot fitness facility, and a 7,500 square foot recreation area with pool, BBQ and seating.

Capalina Apartments – DTA and City of San Marcos
12 Proposed Project Plans (Cont’d)
Site Plan Analysis

Capalina Apartments – DTA and City of San Marcos
13 Proposed Project Plans (Cont’d)
Site Plan Analysis
The apartment unit payout along Capalina Road.

The apartment unit payout along W. Mission Blvd.

Capalina Apartments – DTA and City of San Marcos
14 Apartment Rent
Recommendations
Capalina Apartments – DTA and City of San Marcos
15 Proposed Use Summary
Rent Recommendations
Zonda’s recommended weighted average market rate rent is $3,072 or $3.53 per square foot for the proposed 113 market rate apartment units. We researched comparable communities and average rents in the San Marcos region to recommend target rents. The 5% set aside as affordable units average $1.82 per square foot. See page 17 for details on our assumptions for the low-income unit rents. $1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
500 550 600 650 700 750 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 Average Rent
Unit Size (Square Feet)
Capalina Apartments (Market Rate) (Four-
Story) DTA
Capalina Apartments (Affordable) (Four-
Story) DTA
Source: Meyers LLC
Building # of Est % of Average Base Average Rent Base Net Effective Average Net Effective Project Type Stories Units Total Units Unit Size Rent $/SF Rent $/SF Conc. Net Base $/SF Avg. Rent $/SF Capalina Apartments (Market Rate) Stacked Flats Four-Story 113 95% 871 $3,206 $3.68 $3,206 $3.68 ($134) $3,072 $3.53 $3,072 $3.53 Capalina Apartments (Affordable) Stacked Flats Four-Story 6 5% 748 $1,364 $1.82 $1,364 $1.82 $0.00 $1,364 $1.82 $1,364 $1.82 119 100% 864 $3,113 $3.59 $3,113 $3.59 ($127) $2,986 $3.44 $2,986 $3.44Community Summary Capalina Apartments – DTA and City of San Marcos
16 Property Name Base Est. Avg. Rent Net. Eff. Net. Eff.

Location Client/Developer Unit Size Pkg Monthly Avg. Monthly Conc. Base Avg Product Details Lease Summary Mix SF Bed Bath Level Pkg Typ Rent $/SF Prem. Rent $/SF Direct Indirect Total Rent $/SF Rent $/SF Capalina Apartments (Market Rate)DTA 10 600 0 1.0 1 1 O $2,700 $4.50 $0 $2,700 $4.50 ($113) $0 ($113) $2,588 $4.31 $2,588 $4.31 Location: San Marcos 5 680 1 1.0 1 1 O $2,890 $4.25 $0 $2,890 $4.25 ($120) $0 ($120) $2,770 $4.07 $2,770 $4.07 Product: Stacked Flats Total Units: 119 45 710 1 1.0 1 1 O $2,950 $4.15 $0 $2,950 $4.15 ($123) $0 ($123) $2,827 $3.98 $2,827 $3.98 Building Stories: Four-Story Est Market Entry: Jan - 2025 4 925 2 1.0 1 1 O $3,285 $3.55 $0 $3,285 $3.55 ($137) $0 ($137) $3,148 $3.40 $3,148 $3.40 Parking Included: Open GLA 98370 41 1,080 2 2.0 1 1 O $3,560 $3.30 $0 $3,560 $3.30 ($148) $0 ($148) $3,412 $3.16 $3,412 $3.16 Affordable % 15% 17.85 8 1,130 3 2.0 1 1 O $3,620 $3.20 $0 $3,620 $3.20 ($151) $0 ($151) $3,469 $3.07 $3,469 $3.07 113 871 $3,206 $3.68 $0 $3,206 $3.68 ($134) $0 ($134) $3,072 $3.53 $3,072 $3.53 Capalina Apartments (Affordable)DTA 1 600 0 1.0 1 1 O $1,206 $2.01 $0 $1,206 $2.01 $0 $0 $0 $1,206 $2.01 $1,206 $2.01 Location: San Marcos 3 680 1 1.0 1 1 O $1,292 $1.90 $0 $1,292 $1.90 $0 $0 $0 $1,292 $1.90 $1,292 $1.90 Product: Stacked Flats Total Units: 18 2 925 2 1.0 1 1 O $1,551 $1.68 $0 $1,551 $1.68 $0 $0 $0 $1,551 $1.68 $1,551 $1.68 Building Stories: Four-Story Est Market Entry: Jan - 2025 Parking Included: Open GLA 4490
6 748 $1,364 $1.82 $0 $1,364 $1.82 $0 $0 $0 $1,364 $1.82 $1,364 $1.82 *Notes :
1/ Parking type definitions:

O = Open
C = Carport
A = Assigned Space In Lot
DAG = Direct Access Garage
AG = Attached Garage (No Direct Access)
DG = Detached Garage
2/ All concessions are translated into a monthly discount on rent, as follows:

Direct = A direct discount to the normal rate.

Indirect = Other discounts, such as "$500 off the first month".

Summary Statistics:

Summary Statistics:

Proposed Use Detail
Rent Recommendations
Zonda’s recommended base rents for the 113 market rate apartment units range from $2,700 to $3,620, or $3.20 up to $4.50 per square foot, for a blended average base rent of $3.68 per square foot. We did not program unit premiums, but did factor in a concession estimated at two weeks rent free, to be applied during the lease up period. Unit premiums and concessions should be evaluated when the project comes to market. These proposed rents are consistent with the actively leasing competitive apartment communities.

Zonda used these values in our assessment of potential price as the Proposed land use scenario. Our positioning rational versus the competitive for-rent residential market is explained in the following section. Our low-income housing units yield a blended average rent of $1.82 per square foot, based on the tables show on the following page.

Capalina Apartments – DTA and City of San Marcos
17 Zonda priced the Subject’s Very Low Income (VLI) affordable units according to the lower of the 30%-50% Very Low Income levels as established by the Section 8 program and the LIHTC program. The Very Low Income Housing Tax Credit Allocation (LIHTC) Rents are slightly different at the same Average Median Income (AMI) set aside, and these discrepancies are based on occupancy for the one- and three-bedroom units.

Proposed Use Affordable Apartment Rent Detail
Rent Recommendations

LIHTC RENTS
Source: Novogradac
SECTION 8 RENTS
SECTION 8 RENTS
Capalina Apartments – DTA and City of San Marcos
18 Competitive For-Rent
Market Analysis
19 Capalina Apartments – DTA and City of San Marcos
Competitive Project Location Summary
Competitive For-Rent Market Analysis
Zonda considered comparable apartment communities proximate to the Subject, located in San Marcos and Vista. All apartments were built after 2014, with The Rylan being the newest built in 2020. Block C located south of the Highway 78 is considered the upper end of this Submarket.

Marc San MarcosPalomar Station
The Rylan
Block C
Management Company/ Lease Mo. Unit Size Range Rent Range Rent/SF Avg. Eff. Rent Range Eff. Rent/SF # Community/Project Builder Story Total Occ. Up Turns Min Max Avg Min Max Avg Min Max Avg Conc. Min Max Avg Min Avg Avg Traditional Apartment Competitors 282 606 1,526 1,024 $2,529 $3,935 $3,187 $2.58 $4.56 $3.42 $0 $2,529 $3,935 $3,187 $2.58 $4.52 $3.42 1 Marc San Marcos MG Properties Three 416 95.5% - - 650 1,357 927 $2,482 $3,636 $2,991 $2.63 $3.83 $3.30 $0 $2,482 $3,636 $2,991 $2.63 $3.82 $3.30 2 Block C MG Properties Five 198 94.5% - - 348 1,174 751 $2,333 $3,685 $3,038 $3.19 $6.84 $4.59 $0 $2,333 $3,685 $3,038 $3.19 $6.99 $4.59 3 Palomar Station Greystar Three 386 97.0% - - 675 1,765 1,254 $2,708 $4,128 $3,423 $2.25 $4.35 $2.97 $0 $2,708 $4,128 $3,423 $2.25 $4.14 $2.97 4 The Rylan MG Properties Four 126 95.5% - - 657 1,907 1,063 $2,440 $4,727 $3,345 $2.48 $4.05 $3.33 $0 $2,440 $4,727 $3,345 $2.48 $4.05 $3.33 20 Capalina Apartments – DTA and City of San Marcos
Total Rent Positioning vs Competitive Market
Competitive For-Rent Market Analysis
Proposed net effective rents are positioned consistently with Phase II of Marc San Marcos, and base rents are consistent with or slightly above The Rylan in Vista. Recommended Subject market rate rents are priced at a significant premium to the older Palomar Station (built 2014). This positioning adjusts for the perceived premium for new construction at the Subject, with the exception of Block C which has a more desirable location in North City.
$2,000
$2,250
$2,500
$2,750
$3,000
$3,250
$3,500
$3,750
$4,000
$4,250
$4,500
$4,750
$5,000
300 500 700 900 1,100 1,300 1,500 1,700 1,900
Average Rent/ Monthly Payment
Unit Size (Square Feet)
Capalina Apartments (Market Rate) (Four-Story) DTA
Capalina Apartments (Four Story) DTA Stabilized
Marc San Marcos - 2017, Three-Story, 95.5% Occ.

Block C - 2016, Five-Story, 94.5% Occ.

Palomar Station - 2014, Three-Story, 97.0% Occ.

The Rylan - 2020, Four-Story, 95.5% Occ.

Source: Zonda Advisory; Individual Community Management Offices 21 Capalina Apartments – DTA and City of San Marcos
Competitive For-Sale Market Detail
Competitive For-Rent Market Analysis
Traditional Apartment Competitors Floorplan Summary
Project Size Pkg Current Rents Current Rent $/SF Rent Concessions Net Effective Net Effective $/SF Project Detail Mix SF Bed Bath Level Pkg Type Low - High Avg. Low - High Avg. Direct Indirect Total Low - High Avg. Low - High Avg. 1 MARC SAN MARCOS │ MG PROPERTIES │ SAN MARCOS │ THREE-STORY │ YEAR BUILT - 2017

% Leased/Occupancy: 95.9/95.5 2 650 0 1.0 1 1 O $2,482 - $2,488 $2,485 $3.82 - $3.83 $3.82 $0 $0 $0 $2,482 - $2,488 $2,485 $3.82 - $3.83 $3.82 Total Units/Leased: 416/399 5 749 1 1.0 1 1 O $2,596 - $2,613 $2,605 $3.47 - $3.49 $3.48 $0 $0 $0 $2,596 - $2,613 $2,605 $3.47 - $3.49 $3.48 Available Units: 17 1 924 2 2.0 1 1 O $2,771 - $2,771 $2,771 $3.00 - $3.00 $3.00 $0 $0 $0 $2,771 - $2,771 $2,771 $3.00 - $3.00 $3.00 Turnover/Monthly: - 5 974 2 2.0 1 1 O $3,199 - $3,274 $3,237 $3.28 - $3.36 $3.32 $0 $0 $0 $3,199 - $3,274 $3,237 $3.28 - $3.36 $3.32 Lease-Up Rate: - 1 1,053 2 2.0 1 1 O $3,358 - $3,385 $3,372 $3.19 - $3.21 $3.20 $0 $0 $0 $3,358 - $3,385 $3,372 $3.19 - $3.21 $3.20 1 1,155 2 3.0 2 1 O $3,206 - $3,432 $3,319 $2.78 - $2.97 $2.87 $0 $0 $0 $3,206 - $3,432 $3,319 $2.78 - $2.97 $2.87 17 927 $2,482 - $3,636 $2,991 $2.63 - $3.83 $3.23 $0 $0 $0 $2,482 - $3,636 $2,991 $2.63 - $3.83 $3.23 2 BLOCK C │ MG PROPERTIES │ SAN MARCOS │ FIVE-STORY │ YEAR BUILT - 2016 % Leased/Occupancy: 94.9/94.5 1 348 0 1.0 1 1 O $2,333 - $2,381 $2,357 $6.70 - $6.84 $6.77 $0 $0 $0 $2,333 - $2,381 $2,357 $6.70 - $6.84 $6.77 Total Units/Leased: 198/188 1 350 0 1.0 1 1 O $2,626 - $2,270 $2,448 $7.50 - $6.49 $6.99 $0 $0 $0 $2,626 - $2,270 $2,448 $7.50 - $6.49 $6.99 Available Units: 10 1 482 0 1.0 1 1 O $2,672 - $2,693 $2,683 $5.54 - $5.59 $5.57 $0 $0 $0 $2,672 - $2,693 $2,683 $5.54 - $5.59 $5.57 Turnover/Monthly: - 1 595 1 1.0 1 1 O $2,741 - $2,741 $2,741 $4.61 - $4.61 $4.61 $0 $0 $0 $2,741 - $2,741 $2,741 $4.61 - $4.61 $4.61 Lease-Up Rate: - 1 640 1 1.0 1 1 O $2,896 - $2,896 $2,896 $4.53 - $4.53 $4.53 $0 $0 $0 $2,896 - $2,896 $2,896 $4.53 - $4.53 $4.53 10 751 $2,333 - $3,685 $3,038 $3.19 - $6.84 $4.05 $0 $0 $0 $2,333 - $3,685 $3,038 $3.19 - $6.84 $4.05 3 PALOMAR STA TION │ GREYSTAR │ SAN MARCOS │ THREE-STORY │ YEAR BUILT - 2014 % Leased/Occupancy: 97.2/97.0 1 675 1 1.0 1 1 O $2,744 - $2,668 $2,706 $4.07 - $3.95 $4.01 $0 $0 $0 $2,744 - $2,668 $2,706 $4.07 - $3.95 $4.01 Total Units/Leased: 386/375 1 688 1 1.0 1 1 O $2,708 - $2,993 $2,851 $3.94 - $4.35 $4.14 $0 $0 $0 $2,708 - $2,993 $2,851 $3.94 - $4.35 $4.14 Available Units: 11 2 829 1 1.0 1 1 O $3,053 - $3,088 $3,071 $3.68 - $3.72 $3.70 $0 $0 $0 $3,053 - $3,088 $3,071 $3.68 - $3.72 $3.70 Turnover/Monthly: - 1 894 2 1.0 1 1 O $3,043 - $3,191 $3,117 $3.40 - $3.57 $3.49 $0 $0 $0 $3,043 - $3,191 $3,117 $3.40 - $3.57 $3.49 Lease-Up Rate: - 2 1,298 2 1.0 1 1 O $3,314 - $3,314 $3,314 $2.55 - $2.55 $2.55 $0 $0 $0 $3,314 - $3,314 $3,314 $2.55 - $2.55 $2.55 12 1,254 $2,708 - $4,128 $3,423 $2.25 - $4.35 $2.73 $0 $0 $0 $2,708 - $4,128 $3,423 $2.25 - $4.35 $2.73 4 THE RYLAN │ MG PROPERTIES │ VISTA │ FOUR-STORY │ YEAR BUILT - 2020 % Leased/Occupancy: 95.5/95.5 7 657 1 1.0 1 1 O $2,664 - $2,664 $2,664 $4.05 - $4.05 $4.05 $0 $0 $0 $2,664 - $2,664 $2,664 $4.05 - $4.05 $4.05 Total Units/Leased: 126/120 7 658 1 1.0 1 1 O $2,440 - $2,440 $2,440 $3.71 - $3.71 $3.71 $0 $0 $0 $2,440 - $2,440 $2,440 $3.71 - $3.71 $3.71 Available Units: 6 6 726 1 1.0 1 1 O $2,711 - $2,886 $2,799 $3.73 - $3.98 $3.85 $0 $0 $0 $2,711 - $2,886 $2,799 $3.73 - $3.98 $3.85 Turnover/Monthly: - 6 742 1 1.0 1 1 O $2,831 - $2,831 $2,831 $3.82 - $3.82 $3.82 $0 $0 $0 $2,831 - $2,831 $2,831 $3.82 - $3.82 $3.82 Lease-Up Rate: - 6 764 1 1.0 1 1 O $2,986 - $2,986 $2,986 $3.91 - $3.91 $3.91 $0 $0 $0 $2,986 - $2,986 $2,986 $3.91 - $3.91 $3.91 6 822 1 1.0 1 1 O $3,071 - $3,071 $3,071 $3.74 - $3.74 $3.74 $0 $0 $0 $3,071 - $3,071 $3,071 $3.74 - $3.74 $3.74 6 840 1 1.0 1 1 O $3,100 - $3,189 $3,145 $3.69 - $3.80 $3.74 $0 $0 $0 $3,100 - $3,189 $3,145 $3.69 - $3.80 $3.74 5 1,064 2 1.0 1 1 O $3,526 - $3,526 $3,526 $3.31 - $3.31 $3.31 $0 $0 $0 $3,526 - $3,526 $3,526 $3.31 - $3.31 $3.31 5 1,146 2 1.0 1 1 O $3,470 - $3,470 $3,470 $3.03 - $3.03 $3.03 $0 $0 $0 $3,470 - $3,470 $3,470 $3.03 - $3.03 $3.03 5 1,192 2 1.0 1 1 O $3,485 - $3,485 $3,485 $2.92 - $2.92 $2.92 $0 $0 $0 $3,485 - $3,485 $3,485 $2.92 - $2.92 $2.92 88 1,063 $2,440 - $4,727 $3,345 $2.48 - $4.05 $3.15 $0 $0 $0 $2,440 - $4,727 $3,345 $2.48 - $4.05 $3.15 22 Capalina Apartments – DTA and City of San Marcos
Palomar StationMarc San Marcos
Traditional Apartment Comparables
Competitive For-Rent Market Analysis
Block C
The Rylan

Capalina Apartments – DTA and City of San Marcos
23 Multifamily Market
Overview
24 Capalina Apartments – DTA and City of San Marcos
San Marcos Absolute and Per Square Foot Rents
Multifamily Market Overview
San Marcos average rents have decreased quarter over quarter since Q4 2022, but not enough to impact year-over numbers to go negative. However, rent per square foot which factors in unit size, has seen just a very small dip of $0.03 and $0.01 respectively over the past two quarters, indicating a more robust apartment market than an analysis only of absolute rents. Rent per square foot is therefore a more reliable benchmark. Zonda recommends continued monitoring to identify future softening in San Marcos rent.

3.9% 4.5%

2.5%

3.6%

2.2%
-3.0%
-0.6%

0.8%

3.1%

8.7%

12.9% 13.2%

14.3%

17.1%

15.8%

12.0%

7.9%
-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%
$2,000
$2,100
$2,200
$2,300
$2,400
$2,500
$2,600
$2,700
$2,800
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 YOY Effective Rent Change
Effective Rent
Effective Rent YOY Effective Rent Change
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Effective Rent $2,032 $2,116 $2,115 $2,117 $2,095 $2,093 $2,122 $2,150 $2,190 $2,270 $2,391 $2,430 $2,499 $2,639 $2,760 $2,727 $2,717 YOY Effective Rent Change 3.9% 4.5% 2.5% 3.6% 2.2% -3.0% -0.6% 0.8% 3.1% 8.7% 12.9% 13.2% 14.3% 17.1% 15.8% 12.0% 7.9% Effective RPSF $2.22 $2.30 $2.29 $2.28 $2.28 $2.24 $2.27 $2.30 $2.34 $2.43 $2.56 $2.60 $2.67 $2.88 $3.02 $2.98 $2.97 Quarterly Effective RPSF Change 2.6% 3.7% -0.5% -0.1% -0.4% -1.6% 1.3% 1.2% 1.9% 3.7% 5.3% 1.6% 2.8% 7.7% 4.9% -1.2% -0.4% San Marcos, CA
25 Capalina Apartments – DTA and City of San Marcos
San Marcos Apartment Concessions
Multifamily Market Overview
San Marcos concessions appear to be performing at historical norms after an extremely strong market during the COVID pandemic, when concessions disappeared almost entirely. Today's market offers an average concession equal to 2.7% of the base rent, across 5.1% of the apartments in the CMA.

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Average Concession 7.0% 10.4% 6.0% 1.7% 3.6% 3.4% 3.9% 7.4% 1.5% 3.3% 3.3% 3.3% 3.3% 2.6% 2.5% 5.3% 2.7% % of Units Offering Concessions 19.8% 1.0% 18.9% 11.9% 16.6% 30.0% 21.5% 5.5% 3.2% 0.4% 0.4% 0.4% 0.4% 0.5% 0.5% 5.7% 5.1% San Marcos, CA

19.8%

1.0%

18.9%

11.9%

16.6%

30.0%

21.5%

5.5%

3.2%

0.4% 0.4% 0.4% 0.4% 0.5% 0.5%

5.7% 5.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Percent of Units Offering Concessions
Average Concession
Average Concession % of Units Offering Concessions
26 Capalina Apartments – DTA and City of San Marcos
San Marcos Apartment Occupancy Rate
Multifamily Market Overview
After an unprecedented run lasting almost two years, when apartments were almost fully occupied, occupancy is back to more normal levels. Occupancy levels are still strong at just under 96% after experiencing small downward corrections for six consecutive quarters.

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Total Occupancy 94.3% 95.1% 96.0% 94.7% 94.6% 93.8% 95.1% 96.8% 97.7% 98.7% 99.0% 99.2% 98.6% 98.0% 97.2% 96.1% 95.9% YOY Occupancy Change 1.13% 0.68% -0.77% -0.20% 0.34% -1.38% -0.96% 2.04% 3.06% 4.94% 3.94% 2.40% 0.91% -0.67% -1.78% -3.13% -2.59% San Marcos, CA

1.13%

0.68%
-0.77%
-0.20%

0.34%
-1.38%
-0.96%

2.04%

3.06%

4.94%

3.94%

2.40%

0.91%
-0.67%
-1.78%
-3.13%
-2.59%
-4.00%
-3.00%
-2.00%
-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

91.0%

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

98.0%

99.0%
100.0%
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Class A - YOY Occupancy Change
Occupancy
Total Occupancy YOY Occupancy Change
27 Capalina Apartments – DTA and City of San Marcos
North County Demand, Supply and New Construction
Multifamily Market Overview
No new apartment supply has been introduced into the San Marcos multifamily market for the past three years, and new apartments at the Subject should therefore be well received. Annual demand went negative in Q2 2022 to counterbalance the abnormally high demand during the pandemic, and could be turning the corner in Q1 2023.

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Inventory Change 2.1% 1.7% 1.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Units Under Construction 173 138 102 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Annual Supply 71 46 82 184 173 138 102 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Annual Demand 135 102 14 175 214 24 25 179 256 413 338 199 71 -57 -150 -261 -221 San Marcos, CA
-300
-200
-100
0 100
200
300
400
500
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Units Under Construction
Annual Supply Annual Demand Units Under Construction
Capalina Apartments – DTA and City of San Marcos
28 Commercial Price Assessment
Capalina Apartments – DTA and City of San Marcos
29 Our valuation of the Subject includes both the NOI cap rate approach and a comparison of recent sales transactions and focused specifically the original land use. Sales truncations were researched both by price per square foot and price per unit where applicable, and the resulting average or median was used. Zonda assumptions are supported by extensive market research and interviews with local retail brokers including VOIT, REIS,, CBRE, Lee & Associates, Cushman and Wakefield, and Colliers. The resulting price assessment cross- referencing both methods is between $27.87 million and $28.72 million, and averages around $28.3 million.

Methodology and Price Assessment Conclusions – Original Use Price Assessment
Zonda used the San Diego County market cap rate table at left as a guide to establish possible land use values.

However, we adjusted these assumptions to fit the local San Marcos market trends based on market research and
interviews with local retail brokers including CBRE, Voit, Cushman and Wakefield, and Colliers as follows:

NEIGHBROHOOD RETAIL
− Vacancy rate of 5.5%, operating expenses of +/-25%,
Median Cap Rate for Suburban Class A range of 6.55%.
− Sales price per square foot based on median sales price of comparables.
− Lease rate is the average rent per square foot of CMA.

COMMERCIAL OFFICE
− Vacancy rate of 7.1%, operating expenses of +/-32%,
Median Cap Rate for Metro Class A range of 7.05%.
− Sales price per square foot is the CMA median price.
− Lease rate is the CMA average rent per square foot.

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
Ground Floor Retail 10,000 10,000 $2.69 $32.28 $322,800 -25% ($80,700) $242,100 -5.5% ($17,754) $224,346 6.55% $3,425,130 $343 Commercial Office + Parking 90,000 90,000 $2.62 $31.44 $2,829,600 -32% ($905,472) $1,924,128 -7.1% ($200,902) $1,723,226 7.05% $24,442,928 $272 Original Total 100,000 100,000 $2.63 $31.52 $322,800 ($80,700) $242,100 ($17,754) $224,346 $27,868,057 $279 *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
Ground Floor Retail 10,000 10,000 $397 $3,970,000
Commercial Office + Parking 90,000 90,000 $275 $24,750,000 Original Total 113,810 113,810 $28,720,000
Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
Capalina Apartments – DTA and City of San Marcos
30 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
Multifamily Market Rate Apts (113) p.u.98,370 98,370 $3.53 $42.36 $4,166,953 -35% ($1,458,434) $2,708,520 -5.0% ($208,348) $2,500,172 4.50% $55,559,376 $565 Multifamily Affordable Apts (6) 4,490 4,490 $1.82 $21.84 $98,062 -35% ($34,322) $63,740 -1.0% ($981) $62,759 4.90% $1,280,805 $285 Leasing Office 650 650 $3.75 $45.00 $29,250 -35% ($10,238) $19,013 -13.0% ($3,803) $15,210 7.05% $215,745 $332 Ground Floor Office Cowork 950 950 $6.00 $72.00 $68,400 -40% ($27,360) $41,040 -20.0% ($13,680) $27,360 7.60% $360,000 $379 Proposed Total 104,460 104,460 $3.48 $41.76 $4,362,665 ($1,530,353) $2,832,312 ($226,811) $2,605,501 $57,415,925 $550 *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
Multifamily Market Rate Apts (113) p.u. 871 98,370 $580 $505,000 $51,005,000 Multifamily Affordable Apts (6) 748 4,490 $481 $360,000 $6,480,000 Leasing Office 108 650 $335 $217,750
Ground Floor Office Cowork 950 950 $400 $380,000
Proposed Total 104,460 104,460 $58,082,750
Net Operating Income / Cap Rate Valuation Approach
Sales Transaction Valuation Approach
Our valuation of the Subject includes both the NOI cap rate approach and a comparison of recent sales transactions and focused specifically the proposed land uses. Sales transactions 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, JLL, CBRE, Lee & Associates, Cushman and Wakefield, and Colliers. The resulting price assessment cross-referencing both methods is between $57.416 million and $58.083, for an average of roughly $57.75 million.

Methodology and Price Assessment Conclusions – Proposed Use Price Assessment
Zonda’s assumptions include the following:
• Market Rate Multifamily cap rate is estimated at 4.5% based on interviews with local brokers and Cap Rate Index data sources which indicate slightly better rates for San Marcos than the overall San Diego County rates quoted below. • Cap Rates for income restricted apartments typically run roughly 9% higher than market rate, hence the 4.9% estimated rate. • Apartment vacancy rate of 5% for the market rate units and 1% for the low-income units. • Operating expenses estimated at 35% of gross receipts. • Average market rate rent of $3.53 per square feet based on Zonda’s • recommended rents for the Subject apartments on page 15. • Average income-restricted rent of $2.81 per square foot per the • Novogradac Low Income rent tables on page 17.

Of the 4,000 square feet of commercial space, the fitness center, mail room, restrooms and trash corridors are provided exclusively for the benefit of the prospective apartment tenants, free of charge, rather than as a stand-alone monetized retail concern. Therefore, only the 950 square foot coworking office and 650 square foot leasing office are considered revenue earners for this analysis.

Capalina Apartments – DTA and City of San Marcos
31 Property Name
No. Address Zoning Total SF Sale Date Year Built Cap Rate Leasable SF Sale Price Price/ SF 1 El Dorado II Restaurant/Café MU 2150 0.05 2022 2,150 $1,018,000 $473 309 Richmar Ave
San Marcos, 92069
2 Nhbd Retail/Restaurant 18256 1/24/2022 2004 18,256 $12,311,000 $674 712 Center Drive
San Marcos, 92069
3 Lakeshore Learning Center Nhbd Retail/Restaurant 8060 1/24/2022 1991 16,954 $5,276,500 $311 702 Center Drive
San Marcos, 92069
4 San Marcos Square Nhbd Retail/Restaurant 21352 Listing 2014 5.47% 21,390 $8,500,000 $397 156-190 Rancho Santa Fe Rd
San Marcos, 92078
5 Twin Oaks Town Center Nhbd Retail/Restaurant 21410 7/12/2022 2006 21,410 $8,200,000 $383 407 N Twin Oaks Valley Rd
San Marcos, 92078
6 Slater's 50/50 Restaurant 7065 3/3/2022 1999/2014 7,065 $3,400,000 $481 110 Knoll Rd
San Marcos, 92069
7 Galleria Vera Cruz Nhbd Retail/Restaurant 28451 Listing 1986 5.33% 28,451 $10,000,000 $351 1001-1003 W San Marcos Blvd
San Marcos, CA 92078
Min: 2,150 0.04935721 1986 5.33% 2,150 $1,018,000 $311
Max: 28,451 44754 2022 5.47% 28,451 $12,311,000 $674
Median 18,256 44585 2005 5.40% 18,256 $8,200,000 $397
Average: 15,249 35709.41 2004 5.40% 16,525 $6,957,929 $439 The following neighborhood retail listings and sales were used to help determine a likely sale price for the retail component. Zonda priced the Subject Neighborhood Retail at $397 per square foot, but used a higher cap rate to adjust for today’s market compared to 2022 transactions.

Original Use: Commercial Neighborhood Retail Sales
Price Assessment
Capalina Apartments – DTA and City of San Marcos
32 The following retail leases were
used to determine a likely lease
rate for the retail component.

All of the listed sales at right are
for older properties, but many
benefit from a more visible
location, creating a trade of
between the Subject new space,
larger than average footprint,
and slightly less desirable
address north of the 78
Freeway. Zonda priced the
neighborhood retail space
similarly to the CMA average of
$2.69.

Original Use: Commercial Retail Leases
Price Assessment
Building Name Total Building Occupancy Vacancy Asking Lease Rate No. Address Class Type Built Acreage Leasable SF Available Space Rate (%) Rate (%) (Per SF Per Mo.) Terms 1 Home Depot Center C Inline Retail 2002 0.3 3,797 725 $3.85 NNN 500 W San Marcos Blvd
San Marcos, 92078 Total 725 80.9% 19% $3.85
2 Creekside at Promenade A MU Retail 2018 0.55 11,003 1,598 $2.25 NNN 6 Creekside Drive
San Marcos, CA 92078
Total 1,598 85.5% 14.5% $2.25
3 San Marcos Food Court C Inline Retail 1988 0.17 7,500 1,721 $2.50 NNN 1158 W San Marcos Blvd 1,810 $2.50
San Marcos, 92078 Total 1,721 77.1% 23% $2.50
4 Park Place North C MU 2006 0.55 4,795 2,147 $2.55 NNN 950 Boardwalk 1,324 $2.55
San Marcos, CA 92078 1,324 $2.55
Total 4,795 0.0% 100.0% $2.55
5 ALDI - Rancho S.M. Village C Inline Retail 1988 0.64 21,687 3,110 $2.50 NNN 621-701 S. Rancho Santa Fe Rd
San Marcos, 92078 Total 3,110 85.7% 14% $2.50
6 Campus Pointe A Inline Retail 2010 0.55 4,795 1,103 $3.25 NNN 801 S Twin Oaks Valley Rd
San Marcos, CA 92078
Total 1,103 77.0% 23.0% $3.25
7 Creekside Marketplace C Inline Retail 1988 0.64 6,100 3,110 $2.50 NNN 640 Grand Ave
San Marcos, 92078 Total 3,110 49.0% 51% $2.50
8 West Vista Plaza B Inline Retail 1982 0.55 14,206 2,400 $3.50 NNN 567-575 W Vista Way 1,032 $2.50
Vista, CA 92083
Total 3,432 75.8% 24.2% $3.20
9 B Inline Retail 600 $3.00 Mod. Gross
902 W San Marcos Blvd 600
San Marcos, 92078 Total 0 100.0% 0% $3.00
Min 4,795 1,032 0.0% 14.3% $2.25
Max 21,687 4,795 85.7% 100.0% $3.50
Median 7,500 1,766 77.0% 23.0% $2.53
Average 10,012 2,197 64.3% 35.7% $2.69
Capalina Apartments – DTA and City of San Marcos
33 The following neighborhood Office listings and sales were used to help determine a likely sale price for the Office component. Zonda priced the Subject at the $335 per square foot average price. Zonda only found one transactional cap rate in our research of sales and listings, and based on the cooling market for this space type, used the more conservative rate of around 7.05% provided by the latest industry trend reports.

Original Use: Office Sales
Price Assessment
Property Name
No. Address Class Zoning Acreage Year Built Sale Price Price/ SF Price/Acre San Marcos Plaza B Office 1410 0.58 2001 $416,000 $295
1 330-340 Rancheros Dr 6459 2001 $1,292,000 $200
San Marcos, 92069 1118 2001 $395,000 $353
87806 8,987 $2,103,000 $234 $3,598,426
2 Palomar Crest Corporate Center B Office 32196 1.77 2002/2019 32,196 $8,200,000 $255 $4,632,768 2710 Loker Ave
Carlsbad, 92010
San Marcos Plaza B Office 160000 5.71 2001 96,606 $16,300,000 $169 $2,854,641 5/5/2021 3 330-340 Rancheros Dr
San Marcos, 92069
4 B Office 2555 0.48 1978 2,555 $1,570,000 $614 $3,270,802 10/21/2022 1155 Grand Ave
San Marcos, 92078
5 Park Place North B Office 2909 0.23 2007 2,909 $858,000 $295 $3,730,435 Listing 950 Boardwalk
San Marcos, 92078
7 Park Place South A Office 24396 0.12 2008 2,081 $975,000 $469 $8,404,507 955 Boardwalk
San Marcos, CA 92078
8 B Office 3012 0.68 4.90% 3,012 $1,341,000 $445 $1,974,979 4/18/2023 469 E Mission Rd
San Marcos, 92069
9 RSF Professional Building B Office 24447 1.52 1981 24,447 $4,800,000 $196 $3,157,904 3/18/2022 365 S Rancho Santa Fe Rd
San Marcos, 92078
Min: 2,555 0.12 1978 4.90% 2,081 $858,000 $169 $1,974,979 Max: 160,000 5.71 2008 4.90% 96,606 $16,300,000 $614 $8,404,507 Median: 24,422 0.68 2001 4.90% 6,000 $1,836,500 $275 $3,434,614 Average: 42,165 1.50 1995 4.90% 21,599 $4,518,375 $335 $3,953,058 Sale DateCap Rate Leasable SFTotal SF
Capalina Apartments – DTA and City of San Marcos
34 The following Industrial leases were used to determine a likely lease rate for the Office component. The higher performing comparable leases listed below are within a relatively tight price band of between $30.60 to $34.20. These represent triple net asking prices which, after factoring in operating expense recapture, results in an estimated net effective rent of $3.42 to $3.72 per square foot. Zonda used the higher end of this spectrum as a rental rate for the leasing office at the Subject.

Original Use: Office Leases
Price Assessment
Building Name Total Building Occupancy Vacancy Asking Lease Rate No. Address Class Type Built Acreage Leasable SF Available Space Rate (%) Rate (%) (Per SF Per Mo.) Terms 3 Civic View Corporate Center A Office 2008 0.64 95,531 9,336 $2.85 NNN 300 Rancheros Drive
San Marcos, 92069 Total 9,336 90.2% 10% $2.85
4 San Marcos Plaza C Office 2006 0.55 4,795 2,147 $2.55 NNN 330-340 Rancheros Dr 1,324 $2.55
San Marcos, CA 92069 1,324 $2.55
Total 4,795 0.0% 100.0% $2.55
5 Park Place North B Office 2006 3.0455 2,314 1,478 $2.55 NNN 950 Boardwalk
San Marcos, 92078 1,478 36.1% 64% $2.55
6 Gateway at San Marcos A Office 2002 0.55 66,130 16,532 $2.60 NNN 100 E San Marcos
San Marcos, 92069
Total 16,532 75.0% 25.0% $2.60
7 North County Corporate Center B Office 2000 3.22 52,785 3,140 $2.60 NNN 277 Rancheros Dr
San Marcos, 92069 Total 3,140 94.1% 6% $2.60
8 San Marcos Civic Center A Office 2018 0.55 54,703 6,770 $2.65 NNN 1 Civic Center Dr 3,400 $2.65 $0.87
San Marcos, 92078 Eff rate =
Total 10,170 81.4% 18.6% $2.65 $3.52
Min 2,314 1,324 0.0% 5.9% $2.55
Max 95,531 16,532 94.1% 100.0% $2.85
Median 53,744 3,400 78.2% 21.8% $2.60
Average 46,043 6,060 62.8% 37.2% $2.62
Capalina Apartments – DTA and City of San Marcos
35 The following Multifamily sales were used to help determine a likely sale price for the Multifamily component. Zonda priced the Subject Multifamily Market Rate apartments based on Palomar Station which is older but of a larger scale, with a better marketing window. The median and average cap rates are consistent with what is reported in the current local market. Cap rates have softened slightly over the past year, and Zonda therefore used the reported 4.5% for the market rate apartments. Income restricted apartments, which are discussed in more detail on the following page.

Multifamily Sales – Market Rate
Price Assessment
Property Name Total
No. Address Type Zoning Acreage List Price Sale Date Year Built # Units Square Feet Total SF Sale Price Sale $/SF Sale $/Unit Cap Rate NOI 1 Sunset View Class A Apt 22.25 $45,500,000 8/25/2021 2016 111 780 86,580 $45,500,000 $526 $409,910 4.40% 2500 Sea Cliff Way
Oceanside, 92056
2 The Dylan Class B Apt 9.22 $74,100,000 1973 208 1,187 246,896 $74,100,000 $300 $356,250 550 Los Arbolitos Blvd
Oceanside, CA 92058
3 Palomar Station Class A Apt 14.82 $195,000,000 10/11/2021 2014 386 959 424,100 $195,000,000 $460 $505,181 4.71% $9,184,500 1257 Armorlite Drive
San Marcos, 92069
4 Sunterra Class B Apt 4.96 $97,500,000 2/16/2022 1978 240 911 218,640 $97,500,000 $446 $406,250 3851 Sherbourne Ave
Oceanside, 92056
5 Sofi Ocean Hills Class A Apt 24.15 $196,000,000 1987 404 858 346,632 $196,000,000 $565 $485,149 3500 Windrift Way
Oceanside, 92056
6 City Plaza 55 Class A Apt $25,000,000 4/14/2022 2018 55 634 34,848 $25,000,000 $717 $454,545 3.90% 300 S. Escondido Blvd
Escondido, 92025
Min: 1973 55 634 34,848 $25,000,000 $300 $356,250 3.9% - Max: 2018 404 1,187 424,100 $196,000,000 $717 $505,181 4.7% - Median 2000.5 224 885 232,768 $85,800,000 $493 $432,228 4.4% $9,184,500 Average: 1998 234 888 226,283 $105,516,667 $502 $436,214 4.3% $9,184,500 Capalina Apartments – DTA and City of San Marcos
36 Affordable apartments generally transact at slightly higher rates, and our price assessment therefore uses a cap rate of 4.90% which is 9% higher than the market rate. Apartments which set aside 100% of the units as affordable generally fetch a higher price per unit by virtue of not bifurcating income level set asides. Alora is the latest 100% affordable community to be developed in San Marcos, at an average cost of roughly $400,000. Zonda therefore discounted the per unit Alora price of $400,000 by 10% to establish a possible price per unit for the 5% very low income component of the Subject.

Multifamily Sales
Price Assessment
Property Name Total
No. Address Type Zoning Acreage List Price Sale Date Year Built # Units Square Feet Total SF Sale Price Sale $/SF Sale $/Unit 1 Villa Serena Development Ph I Affordable Apt 2.39 $41,052,136 3/22/2021 1971 85 570 96,880 $41,052,136 $424 $482,966 340 Marcos St
San Marcos, 92069
2 Alora Affordable Apt 3.53 $39,900,000 2023 100 790 79,000 $39,900,000 $505 $399,000 604 Richmar Ave
San Marcos, 92069
3 Pacific Wind Apartments Affordable Apt $54,049,758 2022 89 800 187,673 $51,223,950 $273 $575,550 Carol Pl & Harding St
Carlsbad, 92008
4 ShoreLINE Affordable Apt 3.53 $60,947,113 2022 126 750 178,731 $59,947,146 $335 $475,771 4470 Alvarado Cyn Rd
San Diego, 92120
5 Crest on Imperial Affordable Apt $40,379,504 2023 100 780 203,937 $37,895,100 $186 $378,951 101 50th St
San Diego, 92113
Min: 1971 85 570 79,000 $37,895,100 $186 $378,951
Max: 2023 126 800 203,937 $59,947,146 $505 $575,550
Median 2022 100 780 178,731 $41,052,136 $335 $475,771
Average: 2012 100 738 149,244 $46,003,666 $345 $462,448 Capalina Apartments – DTA and City of San Marcos
37 Commercial Office Market
Overview
38 Capalina Apartments – DTA and City of San Marcos
-4.0%
-3.0%
-2.0%
-1.0%

0.0%

1.0%

2.0%
0%
5%
10%
15%
20%
25%
30%
2014 Q4 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 % Change in Vacamcy Rate
Average Vacancy Rate
Axis Title
Vacancy by Submarket
Downtown Central I-15 Corridor North County Coastal North City Southern & Eastern Areas Highway 78 Corridor North County Office Vacant Space & Occupancy Rate
Commercial Retail Market Overview
The Subject is located in the Highway 78 Corridor Office Submarket. Over the past year, vacant office space increased and occupancy rates softened across all Submarkets except for North County Coastal and the Highway 78 Corridor. The vacancy rates stated below do not however truly reflect sublet space too, and are therefore likely higher than stated. North County remains an area of interest for Life Sciences office space and medical office space, but even this type of specific use is seeing slower growth.

Vacancy 2014 Q4 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 Downtown 15.22% 16.20% 11.13% 15.22% 16.93% 19.28% 24.80% 24.48% 25.08% 25.75% 25.13% 25.82% Central 9.46% 9.23% 6.60% 7.37% 7.01% 11.07% 10.80% 10.80% 10.24% 10.51% 10.98% 10.48% I-15 Corridor 10.20% 9.83% 11.15% 11.46% 10.34% 12.99% 11.82% 13.47% 11.24% 12.31% 14.41% 13.50% North County Coastal 13.84% 13.43% 15.83% 15.71% 13.25% 13.52% 12.85% 13.95% 13.21% 12.62% 11.34% 11.26% North City 11.92% 13.76% 10.96% 9.75% 9.20% 10.81% 8.66% 7.97% 6.78% 7.53% 7.39% 7.91% Southern & Eastern Areas 9.56% 9.94% 5.95% 5.54% 5.13% 5.77% 5.00% 4.46% 3.50% 3.50% 3.50% 4.67% Highway 78 Corridor 15.59% 13.09% 12.80% 11.80% 12.48% 14.16% 10.92% 11.14% 11.08% 10.37% 10.07% 9.59% % Change Hwy 78 Corridor -2.50% -0.29% -1.00% 0.68% 1.68% -3.24% 0.22% -0.06% -0.71% -0.30% -0.48% 39 Capalina Apartments – DTA and City of San Marcos
North County Office Lease Rates
Commercial Retail Market Overview
Office lease rates in the Subject Highway 78 Corridor Submarket have improved slowly quarter-over-quarter over the past eighteen months. However, local brokers indicate that landlords have been holding fast on lease rates in the face of weakening occupancy, resorting instead to deep concession in the short term. If vacancy rates continue to increase, brokers anticipated that lease rates will be renegotiated at lower rates in the future.
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
2014 Q3 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 % Change in Lease Rate
Average Asking Lease Rate (Monthy $/SF)
Rental Rate by Submarket
Downtown Central I-15 Corridor North County Coastal North City Southern & Eastern Areas Highway 78 Corridor Rental Rate 2014 Q3 2015 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 Downtown $2.21 $2.49 $2.60 $2.79 $2.83 $2.91 $2.97 $2.91 $2.93 $2.87 $2.85 $2.85 Central $1.98 $2.11 $2.26 $2.40 $2.48 $2.60 $2.71 $2.73 $2.74 $2.77 $2.76 $2.79 I-15 Corridor $2.09 $2.14 $2.55 $2.77 $2.87 $2.82 $2.85 $2.88 $2.90 $2.91 $3.04 $3.02 North County Coastal $2.81 $2.52 $3.25 $3.35 $3.35 $3.31 $3.51 $3.54 $3.50 $3.51 $3.56 $3.51 North City $3.38 $3.80 $2.92 $2.80 $3.01 $3.25 $3.32 $3.40 $3.48 $3.51 $3.52 $3.53 Southern & Eastern Areas $1.33 $1.43 $2.33 $2.34 $2.35 $2.14 $2.48 $2.54 $2.55 $2.54 $2.40 $2.45 Highway 78 Corridor $1.53 $1.52 $2.00 $2.03 $2.02 $2.28 $2.19 $2.24 $2.24 $2.30 $2.31 $2.36 % Change Hwy 78 Corridor -0.7% 31.6% 1.5% -0.5% 12.9% -3.9% 2.3% 0.0% 2.7% 0.4% 2.2% Capalina Apartments – DTA and City of San Marcos
40 Commercial Retail Market
Overview
41 Capalina Apartments – DTA and City of San Marcos
San Diego County Retail Trends by Type
Commercial Retail Market Overview
North County is the second largest retail Submarket in San Diego County with the highest vacancy rate of 5.5%, relatively low asking lease rate averaging $1.95 (East County is marginally lower at $1.89), and a fairly robust pipeline of space. These market indicators suggest that a Mixed Use Multifamily land use at the Subject makes more sense than a Mixed-Use large-scale office and retail complex.

North County San Diego MSA
Retail Market Statistics by Type for Subject Submarket (2nd Quarter 2022) Planned YTD Net YTD Gross Under Quoted Quoted Rates
Type # Bldgs. Total GLA SF Total SF Vac. % Absorption Absorption Const. SF Rates ($/ SF/ Mo.) General Retail 1,680 11,671,330 139,500 465,678 4.0% 2,813 30,344 125,109 $21.48 $1.79 Mall 26 2,916,678 0 296,130 10.2% 37,443 37,443 0 $0.00 $0.00 Power Center 109 3,265,022 4,000 181,392 5.6% (90,874) 20,241 5,000 $0.00 $0.00 Shopping Center 977 14,898,998 380,598 879,518 5.9% (350) 84,501 0 $24.12 $2.01 Specialty Center 5 369,833 0 0 0.0% 0 0 0 $0.00 $0.00
Total 2,797 33,121,861 524,098 1,822,718 5.5% (50,968) 172,529 130,109 $23.40 $1.95 SD County Total 13,170 134,681,928 2,370,434 2,733,225 4.3% (394,774) (394,774) 515,376 $28.44 $2.37 Existing Inventory Vacancy
42 Capalina Apartments – DTA and City of San Marcos
North County Retail Inventory
Commercial Retail Market Overview
Retail inventory in North County remains relatively flat at just over 33.1 million square feet, after jumping up in Q4 2021. However, inventory is still nowhere near the over $34.5 million square feet reached in Q2 2020.

31.50 32.00

32.50 33.00

33.50 34.00

34.50 35.00
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Square Feet (in Millions)
Source: Voit
Retail Inventory (in Millions Square Feet)
Inventory Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Total Inventory (SF) 33,087,462 33,176,034 33,204,037 33,402,058 33,444,016 33,397,068 33,338,121 33,343,107 34,520,068 33,043,585 33,056,152 32,870,481 32,795,536 32,646,928 33,119,470 33,110,789 33,083,358 33,093,752 33,129,419 33,121,861 Inventory Change 1,894 88,572 28,003 198,021 41,958 -46,948 -58,947 4,986 1,176,961 -1,476,483 12,567 -185,671 -74,945 -148,608 472,542 -8,681 -27,431 10,394 35,667 -7,558 % Change 0.0% 0.3% 0.1% 0.6% 0.1% -0.1% -0.2% 0.0% 3.5% -4.3% 0.0% -0.6% -0.2% -0.5% 1.4% 0.0% -0.1% 0.0% 0.1% 0.0% 43 Capalina Apartments – DTA and City of San Marcos
North County Retail Lease Rates
Commercial Retail Market Overview
North County retail lease rate steadied at $1.95 over the past two quarters, and vacancy is going in the right direction with an improvement of about 1% from the same time last year. However, word on the ground from local brokers is that the market is softening slightly, which may account for the uptick in vacancy from 5.2% in the latter half of 2022. The good news is that inventory under construction in San Marcos specifically is already 100% leased (the Panera on San Marcos Blvd), and that the newly constructed Creekside place is successfully leasing up to tenants such as Total Wine & More.

5.2% 5.5%

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Vacancy Rate
Avg. Asking Lease Rate (Monthly $/ SF)
Source: Voit
Lease Rates and Vacancy Lease Rates Vacancy Rates
Lease Rates Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Lease Rate ($/ SF/ Mo.) $1.75 $1.71 $1.72 $1.42 $1.39 $1.40 $1.64 $1.66 $1.76 $1.79 $1.81 $1.87 $1.87 $1.91 $1.87 $1.85 $1.86 $1.89 $1.95 $1.95 Lease Rate Change $0.22 ($0.04) $0.01 ($0.30) ($0.03) $0.01 $0.24 $0.02 $0.10 $0.03 $0.02 $0.06 $0.00 $0.04 ($0.04) ($0.02) $0.01 $0.03 $0.06 $0.00 % Change 14.3% -2.3% 0.6% -17.4% -2.1% 0.7% 17.1% 1.2% 6.0% 1.7% 1.1% 3.3% 0.0% 2.1% -2.1% -1.1% 0.5% 1.6% 3.2% 0.0% 44 Capalina Apartments – DTA and City of San Marcos
North County Retail Vacant Space & Occupancy Rate
Commercial Retail Market Overview
Vacant space and occupancy rates indicate slightly softening in the North County market since the latter half of 2022. However, small ground floor quick-service restaurant and neighborhood serving spaces are still in demand in the local San Marcos Submarket.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%
0 500,000
1,000,000
1,500,000
2,000,000
2,500,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Vacant Space (Square Feet)
Source: Voit
Vacant Space and Vacancy Rates
Vacant Space Vacancy Rates
Vacancy Rates Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Vacancy Rate 4.7% 4.5% 4.8% 4.8% 4.8% 4.8% 4.5% 5.1% 5.1% 5.9% 6.1% 7.0% 7.2% 6.9% 6.5% 6.4% 5.6% 5.2% 5.2% 5.5% Vac. Rate Change 0.4% -0.2% 0.3% 0.0% -0.1% 0.0% -0.3% 0.6% 0.1% 0.8% 0.1% 1.0% 0.2% -0.3% -0.4% -0.1% -0.8% -0.4% 0.0% 0.3% % Change 8.4% -4.8% 7.1% 0.1% -1.0% 0.8% -5.8% 12.2% 1.2% 16.0% 1.9% 16.0% 2.3% -3.5% -6.1% -1.7% -12.5% -7.1% 0.2% 5.6% Vacanct Space Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Vacant Space 1,553,747 1,489,495 1,582,027 1,602,460 1,589,003 1,598,746 1,502,082 1,687,798 1,766,041 1,963,907 1,998,857 2,307,225 2,355,253 2,261,464 2,155,761 2,119,322 1,853,233 1,722,158 1,725,591 1,822,718 Vac. Space Change - (64,252) 92,532 20,433 (13,457) 9,743 (96,664) 185,716 78,243 197,866 34,950 308,368 48,028 (93,789) (105,703) (36,439) (266,089) (131,075) 3,433 97,127 % Change - -4.1% 6.2% 1.3% -0.8% 0.6% -6.0% 12.4% 4.6% 11.2% 1.8% 15.4% 2.1% -4.0% -4.7% -1.7% -12.6% -7.1% 0.2% 5.6% 45 Capalina Apartments – DTA and City of San Marcos
Net Absorption Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net Absorption (SF) (111,829) 139,017 26,939 43,537 18,901 18,755 120,457 (201,551) (81,243) (119,700) 12,567 (309,868) (15,060) 80,616 92,381 49,183 221,731 128,892 483,264 (50,968) Net Absorption Change (78,704) 250,846 (112,078) 16,598 (24,636) (146) 101,702 (322,008) 120,308 (38,457) 132,267 (322,435) 294,808 95,676 11,765 (43,198) 172,548 (92,839) 354,372 (534,232) % Change 237.6% 224.3% -80.6% 61.6% -56.6% 0.8% 542.3% -267.3% 59.7% -47.3% 110.5% -2565.7% 95.1% 635.3% 14.6% -46.8% 350.8% -41.9% 274.9% -110.5% North County Retail Net Absorption
Commercial Retail Market Overview
Net absorption in North County improved quarter-over-quarter between the second half of 2021 and the end of 2022. The continued development of new retail space in North County is putting pressure on absorption in some areas of the Submarket, and the introduction of 10,000 of retail as approved would likely do the same in San Marcos. A smaller ground floor retail space below apartments would likely fare better.
-350,000
-300,000
-250,000
-200,000
-150,000
-100,000
-50,000
0 50,000
100,000
150,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Square Feet
Source: Voit
Net Absorption (Square Feet)
46 Capalina Apartments – DTA and City of San Marcos
North County Retail Space Gross Absorption
Commercial Retail Market Overview
Gross absorption in North County remains positive, but volume has dropped off over the past two quarters to below average levels compared to activity over the past four years. This could point to further softening as discussed on the previous pages. 0 50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Square Feet
Source: Voit
Gross Absorption (Square Feet)
Gross Absorption Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Gross Absorption (SF) 241,966 439,842 221,958 365,476 246,985 281,522 365,248 181,689 159,465 148,322 251,623 184,350 289,657 215,907 239,673 288,113 355,390 258,871 145,801 172,529 Gross Absorption Change 206,885 197,876 (217,884) 143,518 (118,491) 34,537 83,726 (183,559) (22,224) (11,143) 103,301 (67,273) 105,307 (73,750) 23,766 48,440 67,277 (96,519) (113,070) 26,728 % Change - 81.8% -49.5% 64.7% -32.4% 14.0% 29.7% -50.3% -12.2% -7.0% 69.6% -26.7% 57.1% -25.5% 11.0% 20.2% 23.4% -27.2% -43.7% 18.3% 47 Capalina Apartments – DTA and City of San Marcos
North County Retail Space Under Construction
Commercial Retail Market Overview
The pipeline for North County is just below 130,000 square feet, which could be a concern in other areas of the market. However, the pipeline for San Marcos in the form of the Panera Bread site on San Marcos Blvd is already 100%, and potential absorption of new space into this particular Submarket is therefore less concerning. 0 50,000
100,000
150,000
200,000
250,000
300,000
350,000
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Square Feet
Source: Voit
Under Construction (Square Feet)
Under Construction Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Under Construction (SF) 311,836 238,793 210,790 42,000 48,000 57,921 27,412 35,062 96,272 94,681 99,786 147,226 58,282 61,820 53,650 48,550 65,239 128,302 129,086 130,109 Under Const. Change 76,219 -73,043 -28,003 -168,790 6,000 9,921 -30,509 7,650 61,210 -1,591 5,105 47,440 -88,944 3,538 -8,170 -5,100 16,689 63,063 784 1,023 % Change 32.3% -23.4% -11.7% -80.1% 14.3% 20.7% -52.7% 27.9% 174.6% -1.7% 5.4% 47.5% -60.4% 6.1% -13.2% -9.5% 34.4% 96.7% 0.6% 0.8% Capalina Apartments – DTA and City of San Marcos
48 Retail Demand Outlook
Capalina Apartments – DTA and City of San Marcos
49 Source: Meyers Research, ESRI
The daytime population in the 5-mile radius
around the Subject is roughly 14x the local (1-
mile) resident population. This indicates that
demand for apartments will come not only from
local residents but people within five-miles
looking for rentals. These numbers indicate high
demand and support for the proposed project.

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

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

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

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

1. NeWest
Residents
Pleasantville (2B) Boomburbs (1 C)
Capalina Apartments – DTA and City of San Marcos
51 Source: Meyers Research, ESRI
The area within a 5-mile radius of the site has higher average Spending Potential Index (SPI) across all retail sectors than the 1-mile and 3-mile radii.

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

A summary of the leakage and
surplus by industry Subsector is
shown at right for the 1-mile
radius. Undersupplied sectors
include:
• Food & Beverage
• Health & Personal Care
• Clothing and Accessories
• General Merchandise
• Nonstore Retailers
Capalina Apartments – DTA and City of San Marcos
53 -15.5 213Restaurants/Other Eating Places 7225 $111,307,975 $152,223,477 -$40,915,502

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

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

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

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

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

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

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

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

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

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

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

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

Capalina Apartments – DTA and City of San Marcos
54 3-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
-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
Capalina Apartments – DTA and City of San Marcos
55 5-Mile Radius CMA Retail Leakage & Supply
Retail Demand Outlook
Given the Proposed Uses, the 5-
Mile Radius from the Subject is
considered too broad of an area
in which to measure supply and
demand.
-15.5 213Restaurants/Other Eating Places 7225 $111,307,975 $152,223,477 -$40,915,502

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

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

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

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

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

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

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

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

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

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

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

28.2 61Motor Vehicle & Parts Dealers 441 $218,981,867 $122,549,018 $96,432,849 Leakage/Surplu
s
Number of
2017 Industry Group (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
-14.6 228Total Food & Drink 722 $116,162,010 $155,962,326 -$39,800,316 -19.8 630Total Retail Trade 44-45 $1,059,382,107 $1,581,317,531 -$521,935,424 -19.3 858Total Retail Trade and Food & Drink 44-
45,722
$1,175,544,117 $1,737,279,857 -$561,735,740
Leakage/Surplu
s
Number of
2017 Industry Summary (Retail Potential) (Retail Sales) Factor Businesses NAICS Demand Supply Retail Gap
Capalina Apartments – DTA and City of San Marcos
56 Location Analysis
57 Capalina Apartments – DTA and City of San Marcos
Current Site Photos
Location Analysis
Current site from liquor store
parking lot looking northeast
View looking north
Current parcel zoned as Industrial
from N. Las Flores Drive
Demolished Mission Plaza Shopping Center to the west
View to the northeast
View to the southwest
View to the southeast
58 Capalina Apartments – DTA and City of San Marcos
Employees by Zip Code Drive Time Map
Location Analysis
Collectively there are 35,794 employees in the two San Marcos zip codes, with 17,928 in the Subject zip code 92069. The greatest concentration of local residents commute to destinations along the Highway 78 Corridor, although some do travel as far as Temecula and Downtown San Diego for work.
15-minute
drive time
30-minute
drive time
45-minute
drive time

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

60 Capalina Apartments – DTA and City of San Marcos
Power Inn Apartments│ Virtua Opportunity Zone Fund I, LLC │ 60 The Subject has excellent access to public transportation options including the Breeze Bus line, the Inland Rail Trail and Rail Sprinter lines.

Area Public Transit
Location Analysis
The nearest Breeze bus stop is the Palomar
College Transit Center and is located about one
mile from 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.
61 Capalina Apartments – DTA and City of San Marcos
The Sprinter light rail is a 22-mile rail system that connects Oceanside, Vista, San Marcos, and Escondido, serving 15 stations along the Highway 78 corridor. The nearest Sprinter stop is the Palomar College Station stop, located about one mile south along Mission Road.

Source: North County Transit District
Sprinter Transit Map
Location Analysis
62 Capalina Apartments – DTA and City of San Marcos
Source: ESRI
The Subject is next to W. Mission Blvd, which has strong average daily traffic (ADT) counts, creating a viable marketing window for the Subject from a leasing standpoint. Furthermore, the planned four-story structure will likely be visible from the 78 Freeway once it is topped out. The average daily traffic counts along the 78 Freeway are very high, at 119,000 ADT, while ADT in and around Capalina Rd is between 15,400 and 20,200 cars per day.

Average Daily Traffic Count
Location Analysis

1.5 miles

Capalina Apartments – DTA and City of San Marcos
63 Land Use & Zoning Analysis
Capalina Apartments – DTA and City of San Marcos
64 The Subject is located in the City of San Marcos. The San Marcos General Plan is shown below with the Subject displayed as a white circle. The zoning for the site is Mixed-Use Commercial (MU-3). The proposed rezone for the Subject is to Mixed-Use (MU-2) to allow for Multi-Family Residential.

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

Capalina Apartments – DTA and City of San Marcos
65 Source: City of San Marcos
According to the zoning maps from the City of San Marcos, the Subject is zoned for Mixed-Use-3 under the current zoning. Under the proposed zoning, the parcel would be rezoned to Mixed-Use-1 to permit the development of multifamily residential.

Zoning Map Detail
Location, Land Use & Zoning Analysis

Capalina Apartments – DTA and City of San Marcos
66 Original (Approved) Development Plan – MU-3
Land Use & Zoning Analysis
The original plan for this site is zoned as Mixed Use (MU-3). Development consistent with this zoning could support an estimated 90,000 square feet of general office space and 10,000 square feet of retail. Zonda does not have specific plans provided for the current zoning of the Subject site. Based on the Mixed Use Zone Floor Ara Ratio (FAR) guidelines shown below, we conclude that up to 1.5x the lot size is permitted to be constructed at the Subject. This translates to +/-164,000 square feet, assuming lot size is 2.51 acres (109,336 square feet).

The Mixed Use 3 (MU-3 (SP)) Zone is intended to support a job-based mixed use area combining a variety of commercial and office uses integrated as a cohesive development. This business-oriented area shall be complementary to the MU-1 and MU-2 Zones, Permitted land uses for MU-3 (SP) and MU-4 (SP) developments are established at the time of Specific Plan adoption, but are limited to commercial and industrial uses. Residential uses are not permitted in the MU-3 (SP) Zone, and Zonda therefore provides analysis of MU-2 requirements on the following page.

The Client has provided a development guideline as shown below.

The total lot size can be reduced by the required setbacks which amount to approximately 9,640 square feet, resulting in a net developable footprint of 99,696 square feet. This is smaller than the proposed total developable square footage of 100,000 square feet, and Zonda therefore assumes that this would likely be a two- or possibly a three-story building.

Capalina Apartments – DTA and City of San Marcos
67 Proposed Site Plan Permitted Uses – MU-2
Land Use & Zoning Analysis
Permitted Residential Mixed Use Land Uses.

Any single parcel or building within the Mixed
Use Zones may be permitted to include a
single or multiple land uses subject to the
permit requirements of the applicable Zone.

Mixed Use property uses are not specified for
the MU-3 (SP) and MU-4 (SP) Zones, hence the
rezone to MU-2 and GPA triggered to facilitate
the proposed development of Mixed-Use
apartments.

Permitted Recreational, Educational Mixed Use Land Uses.

Capalina Apartments – DTA and City of San Marcos
68 Original (Approved) Site Plan Permitted Uses (ctd.)
Land Use & Zoning Analysis
Permitted Office, Service Mixed Use Land Uses.

Permitted Industrial Mixed Use Land Uses.

Capalina Apartments – DTA and City of San Marcos
69 Original (Approved) Site Plan Permitted Uses (ctd.)
Land Use & Zoning Analysis
Permitted Retail Land Uses.

Capalina Apartments – DTA and City of San Marcos
70 Source: SanGIS, http://www2.sdcounty.ca.gov/pts/trasearch.asp The Subject parcel is assigned to the tax rate area (TRA) 013151. An analysis of the base tax rate and additional tax obligations brings the total tax rate to 1.11222%. The breakdown of the additional tax breakdowns are listed below. The Subject APN 219-115-33-00 is outlined below in aqua.

Tax Rate Area Map
Land Use & Zoning Analysis

Capalina Apartments – DTA and City of San Marcos
71 Demographic Overview
Capalina Apartments – DTA and City of San Marcos
72 20-Minute Drive Time CMA
Demographic Profile
The following section focuses on demographics in the competitive market area (CMA) which is defined as a 20-Minute Drive time from the Subject, and includes the areas of San Marcos, Vista, Escondido, Oceanside, Carlsbad, Rancho Bernardo and Encinitas.

Capalina Apartments – DTA and City of San Marcos
73 Median Household Income in the CMA
Demographic Profile
The Subject Zip code 92069 has a median income of $92,900, with concentrations of higher incomes in the neighboring zip codes and census tracts. 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

Capalina Apartments – DTA and City of San Marcos
74 Average Net Worth in the CMA
Demographic Profile
Average net worth in the Subject zip code
92069 is a little over $1,096,800 and is lower
to the neighboring San Marcos zip code
92078 at $1,519,000. 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

Capalina Apartments – DTA and City of San Marcos
75 Population, Household Profile and Age
Demographic Profile
The City of San Marcos has a population of just under 100,000 living in +/-31,000 households which tend to be larger in size at 3.0 people compared with 2.8 for the CMA but smaller than 3.2 for the Subject North San Marcos zip code 92069. Median age in San Marcos overall is somewhat younger than the CMA, and slightly older than the 92069-zip code.

Paste Paste
Paste Paste
Source: ESRI

37.9 35.0

34.0 32.0

33.0 34.0

35.0 36.0

37.0 38.0

39.0 CMA (20-Minute Drive Time) City of San Marcos Subject Zip Code 92069 Median Age (2023)

2.8 3.0

3.2 2.6

2.7 2.8

2.9 3.0

3.1 3.2
CMA (20-Minute Drive Time) City of San Marcos Subject Zip Code 92069 Avg. HH. Size (2023)
738,855
95,897
49,094
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 (2023)
258,935
30,941 15,465
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 (2023)
Capalina Apartments – DTA and City of San Marcos
76 Income, Net Worth, Occupation & Education
Demographic Profile
The City of San Marcos has a higher median income and net worth than the greater CMA and the north San Marcos zip code 92069 which includes Santa Fe Hills and Twin Oaks. The CMA and City of San Marcos have above 50% attainment and the Zip Code 92069 has about 47% educational attainment. All geographies have less than 65% of residents working in white-collar jobs.

Paste Paste
Paste Paste
Source: ESRI
$99K
$103K
$93K
$86,000
$88,000
$90,000
$92,000
$94,000
$96,000
$98,000
$100,000
$102,000
$104,000
CMA (20-Minute Drive
Time)
City of San Marcos Subject Zip Code 92069
HH. Income (2023)
$215K $209K
$152K
$0
$50,000
$100,000
$150,000
$200,000
$250,000
CMA (20-Minute Drive Time) City of San Marcos Subject Zip Code 92069 Net Worth (2022)

51.0%

52.7%

47.2%

44.0%

45.0%

46.0%

47.0%

48.0%

49.0%

50.0%

51.0%

52.0%

53.0%

54.0%
CMA (20-Minute Drive Time) City of San Marcos Subject Zip Code 92069 Educational Attainment - Associate's or Higher (2023)

63.6% 64.6%

58.7%

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 (2023)
White Collar Services Blue Collar
Capalina Apartments – DTA and City of San Marcos
77 Demographic Tapestry Profile
Demographic Profile
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 Married Couples 60 83% Single Family 41.0 3.2 $122,076 $431,013 $945,361 10.2% 2 1E: Exurbanites Affluent Estates Married Couples 34 85% Single Family 48.9 2.7 $139,164 $662,328 $1,061,804 7.2% 3 8C: Bright Young Professionals Middle Ground Married Couples 66 43% Single Family; Multi-Units 31.6 2.7 $73,683 $48,864 $515,483 6.1% 4 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 32.6 4.2 $80,518 $156,446 $742,784 5.6% 5 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 32.7 3.6 $152,015 $477,139 $938,981 5.4% 6 13C: NeWest Residents Next Wave Married Couples w/ Kids 87 17% Multi-Unit Rentals 26.4 3.7 $41,011 $15,056 $374,051 5.2% 7 13A: Diverse Convergence Next Wave Married Couples w/ Kids 89 28% High Density Apts; Single Family 31.6 3.4 $58,646 $20,668 $900,965 5.1% 8 2D: Enterprising Professional Upscale Avenues Married Couples 72 52% Multi-Units; Single Family 34.0 2.7 $111,414 $127,429 $910,269 5.0% 9 2A: Urban Chic Upscale Avenues Married Couples 47 66% Single Family 41.6 2.6 $141,625 $372,979 $1,534,484 4.5% 10 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 51.2 2.1 $50,444 $59,540 $467,630 4.2% 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 30.2 3.9 $157,884 $463,904 $886,622 24.0% 2 8C: Bright Young Professionals Middle Ground Married Couples 66 43% Single Family; Multi-Units 29.2 2.9 $76,528 $47,508 $486,739 9.3% 3 13C: NeWest Residents Next Wave Married Couples w/ Kids 87 17% Multi-Unit Rentals 24.3 4.0 $42,595 $14,638 $353,193 8.8% 4 4A: Workday Drive Family Landscapes Married Couples 49 85% Single Family 32.9 3.5 $125,796 $362,233 $651,160 8.4% 5 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 30.1 4.5 $83,627 $152,106 $701,366 6.8% 6 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 37.9 3.4 $126,790 $419,057 $892,647 6.7% 7 13A: Diverse Convergence Next Wave Married Couples w/ Kids 89 28% High Density Apts; Single Family 29.2 3.6 $60,910 $20,095 $850,726 6.4% 8 9D: Senior Escapes Senior Styles Married Couples w/No Kids 43 75% SF; Mobile Homes/Seasonal 47.8 2.6 $52,959 $135,738 $305,247 5.1% 9 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 33.5 3.4 $98,819 $247,921 $499,541 4.8% 10 9E: Retirement Communities Senior Styles Singles 48 45% Multi-Units; Single Family 47.3 2.2 $52,391 $57,888 $441,554 4.7% 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 23.7 4.1 $38,391 $10,625 $312,203 15.2% 2 13A: Diverse Convergence Next Wave Married Couples w/ Kids 89 28% High Density Apts; Single Family 28.3 3.8 $54,899 $14,585 $751,994 12.8% 3 1C: Boomburbs Affluent Estates Married Couples 62 84% Single Family 29.3 4.0 $142,301 $336,701 $783,725 10.0% 4 4B: Home Improvement Family Landscapes Married Couples 64 80% Single Family 32.5 3.6 $89,066 $179,941 $441,566 9.7% 5 1D: Savvy Suburbanites Affluent Estates Married Couples 35 91% Single Family 38.9 3.5 $141,277 $498,001 $790,826 9.4% 6 2B: Pleasantville Upscale Avenues Married Couples 60 83% Single Family 36.8 3.6 $114,276 $304,152 $789,050 9.4% 7 7B: Urban Villages Ethnic Enclaves Married Couples 86 70% Single Family 29.2 4.7 $75,373 $110,399 $619,968 8.3% 8 4A: Workday Drive Family Landscapes Married Couples 49 85% Single Family 32.0 3.7 $113,380 $262,909 $575,590 6.3% 9 9D: Senior Escapes Senior Styles Married Couples w/No Kids 43 75% SF; Mobile Homes/Seasonal 46.4 2.7 $47,732 $98,518 $269,822 5.6% 10 8F: Old and Newcomers Middle Ground Singles 51 46% Single Family; Multi-Units 33.8 2.6 $51,315 $27,720 $378,105 4.7% Locally Adjusted Characteristics
Locally Adjusted Characteristics
Locally Adjusted Characteristics
Capalina Apartments – DTA and City of San Marcos
78 CMA Demographic Profile
Demographic Profile
The San Marcos area is characterized by a mix of lower and high income households, ranging from families, married couples, and professionals. Top Lifestyle Groups include affluent “Boomburbs,” Young Professional Couples, low-income New Wave Married Couples with Kids, Comfortable Families, and above average earning Ethnic Families. Lifestyle Groups are shown below.

Capalina Apartments – DTA and City of San Marcos
79 Economic Overview
80 Capalina Apartments – DTA and City of San Marcos
Population Growth
MSA Economic Trends
Population growth in the MSA is expected to attain a post-pandemic high of 14,672 this year (2023) before experiencing slower but still positive growth thereafter. Positive population growth bodes well for the development of new multifamily development, especially with rent increases and limited availability.
-30,000
-20,000
-10,000
0 10,000
20,000
30,000
40,000
50,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F Total Population 3,187,595 3,216,350 3,238,250 3,257,594 3,268,139 3,282,879 3,286,781 3,297,412 3,278,126 3,269,321 3,283,993 3,292,612 3,298,110 3,302,428 3,305,881 Prior Year Change 28,402 28,756 21,899 19,344 10,545 14,740 3,902 10,631 (19,286) (8,805) 14,672 8,619 5,498 4,317 3,454 Annual % Change 0.9% 0.9% 0.7% 0.6% 0.3% 0.5% 0.1% 0.3% -0.6% -0.3% 0.4% 0.3% 0.2% 0.1% 0.1% 81 Capalina Apartments – DTA and City of San Marcos
Residential Building Permits
MSA Economic Trends
Building permits in the MSA are expected to continue to increase through 2023 and stay above the historical average of +/- 9,249 units through 2027. The area demand for new homes in turn triggers demand for commercial retail services such as the planned site. 0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F Total Building Permits 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,472 10,048 9,346 9,053 11,242 12,203 12,423 11,739 Annual % Change 45.9% -16.8% 43.8% 9.2% -3.2% -5.8% -16.5% 15.3% 6.1% -7.0% -3.1% 24.2% 8.5% 1.8% -5.5% SFD Building Permits 2,565 2,487 3,222 2,351 4,056 3,489 3,019 2,900 3,227 3,517 3,200 4,280 4,989 5,256 5,043 Annual % Change 16.8% -3.0% 29.6% -27.0% 72.5% -14.0% -13.5% -3.9% 11.3% 9.0% -9.0% 33.8% 16.6% 5.3% -4.1% MF Building Permits 5,699 4,388 6,661 8,440 6,385 6,345 5,197 6,572 6,821 5,829 5,853 6,961 7,213 7,168 6,696 Annual % Change 64.3% -23.0% 51.8% 26.7% -24.3% -0.6% -18.1% 26.5% 3.8% -14.5% 0.4% 18.9% 3.6% -0.6% -6.6% 82 Capalina Apartments – DTA and City of San Marcos
Employment
MSA Economic Trends
After 117,200 job losses in the MSA in 2020, unemployment started to recover in 2021 and is forecast to grow at a lower rate through 2027. Unemployment which spiked to 9.5% in 2020 is expected to remain flat at a healthy level of between 3.5% and 3.8% over the next five years.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%
-150,000
-100,000
-50,000
0 50,000
100,000
150,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F2024F2025F2026F2027F 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F Non-Farm Employment 1,316,200 1,344,933 1,384,833 1,422,617 1,452,292 1,482,183 1,503,058 1,385,800 1,442,083 1,534,933 1,574,572 1,588,204 1,601,907 1,610,025 1,615,301 Prior Year Change 33,400 28,733 39,900 37,783 29,675 29,892 20,875 (117,258) 56,283 92,850 39,638 13,633 13,703 8,118 5,275 Annual % Change 2.6% 2.2% 3.0% 2.7% 2.1% 2.1% 1.4% -7.8% 4.1% 6.4% 2.6% 0.9% 0.9% 0.5% 0.3% Unemployment Rate 7.9% 6.5% 5.2% 4.7% 4.1% 3.4% 3.2% 9.5% 6.5% 3.4% 3.5% 3.8% 3.8% 3.7% 3.7% 83 Capalina Apartments – DTA and City of San Marcos
Employment by Sector
MSA Economic Trends
The pandemic year saw a sharp decline in most job sectors, but year over year, San Diego is seeing growth in all categories expect for Information, which is flat. Leisure & Hospitality, one of the hardest hit industries from the pandemic, evidences the strongest job growth with over 14,000 added jobs since June 2022, followed by Education & Health Services at over 9,500 positions. 861
-104
245
1,526
9,571
2,525
14,270
272
3,665
2,268
-2,000
0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Financial
Activities
Information Professional &
Business
Services
Construction &
Mining
Education &
Health Services
Government Leisure &
Hospitality
Manufacturing Other Services Trade, Transp.
and Utilities
Annual Non-Farm Employment Growth
Source: Moody's Analytics; U.S. Bureau of Labor Statistics (BLS) Category Financial Activities Information
Professional &
Business
Services
Construction &
Mining
Education &
Health Services Government Leisure &
Hospitality Manufacturing Other Services Trade, Transp. and Utilities
Current Month (Jun-2023) 77,867 21,951 287,014 89,112 237,668 250,189 209,309 118,046 58,525 224,717 Current Month (Jun-2022) 77,006 22,056 286,769 87,586 228,097 247,664 195,038 117,774 54,860 222,448 12-Month Change 861 -104 245 1,526 9,571 2,525 14,270 272 3,665 2,268 84 Capalina Apartments – DTA and City of San Marcos
E/P Ratio
MSA Economic Trends
E/P Ratios in excess on 1.2 indicate a supply-constrained housing market with implied price growth. The E/P ratio jumped to 9.9 in 2022 and is expected to ameliorate somewhat in 2023 before dipping back down to what is considered equilibrium (1.2) in 2024. The outer years are forecast to see more attainably priced housing.

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

5.6 9.9

4.4 1.2

1.1 0.7

0.4 -25.0
-20.0
-15.0
-10.0
-5.0

0.0 5.0

10.0 15.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F Non-Farm Employment 1,316,200 1,344,933 1,384,833 1,422,617 1,452,292 1,482,183 1,503,058 1,385,800 1,442,083 1,534,933 1,574,572 1,588,204 1,601,907 1,610,025 1,615,301 Prior Year Change 33,400 28,733 39,900 37,783 29,675 29,892 20,875 (117,258) 56,283 92,850 39,638 13,633 13,703 8,118 5,275 Building Permits 8,264 6,875 9,883 10,791 10,441 9,834 8,216 9,472 10,048 9,346 9,053 11,242 12,203 12,423 11,739 Employment/Housing 4.0 4.2 4.0 3.5 2.8 3.0 2.5 -12.4 5.6 9.9 4.4 1.2 1.1 0.7 0.4 85 Capalina Apartments – DTA and City of San Marcos
Affordability Index
MSA Economic Trends
The Affordability Index is expected to drop (ie: become less affordable) over the next five years, implying higher priced homes in reaction to lower new home building activity, high interest rates, and the current trend where existing home prices inch ever closer to new home prices. As the existing home market price rises, so new home prices are pushed up, and Moody’s Economy.com predicts that the ratio will remain at +/- 58 the next few years. Affordability in the San Diego MSA has been less than (or equal to) 100 for the last twenty years meaning it has a history of being unaffordable. The Affordability Index is based on detached housing. 67 54
49 47
52 78
95 86
95 100
85 82 79 82 79
74 81 84
76 54 50
56 58 58 58
0 25
50 75
100
125
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F 2026F 2027F Affordability Index 85.2 81.9 78.9 81.8 79.1 73.8 81.2 83.9 75.6 53.6 50.3 55.6 58.3 58.0 57.8 Capalina Apartments – DTA and City of San Marcos
86 Appendix
87 Capalina Apartments – DTA and City of San Marcos
Proposed Project Plans
Appendix

88 Capalina Apartments – DTA and City of San Marcos
Proposed Project Plans (Cont’d)
Appendix

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